109 P.2d 805 | Wyo. | 1941
The question for decision is whether the town council of Greybull, without approval by the people of the town, has authority to borrow money to pay for a municipal electric light and power plant, and to issue therefor bonds to be paid solely from revenue accruing from the operation of the plant.
A town ordinance, passed in August, 1938, amended by an ordinance passed in April, 1939, provided for the issuance of bonds in the amount of $140,000 to draw interest at 5 per cent.; for delivery of the bonds to a named purchaser; for the use of the proceeds in the construction of a plant to supply the town and its inhabitants with light and power; for maintenance of the plant by the town, and for payment of the bonds *363 solely from receipts derived from the operation of the plant. Details of the plan as outlined in the ordinances, need not be stated. The proposition to issue the bonds was not submitted to a vote of the people.
The action, questioning the power of the town to issue the bonds, and for injunction, was commenced by Whipps, a taxpayer, suing for himself and all others similarly situated. Thereafter, the Mountain States Power Company, a public utility furnishing light and power to the town and its inhabitants, was granted leave to intervene as plaintiff, and filed its petition which, so far as it is material on the point that controls our decision, was substantially the same as the petition of Whipps.
To these petitions defendants demurred on the ground that neither of them stated facts sufficient to constitute a cause of action. The demurrers were overruled; defendants refused to plead further, and the trial court entered the order appealed from, declaring that the ordinances were invalid and enjoining proceedings thereunder.
Both plaintiffs contend that the ordinances were void because not authorized by statute, and as we are of opinion that that contention must prevail, it will not be necessary to decide or discuss any question as to the validity of the ordinances under constitutional limitations of municipal indebtedness. We shall assume that the bonds were valid if authorized by statute.
An act of the legislature of 1907 (Sess. Laws, 1907, ch. 92; C.S. 1920, ch. 142), which we shall usually call the act of 1907, provided, by section 1, that:
"In addition to the other powers conferred upon them by law, each incorporated city or town in the State of Wyoming shall have power and authority to establish, maintain and regulate electric light plants and electric power plants within the corporate limits *364 of such city or town, for the purpose of supplying the inhabitants of said city or town with electric lights and electric power and to light the streets and highways and public buildings of said city or town, and to furnish power for water works and other municipal works owned by and operated by such city or town."
Section 2 (C.S. 1920, § 2194) provided that the city or town, "for the purpose of providing funds for establishing, constructing, purchasing or extending" such plant or plants, "is authorized to borrow money and to issue coupon bonds of said city or town," and there were regulations as to the denomination, rate of interest, maturity dates and signing of the bonds.
Section 3 (C.S. 1920, § 2195) provided for the registration of the bonds.
Section 4 (C.S. 1920, § 2196) required the levy of an annual tax sufficient to pay interest on and to redeem the bonds.
Section 5 (C.S. 1920, § 2197) provided that: "No bonds shall be issued for the purpose provided by the act, until the proposition to issue the same shall have been submitted to the vote of the people of such city or town and by them approved," at an annual or special election. Further, that "the proposition so submitted shall specify the amount of the bonds proposed to be issued, the rate of interest and the purpose for which it is proposed to issue the bonds. At any such election the official ballot shall contain the words, `For electric plant bonds,' and `against electric plant bonds.' If a majority of the legal votes cast upon the proposition shall be for bonds, then such proposition shall be deemed to have been approved by the people. . ."
Sections 6, 7 and 8 (C.S. 1920, §§ 2198-2200) made regulations in regard to the redemption of the bonds and the duties of the city or town treasurer. *365
Sections 9 and 10 (C.S. 1920, §§ 2201, 2202) were repealed by section 179, ch. 73, Session Laws of 1931.
This act of 1907 and other acts (chapters 139, 140, 141, 143, 144, C.S. 1920), authorizing cities and towns to borrow money and issue bonds in order to construct or acquire water works, viaducts and subways, sewers, parks, etc., contained many similar provisions. By the Revision Act of 1931 (Sess. Laws, 1931, ch. 73) these various separate acts were consolidated and in the Revised Statutes of that year are contained in one article (Rev. St. 1931, art. 16, ch. 22). Section 1 of the act of 1907 is the sixth sub-division of 22-1601 of the Revision; section 2 of the act of 1907 was repealed, and the first paragraph of section 22-1605 of the Revision takes its place; the provisions of sections 3, 4, 6, 7 and 8 of the act of 1907 are embodied in substance in sections 22-1607, 22-1609, 22-1611, 22-1612 of the Revision. The prohibition of section 5 of the act of 1907, is contained in the second paragraph of section 22-1605 of the Revision, amended so as to make the introductory words read thus: "No bonds, except local improvement bonds, as provided by law, shall be issued for purpose or purposes provided by this article, until * * *."
Bonds of the kind here in question are commonly called "revenue bonds," and we shall use that term in referring to them. Sometimes, as shown by some of the cases cited below, similar contracts of municipal corporations are evidenced by written instruments called notes, warrants, certificates, orders, conditional sales contracts or the like, but we shall assume that cases cited as authority on the question to be decided are not to be distinguished on the ground that the writing was not in the form of a bond.
