Scheub v. Town of Schererville

• Decision Date: 27 July 1993
• Docket Number: No. 56A05-9206-CV-196,56A05-9206-CV-196
• Citation: 617 N.E.2d 585
• Parties: Gerry SCHEUB, Appellant-Plaintiff, v. TOWN OF SCHERERVILLE, Clarence Kuhn, Clerk Treasurer, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 585

617 N.E.2d 585

Gerry SCHEUB, Appellant-Plaintiff, v. TOWN OF SCHERERVILLE, Clarence Kuhn, Clerk Treasurer Appellees-Defendants.

No. 56A05-9206-CV-196.

Court of Appeals of Indiana Fifth District.

July 27, 1993.

Opinion on Denial of Rehearing Sept. 15, 1993.

Richard F. James, James, James & Manning P.C., Dyer, for appellant-plaintiff.

Edward P. Grimmer, Crown Point, for appellees-defendants.

BARTEAU, Judge.

In this appeal we are called upon to examine whether the Town of Schererville ("Town") was required to follow all of the procedures for notice and hearings as set out in Ind.Code 36-1-10, which governs the leasing and lease-purchasing of structures by political subdivisions and agencies of political subdivisions, before entering into a three-year lease, which contained no option to purchase, with Northern Indiana Public Service Co. ("Nipsco"). We hold that the Town was required to follow these procedures, and, because the Town failed to do so, the lease with Nipsco is void. Further, we deny the Town of Schererville's request to assess "sanctions" against Scheub.

FACTS

The facts are not in dispute. On January 17, 1991, Town held a special meeting "to discuss addition [sic] space for the police department." The minutes of this meeting reveal that the council discussed the problems the police department was having and discussed a new Town Complex that had not been completed. The council then adopted Resolution # 91-2, which authorized John Fladeland, council president, to negotiate and endorse a lease for the rental of office space for the Town of Schererville. Council attorney Edward Grimmer then discussed a lease that had been prepared by Nipsco for the lease of office space. The lease is for a term of three years, with a cost of about $45,000 a year. In Grimmer's opinion, the lease was fair to the Town. At the meeting, a citizen attending the meeting, Gerry Scheub, appellant, requested a "point of order" before the council voted on the resolution; however, he was not given an opportunity to On July 23, 1991, Scheub filed a complaint in the Lake Superior Court alleging, among other things, that the lease with Nipsco violated I.C. 36-1-10 because the council had not followed the procedures set out in that chapter for the leasing of structures. After a change of venue to Newton County Superior Court, Town's motion for summary judgment was granted. Scheub's Motion to Correct Error was subsequently denied and this appeal ensued.

speak because the floor had not yet been opened for comment. Mr. Scheub also objected to the Nipsco lease by a letter dated January 27, 1991, to the town council.

IND. CODE 36-1-10

The first issue we must address is whether the Town was required to follow the provisions in I.C. 36-1-10 before it entered into a three-year lease that contained no option to purchase the property. Before we address the parties' contentions, we will set out an overview of the chapter in general terms. Indiana Code 36-1-10-1 sets out the applicability of the chapter as follows:

(a) Except as provided in subsection (b), this chapter applies to:

(1) political subdivisions; and

(2) agencies of political subdivisions;

that determine to acquire structures, transportation projects, or systems by lease or lease-purchase.

(b) This chapter does not apply to:

1) the lease of library buildings under IC 20-14-10, unless the library board of the public library adopts a resolution to proceed under this chapter instead of IC 20-14-10;

2) the lease of school buildings under IC 21-5;

3) county hospitals organized or operating under IC 16-12.1;

4) municipal hospitals organized or operating under IC 16-22.2-5; or

5) boards of aviation commissioners established under IC 8-22-2.

In general, I.C. 36-1-10 provides the procedure to be followed by the political subdivision before entering into a lease for a "structure" (a building used in connection with the political subdivision or a parking lot), a "system" (computer, communications or mobile or remote equipment that is linked by a computer), or a "transportation project." I.C. 36-1-10-2.

