156 N.W. 54 | N.D. | 1915
The relator, a citizen and taxpayer in the defendant school district, seeks to enjoin certain of the defendants who are officers of such school district from issuing and delivering, and certain other defendants who are contractors and who erected and furnished a school building in such district pursuant to contract with the school
At the conclusion of the trial in the district court, findings of fact and conclusions of law were made adverse to the relator’s contention, and judgment entered pursuant thereto, dismissing the action. Plaintiff has appealed and demands a trial de novo in the supreme court.
The facts as briefly stated in appellant’s brief, and which we deem correct, are as follows: “The defendant, school district, is International School District No. 5, and comprises territorially the whole of Portal township, Burke county, North Dakota. That within this territory are four country schoolhouses and a graded school in the village of Portal, all under one school board and the common school district.
“In the spring of 1913 a vote was held to bond the district to build a new schoolhouse, which carried. Also a vote to bond the district in the sum of $13,000, which carried, and the bonds were issued, sold, and the funds paid into the district treasury.
“May 27, 1913, a contract was entered into with one Carl Bartelson in the siim of $24,000 to erect a schoolhouse in the village of Portal.
“July 22, 1913, another contract for heating and ventilating, in the sum of $3,679, and on August 12, 1913, a third contract for wiling was entered into, in the sum of $599.95.
“The matter was rushed to a completion, and the schoolhouse erected and moved into, the forepart of January, 1914, and at the time suit was instituted had been used since its completion.
“March 20, 1914, papers were served upon the defendants, starting an action by the appellant and plaintiff to enjoin further issuance of warrants in payment of outstanding warrants upon these contracts, on the theory that the school district was in debt beyond the 5 per cent limit. The plaintiff started action as a resident and taxpayer on behalf of all taxpayers in the district. A temporary injunctional order was issued at the start of the action, and the case was tried November 9, 1914, resulting in an order dissolving the temporary injunction, and judgment for the defendants dismissing the action.”
We deem it advisable, to here set out the findings of fact of the trial court, which constitute a more detailed statement of the facts. With the exception of the first three, which relate to formal matters, respecting the parties, their official positions, etc., such findings are as follows:
*417 “4. That heretofore and prior to the 24th day of May, a. d. 1914, pursuant to the authority given by the electors of said school district, at an election held for that purpose, the bonds of said school district in the amount of $13,000 were issued for the purpose of raising moneys with which to aid in the building of a high-school building at Portal, in said school district; and that on the 24th day of May, 1912, there was paid into the treasury of said school district as the proceeds of the sale of such bonds the sum of $13,000.
“5. That on the 27th day of May, 1913, the said school board of said district entered into a contract with the defendant Carl Bartelson, to furnish the materials and labor for the erection of a high-school building in said district, and by the terms of said contract, agreed to pay to the defendant Bartelson, on the completion of such building, the sum of $24,000, and by the terms of said contract the said building was to be completed on or before the 1st day of January, 1914; that pursuant to such contract the defendant Bartelson did furnish the material and labor for, and did construct for said school district, at the city of Portal, therein, the said high-school building, and delivered the same to the said district on or about the 1st day of January, 1914.
“6. That between the 11th day of July, 1913, and the 23d day of December, 1913, the defendant school district, through its said officers, paid to said defendant Bartelson on the contract price for said school district, in the warrants of said district, the sum of $21,352.92, and that there remains on the principal contract price for said schoolhouse, and is due and owing to said Bartelson thereon, the sum of $2,647.08.
“7. That the assessed valuation of the taxable property in the defendant school district for the year 1912 was $291,000, and the assessed valuation of the taxable property in said district for the year 1913 was $337,980, and that the assessed valuation of the taxable property, in said district for the year 1914 was $289,644.
