Morgan v. Board of Sup'rs, 5019

• Decision Date: 05 April 1948
• Docket Number: 5019
• Parties: MORGAN v. BOARD OF SUP'RS et al
• Court: Arizona Supreme Court

192 P.2d 236

67 Ariz. 133

MORGAN v. BOARD OF SUP'RS et al

No. 5019

Supreme Court of Arizona

April 5, 1948

Appeal from Superior Court, Maricopa County; Walter J. Thalheimer Judge.

Suit for injunction by Milo Morgan against the Board of Supervisors, Maricopa County, Arizona, and others to restrain issuance and sale of school district bonds. From a judgment dismissing complaint, the plaintiff appeals.

Judgment affirmed.

Harold J. Janson, of Phoenix, for appellant.

Francis J. Donofrio, County Atty., and Fred C. Struckmeyer, Jr. Deputy County Atty., both of Phoenix, for appellees.

John L Sullivan, Atty. Gen., and William P. Mahoney, Jr., Asst. Atty. Gen., for amici curiae.

Udall Justice. Stanford, C. J., and La Prade, J., concurring.

OPINION

Udall, Justice.

This is an appeal by Milo Morgan (plaintiff-appellant) from a judgment dismissing his complaint for injunctive and other relief against the Maricopa County Board of Supervisors and the Board of Trustees of Washington School District No. 6. The defendants will be termed appellees.

At a regularly called election held in said district on May 14, 1947, the vote was 308 in favor of the issuance and sale of bonds in the sum of $ 164,000, and 187 "bonds no" votes were cast. Appellant, who was a qualified elector and a real property taxpayer residing in the district, brought this suit for himself and all others similarly situated, seeking to void the results of the bond election by restraining the issuance and sale of the bonds thus voted.

The assignments of error, which will be stated more in detail later, contend that the lower court disregarded the constitutional limit of bonded indebtedness for school purposes and also challenge its implied finding that the election was fairly conducted, particularly as to the exclusion from voting of ex-service men and widows who had claimed exemption from payment of taxes.

If the bonds in the instant case are issued and sold unquestionably the property rights of the appellant and other taxpayers similarly situated would be involved; hence, appellant had the right to bring an action seeking injunctive relief on the ground that the constitutional limitation of indebtedness was exceeded.

"The right of properly interested persons to have an illegal issuance, sale, or delivery of the bonds of a political subdivision enjoined is so well settled as to be beyond dispute, and, as a matter of fact, is tacitly recognized by the courts and various litigants as a mere matter of course in many hundreds of decisions. * * *" 43 Am.Jur., Public Securities & Obligations, section 335, page 538. See also 43 C.J.S., Injunctions, § 121.

The problem as to whether the actual debt limit of ten percent, as fixed by article 9, section 8, Constitution of Arizona, was here being exceeded hinges upon the answer to two questions: (a) can moneys in the district's bond sinking fund be treated as an asset in computing the net in indebtedness? (b) does the ten percent limit of indebtedness apply separately to each distinct political unit?

As to the first question, the authorities disclose practical unanimity in holding that in determining the indebtedness of a district, within the constitutional provision limiting indebtedness, a sinking fund reserved and pledged for the payment of existing bond obligations may be deducted in computing outstanding bonded indebtedness. City of Stamford v. Town of Stamford, 107 Conn. 596, 141 A. 891, 896; First National Bank v. City of Jackson, 199 Ky. 94, 250 S.W. 795; Kirk v. School Dist. No. 24, 108 Okl. 81, 234 P. 596. See also 44 C.J., Municipal Corporations, section 4056, page 1123; 38 Am.Jur., Municipal Corporations, section 481, page 160. In the case at bar the record shows that the deduction of the amount in the sinking fund brings the district's net indebtedness down to a few hundred dollars below the maximum fixed by the constitution; hence, the first question must be answered in the affirmative.

Appellant contends (though he offered no proof in support) that the appellee school district lies within the Glendale Union High School District, and that if its proportionate part (two-fifths) of the High School District bonded indebtedness were added to appellee school district's indebtedness it would far exceed the ten percent limit; in fact, he argues that it would be possible by computing the indebtedness in this manner to saddle onto an area twenty percent indebtedness rather than the limit fixed by the Constitution. Even admitting the facts relied upon by appellant to be true, there is no merit to this contention because the grade school and the high school are distinct political units and the constitutional limitation is held to apply separately to elementary school and high school districts even though they are wholly or partly coincident in territory. Board of Education v. Upham, 357 Ill. 263, 191 N.E. 876, 94 A.L.R. 813, see Ann. page 818; Wilson v. Board of Education of City of Huron, 12 S.D. 535, 81 N.W. 952; Ex parte City of Newport, 141 Ky. 329, 132 S.W. 580, 37 L.R.A.,N.S., 1034, Ann.Cas.1912C, 447.

The amended complaint further charged that the fairness, purity, and freedom of the bond election were materially interfered with by acts of coercion and intimidation on the part of the school trustees, the election board, and other officials of the district. Particularly, objection is made to the fact that prior to the election there was widely distributed to the electorate of the district, both through the mails and by sending copies home by students, a printed circular prescribing voters' qualifications which was addressed to Washington School Taxpayers, such statement being admittedly approved by the county attorney's office. One item on this circular read "If you are a veteran or widow and are tax exempt and have paid no real property tax you can not vote." To carry out the spirit of this pronouncement and to see that only real property taxpayers voted, the election officials required every person applying for a ballot to fill out a certificate or questionnaire giving the description of his realty lying in the district or in lieu thereof to present a current receipt for taxes paid.

These are all matters that in reality comprise a contest of the bond election, and were we to follow the holdings of this court in two previous cases we would have no jurisdiction to consider the question thus raised. The first pronouncement on this matter appears in the case of Phoenix Water Co. v. Common Council, 1906, 9 Ariz. 430, 84 P. 1095, 1096, viz.:

"* * * Moreover, the election having been held, in compliance with the law, and the return thereof, lawful on its face, showing that those supporting the issue of the bonds had prevailed by the lawful majority, this return cannot collaterally be attacked for errors or frauds alleged to have occurred in the conduct of the election or in the registration preceding it. Carroll County v. Smith, 111 U.S. 560, 565, 4 S.Ct. 539, 28 L.Ed. 517; Hamilton v. Carroll, 82 Md. 326, 33 A. 648."

In that case a demurrer was sustained to a complaint wherein the plaintiff sought to restrain the City of Phoenix from issuing bonds for construction of a water system. The grounds relied upon for the injunctive relief were irregularities in the conduct of the election similar to those charged in the instant case. Later in Alexander v. Phillips, 1927, 31 Ariz. 503, 254 P. 1056, 52 A.L.R. 244, which had a similar factual situation to the case now under consideration, the taxpayers in the Phoenix Union High School District had voted bonds with which to build a stadium. A suit seeking injunctive relief was brought in which there was challenged the legality of votes cast by persons who it was claimed were not bona fide taxpayers. It was held that this was a collateral attack upon the validity of a school bond election, and the court refused to consider such matters.

A third Arizona case is Howard v. Luke, 1917, 18 Ariz. 563, 164 P. 439, wherein resident taxpayers brought an action solely against the Board of Supervisors of Maricopa County to contest a school bond election and to restrain the issuance and sale of the bonds so voted. The school district, the real party in interest, was not made a party to the suit; hence, this court properly held that it was a collateral attack on the election and refused to determine the matter of alleged irregularities occurring in the election.

In analyzing the two cases cited in the quotation from Phoenix Water Co. v. Common Council, supra, which were the basic cases relied upon, we find in Carroll County v. Smith, supra, an action at law to recover certain overdue interest upon municipal bonds theretofore issued. One of the defenses was infirmities in the election authorizing the issue. The Supreme Court of the United States pointed out that this was a collateral attack upon the election inasmuch as it was instituted long after the canvass of election returns and was not brought as a contest in a direct proceeding instituted for that purpose. The other case there cited, Hamilton v. Carroll, supra, was brought to restrain the issuance of county court house bonds, and it was further contended that the special election was conducted in a fraudulent manner in that the will of the majority of the voters was not fairly and lawfully ascertained. This was declared by the Maryland Supreme Court to be a collateral attack primarily for the reason that the action seeking injunctive relief was brought on the equity and not the law side of the court, and that a court of equity, as such, had no jurisdiction to hear and determine an election contest.

The rulings in the Phoenix Water Co. and Alexander cases, supra as to this being a collateral attack,...