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HomeMy WebLinkAboutA019 - Defendants' Brief, Case No. 30323 IN THE IOWA DISTRICT COURT IN AND FOR STORY COUNTY PLED CITY CLERK �OF AMES,IOWA THOMAS H. HINDERS, Plaintiff CASE NO. 30323 11ER 1 1981 vs. CITY OF AMES, IOWA, PAUL F. GOODLAND, MAYOR -• LARRY CURTIS, CHARLES L. HAMMER, MARY ATHERLY, JOHN DEFENDANTS' BRIEF PARKS, JOHN THURSTON, GEORGENE SHANK, CITY COUNCIL Defendants. INTRODUCTION a The City of Ames is the owner and operator of an electric utility which does now and has, since 1896, generated and distributed electricity to all parts of the city, with the exception of several small, recently annexed areas that are served by one or another of the neighboring utilities. (Iowa Electric Light and Power Co. , Greene County REC, Marshall County REC) There has never been a Board of Trustees established for this municipal utility, the governing body for its management and control being the Ames City Council. In 1978 the City Council, after advice from its retained consultants and consultation with a number of Iowa utility industry execu- tives, undertook to expand the generating capacity of the utility by sixty megawatts, at a cost of about fifty-two million dollars. Financing was through issuance of bonds secured by a pledge of the utility's revenues. Rate increases needed to make the bonds attractive to purchasers ensued. In the summer of 1980 a special summer rate enacted to discourage con- sumption during the period of peak demand for electricity inspired noticeable disaffection among customers of the utility. One aspect of that experience was the circulation of a petition in support of a proposition as follows: "That the City of Ames, Iowa, discontinue the operation of the City Electric Utility and that the City Electric Generating Plant, all transmission lines, and all other assets of the electric utility, be sold and disposed of, all as provided under Section 388.2, Code of Iowa." (copy attached) 2 On August 11, 1980, a petition bearing that proposition and something in excess of one thousand names was filed with the Ames City Council. The point of law which must now be adjudicated is whether the propo- sition is a "proposal" within the meaning of Section 388.2 Code of Iowa which must be submitted to the voters. The City Council of Ames takes the position it is not a Section 388.2 proposal -- the Plaintiff Hinders contends that it is. That the City Council' s position is correct becomes evident when the language of the proposition is laid next to and compared with the plain words of Section 388.2 Code of Iowa. That conclusion is buttressed when one con- siders applicable common law; the object of the law; the legislative history of the statute; and, never to be overlooked, the consequences of adopting the views urged by the Plaintiff. I THE PLAIN WORDS When the words of the proposition are compared with the words of the first sentence of Section 388.2 one is immediately struck by the realization that the proposition was cast by turning the law inside out, or reversing it. You will note that the language of Section 388.2 is: "The proposal of a city to . . . dispose of a city utility in order to discontinue the operation of the city utility. . ." Whereas, the proposition being urged by the Plaintiff is that first the operations of the utility be discontinued; and, then the various assets of the utility sold and disposed of. That is exactly opposite the words of the statute and quite a different matter, in form and substance, than what the law provides for. Clearly, the statute envisions some proposal whereby the utility is disposed of so as to thereby discontinue its operation. The statute most certainly does not contemplate the double proposition of stop- ping operations and then disposing of assets. 3 II THE COMMON LAW In Grove v City of Des Moines (Iowa 1979) 280 N.W.2d 278 the Iowa Supreme Court reminded us that the "single purpose rule" is still very much alive and will serve to invalidate a ballot proposition which is not in accord with its principal. This rule is found in the Iowa Constitution, Article III, Sec. 29. There is also a similar rule of common law which, expressed in its most universal form is: "Propositions submitted to a vote must be clearly stated and not in fact contain two or more." 12 McQuillin Mun. Corp. (3rd Ed. ) Sec. 35.28, p. 440. The object of this rule of the common law is to protect the voter from the double-bind of having to vote for a separable and feasible part of the pro- position he does not approve of in order to express his support for another separable and feasible part of the proposition; or in the alternative, having to abstain from voting so as not to contribute to the passage of a separable and feasible portion of the proposition he cannot support even though he may favor the other separately feasible part of the