Agar School Dist. No. 58-1 Bd. of Educ., Agar, S.D. v. McGee

• Decision Date: 25 January 1995
• Docket Number: 18761,18767 and 18769,Nos. 18758,s. 18758
• Citation: 527 N.W.2d 282
• Parties: AGAR SCHOOL DISTRICT # 58-1 BOARD OF EDUCATION, AGAR, SOUTH DAKOTA; John Bush, Joan Bush, Jeff Bush, Jerry Bush, Carol Bush, and Tom Asmussen of Pierre, South Dakota; Stanley Asmussen, W.J. Asmussen, Ted Asmussen, Vernon Brandt, Mike Mikkelsen and Lewis Robbennolt of Agar, South Dakota; and Marion Schreiber of Gettysburg, South Dakota, Petitioners and Appellants, v. Sully County Auditor Patty McGEE, Sully County Treasurer Edna M. Brunmeier, Pierre School District, Gettysburg School District, and Sully Buttes School District, Appellees.
• Court: South Dakota Supreme Court

Page 282

527 N.W.2d 282

AGAR SCHOOL DISTRICT # 58-1 BOARD OF EDUCATION, AGAR, SOUTH DAKOTA; John Bush, Joan Bush, Jeff Bush, Jerry Bush, Carol Bush, and Tom Asmussen of Pierre, South Dakota; Stanley Asmussen, W.J. Asmussen, Ted Asmussen, Vernon Brandt, Mike Mikkelsen and Lewis Robbennolt of Agar, South Dakota; and Marion Schreiber of Gettysburg, South Dakota, Petitioners and Appellants, v. Sully County Auditor Patty McGEE, Sully County Treasurer Edna M. Brunmeier, Pierre School District Gettysburg School District, and Sully Buttes School District, Appellees.

Nos. 18758, 18761, 18767 and 18769.

Supreme Court of South Dakota.

Argued Oct. 17, 1994.

Decided Jan. 25, 1995.

Mark A. Moreno and Cheryl Schrempp Dupris of Schmidt, Schroyer, Colwill & Moreno, Pierre, for petitioners and appellants.

Darla Pollman Rogers of Sully County State's Atty., Onida, for appellees McGee and Brunmeier.

Craig E. Smith of Neumayr and Smith, Gettysburg, for appellee Gettysburg School Dist.

Robert D. Hofer of Riter, Mayer, Hofer, Wattier & Brown, Pierre, for appellee Pierre School Dist.

Dennis H. Hill and Thomas W. Stanton of Costello, Porter, Hill, Heisterkamp & Bushnell, Rapid City, for appellee Sully Buttes School Dist.

MILLER, Chief Justice.

Appellants Agar School District No. 58-1, Agar School District Board of Education, and certain taxpayers of Agar, South Dakota (collectively referred to as Agar) appeal the decision of the trial court granting dismissal to appellees Sully County Auditor, Sully County Treasurer, and the Pierre, Gettysburg, and Sully Buttes School Districts. Agar disputes the trial court's conclusion that the Agar School District and its board of education lacked standing to file suit challenging the validity of a tax because it had received no injury from the appellees' actions. Agar also appeals the trial court ruling that it had an adequate remedy at law pursuant to SDCL 10-27-1 so as to preclude its action for prohibition, injunction or declaratory relief. Sully County and Sully Buttes School District appeal, claiming that the South Dakota Department of Revenue was an indispensable party and that the trial court should have dismissed the action for this reason. Sully Buttes School District also alleges that summary judgment should have been granted to it on the grounds of champerty or maintenance. We affirm in part and reverse in part and remand.

FACTS

The Agar School District closed its high school in 1984. It subsequently entered into agreements with the Pierre, Gettysburg, and Sully Buttes School Districts for the education of Agar's high school students. The South Dakota Legislature later enacted SDCL 13-15-14.2. Under this law, if the Agar School District did not operate a grade school and a high school within the boundary of the school district by July 1, 1993, it could be required to reorganize its school district or adjust its taxation. Agar School District prepared to re-open a high school. According to Agar, on July 1, 1993, one student was enrolled in a summer course which would apply toward his diploma at the new high school. Agar also claims that, in June 1993, four students had expressed their intention to attend the new Agar high school in the fall of 1993.

In August 1993, Agar's Board of Education approved its budget for the 1993-94 school year. A budget report was sent to the Sully County Auditor, requesting that she make a property tax levy of approximately $637,257.00 for the Agar School District. According to Sully County officials, the Department of Revenue rejected the levy on the grounds that a tax adjustment was required. The Sully County Auditor accordingly adjusted the tax levy, which caused an additional tax to Agar taxpayers of approximately $430,000. The Sully County Treasurer began collecting the tax in accordance with the higher, adjusted levy. Various Agar taxpayers, Agar School District, and the Board of Education filed suit against the Sully County Auditor, the Sully County Treasurer, and the Pierre, Gettysburg, and Sully Buttes School Districts. In an amended petition, they asked the court to declare the adjusted tax levy void and to prohibit the Sully County Treasurer and Auditor from collecting the additional tax and distributing it to the Pierre, Sully Buttes and Gettysburg School Districts.

