State ex rel. St. Charles County v. Smith

• Decision Date: 12 June 1941
• Docket Number: 37587
• Parties: State of Missouri at the relation of St. Charles County, Relator, v. Forrest Smith, State Auditor
• Court: Missouri Supreme Court

152 S.W.2d 1

348 Mo. 7

State of Missouri at the relation of St. Charles County, Relator, v. Forrest Smith, State Auditor

No. 37587

Supreme Court of Missouri

June 12, 1941

Peremptory writ ordered.

Joseph B. Wentker, Carl Trauernicht and Wm. Wayne Jr., for relator.

(1) Authority for the issuance of toll bridge revenue refunding bonds is fairly implied in Sections 8457 to 8551, Revised Statutes 1939. (a) The issuance of refunding bonds in this case effectuates the purposes of the statute by reducing interest costs and thereby making additional funds available for debt retirement and the earlier freeing of bridges from tolls. State Highway Comm. of Kentucky v. King, 259 Ky. 414, 82 S.W.2d 443; Cook v. Louisville, 260 Ky 474, 86 S.W.2d 157; Security Trust Co. v. Paris, 264 Ky. 846, 95 S.W.2d 781; State ex rel. Washington Toll Bridge Authority v. Yelle, 105 P.2d 813; State ex rel. Maestri v. Cave, 193 La. 419, 190 So. 631. (2) The outstanding toll bridge revenue bonds of relator are callable prior to maturity and, when so called, may be redeemed out of any available funds. (a) Holder of callable bond may not question source of funds from which his bond is redeemed when called. State ex rel. Maestri v. Cave, 193 La. 419, 190 So. 631. (3) The overlapping of interest as between original bonds and refunding bonds does not invalidate the latter. Fleeman v. Jacksonville, 191 So. 840. (a) Issuance of refunding bonds does not create a new debt. State ex rel. Consolidated School Dist. No. 8 of Pemiscot County v. Smith, 343 Mo. 288, 121 S.W.2d 160; Security Trust Co. v. Paris, 95 S.W.2d 781, 264 Ky. 846. (4) The simultaneous redemption of outstanding bonds of Series A and Series B satisfies the terms of said bonds with respect to order of payment. Robertson v. Tillman, 39 S.C. 298, 17 S.E. 678. (5) The lien of the outstandbonds is satisfied by deposit with paying agent of funds sufficient to redeem said bonds on call date. Robertson v. Tillman, 39 S.C. 298, 17 S.E. 678; State ex rel. Consolidated School Dist. No. 8 of Pemiscot County v. Smith, 343 Mo. 288, 121 S.W.2d 160. (a) The lien of the refunding bonds will thereupon be the only lien upon the revenues of said bridges. (6) The indebtedness incurred for the acquisition of bridges owned by relator will not be discharged until the refunding bonds shall have been paid. (a) The statute authorizes the collection of bridge tolls until the debt incurred in acquiring the bridges shall have been paid. Cook v. Louisville, 260 Ky. 474, 86 S.W.2d 157.

Roy McKittrick, Attorney General, and Olliver W. Nolen, Assistant Attorney General, for respondent; John L. Graves of counsel.

