author: MORGAN, Chief Justice.

text:
    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, 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 instrumen-talities, 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 State.”

In fact, § 349.080 declares that:

“Bonds and notes issued under this section by a corporation created by or pursuant to sections 349.010 to 349.100 shall not be a debt of the county, the municipality or the state and neither the county, the municipality or the state shall be liable thereon nor in any event shall such notes or bonds be payable out of any funds or properties other than those acquired for the purposes of this law and such bonds and notes shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.”

Because of the striking similarities between the present statutory authority and that dealt with in State ex rel. Farmers’ Electric Cooperative, supra, we find the reasoning of the court in that case persuasive in that:

“. . . the potential liability of the Authority would not be that of the state under the ‘separate entity’ status created for it by the Act, which is a principle heretofore recognized by this court. State ex rel. State Highway Commission v. Bates, 317 Mo. 696, 296 S.W. 418 (banc 1927); Christeson v. State Highway Commission, 40 S.W.2d 615 (Mo.1931); Board of Public Buildings v. Crowe, 363 S.W.2d 598 (Mo. banc 1962); State ex rel. Curators of University of Missouri v. McReynolds, 354 Mo. 1199, 193 S.W.2d 611 (1946).” 518 S.W.2d at 73.

Relator claims that the fact § 349.025 of the Act requires that the governing body of the municipality or county approve not only the formation of the Authority but also its Articles of Incorporation negates any “separate entity” status, as does the fact that the governing body elects the Board of Directors of the Authority. Finally, relator argues that the fact § 349.075 gives the county or municipality priority rights in all rights and property of the Authority upon dissolution, subject only to the claims of creditors, is equally persuasive. All told, relator argues these statutory provisions give the governing body such powers over the Authority as to negate any contention that the Authority is a separate entity.

However, this court held such separate entity status did apply to the State Highway Commission, though the status of the Commission was authorized by and controlled by the state. In State ex rel. State Highway Commission v. Bates, 317 Mo. 696, 296 S.W. 418, 420 (banc 1927) this court stated clearly, in reference to the Commission, that:

“It is an entity, with powers of a corporation, established and controlled by the state for a specific public purpose, but that does not make this legal entity the sovereign state. No contract it is authorized to make is made in the name of this state, but in the name of the commission. The sovereign state could have contracted for the building of its public highways in its own name, but it chose to create a legal entity for this work. This act gave to this legal entity no part of the state’s sovereignty, but authorized it to proceed to do certain work which the state could have had done by private contracts made direct with the state. Thus it has been well said in 14 C.J. at page 75: “ ‘Although a corporation may be public, and not private, because established and controlled by the state for public purposes, it does not necessarily follow that such a corporation is in effect the state, . . ’ ”

Such a Commission said the court, “. . .is not the state . . . but is a mere creature of the state, created for the express purpose of performing a specific work.” Id.

That the state does create and have some power over such a commission or authority, does not, we have held, negate the separate entity status of the body.

Relator cites West v. Industrial Development Board of City of Nashville, 206 Tenn. 154, 332 S.W.2d 201, 203 (1960) for a holding consistent with relator’s attack on the separateness of the entity in question here. However, the language cited there is not as helpful as relator suggests. The Supreme Court of Tennessee merely stated without elaboration that though the Industrial Board in that case was a separate corporate entity, the pleadings showed it was also a mere agency or instrumentality of the municipality for purposes of demonstrating that the Board's property was held for a public purpose. In so stating, the court added that the Act authorizing the creation of the Board did not run afoul of a constitutional prohibition against giving or loaning the credit of a city without a referendum. Bonds issued in that case, said the court, were to be retired solely from the revenue of the Industrial Board’s projects, thus no city credit was given. 332 S.W.2d at 202. We believe the holding in that case conforms with the separate entity doctrine and belies the oblique reference to “agency or instrumentality” cited rather hopefully by the relator here. We also note that the Supreme Court of Appeals of Virginia examined the independence of operation, in-curment of debt and ownership of property in determining that an Industrial Development Authority in the City of Chesapeake was a separate entity and, as such, could issue bonds without a vote. Obviously, the issue was nearly identical to that with which we are faced, and the Virginia court held a statute much like our own was not infirm despite a constitutional provision requiring an election for the issuance of bonds by the city. In Industrial Development Authority of the City of Chesapeake v. Suthers, 208 Va. 51, 155 S.E.2d 326, 331-32 (1967), the court stated that:

“The respondent argues that the Authority is but the alter ego of the city and is, therefore, subject to the same constitutional limitations as are imposed upon the city. That being so, the respondent says, the Act is rendered unconstitutional because it permits the Authority, acting in place of the city under a ‘device or pretense,’ to issue bonds without an election in violation of § 127(b) of the Constitution;
* * * * * *
“We have no hesitancy in holding that the Authority is not the alter ego of the city or a ‘device or pretense’ created to evade constitutional limitations. The Authority is a separate and distinct legal entity established to perform the public purpose designated by the legislature. It is independent of the city in its operations, its incurment of debt, and its ownership of property.
“The revenue bonds proposed to be issued by the Authority will not be the bonds of the city, nor will the city thereby incur any indebtedness or grant its credit to or in aid of any private corporation.”

We take special notice of the following reasoning:

“From a reading of the Act, it is clear that there has been created a ‘special fund’ providing the only means for payment of the bonds issued by the Authority. That fund is to be made up solely of the revenues and receipts derived from the lease or sale by the Authority of its properties. It is equally clear that under such an arrangement the city does not, either directly or indirectly, issue any bonds, incur any indebtedness, or grant its credit to anyone. Thus, there is no violation of §§ 127(b) and 185 of the Constitution.” Id. at 332.

It should be noted too that both the Missouri and Virginia statutes provide for creation of the Authority by action of the governing body of the municipality. Both statutes provide for a board of directors to be appointed by the municipalities’ governing bodies, and both statutes allow the Authority to issue revenue bonds by a majority vote of that board without a vote of the electorate. Neither statute allows bonds of an Authority to constitute a debt of the governing body and upon dissolution of the Authority, title to all property owned by the Authority would rest in the municipality. On the basis of an analysis of all these factors, the Virginia court rejected the claim that such an Authority constituted a device created to sidestep a constitutional provision requiring a vote of the electorate for the issuance of bonds by a city.

The Alabama Supreme Court also has held that Industrial Development Boards in that state are separate entities from the municipalities in which they are organized. George A. Fuller Company, Inc. v. Vulcan Materials Company, Southeast Division, 293 Ala. 199, 301 So.2d 74 (1974).

In Opinion of the Justices, 254 Ala. 506, 49 So.2d 175, 179-80 (1950), the Alabama Supreme Court stated:

“Furthermore an industrial development board organized under Act No. 648 cannot be said to be the alter ego or agent of the municipality so that the acts of such a board are the acts of the municipality. An industrial development board under Act No. 648 is a separate and independent corporate entity, the management of the affairs of which is vested in a board of directors. After the governing body of a municipality has authorized the incorporation of an industrial development board under Act. No. 648 and has appointed the members of its board of directors (who serve for staggered terms of six years each), it has no further control over the management and affairs of the corporation, except to appoint additional directors upon expiration of the terms of the incumbents or upon the occurrence of vacancies. Act No. 648 expressly and specifically provides that the municipality shall not in any event be liable for the payment of the principal of or interest on any bonds of the corporation or for the performance of any obligation of the corporation and that the debts and obligations of the corporation organized thereunder shall not be construed to be debt and obligations of the municipality in which the corporation is organized. None of the evils sought to be prevented by Section 94 can arise as the result of any activity of a corporation organized under Act No. 648, since the incurring of obligations by such a corporation cannot result in an expenditure of public funds or in an increased burden of public debt or taxation.” (Emphasis added.)

Again, the reasoning of the Alabama court is sound and is premised upon a virtually identical statute. For the reasons enumerated throughout this discussion, based on Missouri’s existing law and upon the cited opinions from other jurisdictions, we hold that the Authorities created under the Act are separate and distinct entities from the state, counties or municipalities and as such do not violate the constitutional requirement of a popular vote in cities, towns and villages for the issuance of bonds.

