Arkansas-Missouri Power Corp. v. City of Kennett

• Decision Date: 13 March 1942
• Docket Number: No. 37846.,37846.
• Parties: ARKANSAS-MISSOURI POWER CORPORATION, a Corporation, ET AL., Appellants, v. CITY OF KENNETT, a Municipal Corporation, ET AL.
• Court: Missouri Supreme Court

159 S.W.2d 782

ARKANSAS-MISSOURI POWER CORPORATION, a Corporation, ET AL., Appellants, v. CITY OF KENNETT, a Municipal Corporation, ET AL.

No. 37846.

Supreme Court of Missouri.

Division Two, March 13, 1942.

Appeal from Dunklin Circuit Court. — Hon. Gordon Dorris, Special Judge.

AFFIRMED.

Patterson, Chastain & Smith, D.C. Chastain and Langdon R. Jones for appellants.

(1) The duty and obligation to sell the securities of a city is vested by law in the city council, and authority to sell the securities of a city cannot be delegated to the mayor and the city clerk. (a) Here the original resolution must fail because it constitutes an unlawful delegation of power to the mayor and city clerk in that the discretion as to how much premium will be required could be exercised only by the council. McQuillin on Municipal Corps., sec. 2462, n. 34; Digest, Mun. Corp., secs. 921(1), 225(2), 62, 214(5), 225(2), 284, 591, 957(2); Digest, Counties, sec. 182; 43 C.J., Mun. Corp., secs. 237-244, sec. 244, n. 34; 44 C.J., Mun. Corp., secs. 4186-4192, sec. 4186, n. 11-14; 15 C.J., Counties, Sec. 339, n. 31; 56 C.J., Schools, sec. 734, n. 94-95; Aquamsi Land Co. v. Cape Girardeau, 142 S.W. (2d) 332; Edwards v. Kirkwood, 147 Mo. App. 599, 127 S.W. 378; Town of Trenton v. Clayton, 50 Mo. App. 535; Blair v. City of Waco, 75 Fed. 800; Elyria Gas Co. v. Elyria, 57 Ohio St. 374, 49 N.E. 335; Jones v. Veltmann, 171 S.W. 287; St. Louis v. Russell, 22 S.W. 470; St. Louis v. Clemens, 43 Mo. 395; Brown v. Newberryport, 209 Mass. 259, 95 N.E. 504; State ex rel. v. Hauser, 163 Ind. 155. (b) The power of sale of municipal securities is a discretionary or legislative function and such powers are vested exclusively in the governing board of the city. In the case of cities of the third class such powers are vested in the council of the city. The only statutory restriction placed upon the discretionary power of the city council in this regard is that such securities cannot be sold for less than par. Secs. 6949, 7371, R.S. 1939. (c) All of the facts concerning the wrongful delegation of powers of sale by the city council to its officers appear of record on the minutes of the city clerk, and constitute a definite link in the chain of title purportedly acquired by the purchaser. The purchaser took the city's bonds with full knowledge of all facts and information of record affecting the validity of the sale of such bonds, and is, therefore, in no wise a purchaser without notice. Greene County v. Shortell, 116 Ky. 108, 75 S.W. 251; State ex rel. Harrington v. City of Pompano, 180 So. 610; State ex rel. Ackerman v. City of Carlsbad, 39 N. Mex. 352, 47 Pac. (2d) 865. (2) The court erred in permitting the defendants to offer in evidence the nunc pro tunc proceedings of the city council under date of April 8, 1941, wherein such nunc pro tunc proceedings purported to amend and correct the proceedings of the city council of March 22 and March 28, 1941, and such record of April 8, 1941, should have been excluded by the court, and the court further erred in taking into consideration in rendering its judgment and decree the record of the city council made on April 8, 1941. (a) The city council, when its acts are questioned by suit, cannot by its own order alter or modify the existing minutes of its proceedings antedating the filing of said suit, and attempted nunc pro tunc amendments are incompetent and inadmissible in evidence. The only remedy whereby such records may be modified or amended, if inaccurate, is a proceeding for a nunc pro tunc amendment in a court having jurisdiction of the subject matter, and after hearing is had upon the question of whether or not the minutes as originally written are true and correct. No such proceedings were had in the case at bar, and, therefore, the attempted nunc pro tunc corrections of the clerk's minutes are wholly unavailing and ineffective. Steiger v. Ste. Genevieve, 141 S.W. (2d) 233; California Implement Co. v. Moran, 128 Cal. 373, 60 Pac. 969; State ex rel. Owen, Atty. Gen., v. Schotten, 165 Wis. 88, 160 N.W. 1066, 3 A.L.R. 1306; McQuillin on Municipal Corps., sec. 656; 43 C.J., Mun. Corp., sec. 795, p. 517, n. 53-61; 19 R.C.L., Mun. Corp., sec. 202; 3 A.L.R. l.c. 1308. (b) The city introduced evidence to contradict written record of the proceedings of the council relating to the sale of its bonds. Such evidence is wholly inadmissible because the same is in direct conflict with the records of the city and is not intended merely to supply missing records. Likewise, parol evidence contradictory to the record is insufficient to sustain nunc pro tunc proceedings for the amendment or correction of the city records when such evidence is contradictory to the existing record. Peter v. Kaufman, 327 Mo. 915, 38 S.W. (2d) 1062; State ex inf. Mansur v. McKown, 315 Mo. 1336, 290 S.W. 123; Bonsack & Pearce, Inc., v. School Dist. of Marceline, 226 Mo. App. 1238, 49 S.W. (2d) 1085; Tucker v. McKay, 131 Mo. App. 728, 111 S.W. 867; Watts v. Levee Dist. No. 1 of Miss. County, 164 Mo. App. 263, 145 S.W. 129; City of New Franklin v. Edwards, 23 S.W. (2d) 235; State ex rel. Barkwell v. Trimble, 309 Mo. 546, 274 S.W. 683; City of Brunswick v. Scott, 219 Mo. App. 45, 275 S.W. 994; Lebanon L. & M. Water Co. v. Lebanon, 163 Mo. 254, 63 S.W. 811; Huntersville v. Eatherton, 182 S.W. 767; Hoskins v. Pittman, 16 S.W. 1052, 229 Ky. 260; Jeffers v. Wharton, 197 So. 352, 358. (3) The attempted sale by the mayor and the clerk being invalid in the first instance, the same is not subject to subsequent ratification and approval by the governing board of the city, and, therefore, the attempted approval and confirmation of the report of the mayor and the city clerk filed with the council on March 28th is wholly unavailing and ineffectual to make valid the sale in question. General Mfg. Co. v. Portageville, 28 S.W. (2d) 119; Likes v. Rolla, 184 Mo. App. 296, 167 S.W. 645; Dearmont v. Mound City, 278 S.W. 802; Miller v. Alsbaugh, 2 S.W. (2d) 208. (a) Under Sec. 3349, R.S. Mo. 1939 (Mo. St. Ann., p. 1827, sec. 2962), a city contract must be made by its "agents authorized by law and duly appointed and authorized in writing ...," and hence the mayor cannot make a contract on behalf of the city unless he is authorized by ordinance or resolution to make that particular contract. Atwill v. Richmond, 132 S.W. (2d) 672; General Mfg. Co. v. Portageville, 28 S.W. (2d) 119; Eureka Fire Hose Mfg. Co. v. Portageville, 106 S.W. (2d) 513; Lively v. Webb City, 106 S.W. (2d) 517; Iowa B. & C. Co. v. Marceline, 255 S.W. 577. (b) And, since under Section 3349, city contracts must be "made upon a consideration wholly to be performed or executed subsequent to the making of the contract...," where a contract is made by the mayor without proper authorization and performed then the contract cannot be authorized or ratified by subsequent action of the council. Likes v. Rolla, 184 Mo. App. 296, 167 S.W. 645; Dearmont v. Mound City, 278 S.W. 802. (4) The court erred in excluding the testimony of expert witnesses as to the value of the bonds involved at the date of the purported sale by the mayor and city clerk to Baum-Bernheimer. 22 C.J., sec. 684, p. 582; Matthews v. Ry. Co., 142 Mo. l.c. 666; Harris v. Ry. Co., 115 Mo. App. l.c. 533; Fry v. Estes, 52 Mo. App. l.c. 5; State v. Reid, 185 N.E. 449, 86 A.L.R. l.c. 1448.

