Moore v. City of Corpus Christi , 1976 Tex. App. LEXIS 3248 ( 1976 )

OPINION

BISSETT, Justice.

This is a bond election contest case. A. J. Moore, a resident of Corpus Christi, Texas, hereinafter called “contestant”, brought suit against the City of Corpus Christi, its City Secretary, and the Attorney General of the State of Texas, to contest a bond election called for and held by the City on June 26, 1976. The results of the election were canvassed on June 30,1976. The electorate, by a small majority of the votes cast, authorized the issuance of the bonds ($14,400,-000.00). The contest was filed on July 30, 1976. The suit against the Attorney General was dismissed on jurisdictional grounds. Following a trial before the court without a jury, judgment was rendered on August 12, 1976, which held that the election was valid. The contestant has duly and timely perfected an appeal from that judgment to this Court.

At said election, the following proposition, insofar as this appeal is concerned, was submitted:

“Shall the City Council of said City be authorized to issue the bonds of said City to be sold at such prices and bear interest at such rates as shall be determined within the discretion of the City Council, for the purpose of making permanent public improvements, to-wit: A COMMUNITY-CONVENTION FACILITY INCLUDING AN EXHIBIT HALL, MEETING ROOMS, BANQUET HALL, ADDITIONAL AUDITORIUM IMPROVEMENTS, AND FURTHER ACQUISITION AND DEVELOPMENT OF THE SITE, AT THE BAYFRONT CENTER FOR THE ARTS AND SCIENCES ...”

The contestant, in his first point, contends that the trial court erred in upholding the validity of the election because the proposition submitted to the voters presented two separate and distinct propositions to be voted upon: 1) a community-convention facility and 2) additional auditorium improvements.

Any person intending to contest an election must comply with the provisions of Tex. Election Code Ann. art. 9.03 (1967). The statute requires that the contestant:

“. . . shall, within thirty (30) days after the return day of election, give him a notice thereof in writing and deliver to him, his agent or attorney, a written statement of the ground on which such contestant relies to sustain such contest. By the ‘return day’ is meant the day on which the votes cast in said election are counted and the official result thereof declared.”

The two-fold notice required by the statute, being jurisdictional, is mandatory, cannot be waived, and must be served on the contestee within thirty days after the official result of the election is declared. Moore v. Edna Hospital District, 449 S.W.2d 508 (Tex.Civ.App.—Corpus Christi 1969, writ ref’d n. r. e.); Walker v. Thetford, 418 S.W.2d 276 (Tex.Civ.App.—Austin 1967, writ ref’d n. r. e.); Landrum v. Centennial Rural High School Dist. No. 2, 134 S.W.2d 353 (Tex.Civ.App.—Austin 1939, writ dism’d jdgmt. cor.).

In the case at bar, the time within which to comply with the requirements of Article 9.03 of the Election Code with respect to notice expired on July 30, 1976 at midnight. The contestant claims that the writings, dated July 5, 1976 and July 28, 1976, signed by him and by his attorney, and hand-delivered to the contestees, met the requirements of the statute. We do not agree. There is no proof in the record that either of the writings were personally served on any of the contestees on or prior to July 30, 1976. The statement in each of the writings to the effect that the respective writing was “hand-delivered” to each of the contestees is not proof that they were delivered on the date thereof, or on any other date, and certainly not on or before July 30, 1976 at midnight. We cannot presume that the writings were delivered to the contestee within the time limited by Article 9.03 of the Election Code. Moreover, the writings do not set out as grounds for the election contest any of the grounds asserted by the contestant in the points of error brought forward in this appeal. The only grounds set out in the writings are asserted irregularities in the conduct of the election. They are not before us in this appeal.

Contestant’s original petition was filed on July 30,1976 at 9:30 a. m., and was served on the contestees at 4:30 p. m. that same day. The only grounds of contest alleged therein were: 1) the election was invalid because the election notice did not prescribe the rate of interest in accordance with the requirements of Tex.Rev.Civ.Stat. Ann. art. 703 (1964); and 2) the election was void because of certain violations of the Texas Election Code in the manner in which the election was conducted. The service of the petition on the contestees was made on the thirtieth day following the return date of the contested election. Since it was served after the contest was filed and within the statutorily prescribed time, it met the requirements of Article 9.03 both as to notice of intention to contest the election and as to notice of the grounds to be relied on by the contestant in the contest. Thus, the district court acquired jurisdiction of the election contest insofar as the grounds set out in the original petition are concerned, and no more. See McCasland v. Steele, 496 S.W.2d 937 (Tex.Civ.App.—Waco 1973, no writ).

