Campbell v. City of Indianapolis

• Decision Date: 29 June 1900
• Docket Number: 19,258
• Parties: Campbell et al. v. City of Indianapolis et al
• Court: Indiana Supreme Court

57 N.E. 920

155 Ind. 186

Campbell et al. v. City of Indianapolis et al

No. 19,258

Supreme Court of Indiana

June 29, 1900

From the Marion Superior Court.

Affirmed.

W. H H. Miller, J. B. Elam, J. W. Fesler, S.D. Miller, and F Winter, for appellants.

J. W Kern, J. E. Bell, Benj. Harrison and Baker & Daniels, for appellees.

Jordan J. Monks and Dowling, JJ., dissent. Baker, C. J.

OPINION

Jordan, J.

Appellants Campbell and Wild, as citizens and taxpayers of the city of Indianapolis, Indiana, on January 30, 1900, instituted this action to enjoin the defendants below, the board of school commissioners of the school city of Indianapolis and the civil city of Indianapolis, from issuing certain school bonds to the amount of $ 100,000 as the obligations of the said school corporation, and from paying either the interest or principal upon outstanding school bonds issued by the board of school commissioners of said city in 1890.

The city of Indianapolis and the board of school commissioners, the latter representing the school corporation thereof, each separately demurred to the complaint for insufficiency of facts. These demurrers were each sustained, and final judgment was rendered in favor of the defendants; and this appeal is prosecuted by appellants from that judgment upon the exceptions reserved by them to the ruling of the court in sustaining the demurrer to their complaint.

It is virtually conceded, and properly so we think, that the civil city of Indianapolis is not a necessary party to this action. It may be further asserted that it is not even a proper party thereto, and, so far as the questions here involved are concerned, the civil city of Indianapolis may be considered as eliminated from the case.

The material facts disclosed under the averments of the complaint are as follows: Appellee, the board of school commissioners, has the charge and control of the affairs and business of the school city or school corporation of Indianapolis and of all matters relating to the common schools of such city. This board was created and organized, as alleged, under an act of the General Assembly of this State in force March 3, 1871 "with the amendments thereto and supplementary acts of the legislature subsequently enacted and the act of March 4, 1899". Such board has had the charge and control of the public schools and school affairs of the school corporation of the city of Indianapolis since its organization under the act of March 3, 1871. On March 1, 1890, the aggregate indebtedness of the civil city of Indianapolis and of its school corporation was $ 2,145,500, which amount at that time exceeded two per cent. of the taxable property of the city of Indianapolis. It is further averred that at no time since March 1, 1890, and the time of filing the complaint in this action has the aggregate indebtedness of the civil city and the school city combined been under two per cent. of the assessed taxables of the current year, as shown by the city's tax duplicate.

By reason of the increased value of the taxable property of the city and by payment of a portion of the public debt incurred by the civil city, the latter's indebtedness has been reduced within the two per cent. limit. On March 1, 1890, the board of school commissioners, acting in behalf of and representing the school corporation of that city, issued bonds to the amount of $ 80,000, payable ten years after date with interest at four per cent. per annum. These bonds were sold and negotiated by said board of school commissioners and the proceeds arising from the sale thereof were applied to and used for legitimate school purposes. On July 1, 1890, said board issued and sold $ 20,000 additional school bonds, which, including those issued on the 1st day of March of that year, made in the aggregate $ 100,000; all of which bonds were issued and negotiated by the said board upon the assumption and under the claim that it was a corporation entirely independent of the civil city and that as such school corporation it had the power to contract an indebtedness of its own for school purposes to an amount not exceeding two per cent. of the taxable property of the city of Indianapolis, notwithstanding the fact that at the time of the issue of said bonds the indebtedness of said civil city and the indebtedness of the school corporation combined exceeded two per cent. of the taxable property for the year 1890 and for each following year thereafter.

