Fickes v. Missoula County
| Decision Date | 04 June 1970 |
| Docket Number | No. 11836,11836 |
| Citation | 155 Mont. 258,470 P.2d 287 |
| Parties | C. P. FICKES, Plaintiff and Appellant, v. MISSOULA COUNTY et al., Defendants and Respondents. |
| Court | Montana Supreme Court |
Worden, Worden, Thane & Robb, Donovan Worden, Jr., Missoula, argued, for appellant.
H. J. Pinsoneault, County Atty., Garlington, Lohn & Robinson, J. C. Garlington, Missoula, argued, for respondents.
A. W. Scribner, Helena, argued, amicus curiae.
The plaintiff C. P. Fickes brought this action to enjoin the defendants, the Board of County Commissioners of Missoula County, from taking certain actions under the provisions of the 'Industrial Development Projects Act' of 1965 and to declare the same unconstitutional. The defendants filed a motion to dismiss the complaint upon the grounds it did not state a claim upon which relief could be granted, and a motion under Rule 12(c), M.R.Civ.P. for judgment on the pleadings.
The district court granted the defendants' motion for judgment on the pleadings and directed that final judgment be entered in favor of the defendants. From this judgment plaintiff appeals. Amicus curiae representing the Montana Chamber of Commerce appeared on the appeal by brief and argument.
Under the terms and provisions of sections 11-4101 through 11-4110, R.C.M.1947, as amended, entitled 'Industrial Development Projects' the Board of County Commissioners of Missoula County adopted a resolution whereby Missoula County would issue revenue bonds in the sum of $14,000,000 to assist Hoerner Waldorf Corporation of Montana, a Delaware corporation, to acquire and erect certain facilities to be used in connection with its pulp and paper mill located west of the city of Missoula. The facilities to be so acquired and erected to be used by Hoerner Waldorf Corporation in connection with air and water pollution control projects.
The projects for which the bonds are to be issued were, at the time of the adoption of the resolution by the county commissioners, already in the process of planning, in whole or in part, by the corporation.
The facilities to be acquired and erected are to be owned by Missoula County; mortgaged to secure the repayment of the bonds by the county; and leased to Hoerner Waldorf Corporation.
The rentals to be paid under the lease are to be pledged and assigned to a trustee for the repayment of the principal and interest due on the bonds, and performance of the lease is guaranteed by Hoerner Waldorf Corporation, a Delaware Corporation, the parent company of Hoerner Waldorf Corporation of Montana.
Plaintiff contends the Industrial Development Projects Act of 1965, as amended, is unconstitutional in that:
(1) The bonds to be issued by the county and the mortgage to secure payment of the bonds constitute a lending of the credit of the county in violation of Article XIII, Sec. 1 of the Constitution of Montana.
(2) That said bonds and mortgage constitute a debt of the county which will be incurred without approval of a majority of the electors of the county, voting at an election, as required by Article XIII, Sec. 5 of the Constitution of Montana.
(3) That the debt that will be created if said bonds are issued will exceed the debt limit established for counties under the provisions of Article XIII, Sec. 5 of the Constitution of Montana.
(4) Since section 11-4108, R.C.M.1947, provides for taxation of property notwithstanding it is owned by a county, this section is unconstitutional under the provisions of Article XII, Sec. 2 of the Constitution of Montana.
(5) The proposed lease agreement provides that Hoerner Waldorf Corporation of Montana shall have the option to purchase the property, after all bonds are paid, for the sum of $1,000. This constitutes a grant or donation by Missoula County to the corporation and is unconstitutional under the provisions of Article XIII, Sec. 1 of the Constitution of Montana.
(6) The issuance of bonds to acquire an existing project or to construct an addition to an existing project is contrary to the provisions of Article XIII, Sec. 3 of the Constitution of Montana.
Plaintiff further contends that the actions of the Board of County Commissioners of Missoula County are contrary to the force and effect of the statutes of the state of Montana in that:
(7) The sale contemplated under the lease agreement does not provide for sale at public auction and is therefore contrary to the porvisions of section 16-1009, R.C.M. 1947.
(8) The project encompassed in the agreement between Missoula County and Hoerner Waldorf requiring purchase of property of the county in a sum in excess of $2,500 without public bid is contrary to the provisions of section 16-1803, R.C.M.1947.
(9) The issuance of revenue bonds pursuant to the provisions of the Industrial Development Projects Act and the leasing of facilities to private industry is not a public purpose and therefore exceeds the powers of the counties of the state of Montana and the powers of the Board of County Commissioners.
(10) Under the Constitution and statutes of the state of Montana, a county may only exercise its powers within its own boundaries. Therefore section 11-4102, R.C.M.1947, which provides that a project may be partially within and partially without the boundary of a county, is an attempt to create additional powers not contemplated in the Constitution and statutes of the state of Montana.
(11) The lease agreement creates a term of lease which may exceed ten years and is therefore contrary to the terms and provisions of section 16-1030, R.C.M.1947.
Plaintiff further contends:
(12) In the event the Industrial Development Projects Act is declared to be constitutional, the acts of the Board of County Commissioners of Missoula County are illegal in that the project to be financed consists of air and water pollution control devices and such projects are not within the purview and intent of the legislature as set forth in the definition of 'project' by section 11-4101, R.C.M.1947.
The foregoing issues numbered 1 through 5, and 9, presented in appellant's brief, concern constitutionality of the Industrial Development Projects Act. The other issues raise questions as to the applicability of various statutes limiting the way in which county property and contracts may be dealt with.
First, as to constitutionality, Article XIII, Sec. 5 of the Constitution of Montana provides:
Issues 2 and 3, as to whether a 'debt' or 'liability' prohibited by Article XIII, Sec. 5 of the Constitution of Montana will be created by this plan, will be considered first.
Appellant states correctly that there is no plan for submitting this bond issue to the voters, and that the county debt limit would be exceeded by the addition of a fourteen million dollar bonded debt to its present total. Therefore, if the bonds now to be issued are an 'indebtedness or liability' as those terms are used in Article XIII, Sec. 5, the entire program is prohibited by the Constitution. However, this basic premise for appellant's contention is not correct, as can readily be shown by our own precedents.
There is a long history in Montana of the financing of various projects by revenue bonds as distinguished from general obligation bonds payable out of ad valorem property tax receipts. These have uniformly been held not to create a debt or liability within the meaning of Article XIII, Sec. 5 of our Constitution.
This is true as to dormitory revenue bonds (Barbour v. State Board of Education, 92 Mont. 321, 13 P.2d 225); student union building bonds (State ex rel. Veeder v. State Board of Education, 97 Mont. 121, 33 P.2d 516); water conservation board bonds (State ex rel. Normile v. Cooney, 100 Mont. 391, 47 P.2d 637); housing authority bonds (Kraus v. Riley, 107 Mont. 116, 80 P.2d 864); and veterans bonus bonds (Cottingham v. State Bd. of Exam., 134 Mont. 1, 328 P.2d 907), just to give a few illustrations. The common quality of all these projects is that in each there is explicit provision that the public body issuing the bonds does not obligate its taxing power to pay them. The same exact provision is written into the law and the bonds involved in this case, so that the same decision must necessarily be made in this case.
The dormitory bonds case is analogous in its essential respects. The statute there involved (Chap. 94, Laws of 1929) read in part:
* * *'
Referring to Article XIII of the Montana State Constitution the Court held in Barbour v. State Board of Education, 92 Mont. 321, 13 P.2d 225:
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