121 S.W.2d 160 | Mo. | 1938
This is an original proceeding in mandamus for a writ to direct the State Auditor, the respondent, to register as required *294 by law an issue of refunding bonds in the amount of $40,300 issued by the Consolidated School District No. 8 of Pemiscot County, Missouri, which were presented to him for registration, but which he has refused to register.
The relator Consolidated School District was formed in 1926 under Article IV, Chapter 57 of our statutes by the consolidation of common school districts Nos. 28, 33 and 34 and the town or village school district of Steele, Missouri, No. 32. The latter district is included in references hereinafter made to "common" school districts. Thereafter common school district No. 26 and later school district No. 35 were annexed and consolidated so that the consolidated district as it now stands embraces the former common school districts No. 26, 28, 32, 33, 34, and 35. These districts, with the exception of No. 28, which had no debt at the time of consolidation or annexation, were separately indebted in varying amounts for money borrowed as evidenced by outstanding bonds. There remains unpaid of these various bond issues the following amounts: No. 26, $7,300; No. 28, no debt; No. 32, $5,500; No. 33, $6,300; No. 34, $6,500; No. 35, $4,000 or a total of $29,600. These bonds had been issued with the consent of two-thirds of the voters of the individual districts in accordance with the constitutional provision for incurring debts.
It is admitted that there was no irregularity of any kind in incurring the various debts by the component districts and at the time of the consolidation and the subsequent annexations they were valid, outstanding debts of such districts; that the consolidated district was formed according to law and that the proceedings for the issuance of the refunding bonds here involved were regular and in proper form.
In addition, the consolidated school district is also indebted for its refunding bonds in the sum of $10,700, heretofore issued and exchanged, to retire and pay off a like amount of the outstanding bonded indebtedness of said component districts. These bonds were issued from time to time by the consolidated district to refund maturing bonds of the various common school districts previously issued together with the above issues with the consent of the voters of the districts. As they were issued, the refunding bonds were registered in the office of the State Auditor. At the time of the proceedings, wherein the consolidated district issued the bonds now offered for registration, the consolidated district was in default for non-payment of bonds which had matured in the amount of $12,000. This new refunding bonds issue is for the purpose of paying off or delivering refunding bonds in exchange for all said bonds now outstanding in the aggregate amount of $40,300 or, to quote the resolution of the school board of relator consolidated district providing for the issuance of said bonds: "for the purpose of providing funds with which to take up and redeem the aforementioned and described outstanding *295 bonds aggregating $40,300, or to issue refunding bonds to be delivered in exchange for said outstanding bonds." These refunding bonds bear a lower rate of interest than the bonds to be funded and mature over a period of twenty years. Upon the issuance of these refunding bonds the consolidated district provided for the levy of a tax for the payment of interest and to provide a sinking fund as required by law.
In each component school district there was a schoolhouse, furnishings and other equipment, all of which were turned over to the consolidated school district, were received by it and are now in its possession, and the consolidated district has assumed the entire indebtedness of the component districts.
[1] Respondent has waived the issuance of an alternative writ of mandamus and has accepted relator's petition as such writ, to which he has filed his demurrer. The questions involved therefore, are the ones of law only. [State ex rel. Muns v. Hackmann,
[2] One of the grounds on which the State Auditor has refused to register these bonds is that the consolidated school district did not, by the consolidation, legally assume and become liable to pay the then-existing bonded indebtedness of the component common school districts for the reason that Section 9356, Revised Statutes 1929, providing for the assumption of such indebtedness by the consolidated district, is unconstitutional and void and violates Section 12 of Article X of the Constitution of Missouri, which prohibits a school district from incurring an indebtedness except with the consent of two-thirds of the voters of the district. Section 9356 reads in part as follows: "Whenever any consolidated (school) district is organized under the provisions of this article . . . all the property, money on hand, books and papers of the school districts whose schoolhouse sites are included within said consolidated district shall by the officers of aforesaid districts be turned over to the board of directors of the consolidated district, and also all bonds outstandingagainst the aforesaid districts shall become debts against theconsolidated district. . . ." (Italics ours.)
It has long been the rule in this State, and generally throughout the country, that the power of the Legislature in the creation of public corporations (which term includes school districts) is absolute except where limited by the Constitution. The Legislature may also change, divide, consolidate and abolish them as the public welfare demands. [Harris v. Wm. R. Compton Bond Mortgage Co.,
It has also been held to be the general rule in this State that in the absence of constitutional or statutory provisions to the contrary where one corporation goes entirely out of existence by being annexed to or merged in another corporation, then the subsisting corporation will be entitled to all the property and will be answerable for all the liabilities. When the benefits are taken, then the burdens are assumed. This general rule was applied to school districts in the case of Thompson v. Abbott,
[3] In the consolidation of school districts, the Legislature has specifically provided as pointed out above in Section 9356 that whenever any consolidated school district is organized, it shall assume the debts of the component school districts. In his contention that this section is unconstitutional respondent asserts that it violates Section 12 of Article X of the Missouri Constitution, which requires the assent of two-thirds of the voters before a school district may become indebted beyond its current revenues. The constitutional provision reads in part: "No . . . school district . . . shall be allowed to become indebted in any manner or for any purpose to an amount exceeding in any year the income and revenue provided for such year, without the consent of two-thirds of the voters thereof. . . ."
