This action was initiated by the City of Pocatello, plaintiff-respondent, for the purpose
The facts set forth by the pleadings, the exhibits, and stipulation disclose that on September 12, 1969, the Pocatello City Council enacted an ordinance declaring its intention to sell certain described unimproved lands owned by it. These lands were part of the Pocatello Municipal Airport and were situated near the runways of the airport. At this same time the city published a notice calling for competitive bids in accordance with certain contract documents. In calling for bids the city proposed that the successful bidder would purchase the unimproved land and construct an airport terminal building thereon in accordance with the specifications and requirements of the bid documents, and thereafter lease the completed structure on the purchased land back to the city. The structure to be built was to be used as an airport terminal facility to accommodate airlines serving the community, travelers on the airlines, and in addition to provide space for the Federal Aeronautics Administration, the Weather Bureau, and other related facilities.
Appellants Peterson and Nielson, doing business as joint venturers, submitted both a bid for the purchase of the property and a proposal to construct the terminal building and to lease it back to the city. In substance the proposed lease provided that the lessor was to construct a building on the property deeded by the city to them, construction to be in accordance with the plans and specifications which were a part of the bid documents and for the city to pay a rental of $6,000 per month for a twenty year period.
On December 8, 1969, the overall bid of the appellants was accepted by the respondent city as the lowest and best bid. On February 9, 1970, the city tendered to the appellants a lease agreement for execution but the appellants refused to sign it since they were uncertain whether the city could constitutionally enter into such an agreement. The city then initiated this action seeking a declaratory judgment to determine whether the lease agreement violates the provisions of the Idaho Const., Article 8, § 3.
Amicus curiae representing Bonneville County contends that the drafters of the Idaho Constitution intended that expenses authorized by the general laws of the state for units of local government to incur are the ordinary and necessary expenses to be excluded from the limitations of the constitutional provision. The attorney general as amicus curiae has adopted the brief and position of respondent (City of Pocatello).
At the outset it is to be pointed out that there is no issue before this Court as to whether there was a compliance with the provisions of I.C. Chapter 40, Title 31, as discussed in Swensen v. Buildings, Inc., 93 Idaho 466, 463 P.2d 932 (1970).
The principal issue presented by this appeal is whether the repair and improvement of the municipal airport by the City of Pocatello is an ordinary and necessary expense falling within the pertinent constitutional provision.
Thus these cases are of little help to this Court in considering the Idaho constitutional proviso as it relates to the facts of this case.
By I.C. § 50-321
It is fundamental, however, that insofar as the position of amicus curiae representing Bonneville County is concerned, statutes enacted by the legislature in this context cannot contravene constitutional limitations. In other words, even though the legislature may have authorized various expenditures by counties or cities and villages, if such expenditures are contrary to the constitutional provision, they cannot be made. The proviso to Article 8, § 3 requires both that the expenditure be authorized by the general laws of the state and that it be an ordinary and necessary one. The mere fact that the lease here is authorized by the general laws of the state does not ipso facto bring the expenditure within the proviso as an ordinary and necessary expense.
This Court will now consider whether the operation of an airport can be considered as an "ordinary and necessary" expense within the constitutional provision. As stated previously, few cases have been passed upon by the courts involving the precise issue presented by the instant case. However in an analogous situation, courts have on frequent occasion determined whether the operation of an airport is of such public use or necessity that the state
The construction, maintenance, and operation of airports is generally considered to be for a public use justifying the exercise of the power of eminent domain for the purpose of acquiring private property for such use. See, City of Caldwell v. Roark, 92 Idaho 99, 437 P.2d 615 (1968); Ferguson v. City of Kenosha, 5 Wis.2d 556, 93 N.W.2d 460 (1958); 8 Am.Jur.2d Aviation, § 47, p. 667; Annot. 135 A.L.R. 756. As heretofore stated, in the State of Idaho, pursuant to I.C. § 21-401,
Thus the construction and maintenance of an airport facility is a valid justification for employing the power of eminent domain since airports are constructed and operated for the public benefit, utility and necessity. Examining the factual situation presented by the case at bar, it appears that the City of Pocatello has operated a municipal airport since 1947, but presently finds that the airport must be expanded if it is to remain of any value. The passenger terminal is an unsound structure. The observation room, technician's shop, teletype room, weather bureau, office space and storage areas are all inadequate to accommodate the needs of the people. Furthermore the facility is inadequate to accommodate the needs of the Federal Aviation Agency. In view of these facts, were the expenditures by the City of Pocatello "ordinary and necessary expenses"? "Ordinary" means "regular; usual; normal; common; often recurring; * * * not characterized by peculiar or unusual circumstances." Black's Law Dictionary, p. 1249, (Rev. 4 ed. 1968).
