Champ v. Poelker, s. 52912

• Decision Date: 21 June 1988
• Docket Number: Nos. 52912,52933,s. 52912
• Citation: 755 S.W.2d 383
• Parties: Norman CHAMP, et al., Plaintiffs-Appellants, v. John H. POELKER, et al., Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 383

755 S.W.2d 383

Norman CHAMP, et al., Plaintiffs-Appellants, v.John H. POELKER, et al., Defendants-Respondents.

Nos. 52912, 52933.

Missouri Court of Appeals,

Eastern District,

Division Five.

June 21, 1988.

Motion for Rehearing and/or Transfer to Supreme Court Denied

July 27, 1988.

Application to Transfer Denied Sept. 13, 1988.

Lewis C. Green, St. Louis, for plaintiffs-appellants.

Donald Gunn, Jr., Edward J. Hanlon, City Counselor's Office, Gerard T. Carmody, and George S. Roudebush, Bryan, Cave, McPheeters & McRoberts, Harry B. Wilson, Jr., Husch, Eppenberger, Donohue, Elson & Cornfeld, Walter M. Clark, and Joseph R. Niemann, Armstrong, Teasdale, Kramer & Vaughan, St. Louis, Thomas W. Wehrle, County Counselor, Clayton, Stefan J. Glynias, Evans & Dixon, St. Louis, for defendants-respondents.

CARL R. GAERTNER, Judge.

Appellants, Norman Champ and Champ Spring Corporation, brought this taxpayers' action to recover $300,000 in contributions paid by the Industrial Development Authority of the City of St. Louis(IDA) and the Convention and Visitors Bureau of Greater St. Louis (Convention Bureau) to People for Jobs and Growth (PJG), a campaign committee organized under Chapter 355, RSMo 1986, to promote passage of a 5/8th cent sales tax proposition in St. Louis City and County.Following extensive discovery, the trial court dismissed all counts of plaintiffs' petition with prejudice and plaintiffs appeal.We affirm in part and reverse in part.

In passing upon the sufficiency of a petition to state a claim upon which relief may be granted to the plaintiff, we disregard mere conclusions by taking as true all well pleaded facts alleged.If the facts pleaded and the reasonable inferences to be drawn therefrom show any ground for relief, then the petition should not be dismissed without providing the pleader an opportunity to prove the truth of his allegations.Johnson v. Great Heritage Life Insurance Co., 490 S.W.2d 686, 690(Mo.App.1973).Accordingly, we synopsize the facts as gleaned from plaintiffs allegations.

One of the issues in the August 3, 1982St. Louis City and County election was the imposition of a 5/8th cent sales tax to fund a regional economic development district.Prior to the election, supporters of the tax proposition, known as Proposition 1, formed PJG to campaign for passage of the ballot measure.PJG hired the firm of Fleishman-Hillard, Inc. as public relations consultants and borrowed $250,000 from Centerre Bank, Inc. to meet immediate campaign needs.

Despite PJG's efforts, Proposition 1 was defeated.On August 19, 1982, St. Louis City Mayor Schoemehl requested the IDA to contribute $150,000 to PJG for "further commercial and industrial development in St. Louis."IDA directors approved the expenditure and issued a check for $150,000 to the Convention Bureau to be combined with Convention Bureau funds and donated to PJG.On September 20, 1982, at the instigation of Mayor Schoemehl and St. Louis County Executive McNary, the executive committee of the Convention Bureau approved a $300,000 contribution to PJG.PJG used the funds to repay its outstanding loan with Centerre Bank and to pay Fleishman-Hillard, Inc. for consulting services.

On February 18, 1983, appellants filed an eight count petition against the IDA, the Convention Bureau, various IDA and Convention Bureau board members, Mayor Schoemehl, County Executive McNary, Centerre Bank and Fleishman-Hillard, Inc. Count I alleged that IDA board members violated the Missouri Constitution, article VI §§ 23and25, by illegally transferring public funds to the PJG for a private purpose, violated Missouri's Sunshine Law by failing to hold open meetings or give notice of meetings regarding the PJG donation, and violated the Campaign Finance Disclosure Law by failing to properly report the PJG contribution.In Count II, appellants allege that the Bureau was unjustly enriched by the funds transferred to it from the IDA and sought to impose a constructive trust on the Convention Bureau in the amount of $150,000.Counts III and IV allege that the individual Convention Bureau defendants purposefully violated the Sunshine Law and violated article VI, §§ 23and25 by illegally expending public funds.In Counts V and VI appellants sought to impose a constructive trust on PJG in the amount of $300,000 and enjoin PJG from further violating the Campaign Finance Disclosure Law.Count VIII alleged that Fleishman-Hillard violated the Campaign Finance Disclosure Law and sought to impose constructive trusts on Fleishman-Hillard and Centerre Bank.