proposition. It is feasible for the first part of the Plaintiff' s proposition to be done without the second; and for the second to be done without the first. That is, the operation of the utility can be discontinued without its assets being disposed of. Conversely, and most notably, the utility and all its assets can be sold without its operations being discontinued. A majority of the voters may be in favor of the latter measure and opposed to the former. By uniting the two separately feasible propositions and submitting them as one the voters are forced to vote for or against both propositions combined or abstain from voting at all. See: Grove v Des Moines, supra. at 384. Thus, the voters are denied, contrary to the common law, an opportunity to express their will on a clearly stated single proposition. It is not con- tended of course that a proposition may never contain conjunctive or dis- junctive expression. Phrases such as "construct and maintain" are certainly lawful propositions and have been so held many times. Similarly, "construct or acquire" can be upheld as mutually exclusive alternatives for a single purpose. However, when the proposition will admit the occurrence of two or more wholly separable and independently feasible eventualities it is fatally tainted with duality. 4 III THE OBJECT OF THE LAW The object of the law is to afford and require a voter referendum on a clearly stated single "proposal" for disposal of a municipal utility. The dual propositions urged by Plaintiff do not, either separately or together, express a proposal for the disposal of the utility. There is only the naked proposition that the utility assets be sold and disposed of. In the context of disposing of valuable municipal assets the word "proposal", the key word of Section 388.2, takes on a specific legal meaning. It is: "An offer, something proffered. An offer, by one person to another, of terms and conditions with reference to some work or undertaking, or for the transfer of proper- ty, the acceptance whereof will make a contract between them." Blacks Law Dictionary, 4th Ed. Any proposal for disposition of a valuable municipal asset must contain some expression as to whom the grantee is to be or at least how the grantee is to be determined, and for what consideration, if any. See: Sec. 364.7 Code of Iowa. See also: Gritton v City of Des Moines (1956) 247 Iowa 326, 73 N.W.2d 813. It is the object of the law that those essential elements of the trans- action be submitted to the voters for approval. Baird v Webster City (1964) 256 Iowa 1087, 130 N.W.2d 432. This is not to say that every word of the contract must be set out verbatim on the ballot, but there must be enough stated to show the essential elements of a lawful transaction. Wyatt v Town of Manning (1933) 189 Iowa 556, 250 N.W. 141. In the earlier case of McLaughlin v City of Newton (1920) 189 Iowa 556, 178 N.W. 540, which was noted with approval in Wyatt v Manning, supra. at 143, the court invalidated a proposition which did not set out the term: of the sale contract by observing: "when they [electors) were called to the election it was to express their approval or disapproval of the contract proposal by the city, every detail of which -- insofar as it involved contractual rights and duties -- was essen- tial to be known by the voters before they could intel- ligently approve or disapprove the same." 5 In the absence of some expression of the essential elements of a lawful transaction for disposal of the utility the object. of the law's requirement for a referendum is not served. The Plaintiff's proposition cannot be saved by arguments that, after the election, at some time in the future, right thinking people will surely come to the council or Board of Trustees, which- ever, with a lawful proposal for disposing of the utility. Such proposals must be submitted to the voters for authorization. No other proposition can be. IV THE LEGISLATIVE HISTORY The Code of 1931 provided, in Section 6131 thereof, that: "No such works or plants shall be authorized, establish- ed, erected, purchased, leased or sold, or franchise granted, extended, renewed or amended, or contract of purchase provided for in the preceding section shall be entered into unless a majority of the legal electors voting thereon vote in favor of the same." In Wyatt v Manning, supra. and other cases decided in 1934 this language was interpreted as not requiring the terms of contracts pertaining to acquisition or construction of electric utility plants to be set out in full on the ballot. However, it was also held in that year that there must be enough information appearing on the ballot to tell people how it was proposed for the city to proceed. In a case where not enough information was provided on the ballot, an election purporting to authorize the establishment of an electric utility was voided as a