NO. 93-145
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
CARBON COUNTY,
Plaintiff and Respondent,
DAIN BOSWORTH, INCORPORATED, a Delaware
Corporation, et al., and D.A. DAVIDSON & CO.,
KAREN T. DOOLEN and FRANK and MARGO KELLEY,
as representatives of the Bondholder Class,
Defendants and Appellants,
V.
CARBON COUNTY,
Plaintiff and Respondent,
and
DON TAYLOR, MONA L. NUTTING
and JOHN PRINKIZI,
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Thomas C. Honzel, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Keith Strong (argued) and Bruce A. MacKenzie
(argued), Dorsey & Whitney, Great Falls,
Montana; and James H. Goetz (argued), Attorney
at Law, Bozeman, Montana (for the Underwriters)
Robert M. Murdo (argued), Jackson, Murdo,
Grant & McFarland, Helena, Montana (for
the Bondholder Class)
FOG Respondent Carbon County:
Ward Swanser (argued) and T. Thomas Singer
(argued), Moulton, Bellingham, Long0
& Mather, Billings, Montana; and Anthony
Kendall, Carbon County Attorney,
Red Lodge, Montana
Submitted: April 18, 1994
Decided: May 16, 1994
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Appellants appeal from an order of the First Judicial District
Court, Lewis and Clark County, denying their motion for summary
judgment and granting summary judgment to plaintiff Carbon County,
finding that the County has no further obligation to make loans
from the revolving fund to the rural special improvement district
(RSID) fund when the RSID assessments are insufficient to pay the
RSID bonds. Respondents are the present Carbon County
Commissioners. Appellants are three underwriters, Dain Bosworth,
Inc., D.A. Davidson 8 Company, and Piper Jaffray 8 Hopwood, Inc.,
and numerous bondholders.
We reverse the District Court's order for summary judgment and
remand for further proceedings in accordance with this opinion.
While many issues are raised by the parties, we need not
discuss them because the dispositive issue on appeal is whether a
county is required to continue to levy general taxes and loan money
to an RSID revolving fund created pursuant to § 7-12-2181, MCA,
when the RSID is deficient, and the revolving fund may never be
sufficient to retire the bonds, and the county's loans may never be
repaid.
In 1984, when a developer called Joint Venture petitioned
Carbon County to approve a subdivision plat to develop a country
club subdivision and golf course known as Red Lodge Country Club
Estates, the then-seated County Commissioners required that Joint
Venture construct street, water, and sanitary improvements. The
County Commissioners agreed to help finance these improvements.
3
After notice requirements were met under § 7-12-2105, MCA, the
County Commissioners created two RSIDs, 8 and 9, under § 7-12-2103,
MCA. The County Commissioners authorized improvements totalling
$2,244,000 for RSID 8, and $1,025,000 for RSID 9.
The County Commissioners agreed to issue bonds to the public
to finance the improvements following the requirements found in
55 7-12-2169 to -2175, MCA, and agreed to levy and collect
assessments in the principal amount of the bonds against property
within the RSIDs under §§ 7-12-2151 to -2168, MCA.
The County Commissioners also created a revolving fund under
§ 7-12-2181, MCA, and agreed to authorize loans or advances from
the revolving fund to the RSID fund when assessments are deficient
to pay the bond payments. To replenish the revolving fund,
5 7-12-2182(1)(a), MCA, provides that county commissioners may loan
monies from the general fund to the revolving fund as may be
necessary, and § 7-12-2182(1)(b), MCA, allows the County to levy a
tax on all taxable property within Carbon County "as shall be
necessary to meet the financial requirements of such fund." The
tax levy iS Subject to the limitations in fr 7-12-2182(1)(b), MCA,
requiring that the tax may not be an amount that would increase the
balance in the revolving fund above five percent of the principal
amount of the then-outstanding RSID bonds. When the revolving fund
makes a loan to the RSID fund, a lien up to the loan amount
attaches to the following: all RSID property which is delinquent
in assessment payments: all unpaid assessments whether delinquent
or not; and all money deposited into the RSID fund. Section
4
7-12-2184(l), MCA. The liens may be enforced by the sale of the
property at a tax sale. Section 7-12-2184(2), MCA.
