Hansen v. Kootenai County Bd. of County Com'rs, 10458

• Decision Date: 23 June 1970
• Docket Number: No. 10458,10458
• Parties: , 47 A.L.R.3d 1 Joseph G. HANSEN, on behalf of himself and all other taxpayers of the County of Kootenai, State of Idaho, Plaintiffs-Respondents, v. KOOTENAI COUNTY BOARD OF COUNTY COMMISSIONERS, acting by and through Henry J. Meyer, Ralph W. Cope, and Don Adams, and the Coeur d'Alene Turf Club, Inc., an Idaho corporation, and Donald MacDonald, Lloyd Shelhamer, Jr., Ruland J. Gill and Kenneth Wiegele, its officers. Defendants-Appellants.
• Court: Idaho Supreme Court

Page 42

471 P.2d 42

93 Idaho 655, 47 A.L.R.3d 1

Joseph G. HANSEN, on behalf of himself and all other taxpayers of the County of Kootenai, State of Idaho, Plaintiffs-Respondents, v. KOOTENAI COUNTY BOARD OF COUNTY COMMISSIONERS, acting by and through Henry J. Meyer, Ralph W. Cope, and Don Adams, and the Coeur d'Alene Turf Club, Inc., an Idaho corporation, and Donald MacDonald, Lloyd Shelhamer, Jr., Ruland J. Gill and Kenneth Wiegele, its officers. Defendants-Appellants.

No. 10458.

Supreme Court of Idaho.

June 23, 1970.

Rehearing Denied July 16, 1970.

E. L. Miller and James W. Ingalls, Coeur d'Alene, for appellants Coeur d'Alene Turf Club, Inc., and its officers.

J. Ray Cox and Frank Powell, Coeur d'Alene, for respondents.

McFADDEN, Chief Justice.

This appeal is from the judgment of the district court determining that a lease of July 188 1968 is void. The lease involved was executed by the appellant board of county commissioners of Kootenai County and by appellant Coeur d'Alene Turf Club, Inc. Prior to the execution of this lease, another lease had been executed by the same parties, and in previous proceedings in this action the district court held the first lease to be null and void. This court has also previously considered a subsidiary issue in this litigation. See Coeur d'Alene Turf Club, Inc. v. Cogswell, 93 Idaho. 324, 461 P.2d 107 (1969).

Kootenai County for a number of years prior to this litigation has owned certain real property north of Coeur d'Alene adjacent to and east of Highway No. 95. This property generally is referred to as to Kootenai County Fairgrounds. In 1964 subsequent to enactment of the Idaho Horse Racing Act, Ch. 25 Title 54 I.C., the county commissioners, in order to provide for horse racing, arranged for construction of a race track and certain barns on this property. The county also extended the north end of a grandstand already on the site and did other work, expending about $32,000 from the county fair building fund for these improvements.

In June 1966 the county then leased the race track, the barns and the grandstand to the North Idaho Racing Association for the purpose of conducting pari-mutuel horseracing on certain specified days. The relationship between this group and the county was apparently unsatisfactory and the parties terminated the agreement with the association still owing about $1,200 to the county.

In 1967 the appellant Coeur d'Alene Turf Club (hereinafter referred to as either the appellant or the Turf Club) was incorporated, and on March 29, 1967 it entered into a written five year lease with Kootenai County, leasing that portion of the fairgrounds property which included the racretrack, grandstand, certain barns, parking area, and related grounds necessary for ingress and gress. The Turf Club agreed to pay the $1,200 which was still owing the cunty from the prior lease and also agreed to pay as rent one per cent of the gross amount handled on all wagering up to a maximum rental of $20,000 per year. The lease also provided that the county would give the Turf Club credit against its rental payments for any permanent improvements made to the property by the Turf Club up to a maximum of $100,000.

During 1967, the county expended money from the fair building fund ¹ for payment of insurance premiums for insurance coverage on all buildings on the fairgrounds property, including the buildings leased to the Turf Club, and extended a water line into the barn area leased to the Turf Club. Other than these expenditures, all money spent on the county fairgrounds was spent on areas not leased to the Truf Club.

During 1967 the Turf Club made extensive improvements to the premises leased to them. The record shows that the Turf Club expended about $137,000 on the improvements. The county had an appraisement made of the improvements, and the appraisement indicated the value of these improvements to be $109,782, which was the valuation placed on the improvements by the district court in its findings of fact. During 1967 the Turf Club also paid for various operating expenses of the racetrack, including lights and water, and also carried liability in insurance on the operation and property.

