Allen v. Van Buren Tp. of Madison County

• Decision Date: 26 June 1962
• Docket Number: No. 30194,30194
• Parties: Wilfred ALLEN, for himself and on behalf of all others similarly situated, Appellant, v. VAN BUREN TOWNSHIP OF MADISON COUNTY; Van Guren School Township of Madison County; Harold Forrest, as Township Trustee of Van Buren Township of Madison County and Van Buren School Township of Madison County; Don Gossett, Eugene Dupouy, and Robert A. Dean, as and constituting the Advisory Board of Van Buren Township of Madison County and Van Buren School Township of Madison County, Appellees.
• Court: Indiana Supreme Court

Page 25

184 N.E.2d 25

243 Ind. 665

Wilfred ALLEN, for himself and on behalf of all others similarly situated, Appellant, v. VAN BUREN TOWNSHIP OF MADISON COUNTY; Van Guren School Township of Madison County; Harold Forrest, as Township Trustee of Van Buren Township of Madison County and Van Buren School Township of Madison County; Don Gossett, Eugene Dupouy, and Robert A. Dean, as and constituting the Advisory Board of Van Buren Township of Madison County and Van Buren School Township of Madison County, Appellees.

No. 30194.

Supreme Court of Indiana.

June 26, 1962.

William F. Lawler, Jr., Anderson, for appellant.

Donald P. Jones, Alexandria, Harry T. Ice, David N. Brewer, Robert D. Risch, Robert D. McCord, Jr., (Ross, McCord, Ice & Miller, Indianapolis, of counsel), for appellees.

BOBBITT, Justice.

Appellant brought this suit to enjoin appellees, and each of them, from taking further action regarding the issuance of bonds to finance the construction and equipment of an elementary school in Van Buren School Township in Madison County, Indiana, for the alleged reason that the proposed amount of such bonds, together with all other outstanding indebtedness will exceed the two per cent debt limit in both the civil and school townships in violation of the provisions of Article 13, § 1, of the Constitution of Indiana.

Trial was to the court on a stipulation of facts by the parties.

Pertinent facts stipulated are:

Plaintiff-appellant is a resident of and owner of taxable property located within both the Van Buren civil and school townships and brings this suit for himself and for and on behalf of all other resident taxpayers in such townships; that proper proceedings were instituted for the issuance of bonds of the school township in an amount not to exceed $100,000, and of the civil township in an amount not to exceed $95,000, for the purpose of procuring funds to pay the cost of construction and equipment of an elementary school building in such school township; that it is proposed to issue bonds of the school township in an amount of $76,000, and of the civil township in an amount of $71,000; that the school township has heretofore issued and has now outstanding bonds in the amount of $56,000, and the civil township has heretofore issued and has outstanding bonds in the amount of $61,000; and that the total net taxable property within the school township, as shown by assessments for taxes for the year of 1960, payable in 1961, is $3,152,350, and for the civil township, $3,150,350.

It is readily apparent from the foregoing that on the basis of two per cent of the net assessed valuation the bonding limit of the school township is $63,047, and of the civil township also $63,047.

The amount of bonds which could legally be issued under the two per cent limit, based on the net taxable property, is: school township-$7,047; and civil township-$2,047.

The injunction was denied, and this appeal followed.

The sole error assigned is the overruling of plaintiff-appellant's motion for a new trial, and we shall consider only Specification No. 1: 'That the decision of the Court is contrary to law.'

Appellant asserts that the limit of indebtedness upon a political or municipal corporation pursuant to Article 13, § 1, of the Constitution of Indiana, supra, is two per cent of the net assessed valuation of taxable property within such politicial or municipal corporation and not two per cent of the 'actual or true value' as contended by appellees.

Appellees rest their position upon the validity of Acts 1961, ch. 122, § 2, which appellant asserts is invalid and void as being in violation of the provisions of Article 13, § 1, supra, which is as follows:

'No political or municipal corporation in this State shall ever become indebted in any manner or for any purpose to an amount in the aggregate exceeding two per centum of the value of the taxable property within such corporation, to be ascertained by the last assessment for State and county taxes, previous to the incurring of such indebtedness; and all bonds or obligations, in excess of such amount, given by such corporation, shall be void: * * *.' (Our italics.)

