House v. School Dist. No. 4 of Park County

• Citation: 184 P.2d 285,120 Mont. 319
• Decision Date: 04 September 1947
• Docket Number: 8760.
• Parties: HOUSE v. SCHOOL DIST. NO. 4 OF PARK COUNTY et al.
• Court: United States State Supreme Court of Montana

184 P.2d 285

120 Mont. 319

HOUSE v. SCHOOL DIST. NO. 4 OF PARK COUNTY et al.

No. 8760.

Supreme Court of Montana

September 4, 1947

Appeal from District Court, Sixth District, Park County; Benjamin E Berg, Judge.

Action by Walter C. House against School District No. 4 of Park County, Mont., and H. C. Clayton and others, as members of the Board of Trustees of the school district, and J. L Gleason as clerk of the school district, to enjoin the sale of bonds of the school district. From a judgment dismissing the action, the plaintiff appeals.

Judgment affirmed.

Ben E. Berg., Jr., of Livingston, and Wesley W Wertz, of Helena, for appellant.

Richard A. Bodine, of Livingston, R. V. Bottomly, Atty. Gen., and Robert L. Word, Jr., Sp. Asst. Atty. Gen., for respondent.

CHOATE Justice.

This action was brought by plaintiff and appellant in the district court of Park county to enjoin the sale of bonds of school district No. 4 of said county in the amount of $325,000. The trial court sustained defendants' demurrer to the complaint and motion to quash the order to show cause, and entered judgment of dismissal of the action.

The facts. School district No. 4 of Park county is a second class school district regularly organized under the laws of Montana. Park county high school district is a high school district regularly organized under the laws of said state. The exterior boundaries of school district No. 4 (hereinafter designated as the school district) lie entirely within the boundaries of the Park county high school district (hereinafter referred to as the high school district) and the territory which comprises the school district is a part of that which comprises the high school district. Defendants in the action are the school district, its clerk and the members of its board of trustees. The qualified electors of the school district, by majority vote, have authorized the board of trustees of the school district to issue the bonds in question for the purpose of erecting a new elementary school building and to build an addition to a school in said district. The board of trustees has sold the bonds and contracted to deliver them to the purchaser on or before July 1, 1947. It is conceded that said board will, unless restrained by injunction, proceed to execute and deliver the bonds in question and that as a result thereof the plaintiff's property will be subject to a tax to pay the principal and interest of said bonds.

The assessed value of the property lying within and taxable by the school district is $11,754,542, and three per cent. of that valuation is $352,636. The school district has no outstanding indebtedness of any kind. The high school district has an outstanding bonded indebtedness of $99,000. The taxable value of the property lying within and taxable by the school district comprises 59% of the taxable value of the property within the high school district. It is therefore apparent that if, in computing the amount of bonds which may legally be issued by the school district under the 3% constitutional limitation hereinafter considered, it is not necessary to take into consideration any part of the $99,000 indebtedness of the high school district, then the proposed school district bond issue will not exceed the constitutional debt limit. If, however, 59% of the outstanding indebtedness of the high school district must be apportioned to the school district, such apportionment will amount to $58,410 and if bonds of the school district are issued in the amount of $325,000, such bonds when added to the school district's proportionate share of the indebtedness of the high school district ($325,000 plus $58,410) will exceed the constitutional debt limit by the sum of $30,774.

The sole question for determination on this appeal, therefore, is whether the indebtedness of the high school district must be considered in computing the debt limit of the school district.

The law. Section 6 of Article XIII of the Constitution of Montana reads in part as follows: 'No * * * school district shall be allowed to become indebted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate exceeding three (3) per centum of the value of the taxable property therein, to be ascertained by the last assessment for state and county taxes previous to the incurring of such indebtedness, and all bonds or obligations in excess of such amount given by or on behalf of such * * * school district shall be void.'

Chapter 275 of the Laws of the 30th legislative assembly of Montana of 1947, provides that to effectuate the purposes of the Act (a program of public works for the construction of high school buildings etc.) 'in all counties having a high school, or high schools, a commission consisting of the county commissioners and the county superintendent of schools shall at the request of any high school board of trustees in the county, divide the county into high school districts for the purpose of this act, after hearing.'

