Board of Public Works of Rolla v. Sho-Me Power Corp.

• Decision Date: 12 November 1951
• Docket Number: SHO-ME,No. 42592,42592
• Citation: 244 S.W.2d 55,362 Mo. 730
• Parties: BOARD OF PUBLIC WORKS OF ROLLA v.POWER CORP.
• Court: Missouri Supreme Court

Page 55

244 S.W.2d 55

362 Mo. 730

BOARD OF PUBLIC WORKS OF ROLLA v. SHO-ME POWER CORP.

No. 42592.

Supreme Court of Missouri, en Banc.

Nov. 12, 1951.

Rehearing Denied Dec. 10, 1951.

Gregory C. Stockard, Jefferson City, Louis H. Breuer, Rolla, for appellant.

E. W. Allison, Dewey A. Routh, Rolla, for respondent.

HOLLINGSWORTH, Judge.

By this action, designated a suit in equity, plaintiff (respondent) seeks a judgment declaring null and void a purported contract entered into between 'Rolla, Missouri, Municipal Utilities Board' and defendant (appellant) on April 24, 1948, whereby defendant agreed to sell and said board agreed to purchase all electric energy required by the City of Rolla, Missouri, and its inhabitants, for a term of at least five years and thereafter until the contract was terminated by either party upon six months notice.

The grounds upon which plaintiff bases its claim for relief are (1) that the contract was not executed or approved by any officer or agency of the City of Rolla having authority so to do, and (2) misrepresentations held out as an inducement to the execution of the contract and continuing breach of the provisions thereof. The petition further alleges that the purported contract constitutes a cloud upon the rights and privileges of plaintiff to obtain an adequate supply of electric energy required by the municipally owned public utilities of Rolla, and asks declaratory relief.

Defendant pleaded that jurisdiction of the subject matter of the action was vested exclusively in the Public Service Commission, which plea was overruled. Defendant then, by answer, joined issue on the allegations of plaintiff's petition and further pleaded that the City of Rolla knew of the terms of said contract, consented thereto, recognized it, operated under it, and accepted its benefits; and that plaintiff was therefore estopped to deny its validity.

The trial court filed a detailed finding of facts and conclusions of law. It found the evidence in favor of plaintiff on both grounds pleaded, but rendered judgment in its favor on the sole ground that the contract was null and void because it was never executed or approved by the City of Rolla or any authorized officer or agency thereof. Upon appeal to the Springfield Court of Appeals, the judgment of the trial court was reversed. See 236 S.W.2d 603. The cause was ordered transferred to this court under the provisions of Sec. 10, Art. V, Constitution of Missouri.

Rolla is a city of the fourth class. It has owned and operated an electric energy distribution system since 1928, and since 1932 its electric current has been furnished by or purchased from defendant and its predecessors. From 1932 to 1941, both inclusive, this was furnished to the city under a series of written contracts, but from 1942 until the execution of the contract here in suit on April 24, 1948, there was no written contract.

In August, 1944, acting under the provisions of Secs. 91.450-91.550, R.S.Mo1949, the City, by Ordinance No. 630, established the Board of Public Works, plaintiff herein, since which time that board has managed, operated and controlled the electric distribution system. The ordinance closely follows the wording of the statutes authorizing the creation of boards of public works and defining their duties. The ordinance specifically provides, as do the statutes, that all contracts made by the board shall be submitted to the common council for approval. For some reason not made clear in the record the Board of Public Works has functioned, in some instances at least, as it did in the signing of the contract in suit, as 'Rolla Municipal Utilities'.

Beginning in 1946, negotiations for a written contract were in progress between defendant (and its predecessor) and the Board of Public Works. It is conceded that during these years the voltage of electric current furnished the City was too low for its needs and service was too frequently interrupted. The board was insisting these deficiencies be corrected before entering into a written contract, and defendant was attempting, but failing, to do so. During the course of these negotiations, defendant, acting through its chief engineer, urged Mr. Bronson, general manager of the city's utilities, to 'support the signing of the contract' here in suit, and stated to him that such a contract would assist defendant in obtaining a five million dollar loan it was then seeking from REA, and that if such a loan were obtained, defendant had tentatively planned to use a part of it to build a steam plant on the Gasconade River which would enable defendant to furnish the city with adequate service.

