Utah Power & Light Co. v. Ogden City

• Citation: 95 Utah 161,79 P.2d 61
• Decision Date: 16 May 1938
• Docket Number: 5868
• Parties: UTAH POWER & LIGHT CO. v. OGDEN CITY et al. (GENERAL CONTRACTORS ASS'N OF UTAH, Intervener)
• Court: Supreme Court of Utah

79 P.2d 61

95 Utah 161

UTAH POWER & LIGHT CO. v. OGDEN CITY et al. (GENERAL CONTRACTORS ASS'N OF UTAH, Intervener)

No. 5868

Supreme Court of Utah

May 16, 1938

Original proceeding in prohibition and certiorari by the Utah Power & Light Company against Ogden City and others, to review action taken and prohibit further action by defendants pertaining to a contract for the construction of an electric light and power plant and distributing system in Ogden, Utah wherein the General Contractors Association of Utah intervened as a party plaintiff.

Petitions of plaintiff and intervener dismissed, and alternative writ of prohibition recalled.

George R. Corey, Calvin Behle, and Shirley P. Jones, all of Salt Lake City, and Devine, Howell & Stine, of Ogden, for plaintiff.

George S. Barker, of Ogden, Dey, Hoppaugh, Mark & Johnson, of Salt Lake City, and R. E. More and H. D. Roberts, both of Denver for defendants.

Badger, Rich & Rich, of Salt Lake City, for plaintiff in intervention.

HANSON Justice. WOLFE, Justice, concurring. LARSON, Justice, FOLLAND, Chief Justice, concurring in part and dissenting in part. MOFFAT, Justice, dissenting.

OPINION

HANSON, Justice.

This is an original action in prohibition and certiorari to review action taken and prohibit further action by defendants pertaining to a contract with one A. C. Todd for the construction of an electric light and power plant and distributing system in Ogden, Utah. The defendant Peery is mayor of defendant City; Peery, Saunders, and O'Connor are the city commissioners; and Ballantyne is city recorder of the city.

The admitted facts are that on August 26, 1936, defendants city commissioners (except O'Connor) adopted City Ordinance No. 47, authorizing the contract complained of, and pursuant thereto executed said contract with Todd on behalf of the city. By the contract Todd agreed to construct and deliver to defendant city a complete municipal light and power plant and distributing system in consideration of $ 2,600,000 in special revenue bonds of the city, payable out of the net earnings of the proposed plant. A copy of the contract and ordinance are attached to the petition as exhibits and are admitted by the answer. It is charged that the contract and ordinance are illegal and void for reasons later to be stated herein.

The petition was filed in this court, and an alternative writ issued on September 25, 1936, prohibiting further action in the matters complained of until the further orders of the court, and requiring defendants to show cause, etc., and to certify up to this court a record of proceedings already taken.

On November 12, 1936, the General Contractors Association of Utah, a corporation, on leave granted, filed its petition in intervention in which it, by reference, adopted and repeated the averments of plaintiff's petition, added other allegations, and prayed the same relief as that prayed by the plaintiff. Defendants answered both petitions, defendant O'Connor answering separately agreeing with plaintiff and disapproving the action taken by his associate city commissioners.

On February 16, 1937, after briefs were filed and while the action was awaiting a hearing in this court, plaintiff filed in this court its supplemental petition alleging that the defendants (except O'Connor) did on February 11, 1937, in disregard of the court's writ of prohibition, pass a resolution and attempt to enter into a purported supplemental agreement with said A. C. Todd based upon the prior agreement of August 26, 1936, for the construction of said light and power plant and system and the issuance of bonds in payment therefor, and also did on said date pass and adopt its Ordinance No. 49, amending its said prior Ordinance No. 47 of August 26, 1937, approving and authorizing said supplemental agreement. Copies attached as exhibits.

