274 N.Y. 39 | NY | 1937
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *42 A single constitutional question is presented.
The city of Troy was successful in obtaining Federal aid for a Public Works Administration project, involving the construction and equipping of a new high school building, provided the city would itself find some $786,000 as its share. The debt limit of the city still permitted some margin of borrowing power under the restriction of the State Constitution (N.Y. Const. art. 8, § 10), but not sufficient to embrace the above amount. Application was made to the Legislature, which enacted a law providing that the Board of Education of the city school district of the city of Troy (which comprised all the territory of the city except that within the boundaries of Union Free School District No. 1 of the town of Lansingburg) was empowered to construct and equip a new high school for the city school district, and to issue and negotiate bonds of the city school district for the purpose of paying that portion of the cost to be borne by the city school district. "Said bonds shall be general obligations of said city school district and shall not be reckoned as part of the debt of the city of Troy, and the full faith, credit and taxing power of said city school district shall be pledged for the punctual payment of the principal of and interest on said bonds." (Laws of 1937, ch. 20.) The bonds are not to be issued unless the city of Troy, through the Common Council (by ordinance adopted by not less than two-thirds of all the members of the Common Council), shall approve both the project and the amount of bonds to be issued by the city school district, and such ordinance shall also be approved by the Board of Estimate and Apportionment of the city. The total amount of bonds to be issued by the school district for this purpose shall not exceed one and one-half per cent of the assessed valuation of the real estate in the city school district. A sum sufficient to pay the principal and interest of the *43 bonds, which shall mature in annual installments varying from two years to thirty-five years, shall be levied and collected and disbursed by the same officers, and pursuant to the same procedure as is provided by law for the raising, collection and disbursement of other school moneys of the city school district, which are performed by the proper city officials. "The carrying out of such project and the issuance of such bonds shall not be subject to any referendum vote * * *."
The plaintiff brought a taxpayers' action (Gen. Mun. Law [Cons. Laws, ch. 24], § 51) for an injunction to restrain the Board of Education from issuing the bonds. From a judgment granted at Special Term dismissing the complaint upon the ground that it did not state facts sufficient to constitute a cause of action, an appeal was taken directly to this court (Civ. Prac. Act, § 588, subd. 3) to test the validity of this legislation (Laws of 1937, ch. 20) under the provisions of the Constitution of the State (Art. 8, § 10). Do these bonds fall within the restriction of the State Constitution setting up a debt limit? If so, their issuance is prohibited and they are void.
The question involved is one of importance and has not been passed upon by the courts of New York. Decisions in other States, because of differing conditions, are of little, if any, assistance.
The Education Law (Cons. Laws, ch. 16) provides for a general system of school districts which are under the legislative direction of the Regents and the executive direction of the Commissioner of Education (Education Law, § 20). The types of school district include (a) common school districts, the trustee or trustees of which constitute separate corporate bodies, with very broad powers, including the power to assess and collect school district taxes (Education Law, §
A history of the school districts of the city of Troy is as follows: In 1816 the city was incorporated. Prior to the year 1900 the boundaries of the city and the city school district were coterminous. In 1900 portions of certain towns were annexed to the city, including the territory in Union Free School District No. 1 of the town of Lansingburg. The Union Free School District No. 1 has since operated independently as a union free school district, and issues its own bonds in the corporate name of the Union Free School District. The territory in this Union Free School District is now, as noted, a part of the city of Troy. Heretofore the city has issued bonds on behalf of the city school district in the corporate name of the city. Such bonds are payable, however, primarily from taxes from the city school district, and, secondarily, from all taxable property of the city. (Laws of 1873, ch. 126; Troy School Commissioners Act, Laws of 1892, ch. 80; the City Charter, Laws of 1892, ch. 670, as amended; Second Class Cities Law [Cons. Laws, ch. 53], and amendments; Education Law, § 879; Second Class Cities Law, §
We have, therefore, entirely within the city of Troy two separate school districts, one a city school district and the other a union free school district, which, together, constitute all the territory of the city. The assessed valuation of the taxable real estate of the whole city is $74,071,817, and of the city school district $62,788,847. *45
The portion of the Constitution involved reads as follows (Art. 8, § 10):
"* * * No county or city shall be allowed to become indebted for any purpose or in any manner to an amount which, including existing indebtedness, shall exceed ten per centum of the assessed valuation of the real estate of such county or city * * *
"* * * and any debt hereafter incurred by any portion or part of a city, if there shall be any such debt, shall be included in ascertaining the power of the city to become otherwise indebted."
It is to be noted that we are dealing in the case at bar with a city school district, as distinguished from a union free school district or a common school district.
If we should ignore all historical considerations, including the facts which gave rise to this provision of the State Constitution and the practical results, and read with strict literalness the constitutional provision (Art. 8, § 10), an argument could be made that the bonds in question should not be included within the constitutional prohibition, since nominally the city does not appear as the debtor on the bonds. Some support for this view may be found in Adams v. East River SavingsInstitution (
In Gaynor v. Marohn (
In Robertson v. Zimmermann (
So not only is the intention unmistakable that this restriction covers school debts of city school districts, but this result is somewhat confirmed by the fact that until the adoption of the present act (Laws of 1937, ch. 20) there has been no legal recognition of the so-called city school district as an entity separate and apart from the municipal corporation. Furthermore, this particular act does not purport to give to the so-called city school district general power to issue bonds for the purpose of erecting school buildings, but only authorizes this so-called city school district to issue bonds for this one high school. In other words, in order to meet this situation, this act is adopted to apply only to this specific case. If this city school district can be created as an entity, separate and apart from the municipal corporation, upon the theory that the State is thus making the city school district its agent, because education is a State purpose, so also may special districts be created in the same way by police, fire and health districts, since police, fire and health can likewise be considered on occasion as State purposes, in the same way as education. Thus not only will the debt-borrowing capacity of cities be allowed *50 to expand, but these separate districts will be able to incur indebtedness without any constitutional limitation whatsoever.
The respondents point to that section of the Constitution reading: "The Legislature shall provide for the maintenance and support of a system of free common schools, wherein all the children of this State may be educated" (Art. 9, § 1), and claim that this section excludes debts arising on account of city school districts from the restriction in article 8, section 10. If this article were omitted entirely from the Constitution, the Legislature would still have power to create and maintain a school system, unless this was prohibited by the Constitution. Moreover, nothing is found in article 9, section 1, which provides that, in carrying out this system of free schools, the Legislature shall disregard the prohibition in article 8, section 10, but, on the contrary, historical considerations show unmistakably an intention to include in the constitutional restriction school debts of city school districts, which intention has been confirmed by acquiescence in such intention for many decades by the cities of the State.
It follows that the judgment should be reversed, without costs, and the motion denied. (See
CRANE, Ch. J., LEHMAN, O'BRIEN, HUBBS, LOUGHRAN and RIPPEY, JJ., concur.
Judgment reversed, etc. *51