Monadnock Regional School Dist. v. Towns of Fitzwilliam et al.

• Decision Date: 07 August 1964
• Citation: 105 N.H. 487,203 A.2d 46
• Parties: MONADNOCK REGIONAL SCHOOL DISTRICT v. TOWNS OF FITZWILLIAM, et al.
• Court: New Hampshire Supreme Court

Page 46

203 A.2d 46

105 N.H. 487

MONADNOCK REGIONAL SCHOOL DISTRICT v. TOWNS OF FITZWILLIAM, et al.

Supreme Court of New Hampshire.

Argued July 16, 1964.

Decided Aug. 7, 1964.

Homer S. Bradley, and Homer S. Bradley, Jr., Keene, for Monadnock Regional School District, furnished no brief.

Bell, Bell & Shortlidge, Keene, Ernest L. Bell, III, Keene, and Raphael J. Shortlidge, Jr., Keene, orally), for town of Fitzwilliam.

Goodnow, Arwe & Ayer, Keene, (John R. Goodnow, Keene, orally), for the towns of Gilsum, Surry and Swanzey.

McLane, Carleton, Graf, Greene & Brown and John A. Graf, Manchester (John A. Graf, Manchester, orally), for the town of Troy.

Cristiano & Kromphold, Keene, and Lewis A. McMahon, Keene, (Lewis A. McMahon, orally), for the towns of Richmond and Roxbury.

Gardner C. Turner, Sullivan, for the town of Sullivan.

LAMPRON, Justice.

Because of their interrelation we will consider together the first two transferred questions which read as follows:

'1. Is the doctrine of estoppel available in this action in Fitzwilliam, Troy, Richmond and Roxbury?

'2. If the answer to question 1 is 'yes,' may the Court find estoppel if it finds the facts in accordance with the requests for findings of fact?'

Estoppel, whether called equitable estoppel or estoppel in pais, has been said to arise when 'a party who knows or should know the truth is absolutely precluded, both at law and in equity, from denying, or asserting the contrary of, any material fact, which, by his words or conduct, affirmative or negative, intentionally or through culpable negligence, he has induced another, who was excusably ignorant of the true facts and who had a right to rely upon such words or conduct, to believe and act upon them thereby, as a consequence reasonably to be anticipated, changing his position in such a way that he would suffer injury if such demand or contrary assertion were allowed.' 19 Am.Jur., Estoppel, s. 34, p. 634. See also, Drew v. Kimball, 43 N.H. 282, 285; Gilbert v. Manchester, 55 N.H. 298; Bowen v. Casualty Co., 99 N.H. 107, 112, 107 A.2d 379; Margolis v. Insurance Company, 100 N.H. 303, 308, 125 A.2d 768.

Estoppel rests largely on the facts and circumstances of the particular case. Jennings v Bituminous Casualty Corporation, 47 Ill.App.2d 243, 197 N.E.2d 513. It can be invoked as a defense against municipal corporations, as is being done here, if the necessary facts are established to warrant its application. Gilbert v. Manchester, supra; Lucier v. Manchester, 80 N.H. 361, 362, 117 A.2d 286. Thus limited the answer to the first question is 'yes.'

The facts which the towns of Fitzwilliam, Troy, Richmond and Roxbury seek to establish as the basis for their defense of estoppel against the towns of Gilsum, Swanzey, Sullivan and Surry are essentially the following.

During the formation of Monadnock, starting in 1960, it was the policy and intention of the participants that the fiscal needs of the district would be raised by the constituent communities according to the following three part formula. First, foundation aid under RSA 198:8, 198:9, 198:10 as received by the district on behalf of the qualifying towns (RSA 195:15) was to be applied against the total budget of the district. Second, one half of the balance of the budget was to be paid by the towns in accordance with their average daily membership. Third, the remainder was to be apportioned on the basis of the ratio that the equalized valuation of each pre-existing district bears to that of the cooperative district. RSA 195:8 II (now RSA 195:7 II).

Monadnock was established on February 11, 1961 (effective as of July 1, 1962) by the five towns of Fitzwilliam, Swanzey, Troy, Richmond and Roxbury. Shortly thereafter the district received written inquiries from the towns of Gilsum, Sullivan and Surry expressing interest in joining Monadnock. They were accepted at a district meeting held April 20, 1961.

The requests for findings of fact received by the Trial Court as an offer of proof state that prior to their admission the latter three towns had actual knowledge of the manner of allocating foundation aid adopted by Monadnock. These towns had been informed by a consultant firm employed in the organization of the district and by the State Board of Education that state foundation aid was to be deducted from the gross budget in the first instance.