The County Commissioners published notice of the bond sale
stating it would create, use, and fund a revolving fund if
assessments were insufficient until all the bonds and interest
thereon are fully paid. Because the bonds did not sell initially,
the County Commissioners agreed to sell the bonds to Dain Bosworth,
Inc., D.A. Davidson, Piper Jaffray & Hopwood, Inc. (underwriters),
who in turn sold the bonds to the public. The bond purchase
agreement between the County Commissioners and the underwriters
restates the promise to use and maintain the revolving fund. The
RSIDs were recreated, and again, the County Commissioner's
resolution made the following promise to create, use, and fund a
revolving fund:
[T]his Board does hereby undertake and agree . . . to
secure the Bonds with the Revolving Fund and to issue
orders annually authorizing loans . . . in the amounts
sufficient to make good any deficiency in the District
Fund, to the extent that funds are available, and to
provide funds for the Revolving Fund by annually making
a tax levy or loan from the General Fund, subject to the
maximum limitations imposed by the Montana Code
Annotated, Section 7-12-2182. Specifically, this Board
shall annually or more often if necessary issue an order
authorizing a loan or advance from the Revolving Fund to
the District Fund in an amount sufficient to make good
any deficiency then existing in the Interest Account in
the District Fund, and shall issue an order authorizing
a loan or advance from the Revolving Fund to the District
Fund in an amount sufficient to make good any deficiency
then existing in the Bond Account of the District Fund to
the extent that moneys are available in the Revolving
Fund.
Joint Venture agreed with the underwriters to provide
additional security through covenants to: (1) guarantee the bond
5
payments in 1985 and 1986 with two letters of credit: (2) pay the
assessments on all developer owned land from 1987 to 1992; (3) pay
a substantial portion of the unpaid assessments after 1992; and
(4) remain in existence until it sold its assets to a buyer worth
$16 million or more. However, in order to keep the tax exempt
status of the bonds, the County waived section (2) of the security
agreement whereby Joint Venture would pay all assessments on all
developer owned land through 1992.
The bonds were prepared according to the form set out in
5 7-12-2170, MCA (repealed 1989). The underwriters advertised to
the public that the bonds were for sale and were secured by the
revolving fund. Numerous .people bought the bonds totalling over
$3 million. The issued bonds were arranged for interest to mature
on January 1, 2000, bearing interest at annual rates from 7.5
percent to 12.625 percent payable on each January 1, commencing
January 1, 1985. Additional interest would be paid for a limited
time ending January 1, 1986.
The property improvements were made using the bond proceeds.
The RSID property did not sell as expected, and of the property
that did sell, the assessments became delinquent resulting in
inadequate revenue to pay the bond payments. Under ii 7-12-2184,
MCA, the County used its authority to sell two lots of the 150
delinquent lots at a tax sale. Bond payments on January 1, 1985,
1986, and 1987, were paid from the following: bond proceeds
remaining after improvements were completed; the few assessments
paid: and one of two letters of credit from Joint Venture. Tax
6
levies to replenish the revolving fund became necessary for the
payments on January 1, 1988, 1989, and 1990. Since January 1,
1990, the newly-seated County Commissioners refused to loan funds
from the revolving fund, asserting that the loans would be
unsecured because the current value of the RSID property is less
than the delinquent and future assessments against them.
On December 31, 1990, the County Commissioners filed action
for a declaratory judgment defining the County's obligation under
the bonds, the revolving fund laws, and the Montana Constitution.
In February 1992, the underwriters and bondholders, and the
County filed cross-motions for summary judgment. The underwriters
and bondholders also filed two motions in limine challenging the
relevance of evidence concerning current property values of the
RSID property, and challenging the relevance of Joint Venture's
agreement to provide further security. On February 10, 1992,
during the pendency of this action in state court, Joint Venture
filed its petition for Chapter 11 bankruptcy. The Bankruptcy Court
held a hearing on February 16, 1994, on debtor Red Lodge County
Club Estates Joint Venture's fourth amended plan of reorganization,
together with objections filed by Carbon County, and Northwest
Capital Management and Trust Company. Each party was represented
by counsel. The Bankruptcy Court issued its order on January 7,
1994, conditionally approving debtor's third amended disclosure
statement, and set February 10, 1994, as the last day for a
party-in-interest to file objections to the disclosure statement.
No objections were filed, and the Bankruptcy Court issued its order
7
confirming a Chapter 11 amended plan of reorganization for debtor
on February 28, 1994.
In its order, the Bankruptcy Court said:
Once the bondholders agree to accept their payment
proposed under the Plan, as is the case, then all legal
claims of the bondholders againstR.S.1.D. Nos. 8 and 9,
as well as lien rights of Carbon County involving the
Debtor's property, are extinguished.