nullity. See: Pennington v Fairbanks, Morse Co. (1934) 217 Iowa 1117, 253 N.W. 60. The relevant language of the Code of 1931, quoted above, became codified in Chapter 397 in the Code of 1946 and continued unchanged in that chapter number until the Code of 1973. As a result of the extensive changes and recodification of Iowa municipal law done by Acts of 64th G.A. , Chapter 1088 (the so-called "Home Rule Law") present Section 388.2 was enacted by di- gesting and combing various provisions of four previous code chapters, speci- fically, chapters 397, 398, 398A and 399. In an exhaustive commentary on the effects and purposes of the "Home Rule Law", which was quoted with favor by 6 the Iowa Supreme Court in Bechtel v Des Moines (1975) 225 N.W.2d 326, 332, the author noted no legislative purpose or intent in the changes other than consolidation of existing law. See: Scheidler, Implementation of Constitutional Home Rule in Iowa 22 Drake L. Rev. 294, 323, 324. There is nothing in the legislative history of the matter, through all the years of legislative opportunity, giving any indication of legislative intent for departure from the standards enunciated in the dicta of McLaughlin v Newton, supra. ; Wyatt v Manning, supra. ; Pennington v Fairbanks, Morse Co, supra. ; and most recently, in Baird v Webster City supra. ; wherein the court said, in ruling on the ballot requirements of former Chapter 397: "A public measure should be sufficiently definite to apprise the voters with substantial accuracy of what they are called on to approve." Id. 440 "Plaintiff in mandamus must not only show the mayor was under an obligation to call an election but also a basis for the court controlling such by mandamus. The issuance of a writ of mandamus is not a matter of absolute right but rests in the discretion of the court." "Where the petition of the electors does not propose a question required by statute to be submitted to a vote the writ should, of course, be refused. Likewise it should be refused when its issuance as prayed will create disorder or confusion. " The legislative history of the statutes confirms that a proposition such as that urged by the Plaintiffs is not within the legislative intent of Section 388.2, The Code. V THE CONSEQUENCES As is clear from the dicta of Baird v Webster City, Supra. the court will not decide a case of this kind in a vacuum. The court has a decent regard for the practical implications of what it does. The Plaintiffs, however, would apparently have it otherwise. By reply to the city's answer to the petition the Plaintiff takes the position it is "immaterial" that the proposition contains no statement of when the utility's operations are to discontinue and cease. From that are we to conclude a willingness for the city council or board of trustees to be forever after authorized to shut down the utility and dispose of its assets whenever and however they please? 7 The Plaintiff says it is immaterial that the proposition make no pro- vision for current and potential beneficiaries of the utility retirement system. Finally, the Plaintiff says it is immaterial which, or how many of the neighboring utilities shall serve Ames in the absence of the municipal utility. In fact those practical, mundane issues are not immaterial. They are matters of importance and responsibility. They are matters about which something definite must be said before there can be a genuine proposal for the disposition of the City of Ames municipal electric utility. Whatever the disposition of the utility is to be, one thing is clear. It is the intent and purpose of the law that the voters of the city have a knowing, informed and direct role in making the decision. Perhaps the cruel- est consequence of accepting the Plaintiff's proposition could be the way that it would effectively deny the voters the right to participate in the true decisions that will need to be made in any disposition of the utility. CONCLUSION The Plaintiff's proposition is not one contemplated in the law. The proposition is perversely cast as the exact opposite of what the statute provides for in plain words. It is tainted with duality. It defeats the object of the statute. It lacks the informative elements which over a half century of judicial and legislative history show to be the law's minimum requirement for a genuine proposal. It is attended by the prospect of serious, unresolved practical difficulties; and, worst of all, it threatens the effective denial, to the voters, of any real participation in the de- cision on disposition of the utility. The people deserve better than that, and are entitled to more. The law requires more. The law does not require the submittal of the proposition urged by the Plaintiff. The court must so rule. Respectfully submitted, John R. Klaus City Attorney 5th & Kellogg Ames, Iowa 50010 Tel. 232-6210, ext. 244 ATTORNEY FOR DEFENDANTS