Madeley v. Trustees of Conroe I. School Dist.
| Decision Date | 27 June 1939 |
| Docket Number | No. 3578.,3578. |
| Citation | 130 S.W.2d 929 |
| Parties | MADELEY et al. v. TRUSTEES OF CONROE INDEPENDENT SCHOOL DIST. et al. |
| Court | Texas Court of Appeals |
Appeal from District Court, Montgomery County; E. T. Murphy, Judge.
Suit by D. A. Madeley and others against the Trustees of the Conroe Independent School District and others to enjoin the trustees from using the surplus in the maintenance fund to pay the cost of erecting new buildings, and from levying and collecting an ad valorem tax for the years 1939 and 1940. From a judgment denying plaintiffs' prayer for injunctive relief, the plaintiffs appeal.
Affirmed.
C. L. Madeley and W. N. Foster, both of Conroe, and Edd R. Campbell, of Houston, for appellants.
R. A. Powell, W. P. McComb, and O. Etheridge, all of Conroe, and Vinson, Elkins, Weems & Francis, W. P. Hamblen, and Gavin Ulmer, all of Houston, for appellees.
Conroe Independent School District, as it exists now, was created and organized by a special act of the 39th Legislature, approved the 17th day of March, 1925 (23 Gammel's Laws of Texas, p. 487), embracing the old Conroe Independent School District, common school districts Nos. 12, 14, 28, and parts of common school districts Nos. 11, 13 and 20. The trustees of the Conroe Independent School District will be referred to as Trustees, and the district as the District.
By an election ordered on the 25th day of March, 1925, and held and returns made on the 25th day of April, 1925, and the result declared on the 29th day of May, 1925, the new district assumed all the bonds outstanding against its component parts, subjected all the property within the district to all school taxes theretofore levied and assessed by the old Conroe Independent School District, and authorized the levy of an ad valorem tax "for the maintenance of public free schools in said district" at a rate not to exceed $1 on the $100. valuation of the taxable property in the new district. By orders duly made and entered, for the years 1934-38, inclusive, the Trustees levied and collected an ad valorem tax on all the property within the district for "the support and maintenance" of its public free schools, at the following rates:
Year Rate
1934 .38
1935 .67
1936 .70
1937 .53
1938 .95"
All money received and held by the Trustees for public free school purposes was divided into—earmarked—the following funds, as shown by their books and their bank account: "state available fund," "county available fund," "vocational aid," "local maintenance fund," "interest and sinking fund," "delinquent taxes," "sale of property and insurance adjustments," and "other sources." From the funds thus received and collected, the Trustees supported and maintained the public free schools of the district, and from this fund also made the following building improvements:
1935 to 1939 athletic stadium
field, truck, etc............. $ 15,000.00
1936 North and South wings to
Crockett High School
Building ..................... 210,000.00
1936 to 1937 Sam Houston Elementary
School Building 250,000.00
1937 Home Economics Building 25,000.00
1937 Gymnasium building, connected
with Athletic building ...... 12,000.00
1938 School bus garage building .. 10,000.00
___________
Total .................. $522,000.00
After all these expenditures had been made and charged against the maintenance fund collected under the orders given above, on April 11, 1939, the Trustees had on hand, in cash, as a surplus in the maintenance fund, $332,876.26.
The school budget prepared for the year 1939-40 calls for the expenditure in the maintenance of the schools of the sum of $275,000; of that sum it was estimated that $140,965.97 would be expended from the maintenance fund. The tax receipts for 1938-39, as shown above, on the rate of $.95 amounted to the sum of $393,861.68.
The Trustees adjusted the valuation of the taxable property within the District for 1938-39 at the sum of $37,500,000; the Conroe oil field had been discovered and developed, thus giving to the District this great value for the purposes of taxation. In 1933, the outstanding bonds against the District amounted to about $144,000; which had been reduced to about $12,000. Since 1933, no bonds have been issued or voted for any purpose; all the improvements listed above were paid for out of the maintenance fund.