“8. That at the time of the signing and execution of said contract by the officers of said school district with said defendant Bartelson, to wit, on the 27th day of May, 1913, the said school board, for the purpose of ascertaining whether or not the expense of building said schoolhouse could be paid out of the funds then in the treasury, and out of the proceeds of the tax levy for the ensuing school year, and other funds to be received from the state, county, and other.sources during the*418 ensuing year, ascertained the amount of available cash in the treasury of said district or due to it at that time, and made an estimate of the other school funds to be received, and a computation of the amount of the tax levy at the maximum rate of 30 mills for the ensuing year, together with the uncollected taxes theretofore levied upon the property n said school district, and therefrom such board decided that the cost of the construction of such schoolhouse under said contract with the defendant Bartelson should be fully paid out of the available cash then on hand,' and the estimated income of said district for the ensuing school year, such estimates showing that the total amount of funds available and the'income from the various sources during the ensuing year would aggregate upwards of $35,000, and that the expense of maintenance of the schools of said district for the ensuing school year of 1913 and 1914 would be approximately $9,000, including the salaries of teachers and all other expenses; that the amount of cash on hand at the time of the execution of said contract, together with the funds received from all sources during the school year of 1913 and 1914, and the amount of uncollected taxes outstanding on the date of such contract, and the tax levy for the school year of 1913 and 1914, was as follows:
Cash in the treasury from the sale of bonds........... $13,000.00'
Cash in the general fund of the district.............. 3,618.55-
Cash in the hands of the county treasurer due to said district on the 1st day of June, 1913 ................ 3,840.42'
Cash received as interest paid by the district depositary .. 198.67
Cash received from the state tuition fund.............. 1,365.10
Cash received from the county tuition fund............ 912.17
Cash received from the tuition paid by pupils from outside the district .................................... 209.25-
Cash received from the school poll tax................ 199.37
Cash received from the state of North Dakota for high-school aid ..................................... 270.00'
Tax levy of 30 mills on $337,980, being the assessed valua- ' tion of the taxable property within said district for 1913 10,139.40'
Amount of uncollected taxes due said district on May 27, 1913 ......................................... 1,750.65-
$35,503.58-
*419 “9. That at the time of the making of said contract with the said defendant Bartelson, there were no outstanding warrants of said district unpaid, except one warrant for the sum of $1,155; that the actual amount of the expense of maintaining and operating the schools in said district for the school year ending June 30th, 1914, including the salaries of all teachers, and incidental expenses, was the sum of $9,324.-68.
“10. That at the time of the making of said contract with said defendant Bartelson, there were outstanding bonds of said school district 1» the amount of $15,000, and that there was at the same time in the treasury of said school district, in cash, the full proceeds of the bond issue of $13,000, and that on the 1st day of July, the beginning of the school year of 1913 and 1914, there was cash in the treasury of said district, including the proceeds of such bonds, the sum of more than $17,000.
“11. That the new school building constructed under the contract with the defendant Bartelson was intended to, and did, take the place of another school building belonging to said district and situated in the city of Portal, which had theretofore been used by said district as its high-school building, and that the said school building, together with the half block of land in said city of Portal on which it was situated, was, at the time of the making of the said contract with said Bartelson, of the value of $4,500 to $5,000, and it was estimated and considered by said defendant board that, upon the completion of the new school building, the old school building, together with the lots upon which it stood, should be sold, and would be sold, for the sum of at least $4,000, and that thereafter, in the month of May, 1914, at a duly called election within said school district for the purpose of deciding whether such old school building should be sold, it was determined by the vote of said district that such building and property should be sold, and the board of directors were authorized to sell same, and the proceeds to be turned into the general fund of the district; that at such election there were but two votes east opposed to said sale.
“12. That the first payment by the defendant school district to the defendant Bartelson on said contract was not made until the 11th day of July, 1913.
“13. That the aggregate sum of the cash in the treasury of said*420 school district at the date of the execution of said contract with said defendant Bartelson, and the cash received from the various sources into the treasury of said school district during the school year of 1913 and 1914, together with the amount of the tax levy for said year, and the amount of the uncollected taxes outstanding, at the date of the making of such contract, exclusive of the value of the school building so to be sold, amounted to the sum of $1,023.90, more than the amount of said Bartelson’s contract, namely $24,000, and the entire expense of the maintenance of said schools and the incidental expenses of said district, the aggregate amount of such moneys and revenues being the sum of $35,503.58, and the amount of the outstanding warrants, the Bartelson contract, and the expenses of the school year being the sum of $34,479.68; and that at the beginning of the school year of 1914 and 1915, namely on July 1st, 1914, there was available funds and revenues to the credit of said school district, after the discharge of all of said contract and other liability sustained during the school year of 1913 and 1914 the said sum of $1,023.90.
