Shouse v. Board of Com'rs of Cherokee County

Decision Date09 March 1940
Docket Number34612.
Citation151 Kan. 458,99 P.2d 779
CourtKansas Supreme Court

Syllabus by the Court.

The cash basis law, the tax limitation law and the budget law which were enacted at same session of the Legislature have a common basic purpose and must be construed together. Gen.St.1935, 10-1101 to 10-1122, 79-1945 to 79-1970, 79-2925 to 79-2937.

Under budget law, revenues itemized and classified become a trust fund to be applied to purpose for which it was allocated and cannot be used for any other purpose. Gen.St.1935, 79-2925 to 79-2937.

The cash basis law and the budget law were not inapplicable to county's obligations arising by force by statutes on theory that application would cause a breakdown of fundamental functions of county government. Gen.St.1935 10-1101 to 10-1122, 79-2925 to 70-2937.

The purpose of the cash basis law and the budget law is to prevent a deficit in funds of municipality at the end of the fiscal year, and to effectuate that purpose the budget is to be carefully made and estimate of expenditures therein specified is to be faithfully observed, and to that end a duty is imposed on board of county commissioners to keep account of all claims allowed, allocating each claim to its respective budgeted item or fund, and to keep a check on obligations allowed. Gen.St.1935, 10-1101 to 10-1122, 79-2925 to 79-2937.

Where board of county commissioners in 1937 adopted a budget for 1938, and properly itemized and classified the funds, and out of revenue received under such budget board paid sums to liquidate unpaid 1937 obligations, paid 1938 warrants out of funds other than classified fund to which they were properly chargeable, and also paid obligations which were not budgeted, which payments resulted in deficiency of available funds for payment of claims properly assigned to classified funds, claims against county for salaries, expenses and similar expenditures were unenforceable under cash basis law and budget law. Gen.St.1935, 10-1101 to 10-1122, 79-2925 to 79-2937.

In 1937 the board of county commissioners adopted a budget for the year 1938, properly itemized and classified by funds aggregating $72,191.98. Out of the revenue received under the 1938 budget the board paid large sums to liquidate unpaid obligations for the year 1937; also certain 1938 warrants were paid out of classified funds other than the classified fund to which they were properly chargeable; also obligations were incurred for services and materials not budgeted. By reason of such action of the board the revenue for 1938 was not available for the payment of claims properly assigned to a classified fund. The total obligations incurred by the county in 1938 against the 1938 revenue were $87,502.53 leaving unpaid claims in the sum of $14,741.56. In an action by the assignee of such unpaid claims it is held that under the cash-basis law and the budget law, the claims sued on are unenforcible in this action and judgment should be entered for defendant.

Appeal from District Court, Cherokee County; Vernor J. Bowersock Judge.

Action by C. E. Shouse against the Board of County Commissioners of Cherokee County and others to recover on claims against county which were assigned to plaintiff, wherein the Missouri-Kansas-Texas Railroad Company and others intervened. From a judgment for plaintiff, interveners appeal.


Don H. Elleman and Paul H. Elleman, both of Columbus, W. W. Brown, of Parsons, W. P. Waggener and O. P. May, both of Atchison, F. H. Moore, Wm. E. Davis, and James B. McDonough, Jr., all of Kansas City, Mo., for appellants.

C. E. Shouse, of Baxter Springs, pro se.

ALLEN Justice.

The appellee, assignee of a large number of claimants, brought this action against the board of county commissioners of Cherokee county. The claims assigned were for salaries, expenses for various county officers, services and equipment for the county, election expenses, etc., all arising during the fiscal year 1938. The court granted permission to the appellants, the three railroad companies, as taxpayers, to intervene, as defendants in the action. Plaintiff recovered judgment and this appeal followed.

