Court Opinion

ID: 9678996
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:38:00.249666+00
Date Added: 2024-06-11T18:17:09.493949
License: Public Domain

NYE, Chief Justice
(dissenting).
I respectfully dissent. When the City of Corpus Christi was attempting to sell to its citizens improvements to be made to the Bayfront Center, it was required by law to submit the proposition to its qualified voters. The law says that the City “shall distinctly specify” five (5) separate things in calling for the proposition to be voted on. These five (5) requirements are:
“1. The purpose for which the bonds are to be issued;
2. The amount thereof;
3. The rate of interest;
4. The levy of taxes sufficient to pay the annual interest and provide a sinking fund to pay the bonds at maturity;
5. The maturity date, or that the bonds may be issued to mature serially within any given number of years not to exceed forty.” Art. 703, Y.A.C.S.
Four (4) of these five (5) requirements were met. They were distinctly specified as herein set out below. Number 3, the requirement as to “interest”, was not.
1. The law says “distinctly specify the purpose”: The City’s call for the election stated, “. . . making permanent public improvements to-wit: A COMMUNITY-CONVENTION FACILITY, INCLUDING AN EXHIBIT HALL, MEETING ROOMS, BANQUET HALL, ADDITIONAL AUDITORIUM IMPROVEMENTS, AND FURTHER ACQUISITION AND DEVELOPMENT OF THE SITE, AT THE BAY-FRONT CENTER FOR THE ARTS AND SCIENCES: . . .”
2. The law says “distinctly specify the amount thereof”: The City’s call for the election stated, “. . .in the aggregate principal amount of $14,400,000.”
3. The law says “distinctly specify the rate of interest”: the City’s call for the election stated: “. . . interest at such rates as shall be determined within the discretion of the City Council.” (Emphasis supplied.)
4. The law says “distinctly specify the levy”: the City’s call for the election stated: “. . . to levy and cause to be assessed and collected annual ad valorem taxes in an amount sufficient to pay the annual interest on said bonds and provide a sinking fund to pay said bonds at maturity.”
*7265. The law says “distinctly specify the maturity date”: the City’s call for the election stated: . .to mature serially within not to exceed twenty-five years from their date.”
In these “truth in lending” days in which we live, the law requires of everyone that the rate of interest to be charged a person must be spelled out in exact terms and in advance. This is so the person who is expected to pay the interest ultimately will know the total amount of his obligation. This law makes a vast improvement within our society. It prevents hidden charges and deceptive practices. See Art. 5069.14-01, et seq. (Supp.1976).
The bond election results were very close. There is no way that any court could determine the reason some people voted “for” or “against” the proposition. If the rate of interest had been distinctly set out as the law requires, the election result undoubtedly would have been different. It might have been more in favor of the proposed expenditure, or on the other hand, the bond election may have failed. We have no way of knowing or inquiring into the mental process of the voters.
In a case where the grant of authority is to levy and collect a certain rate of taxes on the taxpayer’s property, for a given purpose, the voters not only grant such authority to levy and collect such taxes (not to exceed a stated rate), but also give a mandate to levy and collect that rate of taxes. The voters are the sole beneficiaries of the levy, and they authorize the same because they are of the opinion that such action will subserve their best interests. They are interested in fixing the maximum rate, for in voting for the proposition to issue the bonds they give their consent to be taxed at a rate not to exceed that authorized by their vote. See Cameron v. City of Waco, 8 S.W.2d 249 (Tex.Civ.App.—Waco 1928, no writ).
It is undisputed that the City did not “distinctly specify” the rate of interest in either of its two descriptions of the proposition given to the voters. This, I believe was a serious omission on the part of the City. Article 703’s requirement that the rate of interest be distinctly specified is to inform the public the maximum amount they will be charged on the bond obligation.
The rate of interest on $14,400,000.00 over a twenty-five year period is very important. If an outside limit was not set at the time the proposition was voted on, delay in the issuance of such bonds could conceivably require a much higher interest rate resulting in a much higher tax rate than that anticipated at the time the voting public gave authority to issue bonds. By setting the maximum rate and by receiving authority for such amount, a governing body would of necessity have to go forward almost immediately with the sale of the bonds at the best possible rate (not to exceed the rate authorized by the voters) rather than by waiting and taking a chance that the bond market would make the bonds unmarketable and a new election inevitable. On the other hand, if a City could dispose of the bonds at a lesser rate of interest than that authorized by the voters, then the benefit would enure to the taxpayers of the City who granted permission for their issuance in the first place. No harm would result. This is the holding of the two cases cited by the majority as the sole authority to permit a governing body to set any rate that they may see fit in their discretion. See also Amstater v. Andreas, 273 S.W.2d 95 (Tex.Civ.App.—El Paso 1954, writ ref’d n. r. e.); Cameron v. City of Waco, 8 S.W.2d 249 (Tex.Civ.App.—Waco 1928, no writ).
