Conn v. Middlebury Union H.S. District #3

CONN_V_MIDDLEBURY_UNION_HS_DISTRICT_3.93-420; 162 Vt. 498; 648 A.2d 1385


[Filed 02-Sep-1994]

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 93-420


 Samuel Conn, et al.                          Supreme Court

                                              On Appeal from
      v.                                      Addison Superior Court

 Middlebury Union High School                 March Term, 1994
 District #3


 Edward J. Cashman, J.

 Gerard F. Trudeau, Middlebury, for plaintiffs-appellants

 Richard G. English of Powers, English & Carroll, Ltd., Middlebury, for
    defendant-appellee

 Julian R. Goodrich of Goodrich & Rice and John A. Nelson, Montpelier, for
    amicus curiae Vermont School Boards Association


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.



      JOHNSON, J.   Plaintiffs appeal from a superior court decision, which
 concluded that defendant Middlebury Union High School District #3 was
 authorized to borrow money for a period exceeding one year without following
 the procedure set forth in 24 V.S.A. {{ 1751-1785 to obtain bond approval.
 We hold that the school district had no authority to borrow money beyond
 one year without a bond vote and, therefore, reverse.
      On May 18, 1993, the district school board decided to call a special
 meeting of the district electorate to obtain authorization to borrow
 $180,000 for a period not to exceed five years, to construct a building for

 

 high school vocational training.  It also decided to request approval to
 borrow $90,000 for a five-year period, to prepare plans for another new
 building.  The special meeting was scheduled for June 29, 1993, and warnings
 were issued according to notice requirements.  One week prior to the
 meeting, the school district sent an informational letter with a copy of the
 warning to each voter in the district.  A majority of voters present at the
 June 29 meeting approved both articles by floor vote.
      On July 2, 1993, plaintiffs filed a petition requesting that the
 superior court enjoin defendant from borrowing the $270,000 and set a date
 for a bond vote on the two articles to proceed by Australian ballot as
 required by 24 V.S.A. { 1758.  Plaintiffs maintained that the floor vote at
 the June 29 meeting was inadequate to authorize the school district to
 borrow money for a period longer than one year, and that the school district
 was required to follow the statutory procedures for bond approval set out
 at 24 V.S.A. {{ 1751-1785.  Plaintiffs also argued that the board improperly
 influenced the vote, in violation of 17 V.S.A. { 2666, by sending an
 informational letter about the proposed school construction to each voter in
 the district, and that the board exceeded its authority by spending district
 funds to send the letter.
      Defendant maintained that the June 29 vote was a valid exercise of the
 general borrowing power pursuant to 24 V.S.A. { 1788.  It denied any
 improper influence on the vote and contended that the letter sent to voters
 merely provided information regarding the two articles.  The superior court
 rejected defendant's argument that 24 V.S.A. { 1788 authorized the June 29
 floor vote, but found that the vote was a valid exercise of power under 16
 V.S.A. { 562(9) because payments on the notes could be made with anticipated

 

 annual revenues.  The court also concluded that the letter sent to voters
 did not violate 17 V.S.A. { 2666 but, rather, was authorized conduct in
 furtherance of the duty to protect and maintain the assets of the district.
 Consequently, the court denied plaintiffs' petition, and plaintiffs
 appealed.
                                     I.
      The principal issue for decision is whether a school district has
 express or implied power to borrow money for longer than one year without
 complying with the bond statute.  See 24 V.S.A. {{ 1751-1785.  Plaintiffs
 argue that the floor vote was inadequate to authorize the school district to
 borrow money for the school improvements.  They maintain that to borrow
 money for a period exceeding one year, the school district must obtain bond
 approval, and that under the bond statute, the vote must be held by
 Australian ballot.  See 24 V.S.A. { 1758 (vote on issuing bonds "shall be by
 Australian ballot").
      A school district is defined as a municipal corporation.  See 24 V.S.A.
 { 1751(1).  We have held that a municipality possesses only those powers or
 rights expressly granted to it by the Legislature, those fairly implied
 because necessary to carry the latter into effect, and those essential to
 the declared purposes of the municipality.  Robes v. Town of Hartford, ___
 Vt. ___, ___, 636 A.2d 342, 345 (1993).  Moreover, we construe the municipal
 function strictly.  In re Ball Mountain Dam Hydroelectric Project, 154 Vt.
 189, 192, 576 A.2d 124, 126 (1990).  Any "fair, reasonable, substantial
 doubt" regarding the power of a municipality will be resolved against the
 grant of such power.  Id. (quoting Valcour v. Village of Morrisville, 104
 Vt. 119, 130, 158 A. 83, 86 (1932)).

