Alexander v. Town of Montezuma, 47999

• Decision Date: 05 February 1952
• Docket Number: No. 47999,47999
• Citation: 243 Iowa 251,51 N.W.2d 456
• Parties: ALEXANDER v. TOWN OF MONTEZUMA et al.
• Court: Iowa Supreme Court

Page 456

51 N.W.2d 456

243 Iowa 251

ALEXANDER v. TOWN OF MONTEZUMA et al.

No. 47999.

Supreme Court of Iowa.

Feb. 5, 1952.

William L. Hassett, of Des Moines, for appellants.

E. W. McNeil, of Montezuma, for appellee.

BLISS, Justice.

The population of Montezuma in 1950 was 1460. Proceeding under Chapter 407, entitled 'Indebtedness', of the 1950 Code of Iowa, I.C.A., the electors of the defendant town, at a special election held on January 17, 1951, voted 556 to 113, in favor of the following public measure: 'Shall the Town of Montezuma, Iowa, improve its Municipal Water Works System by the construction of a water reservoir and the acquisition of a site therefor, and contract indebtedness for such purpose not exceeding $90,000.00 and issue bonds for such purpose not exceeding $90,000.00, and levy a tax annually upon the taxable property in said Town * * *, not exceeding nine mills per annum for the payment of such bonds and interest thereon?' The regularity of the election proceedings is not challenged.

On July 25, 1951, the Town Council, with all members present, and the Mayor presiding, unanimously adopted a resolution, which, after stating: the holding of the election on January 17, 1951, on the proposition of extending and reconstructing the town's waterworks system; the statutory steps preliminary to the election; the affirmative vote in excess of 60% of the votes cast; the adoption of plans and specifications and the execution of a contract for the construction of the improvement at a cost of $90,000, ordered the issuance of ninety Water Works Bonds in denominations of $1000 each, bearing date of August 1, 1951, with interest at a rate dependent upon the successful bid. The bonds, numbered from one to ninety, were to mature in their numerical order, in each year from 1953 to 1970, inclusive. For the payment of the principal and interest of the bonds, the resolution ordered the levy of a tax annually in the years 1951 to 1969, inclusive, in amounts varying from $6200, to $7000.

On July 25, 1951, plaintiff filed his petition, alleging the matters, in substance, as stated above, and that: any bonds issued pursuant to said resolution, being under Chapter 407, Code of 1950, I.C.A., would be without authority and void, since the issuance of such bonds, and any tax levied to pay them, is governed and controlled, since July 4, 1951, by Chapter 159 of the Laws of the 54th General Assembly; and section 12 of said chapter, I.C.A. § 404.12, provides for a levy of not to exceed five mills on the dollar on all taxable property within the corporate limits of the defendant town, for the payment of the proposed bonds; and the annual levy of a nine-mill tax, as provided in the resolution, wrongfully exceeds the statutory five-mill limit, and will annually exhaust the proceeds thereof, and leave nothing to pay the cost of street lighting, and other items specified in said section 12.

Defendants filed their answer on July 28, 1951, admitting in Count I thereof, the allegations of the petition as to what had been done, and the allegation that Chapter 159 of the session laws of the 54th General Assembly became effective on July 4, 1951, but denied that said Act invalidated the proposed bonds by any amendment to or modification of, Chapter 407, Code of 1950, I.C.A., pursuant to which the bonds were voted and authorized by the electors, who also by their vote authorized a tax of nine mills on the dollar to pay the principal and interest of said bonds, and that the annual tax levy, authorized by the resolution, is substantially less than that authorized by the vote of the electors.

Because of the grounds of our opinion we do not set out or discuss Count II of defendants' answer. Plaintiff denied the affirmative allegations of the answer in his reply.

Trial began on July 31, 1951. It was stipulated that the bonds authorized in the resolution had not been sold or issued; that the value of all of the taxable property in Montezuma, as of January 1, 1951, was $1,118,525, and that one mill of taxation would raise $1,118.52; and that under a contract between the town and the Municipal Light Pant of the town, the town paid the Light Plant $983.68 annually for street lighting. Copies of the resolution and other documents referred to above were introduced by agreement. Defendants also introduced a true copy of a Report of the Municipal Statutes Study Committee authorized by a Joint Resolution of the 53rd General Assembly which appears as Chapter 308 of its session laws, approved May 5, 1949. The official report of this six-member committee was made to the Governor of the State of Iowa, about November 15, 1950.

