8 Wn.2d 233, THE STATE OF WASHINGTON, on the Relation of Washington Mutual Savings Bank, Appellant, v. THE CITY OF BELLINGHAM et al., Respondents and Cross-appellants
[No. 27676.. En Banc.      Supreme Court      April 3, 1941.]
THE STATE OF WASHINGTON, on the Relation of
     Washington Mutual Savings Bank, Appellant, v. THE
          CITY OF BELLINGHAM et al., Respondents
                and Cross-appellants.«1»

[1] MUNICIPAL CORPORATIONS - FISCAL MANAGEMENT - LOCAL IMPROVEMENT GUARANTY FUND - BONDS PROTECTED. The local improvement guaranty fund act of 1925 does not apply to local improvement district bonds issued for improvements ordered prior to its effective date.

[2] STATUTES - CONSTRUCTION - GENERAL RULES OF CONSTRUCTION -MEANING OF LANGUAGE - AMBIGUITY. In construing a statute, intrinsic and extrinsic aids may be resorted to only when the meaning cannot be declared from the language to be construed.

[3] MUNICIPAL CORPORATIONS - FISCAL MANAGEMENT - BONDS SECURED BY SPECIAL ASSESSMENT OR FUND. The 1925 local improvement guaranty fund act provides for only a single tax credit of five per cent of the bonds or warrants issued subsequent to the effective date of the act, that being the measure of protection enjoyed by the holders of bonds or warrants issued for improvements ordered subsequent to the effective date of the 1925 act and prior to the effective date of the 1927 act.

[4] SAME - CONSTITUTIONAL LAW - OBLIGATION OF CONTRACTS -LOCAL IMPROVEMENT BONDS - TAX CREDIT AS SECURITY. Where, under the 1925 local improvement guaranty fund act, certain local improvement bonds were protected by a tax pledge equal to five per cent of all bonds or warrants issued subsequent to the effective date of the act, the 1927 guaranty fund act cannot be so construed as to have the effect of cutting off the right of the holders of the bonds so protected to the tax credit accorded by the 1925 act as to bonds issued subsequent to the effective date of the 1927 act; since such construction would amount to an unconstitutional impairment of the contractual obligation between the city and the holders of bonds issued under the protection of the 1925 act.

«1» Reported in 111 P. (2d) 781.

[4] See 12 Am. Jur. 50.

234 STATE EX REL. WASH. ETC. BANK v. BELLINGHAM
Statement of Case. [8 Wn. (2d)

[5] STATUTES - REPEAL - IMPLIED REPEAL. Repeals by implication are not favored, and will not be held to exist where the earlier and the later statutes may stand together and both be held valid.

[6] MUNICIPAL CORPORATIONS - FISCAL MANAGEMENT - LOCAL IMPROVEMENT GUARANTY FUND - BONDS PROTECTED. The provisions of the 1925 guaranty fund act establishing a tax credit and providing for the levy of taxes in support thereof are not in conflict with the 1927 guaranty fund act; and the later act should be construed as applying prospectively and as operating only for the benefit of holders of securities issued subsequent to its effective date which otherwise come within the terms of its guaranty.

[7] CONTRACTS - CONSTRUCTION AND OPERATION - STATUTORY PROVISIONS AS PART OF CONTRACT. The law in force when a contract is made becomes a part thereof, and continues in force until the engagements of the contract are fully performed.

[8] MUNICIPAL CORPORATIONS - FISCAL MANAGEMENT - TAXES PAYMENT OF INDEBTEDNESS. The municipal power to tax cannot be abated or destroyed until the contract claims to the benefit of the exercise of the taxing power have been fully satisfied.

[9] MUNICIPAL CORPORATIONS - LEGISLATIVE CONTROL - MUNICIPAL TAXES. In so far as the 1927 guaranty fund act purports to bring within its terms securities issued before its effective date, the act is ineffective as within Const. Art. XI, § 12, prohibiting the legislature from imposing taxes on cities or towns for municipal purposes.

