The issues raised in this case arise from the pleadings in a suit for a writ of prohibition by the plaintiff to prevent the defendant commissioners of Provo City from proceeding with a written contract to sell the city's bonds for the purpose of acquiring or constructing an electric light and power system for the city. The General Contractors Association of Utah was permitted to intervene in support of the writ of prohibition on the ground that the required statutory provisions regarding the advertising and letting of bids had not been followed. Walter P. Whitehead, one of the commissioners of Provo City, who was opposed to the building or acquisition of the power plant, answered supporting the position of the power company.
The facts preceding the suing out of a writ of prohibition and certiorari are as follows: On August 11, 1936, two initiative petitions were filed with I.G. Bench, city recorder of Provo City (hence the joining of Mr. Bench in the petition) containing the appropriate number of signatures and properly verified. One of these petitions asked that the "Bond Ordinance" be referred, the other that the "Construction Ordinance" be referred. As provided by the initiative and referendum law, the ordinances proposed by the initiators were considered by the commissioners and by a two to one vote — Commissioner Whitehead voting in the
negative — were ordained. The city commission, however, went further than this. It passed an ordinance to refer to the people of the city for their decision these bond and construction ordinances. Provision is made for such reference in the initiative and referendum law, Rev. St. 1933, 25-10-1 et seq. A special election was called for and held on October 13, 1936. The ordinances were voted on separately at said election after much discussion of them from the rostrum and among the people, through the press and by the circulation of literature. The approval of the ordinances was vigorously opposed by the plaintiff. Both ordinances were approved by narrow margins.
Briefly, the bond ordinance provided for the sale to John Nuveen Co. of Chicago of electric power and light bonds of Provo City in the amount of $850,000 par value, to bear interest at 4 1/2 per cent and to be sold at par and accrued interest. The defendants contend these bonds are what are known as special revenue bonds, i.e., that only the income from the plant to be constructed from the proceeds of the bonds can be looked to for the payment of their principal and interest. Plaintiff contends that certain provisions in the contract indirectly make them a charge on the general revenue. On resolution of this issue depends the finding as to whether the special fund doctrine hereinafter considered applies if we decide to adhere to that doctrine. These provisions will be found discussed and considered in detail in the opinion of Mr. Justice LARSON.
The so-called construction ordinance provides for a contract between Provo City and the Ulen Contracting Corporation by which the latter agrees to draw plans and specifications to be approved by the city engineer for the proposed electric light and generating plant and distributing system, to supervise and direct the purchase of the necessary materials and construction of the proposed power plant and distributing system. Other and more detailed provisions of this contract are discussed and considered in the opinion of Mr. Justice LARSON. Naturally the money to
pay for the construction is to come from the proceeds of the sale of the bonds or the Ulen Corporation is to take the bonds on account of payment.
It should be noted that both ordinances simply provided for an acceptance of proposals by Nuveen Co. and the Ulen Corporation. They did not submit contracts conditionally executed to become absolute on the approval of the people. It appears to us it is important to keep this fact in mind when the opinion of Mr. Justice LARSON is read.
It is admitted that the cost of construction of this plant and distributing system could not be paid out of the anticipated general revenues which for 1936 were approximately $171,000. It is also admitted that, if the city took on an obligation to pay the $850,000 bond issue at all events, it would exceed its constitutional debt limit.
Many of the steps taken by the commissioners coincided with the procedure outlined by the so-called Granger Act, chapter 22, Laws of Utah, Second Special Session 1933. But at least two of the main provisions specified by the Granger Act were not followed, to wit, that of section 3, wherein it was required to obtain a comprehensive estimate of a competent engineer, approved by the state engineer, and that of requiring the special revenue bonds to be sold on bid only after advertisement.
The bond ordinance provides for the sale to John Nuveen Co. of electric power and light revenue bonds of Provo City to bear interest at 4 1/2 per cent per annum. Certain provisions pertaining to how the principal and interest of these bonds were to be paid will be set out hereunder for the reason that there is a dispute as to whether they are in reality special revenue bonds. It is the defendants' contention that they are special revenue bonds, whilst plaintiff contends that they are, at least indirectly, a charge on the general funds and thus are taken out of the category of special revenue bonds.
