Case Title: Board of County Com'rs of County of Laramie v. Laramie County School Dist. Number One

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1994-11-07T00:00:00Z

Document:
Board of County Com'rs of County of Laramie v. Laramie County School Dist. Number One1994 WY 121884 P.2d 946Case Number: 93-234Decided: 11/07/1994Supreme Court of Wyoming
The BOARD OF COUNTY 
COMMISSIONERS OF the COUNTY OF LARAMIE and The Laramie County Treasurer, In Her 
Official Capacity,

Appellants 
(Defendants),

v.

LARAMIE COUNTY SCHOOL 
DISTRICT NUMBER ONE,

Appellee 
(Plaintiff).

Appeal from District 
Court, Laramie County, Barton R. Voigt, J.

 

Thomas N. Long, Cheyenne, 
Craig E. Kirkwood, Laramie, and Roberta A. Coates and Cynthia L. Harnett, 
Cheyenne, for appellants.

J. Kent Rutledge of 
Lathrop & Rutledge, P.C., Cheyenne, for appellee

Valerie Hafner Phifer, 
Lander, for amicus curiae Wyoming County Com'rs Ass'n.

Tracy J. Copenhaver and 
R. Scott Kath of Copenhaver, Kath & Kitchen, Powell, for amicus curiae 
Wyoming School Boards Ass'n.

Eric A. Easton, Natrona 
County Atty., Casper, for amicus curiae Bd. of County Com'rs and Treasurers 
of Albany, Campbell, Fremont, Natrona, Park, Sublette, Teton and Weston 
Counties.

Before 
GOLDEN, C.J., THOMAS, CARDINE* and 
MACY,** JJ., and BROWN, J., 
Retired.

BROWN, Justice, 
Retired.

[¶1]      Laramie County 
School District No. One (School District) filed this action to obtain a 
declaration that: (1) the School District is entitled to interest earned by the 
Laramie County Treasurer on revenues collected for the School District between 
the time the revenues were collected and the time they were distributed to the 
School District; (2) the School District is entitled to the interest paid by 
taxpayers for delinquent taxes attributable to the School District; and (3) the 
interest earned by the Laramie County Treasurer on revenues attributable to 
school district bond levies must be applied to retire the School District's bond 
issues. In addition, the School District requested that the Board of County 
Commissioners of the County of Laramie and the Laramie County Treasurer pay over 
to or for the benefit of the School District the amounts which have been 
improperly diverted in the past.

[¶2]      The district 
court granted a partial summary judgment to the School District substantially 
awarding the relief requested. The only issue reserved for trial was a factual 
issue regarding the amount of interest withheld by the Laramie County 
Treasurer.

[¶3]      We affirm and 
hold that our determination will be prospective.

[¶4]      Appellants, Board 
of County Commissioners of the County of Laramie (Board) and the Laramie County 
Treasurer (County Treasurer), identify these issues:

I. Whether the trial 
court properly entered partial summary judgment requiring Laramie County to pay 
damages to Laramie County School District No. One.

A. Whether, appellant 
Laramie County should be required to pay damages given appellee's defenses of 
lack of standing, general restitution principles, and the budget 
defense.

B. Whether the court 
lacks subject matter jurisdiction to award certain damages to appellee because 
appellee failed to comply with the Wyoming Governmental Claims Act.

C. Whether equitable 
principles prevent recovery of damages by appellee Laramie County School 
District No. One.

D. Whether collection of 
a portion of the damages sought is barred by the applicable statute of 
limitations.

II. Whether the trial 
court properly entered partial summary judgment in favor of Laramie County 
School District No. One, to the extent such judgment requires prospective 
payment of certain interest amounts by Laramie County to Laramie County School 
District No. One.

A. Whether, under Wyo. 
Stat. § 21-13-207, taxes collected by the Laramie County Treasurer "belong" to 
the school district before the time of apportionment and 
distribution.

B. Whether Wyo. Stat. § 
21-13-207 requires interest earned upon taxes collected by the Laramie County 
Treasurer, prior to the second Monday of the month, to be paid to the school 
district.

C. Whether Article 15 § 
13 of the Wyoming Constitution requires Laramie County to pay over any interest 
earnings to the School District or its "bond and interest" accounts.

D. Whether appellants 
have a statutory or common law duty to earn interest on taxes collected for 
appellee school district.

E. Whether Wyo. Stat. § 
21-13-207 requires that interest be paid on fines and forfeitures.

[¶5]      The School 
District urges slightly different issues:

I.

Is the County Treasurer 
obligated to pay over to the School District[] interest earned on revenues 
collected for the School District while those revenues were in the possession of 
the Treasurer, and interest collected by the Treasurer on the School District's 
share of delinquent property taxes?

II.

Do the defenses raised by 
Appellants prevent entry of partial summary judgment?

A. Does the School 
District have standing to bring an action to require the County Treasurer and 
the County Commissioners to pay over interest earned in the past which was 
improperly diverted?

B. Must the School 
District file a claim under the Governmental Claims Act in order to give the 
District Court jurisdiction to recover monies which were improperly diverted in 
the past by the County Treasurer?

C. Are the affirmative 
equitable defenses, including the so-called "budget defense", waiver, estoppel, 
laches, and set-off applicable in an action by a school district to require the 
County Treasurer and the County Commissioners to pay over monies which were 
improperly diverted?

D. Is the statute of 
limitations applicable to bar the School District from bringing an action to 
require the County Treasurer and the County Commissioners to pay over monies 
which were improperly diverted?

III.

Does the County Treasurer 
have a duty to act with reasonable skill, diligence, good faith and honesty, and 
to act as a fiduciary, with regard to the funds collected and held on behalf of 
the School District?

[¶6]      Our resolution of 
this case makes it unnecessary to address all the issues urged by the parties. 
Furthermore, in an effort not to multiply words and obscure our determination, 
we will not analyze every case cited or address every theory urged by the 
parties.

[¶7]      The adjudicative 
facts are not complicated. The County Treasurer collected revenues which she was 
required to collect for the School District and distributed those revenues to 
the School District. Since June 30, 1983, the revenue collected has earned 
interest between the time of collection and the time of distribution to the 
School District. Instead of distributing this interest to the School District, 
along with the revenues which produced it, the County Treasurer made the 
interest available to the Board who used it for county purposes. Additionally, 
since September 1, 1988, the County Treasurer has collected interest paid by 
taxpayers on delinquent property taxes attributable to school district taxes and 
made that interest available for Board purposes.

[¶8]      The School 
District brought this declaratory judgment action for: (1) a declaration of 
rights and liabilities of the two governmental entities;1 and (2) the recovery of money that 
should have been distributed to it in the past.

[¶9]      The Board and the 
County Treasurer counterclaimed, seeking reimbursement for interest on 
delinquent real property taxes which the County Treasurer had distributed and a 
declaratory judgment that the County Treasurer had no duty to invest and earn 
interest on revenues collected for the School District.

[¶10]   In an order dated October 7, 1993, 
a partial summary judgment was granted in favor of the School District. At the 
same time, the motion for summary judgment by the Board and the County Treasurer 
was denied. The summary judgment granted to the School District resolved all 
issues except for the issue of the amount of interest withheld by the County 
Treasurer. That issue was reserved for trial, there being a factual dispute 
concerning the calculation of the amount. The dispositive provisions of the 
summary judgment are:

1. Judgment in favor of 
the School District on the issues of the rights and obligations of the parties 
concerning interest earned on the various revenues in question; declaring that 
the County Treasurer has an obligation to pay over to the School District, or to 
its bond and interest fund, as the case may be, interest earned on revenues 
collected for the School District while those revenues were in the hands of the 
County Treasurer; and interest collected on delinquent property taxes 
attributable to the School District; and

2. Judgment in favor of 
the School District regarding the duty of the County Treasurer to earn interest; 
declaring that the County Treasurer has a duty to act with reasonable skill, 
diligence, good faith and honesty; and that the County Treasurer is a fiduciary 
with regard to the funds collected and held on behalf of the School 
District.

[¶11]   The summary judgment order provided 
that there was no just reason for delay and that final judgment should be 
entered pursuant to W.R.C.P. 54(b) as to the claims resolved in the order. An 
appeal was taken accordingly.

STANDING TO BRING 
LAWSUIT

[¶12]   The Board and the County Treasurer 
contend that the School District does not have standing to bring this action 
because it would violate the rule that one governmental entity cannot sue 
another, since it would in effect be suing itself.

[¶13]   We believe that Simons v. 
Laramie County School Dist. No. One, 741 P.2d 1116 (Wyo. 1987) is 
dispositive of the standing issue. In Simons, the school district brought a 
declaratory judgment proceeding, seeking a determination of the rights and 
liabilities of the parties under a statute affecting state educational funding 
and to recover payments that had been withheld from the school district. The 
state contended that the school district, as a constitutionally implemented 
instrumentality of the state, could not claim unpaid amounts withheld by other 
public officials. Id. at 1121. This court rejected the state's argument. 
In Simons, we said: "[S]overeign immunity as a doctrine in Wyoming does 
not apply to proceedings between segments of state government wherein 
declaratory judgment or administrative appeal provisions are available to 
determine respective rights and liabilities under constitutional provisions and 
statutory enactments." Id. at 1122. See also, Washakie County School 
Dist. No. One v. Herschler, 606 P.2d 310, 316-17 (Wyo.), cert. 
denied, 449 U.S. 824, 101 S. Ct. 86, 66 L. Ed. 2d 28 (1980).

[¶14]   The case before us, as in 
Simons, is a declaratory judgment action in which the School District 
seeks a declaration of rights and obligations as well as a judgment requiring 
the Board and the County Treasurer to pay over to the School District interest 
which was diverted to the use of the county. Some loose language in the amended 
complaint uses the term "damages;" however, the School District is only seeking 
to require the Board and the County Treasurer to properly apply the funds that 
have been diverted by the County Treasurer.

[¶15]   In Carbon County School Dist. 
No. 2 v. Wyoming State Hosp., 680 P.2d 773, 775 (Wyo. 1984), we 
said:

The principles here set 
forth [one cannot sue himself] do not apply to actions to have statutes 
construed and to determine correlative rights between agencies of the state, 
between such agencies and the state itself, and between the state and officers 
of the state. Town of Pine Bluffs v. State Board of Equalization, 79 Wyo. 
262, 333 P.2d 700 (1958); Washakie County School District Number One v. 
Herschler, 606 P.2d 310, cert. denied 449 U.S. 824, 101 S. Ct. 86, 66 L. Ed. 2d 28 (1980); Goshen County Community College District v. School 
District No. 2, Goshen County, Wyo., 399 P.2d 64 (1965).

[¶16]   The Board and the County Treasurer 
argue that District No. 55 v. Musselshell County, 245 Mont. 525, 802 P.2d 1252 (1990) supports their position that the School District does not have 
standing to sue. Musselshell County is not applicable to our present 
case. Musselshell County was not a declaratory judgment action. 
Furthermore, of more importance given the issues before us, Musselshell 
County was an action for compensatory damages while the action before this 
court is not. The school district in Musselshell County was seeking to 
recover the amount of revenues that had been lost because of miscalculated mill 
levies. The school district also sought to recover income that it lost by not 
having the uncollected revenues. This distinction was important to the decision 
in Musselshell County, and the court discussed the distinction between 
cases where damages were sought and other types of actions. Because of the 
factual and statutory differences in the case before us and Musselshell 
County, the latter is not persuasive authority for the position contended by 
the Board and the County Treasurer. Other cases cited by the Board and the 
County Treasurer are not on point.

[¶17]   East Jackson Public Schools v. 
State, 133 Mich. App. 132, 348 N.W.2d 303 (1984) was the only case cited by 
the Board and the County Treasurer which was brought under a declaratory 
judgment statute. Similarities in circumstances between that case and the case 
before us are rendered insignificant by the Michigan court's determination that 
education is not a fundamental right in Michigan. Id., 348 N.W.2d  at 305. 
Constitutional and philosophical differences between Michigan and Wyoming 
minimize any precedential value East Jackson Public Schools may otherwise 
have on the issue of standing.

[¶18]   The principles set out in 
Simons, 741 P.2d 1116 require us to conclude that the School District has 
standing to bring this action. As in Herschler, 606 P.2d 310, issues of 
great public importance are at stake here and Simons is controlling. The 
district court correctly rejected the standing defense as a matter of 
law.

WYOMING GOVERNMENTAL 
CLAIMS ACT

[¶19]   Much of what we have said with 
respect to the standing of the School District to bring this action is also 
relevant to the question of whether or not the Wyoming Governmental Claims Act, 
Wyo. Stat. §§ 1-39-101 through 1-39-120 (1988 & Cum.Supp. 1994), is 
applicable. The Uniform Declaratory Judgments Act, Wyo. Stat. §§ 1-37-101 
through 1-37-115 (1988), does not invoke sovereign immunity principles for 
actions against governmental agencies or specify restrictions to determine the 
rights or the award of appropriate relief between segments of Wyoming 
government. Simons, 741 P.2d 1116.

