Appeal
from Circuit Court, Mobile County; Claude A. Grayson, Judge.
Bill
for declaratory judgment by Dudley W. Lang, Jr., against the
City of Mobile, Cecil F. Bates, as Mayor and Commissioner
and Charles A. Baumhauer, as Commissioner, of the City of
Mobile, as to right of the City of Mobile to refund certain
bonds issued for purpose of financing construction of port
facilities, its right to contract with the State Department
of Docks and Terminals for lease of said port facilities, and
the right of the Department of Docks and Terminals to so
contract. From an adverse decree, complainant appeals.
Affirmed.
City of
Mobile would have authority to lease municipal port
facilities to state department of docks and terminals, under
contract providing for rentals to be paid from first gross
operating revenues of leased facilities. Code 1923, § 2018
as amended by Gen.Acts 1939, p. 38; Gen.Acts 1927, p. 1;
Gen.Acts 1935, p. 195; Const.1901, Amend. No. 12.
The
proposed contract of lease is in pertinent part as follows:
"Now
therefore, in consideration of the business which the
Department believes will be developed for the Project and
for the state-owned terminals and in consideration of the
profit which the Department believes that it can derive
through the acquisition and operation of the project, the
State of Alabama, acting by and through the Department of
State Docks and Terminals for the State of Alabama (herein
referred to as the 'Department'), and with the
approval of the Governor, hires and takes from the City of
Mobile and the City of Mobile rents, leases, and lets unto
the aforesaid Department, upon the terms and conditions
hereinafter set forth, those certain marine terminal
facilities hereinabove described and referred to as the
'Project' and the use and occupation thereof, for a
term of thirty years, beginning as of February 1, 1940, and
ending on January 31, 1970.
"The
rents for said facilities shall be for the following
amounts for the following years
"For
the year beginning February 1, 1940, and ending on January
31, 1941, $14,900, which sum shall be payable in equal
installments of $7450 each, the first installment being
payable on July 1, 1940, and the second installment on
January 1, 1941. (Here follow remaining rental figures.)
"For
the period beginning February 1, 1965, and ending February
1, 1970, the rental for the entire period shall be the sum
of twenty-three Thousand Eight Hundred Dollars ($23,800),
which shall be payable in one lump sum on July 1, 1965.
"These
rentals shall be payable from the first gross operating
revenues of the project itself and if for any reason and at
any time such first gross operating revenues are
insufficient to make such payments, and to the extent of
such insufficiency, they shall be payable from the gross
operating revenues derived from the operation of the
stateowned terminals at the Port and City of Mobile,
Alabama. Such rentals shall be payable from no other funds
than those mentioned above.
"The
Department agrees to maintain said Project during the life
of this lease as a unit or part of the entire marine
terminal system owned and operated by the State.
"The
Department agrees to maintain said Project in as good a
condition as when the same was acquired by it, the usual
wear and tear excepted.
"The
City shall cause the Project to be insured and at all times
kept insured in an amount equal to the full insurable value
thereof under a policy or policies covering specifically
all loss or damage occasioned by fire or lightning and all
other risks or hazards usually insured against by private
parties carrying on a similar business with similar
facilities. All policies of insurance shall be issued by a
responsible insurance company or companies and shall be for
the benefit of the holder or holders of the Bonds and the
coupons thereunto appertaining and/or the City as their
respective interests may appear. The proceeds of any
insurance received on account of any of the risks or
hazards specified above shall be applied solely to the
repair, rebuilding or replacement of the portion of the
Project destroyed or damaged; provided, however, that any
portion of the proceeds of such insurance remaining after
the completion of such repair, rebuilding, or replacement
and after the payment in
full of all cost thereof shall be paid into the Bond Fund
and applied as hereinafter provided. The City shall
provide, or cause to be provided, insurance for the benefit
of all employees injured or killed in the operation of the
Project; provided, however, that that basis of any
settlement for any such injuries or deaths under the terms
and provisions of the Workmen's Compensation Act of
Alabama. (Sic) The City shall further cause public
liability insurance to be carried for the Project,
providing coverage for each accident occurring on or in
connection with the Project of not more than $10,000. for
one person killed or injured therein, and not more than
$25,000. if there be more than one person killed or injured
therein. The City shall, however, be under no obligation to
pay insurance premiums except from the income and revenues
from the project.
