State ex rel. Stanford v. School District No. 1

| Mont. | Nov 19, 1894

De Witt, J.

— Under the statute quoted in the statement above (section 1950, as amended), a majority of the school trustees must first decide to submit the question named in the statute to the electors, and the electors must then vote upon the proposition submitted. That which the trustees may decide to submit to the electors, and upon which the electors shall vote, is plainly stated in the statute. It is whether authority shall be given to the trustees to issue coupon bonds in a certain amount (within the limit defined by the statute) and bearing a certain rate of interest (within the limit fixed by the statute), and payable and redeemable at certain times and for certain purposes. So it seems that, in an election upon the question of issuing bonds of a school district, the matter submitted to the electors contains several propositions, as follows: 1. The amount of bonds; 2. The rate of interest which they shall bear; 3. The time when payable; 4. The time when redeemable; and 5. The purposes for which the money is to be used.

Consulting the notice published by the school trustees, set forth in the statement above, we find that they submitted to the electors only two of the above propositions, namely, the first and fifth; that is,' the amount of the bonds, and the purposes of the use of the money. They wholly omitted to submit the second, third, and fourth propositions, namely, the rate of interest of the bonds, the time when payable, and the time when redeemable. Were these propositions so omitted material, or were they simply formalities? The question now arises before the bonds are delivered to any purchaser, and no question of innocent purchaser is involved. (15 Am. & Eng. Ency. of Law, 1272, cases cited in note 4.)

We are of opinion that the trustees did not submit to the electors questions which the law required to be submitted, and that those questions so omitted should, on consideration of an application to enjoin the issuance of the bonds, be considered vital and material, and not simply needless formalities. An election for the issuance of school bonds is a special election, held pursuant to notice. The electors had no notice by any general law, as they have of a general election. The notice of election was therefore indispensable. (Mechem on Public Offices, §§ 172-76; Cooley on Taxation, c. 11.) But the alleged notice in the matter before us did not notify. The electors should have been permitted to decide what rate of interest they were willing that the district should pay. This item was important, and the statute considered it so. Whether the district should pay one rate of interest or another was a question whether the district should or should not pay out a certain sum of money as interest. The difference between one rate of interest and another is a sum of money to be paid, just as much as is the face of the bonds itself. And the statute provides that the electors shall decide upon the payment of this amount just as positively as that they shall decide upon the amount of the principal sum that they shall borrow. The time of payment and redemption is also a matter of importance to the electors. It is of interest to the borrower (and the electors are in fact the borrowers) to decide whether he wishes to make a short loan or a long loan, and whether he shall have the privilege to redeem in a short time, or whether he must allow the principal to stand, and he be compelled to go on and pay interest, after a date when he thinks that he can lift from himself the burden of this debt. These three important matters the electors never had an opportunity to vote upon. No one ever passed upon these questions, except the trustees when they came to prepare their bonds. We have no doubt that this was for the electors to determine, and not the trustees. As above noticed, this question arises under proceedings to enjoin the issuance and delivery of the bonds, and is not between any innocent purchasers of the bonds and the school district.

It is therefore ordered that the judgment be reversed, and the case be remanded to the district court, with directions to overrule the demurrer, and to proceed thereafter in accordance with the views expressed in this opinion.

Reversed.

PembertoN, C. J., concurs.