 

      Defendant contends that school districts may borrow money, for a term
 longer than a year, either pursuant to the bond statute or pursuant to the
 general municipal borrowing power.  It maintains that the June 29 vote was a
 valid exercise of the general borrowing power and finds support for that
 power in several sources.  Defendant first claims that 24 V.S.A. { 1788
 grants municipalities general borrowing power, or at least recognizes such
 power.  Section 1788 provides in part:
      The existing power of a municipality to authorize public
      improvements by a majority vote in a meeting duly called and held
      and to finance the same temporarily by the issue of orders or
      notes, and to issue bonds therefor, is not repealed nor affected
      by the provisions of this subchapter.
 24 V.S.A. { 1788 (emphasis added).  Plaintiffs counter that the "existing
 power of a municipality" referred to in { 1788 is the power expressly
 granted to a municipal corporation by its charter provisions or by special
 act of the Legislature.  They maintain that a municipal corporation has no
 general borrowing authority absent a specific grant by charter or special
 act.
      "Our primary objective in construing a statute is to effectuate the
 intent of the Legislature."  Bisson v. Ward, ___ Vt. ___, ___, 628 A.2d 1256, 1260 (1993).  Generally, we rely on the plain meaning of words because
 we presume that it shows that intent.  Id.  In the instant case, the
 language at issue cannot be construed, on its face, to be a grant of power.
 The statute refers to "existing" powers, which ordinarily means the powers
 are granted elsewhere or exist apart from the statute at issue.  Strictly
 construing the powers of the school district, we conclude that there is no
 express grant of power in { 1788.  Defendant maintains, nonetheless, that

 

 the Legislature "recognized" a general borrowing power in { 1788.  We
 disagree.
      The statutory history of { 1788 supports plaintiffs' construction of
 the statute.  In 1917, the Legislature enacted the first general law
 granting all municipalities the authority to issue bonds to fund public
 improvements provided, two-thirds of the voters at a duly called meeting
 approved.  See 1917, No. 105, {{ 3-5.  Although this law was comprehensive
 in regulating the procedure for voting on and issuing municipal bonds, the
 Legislature also provided: "This chapter shall not affect rights now allowed
 any municipal corporation by its charter provisions, nor any rights now or
 hereafter granted by special act of the legislature."  Id. { 29.  Thus, the
 general law applied to all municipal bonding, except where its requirements
 conflicted with the procedure set forth by charter or special act.  E.B. &
 A.C. Whiting Co. v. City of Burlington, 106 Vt. 446, 454, 175 A. 35, 39
 (1934).  This reservation of rights was codified as { 4103 of the General
 Laws of 1917 and titled "Charters and special acts control."  See 1917 G.L.
 { 4103.
      The Legislature amended G.L. { 4103 in 1925 by adding the "existing
 powers" language, which is now, with a few editorial changes, 24 V.S.A. {
 1788.  See 1925, No. 60, { 9.  Subsequently, in 1933, the Commissioners on
 the Revision of the Laws divided { 4103 into two separate sections.  The
 original 1917 language, reserving rights granted by charter or special act,
 and the 1925 amendment, reserving the "existing power" to authorize and
 finance public improvements, were codified in separate sections, and with
 some minor amendments, are now set forth as 24 V.S.A. { 1787 and { 1788.
 See Vermont Comm'rs on the Revision of the Laws, Report Upon the Revision of

