In re Protest of Carter Oil Co., Case Number: 21285

• Court: Supreme Court of Oklahoma
• Writing for the Court: ANDREWS, J.
• Citation: 148 Okla. 1,1931 OK 15,296 P. 485
• Parties: PROTEST of CARTER OIL CO.
• Docket Number: Case Number: 21285
• Decision Date: 27 January 1931

1931 OK 15
296 P. 485
148 Okla. 1

PROTEST of CARTER OIL CO.

Case Number: 21285

Supreme Court of Oklahoma

Rehearing Denied March 10, 1931
Decided: January 27, 1931

Syllabus

¶0 1. Schools and School Districts--Counties--Failure to Make Genuine Defense Against Illegal Claims as Fraud on Municipality.

The failure of a board of county commissioners to file, or cause to filed, proper pleadings and to make, or cause to be made, a defense against claims in excess of the appropriation made for any purpose for a fiscal year, constitutes a fraud upon the county and the taxpayers they represent.

2. Same--Dealings with Municipality Presumed with Knowledge of Legal Limitations.

Whoever deals with a municipality does so with notice of the limitations on it or its agents' powers. All are presumed to know the law, and those who contract with it, or furnish it supplies do so with reference to the law; and if they go beyond the limitations imposed they do so at their peril.

3. Same--Constitutional Limitations on Indebtedness.

The intention and plain purpose of section 26, art. 10, of the Constitution is to require municipalities to carry on their corporate operations upon the cash or pay as you go plan. The revenues of each year must take care of the expenditures of such year; and any liability sought to be incurred by contract, express or implied, executed or executory, in excess of such current revenue in hand, or legally levied, is void, unless it be authorized by a vote of the people and within the limitations therein provided.

4. Same--Debt in Excess of Legal Limits Void in Any Form.

A debt which is in excess of the constitutional or statutory limit is void; and in no form can such debt be held valid upon any theory of quantum meruit, or equitable obligation. The absolute lack of power to contract such indebtedness bars every form of action and every legal device by which recovery is sought.

5. Same -- Constitutional Provisions Harmonized.

Section 1, art. 13, of the Constitution must be construed in connection with the other sections thereof. While that section directs the Legislature to establish and maintain a system of free schools, the Constitution also provides that the total taxes on an ad valorem basis for all purposes for one of those schools shall not exceed in any year 15 mills without the assent of three-fifths of the voters thereof voting at an election to be held for that purpose as provided by sections 9 and 26, art. 10, of the Constitution.

6. Same--Statute Providing for Transportation of Pupils.

Section 10465, C. O. S. 1921, provides for transportation of school children under certain circumstances. It is a legislative act and the duty imposed upon the school district to transport the school children was imposed by the Legislature. That act does not require the transportation of school children without a valid appropriation for that purpose as required by the provisions of the Constitution.

Error from Court of Tax Review; Hal Johnson, Harve L. Melton, and T. G. Chambers, Judges.
In the matter of the protest of the Carter Oil Company against certain tax levies made by the Excise Board of Carter County. Judgment for protestant, and protestee appeals. Affirmed.

James A. Veasey, L. G. Owen, and Earl A. Brown, for protestant.

John L. Hodge, Co. Atty., Joe Brown, Asst. Co. Atty., Marvin Shilling, and Stephen A. George, for protestee.

ANDREWS, J.

¶1 Zaneis consolidated school district No. 72, Carter county, a consolidated school district, included in its estimate for the fiscal year commencing July 1, 1928, the sum of $ 15,560 for "Replacement of, or new vehicles" for transportation of pupils.

¶2 On the 28th day of August, 1928, the excise board made the appropriations for the school district and fixed the rate of levy for the school district. No appropriation was made for the item of "Replacement of, or new vehicles" for the reason that "their valuation was not sufficient." The record shows that the valuation of the school district was not sufficient to produce an amount within the 15 mills authorized rate of levy to provide appropriations for all of the estimated needs of the school district and that among the estimates for which no appropriations were made was the one in question here. The order of the county excise board became final, the rate of levy was certified to the county assessor, and the appropriations were certified to the school district. On the 29th day of August, 1928, a judgment was rendered by the district court of Carter county against the school district for $ 16,124 in favor of the W. S. Spears Motor Company for the school busses in question.

¶3 That judgment was listed by the school district in its estimate for the fiscal year commencing July 1, 1929, and the excise board of Carter county included one-third thereof and the interest on the entire amount in the appropriation for sinking fund purposes for the school district for that fiscal year and fixed the rate for sinking fund purposes on that calculation. The Carter Oil Company filed its protest before the Court of Tax Review, and, after full and complete hearing, that court rendered judgment sustaining the protest and directing the elimination of that judgment from the levy for sinking fund purposes for said school district for said fiscal year and the correction of the appropriation accordingly. From that judgment the excise board of Carter county has appealed to this court.

¶4 The Carter Oil Company will be hereinafter referred to as the protestant, the excise board of Carter county as the protestee, and the W. S. Spears Motor Company as the motor company.

¶5 The record before this court discloses that the petition on which the judgment was rendered by the district court of Carter county was verified by the vice president of the motor company on the 23rd day of August, 1928. The date of the filing of the petition in the district court was not shown by the record. Summons was issued, dated the 27th day of August, 1928, and was served on the director, clerk, and member of the school district on August 27, 1928. On August 29, 1928, Stephen A. George, as "attorney for defendant," filed an answer in the cause in that court, and on the 29th day of August, 1928, judgment was rendered.

¶6 It was alleged in the petition that on the 22nd day of August, 1928, the school district purchased from the motor company eight school busses for which it agreed to pay $ 17,025, less a credit of $ 900 for old busses owned by the school district and taken in exchange; that the busses had been delivered to the school district; that the motor company had filed a sworn claim with the clerk of the school district for the sum of $ 16,124; that the school district had failed and refused to pay the claim; "that said claim has been disallowed for reasons unknown to this plaintiff"; "that there are ample funds available under the control of said school district with which to pay for said busses, but said school district by its...