B. FRANK MACKEY ET AL v. STEVE MCDONALD JR.
73-128
Supreme Court of Arkansas
February 4, 1974
504 S.W. 2d 726
Eubanks, Files & Hurley, for appellee.
JOHN A. FOGLEMAN, Justice. This action was instituted by appellee Steve McDonald, Jr., (a justice of the peace for Big Rock Township in Pulaski County) as a citizen, taxpayer and property owner of Pulaski County, on behalf of himself and all others similarly situated. The suit was a proceeding against B. Frank Mackey, individually and as County Judge of Pulaski County, and William L. Tedford, individually and as County Treasurer of Pulaski County. Appellee sought to have certain appropriations made by the county‘s levying court, commonly called the quorum court, declared void and to have Mackey, individually and as county judge, and Tedford, individually and as county treasurer, enjoined from authorizing, issuing, paying or disbursing any county warrants or otherwise expending any public funds under the authority thereof.
The appropriations questioned by appellee were made at meetings of the levying court held on January 12, 1973, and March 5, 1973. At the January meeting, the court made an appropriation to “County Court” for a “Contingent Fund” in the amount of $63,410.61. On March 5, 1973, the court made an appropriation of $222,265 from Federal Revenue Sharing Funds designated only as “Contingent Fund.” The chancery court held that both appropriations were unlawful and unauthorized, and granted an injunction against Mackey, in his capacity as county judge or individually, from initiating, directing or authorizing any expenditure from either “Contingent Fund” and against the county treasurer from paying out any monies from these funds.
Judge B. Frank Mackey was called as a witness by
Appellants filed a general demurrer to appellee‘s pleading, which was styled “Pеtition for Injunction,” and specifically alleged that the chancery court was without jurisdiction under
After hearing the matter, the chancellor expressed grave concern about the jurisdiction of the chancery court to act in the matter, as well he might. In view of the disposition we make of the case, however, we need not concern ourselves too much with the serious doubt about the jurisdiction of the chancery court over this action, which basically would appear to fall within the jurisdiction of the circuit court under
It is true that appellee had the right to appeal from the appropriations made by the quorum court. Lee Coun-ty v. Robertson, 66 Ark. 82, 48 S.W. 901 (1898). It is not clear, however, that his remedy at law was plain, adequate and complete. Under similar circumstances, this court has held that the chancery court properly exercised jurisdiction in an action against the county clerk to restrain the clerk from issuing warrants based on allegedly unauthorized orders of the county court. Worthen v. Roots, 34 Ark. 356 (1879). We consider this case to be controlling authority as to the chancery court‘s jurisdiction, at least insofar as the county treasurer is concerned. See also, Farrell v. Oliver, 146 Ark. 599, 226 S.W. 529 (1921). Under the authority of the cited cases, it seems that all the issues here raised may be adequately treated within the jurisdiction of the chancery court.
Appellants’ first point for reversal is based upon their contention that the court had no jurisdiction insofar as the federal revenue sharing funds are concerned. They base their argument upon the assertion that
At the outset, we should say that the application of
Under the State and Local Fiscal Assistance Act of 1972 funds received by units of local government may be used only for specified priority expenditures enumerated in the act. See
- ordinary and necessary maintenance and operating expenses for—
- public safety (including law enforcement, fire protection, and building code enforcement),
- environmental protection (including sewage disposal, sanitation, and pollution abatement),
- public transportation (including transit systems and streets and roads),
- health,
- recreation,
- libraries,
- social services for the poor or aged, and
- financial administration; and
ordinary and necessary capital expenditures authorized by law.
In order to qualify for funds under the act, a unit of local government must show that it will establish a trust fund in which it will deposit all payments it receives and use the fund only for the prescribed priority expenditures and pay over to the Secretary of the Treasury an amount equal to 110% of any amount expended out of such fund in violation of the limitations on expenditures, if such amount is not promptly repaid to the trust fund.
