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IN RE: VALIDATION OF $7,800,000 COMBINED UTILITY SYSTEM REVENUE BOND, GAUTIER UTILITY DISTRICT, JACKSON COUNTY, MISSISSIPPI, DATED AS OF THE DATE OF DELIVERY AND B. L. WHITE, ET AL, APPELLANTS v. GAUTIER UTILITY DISTRICT OF JACKSON COUNTY

FEBRUARY 27, 1985

IN RE: VALIDATION OF $7,800,000 COMBINED UTILITY SYSTEM REVENUE BOND, GAUTIER UTILITY DISTRICT, JACKSON COUNTY, MISSISSIPPI, DATED AS OF THE DATE OF DELIVERY AND B. L. WHITE, ET AL, APPELLANTS
v.
GAUTIER UTILITY DISTRICT OF JACKSON COUNTY, MISSISSIPPI, ET AL, APPELLEES



BEFORE, ROY NOBLE LEE, P.J., ROBERTSON AND SULLIVAN, JJ.

ROBERTSON, JUSTICE, FOR THE COURT:

I. Introduction

These consolidated bond validation and declaratory judgment actions present important questions concerning whether citizens have due process rights to be heard - and, if so, where and to what extent - before their property may become burdened by the obligation to underwrite revenue bonds issued by a local political subdivision. Beyond that the case presents the question of whether a local utility district may consistent with our state's constitution be organized and exist under a local and private law in the face of a general law respecting the organization and existence of such districts.

 On this latter point, so long as the local and private act furthers the same general purposes and policies as the general act and so long as the differences between the two are primarily procedural or otherwise relatively minor, nothing in our Constitution, Article IV, Sections 87-90, saps the local and private act of its enabling power. Where, as here, such a situation exists, the citizens of the political subdivision covered by the local and private act have alternatives in that they may proceed under either that act or the general law, and the election so made is not subject to judicial review.

 More fundamentally, we recognize that the decision to undertake substantial public improvements and to finance same via a bond issue are matters generically legislative. Our law secures to individuals no access to a judicial forum to thwart such actions except when they contravene the authority of the legislative body, and, accordingly, nothing in the due process guarantee of our constitution affords any citizen the right to reasonable advance notice and the opportunity to be heard before such legislative actions may be taken. The citizen has a due process right to challenge the accuracy and proportionality of the assessment and taxation of his property. He has a similar right of access to a judicial forum to present with respect to the bond issue any objection based in principle as distinguished from policy, and there to raise the question of whether the political subdivision has exceeded the substantive limitations upon its legislative power. So long as the citizen has been afforded these rights, the district may proceed with such projects as are consistent with the governing board's perception of the public need and finance such projects in any manner allowed by law.

 As will be explained more fully below, each of the assignments of error tendered by Objectors on this appeal is rejected. The final decree rendered below is affirmed.

 II. The Background

 A. The Core Facts

 The Board of Commissioners of the Gautier Utility District of Jackson County, Mississippi, (sometimes" the Board ") has determined to develop, construct, operate and maintain a new water and sewage treatment system designed to serve and benefit the entire district. The anticipated total cost of the project is $11,185,000. The project is to be financed by a grant from the United States Environmental Protection Agency in the sum of $3,385,000 and an interest bearing loan from the United States Farmers Home Administration (FmHA) in the amount of $7,800,000.

 The mechanism selected by the Board for the consummation of the $7,800,000 FmHA loan is a bond issue. The District proposes to issue an 11.625 percent Combined Utility System Revenue Bond in the principal amount of $7,800,000. The record suggests that FmHA is prepared to purchase this bond, provided certain conditions are met or agreed to.

 Prior to its determination to issue the bond, the Board by resolution

 determined that it is necessary and in the best interest of the District and of those residing within its boundaries to provide the improvements [the water and sewage treatment system] hereinafter described.

 By resolution adopted April 11, 1983, the Board found and determined

 that it is necessary and in the public interest that the aforesaid [11.625 percent combined utility system revenue] bond be issued as hereinafter provided.

 These determinations are legislative in nature made in the exercise of legislative authority vested in the Board.

