Faulconer v. City of Danville

Decision Date14 July 1950
PartiesFAULCONER et al. v. CITY OF DANVILLE et al.
CourtUnited States State Supreme Court — District of Kentucky

James G. Begley, Danville, for appellants.

Henry Jackson, Danville, Wyatt, Grafton & Grafton, Louisville, Smith & Leary, Frankfort, for appellees.

PER CURIAM.

It seems to the Court that the judgment herein insofar as it affects the rights of the parties to the action is concerned should be and it is hereby affirmed.

The opinion will be prepared and delivered at a later date.

STANLEY, Commissioner.

The declaratory judgment sanctions the proposal of Danville to acquire a site and erect a building to be leased to a manufacturer. To finance the project the City proposes to issue bonds to the amount of $300,000 to be paid, principal and interest, from the rents. KRS 103.200 to 103.280, Ch. 58, Acts of 1946, authorize any city to take such action to procure an 'industrial building,' which is defined as 'any building or structure suitable for and intended for use as a factory, mill, shop, processing plant, assembly plant or fabricating plant, to be rented or leased to an industrial concern by the city by which it is acquired.'

The purpose of the enactment is stated to be, 'In order to promote the reconversion to peace-time economy, to relieve the conditions of unemployment, to aid in the rehabilitation of returning veterans and to encourage the increase of industry in this state.'

This present experiment under the statute is the first to reach this court.

An ordinance provides for the project in its entirety in accordance with the terms of the statute. It includes the issuance and the terms of what are to be known as 'City of Danville Industrial Building Revenue Bonds.' They have serial annual maturities over a period of 25 years, but are subject to earlier redemption after 1955 at the option of the City. The ordinance establishes a special 'Bond Fund,' or sinking fund, and embraces also the approval of the execution of a 'Contract of Lease and Rent' with the General Shoe Corporation. The contract will provide for the payment of annual rentals for the period ending June 30, 1975, sufficient to pay the bonds and the cost of maintaining and insuring the building, the same to be deposited in the special fund and administered by the City. The contract provides further for the option of an additional term of 25 years at a rental of $1 plus an amount sufficient to pay for the maintenance and preservation of the property.

The preamble of the ordinance is in substance that the City of Danville is located in the center of an agricultural section of the estate; that the economy of the city and its citizens and inhabitants is dependent to a large degree upon agriculture, and there is not a sound and proper balance between agriculture, commerce, and industry; that adequate opportunities for industrial employment are not available in Danville; that unless such opportunities are provided, citizens both now and in the future will be required to move to other communities to obtain employment; and that the appellee General Shoe Corporation, having been thoroughly investigated, appears to be sound and stable and to have a good reputation for good citizenship, labor relations, and labor policies in other communities where its plants are located and with ample resources, thereby furnishing every reasonable assurance of its ability to make the prescribed rental payments and observe the other commitments set forth in its proposal.

All these factual conditions are fully proved by evidence.

The question is raised whether or not owning industrial property and leasing it to a private manufacturer is a public purpose within the powers of a municipality. Powers of a municipality, derived from the legislature, are broadly classified as governmental or political and proprietary or private. The former are those functions which are essential to the existence of the city as an arm of the state government--the exercise of a part of the sovereign power within the incorporated territory. The latter embrace acts or functions of a local character which are voluntarily assumed, mainly for the city's own purposes and benefit, or those which are ordinarily exercised by private persons, and are not within the police power. Board of Councilmen v. White, 224 Ky. 570, 6 S.W.2d 699; Board of Trustees v. City of Newport, 300 Ky. 125, 187 S.W.2d 806; 37 Am.Jur. 114, 120.

We take it to be unquestionable that in the exercise of proprietary powers there must be some relation to the public convenience or welfare; in short, a project public in nature rather than engaging in private business. Otherwise it is ultra vires. 37 Am.Jur., Municipal Corporation, Secs. 120, 132; cf. Lancaster v. Clayton, 86 Ky. 373, 5 S.W. 864; Carman v. Hickman County, 185 Ky. 630, 215 S.W. 408. Within the scope of granted municipal powers, the General Assembly, in an independent act of 1946 (now Ch. 58, KRS), has defined a 'public project' for which revenue bonds may be issued, to mean 'any lands, buildings or structures, works or facilities suitable for and intended for use as public property for public purposes or suitable for and intended for use in the promotion of the public health, public welfare or the conservation of natural resources, including the planning of any such lands, buildings, structures, works or facilities, and shall also include existing lands, buildings, structures, works and facilities, as well as improvements or additions to any such lands, buildings, structures, works or facilities.' KRS 58.010.

In enacting the statute under which the present venture is undertaken, the legislature deemed the acquisition and ownership by a city of an 'industrial building' to be a public project. The legislative determination of what is a public purpose will not be interfered with by the courts unless the judicial mind conceives it to be without reasonable relation to the public interest or welfare and to be within the scope of legitimate government. The concensus of modern legislative and judicial thinking is to broaden the scope of activities which may be classed as involving a public purpose. 37 Am.Jur., Municipal Corporations, Sec. 132. It reaches perhaps its broadest extent under the view that economic welfare is one of the main concerns of the city, state and the federal governments. This is manifested by the great bulk of recent social security programs of the nation and the state. Of special pertinence are those providing for unemployment insurance and security, thus decreasing what the Tennessee Supreme Court calls 'unemployment's twin offspring, hunger and crime.' Azbill v. Lexington Manufacturing Co., Tenn.Sup., 221 S.W.2d 522, 524. With reference to this concern of government, Mr. Justice Stone, later Chief Justice, writing for the Supreme Court, in holding constitutional an Alabama statute levying taxes and providing for their use, said: 'The evils of the attendant social and economic wastage permeate the entire social...

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  • Common Cause v. State
    • United States
    • Maine Supreme Court
    • 7 d5 Janeiro d5 1983
    ...the view that economic welfare is one of the main concerns of the city, state and federal governments. Faulconer v. City of Danville, 313 Ky. 468, 472, 232 S.W.2d 80, 83 (1950). It has been inferred from Allen that any indirect economic benefit, including job creation, however certain and g......
  • Mitchell v. North Carolina Indus. Development Financing Authority, 532
    • United States
    • North Carolina Supreme Court
    • 6 d3 Março d3 1968
    ...5 (1964); Kansas: State ex rel. Ferguson v. City of Pittsburg, 188 Kan. 612, 364 P.2d 71 (1961); Kentucky: Faulconer v. City of Danville, 313 Ky. 468, 232 S.W.2d 80 (1950); see also Industrial Development Authority v. Eastern Kentucky Reg. Pl.Comm. (Ky.C.A.) 332 S.W.2d 274 (1960); Maryland:......
  • City of Gaylord v. Beckett
    • United States
    • Michigan Supreme Court
    • 24 d3 Agosto d3 1966
    ...particular function, or purpose, involved is a 'public' one cannot be seriously doubted. We think the court in Faulconer v. City of Danville, 313 Ky. 468, 232 S.W.2d 80, 83, was particularly articulate on this subject when it said "The consensus of modern legislative and judicial thinking i......
  • State ex rel. Hammermill Paper Co. v. La Plante
    • United States
    • Wisconsin Supreme Court
    • 9 d1 Abril d1 1973
    ...the great majority have upheld such acts against attacks as to public purpose. 7 In Faulconer v. City of Danville, supra, 313 Ky. at pages 471, 472, 473, 232 S.W.2d at page 82, it is 'In enacting the statute under which the present venture is undertaken, the legislature deemed the acquisiti......
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