Since the determination of this appeal is largely a matter of statutory construction, some further reference to this study and report is made. Section 2 of the Joint Resolution states that: 'It shall be the duty of the committee to make a comprehensive study of the laws relating to the construction and financing of public improvements within municipalities, and other laws relating to the conduct of the business of the mupnicipalities, and to make such recommendations as it sees fit as to the codification, simplification, and modification of such laws to the end that the business of municipalities may be more expeditiously and more efficiently conducted.'

The Committee had the cooperation of the Attorney General and his staff and other departments of state government, and counselled with many municipal officers. It was directed by the Joint Resolution to include in its report drafts of proposed bills. Copies of all of these were sent to the Governor of Iowa and to the members of the 54th General Assembly. Senate File 212 which is Chapter 159 of the Laws of the 54th General Assembly, the statute involved herein, is the fruition of the study and investigation and report and recommendations of this Committee.

After stressing the great number of people in Iowa whose welfare in many ways depends upon the proper functioning of municipal government, and the community problems which modern development has placed on municipal officials, the report states:

'It is most appropriate, therefore, that we critically review the Iowa Statutes and recommend such changes as are needed to meet the conditions of today. Our municipalities and their officials should not be handicapped in the conduct of the business of the municipalities by obsolete laws. * * *. The need for reviewing, clarifying, simplifying, and modernizing the procedural laws governing incorporated municipalities has long been realized by municipal officials and legislators. * * *.' As a result of its studies and conferences, the Committee agreed: '1. That there is neither need nor justification for the 164 municipal funds that are now authorized by the laws of Iowa. * * *. 3. That municipal corporations should be given broad latitude in determining the amount needed to finance the several activities that fall within a function of municipal government. There is a wide difference in the local conditions in the 935 municipal corporations of Iowa. The state should not specify arbitrary limitations on tax levies for specific purposes that are so low that it is not possible for municipal officials to successfully cope with their local problems. 4. The taxpayers interests can be protected by specifying a reasonable maximum over-all limitation on total millage levies, and by retaining all existing controls in the form of public hearings at the time that the budgets and levies are determined for the ensuing fiscal year. 5. That no arbitrary limitations should be imposed on the tax levies required either for servicing municipal indebtedness, or for financing the municipal corporation's share of the cost of retirement and pension plans for municipal employees, as authorized by state law. (Italics ours.)

'Bill No. 13, Part II, provides for changes in and amendments to existing laws that are needed to carry out the Committee's recommendations * * *. In lieu of the 164 municipal funds now provided by statute, Bill No. 13 makes provision for nine funds as follows:' General, Street, Public Safety, Sanitation, Municipal Enterprises, Recreation, Utilities, Debt Service, and Trust and Agency Fund.

The task which the 53rd General Assembly placed on the Committee was a most difficult one and the labor of attempting to perform it was very great. Several chapters of the Iowa Code and scores of sections deal with towns and cities of different classes and the numerous matters connected with them. Their functions, duties and responsibilities are many and burdensome and each of them requires the contracting of indebtedness, which must be paid by the levying of taxes, and from other sources of income. These municipal obligations follow a general pattern yet the problems of individual cities and towns may vary greatly and it is difficult to enact statutes and to fix the millage of tax levies to adequately meet the needs of each municipality in many situations. The report and recommendations of the Committee indicate this.

Senate File 212 appears as Chapter 159 in the Laws of the 54th General Assembly, and is entitled 'Municipal Revenue', 'An act relating to taxation and other sources of municipal revenue, and to repeal chapter four hundred four (404) of the Code relating thereto and enact a substitute therefor, and to repeal * * * and to amend certain sections of the Code relating thereto.' It also repeals Chapter 406, and refers to, amends, and repeals over 100 other Code sections. We have italicized above some propositions upon which the Committee reported that its members had agreed. The bill as passed by the 54th General Assembly indicates its intention to effect these objects.

In repealing Chapter 404, the bill does not eliminate any taxes, but reduces the number of functional funds for which taxes are to be levied, and groups the taxes and the various kindred purposes for which they...