First National Bank v. City of Laramie

Beard, Justice.

This case involves the question of the validity of a proposed issue of bonds of the City of Laramie for the purpose of realizing funds to extend the water system of said city. The case was submitted to the District Court upon an agreed statement of facts, and the court adjudged that the bonds when issued would be valid obligations of said city. The bank brings error.

The grounds upon which the plaintiff in error contends that the proposed issue of bonds would be invalid are, “(1) The ordinance of the city council authorizing the submission of the bond proposition to a vote of the qualified electors of said city, and the notice of election failed to specify the amount of bonds proposed to be issued.

“(2) The proposition submitted to a vote of the qualified electors failed to specify the amount of bonds proposed to be issued.

“(3) The ordinance of the city council authorizing the submission of the bond proposition to a vote of the qualified *272electors of -said city, and the notice of election failed to spec-^ ify the rate of interest which said bonds should bear.

“(4) The proposition submitted to a vote of the qualified electors failed to specify the rate of interest which said bonds should bear.”

The section of the ordinance in question reads as follows: “Sec. 1. That at the regular election to be held in the City of Laramie, County of Albany, State of Wyoming, on the first Tuesday after the first Monday in November, 1916, there shall be submitted to a vote of the qualified electors of said city a proposition to issue coupon bonds of said city in an amount not to exceed sixty thousand dollars -($6o,-000.00), for the purpose of realizing funds to extend the water system of said city, said bonds to bear interest at a rate not exceeding five per cent (5 %) per annum.”

The notice of election and the ballots used at said election each contained the identical language of the ordinance with respect to the amount of bonds and the rate of interest. At the election more than two-thirds of the electors voted in favor of the issuing of said bonds. The election was regularly conducted and it is admitted that there were no irregularities or defects in any of the proceedings which would invalidate the bonds if the amount of the bonds and rate of interest were sufficiently specific in the ordinance, notice of election and ballots. After the election the city council adopted an ordinance authorizing the issuance of the bonds as follows: “That there be borrowed on the credit and in behalf of the City of Laramie the sum of sixty thousand dollars for the purpose of providing funds for the construction, extension and completion of the water works system of said City of Laramie, and that negotiable coupon bonds of said city in said sum be issued therefor; * * * * that said bonds shall bear interest at four and one-half per cent per annum, payable semi-annually,” and fixing the date of the bonds, place of payment, etc.

The provisions of the statute under which the city was proceeding is Section 1870, Comp. Stat. 1910, “No bonds shall be issued for the purpose provided by this chapter until *273the proposition to issue the same shall have been submitted, to a vote of the qualified electors of such city or town, and by them approved; * * * * the proposition so submitted to a vote of the qualified electors shall specify the amount of bonds to be issued, the rate of interest and the purpose for which it is proposed to issue the 'bonds.” And providing that “if a majority of the votes cast upon the proposition shall be for the bonds, then such proposition shall be deemed to have been approved by the people.”

It is contended on behalf of the plaintiff in error, that the statement in the ordinance submitting the proposition, and in the election notice and official ballot, “in an amount not to exceed .sixty thousand dollars,” and “to bear interest at a rate not exceeding five per cent per annum/’- was not a compliance with the requirements of the statute which requires that the proposition submitted to a vote of the qualified electors shall specify the amount of bonds to be issued, and the rate of interest. We are aware that there are two lines of decisions upon the proper construction of statutes similar to our own. One line holding that the statute must be strictly and literally complied with, while the other line holds that a substantial compliance is all that is required. That is, such a compliance as “to enable the voters to 'fairly and intelligently understand the character and extent of the liability proposed to be imposed upon the city.” (Cheyenne v. State ex rel. Rollins, 17 Wyo. 90, on p. 104, 96 Pac. 244.) In that case the statute in question was fully' considered and the authorities cited and reviewed in an elaborate opinion by -Chief Justice Potter; and while the identical questions in the present case were not there involved, the reasoning therein does apply to the case at bar. There the rate of interest stated in the proposition submitted was “to. bear interest at a rate not exceeding five per cent per annum.” It was held that that was such, a substantial compliance with the statute as to render the bonds valid. It is true that in that case the bonds were issued at five per cent, while in the present case they are proposed to be issued at four and one-haif per cent, being at a less rate than the limit authorized *274by the vote. In this ease the ordinance adopted after the election fixed the amount of the bonds to be issued at $6o,-000.00, the limit authorized by the vote of the people. It certainly cannot be seriously contended that the voters did not clearly understand that they were by their,votes authorizing the issuance of bonds to that amount. We regard the Cheyenne case, supra, as practically decisive of the question of the sufficiency of the statement specifying the amount of the bonds, the statutory requirement being that the proposition submitted shall specify the amount of the bonds and the rate of interest. The one is not required 'to be more definitely specified than the other; and it having been held that to state the rate of interest at “not exceeding five per cent’' did not invalidate the bonds when issued at that rate, we see no substantial reason why the same rule should not apply to the amount of the bonds. In addition to the cases cited in the Cheyenne case, see Elyria Gas & Water Co. v. City of Elyria, 14 Ohio Cir. Ct. Rep. 219, and City of Oswego v. Davis, 97 Kan. 371, 154 Pac. 1124.

As to the question of interest, the only difference between the present case and the Cheyenne case is that in this case the rate of interest the bonds should ¡bear was fixed by the CQUncil after the election at four and one-half per cent instead of five per cent. But we do not think that would render them invalid. By Section 1867, Comp. Stat. 1910, “Any incorporated city or town in the State of Wyoming is hereby authorized, for the purpose of providing funds for constructing, purchasing, extending or maintaining a system of water works, * * * * to borrow money and to issue coupon bonds of such city or town, * * * * and shall bear interest at a rate not exceeding six per cent per annum, payable annually or semi-annually. * * * * That said bonds shall not be sold for less than their par value.” The statute authorizing the city to borrow money and issue its bonds therefor for said purpose at any rate of interest, not exceeding six per cent per annum, at which it could sell the bonds at their par value. It was not intended to prohibit the city from securing the money at the lowest *275rate at which it could be secured at the time, and, in our opinion, the provision of Section 1870 that the proposition submitted shall specify the rate of interest, when reasonably construed, means that the rate of interest to be so specified shall be the rate at which the council believes bonds can be sold at par, and fixes the limit of the indebtedness in that respect which it is proposed to impose upon the city. It does not seem reasonable that after the people had authorized the council to borrow the money at five per cent if it was found that the amount desired could be had at four and one-half per cent, that the council should be bound by a strict and literal construction of the language of Section 1870 to impose a greater burden on the people. It is the duty of the council to administer the business of the city honestly and economically, and we do not think it was intended by the Legislature by the language used to do more than require the council to specify the limit of the indebtedness which it asked the electors to approve or disapprove. Certainly no taxpayer should complain because his agents have made a better -bargain for him in the matter of the rate of interest to be paid than he had expressed his willingness to pay. To hold the proposed issue of bonds invalid for the reasons assigned would be to give to the language of the statute a more technical, strict and literal construction than we believe was intended ¡by the Legislature. The judgment of the District Court is affirmed. Affirmed.

Potter, C. J., and Brydrnburgh, J., concur.