Lamar Water & Electric Light Company v. City of Lamar

• Decision Date: 30 April 1895
• Citation: 31 S.W. 756,128 Mo. 188
• Parties: Lamar Water & Electric Light Company, Appellant, v. City of Lamar
• Court: Missouri Supreme Court

31 S.W. 756

128 Mo. 188

Lamar Water & Electric Light Company, Appellant, v. City of Lamar

Supreme Court of Missouri

April 30, 1895

Appeal from Barton Circuit Court. -- Hon. D. P. Stratton, Judge.

The facts of the case appear in the opinion filed in the first division, May 28, 1894, upon the first hearing. After that ruling, a motion for rehearing was made, which was overruled one of the judges dissenting. On that dissent, the cause was transferred to the court in banc, and there re-argued.

The decision of the court in banc refers for a statement of facts to the divisional opinion which was as follows:

"Black C. J. -- This is a suit to collect a balance of $ 900 due on hydrant rents for the last half of 1891, and $ 3,000 for the year 1892. The petition declares upon a written contract alleged to have been executed on December 31, 1890. There is the further averment that the defendant executed the contract by and through its mayor and clerk, they being duly authorized so to do, which averment is denied. The answer also raises several constitutional questions as affirmative defenses.

"The record discloses the following facts: The defendant is a city of the fourth class, having three thousand inhabitants. The board of aldermen passed an ordinance on April 21, 1890 setting forth the terms of a contract between the city, of the one part, and Messrs. Snyder and Guinney and their assigns, of the other part, for the construction and operation of waterworks by the latter. The ordinance was approved by the mayor on the twenty-second of the same month. The ordinance provides that it shall take effect from the date of its approval; that the contract therein contemplated shall be signed by the mayor and attested by the clerk, and signed by Snyder and Guinney; and that the contract shall take effect when the ordinance is ratified by a two thirds vote of the voters. An election was held on May 20, 1890, at which more than two thirds of the voters voted for the contract. Snyder and Guinney then accepted in writing the terms of the ordinance. Snyder assigned his interest in the contract to Guinney, who assigned the contract to the Lamar Water Company. That corporation and the Lamar Electric Light & Power Company were duly consolidated under the name of the present plaintiff.

"The works were constructed, and accepted by the city, and thereupon the mayor and clerk, pursuant to a resolution of the board of aldermen, and the plaintiff signed a contract which is dated December 31, 1890. This contract is simply a copy of the ordinance, with a statement thereto added that the ordinance is now in full force and effect. By the seventh section of the ordinance the city agrees to and does rent sixty hydrants for twenty years, to be used for the purpose of extinguishing fires and flushing gutters and sewers, and to pay therefor $ 50 per annum for each hydrant, payable semiannually. The plaintiff agrees to furnish the hydrants and keep them supplied with water and to supply the inhabitants with water at specified rates. Section 10 secures to the city the right to purchase the works ten years after their completion, at their equitable value. The company has the right to mortgage the works; and, in case they are mortgaged, the hydrant rents, or so much as may be necessary, are to be set apart as net earnings, to be paid to the holders of the interest coupons on the bonds so secured. Section 19 provides: 'That for the purpose of meeting and paying the annual rental to the said A. H. Snyder and J. Guinney, their associates or assigns, by the city of Lamar, as provided in section 7 of this ordinance, there shall be levied and collected annually during the continuance of this ordinance a tax, not exceeding forty cents on the hundred dollars' valuation on all taxable property in the city, sufficient to pay said rental, if necessary. Said tax shall be levied and collected at the same time and in the same manner as are taxes for general purposes, and, when collected, the same shall be set apart for the specific purpose of paying said installments of rental as they become due, as provided in this ordinance, and shall not be appropriated to any other purpose or purposes."