The construction ordinance provides for a contract between Provo City and the Ulen Contracting Corporation.
The latter agrees to draw plans and specifications to be approved by the city engineer for the proposed electric light plant and distributing system and for the purchase of necessary materials and construction of the plant from the proceeds derived from the sale of bonds. The purchase of materials and the construction are subject to the control of the city commission. The amount payable to the Ulen Corporation for services to be rendered is $65,000. In the event the bonds are not sold, the Ulen Corporation is given an option to accept the bonds in payment for its services and the cost of construction of the electric lighting plant and distribution system. For a more detailed recital of the provisions of this contract reference is made to the opinion of Mr. Justice LARSON.
The day following the election, plaintiff applied to this court for a writ prohibiting the defendants from further proceeding in the matter of executing or disposing of the proposed bonds or of proceeding with the Ulen contract. The alternative writ of prohibition was granted with a writ of certiorari in assistance thereof. The ultimate question for this court to decide is as to whether the writ of prohibition shall be dismissed or made permanent. Plaintiff sets out clearly the five propositions which it relies upon in urging that the writ be made permanent. These propositions are, without their subdivisions stated, as follows:
"I. The so-called special fund doctrine is wrong and should not be followed or adhered to in this State.
"II. The contracts and ordinance are void even under the special fund doctrine.
"III. If we are to follow the special fund doctrine in this State, the legislature has prescribed the only method by which cities may embark upon undertakings under it, which method has not been followed by the defendants in this instance.
"IV. That the defendants have not followed the other statutory method of incurring bonded indebtedness, or any other statutory requirements with reference to municipal construction.
"V. The legislature in this State has affirmatively declared the public policy of this State with reference to public utilities and public
improvements. The special fund doctrine violates these principles of public policy and if adopted would judicially destroy valid legislative declarations."
The General Contractors Association of Utah, permitted to intervene, places its opposition to both purported ordinances on the ground that they are void, and sets out many reasons in support of its contention.
We shall consider in this opinion only questions I, III, and IV propounded by plaintiff. Mr. Justice LARSON in his concurring opinion has so ably covered the other questions raised by plaintiff and intervener that we see no need of touching on them here, and adopt the conclusions, in so far as hereafter qualified, reached by him in regard thereto.
We state at the outset that we adhere to the so-called special fund doctrine. That would ordinarily end any further consideration of that principle in this case, but because of plaintiff's contention that the so-called Granger Act, chapter 22, Laws of Utah Second Special Session 1933, provides the only way in which electric light plants can be acquired or constructed under the special fund doctrine, it is necessary to examine into the nature of that doctrine. If what is 1 denominated as the special fund doctrine is only a natural and reasonable method convenient and appropriate to carry into effect the powers given to a city to acquire or construct an electric light plant and distributing system, which powers are not disturbed by the Granger Act, and what is called a "doctrine" is in reality only a recognition by the courts of the right to use that method in pursuit of the more general power given, then such method is really part of the statutory power given to cities independent of the Granger Act and by the very terms of that act not affected by it. If, on the other hand, the special fund doctrine, as contended for by plaintiff, is a piece of judicial legislation which was intended to be limited and circumscribed by the Granger Act, then the principle involved
in the so-called special fund conception cannot be used except as provided in the Granger Act. We therefore examine the nature of this doctrine.
