No. 12940
I N THE SUPREME COURT OF THE STATE OF MONTANA
THE STATE OF MONTANA, e x rel., THE C I T Y OF TOWNSEND, a m u n i c i p a l c o r p o r a t i o n ,
Relator,
D. A. DAVIDSON, I N C . , a Montana Corpora t i o n ,
Respondent.
ORIGINAL PROCEEDING :
Counsel o f Record:
For Relator:
P a t r i c k F . Hooks a r g u e d , Townsend, Montana
F o r Respondent :
S c r i b n e r and Huss, Helena, Montana W i l l i a m S c r i b n e r a r g u e d , H e l e n a , Montana
Submitted: J a n u a r y 14, 1975
Decided : &,I fl y g ! :.; JAN 3 0 1975 Filed : J u s t i c e FJesley C a s t l e s d e l i v e r e d t h e Opinion of t h e Court.
This i s an o r i g i n a l proceeding f o r d e c l a r a t o r y r e l i e f under T i t l e 93, Chapter 89, R.C.M. 1947, t h e Uniform D e c l a r a t o r y Judg- ments Act. R e l a t o r i s a m u n i c i p a l i t y of t h e s t a t e of Montana, d u l y organized and e x i s t i n g a s a municipal c o r p o r a t i o n under t h e laws of Montana. Respondent i s a Montana c o r p o r a t i o n which, i n t h e c o u r s e of i t s b u s i n e s s , purchases f o r r e s a l e bonds i s s u e d by s p e c i a l improvement d i s t r i c t s w i t h t h e s t a t e of Montana. O March 5 , 1974, by r e s o l u t i o n of i t s c i t y c o u n c i l r e l a t o r n c r e a t e d , w i t h i n t h e c i t y , S p e c i a l Improvement D i s t r i c t No. 4 f o r t h e purpose of g r a d i n g s t r e e t s , r e p l a c i n g e x i s t i n g g r a v e l b a s e c o u r s e a s needed, p l a c i n g a s p h a l t i c s u r f a c e c o u r s e , i n s t a l l i n g storm d r a i n a g e p i p e s and i n l e t s a s need, a l l upon t h e s t r e e t s and avenues of t h e s p e c i a l improvement d i s t r i c t . T h e r e a f t e r , on June 27, 1974, r e l a t o r awarded a c o n t r a c t f o r t h e c o n s t r u c t i o n o f such improvements. R e l a t o r c i t y and t h e c o n t r a c t o r i n t e n d t o proceed w i t h t h e c o n s t r u c t i o n i n accordance w i t h t h e c o n t r a c t when bonds of t h e s p e c i a l improvement d i s t r i c t a r e s o l d and t h e n e c e s s a r y funds a r e obtained f o r t h e f i n a n c i n g of t h e work. By n o t i c e duly given and a d v e r t i s e d according t o law, r e l a t o r r e q u e s t e d b i d s f o r submission t o t h e c i t y c o u n c i l f o r t h e purchase of $264,000, par v a l u e , of S p e c i a l Improvement D i s t r i c t No. 4 bonds f o r t h e f i n a n c i n g of such c o n s t r u c t i o n . O September 3 , 1974, a n b i d was submitted by respondent and S t a t e Banlc of Townsend f o r t h e purchase of such bonds a t p a r w i t h an a c c r u i n g i n t e r e s t r a t e of 7.75% per annum. N o t h e r b i d was submitted. o The b i d was condi- t i o n e d upon t h e i s s u a n c e and f i l i n g of an opinion of t h e a t t o r n e y g e n e r a l of t h e s t a t e of Montana, t o t h e e f f e c t t h a t c i t i e s and towns could l a w f u l l y i s s u e and s e l l s p e c i a l improvement d i s t r i c t bonds b e a r i n g an i n t e r e s t r a t e i n excess of 7% per annum. The b i d was accepted by t h e c i t y c o u n c i l and t h e r e a f t e r a c o n t r a c t was e n t e r e d i n t o between r e l a t o r and t h e b i d d e r s , c o n d i t i o n e d a s a f o r e s a i d , providing f o r t h e i s s u a n c e of S p e c i a l Improvement D i s t r i c t No. 4 bonds i n t h e sum of $264,000 b e a r i n g i n t e r e s t a t t h e r a t e of 7.75% per annum, and f o r t h e purchase t h e r e o f by t h e b i d d e r s a t p a r p l u s accrued i n t e r e s t t o t h e d a t e of d e l i v e r y . T h e r e a f t e r , on November 2 7 , 1974, t h e a t t o r n e y g e n e r a l of t h e s t a t e of Montana i s s u e d an opinion s t a t i n g , i n e f f e c t , t h a t c i t i e s , towns and c o u n t i