The circuit court dismissed the case. Agar appeals to this Court and raises the following issues:

1. Whether the trial court erred in dismissing Agar's case under SDCL 15-6-12(b) and applicable precedent.

2. Whether the Agar School District and Board of Education have standing to sue and maintain a suit against Sully County and the Pierre, Sully Buttes, and Gettysburg School Districts.

3. Whether the trial court erred in holding that the Sully County Auditor's and Treasurer's actions were lawful and authorized by state law.

4. Whether the trial court erroneously held that Agar was not entitled to prohibition or injunctive and/or declaratory relief.

5. Whether the trial court erred in not granting Agar's motion for summary judgment, in whole or in part.

Sully County officials and/or Sully Buttes School District raise the following additional issues on appeal:

6. Whether the lawsuit was barred under SDCL 10-27-1.

7. Whether the case should have been dismissed for failure to join the South Dakota Department of Revenue as an indispensable party.

8. Whether Sully Buttes School District was entitled to summary judgment on the defense of champerty or maintenance.

DECISION

ISSUE I

WHETHER THE AGAR SCHOOL DISTRICT AND BOARD OF EDUCATION HAVE STANDING TO SUE AND MAINTAIN SUIT AGAINST SULLY COUNTY AND THE PIERRE, SULLY BUTTES, AND GETTYSBURG SCHOOL DISTRICTS.

"Standing is established through being a 'real party in interest' and it is statutorily controlled." Wang v. Wang, 393 N.W.2d 771, 775 (S.D.1986). Under SDCL 15-6-17(a), "[e]very action shall be prosecuted in the name of the real party in interest." The real party in interest requirement for standing is satisfied if the litigant can show " 'that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the Defendant.' " Parsons v. South Dakota Lottery Commission, 504 N.W.2d 593, 595 (S.D.1993) (quoting Gladstone, Realtors v. Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66, 76 (1979)).

The various taxpayer plaintiffs in this case clearly have standing to bring suit. "[A] taxpayer need not have a special interest in an action or proceedings nor suffer special injury to himself to entitle him to institute an action to protect public rights." Wyatt v. Kundert, 375 N.W.2d 186, 195 (S.D.1985) (citing State ex rel. Jensen v. Kelly, 65 S.D. 345, 347, 274 N.W. 319, 321 (1937)).

In contrast, the School District and Board of Education are not taxpayers. The trial court concluded that these entities failed to establish any other injury that would satisfy requirements for standing.

Agar argues that the School District and Board of Education have suffered actual or threatened injury as a result of the conduct of the Sully County Treasurer and Auditor. These claimed injuries consist of (1) the disbursement of the additional tax to the Pierre, Gettysburg, and Sully Buttes School Districts rather than the Agar School District; (2) the usurpation of the Board's and School District's taxing authority through the failure of the Sully County Auditor to obtain the approval of the Agar School District or Board of Education before carrying out the tax adjustment; (3) the possibility that the School District will be required to dissolve or combine with another school district under SDCL 13-6-9.4; and (4) potential liability for breach of the school district's and school board's fiduciary duty to taxpayers to levy and spend no more taxes than are reasonably necessary.

None of the alleged injuries cited by Agar satisfy standing requirements. Agar School District does not dispute that it received all of the money it requested for the relevant school year. Consequently, the fact that the additional tax will be disbursed to other school districts does not affect Agar School District's operation. Claims of harmful "usurpation" of the Board's or School District's taxing powers are likewise unconvincing in light of the School District's receipt of the full amount of tax money it requested. See Nebraska Sch. Dist. No. 148 v. Lincoln Airport Authority, 371 N.W.2d 258, 261 (Neb.1985) (school district lacked standing to challenge real estate acquisitions by airport authority where school district was not a taxpayer and would therefore suffer no increased tax burden or public loss from the expenditure, and school district would not lose money as a result of the acquisition).

Furthermore, "a hypothetical or abstract interest is insufficient to confer standing to bring a declaratory judgment action." Mosher Steel-Virginia v. Teig, 229 Va. 95, 327 S.E.2d 87, 91 (1985). Liability for breach of a nebulous "fiduciary duty" to taxpayers is highly speculative given the fact that neither the School District nor the Board of Education levied the allegedly tortious tax. Similarly, there is no evidence that imminent dissolution or recombination of the Agar School District is contemplated.

Lastly, Agar School District argues that its contracts with other school districts for the education of students confers standing in this action. The rights and liabilities of the parties to those contracts is not at issue in this case. Those contracts are only tangentially related to this action. This attenuated relationship is not sufficient to confer standing on Agar School District or the Board of Education.

We are therefore unable to conclude that Agar School District or the Board of Education have "a definite interest in the matters in contention in the sense that [their] rights will be significantly affected by a resolution of the contested point." Bonan v. City of Boston, 398 Mass. 315, 496...