State ex rel. City of Excelsior Springs v. Smith

• Citation: 82 S.W.2d 37,336 Mo. 1104
• Parties: State of Missouri at the Relation of the City of Excelsior Springs, Relator, v. Forrest Smith, State Auditor
• Decision Date: 29 April 1935
• Court: United States State Supreme Court of Missouri

82 S.W.2d 37

336 Mo. 1104

State of Missouri at the Relation of the City of Excelsior Springs, Relator, v. Forrest Smith, State Auditor

Supreme Court of Missouri

April 29, 1935

Peremptory writ awarded.

Robert T. Stephens, Harris L. Moore, John W. Moore and Robert H Moore for relator.

(1) Where, as here, a city obtains money by negotiating bonds that are payable only from the income of the property purchased by such money or by resort to the property itself then a city can give a mortgage or other lien on the property purchased with the proceeds of such bonds, to secure the repayment thereof, without offending against the constitutional debt limitation. State ex rel. v Smith, 74 S.W.2d 367; State ex rel. City of Blue Springs v. McWilliams, 74 S.W.2d 363; Hight v. Harrisonville, 41 S.W.2d 155; Bell v. Fayette, 28 S.W.2d 356; State v. Neosho, 101 S.W. 99, 203 Mo. 40; Hagler v. Salem, 62 S.W.2d 751; State ex rel. v. Mobile, 155 So. 876; State v. Portage, 174 Wis. 588, 184 N.W. 376; Iowa So. Utilities Co. v. Cassill, 69 F.2d 707; McCutcheon v. Siloam Springs, 49 S.W.2d 1037; Jones v. City of Corbin, 13 S.W.2d 1013; City of Dayton v. Allred, 68 S.W.2d 172; City of Cross Plains v. Radford, 73 S.W.2d 1093; In re Opinion of the Justices, 148 So. 111; In re Opinion of the Justices, 145 So. 481; Burnham v. Milwaukee, 98 Wis. 138, 73 N.W. 1018; Swanson v. Ottumwa, 118 Iowa 161, 91 N.W. 1048; Fox v. Bicknell, 103 Ind. 537, 141 N.E. 222; Brockenbrough v. B. of W. Commissioners, 134 N.C. 1, 46 S.E. 28; Williams v. Village of Kenyon, 244 N.W. 558; Bankhead v. Town of Sulligent, 155 So. 869; Smith v. Town of Guin, 155 So. 865; Oppenheim v. City of Florence, 155 So. 859; City of Jerseyville v. Connett, 49 F.2d 246; Underwood v. Fairbanks Morse, 185 N.E. 118; Garrett v. Swanton, 216 Cal. 220, 13 P.2d 725; Bowling Green v. Kerby, 295 S.W. 1004. (2) From the standpoint of whether the obligation secured on the property purchased constitutes a debt or not, it makes no difference whether the security is in the form of a mortgage or a conditional sale contract. General Excavator Co. v. Emory, 40 S.W.2d 492; Garrett v. Swanton, 216 Cal. 220, 13 P.2d 725; Williams v. Village of Kenyon, 244 N.W. 558.

Roy McKittrick, Attorney General, Harry G. Waltner, Jr., and Covell R. Hewitt, Assistant Attorneys General, for respondent.

(1) The construction and operation of the "System" is not a public purpose within the meaning of Article X, Section 3, but is by its nature a private enterprise, and the Legislature, therefore, cannot make a valid grant of authority. Sec. 3, Art. X, Mo. Const.; Kennedy v. Nevada, 281 S.W. 56; State v. O'Rear, 210 S.W. 392; Halbruegger v. St. Louis, 262 S.W. 379; Dysart v. St. Louis, 11 S.W.2d 1044; Fagen v. Hoboken, 88 A. 1027, 85 N. J. Law 297. A city cannot expend public funds for advertisements published in a newspaper, not designated as official. (a) It is a mandatory duty to determine whether or not a use is public, and the courts are expressly directed by the Constitution that any assertion of the Legislature is to be disregarded. Sec. 20, Art. II, Mo. Const. (b) The construction and operation of the "System" is not a municipal purpose and therefore cannot be authorized by the Legislature. (2) The bonds presented to the State Auditor for registration are void because they result in the creation of a debt of the city in excess of the constitutional debt limitations. Art. X, Sec. 12, Mo. Const.; State ex rel. v. Neosho, 203 Mo. 40; Bell v. Fayette, 28 S.W.2d 356; Hight v. Harrisonville, 41 S.W.2d 155; Hagler v. Salem, 62 S.W.2d 751; State ex rel. City of Blue Springs v. McWilliams, 74 S.W.2d 363; State ex rel. Hannibal v. Smith, 74 S.W. 367; Trantor v. Allegheny County, 173 A. 298; Bowling Green v. Kirby, 259 S.W. 1007; City v. Power Co., 55 F.2d 563. (3) Municipal powers must be exercised in the manner prescribed by the Legislature, and any deviation from this is invalid. Sec. 6898a-6898d, Laws 1933-1934, Ex. Sess.; State ex rel. v. Clifford, 128 S.W. 755, 228 Mo. 205; City of Nevada v. Eddy, 27 S.W. 471, 123 Mo. 546; St. Louis v. Kaime, 79 S.W. 140, 180 Mo. 309; Carthage v. Carthage Light Co., 70 S.W. 936, 97 Mo.App. 25; Joplin v. Leckie, 78 Mo.App. 8. The word "shall" as it is used in Section 6898b, is mandatory. 57 C. J. 548. (4) Property acquired by a city by dedication, either statutory or common law, cannot have its use diverted or be sold. Price v. Thompson, 48 Mo. 361; Cummings v. St. Louis, 90 Mo. 259, 2 S.W. 130; Neil v. Independent Realty Co., 298 S.W. 363; Laddonia v. Day, 265 Mo. 391, 178 S.W. 741. The same is true when the property is acquired by condemnation. Heger v. St. Louis, 20 S.W.2d 665. (5) Ordinance No. , providing for the management, operation and control of a mineral water system of the relator, is void because it delegates legislative powers to a committee created by the council. 43 C. J. 245; Childers v. Holmes, 68 S.W. 1046, 95 Mo.App. 154; Neil v. Gates, 54 S.W. 460, 152 Mo. 585; Edwards v. Kirkwood, 127 S.W. 378, 147 Mo.App. 599; Thompson v. Boonville, 61 Mo. 282; Ruggles v. Collier, 43 Mo. 353; Creamer v. Clemens, 52 Mo. 133; McQuiddy v. Brannock, 70 Mo.App. 535.

