Case Title: Wunderlich v. City of St. Louis

Citation: 511 S.W.2d 753

Docket Number: 

State: missouri

Court: Missouri Supreme Court

Date: 1974-07-30T00:00:00Z

Document:
511 S.W.2d 753 (1974)
Peter WUNDERLICH et al., Plaintiffs-Appellants. and
Edward R. Joyce, Intervenor-Appellant,
v.
The CITY OF ST. LOUIS et al., Defendants-Respondents.
No. 58631.

Supreme Court of Missouri, En Banc.
July 30, 1974.
*754 Peter Wunderlich, St. Louis, pro se and for Marvin Reiss, d/b/a Gravois Bottery, Warwick Hotel Inc., and Henry Ruggeri, Jr., d/b/a Ruggeri's.
Edward R. Joyce, pro se.
Jack L. Koehr, City Counselor, Robert C. McNicholas and James J. Wilson, Associate City Counselors, St. Louis, Cullen Coil, Carson, Inglish, Monaco & Coil, Jefferson City, for respondents.
Thompson & Mitchell, James M. Douglas, William G. Guerri, John B. Crosby, St. Louis, for amici curiae.
DONNELLY, Chief Justice.
This is an action which seeks to have a funding arrangement conceived for the purpose of financing the building of a convention center facility in the City of St. Louis declared illegal and void. The trial court denied relief and an appeal was taken to this Court.
On November 7, 1972, the following proposition was submitted to the qualified electors in the City of St. Louis:
The parties stipulate as follows:
The essential question in this case is whether this arrangement for financing the Convention Center violates Mo.Const. Art. VI, § 26(a) and (f), V.A.M.S.
We make the following preliminary observations:
(1) In the Constitution of 1945, provision is made for the issuance of "revenue bonds," which are not paid directly or indirectly by resort to taxation. Mo.Const. Art. VI, § 27 reads as follows:
Limitations are, however, imposed upon the issuance of general obligation bonds, which are payable by utilization of the full taxing power of the issuing entity.
Mo.Const. Art. VI, § 26(a) reads as follows:
Mo.Const. Art. VI, § 26(b) reads as follows:
*756 (2) In Missouri, we have historically recognized the "special fund doctrine," which holds that an indebtedness of a city payable only out of income derived from the property purchased or built is not a debt within the limitations of Mo.Const. Art. VI, § 26. Grossman v. Public Water Supply District No. One, 339 Mo. 344, 96 S.W.2d 701 (banc 1936).
The "special fund doctrine" may, however, be utilized only if the obligation incurred is payable solely from the special fund and not, directly or indirectly, from any form of taxation. Scroggs v. Kansas City, 499 S.W.2d 500 (Mo.1973).
We believe the funding arrangement creates a present indebtedness and obligates the City to impose taxes in succeeding years to satisfy that indebtedness. It is not contingent. It is undisputed that the building of the Convention Center in St. Louis is to be funded from revenues derived from the use of the building and with receipts from a Convention and Tourism Tax and a Merchants and Manufacturers Tax. The holding in Scroggs applies, and the limitations of Mo.Const. Art. VI, § 26(a) and (b) must be imposed.
Appellants do not assert that the funding arrangement fails to meet the requirements of Mo.Const. Art. VI, § 26(b). The proposed indebtedness does not exceed the allowable limits and the proposition was approved "by a vote of two-thirds of the qualified electors voting thereon." The thrust of appellants' contentions is that the proposition does not pass muster because it "makes no provision for the collection of an annual tax on all tangible taxable property and calls for the debt to be retired in thirty years, all in violation of Article VI, Section 26(f) of the Missouri Constitution." Mo.Const. Art. VI, § 26(f) reads as follows:
It is evident that the bonds involved here are not "revenue bonds" under Mo.Const. Art. VI, § 27; and that they are not general obligation bonds, because the full taxing power of the City is not pledged to their payment. They are more in the nature of limited obligation bonds because they are not intended to expose the total taxable resources of the City to liability. In this connection, the case of City of Redondo Beach v. Taxpayers, Property Owners, Citizens and Electors, 54 Cal. 2d 126, 5 Cal. Rptr. 10, 352 P.2d 170 (banc 1960), is of considerable interest. In that case, the proposed issuance of bonds to raise funds for construction of a harbor, repayable from harbor tidelands revenues and from increase in sales, use and license taxes from the area of the project, was in question, and the Supreme Court of California said:
We recognize that Mo.Const. Art. VI, § 26(f) is broader than California's requirement of an "annual tax" (as was in Art. X, § 12 of the Missouri Constitution of 1875) because Missouri now requires "an annual tax on all taxable tangible property." We agree with the California Supreme Court, however, "that a specific limitation on the general funds to be used for the repayment of the bond issue... itself satisfies the annual tax requirement." We are of the opinion that limited obligation bonds funded as in this case from enumerated taxes, and approved by a vote of two-thirds of the qualified electors voting on the proposition authorizing them, are within the powers of the City of St. Louis (Mo.Const. Art. VI, § 19(a) ), and are within Mo.Const. Art. VI, § 26(f). We do believe that the bonds must be retired within twenty years from the date contracted. We do not believe the prior failure of the City "to so provide had the effect to vitiate the bonds." State ex *758 rel. City of Carthage v. Gordon, 217 Mo. 103, 119, 116 S.W. 1099, 1103 (banc 1909).
Appellants contend the proposition submitted was improper "because it constituted a multiple submission requiring just one `yes' or `no' vote, and because it described the bonds involved as `revenue bonds.'" We do not agree. We believe "the several parts of the proposition are plainly and naturally so related or connected that, united, they form in fact but one united, rounded whole, and may be logically viewed as parts or aspects of a single plan." State ex rel. Phelps County v. Holman, 461 S.W.2d 689, 691 (Mo. banc 1971). We do not believe the electors were misled. They were advised that the questions presented involved the building of the Center and its financing by utilization of revenues produced by use of the building and by taxation specifically described. The contention is ruled against appellants.
Appellants also contend that "the financing scheme embodied in the aforesaid proposition is invalid because the pledge of certain taxes contained in the proposition is subject to repeal or change at any time at the will of the board of aldermen." In Gordon supra, this Court held that such a contingency can be resolved by mandamus.
Intervenor-appellant contends that the aforesaid proposition and ordinances relating thereto constitute an amendment to the City Charter, and particularly Article XVI, §§ 2 and 3 thereof, in that they would "allow the taxes heretofore described to be credited to the Convention Center Fund without the annual recommendation of the Board of Estimate and Apportionment and without the annual appropriation of the Board of Aldermen." The contention is ruled against intervenor-appellant. The financing procedures were approved by the electors.
We hold the Convention Center funding arrangement valid in all particulars except as to the retirement date of the bonds, and as to that issue the City should be authorized to conform to the twenty-year requirement.
The judgment of the trial court is affirmed and remanded for further judgment entries not inconsistent with this opinion.
All concur.