 The Board contemplates that the property owners of the District will pay fees for the services rendered through the new combined utility system and that the revenue so generated

 shall be applied to the retirement of the District's principal and interest obligations under the bond. In the event of the insufficiency of such revenues to meet the bond obligations, the property owners of the District would be subject to a special ad valorem tax in such amount as is reasonably necessary" not to exceed Five (5) Mills on all taxable property in the district ".

 B. L. White and others, residents and property owners within the District (referred to herein as Objectors), have taken great exception to these plans. Not only have Objectors opposed validation of the bond, they have gone so far as to charge that the legislative authority under which the District was created and purports to function was granted in contravention of the provisions of the Constitution of the State of Mississippi restricting the enactment of local and private laws. Because of the nature and scope of the attack mounted by Objectors, it is appropriate that we recite a bit of the history.

 B. The Creation of The District

 On May 17, 1966, Senate Bill No. 2251 was approved by the Governor. It has been published as Chapter 831, Local and Private Laws of Mississippi, Regular Session, 1966. This enactment set forth a scheme for the incorporation of water, sewer, gas, utility and fire protection districts in Jackson County, Mississippi. No other county is covered. At the time there was no general law providing a statewide scheme for the creation of such utility districts.

 On May 23, 1972, however, such a general law, designated Senate Bill No. 2010, became law. This enactment was originally published as Chapter 536, General Laws of Mississippi, Regular Session, 1972. It has been codified as Miss. Code Ann. 19-5-151 et seq, (Supp. 1984). The act has been amended in respects not important here.

 A comparison of the local and private law of 1966 with the general law of 1972 reveals substantial similarities. Those similarities are sufficient to undergird a speculation that the statewide act was modeled upon the then six year old Jackson County local and private act, although nothing turns on the point.

 For reasons not explained by any utterance of the legislature, the general law did not purport to affect the local and private law. Evidence that the legislature regarded the local and private law as of continuing viability was supplied by the enactment on May 26, 1980, of House Bill No.

 1286 which amended the 1966 act by providing, inter alia, that the maximum rate of interest authorized for payment on bonds issued by the utility district would be increased from six to ten percent per annum. See Chapter 949, Local and Private Laws of Mississippi, Regular Session, 1980. This bond interest ceiling was further increased in 1982 to 14 percent by House Bill No. 1127. See Chapter 844, Local and Private Laws of Mississippi, Regular Session, 1982.

 At the time of the enactment of the general law enabling the creation of utility districts - May 23, 1972 - the Gautier Utility District had not been organized. That step was not begun until April 12, 1973 - some ten and a half months later. On that date, the law on its face made available to Gautier two alternatives - that provided in the local and private law of 1966 and that provided in the general law of 1972.

 On April 12, 1973, at a recessed regular meeting of the Board of Supervisors of Jackson County, Mississippi (the" Supervisors "), petitions for the incorporation of the Gautier Utility District were filed by more than twenty-five (25) owners of real property residing within the boundaries of the proposed district. The petitions were presented under the authority of and in conformance with the 1966 local and private act. Upon receipt of the petitions, the Supervisors issued an order setting a public hearing on the question of whether organization of such a district were required by the public convenience and necessity, and further directing the publication of notice that the public hearing would be held. Following the hearing, the Supervisors, on June 4, 1973, adopted a" Resolution Finding and Determining that the Public Necessity and Convenience Requires the Creation of the Gautier Utility District of Jackson County, Mississippi. "A copy of the resolution was published in a newspaper of general circulation in the county on June 7, 14, 21, and 28, 1973.

 On July 3, 1973, at its recessed regular meeting, the Supervisors adopted a resolution creating the District as a combined water and sewer utility and fire protection district within Jackson County pursuant to the 1966 local and private act. The resolution noted that no protest or objection was filed with the Supervisors and that no party had appeared in opposition to the creation of the District.

 Section 1(f) of the 1966 local and private act provides" any party "aggrieved or prejudiced by the action of the Supervisors could appeal to the Circuit Court, and if no appeal be taken within 15 days after the adoption of the resolution creating the District, the" creation of such

 district shall be final and conclusive, and shall not thereafter be subject to attack in any court. "No such appeal was taken. On July 18, 1973, by resolution of the Supervisors, three Commissioners were appointed to the District and directed to organize in the manner prescribed by the Act.

