                                       No. 12940

          I N THE SUPREME COURT OF THE STATE OF MONTANA

                                          1975



THE STATE OF MONTANA, e x rel.,
THE C I T Y OF TOWNSEND, a m u n i c i p a l c o r p o r a t i o n ,

                              Relator,



D. A. DAVIDSON, I N C . ,        a Montana
Corpora t i o n ,

                              Respondent.




ORIGINAL PROCEEDING :


Counsel o f Record:

       For Relator:

              P a t r i c k F . Hooks a r g u e d , Townsend, Montana

       F o r Respondent :

              S c r i b n e r and Huss, Helena, Montana
              W i l l i a m S c r i b n e r a r g u e d , H e l e n a , Montana



                                                 Submitted:          J a n u a r y 14, 1975

                                                     Decided :
          &,I fl y
                 g
                 !
                 :.;
                                                                   JAN 3 0 1975
Filed :
J u s t i c e FJesley C a s t l e s d e l i v e r e d t h e Opinion of t h e Court.

      This i s an o r i g i n a l proceeding f o r d e c l a r a t o r y r e l i e f under
T i t l e 93, Chapter 89, R.C.M.                1947, t h e Uniform D e c l a r a t o r y Judg-
ments Act.
      R e l a t o r i s a m u n i c i p a l i t y of t h e s t a t e of Montana, d u l y
organized and e x i s t i n g a s a municipal c o r p o r a t i o n under t h e
laws of Montana.             Respondent i s a Montana c o r p o r a t i o n which,
i n t h e c o u r s e of i t s b u s i n e s s , purchases f o r r e s a l e bonds i s s u e d
by s p e c i a l improvement d i s t r i c t s w i t h t h e s t a t e of Montana.
      O March 5 , 1974, by r e s o l u t i o n of i t s c i t y c o u n c i l r e l a t o r
       n
c r e a t e d , w i t h i n t h e c i t y , S p e c i a l Improvement D i s t r i c t No. 4 f o r
t h e purpose of g r a d i n g s t r e e t s , r e p l a c i n g e x i s t i n g g r a v e l b a s e
c o u r s e a s needed, p l a c i n g a s p h a l t i c s u r f a c e c o u r s e , i n s t a l l i n g
storm d r a i n a g e p i p e s and i n l e t s a s need, a l l upon t h e s t r e e t s and
avenues of t h e s p e c i a l improvement d i s t r i c t .                T h e r e a f t e r , on
June 27, 1974, r e l a t o r awarded a c o n t r a c t f o r t h e c o n s t r u c t i o n
o f such improvements.                R e l a t o r c i t y and t h e c o n t r a c t o r i n t e n d t o
proceed w i t h t h e c o n s t r u c t i o n i n accordance w i t h t h e c o n t r a c t
when bonds of t h e s p e c i a l improvement d i s t r i c t a r e s o l d and t h e
n e c e s s a r y funds a r e obtained f o r t h e f i n a n c i n g of t h e work.
      By n o t i c e duly given and a d v e r t i s e d according t o law, r e l a t o r
r e q u e s t e d b i d s f o r submission t o t h e c i t y c o u n c i l f o r t h e purchase
of $264,000, par v a l u e , of S p e c i a l Improvement D i s t r i c t No. 4 bonds
f o r t h e f i n a n c i n g of such c o n s t r u c t i o n .     O September 3 , 1974, a
                                                                     n
b i d was submitted by respondent and S t a t e Banlc of Townsend f o r t h e
purchase of such bonds a t p a r w i t h an a c c r u i n g i n t e r e s t r a t e of
7.75% per annum.             N o t h e r b i d was submitted.
                              o                                               The b i d was condi-
t i o n e d upon t h e i s s u a n c e and f i l i n g of an opinion of t h e a t t o r n e y
g e n e r a l of t h e s t a t e of Montana, t o t h e e f f e c t t h a t c i t i e s and towns
could l a w f u l l y i s s u e and s e l l s p e c i a l improvement d i s t r i c t bonds
b e a r i n g an i n t e r e s t r a t e i n excess of 7% per annum.                   The b i d was
accepted by t h e c i t y c o u n c i l and t h e r e a f t e r           a c o n t r a c t was e n t e r e d
i n t o between r e l a t o r and t h e b i d d e r s , c o n d i t i o n e d a s a f o r e s a i d ,
providing f o r t h e i s s u a n c e of S p e c i a l Improvement D i s t r i c t No. 4
bonds i n t h e sum of $264,000 b e a r i n g i n t e r e s t a t t h e r a t e of
7.75% per annum, and f o r t h e purchase t h e r e o f by t h e b i d d e r s a t
p a r p l u s accrued i n t e r e s t t o t h e d a t e of d e l i v e r y .
      T h e r e a f t e r , on November 2 7 , 1974, t h e a t t o r n e y g e n e r a l of t h e
s t a t e of Montana i s s u e d an opinion s t a t i n g , i n e f f e c t , t h a t c i t i e s ,
towns and c o u n t i e s may l a w f u l l y i s s u e and s e l l s p e c i a l improvement
d i s t r i c t bonds o r w a r r a n t s , b e a r i n g an i n t e r e s t r a t e i n excess of
7% per annum i f t h e s p e c i a l assessments paid by t h e p r o p e r t y owners
w i t h i n t h e d i s t r i c t a r e a p p r o p r i a t e d f o r t h e payment of p r i n c i p a l
and i n t e r e s t on such bonds o r w a r r a n t s .
      R e l a t o r was then advised by respondent t h a t , n o t w i t h s t a n d i n g t h e
p r o v i s i o n s of t h e i r c o n t r a c t and t h e a t t o r n e y g e n e r a l ' s o p i n i o n ,
i t would c o n t i n u e t o r e f u s e t o purchase t h e bonds f o r t h e claimed

