State ex rel. Jardon v. Industrial Development Authority of Jasper County

• Decision Date: 12 September 1978
• Docket Number: No. 60594,60594
• Citation: 570 S.W.2d 666
• Parties: STATE ex rel. Claude E. JARDON, Jr., Relator, v. The INDUSTRIAL DEVELOPMENT AUTHORITY OF JASPER COUNTY, Missouri, Respondent.
• Court: Missouri Supreme Court

Page 666

570 S.W.2d 666

STATE ex rel. Claude E. JARDON, Jr., Relator, v. The INDUSTRIAL DEVELOPMENT AUTHORITY OF JASPER COUNTY Missouri, Respondent.

No. 60594.

Supreme Court of Missouri, En Banc.

Sept. 12, 1978.

David E. Dwyer, Spencer, Scott & Dwyer, Joplin, Mo., for relator.

Jerry T. Powell, Lawrence M. Berkowitz, Webb R. Gilmore, Ellen S. Holmes, Kansas City, Mo., for respondent.

MORGAN, Chief Justice.

This is an action in the nature of quo warranto and this court has jurisdiction pursuant to Section 4 of Art. V of our Constitution.

The facts are not in controversy since both parties have stipulated as to the essential factual elements.

The original information was filed by the Attorney General at the relation of Claude E. Jardon, Jr., who resides in Jasper County, Missouri, and is a resident taxpayer and duly qualified registered voter in the City of Joplin.

Respondent is a corporation created pursuant to §§ 349.010-349.100, RSMo Supp.1977, ¹ hereinafter referred to as the "Act." Those sections of the Act provide for the creation of an Industrial Development Corporation. Respondent is such a corporation, authorized by the Jasper County Court which approved its Articles of Incorporation and appointed its initial Board of Directors pursuant to the Act.

Respondent has taken steps, required by the Act, to purchase land and construct an office building in an unincorporated area of Jasper County, along with improvements, fixtures, equipment and related support facilities. The entire project is to be leased to Leggett & Platt, Inc., a Missouri corporation, for use as that company's corporate headquarters.

Respondent's intention is to issue and sell, all pursuant to the Act, approximately $1,700,000 of Industrial Revenue Bonds to finance the project. Such bonds would be payable solely out of the lease payments to be made by the company to the respondent. Additionally, respondent intends to execute a mortgage and indenture of trust securing the bonds. The bonds would not be payable from any funds which are raised by taxation; and, the project itself would be subject to all real and tangible personal property taxes of both the state and county.

Leggett & Platt's headquarters is currently in Jasper County at Carthage. The company is engaged in the home furnishings industry with plants and facilities located in various areas of the county. Both parties have stipulated that the availability of tax-exempt revenue bond financing, pursuant to the Act, favorably influenced the company's decision to remain in Jasper County.

It should further be noted that respondent intends to undertake additional projects from time to time, under the Act, which may be located in either incorporated or unincorporated areas of Jasper County and which may include the purchase and construction of facilities to be used as factories, distribution and warehouse facilities, office buildings and pollution control facilities.

The constitutionality of the Act and of the various activities of the respondent pursuant to the Act are challenged by the relator on a number of separate grounds and we will examine such issues individually after first exploring the nature of the Act itself.

The chapter is entitled "Industrial Development Corporations." Therein, are delineated the procedures for incorporation and the resultant powers and limitations of any "authority" formed thereunder.

Such a corporation may be formed by any number of persons, not less than three, ". . . each of whom shall be a duly qualified elector of and taxpayer in the county or municipality." § 349.025. They may proceed by filing with the governing body an application in writing, seeking permission to apply for the incorporation of an industrial development corporation of such county or municipality, to develop commercial, industrial, agricultural (as limited by § 349.020), or manufacturing facilities. If, after consideration, the governing body by appropriate order allows the formation of the corporation, articles of incorporation must be filed setting out the corporation's purpose and other pertinent information. §§ 349.025-030.

The powers of the corporation are set out in § 349.050. They include the power to acquire real and personal property and to improve and maintain one or more projects and further to lease any project and charge rent therefor. In addition, the corporation may issue bonds and temporary notes, invest funds and sell any project to a private or public body. § 349.050.