The Bankruptcy Court further said:
The bondholders, like Carbon County, are only secured up
to the value of the Debtor's R.S.I.D. property.
11 U.S.C. § 506(a). Whether that value, pegged at
$1,3~1,011.11, is said to pay assessments or principle or
interest, is unimportant. The plan payment is in full
satisfaction of all bondholder's indebtedness against the
R.S.I.D. property of the Debtor because all lien rights
of both Carbon County and the bondholders are being
extinguished.
The debtor owned more than 75 percent of the property in the
RSID, and as to the property that the debtor owned, all liens were
extinguished. The Bankruptcy Court's order did not affect the
obligations of non-Joint Venture property, and the legal issues
posed for this Court remain the same for the property within the
RSID not affected by the Bankruptcy Court's order.
On February 4, 1993, the District Court denied the
underwriters' and bondholders* motion challenging property value
evidence, left undecided the motion concerning the agreement to
provide further security, and granted summary judgment in favor of
the County. The underwriters and bondholders appeal.
Is a county required to continue to levy general taxes and
loan money to an RSID revolving fund created pursuant to
5 7-12-2181, MCA, when the RSID is deficient, and the revolving
3
fund may never be sufficient to retire the bonds, and the county's
loans may never be repaid?
Rule 56(c), M.R.Civ.P., provides that summary judgment should
be granted when the record does not contain any genuine issue of
material fact and the moving party is entitled to judgment as a
matter of law. The scope of review for a suit that is disposed of
by summary judgment by a judge where the facts are uncontested, is
broader than in other appeals, and this Court may examine the case
and reach a conclusion according to our findings. District No. 55
v. Musselshell County (1990), 245 Mont. 525, 527, 802 P.2d 1252,
1253.
The underwriters and bondholders contend that although the
District Court acknowledged that the revolving fund laws provide
that the County was obliged to make the loans, it ignored the laws
when it found that the County Commissioners are not required to
make further payments from the revolving fund. The County
Commissioners assert that the purpose of the revolving fund was to
provide short-term secured loans; it was not intended to be a
guarantee of partial payment.
When analyzing statutory law, courts look first to the plain
meaning of the words used in the statute, and if that is unclear,
then courts look to legislative history. State ex rel. Roberts v.
Public Service Commission of Montana (1990), 242 Mont. 242, 246,
790 P.2d 489, 492. If the statute's language is plain,
unambiguous, direct, and certain, the statute speaks for itself.
Blake v. State (1987), 226 Mont. 193, 198, 735 P.2d 262, 265.
9
The County was following a well-established process in Montana
when it created the RSIDs and financed the improvements by selling
bonds, and when it authorized the use of the revolving fund.
In 1913, the Legislature first authorized cities to create
special improvement districts (SIDs). Laws 1913, Ch. 89. In 1915,
the Legislature authorized the counties to create rural special
improvement districts. Laws 1915, Ch. 123. Prior to 1929, special
assessments were the only source of payment for the bonds, and when
these assessments were delinquent, many bonds were never paid. Two
problems arose: first, bonds matured sequentially, therefore, the
failure to pay bond payments placed the entire bond offering into
default: second, when property assessments were delinquent and the
city sold the property at a tax sale, statute provided that when
the tax deed was issued, all liens were extinguished. Once the
liens were extinguished, the city had no right to collect
delinquent SIDs, and consequently, bonds were not paid in full. In
1929, the Legislature mandated that cities create an SID revolving
fund to secure the prompt payment of bonds when interest becomes
due. Laws 1929, Ch. 63, § 1.
Before 1983, § 7-12-2181, MCA (1981), also required that any
county creating an RSID "shall . . . create, establish and maintain
. . . [a] revolving fund." (Emphasis added). The section was
amended in 1983 to read that a county 'Imay . . . create, establish
and maintain" (emphasis added) a revolving fund, making the
revolving fund voluntary. The Legislature also added a final
sentence to the section providing:
10
Nothing herein shall authorize or permit the elimination
of a revolving fund until all the bonds and warrants
secured thereby and the interest thereon have been fully
paid and discharged.
Section 7-12-2181, MCA (1993).
In 1983, the Legislature amended § 7-12-2181, MCA, to allow
the counties to have a revolving fund. The sponsor stated in
testimony in support of his Bill:
Our present laws that establish bonds for SIDs and RIDS
have a revolving fund requirement that the whole tax
paying area is actually responsible for the payments of
those bonds. When you get into a period like we're in
now when payments are not being made, then the county has
to levy a property tax on the whole district to make
those bond payments. This is an alternate type of bond.
