School Dist. No. 14 v. School Dist. No. 21 , 51 Wyo. 370 ( 1937 )

School District No. 14 in the County of Fremont was established on June 8, 1932. Its territory previously was part of School District No. 21, except that a small portion was taken from School District No. 38. In the fall of 1932, some of the expenses of the new district were paid by School District No. 21. The directors of the new district, however, believed it best that the funds expected at that time from the general county taxes and from the state should be divided immediately. They also believed it best that whatever apportionment of property and credits the law provided should be made at that time. This also was the opinion of the county superintendent of schools of Fremont County. She accordingly called in the directors of both districts and caused them to enter into an agreement, on October 23, 1932. That agreement, omitting the signatures, is as follows:

"Lander, Wyoming October 23, 1932.

This agreement, entered into the 23rd day of October, 1932, between the boards of trustees of School Districts No. 21 and 14, respectively, witnesseth:

Whereas the joint property of Districts No. 21 and 14 before division has a total valuation of $8728.09 as evidenced by the attached statement, which is hereby accepted as correct by both parties for purposes of division, and

Whereas district No. 21 has about 28% and district No. 14 has about 72% of the assessed valuation of the combined districts; and

Whereas the trustees of both districts are desirous of arriving at a mutual agreement without recourse to expensive and annoying litigation and after full and free conference, they have agreed as follows:

District No. 21 agrees to pay, and district No. 14 agrees to accept as full settlement the sum of $1307.25 to be paid as follows: $425.00 on or before April 1st, 1933; $425.00 on or before April 1st, 1934; and $457.25 on or before April 1st, 1935.

And it is further agreed that both parties shall enter this agreement upon the minutes of their districts as a part thereof.

It is further agreed that this agreement if and when ratified by the Honorable Judge of the District Court of Fremont County, shall forever bar either party from instituting or prosecuting any suit at law based upon the division of property as herein agreed upon.

In view of the above, all parties pray the Honorable Court to ratify this agreement."

The statement of assets attached to the agreement showed that at that time there were in School District No. 21 seven schools, valued at the sum of $6800; cash on hand $1365.63; a bus, valued at $250, unexpired premium insurance, $310.46, making a total of assets of School District No. 21, before the division, of $8726.09. Three of the schools were located in District No. 14, valued at $3300, which was subtracted from the total. The taxable property of School District No. 21, after the division, was stated at $184,864.06. The taxable property of School District No. 14, after the division, was stated as $481,166.28. In other words, the assessed valuation of School District No. 14 was approximately 72%, and the assessed valuation of No. 21 (after the division) was approximately 28% of the combined assessed valuation of the two districts. While it does not appear from the record just exactly how the sum of $1307.75, mentioned in the agreement, was arrived at, it was approximately 72% of the public property, including credits, of District No. 21 at the time of the division, after giving it credit for the three school houses located in District No. 14. The agreement above mentioned was filed in the district court of Fremont County, and confirmed ex parte.

District No. 21 refused to pay as it had agreed, and this action was brought to compel it to do so. The district court rendered judgment in favor of the plaintiff and against the defendant for the sum of $1748, and from this judgment the defendant has appealed.

1. Appellant claims that the agreement in this case, upon which suit was brought, was not authorized by statute and is therefore void. Counsel for the respondent argues that the legislature has, in the case of a division of a school district, provided for an apportionment of the indebtedness according to the assessed valuations in the respective districts and that, accordingly, this "yard-stick" should be used also in dividing the property and the money on hand at the time of the division. It is however, stated in 56 C.J. 269 as follows:

"In the absence of an applicable statutory provision to the contrary, it is a general rule that when a school district or other local school organization is divided or a part is detached, the territory so detached, being attached to another district or included in a district newly created, and the old district retaining its existence, such old district retains all its rights, powers, privileges and property, and all its moneys and funds on hand or receivable."

The principle is applicable, of course, also in case of division of a county, and was recognized by this court in the case of County Commissioners of the County of Laramie v. County Commissioners of the County of Albany, 1 Wyo. 137. That case was appealed to the Supreme Court of the United States, in which the question was discussed at length. 92 U.S. 307. The court, in that case, quoted from Windham v. Portland, 4 Mass. 389, decided in 1808, which seems to be one of the earliest cases upon the subject, and in which it was said, discussing the division of a county:

"If a part of its territory and inhabitants are separated from it by annexation to another, or by the erection of a new corporation, the former corporation still retains all its property, powers, rights and privileges, and remains subject to all its obligations and duties, unless some new provision should be made by the act authorizing the separation."