On or about the 9th day of March, 1939, after giving due public notice, the Trustees executed the following building contracts, all expenditures to be made from the surplus of $332,876.26 in their hands on the 11th day of April, 1939:
T. B. Hubbard Construction
Company ..................... $183,045.00
Barber Plumbing Company ....... 27,650.00
Herbert Sisco (Electrician) ... 10,137.00
Lamar Q. Cato (Architect) ..... 11,041.60
At the time of the execution of these contracts the Trustees had no funds, except the surplus in the maintenance fund, to pay the cost of the improvements.
This suit was filed on the 5th day of May, 1939, in the district court of Montgomery County, by appellants, D. A. Madeley and others, tax paying citizens residing within the Conroe Independent School District, against appellees, the Trustees and certain other parties, alleging the levy, assessment and collection of the local tax, its expenditure in the maintenance of the schools and for building improvements, all as given above, and that the expenditures for the building improvements constituted an unlawful diversion of the maintenance fund; the execution of the contract of March 9, 1939, and that it was to be paid for by the Trustees from the surplus in the maintenance fund now in their hands, and that such expenditure would constitute an unlawful diversion of the maintenance fund; that the money now held by the Trustees, as a surplus in the maintenance fund, is sufficient to maintain the schools for 1939-40 without any additional levy for that purpose. The prayer was for a temporary injunction, to be made permanent on hearing, enjoining the Trustees from paying out any money from the surplus fund in discharge of the contract of March 9, 1939, and from levying and collecting an ad valorem tax for the year 1939-40.
On the day the suit was filed, on presentation of the petition to the district judge in chambers, a restraining order was granted as prayed for by appellants and a hearing on the prayer for the temporary injunction was set for the 9th day of May. The issues made by appellants' petition and appellees' answer were submitted to the court on the pleadings and a full development of the facts; the temporary restraining order was dissolved and the prayer for temporary injunction denied. From that order appellants have duly prosecuted their appeal to this court.
At the time the suit was filed and before the issuance of the restraining order, the construction of the improvements embraced within the contract of the 9th day of March had been started; the Hubbard Construction Company, on its contract, had been paid the sum of $12,500 and Mr. Cato the sum of $6,000, all out of the surplus in the maintenance fund in the hands of the Trustees on the 11th day of April, 1939.
Opinion.By the election held on the 5th day of May, 1925, the Trustees were authorized to levy and collect an ad valorem tax "for the maintenance of public free schools in said district" at a rate not to exceed $1 on the $100 valuation of taxable property in the district. Under that tax, during the years immediately prior to the school year of 1939-40, the Trustees levied the ad valorem tax authorized by the election, from which they, on April 11, 1939, had on hand in cash a surplus of $332,876.26, which, without the collection of any additional tax, was sufficient to maintain the public free schools of the District for the school year 1939-40. On this statement, are appellants, tax paying citizens of the district, entitled to an injunction restraining the Trustees from levying and collecting an ad valorem tax for the maintenance of the public free schools of the District for the school year 1939-40? The question must be answered in the negative. By the election of the 5th of May, 1925, the Trustees were vested with the power to levy and collect an ad valorem tax "for the maintenance of public free schools" in the District, and were vested with the discretion to fix the tax rate at a rate not to exceed $1 on the $100 valuation of the property in the District. In the absence of fraud in fact, the courts cannot limit the trustees of an independent school district in the exercise of the power vested in them to levy the tax. That power was given them by the sovereign voters under the mandate of the law, and its exercise cannot be restrained. In point in principle, State v. Mallet Land & Cattle Co. 126 Tex. 392, 88 S.W.2d 471; Menardville Independent School District v. Moser, Tex.Civ.App., 90 S.W.2d 578. But, conceding to the Trustees the power, absolute and beyond the control of the courts, to levy and collect annually an ad valorem tax for the maintenance of the public free schools of the District, can their discretion as to the tax rate vested in them by the election of the 5th day of May, 1925, be controlled by the courts? We think this question is answered against appellants by Eagle Lake Independent School District v. Hoyo, Tex. Civ.App., 199 S.W. 352. In the absence of fraud in fact, the courts will not interfere with the discretion vested in the trustees of an independent school district, as the result of a tax election, in levying and assessing the tax, and in fixing the tax rate.
The second point presented by the appeal is: Can the Trustees be enjoined from expending the...
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