Meder v. City of Oklahoma City
| Decision Date | 23 March 1960 |
| Docket Number | No. 38923,38923 |
| Citation | 350 P.2d 916 |
| Parties | Leonard L. MEDER, Plaintiff. v. CITY OF OKLAHOMA CITY, a municipal corporation, Sheldon L. Stirling and Philip J. Rhoads, Trustees of the Oklahoma City Development Trust, the Oklahoma City Development Trust, a trust, and the First National Bank and Trust Company of Oklahoma City, Defendants. James R. Huggins, Intervenor. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court
1. Where the charter of a city of the first class provides that the city shall have power to lease and otherwise dispose of its property, the City Council of such city may effectively lease its utilities without first having submitted the question to a vote of the people, absent charter provisions to the contrary, and the provisions of 11 O.S.1951 §§ 441, as amended, and 442, are not applicable.
2. When a city by valid agreement leases its sanitary sewer system to the trustees of a charitable public trust, and by the agreement the city will ultimately become the owner of all extensions thereof, and the system together with the extensions are to be operated with said city for the exclusive benefit of the city, there is no requirement of law that such operation must be authorized by franchise; and such leasing and operation does not constitute the granting of any formal franchise.
3. Where a city owned public utility is leased to the trustees of a charitable public trust, and such lease agreement purports to prevent the franchising of competing public utilities, such agreement is ineffective to deprive the people of their reserved powers under the provisions of Art. 18, Sec. 5(a), Oklahoma Constitution.
4. Principles of public policy demand a stable and fixed construction of constitutional law; and that which has been deliberately decided should not be unsettled, unless clearly erroneous.
5. A contract between a municipal corporation and the trustees of a charitable public trust whereby the municipality leases its sanitary sewer system to the trust, and agrees to operate and maintain the sewer facilities for a period of 30 years out of its general fund revenues, constitutes a charge against the municipality's funds beyond the current fiscal year in an amount exceeding in any year the income and revenue provided for such year under the limitations imposed by sec. 26, art. 10, Okla. Const.
An original action for writ of injunction by Leonard L. Meder, plaintiff, and by James R. Higgins, intervenor, resident owners of property, and taxpayers, and patrons of city sewer and garbage services, of Oklahoma City, and all others similarly situated, against The City of Oklahoma City, and others, as defendants, praying for an injunction to prevent defendants from proceeding further in the performance and consummation of certain lease agreements and bond indenture agreements set forth in plaintiff's petition. Writ denied.
Withington, Shirk, Nichols & Work, by George H. Shirk, Oklahoma City, for plaintiff.
Edward H. Moler, Municipal Counselor of City of Oklahoma City, George J. Fagin, Norman E. Reynolds, Jr., Oklahoma City, for defendants.
Merton M. Bulla, Baker H. Melone, and Paul Johanning, Bulla, Melone, Meister & Sheehan, Oklahoma City, for intervenor, James R. Huggins.
State Department of Commerce and Industry, by L. D. Melton, Oklahoma City, amicus curiae.
This is an original action for injunction filed in this court by Leonard L. Meder, a resident taxpayer and owner of property in Oklahoma City, for himself and all other taxpayers of Oklahoma City similarly situated. The action is against The City of Oklahoma City, a municipal corporation; Sheldon L. Stirling and Philip J. Rhoads, Trustees of the Oklahoma City Development Trust; The Oklahoma City Development Trust, a trust; and The First National Bank and Trust Company of Oklahoma City, as defendants.
After the action was filed James R. Huggins, a resident owner of property and taxpayer, and patron of city sewer and garbage services, hereinafter called intervenor, was permitted to intervene as a party plaintiff for himself and all others similarly situated.
In view of the urgency and importance of the matters involved both to the defendant City of Oklahoma City and other cities of the State of Oklahoma we have concluded to accept original jurisdiction.
From the exhibits attached to plaintiff's petition it is established that on January 2, 1958, Edgar R. Oppenheim, as trustor, and Sheldon L. Stirling and Philip J. Rhoads, as trustees, entered into a trust indenture. By the terms of the trust indenture Edgar R. Oppenheim created the trust for the use and benefit of The City of Oklahoma City, Oklahoma, and for public purposes set forth in the indenture, under the provisions of 60 O.S.1951 §§ 176-180, inclusive, and as amended in 1953.