Closely analogous to the instant case is the situation presented by Hickey v. City of
In Hickey, wooden pipes in the city's wooden water system had become obsolete and of no value to the City of Nampa (they burst and became useless). In the case at bar the Pocatello Airport is an obsolete facility, inadequate and unsafe for the citizens of the area. In Hickey, iron pipes were purchased by the City of Nampa to replace the obsolete wooden ones. The Supreme Court was of the opinion that the repair and improvement of the property was a necessary and ordinary expense since "In order for this property to be of any value to the city, it was necessary for it to be kept in repair." Hickey v. City of Nampa, supra, 22 Idaho at 45, 124 P. at 281.
It is the opinion of this Court that the funds to be expended by the City of Pocatello for the repair and improvement of its airport facility are "ordinary and necessary expenses" incurred by the municipality, falling within the proviso to Article 8, § 3 of the Idaho Constitution.
Judgment affirmed. Costs to respondent.
McQUADE and SHEPARD, JJ., concur.
McFADDEN, Chief Justice (dissenting).
The majority opinion deals solely with the issue as to what constitutes "ordinary and necessary expenses" within the proviso clause of Idaho Const. art. 8, § 3. It concludes that "the funds to be expended by the City of Pocatello for the repair and improvement of its airport facility are `ordinary and necessary expenses' incurred by the municipality, falling within the proviso to Article 8, § 3 of the Idaho Constitution. Furthermore the repair and improvement of the Pocatello airport facility is essential for the proper growth and development of the area."
At the outset it is to be noted that the issue here is whether the rental payments of $6,000 per month for twenty years violate the constitutional provision, and not whether "the repair and improvement of the airport facility were `ordinary and necessary expenses' incurred by the municipality" fall within the proviso clause of the constitutional provision. This case does not deal with "repair and improvement" of existing facilities, but does deal with rental payments for a wholly new terminal building.
Inasmuch as I disagree with the conclusion reached by the majority opinion, an additional issue must be discussed. This additional issue, which I will first discuss, is whether the rental payments provided in the twenty-year lease before this court
Respondent, citing the cases set out in the footnote (1) below, contends that the plan whereby the city sells the land to appellants who construct the airport terminal facility and lease it back to the city is one that has generally been accepted in other jurisdictions. Throughout these cases runs the thought that where the lease is in fact a lease and the rentals are intended as rentals, rather than as a subterfuge for installment payments on the purchase price under a conditional sales contract, the lease, even if it contains an option to purchase the property, does not create an indebtedness within the meaning of a constitutional limitation on indebtedness.
Although the mere fact that a lease contains an option to purchase the property upon expiration of the lease will not inevitably transform the lease into a conditional sales agreement, where the option
Examination of the constitutions of those states from which opinions are cited by respondent (supra 1) reveals that their constitutions do not contain a phrase "shall incur any indebtedness, or liability" (emphasis added) as used in Idaho Const. art. 8, § 3. Rather, most of those constitutions only prohibit governmental bodies from incurring "debts" or "indebtedness."
It is also noteworthy that Los Angeles County v. Byram, 36 Cal.2d 694, 227 P.2d 4 (1951), cited by respondent as sustaining a lease arrangement as not in violation of the constitutional debt limitation, dealt with a case in which the city was under a mandatory statutory duty to provide a court building, and for that reason the court held that the cost of leasing such a building was not within the constitutional prohibition against incurring a debt or liability.
The Missouri constitution originally contained a reference to both "debt" and "liability," but was later amended to delete the reference to "debt," leaving only the word "liability." The Missouri case cited by respondent, Petition of Bd. of Public Bldgs. v. Crowe, 363 S.W.2d 598 (Mo. 1962), discussed in detail the difference between "debt" and "liability" and upheld a revenue bond issue. The factual situation in that case, however, was quite different from the case before this court.
The Minnesota case cited by respondent, Ambrozich v. City of Eveleth, 200 Minn. 473, 274 N.W. 635 (1937), upholds a lease arrangement such as is involved here, stating that rent is not a "debt" or "liability," but it does not involve the interpretation of a constitutional debt limitation. That case dealt only with a debt limitation contained in a city charter.
