Coalition to Preserve Education on the Westside v. School District of Kansas City ( 1983 )

NUGENT, Judge.

The Coalition to Preserve Education on the Westside (hereinafter Coalition) appeals from the trial court judgment that no valid, binding contract existed between the Coalition and the School District of Kansas City (hereinafter District) to open an experimental school in the West High School building. The Coalition argues that the contract is valid because the operation of the school was a proprietary, non-governmental function; because the Coalition was not granted any discretion over governmental functions; because even if the contract limited the exercise of governmental discretion, the limitation was reasonable; and because the District is estopped from denying the validity of the contract because it has already received substantial benefit. We affirm the judgment.

The Coalition is an unincorporated association of parents, students and residents of the “westside” of Kansas City, Missouri, organized in July, 1980 for the purpose of advocating improvements in the quality of education in the westside neighborhood. Six individual members represent the association in this action.

Although West High School had, at one time, an enrollment of 700 or 900 students, in 1978 the District stopped operating a high school at that location because, according to Superintendent of Schools, Dr. Wheeler, the cost of operation was disproportionately high, enrollment was too small (167) and insufficient funds were available to operate the high school. After closing the high school program, the District received funding from the federal government for a business management magnet school which it operated in the West High School building. For the next two years, the magnet program failed to live up to expectations, incurring a $3,600 per student cost, or $1,400 above the District’s average high school cost. Finally, on August 5, 1980, the school board voted to close the building and relocate the magnet program.

Mr. Don Pecina, chairman of the Coalition, testified that in 1978, he and other area residents became concerned about the high rate of absenteeism at West High School, the high dropout rate, and the failure of westside youths to receive a quality education. The group began conferring with the principal of the school and Dr. Wheeler about these and other problems.

When the building was closed in 1980, the group was highly dissatisfied. It wanted the high school reopened, but it wanted one of higher quality than the previous school, and one over which the community could have control.

Following an unsuccessful attempt by the Coalition to meet with the school board, the group entered and occupied the West High School building “in the name of the community.” The group was ordered to leave but refused to do so. Dr. Wheeler testified that as a result of this occupation, he decided to reach an accommodation with the Coalition. As the occupation continued, he met several times with a committee of westside residents which had drafted a “proposal concept” for a “community-controlled” experimental program. On August 14, 1980, he and his staff reviewed the proposal concept, meeting with Coalition representatives who agreed to substitute “community-sponsored” for the troublesome “community-controlled”. That evening, a special meeting of the school board was held at which the proposal concept was unanimously adopted.

The document, as approved, provided that “the Kansas City School Board agrees to develop a community-sponsored experimental high school to be located in the West High School building and to begin operations in the fall of 1981.” Also provided for was a West Community School Committee, comprised of nine persons, five of which were to be representatives of the community, to work with the District to “insure operation of the facility in the 1980-81 school year”, “participate in the evaluation of the principal and the staff”, “raise funds”, “recommend budgetary expenditures”, “develop curriculum”, and “establish methods of communicating with the community and the Kansas City School Board.” The committee agreed to present a comprehensive program, including budgets, by January 15, 1981.

Following the approval of the proposal, the Coalition vacated the West High School building, appointed the committee provided for in the document, met with parents, planned curriculum, recruited students, raised funds, interviewed applicants for the principal position, and consulted frequently with the school board. At the recommendation of the committee, the board employed Midwest Research to develop a detailed plan of operation for the proposed experimental program at a cost of $40,000. The plan was adopted on February 19, 1981, with a budget of $390,594.

By June, however, financial difficulties began to put several school programs in jeopardy. On July 21, 1981, the board adopted a motion “that the westside be notified that the District at this time had no plan to open an experimental school as previously planned.” Dr. Wheeler later testified that this move was necessitated by uncertainty as to the amount of revenue the District would receive and a need to cut $5,000,000 from the preliminary budget to avoid operating at a deficit. Thirteen other schools were closed at the same time and 450 teachers furloughed. In light of these cutbacks, Dr. Wheeler stated that he could not justify the operation of an experimental program at West High School.

