Dupont v. Mills
| Decision Date | 22 December 1937 |
| Parties | DUPONT et al. v. MILLS et al., Board of School Trustees. |
| Court | United States State Supreme Court of Delaware |
DUPONT et al.
v.
MILLS et al., Board of School Trustees.
Court in Banc of Delaware.
Dec. 22, 1937.
[Copyrighted material omitted.]
RODNEY and SPEAKMAN, JJ., dissenting in part.
Amicable action by Francis I. Dupont and others, trading as Francis I. Dupont & Company, against Charles Mills and others, composing the Board of School Trustees of Rehoboth School District No. 111 of Sussex County, to recover a sum paid by plaintiffs as evidence of their good faith in bidding for school bonds issued by the defendants. The superior court certified questions of law to be heard by the Supreme Court.
Order in accordance with opinion.
LAYTON, C. J., HARRINGTON, RICHARDS, RODNEY and SPEAKMAN, JJ., sitting.
Tunnell & Tunnell, of Georgetown, for plaintiff. Houston Wilson, of Georgetown, for defendant.
Court in Banc. Case certified by the Superior Court for Sussex County, June Term, 1937.
The parties agreed to the docketing of an amicable action in the Superior Court for Sussex County, by which the plaintiff sought to recover from the defendant the sum of $4800.00 which had been paid to it as evidence of their good faith in bidding for, and as partial payment for, school bonds issued by the defendant, should the bid be accepted. There was a stipulation of facts; and the Superior Court, upon application of the parties, certified the questions of law to be heard by the Court in Banc.
By an act, 41 Del.Laws, c. 171, entitled, "An Act Authorizing the Board of School Trustees of School District No. 111 of Sussex County to procure a site and thereon to erect and fully equip a new school building in the Town of Rehoboth, and to borrow money to pay for the same by issuing bonds to secure said loan," the defendant board was authorized to borrow at its discretion a sum of money not in excess of $160,000.00 for the purpose of procuring a site within the limits of the Town of Rehoboth and to construct thereon and fully to equip a twelve-grade school building, and to take and keep title thereto in its own name. The power of eminent domain was expressly conferred, the manner of exercise being that provided in the State Highway Department Act. Rev.Code 1935, § 5720 et seq. The State Board of Education was directed to render to the local board all such expert advice and assistance as required by the General School Law, "even though the purposes named in this Act are not to be carried out with funds appropriated by the State or applied under the direction of the State Board of Education." Section 3. The State Board of Education was required to accept and make use of the building upon its completion as a part of the public school system.
Section 6 of the act was as follows:
"That the said Bonds shall be authorized by a resolution of the Board of School Trustees and shall be issued in one or more series, shall bear such date or dates, mature at such time or times, not exceeding twenty-five (25) years from their respective dates, bear interest at such rate or rates, not exceeding four and one-half (4 1/2%) per centum per annum, payable at such time, be in such denominations, and payable at such place or places as such resolution or subsequent resolutions may provide. The Bonds may or may not be coupon Bonds and may or may not be registered Bonds, as the said Board of School Trustees shall determine. Any or all of said Bonds may be redeemed at the option of the Board of School Trustees at par and accrued interest at any interest period after the expiration of five (5) years from the date of said Bonds; provided, however, that if the said Board of School Trustees shall elect to redeem any or all of said Bonds as aforesaid, such redemption shall be made in pursuance of a notice signed by the Chairman and one other member of the Board of School Trustees, published once a week for two consecutive weeks in a newspaper or newspapers published and circulating in Sussex County, Delaware. Such notice shall indicate the Bonds called,
and in making such call or calls for redemption the said Board of School Trustees shall begin with the lower numbers and select serially the Bonds to be called, and, provided further, that if the Bonds issued under the provisions of this Act shall be 'Registered Bonds,' such Bonds shall not be called until two weeks after notice has also been sent in writing by registered letter to the registered owners of the Bonds to be called.
"The interest on any of said Bonds so called shall cease from the date named in any of said calls for redemption."