Elbert L. Ford, Arthur U. Goodman, Jr., and Robert B. Fizzell for respondents; Bowersock, Fizzell & Rhodes of counsel.

(1) The action of the city council in authorizing and ratifying the sale and delivery of the city's bonds as shown by the minutes of March 22, 1941, and March 28, 1941, without considering the corrected minutes approved by the council on April 8, 1941, was legal and did not involve the delegation of legislative power by the council. The minutes of the council meetings are sufficiently complete. Haskins v. De Soto, 35 S.W. (2d) 964; Morrow v. Pike County, 189 Mo. 610, 88 S.W. 99. Action taken by the city council on March 22, 1941, authorizing the sale of bonds, did not involve the delegation of legislative power. Frantz v. Jacob, 88 Ky. 525, 11 S.W. 564; Hunter v. Louisville, 208 Ky. 326, 271 S.W. 690. The action taken by the city council on March 28, 1941, operated as a ratification or final approval of the sale and delivery of the bonds. State ex rel. Carthage v. Cowgill & Hill Milling Co., 156 Mo. 620, 57 S.W. 1008; Devers v. Howard, 88 Mo. App. 253; City of Unionville v. Martin, 95 Mo. App. 28, 68 S.W. 605; 1 McQuillin, Municipal Corps. (2d Ed. Revised 1940), sec. 399, p. 1114; 3 McQuillin, Municipal Corps. (2d Ed.), sec. 1358, pp. 561-562. (2) The nunc pro tunc proceedings of the city council had on April 8, 1941, correcting the minutes of March 22, 1941, establish that the council itself, on March 22, 1941, authorized the sale of the city's bonds at par and accrued interest and authorized the mayor and city clerk to execute a contract covering such sale. 2 McQuillin, Municipal Corps. (2 Ed. Revised 1939), sec. 656, pp. 642-645; State ex rel. School District v. Hackmann, 277 Mo. 56, 209 S.W. 92; Peter v. Kaufmann, 327 Mo. 915, 38 S.W. (2d) 1062; Webb v. Strobach, 143 Mo. App. 459, 127 S.W. 680. (3) The lower court properly excluded certain testimony offered by the plaintiffs as to the value of the bonds of the city of Kennett because (1) all such testimony was based on assumed facts not existing in the present suit and (2) such testimony related merely to the exercise of the judgment and discretion vested in the city council and not regulated or controlled by the courts. (a) The testimony in question was based on assumed facts which did not exist in the present case and consequently such testimony was not relevant or material. (b) The testimony in question offered by the plaintiffs was not competent because it related merely to the exercise of the judgment and discretion vested in the city council and not regulated or controlled by the...