Relator finally argues that by so construing the Act, we would allow counties, through Authorities such as this one, to issue revenue bonds without a popular vote, while Art. VI, § 27 not only requires a popular vote by cities, towns and villages, but doesn’t even mention counties. Relator reads that as a flat prohibition against county issuance of bonds, buttressing his argument by pointing out that an amendment to Article VI was defeated in 1976 that would have allowed counties to issue bonds on a majority vote of the governing body alone.

We need not delve too deeply into this reading of Art. VI, § 27 by relator, because we agree with respondent that the Article has no application to Industrial Development Authorities created pursuant to the Act. As indicated above, such authorities are separate entities from the city or county in which they are located.

We need only to note our language in State ex rel. Farmers’ Electric Cooperative, Inc. v. State Environmental Improvement Authority, supra, that:

“The state constitution, unlike the federal constitution, is not a grant of power, but as to legislative power, it is only a limitation; and, therefore, except for the restrictions imposed by the state constitution, the power of the state legislature is unlimited and practically absolute. Kansas City v. Fishman, 362 Mo. 352, 241 S.W.2d 377 (1951). An act of the legislature is presumed to be valid and will not be declared unconstitutional unless it clearly and undoubtedly contravenes some constitutional provision. State ex rel. Eagleton v. McQueen, 378 S.W.2d 449 (Mo. banc 1964). Legislative enactments should be recognized and enforced by the courts as embodying the will of the people unless they are plainly and palpably a violation of the fundamental law of the constitution. Borden Company v. Thomason, 353 S.W.2d 735 (Mo. banc 1962).” 518 S.W.2d at 72.

We find no such plain or palpable violation of the Constitution on this issue and resolve it in favor of the respondent.

Point II

Relator contends the Act is unconstitutional because it allows the expenditure of public funds for other than a public purpose by authorizing the issuance of revenue bonds to finance facilities to be used by private corporations in violation of Art. VI, §§ 23-25 and Art. X, § 3.

We rule against relator as far as Art. X, § 3 of the Missouri Constitution is concerned because as we stated in State ex rel. Farmers’ Electric Cooperative, Inc. v. State Environmental Improvement Authority, supra at 75, that section is “. confined expressly to ‘tax revenues.’ The Authority does not levy or collect taxes and does not exercise any taxing power . ..”

As to Sections 23 and 25 of Article VI, these constitutional prohibitions are not violated simply because incidental benefits may accrue to private interests. State ex rel. City of Boonville v. Hackman, 293 Mo. 313, 240 S.W. 135 (1922). “Furthermore, determination of what constitutes a public purpose is primarily for the legislative department and it will not be overturned unless found to be arbitrary and unreasonable.” State ex rel. Farmers’ Electric Co-operative, Inc. v. State Environmental Improvement Authority, supra at 74 (1975). With that in mind, we note that § 349.090 of the Act specifically declares that bonds issued by an Authority are issued for an essential public and governmental purpose.

Nevertheless, we review this particular purpose in the light of the test laid down in Dysart v. City of St. Louis, 321 Mo. 514, 11 S.W.2d 1045, 1047 (banc 1928), as discussed recently in State ex rel. Mitchell v. City of Sikeston, 555 S.W.2d 281, 285 (Mo. banc 1977), which requires that the expenditure be:

“. . . for the support of the government or for some of the recognized objects of government, or directly to promote the welfare of the community. It may also be conceded that that is a public purpose from the attainment of which will flow some benefit or convenience to the public. In this latter case, however, the benefit or convenience must be direct and immediate from the purpose, . .”

In the instant case the question is whether the issuance of revenue bonds for commercial, industrial, agricultural and manufacturing facilities does serve a public purpose. We have already so held with regard to issuance of revenue bonds for pollution control facilities. State ex rel. Farmers’ Electric Cooperative, Inc., supra. We have also held that the issuance of bonds for industrial development of blighted areas serves a public purpose although it was argued therein that benefits to the public were indirect and benefits to private interests were substantial. State ex rel. Atkinson v. Planned Industrial Expansion Authority of St. Louis, 517 S.W.2d 36 (Mo. banc 1975). Again, we stated that:

“The law does not require us to determine whether the public or private citizens benefit ‘more’ by reason of the legislation. Rather, the rule is that if the primary purpose of the act is public, the fact that special benefits may accrue to some private persons does not deprive the government action of its public character, such benefits being incidental to the primary public purpose.” Id. at 45.

We note further that several other states have enacted laws which also authorize issuance of revenue bonds to finance and encourage economic development, and that such statutes have been upheld frequently in the face of challenges like that in the instant case. This may be based upon the public benefit of preventing unemployment and promoting economic stimulation or upon the public benefit of keeping pace with other states which have passed legislation designed to facilitate the financing of construction of new industry on a tax exempt basis. City of Pipestone v. Madsen, 287 Minn. 357, 178 N.W.2d 594 (1970). Therein, at 603, the Minnesota Supreme Court stated:

“The citizens of Pipestone and the residents of this state will benefit substantially from the proposed transaction. Providing gainful employment for our people will increase their purchasing power, improve their living conditions, and relieve the demand for unemployment and welfare assistance. New or modernized buildings will add properties to the tax lists and increase the tax base. There is little doubt that the establishment of new and improved industry will measurably increase the resources of the community, promote the economy of the state, and thereby contribute to the welfare of its people. These benefits are clearly public in nature.”

With a great many states enacting such statutes, a number of courts have resolved the problem similarly. See, e. g., Green v. City of Mt. Pleasant, 256 Iowa 1184, 131 N.W.2d 5 (1964), in which it was stated that:

“The concensus of modern legislative and judicial thinking is to broaden the scope of activities which may be classed as involving a public purpose. 37 Am.Jur., Municipal Corporations, Sec. 132. It reaches perhaps its broadest extent under the view that economic welfare is one of the main concerns of the city, state and the federal governments. This is manifested by the great bulk of recent social security programs of the nation and the state. Of special pertinence are those providing for unemployment insurance and security, thus decreasing what the Tennessee Supreme Court calls ‘unemployment’s twin offspring, hunger and crime.’ Azbill v. Lexington Manufacturing Co., 188 Tenn. 477 Sup., 221 S.W.2d 522, 524.” 131 N.W.2d at 17.

Without an extended analysis, we do refer to the treatment of this trend in Mitchell v. North Carolina Industrial Development Financing Authority, 273 N.C. 137, 159 S.E.2d 745 (1968), in which the North Carolina Supreme Court pointed out that as of ten years ago, at least forty-two states (not counting North Carolina) had held that some form of governmental financing for industrial development serves a public purpose. See cases cited at 159 S.E.2d at 753-55. The evidence is clear that for some time now the vast majority of jurisdictions have, in the words of the North Carolina Court, concluded that:

“An inadequate number of jobs means an oversupply of labor, which results in low wages. Unemployment and low wages lead to hunger, ill health, and crime. The continued existence of an established industry and the establishment of new industry provide jobs, measurably increase the resources of the community, promote the economy of the state, and thereby contribute to the welfare of its people. The stimulation of the economy is, therefore, an essential public and governmental purpose. The fact that a private interest incidentally benefits from such governmental aid is not fatal if substantial public benefits also result.” 159 S.E.2d at 752.

We agree with the above reasoning that improved employment and stimulation of the economy serve essential public purposes.

Relator argues that this particular project is distinguishable from many others in that the office building, though to be built for an industrial concern, is commercial in nature. As such, it places a competitive hardship on other commercial enterprises if it is the recipient of financing assistance. Further, relator cites State ex rel. Keystone Laundry and Dry Cleaners, Inc. v. McDonnell, 426 S.W.2d 11 (1968) for refusal to allow the issuance of bonds for a commercial laundry.

We do not agree with relator; nor do we need to decide whether the nature of the enterprise is in fact industrial or commercial. Both are within the language of the statute. We are not convinced that any greater burden falls upon other local enterprises if one is involved rather than the other, and we believe the public interest in an expanded economy with attendant employment outweighs any such hypothetical increase in competition (which has not been demonstrated).

Finally, we distinguish State ex rel. Keystone, supra. In that case this court held that a commercial laundry was a “service business” and not a manufacturing or industrial development so that approval of a project by the industrial development commission was rescinded. The proposed project would have called for issuance of revenue bonds to finance the construction of a building to be leased to a laundry concern under the provisions of §§ 71.790-71.850, RSMo Supp.1965 (now §§ 100.010-100.190).