The United States Supreme Court, in continuing its discussion in the case above mentioned, further stated in part:

"Decisions to the same effect have been made since that time in nearly all the States of the Union where such municipal subdivisions are known, until the reported cases have become quite too numerous for citation. Nor are such citations necessary, as they are all one way, showing that the principle in this country is one of universal application. Concede its correctness, and it follows that the old town, unless the legislature otherwise provides, continues to be seized of all its lands held in a proprietary right, continues to be the sole owner of all its personal property, is entitled to all its rights of action, is bound by all its contracts, and is subject to all the duties and obligations it owed before the act was passed effecting the separation * * *. Regulation upon the subject may be prescribed by the legislature, but, if they omit to make any provision in that regard, the presumption must be that they did not consider that any legislation in the particular case was necessary. Where the legislature does not prescribe any such regulations, the rule is that the old corporation owns all the public property within her new limits, and is responsible for all debts contracted by her before the act of separation was passed. Old debts she must pay, without any claim for contribution; and the new subdivision has no claim to any portion of the public property except what falls within her boundaries, and to all that the old corporation has no claim."

We have found no case announcing a contrary rule. Thus it was held in Munhall Borough School District v. Mifflin Township School District, 207 Pa. 638, that when the legislature provides for apportioning the money, but no other property, the apportionment must be confined to money. The court in part said:

"Express provision is made for ascertaining the amount of money which the new district shall pay to the old, in case of its having an undue proportion of property within its bounds. But the former contingency (that of dividing other property) seems not to have been contemplated. * * * It is not for us to give reasons for the legislative action, but it is apparent that, in forming a new district, the situation is fully open to the view of those interested. It is not forced out of the old district — it goes out presumably for its own benefit, and its interests can be properly protected, and its proportion of the real estate and movable property of the old district can be secured to it, if deemed important, by so adjusting the lines of division. But, however that may be, we have before us nothing more than the construction of a statute, which, by its terms, in so far as it relates to the subject-matter of the plaintiff's claim, gives it no right to demand from the defendant payment for any excess of school property remaining with it, after the lines of the new district were drawn."

It is apparent, accordingly, that no apportionment of any property whatever is valid in this case, unless the legislature has made provision therefor. The only statute bearing upon the subject is Chapter 150 of the Session Laws of 1921, now contained in Section 99-901, Rev. St. 1931. That chapter, in so far as material here, including its title, is as follows:

"An Act providing that Chapter 92 of the Wyoming Compiled Statutes, relating to the apportionment shall apply to the apportionment of indebtedness of school districts. Be It Enacted by the Legislature of the State of Wyoming: Apportionment When District is Divided.

Section 1. That whenever any school district shall be divided into two or more parts, the credits or the indebtedness of such district shall be apportioned between the several districts in the same manner that indebtedness or credits are apportioned when a county is divided, as provided in Chapter 92 Wyoming Compiled Statutes of 1920" etc.

In order to determine, accordingly, what, if any, property shall be divided when a new school district is created and how it shall be divided, it is necessary to turn to the law providing for apportionment when a county is divided, as mentioned in Chapter 92, Compiled Statutes of 1920, now contained in Chapter 29, Article 6, of the Revised Statutes of 1931, being Sections 29-601 to 29-606 inclusive. It may be interesting to note that the first law upon that subject was approved on December 15, 1877, as shown by page 54 of the Session Laws of that year. The law then enacted is substantially Section 29-601, Rev. St. 1931, and merely provided that in case of a division of a county, the new district should be held liable for the payment of a just and equitable proportion of the indebtedness of the old county. The act related to indebtedness alone, and nothing more. It made no provision whatever for taking into consideration any property or credits of the old county. Further provision was made by Chapter 32 of the Session Laws of 1882, now contained, without any substantial change, in Section 29-602 to 29-606 of the Revised Statutes of 1931. Section 29-602 makes reference only to the apportionment of indebtedness. The new county is thereby compelled to assume the same proportion of the old county's indebtedness which the assessed value of the real and personal property of the detached territory bears to the assessed value of the real and personal property of the original county. The next section is the first section which makes any reference to the public property and the money and the credits of the old county, and provides that a report shall be made to the court thereof. Section 29-605 then provides:

"It shall be the duty of said court to which such report is made or the judge thereof in vacation to determine upon the basis hereinbefore stated the proportion of the existing indebtedness which such new county shall bear after deducting its proportionin the same ratio of the value of all public property, moneys andcredits of the original county."