Revenue bonds may be issued for the purpose of paying any part of the cost of any project, payable out of the revenues of the corporation. § 349.055. Further, trust agreements are authorized to secure notes and bonds. § 349.075.

Finally, projects of the corporation are not tax exempt; however, "Bonds and notes of the corporation are declared to be issued for an essential public and governmental purpose and to be public instrumentalities, and interest thereon and income therefrom shall be exempt from taxation except for death and gift taxes or transfers." § 349.090.

Point I

Relator first contends that the Act unlawfully attempts to circumvent the restrictions of Art. VI, § 27 of the Missouri Constitution by permitting the issuance of revenue bonds in cities and counties without approval by a majority of the electors.

This claim is based on the fact that an Authority, pursuant to § 349.055, has the power to issue industrial revenue bonds merely by resolution of its Board of Directors, with no requirement for voter approval. Relator points out, in contrast thereto, that Art. VI, § 27 of the Missouri Constitution authorizes cities, towns and villages of Missouri to issue industrial revenue bonds Only after voter approval has been obtained. Further, relator points out that bonds may be issued by the Authority for industrial, manufacturing, agricultural, commercial and other purposes set out in the Act, while the Constitution authorizes cities, towns and villages to issue bonds Only for manufacturing and industrial development.

In other words, relator claims the Act is an attempt to circumvent the Constitution and that the purpose of the Act directly conflicts with Art. VI, § 27 in that such an Authority as the Act creates is Not a legally separate and distinct entity from the city or county in which it is established. Accordingly, offers relator, when an Authority issues bonds without voter approval, it is merely acting for the city or county and does so in violation of Art. VI, § 27.

Respondent argues that the Act does not contravene Art. VI, § 27 because that specific constitutional provision merely limits the power of the General Assembly to authorize the issuance of bonds by cities, towns and villages and does not limit the General Assembly's power to authorize the issuance of bonds by Other public entities.

Thus, this issue hinges on whether or not such Authorities as are contemplated by the Act are separate and distinct legal entities from the cities or counties in which they are established. If so, as respondent argues, they do not contravene the Constitution. If they are not "separate entities," relator's position that they do contravene the Constitution would merit consideration.

We, again, note that "separate entity status" for authorities and commissions created by the General Assembly has long been recognized by this court. In State ex rel. Farmers' Electric Cooperative, Inc. v. State Environmental Improvement Authority, 518 S.W.2d 68 (Mo. banc 1975), we held that the State Environmental Improvement Authority was such a separate entity. Thus, it, not the state, was liable on the issuance of its pollution control bonds. In that case, as in the present one, the notes and bonds were not issued by the state, but by the Authority, which was created and established as a body corporate. The Authority in this case is referred to by statute as a public corporation and again it, not the state, issues bonds and notes.

In State ex rel. Farmers' Electric Cooperative, supra, as in the present case:

"The statutory scheme contemplates that a bond purchaser must look to that company purchasing or leasing a specific project or facility for payment of related principal and interest due on the bond. We quote, as one example, from an indenture heretofore issued by the Authority, to-wit: 'This bond and the interest herein shall not be deemed to constitute a debt of the Authority or the State of Missouri or of any political subdivision thereof, or a pledge of the faith and credit of the Authority or of the State of Missouri or any political subdivision thereof, but this bond shall be payable solely from the receipts and revenues of the Authority from the projects pledged therefor and the Authority is not obligated to pay this bond or the interest hereon except from the receipts and revenues of the Authority from the projects pledged therefor and neither the faith and credit nor the taxing power, if any, of the Authority or of the State of Missouri or of any political subdivision thereof is pledged to the payment of principal or the interest on this bond.' " 518 S.W.2d at 73.

In the current case, the form of the bond (Exhibit N) states that:

"The Bonds and the interest coupons appertaining thereto are limited obligations of the Authority and are payable solely out of the rents and revenues received by the Authority from the Project, and are secured by a pledge of such rents and revenues and a mortgage in favor of the holders of the Bonds. The Bonds and the interest coupons appertaining thereto do not constitute an indebtedness of the Authority or of Jasper County, Missouri, or the State of Missouri, within the meaning of any state constitutional provision or statutory limitation and shall not constitute nor give rise to a pecuniary liability of the Authority or of said County or State nor a charge against the general credit or taxing powers of the Authority or of said County or...