“14. That on the 22d day of July, 1913, the defendant school board, in order to complete the equipment of said schoolhouse so being constructed by the defendant Bartelson, entered into a contract with the defendants Davidson & Olson to provide a heating and ventilating system for said schoolhouse, and for which heating and ventilating system, by the terms of said contract, the said school district agreed to pay the said Davidson & Olson, the sum of $3,769 within twenty days after the final completion of their contract; that said Davidson & Olson furnished and placed in said building the said heating and ventilating system, and completed their work thereon on or about the 1st day of January, 1914.
“15. That on or about the 12th day of August, 1913, the said school district, through its said school board, for the purpose of further equipping said schoolhouse with proper facilities for lighting the same, entered into a contract with the defendants Everett & Leary, whereby said school district agreed to pay to said Everett & Leary for the wiring of said schoolhouse for the purposes of lighting the same, the sum of $599.95, the same to be. paid upon the full completion of their said contract; that the said defendants Everett & Leary fully pei’formed : their contract by completing the work on or before the 1st day of January, 1914.
*421 “16. That prior to entering into said contracts with the defendants Davidson & Olson and Everett & Leary, the said board made an estimate and computation of the sources of revenue for the then current year and the next succeeding school year of said district, for the purpose of ascertaining whether or not they would be able to provide funds for the payment of said last-mentioned contractors out of the revenues of the current year and the maximum tax levy of the next succeeding school year; and said school board thereupon estimated that the state and county school funds and other sources of revenue, together with the taxes for the year 1914, plus the surplus that should remain over the expenditures and liabilities for the year 1913 and 1914, and including the amount which it was estimated would be realized from the sale of the old schoolhouse during the then current year or the subsequent school year, and from such estimate determined that there would be available for the payment of the salaries of teachers and general expenses of the school district, and of the Davidson & Olson and the Everett & Leary contracts, during the current school year and the succeeding school year of 1914 and 1915, more than $15,000, and that the schools and the defraying of incidental expenses for the school year, of 1914 and 1915 would be the sum of $8,924, adding to which the amount of the last-mentioned contracts, the total necessary expenditures for the next succeeding school year would be the sum of $13,292.95.
“17. That the tax levy within the legal limit for the year 1914 for said district amounts to the sum of $8,689.32; the estimated return from state and county tuition funds, school poll and high-school sources of revenue, would be the sum of $3,000, and that there would be available from the sale of the old school house the sum of $4,000; that,talcing into consideration the amount of such tax levy, the estimated returns from the various funds and the return from the sale of the old school?, house, and the excess over the expenditures of the school year ending June 30, 1914, there would be and will be available for payment of said contracts and operating expenses of the current year the sum of $16,-713.22 leaving a surplus, after the discharge of the obligations of all three of the contracts herein referred to, and the payment of all the expenses of the maintenance of said school district during the two years of $3,420.20.
“18. That during the school year of 1913 and 1914 and the current*422 school year, no warrants have been drawn upon the treasury of said defendant school district in excess of the revenues and funds available for the ultimate payment thereof, without taking into consideration the anticipated proceeds of the sale of the old school building.
“19. That there has been paid by said school district, in warrants, the sum of $2,512 on the contract of the said Davidson & Olson, and that there remains unpaid by warrants or otherwise on said contract the sum of $1,257, and the amount of said contract with the defendants Everett & Leary has been fully paid by the warrants of said district.”
Appellant contends that the evidence is insufficient to support findings Nos. 8, 11, and 14 to 19, both inclusive; he also contends that the evidence is wholly insufficient to justify the court in finding that the defendant school district could legally enter into the contracts described in the pleadings, and that the same conclusively establishes that on May 27, 1913, the defendant school district in entering into the contract with the defendant Bartelson for the construction of such school building exceeded the constitutional debt limit of 5 per cent of all taxable property within such district.