Further offer of proof is made that this information was made available to the voters of these three towns who voted to join Monadnock of their own volition thereby increasing the capital expense of the cooperative. None of these towns questioned or challenged the manner of allocating foundation aid. Had a different formula for allocation of this aid been proposed Gilsum, Sullivan and Surry 'would not have been allowed to join the cooperative district or at least not under a formula for tax allocation such as that then in use which already fully allowed for equalized land valuation.' Fitzwilliam request No. 12. Proof also will be made that these three towns received a material benefit as a result of annexation pursuant to the original formula of allocation.

Fitzwilliam, Troy, Roxbury and Richmond maintain that because all of the constituent towns in Monadnock agreed to, acquiesced in, and relied on the original three part formula for the apportionment of the financial costs of the district, these towns should be estopped from asserting a position inconsistent with the method of financial apportionment.

In Gilsum v. Monadnock Regional School District, 105 N.H. 361, 202 A.2d 790, this court held that it was the intent of the Legislature 'that a town which is a part of the cooperative school district should benefit from foundation aid to the same extent that its pre-existing school district would have benefited if it still existed. In order to accomplish this purpose the foundation aid paid to the cooperative district because of and measured by the needs of a pre-existing school district must be credited to the town which constituted it.' 105 N.H. P. 365.

This means that for the school year 1962-63 the sum of $110,352.59 received by Monadnock in foundation aid would not be deducted from the total budget as required by part 'First' of the original formula. Instead the percentage of cost to be borne by each town would be arrived at by applying parts 'Second' and 'Third' of the original formula to the total budget. Then the full amount of the foundation aid which the pupils attending Monadnock from a certain pre-existing district would have entitled that district to receive would be credited against its share of the cost previously determined in the above manner. The balance would constitute the assessment against that town to be raised by it from the taxable property within its limits. RSA 198:5.

Applying the actual figures for that school year specifically to Gilsum, under the original formula it receives credit for $6,014.18 of foundation aid and the assessment against it to be raised by taxation in the town is $46,966.65. If foundation aid is applied in accordance with Gilsum v. Monadnock Regional School District, supra, Gilsum receives credit for $22,981.14 (the amount to which it was entitled as a pre-existing school district) and the amount to be raised by taxation is $29,999.35 or $30,004.90.

Under the latter method Gilsum, Sullivan, Surry and Swanzey would be entitled to credits against the assessments made against them by Monadnock in accordance with the original formula. Conversely Fitzwilliam, Richmond, Roxbury and Troy would be subject to supplemental assessments to make up the lesser amounts thus assessed against them.

The bare bones issue therefore is whether, assuming the facts stated in the requests for findings are established and true, equity and good conscience require that Gilsum, Sullivan, Surry and Swanzey be estopped from asserting an improper allocation of foundation aid for the school years 1962-63 and 1963-64 and from advocating for the succeeding years, subject to RSA 195:8, an allocation of such aid in accordance with the Gilsum decision rather than according to the original three part formula.

The elements essential to such an estoppel are (1) a representation or a concealment of material facts; (2) the representation must have been made with knowledge of the facts; (3) the party to whom it was made must have been ignorant of the truth of the matter; (4) it must have been made with the intention that the other party should act upon it; and (5) the other party must have been induced to act upon it to his prejudice. Stevens v. Dennett, 51 N.H. 324, 333; Horn v. Cole, 51 N.H. 287, 297; Hampton v. Paramount Pictures Corporation, 279 F.2d 100 (9th Cir.1960); 19 Am.Jur., Estoppel, s. 42, pp. 642-643.

On April 20, 1961, when Gilsum, Sullivan and Surry were accepted as members of Monadnock, and prior thereto when Swanzey became part of the district, the only statutory formula for apportionment of costs was the following. Costs of capital outlay and operation of a cooperative school district were to be apportioned (I) on the basis of the ratio of the equalized valuation of each pre-existing district to that of the cooperative, or (II) one half of such costs was to be apportioned as above and the other half apportioned on the average daily membership for the preceding year. Laws 1959, 195:1. There was therefore no statutory basis for part 'First' of the original three part formula which was adopted and which provided for the deduction of all foundation aid from the total budget. Furthermore parts 'Second' and 'Third' being based on statutory method II above, weighted the original formula to impose as heavy a burden upon the towns with small valuations in relation to the number of pupils attending Monadnock as the existing law would permit. Such towns are Gilsum, Sullivan, Surry and Swanzey.

The application of the foundation aid received by Monadnock on...