Sch. Dist. No. 2, Consol., Pushmataha Co. v. Gossett, Co.

• Decision Date: 10 December 1929
• Docket Number: Case Number: 20207
• Citation: 140 Okla. 243,1929 OK 543,283 P. 249
• Parties: SCHOOL DIST. NO. 2, CONSOLIDATED, PUSHMATAHA Co., ex rel. HIXON et al. v. GOSSETT, Co. Atty.
• Court: Oklahoma Supreme Court

1929 OK 543

283 P. 249

140 Okla. 243

SCHOOL DIST. NO. 2, CONSOLIDATED, PUSHMATAHA Co., ex rel. HIXON et al. v. GOSSETT, Co. Atty.

Case Number: 20207

Supreme Court of Oklahoma

Decided: December 10, 1929

Syllabus

¶0 1. Municipal Corporations -- Schools and School Districts--Constitutional Limitations on Indebtedness.

The intention and plain purposes of section 26, art. 10, of the Constitution of Oklahoma, is to require school districts and other subdivisions of the state government to carry on their operations upon a "cash" or "pay as you go plan." The revenues of each year must take care of the expenditures of such year, and any liability sought to be incurred in excess of such current revenue in hand or legally levied is void, unless it be authorized by a vote of the people and within the limitations provided by said section.

2. Same.

The constitutional and statutory inhibitions imposed by section 26, art. 10 of the Constitution of Oklahoma plainly say and mean that the limitations therein prescribed shall not be exceeded, neither directly nor indirectly. They were adopted for the protection of the people, and it is the duty of the courts and municipal officers to see that they are strictly enforced.

3. Same--What Constitutes "Existing Indebtedness" in Determining Validity of Bond Issue.

The term "existing indebtedness," as used in Oklahoma Constitution, section 26, art. 10, providing that no municipal corporation shall be allowed to become indebted, in any manner or for any purpose to an amount including "existing indebtedness" in the aggregate exceeding 5 per cent. of the valuation of the taxable property therein, to be ascertained from the last assessment for state and county purposes previous to the incurring of such indebtedness, is not to be confined to debts evidenced by bond or to those which are due simply, but is to be construed in its fair and natural meaning, and where it appears that there are outstanding unpaid legal warrants of said municipality drawn against legal appropriations for prior fiscal years, such outstanding unpaid warrants constitute prima facie evidence of "existing indebtedness" in determining the validity of proposed bond issues, as provided in section 26, art.10, Constitution of Oklahoma.

Error from District Court, Pushmataha County; George T. Arnett, Judge.

Petition for mandamus by Consolidated School District No. 2, of Pushmataha County, ex rel. J. W. Hixon, W. B. Barlow, and Walter G. Files, District School Board, against Louie C. Gossett, as County Attorney, to compel him to certify that a certain bond issue was within the constitutional debt limit of said district. The trial court denied the writ, and from that order plaintiffs appeal. Affirmed.

R. S. Howe and H. L. Douglass, for plaintiffs in error.

Louie C. Gossett and F. L. Welch, for defendant in error.

CULLISON, J.

¶1 This is an appeal from the district court of Pushmataha county, Okla., wherein consolidated school district No. 2, of Pushmataha county, Okla., ex rel. J. W. Hixon, W. B. Barlow, and Walter G. Files, district school board, plaintiffs in error and plaintiffs in the trial court, brought an action against Louie C. Gossett, as county attorney of Pushmataha county, Okla., to require him as such county attorney to certify that a certain $ 2,500 bond issue alleged to have been voted by the electors of said school district was issued in conformity with the law and within the constitutional debt limit of said district.

¶2 The district court in and for said county and state issued an alternative writ of mandamus, requiring the county attorney to either certify that the said bonds were issued in conformity with the law and were within the constitutional debt limit, or to show cause why he should not do so. The county attorney filed his response setting out the reasons why he refused to certify that the said bonds were issued according to law and within the constitutional debt limit.

¶3 The cause was heard by the trial court without a jury, upon the petition for writ of mandamus filed by the school district and the county attorney's answer thereto, and, after a complete hearing upon the matter, the trial court denied said petition for the writ of mandamus and held that the proposed bond issue was illegal and void because, if allowed, it would exceed the constitutional limitation.

¶4 Those facts in the instant case which stand admitted by the parties to this appeal, and which are likewise disclosed by the record, and which clearly present the issue before the trial court and now before this court on appeal, are as follows:

¶5 The electors of the school district aforesaid voted a $ 2,500 bond issue for the purpose of installing a heating system in the school building in and for said district. The record discloses, and the trial court found it to be a fact, that at the time this bond issue was voted the total assessed valuation of said district was $ 605,088, and that there was outstanding bonded indebtedness at that time of $ 25,000; that warrants for the years 1922, 1923, and 1924 had been issued which had not been paid by said district, in the sum of $ 14,925.96. The amount of sinking fund on hand in said school district, at the time this action was commenced, was the sum of $ 9,288.37.

¶6 The contention of the defendant, county attorney, is that the unpaid warrants together with the interest thereon, when added to the bonded indebtedness of the school district, exceed five per cent. of the district's taxable property, and that the warrant indebtedness unpaid is "existing indebtedness" within the meaning of that phrase as used in the Constitution of Oklahoma, sec. 26, art. 10.

¶7 The contention of plaintiff, school district, is that the outstanding unpaid warrants for the years above mentioned should not be taken into consideration in calculating the amount of indebtedness of said district, but in ascertaining the limit to which the district may become indebted by a bond issue, that the total bonded indebtedness should be added to the proposed bonded indebtedness and the amount of the sinking fund on hand deducted, and that if this is done, the proposed bond issue would be within the constitutional limitation.

¶8 From the judgment of the lower court holding that the proposed bond issue was illegal and void because, if allowed, it would exceed the constitutional limitation, plaintiffs appeal to this court.

¶9 Plaintiffs set out numerous assignments of error, but elect to discuss all assignments under the proposition:

"That the verdict of the court is contrary to the law and the evidence and is not supported by law."

¶10 We think the controlling question in the case at bar is one of law, namely:

"Are the unpaid outstanding warrants of said school district, in the sum of $ 14,925.96, together with interest thereon, 'existing indebtedness' within the meaning of that phrase as used in section 26, art. 10, of the Constitution of Oklahoma?"

¶11 As is stated by plaintiff, school district, at page 37 of their brief:

"Of course, when the court below made its finding and rendered judgment holding that the warrants for the years 1922-23-24 were issued and which had not been paid by the district in the sum of $ 14,925.96, by adding the $ 14,925.96 warrants in process of collection issued for the years herein set out as shown in the face of the judgment, would place this present proposed bond issue over and above the five per cent. limitation as fixed by the Constitution, and the bond issue could not be put through, as it would be in violation of section 26, art 10, in that when you add the $ 14,925.96 it would exceed the five per cent. limitation as fixed by the Constitution.

"In other words, it was agreed in the lower court, and the court understood and all parties understood, if this $ 14,925.96 worth of warrants should be considered in determining when the district could issue bonds as herein argued, then as a natural consequence the bond issue could not be put through, but if the warrants in process of collection are not to be taken into consideration, then the proposed bond issue is within the limit and the county attorney of Pushmataha county, respondent, should so certify."

¶12 Section 26, art. 10, of the Constitution of Oklahoma, here under consideration, provides:

"Limitation upon Debts of City, County, etc.--Vote by People--Sinking Fund. No county, city, town, township, school district, or other political corporation, or subdivision of the state, shall be allowed to become indebted, in any manner, or for any purpose, to an amount exceeding, in any year, the income and revenue provided for such year, without the assent of three-fifths of the voters thereof, voting at an election, to be held for that purpose, nor in cases requiring such assent, shall any indebtedness be allowed to be incurred to an amount including existing indebtedness, in the aggregate exceeding five per centum of the valuation of the taxable property therein, to be ascertained from the last assessment for state and county purposes previous to the incurring of such indebtedness. * * *"

¶13 It is conceded by the parties to this appeal that if the unpaid warrants in the instant case constitute "existing indebtedness" within the meaning of that phrase as used in section 26, art. 10, supra, then the bond issue exceeds the constitutional debt limit.

¶14 It is likewise conceded, and necessarily follows, that if said warrants do not constitute "existing indebtedness"...