Russell v. Frank

• Decision Date: 28 July 1941
• Docket Number: No. 37493.,37493.
• Citation: 154 S.W.2d 63
• Parties: RUSSELL et al. v. FRANK et al.
• Court: Missouri Supreme Court

154 S.W.2d 63

RUSSELL et al. v. FRANK et al.

No. 37493.

Supreme Court of Missouri, in Banc.

July 28, 1941.

Rehearing Denied September 25, 1941.

Appeal from Circuit Court, St. Louis County, Division No. 1; Julius R. Nolte, Judge.

Suit in equity by Charles E. Russell and others against Harry A. Frank and others, comprising the Board of Education of the School District of University City, and others, to have a school tax levy declared illegal and enjoin extension thereof on the tax books. Decree for plaintiffs, and defendants appeal.

Affirmed.

M. P. Phillips, of St. Louis, for appellants.

Arthur U. Simmons of Clayton, of counsel for appellant County Clerk.

Harold S. Cook, B. Sherman Landau, and Eliot, Blayney & Bedal, all of St. Louis, for respondents.

HAYS, Judge.

This is a suit in equity brought by certain citizens and taxpayers of the School District of University City, Missouri, against the members of its Board of Education, their secretary, and the county clerk, collector, and treasurer of St. Louis County, in which said district is located. The object of the suit was to obtain a decree declaring illegal the levy of a school tax of forty-four cents on the one hundred dollar valuation "for building fund purposes," and to enjoin the county clerk from extending the said levy on the tax books. The tax mentioned had been authorized at a special election held on April 23, 1940. Upon the trial of the issues in Division No. 1 of the Circuit Court of St. Louis County, the chancellor found for the plaintiffs and entered a decree declaring the levy illegal and enjoining the clerk from extending it upon the tax books. From this decree the members of the Board of Education, defendants below, have appealed.

The School District of University City is a town school district, organized under the laws of the state and having a population of less than one hundred thousand. At the regular election held on the 2nd of April, 1940, there were duly submitted to the voters of said district two propositions: (1) to Increase the rate of taxation for general school purposes to one dollar per one hundred dollars, this being the maximum rate permitted by the Constitution for such tax; and (2) to levy a tax of forty-four cents per hundred dollars "for building fund purposes." It is this latter tax that is here involved. Both of such propositions were defeated. A few days later the school board called a special election to resubmit the same two propositions, fixing the date therefor as the 23rd of April. This time each proposition was carried by the requisite majority. The results of the latter election were certified to the county clerk so that he could extend the levy upon the tax books of the county. Thereupon the present suit was brought. The facts developed in evidence may best be stated in the course of the opinion.

Section 11 of Article 10 of the Constitution of Missouri, Mo.St.Ann., cited and relied on in the plaintiffs' petition, contains a list of limitations imposed upon the powers of various local taxing authorities in the state. The portion of such section here applicable is as follows: "For school purposes in districts composed of cities which have one hundred thousand inhabitants or more, the annual rate on property shall not exceed sixty cents on the hundred dollars valuation and in other districts forty cents on the hundred dollars valuation: Provided, The aforesaid annual rates for school purposes may be increased, in districts formed of cities and towns, to an amount not to exceed one dollar on the hundred dollars valuation, * * * on the condition that a majority of the voters who are tax-payers, voting at an election held to decide the question, vote for said increase. For the purpose of erecting public buildings in counties, cities or school districts, the rate of taxation herein limited may be increased when the rate of such increase and the purpose for which it is intended shall have been submitted to a vote of the people, and two-thirds of the qualified voters of such county, city or school district, voting at such election, shall vote therefor."

Under the first of the two tax propositions, approved by the voters of University City, the school district imposed the maximum tax permitted for general school purposes — one dollar. The forty-four cents levy now involved can be sustained, if at all, only under the last sentence of the quoted section. In the case of State ex rel. Marlowe v. Himmelberger-Harrison Lumber Company, 332 Mo. 379, 58 S.W.2d 750, this court was called upon to construe the above quoted constitutional provision. In that case the county collector sought to enforce the collection of certain school taxes against the defendant. While certain other taxes were involved, the levy with which we are here concerned was one of fifty cents "for building purposes." This levy had been duly voted by the requisite majority of the electors of the school district. The records of the school board were silent as to any contemplated erection of new school buildings or any substantial addition to existing buildings and oral evidence tended to show that no such improvements were contemplated, although there was some testimony to the effect that the board "was figuring on building additional room to the schoolhouse." The record also showed that there was at the end of the current year a substantial balance in the building fund which the board ordered transferred to the teachers' fund. We held that the additional tax, over and above the constitutional maximum of one dollar which may be voted by the electors of the district, must be for the purpose of erecting new buildings or at least new additions to existing buildings and not for the maintenance, furnishing or repair of old buildings. In this we followed a rule laid down in our previous decisions in the cases of Harrington v. Hopkins, 288 Mo. 1, 231 S.W. 263, and Jacobs v. Cauthorn, 293 Mo. 154, 238 S.W. 443. We pointed out that a tax "for building purposes" was not necessarily a tax "for the purpose of erecting public buildings" within the meaning of the Constitution. We did not, however, rest our decision solely on the ground that the tax was improperly denominated in the election notice and on the ballots, but we held that where the obvious purpose of the levy was not to erect buildings or additions thereto, but to create a bookkeeping balance in the building fund for the purpose of later transferring the same to the general fund, the tax is void.

The principles laid down by us in the Marlowe case, supra, are not at all at variance with our decision in Peter v. Kaufmann, 327 Mo. 915, 38 S.W.2d 1062. In that case the evidence disclosed that the school district was not only contemplating the erection of a new building, but was actually engaged in constructing it. This building was to be paid for in part by a bond issue and in part out of the proceeds of the challenged tax. We held that under the Constitution and statutes two methods are available to a school district to finance building operations: borrowing money through a bond issue and raising money directly by a properly voted tax, and we said that it might avail itself of both sources of funds concurrently. The chancellor had there found (and we said that his finding was supported by the record) that the tax in question was actually levied for the purpose of paying for the excess in the cost of the building over and above the amount realized from the sale of bonds. We therefore impliedly found that the tax was not a mere subterfuge to gain funds to pay off an illegally created debt. The case, therefore, is in reality an authority in support of the rule announced in the Marlowe case.

It is true that in Lyons v. School District, 311 Mo. 349, 278 S.W. 74, we refused to enjoin the collection of a tax for sinking fund purposes which was obviously largely in excess of the requirements of the district for the current year. In so doing we said (278 S.W. loc. cit. 76): "The charge that there was a fraudulent purpose to divert the fund to other purposes could not be dealt with by the trial court, but was a question to be dealt with when an attempt to divert might be made. These expressions are in accord with what was held in Pope v. Lockhart, 299 Mo. 141-146, 252 S.W. 375." A distinction exists, however, between the situation involved in the Lyons case, supra, and that in the Ma...