There is no statute that expressly authorizes a town to issue bonds for the construction of a light and power *366 plant, except the act of 1907, and the question is whether the power to issue revenue bonds without compliance with that act can be implied. Guiding principles may be stated in the language of Judge Dillon, often quoted by the courts:
"It is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers, and no others: First, those granted by express words; second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to the accomplishment of the declared objects and purposes — not simply convenient, but indispensable. Any fair, reasonable, substantial doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied." Dillon on Municipal Corp. (5th ed.) § 237. "Respecting the mode in which contracts by corporations should be made, it is important to observe that when, as is sometimes the case, the mode of contracting is specially and plainly prescribed and limited, that mode is exclusive and must be pursued * * *." Id. § 783. "The rule of strict construction does not apply to the mode adopted by the municipality to carry into effect powers expressly or plainly granted, where the mode is not limited or prescribed by the legislature, and is left to the discretion of the municipal authorities. In such a case the usual test of validity of the act of a municipal body is whether it is reasonable." Id. § 239.
Specific constitutional limitations on the power of a municipal corporation to incur indebtedness, do not prevent the legislature from imposing additional restrictions on the exercise of the power. State ex rel. Voiles v. Johnson County High School,
By the act of 1907, the legislature undertook (1) to grant municipal corporations the power to establish and maintain electric light and power plants; (2) to authorize them to borrow money and issue bonds to provide funds needed for the exercise of the power, and (3) to require them to do acts deemed necessary to provide for payment of the bonds. The authority to borrow money and issue bonds was restricted by the provisions of section 5 requiring approval by the people voting at an election. There was the direct prohibition: "No bonds shall be issued for the purpose" until such approval is obtained. Defendants argue that, as the legislature then had in mind only the kind of bonds payable from general revenues, the word "bonds" in this prohibitory language could have no reference to the revenue bonds, citing State v. City of Miami,
In looking for authority in the decisions of the courts of other states we are embarrassed by the difficulty of *369 telling how far the decisions may have been based on statutes different from ours. The cases that seem most nearly in point support the view that the mode of borrowing money as prescribed by the act of 1907 is exclusive and must be pursued, in accordance with the principle stated by Dillon, supra, § 783.
In Kansas, a city had power under section 12-842, R.S. 1923, originally enacted as § 3, ch. 136, Laws of 1903, to construct and operate an electric plant, and under section 12-843 of R.S. 1923, § 4 of the original act, it was granted "full power and authority to issue bonds of the city" for any and all indebtedness, obligation or liability incurred, with the proviso that no bonds should be issued except upon a vote of a majority of the electors. In Kansas Power Co. v. Fairbanks, Morse Co.,
"The statute (§ 12-842, supra) had its inception in the Laws 1903, c. 136, § 3. * * * In 1903 the only statutory provision whereby the funds could be raised to establish a municipal light and power plant were those conferred by section 4 of the same act. That section provided that * * * bonds of the city might be issued under prescribed regulations and limitations. Nowhere in the statute of 1903 or elsewhere is the project of procuring a municipal light plant without a bond issue specifically sanctioned, doubtless for the reason that in 1903 the instances of a city having sufficient funds available for such a purpose were so rare that it did not challenge legislative attention. And under R.S. 12-842 * * *, if the city had the money on hand or in sight, it might be lawful to purchase, construct or acquire a power and light plant without a bond issue. *370 Such an unusual situation apparently would permit a city government to embark on municipal ownership and operation of a light and power plant without a vote of the people — a result which probably the legislature never anticipated. Be that as it may, where the city does not have the money, or the money in sight through a levy already made, it seems clear that section 4 of chapter 136 of the act of 1903, as revised in R.S. 12-843, is the proper course for the city to pursue * * *. Defendants contend that the method prescribed by this section for meeting any and all indebtedness, obligation or liability * * * is not exclusive; * * *. It seems clear to the court that since a specific method of financing the establishment of a municipal light and power plant is prescribed by statute, and the statutory method gives no sanction to the proposed method of payment challenged in this action, the contract is illegal in its main features, and this court must so hold."
See, also Interstate Power Co. v. City of Ainsworth,
Defendants argue that the town had power to construct the plant under an act of 1888 which prescribed no method for carrying the power into effect; therefore, the town had implied power to borrow money on revenue bonds, a reasonable method of exercising the power, and that the method prescribed by the later act of 1907 is merely permissive and cumulative, and not exclusive. *371
This argument, if otherwise valid, falls with a rejection of the first stated premise. The act of 1888, now section 22-1427, R.S. 1931, (enacted in 1888, Sess. Laws, 1888, ch. 43, section 7) granted to towns power, "to provide for and regulate the lighting of the streets and the erection of lamp posts." We cannot hold that the power to construct a public utility plant, such as is contemplated by the town of Greybull, and to borrow the large sum of money necessary to pay for it, can reasonably be implied from the power to provide for lighting the streets and the erection of lamp posts. In Christensen v. City of Fremont,
We cannot undertake to discuss in this opinion the many cases cited by defendants, but venture to suggest reasons for distinguishing a few that are most emphasized on the question of the town's statutory power to issue the bonds.
The power of cities in Utah to issue securities payable exclusively from income from utilities that they own and operate has been discussed at length in several cases upon which defendants rely with considerable confidence. Barnes v. Lehi City,
Lang v. Cavalier,
In Nebraska, cities were authorized (1) to purchase, construct, maintain and improve lighting systems (§ 4396, Nebr. C.S. 1922); (2) to pay the "costs of such utilities" by the levy of a tax or, when such tax is *374
insufficient, by the issuance of bonds (§ 4397) approved by the electors and payable from taxes (§ 4398). In Carr v. Fernstermacher,
As we think the town had no power, expressed or implied, to issue the bonds in the manner provided in the ordinances, the judgment of the district court will be affirmed.
RINER, Ch. J., and BLUME, J., concur. *375