Before the Granger Act was passed in 1933, this court held inBarnes v. Lehi City, 74 Utah 321, 279 P. 878, 885, that the restrictions placed upon the municipal corporations by the debt limit provisions of the Constitution, article 14, §§ 3, 4, "do not apply to a case where public property is purchased or constructed, and payment therefor is to be made, exclusively from the revenues derived from the property." This language is the heart of the special fund doctrine. And it is not affected by the means employed as long as the earnings are impounded in a special fund "which is expressly pledged for the purpose of maintaining the plant and the payment of the interest and purchase price installments as they accrue under the proposed contract [which] casts no additional burden on the taxpayers of the city." Whether the contract is one of conditional sale, outright purchase paid for by bonds to be paid for solely by revenues derived from services rendered, or some other sound and businesslike method, can make no difference in the principle; nor is the principle affected by the fact that the city contracts to charge a rate calculated to pay operating expenses, depreciation, interest, and sinking fund requirements, where it is still left to future commissions to say what the rate may be. This should not be read as demanding that future commissions must charge such a rate as would be greater than a reasonable rate, if the operating expenses, etc., should demand it. In fact, ordinarily, operating expenses, if reasonable, reasonable depreciation, if costs were reasonable, and interest and sinking fund requirements, if the borrowings were reasonable and founded on reasonable costs, largely enter into the making of a reasonable charge. It still has within its power to determine such reasonable rate. Nor is it affected by the fact that it pledges itself to use and pay rates for like services charged others for electricity for its own purposes out of the general
fund. Whether it purchased from a public utility company, it would be required to pay for these services. The provision is always subject to the constitutional proviso that it could not spend more for such services or any other services or materials than its current revenue would pay for. When it attempted to do so, such is the time when plaintiff may object. In Fjeldsted v.Ogden City, 83 Utah 278, 28 P.2d 144, 153, it was stated:
"(c) The bond ordinance requires that `the reasonable value of all water used by Ogden City for public purposes shall be paid by said City into the Waterworks Fund.' We can see no objection to a municipality, which owns and operates a waterworks system or other utility, adopting as a policy the requirement that the city or its several departments should pay for such of the product or service as is used by the city in its public service, such reasonable rates, uniform in proportion to amount used, as is charged other users or consumers. Indeed, when a public utility is operated by a municipality, its books of account should be so kept that they disclose whether or not the property is self-supporting. The income should be sufficient to pay interest on and principal of the bonds issued or other obligations incurred in the purchase, improvement, or extension of the system, in addition to cost of operation, maintenance, betterments, and replacements. The amendment to Laws Utah 1925, § 794, p. 116, c. 63, contemplates that the system should bear the burden of paying interest on and principal of bonds, the proceeds of which have gone into the system, and that the general taxpayer should only be burdened with the deficiency. Good business principles dictate that such utility be self-supporting so far as possible. That this provision alone does not create a debt within contemplation of the Constitution was held in Barnes v. LehiCity, supra, where the court said:
"`The general rule is that such contracts, being for services to be paid for periodically, are merely arrangements to pay for current expenses as they are incurred.'
"The city has not obligated itself to purchase its water from the water department, nor bound itself to take any particular amount of water, but merely to pay for what it uses each year during the life of the bonds. 6 McQuillin on Municipal Corporations, p. 52; 44 C.J. 1130."
To repeat, the Barnes v. Lehi Case laid down unequivocally the rule not to be differentiated because future commissions
had the choice of carrying through the contract or permitting the seller to take it away on the conditional sale provisions, but covering the larger principle as above set out that the obligation was a charge only against the income from the improvement itself and not against the general taxes. Every commission makes contracts which are binding on future commissions. If they cannot perform because the current revenue will not permit, it is not because they are not binding but because the situation is such as to make it legally impossible to perform.
While the case of Fjeldsted v. Ogden City, supra, seems at first blush to distinguish the Barnes v. Lehi Case from the Ogden City Case on the grounds that in the former case the "contract as could be abandoned or repudiated at any future time by the governing authorities of the city, and the city would lose nothing of its owned property or income and would be under no obligation to make further payment," it will be seen, on more careful study of the two decisions, that the distinguishing feature was not the method by which the improvements were purchased, but the fact that in the Ogden City Case that portion of the revenue which was derived from the already owned part of the utility was to be diverted into the special fund. At this particular time we have no comment to make on the soundness of the holding in the Ogden City Case and pause with it only for the purpose of pointing out that the fact that a present commission binds a future one to apply income from a newly acquired plant to the payment of such plant when the general revenues are not chargeable therewith cannot affect the special fund doctrine.
