Marsing v. Gem Irrigation District

• Decision Date: 07 September 1935
• Docket Number: 6268
• Citation: 56 Idaho 29,48 P.2d 1099
• Parties: EARL Q. MARSING, Appellant, v. GEM IRRIGATION DISTRICT, a Public Corporation, and I. H. LINEBERGER, E. B. SNELL, ELGY ANDRUS, E. N. FULWYLER and OSCAR FIFER, as the Board of Directors of Said GEM IRRIGATION DISTRICT, Respondents
• Court: Idaho Supreme Court

48 P.2d 1099

56 Idaho 29

EARL Q. MARSING, Appellant, v. GEM IRRIGATION DISTRICT, a Public Corporation, and I. H. LINEBERGER, E. B. SNELL, ELGY ANDRUS, E. N. FULWYLER and OSCAR FIFER, as the Board of Directors of Said GEM IRRIGATION DISTRICT, Respondents

No. 6268

Supreme Court of Idaho

September 7, 1935

MUNICIPAL CORPORATIONS-IRRIGATION DISTRICTS-REFUNDING BONDS-ISSUANCE-EXTENSION OF DUE DATE-CONSTITUTIONAL LAW.

1. Extending due date of refunding bonds issued by irrigation district to forty years without vote of two-thirds of qualified electors of the district held not invalid as violative of constitutional requirement that indebtedness of any subdivision of state must be retired within twenty years of its creation (Sess. Laws 1935, chap. 39, amending I. C A., sec. 42-610; Const., art. 8, sec. 3).

2. Where original indebtedness has been approved by vote of the people, issuance of refunding bonds need not be submitted to such vote.

3. Provisions of Constitution prohibiting the incurring of indebtedness exceeding current year's revenue unless by vote of people, and requiring establishment of sinking fund for payment of principal and interest of such debt within twenty years, held mandatory (Const., art. 8, sec. 3).

APPEAL from the District Court of the Third Judicial District, for Owyhee County. Hon. Charles E. Winstead, Judge.

Action to restrain the issuance of refunding bonds. Judgment for defendants. Affirmed.

Judgment affirmed. Costs to respondent.

Laurence N. Smith, for Appellant.

A bond issue of a "subdivision of the state" must mature within twenty years after incurring the debt for which the bonds were issued. (Const., art. 8, sec. 3.)

An irrigation district is a quasi-municipal or public corporation. (Nampa v. Nampa etc. Irr. Dist., 19 Idaho 779, 115 P. 979; Pioneer Irr. Dist. v. Walker, 20 Idaho 605, 119 P. 304.)

Section 3, article 8 of the Constitution was intended to place all kinds of political subdivisions on a "pay-as-you-go" basis except by vote of the electors. (Dexter Horton Trust etc. Bank v. Clearwater County, 235 F. 743, 752; Ada County v. Bullen Bridge Co., 5 Idaho 79, 47 P. 818, 36 L. R. A. 367.)

Maurice H. Greene and R. B. Scatterday, for Respondents.

Assessments levied by a special improvement district according to benefits are not taxes imposed for governmental purposes, do not constitute a municipal indebtedness and are not subject to the limitations imposed by section 3, article 8 of the Constitution of the state of Idaho. (McGilvery v. City of Lewiston, 13 Idaho 338, 90 P. 348; Byrns v. City of Moscow, 21 Idaho 398, 121 P. 1034; Elliott v McCrea, 23 Idaho 524, 130 P. 785.)

An irrigation district is not another "subdivision of the state" within the meaning of section 3, article 8 of the Constitution. (Thaanum v. Bynum Irr. Dist., 72 Mont. 221, 232 P. 528; Day v. Buckeye Water Conservation etc Dist., 28 Ariz. 466, 237 P. 636.)

An irrigation district is not another "municipal corporation" within constitutional provisions placing limitations on the exercise of the power of taxation. ( Lewiston Orchards Irr. Dist. v. Gilmore, 53 Idaho 377, 23 P.2d 720; Board of Directors of Middle Kittitas Irr. Dist. v. Peterson, 4 Wash. 147, 29 P. 995.)

Where there is no increase in indebtedness under a refunding bond issue, section 3, article 8 of the Constitution has no application. (Veatch v. City of Moscow, 18 Idaho 313, 109 P. 722, 21 Ann. Cas. 1332; Sobern v. Cobb, 41 Idaho 386, 238 P. 1023.)

Richards & Haga, Amici Curiae.

Section 3 of article 8 of the Idaho Constitution places municipal corporations of all kinds on a cash basis and requires that current expenditures come within the current income. It was taken from section 18 of article 11 of the Constitution of California. This provision was construed by the California courts before it was adopted in Idaho.

"In other words, each year's income and revenue must pay each year's indebtedness and liability, and that no indebtedness or liability incurred in any one year shall be paid out of the income or revenue of any future year. .... We have neither the right nor the disposition, by judicial interpretation, to take away the wholesome restriction upon municipalities thus imposed by the constitution." ( San Francisco Gas Co. v. Brickwedel, 62 Cal. 641; Shaw v. Statler, 74 Cal. 258, 15 P. 833.)

