Kansas Utilities Co. v. City of Burlington

• Decision Date: 04 May 1935
• Docket Number: 32351.
• Citation: 44 P.2d 223,141 Kan. 926
• Parties: KANSAS UTILITIES CO. v. CITY OF BURLINGTON et al.
• Court: Kansas Supreme Court

44 P.2d 223

141 Kan. 926

KANSAS UTILITIES CO. v. CITY OF BURLINGTON et al.

No. 32351.

Supreme Court of Kansas

May 4, 1935

Syllabus by the Court.

Where regularity of bond election and legality of bonds were not in question, plaintiff, as a taxpayer, could not maintain action challenging legality of proposed contract between municipality and federal government in connection with construction of municipal electric light plant, since under such circumstances no public burden was created, nor was there to be any levy of unlawful tax as result of unauthorized act (Rev. St. 1923, 60-- 1121; National Industrial Recovery Act, §§ 201-304, 40 USCA §§ 401-414).

Municipality could enter into contract with federal government in connection with construction of municipal electric light plant if National Industrial Recovery Act was valid (Rev. St Supp. 1933, 12--674; National Industrial Recovery Act, §§ 201-304, 40 USCA §§ 401-414).

Court held without jurisdiction to pass on right of federal government to co-operate with municipality in construction of municipal electric light plant where officer or agency of federal government was not party to action (National Industrial Recovery Act, §§ 201-304, 40 USCA §§ 401-414).

Suit by federal taxpayer to restrain enforcement of federal act authorizing appropriations of public money on ground that act is invalid cannot be entertained in equity.

To invoke judicial power to disregard statute as unconstitutional, party assailing it must show not only that act is invalid but that he has or will immediately sustain direct injury as result of its enforcement, and not merely that he suffers in common with people generally.

The record in an action brought by plaintiff, as a public utility and as a state and federal taxpayer, against the officials of the city and the city where it operates and owns property seeking to prevent the city from entering into a co-operative contract with the Federal Emergency Administration of Public Works, whereby the city will sell and the federal government will buy certain duly authorized bonds, and, in addition, the federal government will make a certain grant, the proceeds to be used to construct a municipal electric light plant and distribution system, the contract containing many provisions as to the manner in which the work shall be done, funds advanced, etc., on the principal ground that it will be unlawful on the part of the city because the federal government lacks power to so contract in that the National Industrial Recovery Act, titles 2, 3 (40 U.S. CA §§ 401-414) does not authorize such co-operation on the part of the federal government, or if it be held that it does, so construed the act is unconstitutional, and in which action no officer or agent of the federal government is a party defendant, examined, and it is held:

1. On the question raised, plaintiff cannot maintain the action as a taxpayer under R. S. 60--1121.

2. Assuming validity of the National Industrial Recovery Act under Laws 1933 (Sp. Session), c. 33, § 1 (R. S. Supp. 1933, 12--674), the city was authorized to enter into the contract in question.

3. In the absence of a proper officer under the National Industrial Recovery Act, the trial court was without jurisdiction to allow relief as against the federal government.

4. Under the facts, the trial court was without jurisdiction and was without power to pass upon the right of the federal government to co-operate with the defendant city in the manner provided by the proposed "loan agreement" referred to in the opinion.

5. The trial court ruled correctly in denying the prayer of plaintiff's petition.

Appeal from District Court, Shawnee County, Division No. 1; George A. Kline, Judge.

Suit by the Kansas Utilities Company against the City of Burlington and others. Plaintiff's motion for a new trial after adverse judgment was denied, and plaintiff appeals.

James A. Allen and B. M. Dunham, both of Chanute, and Robert Stone, James A. McClure, Robert L. Webb, Beryl R. Johnson, and Ralph W. Oman, all of Topeka, for appellant.

B. A. Kingsbury, City Atty., and L. H. Hannen, both of Burlington, for appellee.

THIELE Justice.

This was an action to enjoin the city from entering into, and challenging the legality of, a proposed contract with the federal government in connection with the construction of a municipal electric light plant.

Although as originally presented to the trial court, other grounds for relief were urged and other relief was sought, only the principal question above outlined is presented by the appeal.

