Harberson v. Arledge, 16991

• Decision Date: 14 February 1969
• Docket Number: No. 16991,16991
• Citation: 438 S.W.2d 591
• Parties: Lewis A. HARBERSON et al., Appellants, v. Herbert A. ARLEDGE et al., Appellees. . Fort Worth
• Court: Texas Court of Appeals

Page 591

438 S.W.2d 591

Lewis A. HARBERSON et al., Appellants, v. Herbert A. ARLEDGE et al., Appellees.

No. 16991.

Court of Civil Appeals of Texas Fort Worth.

Feb. 14, 1969.

Rehearing Denied March 21, 1969.

Gerald E. Stockard, and John L. Sullivan, Denton, for appellants.

Minor & Knight, Denton, Saner, Jack, Sallinger & Nichols, and B. Robert Baker, and Tim Kirk, Dallas, for appellees.

OPINION

RENFRO, Justice.

More than eighty (80) taxpayers sued the Sanger Independent School District in an effort to enjoin the assessment and collection of certain taxes levied by the District for the year 1967.

A hearing resulted in denied of a temporary injunction. Following a jury trial, permanent injunction was denied and a judgment entered for the District for delinquent taxes alleged to be due by the individual plaintiffs.

Exhibit 3 shows:

'September 11, 1967

'The Sanger School Board met in Regular Session.

'All members present.

'Motion made by Jack Burkholder, seconded by Mr. Davis, to accept the plan to raise the assessed valuation by a figure of 2.4 and a contemplated decrease in the tax rate from $1.75 to $1.00 per $100.00 valuation and rate of 40% Of the value. All members approved.

'President /s/ Donald R. Holson

'Approved: 10--11--1967

'Secretary /s/ Jack Burkholder'

Plaintiffs' original petition for temporary injunction was filed November 13, 1967. Plaintiffs filed their first amended petition on February 2, 1968. In the amended petition of February 2, 1968, they, for the first time, alleged the taxes were increased for an unlawful purpose, namely, to raise sufficient taxes for the school year 1967--8 to pay debts or deficiencies created during the school year 1966--7.

The jury found the plan adopted for the 1967--8 increase was for the intended purpose of using a portion thereof to pay off the deficit of $11,116.11 which accrued in the year 1966--7. No other issues were submitted or requested. Upon motion, judgment was rendered for the District notwithstanding the verdict.

Plaintiffs' chief point of error, which they argue ably and earnestly, is the tax increase is void because it was levied and assessed for an unlawful purpose, that is, the payment of an illegal deficit for the prior school year.

Although they failed to show that the prior debts were illegally incurred, we treat the point as though they were claiming the payment of such prior debts out of current taxes would be illegal.

The law is well established that current tax funds appropriated for operating the school on subsequent years cannot be used to pay obligations accruing during a previous school year. City State Bank in Wellington v. Wellington Independent School District, 142 Tex. 344, 178 S.W.2d 114 (1944); National Surety Corporation v. Friendswood Independent School District, 433 S .W.2d 690 (Tex.Sup., 1968); Aldine Independent School District v. Standley, 154 Tex. 547, 280 S.W.2d 578 (1955). An injunction will properly be granted to prevent a school board from so using current tax revenue. Warren v. Sanger Independent School Dist., 116 Tex. 183, 288 S.W. 159 (1926).

An injunction will also lie to restrain the collection of taxes levied and assessed without authority of law. Ripley v. Trinity River Canal and Conservancy Dist., 88 S.W.2d 752 (Tex.Civ.App., 1935, writ ref.).

In Eagle Lake Independent School Dist. v. Hoyo, 199 S.W. 352 (Tex.Civ.App., 1917, writ ref.), the court held: '* * * we do not think it appears from the evidence that any part of the 1914 maintenance tax upon the new district was actually applied upon the bonded debt of the old one, Nor if it had been, that such fact alone would have invalidated an otherwise lawfully laid tax, and have given appellee a valid ground for resisting its payment; for, at most, such action would have amounted to an unlawful diversion from its proper application * * *.' (Emphasis added.) If such payments were attempted, the District could be restrained upon proper injunction proceedings.

In their effort to prove the increase was void because assessed for an illegal purpose, the plaintiffs relied largely upon the testimony of the superintendent of the School District.

Superintendent Arledge testified that at the time he prepared the 1967--8 budget an emergency existed. The school had a growth problem . At that time the school was spending $20.00 per student below the average of $68.00 per student. After he prepared the budget the scholastic population increased by 90 students. If the tax had not been increased, the District, because of increased enrollment, would have incurred a deficit of $10,000.00 for the scholastic year 1967--8 . Something had to be done to take care of the education of the children. The primary purpose of the increase in taxation was to build and expand to take care of the school children.

