169 Ga. 85 | Ga. | 1929
Lead Opinion
L. P. Conley, D. L. Durrence, and C. B. Collins filed air equitable petition against R. J. Rogers, H. J. Brewton, D. B. Summerford, and J. Madison Smith, constituting the board of trustees of the Eeidsville school district. The petitioners alleged that an order had been passed by the board of education of Tattnall County, changing the district lines between Eeidsville school district and Hughland school district so as to include in the Eeidsville district a portion of the territory which had been a part of the Hughland district, including the petitioners and their property in the territory added to the Eeidsville district. It is alleged that prior to the action of the county board of education the Eeidsville district was badly in debt; that on January 1, 1922, it had issued bonds in the sum of $30,000, one bond maturing each year for 30 years; that at and before the issuance of said bonds a tax was levied on the property of said district as it then existed, without the addition of the territory from the Hughland district, sufficient to pay the interest on said bonds and to retire the same as they became due; that said tax levy is still of force and constitutes a burden against the property that is embraced in the district as it existed in 1922, but is not a burden against the territory transferred by the county board of education from Hughland district; that the schoolhouse in the Eeidsville school district for which the bonded debt was incurred was burned in December, 1927, and the defendant trustees collected $21,000 of insurance carried on the building; that the trustees have used approximately $5000 of the insurance money for the purpose of paying past-due bonds, and now are endeavoring and threatening to use the balance of the insurance money which they have in hand for the purpose of paying off and buying in the outstanding bonds or so many of them as they can, which contemplated action is without authority of law. On information and belief the petitioners allege that the defendant trustees have illegally paid to the Tatnall Bank about $3000, which is alleged to be a debt or debts illegally contracted by the defendants, and which did not constitute a valid obligation against the district. “That the total amount of insurance money collected by
Upon the interlocutory hearing now under review the court considered the sworn answer of the defendant and the petition and the affidavits of the three petitioners in support of the allegations of the petition. The judge set aside a previous temporary restraining order and refused to enjoin the defendants as prayed for in the petition. To this judgment the petitioners excepted. The bill of exceptions presents the following specific assignments of error: (1) The fund received from the insurance companjr in settlement of the loss caused by the burning of the schoolhouse constitutes a trust fund to be held and used by the defendants as trustees for the purpose of rebuilding the schoolhouse, and for no other purpose; and the judge erred in refusing to enjoin the defendants from using said fund to pay the indebtedness of the district. (2) It appears that a tax had been levied on the property of the district for the purpose of'retiring the bonds as they matured, and the effort to retire said bonds before maturity with money derived from other sources is contrary to law. (3) The fund received from the insurance company in settlement of the loss by fire is a trust fund in the hands of the trustees for the benefit of the citizens of the entire district, whereas the debts which the defendants are seeking to pay are debts for which a portion of the district is not liable and for the payment of which no tax can be levied;
We are of the opinion that the first assignment of error is sustained by the record. There is no denial that certain sums of money have been paid to the Tattnall Bank and to other parties from the proceeds of the fund collected from the insurance company in compensation for the loss sustained by the burning of the Reidsville school building. It is strongly urged by able counsel for the defendants that the sum of $21,000 resulting from the removal and destruction of the school building can properly be used by the trustees of the Beidsville school district in discharging any proper and just obligation of that district. We can not concur in that argument, but are constrained to hold that the proceeds accruing from the destruction of the building, whether consisting of insurance or any salvage that might have been saved from the building, is by law placed in special trust of the trustees of the school district for the sole purpose of replacing a school building for that school district, either upon the site where the building formerly stood or some other site purchased by the board of trustees as the location of a new school building. The controlling question in this case is whether the trustees of a school district have the right to use funds derived from insurance on a burned school building in paying the bonded indebtedness and other indebtedness of the district, or must use such funds to replace the burned building. So far as our knowledge or research extends, the precise question seems never to have been decided by the courts of Georgia. There is no statute which siiecifically refers to funds received from insurance on turned school buildings. But it is stated generally in tlie Code of School Laws of 1919, section 111-, how the proceeds of bonds are to be held and used, this being the caption of that section (Ga. L. 1919, pp. 288, 347, sec. 144). It is declared: “Should bonds be issued and sold, the proceeds shall be turned over
Judgment reversed.
Concurrence Opinion
concurs in the judgment of reversal. The money collected from insurance on the building was a trust fund, which could have been applied to erection of a new building or retirement of the bonds, but not to payment of other debts or expenses of the schools.