It should be noted, however, that the statute therein did not refer to and include within its scope, commercial developments, as does the statute involved in the present case. Further, that case merely held that neither the statute involved nor Art. VI, § 27 of the Constitution of Missouri, contemplated a “service business” within the meaning of an industrial or manufacturing plant. We deal here with a different statute and a nonservice plant. Thus, while it is true that a laundry manufactures nothing and is purely a service institution, the court in State ex rel. Keystone took pains not to extend its holding beyond the factual situation presented in that case, and the holding is not controlling here.

Relator also alludes briefly to policy reasons for prohibiting a bond issuance to benefit private corporations; however, we are unconvinced that any of these arguments outweigh the public value of a stimulated economy and job market and we cannot hold that the legislative determination of public purpose in this case is arbitrary or unreasonable. Therefore, we hold against relator on this point.

Point III

Relator next contends that the Act violates Article VI, §§ 23-25 of the Missouri Constitution because it permits the lending of public credit or grant of public money or thing of value to private corporations by authorizing the issuance of revenue bonds to finance facilities to be used by private corporations.

This contention may be disposed of adversely to relator on either of two theories, both discussed by this court in State ex rel Mitchell v. City of Sikeston, 555 S.W.2d 281 (Mo. banc 1977). We will merely summarize here what we stated at length in that case.

First, there is no lending of credit where, as here, revenue bonds are paid solely from the revenue derived from the project and not from taxes. Moreover, in the Sikeston case, we cited New Liberty Medical and Hospital Corp. v. E. F. Hutton & Company, 474 S.W.2d 1 (Mo. banc 1971) for the proposition that the purpose of the constitutional prohibition against the lending of credit is to prohibit the state from acting as a surety or guarantor of the debt of another. As in the Sikeston case, neither the Authority nor any city or county guarantees payment of the bonds.

Relator would have us extend the definition of lending of credit to include the use of the name of a city or county in conjunction with the obligation of another. We decline to take this opportunity to consider that question, because under the second reason submitted in the Sikeston case, we would uphold the constitutionality of this issue in any event. Therein, we reiterated our position in State ex rel. Farmers’ Electric Cooperative, Inc. v. State Environmental Improvement Authority, supra, 518 S.W.2d at 74 (Mo. banc 1968) “. . . that the constitutional prohibitions noted are not violated when money and property are expended or utilized to accomplish a ‘public purpose.’ ” As we have already concluded that the project in question does serve a public purpose, this issue is also ruled against relator.

Point IV

Relator also contends that the Act contains more than one subject and the subject of the Act is not clearly expressed in its title in contravention of Art. Ill, § 23 of the Missouri Constitution. We cannot agree. The Act has one general subject, i. e., the “Establishment of Industrial Development Corporations.” Nothing therein deals with other matters. The Constitution is not violated when a section of the Act in question, establishing an Authority, grants to a public body certain powers to aid the financing, planning and execution of an Authority’s development projects. State ex rel. Atkinson v. Planned Industrial Expansion Authority of St. Louis, 517 S.W.2d 36, 42 (Mo. banc 1975).

Clearly, the controlling test is whether or not all of the provisions of the statute fairly relate to the same subject, have a natural connection therewith or are the incidents or the means to accomplish its purpose. State ex inf. Barrett ex rel. Bradshaw v. Hedrick, 294 Mo. 21, 241 S.W. 402 (banc 1922); Thomas v. Buchanan County, 330 Mo. 627, 51 S.W.2d 95 (banc 1932). We are confident that the Act meets that test.

Further, the title to a statute “. . . needs only to indicate the general contents of the act, and if the contents fairly relate to and have a natural connection with the subject expressed in the title they are within the purview of the title.” State v. Weindorf, 361 S.W.2d 806, 809 (Mo.1962). The title to the Act here could neither mislead nor surprise any reader who learns that it contains provisions relating to the financing of its goal. State ex rel. Atkinson v. Planned Industrial Expansion Authority, 517 S.W.2d 36, 43 (Mo. banc 1975). Accordingly, we rule against relator on this point also.

Point V

Relator next urges a violation of Art. X, § 6 of the Missouri Constitution which provides that all property of the state, counties and other political subdivisions shall be exempt from taxation. The violation as alleged is that the Act provides that projects financed and constructed pursuant thereto shall be subject to all real and tangible personal property tax.

First of all, we have already found that the Authority is a separate entity from the state or any city or county, see Point I, supra.

Secondly, the Authority is not a political subdivision within the meaning of the Constitution. As respondent correctly points out, Art. X, § 15 defines other political subdivisions as follows:

“The term ‘other political subdivision’ as used in this article, shall be construed to include townships, cities, towns, villages, school, road, drainage, sewer and levee districts and any other public subdivision, public corporation or public quasi-corporation having the power to tax.”

To put it simply, the Authority lacks the power to tax; therefore, it is not a political subdivision under the terms of Article X. Thus, there is no constitutional violation on this point, and we so hold.

Point VI

Relator also contends that an unlawful delegation of powers of a municipal corporation would result if the Authority enters into a mortgage and indenture of trust, which is envisioned by said Authority.

Under the trust indenture, as stipulated, a private corporate trustee would handle the proceeds of the bonds used to pay the cost of the project and will receive and disburse the revenue from the project that would be used to pay the principal and interest on the bonds issued by the respondent Authority. Upon default, the Authority must surrender to the trustee possession of its rights to the project property and the trustee has the power to enforce any rights of action granted by the trust indenture. The powers of the trustee in default, as set out in the trust indenture, include the right to take over the management of the project, make improvements or repairs, operate it, lease it, foreclose by sale or equitable proceeding or place the project in receivership.

It is relator’s position that these powers are so broad that they result in a virtual abdication by the Authority of its right to control project property and revenues. In behalf of this position, relator relies solely upon McNichols v. City & County of Denver, 123 Colo. 132, 230 P.2d 591 (banc 1950). In that case, the Colorado Supreme Court did hold that the mechanism of a trust indenture running to a private trustee under a mortgage of the city’s off-street parking meter revenues and giving the trustee the power to hold both titles to property and funds was an invasion of the powers and duties of the city treasurer and auditor. In that ease, it should be noted first that there was no statutory provision comparable to § 349.075 in the instant case which spells out quite clearly the powers of the trustee necessary to protect bondholders’ rights to be paid. Secondly, the scheme directly violated specific Denver charter provisions giving the treasurer and auditor the powers and duties the proposed trust indenture undertook to bestow upon the private trustee. The court predicated its holding upon that direct violation of the charter, not upon an unconstitutional delegation of duties of a municipal official. Further, again indicating the distinguishable character of the McNichols case, the Colorado Supreme Court later held that the issuance of revenue bonds by a county pursuant to an Economic Development Revenue Board Act was not unconstitutional because of a delegation of power. In that case the Act authorized cities and counties to finance the acquisition of real and personal properties for manufacturing or industrial enterprises, and to lease such properties to private lessees for operation of such projects. As in the instant case, rent from the private lessees was to pay all bond obligations and a mortgage and indenture of trust naming a private trustee covered all project properties. The Colorado court disposed of the attack by stating that the delegation, to be prohibited, would have to be of the type that could be classified as a municipal function, adding that:

“The fact that the project is for a ‘public purpose’ does not necessarily make its existence or its function municipal in nature. It is the effect of, or the benefits flowing from, the completed project and its operation by private enterprise that fulfills the ‘public purpose’ requirement discussed in Part II above and not, per se, the county’s participation therein. The participation as a ‘lessor’ does not constitute a ‘municipal function.’
“The trustee, under the terms of the financing documents, performs no ‘municipal functions’ and exercises no control over a ‘municipal improvement’ within the usual meaning of those terms.” Allardice v. Adams County, 173 Colo. 133, 476 P.2d 982, 992 (1970).

The Supreme Court of Kentucky held similarly regarding a trustee with, among other powers, the right to receive and disburse bond proceeds and project revenues. In Gregory v. City of Lewisport, 369 S.W.2d 133 (Ky.1963), that court pointed out that:

“. .we think there actually is no delegation of power here. The city is in the position of a borrower, and the provisions in question are standard for borrowing transactions. A borrower usually has to surrender some of his rights in order to protect the lender. The city here is not surrendering any governmental powers. What are involved are simply details of a proprietary transaction.” 369 S.W.2d at 136-137.