 

 the Laws (Proposed Revision) 240 (1933) (dividing G.L. { 4103 into P.L. {{
 3386 and 3387); P.L. {{ 3386-87 (Proposed Revision).
      Thus, in construing { 1788 of the general bonding statute, we are
 mindful that it was originally an amendment to { 1787, which reserves to
 municipalities rights granted by charters and special acts of the
 Legislature.  In this light, { 1788 must be regarded as simply detailing
 those reserved powers, such as the power to authorize a public improvement
 (1) by majority, rather than two-thirds, vote, and (2) by floor vote,
 rather than by Australian ballot.  See Whiting, 106 Vt. at 463, 175 A.  at
 43-44 (bonding statute required two-thirds vote while many charters required
 majority vote).  We presume that the statutory revision, dividing G.L. {
 4103 into two sections, did not intend to change the substantive meaning of
 the law.  See Town of Cambridge v. Town of Underhill, 124 Vt. 237, 240, 204 A.2d 155, 157 (1964) (presume revision is not intended to change substantive
 law unless clearly indicates otherwise).
       In view of the origin of { 1788 and the strict construction of
 municipal powers, we conclude that the "existing power of a municipality"
 refers to the power conferred by municipal charter or special act.  It does
 not grant any additional authority to municipalities, nor does it recognize
 a general borrowing power.  It merely reserves powers granted to
 municipalities by their charters or by special act.  Indeed, defendant's
 construction of { 1788 would authorize bonding by majority vote at a duly
 called meeting because { 1788 refers to the "existing power" to issue
 "orders or notes, and to issue bonds therefor."  24 V.S.A. { 1788.  We
 reject the notion that the Legislature intended to include, in the chapter

 

 of comprehensive municipal bonding rules, a general power to borrow and to
 bond outside of this bonding scheme.
      Alternatively, defendant maintains that it has an implied power to
 borrow in this instance because such power is necessary to carry into effect
 the power to build schoolhouses, which is expressly granted in 16 V.S.A. {
 562(7) (electorate may authorize school board to erect schoolhouses).
 According to defendant, the power to borrow for a period exceeding one year
 must be implied from { 562(7) because it would be impossible to pay for
 constructing a school in a single year.  We are not persuaded to imply the
 power to borrow as necessary to build schoolhouses.  The Legislature has
 provided express authority to fund improvements by granting municipalities
 the power to borrow and bond; it has also provided the procedure by which
 the municipality must obtain approval from the electorate for such funding.
      Nor are we persuaded that 16 V.S.A. { 562(9) grants voters the power to
 authorize the school board to borrow money for a term longer than one year,
 provided payments on the notes are made from annual revenue.  Section 562(9)
 provides that the electorate may authorize the school board, at a school
 district meeting, "to borrow money by issuance of bonds, or notes not in
 excess of anticipated revenue for the school year."  16 V.S.A. { 562(9).
 The statute clearly states that the notes cannot exceed the anticipated
 annual revenue.  There is no reason to construe "notes" in this subsection
 as "payments on the notes."  "Where the meaning of a statute is plain on its
 face, this Court will enforce the statute according to its terms for 'there
 is no need for construction . . . .'"  Burlington Elec. Dep't v. Vermont
 Dep't of Taxes, 154 Vt. 332, 335-36, 576 A.2d 450, 452 (1990) (quoting Hill
 v. Conway, 143 Vt. 91, 93, 463 A.2d 232, 233 (1983)).

