Morris v. City of Oklahoma City, 37345

• Decision Date: 26 June 1956
• Docket Number: No. 37345,37345
• Citation: 1956 OK 202,299 P.2d 131
• Parties: , 1956 OK 203 L. M. MORRIS, Plaintiff in Error, v. The CITY OF OKLAHOMA CITY; Oklahoma Industries, Inc., a corporation; William Gill, Jr. and Philip J. Rhoads, Trustees of the Oklahoma City Airport Trust; The Oklahoma City Airport Trust; The First National Bank and Trust Company of Oklahoma City, Defendants in Error.
• Court: Oklahoma Supreme Court

Page 131

299 P.2d 131

1956 OK 202, 1956 OK 203

L. M. MORRIS, Plaintiff in Error, v. The CITY OF OKLAHOMA CITY; Oklahoma Industries, Inc., a corporation; William Gill, Jr. and Philip J. Rhoads Trustees of the Oklahoma City Airport Trust; The Oklahoma City Airport Trust; The First National Bank and Trust Company of Oklahoma City, Defendants in Error.

No. 37345.

Supreme Court of Oklahoma.

June 26, 1956.

Rehearings Denied July 17, 1956.

Syllabus by the Court

1. Under the provisions of 60 O.S.1951 §§ 176 to 180, inclusive, as amended, a municipality may lease its airports to the trustees of a charitable public trust for the purpose of promoting and enlarging the air navigating facilities of the city, a public function, and the trustees may issue and sell bonds to cover the cost of such improvements, provided the bonds do not become an obligation of the city or the state, but are payable solely from income to the trustees.

2. The trustees of trusts for the furtherance of public functions being by law a state agency, indebtedness incurred by them and payable solely from the trust estate and its revenues, is not violative of Article X, Sections 23 and 25 of the Constitution; and the fact that such trustees also are designated as regularly constituted authorities of a beneficiary governmental subdivision does not violate Sections 26 and 27 of Article X of the Constitution.

3. A valid trust in property, with a governmental entity as beneficiary, may be created for the furtherance, or the providing of funds for the furtherance, of any public function which the governmental entity might be authorized by law to perform.

4. The trustees of an express trust, unless restrained by the provisions of the trust instrument, may raise money by mortgaging or otherwise encumbering all or any part of the trust property. 60 O.S.1951 § 175.24.

An original action by L. M. Morris, a resident and taxpayer of the City of Oklahoma City, for himself and other taxpayers similarly situated, against the City of Oklahoma City, and others, praying for an injunction to prevent the City of Oklahoma City from leasing its airports to the Oklahoma City Airport Trust, a public charitable trust, created for the purpose of enabling the City to take advantage of the offer of the United States Government to lease from Trustees the buildings and facilities to be constructed by Trustees of the Trust, and to expand and enlarge its airport facilities, by the issuance of bonds by the Trustees and to be retired from the rentals agreed to be paid by the United States Government and the revenues of the trust estate, and declaring the Trust and all proceedings had and proposed under the plan of the Trustees be prohibited as unlawful and void. Injunction denied and proceedings had and proposed held valid.

George H. Shirk, Oklahoma City, for plaintiff in error.

A. L. Jeffrey, Municipal Counselor, City of Oklahoma City, George J. Fagin, Oklahoma City, for defendants in error.

W. A. McWilliams, Oklahoma City, amicus curiae.

C. W. Schwoerke, Oklahoma City, for Harlan Bell, intervenor.

William W. Hayden, Oklahoma City, for B. T. Kirby, intervenor.

HALLEY, Justice.

L. M. Morris, a resident taxpayer of the City of Oklahoma City, filed this original action in this Court for himself and others similarly situated, against the City of Oklahoma City, Oklahoma Industries, Inc., William Gill, Jr., and Philip J. Rhoads, Trustees of the Oklahoma City Airport Trust, The Oklahoma City Airport Trust and the First National Bank and Trust Company of Oklahoma City, seeking an injunction to restrain the defendants from proceeding further in promoting the issuance of $12,000,000 of bonds by the Trustees named, to enable them to construct improvements upon the airports of Oklahoma City, to be leased to the United States for occupancy by the Civil Aeronautics Authority for a period of twenty-five years, the lease to include the improvements to be constructed and all airports now owned by Oklahoma City or acquired during the term of the lease.

This action was filed May 3, 1956. On January 13, 1956, the General Services Administration of the United States issued a binding Letter of Intent, which was accepted by Oklahoma City January 17, 1956, and under the terms of which it was agreed that the City would construct certain permanent facilities at Will Rogers Airport to be leased to the Federal Gevernment for occupancy and use of the Civil Aeronautics Authority.

