Original proceedings in mandamus. Alternative writ made peremptory.
Mr. Harold R. Scoville, County Attorney and Mr. Leslie C. Hardy, Special Counsel, for Plaintiff.
Mr. Joe Conway, Attorney General and Mr. Earl Anderson, Special Assistant Attorney General, for Defendants.
[60 Ariz. 292] McALISTER, C.J.
This is a proceeding in mandamus, brought by the board of supervisors of Maricopa County, Arizona, to compel the governor, the state auditor and the state treasurer, as the loan commissioners of Arizona, to execute and deliver $4,100,000 refunding bonds of the State of Arizona for the purpose of redeeming a like amount of outstanding Maricopa County highway bonds, bearing interest at the rate of 5 1/2% and 6%.
In Maricopa County v. Osborn, et al., 59 Ariz. 244, 125 P.2d 703, 705, this court determined that these outstanding highway bonds were subject to redemption at any time prior to their fixed maturity dates, notwithstanding the fact none of these bonds had matured or contained any provision on their face making them redeemable at the option of the county prior to their maturity dates. After it was so held, the loan commissioners [60 Ariz. 293] advertised for bids for $4,100,000 of the State of Arizona refunding bonds to be issued for the purpose of redeeming these outstanding highway bonds of Maricopa County, and one bid was received. A syndicate of investment bankers offered to take the bonds at par and accrued interest and a premium of $800, the bonds to bear an interest rate of 2 3/4%. The loan commissioners, upon recommendation of the board of supervisors of Maricopa County, on February 10, 1943, awarded the bonds to this bidder. It will be observed that the difference in interest on the refunding bonds, 2 3/4% per annum, as compared to interest accruing on the outstanding highway bonds, 5 1/2% and 6%, will be a saving to Maricopa County and its taxpayers of approximately 3% per annum on the $4,100,000 principal amount of the bonds, or a saving of $124,750 in interest the first year of the refunding bonds.
After awarding the bonds to the successful bidder the loan commissioners, acting on the advice of the attorney general of the state, refused to execute and deliver the 2 3/4% refunding bonds for several reasons. The questions before this court in this action, raised by such refusal, involve several propositions of law and these will be treated in the order we think best.
The first proposition advanced is that none of the highway bonds are subject to redemption at the option of Maricopa County, or upon call of the loan commissioners, prior to their fixed maturity date, and if the State of Arizona refunding bonds were issued at this time, long prior to the fixed maturity dates of the
county highway bonds, the taxpayers of Maricopa County would be compelled to pay interest both on the county highway bonds and also on the refunding bonds. If we cannot stop interest from running on the outstanding county bonds, no benefit or profit will result to the county from the issuance of the state refunding bonds. This question is answered by the opinion in the [60 Ariz. 294] case of Maricopa County v. Osborn, supra, wherein we said:
"This being true, any bonds of Arizona, issued while this provision was a part of its statutory law, to take care of the indebtedness specified therein, were redeemable and refundable whenever state bonds could be issued at a rate of interest sufficiently lower than that previously paid to render it profitable and beneficial to the state to issue them. This portion of 5252, whether contained in such bonds or not, becomes as much a part of them when issued as it does if incorporated in them and is binding upon the holders thereof as well as the state. National Bank of Republic v. City of St. Joseph, C.C., 31 F. 216; Miners' & Merchants' Bank v. Herron, 46 Ariz. 71, 47 P.2d 430; Catholic Order of Foresters v. State of North Dakota, 67 N.D. 228, 271 N.W. 670, 109 A.L.R. 979; Roberts & Co. v. City of Paducah, C.C., 95 F. 62; Board of Commissioners of Harmon County v. R. J. Edwards, 140 Okl. 247, 282 P. 1090."
Again, it is suggested that there is no legal procedure by which the call for redemption may be made under existing law, for individual notice to each and every bond holder would be required and this cannot be given as it is impossible to ascertain the names of the owners of negotiable bonds which are being transferred every day in the open market. Hence, any publication notice of redemption would be an idle act and interest would continue to run on the outstanding bonds and the county would be required to pay the same. In view of the statute we see no difficulty of this nature, for the publication notice of redemption will stop the interest, even though they cannot be personally notified. Section 10-406, Arizona Code 1939, which is the same as paragraph 5258 of the 1913 Civil Code, provides:
"Applying proceeds to redemption of indebtedness. -- The money received by the treasurer shall be applied by him to the redemption of the indebtedness [60 Ariz. 295] for the redemption of which the bonds were issued, and the treasurer shall give notice, as for the payment and redemption of state warrants, of his readiness to redeem such indebtedness, and thereafter interest on all such indebtedness due and outstanding shall cease. Before such indebtedness be paid, the state auditor shall indorse on each certificate the amount due thereon, and ...