Frank v. City of Cody

• Decision Date: 09 December 1977
• Docket Number: No. 4833,4833
• Citation: 572 P.2d 1106
• Parties: George FRANK, as Mayor of the City of Cody, Wyoming, Appellant (Defendant below), v. CITY OF CODY, Wyoming, Appellee (Plaintiff below).
• Court: Wyoming Supreme Court

Page 1106

572 P.2d 1106

George FRANK, as Mayor of the City of Cody, Wyoming, Appellant (Defendant below), v. CITY OF CODY, Wyoming, Appellee (Plaintiff below).

No. 4833.

Supreme Court of Wyoming.

Dec. 9, 1977.

Robert D. Olson, Goppert, Fitzstephens, Day & Olson, Cody, signed the brief and waived oral argument on behalf of appellant.

George A. Clarke, Lusk, Sp. Counsel to City of Cody, signed the brief and waived oral argument on behalf of appellee.

V. Frank Mendicino, Atty. Gen., Cheyenne, signed the brief by the Office of Atty. Gen., State of Wyoming, and waived oral argument.

Before GUTHRIE, C. J., and McCLINTOCK, RAPER, THOMAS and ROSE, JJ.

RAPER, Justice.

This is a case in which this court for the first time will consider an application of the Wyoming Joint Powers Act, §§ 9-18.13 to 9-18.20, W.S.1957, 1975 Cum.Supp., authorizing counties, municipal corporations, school districts, community college districts or special districts to jointly exercise a power to provide a facility or function held in common. The City of Cody, appellee-plaintiff, joined with the Towns of Fort Laramie, Guernsey, Lingle, Lusk, Pine Bluffs, Torrington ¹ and Wheatland to organize, by authority of the Joint Powers Act, a non-profit corporation, now known as the Wyoming Municipal Power Agency, which we shall refer to as the Agency, to provide electrical power and energy to their inhabitants. Each of those municipalities had been and is engaged in the activity of selling and distributing electricity to its citizens.

The claim is undisputed that the United States Bureau of Reclamation, their source of electrical power, has reached its capacity to furnish such energy beyond present allocations and other sources to meet future expanding needs had to be sought. The Agency entered into a participation contract with several other entities, ² to become an owner, as a tenant in common, with a 1% interest, in the Laramie River Electric Generation and Transmission System, which we shall refer to as the System, now under construction near Wheatland, Wyoming, to supply more electricity than presently available.

In order to finance participation, it is necessary that the Agency borrow money, through the issuance of tax-free revenue bonds, secured by a pledge of payments to be received by the Agency from the participating municipalities under a power contract between the municipalities and the Agency. The Agency undertakes to furnish all electrical requirements of municipalities, at rates fixed by the power contract formula. Under that contract, the Agency will not only acquire the interest in the System but enter into a master contract with the Bureau of Reclamation for resale to the municipalities of electrical power and energy allocated to the municipalities.

Issuance of the tax-free revenue bonds is being stayed pending refusal of the mayor of the City of Cody, appellant-defendant, to sign on behalf of the city, the Wyoming Municipal Electric Joint Powers Board Agreement, which would activate and place the whole venture into effect. The city council of Cody has, by resolution and ordinance, regularly approved the transaction and directed the mayor to sign the agreement. The mayor bases his refusal upon assertions of unconstitutionality and illegality in several aspects. The city initiated an action seeking a declaratory judgment against the mayor for settlement of the several questions raised. The trial judge held in favor of the city on all issues, declaring the plan constitutional and legal in all particulars and adjudging the mayor obligated to sign the necessary contracts.

The mayor appeals ³ and raises the same questions presented to the district court:

Constitutional

1. Whether the trial court erred in finding the Agency and/or the Agency plan did not contemplate an unconstitutional delegation of powers.

2. Whether the trial court erred in finding the Participation Agreement did not require the Agency to enter into an unconstitutional loan of credit.

3. Whether the trial court erred in finding the Joint Powers Act did not encompass an unconstitutional statutory incorporation by reference.

4. Whether the trial court erred in finding the Cody Power Contract did not constitute an unconstitutional municipal debt or a revenue bond.

Statutory

5. Whether the trial court erred in finding there is sufficient legal authorization for the Agency to undertake its proposed transactions.

