Banner v. City of Laramie

• Decision Date: 08 November 1955
• Docket Number: No. 2696,2696
• Parties: Joseph T. BANNER, Plaintiff and Appellant, v. CITY OF LARAMIE, a Municipal Corporation of Albany County, Wyoming, C. O. Hammond, Vernon G. Bentley, H. H. Cordiner, Josephine Fay, Floyd B. Foreman, J. H. Killian and Carroll S. Mohr, Defendants and Respondents.
• Court: Wyoming Supreme Court

Page 922

289 P.2d 922

74 Wyo. 429

Joseph T. BANNER, Plaintiff and Appellant, v. CITY OF LARAMIE, a Municipal Corporation of Albany County, Wyoming, C. O. Hammond, Vernon G. Bentley, H. H. Cordiner, Josephine Fay, Floyd B. Foreman, J. H. Killian and Carroll S. Mohr, Defendants and Respondents.

No. 2696.

Supreme Court of Wyoming.

Nov. 8, 1955.

W. P. Farthing, Laramie, for appellant.

Alfred M. Pence, Laramie, for respondents.

BLUME, Justice.

Following the adoption and publication of a resolution of intention and a public hearing thereon, the city counsel of the city of Laramie, Wyoming, in May 1953 adopted ordinance No. 51 creating Storm Sewer Local Assessment District No. 4 providing for the construction of a drainage system and for the assessment of the cost against the property benefited. The district is located in the southeastern part of the city and consists of about 1/64 of the total area of the city. It is estimated that the total cost of improvement will be $50,000. In order to finance the construction, the city decided to issue improvement bonds to be paid from the proceeds of assessments levied on and collected from the district. On July 7, 1953, the city council adopted ordinance No. 55 establishing a revolving local improvement fund in accordance with Chapter 155, Session Laws of Wyoming 1953. The city then advertised the bonds for sale but failed to receive any bids. However, the city council passed a resolution declaring its intention to proceed according to the plan adopted without submitting the matter to a vote of the people. The plaintiff herein, a taxpayer and one who owns vehicles and purchases gasoline, then brought this action to enjoin the city from proceeding with the plan adopted, contending herein that the statute of 1953 permitting the establishment of a revolving fund is unconstitutional for various reasons hereafter set out and that the ordinance passed in connection therewith is absolutely invalid for reasons hereinafter mentioned. The plaintiff in his petition set forth the proceedings of the city council. The city filed a demurrer on the grounds that the petition failed to show a cause of action. The trial court sustained the demurrer and dismissed the action. An appeal to this court was thereupon taken by the plaintiff.

Ordinance No. 55, creating the revolving fund mentioned above, provides by section 2 thereof as follows:

'Section 2. That, beginning on the same day as the City's special assessment, negotiable, coupon Storm Sewer Improvement Bonds, of Laramie, Wyoming, Storm Sewer Local Assessment District No. 4 bear, while any of said bonds are outstanding, but in no event to exceed a period of ten years from the date of said bonds, or for the length of time necessary to pay all bonds so issued, whichever is shorter, there shall be placed in and credited to said fund annually from the proceeds of City or State gasoline or state cigarette license taxes collected or received by said City, a sum equal to four per centum (4%) of the original principal amount of said bonds by the expiration of one year from the date of said bonds, and an equal amount by the same month and day in each of the succeeding years; provided, however, in no event shall money be deposited in said fund whenever the monies therein shall exceed twenty per centum (20%) of the original principal amount of the outstanding bond obligations of said District.'

Section 5 of the same ordinance provides that the city may withdraw from the revolving fund any money in an amount not in excess of the difference between the total amount in said fund and the amount of the aggregate principal and interest requirements to maturity of said bonds then outstanding.

The statute in question here, Chapter 155, page 190, Session Laws of Wyoming, 1953, is as follows:

'Revolving Local Improvement Fund

'Section 1. Whenever a city or town council determines that improvements constructed in any local improvement district, authorized by Chapter 29, Article 20, Wyoming Compiled Statutes, 1945, confer general benefits on a City or Town in which such district is created, the City or Town Council ordering and establishing said district may create concurrently a fund to be known as the Revolving Local Improvement Fund. In payment for such benefits and to meet the financial requirements of said Revolving Fund, said cities and towns shall advance annually to the credit of said fund from the proceeds of City or State gasoline or state cigarette license taxes collected or received by said cities or towns, a sum not less than 2% of the total amount of the bonds issued for said local improvement district for a period of ten (10) years or for the length of time necessary to pay all bonds so issued, whichever is shorter, but in no event shall said fund exceed 20% of the outstanding bond obligations of said district.