Appellants also contend that the chancery court erred in applying illegal exaction principles to this case, basing their argument largely on the fact that no fraud or bad faith is involved. We agree with the chancellor‘s finding that no fraud or bad faith had been shown. The illegal exaction principle, however, is not confined to such cases, even though there have been several occasions where these elements were the bases of findings that there had been illegal exactions. A good faith misapplication of funds in a manner or for a purpose not authorized by law constitutes an exaction from the taxpayers which is illegal even though not fraudulent. In Lee County v. Robertson, 66 Ark. 82, 48 S.W. 901, one of the earliest cases arising under this section, there was no issue of fraud or bad faith, but, at the suit of a taxpayer, the court held that an unauthorized appropriation by the quorum court was
We do agree, however, with appellants in their contention that “the contingent fund” appropriation to the county court was not illegal. In this respect we disagree with the сhancellor. We do not believe that the authorities relied upon by the chancellor in reaching his conclusions in this respect are applicable to the facts in this case. In Pressley v. Deal, 192 Ark. 217, 90 S.W. 2d 757 (1936), we simply held that an appropriation for expenses of the county judge was not authorized under Subdivision 6, Paragraph 7, of Crawford & Moses Digest 1982 [now
In Martin v. Bratton, 223 Ark. 159, 264 S.W. 2d 635 (1954), there was an attempted appropriation of $20,000 “... from the county general fund to allow the county judge to use it as he sees fit and deems necessary.” Clearly, this appropriation was not authorized under our statutes, and we characterized it as an attempt to entirely bypass the functions of the county court, because the appropriation was to be used by the county judge, rather than by the county court. But that is not the case here. Even though the county judge, when asked who would make the decision as to disbursements from this contingent fund, responded that he would, he immediately stated that guidelines were set out under the law, and in later testimony made it quite clear that payments out of this contingent fund were made on claims presented to the county court and that he, as county judge, did not make fully independent decisions without the processing of claims through the county court. It seems quite clear to us that the appropriation is not one to be expended by the county judge but by the county court, and that the defects in the appropriations invоlved in Pressley and Martin are absent here.
We agree with appellants and the chancellor that the county is required to pay obligations imposed upon it by law which have not been the subject of an appropriation. A review of our law in that respect would be helpful to an understanding of the disposition of this case. It is true that
The specified order for making appropriations by the quorum court is set out in
- To defray the lawful expenses of the several courts of record of the county or district and the lawful ex-
penses of criminal proceedings in magistrate‘s courts, stating the expenses of each of said courts separately. - To defray the expenses of keeping persons accused or convicted of crime in the county jail.
- To defray the expenses of making the assessments and tax books and collecting taxes on real and personal property.
- To defray the lawful expense of public records of the county or district.
- To defray the expenses of keeping paupers of the county or district.
- To defray the expense of building and repairing public roads and bridges and repairing and taking care of public property.
- To defray such other expenses of county government as are allowed by the laws of this State.
These purposes were first classified in the case of Worthen v. Roots, 34 Ark. 356, where we said that the first four are of an indispensable nature, essential to the support of the government, since they are for services that must be performed, else the business of the counties must stop. The last three were said not to be imposed by necessity, but to be matters of contract. The matter was gone into rather extensively in Polk County v. Mena Star Co., 175 Ark. 76, 298 S.W. 1002 (1927). There we said that quorum or levying courts should follow the provisions of this statute strictly in making appropriations, and first make ample provision for those necessary expenses imposed upon the counties by law, after which they were at liberty to make appropriations of the whole or part of the remainder of the revenue for the second class of items, that is, those that relate to matters of contract regarding the internal affairs of the county or internal improvement thereof over which the county court has discretionary power. It was said that the first class of obligations was imposed on the counties by law and that the county court is substantially
The holding of elections, printing ballots, pollbooks, tally sheets, and other election supplies, the feeding of prisoners confined in the county jail, the holding of courts of record and fees of justices of the peace, the salaries and fees of county offiсers, including the prosecuting attorneys, the making of assessments and tax books, and collecting taxes are all necessary county expenses imposed by law, over which the county court has no control or discretion except possibly the amount to be allowed for the service rendered, as all compensation is either fixed by law, or is provided for.
