Village of Deming v. Hosdreg Co., 6023

• Decision Date: 20 November 1956
• Docket Number: No. 6023,6023
• Citation: 303 P.2d 920,62 N.M. 18,1956 NMSC 111
• Parties: The VILLAGE OF DEMING, New Mexico, a municipal corporation, and George A. Dowdle, Mayor of the Village of Deming, New Mexico, and William Burt, Ed Babers, George Whittenberg and Ernest Flores, constituting the Board of Trustees of the Village of Deming, New Mexico, in their official capacities respectively as such, Plaintiffs-Appellees, v. The HOSDREG COMPANY, Inc., a New Mexico Corporation, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 920

303 P.2d 920

62 N.M. 18

The VILLAGE OF DEMING, New Mexico, a municipal corporation and George A. Dowdle, Mayor of the Village of Deming, New Mexico, and William Burt, Ed Babers, George Whittenberg and Ernest Flores, constituting the Board of Trustees of the Village of Deming, New Mexico, in their official capacities respectively as such, Plaintiffs-Appellees, v. The HOSDREG COMPANY, Inc., a New Mexico Corporation Defendant-Appellant.

No. 6023.

Supreme Court of New Mexico.

Nov. 20, 1956.

Garland & Sanders, Las Cruces, for appellant.

Seth & Montgomery, William R. Federici, Santa Fe, Bert E. Newland, Deming, for appellees.

Joe W. Wood, Farmington, James V. Noble, Las Vegas, T. E. Lusk, Carlsbad, W. F. Kitts, Albuquerque, Brenton & Boyce, Carrizozo, F. S. Merriau, Raton, amici curiae.

PER CURIAM.

Upon consideration of this case on rehearing the Court has decided to withdraw the opinion on file and substitute the following therefor:

SADLER, Justice.

We are called upon to decide in reviewing the judgment entered in an action for declaratory judgment whether L.1955, c. 234, and Ordinance No. 251 of the Village of Deming, Luna County, New Mexico, enacted pursuant thereto, are valid in view of numerous constitutional objections raised against both the statute and the ordinance. The district court upheld both of them and rendered a declaratory judgment accordingly. We are asked to overturn that judgment.

We can best indicate the nature and purpose of the act by quoting section 2 thereof wherein the legislature itself makes a declaration on the subject. It reads:

'Section 2. Legislative Intent.--It is the intent of the legislature by the passage of this act to authorize municipalities to acquire, own, lease or sell projects for the purpose of promoting industry and trade by inducing manufacturing, industrial and commercial enterprises to locate or expand in this state, promoting the use of the agricultural products and natural resources of this state, and promoting a sound and proper balance in this state between agriculture, commerce and industry. It is intended that each project be self-liquidating. It is not intended hereby to authorize any municipality itself to operate any manufacturing, industrial or commercial enterprise. This act shall be liberally construed in conformity with the said intent.'

The enabling act under challenge in the proceeding out of which arises the judgment before us for review was enacted by the 1955 legislature as chapter 234 of the session laws of that year. It consists of some fourteen sections and its purpose is well stated in the copy of section 2 thereof, as next above set out. A statement of the important provisions of the act is indispensable to a clear understanding of the constitutional objections urged against it.

Keeping in mind, then, the end sought to be served by passage of the act as indicated in section 2 thereof, the legislature conferred on municipalities of the state as defined in section 1 of the act the power: (a) to acquire by construction, purchase, gift or lease, one or more projects, located within New Mexico to be located within or without the municipality, or partially within or without the same, but not to be located more than 15 miles outside the corporate limits of the municipalities; (b) to sell or lease or otherwise dispose of any or all of its projects upon such terms and conditions as the governing body of the municipality should deem advisable and as are not in conflict with the provisions of the act; (c) to issue revenue bonds for the purpose of acquiring, by construction and purchase, or either, any project, and to secure the payment of such bonds, all as in the act provided. It was declared, however, that no municipality should have the power to operate any project as a business or in any manner except as lessor thereof.