It can therefore be said that the principle laid down in the Barnes v. Lehi Case is the settled law of this state and was so before the Granger Act was passed. Not only was it the settled law of this state but the law of an imposing array of other states. The case of Fjeldsted v. Ogden City, supra, did not repudiate the Barnes v. Lehi Case. It did not even modify it, but it held that the conditions for the availability of the special fund doctrine were not present in so far as the special fund was attempted to be constituted by revenues which were to come from an already owned municipal utility which had thitherto been part of the general revenue. Whether or not such holding was sound, a matter ably challenged in the dissenting opinion, we need not now decide because in the instant case there is no contemplated income which can be said to have formerly formed a part of the general revenues which it is intended to divert to the special fund. There are some land and some water rights to be put in by the city which will become part of the whole project, but it is not shown that these will in any way affect the general revenue used for general corporate purposes. In the instant case all the income which will constitute the special fund will be created by the improvement and none will come from an already operated and owned municipal utility. So again, we may reiterate that the principle of the Barnes v. Lehi Case — the so-called special fund doctrine — stands as the law of this state and is applicable to this case.
We must now call the reader's attention to a very important fact; that is, that all we have said about the special fund doctrine being part of the law of this state was not primarily for the purpose of so demonstrating what the law was in this regard but to show what now follows, that before the Granger Act, chapter 22, Laws of Utah 1933, Second Special Session, the special fund doctrine was in reality just one of the means of effectuating what before the Granger Act was passed and since then is part of the statutory law of this state. It was recognized by the courts as a reasonable and legitimate manner of exercising the powers given to a city by what is now designated as section 15-8-14, R.S. 1933. It reads:
"They may construct, maintain and operate waterworks, gas works, electric light works, telephone lines or street railways, or authorize the construction, maintenance and operation of the same by others, or purchase or lease such works from any person or corporation, and
they may sell and deliver the surplus product or service of any such works, not required by the city or its inhabitants, to others beyond the limits of the city."
This section is in a separate chapter and entirely independent from sections 15-7-7, 15-7-8 and 15-7-9, which cover the case of a municipality acquiring water, light and sewer systems by means of bonds, the principal and interest of which are payable out oftaxes to be levied for that purpose. Such bond issues are governed by the constitutional provisions regarding debt limitations and the provision which requires that no expenditure for the year be made beyond the obtained or anticipated revenue for the year except by an election. Section 15-8-14, does not require a bond issue, an election, or any particular method. It gives the cities (not towns) power to construct and operate electric light works or authorize their construction, etc. There were no methods set out for the construction or for the payment of the construction. If the city had a surplus from general revenues it could construct under this provision without an election. And it could construct in any other way which comported with the practices of good business and sound economy, as long as it did not infringe on the constitutional provisions which prohibited current annual obligations and expenditures from exceeding current annual revenues and which prohibited any indebtedness above a certain fraction of the assessed valuation. There were no details or methods linked with the power. Therefore, the power to use such methods and means which were appropriate to carrying out such power was implied. In construing a certain famous document which also supposed to grant powers only expressly given or necessarily implied, Mr. Chief Justice Marshall, in McCulloch v. Maryland, 4 Wheat. 316, 421,4 L.Ed. 579, said:
"Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional."
In the case of Wadsworth v. Santaquin City, 83 Utah 321,28 P.2d 161, 171, Mr. Justice Folland recognized this principle when he stated:
"Where a power is conferred on municipalities, the method of exercising such power is, in absence of restriction, usually within municipal discretion, but, where the method of its exercise is prescribed such method constitutes the measure of the power."
He mentioned four ways of paying for waterworks systems including the Granger Act, but did not exclude other methods. The question as to whether the Granger Act was the sole method of exercising the powers granted by section 15-8-14, supra, was not up for decision. In fact, the very basis for the so-called special fund doctrine lies in the fact that it provides a method for cities to acquire certain improvements which their charters or the Legislatures have permitted them to acquire, construct, and operate without running athwart of the constitutional inhibition against exceeding indebtedness, or without paying for them out of current funds, which in most cases they could not do. The very reason the courts recognize this so-called special fund doctrine was not as counsel for plaintiff would have us believe, to judicially legislate, but because it was apparent that it was a legitimate means to exercise a power given to the city where no means or method had been prescribed. The method was so natural and so sensible that in examining it usually all the courts had to do was to determine whether it violated the constitutional debt limit provisions. And, except in a few states where the constitutional provisions were of such a nature as to take in any obligation, the overwhelming number held that the word "debt" as used in the Constitution did not contemplate a contract wherein the creditor was willing to look solely to the income from the project for the payment of his loan. And well might they have taken such view of it, for if the framers of the numerous Constitutions wherein a debt limit was included had been asked, "Do you mean this provision to cover a case where a city or town
may be able to provide its inhabitants with services by the construction of projects which will not be a charge against taxes, but which may be built entirely from the proceeds of bonds which provide that their only source of payment shall be from the revenues of the project?" the answer we may well imagine would have been, "We mean these debt limiting provisions as a protection against burdening the taxpaying inhabitants with too great a load and at the same time to prevent the cities from obligating themselves for expenditures for any current year beyond the current revenue which it may reasonably be expected they will during that year obtain, but we certainly would not want to prevent the people of any city from obtaining the fruits of community life by preventing them from enjoying those services which they may obtain by voluntary payments for the services to a project built by moneys loaned by persons willing to look altogether to the income derived from such services voluntarily subscribed for by the inhabitants."