OPINION

Gantt, J.

Original proceeding in mandamus. The city of Excelsior Springs seeks to compel the State Auditor to register certain bonds. The facts may be stated as follows:

In and about the city are mineral springs and wells. It is a widely known health resort. Indeed, it owes its existence and growth to the several varieties of mineral waters in that locality. In 1912 it acquired by condemnation Siloam Park, and in 1925 it acquired by condemnation Regent Park. In the condemnation proceedings benefits were assessed against the lands in the benefit district and paid by the owners of said lands. The parks are in the city, and on each is located a mineral spring, maintained at the expense of the city. The drinking water from said springs has been free of charge. The city received no income from either park. It did not own other springs or wells.

In December, 1933, those in authority decided that the city should equip, manage and control the principal springs and wells in and about the city. Thereafter the issuance of bonds for that purpose was duly and legally submitted to the voters of the city at a special election authorized by an act of the Legislature amending the laws relating to cities of the third class. [Laws Ex. Sess., 1933-34, p. 102.] At said election there were 1414 votes for and 16 votes against the proposition. The new sections relating to said cities follow:

"Sec. 6898a. CITIES MAY ACQUIRE PROPERTY -- IMPROVEMENTS -- MAINTENANCE -- OPERATION. -- In addition to other powers, the Mayor and Council of cities of the third class are hereby authorized and empowered to acquire by gift, devise, purchase or condemnation, within such cities or within a mile thereof, such real and personal property as may be necessary or desirable for the purpose of the erection or construction of dams, lake and flood protection systems, bath houses, therapeutic bath houses, mineral water vending houses and in connection therewith, auditoriums and lecture rooms and for the laying of pipe lines for the distribution of mineral waters and to so acquire, improve and operate mineral springs and wells, and to construct all necessary and appropriate buildings and works therefor, and to do any and all things necessary to maintain and operate said properties so acquired and constructed as a self-liquidating revenue producing public project, and for that purpose to lease or convey the same; provided such properties shall be so acquired, constructed and thereafter maintained and operated without increasing the indebtedness of such city and shall not be paid for, maintained or operated by taxes, either general or special."

"Sec. 6898b. PAYMENT OF PROPERTY ACQUIRED -- MANNER -- ISSUANCE OF BONDS. -- The Mayor and Council of said cities are authorized to accept gifts and grants and to borrow money and execute, issue and negotiate bonds or other securities, for the purpose of paying the cost of acquiring said property or the construction of said buildings or works thereon, and to secure same by mortgages or deeds of trust on said properties and the income and revenue derived therefrom; which said mortgage or deeds of trust shall be a first lien on all said property and all revenues or income therefrom and shall be enforceable as provided therein but shall not be a debt of said city or payable out of any revenue not derived from said property. Said bonds issued under the provisions of this act shall bear interest at a rate not exceeding six per centum per annum, payable annually or semi-annually, shall be executed in such manner and be payable serially in annual installments beginning not later than three years and extending not more than forty years from the date hereof, and at such place or places as the mayor and council shall determine. Any income, receipts, collections and profits from any properties on which such a mortgage or deed of trust has been so executed, shall be held and kept in the city treasury as a separate fund, and payments therefrom shall be made only as provided by said mortgage or deed of trust."

In substance Section 6898c authorizes the condemnation of land for the purpose stated in the preceding sections, but does not require the establishment of a benefit district or the assessment of benefits.

In substance Section 6898d requires an ordinance authorizing the bonds and the submission of the issuance of the bonds to the voters of the city at a special election.

It will be noted that Section 6898b authorizes the bonds to be secured by a mortgage on the properties acquired by the city for the purposes stated in said act....