Request By:
Honorable Thomas G. Alig, Jr.
Attorney at Law
115-117 Park Place
Covington, Kentucky 41011
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in answer to your letter of July 16 in which you seek an opinion concerning the legality of the city of Ludlow, a city of the fourth class, establishing a fire district in light of a 20-year contract executed between the city and the Ludlow Fire Department, Inc., for fire protection in January, 1975. Said contract was pursuant to an appropriate ordinance which emanated from a referendum voted favorably upon by the citizens of the city pursuant to § 157 of the Constitution and KRS 66.070, to levy a special tax made necessary by virtue of the constitutional restrictions against a city creating an indebtedness that exceedsits anticipated revenue.
Your basic question in light of the above is whether or not the city can legally rescind the contract with the nonprofit corporation known as the Ludlow Fire Department, Inc.
The city had, of course, the power to contract under its original charter pertaining to fourth class cities recently repealed by the 1980 legislative session by Senate Bills 41 and 26. KRS 82.081 continues the right of contract on the part of all cities. However, where the city has executed a valid contract, it is bound thereby in the same manner and to the same extent that natural persons or private corporations are bound by their contracts. See McQuillin, Mun. Corps., Vol. 5, § 19.39; Vol. 10, § 29.119; and Vol. 17, § 49.60. The court in the case of City of Bowling Green v. Davis, 313 Ky. 203, 230 S.W.2d (1950), restated the general rule to the effect that a city has no right to revoke an otherwise binding contract unless that power has been granted by the constitution or by the legislature, which is not the case here. We also note that there is no termination provision in the agreement which simply means the only legal means of revocation is by mutual agreement or by failure of one party or the other to comply with the terms of the contract.
Under the circumstances, we are of the opinion that the contract in question cannot be rescinded by the city, presumedly for the purpose of obtaining its fire protection through the organization of a fire protection district pursuant to KRS 75.010. We might point out here, however, that the city itself cannot establish a fire district in any event as such is created only by petition of the voters in the area to be declared as the fire protection district. Any city, of course, can contract with a fire protection district pursuant to KRS 75.050 but no city that has a fire department can be included in a fire protection district. KRS 75.010.