Shortly prior to April 24, 1948, defendant mailed to the Board of Public Works, addressed to the attention of Mr. Bronson, general manager, five unsigned copies of the contract in suit. On April 24, Mr. Bronson presented these to the Board of Public Works, and the board, as shown by a certified copy of its recorded minutes of that date, authorized their execution. All copies were thereupon executed thus: 'Rolla Municipal Utilities By H. E. Castleman Chairman Pres. Rolla Board of Public Works'. Mr. Bronson then took all copies to the office of the city clerk. The Board of Aldermen was not in session and no member thereof was present. The city clerk then and there affixed the seal of the city to each copy and signed his name thereto following the word 'Attest'. All copies were then returned to defendant. Defendant executed them and returned one executed copy to the Board of Public Works.

The records of the Board of Aldermen do not show any approval of the contract. Mr. Schuman, Secretary of the Board of Public Works, testified that, insofar as he knew, the city officials were not consulted about the contract and had no knowledge the board was entering into it. There was no testimony to the contrary.

The contract made no change in the rates or in the methods of operation, accounting or payment of the bills rendered by defendant, except as hereinafter noted. Both before and after the contract was signed, monthly bills were presented to the Board of Public Works, which, when approved, were sent with checks prepared by the Board of Public Works to the city clerk, where the checks were countersigned by the city clerk and the mayor. The one difference in the written contract was that it afforded the city 'the benefit of the averaging of the three highest 15-minute interval demands during the month', whereas contracts between defendant and other cities 'charge them on the one highest 15-minute interval'. There was no further explanation as to how or to what extent this constituted a benefit to the city, and it is not thereafter referred to in the case.

The disposition which we make of this case renders it unnecessary to consider the evidence relating to alleged misrepresentations made by defendant as an inducement to the Board of Public Works to enter into the contract. Such other evidence as may be necessary to disposition of the case will be hereinafter stated.

Defendant assigns error in the refusal to sustain its plea challenging the jurisdiction of the court over the subject matter of the action. Its contention is that, since plaintiff admits defendant is a public utility operating under supervision of the State Public Service Commission and the pleadings show that the controversy relates to alleged insufficiency of service furnished plaintiff by defendant, initial and exclusive jurisdiction is vested in that body. In support of this contention defendant cites: Sections 393.130 and 393.140, R.S.Mo.1949; State ex rel. and to Use of Cirese v. Ridge, 345 Mo. 1096, 138 S.W.2d 1012; State ex inf. Barker v. Kansas City Gas Co., 254 Mo. 515, 163 S.W. 854; State ex rel. Consumers Public Service Co. v. Public Service Commission, 352 Mo. 905, 180 S.W.2d 40; State ex rel. Kansas City Public Service Co. v. Latshaw, 325 Mo. 909, 30 S.W.2d 105. A careful reading of each and all of the statutes and cases cited reveals that none of them tend in the least to support the contention made.

This action, whether it be considered an action in equity or an action for a declaratory judgment, sought to obtain a decree annulling the contract. Even that part of the petition alleging that defendant both prior and subsequent to the execution of the contract failed to furnish adequate and continuing electric energy seeks not to obtain an order requiring defendant to furnish such service, but rather seeks annulment of the contract because defendant represented it would do so, which representation, it is alleged, induced plaintiff to enter into the contract. The promises allegedly made are pleaded as the inducement and the failure to keep them is pleaded to show them to be misrepresentations.

The Public Service Commission is not a court and has no power to declare or enforce any principle of law or equity. American Petroleum Exchange v. Public Service Comm., Mo.Sup., 172 S.W.2d 952, 955. See also Bell v. City of Fayette, 325 Mo. 75, 28 S.W.2d 356, and May Department Stores Co. v. Union Electric Light & Power Co., 341 Mo. 299, 107 S.W.2d 41. On the other hand, circuit courts have exclusive original jurisdiction in all civil cases not otherwise provided for. Sec. 14, Art. V, Constitution of Missouri. The trial court did not err in overruling defendant's plea of lack of jurisdiction of the subject matter of the action.

The finding of the trial court that the contract was void because not approved by any authorized official or agency of the city, and its refusal to hold that plaintiff, by its acts and conduct, was estopped to assert its invalidity is assigned as error.

Assuming for the purpose of this opinion only that the 'Rolla Municipal Utilities' may be treated as a de facto agency of the Board of Public Works, and that the Board of Public Works may be considered an agency authorized by statute to enter into this contract in its name in behalf of the city,...