It would limit the obligation to the district where the
improvement is being made. There would be no general
taxing backup of these bonds. It would not affect the
existing law but it would create a new section for a new
type bond. Any developer who comes in is getting a cold
shoulder because the city does not want to extend itself
any further. This would say, if you can find a market
for your bonds they will still have a tax exempt feature
and it would not fall back on the general taxpayer, it
would only be an obligation to that district.
Hearings on H.B. 872 Before the Local Govt. Committee, Montana 48th
Legislature, at 4 (1983) (Statement of Representative Walter Sales,
sponsor of H.B. 872).
Once the bonds are issued with the agreement to use the
revolving fund, the Legislature, in § 7-12-2185(2), MCA, provided
the following:
The undertakings and agreements shall be binding upon
said county so long as any of said special improvement
district bond or warrants so offered or any interest
thereon remain unpaid.
Nothing in the statutes voids the commitment to loan from the
revolving fund if the RSID becomes deficient. We conclude that the
11
plain meaning of the Revolving Fund Law and the legislative history
support the legislative intent to allow counties to choose whether
to finance the districts by issuing bonds secured by the revolving
fund. Here, the County Commissioners agreed to the revolving fund
obligation and issued bonds secured by the revolving fund. The
District Court quoted ss 7-12-2185(2) and -2181, MCA, and found
that "[t]he language of these statutes is clear that the County is
required to continue funding the revolving fund and to continue
making loans to the district funds so long as the bonds and
interest remain unpaid."
Because it is the obligation of the County to make loans from
the revolving fund, and the obligation might never be paid, the
District Court reasoned that this was in violation of the Montana
Constitution prohibiting indebtedness past a certain percent. In
Hansen v. City of Havre (1941), 112 Mont. 207, 114 P.2d 1053, and
in Stanley v. Jeffries (1929), 86 Mont. 114, 284 P. 134, we held
that this procedure is constitutional.
The District Court found that the loans from the revolving
funds to the deficient RSIDs are incurring additional debt to the
County, violating 5 7-7-2101(2), MCA (1984), which considered void
any bonds in excess of $150,000 without a majority vote by voters.
The court found that although notice must be published in the local
newspaper of the County's intention to create an RSID, it is mailed
only to real estate owners within the proposed district, therefore,
the property owners outside the districts have no notice to protest
the creation of the district or the bond issuance that they may be
12
required to pay. The court stated that neither Stanley, nor
Hansen, applies because neither decision addresses the question of
the county's obligation to make loans to an RSID when it has
defaulted on the bonds and loans from the revolving funds are
insufficient to cure the default.
Hansen decided the constitutional question concerning debt
limit and the revolving fund. The Hansen Court found that special
improvement district bonds secured by a revolving fund do not
constitute indebtedness of the city within the Montana
Constitution, Article XIII, Section 6 (1889), which provided at
that time that no city shall be allowed to become indebted, in any
manner or purpose, in the aggregate exceeding three percent of
taxable property value therein. Hansen, 114 P.2d at 1056. The
revolving fund is not chargeable with the bond payments, but makes
loans to the district fund secured by a lien on property in the
district. Hansen, 114 P.2d at 1056. Although the revolving fund
may pay part of the bonds, and the revolving fund is replenished by
a tax levy on property within the city, this does not create a city
debt, but is merely a loan arrangement to meet possible
deficiencies in the district fund whereby the city loans money from
the revolving fund. Hansen, 114 P.2d at 1056.
The District Court treated the bonds as general obligation
bonds because the County must continue to make loans from the
revolving fund and levy taxes to replenish the fund. However, a
general obligation would mandate that the bonds be paid when due
from the County's available funds, and if funds are insufficient,
13
from tax levies upon all taxable property within the County.
Sections 7-7-2205 and -2206(4), MCA. On the other hand, special
improvement bond obligations are limited to the district funds, and
if necessary, receive loans from the revolving fund. If both funds
are insufficient to meet bond payments, there is no other source to
pay the bonds. The revolving fund levies are limited to an amount
that would increase the balance in the fund to no more than five
percent of the principal amount of the outstanding bonds under
§ 7-12-2182(1)(b), MCA. The bonds are still special, limited
bonds. We hold that the District Court erred in its application of
Hansen when it cited that decision for support that the County is
relieved of its obligation to make loans to the RSIDs.
