Title: Patterson v. City of Bismarck

State: north-dakota

Issuer: North Dakota Supreme Court

Document:

188 N.W.2d 734 (1971) Rose PATTERSON et al., Plaintiffs and Respondents, v. The CITY OF BISMARCK et al., Defendants and Appellants. Civ. No. 8715. Supreme Court of North Dakota. June 23, 1971. *735 Rausch & Chapman, Bismarck, for plaintiffs and respondents. John A. Zuger, City Atty., City of Bismarck, and Arthur B. Whitney, Minneapolis, Minn., for defendants and appellants. ADAM GEFREH, District Judge. This appeal is from a judgment rendered in favor of the plaintiffs in an action in the District Court of Burleigh County to enjoin the collection of certain special assessments levied against the plaintiffs' property in the City of Bismarck. The defendants have requested a trial de novo in the Supreme Court. The project for which the assessments were levied is a parking facility to provide off-street parking facilities for the principal business district of Bismarck, which facility was constructed under the powers granted under Chapter 40-60 of the North Dakota Century Code. The action to enjoin the collection of the special assessments alleged several grounds as the basis for declaring the special assessments against the properties of the plaintiffs invalid. However, the trial court at the outset of the trial indicated to the parties that it was concerned with the interpretation of Section 40-60-02 subsection 5 (f) of the North Dakota Century Code and inquired whether the parties would stipulate that the City of Bismarck issued bonds for the total amount of the cost of the parking facility and that the City of Bismarck leased out all of the parking facility. No reference was made in the stipulation as to the type of bonds that were issued. This stipulation was agreed to by the parties whereupon the court proceeded to a discussion of Section 40-60-02 subsection 5(f) of the North Dakota Century Code indicating to the parties that under this subsection the city, having leased the entire facility, is precluded from levying special assessments. The defendants thereafter offered as exhibits in evidence all the official proceedings had by the city in connection with this parking facility which the court received. The plaintiffs did not introduce any evidence, but indicated to the court that they had testimony to offer in support of their allegations in the complaint, but would not offer any if the court was prepared to rule on the one issue that the court raised and on that basis rested. The parties thereupon rested and the court issued its decision. The first issue before this court is whether or not the trial court's decision should be sustained. The City of Bismarck determined to use the special assessment route as the primary source of financing a combined parking and commercial facility with the provision that the special assessments would be reduced to the extent that rentals would be derived from both the parking and commercial facilities. The plaintiffs in their complaint have challenged this combination method of construction and financing on several grounds, but the trial court did not rule on any of those issues raised. The court, after the parties had stipulated that the City of Bismarck had leased out all of these facilities and had issued bonds for the total cost of construction, concluded *736 that Section 40-60-02 5(f) North Dakota Century Code, which provides that leases of the facilities must be adequate to pay for the principal and interest for all bonds becoming due during the terms of the leases, precludes a municipality from levying any special assessments. The State Legislature in 1967 enacted Chapter 40-60 entitled "Promotion and Acquisition of Municipal Parking Facilities." The purpose of this legislation is clearly stated in Section 40-60-01 North Dakota Century Code, which reads in part: Section 40-60-02 North Dakota Century Code grants the power to municipalities to implement the legislative policy declared in Section 40-60-01, and reads as follows: Prior to 1967 a municipality had authority to construct and operate parking facilities under Chapters 21-03 (general obligation bonds) 40-22 (special assessments), and 40-35 (revenue bonds) North Dakota Century Code. A municipality also had the power to construct industrial or commercial structures under Chapter 40-57 North Dakota Century Code. Chapter 40-60 for the first time granted power to a municipality to construct a combination parking and commercial structure and finance such structure by any of the methods that heretofore would have been available to finance a parking facility or commercial enterprise facility, or by using a combination of these financing methods. The chapter is silent as to the procedure that a municipality must follow in the event it should choose to employ a combination method of financing. The City of Bismarck determined to proceed to construct a combined parking and commercial facility and arrange for the financing under Chapter 40-22 North Dakota Century Code which is the special assessment procedure, and as the record now stands apparently complied with all the legal requirements under that chapter up to the confirmation of the special assessments levied against the property within the special improvement district. The resolution of necessity adopted by the City of Bismarck set forth the proposed method of assessment of the cost of the improvement and subsequent reduction of assessments by the amount of net revenues *738 derived from rentals from said facility. The resolution in part reads as follows: This court in City of Fargo v. Annexation Review Commission, 148 N.W.2d 338, at page 352 (N.D.1967) stated: Likewise, in Beck v. Workmen's Compensation Bureau, 141 N.W.2d 784, on page 787 (N.D.1966), we stated: The declared policy in enacting Chapter 40-60 was to facilitate the acquisition and operation of parking facilities in the business district of a municipality. The legislature apparently had recognized that financing such a facility had been the obstacle that had deterred municipalities, such as Bismarck, from constructing adequate downtown parking facilities. In order to *739 facilitate the financing of such facilities, Chapter 40-60 was enacted which granted the power to municipalities to utilize any method or combination of methods to finance the construction. Chapter 40-60 does not specify how this combination of methods may be accomplished. This is discretionary with the municipality. Subsection 5 of 40-60-02 grants the power to lease and then under subdivisions (a) through (f) specifies the terms and conditions to which the leases must conform. The parties at the suggestion of the trial court stipulated that the City of Bismarck issued "bonds" for the total cost of construction of the facility, and the trial court in its decision also refers to the word "bonds" without specifying or describing the type of bonds that were issued. The record clearly shows that the bonds issued are "Refunding Improvement Bonds" authorized under Chapter 40-27 North Dakota Century Code. The refunding bonds are issued in exchange for the special improvement warrants, and are not bonds payable from either general taxes or revenue from rentals or service charges, but from the fund created for the payment of the special improvement warrants. The trial court without reference to any other sections of Chapter 40-60 construed subsection 5(f) of Section 40-60-02 North Dakota Century Code to mean that once a municipality has determined to lease a parking facility constructed under this chapter it is precluded from levying special assessments against any property on the apparent theory that the income from the rentals shall become the sole source of payment of the refunding bonds. Standing alone, subsection 5(f) of Section 40-60-02 might be given the construction that the trial court placed upon it. This subsection, however, is ambiguous. It is also open to the construction that this subsection only refers to the terms that a lease must contain in order to be a valid lease and in no way prohibits or restricts any levies or assessments against any properties that may be specially benefited by the facility. We can not agree with the trial court's construction of subsection 5(f) of Section 40-60-02 North Dakota Century Code. We do not find any language in this section from which we could infer that a municipality would be prohibited from making special assessments simply because it has issued bonds for the total cost of construction and has leased out the entire facility. If we would accept this interpretation, then a municipality having determined to finance the facility through general obligation bonds would also be prohibited from levying any taxes against any property from which to pay general obligation bonds if it should at any time decide to lease the parking facility. Such an interpretation would practically nullify the purpose of the entire chapter. In Chapter 40-35 and Chapter 40-57 North Dakota Century Code dealing with revenue bonds and municipal industrial revenue bonds we find language to the effect that such bonds are payable solely out of revenue derived from the rentals or service charges of the facility constructed. We do not find such language in Chapter 40-60 other than the reference that financing may be accomplished under Chapters 21-03, 40-22 to 40-27, 40-35, 40-40, 40-41 and 40-57 of the North Dakota Century Code. Had the City of Bismarck chosen to finance the parking facility under either Chapter 40-35 or 40-57 it would have been prohibited from making any levies for the payment of any of those bonds by the terms specifically stated in those chapters and not by virtue of any language found in subsection 5(f) of Section 40-60-02. The City of Bismarck did not issue bonds under either Chapter 40-35 or 40-57, but issued temporary special improvement warrants under Chapter 40-24 which were subsequently exchanged for definitive improvement warrants which in turn were refunded by special improvement bonds authorized under Chapter 40-27. *740 Reading all of the sections of Chapter 40-60 together as one unit, we conclude that subsection 5(f) does not pertain to the power of financing, but merely provides the formula under which leases for these facilities may be offered by the city, and therefore does not prohibit a municipality from levying taxes or assessing special assessments as a primary source of revenue for the payment of any warrants or bonds which a municipality may have issued in connection with the construction of such a facility. We, therefore, conclude that the trial court has erroneously interpreted subsection 5(f) of Section 40-60-02, and its decision must be reversed. The appellants have asked for a trial de novo on all the issues. However, since the trial court's decision is based solely on the interpretation of subsection 5(f) of Section 40-60-02 North Dakota Century Code, and the court having indicated to the parties that it would only consider the evidence introduced as it relates to this one issue, it is quite apparent to this court from the record made that the plaintiffs chose not to offer any testimony in support of its other allegations in order not to prolong the trial. Where it appears from the record that material facts are absent from the record, a new trial may be granted by the Supreme Court under Section 28-27-32 North Dakota Century Code. Te-Soro v. LaDue, 133 N.W.2d 566, (N.D. 1965). In order to accomplish justice in this case the court deems it necessary to grant a new trial. For the reasons stated in this opinion, the judgment of the district court is reversed and the case remanded for a new trial on all the issues. TEIGEN, KNUDSON, PAULSON and ERICKSTAD, JJ., concur. STRUTZ, C. J., did not sit; Adam Gefreh, Judge of the Third Judicial District, sitting in his stead.