e s may l a w f u l l y i s s u e and s e l l s p e c i a l improvement d i s t r i c t bonds o r w a r r a n t s , b e a r i n g an i n t e r e s t r a t e i n excess of 7% per annum i f t h e s p e c i a l assessments paid by t h e p r o p e r t y owners w i t h i n t h e d i s t r i c t a r e a p p r o p r i a t e d f o r t h e payment of p r i n c i p a l and i n t e r e s t on such bonds o r w a r r a n t s . R e l a t o r was then advised by respondent t h a t , n o t w i t h s t a n d i n g t h e p r o v i s i o n s of t h e i r c o n t r a c t and t h e a t t o r n e y g e n e r a l ' s o p i n i o n , i t would c o n t i n u e t o r e f u s e t o purchase t h e bonds f o r t h e claimed
reason t h a t c i t i e s and towns a r e p r o h i b i t e d by law from i s s u i n g o r s e l l i n g s p e c i a l improvement d i s t r i c t bonds o r w a r r a n t s b e a r i n g an i n t e r e s t r a t e g r e a t e r than 7% per annum. R e l a t o r has made d i l i g e n t e f f o r t t o s e c u r e a purchaser f o r t h e bonds a t an i n t e r e s t r a t e of 7% o r l e s s b u t has been unable t o do so. By reason t h e r e o f , r e l a t o r i s informed and b e l i e v e s t h a t i t w i l l be unable t o proceed w i t h such c o n s t r u c t i o n o r t o perform
i t s o b l i g a t i o n s under t h e c o n s t r u c t i o n c o n t r a c t u n l e s s respondent p e r f o r m s u n c k r ' ~ p r o v i s i o n s of i t s c o n t r a c t f o r t h e purchase of t h e bonds. O information and b e l i e f , r e l a t o r s t a t e d i n i t s a p p l i c a t i o n n f o r d e c l a r a t o r y judgment t h a t f o r t h e p a s t s e v e r a l months c i t i e s , towns and c o u n t i e s of t h e s t a t e of Montana have been unable t o f i n a n c e needed s p e c i a l improvements i n d i s t r i c t s c r e a t e d f o r t h a t purpose because t h e p r e v a i l i n g bond market w i l l n o t j u s t i f y t h e purchase of s p e c i a l improvement d i s t r i c t bonds b e a r i n g an i n t e r e s t r a t e of 7% o r l e s s and t h a t t h e p r e v a i l i n g long term municipal bond i n t e r e s t r a t e s a r e u n l i k e l y t o come down i n t h e f o r e s e e a b l e f u t u r e . The subject matter of this action is of great and widespread public concern and should be resolved at the earliest possible time. Due consideration of this question in the trial courts and final determination by an appeal to this Court is an inadequate remedy in that delay would ensue before a final decision could be had, making it impossible for cities, towns and counties to proceed with necessary construction of-improvements in the forth- coming construction season. There are no disputes of fact and only a single issue of law is involved, namely, whether cities, towns and counties have authority to issue and sell special improve- ment district bonds and warrants bearing an interest rate in excess of 7% per annum. For these reasons it is appropriate and proper for this Court to accept original jurisdiction of this proceeding to insure a just and speedy determination of the question involved. The 1971 amendments to the special improvement district laws were a part of a package of amendments relating to interest rates on state, county, city and school district indebtedness. This legislation, House Bill 15, was revised many times before it was finally passed. Sections 2 and 3 of the bill, now codified respectively as sections 79-2602 and 79-2603, R.C.M. 1947, are significant: "79-2602. Rate of interest on bonds to be determined by governing bodies---limitations and exceptions.
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No. 12940
I N THE SUPREME COURT OF THE STATE OF MONTANA
THE STATE OF MONTANA, e x rel., THE C I T Y OF TOWNSEND, a m u n i c i p a l c o r p o r a t i o n ,
Relator,
D. A. DAVIDSON, I N C . , a Montana Corpora t i o n ,
Respondent.
