Opinion
1 Div. 333.
June 30, 1948.
J. B. Blackburn, of Bay Minette, for petitioner.
The governing body of a town has no power to reduce or abate an assessment for public improvements after same shall have been made final, except in cases where appeals are taken within the time prescribed by law. Code 1940, Tit. 37, § 538; Gen.Acts 1927, p. 766, § 28. All assessments for public improvements bear interest at not exceeding 8 per cent. After expiration of 30 days from date on which assessment is made final. Gen.Acts 1927, p. 769, § 45. Interest is the compensation allowed by law or fixed by the parties for the use or forbearance of money, or as damages for its detention. 23 Am.Jur. 623, 625. Every debt is an obligation, but every obligation is not a debt. Lindstrom v. Spicher, 53 N.D. 195, 205 N.W. 231, 41 A.L.R. 968. Legal liability is a liability which the courts enforce as between parties litigant. Vol. 24, Words and Phrases, Perm.Ed., page 564; Pocket Part 1947, page 126. Taxes accrued are an obligation of the taxpayer within the purview of Section 100 of the Constitution. Union Bank Trust Co. v. Phelps, 228 Ala. 236, 153 So. 644; State v. Youngstown Mining Co. 219 Ala. 178, 121 So. 550; McDonald v. State Tax Comm., 158 Miss. 331, 130 So. 473; Morris Ice Co. v. Adams, 75 Miss. 410, 22 So. 944. Such section operates directly on county and municipal officers as well as the legislature. New Farley Nat. Bank v. Montgomery County 203 Ala. 654, 84 So. 815; Mobile v. Coffin, 28 Ala. App. 243, 181 So. 795.
W. C. Beebe, of Bay Minette, opposed.
A street improvement assessment is not such an obligation or liability as is within the purview of Section 100 of the Constitution, an assessment not being a personal liability against the property owner, but a charge against the property benefited by local improvement. Ballenger v. Moragne, 225 Ala. 227, 142 So. 657; Hamrick v. Albertville, 228 Ala. 666, 155 So. 87, 89; City of Huntsville v. Madison, 166 Ala. 389, 52 So. 326, 139 Am.St.Rep. 45; Dothan Nat. Bank v. Hollis, 212 Ala. 628, 103 So. 589; Falkner v. Bessemer, 214 Ala. 130, 106 So. 897; Griffin Lbr. Co. v. Neill, 240 Ala. 573, 200 So. 415, 134 A.L.R. 286. A municipality, for a valuable consideration, may enter into a contract reducing an original obligation without violating Section 100 of the Constitution. Montgomery County v. New Farley Nat. Bank, 200 Ala. 170, 75 So. 918; Brown v. Lowndes County, 201 Ala. 437, 78 So. 815; New Farley Nat. Bank v. Montgomery County, 17 Ala. App. 297, 200 Ala. 170, 85 So. 31. Interest on a street improvement assessment is not a part of the obligation or liability within the meaning of Section 100 of the Constitution, but is in the nature of a penalty. 15 R.C.L. 20; 44 Cyc. 1371; Steinacher v. Swanson, 131 Neb. 439, 268 N.W. 317; Jones v. Williams, 121 Tex. 94, 45 S.W.2d 130, 79 A.L.R. 983; State v. Hitsman, 99 Mont. 521, 44 P.2d 747; Colby v. Medford, 85 Or. 485, 167 P. 487; Kennedy v. State, 240 Ala. 273, 198 So. 620. Section 538, Title 37 of the Code has no application to the reduction of interest, but only an assessment
The question on this petition is controlled by the following facts: A city has made a street improvement and an assessment against property for its cost in whole or in part, and such assessment has been made final as provided by section 538, Title 37, Code, which amount was not paid in thirty days by the property owner, who did not elect to pay in installments, as provided in section 557, Title 37, Code, and on the amount of which assessment the city fixed the interest rate at six percent per annum, the maximum rate authorized by section 557, supra; and has not issued bonds or assigned the claim for said amount. Later, long after the expiration of thirty days, the city council passed a resolution reducing the rate of interest from six percent to three percent per annum for the first year, and two percent for each year thereafter. The property owner is seeking to require the city clerk and treasurer to accept payment at the reduced rate of interest. She has refused to accept such payment on the ground that the city council had no right to make the reduction.
The Court of Appeals held that the contention of the city clerk and treasurer cannot be supported under section 100 of the Constitution, nor any other provision of law. This was based on the fact that section 100 only applies to obligations or liabilities of some person, association or corporation to the city; and that for the tax here involved and the interest on it, there is no obligation or liability of any person, association or corporation, but that the claim is against property only. In this application of section 100, supra, we concur.
But it is insisted that since section 538, Title 37, Code, prohibits the city council from reducing or abating an assessment after it shall have been made final, it would violate that statute to permit the city council to reduce the rate of interest on the amount of the assessment after it has once been fixed.
We cannot agree with that construction of section 538, supra. The amount of the assessment which cannot be reduced is that fixed by making it final. That amount does not include interest, but it is contemplated that the amount of it shall be paid in thirty days thereafter. There can be no interest if it is paid in thirty days. It is not therefore a feature of the assessment, the amount of which cannot be reduced after it is made final. This is made manifest by section 557, section 37, Code, providing that all assessments or installments thereof (If there is an election to pay in installments) shall bear interest at not exceeding six percent per annum after the expiration of thirty days from the date on which the same is made final. That statute does not prescribe a rate of interest, but only a maximum, limiting the power of the city council in fixing such a rate.
It is plain to us therefore that when section 538, supra, prohibits the city council from reducing or abating the amount of an assessment after it shall have been made final, it has reference only to the amount of the assessment which was made final, and had no reference to what the city council might do as to interest if the amount of the assessment as finally made is not paid in thirty days.
When the rights of the city only are to be adversely affected by a reduction of such rate of interest, we know of no law or constitutional provision which would deny the power thus to act.
Many cases hold that "interest" imposed in our tax statutes is a penalty, and that a penalty never vests and its repeal is not a deprivation of vested rights. City of Mobile v. Merchants National Bank, 250 Ala. 159, 33 So.2d 457, where many cases are cited to that effect, as does the opinion of the Court of Appeals in the instant case.
But if not inhibited by section 100, Constitution, we see no reason, nor law, which prohibits a city to reduce the rate of interest on an obligation whether it is strictly "interest" or a "penalty." We do not think that this act of the city council should be interpreted as a remission or reduction of a tax assessment, which we admit is prohibited by section 538, supra.
We think that on the amount of such an assessment, the city council may fix any rate not exceeding six percent per annum, and if the rights of others are not thereby adversely affected, may at any time reduce the rate once fixed, since the situation is not controlled by section 100, Constitution.
Affirmed.
All the Justices concur.