We think that to ascribe any other intent to the framers of the Constitution would do them the injustice of holding that they desired to make the Constitution a barrier rather than a highway to progress. Therefore, it is not necessary to indulge in any finespun argument as to the meaning of "debt" in all its aspects. All we need do is to see what was intended by the framers of the Constitution by including the debt limit provisions and interpret "debt" in the light of that intent.
Having, therefore, come to the inevitable conclusion that the so-called special fund doctrine is merely another recognition by the courts that where a power is given to the city and no methods of excuting it are linked therewith, any reasonable means which will effectuate the purpose is lawful, it follows that it was not a "doctrine" introduced by the courts but a means used by cities in execution of their statutory powers and recognized by the courts in the usual manner in which the legitimacy of numerous other transactions is recognized as lawful. It was not judicial legislation. Being,
therefore, in pursuance of a statutory power, it must still exist as a part of the means to exercise the power given by section 15-8-14, supra, now as well as before the passage of the Granger Act. This would probably be so if the Granger Act had not expressly spoken, unless the act was expressly linked with said section 15-8-14 so as to make it the now exclusive method of using the special fund method; but the Granger Act by express words makes itself an accumulative and alternative method in addition to those already existing. It reads:
Section 2. "This act shall be construed as a cumulative statutory authority for the purposes herein named and shall not be construed to repeal any existing laws with respect thereto, it being the purpose and intent of this act to create an additional and alternate statutory method for the purposes herein named."
Here we have in express words, as plain as they may be stated in the English language, that the Granger Act shall not be construed as repealing any existing laws with respect to the purposes named in the act. The purposes named in the act were those of providing means for the purchase, construction, improvement, enlargement, extension, and repair by any county, city, or incorporated town of, among other projects named, an electric plant and/or distribution system, etc. This act gave counties and towns the right to do something they formerly did not have, and as to those the method prescribed by the act would have to be followed. But as to cities there was an existing law, section 15-8-14, supra, which was by the act not repealed. One of the methods for effectuating this power was by acquiring, as had Lehi City, by a conditional sale and payment by installments. Another way as fully within the principle laid down in the Barnes v. Lehi City Case was construction by selling special revenue bonds which were no charge against taxes. This power given by section 15-8-14 still exists and the means whereby it may function exists as fully and as effectually as if the Granger Act had not been passed. To hold otherwise would
leave section 15-8-14 on the statute books but render it ineffective. Certainly, the Granger Act, which itself said that it should not be construed to repeal any existing laws with respect to the acquisition and construction of electric power plants, did not mean to effect a virtual repeal of section 15-8-14 by taking away the only means by which it could be effectuated, to wit, resort to special revenue bonds or other means to carry out the general powers given in that section.