ORIGINAL PROCEEDING :
Counsel o f Record:
For Relator:
P a t r i c k F . Hooks a r g u e d , Townsend, Montana
F o r Respondent :
S c r i b n e r and Huss, Helena, Montana W i l l i a m S c r i b n e r a r g u e d , H e l e n a , Montana
Submitted: J a n u a r y 14, 1975
Decided : &,I fl y g ! :.; JAN 3 0 1975 Filed : J u s t i c e FJesley C a s t l e s d e l i v e r e d t h e Opinion of t h e Court.
This i s an o r i g i n a l proceeding f o r d e c l a r a t o r y r e l i e f under T i t l e 93, Chapter 89, R.C.M. 1947, t h e Uniform D e c l a r a t o r y Judg- ments Act. R e l a t o r i s a m u n i c i p a l i t y of t h e s t a t e of Montana, d u l y organized and e x i s t i n g a s a municipal c o r p o r a t i o n under t h e laws of Montana. Respondent i s a Montana c o r p o r a t i o n which, i n t h e c o u r s e of i t s b u s i n e s s , purchases f o r r e s a l e bonds i s s u e d by s p e c i a l improvement d i s t r i c t s w i t h t h e s t a t e of Montana. O March 5 , 1974, by r e s o l u t i o n of i t s c i t y c o u n c i l r e l a t o r n c r e a t e d , w i t h i n t h e c i t y , S p e c i a l Improvement D i s t r i c t No. 4 f o r t h e purpose of g r a d i n g s t r e e t s , r e p l a c i n g e x i s t i n g g r a v e l b a s e c o u r s e a s needed, p l a c i n g a s p h a l t i c s u r f a c e c o u r s e , i n s t a l l i n g storm d r a i n a g e p i p e s and i n l e t s a s need, a l l upon t h e s t r e e t s and avenues of t h e s p e c i a l improvement d i s t r i c t . T h e r e a f t e r , on June 27, 1974, r e l a t o r awarded a c o n t r a c t f o r t h e c o n s t r u c t i o n o f such improvements. R e l a t o r c i t y and t h e c o n t r a c t o r i n t e n d t o proceed w i t h t h e c o n s t r u c t i o n i n accordance w i t h t h e c o n t r a c t when bonds of t h e s p e c i a l improvement d i s t r i c t a r e s o l d and t h e n e c e s s a r y funds a r e obtained f o r t h e f i n a n c i n g of t h e work. By n o t i c e duly given and a d v e r t i s e d according t o law, r e l a t o r r e q u e s t e d b i d s f o r submission t o t h e c i t y c o u n c i l f o r t h e purchase of $264,000, par v a l u e , of S p e c i a l Improvement D i s t r i c t No. 4 bonds f o r t h e f i n a n c i n g of such c o n s t r u c t i o n . O September 3 , 1974, a n b i d was submitted by respondent and S t a t e Banlc of Townsend f o r t h e purchase of such bonds a t p a r w i t h an a c c r u i n g i n t e r e s t r a t e of 7.75% per annum. N o t h e r b i d was submitted. o The b i d was condi- t i o n e d upon t h e i s s u a n c e and f i l i n g of an opinion of t h e a t t o r n e y g e n e r a l of t h e s t a t e of Montana, t o t h e e f f e c t t h a t c i t i e s and towns could l a w f u l l y i s s u e and s e l l s p e c i a l improvement d i s t r i c t bonds b e a r i n g an i n t e r e s t r a t e i n excess of 7% per annum. The b i d was accepted by t h e c i t y c o u n c i l and t h e r e a f t e r a c o n t r a c t was e n t e r e d i n t o between r e l a t o r and t h e b i d d e r s , c o n d i t i o n e d a s a f o r e s a i d , providing f o r t h e i s s u a n c e of S p e c i a l Improvement D i s t r i c t No. 4 bonds i n t h e sum of $264,000 b e a r i n g i n t e r e s t a t t h e r a t e of 7.75% per annum, and f o r t h e purchase t h e r e o f by t h e b i d d e r s a t p a r p l u s accrued i n t e r e s t t o t h e d a t e of d e l i v e r y . T h e r e a f t e r , on November 2 7 , 1974, t h e a t t o r n e y g e n e r a l of t h e s t a t e of Montana i s s u e d an opinion s t a t i n g , i n e f f e c t , t h a t c i t i e s , towns and c o u n t i e s may l a w f u l l y i s s u e and s e l l s p e c i a l improvement d i s t r i c t bonds o r w a r r a n t s , b e a r i n g an i n t e r e s t r a t e i n excess of 7% per annum i f t h e s p e c i a l assessments paid by t h e p r o p e r t y owners w i t h i n t h e d i s t r i c t a r e a p p r o p r i a t e d f o r t h e payment of p r i n c i p a l and i n t e r e s t on such bonds o r w a r r a n t s . R e l a t o r was then advised by respondent t h a t , n o t w i t h s t a n d i n g t h e p r o v i s i o n s of t h e i r c o n t r a c t and t h e a t t o r n e y g e n e r a l ' s o p i n i o n , i t would c o n t i n u e t o r e f u s e t o purchase t h e bonds f o r t h e claimed