Shortly thereafter, the Coalition again entered the building and began teaching sixty-two students. On September 3, 1981, the District sought injunctive relief, alleging that the Coalition members were trespassing and conducting a private school program in a public school building. On September 15,1981, the Coalition sought specific performance of the agreement adopted on August 14,1980. The cases were consolidated. After hearing the evidence, the trial court issued an extensive 33-page memorandum and order making the following findings: (1) a contract existed because it was sufficiently specific, and the necessary elements of offer, acceptance by the District, and consideration (in the form of mutual promises) were present; (2) the Coalition, as an unincorporated association, had the capacity to contract and sue; (3) the contract was not invalidated by duress because the District was not bereft of free will simply because of the pressures of the building occupation; (4) by unconditionally promising to open an experimental school, the school board contractually gave up its right not to open the school, a discretionary governmental function which it had no authority to contract away; (5) the board did not clearly abuse its discretion when it decided that financial circumstances required a closing of the experimental program; and (6) the Coalition had no right to enter West High School and conduct an unauthorized school and was, therefore, enjoined from such activities.

On appeal, the Coalition challenges only the finding (4) and charges that the trial court’s ruling that the contract was void because the District contracted away a governmental function was erroneous because:

(1) The actions of the District were proprietary and not governmental in nature;

(2) The contract was a result of proprietary action, not governmental, because it does not purport to invest the Coalition with discretion over governmental functions;

(3) Even though the contract may have the effect of limiting the future exercise of governmental discretion of the District, it is valid because it was for a specific project, was in the public interest, was for the performance of an act within the District’s power to perform, was not a limitation upon the discretionary exercise of police powers, was fair, reasonable, and advantageous to the District, was the result of arms length bargaining and not entered into fraudulently or in bad faith; and

(4) The District is estopped from denying the validity of the contract.

Before proceeding to a discussion of the essential questions on this appeal we must note the gentle remonstration of our brother Manford in his occurrence. He believes that we fail in our responsibility when we decline to address a number of issues raised by the respondent District. His reproofs of this majority opinion reflect a difference of view as to the purpose and function of an appellate judicial opinion.

A discussion of the issues raised by the District is not necessary to the disposition of this appeal because, even if we decided all those issues in favor of the Coalition, the ultimate issue is whether on these facts the school board could legally contract away its discretion. If not, all other issues are moot.

Judicial opinions are meant to resolve legal disputes. Therefore, an appellate court does not decide and should suppress its instructive instincts and not discuss issues which are irrelevant and unimportant to resolution of the legal dispute presented. As Bowen, L.J., wrote in Cooke v. New River Co., (1888) L.R. 38 Ch.D. 56, 70-71:

I am extremely reluctant to decide anything except what is necessary for the special case, because I believe by long experience that judgments come with far more weight and gravity when they come upon points which the Judges are bound to decide, and I believe that obiter dicta, like the proverbial chickens of destiny, come home to roost sooner or later in a very uncomfortable way to the Judges who have uttered them, and are a great source of embarrassment in future cases.

(Quoted in R. Leflar, Appellate Judicial Opinions, 1974 at 56.)

Much the same sentiment appears in the decisions of Missouri courts. The venerable Lamm, J., wrote in West v. Spencer, 238 Mo. 65, 141 S.W. 586 (1911) (at 587-88 in 141 S.W.):

In deciding cases, it is a very good rule not to decide to-day (in an instant case) what you might better decide to-morrow (in some other case). This rule has a tendency to exclude obiter; it points the distinction between a legal treatise on a general head of the law and a judicial opinion on a concrete case, and it saves trouble to those judges who come after us and are called to decide the question as vital and turning in some appeal.

Moreover, decisions on the respondent’s points cannot even be relied upon as alternative grounds for affirmance; they are truly nondecisive issues on this appeal. If anything is dictum, certainly an explication of a non-decisive question is.

As to the Coalition’s first point that the contract merely obligated the District to perform a proprietary function rather than a governmental one, we must begin by noting that the trial court was troubled not by what the District was obligated to do (i.e. operate a school) but by what it had lost the ability to do, namely, to decide not to operate the school. Assuming arguendo that all of the other functions contained in the agreement (i.e. staffing, funding, budgeting, determining curriculum) are proprietary, the crucial question remains, is the power to decide to close a school¹ purely proprietary rather than governmental? The distinction is of importance because of the general rule cited by the Coalition that a municipal corporation may, by contract, limit exercise of its proprietary functions but not governmental functions.

