Missouri Service Co. v. City of Stanberry

108 S.W.2d 25, 341 Mo. 500, 1937 Mo. LEXIS 448
CourtSupreme Court of Missouri
DecidedJuly 30, 1937
StatusPublished
Cited by17 cases

This text of 108 S.W.2d 25 (Missouri Service Co. v. City of Stanberry) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Missouri Service Co. v. City of Stanberry, 108 S.W.2d 25, 341 Mo. 500, 1937 Mo. LEXIS 448 (Mo. 1937).

Opinion

*505 HAYS, J.

This suit was brought by the Missouri Service Company and eight individual plaintiffs, as taxpayers, to enjoin the performance of a contract entered into between the city of Stanberry and Fairbanks-Morse Construction Company, whereby the latter agreed to construct a plant and system for the generation and distribution of electric energy in said city, for a certain compensation agreed upon to be paid by the city. The court below granted temporary injunction. Upon the trial of the cause the court rendered decree dissolving the injunction and dismissing plaintiffs’ bill. The plaintiffs have appealed.

Stanberry, situate in Gentry County, is a city of the fourth class, containing some 2000 inhabitants. On August 20, 1910, one Yenser was by that city granted a twenty-year franchise to establish a lighting system therein, which he did. Through mesne transfers the Missouri Service Company in 1927 acquired said franchise and said system, and has ever since continued to operate it nothwithstanding its charter expired in 1930'.

On May 22, 1928, the voters of the city of Stanberry, pursuant to ordinance calling for and notice given of special election, voted upon the question of the issuance of $40,000 of bonds of the city “for the purpose of erecting or purchasing a municipal electric lighting system for said city.” The proposal carried by popular vote of 574 for the bonded indebtedness to 105 against. Shortly thereafter the city entered into a contract with the Fulton Iron Works Company involving certain expenditures which were in excess of the amount covered by the bond issue and which excess the city was undertaking to obligate itself to pay out of the future earnings of its proposed plant. Upon injunction brought by Missouri Service and a few citizens, as here, this court upon appeal, without interfering with the issuance of the bonds, decreed that the contract between the city and the Fulton Company was invalid because violative of constitutional limitations. [See Sager et al. v. City of Stanberry et al., 336 Mo. 213, 78 S. W. (2d) 431.] That decree became final about January 1, 1935.

Thereafter, in October, 1935, the council through its engineer caused to be duly published a notice to bidders that bids would be received by the board of public works at ten o ’clock A. m., November 22, 1935, at the city council chamber in Stanberry “on material, equipment and labor, comprising a complete electric power plant, *506 distribution system and street lighting system.” The notice stated where copies of the plans and specifications might be obtained. '

When the bids were opened at the appointed time by the board of public works it was disclosed that among the twenty-odd bids submitted only two of them were upon the entire project, that of the White Way Corporation of Milwaukee (hereinafter called White Way), and that of Fairbanks-Morse Construction Company (which will be called Fairbanks); the others were upon separate and minor , portions of the project and were on that account not considered. Fairbanks’ bid was $49,266; White Way’s $44,900. Both of said bids being in excess of the bond issue available, these bidders were requested to reduce their bids accordingly by the elimination of certain designated items. They did so, and the revised bid of Fairbanks was .accepted by the city and a contract between the city and Fairbanks accordingly was executed. The estimates upon which the bids had first been made included duplicate generating units and also series street lighting circuits, but the contract in suit, and the revised bids upon which it was let, includes the purchase of only one generating unit and purports to exclude the series street lighting circuits.

The contract was in- writing, dated November 23, 1935, signed by the mayor of the city and by Fairbanks, acting through its vice president. The contractor, Fairbanks, thereby undertook and agreed, on or before March 1, 1936, to furnish all materials and perform all work or labor called for under “Sections A to C, both inclusive, of the Specifications for furnishing and installing a generator plant for the..purchaser, except the following deductions: .. . .” (tobe noted hereinafter) and to furnish all materials and perform all work or labor called for in ‘ ‘ Sections D to L, both inclusive, of the specifications for the furnishing and installing of a distribution system for the purchaser except the following deductions . . .” (hereinafter noted).

By other provisions the contractor agreed to execute bond in the full amount of the contract as indemnity for failure to pay for materials . and labor and for faithful performance of the contract, in accordance with the plans and specifications ivhieh were attached to -the contract.

In consideration of said agreements the city agreed to pay Fairbanks $41,170, of which sum $38,970 was to be paid in installments, as set forth in the specifications, and the balance $2200, was to be paid by the city delivering to Fairbanks one 15-horse power and one 25-horse power horizontal type “Y” Fairbanks-Morse oil engine.

It is contended in this court, and was in substance charged in the petition: 1. The city’s performance of the contract would constitute a misapplication of the proceeds of the bond issue, because the bonds *507 were voted for the disbursement of their proceeds on the conditions and in the manner provided in the contract that formed the basis of the Sager suit, supra, and upon the understanding of the voters that such was the plan. 2. The contract is void because (a) unilateral, and (2) was not let' to the lowest bidder. Several subsidiary-questions are raised which will be ruled specifically or by implication from other rulings to be made, as may be deemed preferable.

The appellants concede that the issues involve no question of fraud in the election at which the bonds were voted, and no question of the validity of the bonds; but they insist that the project for -which the bonds were voted was that $40,000 should be so supplied and that an additional sum of $56,000 w-as to be paid through deferred payments to be made out of the earnings of the venture; that the voters were asked to approve that plan by authorizing the bonds, and they did so. Upon the directly contrary position taken by the present appellants and others as plaintiffs in the Sager case, supra, this court ruled in favor of their then position, namely, that the incurring of such additional indebtedness of $56,000 not only was not submitted to, and authorized by, the voters of the city at any election, but also exceeded the constitutional limit of the city’s permissible indebtedness. Clearly, the abstract right of the city to erect an electric light plant as described generally in the ordinance submitting the bond proposal and in the published notice of the election, as well as the issuance of the bonds in pursuance of the result of the election, was in no wise criticized, limited or affected by the Sager decisiou. The fair implication of that decision is that the city may use the proceeds of the bond issue <!for the purpose *of erecting or purchasing a municipal lighting system for said city.”

I. The appellants complain that such is not the purpose for which the money is going to be used.

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Bluebook (online)
108 S.W.2d 25, 341 Mo. 500, 1937 Mo. LEXIS 448, Counsel Stack Legal Research, https://law.counselstack.com/opinion/missouri-service-co-v-city-of-stanberry-mo-1937.