reason t h a t c i t i e s and towns a r e p r o h i b i t e d by law from i s s u i n g o r
s e l l i n g s p e c i a l improvement d i s t r i c t bonds o r w a r r a n t s b e a r i n g an
i n t e r e s t r a t e g r e a t e r than 7% per annum.
      R e l a t o r has made d i l i g e n t e f f o r t t o s e c u r e a purchaser f o r
t h e bonds a t an i n t e r e s t r a t e of 7% o r l e s s b u t has been unable t o
do so.       By reason t h e r e o f , r e l a t o r i s informed and b e l i e v e s t h a t
i t w i l l be unable t o proceed w i t h such c o n s t r u c t i o n o r t o perform

i t s o b l i g a t i o n s under t h e c o n s t r u c t i o n c o n t r a c t u n l e s s respondent
p e r f o r m s u n c k r ' ~ p r o v i s i o n s of i t s c o n t r a c t f o r t h e purchase of t h e
bonds.
      O information and b e l i e f , r e l a t o r s t a t e d i n i t s a p p l i c a t i o n
       n
f o r d e c l a r a t o r y judgment t h a t f o r t h e p a s t s e v e r a l months c i t i e s ,
towns and c o u n t i e s of t h e s t a t e of Montana have been unable t o
f i n a n c e needed s p e c i a l improvements i n d i s t r i c t s c r e a t e d f o r t h a t
purpose because t h e p r e v a i l i n g bond market w i l l n o t j u s t i f y t h e
purchase of s p e c i a l improvement d i s t r i c t bonds b e a r i n g an i n t e r e s t
r a t e of 7% o r l e s s and t h a t t h e p r e v a i l i n g long term municipal bond
i n t e r e s t r a t e s a r e u n l i k e l y t o come down i n t h e f o r e s e e a b l e f u t u r e .
    The subject matter of this action is of great and widespread
public concern and should be resolved at the earliest possible
time.   Due consideration of this question in the trial courts and
final determination by an appeal to this Court is an inadequate
remedy in that delay would ensue before a final decision could
be had, making it impossible for cities, towns and counties to
proceed with necessary construction of-improvements in the forth-
coming construction season.   There are no disputes of fact and
only a single issue of law is involved, namely, whether cities,
towns and counties have authority to issue and sell special improve-
ment district bonds and warrants bearing an interest rate in
excess of 7% per annum.   For these reasons it is appropriate and
proper for this Court to accept original jurisdiction of this
proceeding to insure a just and speedy determination of the question
involved.
    The 1971 amendments to the special improvement district laws
were a part of a package of amendments relating to interest rates
on state, county, city and school district indebtedness.   This
legislation, House Bill 15, was revised many times before it was
finally passed.   Sections 2 and 3 of the bill, now codified
respectively as sections 79-2602 and 79-2603, R.C.M. 1947, are
significant:
   "79-2602. Rate of interest on bonds to be determined
   by governing bodies---limitations and exceptions. Bonds
   of a political subdivision shall bear interest at such
   rate or rates as its governing body shall determine, ex-
   cept that no such rate shall exceed seven percent (7%)
   except revenue bonds issued under the terms of sections
   11-2401 through 11-2414, sections 11-2217 through 11-2221,
   and sections 11-4101 through 11-4110, R.C.M. 1947, which
   rate shall not exceed nine percent ( % . I I
                                       9)
    "79-2603. Rate of interest on special assessments to
    be determined by governing bodies---limitations. All
    special assessments levied by a political subdivision
    shall bear interest at such rate or rates as its governing
    body shall determine, except that no such rate shall ex-
    ceed the greater of seven percent (7%) per annum, or in
    the event that the special assessments are appropriated
    for the payment of principal and interest on bonds issued
    by the political subdivision, the rate of interest on
    said bonds. "  (Emphasis added. )
      S e c t i o n 79-2602, i f r e a d a l o n e , would l e a d one t o conclude
t h a t a l l bonds of p o l i t i c a l s u b d i v i s i o n s , except t h e revenue
bonds t h e r e i n s p e c i f i e d , c a r r y a maximum i n t e r e s t r a t e of 7%.
S e c t i o n 79-2603, w i t h r e s p e c t t o s p e c i a l improvement bonds i n d i -
c a t e s t h e c o n t r a r y by a u t h o r i z i n g a g r e a t e r r a t e of i n t e r e s t on
s p e c i a l assessments i n t h o s e c a s e s where t h e s p e c i a l improvement