It is further averred that this board of school commissioners claim and assert on behalf of its school corporation that the indebtedness thereof is not to be counted or considered as a part of the indebtedness of the civil city of Indianapolis in order to determine whether the latter has exceeded the two per cent. limit prohibited by the Constitution of this State. The board of school commissioners in 1890, in contracting the indebtedness by the issue and sale of the bonds heretofore mentioned, acted under the claim and assumption, and so continues to act, that each of the said corporations, civil and school, might contract debts independently of each other, and that the indebtedness of each, under the provisions of article thirteen of the State Constitution must be admeasured and considered independently of each other. The bonds issued on March 1, 1890, will mature the 1st day of March, 1900, and the series issued on July 1st of that year will mature on July 1, 1900; and it is alleged in the complaint that the holder of these latter bonds has agreed with said board of school commissioners to accept the payment thereof on March 1, 1900, in consideration of the fact that the board has agreed to pay him interest on such bonds to April 1, 1900.

In order to take up and fund these two series of bonds issued in 1900, it is averred that the board has ordered by resolution that other bonds be issued and sold for that purpose, the same to draw interest at three and one-half per cent. and to bear date of March 1, 1900, etc. It is further alleged that said board, unless enjoined, will, on March 1, 1900, pay out of the money in its treasury the interest due on the bonds of 1890, which will amount to over $ 1,800.

There is no averment in the complaint that the bonds issued in 1890 increased the indebtedness of the school city of Indianapolis to an amount in excess of the two per cent. of its taxable property or that its present indebtedness is in excess of that amount.

The complaint closes with the prayer that the court enjoin the board of school commissioners from issuing the proposed new bonds and from paying any part of the school bonds issued in 1890, principal or interest.

The cardinal question involved in this appeal, under the facts, is in respect to the validity of the $ 100,000 of school bonds, issued by the board in 1890 as stated, which the present board is now proposing to refund by the issue and sale of new bonds. It is insisted by counsel for appellants that the decision of this principal question involves three other subordinate propositions, namely: (1) Was the statute of March 3, 1871, which authorized the organization of a board of school commissioners of the school corporation of the city of Indianapolis a valid act of the legislature? (2) If invalid, have the acts of said board in issuing and negotiating the school bonds, and contracting thereby the indebtedness in issue in this action, been remedied or cured by the provisions of the statute in force March 4, 1899? (3) Are the debts of the civil city of Indianapolis and those of the school city or school corporation, incurred under the control and government of its board of school commissioners, to be treated and considered under the law as the obligations of distinct and separate municipal corporations, or must the indebtedness of each be combined and limited alone to the civil city, to determine if the latter has exceeded the two per cent. limit of indebtedness prohibited by article thirteen of the State Constitution.

We address ourselves to a consideration of these questions fully impressed with their great public importance, as it is evident, as insisted by counsel for appellee, that a decision adverse to it would in the main be disastrous to the public schools of Indianapolis, and in its effect would result in coercing appellee to repudiate an indebtedness incurred in building up and promoting the public school system of that city, and, as contended, would render worthless over $ 700,000 of bonds issued by the school board and the civil city. At the very threshold we are confronted with the contention of counsel for appellee that appellants are not in a position in this action to question the validity of the organization of the board of school commissioners. It is urged that this body, as created or provided for by the statute of March 3, 1871, has been in existence and recognized as a legitimate organization by both the people of that city and its public authorities for a period of twenty-nine years, and not until the institution of this action has the validity of that board or its authority to act in the management and control of the school affairs of the city of Indianapolis in any manner been denied. Therefore, it is contended that, by this long acquiescence in the existence of this board upon the part of the people and public officials of that municipality, appellants are precluded from attacking its validity in this collateral proceeding. Numerous authorities are cited to sustain this contention. It is also further urged that appellants' petition to secure an injunction against the payment of the school bonds issued by the board in 1890 is devoid of equity for the reason that it appears that they have been guilty of gross laches in delaying for almost ten...