Lakeside School Dist. of Chicot County v. Gaines , 202 Ark. 778 ( 1941 )

I cannot agree with my associates in holding, as I think they do, that this court has a right to construe amendment No. 11 as authorizing the voting of a tax to pay this indebtedness, although the constitution does not so provide.

The decree in this case was originally affirmed and I wrote an opinion which was approved by a majority of this court. The court afterwards, however, concluded that it should be reversed, to which conclusion I do not agree.

I submit, therefore, my original opinion as my dissenting opinion in this case. The opinion is as follows:

This is a suit by a taxpayer, instituted by appellee against the appellant seeking to permanently restrain and enjoin the appellant school district from issuing and disposing of bonds, and alleging that act 91 of the Acts of 1941 is invalid and that the district proposes to pledge, for the retirement of proposed bonds, the proceeds of a 2-mill building fund tax voted by the electors of the district contrary to the provisions of law and in opposition to amendment No. 11 of the State Constitution. Appellee alleged in his complaint not only that act 91 was invalid, but that the district proposes to issue bonds to a greater amount than is authorized by the act.

The appellant filed answer alleging that the indebtedness which it proposed to fund has been incurred in the maintenance of schools and is one of the purposes for which amendment No. 11 expressly authorizes a school tax to be voted; denied that act No. 91 was void, and alleged that act 91 expressly authorized it to issue and sell negotiable coupon bonds in the manner provided by statute for the sale of school bonds; alleges that notice was given and the provisions of the statute complied with and that the State Board of Education had approved the issue and approved the advertising and sale of these bonds; that the sale of the bonds was duly advertised in a newspaper published in Chicot county and a copy of proof of publication notice is attached thereto and made part thereof; that the sale was held at the time and place advertised and bonds were sold to the highest bidder, who proposed to convert $42,715 in 4 per cent. bonds into $48,100 3 per cent. bonds. The answer alleged the dates on which the bonds would mature. The appellant adopted and entered upon its records a resolution declaring the indebtedness as of February 25, 1941, and a copy of this resolution is attached and made part of the answer; that this resolution was duly published, and that no suit has been brought to review the correctness of the finding made by such resolution, and that therefore the finding in the resolution is conclusive both as to the total amount of the indebtedness and as to its validity; that the appellant had $42,715 in warrants outstanding which it was not able to pay; that it is operating under the budget law and is not increasing its debt; yet it is not decreasing the debt; that a warrant issued now cannot be cashed in varying periods of time, from 12 to 18 months after its date; that the result of this is that appellant's warrants are being discounted at the rate of 8 per cent. of the face value, and sometimes at a higher rate; that it is having trouble getting its warrants handled at all, and is having to pay additional cost of operation because it is not on a cash basis; it states that permitting it to issue these bonds will establish it immediately upon a cash basis, and that there will be an actual saving to the district and that the proposed funding is highly beneficial to the district.

The appellee filed a demurrer to the answer upon the ground that the answer did not constitute a legal and valid defense to the complaint. The court sustained the demurrer and issued the restraining order prayed for, and the case is here on appeal. All the requirements of the law governing the case were complied with.

The appellant contends first that act 91 is valid. Constitutional amendment No. 11 provides for the support of common schools by taxes, and that the taxes shall never exceed in any one year 3 mills on the dollar of taxable property, and all annual per capita tax of one dollar, to be assessed on every male inhabitant of the state over the age of 21 years. It then provides that the General Assembly may, by general law, authorize school districts to levy, by a vote of the qualified electors of such district, a tax not to exceed 18 mills in any one year for the maintenance of schools, the erection and equipment of school buildings, and the retirement of existing indebtedness for building.

Act 91 provides that any school district of Arkansas that has valid outstanding non-bonded indebtedness at the time of the approval of the act is authorized and empowered to issue and sell in the maimer provided by statute for the sale of school bonds, for the purpose of funding said indebtedness, negotiable coupon bonds, with the right to convert said bonds into bonds bearing a lower rate of interest, subject to the approval of the commissioner of education upon such terms that by the conversion the district shall receive no less and pay no more than it would receive and pay if the bonds were not converted. Said act also provides that any school district with an assessed value of less than $1,000,000, as shown by the last county assessment, may issue bonds as authorized herein in an amount that, with its outstanding bonds, will make its bonded indebtedness not more than 7 per cent. of its assessed value, and provided further that any district with an assessed value of over $1,000,000 may issue bonds in an amount that, with its outstanding bonds, will make its bonded indebtedness not more than 8 per cent. of its assessed value. The act then provides what must be done by the board of directors before issuing bonds.

It will be observed that amendment No. 11 authorizes a tax for the maintenance of schools, the erection and equipment of school buildings, and the retirement of existing indebtedness for buildings. There may be many districts in the state that have existing indebtedness for buildings, and under act 91 indebtedness of this character could be paid by issuing bonds and voting the tax. We therefore think that act 91 is valid, but what the appellant is attempting to do under the act is not to voted a tax and issue bonds for the retirement of existing indebtedness for buildings; this it could lawfully do; but under amendment No. 11 it could not vote a tax except for the maintenance of schools, and erection and equipment of school buildings, and the retirement of existing indebtedness for buildings. It could not, under said amendment, vote a tax for the retirement of existing indebtedness for any other purpose. If it needed money for the maintenance of its schools or for the erection and equipment of buildings or for the retirement of existing indebtedness for buildings, it could vote a tax and issue bonds for these purposes, but for no other.