Cross-appeals from a judgment of the superior court for Whatcom county, Olson, J., entered April 26, 1939, in mandamus proceedings, ordering the issuance of warrants in payment of certain defaulted local improvement bonds. Affirmed.

Tanner & Garvin, for appellant.

Hobart S. Dawson and Tim Healy, for respondents and cross-appellants.

John A. Homer, John Keeran, Charles R. Lewis, William Stuart, William J. Gilbert, Thomas L. O'Leary, W. V. Wells, H. E. Grimm, Eugene S. Avey, and Martin C. Welsh, amici curiae.

STATE EX REL. WASH. ETC. BANK v. BELLINGHAM 235
Apr. 1941] Opinion Per BEALS, J.

BEALS, J. -

Washington Mutual Savings Bank, a corporation, relator herein, instituted this proceeding before the superior court for Whatcom county, asking for a writ of mandate directed to the city of Bellingham, a municipal corporation, B. E. Hanning, as mayor of the city, J. E. McGinnis, as city treasurer, and Harry Binzer, as city comptroller, requiring them to issue warrants in favor of relator, drawn upon the city's local improvement guaranty fund, in payment of defaulted local improvement bonds and defaulted interest coupons on such bonds, all owned by relator. Two causes of action were stated, the first based upon matured and defaulted interest coupons issued by the city, attached to bonds of local improvement district No. 873, and the second upon matured and defaulted bonds, together with interest coupons attached thereto, issued by the city in connection with local improvement district No. 814. In each cause of action, the refusal of the city officials to issue warrants was alleged.

District No. 873 was created and the improvement ordered August 3, 1926. The improvement in connection with district No. 814 was ordered September 1, 1925, its bonds having been issued September 14, 1926.

The first cause of action presents the question of the extent of the guaranty afforded by Laws of 1925, Ex. Ses., chapter 183, p. 551, as to local improvement bonds issued for an improvement ordered subsequent to April 7, 1926, but prior to June 8, 1927, while the second cause of action presents the question of the operation and extent of the legal guaranty for bonds issued subsequent to April 7, 1926, for a local improvement ordered prior to that date.

Respondents filed separate demurrers to the two causes of action. The court overruled respondents' demurrer to the first cause of action, and sustained the demurrer to the second cause of action. Both parties

236 STATE EX REL. WASH. ETC. BANK v. BELLINGHAM
Opinion Per BEALS, J. [8 Wn. (2d)

elected to stand upon their respective pleadings, and judgment was entered directing the issuance of a peremptory writ of mandate requiring the issuance of warrants in relator's favor for the amount of the defaulted interest coupons, as prayed for in the first cause of action (district No. 873), and denying the issuance of a writ and dismissing relator's second cause of action (district No. 814). Relator has appealed from the judgment dismissing its second cause of action, and respondents appealed from the judgment granting the writ as prayed for in the first cause of action.

In this opinion the relator below will be referred to as appellant, and the respondents in the superior court as respondents.

[1] The question presented on appellant's appeal from the judgment dismissing its second cause of action, based upon bonds issued for the improvement of district No. 814, that improvement having been ordered prior to April 7, 1926, the bonds having been issued subsequent to that date, has been determined adversely to appellant's contention in the case of Longview Co. v. Lynn, 6 Wn. (2d) 507, 108 P. (2d) 365, and the trial court did not err in sustaining respondents' demurrer to appellant's second cause of action.

The question then to be determined is the extent of the guaranty which secures appellant's local improvement bonds issued by district No. 873, which bonds were issued to pay for an improvement ordered subsequent to April 7, 1926, and prior to June 8, 1927. Respondents contend that the bonds last referred to are guaranteed only by a single tax credit of five per cent of bonds or warrants issued, while appellant apparently contends that these bonds are secured by an annual tax credit not exceeding (in any one year) five per cent of the bonds or warrants issued and then outstanding.

STATE EX REL. WASH. ETC. BANK v. BELLINGHAM 237
Apr. 1941] Opinion Per BEALS, J.