After the lessor and the political subdivision, referred to in the chapter as the "leasing agent", have agreed upon the terms of the lease but before the lease is executed, a public hearing must be held to discuss the necessity of the lease as well as its terms. I.C. 36-1-10-13(a). Further, the lease drawings, plans, specifications, and estimates for the structure must be open for public inspection for at least ten (10) days before the hearing. I.C. 36-1-10-13(b). "All persons are entitled to be heard at the hearing as to whether execution of the lease is necessary and whether the rental is fair and reasonable for the proposed structure or system." I.C. 36-1-10-13(d). After the hearing, the subdivision may not lease the structure unless 1) it receives a petition signed by fifty (50) or more taxpayers of the subdivision and 2) the fiscal body of the subdivision determines that the lease is needed. I.C. 36-1-10-7. Finally, the chapter provides a means by which taxpayers may object to the execution of the lease once it has been executed. I.C. 36-1-10-14.

Scheub argues that the lease with Nipsco is void because the Town failed to follow any of the above procedures. Town, on the other hand, argues that it was not required to follow all of the procedures, citing I.C. 36-1-10-4.1 and 5. Indiana Code 36-1-10-4.1 provides:

(a) A leasing agent who wants to lease a structure or transportation project must comply with this chapter. A leasing agent who wants to lease a system must comply with this chapter or IC 36-1-9.

(b) A leasing agent who enters into a lease under this section without an option to purchase must follow the procedure prescribed by section 5 [I.C. 36-1-10-5] of this chapter.

(Emphasis supplied). I.C. 36-1-10-5 provides:

Notwithstanding sections 6, 12, 16, and 17 of this chapter, the following procedure shall be followed whenever a lease does not contain an option to purchase:

(1) The term of the lease may not be longer than ten (10) years; however, a (2) The lease must provide that the lease is subject to annual appropriation by the appropriate fiscal body.

lease may be for a longer term if the lease is approved by the state board of tax commissioners.

(3) The leasing agent must have a copy of the lease filed and kept in a place available for public inspection.

A leasing agent may lease part of a structure.

When a statute is clear and unambiguous on its face, this court may not interpret the statute. Economy Oil Corp. v. Indiana Dep't of State Revenue (1975), 162 Ind.App. 658, 321 N.E.2d 215. Rather, we hold the statute to its clear and plain meaning. Wilson v. Elliott (1992), Ind.App., 589 N.E.2d 259. In addition, we must examine the Act as a whole and, if possible, give effect to every word and clause therein. Guinn v. Light (1990), Ind., 558 N.E.2d 821, 823. A statutory amendment changing a prior statute indicates a legislative intention that the meaning of the prior statute has been changed. Wright v. Fowler (1984), Ind.App., 459 N.E.2d 386.

We do not agree with the Town's reading of Section 4.1 and 5, quoted above. Section 4.1(b) does not, as Town argues, state that leases which do not contain options to purchase need only comply with Section 5. Further, section 5 does not eliminate the need for the Town to follow the procedural requirements of I.C. 36-1-10. This conclusion is reached by examining the prior version of I.C. 36-1-10-5 and comparing it to the current version as amended in 1985. Before the amendments, the first part of this section provided:

Notwithstanding sections 6, 7, 12, 13, 14, 15, 16, and 17 of this chapter, the following procedure shall be followed whenever the lease does not contain an option to purchase....

I.C. 36-1-10-5. Of particular significance here are sections 7, 13, 14, and 15. As already mentioned, I.C. 36-1-10-7 requires a petition signed by 50 or more taxpayers in favor of the lease before the lease may be executed. Sections 13, 14, and 15 deal with notice, opportunity for hearing, and the procedures for objecting to the lease. Thus, the prior version contained a special exception to the requirements for notice, hearing, etc., contained in the chapter so long as the lease did not contain an option to purchase.

This is in contrast to the current version of section 5, which begins as follows:

Notwithstanding sections 6, 12, 16, and 17 of this chapter, the following procedure shall be followed whenever a lease does not contain an option to purchase....

In the amended version of Section 5, the legislature did not include the sections, contained in the first version, that brought leases without options to purchase outside the procedural requirements of I.C. 36-1-10. Because these sections were excluded from the present version, we find the legislature intended to make leases without options to purchase subject to all of the procedural requirements of the chapter, with the exceptions of sections 6, 12, 16 and 17. ¹

The Town asserts that I.C. 36-1-10-4.1 and 5 were intended to provide a means by which a political subdivision may proceed with less significant leases in an expedited manner. While we agree that this seems to be the intent behind the original version of section 5, the legislature apparently "changed its mind" as evidenced by the amendments. We also note that even leases that do not contain options to purchase can be very significant in terms of cost to the taxpayer. Thus, it is logical that the municipality be required to...