No. 12940 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1975 

THE STATE OF MONTANA, ex rel., 

THE CITY OF TOWNSEND, a municipal corporation, 

Relator, 

D. A. DAVIDSON, INC., a Montana 

Corpora tion, 

Respondent. 

ORIGINAL PROCEEDING : 

Counsel of Record: 

For Relator: 

Patrick F. Hooks argued, Townsend, Montana 

For Respondent : 

Scribner and Huss, Helena, Montana 

William Scribner argued, Helena, Montana 

Filed : 

&,I fl .; yg!: 

Submitted: January 14, 1975 

Decided : 

JAN 3 0 1975 
Justice FJesley Castles delivered the Opinion of the Court. 

This is an original proceeding for declaratory relief under 

Title 93, Chapter 89, R.C.M. 1947, the Uniform Declaratory Judgments Act. 

Relator is a municipality of the state of Montana, duly 

organized and existing as a municipal corporation under the 

laws of Montana. Respondent is a Montana corporation which, 

in the course of its business, purchases for resale bonds issued 

by special improvement districts with the state of Montana. 

On March 5, 1974, by resolution of its city council relator 

created, within the city, Special Improvement District No. 4 for 

the purpose of grading streets, replacing existing gravel base 

course as needed, placing asphaltic surface course, installing 

storm drainage pipes and inlets as need, all upon the streets and 

avenues of the special improvement district. Thereafter, on 

June 27, 1974, relator awarded a contract for the construction 

of such improvements. Relator city and the contractor intend to 

proceed with the construction in accordance with the contract 

when bonds of the special improvement district are sold and the 

necessary funds are obtained for the financing of the work. 

By notice duly given and advertised according to law, relator 

requested bids for submission to the city council for the purchase 

of $264,000, par value, of Special Improvement District No. 4 bonds 

for the financing of such construction. On September 3, 1974, a 

bid was submitted by respondent and State Banlc of Townsend for the 

purchase of such bonds at par with an accruing interest rate of 

7.75% per annum. No other bid was submitted. The bid was conditioned upon the issuance and filing of an opinion of the attorney 

general of the state of Montana, to the effect that cities and towns 

could lawfully issue and sell special improvement district bonds 

bearing an interest rate in excess of 7% per annum. The bid was 

accepted by the city council and thereafter a contract was entered 
into between relator and the bidders, conditioned as aforesaid, 

providing for the issuance of Special Improvement District No. 4 

bonds in the sum of $264,000 bearing interest at the rate of 

7.75% per annum, and for the purchase thereof by the bidders at 

par plus accrued interest to the date of delivery. 

Thereafter, on November 27, 1974, the attorney general of the 

state of Montana issued an opinion stating, in effect, that cities, 

towns and counties may lawfully issue and sell special improvement 

district bonds or warrants, bearing an interest rate in excess of 

7% per annum if the special assessments paid by the property owners 

within the district are appropriated for the payment of principal 

and interest on such bonds or warrants. 

Relator was then advised by respondent that, notwithstanding the 

provisions of their contract and the attorney general's opinion, 

it would continue to refuse to purchase the bonds for the claimed 

reason that cities and towns are prohibited by law from issuing or 

selling special improvement district bonds or warrants bearing an 

interest rate greater than 7% per annum. 

Relator has made diligent effort to secure a purchaser for 

the bonds at an interest rate of 7% or less but has been unable to 

do so. By reason thereof, relator is informed and believes that 

it will be unable to proceed with such construction or to perform 

its obligations under the construction contract unless respondent 

performsunckr'~provisions of its contract for the purchase of the 

bonds. 

On information and belief, relator stated in its application 

for declaratory judgment that for the past several months cities, 

towns and counties of the state of Montana have been unable to 

finance needed special improvements in districts created for that 

purpose because the prevailing bond market will not justify the 

purchase of special improvement district bonds bearing an interest 

rate of 7% or less and that the prevailing long term municipal bond 

interest rates are unlikely to come down in the foreseeable future. 
The subject matter of this action is of great and widespread 

public concern and should be resolved at the earliest possible 

time. Due consideration of this question in the trial courts and 

final determination by an appeal to this Court is an inadequate 

remedy in that delay would ensue before a final decision could 

be had, making it impossible for cities, towns and counties to 

proceed with necessary construction of-improvements in the forthcoming construction season. There are no disputes of fact and 

only a single issue of law is involved, namely, whether cities, 

towns and counties have authority to issue and sell special improvement district bonds and warrants bearing an interest rate in 

excess of 7% per annum. For these reasons it is appropriate and 

proper for this Court to accept original jurisdiction of this 

proceeding to insure a just and speedy determination of the question 

involved. 