Also see Uhls v. State ex rel. City of Cheyenne, 429 P.2d 74 (Wyo.1967), wherein the Wyoming Supreme Court reached the same conclusion.

We believe that the rights granted to the private trustee in the instant case do not involve any governmental powers. They are merely bestowed upon the trustee for the purpose of protecting a bondholder’s expectation of receiving principal and interest payments. As such, they do not constitute an unlawful delegation of power.

Point VII

Finally, relator contends that the mortgage and indenture of trust, which the Authority intends to enter into, provides for the mortgage of the project and is not authorized under the Act. It is true, as relator points out, that § 349.050, which contains an enumeration of the powers of the Authority, does not specify the power to mortgage the project. However, § 349.075 of the Act does authorize the Authority to vest in the trustee:

. . such property, rights, powers and duties in trust as the corporation may determine. . . . Any such trust agreement may contain such provisions for protecting and enforcing the rights and remedies of the noteholders or bondholders as may be reasonable and proper. . Such trust agreement may contain such other provisions as the corporation determines reasonable and necessary for the security of the noteholders and bondholders. . . . ”

Obviously, the indenture provision providing for the conveyance of property in trust to the trustee to take possession of the project and operate it or to foreclose on behalf of bondholders in the event of default is utilized for the purpose of protecting bondholders. A mortgage on revenue-producing property is the usual manner of giving bondholders security in the event of default. It is this added security, above and beyond the soundness of the project, that provides a stimulus for this bond market and the power so to provide falls clearly within the terms of the language used in § 349.075. We regard the mortgage as such a provision as the corporation might “. . . determine reasonable and necessary for the security of the noteholders and bondholders.” We read the statute as authorizing the mortgage and accordingly rule against relator on this point, too.

For all of the above enumerated reasons, we believe the Authority conferred upon respondent is valid under the Constitution and laws of this state and the relief sought in the information in the nature of quo warranto is hereby denied.

Judgment accordingly.

BARDGETT, FINCH, DONNELLY, RENDLEN and SEILER, JJ., and HOUSER, Special Justice, concur.

SIMEONE, J., not participating because not a member of the Court when cause was submitted.

      . Laws 1977, S.B. 267, §§ 1 to 19.

      . In Kansas City v. Fishman, 362 Mo. 352, 241 S.W.2d 377 (1951), the legislature’s power to authorize cities to issue revenue bonds without a vote for the purpose of constructing a parking facility was challenged. The challenge was premised on the contention that the legislature lacked the power to so legislate because of Art. VI, § 27. The court rejected the challenge, holding that the Article only limited the legislature’s power to authorize bond issuance as to the kind of utilities explicitly described therein, but did not apply to those not mentioned (in this case public parking facilities).

      . See, e. g., Ala.Code tit. 11, §§ 11-54-80 to 101 (1975), Ariz.Rev.Stat. §§ 9-1151 to 1196 (1977); Haw.Rev.Stat. §§ 48-1 to 7 (1968, as amended); Ind.Code Ann. §§ 18-6-4.5-1 to 29 (Burns Cum.Supp.1977); Iowa Ann. §§ 419.1 — .16 (West 1976); Kan.Stat. §§ 12-1740 to 1749 (1975, as amended); Me.Rev.Stat. tit. 30, §§ 5325-5341 (1973 Supp., as amended); Mich. Comp.Laws Ann. §§ 125.1601-.1636 (1976); Minn.Stat. §§ 474.01-.15 (1977); Miss.Code Ann. §§ 57-3-1 to 33 (1972); Mont.Rev.Codes Ann. §§ 11-4101 to 4110 (1968, as amended); N.M.Stat.Ann. §§ 14-31-1 to 13 (1976); N.Y. Gen.Mun.Law §§ 850-888 (McKinney 1974, as amended); N.D.Cent.Code §§ 40-57-01 to 20 (1968, as amended); Ohio Rev.Code Ann. §§ 165.01-.20 (1969, as amended); R.I.Gen. Laws §§ 45-37.1-1 to 18 (1971, as amended); S.C.Code §§ 4-29-10 to 150 (1976); Tenn.Code Ann. §§ 6-2801 to 2820 (1971, as amended); Utah Code Ann. §§ 11-17-1 to 17 (1973, as amended); W.Va.Code §§ 13-2C-1 to 20 (1972, as amended); Wyo.Stat. §§ 15-1-801 to 810 (1977).


source: Caselaw Access Project

author: FINCH, Judge.

license: Public Domain

text:
    Elmer THUMMEL, Plaintiff, v. Daryl KING and O. J. Swander, Defendants-Appellants, W. L. Brady Investments, Inc., Defendant-Respondent, W. L. Brady, and Robert Lee Barnes and Judy Barnes. O. J. SWANDER, Appellant, v. W. L. BRADY INVESTMENTS, INC., Respondent.
    No. 60340.
    Supreme Court of Missouri, En Banc.
    Sept. 12, 1978.

      Lloyd S. Heilman, Sandler, Balkin, Hellman & Weinstein, Kansas City, for appellants.
    Donald G. Stubbs, Stubbs & Mann, Kansas City, for respondent.
   FINCH, Judge.

These consolidated eases come before this court on transfer from the Missouri Court of Appeals, Kansas City District. In its written opinion (Turnage, J.), that court affirmed No. 773678 with modification and affirmed No. 772702. In the latter case, the court declined to consider all but two sub-points of appellant Swander’s eighty page brief which attempted to raise nine points, one of which contained five sub-points, citing various failures to comply with Rule 84.04. In his application to transfer Swander alleged that such action by the court below was contrary to prior decisions of this court and presented a question of general interest and importance to the bar. We granted transfer in order to clarify what Rule 84.04 requires. We affirm No. 772702 and affirm with modification No. 773678.

We shall decide these cases as though they were here on direct appeal. Art. V, § 10, Mo.Const.; Rule 83.09. However, in the interest of providing the fullest guidance to the bar, we shall refer in the course of our discussion to the court of appeals’ disposition of the various points raised in No. 772702.

Inasmuch as the main point to be decided in No. 773678 bears significantly upon No. 772702, it will be helpful to address that appeal first. We adopt without quotation marks portions of the court of appeals’ opinion.

In No. 773678 Elmer Thummel brought suit to enforce a mechanic’s lien on lot 43, Fairway Hills, in Jackson County, Missouri. Thummel had done brick work in the construction of a fireplace in the house built on such lot and claimed his bill in the amount of $1,126 had not been paid. Thummel named W. L. Brady Investments, Inc. (Brady) and O. J. Swander, among others, as defendants. Swander filed a cross claim for indemnity against Brady, claiming it had guaranteed to Swander it would pay all mechanic’s liens.

The court found Thummel was entitled to recover $1,126, plus interest, and declared such amount to be a mechanic’s lien on the lot in question. No question is presented as to the propriety of that judgment. However, the court found Swander was not entitled to judgment on his cross claim against Brady because a judgment was not entered against Swander for the amount due Thum-mel.

On his appeal Swander asserts he should have been given a judgment against Brady because an agreement between them obligated Brady to indemnify Swander against the Thummel judgment and lien. He argues that even though Thummel did not obtain a personal judgment against him, the mechanic’s lien resulted in an obligation on his part by reason of his liability on the warranty deed given when he sold the lot.

Swander borrowed $30,200 from Brady as a construction loan to construct a house on lot 43. Swander permitted all of the paperwork to be in his name, even though he claimed he was doing this only as an accommodation for his son-in-law, Daryl King. As a part of the transaction, Swander and Brady entered into a construction loan agreement. It recited it was made in consideration of Brady making a construction loan to Swander and provided generally for the payout of the loan to pay all construction costs. Under this agreement, Brady was to make disbursements for labor performed and materials used in building the house after Swander had approved the bills. The agreement contained a final paragraph which was typed in a printed form as follows:

“11. Borrower agrees to pay 2% construction loan fee and for other services including approval of plans, supervision of construction, periodic inspection, payment of all bills of labor, materials, taxes and insurance guaranteeing against liens, accounting, and for other necessary services during construction and/or the term of this agreement, and the borrower agrees to pay an additional 1% if W. L. Brady Investments, Inc. does not get the end loan.”

Also, as a part of the transaction, Swan-der executed a bond in which he acknowledged himself firmly bound to Brady in the sum of $80,200. The condition of the bond was that Swander would indemnify and hold Brady harmless by reason of any loss which Brady might suffer from the failure of Swander to fully complete the house or by reason of any mechanic’s liens or any unpaid labor and material bills.