reason t h a t c i t i e s and towns a r e p r o h i b i t e d by law from i s s u i n g o r s e l l i n g s p e c i a l improvement d i s t r i c t bonds o r w a r r a n t s b e a r i n g an i n t e r e s t r a t e g r e a t e r than 7% per annum. R e l a t o r has made d i l i g e n t e f f o r t t o s e c u r e a purchaser f o r t h e bonds a t an i n t e r e s t r a t e of 7% o r l e s s b u t has been unable t o do so. By reason t h e r e o f , r e l a t o r i s informed and b e l i e v e s t h a t i t w i l l be unable t o proceed w i t h such c o n s t r u c t i o n o r t o perform
i t s o b l i g a t i o n s under t h e c o n s t r u c t i o n c o n t r a c t u n l e s s respondent p e r f o r m s u n c k r ' ~ p r o v i s i o n s of i t s c o n t r a c t f o r t h e purchase of t h e bonds. O information and b e l i e f , r e l a t o r s t a t e d i n i t s a p p l i c a t i o n n f o r d e c l a r a t o r y judgment t h a t f o r t h e p a s t s e v e r a l months c i t i e s , towns and c o u n t i e s of t h e s t a t e of Montana have been unable t o f i n a n c e needed s p e c i a l improvements i n d i s t r i c t s c r e a t e d f o r t h a t purpose because t h e p r e v a i l i n g bond market w i l l n o t j u s t i f y t h e purchase of s p e c i a l improvement d i s t r i c t bonds b e a r i n g an i n t e r e s t r a t e of 7% o r l e s s and t h a t t h e p r e v a i l i n g long term municipal bond i n t e r e s t r a t e s a r e u n l i k e l y t o come down i n t h e f o r e s e e a b l e f u t u r e . The subject matter of this action is of great and widespread public concern and should be resolved at the earliest possible time. Due consideration of this question in the trial courts and final determination by an appeal to this Court is an inadequate remedy in that delay would ensue before a final decision could be had, making it impossible for cities, towns and counties to proceed with necessary construction of-improvements in the forth- coming construction season. There are no disputes of fact and only a single issue of law is involved, namely, whether cities, towns and counties have authority to issue and sell special improve- ment district bonds and warrants bearing an interest rate in excess of 7% per annum. For these reasons it is appropriate and proper for this Court to accept original jurisdiction of this proceeding to insure a just and speedy determination of the question involved. The 1971 amendments to the special improvement district laws were a part of a package of amendments relating to interest rates on state, county, city and school district indebtedness. This legislation, House Bill 15, was revised many times before it was finally passed. Sections 2 and 3 of the bill, now codified respectively as sections 79-2602 and 79-2603, R.C.M. 1947, are significant: "79-2602. Rate of interest on bonds to be determined by governing bodies---limitations and exceptions. Bonds of a political subdivision shall bear interest at such rate or rates as its governing body shall determine, ex- cept that no such rate shall exceed seven percent (7%) except revenue bonds issued under the terms of sections 11-2401 through 11-2414, sections 11-2217 through 11-2221, and sections 11-4101 through 11-4110, R.C.M. 1947, which rate shall not exceed nine percent ( % . I I 9) "79-2603. Rate of interest on special assessments to be determined by governing bodies---limitations. All special assessments levied by a political subdivision shall bear interest at such rate or rates as its governing body shall determine, except that no such rate shall ex- ceed the greater of seven percent (7%) per annum, or in the event that the special assessments are appropriated for the payment of principal and interest on bonds issued by the political subdivision, the rate of interest on