6. Whether the trial court erred in finding the Agency will not use the Laramie River Project for purposes other than those permitted by the Act.

7. Whether the trial court erred in finding the Power Contracts are not impermissible due to their requirements nature and/or their fixed rate formula.

8. Whether the trial court erred in finding the Agency's revenue bonds are not

illegal for failure to comply with the Political Subdivision Bond Election Law.

We will affirm the district court.

1. Is there an unconstitutional delegation of powers? Section 37, Article III, Wyoming Constitution, provides:

"The legislature shall not delegate to any special commissioner, private corporation or association, any power to make, supervise or interfere with any municipal improvements, moneys, property or effects, whether held in trust or otherwise, to levy taxes, or to perform any municipal functions whatever."

This question is in two parts: first, the relationship between the separate municipalities, including Cody, with the municipal power Agency they have created and, second, the relationship between the municipal power Agency and the System.

In Stewart v. City of Cheyenne, 1944, 60 Wyo. 497, 154 P.2d 355, it was pointed out at some length by this court that the purpose of § 37, Article III was to prevent the legislature, either directly or indirectly, from taking away municipal powers from municipal authorities and conferring them on some commission in no way connected with the regularly-constituted municipal authority, subject to the will of the municipal inhabitants and that there must be control by regularly-elected municipal officers in the creation of bonded indebtedness. Stewart goes on to say that administrative powers of a municipality may be delegated, as long as they are subject to direction by the governing body of the city.

The mayor asserts that the city would relinquish its control to determine what price Cody will have to charge its residents for electrical energy because under the power contract, the Agency would, for a period of 40 years, have entire control over its municipal electric supply and there would be no popular control over the Agency by the residents of the municipality nor would Cody have any control over the price charged for electricity obtained from the System by the Agency.

It should be pointed out that Cody would have representation on the joint powers board of the Agency in accordance with the provisions of § 9-18.17(a) ⁴ of the Joint Powers Act. In turn, the Agency has representatives on the Management, Engineering and Operating and Auditing Committees of the System.

As we see the function of the Agency, its role is to acquire electrical power for the member municipalities. Cody would now deal with respect to its source of supply with the Agency, rather than directly with the Bureau of Reclamation, with the Agency having the added responsibility of securing additional sources of electrical energy, at the moment acquiring an interest in the System for that purpose. The bargaining power of Cody would seem to be enhanced by joinder with others in a like position, none of whom had electric generating plants of their own. All participating municipalities buy electric power at wholesale and sell to their citizen consumers at retail.

In Uhls v. State of Wyoming ex rel. City of Cheyenne, Wyo.1967, 429 P.2d 74, ⁵ an evenly split-decision case coming out of this court, Justice McIntyre, speaking for only two members of the then four-justice court, summarized the rule, with respect to the delegation of power under the constitutional provision with which we are concerned:

"The constitutional prohibition against delegation of power is intended to protect against the exercise of the taxing power and other purely municipal functions by officials not subject to the people's control. (Citing cases.)

"Matters which are administrative only may be delegated without violating the constitutional prohibition against the legislature delegating to a special commissioner power to supervise or interfere with any municipal function. (Citing cases.)"

In Uhls, then, the opinion author concluded that when the details of a "proprietary" transaction only are involved, there is no unconstitutional delegation of powers because the constitutional provision relates only to "purely" municipal or governmental functions of a city. Because of affirmation of those principles by Powers v. City of Cheyenne, supra, footnote 5, we consider those concepts to be the latest expression of this court.

The reason in this case for drawing the narrow but important distinction between "municipal" and "proprietary" functions, lies in the fact that the operation we are considering is a proprietary function rather than governmental. This distinction is brought sharply into focus by Town of Pine Bluffs v. State Board of Equalization, 1958, 79 Wyo. 262, 333 P.2d 700, where it was held that a municipality, engaged in the business of selling electricity to its inhabitants, is not completely performing within a municipal or governmental sphere when it engages in an activity of a private or commercial nature as a source of profit. This court then held that towns, operating an electric utility, are not exempt from taxation by the State under § 12, Article XV, Wyoming Constitution. ⁶ It went on to announce that when a municipality engages in business, as an electric utility, it is acting in a private or proprietary capacity in competition with private enterprise and...