Respondent argues that relator school district has "become indebted" in violation of the provision. He particularly stresses the fact that common school district No. 28, when it was absorbed into the consolidated school district, was free of debt and that therefore when the combined debts of the other common school districts were assumed by the consolidated district the taxpayers and the property included in District No. 28, contrary to the constitutional provision, became charged with an indebtedness. The same argument might as well have been advanced by respondent in favor of all the taxpayers of all the other component districts, assuming that they were indebted in the same proportions as they are now except those of No. *297 26, whose debt is the highest, as they also became liable proportionately to the extent of the difference between the debt of their old district and the greater debt of No. 26.
The question is: Was the consolidated school district, by assuming the debts of the component districts, "allowed to become indebted" within the purview of the Constitution and thereby subject to its restrictions? As stated above, it is admitted that the various debts of the various districts (the entire bonded amount sought to be refunded) when first incurred where created by the vote of the people in strict accordance with the provisions of the Constitution. Upon the consolidation of these districts, the total debt by the terms of the statute became a charge against the consolidated district. It is important to note that the consolidated district merely assumed the debt; it did not create it. Furthermore, it did not become indebted by virtue of any act of its agencies, but succeeded to an old debt by virtue alone of the statute and the voters who chose to consolidate the districts. It was in fact born in debt. Upon consolidation the identities of the component districts fade and disappear completely and in their stead emerges a new entity in the form of the consolidated district. This new entity spontaneously becomes the owner of the properties and liable for the old debts. The fact that some persons and some property embraced in the limits of the consolidated district are required to pay more taxes than they would have had to pay had the districts not been consolidated, cannot be considered a constitutional factor in preventing the consolidation of the districts in view of the power of the Legislature to do so. It is no constitutional objection, says Dillon, "that the property brought within the corporate limits (by annexation) will be subject to taxation to discharge a pre-existing municipal indebtedness since this is a matter which, in the absence of such constitutional restriction, belongs wholly to the Legislature to determine." [1 Dillon on Municipal Corporations (5 Ed.), sec. 355.]
As likewise said in True v. Davis,
The holding in People ex rel. Haight v. Brown, 169 N.Y. Rep. 695, Appellate Division, affirmed in
"The effect of the constitutional provision is limited to those municipal transactions which create indebtedness; hence, it doesnot prevent the annexation or consolidation of two or more cities or other municipalities even if one of them has reached or exceeded the constitutional limit, for thereby the debt of the cities is not increased." [1 Dillon on Municipal Corporations (5 Ed.), sec. 191.]
We are irresistably drawn to the conclusion that the constitutional provision about incurring debts applies to thecreation of new debts. Therefore, it does not limit or cause conflict with the statute in question, providing for the assumption of the old debts of the school districts consolidated into one entity. The relator here, under the terms of said Section 9356, has assumed an aggregate indebtedness theretofore constitutionally created and has become bound to pay the same. As said constitutional provision is not applicable no vote was necessary, and we must rule against respondent's contention.
[4] For a second reason, the respondent refuses to register the bonds on the ground that the issue of the refunding bonds here offered for registration has not been submitted to the vote of the district and authorized by the consent of two-thirds of the voters as required by Section 12 of Article X of the Constitution of Missouri.
The refunding bonds were issued in pursuance of the authority granted by Section 2892, Revised Statutes 1929, as amended by the Laws of 1931, page 138 and Section 9200 as amended by Laws of 1931, page 348. Sections 2892 and 9200 et seq., allow the refunding bonds to be exchanged for outstanding bonds or to be sold for cash and the proceeds used for redeeming outstanding bonds, both of which procedures we hereby approve.
This contention has already been decided in this State by the case of State ex rel. Proctor v. Walker,
The weight of authority holds to the view that the issuance of bonds by a public corporation for refunding a valid, out-standing indebtedness does not increase the total indebtedness within the meaning of a constitutional limitation or require the consent of the voters for the issuance of such bonds, but merely changes the form of an existing debt. [See annotation in 97 A.L.R. 442 and cases cited therein; 44 C.J., p. 1132, sec. 4065; 1 Dillon on Municipal Corporations, sec. 202.] An examination of the decisions of this State indicate that we are in accord with this view so long as the outstanding indebtedness to be refunded has been voluntarily incurred in compliance with the Constitution upon the approval of two-thirds of the voters.
In his insistence that the refunding bonds cannot be issued without the approval of the voters of the district, the respondent leans heavily on the case of State ex rel. Clark County v. Hackmann,
[5] Lastly, respondent complains that the levy of the tax to provide interest and a sinking fund for the payment of said refunding bonds was unauthorized because the issuance of bonds was not voted by the people. This court has held more than once that the *301 constitutional requirement of the tax levy is self-enforcing and that no vote is necessary.
In State ex rel. Audrain County v. Hackmann,
For the reasons stated, the peremptory writ of mandamus should issue. It is so ordered. All concur.