The contestant, by an amended petition that was filed on August 5, 1976, alleged that the election was void upon the additional ground that the proposition included two separate and distinct propositions, which prevented the electorate from voting separately on each proposition. The contestees were not served with written notice of that ground of attack upon the election until August 5,1976. Since written notice of the additional ground of contest was not given to the contestees within thirty days after the official result of the election was declared, there was no compliance with Article 9.03 of the Election Code as to that ground. In that state of the record, the district court did not acquire jurisdiction of the election contest with respect to the ground of invalidity set out in the amended petition.

The first point of error, under the record here presented, cannot be considered in this appeal. The point is overruled.

The contestant, in his second point of error (his remaining point), contends that the trial court erred in holding that the election was valid because the proposition to be submitted to the electorate and the ballot did not specify an exact rate of interest which the bonds would bear. He claims that it was mandatory under the express provisions of Tex.Rev.Civ.Stat.Ann. art. 703 (1964) that the proposition and the ballot specify an exact rate of interest, the omission of which rendered the election void. We do not agree.

The statute, Article 703, which was last amended in 1921, provides, in part:

“The proposition to be submitted shall distinctly specify:

3. The rate of interest.”

There is no statutory requirement that the ballot in a municipal bond election shall specify “the rate of interest”. All that is required is that the ballot substantially submit the proposition to be voted on with such definiteness and certainty that the voters will not be misled. England v. McCoy, 269 S.W.2d 813 (Tex.Civ.App.—Texarkana 1954, writ dism’d); Turner v. Lewie, 201 S.W.2d 86 (Tex.Civ.App.—Ft. Worth 1947, writ dism’d). The character, features and purposes of the proposed bond election are to be set out in sufficient detail in the proposition, so that the voters will be familiar with the proposal when they cast their ballots. Railroad Commission v. Sterling Oil & Refining Co., 147 Tex. 547, 218 S.W.2d 415 (1949). It is presumed that all persons eligible to vote in a bond election will familiarize themselves with the contents of and the statements made in the proposition before casting their ballots; otherwise the legislature would have required a verbatim copy of the proposition on the ballot. Whiteside v. Brown, 214 S.W.2d 844 (Tex.Civ.App.—Austin 1948, writ dism’d). In this case, the election was not invalid on the ground that the ballot did not specify an exact rate of interest which the bonds would bear, or that it did not properly inform the voters of the amount of debt being created by approval of the bond issue, as argued by the contestant in his brief.

With respect to municipal bond elections, Article 703 has been construed by the appellate courts of this State on two occasions. It was held in each instance that the aforesaid statute did not require that an exact rate of interest be specified in the proposition, but that there was a substantial compliance with the statutory requirement where the proposition specified only a maximum rate of interest. Amstater v. Andreas, 273 S.W.2d 95 (Tex.Civ.App.—El Paso 1954, writ ref’d n. r. e.); Cameron v. City of Waco, 8 S.W.2d 249, 254 (Tex.Civ. App.—Waco 1928, no writ).

In deciding whether a statute is mandatory or not, the legislative intent is determined from a consideration of the entire act, its nature, its object, and the consequences that follow from the construction thereof. State v. Fox, 133 S.W.2d 987 (Tex. Civ.App.—Austin 1939, writ ref’d); Nichols v. Aldine Independent School District, 356 S.W.2d 182 (Tex.Civ.App.—Houston 1962, no writ). “There is no absolute test by which it may be determined whether a statutory provision is mandatory or directory . although the word ‘shall’ is generally construed to be mandatory, it may be and frequently is held to be merely directory”. Chisholm v. Bewley Mills, 155 Tex. 400, 287 S.W.2d 943 (1956).

