Title: SCHUMACHER v CITY OF BOZEMAN

State: montana

Issuer: Montana Supreme Court

Document:

No. 13672 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977 DOUGLAS L. SCHUIVIACHER, M.D., et al., Plaintiffs and Appellants, THE CITY OF BOZEMAN, et al., Defendants and Respondents. Appeal from: District Court of the Eighteenth Judicial District, Honorable peter:% Meloy, Judge presiding. Counsel of Record: For Appellants: McKinley Anderson argued, Bozeman, Montana Drysdale, McLean & Screnar, Bozeman, Montana James J. Screnar argued, Bozeman, Montana Bennett and Bennett, Bozeman, Montana Lyman Bennett I11 argued, Bozeman, Montana For Respondents: Berg, Angel, Andriolo & Morgan, Bozeman, Montana Ben E. Berg Jr. argued, Bozeman, Montana -- SPV - 13 a:-:? Filed: - I Submitted: October 4, 1977 Decided :Bm) Clerk M r . Justice Gene B. Daly delivered the Opinion of the Court. In the District Court, County of Gallatin, plaintiffs sought 1) a w r i t of prohibition t o restrain the City of Bozeman from any further action in Special Improvement District No. 565 to establish an off-street parking f a c i l i t y i n the downtown area of Bozeman; 2) an injunction enjdning the City from selling special improvement d i s t r i c t bonds or assessing property in Special Improvement District No. 565; and 3) a judgment declaring invalid the proceedings of the City of Bozeman in the creation of Special Improvement District No. 565. The proceedings undertaken by the City of Bozeman i n the creation of Special Improvement District No. 565 for the purpose of establishing off-street parking f a c i l i t i e s i n the downtown area may be chronologically summarieed: 1. On June 16, 1976, the City Commission by Resolution No. 1795 announced its intention to create Special Improvement District No. 565 for the purpose of establishing an off-street parking f a c i l i t y i n downtown Bozeman; designated the boundaries of the d i s t r i c t ; and, estimated the cost a t $750,000. 2. O n the same day, June 16, 1976, the City Commission also provisionally passed Ordinanee No. 962, setting forth a proposed formula for the assessment of property to finance the off-street parking facility. A t the time of the adoption of the ordinance, the City Commission designated July 7, 1976, as the t i m e for hearing protests against the proposed formula. 3. On July 30, 1976, the City Commission amended its original resolution of intention to create Special Improvement District No. 565 by Resolution No. 1802 and-designateed July 21, 1976, a s the time for hearing protests against the creation of Special Improvement District No. 565. Notices of the t i m e and place of hearing were published and mailed a s required by sections 11-2204 and 11-2205, R.C.M. 1947. 4. O n July 7 and again on July 21, 1976, the City Coannission held hearings on the proposed formula. They were attended by both proponents and opponents. A s a result of the hearings the formula was amended t o include the definition of "park" and a s amended was finally passed and adopted on July 21, 1976. 5. Thereafter, on July 28, 1976, Resolution No. 1808 creating Special Improvement District No. 565 was passed and adopted by the City Commission. 6. O n August 18, 1976, p l a i n t i f f s f i l e d t h e i r complaint and the court issued a temporary restraining order and a w r i t of prohibition, scheduling both for hearing on August 31, 1976. On the l a t t e r date hearing was held, evidence introduced and thereafter on September 27, 1976, the court made findings of fact and conclusions of law i n favor of defendants and judgment was entered on that day quashing the w r i t of prohibition, dissolving the injunction and dismissing the action. From that f i n a l judgment, p l a i n t i f f s appeal. Appellants pres'ent a number of issues for review by t h i s Court which will be treated i n order: F i r s t . Appellants allege the City did not have jurisdiction t o create Special Improvement District (SID) 565, because 30 days had not elapsed a f t e r the adoption of Ordinance No. 962 when the City passed Resolution No. 1808 creating SID 565. This 30 day requirement is found i n section 11-1106, R.C.M. 1947. - 3 - This section is not applicable because it does not apply t o special improvement d i s t r i c t s but only applies t o matters of general legislation~on which a l l electors whether taxpayers or not, may vote. Carlson v. City of Helena, 39 Mont. 82, 113, 102 P. 39 (1909). Second. Appellants allege Ordinance No. 962 adopting a formula for assessment of off-streeting parking improvements, violates both the due process and the equal protection clauses of the Uniked-States and the 1972 