bonds b e a r a h i g h e r r a t e of i n t e r e s t than 7%.             Originally section
2 of House B i l l 15 provided f o r a g e n e r a l maximum r a t e on a l l
bonds o f 8%, except i n t h o s e c a s e s where t h e lowest of two o r
more c o m p e t i t i v e b i d s was h i g h e r than 8%, ( i n which event t h e r e
was no l e g a l maximum).              As s o o r i g i n a l l y drawn t h e r e was no
i n c o n s i s t e n c y between s e c t i o n s 2 and 3.        The exception a l l o w i n g a
l e g a l r a t e i n excess of 8% was, however, d e l e t e d from t h e b i l l on
i t s f i r s t r e v i s i o n i n t h e House, w h i l e t h e u n d e r l i n e d p o r t i o n o f
s e c t i o n 3 was r e t a i n e d .   T h e r e a f t e r , through a s e r i e s of amendments,
a g r e a t number of e x i s t i n g code s e c t i o n s p e r t a i n i n g t o i n t e r e s t
r a t e s on c i t y , county and school d i s t r i c t indebtedness were i n -
cluded i n t h e b i l l .        Some e x i s t i n g code s e c t i o n s were amended t o
d e l e t e a l l r e f e r e n c e t o a maximum r a t e of i n t e r e s t , among t h o s e
were s e c t i o n s r e l a t i n g t o s p e c i a l and r u r a l improvement d i s t r i c t s ;
others      were amended by changing t h e maximum r a t e of i n t e r e s t .                          On   .
i t s f i n a l r e v i s i o n , t h e Senate committee of t h e whole reduced t h e
g e n e r a l maximum i n t e r e s t r a t e i n s e c t i o n 2 t o 7%.
      The c o n t r o v e r s y h e r e i n v o l v e s whether t o g i v e some meaning
t o t h e u n d e r l i n e d p o r t i o n o f s e c t i o n 79-2603, R.C.P.I.       1947.      Relator
contends t h a t t h e r e t e n t i o n o f t h e u n d e r l i n e d p o r t i o n i n d i c a t e s
a l e g i s l a t i v e i n t e n t t h a t t h e i n t e r e s t r a t e on s p e c i a l assessment
bonds should be allowed t o exceed 7%.                         Respondent, on t h e o t h e r
hand, contends t h a t t h e u n d e r l i n e d p o r t i o n i s redundant and                   the
c l e a r wording of s e c t i o n 79-2602, R.C.M.                1947, should c o n t r o l .
      This Court w i l l presume t h a t t h e l e g i s l a t u r e would n o t pass
u s e l e s s o r meaningless l e g i s l a t i o n ; and a l s o must harmonize s t a t u t e s
                                                    give
r e l a t i n g t o t h e same s u b j e c t a n d / e f f e c t t o each. S t a t e ex r e l .
Dick I r v i n , Inc. v. Anderson,                      Mon t   .        ,   525 P.2d 564, 3 1
St.Rep. 482.          W must presume t h a t t h e l e g i s l a t u r e had some
                       e
purpose i n mind when i t r e t a i n e d t h e u n d e r l i n e d p o r t i o n o f
s e c t i o n 79-2603.       I n o r d e r t o g i v e t h a t phrase any meaning what-
s o e v e r , we must hold i n accord w i t h t h e c o n t e n t i o n s of r e l a t o r .

T h e r e f o r e , (1) a m u n i c i p a l i t y o r county a c t i n g i n b e h a l f of a l e g a l l y
formed s p e c i a l improvement d i s t r i c t under t h e p r o v i s i o n s o f T i t l e
11, Chapter 22, o r T i t l e 1 6 , Chapter 16, R.C.M.                           1947, may i s s u e
and s e l l bonds o r w a r r a n t s b e a r i n g an i n t e r e s t r a t e i n excess of
7% per annum, and (2) t h e c o n t r a c t between r e l d t o r and respondent
f o r t h e purchase of t h e bonds r e f e r r e d t o h e r e i n i s b i n d i n g upon
t h e p a r t i e s , n o t w i t h s t a n d i n g t h e f a c t t h a t t h e bonds a r e t o b e a r
i n t e r e s t a t t h e r a t e of 7.75% per annum.
      Judgment f o r r e l a t o r .

                                                                                   I

                                                        --,,-A-~-L;-         J-L--L-:AL-~LL-L ---
                                                                                         '
                                                                                          ----
                                                                                             1



                                                                             1
                                                                Justice      I




W Concur:
 e



   Chief J u s t i c e




d.................................
   Justices.