This court has previously had occasion to consider the use of the terms "indebtedness" and "liability" in Idaho Const. art. 8, § 3. Williams v. City of Emmett, supra, dealt with an agreement under which the city had the use of street sprinklers for which it contracted to make annual payments. The agreement gave the city an option to purchase the equipment and provided that these payments, which in the aggregate amounted to approximately the option price, would be applied to the option
In Boise Development Co., Ltd. v. Boise City, 26 Idaho 347, 143 P. 531 (1914), this court first considered the distinction between "indebtedness" and "liability" as used in our constitution. In that case the city had agreed, in consideration of agreements from the Boise Development Company for the use of the land, to expend at least $5,000 annually for five years to improve the channel of the Boise River. This court considered art. 8, § 3, of the Idaho Constitution and held that although there was not a "present indebtedness" created by the agreement, there was a "present liability" for the total expenditures over the five year period. In reaching this conclusion the court discussed a California case indistinguishable in principle from the case at bar. McBean v. City of Fresno, 112 Cal. 159, 44 P. 358 (1896), involved a contract between the city and McBean under which McBean agreed to dispose of the city's sewage for five years for $4,900 per year. The California court upheld the contract on the grounds that only the annual payment of $4,900 was a present debt or liability. This court, however, severely criticized that holding, stating that although there was not a present debt for the aggregate payments, there was a present liability for them. This court set forth a hypothetical case and stated:
Although the discussion of McBean v. City of Fresno, supra, was dictum, it is in accord with the statements later made in 1931 by this court in Williams v. City of Emmett, supra, in which this court stated:
See also Feil v. City of Coeur d'Alene, 23 Idaho 32, 129 P. 643 (1912); School Dist. No. 8 v. Twin Falls County Mut. Fire Ins. Co., 30 Idaho 400, 164 P. 1174 (1917). Regardless of whether this lease agreement created an indebtedness for the aggregate rentals, it is evident that upon execution of the agreement there was created within the meaning of the Idaho constitution a "liability" for the aggregate rentals to become due.
The next issue for consideration is the one which is the rationale of the majority opinion which accepts the contention of both parties, as well as amicus curiae, that the expenditures in this case are to be considered "ordinary and necessary expenses" within the meaning of the constitutional proviso which states:
Thomas v. Glindeman, supra, was an application to this court for a writ of mandate to compel the mayor of Coeur d'Alene to sign a city warrant in payment of a claim authorized by the counsel for work done on the city streets. The claim had not been paid because funds previously appropriated had been expended. A petition signed by a majority of the legal voters of the city requesting an additional appropriation to be made had been filed. The issue before the court involved the provisions of C.S. 1919, § 4053 (I.C. § 50-1003) which provided in part:
Thomas v. Glindeman, supra, in my opinion, limited as it was to the issues there, is hardly to be considered authoritative for the position taken by counsel.
In Hanson v. City of Idaho Falls, supra, this court held that future payments to be made under a policeman's retirement fund, while a liability, were ordinary and necessary expenses of city government. Therein it is stated:
The words "ordinary and necessary" as used in their constitutional context have been considered by this court in several other cases. In Williams v. City of Emmett, 51 Idaho 500, 6 P.2d 475 (1931), this court held that payments by the city on an agreement to acquire use of and title to a street sprinkler were not ordinary or necessary expenses. In Dunbar v. Board of Com'rs, 5 Idaho 407, 49 P. 409 (1897), this court held that building of a bridge and the payment of scalp bounties were not within the contemplation of those terms. Therein this court stated:
Bannock County v. C. Bunting & Co., 4 Idaho 156, 37 P. 277 (1894), in construing Revised Statutes § 1762 (dealing with construction of public buildings or improvements) held that the purchase and building of a county courthouse "is clearly not among the ordinary and necessary expenses of the county." Allen v. Doumecq Highway Dist., 33 Idaho 249, 192 P. 662 (1920), held that construction of a bridge was not an ordinary and necessary expense.
Cases decided by this court recognizing expenditures to be "ordinary and necessary expenses" are: Butler v. City of Lewiston, 11 Idaho 393, 83 P. 234 (1905) — validity of bond issue to redeem city warrants issued for salaries of city officials and employees, the bond issue having passed by a two-thirds majority; Hickey v. City of Nampa, 22 Idaho 41, 124 P. 280 (1912), which approved a bond issue passed to retire warrants used to pay for reconstruction of a water main which collapsed while firemen were fighting a fire; Jones v. Power County, 27 Idaho 656, 150 P. 35 (1915), which held transcribing of county records, providing furniture fixtures, record books and erecting a jail for a newly created county were ordinary and necessary expenses within the constitutional proviso, and such items could be contracted for without submitting the issue to the vote of the people.