'Transfer From Revolving Fund To Local Improvement Fund

'Section 2. Each such city or town shall withdraw annually from said Revolving Fund and deposit in the Local Improvement District Fund sufficient money to meet the difference between the principal amount of assessments due that year and the amount of assessments actually collected that year. Delinquent assessments shall remain liens upon the property assessed, and when said liens are enforced or foreclosed as provided by Chapter 29, Article 20, Wyoming Compiled Statutes, 1945, the proceeds of the sales, or other payments discharging said delinquencies, shall forthwith revert to the said Revolving Fund in repayment for amounts so advanced. Whenever there shall be money in such local improvement fund which is not required for the payment of any bond or interest of such local improvement fund, and after all of said bonds and interest have been fully paid, the money so remaining in the local improvement fund shall, by order of the council, be transferred to, and become a part of, the Revolving Fund for disposition in such manner as the City or Town Council may determine.

'Remedy of Local Improvement Bondholder

'Section 3. That Section 29-2050, Wyoming Compiled Statutes, 1945, be and the same is hereby amended and re-enacted to read as follows:

'29-2050. Neither the holder nor owner of any bond issued under the authority of this Act shall have any claim therefor against the City or Town by which the same is issued, except from the special assessment made for the improvement for which such bond was issued, or from the local improvement fund of such City or Town, but his remedy in case of non-payment, shall be confined to the enforcement of such assessments, or for payment out of the Local Improvement Fund. A copy of this section shall be plainly written, printed or engraved on each bond so issued.

'Approved February 24, 1953.'

Before proceeding further, it may be well to remember that in order to make an improvement in a city, it is not necessary to create an improvement district. But if the funds of the city permit, the improvement may be made out of the general funds of the city. Thus it is stated in 63 C.J.S., Municipal Corporations, § 1083, pp. 727, 728:

'Authority to make public improvements may provide or include the power to provide that the cost of such improvements may be paid from the general levy of taxes, or by means of special assessments made against the property specially benefited, or that a part of the cost shall be paid by the municipality and the remainder by the abutting owners. Hence, subject to special statutory provisions, and subject also to the ordinary legislative limitations as to expenditures and indebtedness, as discussed infra § 1846 et seq., a municipal corporation may make a public improvement and pay for it out of its general fund. A charter or statutory provision allowing special assessments or bond issues does not necessarily deprive the city of this power, but, in the absence of express direction, it leaves to the discretion of the municipal authorities the choice of modes for defraying expenses.'

1. Power of City to Create a Revolving Fund.

We pointed out in Abel v. Town of City of Gillette, 72 Wyo. 366, 377, 265 P.2d 376, 379, that the legislature by creating a revolving fund to supplement special assessments 'intended to repair to some extent the unsavory reputation which local improvement bonds had attained in this state, so we should construe the legislation liberally in that light.' A like reason caused the legislatures of other states to create a revolving or guaranty fund in such cases a good many years ago. Thus Utah passed a law in that connection as early as 1917. Stanley v. Jeffries, 86 Mont. 114, 284 P. 134, 139, 70 A.L.R. 166, had under consideration a statute creating such a fund in 1921. The court said among other things: 'It is readily discernible that, under the law as it existed at the time this act was passed, the value of district bonds and warrants was problematical, and their salability greatly impaired, and the public credit and public good necessitated some action to remedy the defects in the existing law.' What was true in Montana was true in this State, so that unless it is clear that the legislative act is unconstitutional, it must, in the interest of all, be upheld. To leave special improvement bonds unsalable cannot be said to be in the public interest. There should be some way to make them salable, and we know of no better way than that devised by the various legislatures, including our own.

In Wicks v. Salt Lake City, 60 Utah 265, 208 P. 538, 540, the court said:

'The city had the undoubted right, if it chose so to do, to provide for the lighting of the street in question and cast the burden thereof on the taxpayers of the entire municipality. It was not under the necessity of creating a special improvement district at all. It was not incumbent upon the city to impose the burden exclusively upon the owners of the abutting property. How then can it be consistently contended that the city is without...