Adams v. Pritchard
| Decision Date | 18 February 1965 |
| Docket Number | No. 9574,9574 |
| Citation | 88 Idaho 325,399 P.2d 252 |
| Parties | Edna ADAMS, Plaintiff-Appellant, v. George PRITCHARD, Harold Conn, Dortha Bills, Howard Thomas, and Evan Siggelkow, Members of the Board of Trustees of the Village of Garden City, Idaho, and the Village of Garden City, Idaho, Defendants-Respondents. |
| Court | Idaho Supreme Court |
John H. Fairchild, Boise, for appellant.
Cosho & Humphrey, Boise, for respondents.
Plaintiff (appellant) brought this action as citizen, resident and property owner of the village of Garden City, against the village and the board of trustees of the village, defendants (respondents), seeking a declaratory judgment declaring null and void a resolution adopted by the board June 1, 1964, providing for the refunding of outstanding water and sewer revenue bonds.
The parties stipulated that the facts are undisputed and are as alleged in plaintiff's complaint. The water and sewer revenue bonds were issued and sold by the village in the year 1957, pursuant to the Revenue Bond Act. S.L.1951, c. 47, compiled as I.C. §§ 50-2812 through 50-2827. Of the original issue of $400,000 in bonds, some $330,000 are still outstanding and unmatured. The outstanding bonds are owned by the Housing and Home Finance Agency, an agency of the United States government. The agency has offered to surrender such bonds to the village upon payment of the principal thereof, and interest accrued to the date of surrender. The village has ascertained that it may issue and sell refunding bonds, for the purpose of retiring outstandidng bonds of the original issue, at a lower rate of interest than that payable on the outstanding bonds, thus effecting a saving to the users of the water and sewer services in excess of $20,000.
The board of trustees of the village at a regular meeting, June 1, 1964, adopted a resolution providing for issuance and sale of refunding revenue bonds, at a lower rate of interest; providing for the use of the proceeds to the sale for the payment and redemption of the outstanding water and sewer revenue bonds; providing that the refunding revenue bonds shall be a lien against the combined water and sewer utility constructed with the proceeds of the sale of the original water and sewer bonds; and providing that the interest and principal of the refunding revenue bonds shall be paid out of the future revenues of the combined utility in the same manner as was provided for the payment of principal and interest of the outstanding bonds.
In the district court the plaintiff contended that the village had no legal power or authority to issue and sell the proposed refunding bonds, for the reason that there is no express or implied power given by law to the village for that purpose; and further, that the village board had no power to provide for refunding of such bonds by resolution rather than by ordinance or election of the residents and taxpayers of the village.
The district court entered its judgment in favor of the defendants, adjudging that the village had the power to issue the refunding bonds and to do so by resolution. From the judgment the plaintiff brought this appeal.
The issues here are the same as those presented to the district court. The Revenue Bond Act of 1951 contains no express authorization for refunding of outstanding municipal revenue bonds. However, it does clearly imply such authority. Idaho Code § 50-2813, in declaring the legislative policy in the enactment of the Revenue Bond Act, recites that the municipal works therein authorized shall be managed in the most efficient manner consistent with sound economy to the end that the services provided thereby shall be furnished users at the lowest possible cost, and that such works shall not be operated as a source of revenue to the village, but for the benefit of those served. The saving to users by means of refunding the outstanding bonds at a lower rate of interest, is in harmony with, and in furtherance of, the legislative policy declared by the act.
Idaho Code § 50-2821, of the act, authorizes the municipality, in issuing the original bonds, to provide for their maturity at 'such time or times' as it chooses, and to provide that the bonds 'may be redeemable before maturity at the option of the municipality, may be payable in such medium of payment, at such place or places, may carry such registration privileges, may be subject to such terms of redemption, may contain such terms, covernants, and conditions, and may be in such form either coupon or registered, as such ordinance may provide.'
The record does not contain a copy of the ordinance providing the terms and conditions of the original bonds, nor a copy of one of the bonds, and for the present purpose we assume that no provision was made in either, for the payment of such bonds by means of a refunding bond issue. The village, of course, could not provide for payment or redemption of the bonds other than as provided by the original contract with the bondholders, as evidenced by the ordinance and the bond. However, the terms of that contract are of no importance in this connection because the bondholder is willing to accept payment in advance of maturity, with interest to the date of redemption only. The important consideration here is that the legislature authorized the village to provide, in the...
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City of Fairmont v. Investors Syndicate of America, Inc.
...can call the bonds before maturity. Accord, Neighbors of Woodcraft v. Rupert, 51 Idaho 215, 4 P.2d 360 (1931); Adams v. Pritchard, 88 Idaho 325, 399 P.2d 252 (1965). It cannot, by its ordinance, give the redemption decision to the bondholders. A municipal corporation has only the powers gra......