A precise line between governmental and proprietary functions remains to be drawn in the law but a foray through the myriad attempts to define the terms in various contexts would run us far afield. Looking only to Missouri school district cases, we note that the Supreme Court attempted to clarify the tests involved in State ex rel. Allen v. Barker, 581 S.W.2d 818, 824 (Mo.1979) (en banc), by noting that the “underlying test is whether the particular act performed is for the common good of all or whether the act can be performed adequately only by government .... ” In Kansas City v. School Dist. of Kansas City, 356 Mo. 364, 201 S.W.2d 930, 933 (1947), the Supreme Court referred to a school district’s “governmental function of imparting knowledge to the State’s youth,” and cited the definition of a school district as a “quasi public corporation, ‘the arm and instrumentality of the state for one single and noble purpose, viz., to educate the children of the district.’ ” In Allen v. Salina Broadcasting, Inc., 630 S.W.2d 225, 227 (Mo.App.1982), all functions of a school district not serving this “noble purpose” were said to be proprietary.

Applying these tests, we need only say that we can scarcely imagine a function-more critical to the “noble purpose” of “imparting knowledge to the State’s youth” “for the common good of all” then deciding whether or not to open a school. If that function — lying at the very heart of the educational process — is ruled proprietary, what possible function could be considered governmental? This is the very function for which school districts exist — not building buildings or operating playgrounds or even hiring teachers — but deciding where and if schools are needed to educate our children. That is not to say that a district may not be able to contract for advice on this question, but to contract away the power ultimately to decide whether certain educational facilities should remain open to serve the District’s children is to give up the most basic function of all. Accordingly, we find that the contract deprived the District of a governmental function, a function which the District was not empowered to contract away, and was not merely proprietary in nature.

A careful examination of the Coalition’s second point, especially as it is argued in both the reply brief and an invited post-argument letter to this court concerning its interpretation of Sumpter v. City of Moberly, 645 S.W.2d 359 (Mo.1982) (en banc), reveals that the Coalition takes the position that even if we hold, as we have, that the District’s operation of a school is a governmental (as opposed to a proprietary) function, contracts may legitimately limit governmental functions so long as the limitation is reasonable. Only when the limitation is unreasonable, according to the Coalition, is the contract an improper exercise of governmental powers.

Assuming arguendo that the Coalition’s statement of the law is correct, the question in this case is, then, whether an agreement which commits the District to opening a school for three years, thereby relieving it of the power to decide to close this school, is unreasonable.

The Coalition contends that a municipal corporation may reasonably bind itself to establish a governmental function so long as it does not yield control of the function. In support of that position, it cites City of St. Joseph ex rel. Danaher v. Wilshire, 47 Mo.App. 125 (1891), and City of Sikeston v. Sisson, 363 Mo. 104, 249 S.W.2d 345 (1952) (en banc). Neither ease supports the expansive meaning the Coalition suggests. City of St. Joseph involved a contract between a builder and a city for construction of a sewer. The validity of the contract was not at issue and, in fact, the court simply found the underlying ordinance invalid because it improperly delegated to the city engineer the power to determine the construction materials. The Supreme Court later analyzed City of St. Joseph in Neill v. Gates, 152 Mo. 585, 54 S.W. 460, 462 (1899), and commented that “[wjhile the city ... has the power and authority to establish sewers in the city ... the city could not delegate such powers; they being legislative, and implying judgment and discretion, to any person or persons, by contract or otherwise.” Even if that particular contract had been held valid, it would have obligated the city only to have a sewer built, comparable to a contract by the District to construct a school. See Rector v. Consolidated School Dist. No. 3 of Platte County, 58 S.W.2d 785 (Mo.App.1933), finding such a contract enforceable. The city made no unequivocal commitment to operate the sewer if conditions later made operation impractical. Similarly, Sikeston involved challenges to the city’s power to agree that sewerage rates would not be reduced until certain revenue bonds were paid off and that, where service was available, the city would require property owners to connect to the system. A commitment to operate the system was not at issue.

We find no Missouri case holding that an unequivocal commitment to operate a governmental function for a specified period of time, depriving the municipal corporation of all discretion to discontinue that function, is reasonable. We cannot agree with the Coalition that we should so hold now. The very reason frequently given for the rule that a municipal corporation cannot contract away its legislative powers is that it would thereby preclude itself from meeting in a proper way any emergencies that may arise.² Stewart v. City of Springfield, 350 Mo. 234, 165 S.W.2d 626, 629 (1942) (en banc). Almost by definition, then, any delegation which deprives the municipal corporation of the ability to meet emergencies or certain critical, changed circumstances is unreasonable. This case presents one of those circumstances, namely, the loss of certain funding necessary to the operation of the schools in the District as planned.