Appellant filed its complaint herein before the superior court April 11, 1939, and speaking as of that date, the following facts, as alleged, stand admitted:

Local improvement district No. 873, providing for the improvement of certain streets in the city of Bellingham, was created by the city council by an ordinance passed August 2, 1926, and approved by the mayor the following day. Pursuant to the ordinance, the improvement was made, and local improvement bonds in the amount of twenty-six thousand dollars were issued and sold. Appellant is now the owner of these bonds to the aggregate par value of nine thousand seven hundred dollars. The city of Bellingham had not availed itself of the privilege of creating a local improvement district guaranty fund pursuant either to Laws of 1917, chapter 138, p. 576 (Rem. Rev. Stat., § 8986 [P. C. § 1066] et seq.), or Laws of 1923, chapter 141, p. 454, its guaranty fund having been first set up under Laws of 1925, Ex. Ses., chapter 183, and of course maintained after June 8, 1927, as provided by Laws of 1927, chapter 209, p. 308 (Rem. Rev. Stat., § 9351-1 [P. C. § 1071-1] et seq.).

Between April 7, 1926 (the effective date of the guaranty fund act of 1925), and June 8, 1927 (the effective date of the act of 1927), the city of Bellingham issued local improvement bonds and warrants in the aggregate sum of $650,529.60, of which amount $351,-670.55 (including the bonds of district No. 873) was issued on account of local improvements ordered subsequent to April 7, 1926, the balance having been issued on account of improvements ordered prior to that date. Subsequent to April 7, 1926, the city issued warrants on its local improvement guaranty fund for the purchase by the fund of defaulted local improvement bonds issued between April 7, 1926, and June 8, 1927, together with defaulted interest coupons, in the

238 STATE EX REL. WASH. ETC. BANK v. BELLINGHAM
Opinion Per BEALS, J. [8 Wn. (2d)

aggregate sum of $34,745.76. These warrants were paid by a tax levy equal to five per cent of the total amount of bonds issued between the dates mentioned and some other revenues which augmented the funds.

After June 8, 1927, the city has issued local improvement bonds on account of local improvements ordered subsequent to that date, in the aggregate sum of $302,400. The outstanding obligations of local improvement districts on account of local improvement bonds issued subsequent to April 7, 1926, exceed in the aggregate $195,125, of which bonds approximately onethird in amount were issued on account of improvements ordered prior to April 7, 1926, one-third represent improvements ordered subsequent to April 7, 1926, and prior to June 8, 1927, and one-third represent improvements ordered subsequent to June 8, 1927. Of bonds issued subsequent to April 7, 1926, and prior to June 8, 1927, for improvements ordered between those dates, in which class are the bonds of district No. 873, bonds in the aggregate amount of $4,343 have matured and remain unpaid, for which guaranty fund warrants have been demanded and refused. As alleged in the complaint, the entire bond issue of district No. 873 would mature July 5, 1939, appellant basing its first cause of action upon unpaid interest coupons which matured July 5, 1938.

Respondents contend that the amount which the city has already raised and paid into the guaranty fund by a tax levy equal in amount to five per cent of the local improvement bonds and warrants issued between April 7, 1926, and June 8, 1927, is the maximum tax which the city can be required to levy pursuant to Laws of 1925, Ex. Ses., chapter 183, and that such bonds and warrants are not in any way protected by Laws of 1927, chapter 209. On the other hand, appellant contends that the acts of 1925 and 1927, above referred

STATE EX REL. WASH. ETC. BANK v. BELLINGHAM 239
Apr. 1941] Opinion Per BEALS, J.

to, provide for a single continuing guaranty fund, for the benefit of which the city is required to levy taxes annually, when necessary, in an amount not exceeding an annual levy of five per cent of the bonds and warrants issued and outstanding, to purchase defaulted bonds and warrants presented.

The parties have also argued the question of whether the act of 1927 applies to bonds issued in connection with an improvement ordered subsequent to April 7, 1926, and prior to June 8, 1927, the effective date of the 1927 act.

Laws of 1917, chapter 138, accorded cities of the first class authority to create a fund for the purpose of guaranteeing, to the extent of the fund and as provided in the act, bonds of local improvement districts. The title of this act reads as follows: