City of Springfield v. Monday

• Decision Date: 07 February 1945
• Docket Number: 39356
• Parties: In the Matter of the Petition of the City of Springfield, Missouri, a Municipal Corporation, for a Pro Forma Decree Authorizing the Issuance of $ 6,750,000 Principal Amount of Public Utility Revenue Bonds, Series A, of said City. City of Springfield, Missouri, Petitioner, Appellant, v. Harry Monday, W. E. Freeman, Joe E. Keet and C. A. Ralston, Interveners
• Court: Missouri Supreme Court

185 S.W.2d 788

353 Mo. 981

In the Matter of the Petition of the City of Springfield, Missouri, a Municipal Corporation, for a Pro Forma Decree Authorizing the Issuance of $ 6,750,000 Principal Amount of Public Utility Revenue Bonds, Series A, of said City. City of Springfield, Missouri, Petitioner, Appellant, v. Harry Monday, W. E. Freeman, Joe E. Keet and C. A. Ralston, Interveners

No. 39356

Supreme Court of Missouri

February 7, 1945

Rehearing Denied March 5, 1945.

Appeal from Greene Circuit Court; Hon. Guy D. Kirby, Judge.

Reversed and remanded (with directions).

Alfred Page, Ted Beezley, and Robert B. Fizzell for appellant Farrington & Curtis, Dan M. Nee, Barbour, McDavid & Barbour A. P. Stone, Jr., and Stinson, Mag, Thomson, McEvers & Fizzell of counsel.

(1) The City of Springfield has power under subparagraphs VII and XXXVII of Sec. 6609, R.S. 1939, to issue its Public Utility Revenue Bonds, Series A, authorized by and described in Ordinance No. 4854 of such City. Woodmansee v. Kansas City, 346 Mo. 919, 144 S.W.2d 137; Dodds v. Kansas City, 347 Mo. 1193, 152 S.W.2d 128. (2) The revenue bonds authorized by the City of Springfield are payable solely from the income derived by the City from the public utilities being acquired by it, and not out of funds raised by taxation. Such bonds do not constitute "indebtedness" of the City within the meaning of the constitutional provision (Sec. 12, Art. X) which requires that municipal indebtedness in excess of the current year's revenue be authorized by the vote of two-thirds of the electors of the City voting on the proposition. State ex rel. Smith v. City of Neosho, 203 Mo. 40, 101 S.W. 99; Bell v. City of Fayette, 325 Mo. 75, 28 S.W.2d 356; State ex rel. City of Hannibal v. Smith, 335 Mo. 825, 74 S.W.2d 367; State ex rel. Excelsior Springs v. Smith, 336 Mo. 1104, 82 S.W.2d 37; Grossman v. Public Water Supply District No. 1 of Clay County, 339 Mo. 344, 96 S.W.2d 701; Woodmansee v. Kansas City, 346 Mo. 919, 144 S.W.2d 137; Dodds v. Kansas City, 347 Mo. 1193, 152 S.W.2d 128; City of Lebanon v. Schneider, 349 Mo. 712, 163 S.W.2d 588. (3) Subparagraph VII of Sec. 6609, R.S. 1939, authorizes the City of Springfield to issue its Public Utility Revenue Bonds for the purpose of purchasing and acquiring public utilities as well as for extending and improving utilities already owned by the City. Woodmansee v. Kansas City, 346 Mo. 919, 144 S.W.2d 137. (4) Section 12, Article X of the Constitution of Missouri does not prohibit cities having a population of less than 75,000 inhabitants from issuing revenue bonds. City of Lebanon v. Schneider, 349 Mo. 712, 163 S.W.2d 588; Woodmansee v. Kansas City, 346 Mo. 919, 144 S.W.2d 137; Dodds v. Kansas City, 347 Mo. 1193, 152 S.W.2d 128; State ex rel. City of Excelsior Springs v. Smith, 336 Mo. 1104, 82 S.W.2d 37; State ex rel. City of Hannibal v. Smith, 335 Mo. 825, 74 S.W.2d 367. (5) The maxim expressio unius est exclusio alterius is a mere auxiliary rule of construction in ascertaining the intention of the Legislature, and such maxim must be applied with caution. Springfield City Water Co. v. City of Springfield, 182 S.W.2d 613. (6) Secs. 7806 to 7827, inclusive, R.S. 1939, authorizing cities to issue bonds of the particular character therein specified, do not restrict the right of the City of Springfield to issue its revenue bonds under the general provision constituting subparagraph VII of Sec. 6609, R.S. 1939. This follows from the differences in the two statutes and in the attributes of the bonds authorized by such statutes. Woodmansee v. Kansas City, 346 Mo. 919, 144 S.W.2d 137. (7) This also follows from the fact that subparagraph VII of the Sec. 6609 was adopted subsequently to Secs. 7806 to 7827, inclusive, and applies only to cities of the second class. State ex rel. Springfield v. Smith, 344 Mo. 150, 125 S.W.2d 883. (8) The bonds authorized by Secs. 7806 to 7827, inclusive, R.S. 1939, being payable in part out of funds raised by taxation, constitute "indebtedness" within the prohibition against incurring indebtedness contained in Section 12, Article X of the Constitution of Missouri. State ex rel. Blue Springs v. McWilliams, 335 Mo. 816, 74 S.W.2d 363; Hight v. City of Harrisonville, 328 Mo. 549, 41 S.W.2d 155; Hagler v. City of Salem, 333 Mo. 330, 62 S.W.2d 751; Sager v. City of Stanberry, 336 Mo. 213, 78 S.W.2d 431. (9) The fundamental rule of statutory construction is that the courts shall ascertain and give effect to the intention of the Legislature. Wentz v. Price Candy Co., 175 S.W.2d 852; American Bridge Co. v. Smith, 179 S.W.2d 12; Zinn v. City of Steelville, 351 Mo. 413, 173 S.W.2d 398; Nordberg v. Montgomery, 351 Mo. 180, 173 S.W.2d 387. (10) The action of the City of Springfield in acquiring the electric, gas and bus transportation systems serving such City by purchasing all of the common stock of Springfield Gas & Electric Company and immediately causing such Company to be dissolved and its properties conveyed to the City, is legal and valid. Subpar. XXXVII, Sec. 6609, R.S. 1939; Subpar. LXXII, Sec. 6609, R.S. 1939; People ex rel. Murphy v. Kelly, 76 N.Y. 475; Long v. Mayo, 271 Ky. 192, 111 S.W.2d 633; Cawood v. Coleman, 294 Ky. 858, 172 S.W.2d 548; State ex rel. Johnson v. Consumers Public Power Dist., 143 Neb. 753, 10 N.W.2d 784. (11) The fact that certain small parts of the utility properties being acquired by the City of Springfield are located outside the corporate limits of the City does not prohibit the City from purchasing such utilities. Subpar. XXXVII, Sec. 6609, R.S. 1939; Speas v. Kansas City, 329 Mo. 184, 44 S.W.2d 108. (12) The provisions of Sections 6 to 12, inclusive, of the Ordinance authorizing the issuance of Public Utility Revenue Bonds, Series A, of the City of Springfield, are legal and valid. Dodds v. Kansas City, 347 Mo. 1193, 152 S.W.2d 128. (13) The determination of the amount of the purchase price that the City of Springfield has contracted to pay for the utilities in question lies within the power, judgment and discretion vested by law in the City Council, and the courts do not interfere with the exercise of such power except for fraud or gross abuse. There was no fraud or gross abuse of power in this case. On the contrary, such price was fairly arrived at and is reasonable. Heman v. Schulte, 166 Mo. 409, 66 S.W. 163; Collins v. A. Jaicks Co., 279 Mo. 404, 214 S.W. 391; Kansas City v. Brown, 286 Mo. 1, 227 S.W. 89; Missouri Service Co. v. City of Stanberry, 341 Mo. 500, 108 S.W.2d 25; 1 McQuillin on Municipal Corporations (2nd Ed.), Revised 1940, sec. 390, pp. 1068-1072.

