Shonk Land Co v. Joachim

• Decision Date: 09 January 1924
• Docket Number: (Nos. 4786, 4892.)
• Citation: 123 S.E. 444
• Court: West Virginia Supreme Court
• Parties: SHONK LAND CO. et al. v. JOACHIM et al. (two cases).

123 S.E. 444

SHONK LAND CO. et al.

v.JOACHIM et al. (two cases).

(Nos. 4786, 4892.)

Supreme Court of Appeals of West Virginia.

Jan. 9, 1924.

Rehearing Denied July 1, 1924.

(Syllabus by the Court.)

Litz, J., dissenting.

Appeal from Circuit Court, Kanawha County.

Separate suits by the Shonk Land Company and others against F. G. Joachim and others and against F. G. Joachim, Theodore Kundtz Company, and others. From an order dissolving a temporary injunction, plaintiffs in each case appeal. Reversed, and injunction perpetuated.

Price, Smith, Spilman & Clay, of Charleston, for appellants.

Koontz & Hurlbutt and W. C. Revercomb, all of Charleston, for appellees.

R. Kemp Morton, of Charleston, amicus curiæ.

LIVELY, J. The bill seeks to enjoin the board of education, Keeney and Vickers, Theodore Kundtz Company, a corporation, Henry Walker, sheriff, and Jenkins, the county financial secretary, from paying or collecting certain indebtedness to Keeney and Vickers, and to the Kundtz Company, contracted by the board, either by laying a levy therefor or by the issuance and payment of school orders. The debts to Keeney and Vickers, for which they hold orders on the sheriff for payment, amount to $12,000 and $24,951.60, respectively; and the debt to Kundtz Company, for which no order has been issued, is $8,761.50. In December, 1920, the building and improvement fund for that fiscal year ending June 30, 1921, had been exhausted. The board, however, perceiving an urgent necessity for the repair of schoolhouses and the erection and furnishing of new schoolhouses to accommodate the increasing number of school children, entered into contracts with Keeney and Vickers for the repair of the houses and building of others. Vickers was to repair the houses south of the Kanawha river, and Keeney those north of the river, and furnish to the board itemized statements for work done and materials furnished, and they were to be paid $10 per day for overseeing the work and 15 per cent. on the gross sums spent, including purchases for stoves, brooms, and the like. They also built certain new schoolhouses in their respective territories. On April 29, 1921, the board placed a written order with Kundtz Company for desks and chairs for schoolhouses amounting to $8,761.50 f. o. b. factory, Cleveland, Ohio, for which the board agreed to pay by check on November 15, 1921. By an audit made by the tax commissioner it was ascertained, at the beginning of the fiscal year 1921-22, that the grand total of floating indebtedness in excess of funds at the disposal of the board, including orders issued and debts for which orders had not been issued, was $84,190.18. This floating indebtedness was included by the board in the August, 1921-22 budget, to be paid by levy for that year. The plaintiffs, large taxpayers, filed this bill to prevent the board from Including in its budget the stated indebtedness to Keeney, Vickers, Kundtz Company, and others, and from laying taxes to pay same, and from the issuance, countersigning, and paying of orders already or which might be issued to pay such indebtedness, alleging that the orders and claims were illegal and void because they represented obligations incurred by the board in the fiscal year 1920-21 after all the funds legally at the disposal of the board for that fiscal year had been exhausted, contrary to section 12, c. 126, Acts 1919 (Barnes' Code 1923, c. 28A, § 12), which reads:

"It shall be unlawful for any county court, board of education, or council of a municipal corporation, or other body charged with the administration of the fiscal affairs of any county, school district or independent school district, or municipality to expend any money or to incur any obligation or indebtedness which such fiscal body is not expressly authorized by law to expend or incur. Nor shall any such fiscal body make any contract, express or implied the performance of which, in whole or in part, would involve the expenditure of money in excess of funds legally at the disposal of such fiscal body, nor issue or authorize to be issued any certificate, order or other evidence of indebtedness which cannot be paid out of the levy for the current fiscal year or out of the fund against which it is issued. Nor shall any such tribunal attempt to lay any levy the rate whereof shall exceed the rate specified by law. Any indebtedness created, contract made or order or draft issued in violation hereof, shall be void and of no effect, and any money received thereon may be recovered from the person receiving the same by the fiscal body which created, made or issued the indebtedness, contract order or draft."