At the time the budget was prepared a $10,000 plus deficit existed for the year 1966--7. He reported the deficit to the School Board. He did Not include the deficit in the budget. He intended to take care of the deficit out of state and local funds, but that was not the purpose of the tax increase.

The law authorizes the trustees to exercise a judicious discretion for the successful and economical management of the schools. Adams v. Miles, 35 S.W.2d 123 (Tex.Com.App., 1931).

Under Article 2749, Vernon's Ann.Civ.St., management and control of school district affairs are entrusted to Boards of Trustees. It is the duty of said Boards to raise and disburse an amount of money sufficient to defray the necessary and reasonable expenses of school districts.

The budget presented to and adopted by the trustees did not include any of the items making up the deficit except one short term loan obtained in 1966--7. The tax plan adopted by the trustees did not mention payment of deficits as a purpose for the valuation increase. None of the trustees were called as witnesses. There is no evidence, oral or documentary, from the trustees that the purposes or a purpose of the increase was to pay off the deficit.

The erroneous opinion of the Superintendent that he could pay some of the 1966--7 debts out of current tax revenues is not sufficient to support a finding that the School Board adopted a tax plan to increase available school funds with the intention of using a portion to pay off a deficit.

The tax levied was not in excess of the statutory limit.

Further, we find no evidence or stipulation that the deficit existed at the time of trial, or at the time the suit was filed. If the debts have been paid, plaintiffs' injunction suit is moot. Rawson v. Brownsboro Independent School Dist., 263 S.W.2d 578 (Tex.Civ.App., 1953, ref., n.r.e.). There is no proof the debts were invalidly incurred. This being so, they could be paid from 'delinquent tax collections, or from devises or donations, or perhaps from other sources.' National Surety Corporation v. Friendswood Independent School Dist., 433 S.W.2d 690 (Tex.Sup., 1968).

Under the evidence we must hold that the trustees acted in good faith and within the limits fixed by law. "So long as the levying officers keep within the statutory limits, the courts can not inquire into the necessity for the amount of the levy and except in a case of clear abuse of discretion they can not interfere to increase or reduce the amount of the levy, which is within the authority and discretion of the levying officers." Texas Co. v. Panhandle Independent School Dist., 72 S.W.2d 957 (Tex.Civ.App., 1934, writ ref.); Madeley v. Trustees of Conroe Independent School Dist., 130 S.W.2d 929 (Tex.Civ.App., 1939, dism., judg. cor.); Rawson v. Brownsboro Independent School Dist., 263 S.W.2d 578 (Tex.Civ.App., 1953, ref., n.r.e.). In the Madeley case it was held: 'In the absence of fraud in fact, the courts cannot limit the trustees of an independent school district in the exercise of the power vested in them to levy the tax.'

The plaintiffs did not allege the deficiency aspect of the case until February 2, 1968. The tax plan had gone into effect in October, 1967. By February 2, 1968, more than 70 per cent of the school taxes had been paid.

The increased valuation was not limited to the plaintiffs but was assessed against all like taxpayers in the District. There is no contention the valuations fixed exceeded the actual cash market value of the property or that plaintiffs' assessments were substantially higher than property interests of equal or greater value owned by others.

The tax plan had been adopted prior to the filing of suit, and had been in operation more than three months before 'illegal purpose' was pleaded by plaintiffs. Assuming, but not holding, that there were irregularities or that the proceedings were arbitrary, the burden was on the plaintiffs in an attempt to avoid the tax to show substantial injury. They had to show that their property interests were 'assessed substantially higher than property interests of equal or greater value owned by others.' State v. Whittenburg, 153 Tex. 205, 265 S.W.2d 569 (1954).

Said the Supreme Court in City of Arlington v. Cannon, 153 Tex. 566, 271 S.W.2d 414 (1954): 'There is no showing in the record and no finding by the trial court that the taxes, within themselves, of any of the individual plaintiffs were excessive. * * * to obtain relief from taxes arrived at through the use of an arbitrary, illegal and fundamentally erroneous plan of valuation, the taxpayer must show substantial injury.' To the same effect are the holdings in State v. Federal Land Bank of Houston, 160 Tex. 282, 329 S.W.2d 847 (1959); City of Orange v. Levingston Shipbuilding Co., 258 F.2d 240 (5 Cir., 1958); Whelan v. State, 155 Tex. 14, 282 S.W.2d 378 (1955).

In City of Orange, supra, the court held: 'It is merely an...