State ex rel. Curators of University of Mo. v. McReynolds

• Decision Date: 11 April 1946
• Docket Number: 39885
• Citation: 193 S.W.2d 611,354 Mo. 1199
• Parties: State of Missouri, at the Relation of the Curators of the University of Missouri, Relator, v. Allen McReynolds, as President of the Board of Curators of the University of Missouri
• Court: Missouri Supreme Court

193 S.W.2d 611

354 Mo. 1199

State of Missouri, at the Relation of the Curators of the University of Missouri, Relator,

v.

Allen McReynolds, as President of the Board of Curators of the University of Missouri

No. 39885

Supreme Court of Missouri

April 11, 1946

Original Proceeding in Mandamus.

Writ issued.

Orrin B. Evans for relator.

(1) The Board of Curators has the right to retain or expend the fees and other funds received from sources other than legislative appropriations. State ex rel. State Treasurer v. Board of Regents of Northeast Mo. Teachers College, 305 Mo. 57 264 S.W. 698; Sec. 13051, R.S. 1939. (2) In other states the implied power to issue revenue bonds has been recognized. Fanning v. University of Minnesota, 236 N.W. 222 183 Minn. 217; State College Development Assn. v Nissen, 66 S.D. 287, 281 N.W. 907; State v. Regents of the University System of Georgia, 179 Ga. 210, 176 S.E. 567; Caldwell Bros. v. Board of Supervisors of Louisiana State University, 176 La. 825, 147 So. 5; State ex rel. Dragstedt v. State Board of Education, 103 Mont. 336, 62 P.2d 330. (3) The proposed revenue bonds are not an indebtedness within the meaning of Sec. 10791, R.S. 1939. State ex rel. Hannibal v. Smith, 335 Mo. 825, 74 S.W.2d 367; Saleno v. City of Neosho, 127 Mo. 627, 30 S.W. 190; 17 C.J. 1377. (4) The Board of Curators has the right to capitalize the future net revenues. State ex rel. Veeder v. State Board of Education, 97 Mont. 121, 33 P.2d 516.

John H. Flanigan for respondent.

(1) Public agencies have only powers which are granted in express words, or those necessarily or fairly implied in or incident to the powers expressly granted or those essential to the declared objects and purposes of the corporation not simply convenient, but indispensable. State ex rel. City of Blue Springs v. McWilliams, 335 Mo. 816, 74 S.W.2d 363. (2) Power to issue bonds is never implied. Reals v. Courson, 349 Mo. 1193, 164 S.W.2d 306; McQuillin, Municipal Corporations (2 Ed.), Revised Vol. 6, sec. 2437, p. 150. (3) The above rule applies to State Universities. Alabama College v. Harman, 234 Ala. 446, 175 So. 394; State ex rel. Dragstedt v. State Board of Education, 103 Mont. 336, 62 P.2d 330; 14 C.J.S., sec. 6, p. 1340. (4) When State Universities have wished to finance the erection of dormitories the usual practice has been to obtain enabling legislation; such is the practical interpretation put upon the law governing such institutions. Brown v. Sikes, 188 S.C. 288, 198 S.E. 854; Secs. 15-21, Act 597 for the year 1935 approved June 3, 1935; 39 Stat. at Large, p. 1200; State ex rel. Dragstedt v. State Board of Education, 103 Mont. 336, 62 P.2d 330; Chap. 24, Ex. Sess. Laws 1933-1934; Chap. 135, Laws 1935; State ex rel. Miller v. State Board of Education, 56 Idaho 210, 52 P.2d 141; Chap. 55, 1st Ex. Sess. Laws 1935; State ex rel. Wilson v. State Board of Education, 102 Mont. 165, 56 P.2d 1079; Chap. 133, Laws 1935; J. D. Van Hooser & Co. v. University of Kentucky, 262 Ky. 581, 90 S.W.2d 1029; Chap. 72, Acts of 1934, Secs. 162-340-162-380, Baldwin's Kentucky Revised Statutes; State ex rel. Veeder v. State Board of Education, 97 Mont. 121, 33 P.2d 516; McClain v. Regents of the University, 124 Ore. 629, 265 P. 412; Chap. 289, Laws 1927. The act said nothing about bonds, but authorized a contract to pay the principal and interest of the purchase price or construction cost of a dormitory within twenty years and to pledge the net income thereto. Arnold v. Bond, 47 Wyo. 236, 34 P.2d 28; State v. State Board of Education, 97 Mont. 371, 34 P.2d 515; Hoyt v. Trustees of State Normal School, 96 Colo. 442, 44 P.2d 513; Barbour v. State Board of Education, 92 Mont. 321, 13 P.2d 225; Chap. 94, Laws 1929; Baker v. Carter, 165 Okla. 116, 25 P.2d 747; Chap. 34, Art. 6, Laws 1931; Board of Regents of University of Arizona v. Sullivan, 45 Ariz. 619, 42 P.2d 619; Chap. 7, 3rd Spec. Sess. Laws 1933-1934. (5) Section 10791, Revised Statutes of Missouri, 1939, prohibits the Curators from creating any indebtedness in any one year above what they can pay out of the annual income of said year. This section applies to all income of the University. Sec. 10791, R.S. 1939. (6) All income of the University is state funds and must be deposited in the state treasury and can be withdrawn only in accordance with an appropriation. Constitution of 1945, Art. IV, Secs. 15, 28; State ex rel. Heimberger v. Board of Curators of the University of Missouri, 268 Mo. 598, 188 S.W. 128. (7) The funds and income of the University like those of other public educational institutions are public funds; all property of such institutions is subject to the control of the General Assembly. School Dist. of Oakland v. School Dist. of Joplin, 340 Mo. 779, 102 S.W.2d 909. (8) All legislative power abides in the General Assembly. No power exists that can deprive it of power to pass laws governing the expenditure of public funds, including those of the University. Constitution of 1945, Art. III, Sec. 1. (9) The General Assembly has never relinquished its control of the income of the University; rather it has always exercised such control. Sec. 10791, R.S. 1939. (10) The Constitution of Missouri imposes upon the General Assembly the duty of adequately maintaining the University. Only the government of the University is vested in the Board of Curators. The powers of "government" at the most include only the management and regulation of the University in its function of giving a college education. The function of providing funds is "maintaining" the University and the duty, responsibility and power to maintain the University resides in the General Assembly. Constitution of 1945, Art. IX, Sec. 9, continuing substantially Art. XI, Sec. 5 of the Constitution of 1875; State ex rel. Heimberger v. Board of Curators of the University of Missouri, 268 Mo. 598, 188 S.W. 128.