"Any statute which purports to authorize a municipal corporation to contract debts in any manner or for any purpose whatever in excess of the constitutional limit is to that extent unconstitutional and void." (Bannock County v. C. Bunting & Co., 4 Idaho 156, 37 P. 277; Doon Dist. Township v. Cummins, 142 U.S. 366, 12 S.Ct. 220, 35 L.Ed. 1044; Theiss v. Hunter, 4 Idaho 788, 793, 45 P. 2.)

GIVENS, C. J. Budge, Morgan, Holden, JJ. , and AILSHIE, J., concurring.

OPINION

GIVENS, C. J.

Appellant, as an elector and taxpayer within and of respondent Irrigation District, instituted this action to restrain the District and its Board of Directors from issuing its refunding bonds under the authority of chapter 39, Session Laws 1935, page 67, amending I. C. A., sec. 42-610, contending that such bonds had not been authorized by a vote of two-thirds of the qualified electors of the District, and that the statute permitting their due date to be extended for forty years violated sec. 3, article 8 of the Idaho Constitution.

No question is raised as to the legality or constitutionality of the original bonds sought to be refunded herein, or that the indebtedness because not having been retired within twenty years is now illegal or void, but impliedly concedes it may be renewed for twenty years.

The sole point now urged is that an irrigation district is a "subdivision of the state" within the meaning of sec. 3, article 8, and repayment of the refunded indebtedness must therefore be limited to twenty years. It has heretofore been held by a long line of authorities that the issuance of refunding bonds is not the "incurring" of any indebtedness or liability exceeding the current year's revenue within the purview of sec. 3, article 8 of the Constitution. (Butler v. City of Lewiston, 11 Idaho 393, 83 P. 234; Veatch v. City of Moscow, 18 Idaho 313, 109 P. 722, 21 Ann. Cas. 1332; Hickey v. City of Nampa, 22 Idaho 41, 124 P. 280; Sebern v. Cobb, 41 Idaho 386, 238 P. 1023; Lloyd Corporation v. Bannock County, 53 Idaho 478, 25 P.2d 217. See, also, Hotchkiss v. Marion, 12 Mont. 218, 29 P. 821; McQuillin, Municipal Corporations, 2d ed., sec. 2385, and Dillon, Municipal Corporations, 5th ed., sec. 939.)

Appellant argues that the twenty-year provision must apply to refunding bonds the same as to the original indebtedness because otherwise the twenty-year provision is evaded. It is not evaded; it simply does not apply because the Constitution does not so specify. The premise or condition precedent which brings into effect the necessity of an election and provision for retirement within twenty years is that the indebtedness shall exceed in the year incurred the income and revenue provided for that year. As already indicated the above authorities have held that a refunding bond does not bring about such a condition, and therefore since the election requirement does not obtain, neither does the twenty-year requirement as no distinction is made between the two. It is not every indebtedness that must be retired within twenty years, only that which increases the debt of the organizations mentioned, and refunding bonds do not increase the debt but merely continue the obligations theretofore issued.

Conceding, therefore, without deciding that an irrigation district is a "subdivision of the state," the twenty-year limitation does not apply to refunding bonds, which appellant expressly alleges the obligations herein sought to be restrained are, and with which alone chapter 39, supra, deals.

Judgment affirmed.

Costs to respondent.

Budge, Morgan and Holden, JJ., concur.

CONCUR BY: AILSHIE

AILSHIE J., Concurring.--

This proceeding calls in question the constitutionality of that portion of sec. 42-610, I. C. A., as amended by chap. 39 of the 1935 Sess. Laws, wherein it is provided that refunding bonds may be issued maturing in a period not exceeding forty years from date of issue. Sec. 3, art. 8 of the Constitution, provides as follows:

"No county, city, town, township, board of education, or school district, or other subdivision of the state, shall incur any indebtedness, or liability, in any manner, or for any purpose, exceeding in that year, the income and revenue provided for it for such year, without the assent of two-thirds of the qualified electors thereof voting at an election to be held for that purpose, nor unless, before or at the time of incurring such indebtedness, provision shall be made for the collection of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the principal thereof, within twenty years from the time of contracting the same. Any indebtedness or liability incurred contrary to this provision shall be void: provided, that this section shall not be construed to apply to the ordinary and necessary expenses authorized by the general laws of the state."

The rule is well settled (see cases cited by the Chief Justice) that the issuance of refunding bonds need not be submitted to a vote of the people. The reason for this is obvious: the original indebtedness having already been voted upon by the taxpayers and by them sanctioned and approved, it is not necessary--and indeed would not be proper--after the indebtedness has actually been incurred and the bonds sold, to again submit the same question to a popular vote.

It is the opinion of the writer that the...