This thesis is fully substantiated by the circumstances under which the Granger Act was passed. Ogden City was in need of funds to repair a rapidly deteriorating water system. We said in the Fjeldsted Case that it could not pledge revenues derived from an already owned system even though those revenues had formerly been tapped to relieve the general taxpayer instead of being returned to the system to make the very repairs which Ogden City was then, because of such divertion, compelled to borrow money for. Only revenues from the new part could be pledged for payment of the new part. As Mr. Justice Straup remarked in his dissenting opinion, the Granger Act was "a legislative struggle" to devise some means whereby the special fund doctrine, notwithstanding the Ogden decision, might be made applicable and operative under the circumstances and conditions involved in that case. As far as the special fund doctrine applied to cities in those cases where the cities already had power to construct and operate utilities, that was its purpose. It did not and it expressly said it did not intend to disturb any existing laws with respect thereto. The cumulative statutory authority was as to powers given to purchase, construct, etc., certain projects in regard to which power did not thitherto exist and to provide a method of applying the special fund doctrine to a situation as existed in the Ogden Case.
The very title of the Granger Act reveals that it was for the purpose of "Affording a Means of Obtaining Assistance From the Federal Emergency Administration of Public Works in Carrying Out of Such Projects." Section 22 of the
act reads in part as follows: "It being deemed by reason of the existing state of the laws of the state of Utah that counties, cities and incorporated towns in Utah are not able to obtain loans from the Federal Emergency Administration of Public Works for the purpose of purchase, construction, improvement, enlargement, extension or repair of such projects or services as are named and referred to in Section 1 of this Act, the legislature deems that an emergency exists."
It permitted for that purpose the construction or acquisition by cities of many enterprises which theretofore these towns and counties had not been permitted to operate, such as slaughterhouses, ice plants, hospitals, and included among them waterworks, gas and electric light works which under other statutory provisions, which the act by express terms stated should remain in force, the city could construct and acquire. The act also gave to counties and incorporated towns the right to acquire or construct with federal aid all these enterprises, including electric light plants, which counties at least were not theretofore permitted to acquire or construct. It is clear that the Granger Act was to permit the construction of any of these projects from funds to be furnished by the federal government and was designed to meet the requirements of the federal government as a condition of furnishing or lending the money. Section 14 of the act was designed to endeavor to comply with the restrictions laid down in the Fjeldsted Case. It did not affect the power to proceed under section 15-8-14, R.S. 1933, where no federal funds are involved. Section 22 of the act shows that it was deemed that the existing laws of the state did not permit counties, cities, and incorporated towns to obtain loans from the Federal Emergency Administration of Public Works for the purpose of purchase, construction, etc. This act was to provide machinery whereby they could take advantage of the federal act and regulations and did not affect methods theretofore used wherein it was not desired to obtain federal funds.
It is also persuasive of this conclusion that the Granger Act is for an emergency only. By its own section 23, as amended by chapter 74, Laws of Utah 1935, it provided that the act should cease to be in effect except to complete projects theretofore entered into at such time as the Governor shall by proclamation or the Legislature by joint resolution declare the emergency recognized by section 1, chapter 21, Laws of Utah 1933, Second Special Session, has ended. Is it likely that the Legislature would have repealed by implication section 15-8-14 by an act which itself would be eliminated as soon as the emergency had passed? If before the Granger Act went into effect section 15-8-14 was in effect was it altogether repealed or suspended by the Granger Act — a temporary measure? When we take in the numerous sorts of projects which towns, cities, and counties were permitted to undertake by this Granger Act, together with this provision for termination, it is clear that it was for the purpose of permitting these cities, towns, and counties to take advantage of the provisions of the National Recovery Act, 48 Stat. 195, and that it did not want to affect projects like this endeavored to be undertaken by Provo City which do not depend on the National Recovery Act, but are independent of it.
In consequence of what has been said heretofore, we think it plain that the fallacy of plaintiff's contention lies in construing the Granger Act, as providing the only method now extant for applying the special fund doctrine to the acquisition or construction of electric light plants by cities. In making the above analysis we have not considered matters which lie outside of the scope of our province which seem to be injected into the case by plaintiff under the argument of public policy. It is not our business to determine whether or not it is a good thing for Provo City to undertake this project or, on the other hand, whether it will adversely affect the interests of plaintiff. It may or may not be that in this day of interstate integrated power systems the time for creating municipal fragments of such systems is an economic
step back, and that if we have public ownership it should be of these integrated systems by federal authorities, or it may or may not be an advantage to the inhabitants of Provo City. Those matters are for the legislative action of the people or the board of commissioners of Provo City. They are matters which go to the wisdom and not the law of the situation.