OPINION

Douglas, J.

The Curators of the University of Missouri, a public corporation, bring this original proceeding in mandamus to test its authority to issue $ 2,732,000 of Dormitory Revenue Bonds. The proceeds are to be used for building dormitories.

The University of Missouri was created by the General Assembly in 1839. Laws of 1838, p. 173. A fund designated as the "seminary fund" was established by the act. This fund was to receive the proceeds of the sale of seminary lands and after the principal reached the sum of $ 100,000 the income was to be applied for the support of the University. The original buildings were financed and for many years maintained solely from the income from the seminary fund and by gifts, subscriptions and student fees. These funds were paid directly to the curators who had control and management of them. The first funds by way of appropriation by the Legislature came in 1867 and then not for support but to reimburse the University for $ 10,000 damage to its property because of military occupation during the war between the States. It appears that it was not until 1879 that the Legislature made its first general appropriation to the University.

The first constitutional provision for the government of the University is found in the Constitution of 1875 (Art. XI, Sec. 5) as follows: "The government of the State University shall be vested in a Board of Curators, to consist of nine members, to be appointed by the Governor, by and with the advice of the Senate." The same provision was carried over into the Constitution of 1945, Art. IX, Sec. 9(a).

The General Assembly has vested the University with the express powers, among others, to sue and be sued; to take, purchase, sell, and otherwise dispose of lands and chattels; to condemn and appropriate real estate and other property. Sec. 10783, R.S. 1939. The statutory duty is placed on the curators "to erect and continue thereon [the site of the University] all edifices designed for the use and accommodation of the officers and students of the University." Sec. 10810, R.S. 1939.

Chiefly because of post war conditions the enrollment at the University will jump from a low of 1938 students in 1943 to an estimated 6,600 in the Fall of this year and then to an estimated 8,000 or more each year for the next decade. Housing for students is overcrowded and inadequate. There are dormitory facilities now available for only 158 men and 158 women. Auto-trailers have been installed as an emergency measure to house married veterans. To remedy the situation and provide proper rooming and boarding facilities the curators propose to erect on the campus of the University at Columbia dormitories and dining rooms to accommodate 1850 men and 550 women and 250 married students, and on the campus of the School of Mines and Metallurgy at Rolla dormitories and dining rooms for 300 men, all at a total cost of $ 5,464,000. The curators are looking to the Legislature for an appropriation of one-half that sum and propose to issue Dormitory Revenue Bonds in the amount of $ 2,732,000 to raise the balance. The bonds will mature in 20 years unless called for redemption. They will bear 3% interest payable semi-annually. They are declared to be fully negotiable. The bonds provide they are not an indebtedness or general obligation of the State of Missouri, or of the University of Missouri, or of the Curators of the University of Missouri. The principal and interest of the bonds "are payable solely and only from the net income revenues derived from the operation of said dormitories and dining room facilities" and a lien is imposed against such revenue.

The question for decision is whether the curators have the power to borrow money for building the dormitories and issue such revenue bonds as security.

This State has long followed the rule announced in Dillon Municipal Corporations (1911) sec....