Smith v. Board of Trustees of Shelby Graded School Dist.

• Decision Date: 16 June 1916
• Citation: 186 S.W. 927,171 Ky. 39
• Parties: SMITH ET AL. v. BOARD OF TRUSTEES OF SHELBY GRADED SCHOOL DIST. ET AL.
• Court: Kentucky Court of Appeals

186 S.W. 927

171 Ky. 39

SMITH ET AL. v. BOARD OF TRUSTEES OF SHELBY GRADED SCHOOL DIST. ET AL.

Court of Appeals of Kentucky.

June 16, 1916

Appeal from Circuit Court, Shelby County.

Suit by L. G. Smith and others against the Board of Trustees of Shelby Graded School District and others. From a judgment dismissing the petition after overruling of plaintiffs' demurrer to the answer, plaintiffs appeal. Judgment affirmed.

Beard &amp Pickett, of Shelbyville, for appellants.

Willis Todd & Bond, of Shelbyville, for appellees.

THOMAS J.

By a special act of the Kentucky Legislature approved March 10 1871 (Laws 1871, vol. 1, c. 1477), the Shelby graded school district in Shelby county was created. The district included the town of Shelbyville and contiguous territory around it not to exceed a distance of three miles from the courthouse located in that town. Prior to the passage of this act there was being conducted in the town of Shelbyville a school known as St. James' College; the buildings and grounds of which belonged to the city of Shelbyville. In the act creating the graded school district the board of trustees of the town of Shelbyville was authorized and empowered in the manner specified in the act to sell the land constituting the grounds of St. James' College, except two acres upon which the buildings stood. They were also further authorized and empowered to expend in the way of repairing the buildings from the proceeds of the sale of the ground a sum not to exceed $3,000, and the balance of the proceeds was to be turned over to the board of trustees of the graded school to be held by it as an endowment fund for the school. This special act was amended by acts of the Legislature at its sessions in 1880, 1882, and 1884, but these amendments have no material bearing upon the question presented for determination in this case. The fund arising from the sale of the land provided for by the special act of 1871, after making the repairs therein provided for, amounted to something over $12,000; but the act creating the school district and authorizing the sale of the land to produce the fund prohibited the trustees of the graded school from using any part of it, but required that it should be invested or handled so as to produce an income, and the trustees of the school were authorized to expend for the benefit of the school only the dividends or income from the fund. The resources of the graded school district arising from local taxation, together with the school money received from the state and the income from the endowment fund, were not sufficient to defray the expenses of the school and maintain the buildings in repair or adequate for the accommodation of the constantly increasing number of pupils.

As this character of graded school was not included in chapter 260, article 10, sections 124, 125, of the Acts of the Legislature of 1891-93, and as it is impossible to further conduct the school or to accommodate the pupils therein (which are gradually increasing), the Legislature at its 1916 session passed an act entitled "An act for the benefit of graded schools under special charters and having an endowment fund," being chapter 112, p. 673, Acts 1916. This act provides in substance that any graded school district created by special act and having a school fund other than that provided by general law shall have the power to issue the bonds of such school district with coupons attached not to exceed the sum of $50,000, and bearing 5 per cent. interest, payable semiannually. It provides that the bonds shall be in the denomination of $100 and $500, at the discretion of the board of trustees and to be paid within 20 years from the date of their issual with the privilege, however, of the board of trustees to pay them or any of them, if it sees proper within 10 years after they are issued. The act provides for the levy of an annual tax to pay the interest and create a sinking fund for the payment of the bonds not to exceed 25 cents on the $100 of taxable property in the district. But it is further provided by the act that before the board of trustees should issue such bonds the question as to whether or not they should be issued should be submitted to the legal voters of the district at an election to be held therein after due notice, as provided by the act, had been given, and if at such election two-thirds of the voters of those participating therein should favor the issual of the bonds, then the trustees were authorized to issue them as provided in the act. An emergency clause therein made the act take effect from and after its passage.

On April 18, 1916, the school board of the Shelby graded school district called an election to be held at the courthouse in Shelbyville on May 27, 1916, for the purpose of determining whether or not the school board should be empowered to issue bonds of the district to the amount of $50,000, and to collect an annual tax of 10 cents on each $100 of taxable property therein for the purpose of paying the interest on, and finally liquidating, the bonds. This election was called in strict conformity to the provisions of the law and at it there were cast in favor of issuing the bonds 457 votes and against the proposition 64 votes. It was specified in the order calling the election as well as in the question submitted to the voters that the purpose of issuing the bonds was for "building and equipping a high school and in order to relieve the congestion now existing in said graded school district, and to furnish reasonable accommodations and facilities to the teachers and pupils in said school district." The result of the election was duly canvassed and certified as required both by the special act and by the general school law.

After the certificate of election was duly recorded and the board of trustees of the graded school were taking steps looking to the issuing of the bonds, this suit was filed by the appellants, taxpayers in the district, for themsleves and all other taxpayers therein against the board of trustees of the graded school and the individual members thereof, seeking to enjoin the defendants from issuing the bonds and to enjoin the chairman and secretary of the board from signing any such bonds and to enjoin them from expending any of the funds of the district in having any of the bonds engraved or otherwise prepared for signature. The only grounds alleged in the petition for the relief sought is that the issuing of the bonds would create an indebtedness "all of which is illegal and without authority of law and contrary to the Constitution of this state and the statutes thereof." It is furthermore averred that the indebtedness would exceed the income and revenue provided for the fiscal year 1915-16. The answer admits practically all of the allegations of the petition, except a denial that the issuing of the bonds would be contrary to either the Constitution or the statutes. It furthermore avers the necessity of constructing new buildings to accommodate the pupils of the district inasmuch as one of the buildings theretofore used in connection with the school was a rented one, and that the lease had expired and could not, because of the facts therein stated, be renewed. Furthermore, that the old school buildings were very much dilapidated and entirely inadequate to accommodate the necessities of the school. A demurrer to this answer was overruled, and, plaintiffs declining to plead further, their petition was dismissed, and they have appealed to this court...