Wicks v. Salt Lake City

• Decision Date: 14 June 1922
• Docket Number: 3808
• Citation: 208 P. 538,60 Utah 265
• Court: Utah Supreme Court
• Parties: WICKS v. SALT LAKE CITY et al

208 P. 538

60 Utah 265

WICKS v. SALT LAKE CITY et al

No. 3808

Supreme Court of Utah

June 14, 1922

Original proceedings by E. B. Wicks against Salt Lake City and others to prohibit such City from issuing certain special improvement bonds for a lighting district.

Temporary writ of prohibition QUASHED, and permanent writ DENIED.

C. W Boyd, of Salt Lake City, for plaintiff.

Wm. H Folland, City Atty., of Salt Lake City, for defendants.

THURMAN, J. CORFMAN, C. J., and WEBER, GIDEON, and FRICK, JJ., concur.

OPINION

THURMAN, J.

Plaintiff seeks by this proceeding to prohibit Salt Lake City and its officers from issuing certain special improvement bonds for lighting district No. 6, as contemplated in a certain resolution adopted by the board of commissioners of said city.

Lighting district No. 6 of Salt Lake City covers and includes all of the abutting property on both sides of State street between South Temple and Fourth South streets. The improvement contemplated within the district is the erecting, constructing, and installing of the necessary ornamental standards and luminous are lights for the purpose of lighting said street.

It is conceded by the plaintiff that the proceedings relating to said district and the contemplated improvement thereof prior to the adoption of the resolution authorizing the city auditor to issue and deliver the bonds in question were regular and according to law, but it is contended by plaintiff that the auditor is without power or authority to issue said bonds because of the following paragraph contained therein:

"A special improvement guarantee fund has been created by said city as provided in chaper 9, Laws of Utah 1921, and said city agrees that at all times during the life of this bond and until payment thereof in full said fund shall be at all times maintained. This bond is payable exclusively out of said special tax and the said special improvement guarantee fund, and neither said city nor any officer thereof is holden for the payment thereof otherwise."

Plaintiff is a resident of Salt Lake City and a property owner in District No. 6 and challenges the right of said city, and the auditor thereof, to issue said bonds incumbered with the paragraph heretofore quoted for the reason that it attempts to impose an obligation upon the city which is beyond its constitutional power to discharge.

Plaintiff concedes the right of the city to issue its negotiable coupon bonds for the purpose of raising money with which to make improvements by installing such lighting system, provided such money is raised exclusively from the levy and assessment of special taxes upon the property adjacent to or abutting upon the street benefited by such improvement. The objection, however, is that by the issuing of said bonds containing the objectionable paragraph referred to the city threatens to either levy a general tax for the payment of such bonds, if necessary, or to pay the same, and the interest thereon, from the general fund of the city.

The provision in the bond providing for a special improvement guaranty fund to which objection is made by plaintiff is expressly authorized by legislative enactment. See Session Laws 1921, c. 9. The act is deemed of sufficient importance to quote at length:

"Section 1. Any city or town which has issued, or may hereafter issue, any special improvement bonds or warrants, shall by appropriation from the general fund or by the levy of a tax of not to exceed one mill in any one year, or by the issuance of general obligation bonds, or by appropriation from such other sources as may be determined by the board of commissioners, or city council, or board of town trustees, as the case may be, create a fund for the purpose of guaranteeing, to the extent of such fund, the payment of bonds or warrants and interest thereon, issued against local improvement districts for the payment of local improvements therein. Such fund shall be designated as 'special improvement guaranty fund.'

"Sec. 2. All excess interest charges and penalties collected by the city or town for the benefit or credit of any special improvement fund and remaining on hand after all the bonds or warrants, together with interest thereon, drawn against said special improvement fund shall have been fully paid and canceled, shall be transferred by the treasurer to the said special improvement guaranty fund.

"Sec. 3. When any bond, warrant or coupon drawn against any special improvement fund is presented to the city or town for payment, and there is not sufficient amount in said special improvement fund against which it is drawn to pay the same, unless otherwise requested by the holder payment therefor shall be made by warrant drawn against the special improvement guaranty fund.

"Sec. 4. In the event that any property is sold to the city at tax sales or under foreclosure for delinquent special improvement taxes, said purchase shall be made by warrant drawn against the special improvement guaranty fund. All proceeds from the redemption or sale of property sold under foreclosure or of certificates of tax sale held by the city or town shall be paid into the special improvement guaranty fund.

"Sec. 5. Whenever there is not a sufficient amount of cash in said special improvement fund at any time to make any and all purchases of property bid in by the city or town at sales of property for delinquent special improvement taxes, the board of commissioners, or city council, or board of town trustees, as the case may be, may replenish said special improvement guaranty fund by transfer or appropriation from the general fund of the city or town, or other available sources as may be determined by said board of city commissioners, or city council, or board of town trustees. Warrants drawing interest at a rate of not to exceed eight per cent. (8%) per annum may be issued against said fund to meet any financial liabilities accruing against it; but at the time of making its next annual tax levy, the city or town shall provide for the levy of a sum sufficient with the other resources of the fund to pay warrants so issued and outstanding, the tax for this purpose not to exceed one mill in any one year.

"Sec. 6. Whenever the city or town shall have paid under its guaranty any sum on account of principal or interest on the bonds or warrants of any district, it shall be subrogated to the rights of the holders of such bonds or warrants or interest coupons so paid, and such bonds or warrants or coupons, and the proceeds thereof, shall become a part of the guaranty fund."

It is contended by plaintiff that the city has no power to create a special guaranty fund for the payment of said bonds or the interest thereon or to levy a general tax in any amount for said purpose or to pay the same from the general fund. In short, it is contended that the city has no right to pledge the taxing power of the city for said purpose without submitting the question to the qualified electors of the city for their determination.

The validity of sections 1 and 5 of the act just quoted are challenged as being in conflict with article 1, § 7, of the state Constitution, which provides:

"No person shall be deprived of life, liberty or property without due process of law."

The gist of plaintiff's contention is illustrated by the following excerpt from the brief of his able counsel:

"We think it cannot be successfully maintained that the establishment of the lighting district is in reality for a 'public purpose.' Practically the only persons materially benefited are those owning property adjacent to or abutting upon the street along which the lighting district extends, and hence a general levy of taxes throughout the city for the purpose of establishing and maintaining such lighting district would violate the provisions of the Constitution above quoted. Why should A., whose property lies wholly without the lighting district, be compelled to pay...