192 Wis. 283 | Wis. | 1927
This case presents another chapter in the financing of School District No. 4 of the Village of Shorewood, Wisconsin. The first case concerned an action by the district to compel a bank to take an issue of the district’s school bonds and pay for them pursuant to contract. The defense set up that the bonds exceeded the constitutional debt limit of the district and therefore were void. This court sustained that contention. School Dist. v. First Wisconsin Co. 187 Wis. 150, 203 N. W. 939. Incidental to the same bond issue, action was brought by a taxpayer to prevent the issuance and sale of the bonds referred to above, and this court granted the prayer of the plaintiff in that action. Lippert v. School Dist. 187 Wis. 154, 203 N. W. 940. Thereafter the plaintiffs in the instant case brought an action to recover from the school district the balance due on contracts for building a school house and other similar obligations. The district set up tire defense that the contracts were void in that they were executed in violation of the constitution of the state limiting the amount of indebtedness the district could incur. Art. XI, sec. 3, Const. The plaintiffs demurred to the answer, which was overruled by the lower court. This court affirmed the order of the circuit court in an extended opinion where the law of the case was fully considered. Riesen v. School Dist. 189 Wis. 607, 208 N. W. 472.
The main contention centers around the question as to the offsets that may be properly allowed against the indebtedness of the district because of cash in the general fund, so called. Preliminary to that question the appellants make serious objection to the manner and sufficiency of the proof of the existing net indebtedness of the district at the various dates when the contracts were entered into.
It appears that the accounts of the district were loosely kept. The books of account, such as were kept, did not show all the facts from which the district’s debts could be determined. Resort had to be had to check stubs, contracts, bond records, and other data. The appellants contend that the district should have kept books of account which would show the true financial condition of the district at all times, and that other evidence was incompetent. They cite sec. IS.10, Stats., which provides:
“Every public body shall employ economical, efficient and accurate methods in the conduct of its affairs and accounts, and such as shall result in a reasonable harmony with all other such public bodies; shall keep such accounts as adequately disclose its affairs; and shall make such reports at such times as are reasonably necessary, and in such form as adequately discloses the facts relating to the exercise of its jurisdiction.”
They also cite sub: (2), sec. 40.19, Stats., to the effect that the treasurer of the school district shall keep a book in which he shall ■ enter all money received and disbursed by him, and specify all the particulars; and par. 6, sub. (1), sec. 40.21, Stats., requiring the clerk to make a report to the county or city superintendent showing the amount of money
The law certainly contemplates that the records of the school district shall be complete and adequate to show its financial condition at all times. However, we take notice that school district officers are selected from the body of electors with little reference to their knowledge of bookkeeping, and that they in fact seldom have much experience in that line. The legislature, in placing these duties on such officers, could not have intended that the accounts and records of the district would be kept with the accuracy of skilled bookkeepers, and certainly the legislature did not intend that failure on the part of the district officers to keep accurate books of account should enable the district to disregard the constitutional limitation as to its permissible indebtedness. The issue presented by the answer to the complaint was one of fact, to be determined from the best evidence available and under methods recognized by the courts as consistent with justice. This court recently held that a large business concern, suing on a policy of burglary insurance, was not required to keep a complete and accurate set of books, notwithstanding the policy required such books to be kept. If the loss could be set up with reasonable certainty with the aid of other data, it was held sufficient. Max L. Bloom Co. v. United States Cas. Co. 191 Wis. 524, 210 N. W. 689. The defendant had the burden of showing the invalidity of the contracts. It secured an expert accountant to set up a stated account showing as accurately as possible the true financial situation of the district, which account was testified to be correct. . It was admitted in evidence over the objection of the appellants. It appears that the appellants were furnished with an oppor
“The practice of permitting expert accountants to examine long book accounts and to give in summary form the results thereof for the information of the court and jury is approved as practical and proper in the trial of causes involving the examination of long book accounts. A proper administration, of course, requires that the opposing party shall be afforded the time and opportunity to test the correctness of the evidence, and for this purpose to have access to the books and the use of them for the purposes of cross-examination.”
To the same effect also see Payne v. Franklin County, 155 Ga. 219, 116 S. E. 627; Hollingsworth v. State, 111 Ind. 289, 12 N. E. 490; State v. Mathis, 106 La. 263, 30 South. 834; Jordon v. Osgood, 109 Mass. 457; Rosenfeld v. Siegfried, 91 Mo. App. 169; Cecil v. Montgomery, 95 Okla. 184, 218 Pac. 311.
