Independent School Dist. of Cedar Rapids, Linn County v. State Appeal Board

• Citation: 299 N.W. 440,230 Iowa 924
• Decision Date: 04 August 1941
• Docket Number: 45483.
• Parties: INDEPENDENT SCHOOL DIST. OF CEDAR RAPIDS, LINN COUNTY, v. STATE APPEAL BOARD.
• Court: United States State Supreme Court of Iowa

299 N.W. 440

230 Iowa 924

INDEPENDENT SCHOOL DIST. OF CEDAR RAPIDS, LINN COUNTY, v. STATE APPEAL BOARD.

No. 45483.

Supreme Court of Iowa.

August 4, 1941

MITCHELL, J., dissenting.

Appeal from District Court, Linn County; Chas. J. Haas, Judge.

This is a proceeding in certiorari to test the legality of the defendant's action in reducing the tax levy for its general fund as certified by plaintiff's board of directors. The trial court adjudged that the levy as certified was " unaffected and unmodified by the proceedings had before the State Appeal Board" the orders of which were adjudged to be " in excess of power and authority and was illegal" and accordingly " annulled, cancelled, set aside and held for naught." From this judgment, defendant appeals.

Reversed.

John M. Rankin, Atty. Gen., and Floyd Philbrick, First Asst. Atty Gen., for appellant.

Donnelly Lynch, Anderson & Lynch and C. J. Lynch, all of Cedar Rapids, for appellee.

SAGER Justice.

For convenience the appellant will be designated as the " board" . In July, 1939, and later, such proceedings were had by the appellee's board of directors as resulted in the certification of a tax levy for the general fund of $909,575. From this certification an appeal was taken to the board by more than 170 taxpayers. After a hearing the levy was reduced in the sum of $28,555, leaving it at $881,020, the same amount it had been the year before. It should be noted that the expenses budgeted were $6,555 more than for the year before. The average monthly balance in the general fund for the first seven months of 1939 was $226,470 and the amount on hand in that fund on June 30th of that year was $298,675. The monthly balance in this fund averaged for the year 1938, $202,972.89 and for 1937, $115,919.74. In 1937 there was transferred from the general to the sinking fund, $50,300.

Much of the argument is devoted to a discussion of the question as to whether the appellee was required to operate on the fiscal or on a calendar year basis and the effect on the financial status of the appellee under the one or the other. Appellee argues that the fiscal year ends on June 30th and that if it were to operate on that basis there would be a deficit because taxes levied in 1939 would not be available until July 1, 1940.

Appellant in effect concedes this in this language:

" On this theory there perhaps might be a deficit in the general fund even though, as a practical matter, if the district maintained its present financial position there would always be an average monthly cost (cash) balance of $200,000.00 or better."

We deem it unnecessary to discuss this phase of the case. Whether appellee's contention be sound as a matter of bookkeeping we need not determine; but when tested by the canons of plain common sense the argument that appellee, having on hand on June 30th a cash balance of nearly $300,000, is, on July 1st (not having spent a dollar meanwhile), " in the red" as the saying goes, is not persuasive. There is no claim made that the board acted corruptly or with any intention or purpose other than to discharge the duties imposed upon it by law. Appellee argues in effect that because the board's decision did not square with the views of the appellee's board of directors it was " illegal" and as a consequence could be challenged by a writ of certiorari. The trial court took that view and as a result we have the judgment of the district court substituted for that of the agency the legislature set up to determine and finally pass on such matters.

We hold that the trial court was in error. The reason for our conclusion will be more readily apparent if the character of these litigants be kept in mind. Both are creatures of the state, with the appellee in a position subordinate to that of the board so far as its tax levies are concerned. The appellee is a school corporation. " It is a legislative creation. It is not organized for profit. It is an arm of the state, a part of its political organization. It is not a ‘ person’ within the meaning of any bill of rights or constitutional limitation. It has no rights, no functions, no capacity except such as are conferred upon it by the Legislature. The legislative power is plenary. It may prescribe its form of organization and its functions today, and it may change them tomorrow." Waddell v. Board of Directors, 190 Iowa 400, 175 N.W. 65, 67. See, also, Scott County v. Johnson, 209 Iowa 213, 222 N.W. 378; McSurely v. McGrew, 140 Iowa 163, 118 N.W. 415, 132 Am.St.Rep. 248; C. Hewitt & Sons Co. v. Keller, 223 Iowa 1372, 275 N.W. 94; Boyd v. Johnson, 212 Iowa 1201, 238 N.W. 61.

The case before us has its foundation in the action of the appellee under chapter 24, § 351 et seq., of Code, 1939, the Local Budget Law. By chapter 91, acts of the Forty-Seventh General Assembly, section 390.5, Code, 1939, was added to the law as it theretofore existed. This declared, among other provisions: " Review by and powers of board. It shall be the duty of the state board to review and finally pass upon all proposed budget expenditures, tax levies and tax assessments from which appeal is taken and it shall have power and authority to approve, disapprove or reduce all such proposed budgets, expenditures and tax levies so submitted to it upon appeal, as herein provided; but in no...