As indicated in the Polk County case, the different manner of treatment of the two classes of appropriations was first demonstrated by this court in Worthen v. Roots, supra. This court there pointed out that by the third section of an act of March 18, 1879, (the same act setting out the order for making appropriations, which now constitutes a part of
The nature and reason of this distinction, and, indeed, the full scope of the operation of the constitution itself, will become apparent from a consideration of the various purposes for which the tax is to be levied. Reverting to them, it will be seen that the first four are of an indispensable nature, essential to the support of the government. They are for services that must be performed, or the business of the counties must stop. The last three are not supposed to be imposed by necessity, but are matters of contract. It is well that appropriations be made for all pur-
poses, but of great consequence that in the matter of contracts the expenses of the counties should be limited to the amounts appropriated. This is impossible in cases of positive service required by law, and expenses incident to them; and in accordance with this view the legislature did not reimpose upon the county any disability as to allowances. Indeed, it is plain that any other view of the case would placе the county court in the attitude of dealing oppressively and unjustly with those citizens who render her involuntary or indispensable services. * * *
There is nothing in the twelfth section to restrain the court from making allowances upon exhausted funds, in the face of the marked removal of that restraint in another section.
The irresistible conclusion, upon a review of all the legislation, is, that the act of March 18, 1879, is the result of an effort (perhaps imperfectly accomplished) to return to the true policy indicated by the constitution of 1874: To require all appropriations to be made and taxes to be levied by a full court of justices, and that no money should be paid out of the treasury except on appropriation; аnd to restrain the county court, or its agents, from making any contracts until money may be appropriated to meet them.
* * *
We search in vain for any prohibition, in the act of 1879, against allowing claims by the county court beyond the appropriations. A large class of the claims ought to be allowed, and with regard to those depending on contracts made in excess of appropriations, if it be error to allow them, any citizen may appeal and correct the error. There is room for the operation of the whole constitution in all its aspects.
It is, of course, true that
If an appropriation has been made “to defray other expenses of County government as are allowed by the laws of this State” pursuant to item 7 under the sixth subdivision of
The nature of the appropriation for general county purposes under item 7 of the sixth subdivision of
In other words, the quorum court has the power to make an appropriation to defray such other county government expenses as are allowed by the laws of this state in addition to those specifically mentioned under the six preceding subdivisions.
We again discussed it in Adams v. Whittaker, 210 Ark. 298, 195 S.W. 2d 634, saying:
This is in the nature of a “lest we forget” provision and covers any and all other expenses of the county government fixed by the laws of the state, and though
no specific reference is made to elections, these expenses have always been paid and the obligation and power to pay them has never been questioned.
Although we feel that the quorum court‘s intentions as to the intended use and purposes of the fund could have been mоre clearly expressed, the “contingent fund” appropriation made to the county court in this case seems to substantially meet these requirements, and in this respect we disagree with the chancellor.
Much of what we have heretofore said has application to the federal revenue sharing funds. It is clear, that once these funds reach the county treasury, they must be appropriated as other funds are, in view of
Appellants contend that the court erred in granting injunctive relief, saying that the court wаs indirectly accomplishing what it could not do directly, i.e., enjoin Mackey, individually and as county judge, and Tedford, as county treasurer, and thereby effectively enjoin the county court. We will not dwell upon this matter, because we see no necessity for an injunction. The power of the court to enjoin the treasurer is clear under the authority of Worthen v. Roots, supra, as previously pointed out in
Accordingly, the injunction is dissolved and that part of the court‘s decree declaring the appropriations unlawful is reversed and the cause remanded for the entry of a declaratory decree limiting allowances from the contingent fund appropriation of county general revenues to claims based upon obligations of the county for indispensable services of county government (described in Items 1, 2, 3 and 4 of
GEORGE ROSE SMITH, J., concurs.
BYRD, J., dissents.
This court has recognized in Nevada County v. News Printing Company, 139 Ark. 502, 206 S.W. 899 (1918), that
“No money shall be paid out of the treasury until the same shall have been appropriated by law, and then only in accordance with said Appropriation.”