Section 13 provided:
"That before any Bonds shall be authorized and issued under the provisions of this Act, a Special Election shall be held in the Rehoboth School Building in the same manner as other school elections" to ascertain the sense of the voters; and authorized the local board to designate the persons to hold the election.
On June 14, 1937, the Board of School Trustees, the defendant, at a special meeting, resolved to proceed with the project, and to borrow $160,000.00 to be secured by an issue of bonds in 21 classes according to maturity dates which ranged from September 15, 1938 to September 15, 1958. Paragraph (f) of the resolution was as follows:
"They shall not, nor shall any of them, contain a provision for their redemption at a date prior to their respective maturity dates, nor shall they, or any of them, be redeemable at a date prior to their respective maturity dates."
At the same meeting, the defendant passed a resolution providing for the submission of the question to the qualified voters of the School District, and for the advertisement of the election. In the description of the bonds in the advertisement of the election, was the following:
"they shall not be redeemable at a date prior to their respective maturity dates"; and at a meeting held on September 1, 1937, a resolution was passed directing the printing on the face of each bond the following: "This Bond shall not be redeemable at a date prior to its maturity"; and it was further provided that at the special election, "every citizen, male or female, resident in the School District No. 111 who would be entitled on June 30th, A. D. 1937 to register and vote in the Third Election District of the Tenth Representative District, Sussex County, at a General Election, if such General Election were to be held on June 30th, A. D. 1937, * * * regardless of the fact whether he or she is at that time a registered voter or not".
The General School Law is found in chapter 71, § 2623 et seq., Rev.Code 1935. Article 10, § § 2712-2717, is entitled "Buildings and Grounds." It provides that Boards of Trustees of School Districts shall file with their biennial school budgets of the year in which there is a legislative session, a proposed building program which shall embrace plans for ample, appropriate and suitable school sites and playgrounds, buildings and equipment. The State Board of Education is required to consider the proposals, and may with the consent of the Boards alter, change, modify, add to and adjust them. Upon final approval by the State Board of Education, the plan shall be for two succeeding years the school building plan of the School District, and if there are funds available the plans may be carried out. The State Board of Education may include such part of the total cost in its biennial budget as it thinks proper to be appropriated by the State. Architects to be employed must be approved by the State Board. Title to land acquired by School Districts must be taken in the name of the State Board of Education; and with respect to School Districts, if condemnation proceedings are necessary, the proceeding is by the State Board of Education, and the procedure is established by section 95, Rev.Code 1935, § 2717.
Article 11, § § 2718-2728, is entitled, "Bonds For School Building Programs." Section 96, Rev.Code 1935, § 2718, provides as follows:
"The Board of Education of a Special School District, or the Board of School Trustees of a School District is authorized and empowered to issue bonds on the credit of the district in amounts sufficient to carry out the building program of said district approved by the State Board of Education."
Bonds are required to be issued in series, and all bonds authorized to be issued at any time within a calendar year shall constitute a series. The text of the bonds shall provide for the payment of interest of any series of bonds and of the principal of any series of bonds by equal payments each year for the period of such series,
and bonds to be retired shall be ascertained each year by lot or otherwise. The issue of bonds must be authorized by a special election.
At the Special Election, a majority of the votes cast was in favor of the bond issue. The Board proceeded to have prepared and to sell the bonds, and accepted the bid of the plaintiffs who paid over to the Board as evidence of their good faith in bidding and as partial payment, the sum of $4800.00.
The plaintiffs' bid called for "all, but no part of, the following described legally issued, properly executed, direct general obligations of Rehoboth School District No. 111 of Sussex County. * * *"
The Board, on or about September 15, 1937, was in a position to deliver the bonds to the plaintiffs, but was notified by them that they would refuse to accept them for the reason that they were not legally issued, direct general obligations of the School District, in that, (a) that the Board was not authorized to issue bonds not redeemable prior to maturity; (b) that the failure of the State Board of Education to approve the issuance of the bonds and the erection of the school building rendered them invalid; (c) that the Act of the Assembly failed to specify the persons entitled to vote at the special election, thereby rendering the bonds invalid; (d) the failure to permit those persons owning property subject to a tax levy for the purpose of paying off...
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