Henderson v. School Dist. No. 44
| Citation | 242 P. 979,75 Mont. 154 |
| Decision Date | 13 January 1926 |
| Docket Number | 5824. |
| Parties | HENDERSON v. SCHOOL DIST. NO. 44 et al. |
| Court | United States State Supreme Court of Montana |
Appeal from District Court, Fergus County; John C. Huntoon, Judge.
Action by L. T. Henderson and another against School District No. 44 and others, as trustees thereof, to enjoin sale of bonds. From a judgment of dismissal, plaintiffs appeal. Affirmed.
Ralph J. Anderson, of Lewistown, for appellants.
L. A Foot, Atty. Gen., and C. N. Davidson, Asst. Atty. Gen., for respondents.
On April 4, 1925, an election for the issuance of $20,000 school district bonds was held in defendant district No. 44 of Fergus county, and a majority of the electors voted in favor of the issue; thereupon the defendant trustees of said district took the appropriate steps for the issuance and sale of such bonds. Before the date of sale, however, plaintiffs as resident taxpayers in said district, commenced an action to enjoin the sale. Issue was joined and the cause submitted to the trial court on an agreed statement of facts, and resulted in a judgment of dismissal and for costs in favor of the defendants. From this judgment plaintiffs have appealed.
From the agreed statement of facts it appears that school district No. 44 of Fergus county had been in existence as a legal entity for years prior to February, 1919; adjoining it there existed a small district with but 19 children of school age then known as school district No. 42. In February, 1919, the people residing in district No. 42, conceiving that their children would be better served in district No. 44 petitioned the county superintendent to annex their district to district No. 44. After a hearing duly noticed, the county superintendent made an order of annexation, which order was filed with the county clerk of Fergus county. From this order no appeal was taken, and its validity was never questioned until this action was commenced in May, 1925.
Upon the annexation, district No. 44 assumed jurisdiction over the territory included within the boundaries of district No. 42, and accepted the children therein into its schools as residents of the district; the board of county commissioners recognized the annexation as valid, and levied school taxes for district No. 44 upon all property within the enlarged district. School district No. 42 ceased to function as a district, and all of the residents within that territory, including the plaintiffs, acquiesced in the annexation, took part in school elections held in district No. 44, sent their children to its schools, and paid the taxes levied upon their property for its support and maintenance. In 1923 district No. 44 issued and sold refunding bonds of the district, which are still outstanding.
The question presented by the appeal is: Does the present status of school district No. 44, as shown by the agreed statement of facts, warrant the judgment of dismissal?
Section 1034, Revised Codes of 1921, existed at the time of the attempted annexation as section 407, Revised Codes of 1907. It authorized the consolidation of school districts or the annexation of one district to another, which latter thereafter continues under its old name and organization, but in order to effect either consolidation or annexation under this section, a petition therefor must be presented to the county superintendent of schools of the county from each of the districts to be affected, and on these petitions an election must be called and the question voted upon in each district. No attempt was made to comply with these provisions other than the presentation of a petition for annexation signed by residents of district No. 42, and the order of annexation was clearly the result of following the provisions of section 1033, Revised Codes of 1921, then section 406, Revised Codes of 1907, providing for the extension of the boundaries of a school district on petition of a majority of the resident freeholders, of territory which is a part of an organized district, to be made a part of such first district, on which petition the county superintendent of schools is authorized, after a hearing, to make the order of inclusion.
1. A school district, organized by compliance with the laws of this state, is a public corporation. Section 1022, Rev. Codes 1921; Finley v. School District, 51 Mont. 411, 153 P. 1010; State ex rel. School District v. McGraw, 74 Mont. ---, 240 P. 812.
2. Public or municipal corporations have been classified, with reference to the regularity or legality of their organization, as (a) corporations de jure; (b) corporations de facto; and (c) void corporations. 28 Cyc. 171.
(a) A corporation de jure exists by reason of full compliance by the incorporators with the requirements of an existing law permitting the organization of such a corporation, and is impregnable to assault in the courts from any source. Jameson v. People, 16 Ill. 257, 63 Am. Dec. 304; State v. Young, 3 Kan. 445; Smith v. Crutcher, 92 Ky. 586, 18 S.W. 521.
(b) Under certain conditions, where an attempt has been made to create a corporation, which attempt falls short of the creation of a corporation de jure, the entity will, nevertheless, be recognized as a corporation de facto, and, if such is the case, the legality of the organization or existence can be questioned only by the state in a direct proceeding. Dillon on Municipal Corporations (5th Ed.) § 67; 25 Cyc. 174; Morgan v. Independent School District, 36 Idaho, 372, 211 P. 529; Nelson v. Consolidated School District, 181 Iowa, 424, 164 N.W. 874; Daily v. Marshall, 47 Mont. 396, 133 P. 681; Barnes v. Smith, 48 Mont. 309, 137 P. 541. The general rule is that, in order to create a corporation de facto, there must exist a charter or general law under which such a corporation might lawfully be organized, an attempt in good faith to organize thereunder, and actual user of the corporate franchise. 1 McQuillin on Municipal Corporations,§ 1511; 28 Cyc. 172; Coe v. City of Los Angeles, 42 Cal.App. 479, 183 P. 822; City of Carthage v. Burton, 51 Tex.Civ.App. 195, 111 S.W. 440; City of Salem v. Young, 142 Mo.App. 160, 125 S.W. 857; Lang v. Bayonne City, 73 N. J. Law, 455, 68 A. 90, 15 L. R. A. (N. S.) 93, 122 Am. St. Rep. 391, 12 Ann. Cas. 961.
(c) Where there is no law under which a corporation such as that attempted to be created can exist, or where there has been no attempt in good faith to organize under an existing law, it is generally held that the purported corporation is void, and the attempted exercise of corporate powers may be attacked, by a private individual who will be affected thereby, in an appropriate proceeding. Green Mt. Stock Ranch Co. v. Savage, 15 Mont. 189, 38 P. 940; Cleveland v. School District, 51 Okl. 69, 151 P. 577; Dartmouth Sav. Bank v. School District, 6 Dak. 332, 43 N.W. 822; 28 Cyc. 174, and cases cited.
Here we have a general law under which the annexation could legally have been accomplished; an attempt, apparently in good faith, to annex district 42 to district 44, not, however, under the law providing for annexation, but under an existing law permitting the extension of the boundaries of one district to take in a part of another organized district, but followed, nevertheless, by user, acquiesced in by the public officials, district No. 42, and all freeholders residing therein, including the plaintiffs, for more than five years.
Manifestly the action taken was irregular and was not sufficient to create a corporation de jure, nor, under the general rule stated above, was it sufficient to create a corporation de facto, and, had timely action been taken, undoubtedly residents of district No. 42 could have prevented district No. 44 from exercising dominion and control over the territory of the former. Van Wagener v. MacFarland, 58 Cal.App. 115, 208 P. 345.
The case of Green Mt. Stock Ranch Co. v. Savage, above, is relied upon by plaintiffs as supporting their contention that a resident freeholder may attack the organization of such a corporation as the one under consideration at any time, if the second requisite given in the above definition of a de facto corporation, to wit, an attempt in good faith to organize under the particular law providing for such organization, is lacking. There this court had under consideration the sufficiency of a complaint which alleged:
"That nothing whatever was ever done by the county superintendent of schools, or the board of county commissioners, or any other person, which section 1875 of the Compiled Statutes of 1877 required to be done in order to organize a school district."
There appears to have been no showing as to whether the alleged school district had ever acted as such prior to the attempted levy and collection of taxes which was opposed by the plaintiff, or that any attempt under...
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