 C. The Decision To Develop A Combined Utility System and To Issue The Bond

 On August 30, 1982, the FmHA advised the District that, on certain terms and conditions, it would provide $7,800,000.00 toward the construction and operation of the combined utility system project. On April 11, 1983, the Board of Commissioners, after considerable investigation and planning, formally adopted three resolutions which have precipitated the instant litigation.

 The first of the three resolutions accepted and agreed to the terms and conditions of the August 30, 1982 FmHA letter. The second authorized the sale to the FmHA, pursuant to Chapter 844, Local and Private Laws of Mississippi, Regular Session of 1982, of a combined utility utility revenue bond in the principal amount of $7,800,000 bearing interest at a rate of 11.625% per annum, payable in annual installments of $932,476 for thirty-five years beginning in the third year from the date of issuance.

 The third resolution authorized and directed issuance of a negotiable interest-bearing combined utility system revenue bond of the District in the principal amount of $7,800,000 to raise money for the purpose of constructing, acquiring, reconstructing, improving, bettering and extending the combined utility system of the District; prescribing the form and incidents of said bond; providing for the collection, segregation, and distribution of the revenues to be derived from the operation of said system in an amount sufficient to pay the cost of the operation and maintenance thereof and to pay the principal and interest on said bond and making provision for the depreciation fund and a contingent fund.

 D. Proceedings Below

 The instant proceedings were commenced on April 21, 1983, on which date there was filed in the Chancery Court of Jackson County, Mississippi, the transcript of the bond validation proceedings of the Board of Commissioners of the Gautier Utility District of Jackson County, Mississippi. Public notice was immediately given. In due course, Objectors and others filed their" Specific Taxpayer's Objections "along with

 their petition to deny issuance of bond. These proceedings were assigned Docket Number 44,063 in the Chancery Court of Jackson County, Mississippi.

 Thereafter, Objector White and others brought in the Chancery Court a separate action against the Gautier Utility District and its commissioners. In this separate complaint filed May 27, 1983, Objectors sought a declaratory judgment that the 1966 local and private act, as amended, was invalid by virtue of the provisions of the Constitution of the State of Mississippi restricting local and private laws [Article 4, 87 and 90] and that guaranteeing due procees of law to all citizens [Article 3, 14] and, therefore, that any utility district organized under that local and private act, such as the Gautier Utility District, was without power to act. *fn1

 The two matters were consolidated for hearing and were in fact heard on May 30, 1983, in the Chancery Court of Jackson County, Mississippi, Honorable Ray H. Montgomery, Special Chancellor. On September 20, 1983, the Chancellor released his opinion wherein he held, inter alia, that the local and private law of 1966 was valid and in full force and effect, that the Gautier Utility District of Jackson County, Mississippi, was duly organized and existing under that act, and that the District had acted within its legislative authority in the premises. A final judgment was entered on October 4, 1983, which validated the 11.625 percent Combined Utility System Revenue Bond in the amount of $7,800,000 and dismissed the complaint for declaratory judgment.

 Objectors *fn2 have timely perfected their appeal to this Court.

 III. Nature and Scope of The Actions

 Of considerable importance is the scope of these proceedings, both in the trial court and on appeal. We begin with the fact that these are two separate actions - a bond validation action and separate civil action for declaratory judgment. The trial court ordered these actions consolidated for all purposes, see Rule 42 (a), Miss. R. Civ. P., albeit with the full acquiescence and consent of each interested party. In such posture any matter is properly presented, litigated and decided if it lies within the scope of either action had there been no consolidation.

 A. The Bond Validation Proceedings

 First, we have a bond validation proceeding instituted in accordance with Miss. Code Ann. 31-13-5 et seq. (1972). The

 purpose of such hearing is to consider all juridical questions of law or fact, or both, touching the legality and validity of the bonds. Legislative questions preceding the issuance of the bonds are beyond judicial review, either in the validation action or otherwise.

 The chancery court is charged with considering" all legal papers pertaining to the issuance of said bonds "emanating from the issuing district, together with the written opinion of the State's bond attorney. Beyond that the chancery court

 may hear additional competent, relevant and material evidence under the rules applicable to such evidence in the chancery court, so as to inquire into the validity of the bonds or other obligations proposed to be issued,

 . . .

 Miss. Code Ann. ...


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