Swander also executed an affidavit and agreement in which he ¿greed to hold any party making a loan on lot 43, Fairway Hills, and the title insurance company who issued title insurance on such lot, harmless against any and all liens, claims or suits of any mechanic, laborer, materialman, or supplier, and all liens in connection with the construction of a building on such lot.

The testimony clearly showed that Brady had no funds on hand remaining from this construction loan when Thummel presented his bill for payment. The proceeds of the construction loan had been exhausted by the payment of previous bills for labor and material which had been presented to Brady for payment. Even so, Swander contends in his cross claim that Brady should have paid Thummel because under paragraph 11 of the construction loan agreement Brady guaranteed to pay all liens. In his brief Swander says the language of paragraph 11 is clear and unambiguous and the only function of the court is to enforce Brady’s obligation.

The position Swander takes totally overlooks the relationship between Swander and Brady and the position they occupy. Brady was making a loan to Swander by which Swander would have the money to construct a house. There is nothing to indicate that Brady undertook to pay any amount for the construction of this house over and above the amount of the loan made to Swander. Although his testimony was equivocal, Swander admitted he would be responsible for all costs in constructing the house in excess of the amount of the loan. He now contends the loan agreement fastens liability on Brady for the Thummel bill without mention of a basis to require Brady to pay more than the loan amount. In the face of Swander’s admission and all the other evidence, including Swander’s bond and his hold harmless agreement, paragraph 11 could not support a finding that Brady is obligated to pay more than the loan proceeds. Its language does not so require.

Swander complains that the trial court made no finding on his cross claim. Such a finding should have been made. However, the evidence does not support a finding in Swander’s favor. For that reason the judgment will be modified by adding thereto “judgment in favor of W. L. Brady Investments, Inc., and against O. J. Swander on Swander’s cross claim.” As modified, the judgment is affirmed.

In No. 772702 Swander brought suit against Brady for an accounting, for an injunction against foreclosure of notes and deeds of trust held by Brady and for other equitable relief. Brady filed an answer and counterclaim and the case was tried without a jury. The judgment was favorable to Brady and Swander appealed.

The accounting made by the court involved the transactions concerning five lots in Fairway Hills subdivision, on all of which houses were constructed pursuant to contractual arrangements between Swander and Brady, the nature of which was described in our discussion of the Thummel suit. Each of the houses was constructed by King on a lot owned by Swander. King only completed one of the houses. The others, only partially constructed when King walked off the job, were finished by another contractor named Morganstern.

King was to and did submit monthly to Brady the bills covering labor and materials on each job. These were on a Request for Payment form which was to be approved and signed by Swander. These bills were then paid by Brady out of funds derived from the construction loans made by Brady on the various lots. It later developed that some of the signatures of Swander on the Request for Payment forms submitted to Brady were actually written by King or his wife, who was Swander’s daughter. Swan-der contended that Brady was not entitled to credit in the accounting for unauthorized advances to King based on these forgeries.

Swander was the only witness to testify on his behalf in the trial of this case. Several witnesses, including W. L. Brady (defendant’s president), King and Morgan-stern, testified for defendant. There was considerable dispute in the respective versions of what occurred. For example, there was a dispute as to whether Brady furnished accounting reports to Swander as the work progressed. Swander testified he received only one monthly report whereas defendant’s evidence was that he was sent regular monthly reports. Another dispute involved whether Swander hired Morgan-stern to finish the jobs after King walked off or whether he was hired by Brady. Still another dispute concerned what happened when the first two houses were.sold. W. L. Brady testified that construction costs on these houses exceeded the amount of the loans available and that he told Swander he would have to come up with the additional money to take care of the overrun. He said that Swander stated he would do so in a few days but meanwhile wanted Brady to release his notes and deeds of trust on these two lots and complete the sales. Brady did that but then Swander did not come up with the additional funds. Consequently, when lots were sold subsequently to the Caldarellos and the Hansons, Brady would not release its deeds of trust and it threatened foreclosure of said deeds of trust if Brady was not paid the balance due it. Swander testified that he did not recall making promises to Brady that he would come up with the additional money required because of overrun on the first two houses sold. As a result of the dispute, the Calda-rellos and the Hansons, who contracted to purchase and paid for two lots, have never received deeds to the properties.

The trial court resolved the various factual disputes in the testimony in favor of defendant and against Swander. After giving credit for all credits found to be due to Swander in connection with the various houses, including net proceeds from the sale of a Swander residence, the court held that Swander was indebted to Brady in the sum $15,575.80, including interest. Judgment for that amount was entered on defendant’s counterclaim. The court found against Swander on his petition. Swander appealed.

The court of appeals declined to consider appellant’s points relied on Nos. I, II, III and IV for the reason that they “fail to state wherein and why the ruling of the court was erroneous as required by Rule 84.04(d). This fails to preserve any question for review. Barber v. MFA Milling Co., 536 S.W.2d 208 (Mo.App.1976).” As set forth in appellant’s brief, points I-IV were:

I
“The Court Erred in Failing to Enforce a Written Contract of Agency and Guaranty for Which Consideration Was Paid to the Agent, [citations omitted]
II
“The Court Erred in Failing to Enforce Fiduciary Responsibilities on Defendant Brady Company, [citations omitted]
III
“The Court Erred in Failing to Require Defendant to Account as Disbursal Agent, [citations omitted]
IV
“The Court Erred in Failing to Enforce Settlement Agreement of September 20, 1973. [citation omitted]”

Rule 84.04(d) provides in part:

“The points relied on shall state briefly and concisely what actions or rulings of the trial court are sought to be reviewed and wherein and why they are claimed to be erroneous, . . . ”

At the outset it is apparent that the foregoing points do not set forth any action or ruling of the trial court. One purpose of the requirement that this be done is the pragmatic consideration that nothing is preserved for review if the question was not properly presented to the trial court in the first instance. The bare allegation that the trial court erred in failing to enforce, require, etc., is plainly inadequate because it does not identify any specific ruling complained of and does not even give any indication of any point in the trial of the ease where the trial court was called upon to take such affirmative action. At first glance, it would appear that appellant is asserting that the trial court refused to enforce a contract for some reason. However, it seems from the argument portion of the brief concerning point I that such is not appellant’s real complaint. Although the actual thrust of the argument is subject to more than one interpretation, it appears that appellant is really disputing the trial court’s interpretation of the agreement or, more particularly, paragraph 11 of the agreement. We already have ruled that contention adversely to appellant in No. 773678. The ruling of the trial court in this regard was stated as its conclusion of law number 1 to the effect that Swander was responsible for the payment of all bills. If that was the action of the trial court of which Swander complained, he should have directed his point relied on to that specific ruling.

We turn now to the basis upon which the court of appeals rejected points I-IV — i. e., the failure to specify wherein and why the (unspecified) ruling of the trial court was erroneous. The dual requirements of Rule 84.04(d) that the point relied on state wherein and why the action or ruling is claimed to be erroneous are apparently the most common source of error in appellate briefing. Actually, compliance with these requirements is a matter of common sense if counsel bear in mind the informational purpose of the brief. After stating the ruling the trial court actually made, it stands to reason that the point should then specify why the ruling was erroneous. This requirement essentially contemplates a statement which ordinarily will closely approximate what appellant believes should have been the trial court’s conclusion of law on the point being addressed. After stating why the ruling was erroneous, the court then must be informed wherein the testimony or evidence gives rise to the ruling for which appellant contends.

The application of these requirements can be illustrated by again referring to appellant’s point I. If we assume that the ruling of which appellant complains is the court’s interpretation of the paragraph 11, appellant’s point I (as supplemented by reference to the argument section of the brief) arguably states the legal reason the action of the trial court was allegedly erroneous (i. e., what appellant contends is the legal effect of paragraph 11) but fails to cite any evidence or testimony upon which appellant relies to give rise to the contended legal effect. To assert, in the form required by Rule 84.04, the point that we have assumed (but are by no means certain) appellant was trying to make, it might have stated:

The trial court erred in its interpretation of the contract as stated in conclusion of law no. 1 to the effect that Swan-der was obligated to pay all amounts of labor and materials, including amounts paid on forged requests, over and above the amount of the loan because paragraph 11 of the contract constituted a written contract of agency and guaranty, supported by consideration, whereby Brady Co. undertook the responsibility for such payments in that it provided that Brady Co. would pay all bills for labor and material (not just to the extent of loan proceeds) and would guarantee against all liens on the property.

Point I in appellant’s brief is not sufficient to so inform counsel and the court. Points II-IV are similarly deficient.

The foregoing example illustrates the three components of the point relied on mandated by Rule 84.04. The challenged ruling of the trial court is concisely stated, the rule of law (in this case, the contended legal effect of the contract) which it is asserted the court should have applied is set forth and the evidentiary basis upon which it is contended that the asserted rule is applicable is specified.

The requirement that the point relied on clearly state the contention on appeal is not simply a judicial word game or a matter of hypertechnicality on the part of appellate courts. It is rooted in sound policy. Perhaps the most important objective of the requirement relative to the points relied on is the threshold function of giving notice to the party opponent of the precise matters which must be contended with and answered. Absent that, it is difficult, at the very least, for respondent’s counsel to properly perform his briefing obligation. This is particularly so in a case such as this where the facts are complex. In addition, such notice is essential to inform the court of the issues presented for resolution. Clear statement of the points relied on facilitates full advocacy and affords the opportunity for clarification by meaningful questions directed to the issues stated in the points relied on. If the appellate court is left to search the argument portion of the brief (or even worse, to search the record on appeal) to determine and clarify the nature of the contentions asserted, much more is at stake than a waste of judicial time (even though in this time of increased litigation and heavy caseloads, that alone is sufficient justification for the rules). The more invidious problem is that the court may interpret the thrust of the contention differently than does the opponent or differently than was intended by the party asserting the contention. If that happens, the appellate process has failed in its primary objective of resolving issues raised and relied on in an appeal.

Failure to properly state the points relied on indicates a lack of understanding of the appellate function and process. Ordinarily, an appellate court sits as a court of review. Its function is not to hear evidence and, based thereon, to make an original determination. Instead, it provides an opportunity to examine asserted error in the trial court which is of such a nature that the complaining party is entitled to a new trial or outright reversal or some modification of the judgment entered. It is not the function of the appellate court to serve as advocate for any party to an appeal. That is the function of counsel. It would be unfair to the parties if it were otherwise. That is the reason for the sometimes expressed unwillingness of an appellate court to assume the role of counsel and advocate for a party on appeal. When counsel fail in their duty by filing briefs which are not in conformity with the applicable rules and do not sufficiently advise the court of the contentions asserted and the merit thereof, the court is left with the dilemma of deciding that case (and possibly establishing precedent for future cases) on the basis of inadequate briefing and advocacy or undertaking additional research and briefing to supply the deficiency. Courts should not be asked or expected to assume such a role. In addition to being inherently unfair to the other party to the appeal, it is unfair to parties in other cases awaiting disposition because it takes from them appellate time and resources which should be devoted to expeditious resolution of their appeals.

Appellant’s point V provides:

“The Court Erred in Entering Judgment in Favor of Defendant in Reliance Upon Incompetent, Insufficient and Less Weighty Evidence of Extrajudicial Oral Statements and in Effect Reversed the Contractual Obligation Running From Defendant to Plaintiff, Which Was Based Upon Written Contract.”

This point was rejected by the court of appeals for failure to specify what evidence is claimed to be incompetent and less weighty. However, this is by no means the only error. Point V plainly does not state wherein and why the trial court erred. Even considering the entire argument following this point, we do not find a single reference to any portion of the transcript which indicates that the trial court relied on or even considered the oral statements referred to in reaching its determination. The argument portion of the brief which follows point V, aside from reasserting appellant’s contentions regarding the proper construction of paragraph 11, discusses hearsay, the statute of frauds, what constitutes an affirmative defense, the burden of proof, consideration, abuse of fiduciary duty, business duress, and the weight of a written contract compared with an oral agreement. Point V is plainly deficient.

The court of appeals declined to consider points VI A, VI B, VI D, VII, VIII(l) and IX for the reason that they “fail to cite any authority in support thereof and are thus deemed to be abandoned,” citing Cady v. Kansas City Southern Railway, 512 S.W.2d 882 (Mo.App.1974) and Rule 84.04(d). We reject an interpretation of Rule 84.04(d) which states categorically that appellate courts will not give further consideration to points which are not followed by citation of authority.

Rule 84.04(a) sets forth four requirements for the appellant’s brief. These are (1) a jurisdictional statement, (2) a statement of facts, (3) the points relied on, and (4) argument. Rule 84.04(d) sets forth the requirements for points relied on. It requires that the point state briefly the actions or rulings of the court for which review is sought and wherein and why they are claimed to be erroneous, “with citations of authorities thereunder. If more than three authorities are cited in support of a point made, the three authorities principally relied on shall be cited first. All authorities discussed in the argument shall be cited under the 'Points Relied On.’ Long lists of citations should not be included.” The foregoing language does not address the question of whether authority must be cited. Rather, it provides where and how citation of authority, if any, is to be set forth in the brief.

If the effect of Rule 84.04(d) was as stated by the court of appeals, the law would become static. New propositions— questions of first impression — would fail to be considered for lack of authority to support their adoption. Changes in existing rules might well fail for the same reason. Moreover, many questions arising on appeal involve interpretation of private agreements, wills, statutes, etc., which have not been interpreted in reported cases. In these situations, the central question is the meaning to be derived from the language used and the most persuasive argument may be an analysis of the words used and a practical discussion of the effect of the various possible constructions. All such questions should be considered, even though not supported by citations to previously decided cases. Rule 84.04(d) is not intended to provide otherwise.

In holding that Rule 84 does not require citation of authority in every instance, we emphasize that we do not thereby intend to modify the appellant’s burden on appeal of demonstrating error by the court below. Thus, if the point advanced is-not a matter of first impression and is not simply a matter of logic or policy or analysis of statutory or documentary language, as would be the case in the type of matters indicated above, the court on appeal need not search for precedential support to overrule the contention. If the point is one for which precedent is appropriate and available, it is the obligation of appellant to cite it if he expects to prevail. We suggest that if the point is one for which it is believed that precedent for or against it is unavailable, counsel would be well advised to specifically so state under the point in question, explaining why citations are unavailable.

In reviewing the points not considered by the court of appeals for failure to cite authority, we have concluded that points VI A, VI B, VII and IX do not comply with the rules in other material respects. Points VI A, VI B and VII do not indicate wherein and why the trial court’s action is claimed to be erroneous. However, we believe no purpose would be served in further lengthening this opinion by quoting each point and pointing out the flaws therein. Sufficient guidance in this regard already has been provided by our previous discussion of these requirements. Point IX merely says that the court erred in failing to advise the plaintiff that the judge of the court was previously acquainted with defendant’s president. There is nothing as to why that was prejudicial and the three sentences of argument concerning the point add nothing thereto. It did not comply with Rule 84.04.

The court of appeals declined to consider points VIII(l) and VIII(2) on two different grounds. Point VIII(l) was rejected for failure to cite authority and point VIII(2) for failure to specify the issues of fact and conclusions of law which the court failed to find. Appellant’s point VIII provides:

VIII
“The Court Erred in Failing to Make Necessary and Proper Findings of Fact on Principal Controverted Fact Issues
and
The Court Erred in Failing to Find Issues of Fact and Conclusions of Law Consistent With the Greater Weight of the Evidence and Non-Controverted Evidence Rule 73.01 (b), V.A.M.R. Clauson v. Tipton, 147 S.W.2d 148, 150 (K.C.A.1941)”

As appellant urged in his application to transfer this case, the court of appeals and not appellant subdivided point VIII into (1) and (2). The argument for both parts of the point is combined and the cited authority is plainly intended as support for both points. Thus, point “VIII(l)” should not have been rejected for lack of authority.

Obviously, the failure to specify the issues of fact and conclusions of law is common to both parts of point VIII. Appellant contended in his application to transfer that the court of appeals was overly technical in rejecting point VIII on this basis because his proposed findings of fact numbers 11-43 were set forth verbatim in the argument portion of his brief. It is apparent from this assertion that appellant misperceives the problem because point VIII would not be cured even if the proposed findings of fact were set forth verbatim in the point relied on itself.