All defendants moved to dismiss.The trial court overruled the motions and ordered extensive discovery which took place throughout 1983 and 1984.Appellants then filed their First Amended Petition on May 22, 1985.All defendants again moved to dismiss.On October 21, 1986, the trial court entered an order dismissing all counts of appellants' First Amended Petition with prejudice.Following an ex parte request by appellants, however, the trial court amended its original order and allowed appellants to file a Second Amended Petition.All defendants renewed their motions to dismiss.The trial court dismissed the Second Amended Petition on December 3, 1986.This appeal followed.

Respondent Fleishman-Hillard moves to dismiss the appeal.Respondent contends that the purported filing of the Second Amended Petition was a nullity because the trial court amended its original order without affording defendants notice or an opportunity to be heard.We agree.

Absent notice to the defendants, the trial court's order, which had the effect of vacating the original judgment, and allowing appellants to file their Second Amended Petition exceeded the court's jurisdiction under Rule 75.01, and was therefore void.Griffith v. Mullenix Corp., 688 S.W.2d 46, 47(Mo.App.1985);Dixon v. Bi-State Development Agency, 636 S.W.2d 696, 698(Mo.App.1982).AppealNo. 52912 is dismissed.However, we find that appellants did not abandon their appeal from the dismissal of the First Amended Petition.On March 25, 1987, we granted appellants leave to file a late notice of appeal from the order dismissing the First Amended Petition.On July 29, 1987, we granted appellant's motion to amend their brief to include the dismissal of the First Amended Petition in their point of error.AppealNo. 52933 is properly before this court.We, therefore, look to the first amended petition to determine whether or not it contains allegations of fact which, if true, show plaintiffs may be entitled to the relief they seek.

I.

Appellants first argue that the IDA, the Convention Bureau, and the individual defendants associated therewith illegally transferred public funds from the IDA and Convention Bureau to pay the private debts of PJG.The Missouri Constitution prohibits any city, county, political corporation or subdivision of the State from granting public money or lending credit to a private corporation or association.Article VI, §§ 23and25.Appellants request the court to declare the expenditures void and hold the defendant directors of both corporations personally liable for restoring the misappropriated funds.Appellants assert their status as taxpayers in both St. Louis City and County as the basis for their claims.

The threshold question in this appeal is whether appellants have standing to challenge the actions of the IDA and the Convention Bureau."Standing is an 'antecedent to the right to relief' and has been said to be, 'in a sense, jurisdictional in limine....' "Sommer v. City of St. Louis, 631 S.W.2d 676, 679(Mo.App.1982) (quoting State ex rel. Schneider v. Stewart, 575 S.W.2d 904, 909(Mo.App.1978).Regardless of the merits of appellants' claims, without standing, the court cannot entertain the action.Worlledge v. City of Greenwood, 627 S.W.2d 328, 331(Mo.App.1982).

"It is a well-recognized rule that an aggrieved taxpayer may institute a suit against a governmental unit to seek relief for an alleged illegal or improper act."Collins v. Vernon, 512 S.W.2d 470, 473(Mo.App.1974);74 Am.Jur.2d, Taxpayers Actions§ 1(1974).The rationale behind the rule is that a taxpayer has an equitable ownership in public funds and the illegal expenditure of such funds subjects the taxpayer to liability for replenishing the misappropriated money.Id.To establish taxpayer's standing, plaintiffs must allege facts from which the court can infer that plaintiffs will "inevitably" or "necessarily" suffer an increased tax burden from the alleged illegal expenditure.Sommer, 631 S.W.2d at 680;Brock v. City of St. Louis, 724 S.W.2d 721, 725(Mo.App.1987); Missourians for Sep. of C. and S. v. Robertson, 592 S.W.2d 825, 839(Mo.App.1979).Merely pleading that public funds were expended illegally is insufficient to establish standing.Worlledge, 627 S.W.2d at 331.We must look to appellants' petition to determine whether "the ultimate fact of damages" in the form of an increased tax burden "arises as a necessary conclusion from facts stated in the petition."Sommers, 631 S.W.2d at 679.

Appellants claim that the money contributed by the IDA came from service charges and interest income generated from IDA bonds.Appellants argue that these funds are public funds.We disagree.

The IDA is a corporation organized under Chapter 349, RSMo 1986, to promote commercial and industrial development.It has the power to issue bonds without voter approval, to loan the proceeds of the bonds for the purchase and construction of development projects, to lease or sell property and to collect rents and fees for IDA services.§ 349.050, RSMo 1986.The IDA is a distinct legal entity, not a political subdivision of the state.State ex rel. Jardon v. Ind. Dev. Auth., Etc., 570 S.W.2d 666, 673(Mo. banc 1978).It receives its revenue solely from "the revenues and receipts derived from the lease or sale ... of its properties."Id. at 672(quotingIndustrial Development Authority...