City of Campbell, Mo. v. Arkansas-Missouri Power Co.
| Decision Date | 16 May 1933 |
| Docket Number | No. 9648.,9648. |
| Citation | 65 F.2d 425 |
| Parties | CITY OF CAMPBELL, MO., et al. v. ARKANSAS-MISSOURI POWER CO. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Willard A. McCaleb, of St. Louis, Mo. (C. D. Bray, of Campbell, Mo., John H. Bradley, of Kennett, Mo., and James C. Jones, Lon O. Hocker, and Frank H. Sullivan, all of St. Louis, Mo., on the brief), for appellants.
D. C. Chastain, of Butler, Mo. (T. R. R. Ely, of Kennett, Mo., and Gardner Smith and A. Z. Patterson, both of Kansas City, Mo., on the brief), for appellee.
Before STONE, GARDNER, and SANBORN, Circuit Judges.
This is an appeal from an order adjudging the appellants guilty of a civil contempt and appointing a master to determine the damages recoverable.
The appellee is the holder of a nonexclusive franchise to furnish light and power in the city of Campbell, Mo. The city, under the laws of Missouri, could erect and operate its own electric plant. In 1930 bonds in the amount of $20,000 were issued and sold by the city for that purpose. The proceeds were used to construct a power house and distribution system. The city, in order to complete the plant and system and make it operative, purchased from Fairbanks, Morse & Co. the necessary machinery under a conditional sales contract whereby all net earnings of the enterprise were to be used to pay for the machinery. The machinery was installed, and the city entered into competition with the appellee in the sale and distribution of electricity. The appellee brought suit to enjoin the city, its officers, and Fairbanks, Morse & Co. from operating the city plant under the contract between the city and the company, on the ground that the contract was invalid because it increased the indebtedness of the city beyond the limit permitted by law. A permanent injunction issued and an appeal was taken to this court. The decree of the lower court granting the injunction was affirmed. (C. C. A.) 55 F.(2d) 560. The reasons for the affirmance are clearly and definitely stated in the opinion. It was held that the contract between the city and Fairbanks, Morse & Co. increased the city's indebtedness, for two reasons: (1) While the payments for the machinery were to be made only from net earnings, such earnings were attributable in part to the city's investment in the plant and distribution system, and were therefore partially derived from an expenditure of money raised by taxation; and (2) the city was required, under the contract, to pay for the light and power which it used, so that the payment of the entire net earnings to Fairbanks, Morse & Co. included moneys derived by the city from taxes. The decree of injunction sustained by this court did not prohibit the city from operating its plant, but only prohibited it from operating it under the contract held to be illegal. With reference to this contract, Judge Gardner, who delivered the opinion of this court said page 563 of 55 F.(2d):
After that decision, the city entered into another contract with Fairbanks, Morse & Co. for the acquisition of the machinery. The provision of the first contract that the city should pay for power consumed by it was eliminated. The new contract did not require that all net earnings should be devoted to payment for the machinery, but provided instead that the total net earnings were to be divided by the city and Fairbanks, Morse & Co. in proportion to the cost of the contribution made by each to the entire plant and distribution system. It was sought thus to obviate the objections which were made to the former contract and which this court held rendered it invalid and the appellee entitled to injunctive relief.
The court below, upon application of the appellee, then cited the appellants to show cause why they should not be held in contempt for operating the plant under this new contract. While the appellee asserted in that court that the appellants had failed to avoid, by the new contract, an increase in the indebtedness of the city, no substantial support for that ground of objection appears in the record and no reliance was placed by the trial court upon it in reaching the conclusion that the appellants were guilty of contempt. Therefore, for the purpose of this appeal we think it must be assumed that the new contract has fairly met and avoided all the objectionable features of the old contract upon which the court below and this court relied in granting and sustaining the injunction, and that the court below must be regarded as having found the appellants guilty of contempt for having operated the city's plant...
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