Bell v. City of Fayette

• Decision Date: 15 May 1930
• Docket Number: 29947
• Citation: 28 S.W.2d 356,325 Mo. 75
• Parties: J. B. Bell et al., Appellants, v. City of Fayette: George L. Todd, Mayor; B. I. Lawrence et al., Members of Board of Aldermen; Tyre W. Burton, City Clerk, and Fairbanks, Morse & Company
• Court: Missouri Supreme Court

28 S.W.2d 356

325 Mo. 75

J. B. Bell et al., Appellants, v. City of Fayette: George L. Todd, Mayor; B. I. Lawrence et al., Members of Board of Aldermen; Tyre W. Burton, City Clerk, and Fairbanks, Morse & Company

No. 29947

Supreme Court of Missouri

May 15, 1930

Rehearing Overruled May 15, 1930.

Appeal from Howard Circuit Court; Hon. E. B. Woolfolk Special Judge.

Affirmed.

Lionel T. Davis and John T. Backer for appellants.

(1) No municipality may purchase machinery to be installed in a municipally-owned plant and agree to pay for such machinery out of the income and revenues of future years. This is the creation of a debt within the meaning of Section 12 of Article X of the Constitution. State ex rel. Smith v City of Neosho, 203 Mo. 96; Feil v. City of Coeur D'Alene, 129 P. 643, 43 L. R. A. (N. S.) 1103; City of Ottumwa v. Water Supply Co., 119 F. 320; City of Santa Cruz v. Wykes, 202 F. 368; Jackson v. School District, 125 A. 312; Searle v. Town of Haxtun, 271 P. 630; Holmgren v. City of Moline, 109 N.E. 1033; Klein v. City of Louisville, 6 S.W.2d 1107; Jones v. Rutherford, 10 S.W.2d 297; Schnell v. Rock Island, 232 Ill. 89, 14 L. R. A. (N S.) 877; United States v. Fort Scott, 99 U.S. 159; Jackson v. School District, 125 A. 312; State ex rel. Gentry v. Curtis, 4 S.W.2d 473; Byars v. City of Griffin, 147 S.E. 72; Lesser v. Borough of Warren, 237 Pa. 501, 43 L. R. A. (N. S.) 841; Baltimore v. Gill, 31 Md. 375; Browne v. Boston, 179 Mass. 321; Joliet v. Alexander, 194 Ill. 457; Lobdell v. Chicago, 227 Ill. 218; Hagan v. Court, 160 Ala. 544, 37 L. R. A. (N. S.) 1033; 6 McQuillin on Mun. Cor. (2 Ed.) 2389; Lamar Co. v. Lamar, 128 Mo. 202. (2) Since the passage of the Public Service Commission Act, a city cannot contract to maintain a certain rate for service, as was done in this case; neither can it surrender its control over its plant, as was done in this case; the entire control, management and supervision of this plant was in such Commission and the city could not contract away such jurisdiction. Bowers v. City of Taylor, 16 S.W.2d 521; Sec. 10488, R. S. 1919; Feil v. Coeur D'Alene, 43 L. R. A. (N. S.) 1105; Sec. 10425, R. S. 1919; Sec. 12, Art. X, Constitution. (3) Although the contract provides that payment for this machinery shall be made exclusively from the income of the electric light plant, yet failure of the city to pay will render it liable and subject its general revenues to such payment. Steffen v. St. Louis, 135 Mo. 51; Oster v. City of Jefferson, 57 Mo.App. 493; Fisher v. St. Louis, 44 Mo. 483; Ash & Gentry v. Independence, 79 Mo.App. 75; State ex rel. v. Zinc Co., 272 Mo. 51; Barber Asphalt Paving Co. v. Denver, 72 F. 339; Barber Asphalt Paving Co. v. Harrisburg, 64 F. 284; Hitchcock v. Galveston, 96 U.S. 350; United States v. Fort Scott, 99 U.S. 160; Board v. McClellan, 114 So. 695; Chapman v. County of Douglas, 107 U.S. 356. (4) The settled policy of Missouri since 1875 has been to require all cities to transact business on a cash basis. This plan and scheme is a mere subterfuge and allows cities to become indebted in any amount without a vote of the people. It is contrary to the laws of Missouri and against public policy. Book v. Earl, 87 Mo. 251; Barnard & Co. v. Knox County, 105 Mo. 386; State ex rel. v. Gordon, 265 Mo. 180; Lamar Co. v. Lamar, 128 Mo. 202; State ex rel. v. Zinc Co., 272 Mo. 51; State ex rel. v. Neosho, 203 Mo. 75; 6 R. C. L. 707; 13 C. J. 424.