The 1971 amendments to the special improvement district laws 

were a part of a package of amendments relating to interest rates 

on state, county, city and school district indebtedness. This 

legislation, House Bill 15, was revised many times before it was 

finally passed. Sections 2 and 3 of the bill, now codified 

respectively as sections 79-2602 and 79-2603, R.C.M. 1947, are 

significant: 

"79-2602. Rate of interest on bonds to be determined 

by governing bodies---limitations and exceptions. Bonds 

of a political subdivision shall bear interest at such 

rate or rates as its governing body shall determine, except that no such rate shall exceed seven percent (7%) 

except revenue bonds issued under the terms of sections 

11-2401 through 11-2414, sections 11-2217 through 11-2221, 

and sections 11-4101 through 11-4110, R.C.M. 1947, which 

rate shall not exceed nine percent (9%). I I 

"79-2603. Rate of interest on special assessments to 

be determined by governing bodies---limitations. All 

special assessments levied by a political subdivision 

shall bear interest at such rate or rates as its governing 

body shall determine, except that no such rate shall exceed the greater of seven percent (7%) per annum, or in 

the event that the special assessments are appropriated 

for the payment of principal and interest on bonds issued 

by the political subdivision, the rate of interest on 

said bonds. " (Emphasis added. ) 
Section 79-2602, if read alone, would lead one to conclude 

that all bonds of political subdivisions, except the revenue 

bonds therein specified, carry a maximum interest rate of 7%. 

Section 79-2603, with respect to special improvement bonds indicates the contrary by authorizing a greater rate of interest on 

special assessments in those cases where the special improvement 

bonds bear a higher rate of interest than 7%. Originally section 

2 of House Bill 15 provided for a general maximum rate on all 

bonds of 8%, except in those cases where the lowest of two or 

more competitive bids was higher than 8%, (in which event there 

was no legal maximum). As so originally drawn there was no 

inconsistency between sections 2 and 3. The exception allowing a 

legal rate in excess of 8% was, however, deleted from the bill on 

its first revision in the House, while the underlined portion of 

section 3 was retained. Thereafter, through a series of amendments, 

a great number of existing code sections pertaining to interest 

rates on city, county and school district indebtedness were included in the bill. Some existing code sections were amended to 

delete all reference to a maximum rate of interest, among those 

were sections relating to special and rural improvement districts; 

others were amended by changing the maximum rate of interest. On . 

its final revision, the Senate committee of the whole reduced the 

general maximum interest rate in section 2 to 7%. 

The controversy here involves whether to give some meaning 

to the underlined portion of section 79-2603, R.C.P.I. 1947. Relator 

contends that the retention of the underlined portion indicates 

a legislative intent that the interest rate on special assessment 

bonds should be allowed to exceed 7%. Respondent, on the other 

hand, contends that the underlined portion is redundant and the 

clear wording of section 79-2602, R.C.M. 1947, should control. 

This Court will presume that the legislature would not pass 

useless or meaningless legislation; and also must harmonize statutes 

give 

relating to the same subject and/effect to each. State ex rel. 
Dick Irvin, Inc. v. Anderson, Mon t . , 525 P.2d 564, 31 

St.Rep. 482. We must presume that the legislature had some 

purpose in mind when it retained the underlined portion of 

section 79-2603. In order to give that phrase any meaning whatsoever, we must hold in accord with the contentions of relator. 

Therefore, (1) a municipality or county acting in behalf of a legally 

formed special improvement district under the provisions of Title 

11, Chapter 22, or Title 16, Chapter 16, R.C.M. 1947, may issue 

and sell bonds or warrants bearing an interest rate in excess of 

7% per annum, and (2) the contract between reldtor and respondent 

for the purchase of the bonds referred to herein is binding upon 

the parties, notwithstanding the fact that the bonds are to bear 

interest at the rate of 7.75% per annum. 

Judgment for relator. 

I 

'1 --,,-A-~-L;- J-L--L-:AL-~LL-L ---- --- 

1 Justice I 

We Concur: 

Chief Justice 

d ................................. 

Justices.