said bonds. " (Emphasis added. ) S e c t i o n 79-2602, i f r e a d a l o n e , would l e a d one t o conclude t h a t a l l bonds of p o l i t i c a l s u b d i v i s i o n s , except t h e revenue bonds t h e r e i n s p e c i f i e d , c a r r y a maximum i n t e r e s t r a t e of 7%. S e c t i o n 79-2603, w i t h r e s p e c t t o s p e c i a l improvement bonds i n d i - c a t e s t h e c o n t r a r y by a u t h o r i z i n g a g r e a t e r r a t e of i n t e r e s t on s p e c i a l assessments i n t h o s e c a s e s where t h e s p e c i a l improvement bonds b e a r a h i g h e r r a t e of i n t e r e s t than 7%. Originally section 2 of House B i l l 15 provided f o r a g e n e r a l maximum r a t e on a l l bonds o f 8%, except i n t h o s e c a s e s where t h e lowest of two o r more c o m p e t i t i v e b i d s was h i g h e r than 8%, ( i n which event t h e r e was no l e g a l maximum). As s o o r i g i n a l l y drawn t h e r e was no i n c o n s i s t e n c y between s e c t i o n s 2 and 3. The exception a l l o w i n g a l e g a l r a t e i n excess of 8% was, however, d e l e t e d from t h e b i l l on i t s f i r s t r e v i s i o n i n t h e House, w h i l e t h e u n d e r l i n e d p o r t i o n o f s e c t i o n 3 was r e t a i n e d . T h e r e a f t e r , through a s e r i e s of amendments, a g r e a t number of e x i s t i n g code s e c t i o n s p e r t a i n i n g t o i n t e r e s t r a t e s on c i t y , county and school d i s t r i c t indebtedness were i n - cluded i n t h e b i l l . Some e x i s t i n g code s e c t i o n s were amended t o d e l e t e a l l r e f e r e n c e t o a maximum r a t e of i n t e r e s t , among t h o s e were s e c t i o n s r e l a t i n g t o s p e c i a l and r u r a l improvement d i s t r i c t s ; others were amended by changing t h e maximum r a t e of i n t e r e s t . On . i t s f i n a l r e v i s i o n , t h e Senate committee of t h e whole reduced t h e g e n e r a l maximum i n t e r e s t r a t e i n s e c t i o n 2 t o 7%. The c o n t r o v e r s y h e r e i n v o l v e s whether t o g i v e some meaning t o t h e u n d e r l i n e d p o r t i o n o f s e c t i o n 79-2603, R.C.P.I. 1947. Relator contends t h a t t h e r e t e n t i o n o f t h e u n d e r l i n e d p o r t i o n i n d i c a t e s a l e g i s l a t i v e i n t e n t t h a t t h e i n t e r e s t r a t e on s p e c i a l assessment bonds should be allowed t o exceed 7%. Respondent, on t h e o t h e r hand, contends t h a t t h e u n d e r l i n e d p o r t i o n i s redundant and the c l e a r wording of s e c t i o n 79-2602, R.C.M. 1947, should c o n t r o l . This Court w i l l presume t h a t t h e l e g i s l a t u r e would n o t pass u s e l e s s o r meaningless l e g i s l a t i o n ; and a l s o must harmonize s t a t u t e s give r e l a t i n g t o t h e same s u b j e c t a n d / e f f e c t t o each. S t a t e ex r e l . Dick I r v i n , Inc. v. Anderson, Mon t . , 525 P.2d 564, 3 1 St.Rep. 482. W must presume t h a t t h e l e g i s l a t u r e had some e purpose i n mind when i t r e t a i n e d t h e u n d e r l i n e d p o r t i o n o f s e c t i o n 79-2603. I n o r d e r t o g i v e t h a t phrase any meaning what- s o e v e r , we must hold i n accord w i t h t h e c o n t e n t i o n s of r e l a t o r .
T h e r e f o r e , (1) a m u n i c i p a l i t y o r county a c t i n g i n b e h a l f of a l e g a l l y formed s p e c i a l improvement d i s t r i c t under t h e p r o v i s i o n s o f T i t l e 11, Chapter 22, o r T i t l e 1 6 , Chapter 16, R.C.M. 1947, may i s s u e and s e l l bonds o r w a r r a n t s b e a r i n g an i n t e r e s t r a t e i n excess of 7% per annum, and (2) t h e c o n t r a c t between r e l d t o r and respondent f o r t h e purchase of t h e bonds r e f e r r e d t o h e r e i n i s b i n d i n g upon t h e p a r t i e s , n o t w i t h s t a n d i n g t h e f a c t t h a t t h e bonds a r e t o b e a r i n t e r e s t a t t h e r a t e of 7.75% per annum. Judgment f o r r e l a t o r .
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