It is not necessary to review the pleadings nor to go into detail about the trial. The trial court made findings of fact which include the following: Plaintiff is a public utility corporation of Kansas, and under proper certificate of convenience and necessity from the corporation commission it serves the defendant city and about thirty other towns in the vicinity with electricity. Since 1926, it has had no franchise at Burlington. It owns real and personal property in Burlington on which it pays taxes, and it is also a federal taxpayer on account of its business and property in Burlington. Burlington is a second-class city and on May 3, 1933, the governing body enacted an ordinance calling an election to vote on a bond issue not exceeding $118,000 for the purpose of erecting an electric light plant and distribution system. The result was in favor of the bonds, and on July 5, 1933, the governing body passed a resolution making application to the Federal Emergency Administration of Public Works for a donation of 30 percent. of the total cost of the construction and a loan to be secured by bonds of the city of 70 percent. of the total cost, and on September 13, 1933, an application was duly filed, showing the total loan and grant as $118,000. On January 10, 1934, the governing body passed a resolution confirming, renewing, and amending its application for a loan of $118,000 and a grant of whatever amount was necessary, when coupled with the loan the federal administration was willing to make the city, to enable the city to build the plant. On January 25, 1934, the federal administration allowed an allotment to the city of $145,000, of which $35,000 was an unconditional grant, the remainder to be made up by the purchase of $110,000 of the general obligation bonds of the city to be issued and sold pursuant to the Constitution and statutes of the state of Kansas, and on February 12, 1934, the federal administration submitted a "loan agreement" which provided for such grant and purchase of bonds, and provided further that the issuance and sale of the bonds should be pursuant to the Constitution and statutes of Kansas, and that in case any of the bonds were sold to purchasers other than the federal government, the principal amount which the government was obliged to take and pay for would be correspondingly reduced. The trial court further found:

"XIII. That no evidence was introduced upon the trial of this case showing or tending to show any invalidity in the proceedings taken by the City of Burlington under the statutes of the State of Kansas in the issuance of the bonds in question, or that said bonds when issued, would increase the total bonded indebtedness of the defendant city beyond the amount authorized by the statutes of this state.

"XIV. That the construction of the proposed municipal plant by the City of Burlington would cause a loss of business to the plaintiff and a consequent loss of profit derived from the operation of its present plant, and would make less valuable the plaintiff's investment in its property used and useable in rendering service to said city and its inhabitants, and the property of plaintiff located in said city would be subjected to the payment of taxes to pay principal and interest on the bonds in question."

As a matter of law, the trial court concluded the city had a legal right to construct a municipal light plant and distribution system; to accept grants or donations, and to issue and sell its general obligation bonds in an amount not to exceed $118,000, for that purpose; that in the absence of any invalidity in the issuance of the bonds, the presumption is that the bonds are, in all respects, regular, and that the plaintiff was not entitled to an injunction by reason of the fact it is a state or a federal taxpayer or because it is a public utility. A previously issued restraining order was set aside, and a permanent injunction denied. Plaintiff's motion for a new trial was denied and it appeals.

It is noted that reference is made in the pleadings to Laws 1933 (Sp. Sess.), c. 32 (R. S. Supp. 1933, 12--805a to 12--805k), but as that act refers to revenue bonds as therein defined, and not to general obligation bonds, and as it is not the act under which the city acted or on which it relies, it will not be noticed further.

The bonds in question were authorized to be issued under R. S. 12--801, 12--802, and 12--834, and there is no question raised as to the regularity of the proceedings, nor does there seem to be any question the city could have proceeded to build the electric light system at a cost not exceeding the authorized amount if it had not attempted to co-operate with the federal government. After the above bonds were authorized, the Legislature of Kansas enacted Laws 1933 (Sp. Sess.), c. 33, § 1 (Rev. St. Supp. 1933, 12--674), which reads as follows:

"In order to cooperate with the federal government under the national industrial recovery act and during the time said act is in effect, the governing body or the proper officers of any municipality or governmental subdivision now empowered by law to make public improvements, or to extend or repair same and to issue

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