Church v. Hadley

• Decision Date: 01 March 1912
• Parties: CHURCH v. HADLEY et al., State Board of Fund Com'rs.
• Court: Missouri Supreme Court

145 S.W. 8

CHURCH v. HADLEY et al., State Board of Fund Com'rs.

Supreme Court of Missouri.

March 1, 1912.

1. STATES (§ 148)—INDEBTEDNESS—POWERS OF LEGISLATURE.

Const. art. 4, § 44, provides that the General Assembly shall have no power to contract any debt on behalf of the state, save that, among other exceptions specified, on the occurring of an unforeseen emergency, when the temporary liability to be incurred shall exceed $250,000, the General Assembly may submit an act providing for a loan and for the levy of a tax sufficient to pay the interest and principal when they become due (the latter not more than 13 years from the creation of the debt), to the qualified voters, which act when ratified shall be irrepealable until payment. Act March 16, 1911 (Laws 1911, p. 416), authorized the issuance and sale of $3,500,000 in state bonds, the proceeds to constitute a fund, designated as the Capitol Building Fund, to be applied exclusively to the building of a new State Capitol. This act was duly submitted to popular vote by a second act approved March 24, 1911 (Laws 1911, p. 250). Held, that the unforeseen destruction of the capitol by fire authorized the Legislature to incur the debt, when ratified by popular vote and, the act having provided a tax sufficient to pay the interest and debt in 13 years, the bonds were valid.

2. STATES (§ 153*) — BONDS PAYMENT OF COMMISSION.

Act March 16, 1911 (Laws 1911, p. 416), providing for the issuance of $3,500,000 3½ per cent. bonds to rebuild the State Capitol which had been destroyed by fire, provided that, if ratified by two-thirds of the voters, the entire proceeds of the sale of the bonds should be paid into the State Capitol Building Fund, and that the proceeds, aggregating the sum of $3,500,000, more or less, should be appropriated to the construction of a capitol. Act March 24, 1911 (Laws 1911, p. 250), submitted the question to a vote, and the issuance of bonds was approved. Another act of March 24, 1911 (Laws 1911, p. 108), created the State Capitol Commission Board, consisting of specified state officers who were vested with powers to sell the bonds and use the proceeds for the construction of the capitol. Held that, while Act March 16, 1911, provides that the bonds should not be sold at less than par, the Board of Commissioners are, in view of the provision asserting that the proceeds of the bonds should aggregate the sum of $3,500,000, more or less, authorized, in case of inability to dispose of the bonds, to pay brokers a commission to dispose of them; the board being vested with a discretionary power as to the contract and amount of commission, for, being general agents, members of the board had power to perform any duties essential to the carrying out of their agency, and, by the very terms of the act, the Legislature anticipated expenses in the sale of the bonds.

In Banc. Appeal from Circuit Court, Cole County; John M. Williams, Judge.

Suit by H. B. Church, Jr., against Herbert S. Hadley and others, as the Board of Fund Commissioners of the state of Missouri. From a judgment for defendants, plaintiff appeals. Affirmed.

W. C. Irwin and Silver & Dumm, for appellant. The Attorney General, for respondents.

GRAVES, J.

Plaintiff, a resident taxpaying citizen of this state, by his bill in equity seeks to enjoin the "Board of Fund Commissioners" of the state, which said board is made up of the Governor, Attorney General, State Auditor, and State Treasurer, (1) from in any wise disposing of all the unsold bonds directed by acts of the General Assembly, to be sold for the purpose of erecting a new State Capitol building and purchasing additional grounds therefor, and (2) especially enjoining said "Board of Fund Commissioners," constituted aforesaid, from entering into a contract with Francis Brother & Company or any other person, persons, copartnership, or corporation, by which contract the said Francis Brother & Company, or any other person, persons, copartnership, or corporation shall be allowed or paid any commission for services rendered in selling and disposing of said bonds. The petition also has a prayer for general relief.