(1) Municipal corporations and political subdivisions have no power to issue bonds, including refunding bonds, in the absence of statutory authority; no such authority exists for the bond here sought to be registered. (a) Statutory authority is necessary for refunding bonds. Merrill v. Town of Monticello, 138 U.S. 673, 34 L.Ed. 1069, 11 S.Ct. 441; Coquard v. Oquawka, 192 Ill. 365, 61 N.E. 662; Redmond Realty Co. v. Central Oregon Irrigation District., 140 Ore. 282, 12 P.2d 1097; 6 McQuillin, Mun. Corps. (2 Ed.), sec. 2441, p. 165; 44 C. J., Mun. Corps., sec. 4157, p. 1186; 1 Jones, Bond & Bond Securities (4 Ed.), sec. 386, p. 408. (b) Statutory authority is necessary for bonds other than refunding bonds. City of Brenham v. German-American Bank, 144 U.S. 173, 36 L.Ed. 390; First Natl. Bank v. Obion County, 3 F.2d 623; Jones v. Stearns, 122 S.W.2d 766; Weil, Roth & Co. v. Mayor, etc., Town of Newbern, 148 S.W. 680. (c) Statutory authority is as necessary for the issuance of bonds payable from the revenues of an income-producing project as for bonds payable from taxes. State ex rel. City of Blue Springs v. McWilliams, 335 Mo. 816, 74 S.W.2d 363. (d) The Toll Bridge Revenue Act contains no authority for the issuance of refunding bonds R. S. 1939, secs. 8547-8551. (e) The question of advantage or benefits, which the county of St. Charles may derive from refunding the toll bridge bonds should not be considered by the court. The question is the right to exercise the power. County of Hardin v. McFarlan, 82 Ill. 138. (2) The toll bridge revenue bonds now outstanding are payable solely from the revenues derived from the operation of the toll bridges and the bondholders cannot be compelled to accept payment from funds derived from other sources. State ex rel. Board of Fund Commrs. v. Smith, 339 Mo. 204, 96 S.W.2d 348; Davis v. Yuba County, 75 Cal. 352, 13 P. 874. (3) Refunding bonds cannot be dated or issued prior to the extinguishment of the indebtedness to be refunded; two issues of negotiable interest-bearing bonds, both based on the same consideration, cannot lawfully be outstanding at the same time. State ex rel. Clark County v. Hackmann, 280 Mo. 686, 218 S.W. 318; State ex rel. City of Sedalia v. Weinrich, 291 Mo. 461, 466, 236 S.W. 872; Doon Township v. Cummins, 142 U.S. 366, 34 L.Ed. 1044; Commissioners of Sinking Fund of Louisville v. Zimmerman, 41 S.W. 428; City of Miami v. Florida, 190 So. 774. (4) The issuance of the refunding bonds will violate a covenant in the original order prohibiting the issuance of additional bonds unless the lien thereof is subordinate to the lien of the outstanding bonds. (5) Relator County will have no authority to charge tolls for the use of the bridges after the payment of the bonds called for redemption; where no legal provision can be made for the payment of bonds, their issuance is unauthorized. R. S. 1939, sec. 8548. (6) No power exists to call the outstanding bonds of Series B prior to the payment of the outstanding bonds of Series A, therefore, no power exists to issue refunding bonds for the purpose of paying the bonds of Series B. (a) "All of the bonds of Series 'A' shall first be called and redeemed before any of the bonds of Series 'B' shall be called in, paid or redeemed." (b) Bonds are callable only upon strict compliance with all conditions set forth in the bonds and in the proceedings by which they are authorized. State ex rel. Board of Fund Commrs. v. Smith, 339 Mo. 206, 96 S.W.2d 348; Davis v. Yuba County, 75 Cal. 452, 13 P. 874. (c) Refunding bonds cannot be issued where the outstanding bonds do not presently mature either by their terms or by reason of a valid call. State ex rel. Board of Fund Commrs. v. Smith, 339 Mo. 206, 96 S.W.2d 348.

OPINION

Leedy, C. J.

Original proceeding in mandamus. The principal question for decision is whether St. Charles County may lawfully issue refunding revenue bonds for the purpose of retiring outstanding toll bridge revenue bonds.

The respondent has adopted the statement of relator, and we adopt and repro duce the same without resort to quotation marks, as follows:

On May 20, 1936, pursuant to an order of the County Court of St. Charles County, made on said day, St. Charles County purchased the Lewis Bridge spanning the Missouri River near Bellefontaine, Missouri, and having its northern terminus within the County of St. Charles, and the Clark Bridge spanning the Mississippi River at Alton, Illinois, and having its southern terminus within said County, and for the purchase of the approaches and the roadways connecting said bridges and connecting the Lewis Bridge with State Highway 94, and Highways 99 and 140.

In full and complete payment for said bridges, the County issued the Toll Bridge Revenue Bonds of said County in the sum of Two Million, Seven Hundred Fifty-seven Thousand ($ 2,757,000.00) Dollars; said bonds being issued in two (2) series, designated Series "A" and Series "B." The bonds of Series "A" were for the sum of Two Million, Three Hundred Thirty-two Thousand ($ 2,332,000.00) Dollars, and bear interest at three and three-fourths (3 3/4%) per cent. per annum, payable semi-annually, and the bonds of Series "B" were for the sum of Four Hundred Twenty-five Thousand ($ 425,000.00) Dollars, and bear interest at the rate of four per cent. (4%) per annum, payable semi-annually. All of the bonds of both series were dated June 1, 1936, and mature July 15, 1956. The bonds of Series "A" were numbered from One (1) to Two Thousand Three Hundred Thirty-two (2,332), both inclusive, and are of the denomination of One Thousand ($ 1,000.00) Dollars. The bonds of Series "B" are numbered from Two Thousand Three Hundred Thirty-three (2,333) to Two Thousand Seven Hundred Fifty-seven (2,757), both inclusive, and are of the denomination of One Thousand ($ 1,000.00) Dollars. The bonds of both series are subject to prior redemption in whole or in part at any interest payment date at the option of the County, at par and accrued interest. Provided, however, that none of the bonds of Series "B" shall be payable as to principal until all of the bonds of Series "A" shall first have been fully paid and redeemed. Provided, further, that no interest shall be paid on the bonds of Series "B" unless and until the funds required to be set aside for the payment of the bonds of Series "A" shall have been first set aside.

The County Court order under which said bonds were issued provided that a specified sum shall be set aside annually, in monthly installments, in a fund to be known as "Toll Bridge Revenue Series 'A' Interest and Sinking Fund Account," to be used solely and only for the purpose of paying interest on the bonds of Series "A," and the principal of said bonds. That after said specified sum has been set aside, there shall then be set aside in a fund to be known as "Toll Bridge Revenue Series 'B' Interest and Sinking Fund Account," a sum of money to pay the interest on the "B" bonds, and after the "A" bonds have all been paid, then all of the income from the bridges is to be set aside for the purpose of taking care of the interest on and principal...