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District Court of Appeal, First District, Division 1, California.

R. A. KLASSEN, Plaintiff and Appellant, v. The CITY OF SAN CARLOS, a municipal corporation, Harry L. Grant, as Treasurer of said City of San Carlos, and L. C. Smith Co., a corporation, Defendants and Respondents.

Civ. 16863.

Decided: November 09, 1956

William O. Ellis, Redwood City, for appellant. Melvin E. Cohn, City Atty. of the City of San Carlos, San Carlos, Kirkbride, Wilson, Harzfeld & Wallace, San Mateo, for respondents.

In this action, brought,1 as the complaint alleges, by a ‘citizen resident and taxpayer of the City of San Carlos and a contributor to the general fund of said City,’ the owner of ‘real property within said city which has been and is assessed for such general taxes,’ who ‘is bound and liable to pay the same, and within one year before commencement of this action has paid a tax in said City,’ seeking to prevent an alleged illegal expenditure from the general fund of the city and to require restoration to that fund of moneys that had been illegally expended, judgment was rendered against plaintiff upon his failure to amend after the sustaining of a demurrer to his third amended complaint, with ten days' leave to amend.

The challenged transaction was incident to a street improvement proceeding conducted under the sanction of the Municipal Improvement Act of 1913, Sts. & Hy. Code, §§ 10000–10609. The complaint alleges that this proceeding was commenced by a resolution of intention adopted on the 13th of September, 1950; that on November 8, 1950, the city council, out of the city's general fund, contributed $4,000 for the improvement, and on June 15, 1951, appropriated an additional $2,000 for the same purpose; that general fund moneys have been used for payment of the contractor; that such payment does not constitute an advance or loan to the special improvement fund by the city, to be repaid to the city; that no provision has been made to repay the general fund out of the proceeds of the special assessment; and that the resolution of intention ‘made no mention of a contribution from any general fund in the City Treasury.’

We think that these and other allegations, which need not be detailed here, clearly state a cause of action, not vulnerable to the general demurrer. The Municipal Improvement Act expressly declares that in the resolution of intention ‘the legislative body may order that a specified portion or percentage of the cost and expenses of the improvement shall be paid out of the treasury of the municipality from such fund as the legislative body may designate.’ Sts. & Hy.Code, § 10201. The allegations of the complaint also show that plaintiff possesses the qualifications prescribed by section 526a of the Code of Civil Procedure for the bringing of such an action as this.

We observe that neither the plaintiff nor the defendants brought the provisions of section 10201 to the attention of the trial court. Plaintiff alleged that the challenged transfer of funds was in violation of section 5582 of the code. Defendants contended that section 5125, based upon a later enactment than section 5582, prevailed.2 Both make the same contentions upon this appeal. Defendants add the suggestion that section 5125 in effect supplements section 5582 by authorizing the city council to determine the desirability of contributing from the general fund after a proceeding has commenced. Plaintiff in his closing brief furnishes a more elaborate analysis of section 5125 than heretofore. Counsel on neither side has directed our particular attention to the provisions of section 10201 of the code.

We perceive no real inconsistency between sections 5125 and 5582. Section 5582 deals with contributions ‘out of the treasury of the city’, provision therefor to be ‘stated in the resolution of intention’. Section 5125 deals with moneys received from other sources (‘from any funds made available for the purpose by any local [such as the county or a joint highway district], state or national agency or authority‘), funds which the city council ‘may accept’ and provide for ‘contribution toward the cost and expenses' of the work. In such a case, it is not ‘necessary to set forth or give notice of such contribution in the resolution of intention’. The complaint herein does not present a section 5125 situation.3 It speaks solely of a proposed contribution from the general fund of the city; makes no mention of funds received from an outside source, whether federal, state, county or district.

Thus, it is clear that the alleged failure to mention in the resolution of intention the proposal to contribute from the city's general fund, is fatal, whether section 10201 or 5582 applies. In this connection, we wish to state that we recognize that section 5582 may not be wholly repugnant to section 10201. The latter speaks of a contribution in terms of ‘a specified portion or percentage’ of the cost and expenses. The former says the legislative body may determine that ‘the whole or any part’ of the costs and expenses may be contributed. It is better to leave the resolution of this seeming inconsistency, under the circumstances of this case, to the determination of the trial court as the facts develop upon the trial, if the case goes to trial. We have before us only the allegations of the complaint and have not had the benefit of a discussion of this point by counsel. (Upon stipulation of counsel, this appeal was submitted upon the briefs on file, without oral argument.)

If plaintiff predicated his pleading upon the wrong section, 5582 instead of 10201, it is of no consequence. His allegation that the failure to mention the proposed contribution in the resolution of intention was ‘in violation of Section 5582, Streets and Highways Code’ is a legal conclusion. If that is an erroneous conclusion, the law supplies the applicable statute where as here the complaint adequately describes the challenged transaction. In re Murphy, 190 Cal. 286, 291–293, 212 P. 30; In re Mingo, 190 Cal. 769, 771, 214 P. 850; and People v. Papayanis, 101 Cal.App.2d Supp. 918, at pages 922–925, 226 P.2d 91, at pages 95–97, in which, Judge Bishop of the Appellate Department of the Superior Court, Los Angeles, furnishes a comprehensive review of the case law on this subject from 1890 to 1950.

It happens that defendant demurred specially as well as generally, but it appears to us that the special demurrer dealt with matters which if vulnerable, should be challenged by means of a motion to strike. See 21 Cal.Jur. 248, Pleading, § 173, and supplements thereto. The special demurrer seems to have been predicated upon the erroneous theory that plaintiff was additionally attempting to present questions which only a special assessment payer in the improvement district could present, and the trial court decision appears to have been based upon the seeming failure of the complaint to state any cause of action. Under the circumstances, particularly in a case which involves the legality of public expenditures, a matter of grave concern to the city itself and to all of its citizens and general taxpayers, the cause should be remanded for such further proceedings as may not be inconsistent with the views herein expressed.

The judgment is reversed.


1.  Against the City of San Carlos, the City Treasurer, and the contractor who had been engaged to do certain improvement work for the city.

2.  Both sections 5125 and 5582 (portions of the Improvement Act of 1911, §§ 5000–6794 of the code) are potentially applicable. The Municipal Improvement Act by a general reference (in § 10205 of the code) potentially incorporates them: ‘The provisions of the Improvement Act of 1911 relating to contributions is incorporated in this division [Division 12 of the code] as if fully set out herein.’ That, however, with three other references to the 1911 Act, §§ 10206–10208 of the code, appears at the end of a chapter, §§ 10200–10208, of the 1913 Act which deals with the ‘resolution of intention’ under that Act and prescribes certain requirements (including those expressed in § 10201) in respect thereto. It is a fair inference that the Legislature, when making those incorporations by reference, intended to make applicable to a 1913 act proceeding only the pertinent provisions of the 1911 act which were not inconsistent with the specifically expressed requirements of the 1913 act.

3.  We are not undertaking a detailed, definitive analysis of the provision of section 5125, such as the question whether a section 5125 determination must be made before any work is done or may be made at a later stage of the improvement proceeding.

FRED B. WOOD, Justice.

PETERS, P. J., and BRAY, J., concur.

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