Leavenworth Nat. Bank v. Reilly

• Decision Date: 08 April 1916
• Docket Number: 20470
• Parties: LEAVENWORTH NAT. BANK ET AL. v. REILLY, COUNTY TREASURER, ET AL.[a1]
• Court: Kansas Supreme Court

156 P. 747

97 Kan. 817

LEAVENWORTH NAT. BANK ET AL. v. REILLY, COUNTY TREASURER, ET AL.^[a1]

No. 20470

Supreme Court of Kansas

April 8, 1916

Syllabus

The term "fiscal year" is the year embraced in the annual term for the opening and closing of financial accounts.

The "fiscal year" in Leavenworth county for the regulation of its county finances and for the opening and closing of its financial accounts begins on the second Tuesday in October of each year.

The issue of warrants in any one fiscal year to defray the general expenses of Leavenworth county is limited to the maximum revenues which the levy for that fiscal year will produce, and is determinable by a calculation applying the levy to the assessed valuation of the county.

The board of county commissioners of Leavenworth county has no power to issue county warrants for the payment of current expenses in excess of the revenues to be derived from the general tax levy made to meet such expenses.

The board of county commissioners of Leavenworth county has no power to issue county warrants in any one year, to be redeemed by anticipating and impairing the revenues of succeeding years.

The board of county commissioners of Leavenworth county has no power to change the beginning of the fiscal year from the second Tuesday of October, 1914, to January 1, 1915, to serve the temporary financial convenience of the county.

The cases of Garfield Township v. Dodsworth, 9 Kan.App 752, 58 P. 565, and Garfield Township v. Hubbell, 9 Kan.App. 785, 59 P. 600, disapproved as precedents governing the case at bar.

When county warrants have been issued in excess of the general maximum revenue fund for the current fiscal year, but for which the county got value received, they can be paid in two ways: (1) By the slow collection of delinquent taxes and miscellaneous items which may inure to the general revenue fund; or (2) by application to the Legislature and obtaining its sanction, authorizing their payment out of later general revenues of the county.

Where county warrants are void only because issued in excess of the maximum revenues derivable from the general levy for the current fiscal year, the holders of such warrants are subrogated to the rights of the original creditors, whose claims against the county were the basis of such void warrants; and, if the claims were lawful, the county is liable to the subrogated holders of such claims, and provision may be made to meet their payment in future annual levies, but no such future annual levy can exceed the maximum fixed by statute.

Original application for writ of mandamus by the Leavenworth National Bank, of Leavenworth, Kan., and others against H. V. Reilly, as County Treasurer of Leavenworth County, Kan., and others. Writ denied.

W. W. Hooper, A. E. Dempsey, and L. H. Wulfekuhler, all of Leavenworth, for appellants.

Lee Bond and M. N. McNaughton, both of Leavenworth, for appellees.

OPINION

DAWSON, J.

This action invokes the original jurisdiction of this court for a writ of mandamus to compel the county treasurer of Leavenworth county to pay certain county warrants held by the plaintiffs, which are the principal banking houses of the city of Leavenworth. The petition alleges that in March, 1915, Leavenworth county was without funds to pay its current obligations, matured and maturing, during the year 1915, except by issuing county warrants, and that the board of county commissioners requested a conference with the bankers of Leavenworth, and that such conference was held, and it was orally agreed thereat that the plaintiff banks would cash all warrants lawfully issued, not to exceed the amount that could be levied and raised by taxation for current expenses during the year 1915, which was approximately $52,000, and it was further orally agreed that the county warrants would be taken by the banks at par, and would be paid out of the first money available, "collected for taxes under the levy made by the board of county commissioners in August, 1915, for the current general taxes of that year."

