School Dist. of Kirkwood R-7 v. Zeibig

• Decision Date: 10 November 1958
• Docket Number: No. 45970,R-7 and S,45970
• Parties: SCHOOL DISTRICT OF KIRKWOODchool District of the City of Ladue, Appellants, v. Charles H. ZEIBIG, Howard E. Ridgway, Henry L. Meier, George E. Niedt, Adalbert von Gontard, and Adolphus B. Orthwein, James B. Orthwein and Mercantile Trust Company, Executors Under the Will of Percy J. Orthwein, Deceased, Respondents.
• Court: Missouri Supreme Court

Page 295

317 S.W.2d 295

SCHOOL DISTRICT OF KIRKWOOD R-7 and School District of the City of Ladue, Appellants, v. Charles H. ZEIBIG, Howard E. Ridgway, Henry L. Meier, George E. Niedt, Adalbert von Gontard, and Adolphus B. Orthwein James B. Orthwein and Mercantile Trust Company, Executors Under the Will of Percy J. Orthwein, Deceased, Respondents.

No. 45970.

Supreme Court of Missouri, En Banc.

Nov. 10, 1958.

Oliver J. Miller, John L. Gilmore, Robert G. McClintock, St. Louis, for appellants.

Joseph Renard, Don O. Russell, St. Louis, for respondents, Fordyce, Mayne, Hartman, Renard & Stribling, St. Louis, of counsel.

VAN OSDOL, Commissioner.

Plaintiffs, School District of Kirkwood R-7 (hereinafter sometimes referred to as 'Kirkwood R-7') and School District of the City of Ladue (sometimes referred to as 'District of Ladue') sought an accounting by defendants, who formerly were acting as directors of the School District of the Village of Huntleigh (sometimes referred to as 'District of Huntleigh'), for monies coming into their hands by taxation and by allotment by state and county to the District of Huntleigh for school purposes in total amount $18,983.54. Defendants conceded, and the trial court found defendants should account for $8,195.20, which amount had remained in defendants' hands and was tendered and paid into the registry of the trial court; but the trial court allowed defendants credits for disbursements aggregating $10,788.34. Plaintiffs have appealed.

Here at the outset it is to be noted that the District of Huntleigh was illegally organized in 1952, and that its purported directors, defendants herein, were ousted by quo warranto proceedings culminating in the review and reversal of the circuit court's judgment for defendants by divisional opinion of this court subsequently adopted by this court en Banc, February 14, 1955. State on Inf. of Wallach ex rel. Reineke v. Zeibig, 365 Mo. 57, 275 S.W.2d 353. Prior to and after the attempted organization of the District of Huntleigh and until this court's final judgment ousting defendants, defendants had employed and advised with attorneys, and had employed them as counsel in the proceedings in quo warranto and other litigation noted infra, and ultimately paid attorneys' fees and other expenses of litigation out of the monies which had come into their hands through taxation of property of the area of the District of Huntleigh, and from other stated sources, for school purposes. Also defendants had reimbursed parents residing in Huntleigh for tuition paid by the parents for their childrens' attendance in schools maintained in the District of Ladue and Kirkwood R-7. The amounts of these fees and expenses of litigation and reimbursements for tuition aggregated $10,788.34, which disbursements, as stated, the trial court allowed defendants as credits in the accounting proceedings.

The question to be resolved is whether defendants are to be justified in making these disbursements, or should they be held as trustees to the use of these plaintiffs and required to account for the whole amount, $18,983.54, including the $10,788.34 in dispute

We shall now endeavor to relate the background of this litigation, and shall state the facts of the organization of the District of Huntleigh and of defendants' administration of the District's affairs.

As noticed in the case of State on Inf. of Wallach ex rel. Reineke v. Zeibig, supra, 275 S.W.2d at page 354, the original Village of Huntleigh was, prior to November 21, 1947, in Des Peres School District No. 45, but on that date the village enlarged its boundaries to include the area known at Huntleigh Woods, which area was in the District of Ladue. October 29, 1949, Kirkwood R-7 was established, which district included Des Peres District, so that all of the original area of the Village of Huntleigh became a part of Kirkwood R-7. However, the area of the newly annexed part of the Village of Huntleigh remained in the District of Ladue. We further note the stipulation of facts, filed in the instant case, indicating that the tax rate of Kirkwood R-7 for the years 1953 and 1954 was $4.05 per $100 assessed valuation; and that the tax rate in the District of Ladue for 1953 was $2.24, and for 1954 was $2.59 per $100 assessed valuation.