It is earnestly insisted by the appellant that, since the amendment authorizes the voting a tax and issuing bonds for maintenance of schools, this provision authorizes the tax and bond issue in this case because, it said, that in authorizing the tax for maintenance, it does not specify or limit the tax to future maintenance or operation, but simply maintenance, and that this would carry the authority to pay indebtedness incurred for maintenance equally as well as the authority to levy taxes to secure money to pay for future maintenance.

The provision of the constitution, in the same sentence that authorizes a tax for maintenance, also authorizes a tax for the retirement of existing indebtedness for buildings, but it does not authorize a tax for existing indebtedness for any other purpose. Moreover, the amendment also provides that no such tax shall be appropriated for any other purpose nor to any other district than that for which it is levied.

We think it would be unreasonable to hold that the constitution meant, in the use of the phrase "maintenance of schools" the retirement of existing indebtedness for that purpose.

The appellant, in its statement, says: "These outstanding warrants are for practically every school purpose except the retirement of bonds and the erection of school buildings." According to appellant's statement, the indebtedness for which the tax was voted and the bonds issued is not for the retirement of existing indebtedness for buildings. But it is earnestly argued that a portion of it at least was for the maintenance of schools. There is no possible way to tell from the record just what all the indebtedness was for, but if it were all for maintenance of schools, the tax could not be voted under amendment No. 11, or if it were for any purpose other than the purpose mentioned in amendment No. 11.

This court recently said, in speaking of amendment No. 11: "Three purposes are named in the amendment (1) ``for the maintenance of schools'; (2) for ``the erection and equipment of school buildings'; and (3) for ``the retirement of existing indebtedness for buildings'" Horne v. Paragould Sp. Sch. Dist. No. 1, 186 Ark. 1000,57 S.W.2d 568.

It was further stated in the opinion in the above case: "This appears to be very simple language, unambiguous, and not difficult of comprehension." It was also said: "In other words, the 12 mills voted for school purposes could not lawfully be appropriated for payment of bonds or the interest thereof, nor could the 6 mills voted for bond purposes be appropriated for schools. Such is the plain language of the amendment. No other construction can be given, and any other in the present case would probably work disaster to both parties."

The above statement was quoted with approval in the case of Pledger v. Cutrell, 189 Ark. 562, 74 S.W.2d 646,75 S.W.2d 76, in which case the court further said:

"Therefore, the county treasurer of Jefferson county was without authority in law in paying or asserting the right to pay out any of the funds arising from the 18-mill levy of taxes accruing to the school district under amendment No. 11 for the retirement of bonds or accrued interest thereon owed by said school district, and the injunction was properly awarded restraining such misapplication of funds.

"For the reason stated, the chancellor was correct in awarding a permanent injunction against appellant treasurer, and the decree will therefore be affirmed."

The word "maintenance" has a well understood meaning. It means "the act of maintaining" and "maintain" means to support, sustain, to uphold, to keep up. See Webster's Unabridged Dictionary, and for numerous definitions of the word "maintenance" see Law Reports, Queen's Bench Division, vol. 11, p. 1.

The appellant is not seeking to vote a tax or issue bonds for the maintenance of schools, for the erection and equipment of school buildings, nor for the retirement of existing indebtedness for buildings. Its purpose is to vote the tax and issue the bonds for the purpose of paying a debt which was not created for buildings.

As said in Horne v. Paragould Sp. Sch. Dist., supra, the language in this amendment seems to be very simple, unambiguous, and not difficult of comprehension. See, also, Houston Sch. Dist. No. 39 of Perry County v. Commercial National Bank of Little Rock, 199 Ark. 683,135 S.W.2d 677; Oak Grove Consolidated Sch. Dist. No. 9 v. Fitzgerald, Treas., 198 Ark. 507, 129 S.W.2d 223.

It is contended that the suit is barred. The act provides that any elector in said district who is dissatisfied may, by a suit in chancery court of the county brought within ninety days after the date of such publication, have a review of the correctness of the finding made in such resolution, but if no such suit is brought within thirty days from the date of such publication, the finding in the resolution shall be conclusive both as to the total amount of indebtedness and as to its validity; that is, the amount of the indebtedness cannot be questioned nor the validity of the indebtedness. But in the case at bar, the amount of the indebtedness is not questioned, nor its validity, and it is not barred for any other purpose.

All the provisions of the law with reference to publication and the election and result of the election and resolution approving bond issue, and all matters necessary to submit the question to a vote of the people, were complied with. There can be no doubt from the record in this case that the people in the district desire to pay this debt. The record shows that every person who voted at the election voted in favor of the tax and the bond issue, and, but for the constitutional amendment No. 11 which limits the power to vote a tax, they would be entitled to issue bonds to pay this debt. School districts do not derive their power to issue bonds from the constitution, but derive their power from the legislature. But they do derive their power to vote a tax from the constitution, and are limited by its terms.

I think, for the reasons stated, that the decree should be affirmed.