D. C. Rogers and Edward C. Crow for respondent city.

(1) The test of whether a "debt" is created by a contract within the meaning of Section 12, Article X, of Missouri Constitution, is to be determined by whether or not taxes can be levied to meet the contract payments. State ex rel Smith v. Neosho, 203 Mo. 82. (2) It is a well-established rule that the underlying purpose of constitutional provisions limiting indebtedness is to serve as a limitation to taxation and a protection to taxpayers, and if no debt is by contract created the constitutional limitation is not violated. State ex rel. v. Neosho, 203 Mo. 82; Terrell v. Dessaint, 71 Tex. 770; Rauch v. Chapman, 16 Wash. 568, 36 L. R. A. 507, 48 P. 253; Law v. People, 87 Ill. 385; Sackett v. New Albany, 88 Ind. 473; Hopkins Co. v. Coal Co., 114 Ky. 153, 37 L. R. A. (N. S.), note pp. 1060, 1061; Shields v. Loveland, 218 P. 913. (3) A municipality may purchase engines and equipment to be installed in a municipally-owned public utility plant to improve and enlarge same, and contract that the improvement shall be paid for wholly and only from plant income or a part of plant income payable at stated times, and such contract does not create a debt within the meaning of Section 12 of Article X of the Constitution. State ex rel. Smith v. Neosho, 203 Mo. 40; Barnes v. Lehi City (Utah), 279 P. 878; Kasch v. Miller, 18 Ohio St. 281; Uhler v. City of Olympia, 87 Wash. 105, 117 P. 105; Johnson v. City of Stuart (Iowa), 226 N.W. 164; Thompson v. Ashland, 109 Ore. 683, 222 P. 346; Shields v. Loveland, 74 Colo. 27, 218 P. 913; State v. Great Falls, 19 Mont. 518, 49 P. 15; Larimer Co. v. Ft. Collins, 68 Colo. 364, 189 P. 929; Faulkner v. Seattle, 19 Wash. 53, 53 P. 365; Dean v. Walla Walla, 48 Wash. 75, 142 P. 467; City of Bowling Green v. Kirby, 220 Ky. 389; Connor v. City of Marshfield, 128 Wis. 280; Winston v. Spokane, 12 Wash. 544, 41 P. 888; Brockenbrough v. Board of Commissioners, 134 N.C. 1, 46 S.E. 28; Griffin v. Tacoma, 49 Wash. 529, 95 P. 1107; 6 McQuillin on Municipal Corporations (2 Ed.) 45, 48, 49, sec. 2389; LaPorte v. Gamewell Tel. Co., 146 Ind. 466, 35 L. R. A. 636; Franklin Trust Co. v. Loveland, 3 F.2d 114; Fox v. Bicknell, 193 Ind. 537, 141 N.E. 222; Denny v. Spokane, 79 F. 724; Ft. Dodge Elec. Co. v. Ft. Dodge, 89 N.W. 7; Winston v. Spokane, 12 Wash. 524; Voss v. Waterloo Co., 163 Ind. 69, 66 L. R. A. 95; Schooley v. Chehalis, 84 Wash. 667; 44 C. J. sec. 4064; Klein v. Louisville, 6 S.W.2d 1104; 19 R. C. L. 985, sec. 281; Saleno v. Neosho, 127 Mo. 639; Brown v. Ringdahl (Minn.), 122 N.W. 469. (4) If the city failed to make payments provided for in the contract Fairbanks, Morse & Co. could not maintain a suit thereon to subject the general revenues and property of the city to payments thereunder, because the contract expressly provides that neither the city nor its property shall be liable for payments to be made under said contract. Cotter v. Kansas City, 251 Mo. 224; Likes v. Rolla, 184 Mo.App. 296; State ex rel. v. Dierkes, 214 Mo. 590; Crutchfield v. Warrensburg, 30 Mo.App. 456; Sec. 2164, R. S. 1919; sec. 48, Art. IV, Constitution; Thornton v. Clinton, 148 Mo. 648. (5) The only suit on the contract that could be maintained against the city would be a mandamus to compel it to apply "savings" earned to payments as was done in the Neosho case, 213 Mo. 40, and this is so because the contract provides the city shall not be liable thereon and this contract clause would defeat any suit against the city on the contract; if the city misappropriated and dissipated the savings, the city might or might not thereby be rendered liable as for a tort; and the liability for a tort is not within the constitutional provision against incurring indebtedness. A contingent liability to be sued for future commission of a tort is not a "debt" within the meaning of Sec. 12, Art. X, Constitution. But that question is not in this case and need not be discussed or decided. State ex rel. v. Neosho, 203 Mo. 82; Conner v. Nevada, 188 Mo. 148. (6) Cities of the class of Fayette (fourth class) are by Secs. 8479, 9079, 9089, R. S. 1919, given power to acquire, to purchase, to build and to operate and improve and enlarge, and to sell the products of, municipal electric light plants, and fix rates therefor, subject to rates being altered by Public Service Commission, and this being so, full authority is given to such cities to acquire and to build and improve a municipal light plant and pay the cost thereof from the plant income only. State ex rel. v. Hackman, 273 Mo. 690; State ex rel. Smith v. Neosho, 203 Mo. 41. (7) A grant of power to a municipality carries with it all necessary authority to make that grant effectual. Water Company v. City of Aurora, 129 Mo. 576; State ex rel. v. Hackman, 273 Mo. 670. (8) The law authorizing the city to operate municipal light plant to fix a schedule of rates, and the law allowing the Public Service Commission to require the city to file a schedule of rates charged for electricity with right of Commission to approve, revise or reject said rates, are both permissive in form, and neither law contains a prohibition in terms against the procedure authorized by the other, and therefore there is no conflict between the two. Clause 3 of ordinance explicitly states that laws of Missouri shall govern fixing of rates and that parties so intend by contract. Connor v. Marshfield, 107 N.W. 639; R. S. 1919, secs. 9089, 9079; Chap. 95, Art. 4, sec. 10478, par. 12, R. S. 1919; 41 C. J. sec. 2309, p. 177; St. Louis Brewing Assn. v. St. Louis, 140 Mo. 419; R. S. 1919, sec. 8479; Shields v. City of Loveland, 218 P. 917. (9) Neither contract nor ordinance give Fairbanks, Morse & Co. authority to supervise, control or operate the plant. Contract merely provides city will operate plant efficiently and economically. A clause calling for economic and efficient plant operation in similar contract has been held not to affect validity of contract. Barnes v. Lehi City, 279 P. 878. (10) It was not necessary to the validity of the ordinance and contract that same be approved by a vote of the people. City of fourth class in Missouri can make contract to improve municipally-owned light plant pursuant to ordinance and legally contract to pay for same from plant income or a part of plant income without submitting question to voters for their...