Montana Constitutions, because: (a) The notice of hearing was defective. (b) The formula is inequitable. (c) The city unlawfully delegated authority t o determine the formula for assessment. The formula had one very minor error which was corrected i n the course of the hearing by the addition to the ordinance formula of the l e t t e r "P=existing parking" when the ordinance was finally adopted. This did not make the notice of the hearing defective. A t the outset w e recognize it is fundamental t o assessments for special improvements that the assessment be in proportion to the benefits conferred hy the improvement. Smith v. City of Bozeman, 144 Mont. 528, 398 P.2d 462 (1965). The formula for assessment adopted by the City Commission includes a l l s i x factors required by section 11-2224(1)(d), R.C.M. 1947, but is divided basically into four components, being area, distance, demand and assessed value. To support their claim that the formula is discriminatory, appellants refer t o four separate property comparisons drawn from a computer calculation of 172 separately evaluated properties within the proposed SID 565. W e note here that the computer layouts are not assessments made or t o be made by the City of Bozeman under the adopted f o m l a , but rather are estimates of cost comparisons made in a study conducted by the Parking Commission of the City of Bozeman. Judicial review of benefits o r detriments to the property owners is premature u n t i l the actual assessments have been levied, and u n t i l then no constitutional question a s to the validity of the formula of assessment can be raised or con- sidered by the court. Murphy v. City of Bismarck, N.D. 1961, 109 N.W.2d 635. Appellants claim the assessment formula was conceived by an unlawful delegation of commission powers. The studies relating to a downtown parking f a c i l i t y were commenced by the Parking Commission of the City of Bozeman i n 1974. The original study was financed through the City by a $10,000 appropriation. The.Downtown Development Association continued the study and advanced an additional $10,000, From the joint efforts of these two entities, a formula was devised and estimates made a s to the approximate cost of the f a c i l i t y t o a l l properties i n the proposed district. A l l of this information was submitted to the City Commission jointly by the two organizations by a l e t t e r dated M a y 26, 1976. Thus, although the factual information for explaining the application of the formula was gathered by both the City Parking Commission and the Downtown Development Associa- tion, the formula for assessment did not become effective u n t i l a f t e r hearing by the City Commission and the final adoption by the City Commission. 2 McQuillin, Municipal Corporations, 3rd ed, 510.41, p. 856, summarizes the law on delegation: "* * * Thus, the council may create committees or other bodies t o investigate given methods, to procure in- formation, to make reports and recoamendations, the committee may be given authority t o employ private consultants, but the council alone must finally deter- mine every subject committed to its discretion and judgment. " And further i n 4 McQuillin, 3rd ed., Municipal Corporations, 513.51, p. 573, it is stated: "While it is true that the council may not delegate its power to a committee, when it r a t i - f i e s the act of the committee in due form it becomes the act of the council.'' Third. Appellants contend the determination by the City C o d s s i o n that single family residences and churches would not be specifically benefited by a downtown parking f a c i l i t y was arbitrarily a violation of the equal protection and due process clauses of the United States and Montana Constitutions. The record discloses no evidence was offered showing that churches and single family residences would be benefited by the off-street parking f a c i l i t y and therefore should be assessed. Jenner v. City Council of City of Covina, 164 C.A.2d 490, 331 P.2d 176;181 (1958), is almost identical on the facts and issues presented here. In Jenner the parking d i s t r i c t consisted of 161 parcels, two were churches and 72 were residential. Testimony before the assessing board and i n court indicated these properties would not be benefited. The t r i a l court found the omission of the residential property from the d i s t r i c t was not arbitrary, unreasonable or an abuse of discretion. On appeal, the 8uperior Court of Los Angeles County, held the evidence supported the findings that the d i s t r i c t was properly formed; that the assessments were i n keeping with the benefits; and the statute was not unconsti- tutional on the ground that it permitted docal authorities t o omit property from the d i s t r i c t . ,The District Court of Appeal of California affirmed saying: "Absent a showing of fraud or mistake, the deter- mination of the City Council that certain property would not be benefited by the creation of the parking d i s t r i c t is conclusive. * * * In Larsen v. City and County of San Francisco, 182 Cal. 1, a t page 14, 186 P. 757, a t page 763, i n an analogous situation, the court stated that 'under the principles established i n this s t a t e and elsewhere, t h i s f i n a l decision of the supervisors a s to the property benefited * * * is con- clusive, unless attacked on the ground of fraud or m i s - take.' A n examination of the record f a i l s to disclose any fraud, mistake or arbitrary action on the part of the City Council i n fixing the boundaries of the district." 331 P.2d 181. The clear rationale of 'these cases is that i f reasonable men might disagree as to whether single family residences and churches w i l l or w i l l not be specially benefited by an off-street parking f a c i l i t y , then i n the absence of a clear showing of fraud or mistake, the determination of the City Commission that such property w i l l not be specially benefited is conclusive. 14 McQuillin, Municipal Corporations, 3rd ed., 538.186. Fourth. Appellants contend an off-street parking f a c i l i t y i n downtown Bozeman is a general government benefit rather than a special benefit t o the properties within the special improvement d i s t r i c t . Appellants c i t e no cases supporting their contention. There is authority directly on point and specifically deciding that a downtown parking f a c i l i t y is a special benefit t o the property i n the vicinity of the facility. In Northern Pacific Railway Co. v. City of Grand Forks, N.D. 1955, 73 N.W.2d 348, 350, the North + Dakota Court answered the same contention: "The constitutional question is general in nature and resolves into the question of whether i n any circumstances the special assessment de- vice can be used to defray the cost of a public off street parking l o t without doing violence to the Constitution. A n affirmative answer t o this question depends upon whether property, i n the vicinity of the parking l o t , which has been constituted a special assessment d i s t r i c t , derives a special benefit from the improvement i n addi- tion to the general benefit in which the whole c i t y shares. " W e have no doubt but that property i n the vicinity of a parking l o t derives special benefit therefrom. Particularly is this true i n the case of a congested business d i s t r i c t which had its development before automobiles and trucks had become the great convenience and problem that they are today. In recent years there has been a trend toward a decentralization, evidenced by the removal of many businesses from congested areas t o outlying d i s t r i c t s where parking l o t s for customers were available. It i s generally acknowledged and logically so, that the provision of parking space _in the vicinity of a congested mercantile area, by making it conveniently accessible to trade, tends to reverse t h i s trend and thus stabilize business i n the area. This is a special benefit sufficient to justify special assessments .'I 73 N.W.2d 350. Fifth. Appellants contend the method of the measurement of distance i n the d i s t r i c t is i n error and cannot stand. This argument is apparently based on the idea that the formula f a i l s t o properly account for distance because it measures distance on a straight line rather than the actual walking distance. In I this respect the statute, section 1 - 2 2 1 , R.C.M. 1947, does not specify the means of measuring distance and therefore it would seem the City has the liberty of selecting the most common, uniform, standard and shortest distance between two points, i.e. the straight line, rather than the circuitous and meandering routes suggested by appellants. I f the City had selected appel- lants' method of measuring it woudd seem t o impose a more d i f f i - cult problem on the City Cornmission to apportion the assessment to attain equity of benefit. Sixth. Appellants question the statutory authority of the City to purchase an off-street parking facility. They rely on section 11-2201, R.C.M. 1947, to support their position. ~ e ' f i n d no support for that proposition when the section is read a s a whole with particular reference to the f i r s t paragraph which states i n part: "* * * the c i t y counsel of each municipality * * * is hereby invested with jurisdiction t o acquire private property for right