John H. Fairman for respondent C. A. Ralston.

(1) The City of Springfield, Missouri, is a City of less than 75,000 inhabitants. The Public Utility Revenue Bonds, Series A, authorized and described in Ordinance No. 4854, constitute "indebtedness" of the City of Springfield, within the meaning of the term as used in Section 12, Article IV, of the Constitution, and are without statutory or constitutional authority and are illegal and void. Sec. 12, Art. X, Mo. Constitution; Subpar. VII, Sec. 6609, R.S. 1939; Special Ordinance No. 4854; State ex rel. Smith v. City of Neosho, 203 Mo. 40, 101 S.W. 99; Bell v. City of Fayette, 325 Mo. 75, 28 S.W.2d 356; Hight v. City of Harrisonville, 328 Mo. 549, 41 S.W.2d 155; State ex rel. City of Blue Springs v. McWilliams, 335 Mo. 816, 74 S.W.2d 363; State ex rel. City of Hannibal v. Smith, 335 Mo. 825, 74 S.W.2d 367; Grossman v. Public Water Supply District No. 1 of Clay County, 339 Mo. 344, 96 S.W.2d 701; Woodmansee v. Kansas City, 346 Mo. 919, 144 S.W.2d 137; City of Lebanon v. Schneider, 349 Mo. 712, 163 S.W.2d 588. (2) That Subsec. VII of Sec. 6609, R.S. 1939, does not authorize the City to issue revenue bonds, to acquire a utility not previously owned, without a vote, requires that the exercise of the power granted shall not be inconsistent with the Constitution, or any laws of this State, or of this Charter. That such revenue bonds can and should be issued in the manner provided by Sec. 7809, R.S. 1939. Dodds v. Kansas City, 347 Mo. 1193, 152 S.W.2d 128; State ex rel. v. Hackman, 273 Mo. 670, 202 S.W. 7; State ex rel. City of Blue Springs v. McWilliams, 335 Mo. 816, 74 S.W.2d 363; Cape Girardeau-Jackson Interurban Ry. Co., v. Light & Development Co. of St. Louis, 210 S.W. 361. (3) That Public Utility Revenue Bonds, Series A, being issued to purchase all of the common stock of Springfield Gas and Electric Company, a corporation, are illegal and void under Section 6, Article IX, of the Constitution of Missouri. State ex rel. Smith v. City of Neosho, 203 Mo. 40, 101 S.W. 99; Crissey v. Cook, 72 P. 541, 67 Kan. 20; Ex parte Oppenstein, 233 S.W. 440. (4) The Public Utility Revenue Bonds are being issued so that the City may purchase, own, and operate parts of the electric and gas distribution system beyond the city limits in Greene County, Missouri, without legal authority, for which reason said bonds are illegal and void. Subpar. XXXVII, Sec. 6609, R.S. 1939; Speas v. Kansas City, 329 Mo. 181, 44 S.W.2d 108. (5) The provisions of Sections 6 to 12, inclusive, of Special Ordinance No. 4854, of the City of Springfield, Missouri, covenants and obligates said City for the payment of the principal and interest of said bonds, out of the general revenue of the City, and each of said sections are illegal and void.

Arch A. Johnson, Arthur W. Allen and W. D. Tatlow for interveners and respondents.

(1) In the case of default the bondholders are entitled to acquire the title to and the possession of the utilities under a well known and ancient principle of law, towit, a strict foreclosure, which is a proceeding in equity by which the mortgagor's right of redemption of the mortgaged premises is barred or foreclosed. 2...