holding that a city could not sell bonds below par value, effectively raising the interest rate, because that would change the terms of the bond measure that voters approved
How later courts described this case
- holding that a city could not sell bonds below par value, effectively raising the interest rate, because that would change the terms of the bond measure that voters approved
Written by the judges who cited it.
The opinion
SHAW, C. J.,
Concurring.—I concur in the foregoing opinion.
I wish to add, however, that, in my opinion, the vote of the people, by which the city was authorized to sell the bonds at a price not less than par, constituted a part, and a material part, of the contract evidenced by the bonds, as stated in
Merchants Nat. Bank
v.
Escondido Irr. Dist.,
144 Cal. 329 , [ 77 Pac. 937 ]. The city is the nominal. obligor or promisor on the bonds. It has no authority to
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make the promise and issue the bonds, except such as it obtained by this vote, and that authority was conditioned that the buyer of the bonds, the promisee, should pay to the city at least the par value as the consideration thereof. The real payors of the bonds are the people who pay the taxes levied to raise the fund for that purpose. They are, under the constitutional scheme, in substance and effect the principals whose authority must be first given, in order to authorize their agent, the city, to make the contract. This authority, as evidenced by the records of the election at which the authority was given, must be considered as a part of the contract, at least to the extent that the conditions therein stated cannot be disregarded by the city in selling the bonds, nor by the purchaser at the sale, and this being so, it necessarily follows that an act of the legislature purporting to authorize a disregard thereof would, if valid, impair a material portion of the contractual obligation.