Billings v. Bankers' Bond Co.

• Decision Date: 01 June 1923
• Citation: 199 Ky. 490,251 S.W. 643
• Parties: BILLINGS v. BANKERS' BOND CO. ET AL.
• Court: Kentucky Court of Appeals

251 S.W. 643

199 Ky. 490

BILLINGS v. BANKERS' BOND CO. ET AL.

Court of Appeals of Kentucky.

June 1, 1923

Appeal from Circuit Court, Daviess County.

Action by Wayne Billings against the Bankers' Bond Company and others, to enjoin performance of a contract with the Board of Education. From a judgment dismissing the action after general demurrer was sustained to the petition, plaintiff appeals. Reversed.

Clements & Clements, of Owensboro, for appellant.

Ben D Ringo, of Owensboro, for appellee board of education.

Lawrence S. Leopold, of Louisville, for appellee Banker Bond Co.

SAMPSON C.J.

Only a few miles from Owensboro, in Daviess county, is the village of Thruston, from which all highways diverge. It is surrounded by a rich farming country. Its citizenship is high class, and especially ambitious for schools. The county board of education owns an eight-acre tract of land suitable for school purposes. It was acquired for the purpose of erecting thereon a school building of the size and requirements which the district believed was needed. As the cost was estimated at something like $50,000 it is easy to determine, under provisions of section 157 of the Constitution, that the funds were not available and could not be obtained except by a bond issue authorized by a two-third vote of the district. For some reason it was not thought best to submit the question to the voters. Thereupon the board of education entered into a contract with the appellees Hagan & Potts, by which it was agreed in writing, as shown by Exhibit J, that the board of education would convey the building site to Hagan & Potts who would erect thereon a school building according to plans and specifications at a cost of $40,000, and would in turn permit the board of education to pay for the school building an annual rental of 13 semiannual payments of $3,750 each and two semiannual payments of $2,500 each. Out of this sum the said Hagan & Potts would either pay to or permit the school board to retain $3,500 to be used for plumbing, heating, and wiring said school building. When all the payments had been made in accordance with said contract, then Hagan & Potts or their vendees would reconvey said property to the Daviess county board of education. It was also provided in the contract that, in the event of default of any of the payments of any installment, then the board of education could be compelled by proper action to levy and collect such taxes as necessary to cover any payment defaulted. The board of education was likewise to pay all taxes on said land and improvements, and to keep same insured in a sufficient amount to cover the unpaid installments.

Simultaneously with the making of said contract between the board of education and Hagan & Potts the latter entered into a written contract with the appellee the Bankers' Bond Company, by which it agreed to lend to Hagan & Potts the sum of $40,000 with which to carry out its contract with the board of education. Hagan & Potts agreed to secure this loan by deed of trust or mortgage on said school property to secure mortgage bonds to be issued and held by said Bankers' Bond Company evidencing said sum of $40,000. Various provisions of said contract provided ample means of protecting the bond company in its loan, which was to be repaid to it by the semiannual installments agreed to be paid by the board of education to Hagan & Potts, as set out in contract marked J. The contract between Hagan & Potts and the Bankers' Bond Company is marked Exhibit Q.

Appellant Billings is a patron and taxpayer of the consolidated school district in which the building is proposed to be erected. He sues for himself and all other patrons and taxpayers similarly situated, of which he avers there are many, to enjoin the board of education compelling contractors Hagan &amp Potts and the Bankers' Bond Company from carrying into effect any of the agreements and contracts above mentioned. The board of education filed its answer, admitting practically all the averments of the petition. Affirmatively it pleaded that...