Upon a disputed question of fact this court will follow the findings of the trial court unless the decided preponderance of the evidence is to the contrary, or unless the trial court has not applied correct principles of law in the reception of evidence. Will of Heymann, 190 Wis. 97, 208 N. W. 913.
.A careful review of the evidence and findings of the trial court fully convinces this court that the evidence amply sustains the findings.
It is the contention of the appellants that the cash in the general fund at the date of the contracts sued upon was available as an offset against the district’s indebtedness. This was equivalent to the assertion that the district might use the taxes levied for maintenance and operation of the school to build school houses and then be without funds to operate the schools. Sec. 40.26, Stats., provides:
“When lawfully directed by the electors the board shall purchase or lease the site for a school house designated by the district, build, hire or purchase a school house out of the funds provided for that purpose, and sell and convey any site, school house or other property of the district.”
Here is a clear legislative expression that school houses are to be built out of funds provided for that purpose, and the funds provided for maintenance and operation cannot be diverted to the purpose of building school houses. Nevil v. Clifford, 63 Wis. 435, 443, 24 N. W. 65.
It appears that money was advanced out of the general fund, which belonged to the funds for maintenance and operation of schools, for the purpose of paying other obligations of the district. In setting up the account the accountant charged these amounts as liabilities to the district, that is to say, the district was obligated to maintain and operate the schools and was entitled to a return of the funds so advanced for other purposes. The trial court held, and we think properly so, that the funds so diverted should be returned to the fund for maintenance and operation, and
It appears that there were $6,000 paid into the general fund as tuition fees, which were considered by the school board in making up its budget as funds for maintenance and operation. This amount the appellants contend should be deducted from the district’s indebtedness. We think the trial court very properly held this a part of the fund for maintenance and operation, which could not be diverted to the payment of the district’s contract liabilities. Rice v. Milwaukee, supra.
The district had borrowed from the-state of Wisconsin $10,000, and at the time the contracts were entered into still owed the state this sum. It is the contention of the appellants that because this item did not appear on the books of the district until December, 1924, it could not be considered as a district liability at the time the contracts were entered into on May 14, 1924, and January 29, 1925. There is no substance to this contention. The debt of the district existed and it was properly proven. The fact that the regular books of account did not show the indebtedness did not authorize the district to avoid the constitutional limitation. The failure to properly keep accounts may subject officers 'to certain penalties but cannot be used to connive at infractions of the fundamental law.
The district owned certain real estate which it had acquired by the exercise of the right of eminent domain but which was not presently used for school purposes. The appellants claim that the value of such real estate should be considered as an asset, available as an offset against indebtedness of the district. This contention confuses indebtedness of the district, as used in the constitution, with the question of insolvency of the district. The constitution does not deal with the question of solvency but with indebtedness. When the district acquired real estate under condemnation proceed
Certain real estate of the school district had been assessed for special improvements, and the district was liable for the payment thereof. It is the contention of the appellants that this amount should not be considered as a liability against the district. There can be no question but that this was an indebtedness of the district which had to be paid in the future. It was not a liability for current expenses, and therefore it should be considered, as the court held, a future capital liability. Ill. Cent. R. Co. v. Decatur, 147 U. S. 190, 13 Sup. Ct. 293; 37 Lawy. Ed. 132; 25 Ruling Case Law, p. 79, note 2.
The district had made some temporary loans for which it had anticipated its revenues for the ensuing year. These amounts were likewise indebtedness within the constitutional limitation. The constitution prohibited the district from becoming “indebted in any manner or for any purpose to any amount” in excess of five per cent, of the assessed valuation. Earles v. Wells, 94 Wis. 285, 297-299, 68 N. W. 964; State ex rel. Marinette, T. & W. R. Co. v. Tomahawk, 96 Wis. 73, 93, 71 N. W. 86; Riesen v. School Dist. 189 Wis. 607, 208 N. W. 472, 474.
The appellants further contend that the equities were all with the appellants, and that the district should be estopped from asserting the constitutional limitation. It is true that the contractors performed their contracts in good faith and the district has received the benefit thereof. If this was a case wherein the district had power to enter into the contracts, a different question would be presented. But the equities of the case are not involved. It is a question of constitutional liability, and the constitutional provision cannot be waived by the district authorities. See Riesen v. School Dist., supra, which is the law of this case.
By the Court. — The judgment of the circuit court is affirmed.