Court Opinion

ID: 3298571
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:15:35.412973+00
Date Added: 2024-06-11T12:24:57.094955
License: Public Domain

I concur in the foregoing opinion, and I place my concurrence in the judgment on the additional ground that in my opinion the sale of the bonds was lawful, as contended by respondents. The appellant places his chief reliance on the case of Peery v.City of Los Angeles, 187 Cal. 753 [19 A.L.R. 1044,203 P. 992], but there is, I think, a wide distinction between the situation presented in that case and in the case at bar. In that case the city was proceeding under the provisions of the general state law with reference to the issuance of its municipal bonds. That procedure was authorized by the city charter. The bond issue was voted by the electors of the city under a law which required that the bonds should be sold at not less than par and should bear interest not exceeding six per cent per annum, such rate to be specified in the ordinance calling the election. The rate of interest specified in the ordinance was five per cent and was not to be exceeded in the issuance of the bonds. The bonds remained unsold. The legislature in 1921 amended the statute so as to provide that municipalities might sell their bonds theretofore duly authorized and remaining unsold at a rate of interest not exceeding six per cent. The city authorities were proceeding to sell the bonds specifying a six per cent interest rate, when the action was brought by a taxpayer to enjoin the sale as legally unauthorized. It was held that when the bonds were voted upon the express condition that the rate of interest was to be five per cent, a status analogous to a contractual relation was created between the electors of the city and the officials thereof that could not constitutionally be disturbed and that it was incompetent for the legislature to authorize the city officials to sell the bonds to bear a higher rate than five per cent. The sale was declared void, not because there was any constitutional inhibition against the sale generally of municipal bonds bearing six per cent *Page 358 
interest, for there was none, but because the constitution protected one of the parties to the contractual relation, to wit, the electors of the city, against any impairment of that contract right without their consent. There is no provision in our constitution which directly or indirectly prohibits the sale of bonds of the city and county of San Francisco at less than par. In the present case it appears that the electors of San Francisco had, before the bonds in question were sold, duly signified their assent to a change in the rate from four and one-half per cent to five and one-half per cent, and for a sale at less than par. This assent was evidenced in the manner provided by law by an amendment to the city charter approved in 1921. (Stats. 1921, p. 1786.) By that amendment the electors of San Francisco specifically authorized the board of supervisors to sell certain school bonds, not involved in this case, and the water bonds here in question, for less than par and at a rate of interest not in excess of five and one-half per cent. By that charter amendment the principals in the contractual relation, namely, the electors of the city and county of San Francisco, specifically authorized the other parties to the transaction, namely, the officials of the city, who constitute the representatives and agents of the electors, to do what was in fact done pursuant to the authority granted. The issuance and sale of said bonds was peculiarly a municipal affair, which it was entirely competent for the electors of the city and county of San Francisco by charter amendment to control by a proper delegation of power to the board of supervisors. The fact that a two-thirds vote was required to authorize the issuance of the bonds did not militate in the least against the power of the electors to express their assent to a change in the terms of sale by a majority vote on the charter amendment. Section 8 of article XI of the constitution provides not only that the original charter but amendments thereto shall be approved by a majority vote. Under this constitutional provision a majority of the electors of the city constitute the legislative or governing unit in amending the charter and in thus controlling matters of local concern. When the majority acts as constitutionally permitted or authorized, all of the electors and taxpayers of the city and the officers of the city are bound to conform. A majority of the electors imposed the original charter *Page 359 
condition as to the terms of sale, or at least a majority was all that was necessary to impose the condition. Likewise a majority authorized by charter amendment the change in the terms of sale. When, as in this case, a majority acted within constitutional bounds no question of the impairment of contract rights can arise. It is fundamental that contracting parties, lawfully agreeing in the first instance, may thereafter change or modify such agreement by assent lawfully expressed. This assent was legally accomplished in this case. The Peery case and other cases of like import can have no application to the situation here presented.
I find no merit in the contention of the appellant that the respondent construction company, under the facts alleged, was an officer or employee of the city and county. The relation was clearly that of a contractor. Nor does the complaint show bad faith or abuse of discretion on the part of the board of supervisors in ordering the sale of the unsold bonds as a whole. The demurrer was properly sustained and as the appellant expressly declined to amend his complaint, the judgment was lawfully entered.
Waste, C.J., Richards, J., Preston, J., and Seawell, J., concurred.