The plaintiffs cashed warrants amounting to $24,793.95, which were issued between April 1, 1915, and November 1, 1915. The warrants were presented to the county treasurer, and registered, numbered, and stamped, "Not paid for want of funds." On November 1, 1915, the warrants were presented for payment, there being then ample funds in the county treasury, raised by the levy made in August, 1915; but payment was refused by the treasurer on the ground that the funds raised by the levy of 1915 could not be devoted to the payment of these warrants. The board of county commissioners make no defense to this lawsuit. In his return to the alternative writ of mandamus, the county treasurer alleges that there is no record of the alleged agreement between the plaintiffs and the county commissioners; that the fiscal year of Leavenworth county begins on the second Tuesday of October; that he has been in the public service in the county treasurer’s office almost continuously for over 20 years, and that during all that time the financial affairs of the county had been conducted on that basis; that when he became county treasurer in October, 1915, he found that between April 1, 1915, and October 1, 1915, warrants amounting to $39,601.93 had been issued and stamped, "Not paid for want of funds; " that he immediately examined the records, and found that the general fund for the year 1914 had commenced on the second Tuesday in October, 1914; and that (by order of the board of county commissioners) the general fund for the year 1914 was changed to begin January 1, 1915, but that the other funds continued as theretofore, the only changes being those affecting the general funds of 1914 and 1915. Answering further, the county treasurer recites that he discovered that the sum of $14,987.05 remained in the general fund for 1914, and thereupon he paid out that amount to the plaintiffs on the warrants held by them; that the total amount of warrants between October, 1914, and October, 1915, was $76,580.48, and that the levy for that year raised $53,261.67, and that (by law) no part of the next succeeding year’s levy and revenue could be devoted to the payment of the excess warrants of the preceding year; that he is, at all times, ready to pay the plaintiffs’ warrants out of any funds which may yet be realized from the levy of 1914; that he has no personal interest in this action except to protect himself and his bondsmen from the consequences of paying out public moneys illegally, and asks for his costs and a reasonable attorney’s fee.

Reduced to shorter terms, the questions to be considered are: (1) Does the fiscal year of Leavenworth county begin on the second Tuesday in October in each year; (2) are the general expenditures of the county limited to the revenues raised by the levy of that year, together with the miscellaneous fees and minor items which accrue to the general revenue, or can the board of county commissioners disregard the maximum general revenues possible in any year and issue warrants in excess thereof; and (3) can the county commissioners change the date of the fiscal year to suit the temporary financial convenience of the county?

Before examining these questions, we note that there is nothing vicious, fraudulent, or questionable in the slightest degree, inhering in any of the warrants, and that the county got value received for each of them. Whether their payment can be compelled at this time by mandamus is the gist of this controversy.

1. There is no general uniformity throughout the state touching the beginning of the fiscal year. A fiscal year is simply the year embraced in the annual term of the opening and closing of financial accounts. In Moose v. State, 49 Ark. 499, 5 S.W. 885, which was a prosecution of a county clerk for failing to publish a financial report of the county within 30 days after the annual settlement with the collector (treasurer) of the county for the fiscal year, it was held that the fiscal year, so far as it relates to the financial affairs of the counties, must mean the current year embraced between the dates of the collector’s (county treasurer’s) annual settlements, and that the "fiscal year ending 1887" covered the period from the collector’s settlement in 1886 to his settlement in 1887. In the state’s own financial affairs, the fiscal year begins on July 1st. Gen. Stat. 1909, § 8955. In first-class cities, under the old form of government, the fiscal year begins on April 1st. In first and second class cities under commission government, the fiscal year begins on January 1st. Gen. Stat. 1909, § § 1038, 1328, 1500.

The defendant alleges, and the fact is not denied, that for many years the fiscal year of Leavenworth county has been considered and dealt with by the county authorities as beginning on the second Tuesday in October in each year. Whether this is true of the counties of this state generally may not have to be determined here. In 1871 a special law was enacted, relating to levies, county revenues, and taxation in Leavenworth county. Laws 1871, c. 148. In 1876, another special law was enacted, concerning bond issues, funding indebtedness, issue of warrants, etc. Laws 1876, c. 36. In that year, also, another special act, relating to Leavenworth county tax levies, was adopted by the Legislature. Laws 1876, c. 90. In 1879 another special law was enacted relating to taxation in Leavenworth county, fixing the fiscal year of that county, limiting the issue of warrants to the sum raised by the levy for each fiscal year, and providing penalties for its violation, etc. Laws 1879, c. 120. By this act the fiscal year of Leavenworth county was thus defined:

"Sec. 2. The fiscal year of the county of

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