Riesen v. Sch. Dist. No. 4 of Vill. of Shorewood

• Decision Date: 08 March 1927
• Citation: 192 Wis. 283,212 N.W. 783
• Parties: RIESEN ET AL. v. SCHOOL DIST. NO. 4 OF VILLAGE OF SHOREWOOD.
• Court: Wisconsin Supreme Court

192 Wis. 283

212 N.W. 783

RIESEN ET AL.

v.SCHOOL DIST. NO. 4 OF VILLAGE OF SHOREWOOD.

Supreme Court of Wisconsin.

March 8, 1927.

Appeal from Circuit Court, Milwaukee County; Charles L. Aarons, Judge.

Action by F. G. Riesen and others, copartners under the name of Paul Riesen's Sons, against School District No. 4 of the Village of Shorewood, etc. Judgment of partial recovery for plaintiffs, and dismissing the action as to the balance, and plaintiffs appeal. Affirmed.--[By Editorial Staff.]

This is an action by the plaintiffs to recover on contract for the building of a school and other buildings for the respondent school district. The complaint sets out eight counts and demands judgment for $40,818.36. The answer alleges that the contracts were void, in that the school district exceeded the constitutional limitation of indebtedness, except as to the sum of $5,191.11, for which it tendered judgment. The trial court determined the facts favorable to the defendant, and gave the plaintiffs judgment for the amount tendered, and dismissed the action as to the balance. The constitutional limitation reads:

“Art. 11. § 3. Cities and villages organized pursuant to state law are hereby empowered to determine their local affairs and government, subject only to this Constitution and to such enactments of the Legislature of state-wide concern as shall with uniformity affect every city or every village. The method of such determination shall be prescribed by the Legislature. No county, city, town, village, school district, or other municipal corporation shall be allowed to become indebted in any manner or for any purpose to any amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of the taxable property therein, to be ascertained by the last assessment for state and county taxes previous to the incurring of such indebtedness. Any county, city, town, village, school district, or other municipal corporation incurring any indebtedness, as aforesaid, shall, before or at the time of doing so, provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal thereof within twenty years from the time of contracting the same; except that when such indebtedness is incurred in the acquisition of lands by cities, or by counties having a population of one hundred fifty thousand or over, for public, municipal purposes, or for the permanent improvement thereof, the city or county incurring the same shall, before or at the time of so doing, provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal thereof within a period not exceeding fifty years from the time of contracting the same.”Alfred Kay, of Milwaukee (Eugene L. McIntyre, of Milwaukee, of counsel), for appellants.

Kaumheimer & Kaumheimer, of Milwaukee, for respondent.

CROWNHART, J.

This case presents another chapter in the financing of school distric No. 4, of the village of Shorewood, Wis. The first case concerned an action by the district to compel a bank to take an issue of the district's school bonds and pay for them pursuant to contract. The defense set up that the bonds exceeded the constitutional debt limit of the district, and therefore were void. This court sustained that contention. School District v. First Wisconsin Co., 187 Wis. 150, 203 N. W. 939. Incidental to the same bond issue, action was brought by a taxpayer to prevent the issuance and sale of the bonds referred to above, and this court granted the prayer of the plaintiff in that action. Lippert v. School District, 187 Wis. 154, 203 N. W. 940. Thereafter the plaintiffs in the instant case brought an action to recover from the school district the balance due on contracts for building a schoolhouse and other similar obligations. The district set up the defense that the contracts were void in that they were executed in violation of the Constitution of the state limiting the amount of indebtedness the district could incur. Article 11, § 3, Const. The plaintiffs demurred to the answer, which was overruled by the lower court. This court affirmed the order of the circuit court in an extended opinion, where the law of the case was fully considered. Riesen v. School District, 189 Wis. 607, 208 N. W. 472.

The case now comes here on appeal from a judgment of the circuit court after trial in the same action. The substance of the complaint and answer is fully set out in the former appeal (Riesen v. School District, supra), and it will be necessary to refer in this opinion only to the precise issues litigated.

The main contention centers around the question as to the offsets that may be properly allowed against the indebtedness of the district because of cash in the general fund, so-called. Preliminary to that question the appellants make serious objection to the manner and sufficiency of the proof of the existing net indebtedness of the district at the various dates when the contracts were entered into.

It appears that the accounts of the district were loosely kept. The books of account, such as were kept, did not show all the facts from which the district's debts could be determined. Resort had to be had to check stubs, contracts, bond records, and other data. The appellants contend that the district should have kept books of account which would show the true financial condition of the district at all times, and that other evidence was incompetent. They cite section 15.10, Stats., which provides:

“Every public body shall employ economical, efficient and accurate methods in the conduct of its affairs and accounts, and such as shall result in a reasonable harmony with all other such public bodies; shall keep such accounts as adequatelydisclose its affairs; and shall make such reports at such times as are reasonably necessary, and in such form as adequately discloses the facts relating to the exercise of its jurisdiction.”

They also cite subdivision 2, § 40.19, Stats., to the effect that the treasurer of the school district shall keep a book in which he shall enter all money received and disbursed by him, and specify all the particulars; and paragraph 6, subd. 1, § 40.21, Stats., requiring the clerk to make a report to the county or city superintendent showing the amount of money received from the school fund income, from the tax levied by the county board, from the tax levied by the district, and from all other sources, and showing the manner in which such funds have been expended. Further, that the clerk shall report the amount of indebtedness of the district, paragraph 7, subd. 1, § 40.21, Stats.

[1][2] The law certainly contemplates that the records of the school district shall be complete and adequate to show its financial condition at all times. However, we take notice that school district officers are selected from the body of electors with little reference to their knowledge of bookkeeping, and that they, in fact, seldom have much experience in that line. The Legislature, in placing these duties on such officers, could not have intended that the accounts and records of the district would be kept with the accuracy of skilled bookkeepers, and certainly the Legislature did not intend that failure on the part of the district officers to keep accurate books of account should enable the district to disregard the constitutional limitation as to its permissible indebtedness. The issue presented by the answer to the complaint was one of fact, to be determined from the best evidence available and under methods recognized by the courts as consistent with justice. This court recently held that a large business concern, suing on a policy of burglary insurance, was not required to keep a complete and accurate set of books, notwithstanding the policy required such books to be kept. If the loss could be set up with reasonable certainty with the aid of other data, it was held sufficient. Max L. Bloom Co. v. United States Casualty Co. (Wis.) 210 N. W. 689. The defendant had the burden of showing the invalidity of the contracts. It secured an expert accountant to set up a stated account, showing as accurately as possible the true financial situation of the district, which account was testified to be correct. It was...