And in this regard we consider the fifth point made by petitioner; that the Legislature has affirmatively declared the public policy in reference to public utilities: It may be that by subtracting the bulk of the urban business, leaving it to depend largely on the rural and mining business, a greatly needed public utility cannot exist, and that with the Public Service Commission determining proper values on which to base fair rates, as a matter of public policy this organization should be alone permitted to occupy the entire field. But until the Legislature thus speaks, we cannot, in the face of specific legislative authorization to the cities permitting the acquisition and construction of plants, hold what petitioner contends for is the public policy of the state.
Furthermore, we think the case should be considered free from predilections for or against municipal ownership and as if the power company were not a competitor in the field. Provo City, having given the franchise, may, if within its legal rights, act for itself so as to affect the value of the franchise it has granted. When it comes to measure the powers of a city in this regard, we prefer to think of a town, rapidly growing because of some new and permanent industry, which badly needs a water system large enough to take care of its future needs, but which it cannot purchase within its debt limit or out of current funds. In such a case, it seems to us we free ourselves from all unconscious factors which may enter where a company already in the field may suffer loss from the building of a municipal plant. In such case we have the bare question of a city's power without the factor of the interests of a competitor entering. In such case might we not all be slow to say that, if an investor were
to offer to advance the funds to construct the water plant so necessary for that town and look only to the revenues obtained from the inhabitants of the town for repayment with faith in its growth, the town could not take advantage of such offer? That is the special fund doctrine. In testing the powers of Provo to do what it desires under the two ordinances which it has passed, we can place it in the position of the supposed rapidly growing but financially limited city which badly needs a water system.
Mr. Justice LARSON has supplied a very interesting thesis in support of the proposition that when the people of a city act in those matters of government affecting their local community under the initiative law, their action arises from power to so act reserved in the Constitution; that their action in reference to those matters which affect only their 2 governmental unit is just as efficacious in that field as is the action of all the people of the state in the matter of legislation in the field in which they act. The writer does not understand his thesis to encompass the proposition that the people of a municipality can invest their municipality with powers not given by the Constitution or the Legislature, but that it can exercise those powers already invested in it; that the Constitution and the statutes have already invested the municipality with the power to acquire or construct an electric light plant and system and that as to this power the people can by initiative exercise it according to such plan or with such conditions attached as they may see fit to supply, provided those conditions are within the power or reasonably appropriate to its execution; that the provisions of the Granger Act apply as a limitation only to the action of the governing body of the municipality, that is, the commission or council, and not to the people of the municipality if they initiate and pass the ordinance. It with the last proposition that the writer has difficulty. The writer conceives of the legislative or governing body of a municipality as exercising all the powers of the municipality; that the people may do no more.
If there are limitations on the power of the representatives, those limitations also apply to the people in the exercise of the power. In this case the provisions of the Granger Act were not a limitation on the commission of Provo City acting under section 15-8-14, R.S. 1933. By the same token they were not a limitation on the people acting under section 15-8-14. The difference between Mr. Justice LARSON and the writer is that the former thinks the Granger Act supplied limitations on the legislators of the city (the commissioners) acting, but not on the people of the city, whereas the writer thinks that such act supplied no restrictions on either legislating power acting under the authority of section 15-8-14, R.S. 1933. But while Mr. Justice LARSON and the writer come to the conclusion that the Granger Act did not apply for different reasons, both come to that conclusion and both, therefore, think that the plaintiff's argument that the Granger Act must be followed must fail.
The writer agrees with the conclusions reached by Mr. Justice LARSON in regard to his construction of the Nuveen contract. As heretofore stated, the contract must not be construed to mean that more than a reasonable rate for services can be charged by the city plant to the city for power. We see no reason at this time for laying down any criteria for arriving at what is a reasonable rate. It is not necessary to supply a test at this time. "What the service is reasonably worth," may be another way of stating "reasonable rates," but what elements are to be taken into consideration in arriving at a reasonable rate require exploration in a field not now necessary to enter.
The writer also agrees with the analysis and conclusions in regard to the construction of the Ulen contract; also with the conclusion that a bond for the faithful performance of that contract must be given; also regarding the conclusions reached as to intervener's contentions respecting the validity of the two ordinances, including what has been said respecting the duty to call for bids.
