Opinion ID: 1573553
Heading Depth: 1
Heading Rank: 3

Heading: Drury's Appeal

Text: Drury cross-appeals, arguing that the trial court should have entered summary judgment in plaintiffs' favor on Count III of the petition, which alleges that Ordinance 2465 creates a municipal indebtedness without approval of a supermajority of the electorate, in violation of article VI, section 26(b) of Missouri's Constitution. [24]
Ordinance 2465 was passed by the City Council on December 21, 1998, and authorizes the City manager to execute an agreement with the University pursuant to the Intergovernmental Cooperation Act. [25] Under the agreement, the University agrees to issue bonds in the amount of the City's agreed portion of the performing arts center project. In return, the City agrees (subject to annual appropriation by the city council) to transfer all of the proceeds of the hotel/motel/restaurant tax increase (less the costs of the City's visitors bureau) to the University for the purpose of paying principal and interest on the University's bonds. The City further agrees not to repeal the tax and not to allow the proceeds to go to any other purpose until those bonds are repaid.
Drury argues that this agreement violates article VI, section 26(b): Any ... city ..., by vote of the qualified electors thereof voting thereon, may become indebted in an amount not to exceed five percent of the value of the tangible taxable property therein.... For elections referred to in this section, the vote required shall be four-sevenths at the general municipal election day.... Contrary to Drury's contention, however, this Court has long recognized a distinction between the indebtedness that this provision refers to and an executory contract such as that at issue here: A debt is understood to be an unconditional promise to pay a fixed sum at some specified time, and is quite different from a contract to be performed in the future, depending upon a condition precedent, which may never be performed, and which cannot ripen into a debt until performed. [26] Here, the contract with the University is, at this time, purely executory. Its performance depends on actions by the city council, the University and the State before any unconditional indebtedness arises. The case primarily relied on by plaintiffs, Grand River Twp. v. Cooke Sales & Service, is distinguishable since that case involved a completely executed contract, specifically an installment purchase of a piece of machinery that had been delivered. [27] Ordinance 2465 does not create an unconditional debt payable by the City, and the trial court properly entered summary judgment in favor of defendant on Count III of the petition.