In making the improvements under the terms of the lease from the county, the Turf Club has an agreement with a local contractor, but it was not put out or public bid. The record is devoid of any evidence that the work was done by a licensed public works contractor. The trial court found that the entire construction was contracted and paid for by the Turf Club. On August 7, 1967, respondent Joseph G. Hansen, a citizen of Idaho and a taxpayer of Kootenai County, in his own behalf and on behalf of all other taxpayers of Kootenai County, instituted an action in the district court challenging the legality of the 1967 lease between Kootenai County and the Turf Club. Following motions by each party for summary judgment, the district court in July 1968 granted summary judgment to respondent Hansen, ruling that the lease was in violation of Idaho Const. Art. 8 § 4 and Art. 12 § 4, and was thus null and void. No appeal was taken from this judgment.

On July 17, 1968, following the district court's ruling, the board of county commissioners adopted the following resolution:

'BE IT HEREBY RESOLVED by the Board of Commissioners of Kootenai County, Idaho, in regular session, that the property known as the Kootenai County fair grounds, located on U. S. Highway #95, consisting of approximately 100 acres, more or less, and situate in Section 36, Township 51 North, Range 4 W.B.M., Kootenai County, Idaho, be, and the said property is hereby declared not necessary for public use or needed by the public excepting for, and exclusive of, one (1) month each calendar year, to-wit: September 1st through September 30th, during which the Kootenai County fair is prepared for, conducted for approximately three (3) days, and disbanded, and during which all activities in conjunction with, and necessary to the operation and success of, the Kootenai County fair shall be conducted by the County of Kootenai through its duly elected, qualified and acting Board of Commissioners, with the cooperation and assistance of the Kootenai County Fair Board.'

The next day the county and Turf Club entered into a new lease agreement covering the same property. ² The term of the lease was from July 11, 1968 through August 30, 1971. It provided that the lessee (Turf Club) should have possesson of the property for the purpose of conducting racing and pari-mutuel operations. The county reserved the right to permit a veterans organization to conduct all parking facilities. It provided that the lessee was to have possession of the barns from May 1 through August 30 of each year. The county also reserved the right to allow other groups to use the premises so long as the use did not interfere with the lessee's use. The lessee agreed to maintain the property and make repairs, and the lease also specified that no modification or change in the facility could be made without written approval by the county engineer; that all additions and improvements which become part of the real property revert to the county on termination of the lease; and that if the county sustained additional expense of insurance, the lessee was to pay such additional expense. The lease also provided

'Nothing herein shall be interpreted or construed to place any financial burden or liability on the Lessor due to use thereof by the Lessee.'

Insofar as consideration for the lease is concerned, it provided:

'WHEREAS, the Lessee has, prior to the date hereof, made valuable improvements to the said property in an agreed value of $109,782.00, which improvements have been approved by the County Engineer and has paid and discharged the obligation of the North Idaho Racing Association to the Lessor in the amount of $1,200.00, and said sum has been accepted as payment in advance of all rental due or to become due under this lease and that said improvements do and have substantially improved the said property and directly benefitted (sic) the Lessor, * * *.'

During 1968 the county did not expend public money to maintain or improve the leased property, other than to pay the premiums on fire insurance on the building and to do certain grading and other road work on access roads to the entire property.

By a supplemental complaint filed in the same action, the respondent again challenged the legality of the second lease. An answer was filed and a trial of the issues was held before the court. In its memorandum decision (treated as findings of fact and conclusions of law under I.R.C.P. 52(a)) and judgment, the trial court held the second lease unconstitutional as a violation of Idaho Const. Art. 8 § 4 and Art. 12 § 4. The Turf Club and Kootenai County each separately appealed from the judgment holding the lease to be null and void.

Before discussing the principal issue of this appeal, i.e. whether this lease is violative of the constitutional provisions, a preliminary issue concerning the statutory authority of the board of county commissioners to enter such a lease should be disposed of.

Appellants contend that I.C. § 31-836, which provides in part,

'Except as otherwise provided by law, the board of county commissioners may lease any property belonging to the county for a term not exceeding five (5) years at such rental as may be determined upon by the unanimous vote of such board * * *.'

is a grant of legislative authority to the board to execute a lease such as is before this court. On the other hand the respondent urges that I.C. § 31-822, which provides in part,

'To contract to purchase a site, grounds or parks on which to hold public fairs or exhibitions, to care for and maintain the same, regulate the use thereof and, in their discretion, to let, demise or lease the same to the State of Idaho or the department of agriculture for such public fair or exhibition...