"The works were mortgaged for $ 45,000. The value of the taxable property in the city was $ 745,000 for 1888, $ 747,015 for 1889, $ 716,613 for 1890, and $ 890,160 for the year 1891. The city levied a general tax of fifty cents on the $ 100 valuation for the years 1886 to and including 1892, and for the years 1891 and 1892 it levied, in addition thereto, the water tax of forty cents. The receipts from both taxes and from licenses and all other sources, and the expenditures were as follows: For 1890 the receipts were $ 8,033, and expenditures $ 7,903; for 1891 the receipts were $ 6,550, and expenditures $ 7,369, and for 1892 the receipts were $ 7,761, and the expenditures $ 8,339. The evidence tends to show that at the date of this contract the city had a bonded debt of $ 2,300. It clearly appears that in 1889 the city made a contract with the Lamar Electric Light and Power Company, whereby it agreed to pay that company annually the sum of $ 1,524 for a period of twenty years for electric lights.

"1. It is first objected that the ordinance is void because it was passed and approved before the proposed contract had been approved by a two thirds vote. In other words, the claim is that an election was a condition precedent to the passage of a valid ordinance.

"Section 1589, Revised Statutes, 1889, provides that the mayor and board of aldermen shall have power, by ordinance, upon a vote of two thirds of the qualified voters, to contract with any person or company, granting to such person or company the exclusive right to furnish gas, electricity or water for the city and the inhabitants for a time not exceeding twenty years.

"We find nothing in this section which gives any support to the objection. The ordinance could not take effect as a contract until ratified by the requisite vote, but it was competent, and perfectly proper, to pass the ordinance to take effect when ratified. Indeed, an ordinance setting forth the terms of the contract, and then approved by the necessary vote, and accepted in writing by the persons proposing to build the works, was all that was necessary to make a perfect and complete contract. Section 20 of the ordinance, however, seems to contemplate a more formal contract, to be signed by the mayor for the city and by the other contracting parties. Such further formal contract was duly signed on December 31, 1890. We see no merit whatever in the objection.

"2. The further objection that the contract is void because the ordinance was not referred to the city treasurer, on the second reading, for his statement, to be indorsed thereon, that a sufficient sum of money stood to the credit of the treasury, and unappropriated, to meet the requirements of the ordinance, was also properly overruled. Sections 1623, 1629, Revised Statutes, 1889, have no application to ordinances like the one in question. They apply to ordinances which direct warrants to be issued on the treasury, or operate as warrants; but they do not apply to ordinances which are contracts, or direct contracts to be made for the performance of work or furnishing supplies in the future. When the work is done, or the supplies furnished, then an ordinance directing payment for the work or supplies should be referred to the treasurer for his certificate.

"3. It is next objected that the ordinance is void because it is in several respects in conflict with sections 11 and 12 of article 10 of the constitution. For the present we shall assume that the ordinance contemplates and requires the levy of a special tax of forty cents on the $ 100 valuation over and above a general tax of fifty cents on the $ 100, to pay the hydrant rents. With this assumption the question is whether this special levy is prohibited by said sections of the constitution. They are set out in full in the case of State ex rel. v. Town of Columbia, 111 Mo. 365, 20 S.W. 90, and need not be copied here.

"In that case the town proposed, pursuant to a two thirds vote, to issue bonds for the purpose of building waterworks and an electric light plant, and to levy and collect annually a special tax over and above the general tax of fifty cents on the $ 100 valuation to pay the interest on the bonds, and to create a sinking fund to pay the principal. Our conclusion in that case was that fifty cents on the $ 100 valuation is the highest rate that can be levied by cities and towns of more than one thousand and less than ten thousand inhabitants for any and all purposes, except for the purpose of erecting public buildings, and except for the purpose of paying indebtedness which existed at the date of the adoption of the constitution; that is to say, in 1875. It was, therefore, held that the proposed additional tax would be illegal, because in excess of the constitutional rate limit.

"That case disposes of the exact question which we now have in hand. According to the ruling then made, the ordinance in this case and the contract sued upon are utterly void in so far as they provide for the levy and collection of this special water tax of forty cents on the $ 100 valuation.

"But it is earnestly argued in behalf of the plaintiff here that in reaching that conclusion due consideration was not given to the last clauses of section 12. The claim now made and urged in many forms of expression is, that, under section 12 a city may, by a two thirds vote, go in debt for any purpose whatever, within its charter powers, up to five per centum of the taxable value of the property in such city; and, as the city has the right to create a debt, it has the right to levy a...