In view of appellant’s concession at the argument, to the effect that the whole question for consideration is whether the contracts for the erection and equipment of the new school building created an indebtedness in excess of the constitutional limit of 5 per cent on the assessed valuation of the district as fixed by § 183 of the Constitution, we deem it useless to here narrate the testimony in support of the various findings challenged in appellant’s brief. Suffice it to say that after duly considering such testimony we deem such findings sustained by the proof. Indeed, thei’e seems to be no serious dispute in the evidentiary facts, upon any material point, but the controversy appears in the main to involve legal questions and conclusions merely. As stated in appellant’s printed brief: “The issue is whether the respondent school district has an indebtedness beyond the 5 per cent limit.” In support of the affirmative of this issue, counsel for appellant call attention to the conceded fact that the assessed valuation for the years 1913 and 1912 were $337,980 and $291,519, respectively, and that consequently the limit of indebtedness under the 1912 assessment would be $14,575.95, and under the 1913 assessment $16,899. They then call attention to the fact that on May 27th, 1913, the date of the Bartelson contract, the district
Applying this rule to the facts before us we are forced to the conclusion that the constitutional debt limit was exceeded. These contracts cannot be said to create merely a future contingent liability, as did the contracts involved in Bismarck Water Supply Co. v. Bismarck, 23 N. D. 352, 137 N. W. 34. We there held that the city, by obligating itself to pay a mere future contingent liability in excess of the debt limit did not thereby violate the constitutional debt limit provision. It will be observed that the language of the Constitution, § 183, is positive and unequivocal. It reads: “The debt of any . . . school district . . . shall never exceed 5 per cent upon the assessed value of the taxable property therein. . . . All bonds or obligations in excess of the amount of indebtedness permitted by this Constitution . . . shall be void.” Construing the above section, this court in Darling v. Taylor, 7 N. D. 538, 75 N. W. 766, quotes with approval from the decisions of Iowa, Yrest Virginia, and South Dakota, and reached the conclusion that no added indebtedness arises within such constitutional restriction by the issuance of a county warrant for current expenses in anticipation of the collection of taxes already levied. The obvious purpose of the constitutional debt limit provision was to prevent the municipalities therein mentioned from improvidently contracting debts for other than ordinary current expenses of administration. As said by the court of appeals of New York in Levy v. Mc
“It seems to me that the better conclusion to be reached upon this ■question, and the one in better accord with the policy of the constitutional provision, is that, in ascertaining the margin of the city’s constitutional debt limit, ‘existing indebtedness’ must be regarded as including the city’s liability upon contracts for public improvements, which is intended to be met from an issue of bonds.
“Decisions by the courts of other states are cited by counsel on either side of the question. Many are inapplicable, by reason of the differing provisions of the state Constitutions. In Illinois the decisions of the supreme court support the views which I have expressed upon the subject of what constitutes an indebtedness. The Constitution of that state prohibits allowing a city ‘to become indebted ... to and amount, including existing indebtedness, in the aggregate exceeding 5 per cent on the value of taxable property therein, to be ascertained by the last assessment for state or county taxes,’ etc. In Culbertson v. Fulton, 127 Ill. 30, 18 N. E. 781, it was sought to restrain the city from accepting water works, constructed for it under a contract, on the ground that the constitutional provision would be violated. The court held that ‘by entering into the contract the city became indebted. The obligations entered into by the terms of the contract constitute such an indebtedness as is contemplated by the language of the Constitution. It
“Without an ampler discussion, I am of the opinion that the amounts which on June 30th, 1908, were involved in the contracts of the city for public improvements, and which the referee states as being upwards of $54,000,000, should have been included in ascertaining the ■city’s ‘existing indebtedness.’ That would result in a reduction, pro tanto, of the ‘margin of constitutional limit of indebtedness,’ as stated by the referee; less, of course, by the amount already charged against the city, as earned upon the contracts, viz., $2,553,933.92.”