The act empowers the issuance of bonds by the municipality to finance projects but specifically and expressly declares any such bonds shall not be the general obligation of such municipality within the meaning of Article IX, sections 12 and 13 of the Constitution of the State of New Mexico. The bonds are to be payable solely out of the revenues derived from the project to finance which the bonds are issued. They are never to constitute an indebtedness of the municipality within the meaning of any state constitutional provision or statutory limitation and shall never constitute nor give rise to a pecuniary liability of the municipality or a charge against its general credit or taxing powers, a fact to be stated plainly in the face of each said bond.

The bonds so issued may be executed and delivered at any time, may be in such form and denominations and of such tenor, and may be in registered or bearer form either as to principal or interest or both, may be payable in such installments and at such time or times not exceeding thirty years from date and bear interest at such rate or rates and contain such provisions not inconsistent with the act, all as provided in the ordinance and proceedings of the governing body whereunder the bonds shall be authorized for issuance.

The bonds so issued under authority of the act may be sold at public or private sale in such manner and from time to time as may be determined by the governing body to be most advantageous, and the municipality is authorized to pay all expenses, attorneys, engineering and architects fees, premiums and commissions deemed necessary or advantageous by the governing body in connection with the sale and issuance thereof. All bonds issued under authority of the act and all interest coupons applicable thereto shall be construed to be negotiable.

The act declares the principal and interest on any bonds so issued shall be secured by a pledge of the revenues out of which the bonds are made payable; may be secured by a mortgage covering all, or any part, of the project from which the revenues so pledged are derived and may be secured by a pledge of the lease of such project.

It is further provided that the ordinance and proceedings under which any such bonds are issued, or any such mortgage, may contain any agreement and provisions customarily contained in instruments securing bonds; provided, however, that in making any such agreements or provisions the municipality shall not have power to obligate itself except with respect to the project and the application of the revenues therefrom but shall not have the power to incur a pecuniary liability or a charge upon its general credit or against its taxing powers.

The act goes on to provide the proceedings authorizing any bonds thereunder and any mortgage securing the same may provide the procedure and remedies in the event of default in payment of the principal or interest on such bonds or in the performance of any agreement. No breach of any agreement so made shall impose any pecuniary liability upon a municipality or any charge upon its general credit or against its taxing powers.

We next find provision for regulations respecting the leasing of projects. Before any project can be leased, the governing body must determine and find: the amount necessary in each year to pay the principal of and interest on bonds proposed to be issued to finance such project; the amount necessary to be paid each year into any reserve funds which the governing body may deem it advisable to establish in connection with the retirement of the bonds and the maintenance of the project; and unless the terms under which the project is to be leased provide for maintenance of the project and the carrying of proper insurance with respect thereto, the estimated cost of maintaining the project in good repair and keeping it properly insured.

The determinations and findings of the governing body so required to be made must be set forth in the proceeding under which the proposed bonds are to be issued; and before the issuance of any such bonds, the municipality shall lease or sell the project to a lessee or purchaser under an agreement conditioned upon the completion of the project and providing for the payment to the municipality of such rentals or payments as, upon the basis of such determinations and findings, will be sufficient (a) to pay the principal of and interest on the bonds issued to finance the project, (b) to build up and maintain any reserve deemed by the governing body to be advisable in connection therewith, and (c) to pay the costs of maintaining the project in good repair and keeping it properly insured, unless the agreement or lease obligates the lessee to pay for the maintenance and insurance of the project.

Provision is to be found in the act for the refunding from time to time by the municipality through the issuance of its refunding bonds in such amounts as the governing body may deem necessary but not exceeding any amount sufficient to refund the principal of the bonds so to be refunded, together with any unpaid interest thereon and any premiums and commissions necessary to be paid therewith. Other provisions in connection with the refunding not material to the present controversy are set out in the act. It is important to state, however, a proviso near the end of the section dealing with refunding the bonds which reiterates a declaration running through the entire act, namely, that the refunding bonds, as in the case of original bonds, shall be payable solely from the revenues out of which the bonds to be refunded were payable, and shall be subject to the provisions contained in section 4 of the act touching the issuance of bonds to be issued for financing projects and may be secured in accordance with the provisions of section 5 thereof relating to the security for such bonds.

The proceeds from the sale of any bonds issued under the act shall be applied only for the purpose for which the bonds were issued; provided, however, that any accrued interest and premiums received in any such sale shall be applied...