One fundamental error in appellant’s approach in point VIII is the attempt to shotgun refusal of all of the proposed findings into one point or one allegation of error. Examination of proposed findings 11 through 43 discloses that they do not relate to a single issue. Instead, they relate to numerous issues. If appellant had selected the finding or findings pertaining to one issue and then stated in a point relied on that specified evidence required a finding of a particular fact or facts and that certain numbered proposed findings of fact properly stated the finding the court should have made thereon and that failure to make said findings was error because (then stating the reasons), there would have been compliance with the rule. Similar points should be stated for each of the issues in the case on which appellant believes the court should have given particular proposed findings of fact, including therein wherein and why failure to make the finding was erroneous.

Appellant concedes in the argument following point VIII that the trial court did make findings of fact and conclusions of law and that specific findings are required only on issues which are material to the lawsuit and necessary to the judgment but there is no indication in the point relied on or the argument portion pertinent thereto stating wherein and why any of the 23 proposed findings are material to any issue in the suit or that the findings of fact made thereon by the court were insufficient. Thus, we are left to search the record to determine the controverted issues, the materiality of the issues and the eviden-tiary support for the proposed findings. This we decline to do.

Although points VI C, VI D and VI E lack technical compliance with the letter of Rule 84, the court of appeals found points VI C and VI E in sufficient compliance to merit consideration. We believe point VI D also was sufficient to justify a review on the merits in this opinion. We consider all three.

Appellant alleges in point VI C that the trial court erred in allowing credit for certain payouts made on the basis of Request for Payment forms on which Swander’s signature had been forged by his son-in-law, King. As previously noted, under the loan agreement between Swander and Brady, requests for payment from the construction loan proceeds held by Brady were to be made on requests signed by Swander. Brady was to verify that the material or labor claimed in such request had actually been used in the house involved and thereafter make payment. Brady and one of his employees both testified they mailed monthly statements to Swander showing all amounts paid. The procedure called for Swander to return one of the copies of this monthly statement to Brady with his signature. Brady and his employee both testified Swander returned the first monthly statement, but thereafter failed to return any statements even though such statements continued to be mailed monthly.

Swander stated he did not receive all of these statements. The court found in an informal statement made to counsel near the conclusion of the hearing that Swander either knew King was signing Swander’s name to requests for payments or that Swander had good reason to believe this was happening. There is substantial evidence to support the court’s finding. Swan-der knew houses were being constructed and knew the proceeds of the construction loan had to be paid out to pay for the continued construction. Swander also knew King was actually in charge of the construction so it is apparent that Swander knew, or should have known, that someone was making the proper requests to Brady for payment to be made for labor and material going into the houses. It is apparent the most likely person who would be responsible for this was King. In spite of all of this knowledge, Swander made no complaint to anyone, nor did he make any investigation to determine the status of the payout of the construction loan. In Newport v. Hedges, 358 S.W.2d 441, 447 (Mo.App.1962), the court stated:

“And one may approve, acquiesce, affirm, accept, alter, or abandon in express words, or such may be implied from the conduct of the parties.”

In this case the court’s finding that Swander approved the payouts, at least by his conduct, is supported by substantial evidence and we do not disturb it. Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976).

Next, appellant contends in point VI D that the trial court erred in allowing defendant credit for overcharges improperly made for which there was no evidentiary support. A table in appellant’s brief sets forth five amounts under the heading of “overcharges claimed” but we are not cited to any evidence from which we can determine whether these amounts were improperly allowed or even where the figures came from. The only figure therein for which appellant gives an explanation as to why the amount is claimed to have been erroneously allowed is $163.80. Appellant urges that credit for this amount should not have been allowed because it represents the cost of publication of notice of foreclosure which appellant asserts was wrongfully commenced. The trial court expressly found that the note was in default and that defendant was entitled to proceed with foreclosure. So far as we can determine, this finding is supported by substantial evidence. Appellant cites no evidence to the contrary. The point is overruled.

Finally, in point VI E, the appellant alleges the court erred in allowing interest to Brady on the construction loans after Brady should have satisfied them with funds in its hands. Swander’s argument appears to be that at the time suit was filed Brady had sufficient funds on hand to satisfy Swander’s construction loan on both lots. He says that other bills for which Brady claimed a right to reimbursement by Swan-der arose from failure of Brady to pay obligations imposed by paragraph 11 of the contract.

We have previously disposed of Swan-der’s contention regarding paragraph 11. Although Brady did have other funds belonging to Swander at the time of closing, these funds were not sufficient to pay the outstanding expenses on all the lots. In reliance on Swander’s promise that the entirety of these additional amounts expended would be forthcoming, two of the lots held as security and been released and the sales closed. Brady made no agreement and was under no obligation to apply the funds it held first to lots 31 and 37, thereby further relinquishing its security, before it received the full amounts due from the other lots. Inasmuch as the funds held by Brady were not sufficient to satisfy both the amounts due from the other transactions and the amounts due on lots 31 and 37 and no allocation to such loans was required, we hold that the trial court properly held the notes to be in default and did not err in allowing interest thereon.

The final disposition of an appeal based on a failure to comply with the appellate briefing rules has long been a matter of great concern in this court. On numerous occasions we have expressed our reluctance to punish innocent parties for the shortcomings of counsel on appeal. As we have often declared, it is the policy of this court to decide cases on the merits whenever possible. We note that the St. Louis District of the Court of Appeals has initiated a program whereby briefs are screened promptly by its research attorneys and, if found not to comply with Rule 84, are returned to the attorneys for rebriefing prior to argument and submission. Although this commendable practice by no means establishes a right to such treatment, we believe this procedure is highly beneficial and should be employed whenever possible. This court is now in the process of establishing its own staff of research attorneys and will adopt a similar policy. Of course, counsel may still raise deficiencies found in an opponent’s brief as an aid to framing the issues to be resolved.

Unfortunately, the circumstances of the instant case do not justify another opportunity for rebriefing. As previously indicated, the court of appeals declined to address all but two of appellant’s contentions on appeal in a written opinion which specified the reason therefor, including the specific deficiencies found to exist in appellant’s brief. Appellant moved for rehearing or transfer in the court of appeals and for transfer in this court contending that his brief was not so deficient as to warrant dismissal. This court ordered the case transferred. Yet, despite the fact that this court may decide cases accepted for transfer “the same as on original appeal,” Rule 83.09, and despite the fact that Rule 83.08 expressly provides for the opportunity to file an additional brief in which the defects noted by the court of appeals could have been cured, no new brief was filed by appellant in this court.

We must bear in mind that appellant is not the only innocent party whose interests are to be considered. This action was filed nearly five years ago. It was tried in April 1974 and judgment was entered in January 1976. Much of the delay on appeal is attributable to the fact that the case was transferred after opinion in the court of appeals, thereby necessitating argument and submission a second time. Of course, as indicated above, had appellant utilized the opportunity afforded by the rules to file an additional brief, defendant would have suffered only the delay of the additional submission to this court. At some point, defendant’s interest in an end to this litigation must be recognized. Moreover, as counsel for appellant strenuously urged on appeal, one purpose of this suit was to clear away the dispute between Swander and Brady so that two totally innocent third parties, the Caldarellos and the Hansons, who purchased lots 31 and 37 more than five years ago, could finally obtain their warranty deeds. The delay of rebriefing and another submission unquestionably would be prejudicial to their interests.

As previously indicated, the judgment in No. 773678 is affirmed as modified. The judgment in No. 772702 is affirmed.

MORGAN, C. J., BARDGETT, DONNELLY, RENDLEN and SEILER, JJ., and HOUSER, Special Judge, concur.

SIMEONE, J., not participating because not a member of the court when cause was submitted.

      . These numbers are the ones assigned in the circuit court. Number 773678 is the Thummel case and number 772702 is the Swander case.

      . All references to rules are to V.A.M.R.

      . See Weier & Fairbank, Why Write a Defective Brief?, 33 J.Mo.B. 79, 88-91 (1977).