Chapter 122, supra, provides that whenever a school corporation, municipal corporation or political subdivision proposes to issue bonds, it shall obtain from the county auditor a certificate indicating the value of taxable property which shall be certified as follows:

'a. The total assessed valuation of such taxable property shall be set out;

'b. The percentage used in converting the value of property into assessed valuation as provided by Chapter 316 of the Acts of 1959 shall be applied to such assessed valuation in such a manner as to derive the valuation to be used as a base for limiting the bonding power of such corporation, as contemplated in Article 13, Section 1, of the Constitution of the State of Indiana and as used in Chapter 316, Acts of 1959.'

Chapter 316 of the Acts of 1959 provides for the reassessment, for taxation purposes, of all real estate and improvements thereon in 1961 and every eight years thereafter. Section 5 ¹ of this Act provides that the rate of assessment shall be thirty-three and a third per cent of the 'true cash value' of the real estate and improvements thereon, which the assessing officials shall determine from forms and standards apopted and promulgated by the State Board of Tax Commissioners, as of March 1 of the year preceding the making of any periodical reassessment.

The determinative question here is whether the two per cent debt limitation is to be based upon the true cash value or upon the assessed value which is one-third of the true cash value.

If the two per cent debt limitation must be based upon the 'assessed value' then the trial court erroneously denied the injunction and the proposed bonds may not be issued because they would exceed the constitutional bonding limit of both the civil and school townships.

Prior to 1949 all property in Indiana was, by statute, required to be assessed at its true and actual value.

The question here presented is one of first impression in this State.

Four other jurisdictions with practically identical constitutional provisions have considered the question with which we are faced in the present case. Three of them, Iowa, Utah and Washington, support appellees' position here, and the State of Illinois supports the position of appellant.

The question was before the Supreme Court of Iowa in N. W. Halsey & Co. v. City of Belle Plaine (1905), 128 Iowa 467, 104 N.W. 494, and Miller v. City of Glenwood (1920), 188 Iowa 514, 176 N.W. 373; and before the Supreme Court of Utah in Board of Education etc. v. Passey (1952), 122 Utah 102, 246 P.2d 1078, and State v. Spring City (1953), 123 Utah 471, 260 P.2d 527; and the Supreme Court of Washington in Hansen v. City of Hoquiam (1917), 95 Wash. 132, 163 P. 391, and Schoen v. City of Seattle (1921), 117 Wash. 303, 201 P. 293.

We are not impressed with the reasoning in these cases. While well-reasoned opinions from other jurisdictions may be persuasive in the determination of a new question of law they are, however, not conclusive. We are, for the reasons which will presently appear, not persuaded by the reasoning in the decisions upon which appellees rely, and accordingly we decline to adopt the result which they have reached.

Section 1 of Articel 13, supra, of the Constitution of Indiana was adopted as an amendment to the Constitution in 1881, and was proposed at a time when towns, cities, townships and counties were overburdened with debt as the result of extravagant spending in the Reconstruction Era and the cry came from townships, cities and towns for protection against increased debt and taxation.

Our Constitution provides that the 'General Assembly shall provide, by law, for a uniform and equal rate of assessment and taxation; * * *.' Article 10, § 1, Constitution of Indiana.

Although the statutes pertaining to the assessment of property have, from the time of the adoption of § 1 of Article 13, supra, of the Constitution of Indiana, to 1949, provided that property should be assessed at its 'true cash value', it is common knowledge and a fact of which we take judicial notice, that assessing officials have always assessed property at a part only of its 'true cash value', and we see no reason why the Legislature should not add some uniformity to this method of assessment by requiring that all real estate and improvements thereon shall be assessed at a fixed per cent of its true cash value as determined by standards fixed in the statute, ² thus eliminating inequalities which have existed between the various taxing districts within the State.

Since the adoption of the amendment in 1881, the two per cent limit on bonded indebtedness has, without exception, been determined and calculated in Indiana by taking two per cent of the net assessed valuation of the property, for taxation purposes, within the unit issuing the bonds. This has been the customary practice in all governmental units, and with attorneys who have approved the validity of the bonds, and with the full knowledge of taxpayers, attorneys and officials involved, that the value of the property to which the two per cent limitation was applied, was less than its true cash value.

A recognition of this custom of accpeting the assessed value as the basis for determining the two per cent limit of indebtedness is also to be found in the decisions of this court. ³

While the custom and practice of using the net assessed value of taxable property as the basis for calculating and ascertaining the limit of indebtedness pursuant to Article 13, § 1, supra, is not binding upon us, however, because this practice has been consistently followed by the administrative officers involved, accepted by attorneys who have approved the legality of bond issues for the past 70 years, and accepted for more than 80 years by the general public...