No. 12940 INTHE 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 Corporation, Respondent.

ORIGINAL PROCEEDING:
Counsel of Record: For Relator: PatrickF. 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:

## JAN30

## 1975JusticeFJesley Castles delivered the Opinion of the Court.
This isan originalproceeding 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 isa Montana corporationwhich, in the course of itsbusiness, purchases for resalebonds issued by special improvement districtswith the stateof Montana. On March 

### 5, 1974, by resolution of itscitycouncil relator created, within the city, Special Improvement District No. 4 for the purpose of grading streets, replacing existinggravel base
course asneeded, placing asphaltic surface course, installing storm drainage pipes and inlets asneed, allupon 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 cityand the contractor intend to proceed with the construction inaccordance 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 StateBanlc of Townsend for the purchase of such bonds atpar with an accruing interest rateof 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 districtbonds bearing an interestrate in excess of 7%per annum. The bid was accepted by the citycouncil and thereafter a contract was enteredintobetween 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 atthe rate of 7.75%per annum, and for the purchase thereof by thebidders 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 orwarrants, bearing an interestrate 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, itwould continue torefuse to purchase thebonds for the claimed
reason that cities and towns areprohibited by law from issuing or selling special improvement districtbonds orwarrants bearing an interest rategreater than 7%per annum. Relator has made diligent effort to secure a purchaser for thebonds atan interest rate of 7%or lessbut has been unable to do so. By reason thereof, relator isinformed and believes that it

### willbe unable toproceed 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 initsapplication fordeclaratoryjudgment that for the past several months cities, towns and counties of the stateof Montana have been unable to finance needed special improvements in districts created for that purpose because the prevailing bond market willnot 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 areunlikely 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 finaldecision could be had, making it impossible for cities, towns and counties to proceed with necessary construction of-improvementsin 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 respectivelyas sections 79-2602and 79-2603,

### R.C.M. 1947, are significant: "79-2602. Rate of interest on bonds to be determined by governing bodies---limitationsand 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 revenuebonds 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%). II 

### "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, ifread alone, would lead one to conclude that allbonds of political subdivisions, except the revenue bonds therein specified, carry a maximum interestrate of 

### 7%. Section 79-2603, with respect to special improvement bonds indicates the contraryby authorizing a greater rateof 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 fora general maximum rate on all bonds of 8%,except in those cases where the lowest of two or more competitivebids was higher than 8%, (inwhich event there
was no legal maximum). As so originallydrawn therewas no inconsistencybetween sections 2 and 3. The exception allowing a legalrate in excess of 8%was, however, deleted from thebill on itsfirstrevision inthe House, while theunderlined portion of section 3was retained. Thereafter, through a series of amendments,
a great number of existing code sections pertaining tointerest rates on city, county and school district indebtedness were included in thebill. Some existing code sectionswere amended to delete allreference toa 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 finalrevision, 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 theunderlined portion of section 79-2603, R.C.P.I. 1947. Relator contends that the retention of theunderlined portion indicates
a legislative intent that the interestrate on special assessment bonds should be allowed to exceed 7%. Respondent, on the other hand, contends that theunderlined portion isredundant and the clearwording of section 79-2602, R.C.M. 1947, should control. This Court willpresume that the legislaturewould not pass useless ormeaningless legislation; and alsomust harmonize statutes give relating to the same subject and/effect toeach. Stateex rel.Dick Irvin, Inc. v. Anderson, Mont

# . , 525 P.2d 564, 31 St.Rep. 482. We must presume that the legislature had some purpose inmind when it retained theunderlined portion of section 79-2603. In order togive that phrase any meaning whatsoever, we must hold inaccordwith the contentions of relator. Therefore, (1) a municipality or county acting inbehalf 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 sellbonds 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 toherein isbinding upon the parties, notwithstanding the fact that thebonds are tobear interest atthe rate of 7.75% per annum. Judgment for relator.

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We Concur:

Chief Justice



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Justices.