      . id.


author: DIXON, Judge.

text:
    AETNA LIFE AND CASUALTY COMPANY, a corporation, Plaintiff-Respondent, v. WESTERN FIRE INSURANCE COMPANY, Defendant-Appellant, and John R. Chrisman, Administrator of the Estate of Michael Wayne Chrisman, Deceased, and Michelle McKinley, a minor, and Mitzi J. McKinley, a minor, and William L. McKinley and Rosemary McKinley, Defendants-Respondents, and John Berry Borders, a minor, and Jere Borders, and Mrs. Jere Borders, Defendants.
    No. KCD 29215.
    Missouri Court of Appeals, Kansas City District.
    June 12, 1978.
    Motion for Rehearing and/or Transfer Denied Aug. 28, 1978.
    Application to Transfer Denied Oct. 10, 1978.
    Edward W. Mullen, Deacy & Deacy, Kansas City, for appellant.
    Clem W. Fairchild, J. Michael Vaughan, Kansas City, for respondent, Aetna Life and Cas. Co.; Linde, Thomson, Fairchild, Langworthy & Kohn, Kansas City, of counsel.
    Clifford N. Jarrett, Heavner, Jarrett & Kimball, Kansas City, for respondents McKinley.
    Before SOMERVILLE, P. J., and DIXON and TURNAGE, JJ.
   DIXON, Judge.

This appeal by defendant Western Fire Insurance Company is from a judgment of the trial court finding Western’s policy afforded coverage to the driver of a non-owned car under a provision of Western’s policy extending coverage to nonowned automobiles.

The primary and controlling issue is the interpretation of the Western policy in its provisions extending coverage to the “use” of other vehicles.

The parties to the declaratory judgment suit were Aetna Life and Casualty Company as plaintiff, Western as defendant, John R. Chrisman, Administrator of the Estate of Michael Wayne Chrisman as defendant, and certain minors named McKinley and Borders who were joined as defendants since they were plaintiffs in suits against the Chrisman Estate.

The automobile accident which gave rise to the claims of the minors against the Chrisman estate involved an automobile owned by the McKinley family but operated by Michael Wayne Chrisman. Aetna had insured the McKinley vehicle, and Western’s policy was issued to cover a vehicle owned by Chrisman’s parents.

The vehicle involved in the accident was taken by the minor daughter of the McKinley family, Mitzi McKinley, to visit her boy friend’s mother, who was in the hospital. Her sister, Michelle, was with her. On the way to the hospital, she stopped at her boy friend’s house; and her boy friend’s brother, John Borders, a boy named Ray Mooney, and Michael W. Chrisman, joined the two girls. After the visit to the hospital, the five drove to Lake Jacomo, and Mitzi, yielding to the cajoling of the boys, permitted Chrisman to drive. While he was driving, the car went off the road. Chrisman was killed, and both of the McKinley girls and the Borders youth were injured.

Aetna as plaintiff below sought a declaration that it had no coverage, claiming the vehicle was being operated “without the express or implied permission of the owner” as the Aetna policy read in its exclusions. The trial court found in favor of Aetna on this claim, and no appeal has been taken from that judgment.

The trial court further found that Western’s policy afforded coverage for the claims of the McKinley minors and Borders against the Estate of Michael Wayne Chris-man based upon the extension of the coverage of the Western policy under the “Use of Other Automobiles” provision.

The Western policy language in pertinent part is:

“V. Use of Other Automobiles: . such insurance as is afforded by this policy . . applies with respect to any other automobile, subject to the following provisions:
(a) . . . the unqualified word ‘insured’ includes (1) such named insured and spouse, [and] (2) any relative of such named insured or spouse .
* * * * * *
(d) This insuring agreement does not apply:
(1) to any automobile . . . used without the express or implied permission of the owner;
******

Defendant Western presents a single point of error:

“The Trial Court erred in holding that the permission granted to Mitzi McKinley to take herself and her sister to the hospital constituted permission to Chrisman to use the automobile by operating it and brought him within the coverage of appellant’s policy as a ‘permissive user’.” (Emphasis supplied).

The point and argument is bottomed on a faulty premise. That premise is that the trial court found and held that the permission given Mitzi McKinley constituted permission to Chrisman and he, therefore, was using the car with the permission of the owner. The trial court did not so find and hold. In fact, it expressly found and held to the contrary. The trial court found that the permission to “operate” given to Mitzi was limited and that she had no right or authority to permit another to operate. This was the factual predicate for the finding that the Aetna coverage did not apply since the Aetna policy excluded coverage unless the ear was being “operated” with the permission of the owner. On the other hand, the trial court found that the “use” of the automobile was with the permission of the owner. What the trial court held was that there was a legal difference between the words “operating,” the language of Aetna’s exclusion, and “use,” the language of Western’s policy, and that an automobile could be used with the express or implied permission of the owner, although the driver thereof had no express or implied permission to operate it.

Western commences its argument by referring to the provision of its policy here in question as “drive-other-car” coverage. That characterization is inaccurate. In specific language set in boldface type, the provision is entitled, “Use of Other Automobiles.”

The real nub of the argument is the assumption by Western that the language of the policy “used without the express or implied permission of the owner,” refers unambiguously to the operation of the car by Chrisman. Obviously, Western could have so limited the coverage by utilizing the word, “operated” in place of “used.” The word “used” in the context of the facts of this case is subject to different interpretations. Implicit in the trial court’s findings of fact and conclusions of law is the determination by the trial court that the word “used” referred to the overall use by the McKinley girls and that the vehicle’s general use to transport them was still a use permitted by the owner. That conclusion of the trial court is buttressed by the fact that the addition of the limiting language requiring the permission 6f the owner was added to prevent the extension of liability coverage under the use of other cars when the car was misappropriated or stolen by a relative of the insured. United States Fidelity & Guaranty Co. v. Safeco Ins. Co. of America, 522 S.W.2d 809 (Mo. banc 1975). Also, as the trial court indicates, there are cases which distinguish “use” and “operate” as those words as used in insurance policies. Farm Bureau Mutual Insurance Company v. Broadie, 558 S.W.2d 751 (Mo.App.1977); Cameron Mutual Insurance Company v. Bower, 558 S.W.2d 226 (Mo.App.1977); Allstate Insurance Co. v. Hartford Accident and Indemnity Co., 486 S.W.2d 38 (Mo.App.1972). These Missouri cases are in accord with the great weight of authority in the United States, Annot., 4 A.L.R.3d 10 (1965). These cases interpret the words as they are used in omnibus clauses, but no rational basis appears as to why they would not be applicable in the interpretation of the “Use of Other Automobile” provision in the Western policy.

In fine, the trial court was confronting language which was ambiguous in its application to these facts. In that sense, this case is analogous to the Safeco case, supra, where the court held that the word “owner” was ambiguous. When such ambiguity appears, a contract of insurance is construed strictly against the insurer and liberally in favor of the insured. Safeco, supra; Surface v. Ranger Insurance Co., 526 S.W.2d 44 (Mo.App.1975); Allison v. National Insurance Underwriters, 487 S.W.2d 257 (Mo.App.1972).

Western does not discuss this authority in its brief but insists that Waltz v. Cameron Mutual Insurance Co., 526 S.W.2d 340 (Mo.App.1975), and Western Casualty & Surety Company v. Verhulst, 471 S.W.2d 187 (Mo.1971), provide support for its position. Waltz denied extension of uninsured motorist coverage to a passenger where the insuring agreement with respect to that coverage limited the coverage to the named insured and members of the family. Waltz does not hold that a permittee who becomes a passenger by permitting another person to drive is not an insured. The holding of Waltz is only that a passenger with no other nexus with the liability coverage is not within the uninsured motorist coverage. Verhulst involves an exclusionary clause relating to the automobile being “used” in the automobile business and holds that the presence of the drive-other-car provision in that policy did not operate to deny effect to the specific exclusion. Western asserts that Helmkamp v. American Family Mutual Insurance Co., 407 S.W.2d 559 (Mo.App.1966) is factually similar to the present case. The permittee was not in the car when the accident occurred, a fact the Helmkamp opinion recites in distinguishing cases where the permittee is actually using the vehicle. Western also cites several cases from other jurisdictions dealing with the definition of use. In the light of the settled Missouri rule in the Allstate Insurance Co. and the Broadie and Bower cases, supra, the citation of authority from other states is not persuasive.

In the instant case, the trial court, confronted with the ambiguous language, construed it in favor of the insured. It found that Mitzi and Michelle McKinley were in the car at a time when they had been permitted to use it and that, therefore, the automobile was in that sense being used with the permission of the owner. This being a court-tried case, the dictates of Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976) are applicable. Since there was substantial evidence to support the factual finding and the judgment of the trial court, the finding is not against the weight of the evidence, and the judgment does not erroneously declare or apply the law, the judgment is affirmed.

All concur.