The purpose of the trust, as set forth in the trust indenture, in generally to (1) finance water mains and extensions; (2) to acquire, construct, purchase, repair, remodel and operate buildings and other facilities for use by the United States of America, or the State of Oklahoma, or for use by agencies of the United States, of the State of Oklahoma, or any municipality thereof; and (3) to establish, construct and enlarge and administer utilities, within and without the territorial boundaries of Oklahoma City, which are or shall be of public use; and (4) to service machinery and equipment in connection with such utilities, buildings and facilities; all or any of which being subject to the approval by ordinance of the City Council of Oklahoma City.
In order to perform the foregoing purposes the trustees, by the trust indenture, are given practically unlimited power to do all things necessary to perform those functions. The trust shall have duration for the term of duration of the beneficiary unless sooner terminated.
That trust estate will consist of funds and property presently in the hands of the trustees and any properties leasehold rights, money, and all other things of value coming into the possession of the trustees pursuant to the trust indenture, and the West 5 feet of Lot 29, Block six, replat of Industrial Boulevard, Addition to Oklahoma City.
On January 7, 1958, by Ordinance No. 8158, the City Council acknowledged that the trustor, Edgar R. Oppenheim, had conveyed the west 5 feet of Lot 29 (above described) to the trust, accepted the terms of the trust indenture, and agreed to become the beneficiary.
Thereafter, and on August 26, 1959, the City Council by Ordinance No. 8645, authorized and approved a lease agreement between the City of Oklahoma City, as lessor, and the trustees of the Oklahoma City Development Trust, as lessee. In the lease agreement it was pointed out that Oklahoma City had grown in area from approximately 80 square miles to approximately 225 square miles during the past year, and that there was a need for extending and improving the sanitary sewer system and for acquiring garbage and trash disposal installations.
The lease conveys and assigns to trustees all the presently existing sanitary sewer system including sanitary sewage collection transportation, processing and disposal system and equipment and accessories appertaining thereto presently belonging to the City, together with its custody, management or control, together with all rights-of-way, real estate, and interests therein, licenses, easements, and other rights and privileges related thereto. It also includes all proceeds, fees, charges, revenues, rents and profits from the use of the sanitary sewer system, together with any additional properties and income therefrom hereafter acquired.
The term of the lease is for thirty years from September 1, 1959, and until all indebtedness hereinafter authorized by the trustees and the City Council has been paid.
It is further agreed in the lease that the trustees will issue bonds for the purpose of extending and improving the sanitary sewer system and for the construction of garbage and trash disposal installations, to be paid for as set forth in the lease and bond indenture.
Under the lease the lessee is to operate all of the leased properties and fix such rates, fees and charges as shall be sufficient to meet interest and reserve requirements for the bond or bond issues, for bank and trustees fees, and other expenses. Ordinance No. 8645 in approving the lease provides that the trustees will secure prior approval of the City Council as to the amount of any unform rate, fee or charge to be imposed by trustees.
All extensions and improvements to the sewer system and garbage and trash disposal installations that are paid for from the sale of trustees bonds are deemed personal property, and title thereto shall be vested in the trustees until the indebtedness of the trust is paid in full, under the terms of the lease.
Any surplus revenues over and above that required to pay the trustees bonds and interest, bank fees and trustees expenses, will be turned back to the City.
The lease agreement was approved by Ordinance No. 8645, dated August 26, 1959.
On September 1, 1959, the trustees of the Oklahoma City Development Trust entered into a $6,500,000 bond indenture to obtain funds for an extension of the sewer system and for garbage disposal facilities as provided for in the lease. By this indenture the trustees assign and pledge to The First National Bank and Trust Company of Oklahoma City the sanitary sewer facilities and garbage and trash disposal installations and equipment to be constructed from the proceeds of the bond issue, including all revenues therefrom. Also assigned and pledged is the trustees leasehold interest in the presently existing sanitary sewer system of the City and revenues therefrom. This bond issue was approved by Ordinance No. 8729 on November 10, 1959.
When the bonds, interest and bank charges, trustees expenses and all...
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