 

      Defendant contends that Vermont case law is replete with references to
 a general municipal borrowing power.  Yet, none of the cases cited by
 defendant addresses the issue before us.  See, e.g., Town of New Haven v.
 Weston, 87 Vt. 7, 20-22, 86 A. 996, 1002  (1913) (approving selectmen's
 ratification of treasurer's unauthorized borrowing, which was needed to meet
 current bills for town necessities); Allen v. City of Burlington, 45 Vt.
 202, 212-13 (1873) (warning was inadequate to authorize vote, and statute
 prohibits voters from authorizing tax to be assessed in future years); Blush
 v. Town of Colchester, 39 Vt. 193, 196-97 (1867) (warning to raise a tax to
 pay for recruits was inadequate to warn a vote to borrow money to pay
 recruits; consequently, vote on loan was invalid).  Most of the cases
 involve provisions in town charters or statutes that have since been
 repealed.  We find no authority in the case law cited to validate the June
 29 vote.  More importantly, however, this Court does not grant powers to
 municipalities.  Only the Legislature has the authority to grant such power.
      Finally, defendant argues that borrowing without bonding is often more
 economical for smaller projects requiring loans less than twenty years; it
 avoids the cost of the bond issue, interest is due over a shorter period,
 and interest rates may even be lower.  Defendant maintains that hundreds of
 loans to municipalities have been made and are outstanding on the authority
 of the "existing power" of { 1788 because municipalities recognize the
 fiscal benefits of multi-year loans without bonding to fund improvements.
      We recognize that it may be more economical and convenient to fund some
 school improvements by borrowing from local banks for a period longer than
 one year.  Despite the merits of defendant's policy arguments, it is not the
 function of the courts to grant powers to school districts where the

 

 Legislature has not done so.  Nor are we inclined to sanction the general
 practice of unauthorized borrowing simply because it is widespread.
 Defendant's arguments are more properly addressed to the Legislature.
      We conclude that there is no general municipal borrowing power in
 Vermont.  Because defendant can point to no authority that expressly grants
 such a power, nor any authority under which such power would necessarily be
 implied, we hold that the June 29 floor vote was invalid to authorize the
 school district to borrow money for school improvements for a period of five
 years.
                                     II.
      Plaintiffs contend that defendant improperly influenced the June 29
 vote, in violation 17 V.S.A. { 2666, by sending voters a letter about the
 issues to be voted upon.   Section 2666 provides: "Neither the warning, the
 notice, the official voter information cards, nor the ballot itself shall
 include any opinion or comment by any town body or officer or other person
 on any matter to be voted on."  17 V.S.A. { 2666.  On appeal, plaintiffs
 concede that defendant did not include any opinion or comment on the
 warning or the ballot but suggest that spending school money to send the
 letter was improper.  As there was no opinion or comment on any of the
 official documents listed in 17 V.S.A. { 2666, we conclude that neither the
 letter, nor the funds spent to send it, constitute improper influence under
 that section.
      Plaintiffs also argue that the school board exceeded its authority by
 spending school revenues to send the letter.  They maintain that the letter
 attempted to persuade voters to support the new buildings, and consequently,
 was an improper political expenditure pursuant to Sargent v. Clark, 83 Vt.

 

 523, 77 A. 337 (1910).  In Sargent, the Court held that a town cannot
 legally vote to pay expenses incurred in opposing a bill to create a new
 town from part of its territory.  Id. at 526, 77 A.  at 338.  The Court found
 that, absent a specific statutory grant, the town had no corporate duty,
 interest or right against the state to maintain its territorial limits.  Id.
 In contrast, the school district in this case has a statutory duty to locate
 and erect schoolhouses.  See 16 V.S.A. { 3741.  Sending an informational
 letter to voters, in this context, is a proper function of the school
 district.  See also 16 V.S.A. { 562(8) (board shall determine how voted
 funds shall be expended).
      Reversed as to the validity of the June 29, 1993 floor vote; affirmed
 as to the authority to send and pay for the informational letter.



                                    FOR THE COURT:



                                    _________________________________
                                    Associate Justice