The bondholders and underwriters argue that the District Court
also misapplied Stanley, which states any loss associated with the
bonds falls upon the bondholders and not the city. They also
contend the court erred when it relied on Griffin v. Opinion
Publishing Company (1943), 114 Mont. 502, 138 P.2d 580, for support
that any loss caused by delinquent assessments falls upon the
bondholders and not the County.
In StanleV, two challenges were present. The first challenge
concerned bonds issued after the revolving fund statutes were
enacted and secured by the revolving fund. The second challenge
concerned bonds issued before the revolving fund statutes were
enacted. This Court held that the bonds issued before the
revolving fund laws were enacted were not secured by the revolving
fund, and any loss falls upon the bondholders and not the city.
14
Stanlev, 284 P. at 139-40. In Griffin, the issue was whether a
newspaper article questioned the source of payment for SID bonds
and the truth of the article. In analyzing the article's truth,
the court said SID bonds were not an obligation of the city.
Griffin, 138 P.2d at 588.
Here, the County contends that the bondholders are private
parties and the obligation to make loans from the revolving fund to
repay the bonds is an unconstitutional guaranty of a private
party's obligation in violation of Article VIII, Section 1, of the
Montana Constitution, requiring that state funds be used for public
purposes.
This Court has consistently upheld the revolving fund law as
constitutional when it authorizes a loan or donation of public
revenues for the benefit of bondholders in payment for the special
improvements in a district, whereby bonds are secured by the
revolving fund.
Although bondholders will profit by the revolving fund law,
the provision will partly avoid the past scenario where bondholders
suffered the loss when a certain percent of property owners fail to
pay the property assessments. Stanley, 284 P. at 138. The Stanlev
Court stated:
[T]he laying out and improvement of streets, alleys,
sewers and the like is essentially a public purpose
benefitting the entire community, although the work is
done in but a portion of the city, and . . . each portion
of the city might be thus improved at the general public
expense, and no taxpayer could be heard to complain
thereof. In other words, in order to erect any public
improvement by the creation of special improvement
districts, both general benefits to the municipality and
special benefits to particular property must be
15
conferred--the special benefit to adjacent property is
but incidental to the general public: it could not
otherwise lawfully be created . . . .
. . . [T]he Legislature . . . might have, lawfully,
imposed a much greater burden upon the municipality.
Stanlev, 284 P. at 138-39. The public policy behind the SID
statute was to build communities by creating districts within the
city and providing improvements, and similarly, the policy behind
RSIDs was to improve rural areas which also benefits the entire
county. Stanlev reveals that losses from delinquent assessments
were contemplated, especially given the period in Stanley, where
great losses to bondholders were likely because when a tax deed was
issued, the unpaid assessment lien on the properties were
extinguished, and the bonds issued before the revolving fund laws
were enacted were not secured by the fund. Stanley, 284 P.2d at
139. Also, the city received no consideration for pledging the
security, therefore, to make loans from the revolving fund would
authorize a tax levy for a private purpose. Stanley, 284 P.2d at
139.
We hold that the loans from the revolving fund and subsequent
tax levies are within the constitutional mandates of Article VIII,
Section 1, of the Montana Constitution, requiring that state funds
be used for public purposes.
The County relies on White v. State (1988), 233 Mont. 81, 759
P.2d 971, and Hollow v. State (1986), 222 Mont. 478, 723 P.2d 227,
for authority to support its argument that the revolving fund and
the obligation to tax county property owners to fund the revolving
16
fund is an unconstitutional pledge of credit. These decisions are
distinguishable and do not apply to these facts.
White concerned a bill establishing a program empowering a
special science and technology board to funnel bond proceeds into
private business ventures through technology investments. This
Court found that the statute required the Legislature to provide
the difference between the board's return on the investment of bond
proceeds and the bond obligations, which were used for the benefit
of private businesses, and was, in effect, a direct pledge of the
state's credit to secure bonds. White, 759 P.2d at 974. This
Court denounced this pledge to secure bonds where the proceeds are
to be used for the benefit of private businesses. White, 759 P.2d
at 974. Here, the bond proceeds were used to benefit Carbon County
by providing improvements to RSIDs within the County--not to
private businesses.
