Petition of Board of Public Buildings, 49598

• Decision Date: 11 December 1962
• Docket Number: No. 49598,49598
• Citation: 363 S.W.2d 598
• Parties: Petition of the BOARD OF PUBLIC BUILDINGS of the State of Missouri, and John M. Dalton, Governor, Hilary A. Bush, Lieutenant Governor, and Thomas F. Eagleton, Attorney General, constituting the members of said Board. The BOARD OF PUBLIC BUILDINGS of the State of Missouri, and John M. Dalton, Governor, Hilary A. Bush, Lieutenant Governor, and Thomas F. Eagleton, Attorney General, constituting the members of said Board (Petitioners), Respondents, v. Joseph M. CROWE and Kathryn K. Crowe (Intervenors), Appellants.
• Court: Missouri Supreme Court

Page 598

363 S.W.2d 598

Petition of the BOARD OF PUBLIC BUILDINGS of the State of Missouri, and John M. Dalton, Governor, Hilary A. Bush Lieutenant Governor, and Thomas F. Eagleton, Attorney General, constituting the members of said Board The BOARD OF PUBLIC BUILDINGS of the State of Missouri, and John M. Dalton, Governor, Hilary A. Bush, Lieutenant Governor, and Thomas F. Eagleton, Attorney General constituting the members of said Board (Petitioners), Respondents, v. Joseph M. CROWE and Kathryn K. Crowe (Intervenors), Appellants.

No. 49598.

Supreme Court of Missouri, En Banc.

Dec. 11, 1962.

Motion for Rehearing Denied and Opinion Modified Jan. 14, 1963.

Rozier, Carson, Inglish, Nacy & Monaco, Jefferson City, for appellants.

Thomas F. Eagleton, Atty. Gen., J. Gordon Siddens, Asst. Atty. Gen., Robert B. Fizzell, Robert B. Fizzell, Jr., Norman E. Gaar, Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, for respondents.

EAGER, Judge.

This matter arises from a petition filed under Secs. 108.310-108.350 ¹ by the Board of Public Buildings of the State of Missouri seeking a pro forma decree authorizing the issuance of, and adjudicating the validity of, a series of $5,000,000 of revenue bonds. Two taxpayers intervened and, by their pleadings, raised the issues which are here for determination. Various constitutional points are directly involved.

By Secs. 8.010 and 8.370-8.450 (largely Laws 1959, HB 241, Secs. 1-9, and as amended in certain respects in 1961 as to Secs. 8.010, 8.390 and 8.420, Mo.Cum.Supp.1961, p. 22), the legislature has provided in substance: that the petitioner Board is constituted 'a body corporate and politic'; that it may acquire sites, construct, equip and operate as a 'project' a public building or buildings in any city of 10,000 or more inhabitants; that it 'may require' any or all state agencies which occupy rented or leased quarters in such a city to occupy space therein and to contribute 'from funds appropriated for its support' a proportion of the rentals necessary from the project in a proportion based upon the number of square feet occupied; that the Board may issue and sell revenue bonds to raise funds for the estimated cost of the project, pledge the net income and revenues from the project to the payment of such bonds, and covenant to 'fix, maintain and collect the reasonable rates and charges for the use of the project' (Sec. 8.400) such as in the judgment of the Board will provide sufficient revenues to operate and maintain the project, and to provide and maintain specifically named funds for the payment of the bonds, for a reserve, and for depreciation; that such bonds shall not be deemed to be an 'indebtedness' of the state or of the Board or of its individual members. Sundry more detailed provisions were enacted concerning the interest rate (not over 5%), maturities of bonds, the right to call the bonds, and the refunding thereof, if necessary. These provisions are not involved here. It was provided, however (Sec. 8.440) that the holder or holders of any bond or bonds might, by proper civil action, compel the Board to perform all duties so imposed upon it, including the 'making and collecting of sufficient rates and charges * * * and also to enforce the performance' of its covenants made in issuing the bonds.

The Board, on December 14, 1961, unanimously adopted a detailed resolution finding that it was 'necessary, advisable and suitable' to acquire a site and erect an office building in Kansas City for the use of the various state departments and agencies operated there and now occupying rented quarters, and that the estimated cost was $5,000,000; and resolving: that revenue bonds should be issued and sold (setting forth specifically all the details and provisions thereof) to cover the cost; that all such bonds should contain a provision that they were 'payable as to both principal and interest and premium, if any, solely and only out of and are secured exclusively by pledge of the net income and revenues arising from the operation of said state office building after providing for the costs of operation and maintenance thereof'; that such bonds should not be deemed to constitute an indebtedness of the state or of the Board. The Board covenanted to build and maintain the building, authorized the setting up of a construction fund and four other special funds or accounts in the hands of the State Treasurer to be administered by action of the Board, and agreed to maintain the building as a revenue producing project, and to set up such a schedule of reasonable rates and charges as would produce income in an amount sufficient to pay operating costs and the principal and interest on the bonds. The Board also agreed that: '* * * it will cause said building to be occupied by the agencies and instrumentalities of the State of Missouri, and by others if all of the space and facilities of the Project are not immediately required by said agencies and instrumentalities * * *.' The resolution also contained provisions for declaration of default, the curing of defaults, and the enforcement of the rights of the bondholders by suit against the Board to require it to perform its obligations or to account, or to enjoin unlawful acts. We have omitted many details in our discussion of this resolution, but they are unnecessary to a decision.

