Commercial State Bank of Shepherd v. Sch. Dist. No. 3 of Coe Tp.

• Decision Date: 19 December 1923
• Docket Number: No. 107.,107.
• Parties: COMMERCIAL STATE BANK OF SHEPHERD v. SCHOOL DIST. NO. 3 OF COE TP., ISABELLA COUNTY, et al.
• Court: Michigan Supreme Court

225 Mich. 656

196 N.W. 373

COMMERCIAL STATE BANK OF SHEPHERD

v.SCHOOL DIST. NO. 3 OF COE TP., ISABELLA COUNTY, et al.

No. 107.

Supreme Court of Michigan.

Dec. 19, 1923.

Error to Circuit Court, Isabella County; Ray Hart, Judge.

Action by the Commercial State Bank of Shepherd against School District No. 3 of Coe Township, Isabella County, Mich., and others. Judgment for defendants, and plaintiff brings error. Reversed, and new trial granted.

The district board of defendant took the following official action at the dates mentioned:

‘Proceedings of District Board.

‘Meeting of district board of district No. 3, township of Coe, held on the 15th day of August, 1919.

‘At Schoolhouse.

‘Present: All members of board, Stahlman, Hutchinson, and Ardner. The meeting was for the purpose of deciding what must be done as to repair on schoolhouse this year. On motion by Hutchinson, it was unanimously voted to repair the old schoolhouse, if we could get labor. To fix the roof, floor, plaster the side walls, and get a heating plant and sanitary toilets. As the township clerk does not have to make his report to the supervisor until October 1, we had an understanding with him as to the amount to be raised for repairs, because we could not yet get a very good estimate. We are to notify him later.

‘Adjourned.

S. C. Stahlman, Dir.'

‘At Schoolhouse, 9-18-19.

‘Present: All members of board, Stahlman, Hutchinson, and Ardner. Meeting called to decide on amount to be raised in this year tax. On motion of Stahlman, it was unanimously voted to raise $1,000 this year to apply as it would for repairs. As the work is not proceeding very fast, it is still hard to tell the exact amount of expense.

‘Adjourned.

S. C. Stahlman, Dir.'

‘Exhibit A.

‘Proceedings of District Board.

‘Meeting of district board of district No. 3, township of Coe, held on the 14th day of November, 1919.

‘Present: All members of board, Stahlman, Hutchinson, and Ardner. Meeting called to decide on hiring money to pay the bills, due for toilets, lumber, labor, and heating plant. As the repair work is nearly done, we estimate that $2,500 will pay everything. As we have but $1,000 assessed this year, we must vote a tax for next year for $1,500.

‘Resolved, that we hereby vote a tax of $1,500 to be spread next year. Yes-all; no-none. Voted.

‘Resolved, that we hire $1,000 until taxes are collected this year, 1919 to 1920, and $1,500 until taxes are collected next year, 1920 to 1921. Yes-all; no-none. Voted.

‘Resolved, that we give to the Commercial State Bank of Shepherd one note for $1,000 to be due March 1, 1920, and one note for $1,500 due March 1, 1921, at 6 per cent. interest. Members of board to sign these notes as school officers. Unanimously voted to do it, and it was done.

‘Adjourned.

S. C. Stahlman, Dir.'

The notes were given pursuant to this action, and the proceeds turned over to the treasurer of defendant and placed to the credit of the district in plaintiff bank. As the work progressed the money was checked out to pay for the work and labor of repairing the schoolhouse. At the next annual meeting the treasurer read his annual report, showing the receipt and in detail the expenditure of this money. His report was adopted, the first note of $1,000 was paid. The schoolhouse was insured for an additional $2,000, and the payment of the premium was reported at an annual meeting and approved. At an annual meeting of the district $300 additional was raised to complete the repairs. At the annual meeting held July 11, 1921, the following action was taken:

‘Shepherd, Michigan, at Annual Meeting.

‘July 11, 1921.

‘At schoolhouse at district No. 3, Coe Twp.

‘The following resolution was offered by Harry Milliken, who moved its adoption:

‘Whereas, the Commercial State Bank of Shepherd. Michigan. holds notes executed in behalf of this district in amount of $1,500, plus $150 interest, and there are no funds available to pay the same:

‘Be it resolved, that school district No. 3 of Coe township, Isabella county, Michigan, borrow from said Commercial State Bank of Shepherd, the sum of $1,650, payable $825 and interest on or before April 1, 1922, and $825 and interest April 1, 1923, and that the district board be and are hereby authorized and instructed move to finish the schoolhouse before school term starts. Carried. for said amount.

‘And be it further resolved, that there be raised the sum of $825 by tax this year to pay the first of said notes.

‘Supported by C. A. Thomas.

+---------+
                ¦“Yeas ¦16¦
                +------+--¦
                ¦“Nays ¦15¦
                +------+--¦
                ¦      ¦31¦
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‘S. C. Stahlman (Director),

‘Sec'y of Meeting.

‘Moved and supported that the board make a move to finish the schoolhouse before school term starts. Carried.

‘Moved and supported that we adjourn. Carried.

S. C. Stahlman, Director.'

The tax contemplated by this resolution was not raised or the new notes executed, and later this suit was brought to recover on the $1,500 note. The trial judge directed a verdict for defendant, and plaintiff sues out this writ of error, urging under several heads plaintiff's rights to recover. But two of plaintiff's contentions need be considered.

Argued before WIEST, C. J., and FELLOWS, McDONALD, CLARK, BIRD, SHARPE, MOORE, and STEERE, JJ.Virgil W. McClintic, and F. H. Dusenbury, both of Mt. Pleasant, and Francis J. Shields, of Howell, for appellant.

Dodds & Dodds, of Mt. Pleasant, for appellee school district.

FELLOWS, J. (after stating the facts as above).

The two contentions of plaintiff's counsel which we shall consider are these: (1) That the district board was authorized by section 5676, C. L. 1915, then in force, to make the repairs on the schoolhouse and to borrow money in anticipation of the tax; and (2) that the district ratified the action of the board. Defendant's contention is that the board, under the guise of repairing the schoolhouse, practically built a new schoolhouse, and that ratification of the action of the board was not efficient because no notice was given in the notice of the annual meeting that such question would be brought before the meeting.

That record does not sustain the contention of defendant's counsel, evidently accepted by the trial judge, that the work done practically amounted to the erection of a new schoolhouse. It is true that the old schoolhouse was only insured for $1,000, and after the repairs, costing $2,500, were made the insurance was increased $2,000; but there was no testimony as to the value of the old building, or that the insurance either before or after the repairs approximated its value, nor does an examination of the report of the treasurer, showing in detail the purpose for which the money was expended, disclose any items paid for which might not be used in the repair of an old building. Not infrequently, as many have learned from experience, the cost of repairing an old building and putting it in shape for use exceeds the value of the old structure. This record does not make a case of the...