"In
the event the Department fails or refuses, for any reason,
to pay the rentals stipulated herein or to perform the
covenants undertaken under the terms of this lease to
operate, maintain and insure said project, and a default in
payment of such rentals and the performance of such
covenants continues for thirty days (30), then in that
event the City may perform such covenants and may, at its
option, declare the terms and conditions of this lease and
operating agreement to be terminated and of no further
force and effect and in that event the City may immediately
enter upon and take possession of the project and upon
doing so agrees to fulfill its obligation to the holder or
holders of any bond or bonds then outstanding, issued for
the purpose of refunding the bonds with the proceeds of the
sale of which, said project was constructed.
"It
is mutually understood and agreed that the execution of
this lease does not merge the leasehold interest of the
City to the site on which said project is constructed with
the fee simple title and reversionary interest held by the
State of Alabama, but it is mutually understood and agreed
that in consideration of the mutual covenants contained
herein, the Department, acting for the State, shall have
any and all rights of ingress and egress over, to or
through the site on which the project is constructed which
are necessary and incidental to the enjoyment of the use or
occupancy of the project by the Department and the
operation and maintenance thereof. It is agreed, however,
that upon the expiration or termination of the leasehold
interest of the City to the site the project constructed
upon said site shall revert to and become the property of
the State of Alabama. (Here follows usual clause setting
forth the execution of the agreement, the approval of the
Governor and the acknowledgments of the officers or agents
executing such agreement.)"
The
following is the decree of the Circuit Court:
"Decree
"This
cause having been heard upon the pleadings and proof as noted
by the Solicitors and attested by the Register and this Court
having determined that it has jurisdiction over the issues
presented thereby;
"It
is therefore ordered, adjudged and decreed by the Court
that:
"1.
The City of Mobile has full power to refund bonds of the
class and description as those authorized under the
provisions of the Municipal Revenue Bond Act of 1935,
either under power implied in that act itself, or under the
provisions of the amendment of the Municipal Bond Code
contained in an act approved July 17, 1935, known as Act
No. 195.
"2.
The Constitution and Enabling Acts authorize the State
through a duly created agency, to engage in the work of
'promoting, developing, constructing, maintaining and
operating all harbors and seaports within the State.'
No broader powers could have been concisely conferred.
Section 7 of the Acts, as amended, gives the State, through
its agency, the power to 'acquire, purchase, install,
lease, construct, own, hold, maintain, equip, use, control
and operate at seaports, wharves, piers, docks * * *
warehouses and other water and railway terminals and other
structures.' It is also given the power to 'lease,
own, hold, maintain, control at seaports a line of terminal
railroad,' etc., 'with the right to lease, install,
construct, acquire,' etc., motor power conveyances and
appliances.
"The
Legislature recognized that the State in the operation of
marine terminals would have ever changing conditions,
brought about by progress and competition of other ports.
They recognized that the terminals had to be operated on a
business basis, requiring operating expenses and authorized
'all expenses of carrying out the purpose of this Act
shall be paid from the proceeds' and referred to the
proceeds
of the operation of the $10,000,000 original investment.
They rightly knew that all types of equipment, such as
railway engines, crane, fertilizer handling equipment, and
special facilities for handling various classes of cargo
and necessary to 'promote' the use and development
of the state-owned terminals, the State, through its
appropriate agency, would have the power to acquire such
equipment and facilities under a lease agreement with the
owner thereof which, in this case, is the City of Mobile.
"It
is, therefore, further ordered, adjudged and decreed by the
Court that the State of Alabama, acting through its agency,
the Department of State Docks & Terminals for the State of
Alabama
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