of way * * * under the proceedings hereinafter described." (Emphasis added.) Subparagraph (4)(a) of section 11-2201 specifically authorizes formation of special improvement d i s t r i c t s for off-street parking f a c i l i t i e s . Finally, subparagraph (4) (e) of section 11-2201, states: "(e) A n improvement d i s t r i c t formed for the purposes - - of establishing a pedestrian mall or off-street parking may be financed i n accordance with the provisions of section 11-2214, R.C.M. 1947, and/or i n accordance with the methods of financing s e t forth for the construction of water or sewer systems a s s e t forth i n section 11-2218, R.C.M. 1947." (Emphasis added.) With no ambiguity the statute authorizes the acquisition of private property, and purchase is not excluded, for special improvement d i s t r i c t s for the purposes specifically authorized. Finally, financing is authorized by assessment or revenue bond sales. Seventh. The most serious matter we are asked to review concerns the voting participation on the special improvement d i s t r i c t i n question by Commissioner Taylor, who is alleged to have a financial interest in the d i s t r i c t parking. Prior to the creation of the SID, Commissioner Taylor purchased business property within the boundaries of the SID with intent t o remodel for office use. On April 20, 1976, Taylor applied for a building permit and was denied because he only provided for 51 off-street parking stalls instead of the 191 required by the area zoning. Taylor appealed to the Board of Adjustment and hearing was had and appeal denied on May 4, 1976. Taylor applied again after the resolution to form the SID was passed and upon which he voted. He was again denied because of the 51 off-street parking stalls and the present- requirement for 183 stalls. Taylor again appealed to the Board of Adjustment. We note here there is nothing in the record to indicate what transpired at the hearing on appeal before the Board of Adjust- ment. A variance was approved for 8 8 off-street parking stalls for Commissioner Taylor. The question is whether the voting participation of Commissioner Taylor, disqualified because of his interest, voids the entire proceedings even though his vote was not needed to constitute the required number to pass SID No. 565 and there were no dissents. Generally a city councilman may not vote on an issue in which he has a direct or indirect interest. Not every interest of a councilman is considered to disqualify him; each instance is necessarily a factual question. For example, it is generally held that the fact a councilman has an interest in property within a proposed special improvement district does not disqualify him from acting on the formation of the district. 4 McQuillin, Municipal Corporations, 3rd ed., 913.35a. The tests of disqualification are variously stated, in some instances by statute. In 4 McQuillin, Municipal Corporations, 3rd ed., $13.35, p . 529, it is stated that disqualification is warranted: "* * * whenever a public official, by reason of his personal interest in a matter, is placed in a situation of temptation to serve his own pur- poses, to the prejudice of those for whom the law authorizes him to act. I t Taylor would not be disqualified from voting on whether to create a special improvement district solely because he owned property within the district. However, here, Taylor had an appeal before the local Board of Adjustment requeeting a variance from the number of off-street parking stalls he would have to provide for his business property. The difference between the number of required stalls and the number he proposed in his building permit was substantial--- approximately 183 stalls required as opposed to 51 proposed. The resolutions creating the special improvement district to finance building additional off-street parking were passed in June and July, 1976. Whether these resolutions actually had any effect on the Board of Adjustment's August 4, 1976 decision to grant Taylor the variance is unknown. The variance, however, saved him substantial additional expenditure. As a city commissioner, Taylor is entrusted with certain duties and responsibilities to carry out the governing func- tions of the city. His position places him on a different level of review regarding his business transactions, than would be that of the ordinary citizen. All courts that have considered the issue are agreed if a disqualified commissioner's vote was necessary to constitute the number required for passage, such a vote renders the entire proceeding void. Not all jurisdictions, however, are agreed as to what effect a vote by a disqualified commissioner has on the proceedings where his vote is not necessary to pass the issue. Some jurisdictions hold that such a vote has no effect on the validity of the proceedings. Others hold that such a proceeding is - void, while still others hold that it is only voidable. 