Court Opinion

ID: 3987514
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:43:39.274692+00
Date Added: 2024-06-11T14:18:22.162642
License: Public Domain

I concur in that part of the opinion of Mr. Justice HANSON which exonerates the city commission of Ogden City from any contempt of this court or of an intention to circumvent the process or order of this court in its amendment to the contract and ordinance while the cause was pending here. I also concur in that part of the opinion which makes clear that the holders of the revenue bonds in question, if and when issued, must look to the net revenues from the operation of the proposed system as the sole and only payment of such bonds, and that in no event will the city be legally or morally obligated for their payment.
Further, I believe the cities of the state may avail themselves of the special fund method of financing their lawful projects but must do so in accordance with and subject to the wholesome and salutary legislative provisions contained in chapter 22, Laws of Utah 1933, Second Special Session, commonly known as the Granger Act.
My principal disagreement with the decision of the court is in the holding that the city commission and the voters of Ogden City may entirely ignore the wise protective provisions which the Legislature has seen fit to enact in the Granger Act. In the case of Utah Power  Light Co. v. Provo City, 94 Utah 203,74 P.2d 1191, I concurred in the dissenting opinion of Mr. Justice MOFFAT and briefly expressed my own views, to which I still adhere. That case is pending on petition for a rehearing and the decision is not yet final. I therefore feel free to again voice my dissent to the decision of the majority and to further state my reasons.
The language of the act as originally passed limited its operation to a definite time, but that provision has now been repealed. The act remains a statute of the state, in full force and effect. Undoubtedly it will remain so for a considerable time in the future. This statute provides a method by which cities and towns may finance themselves by the issuance of revenue bonds for the purpose of constructing any of the public projects, systems, or industries which the city or town may lawfully construct and operate. *Page 194 
It is the only statutory method of municipal financing under the special fund doctrine and in my opinion is binding on all cities and towns of the State, including Ogden City. In Fjeldsted v.Ogden City, 83 Utah 278, 28 P.2d 144, the court referred to the lack of statutory authority to issue self-liquidating bonds, and we there said (page 153):
"There is no mention anywhere in the statutes or constitution of conditional sale contracts or of self-liquidating bonds. The statute has conferred the power to purchase, lease, and construct waterworks or water supply systems, but has not, other than already indicated herein, specified the manner in which, or means by which, the municipality may accomplish its purposes within the powers conferred. It is competent for a municipality to accomplish such purposes in any lawful manner, and may itself by ordinance provide the manner and details necessary for the full exercise of such powers under the provisions of Comp. Laws Utah 1917, § 578, which is as follows: `When by this title power is conferred upon the city council to do and perform any act or thing, and the manner of exercising the same is not specifically pointed out, the city council may provide by ordinance the manner and details necessary for the full exercise of such power.'"
Until the decision of Barnes v. Lehi City, 74 Utah 321,279 P. 878, the so-called special fund doctrine was entirely unknown to the judicial decisions of this state. By that case and the later decisions of this court, the doctrine was recognized and approved, but even then there was no legislative method provided by which cities and towns could avail themselves of special fund financing.
In the Barnes Case there was no thought of issuing bonds of any sort. What was there approved was a conditional purchase by the city of a Diesel engine and equipment with title retained by the vendor, to be conveyed upon final payment. In the Fjeldsted Case, supra, self-liquidating bonds were proposed for the first time. In the absence of any statutory method this court held as above indicated that power was vested in the cities to provide by ordinance the manner and details for the exercise of such power. Section 15-7-2, R.S. 1933 (the same as section 578, Comp. Laws 1917), is a general statute not limited to the subject matter of financing. *Page 195 
While a petition for rehearing in the Fjeldsted Case, supra, was pending undecided in this court, the Second Special Session of the Legislature in 1933 passed the Granger Act. I view quite differently the objects, purposes, and scope of this act than do my associates who join in the prevailing opinion. The Fjeldsted decision had not yet become final, but was under attack at various points by virtue of the pendency of the petition for a rehearing. There was reasonable ground for fear it might not become final. That decision recognized the right of Ogden City to issue special revenue bonds, but pointed out the dearth of legislative sanction of the special fund doctrine or the issuance of self-liquidating bonds. It suggested the need for segregation of revenue earned by city-owned property from revenue earned by the use of new property to be acquired and to be used in connection therewith. We said the special fund out of which self-liquidating bonds could be paid must be revenue from the new system or new portion of the system. If the court's opinion had become final, any city, exercising the power granted by section15-7-2, R.S. 1933, could have provided adequately for the issuance of bonds, construction of the project, and proper segregation of the revenue. Any city, by ordinance, had as much power to provide for the latter as for the former under section15-7-2. The federal government at the time was encouraging the use of the special fund method of financing local improvements in the interests of increasing the employment of men, and Ogden City had made arrangements to obtain its funds from a federal agency.