In Worthen v. Roots, 34 Ark. 356 (1879), while construing
“... [I]t will be seen that the first four [provisions] are of an indispensable nature, essential to the support of the government. They are for services that must be performed, or the business of the counties must stop. The last three are not supposed to be imposed by necessity, but are matters of contract. It is well that appropriations be made for all purposes, but of great consequence that in the matter of contracts the expenses of the counties should be limited to the amounts appropriated. This is impossible in cases of positive service required by law and expenses incident to them; and in accordance with this view the legislature did not reimpose upon the county court any disability as to allowances. . . .”
In Fones Hardware Co. v. Erb, 54 Ark. 645, 17 S.W. 7, 13 L.R.A. 353 (1891), we held that a contract for building a county bridge made without a previous appropriation therefor by the levying court was void.
In Nevada County v. News Printing Co., 139 Ark. 502, 206 S.W. 899 (1918), we held that a valid contract, entered
In Pressley v. Deal, 192 Ark. 217, 90 S.W. 2d 757 (1936), we had before us a quorum court appropriation allowing the county judge $300 for unusual expenses. We there held that those expenses could not be paid out of the appropriations under the seventh subdivision of
In Martin v. Bratton, 223 Ark. 159, 264 S.W. 2d 635 (1954), there was before us a quorum court appropriation “... from the County General Fund to allow the County Judge to use it as he sees fit and deems necessary.” In holding this appropriation invalid, we said:
“Counsel for appellees have cited us to no Statute or case and our search has likewise failed to discover any—that allows the Quorum Court to turn over $20,000, or any other amount, to the County Judge ‘to use as he sees fit and deems necessary.’ That such an appropriation is not within the purview or spirit of our Statutes is shown by a study of
§ 17-412 and§ 17-414 , Ark. Stats. These provisions clearly envision (1) that all appropriations by the Quorum Court must be for a specific purpose allowed by law; (2) that after the appropriation is made, then any allowance of a claim against that appropriation must be by the County Court and not by the County Judge; and (3) that the County Court order of allowance must specify the appropriation against which the claim is allowed before the money can be drawn out of the Treasury. Although the County Judge presides over the County Court, it is the County Court that makes the order of allowance, and not the County Judge.Art. 7, § 28, of the Constitution so provides. See also Lyons v. Pike County, 192 Ark. 531, 93 S.W. 2d 130 (1936). In the case at bar, the Quorum Court by its appropriation of the $20,000 ‘to allow the County Judge to use it as hesees fit and deems necessary,’ attempted to entirely by-pass the functions of the County Court, because the appropriation was to be used by the County Judge, rather than by the County Court.” Id. 223 Ark., at 161-162.
Judge Mackey testified that he had made payments from the “Contingent Fund” in past years for charities and for the moving of a sewer line from the courthouse for the construction of the convention center. On direct examination the record at page 88 shows the following testimony by Judge Mackey:
“Q. Do you have a set of—the budget makes no guide line that I can see as to how these contingent funds are to be spent. Is that your understanding?
A. It is set up for emergency purposes, sir. If we run out of funds in one of the categories set out—we don‘t know how much we are going to spend. Fact of the matter, not a dime of the Federal Revenue Sharing money has been spent yet. We have not paid out a dime against this. The contingent fund is simply if we run out of funds in one of the categories which it is appropriated, we can reach in the contingent fund and supplement that.
Q. Who will make that decision?
A. I will.”
The Chancellor who observed the witnesses as they testified in a written opinion made the following observation:
“The ‘Contingency Fund’ of the General Revenues in this case does not meet the tests for lawful appropriations laid down by the Supreme Court of Arkansas. This fund is not authorized by any statute; it is not being limited to the expenses of the administration of the County Court; it is not for a specific purpose in accordance with the law; and it is being used for all sorts of county expenses.”
Thus, if we consider the “Contingency Fund” without the evidence as to the allowances made therefrom, it appears to me that it is nothing more nor less than an attempt to entirely by-pass the functions of the county quorum court contrary to
For the reasons stated, I respectfully dissent.