The intervenors, appellants here, very ably represented below and here, submit the following points: that the issuance of these bonds constitutes a liability of the state in contravention of Sec. 37, Art. 3, Mo.Constitution 1945, ² and that the statutes themselves are likewise unconstitutional; that, if the Board be considered a separate entity, then the issuance of such bonds would constitute a lending of the State's credit in violation of Secs. 38 and 39, Art. 3, Mo.Constitution; that the statutes in question constitute an unlawful delegation of legislative power in contravention of Sec. 1, Art. 3 thereof; that the proposal, as exemplified in the resolution, violates Sec. 36, Art. 3, which requires state funds to be deposited in the treasury; that it provides for the withdrawal of state funds in a method contrary to Sec. 28, Art. 4; and, that the designation of the State Treasurer as custodian, if these are not state funds, imposes duties upon him not permissible under Sec. 15, Art. 4. The trial court found and adjudged that neither the statutes, the resolution nor the issuance of the proposed bonds were violative of the Constitution and that all were valid.

We note at the outset that there is no Missouri case which is of any direct assistance. Art. 3, Sec. 37 of our Constitution provides, in applicable part, as follows: 'The general assembly shall have no power to contract or authorize the contracting of any liability of the state, or to issue bonds therefor, except * * *.' (Here follow three exceptions with which we are not directly concerned.) The corresponding provision in our 1875 Constitution, Sec. 44, Art. 4, was: 'The General Assembly shall have no power to contract or to authorize the contracting of any debt or liability on behalf of the State, or to issue bonds or other evidences of indebtedness thereof, except in the following cases: * * *.' Strangely, the debates in the 1875 Convention seem to shed no light upon the views of the delegates with reference to the applicable part of this section, although there was much discussion of the exceptions. (Debates Mo. Constitutional Convention 1875, Vol. VII, pp. 326 et seq.) In our 1944 Convention the Committee on Phraseology changed the former wording; essentially, the change merely eliminated the words 'debt or' and left 'liability.' A point, and probably the principal point, now made by appellants here is that our Constitution prohibits 'liabilities' and not merely 'debts' or 'indebtedness,' as do many other constitutions. They more or less concede that these revenue bonds would not constitute a state debt, which, they say, is 'that which one is bound to pay to another or * * * a sum of money due from one person to another * * *.' But they say that 'liability' means 'the state of one who is bound in law and justice to do something which may be enforced by action,' citing, Fidelity Coal Co. v. Diamond, 310 Ill.App. 387, 34 N.E.2d 123; Hyatt v. Anderson's Trustee, 25 Ky. 132, 74 S.W. 1094, 1096; Behnke v. New Jersey Highway Authority, 13 N.J. 14, 97 A.2d 647, 654; 25 Words and Phrases 'Liability' p. 62, et seq. Literally dozens of definitions may be found of the word 'liability.' So far as the definitions are concerned, those interested may examine Black's Law Dictionary, 4th Edition, citing multiple authorities, each with its own definition, and also the many corresponding definitions of the word 'liable.' Generally, the word 'liability' comprehends more than does the word 'debt'; but any ensuing confusion arises, at least in large part, from a failure to consider the context and the precise type of 'liability' under consideration. A common conception of the word is that it denotes present or future debt, fixed or contingent. (See the various definitions in Black, supra.) As stated in Erickson v. Grande Ronde Lumber Co., 162 Or. 556, 92 P.2d 170, loc. cit. 174, 94 P.2d 139: 'The words 'liabilities' and 'indebtedness' would be deemed by Dean Goodrich as accordion words: they are capable of expanding and contracting in their connotations. They may mean present, current, future, fixed or contingent debts. Their meaning in each instance must be determined, not by looking in the dictionaries, but by reading the context, reviewing the transaction, and taking note of the subsequent conduct of the parties who used the equivocal words.' We note here that the prohibited 'liabilities' are those which the legislature might contract, or authorize the contracting of, and that the issuance of 'bonds therefor' is directly and immediately considered in the context; we also note that the exceptions...