The reasoning and conclusion of the New York court impresses us .as sound, and appears to have the support of the great weight of authority, and we have no hesitancy in adopting the rule thus announced for this jurisdiction. To the same effect see Crogster v. Bayfield County, 99 Wis. 1, 74 N. W. 635, 77 N. W. 167; Küchli v. Minnesota Brush Electric Co. 58 Minn. 418, 49 Am. St. Rep. 523, 59 N. W. 1088, and the cases cited in the note to Superior Mfg. Co. v. School Dist. in 37 L.R.A. (N.S.) 1054. Also the very able and exhaustive opinion of Judge Deemer in Windsor v. Des Moines, 110 Iowa, 175, 80 Am. St. Rep. 280, 81 N. W. 476. Judge Deemer very clearly distinguishes contracts of the nature before us from those for the ordinary current expenses. We quote: “Again, it is argued that the contract does not create a debt, but merely a contractual obligation, which may only become a debt as the light was furnished and the compensation earned. It seems to he conceded that, if the contract related to the ordinary expenses of the city, as the furnishing of light or water, or of fire protection, this argument would be sound. Indeed, it is express
“This must be the true rule, for if appellants’ contention be correct,, the city might, by contracts such as the one in suit, absorb all the general revenues in advance, and leave nothing for the payment of current expenses. Suppose a city should anticipate all its general revenues, and thus leave nothing for the payment of current expenses; and suppose, further, that it should issue warrants for the payment of these expenses, which were not paid for want of funds; could not the holder of these-warrants enforce them against the city, and if enforced, and tire city is compelled to pay (as no doubt, it would be obliged to do) the amount thereof, in addition to the amounts previously appropriated for improvements, would not the very object of the constitutional provision-be thwarted, and a wise provision of our fundamental law render nugatory ? The answer to these propositions is so obvious that no amount of refinement can add anything,to the conclusion. We are cited to no case that establishes a contrary doctrine. Language is no doubt used in some of them which is broad enough to sustain appellants’ contention, but that language must be interpreted in the light of the facts dis
Concededly, at the date the Bartelson contract was made the school district was indebted in the sum of $15,000 in bonds and $1,155 in an outstanding warrant, and it had but $16,618.35 in its treasury. The limit- of indebtedness under § 183 of the Constitution, if based on the
We think our holding as above stated sufficiently disposes of respondent’s contention that these contracts were authorized by § 2218, Compiled Laws. Certainly this section could not authorize the incurring of indebtedness in excess of the constitutional debt limit. This section does not purport to do this, but its evident purpose was, as its language-clearly shows, to limit public officers in the contracting of indebtedness or incurring of liability (within the debt limit) to such sum as may be liquidated during the current or subsequent years out of the revenues which may be raised within the maximum rate of taxes which may be-levied as prescribed by law. It has, as we view it, nothing to do with the question of the power to anticipate revenues to be derived from future levies in determining whether the constitutional debt limit has-been exceeded. The judgment appealed from is reversed, and the district court is directed to enter a decree adjudging the warrants which have been issued and are outstanding in payment of the balance due on such contracts to be null and void, and directing that the same be canceled; also adjudging that the defendant officers be perpetually restrained and enjoined- from paying such warrants or any further sums on any of the contracts mentioned in the complaint, and that the warrants which have been issued in payment of such contracts in excess of the debt limit, and which are now outstanding and in the possession and owned by any of the defendants be ordered to be delivered to the-court for cancelation. Appellant to recover his costs on this appeal.
Since the above opinion was filed we have been requested by counsel to determine what portion of
In compliance with such request we have reconsidered this phase of tbe case, and for tbe information of the trial court in entering its judgment, as well as tbe parties, we will briefly state our conclusions.
At tbe date tbe Bartelson contract was entered into (May 27, 1913) tbe debt limit of tbe district was $11,550, being 5 per cent of tbe assessed valuation of tbe taxable property of such district for the preceding year. At that date tbe district was indebted in tbe sum of $16,155. But it bad available resources to off-set such indebtedness in tbe sum of $21,374.10, or a net credit balance of $5,219.10. Tbe district could therefore create a valid indebtedness in tbe sum of $11,550 plus $5,219.10, or a total of $19,769.10. Tbe Bartelson contract therefore exceeded tbe debt limit in tbe sum of $1,230.90. Or in other words such contract was valid to tbe extent only of $19,769.10. Tbe other contracts were both void because in excess of tbe debt limit.
Tbe judgment of the district court is reversed, and that court is directed to enter a decree adjudging that all warrants issued in payment of tbe Bartelson contract in excess of tbe sum of $19,769.10 are void, and directing tbe cancelation thereof, and that all warrants, issued on tbe Davidson & Olson and tbe Everett & Leary contracts be adjudged null and void and be canceled; also adjudging that tbe school district officers be perpetually restrained and enjoined from paying such warrants or any of them, • and from paying or issuing warrants for any further sums on said contracts except to tbe said Bartelson, and as to him only to tbe extent and amount above indicated as within said debt limit; also adjudging that all warrants heretofore issued on said contracts, except as above indicated, which are now outstanding and in tbe possession and owned by any of tbe defendant contractors, be ordered to be delivered to tbe court for cancelation.