It is clear, we think, from what appears above, that when a county is divided an apportionment can take place only in case an indebtedness exists at the time of the division. Public property, moneys and credits possessed by the old county at that time can be considered only as an offset, and nothing more. There is no provision for an apportionment independent of the existence of indebtedness, and the new county can get no benefit from any property or credits or moneys of the old county other than by way of an offset. There is nothing in Chapter 150, Session Laws of 1921, above quoted, relating to the creation of a new school district, which indicates that it is intended to go beyond the like provisions relating to counties. It may be noted that the title of Chapter 150, supra, mentions indebtedness alone. The apportionment of credits and indebtedness must be made in the same manner in which indebtedness and credits are apportioned when a county is divided, and inasmuch as no apportionment whatever can be made in case of the division of counties except only when an indebtedness exists, it seems clear that the same condition must exist for an apportionment when a new school district is created out of an old one. It is agreed, in the case at bar, that District No. 21 had no indebtedness. None was attempted to be apportioned in this case. Hence, no apportionment of any kind was authorized. The agreement made in this case was, accordingly, beyond the power of the Board of School District No. 21 to make. That board has only such powers as are specially conferred upon it by constittuional and statutory provisions, or powers which are incidental to those expressly conferred. 56 C.J. 294-295. No statutory provision has been pointed out which would authorize the agreement in suit in this case. The fact that it was submitted to the court and was approved ex parte, could add nothing to its force. No judgment upon the agreement was, accordingly, authorized. The cases of School District No. 3 v. School District No. 2, 29 Wyo. 80,210 P. 562, and Board of Commissioners of Park County v. Board of Commissioners of Big Horn County, 25 Wyo. 172, 166 P. 674, contain nothing which is inconsistent with this conclusion.

Counsel for the respondent argues, as above mentioned, that no good reason exists why the rule of apportionment applicable to indebtedness should not, in equity, apply to assets. That would perhaps be true if these assets had been derived from special taxation. The record does not show that to be true. It may be that they were derived from the general county levy for the benefit of schools, and from the state. If that is true, no such division of funds and property as was made in this case would be justified even from an equitable standpoint, for the record indicates that after School District No. 14 was formed the latter was entitled to approximately 4/11 and District No. 21 to approximately 7/11 of such funds. However that may be, we have to deal here only with the construction of the statutes of this state, and, as we have seen, these statutes furnish no basis for the claim upon which suit was brought in this case. Nor can we say that the legislature has left the law in an unfortunate situation and has failed to make equitable provisions in case of the division of a school district. It is not altogether improbable that it may have thought that such divisions should not be made too easily. If the school districts in question in this case were compelled to raise their necessary expenses by special taxation, then, it is readily seen, a division in this case, since the old district was left with only 28% of the assessed valuation, might have been very unjust.

2. It appears that during the school year of 1932-33, District No. 14 received funds in the amount of $5524.71, and paid out the sum of $4538.63. The appellant claims, if we correctly understand the record before us and the briefs of counsel, that the amount so received should have been paid over to District No. 21, and that the expenses for that year also should have been paid by it, in accordance with the provisions of Section 99-309, Wyo. Rev. St. 1931, which reads as follows:

"Whenever the district boundary board shall have formed or established a new district from districts already legally organized, the school board of such newly organized district may draw its proportion of the public school funds for paying teachers or other necessary legal school expenses from the school treasury of the district from which it was separated until such time as the newly organized district shall receive its proper apportionment of school moneys and taxes. In like manner, any district which is established from two or more districts may draw its proportion of the proper school funds for payment of teachers or other necessary legal school expenses from the treasury of the district to which the said new school district formerly belonged."

Appellant accordingly asked in the trial court by way of counterclaim and asks here that it should have judgment against the respondent for the difference between $5524.71 and $4358.63. We need not determine as to whether or not the funds received by District No. 14 from the county and the state should have been turned over, as claimed. The sum of $1387.39 was received, if we understand the record correctly, as the result of a special levy in District No. 14, and for which District No. 21 could, of course, have no claim, either legal or equitable. Deducting this amount from $5524.71, the remaining amount received by District No. 14 during the school year above mentioned was $4137.32, an amount less than that which was paid out as expenses during that period, so that no basis remains for a counterclaim.

The judgment of the district court is accordingly reversed, with directions to dismiss the plaintiff's petition as well as the counterclaim of the defendant herein.

Reversed, with Directions.

RINER and KIMBALL, JJ., concur.