In the instant case, the proposition within the notice calling the election specifically stated that the bonds would “bear interest at such rates as shall be determined within the discretion of the City Council”. That language is plain and unmistakably clear. The character, purposes, and chief features of the proposed bond election were set out in sufficient detail in the proposition to inform and acquaint the voters with all aspects of the proposal. No person who had previously read the proposition prior to the election could have been misled, deceived or confused with respect to the rate of interest that was specified therein. The voters knew that the bonds must bear some rate of interest, and that the City Council could provide for the bonds to bear interest at the highest rate allowed by law. The voters also knew that the City Council could, and presumably would, fix the lowest rate at which the bonds could be sold, considering the economic conditions existing at the time of the sale. The electorate was put on notice that the voters were being asked to authorize some interest rate not exactly known on election day, but which would be determined in the future by the City Council, within its discretion and the limits of the law. The voters of the City of Corpus Christi had a clear choice in the matter. They made that choice, and expressly authorized the City Council to set the exact rate of interest in the manner clearly specified in the proposition. We see nothing inherently wrong in the calling and holding of an election which plainly permits the voters to allow the exact rate of interest which the proposed bonds will bear to be set by the persons whom the people have chosen to represent them, and in their discretion and good judgment.

The discretion of a City Council in the performance of public duties is subject to review by the courts. The word “discretion” means what is just and proper under the circumstances, and is not a word for arbitrary will or inconsiderate action. Cowden v. Broderick & Calvert, 131 Tex. 434, 114 S.W.2d 1166 (1938). The governing body of a municipality is constrained in the exercise of its discretion by legal limits, and the discretionary setting of the rate of interest on a public bond issue must be exercised according to honest judgment and within the proscription of the bond market at the time the bonds are sold. See Barrington v. Cokinos, 161 Tex. 136, 338 S.W.2d 133 (1960); Scruggs v. Wheeler, 4 S.W.2d 616 (Tex.Civ.App.—Amarillo 1927, writ ref’d).

It is a matter of common knowledge that interest rates fluctuate according to economic conditions. There has been a very substantial increase in the last few years in the rates of interest required of municipal bonds if the bonds are to be sold. Without the sale of bonds, few, if any, substantial improvements could be constructed by public agencies. The 61st Legislature, in enacting Tex.Rev.Civ.Stat.Ann. art. 717k-2 (Supp.1976), effective September 11, 1969, removed all existing limitations on the net effective interest rate on public securities to be issued and sold from and after the effective date of the Act, and recognized the fact that “many public agencies are presently unable to issue and sell public securities because of legal restrictions on the rate of interest that such public securities may bear, which makes it impossible to finance urgently needed public improvements. . . . ”

The statute, Article 717k — 2, provides, in part:

“Sec. 2. Any public agency is hereby authorized to issue and sell any issue or series of its public securities at any price or prices and bearing interest at any rate or rates, as shall be determined within the discretion of the governing body of the public agency, subject to the exceptions hereinafter provided. . . . ”

“Sec. 3. The provisions of this Act concerning sale price and the maximum rates of interest which public securities may bear shall apply to all public securities notwithstanding the provisions or restrictions of any general or special law or charter to the contrary, but shall not apply to any public securities whose maximum rate of interest or maximum net effective interest rate is, at the time of issuance thereof, otherwise specifically fixed by the Constitution.”

The exceptions mentioned in the statute do not apply to the case at bar.

There is no suggestion in this case that there was any fraud in the choice of the words used in the proposition. It is apparent that the language contained therein followed the mandate of Article 717k-2 concerning the fixing of the exact rate of interest after the bonds had been voted. There is no evidence of any attempt to mislead the voters, or that they were misled. The Courts justly consider the obtaining of a fair election and the voters’ free choice and are anxious to sustain the will of the people as expressed by the result of the election, regardless of the size of the majority vote.

The Legislature, at the time of the passage of Article 717k-2 was cognizant of paragraph 3 of Article 703, and it is obvious that it considered that Article 703 did not require the proposition to state an exact rate of interest. Any other construction would, in many instances, prevent a solution of the problem that Article 717k-2 was designed to solve.

We hold that Tex.Rev.Civ.Stat. Ann. art. 703 (1964) does not make it mandatory that the proposition specify an exact rate of interest which the bonds will bear. The statement regarding the rate of interest in the proposition that was submitted to the voters of Corpus Christi was in substantial compliance with the statute. We refuse to give the statute the technical construction asserted by the contestant, which, if done, would render the bond issue, otherwise valid, invalid. The second point of error is overruled.

The judgment of the trial court is AFFIRMED.