The petition sets out and pleads the two several acts of the General Assembly of this state, by which he avers an attempt is made to authorize the issuance and sale of $3,500,000 state bonds, due in 13 years, bearing interest at 3½ per cent. for the purposes aforesaid. The petition further avers that the legislative act received at special election called therefor more than two-thirds of the votes cast at such election, and such result was duly ascertained and proclaimed. The legislative acts referred to and set out in the petition will have to be discussed in the opinion, and further details may well be omitted at this point. The petition then thus proceeds:

"That the defendants hereto, as said Board of Fund Commissioners aforesaid, have caused said bonds, hereinbefore mentioned, to be printed, engraved, prepared and executed in the form and with the recitals required and provided for in said act of the Forty-Sixth General Assembly of Missouri, approved March 16, 1911, and hereinbefore set out and referred to, and have advertised by public notice in the press of the state and otherwise, said bonds for sale at not less than par.

"That by reason of the fact that they bear an annual rate of interest of only three and one-half per centum a year, said board has been able to dispose of only two hundred and eighty thousand dollars in amount of said bonds, and the remainder thereof aggregating the sum of three million two hundred and eighteen thousand dollars ($3,218,000), said board is unable to dispose of at par, and will be unable to so sell and dispose of the same at par except on the payment of a commission of between four and five per centum of the proceeds of the sale or sales of said bonds to an agent or broker for his services in making the sale or sales thereof and in connection therewith.

"That said Board of Fund Commissioners have received from the firm of Francis Brother & Company, brokers of the city of St. Louis, Mo., an offer to take at par the entire amount of said bonds so unsold, aggregating $3,218,000 in amount, and to dispose of and to sell the same to a buyer or to buyers, provided said Board of Fund Commissioners will allow and pay to said Francis Brother & Company, a broker's or an agent's commission of 4 21/100 per centum of the proceeds of the sale of said bonds payable out of the same.

"That plaintiff concedes that said commission, if legal (which plaintiff denies), is a reasonable one and probably the lowest commission for which said bonds can be disposed of.

"That the defendants hereto, as said Board of Fund Commissioners, are about to and will conclude and consummate with said Francis Brother & Company a contract of the character above indicated, that is, to take and dispose of said bonds at par, said Francis Brother & Company to be paid the aforesaid commission for their services in selling said bonds, and in connection therewith, payable out of the proceeds of the sale thereof, unless said board and the members thereof shall be hindered and restrained from so doing by this honorable court.

"Your petitioner states that the issuance and sale of said bonds in the manner contemplated by said Board of Fund Commissioners, as hereinbefore indicated, will be wrongful, invalid and illegal.

"Because the Board of Fund Commissioners of this state is without legal or competent authority under its Constitution and laws, to sell or to dispose of its said bonds aggregating an amount the sum of $3,218,000; the power and authority purported to be conferred on said board so to do, being inadequate and insufficient in law and not authorized by the Constitution of this state or by laws passed pursuant thereto or in conformity therewith."

The prayer was as above indicated. In the circuit court the defendants constituting the "Board of Fund Commissioners" demurred to this petition in this language: "Now come the defendants, Herbert S. Hadley, Governor of Missouri, John P. Gordon, State Auditor, Elliott W. Major, Attorney General, and James Cowgill, State Treasurer, constituting the Board of Fund Commissioners of the state of Missouri, and demur to the petition filed by plaintiff herein and assign as grounds of demurrer the following: First. Said petition fails to state facts sufficient to constitute a cause of action. Second. There is no equity on the face of the bill filed by complainant herein. Third. Said petition and the matters and things therein, as stated and set forth, are not sufficient in law or in equity, to entitle the plaintiff to the relief prayed for in the petition, nor to authorize the issuance of a restraining order or injunction prayed for therein. Fourth. Because the petition, upon its face, disclosed that the said defendants are authorized, under the laws and Constitution of the state, to issue and sell the bonds mentioned in said petition, and have the right and authority to pay a reasonable commission under the conditions and circumstances stated in said petition. Wherefore, defendants, for the reasons herein stated and covered, pray that the petition be dismissed, and that they be permitted to go hence without day and for costs."

This demurrer the circuit court sustained and entered its judgment accordingly. From such judgment, the plaintiff has appealed and the cause reaches this court for final determination.

1. By act approved March 16, 1911, (Laws 1911, p. 416), the General Assembly of Missouri, so far as it could, authorized the issuance and sale of $3,500,000 in state bonds, and in the same act said: "The proceeds of said sale or sales shall constitute a fund to be designated as the capitol building fund, and shall be applied exclusively to the building of a new state capitol at the present seat of government of the state, including the furnishing and other equipment of said building...