Title: Lakeside Village Improvement Dist. v. Jefferson County

State: kansas

Issuer: Kansas Supreme Court

Document:

237 Kan. 106 (1985)
697 P.2d 1286
LAKESIDE VILLAGE IMPROVEMENT DISTRICT, JEFFERSON COUNTY, KANSAS, Appellant,
v.
JEFFERSON COUNTY, KANSAS, Appellees.
No. 56,928

Supreme Court of Kansas.
Opinion filed April 5, 1985.
Fred W. Rausch, Jr., of Topeka, argued the cause and was on the brief for appellant.
James D. Waugh, of Cosgrove, Webb & Oman, of Topeka, argued the cause, and J. Craig Anderson, of the same firm, and John K. Bork, county attorney, were with him on the brief for appellee.
The opinion of the court was delivered by
*107 McFARLAND, J.:
This is a declaratory judgment action seeking determination of whether plaintiff Lakeside Village Improvement District, Jefferson County, Kansas, or defendant Jefferson County, Kansas, is responsible for payment of certain bonds issued by the Improvement District. The district court held all the bonds were valid obligations of the District and none were valid obligations of Jefferson County. Lakeside Village Improvement District appeals therefrom.
The case was tried upon stipulated facts; said stipulation is reproduced in pertinent part as follows:
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The bonds enumerated in paragraph four of the stipulation (bearing 1975 and 1976 dates) were issued by Lakeside Village Improvement District under the authority of K.S.A. 19-2770 (Weeks) as it existed from March 18, 1974, to July 1, 1976. This 1974 version of K.S.A. 19-2770 provides:
The bonds enumerated in paragraph seven of the stipulation (bearing 1978 and 1980 dates) were issued by Lakeside Village Improvement District under the authority of K.S.A. 19-2770 as amended in 1976 (our present statute). K.S.A. 19-2770 provides:
The trial court, in its memorandum opinion, held:
"FINDINGS OF FACT
"CONCLUSIONS OF LAW
We turn now to the issues raised by Lakeside Village Improvement District in its appeal from the judgment of the trial court. It should be noted that Lakeside Village Improvement District does not claim error in any of the trial court's findings of fact  the issues are wholly concerned with the trial court's conclusions of law.
Eleven series of bonds are involved. Eight of the bond issues were issued pursuant to an earlier version of K.S.A. 19-2770 and the balance of the bond issues were issued pursuant to the statute in its present form. Different questions on appeal arise as to bonds issued under the differing versions of the statute. We shall first consider the questions relating to the bonds issued under K.S.A. 19-2770 in the form in effect from March 18, 1974, to July 1, 1976. Although the memorandum decision of the trial court (previously set forth) notes the absence of certain data in these bonds, a sample bond from one of the issues is reprinted at the conclusion of this opinion to assist in visualizing exactly what is contained in the bonds.
Lakeside Village Improvement District issued the bonds, promised to pay, pledged the district's full faith, credit and resources in payment thereof, and Lakeside Village Improvement District officials executed the bonds. The bonds are a contract between Lakeside Village Improvement District and the bond purchasers. By contrast, Jefferson County did not issue the bonds, made no promise to pay, did not pledge the full faith, credit and resources of the county and the bonds were not signed by county officials. Jefferson County entered into no contract with bond purchasers. One theory on which Lakeside Village *113 Improvement District seeks to impose liability on the county for payment of the bonds is that the inclusion of the phrase found in the second full paragraph of the bonds, "[a]nd this is a General Obligation of Jefferson County," results, per se, in the bonds having been purchased in reliance on these bonds being Jefferson County general obligation bonds. The bonds speak for themselves and clearly show they are Lakeside Village Improvement District bonds. This point is without merit.
Next, the improvement district argues K.S.A. 19-2770, as it existed at the time of the eight bond issues, makes these issues Jefferson County general obligation bonds. The trial court held the statute to be an unconstitutional delegation of authority. That is, the legislature improperly delegated authority to an improvement district to obligate the county, a larger governmental entity. For convenience, K.S.A. 19-2770 in the applicable form is repeated:
Did the legislature intend to grant such authority? We believe not. The result of the granting of unbridled authority to municipalities to obligate their respective counties would be total chaos. The ability of counties to make improvements, borrow money and, indeed, even to function, would be seriously impaired. A statute should never be given a construction that leads to uncertainty, injustice or confusion, if it is possible to construe it otherwise. Jackson v. City of Kansas City, 235 Kan. 278, 680 P.2d 877 (1984).
When reviewing the constitutionality of a statute this court must presume the statute is constitutional; all doubts must be *114 resolved in favor of the statute's validity; and before a statute may be stricken down, it must be clearly shown that it violates the Constitution. It is the court's duty to uphold the statute under challenge, if possible, rather than defeat it, and if there is any reasonable way to construe the statute as constitutionally valid, that should be done. Farmers Co-op v. Kansas Bd. of Tax Appeals, 236 Kan. 632, 694 P.2d 462 (1985).
The issuance of bonds by a governmental entity is a complex and highly technical procedure. See K.S.A. 10-101 et seq. County bonds must be signed by the chairperson of the board of county commissioners and attested by the clerk under the seal of the county. K.S.A. 1984 Supp. 10-105. It is unreasonable to assume the legislature intended that an improvement district could obligate the county without any acceptance by or even knowledge of the obligations by the county.
It is significant that this version of K.S.A. 19-2770 was only in effect two years. Effective July 1, 1976, the legislature amended the statute by: (1) eliminating the language allegedly authorizing an improvement district, in its own discretion, to issue general obligation bonds of the county; and (2) adding a procedure whereby an improvement district could make application to the board of county commissioners for the issuance of general obligation bonds of the county. Such bonds, if approved by the county, would be issued by the county.
It is a fundamental rule of statutory construction, to which all others are subordinate, that the purpose or intent of the legislature governs when that intent can be ascertained from the statute, even though words, phrases or clauses at some place in the statute must be omitted or inserted. School District v. Board of County Commissioners, 201 Kan. 434, 441 P.2d 875 (1968).
We believe the proper construction of K.S.A. 19-2770 in the form in effect from March 18, 1974, to July 1, 1976, is that the emphasized portion of the following clause "authorize the issuance of general obligation bonds of the county" was not intended as a grant of authority to improvement districts to obligate the counties on the improvement district bonds and is, for all practical purposes, meaningless surplusage.
The trial court held that the eight bond series issued by the Improvement District in 1975 and 1976 were valid obligations of the district and not county obligations. We agree with this result. *115 However, the trial court based its decision, at least in part, upon its holding that K.S.A. 19-2770 in the form in effect between March 18, 1974, and July 1, 1976, was unconstitutional. The trial court's determination of unconstitutionality was based upon the provision in the statute which we have now construed as mere surplusage. Therefore, the portion of the trial court's decision relative to unconstitutionality is disapproved.
The three bond series issued after July 1, 1976 could, by the provisions of the version of K.S.A. 19-2770 then (and now) in effect, be general obligation bonds of Jefferson County only upon application to, approval of, and issuance by Jefferson County. No such application was made or approval obtained, and the bonds were not issued by the county. Clearly the district court did not err in considering these three bond issues were valid obligations of Lakeside Village Improvement District and not obligations of Jefferson County.
The judgment of the district court is affirmed as modified.
*116