The remainder of that section (too long to quote in full) makes any member of such fiscal body, who violates any provision of the act or participates in contracting any debt in violation of its terms, liable to the political division represented by him in such official capacity, or to any person prejudiced by his unlawful act; and also liable to fine and imprisonment as for a misdemeanor, and removal from office. Any taxpayer or the state tax commissioner may sue to recover from the offending individual members the money unlawfully expended, for the benefit of the treasury of the proper fiscal body. Keeney and Vickers answered the bill, claiming that their orders and claims were not illegal, because the houses were built and repaired for use in the succeeding year, and were properly payable out of the revenues of the succeeding year, and because their claims as covered by the budget had been approved by the state tax commissioner, Attorney General, and county superintendent of schools. The defense is that the houses, supplies, and furniture could not be supplied after July 1, 1921, in time for the schools to operate in that fiscal year, and that the board had the right to make the contracts and pay for the same out of the funds of the succeeding year. Kundtz Company answered and exhibited the contract of April 29, 1921, for the desks and chairs, and say that this furniture was promptly shipped in May, 1921, and was intended for use in the schools during the succeeding fiscal year, and was to be paid for out of the levies for the succeeding year, and that the funds for the succeeding year were legally at the disposal of the board for that purpose. It says, like Keeney and Vickers, that the increase in the school youth made it necessary that the furniture should be purchased at the time of the contract in order that it might be assembled and placed for the benefit of the schools for the ensuing year. The answer further says the furniture was received, accepted, and used by the board, and for that reason the board is liable to it for the value of the property, namely, the sum of $8,761.50. on quantum meruit, and asks for a decree for that sum as affirmative relief.

The decree of October, 1922, dissolved the temporary injunction in so far as Keeney and Vickers' claims were concerned, and the decree of February, 1923, dissolved the temporary injunction as to Kundtz Company, and found that the board was indebted to it $8,761.50, with interest, and directed the board to issue an order on the sheriff in favor of it for that sum, and directed the latter to pay it. Plaintiffs appeal from both decrees. There is little controversy of fact. The evidence discloses that there was great need for more schoolhouses and furniture at the time the contracts were made, and that condition had existed for many years in the district until there was insistent complaint. The board was trying to meet this situation, and adopted this method to remedy it. As a result it contracted indebtedness to the amount of $84,190.18 in excess of its revenues as shown by the tax commissioner's audit. Its president frankly says it was intended and expected that the indebtedness should be paid out of the levies for the succeeding fiscal year, in order to relieve a condition which had become chronic and pressing. Construction of the new buildings and re-pairs on the old were contracted for and done in the fiscal year 1920-21 to be paid out of the levies for the fiscal year 1921-22, and the orders in question, one to Vickers for $24,951.60, and the other to Keeney for $12,000, for a part of the work and materials, were ordered to be issued by the board on July 4, 1921. The contract for desks and seats with Kundtz Company was made April 29, 1921, and the goods shipped the latter part of the following month f. o. b. Cleveland, Ohio, to be paid for November 15, 1921. There were no funds in the treasury of the board at the time these contracts were made out of which payment could be made. Are the contracts valid and enforceable? This is the question.

At the threshold a preliminary question arises upon the motion of Keeney to dismiss the appeal so far as he is concerned, because, he says, there is no substantial controversy now between him and appellants, for the reason that, after the lower court had dissolved the injunction, and after the stay for appeal had expired, and before an appeal was awarded by this court, the sheriff paid to him all of the orders representing his claim against the board, and therefore the questions originally involved are now moot, as to him. This motion is supported by affidavits; and the resistance thereto is supported by affidavits. The affidavits show that there is one order of $250 payable to Keeney which has not been paid, and is yet outstanding. If the orders paid were illegal and void, the statute provides that the board may recover from the person receiving payment any money received by him. The personal liability of Keeney for a return of the money received is indirectly involved in the appeal. If the debts paid by the board were illegal and void, plaintiffs, the tax commissioner, or the board may recover from the individual members of the board the money so illegally expended. So says the statute. The decrees, if not erroneous, would prevent recovery. It is...