During the year 1950, counsel was engaged by several residents of the Village of Huntleigh, including some of these defendants, to give advice as to the procedure the villagers should follow to bring about the inclusion of the entire area encompassed in the extended limits of the Village of Huntleigh into the District of Ladue. It was the thought of the villagers that the division of the village by school district lines tended to destroy its unity--children of neighbors in the village attended different schools in different districts; the rate of school taxation was not uniform; and the economic and social interests and activities of the villagers and their children were more closely related to those of the residents of Ladue than to those of the residents of Kirkwood.

Counsel advised the villagers that two courses were open for them: the first as set forth in Section 165.170 RSMo 1949, V.A.M.S., requiring an election to be held by the districts involved, and also contemplating arbitration; the second was to organize a separate school district of Huntleigh under the provisions of Section 165.263 RSMo 1949, V.A.M.S., and to annex the newly organized separate district to the District of Ladue under the provisions of Section 165.300, RSMo 1949, V.A.M.S. Upon instructions by the villagers, counsel took the required steps to call an election under Section 165.170, supra, with the result that Kirkwood voted against the proposal and Ladue voted in favor of it. The matter was then referred to arbitrators, according to the statutory provision. The arbitrators decided in favor of Kirkwood, thus maintaining the status quo.

The attorney for the villagers was of the opinion that the only course left open was the alternative stated supra, that is, the organization of an independent school district, comprising the territory of the Village, under the provisions of Section 165.263, supra, and the subsequent annexation of the new district to the Ladue District, under the provisions of Section 165.300, supra. During the latter part of 1951, the villagers sought the advice of additional counsel, an attorney who had recently become counsel for the Village of Huntleigh. Both of counsel were of the opinion that the statute (Section 165.263, supra) was clear in authorizing a village such as Huntleigh to organize as a separate school district, and that such organization would be a valid one. The villagers decided to proceed with the organization of an independent school district as a step to annexation to the District of Ladue.

The District of Huntleigh was purportedly organized June 3, 1952. But, on October 14, 1952, Kirkwood R-7 filed the quo warranto proceedings in the Circuit Court of St. Louis County, challenging the legality of the new District of Huntleigh, and on October 28, 1952, the District of Ladue intervened. January 17, 1953, the quo warranto case was tried, and April 3, 1953, the circuit court rendered judgment in favor of the respondents, defendants herein, and dismissed the petitions of relators and intervener. Kirkwood R-7, as relator in the quo warranto proceedings, filed a motion for a new trial and, after some procedural inadvertences and delay, an appeal to this court was perfected by Kirkwood R-7. The District of Ladue did not appeal. The cause was argued here, and decided adversely to defendants-respondents by Division Number One; and, as stated, upon transfer, the divisional opinion was adopted by court en Banc, February 14, 1955. State on Inf. of Wallach ex rel. Reineke v. Zeibig, supra.

During the month of April, 1954, while the appeal from the judgment rendered in the quo warranto case was pending, the Board of Education of St. Louis County notified the secretary of the board of education of the District of Huntleigh that a plan had been formulated to consolidate the Huntleigh District with Kirkwood R-7. This plan was on the assumption that the District of Huntleigh was a de jure district. Nevertheless, an election was called in the District of Huntleigh to test the wishes of the voters with regard to a proposed annexation to the District of Ladue, which election was called for May 15, 1954. Whereupon, Kirkwood R-7 instituted an action for injunctive relief in the Circuit Court of St. Louis County averring, inter alia, that the defendant, the School District of the Village of Huntleigh of St. Louis County, 'is a de jure school district of said County, although its status as such and of its Board of Education is disputed by these plaintiffs'; and a circuit judge entered an ex parte order restraining the election; but on May 14th, on the application of the District of Huntleigh, the St. Louis Court of Appeals issued its preliminary rule prohibiting the circuit judge from enforcing the restraining order.

The Board of Education of St. Louis County continued in its efforts to consolidate the Huntleigh District with Kirkwood R-7. It submitted successively two such plans of consolidation to the State Board of Education which declined to approve them. The county board, thereupon, on September 23, 1954, adopted its own plan and called for an election of the voters in the area; but the District of Huntleigh instituted an action for injunction against the county board to restrain such election. During the pendency of this latter action for an injunction, this court en Banc, February 14, 1955, as stated, adopted the divisional opinion rendered upon the appeal of the quo warranto case, and, consequently, the issues involved in the injunction case were moot.

We have examined the minutes of the Board of Education of the District of Huntleigh (comprised of defendants) reflecting the action of ...