Since the writer believes that the governing authority had the same right to pass this ordinance subject to reference to the people as the people had to initiate it, it may not be necessary to determine how far the people could go in including detail in the initiated ordinance, nor necessary to attempt to draw the line between executive and legislative functions of the governing body; nor to determine to what extent the governing body (commissioners) could overrule, alter, or repeal the legislative part of an ordinance voted on by the people; nor perhaps to determine how far such governing body could change or repeal so-called executive or administrative detail which accompanied the legislative matter passed on by the people. This would take us into a large field. It might be impossible to lay down a rule whereby legislative and administrative matters could be separated in advance, each case depending on its own facts. Roughly, it is true that in the matter of acquiring or constructing a power plant, the legislative or lawmaking function would go at least to the extent of a decision to (1) acquire or construct, (2) the size of the plant as regards capacity, (3) the type of plant, (4) the maximum cost of the plant. Perhaps all other matters may be executive or administrative, such as the make of generators, the material of which the plant is to be constructed, whether brick, stone, or concrete, and the other multitude of minutiae attendant on the building of such a plant.
The writer thinks that the governing body had the right in this case to exercise the legislative and administrative functions under section 15-8-14, R.S. 1933; that it could have initiated and passed the two ordinances itself subject to the right of referendum; that it could have passed them when initiated by petitions and not voluntarily referred them; that in this case under section 25-10-25, R.S. 1933, it chose voluntarily to refer the ordinances it passed to the people for voting. Whether, therefore, these ordinances came by force of the commission's action or by force of the people's vote is not necessary to decide. If the commission
had passed the ordinances and rested and the plaintiff had referred them to the people with like result, as in this election, it would seem that the election would be only an approval of the commission's action and that the ordinances would derive their legislative force from the commission's and not the people's action. Is it otherwise when the commission passes the ordinances and voluntarily refers them to the people for approval? Or is it as if the ordinances had been initiated by petition, rejected by the commission and put to the people and favorably voted on, in which case the ordinances would derive their legislative force from the people's vote? The writer does not here attempt a solution of these questions. Believing as we do that the commission had the power, independently of the Granger Act, to pass these ordinances without reference to the people, the questions which might finally confront us would be as to the extent of change which the commission could make in the legislative or administrative features after the people had actually voted on definite legislative and/or administrative features. Inasmuch as the governing body has not attempted to alter or make any changes inconsistent with the matters voted on by the people, there is no occasion at this time to distinguish between legislative and administrative features of the ordinances, nor to determine whether one or both types of matters passed upon can be altered, repealed, or added to in such wise as to cause an inconsistency. And there is no occasion to determine whether, after approval, Nuveen Co. or the Ulen Corporation could compel the governing body to execute the contracts exactly as set out in the ordinance or whether the latter could still require certain changes or additions. Under the theory of the writer to the effect that the power to make these contracts resided with the governing body, since the state of negotiations is still in the realm of proposals, such changes could be made unless, indeed, no changes in regard to legislative matters or administrative details can be made after the approval of the people of particular ordinances even if we conceive
of such ordinances obtaining their force from action of the governing body. That question, as said before, does not now confront us. According to the implications of the opinion of Mr. Justice LARSON, the field is left open, at least in respect to the executive and administrative functions, to make the additions and changes in the final contracts with Nuveen Co. and the Ulen Contracting Corporation as suggested by his opinion. We have no doubt but that those changes and additions, calling for deposit of the money derived from the sale of bonds and for the bond for faithful performance, may be made, although we think it unnecessary to definitely decide in regard thereto, because we are not confronted with a situation where the city refuses to make the changes or the two companies insist on the contracts being executed without the changes or additions.
It being the opinion of three members of this court that the two ordinances — the so-called bond and construction ordinances — were and are valid, and it being presumed that the city commission of Provo City will execute the authority given under said ordinances in a lawful manner, the temporary writ of prohibition heretofore issued is recalled and a permanent writ denied. Costs are awarded to defendants against plaintiff and intervener, the costs against the intervener to be limited to such as were incurred by reason of its intervention.
HANSON, J., concurs.