Not one, but a number of purposes, were accomplished by the passage of the Granger Act. Here for the first time was legislative recognition and approval of the special fund doctrine and the enactment of a method by which cities could be financed under it. The act provided that municipalities might issue revenue bonds and placed limitations upon the issuance thereof. Reasonable and proper safeguards were written into the law whereby the citizens and taxpayers of *Page 196 
the various cities, towns, and counties could be protected against unwise and improvident action on the part of their public servants. Provision was made for financing by or through the federal government under the National Industrial Recovery Act, 48 Stat. 195, but revenue bond financing was not limited to that. Provisions were adopted similar to those already existing with respect to issuance by municipalities of general obligation bonds, and the construction of public works payable out of the general fund. Revenue bonds issued or sold to any person other than the federal government or some agency thereof could be sold only after advertisement and upon bids. The rate of interest, the maximum period of such bonds, and provisions for refunding such bonds were specified. A two-thirds vote of the governing body of the municipality was required for authorization. Construction contracts, if in excess of $5,000, were authorized to be let only after due advertisement and competitive bidding. These provisions were applicable in all cases and not restricted merely to projects financed by or through the government. Instead of leaving it to each individual city or town to provide by ordinance the manner or method by which each could finance new projects under the special fund doctrine, this act provided a uniform method for all cities, towns, and counties in the state. The safeguards and limitations imposed by the Legislature were in furtherance of a wise public policy.
The powers of cities and towns referred to in section 15-7-2, R.S. 1933, may be exercised only when such power exists but "the manner of exercising the same is not specifically pointed out." By the Granger Act the manner of exercising the power of cities, towns, and counties to acquire public projects under the special fund doctrine is "specifically pointed out."
It would be indeed strange if the Legislature, after carefully restricting the manner and method of issuing general obligation bonds and providing the same type of restrictions *Page 197 
and limitations when revenue bonds are issued to the federal government, should leave it entirely optional with local authorities to finance its projects by contracting with private capital, entirely free from any statutory provision whatever. They would then be at liberty to make contracts for construction of projects and for sale of bonds without limitation as to rate of interest, price to be obtained, and without advertisement or competitive bidding. I cannot believe the Granger Act was intended merely to afford federal aid to municipalities in view of the National Industrial Recovery Act. The Granger Act is broader in scope than that, yet this court by the prevailing opinion now holds municipalities may ignore it completely whenever they choose to do so.
As I read the opinion of my associates, the act can serve no other purposes when the opportunity for federal aid has passed, than if it were an article published in the newspapers offering its suggestions as a convenient method of financing which cities and towns could follow if they chose. The powers granted in section 15-7-2, R.S. 1933, are not such as can be exercised by cities at their option, but only when there is no legislativemethod prescribed. Section 2 of the Granger Act does not use language from which one can infer the act was intended for use only when any local governing body should choose to do so. The language used is that it is intended to create an "additional and alternate statutory method." The act is itself a statutory method which must have force and effect and is the only method provided by statute for issuance of special revenue or self-liquidating bonds. Section 3, as well as other provisions, of the Granger Act indicates that it was intended to cover more than financing by moneys obtained from the federal government or any of its agencies, notwithstanding the reference to the National Industrial Recovery Act. In other words, the act is much broader in its scope than merely to provide a method by which the local units of the state could finance themselves through federal aid. The language is broad enough *Page 198 
to include, and I think it does include, all financing within the special fund doctrine.
I cannot agree with the views of Mr. Justice LARSON expressed in his concurring opinion to the effect that a still-born ordinance passed by a city commission obtains vitality and life from a referendum, if and when the people approve it. This, to me, is strange doctrine. It has no basis in any statute or in any judicial decision. The referendum statute contemplates a valid ordinance obtaining vitality from its enactment and effective at the date fixed therein, unless a referendum petition be filed. In the event such petition is filed, the effective date is delayed until such time as the ordinance is approved by the voters. If defeated, it never goes into effect. Section 25-10-5, R.S. 1933. The ordinance before us was enacted by the board of commissioners, and it is either valid or not by virtue of the provisions it contains. If within the power of the commission to enact it, it is valid; if not, it is void. I know of no means by which an ordinance, void ab initio, may be resuscitated and given effect by vote of the people. In my view, the ordinance was void as passed because it did not comply with the statutory requirements.
The writ heretofore issued by this court should be made permanent.