62 C . J . S . Municipal Corporations $402. Although we have not previously dealt with this question, the legislature has passed statutes governing city councilmen and connnissioners in an analogous situation. No city councilman nor commissioner may be interested, directly or indirectly, in any contract with the city. Sections 11-3127 and 11-3214, R . C . M . 1947. Section 11-3214 also provides the commission may declare void any contract in which a commissioner is or may be interested. New York, New Jersey and Iowa hold that a vote cast by a commission member who is disqualified renders the proceedinq either void or voidable, even though the disqualified membeh vote was not needed to pass the issue. Baker v . Marley, 8 N . Y . 2d 365, 208 N . Y . S . 2 d 449, 170 N . E . 2 d 900 (1960); Aldom v . Borough of Roseland, 42 N.J.Super. 495, 127 A . 2 d 190, 197 ( 1 9 5 6 ) ; Wilson v . Iowa City, Iowa 1969, 165 N . W . 2 d 813, 820. These decisions do not clearly distinguish between whether the action of the comission is void or merely voidable. Often such a decision is governed by statute. See: Section 11-3214, R . C . M . 1947. Numerous reasons are given for declaring such action void or voidable. Pyatt v . Mayor & Council of Borough of Dunellen, 9 N . J . 548, 89 A . 2 d 1, 5 (1952), states: ' ' P u b l i c policy forbids the sustaining of munici- pal action founded upon the vote of a member of the municipal governing body in any matter before it which directly or immediately af f ects him individually ." Other courts hold that when a municipal body passes on resolutions and ordinances, it acts in a quasi-judicial manner. If any of the council members who participated as a quasi-judge were at the time disqualified by reason of private interest at variance with the impartial performance of his public duty, such proceedings are void. Aldom v . Borough of Roseland, supra; Pyatt v . Mayor & Council of Borough of Dunellen, supra. The bias of the interested person taints the action of the whole body. Pyatt v . Mayor & Council of Borough of Dunellen, supra. In Piggott v . Borough of Hopewell, 22 N.J.Super.106, 91 A.2d 667, 670 ( 1 9 5 2 ) , this was found to be so for two reasons: "'First, the participation of the disqualified member in the discussion may have influenced the opinion of the other members; and, secondly, such participation may cast suspicion on the impartiality of the decision. [Citing cases.] It being impossible to determine whether the virus of self-interest affected the result, it must needs be assumed that it dominated the body's deliberations, and that the judgment was its product. 111 The cases which have held the vote of a disqualified commissioner does not vitiate the proceedings where his vote was not needed to pass the issue have rejected the two factors considered in Piggott. See: Singewald v . Minneapolis Gas Company, 274 Minn. 556, 142 N . W . 2 d 739 (1966); Eways v. Reading Parking Authority, 385 Pa. 592, 124 A . 2 d 92 (1956); Marshall v . Ellwood City Borough, 189 Pa. 348, 41 A . 994 ( 1 8 9 9 ) . The rationale behind Eways and Marshall is that the "illegal1' vote does not affect the "legal1' votes. The Marshall court downplays the influence the "illegal" voter may have on the "legal" voters, particularly when there is a large group of voters and only one illegal voter. As our discussion reveals there seems to be no question on the issue of Commissioner Taylor being disqualified under the circumstances that existed. There is also no question that h i s vote was not required to pass the ordinance which opens the proceedings t o a wide range of opinion a s t o validity, as here- to£ ore discussed. Although Montana has not treated t h i s matter judicially, the legislature has spoken through its enactment of section 1 1 - & & £ , R.C.M. 1947, which i s legally and ethically analogous t o the instant situation and permits a c i t y commission o r council to examine the facts, and, i f so moved, to void the transaction. A s heretofore stated, w e are lacking facts i n the record before us to make determinations beyond the legal finding that the City Commission or Council could i n i t i a l l y examine the trans- action and make a finding. However, i n case of refusal to act by the Commission or Council or an adverse finding to the petitioners, there would be the customary recourse t o the courts. The judgment of the d i s t r i c t cou W e Concur]: