29 P.2d 667 | Mont. | 1934
Lead Opinion
The special election was illegal for the reason that no sufficient notice was given, in that the notice failed to state the amount of the indebtedness in excess of the three per cent. limitation which it was proposed to incur.
The notice in the case at bar states that the question of the issuance of $200,000 of bonds for the purpose of securing a water supply and constructing a water system for the said city of Deer Lodge, and also the question of whether the city for the purpose aforesaid may contract an indebtedness in excess of three per cent. etc., would be submitted. As it is necessary, in view of subdivision 64, section 5039, Revised Codes 1921, to submit the question of issuing bonds for a water supply and system to the taxpayers, whether the indebtedness to be created thereby is within or without the three per cent. limit, the taxpayers were not advised by the submission of the question of the issuance of $200,000 of bonds that it was proposed to incur an indebtedness in excess of three per cent. limit, and the vote upon this question was not a vote on the question *51
of incurring an additional indebtedness beyond the three per cent. limit which the Constitution declares must be submitted. (Art. XIII, sec. 6; Butler v. Andrus,
The question for the taxpayer to decide as stated by Chief Justice Brantly in Carlson v. City of Helena,
As the submission of the question of issuing $200,000 of bonds without any statement that the whole or any part thereof would create an indebtedness in excess of the three per cent. limit gave rise to the presumption that the indebtedness would be within the general three per cent. limit, the submission of the further question of contracting an indebtedness in excess of three per cent. limit carried clearly the implication that any amount of indebtedness in excess of the three per cent. limit might be incurred.
"In submitting the question of incurring the debt, the amount proposed to be incurred must be definitely stated." (1 Dillon on Municipal Corporations, 5th ed., p. 339; City Council v.Dawson Waterworks Co.,
If the constitutional requirement with reference to notice was not complied with, it was, of course, beyond the power of the legislative assembly to validate the election by retroactive legislation, for the same reason that the legislative assembly cannot authorize the incurring of an indebtedness in excess of the three per cent. limit without a submission to the taxpayers of the question required to be submitted by the *52 Constitution. The legislative assembly cannot ratify what it could not have authorized. It follows that Chapter 17, Laws of 1933, did not validate the election.
If, however, the election was a valid election and the issuance of the bonds was authorized, the city is without authority to enter into any contract for the construction of a water system or the procurement of a water supply without complying with section 5070 of the Revised Codes, 1921, as amended by Chapter 22, Laws of 1927, reading as follows: "All contracts for work, or for supplies or material, for which must be paid a sum exceeding Five Hundred Dollars ($500.00) must be let to the lowest responsible bidder, under such regulations as the council may prescribe; provided, that no contract shall be let extending over a period of three years, or more, without first submitting the question to a vote of the resident taxpayers of said city or town." This statute is mandatory and a failure to comply with the provisions renders the contract void, and the city is not liable for any services performed or supplies or material furnished pursuant to such a contract. (Missoula StreetRy. Co. v. City of Missoula,
The city published a notice that bids would be received up to August 31 for the construction of a water system, the notice stating: "Contractor will be paid with 6% bonds of the Deer Lodge City Water Bond Issue."
Pursuant to the notice so given, the city offered to trade or exchange the bonds for the water system. This the city could not do as sections 15 and 19 of Chapter 160, Laws of 1931, require bonds to be sold and the money arising therefrom to be paid into the city treasury. (Town of Buffalo v. Walker,
The only contract which the city was authorized to make in view of this notice was one conforming to its terms, and a departure therefrom rendered the contract illegal. (Hedge v.City of Des Moines,
An injunction was issued in this case enjoining the city from entering into a contract providing for payment with bonds. As the city council could not make a contract at variance with the bids called for and submitted, so it was equally without authority to accept any bid after the date stated in the notice for the submission of bids without re-advertising. (Board of Commrs. v.Templeton,
We, therefore, submit that the contract is invalid for the reasons: 1. That the city was not authorized to pay with bonds, and, therefore, the notice or advertisement for bids was a nullity. 2. That as the city in the notice or advertisement for bids proposed to pay the contractor with bonds, it could not enter into a contract for payment in cash as was done. (Diamond
v. City of Mankato,
The bonds not having been sold, the city was without authority to enter into any contract for the construction of the water system, or for the procurement of a water supply. As was said inHansard v. Green,
Moreover, as the city is indebted in excess of the three per cent. limit, such contract, made before the bonds are sold and the money realized on the sale has been paid into the treasury, creates a general indebtedness in excess of the constitutional three per cent. limit, and is therefore void. (Allen v. Cityof Davenport,
In the case at bar, appellant, to establish invalidity of the bond issue in question, is obliged to establish that the election was held in violation of the constitutional provision. It is not sufficient to establish a mere violation of the provisions of the statute, for here, by Chapter 17 of the Laws of 1933, the legislature undertook to validate elections such as this, and since in this case the notice of the election fully complied with the provisions of the curative Act, all that is required to establish the validity of the election is to demonstrate that the same was held in compliance with the provisions of section 6, supra. We contend that the notice of the election conformed fully to the requirements not only of the Constitution, but of the statute as well, and since it did so the election was valid and the bond issue fully authorized, not only under the provisions of the law generally, but by virtue of the curative Act above.
In the second cause of action of the complaint and in the supplemental complaint the contract between the city and the contractors is attacked principally upon the ground that in the published notice to contractors calling for bids there was inserted the language: "Contractor will be paid with six per cent. bonds of the Deer Lodge City Water Bond Issue." In the second amended complaint proper it was alleged that it was proposed to exchange the bonds for the services of the contractor. In the supplemental complaint it is alleged that the contract with the contractor does not follow this stipulation in the notice, but calls for cash payments to the contractor.
The contention of the appellant is that the city cannot under the statute exchange bonds for the services of the contractor; that the insertion of the clause mentioned respecting payment of the contractor with bonds of the bond issue was unauthorized and contrary to law; that this resulted in a defective notice which did not procure competitive bidding as *56 required by statute and that any contract made pursuant to a bid made under this notice would therefore be void and illegal.
Even assuming the unauthorized character of the requirement that the contractor be paid in bonds, nevertheless the advertisement and notice to bidders was sufficient to warrant the execution of a proper contract between the city and the contractors. This is pointed out clearly in the case of Rice v.Board of Trustees,
The general rule is that under a statute such as Chapter 160, Laws of 1931, section 15, it is competent for the city to exchange bonds for the services of the contractor. This rule is laid down in McQuillin on Municipal Corporations, second edition, section 2462. Our statute cannot be distinguished from that interpreted and construed in the case of Washington-OregonCorp. v. City of Chehalis,
We call attention to the fact that the record shows that the bonds had been twice offered for sale after advertisement. No bids were received and the city council proposed to sell or dispose of the bonds at private sale, as authorized by section 15, supra. (See 44 C.J. 1215; see, also, O'Neill v.Yellowstone Irr. Dist.,
In the court below the plaintiff relied upon the cases ofTown of Buffalo v. Walker,
If what we have just said is correct, and if the bonds may be exchanged for the services of the contractor, this will dispose of another contention of the plaintiff made in the court below, viz., that it was necessary to sell the bonds and receive the money before a contract could be made with the contractor for the construction of the system. Plaintiff, a taxpayer within the city of Deer Lodge, brought this action against the city to enjoin the issuance of bonds in the sum of $200,000 for the purpose of procuring a water supply and system, and the payment of the contract price for the construction of the system. A preliminary injunction was sought as to the issuance of the bonds, and, after hearing, it was granted in part. A supplemental complaint was filed, seeking to enjoin the performance of the construction contract. Issue was joined by appropriate pleadings on certain of the allegations found in the complaints. Trial of the issues thus raised was had before the court sitting without a jury, resulting in findings and judgment against the plaintiff and dismissal of the action. The appeal is from the judgment.
The evidence disclosed that the city of Deer Lodge was indebted during the years 1931 and 1932 in an amount so that the issuance of the bonds and the performance of the construction contract would result in the creation of an indebtedness in excess of the three per cent. limit prescribed by section 6 of Article XIII of our Constitution. An election was held in the city on August 31, 1931, for the purpose of obtaining authority to issue these bonds. The notice of election stated that there would be submitted to the electorate the following: "The question of issuing bonds in the sum of two hundred thousand dollars ($200,000.00), for the purpose of *58 procuring a water supply and constructing or acquiring a water system for the said city of Deer Lodge, which shall own and control such water supply and water system and devote the revenue therefrom to the payment of the debt." The notice further stated that there would be submitted: "The question of whether the said city of Deer Lodge, for the purpose aforesaid, may contract an indebtedness in excess of three per cent. of the total assessed valuation of the taxable property of said city of Deer Lodge as ascertained by the last assessment for state and county taxes."
The result of the election was canvassed by the city council, and it was found that 177 votes were cast in favor of the first above-quoted question or proposition, and 83 against it. It was also found that 157 votes were east for the second above-quoted proposition or question, and 88 against it.