In its third point, the Coalition argues that even though the governmental discretion of the District may have been limited, the contract is not void because it was for a specific project, was in the public interest, was for an act within the District’s power to perform, did not limit the exercise of police power, was fair, reasonable and advantageous to the District when made, was the result of arm’s length bargaining, and was not entered into in bad faith.

According to the Coalition, these are all factors which may be balanced against a finding that a contract touches a governmental function and which permit a conclusion that the contract is valid nevertheless. The Coalition cites numerous cases in which this balancing was weighed in favor of the private contractor.

Even if we assume that all the listed factors exist here, and that in fact a balancing test is appropriate, the Coalition’s argument is stymied by the fact that in any balancing, both sides of the scales must be weighed. Here, the contractual limitation on the District’s authority to close a school was absolute for three years. As we have discussed above, this complete deprivation of a fundamental function of a school district is a heavy burden indeed. The aggregate of all the other factors on the other side of the scales simply cannot equal it. We salute the Coalition’s extensive research effort into this area, but we cannot agree that under these circumstances, a balancing can tip the scales in its favor.

Finally, the Coalition argues that the District is estopped from denying the validity of the contract because the Coalition has already performed its obligation, the District has received substantial benefit, the public interest would not be damaged by enforcement, and manifest injustice would occur absent enforcement.

Although the doctrine of equitable estoppel was held to apply to municipal corporations acting in governmental capacities in State on Inf. McKittrick v. Missouri Utilities Co., 339 Mo. 385, 96 S.W.2d 607, 615-16 (1936), that doctrine was also said to be applied “with great caution.” Recognizing that caution, the court in State ex rel. Walmar Inv. Co. v. Mueller, 512 S.W.2d 180, 184 (Mo.App.1974), stated that “[i]n cases ... involving a governmental body, the doctrine of estoppel is not generally applicable; and if applied, is done so only in exceptional circumstances ... In fact, in the exercise of governmental functions, the doctrine of equitable estoppel cannot usually be invoked against a municipal or public corporation.”

More specifically, as stated in Fleshner v. Kansas City, 348 Mo. 978, 156 S.W.2d 706, 707 (1941), when the governmental entity has no power to make the contract in question, the doctrine is not applicable.

This point, then, like all the others raised by the Coalition, turns on the straightforward fact that the contract was invalid because of a giving up of a fundamental, governmental power, a contractual flaw which cannot be overcome by post-contract activities by either party.

Moreover, although the doctrine may be applied to prevent manifest injustice, Murrell v. Wolff, 408 S.W.2d 842, 851 (Mo.1966), such circumstances are rarely found by our courts in light of the policy that “public rights should yield only in the face of greater equitable rights possessed by private parties.” State ex rel. Letz v. Riley, 559 S.W.2d 631, 634 (Mo.App.1977). Here, although the Coalition has expended great time and energy in reliance on this contract, the District has determined that the public is better served by an abandonment of the effort and an investment of the money involved in other educational endeavors. Although we recognize the resulting frustration to the Coalition, we cannot as a matter of law label this disappointment a “manifest injustice.” The state legislature in the exercise of its constitutional authority has given to the school board and the school board alone the right to make such decisions. Cf. Sumpter v. City of Moberly, supra (an agreement adopted pursuant to the Public Sector Labor Law, §§ 105.500-105.-530, will not be a binding collective bargaining contract, although the ordinance adopted in approving that agreement governs and is binding until changed by appropriate legislative action).

For the foregoing reasons, the judgment of the trial court is affirmed.

PRITCHARD, P.J., concurs.

MANFORD, J., files separate concurring opinion.

1 . That the District has the power to close a school is not questioned in this case. See Title XI generally and Chapter 162 specifically, Revised Statutes of Missouri, 1978. See also Corley v. Montgomery, 226 Mo.App. 795, 46 S.W.2d 283, 289 (1932) (“the power of the ... school district, to establish ward schools carries with it, or necessarily implies, the power to abandon schools no longer required.”).

2 . This rule distinguishes this case from Morrison Homes Corp. v. City of Pleasanton, 58 Cal.App.3d 724, 130 Cal.Rptr. 196 (1976), cited by the Coalition and holding that a city could not avoid its contract to provide a residential developer with sewer connections in spite of an order from the regional water board prohibiting additional hook-ups because of sewage treatment problems. Apparently in California, “[t]he onset of materially changed conditions is not a ground for voiding a municipal contract”, Id. at 202, and the city could commit itself to provide future connections regardless of later events.