It is to be noted, however, that this court held in the following cases that where expenditures, or liabilities exceed income for the current year, they are in violation of the constitution; Ball v. Bannock County, 5 Idaho 602, 51 P. 454 (1897), purchase of real estate for courthouse; McNutt v. Lemhi County, 12 Idaho 63, 84 P. 1054 (1906), building of courthouse, bridge or wagon road; School Dist. No. 8 v. Twin Falls County Mutual Fire Ins. Co., 30 Idaho 400, 164 P. 1174 (1917), membership in county mutual fire insurance company; Miller v. City of Buhl, 48 Idaho 668, 284 P. 843 (1930), purchase of electric system by pledge orders payable from sale of power; Feil v. City of Coeur d'Alene, 23 Idaho 32, 129 P. 643 (1912), purchase of water system, payable from bonds to be redeemed from receipts; Boise Development Co., Ltd. v. Boise City, 26 Idaho 347, 143 P. 531 (1914), payments for land; Mittry v. Bonneville County, 38 Idaho 306, 222 P. 292 (1923), excess expense above bonded limits in completion of courthouse; Williams v. City of Emmett, 51 Idaho 500, 6 P.2d 475 (1931), payments on sprinkler truck; General Hospital v. City of Grangeville, 69 Idaho 6, 201 P.2d 750, debt on hospital construction payable out of proceeds of operation of hospital. In none of these cases, however, did this court consider whether the expenditures could have been considered as "ordinary and necessary."
The majority opinion discards the reasoning of the North Carolina court in the cases of Goswick v. City of Durham, 211 N.C. 687, 191 S.E. 728 (1937); Sing v. City of Charlotte, 213 N.C. 60, 195 S.E. 271 (1938); Greensboro-Highpoint Airport Authority v. Johnson, 226 N.C. 1, 36 S.E.2d 803 (1946); Vance County v. Royster, 271 N.C. 53, 155 S.E.2d 790 (1967); in which series of cases that court held expenditures for municipal airport facilities were not "ordinary and necessary" expenses under that state's constitutional debt limitations. In Henderson v. City of Wilmington, 191 N.C. 269, 132 S.E. 25 (1926), the Supreme Court of North Carolina stated:
The reasoning of the North Carolina court seems valid. An airport terminal facility is not such an integral part of governmental function that an expenditure for renting of a terminal facility is a "necessary" expense. There are a wide variety of facilities that are frequently supplied by city government, such as municipal libraries, auditoriums, golf courses, museums and many more. Yet it is difficult to say in precisely which instance an expenditure for such facilities would be "necessary."
"Ordinary" means "regular; usual; normal; common; often recurring; according to established order; settled; customary; reasonable; not characterized by peculiar or unusual circumstances; belonging to, exercised by, or characteristic of the normal or average individual." Black's Law Dictionary (rev. 4th ed. 1968). "Necessary" has a flexible meaning: "It may import absolute physical necessity or inevitability, or it may import that which is only convenient, useful, appropriate, suitable, proper, or conducive to the end sought." Black's Law Dictionary (rev. 4th ed. 1968).
In the proviso clause the two terms "ordinary and necessary" are used conjunctively in modifying the word "expenses." In the constitutional context with which they are used, only in exceptional circumstances can the expenditures of a city, town, etc., exceed the income or revenue provided for in that year. Idaho Const. art. 8, § 3. When a city obligates itself to pay $1,440,000 at $6,000 per month for a twenty year term it is difficult to see how that is an "ordinary and necessary" expense. When the facility for which the rent is contracted to be paid has not yet been constructed, and where the impetus for the construction of such new facility originated from the city, more than ever am I convinced that this is an "extraordinary" expense, regardless of how necessary such facility might be. Particularly is this so in the instant case, inasmuch as the city of Pocatello held a general obligation bond election in 1968 for the purpose of the city construction of aviation facilities including a municipal airport terminal building (Bogert v. Kinzer, 93 Idaho 515, 465 P.2d 639 (1970)), which did not pass by the necessary majority.
The type of arrangement proposed by this case is an attempt to do indirectly what the constitutional prohibition proscribes — the creation of any "indebtedness, or liability, in any manner, or for any purpose exceeding in that year, the income and revenue provided for it for such year, without the assent of two-thirds of the qualified electors thereof voting at an election to be held for that purpose * * *." Idaho Const. art. 8, § 3.
Sympathetic as we may be for the problem facing the city and understanding the need the city council in its good faith desires to alleviate by this arrangement, yet the regular method of proceeding for acquisition of such a large and expensive facility should be followed.
SPEAR, J., concurs herein.