It is alleged that the amendatory proceedings cover the same subject matter, and the identical light and power plant and system covered by the original proceedings complained of, are open to the same objections, and by reference the same averments are made and others are added thereto. It is further alleged and shown that a referendum petition signed by the requisite number of voters of defendant city had been filed whereby the original Ordinance No. 47 had been referred to a vote of the electorate prior to the issuance and service of the writ of prohibition suspending all further proceedings. It is claimed that thereby and by the said writ the defendants were deprived of power to proceed further, by amendments or otherwise. It is also charged that the amendatory proceedings constitute a contempt of this court. The prayer is, inter alia, that the defendants (except O'Connor) be not permitted to appear or defend until they have purged their contempt by rescinding the supplemental contract and repealing the amending Ordinance No. 49.

The court is of opinion that no contempt was committed or attempted by the defendants city commissioners in this respect. Their answer and the amendatory contract and ordinance purport to show that the purpose was, while not conceding plaintiff's contentions regarding the original contract and ordinance, to obviate some of the objections thereto in matters of detail, clarify others, and to reduce to as narrow a scope as possible the questions remaining for decision. The situation now is the same in substance as it was before the amendatory action was taken, namely, a contract and ordinance authorizing acquisition of a municipal electric light and power plant with no further step taken in prosecution of the enterprise. Defendants disclaim any intention of proceeding further.

While not all of the objections to the original contract and ordinance were met by the supplementary ones, yet substantial changes and additions thereto were made. It cannot be said that the two were identical and the latter without substance, hence contemptuous. The power of the city to contract and to adopt ordinances was not exhausted by the first. Its effort to obviate objections made and to narrow the grounds of controversy, without any intention to circumvent the process and orders of this court by proceeding further, is unobjectionable. The filing of the referendum petition against the Ordinance No. 47 without further action thereon or the holding of an election did not nullify it, but only suspended its enforcement until voted on. Neither did the writ of prohibition and certiorari nullify the ordinance and contract or either of them. It did not prohibit a new contract or ordinance remedying defects or objections made to the suspended contract and ordinance, if practicable, as was the effort here, without any intention of proceeding further until this court's final decision. Our decision in Keigley v. Bench, 90 Utah 569, 63 P.2d 262, is closely in point. We there held that the action of the city commission in repealing an ordinance while a referendum petition against it was being tendered for filing and should have been filed, was effective and rendered the whole question moot. The following cases from other states are also closely similar in facts and to the point; we approve of and adopt the rules of law laid down therein: Ginsberg v. Kentucky Utilities Co., 260 Ky. 60, 83 S.W.2d 497; Ex parte Stratham, 45 Cal.App. 436, 187 P. 986; In re Megnella, 133 Minn. 98, 157 N.W. 991; McBride v. Kerby, 32 Ariz. 515, 260 P. 435.

The answer to the supplementary petition was properly filed, and we proceed now to the merits.

It is conceded that the proposed $ 2,600,000 bond issue for which provision is made in the contract and ordinance is in excess of the defendant city's revenue for the current year, and that the question of issuance of the bonds had not been submitted to a vote of the qualified taxpaying electors of the city. It is also admitted that the amount of the bonds, added to that of existing valid outstanding bonds of the city, will exceed the limit of indebtedness permitted to the city by the provisions of sections 3 and 4 of article 14 of the Constitution of the State of Utah. It is, however, further conceded and the contract shows upon its face that:

"It is mutually agreed and understood that all obligations herein contained on the part of the City are limited solely to the funds to be received from the contractor, or from revenues of the system to be acquired hereunder, and such obligations are not chargeable against the general funds of the City, or funds derived from taxes levied therein." (Article VI.)

"The light and power revenue bonds issued under this contract shall be payable solely out of the net profits derived from the operation of said system, and not otherwise. * * *" (Amended specification No. 7.)

"It is understood and agreed that said light and power revenue bonds are not to be construed as a lien or mortgage against the general funds or any other fund of the City raised by taxation, or a mortgage against any real or other property of the City, and that full title to the power plant, distribution system, and street lighting system passes to the City immediately upon acceptance of the same by the City from the contractor upon completion of the contract, and free and clear of all encumbrances except any lien created on the net revenues thereof by the issuance of said revenue bonds." (Amended specification No. 7.)

"It is further understood and agreed that none of the obligations of the City contained in the bonds shall require, or shall be construed as requiring the City in the performance thereof to expend any of its general funds, or funds derived from taxation, or from any source other than the funds derived by the City from the contractor, or from the ownership and operation of the plant and...