State ex rel. Grimes v. Board of Ed. of Oklahoma City

• Decision Date: 30 January 1940
• Docket Number: 27340.
• Citation: 99 P.2d 876,186 Okla. 665,1940 OK 52
• Parties: STATE ex rel. GRIMES et al. v. BOARD OF EDUCATION OF OKLAHOMA CITY et al.
• Court: Oklahoma Supreme Court

99 P.2d 876

186 Okla. 665, 1940 OK 52

STATE ex rel. GRIMES et al. v. BOARD OF EDUCATION OF OKLAHOMA CITY et al.

No. 27340.

Supreme Court of Oklahoma

January 30, 1940

Rehearing Denied Feb. 20, 1940.

Second Petition for Rehearing Denied March 12, 1940.

Syllabus by the Court.

1.In the performance of their duties, public officers are governed by the existing law, including the statutes, the constitutional provisions, and the current construction placed thereon by the Supreme Court.

2.Where officers in good faith expend public funds in harmony with the decision of this court construing the Constitution and statutes governing the duties of officials in such casesthey are not to be held personally liable for such expenditure though such decision is later overruled as erroneous.

Appeal from District Court, Oklahoma County; Lucius Babcock, Judge.

Suit by the State of Oklahoma, on the relation of Gertrude GrimesAnna Meyers, and A. K. Payne, resident taxpayers, against the Board of Education of the City of Oklahoma City of the State of Oklahoma and others to recover money allegedly paid out by the defendants in violation of law.From a judgment in favor of the defendants, the plaintiffs appeal.

Judgment affirmed.

WELCH V. C.J., and BAYLESS, C.J., dissenting.

B. M. Parmenter, of Oklahoma City, and Harlan Grimes, of Taylor, Tex., for plaintiffs in error.

Hayes, Richardson, Shartel, Gilliland & Jordan, of Oklahoma City, for defendants in error Day Fezler and others.

Maurice M. Thomas, of Oklahoma City, for defendants in errorNational Surety Corporation and New Amsterdam Casualty Co.

Frank Wilkins, of Oklahoma City, for defendant in errorBoard of Education of Oklahoma City.

GIBSON Justice.

This is a taxpayers' suit, commenced in the district court of Oklahoma county pursuant to sections 6831, 6832, O.S.1931, 70 Okl.St.Ann. §§ 132, 133, against the members of the board of education of Oklahoma City, and others, to recover money allegedly paid out by said board in violation of law.

Separate demurrers of the different defendants were sustained on the ground, among others, that the petition failed to state a cause of action against any of the defendants.The plaintiff taxpayers have appealed.

According to the petition, the funds in question, aggregating $100,000, were derived from the sale of a ward school building and grounds known as Lowell School.Upon the receipt of the money the school board placed the same in a special account or fund designated as "building replacement fund", and expended the same during the fiscal year received for additions and improvements on other ward schools.

The petition further reveals that Lowell School was erected in 1909 with funds derived from a bond issue, and that in 1919 it was enlarged with funds received from a bond issue of that year.When the school was sold as aforesaid the school district was indebted in a sum in excess of the amount received at said sale.It is further made to appear that Lowell School was erected by funds received from the sale of bonds regularly voted and issued for the purpose of erecting and improving the school buildings of the district.

In substance and effect the plaintiffs' complaint is, first, that the $100,000 was misappropriated by the defendants in that the money was not used for the purposes for which it was originally borrowed, in violation of section 16, article 10, of the Constitution, Okl.St.Ann.; and, second, that said sum was expended by the board without an appropriation made therefor as required by section 26, article 10, of the Constitution, and by subdivision (d) of section 12677, O.S.1931, 68 Okl.St.Ann. § 289, andsection 5955, O.S.1931, 62 Okl.St.Ann. § 479.

Plaintiffs take the position that the money in question should have been accounted for in the budget of the school district; that it should have been placed in the sinking fund, to the extent of the needs thereof, to reimburse the taxpayers for the money originally borrowed to erect the school, the remainder, if any, placed in the general fund of the district and appropriated by the excise board in due form to the needs of the district for the year in which the money was received, or, if not so appropriated in the current fiscal year, to apply in like manner all, or the balance thereof unappropriated, to the succeeding fiscal year.Protest of Reid, 160 Okl. 3, 15 P.2d 995.

The last-cited case deals with the question of the legal appropriation and disbursement of funds received from the sale of a municipal utility.The city had purchased or constructed the utility with funds derived from the sale of bonds issued pursuant to section 27, article 10, of the Constitution.The proceeds remained unappropriated for any purpose at the end of the current fiscal year, and the court held that the sum in controversy constituted revenue on hand at the close of the year, and that under the provisions of section 12678, O.S.1931, amended1933, 68 Okl.St.Ann. § 290, the excise board was required to deduct the same in determining the rates of levy for the city for the ensuing fiscal year.In re Bliss,142 Okl. 1, 285 P. 73The holding of the court in this respect is stated in the syllabus as follows [160 Okl. 3, 15 P.2d 996]: "At the end of a fiscal year, the balance on hand from the sale of a municipal public utility unappropriated for any legal purpose is subject to the statutory provisions as to unappropriated balances of revenue, and must be used to reduce the rate of ad valorem taxation of the municipality for the ensuing fiscal year, the application thereof being to the sinking fund to the extent of the needs of that fund and the remainder, if any, to the current expense fund to the extent of the needs of that fund."

We agree with the plaintiffs that the above rule may as well apply to a building belonging to a school district as to a public utility of a city.Although section 27 of the Constitution, supra, does not apply to school buildings, section 10, article 10 of the Constitution, togther with section 6880, O.S.1931, 70 Okl.St.Ann. § 200, grants to school districts a similar authority to issue bonds for the erection and repair of such buildings, and when the two latter sections are taken in connection with section 16, article 10 of the Constitution, limiting the expenditure of borrowed funds to the purpose for which the indebtedness was incurred, the rule of law would be the same.

But we cannot agree that the fund in question was misappropriated in the sense that would lay defendants liable therefor to the school district.The district came by this money as a result of a bonded indebtedness.It had been once applied to the use to which it was dedicated by the bond issue.Then the money was returned to the district as a result of a sale of the property in which it was first invested, and was reinvested to a like purpose during the fiscal year in which it was lastly received as aforesaid.All this is made to appear from the petition.

At the time of the second investment the decision in ...