In the petition of appellee it was alleged that during the year 1938 certain county officers and various other claimants presented their claims to the board of county commissioners; that the claims were duly examined and audited and were found to be just, true and proper claims against the county, but that the claims were disallowed by the board for the reason there was no money in the county general fund for the year 1938 to pay such claims, and that under the date of April 10, 1939, the various claimants assigned their claims to the plaintiff Shouse for collection. The plaintiff asked judgment for $14,285.48 with interest.

The answer of the board of county commissioners was a general denial.

The appellants, the railroad companies, as taxpayers, were granted permission to intervene, and by order of the court were made defendants in the action. Separate answers were filed by the appellants.

The appellant Missouri-Kansas-Texas Railroad Company, in its answer, after a general denial, set forth the assessed valuation of its property in the county and the taxes paid to the county in 1938; that its property at substantially the same valuation would be subject to assessment and taxation for the year 1939.

The answer alleged that in 1937 the county commissioners of the county adopted and published a budget for the year 1938, including a general fund itemized in 29 separate budgeted items, aggregating $72,191.98; that in due time the county commissioners levied an assessment on the property of the county to raise the amount so budgeted at the maximum rate permitted by law, to wit, 1.9 mills; and secured from the State Tax Commission permission to issue a 25 percent additional levy, and a further additional authority for emergency warrants to the extent of 25 percent of the amount produced by the maximum levy; that the total rate levied by the county commissioners for the general fund for the year 1938 on the taxable property of Cherokee county was approximately 2.85 mills; that the county received in revenues from various taxation sources the amount of $72,760.97 for its general fund, sufficient to pay the budgeted items of its general fund; but, notwithstanding the fact that the board received sufficient funds and cash with which it could pay all items of its general fund budget, the board violated the statutes of Kansas, and its legal duty in the premises, and attempted to incur obligations for services and materials not budgeted, and paid on such obligations large sums of money in excess of the budgeted items, and diverted and shifted from one budgeted item to another in such a way that funds were dissipated and were not available for the payment of claims properly assigned to a budgeted item, and knowingly and intentionally incurred obligations in excess of the power and authority created by statute.

Defendant further alleged that while the total amount of the budgeted items in the Cherokee county general fund for 1938 was $72,191.98, the board attempted to incur obligations in the sum of $87,199.24, which was $15,007.26 in excess of any amount authorized by the laws of Kansas, and for which taxes in Cherokee county were assessed; that the county received for the general fund the amount of $72,760.97, and disbursed all of the money, leaving outstanding claims on the first day of January, 1939, against the county in the sum of $14,438.27; that the deficit of the county affairs in the general fund at the beginning of 1938 was $5,620.40; but, that due to the improvident and unlawful acts of the board, the deficit was increased during the year by the sum of $8,817.87, amounting, at the end of the year, to $14,438.27.

The answer alleged that the board wholly disregarded the amount of the budget, illegally incurred obligations, paid out excessive amounts, shifted funds from one budgeted item to another and paid claims for the year 1937 out of the 1938 funds.

In view of the agreed statement of facts hereinafter set out, a more detailed recital of the allegations in the answer is not necessary to present the issues in the case.

Separate answers of the other appellants were filed,--being in substance the same as the answer of the Missouri-Kansas-Texas Railroad Company above outlined.

The case was tried on the pleadings and the agreed statement of facts.

It was agreed that the assignment of the claims to plaintiff were signed by the various claimants and were in due form, that the claims were duly audited and presented to the board of county commissioners and were found to be proper claims against the county; that all the claims and charges were against the county general fund; that payment of the claims were refused by the board for lack of funds in the county general fund; that after the assignment to plaintiff the claims were again presented to the board and payment was again refused for the same reason. The population of the county and the value of the tangible and intangible property therein--also the assessed value of the property and the taxes paid by appellants were agreed to and set out.

The agreement stated that in the year 1937 the county commissioners adopted and published the budget of the county for the year 1938, aggregating the sum of $72,191.98.

The agreed statement recites: "10. That the contracts and indebtedness created for general maintenance and expense of Cherokee County for the year 1938 were not authorized by a vote of the electors of said County, and no vote was had in said County...

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