Provision is made for a meeting of the commissioners and for a public hearing on the requested division of the county into high school districts.

Section 3 of the Act reads as follows: 'Each high school district created under this chapter shall be a corporation separate from the common school districts included therein. The boards of trustees of high school districts established under this act are hereby vested with the power and authority to issue and negotiate bonds on the credit of the high school districts in conformity with and for any one or more of the purposes provided in Section 1224.1, Revised Codes of Montana, 1935, and Amendments thereof, and to the full amount permitted by Section 6 of Article XIII of the State Constitution irrespective of the debt of the common school districts.' (Emphasis ours.)

It will be seen from the foregoing portion of Chapter 275, Laws of 1947, that it makes provision for the division of counties having a high school or high schools into high school districts, each of which districts is a corporation separate from the common school districts included therein. The Act authorizes each of these high school districts as well as those created under sections 1301.1 to 1301.6, Revised Codes of Montana 1935, as amended, to issue bonds under section 1224.1, Revised Codes, 'to the full amount permitted by Section 6 of Article XIII of the State Constitution irrespective of the debt of the common school districts.'

Chapter 275, Session Laws of 1947, makes no change in the existing law with respect to the issuance of bonds by school districts. So far as the 1947 Act is concerned the limitation on the amount of bonds which school districts may issue still remains as fixed by section 1224.2, Revised Codes of Montana, 1935, namely '3% of the value of the taxable property therein,' which is the same limitation fixed by section 6 of Article XIII of the Montana Constitution. The case at bar does not involve the issuance of bonds by a high school district, hence the provisions of section 3 of Chapter 275, which pertain only to bond issues by high school districts, are not controlling in the present action. What is controlling in the case at bar is the effect of section 6 of Article XIII of the Constitution of Montana as applied to bond issues by school districts.

As a preliminary approach to the question presented on this appeal it should be borne in mind that this court has held that the rule of strict construction must be applied to the constitutional provision in question and any doubt as to the existence of the power sought to be exercised must be resolved against the right of a city to contract indebtedness. Palmer v. City of Helena, 19 Mont. 61, 68, 47 P. 209; State ex rel. Helena W. W. Co. v. City of Helena, 24 Mont. 521, 537, 63 P. 99, 55 L.R.A. 336, 81 Am.St.Rep. 453; Butler v. Andrus, 35 Mont. 575, 583, 90 P. 785, 787. The same principle of law, of course, applies to a school district. However the rule of strict construction and the principle of denial of power in the case of doubt as to its existence do not forbid us to examine the Constitution to determine whether the rule against the exercise of power is properly invoked.

Also we should not lose sight of the equally cogent and well-established rule that the constitutionality of a statute will be upheld if possible and that a statute will not be declared unconstitutional unless clearly so or so beyond a reasonable doubt. Mullholland v. Ayers, 109 Mont. 558, 567, 99 P.2d 234; State v. Cunningham, 39 Mont. 197, 103 P. 497, 18 Ann.Cas. 705; Spratt v. Helena Power Transmission Co., 37 Mont. 60, 94 P. 631; Hill v. Rae, 52 Mont. 378, 158 P. 826, L.R.A.1917A, 495, Ann.Cas.1917E, 210; Hilger v. Moore, 56 Mont. 146, 182 P. 477, and many similar Montana cases cited in vol. 3, Mont. Dig., Constitutional Law, k48, page 445.

The question as to the effect upon constitutional debt limits of the existence of separate political units with identical or overlapping boundaries is considered in an exhaustive case note in 94 A.L.R. beginning at page 818, following the Illinois case of Board of Education v. Upham, 357 Ill. 263, 191 N.E. 876, in which the Illinois Supreme Court held that each of several corporations may contract corporate indebtedness up to its constitutional limitation without reference to the indebtedness of any other corporation embraced wholly or in part within its territory and that in determining whether the debt limit will be exceeded in issuing bonds of a school district, the indebtedness of a city having the same territorical limits as the district is not to be taken into account.

The author of this case note states the general rule supported by numerous authorities when the boundaries of separate...