The majority states that the notice calling for the election is “plain and unmistakably clear”. This is true, but it violates the specific statute which authorizes the calling for the election. The majority states further that the voters knew that the bonds must bear some rate of interest and that the City Council could provide for the bonds to bear interest at the highest rate allowed by law, and this, in effect, would be setting the maximum rate. If the highest rate that a bond could be sold for is 10%, (Article 16, Section 11, Texas Constitution), then I *727doubt seriously if the present bond election would have carried had the proposition stated “. . .at any rate of interest to be set by the City Council not to exceed 10%”. This is the implication that goes with such majority holding.
The majority also states that the word “shall” in Article 703 is permissive because the legislature in enacting Article 717k-2, V.A.C.S. removed all existing limitations on the net effective rate of interest on bonds to be issued and sold by the governing agency. This is not true. The legislature does not and did not repeal this statute by implication. The word “shall” is ordinarily imperative and operates to impose a duty which may be enforced as in this case. The word must be given that effect which is necessary to carry out the intention of the legislature as determined by ordinary rules of construction. The deliberate refusal of the legislature to insert the word “may” (in setting out the requirement as to the rate of interest) in place of the word “shall”, shows an intent on the part of the legislature to use the latter word as mandatory. Surely, had the legislature intended that this word “shall” be permissive or that this article was to be repealed, it would have so stated. Where a statute clearly indicates that the word “shall” was intended to be mandatory and it would be clearly inconsistent with the overall legislative intent for it to be otherwise — it is mandatory! 82 C.J.S. Statutes § 380, pp. 877-882.
It is true as the majority has so stated that all that is required to be put on the ballot itself, as opposed to the notice calling the election, is just enough to make sure that the voters will not be misled. It would have been sufficient, for instance, for the City to have to put on the ballot “Proposition: Bonds for convention facility” — “For” —or “Against”.
However, in this case, the proposition that was actually placed on the ballot informed the voters of the total amount of the bonds, and the purposes of its expenditure in detail, but then made no reference whatsoever to the rate of interest. Although the publicly published notice to the voters generally is a sufficient compliance with the law, it is possible that the voters were misled in this election by the inclusion of the purpose in detail and the specific amount of the bonds, and then by leaving out the discretionary rate of interest to be set by the City Council after the election was over.
It is my opinion that the City of Corpus Christi acted improvidently. The City was under a statutory duty to set out a maximum rate of interest in the call of the election (the public notice) and also should have included on the ballot itself a short description of the maximum interest rate. The latter is especially important where the City attempted to go into exacting detail on the ballot as to the amount of the bonds and the purpose of the bonds. It follows that the City should also have given in detail the maximum rate of interest to be charged.
The majority by its decision would allow any city, any school district or any other governmental agency to call for a bond election and completely disregard the legislative mandate that the rate of interest “shall” be distinctly specified. The majority relies on two old cases, each of them only holding that if the call of the election sets out a specified maximum amount of interest to be charged (4% in one case and 5% in the other) such specified interest is a sufficient compliance with the law. Art. 703 (V.A.C.S.). The majority goes further than the two cases which it cites. The majority goes further than any other court in this State by holding that any governmental agency may completely disregard the mandatory effect of the statute so long as they inferentially state that they will not charge more than the maximum legal rate of interest. The voters would “know” this maximum rate of interest, not because the agency specifically informed them as required by Art. 703, but because of the legal presumption that all citizens are charged with knowledge of the law. If the legislature had wished to give the City of Corpus *728Christi absolute discretion in setting the rate of interest on bonds to be submitted to the voters, it would have so stated. The legislature did this in authorizing the City to sell bonds under Art. 717k — 2, V.A.C.S. But the legislature did not authorize the City to do this under Article 703, V.A.C.S. because I believe the legislature intended for the voters to “know” in advance the outside limit of the bond obligation.
It is just as important for the City to be required to set out a specified rate of interest on bonds to be approved by the voters as it is to set out the specified total amount of bonds that are to be voted on. Both requirements set in concrete the total maximum obligation. How can you require one requirement to be specific and not the other while they are all covered in the same statute?
The incongruity of the majority holding is quite evident by its reasoning. It overrules appellant’s first point of error saying that the statute which says that the contestant “shall” give notice within 30 days, etc., is a mandatory requirement. Since the appellant did not follow the statute in the first instance, its contest on this point cannot be considered. Using a different standard for the City, the majority says that “shall” in the other statute is not mandatory — the City “may” comply or not comply as it wishes.
Although it is unfortunate that courts are required to set aside an election from time to time, it is far more important that the cities be required to follow the statutory law in matters of such importance.