Notice of the letting of the contract for the construction of the system was given, wherein it was stated: "Contractor will be paid with 6 per cent bonds of the Deer Lodge city water bond issue." Lease Leigland, pursuant to this notice, made a bid which stated: "This bid subject to legality of bonds and for acceptance within 30 days or longer if mutually agreed." At least one other bid was submitted pursuant to the notice, but the bid of Lease Leigland was the lowest bid received. Thereafter, on the 19th of September, 1932, a contract in writing was entered into between Lease Leigland and the city of Deer Lodge, wherein it was agreed that Lease Leigland should accept as full compensation for the performance of the contract the lump sum of $137,850, being the amount specified in their bid. The bonds had theretofore been offered for sale in January and May, 1932, and thereafter were offered for sale on October 24, 1932. No bids were received in response to these various offers, and the bonds have not been sold.
The appellant makes numerous contentions which, if adopted, would result in the reversal of the judgment. It contends that the special election held for the purpose of authorizing the issuance of the bonds was illegal, for the reason that no sufficient notice was given, in that the notice failed to state the amount *59 of the indebtedness within, and the amount in excess of, the three per cent. limitation as provided in the Constitution, which it was proposed to incur.
Section 6, Article XIII, of the Constitution provides: "No city, town, township or school district shall be allowed to become indebted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate exceeding three (3) per centum of the value of the taxable property therein, to be ascertained by the last assessment for state and county taxes previous to the incurring of such indebtedness, and all bonds or obligations in excess of such amount given by or on behalf of such city, town, township or school district shall be void; provided, however, that the legislative assembly may extend the limit mentioned in this section, by authorizing municipal corporations to submit the question to a vote of the taxpayers affected thereby, when such increase is necessary to construct a sewerage system or to procure a supply of water for such municipality which shall own and control said water supply and devote the revenues derived therefrom to the payment of the debt."
Our legislature has, by the enactment of a general statute (subd. 64, sec. 5039, Rev. Codes 1921), proceeded to exercise the power conferred upon it by the Constitution, i.e., to authorize cities to extend their limit of indebtedness for the purpose of the construction of sewer and waterworks systems. The section of the Constitution, together with the statute referred to, has been before this court for consideration in a number of cases, which we will presently notice. The legislature, however, by Chapter 17, Laws of 1933, enacted a curative statute, providing as follows: "That any election heretofore held for the purpose of authorizing any city of the state of Montana to create or increase the indebtedness of such city by issuing bonds for any of the purposes set forth in subdivision 64 of section 5039, Revised Codes of 1921, as amended, or sections 1 and 3, Chapter 160, Session Laws of Montana, 1931, not exceeding the limits therein set forth, and which election was held after notice, stating the time and place *60 of holding the election, the amount and character of the bonds proposed to be issued and the purpose thereof, was published and posted in the manner required by section 5279, Revised Codes of Montana, 1921, or section 8, Chapter 160, of the Session Laws of Montana, 1931, and at which election the proposal to increase said indebtedness and to issue such bonds received a majority of all votes tendered and of the votes cast at such election upon such proposition, be and the same hereby is legalized, ratified, confirmed, and declared valid to all intents and purposes; and all such bonds, whether issued or hereafter to be issued, are legalized and declared to be valid and legal obligations of and against the city issuing the same, regardless of any error, defect, omission, irregularity or departure from statute or city ordinance in the holding of and conducting of such election, or the registration therefor, or in any of the steps or proceedings relating thereto."
Before considering the previous decisions of this court adverted to — none of which involve the identical or any curative Act — it is well to note the effect of this enactment.
That the election in question comes within the provisions of[1] the curative Act is beyond doubt. The facts in the record clearly warrant this statement. The law is a general one, relating to all cities in Montana coming within its terms. The legislature of a state may ratify any Act of a municipal corporation which it could have authorized. (Weber v. City ofHelena,
The question here presented with reference to the validity of[2] the bonds is, not whether the notice was valid under subdivision 64, supra, but whether it is valid under the Constitution. The legislature by the curative Act of 1933 exercised the full measure of its power conferred upon it in this constitutional provision, and, in the exercise of this power, was bound only by the limitations contained therein.
Counsel for plaintiff urge that since under the decision of this court in Butler v. Andrus,
This court, in the case of Butler v. Andrus, supra, had before it a case wherein a city, at a time when there was a sufficient margin within the three per cent. limit, issued bonds pursuant to authority conferred as a result of an election for a waterworks system, and where it had been attempted as a result of the action of the city council to allocate the waterworks bond issue entirely within the extended limitation of indebtedness, thus conserving an unused margin within the three per cent. limitation. It was then sought to issue bonds for a public purpose which could only be included within the three per cent. limitation prescribed by the Constitution. The court held that the previous waterworks bond issue was included within the three per cent. limitation, thereby preventing the attempted conservation of the margin by the city council. In reaching that conclusion the court said: "The legislature in granting the privilege used the expression `and an additional *62 indebtedness shall be incurred when necessary to construct,' etc. This language seems susceptible of but one construction. There may be no extension if there is no debt already contracted, for the word `additional' qualifies the character of the debt to be contracted, and refers also to a pre-existing amount of indebtedness to which it may be added. The word `necessary' defines the condition of affairs which requires the additional indebtedness. The condition must be such as to create the necessity. If a municipality is not indebted in any amount at all, or if it has the necessary funds in its treasury, noadditional indebtedness can be incurred; nor can it be said that any necessity has arisen demanding it."
It will be observed from the foregoing quotation that the basis of the conclusion is found in the language of the legislature in the exercise of the power conferred upon it under the constitutional provision. Emphasis is placed upon the adjective "additional" modifying the word "indebtedness." No such adjective or qualifying word is found in the Constitution. Under a somewhat similar situation this court, in the case of Lepley
v. City of Fort Benton,
Counsel urge the applicability of the decision in City ofBozeman v. Sweet, Causey, Foster Co., 246 Fed. 370. There it was proposed by the city of Bozeman to issue bonds for the construction of a waterworks system. A special election was held. The city was indebted to the extent that it was necessary, in order to issue the bonds, that it come within the extended limit of the Constitution. The notice merely mentioned the question of issuance of bonds in a stated sum for waterworks purposes. No reference was made to any extension of the constitutional limit of indebtedness. The opinion of the court rested entirely upon the statute, subdivision 64 of section 5039, supra.
In the case of Butler v. Andrus, supra, this court in discussing the effect of the attempted allocation of a bond issue *63 entirely within the ten per cent. limit when there was an unused margin within the three per cent. limit sufficient for the issuance of the bonds, said: "The fact that the people, if such were the case, or the city council, arbitrarily voted that the bonds should be classed under the ten per cent. limit does not affect their validity as a liability of the city."
In the case of Edwards v. City of Helena,
There is no contention here made that the favorable vote was procured or influenced by any deception of the voters to their prejudice. True, this court in the case of Carlson v. City ofHelena,
Paraphrasing the proviso of our Constitution under consideration, we find it is said therein: "The legislative assembly may authorize municipal corporations to extend the limit mentioned in this section by submitting the question to a vote of the taxpayers." The only question which the Constitution commands to be submitted to the taxpayers is the extension of the limit of indebtedness. That identical question was submitted in this case.
We therefore conclude that the notice of election was sufficient under the Constitution and the curative Act.
Counsel for plaintiff urge that the majority of the votes cast[3] were against the incurring of an indebtedness in excess of the three per cent. limit. This astonishing contention is based on the argument that by adding the no votes on both questions, and counting them against the favorable vote on each single proposition submitted, the election was lost. If the no votes might properly be added, it would seem that the yes votes might likewise be added on the two propositions. As the questions were submitted, the individual voter could vote on each separate and distinct question, and for us to reach the conclusion suggested we would have to determine in some manner that all persons who voted no on the first question did not likewise vote no on the second. We find no basis for such a conclusion, and the contention is wholly without merit.
Plaintiff contends that the contract for the construction of the waterworks system is illegal, in that the city could not trade or exchange bonds for work done.
Cities are required to let contracts for work and supplies for[4] which there must be paid a sum exceeding $500, to the lowest responsible bidder. (Chap. 22, Laws of 1927.) Failure *65
to comply with this statute renders a contract void. (MissoulaSt. Ry. Co. v. City of Missoula,
It is urged on behalf of plaintiff that the city of Deer Lodge was without authority to exchange bonds for the waterworks system. It is said that, since it is provided by section 19 of Chapter 160, that all money arising from the sale of bonds shall be paid to the city or town treasurer, the bonds can be sold only for cash. Counsel cite in support of their contention the cases of Town of Buffalo v. Walker,
This court in O'Neill v. Yellowstone Irr. Dist.,
It has frequently been held, under statutes authorizing the sale of bonds by boards at private sale, that a contract whereby bonds, at their face value, are exchanged for work at an agreed *67
valuation, and the price of the construction work is determined by a bid which is accepted, is a sale within the meaning of statutes similar to our own. (Washington-Oregon Corp. v.Chehalis,
It is further urged that, since by advertising for bids and[5] stating therein that the successful bidder would be paid for his services in bonds, bidders would be restricted either to those who had funds of their own, or to those who would be forced to sell the bonds at a discount, the price bid for the work to be done would be higher than if it had been advertised that the contract price would be paid in cash; and the statute requiring contracts of this character to be let to the lowest bidder is violated; consequently, the contract is void.
The trial court made the following findings of fact: "The court finds that there is no evidence showing that anyone was deterred from bidding on the contract for the construction of said water system by reason of the condition in the notice to bidders that contractor will be paid with six per cent. bonds of the city water bond issue, or that any person would have bid without such condition who did not bid as a result of said notice to contractors. That there is no evidence to show that the bids received from the contractors were any higher by reason of the insertion of such condition in said notice than such bids would have been without it." It is not contended that the court did not correctly find the facts as quoted, from the evidence produced on the trial.
Counsel in support of their contention cite the case ofLedwith v. City of Lincoln,
Plaintiff asserts that because the bids were made on the basis[6] of the notice, namely, that the contract price was payable in bonds, the city was without power to enter into a contract for the payment of the contract price in cash, and therefore the contract is void. Under the contract the contractor was to receive "the lump sum of $137,850" as full compensation for its performance; that payment in cash should be made was not mentioned.
Municipal authorities may not enter into a contract with the lowest bidder containing substantial provisions beneficial to him not included in or contemplated by the terms and specifications upon which the bids were invited. (19 R.C.L. 1071; Lissiter Co. v. Taylor,
Plaintiff asserts that the city not having sold the bonds, the[7] contract for the construction of the waterworks system creates an illegal indebtedness in excess of the three per cent. limit. As stated by its counsel in their brief, this statement presupposes that no authority had been given the city by virtue of the election to increase its indebtedness beyond the three per cent. limitation, and in view of what we have already said, such position is not tenable. The argument, however, in support of this contention of plaintiff proceeds upon the theory that until the bonds were sold and the proceeds in the treasury, no indebtedness could be created for the construction of the waterworks system. In support of this contention reliance is placed on the case of Hansard v. Green,
Lastly it is urged that the contract was invalid, in that it[8-10] was entered into during the pendency of the preliminary injunction, which, it is said, has never been set aside either on appeal or otherwise; and it is argued that it is therefore still in force. The preliminary injunction in question prohibited the city from entering into a contract for the construction of the waterworks system whereby bonds were to be delivered in exchange for the work to be done. This injunction was in force at the time the contract in question was executed. Mr. Leigland, one of the members of the firm which *70 entered into the contract, testified that they understood at the time the contract was entered into, that the injunction had been quashed so far as the signing of this contract was concerned. No mention is made in the final judgment of the preliminary injunction.
A preliminary injunction comes to an end by the entry of the final decree in the cause making no provision for an injunction, and no formal order of dissolution is necessary to the validity and effectiveness of the decree. (32 C.J. 408; Sweeney v.Hanley, 126 Fed. 97, 61 C.C.A. 153; Gardner v. Gardner,
The preliminary injunction or restraining order upon the entry of the final decree dismissing this case was dissolved. The validity of the contract in question was not affected by the existence of the temporary injunction.
The judgment is affirmed.
MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES ANGSTMAN, MATTHEWS and STEWART concur.
Rehearing denied February 26, 1934.
Dissenting Opinion
On motion for rehearing I have given further consideration to this case and believe the above opinion is erroneous in some particulars. I think that opinion is in error in holding that the case of Butler v. Andrus,
The court in speaking of the legislative Act in the ButlerCase said: "It is apparent that in enacting this provision the legislature intended to pursue strictly the provisions of the Constitution quoted." It also said: "The proviso under which the legislature may authorize an extension of the limit is also clear in purpose, to-wit, to allow an extension of this limit when such extension (increase) is necessary to construct a sewerage system or procure a water supply. It cannot be granted or be made available for any other purpose nor under any other circumstances than those which create the necessity for it." The court then proceeded to point out in effect that the legislature carried out the authority conferred by the Constitution, i.e., that the legislature recognized there must be a necessity for extending the limit before it may be done. The same is true of the case ofLepley v. City of Fort Benton,
I think the correct conclusion was arrived at in the opinion written by Mr. Justice Anderson, because the Constitution does not prescribe the manner in which the question of extending the debt limit shall be submitted. The manner in which it was submitted here, and the favorable vote on the question as submitted, was tantamount to securing consent of the taxpayers that the limit be extended for the full amount of $200,000. If a part of the $200,000 comes within the three per cent. limit, rather than the extended limit, no taxpayer could complain, nor would the validity of the bonds be affected. (Butler v.Andrus, supra.)
I agree, therefore, with the result reached in the foregoing opinion. *72