For the same reason, Hollow does not apply because that
decision also dealt with private debts and obligations. Hollow
concerned an act that made an open-ended promise to loan coal
severance tax revenues from an in-state investment fund to an
economic guarantee fund, which was used to secure bonds for private
economic development projects. Hollow, 723 P.2d at 232. Here, the
RSIDs receive the benefit of the improvements, and the debt is
charged to the district, not to the County. The County is
obligated only to make loans to the district pursuant to the
revolving fund laws and its agreements. The County receives an
17
asset in return, a loan receivable secured by a lien on the RSID
property and the RSID fund for repayment.
We hold that the County's obligation to make loans from the
revolving fund and the obligation to levy taxes to fund the
revolving fund is not an unconstitutional pledge of credit.
The underwriters and bondholders assert that because the
relationship between them and the County was contractual, and the
County was authorized to enter into a contract to establish a
revolving fund, this Court should enforce the contract.
Public bodies are as bound by their contracts as are private
parties. State v. City of Helena (1952), 125 Mont. 592, 602, 242
P.2d 250, 255. Where the language is *@clear and unambiguous there
is nothing for the court to construe; the duty of the court is
simply to apply the language as written to the facts of the case,
and decide the case accordingly." Bain v. Williams (1990), 245
Mont. 228, 231, 800 P.2d 693, 695 (quoting Danielson v. Danielson
(1977), 172 Mont. 55, 58, 560 P.2d 893, 894). In this case, both
the County's resolutions authorizing issuance of the bonds, and the
bond purchase agreement between the County and the underwriters,
contain the County's promise to create, use, and fund a revolving
fund subject to the maximum limitations in § 7-12-2182, MCA, if
assessment payments were insufficient. The agreements are clear
and unambiguous, and the parties had mutual understanding of the
County's obligations.
The County freely entered into and agreed to the terms within
the resolutions and the bond agreement. In fact, in April 1984,
18
the county passed a resolution to offer bonds with a revolving fund
pledge. The revolving fund commitment made in the subsequent
resolution on August 30, 1984, is nearly identical to the earlier
resolution; the bonds were drafted pursuant to the requirements in
5 7-12-2170, MCA (repealed 1989). Those who enter a contract are
charged with the responsibility of acquainting themselves with the
agreement terms, and those who execute a written contract are
presumed to know its contents and terms; they cannot obtain relief
unless they show ambiguity in the contract, misrepresentation, or
bad faith. Johnson v. Estate of Shelton (1988), 232 Mont. 85, 90,
754 P.2d 828, 830-31.
The County was also seeking the benefits of the improvements
of property and increased property values within the County. It
used the security of the revolving fund to encourage people to buy
the bonds. The bondholders relied on the promises to use the
revolving fund. The County Commissioners, having exercised their
discretion to institute the revolving fund, and having freely
entered into an agreement with the bondholders and the
underwriters, under both the statutes and terms of the agreement,
are obliged to carry out their contractual obligations. The
County's refusal to honor this agreement and authorize loans from
the revolving fund is a breach of the contract.
Where the Legislature has provided the requirement to levy
taxes to replenish the,revolving fund to meet the requirements of
this fund, it follows that it is mandatory that the revolving fund
be used for the purpose intended-- to make loans to the district
19
fund to make up any deficiencies. Hansen, 114 P.2d at 1059. The
Court in Hansen stated that under what was then 5 5277.3, RCU
(1937) I providing that the city "may" make the loans from the
revolving fund to the districts to make up any deficiencies, that
"maytl means "must" or *'shall" according to the Legislature's
intent: and, a "contract to do so does not bind successive
officers to perform a discretionary act" but makes the acts
mandatory regardless of the contract. Hansen, 114 P.2d at 1059.
With the exception of the liens and obligations that were
against those lots owned by the debtor Red Lodge Country Club
Estates Joint Venture at the time of the Bankruptcy Court's
judgment and which were not previously sold or agreed to be sold by
Joint Venture and that were extinguished by the Bankruptcy Court's
order of February 28, 1994, we conclude that the County's agreement
to make loans from the revolving fund is mandatory and not
discretionary. The County must continue to make loans to the
revolving fund and must continue to levy taxes to replenish the
revolving fund until the obligations not extinguished by the
bankruptcy proceedings are paid in compliance with § 7-12-2181,
MCA. Because the County receives a loan receivable secured by a
lien on the RSID property when it makes a loan from the revolving
fund, the County has the option to dispose of the remaining
delinquent assessment properties at a tax sale to acquire revenue
for the bond payments.
20
Other issues were raised by the parties, but because of our
holding on the issue discussed, we need not consider the other
questions.
We reverse the District Court's order for summary judgment and
remand for further proceedings in accordance with this opinion.
JustIce
21