The buildings and improvements to be constructed include space for offices and laboratory, warehouse and shops, paved outside storage, vehicle parking and railroad siding and utilities. The above improvements are to be completed and leased to the Government for a five year term, with right of renewal for succeeding periods of five years each, not to exceed a total of twenty-five years.

The annual rental rate for such buildings is based upon an amortization of the cost of construction, plus an annual interest rate not to exceed four per cent over a period of twenty-five years, and which shall not exceed $63.36 per annum per $1,000 cost of construction. It was stipulated that the cost of construction has been estimated by reputable architects and engineers to be approximately $12,000,000, and that the Government will invest approximately $18,000,000 in the contents of the buildings to be erected and will bring 800 employees to Oklahoma City with an annual payroll of approximately $6,000,000. The annual rental to be paid by the Federal Government will be approximately $700,000.

To enable Oklahoma City to take advantage of the opportunity offered, the Oklahoma Industries, Inc., a non-profit group, caused to be formed the 'Oklahoma City Airport Trust' and deeded to the Trustees a 10 acre tract of land adjoining Will Rogers Airport. The Trust agreement provided that all land, money and property rights coming into the hands of the Trustees, shall be held for the beneficiary, the City of Oklahoma City.

The Oklahoma City Airport Trust was created April 1, 1956, by Oklahoma Industries, Inc. with the City of Oklahoma City as beneficiary, and for the purpose of enabling Oklahoma City to take advantage of the offer of the Federal Government to improve and expand its airport facilities, under the provisions of 60 O.S.1951 §§ 176 to 180, inclusive, as amended, the Oklahoma Trust Act, 60 O.S.1951 § 175.1 et seq. and other statutes.

The Trust has been created for the improvement and operation of airports and air navigation facilities, servicing aircraft and for the accommodation of air travelers; or for the use of aviation agencies of the United States, the State of Oklahoma, municipalities or other subdivision of the Government. The City of Oklahoma City has leased for a term of twenty-seven years its three present airports and agreed to include any airports hereafter acquired during the term of this lease. The City agrees to pay the cost of maintenance, insurance and for damages for personal injuries or property during the term of the lease.

It cannot be disputed that the Trust under consideration is authorized by our statutes known as the Oklahoma Trust Act, 60 O.S.1951 § 175.1 et seq., and Sections 175.2 and 171 provide as follows:

'A trust in relation to real and personal property, or either of them, may be created for any purpose or purposes for which a contract may be made.'

'Express trusts may be created in real or personal property or both, with power in the trustee, or a majority of the trustees, if there be more than one, to receive title to, hold, buy, sell, exchange, transfer and convey real and personal property for the use of such trust; to take, receive, invest or disburse the receipts, earnings, rents, profits or returns from the trust estate; to carry on and conduct any lawful business designated in the instrument of trust, and generally to do any lawful act in relation to such trust property which any individual owning the same absolutely might do.'

Our general law in regard to Trusts for the furtherance of public functions was amended in 1953. Section 176, as amended, is as follows:

'Express trusts may be created in real or personal property, or either or both, or in any estate or interest in either or both, with the State, or any county, municipality, political or governmental subdivision, or governmental agency of the State as the beneficiary thereof, and the purpose thereof may be the furtherance, or the providing of funds for the furtherance, of any authorized or proper function of the said beneficiary. Provided, that no funds of said beneficiary derived from sources other than the trust property, or the operation thereof, shall be charged with or expended for the execution of said trust, except by express action of the legislative authority of the beneficiary first had. The officers or any other governmental agencies or authorities having the custody, management or control of any property, real or personal or both, of the beneficiary of such trust, or of such a proposed trust, which property shall be needful for the execution of the trust purposes, hereby are authorized and empowered to lease such property for said purposes, after the acceptance of the beneficial interest therein by the beneficiary as hereinafter provided, or conditioned upon such acceptance.'

Section 177, of the above Act, provides for the acceptance by governing body of municipalities and the recording of such instrument.

The trust property here consists of the land conveyed to the Trust by the Trustor, a lease by the beneficiary, City of Oklahoma City, of airports and airport properties owned by the City of Oklahoma City and leased by the City to the Trustees, and all income accruing during the life of the Trust, or until the Trustees' bonds have been retired or retirement fully provided for. The plaintiff claims that the indebtedness proposed to be incurred by the Trustees violates Sections 23, 25, 26 and 27, Article X of our...