[¶20]   The Wyoming Governmental Claims Act 
was enacted to address the inherently unfair and inequitable results occurring 
because of the application of the common law doctrine of sovereign immunity. 
Wyo. Stat. § 1-39-102(a). The Act provides exceptions for immunity to liability 
for damages for various governmental activities, as well as a procedure for 
pursuing the claims brought under the Act. Wyo. Stat. § 1-39-113(a). The Wyoming 
Governmental Claims Act does not address claims brought under the Uniform 
Declaratory Judgments Act, and expressly excludes claims for mandamus. See Wyo. 
Stat. § 1-39-116(a) ("The remedy against a governmental entity as provided 
by this act is exclusive * * *. Nothing in this section prohibits any 
proceedings for mandamus * * *." (Emphasis added)).

[¶21]   Case law makes it clear that 
governmental agencies are not eligible claimants under the Wyoming Governmental 
Claims Act. Simons, 741 P.2d  at 1119. See also, Wyoming State 
Hosp., 680 P.2d  at 775 and State v. Board of County Com'rs of Johnson 
County, 642 P.2d 456, 458 (Wyo. 1982). A governmental agency is not an 
eligible claimant under the Wyoming Governmental Claims Act because a 
governmental agency cannot sue another governmental agency for compensatory 
damages. We say again, the action here is not for compensatory damages, but 
rather for an action seeking a declaration of rights and obligations and a claim 
for monies belonging to the School District which were wrongfully 
diverted.

[¶22]   The Board and the County Treasurer 
rely upon Dye by Dye v. Fremont County School Dist. No. 24, 820 P.2d 982 
(Wyo. 1991) and Dee v. Laramie County, 666 P.2d 957 (Wyo. 1983) for the 
proposition that, arguably, the School District may be authorized to sue the 
county under Wyo. Stat. § 1-35-107 (1988), but must first file its claim 
pursuant to the Wyoming Governmental Claims Act.

[¶23]   These two cases are not authority 
for the Board's and the County Treasurer's theory regarding the Wyoming 
Governmental Claims Act in at least two respects. In both of these cases, 
plaintiffs sued on a tort theory. Also, in these cases, it is not one 
governmental entity suing another. In the case before us, we do not think the 
Board and the County Treasurer are complaining about lack of notice; the School 
District did in fact file a claim according to Wyo. Stat. § 18-3-511 (1977) 
(claims and demands against the county). The Board and the County Treasurer gave 
notice of their claim under the same statutory provision. Rather, the complaint 
is that the requirements of the Wyoming Governmental Claims Act were not 
complied with.

[¶24]   We hold that the Wyoming 
Governmental Claims Act is not applicable to an action between two governmental 
entities when the relief sought is a declaration of rights and liabilities of 
the governmental entities under statutes affecting state educational funding and 
for the recovery of monies that should have been distributed in the 
past.

EQUITABLE 
DEFENSES

[¶25]   We will make our decision in this 
case prospective; therefore, we need not address certain equitable defense 
issues such as waiver, estoppel and laches. Also, for the same reason, we need 
not be concerned about the statute of limitations.

ENTITLEMENT TO 
INTEREST

[¶26]   County treasurers for the various 
counties are obligated by statute to collect, hold and disburse various funds 
for the school districts.2 Wyo. Stat. § 21-13-207 (1992) 
provides: 

On the second Monday of 
each month, the county treasurer shall apportion all monies in the county 
treasury belonging to the county school fund, including all interest 
earned thereon and including fines and forfeitures, among the various 
school districts in the county in the same percentages as provided by W.S. § 
21-13-201(b) and shall immediately pay the amount to each school 
district.

(Emphasis 
added.)

[¶27]   Regarding interest on monies 
collected by a county treasurer for school districts, the statute specifically 
states that interest shall be paid to the school district for "county school 
fund" money collected. However, there are other funds collected by a county 
treasurer that must also be distributed.

[¶28]   The "county school fund" referred 
to in Wyo. Stat. § 21-13-207 only includes school monies that are received by a 
county treasurer on a county-wide basis. Certain governmental entities, however, 
have authority to levy or require the levy of ad valorem taxes on property 
within the respective district or unit.3 School districts have this 
authority. Wyo. Stat. § 39-2-402(d) (1994). Wyo. Stat. § 39-4-101(a)(iv) (1994) 
provides:

(a) The county treasurer 
shall keep accurate records of taxes collected for each governmental entity for 
which a tax levy is made pursuant to W.S. 39-2-401 and shall pay the taxes 
collected to the treasurer of each governmental unit or settle accounts with the 
county commissioners as hereafter provided:

* * * * * *

(iv) To school districts 
as provided by W.S. 21-13-207[.]

[¶29]   Property taxes are made pursuant to 
Wyo. Stat. § 39-2-401 (1994). Therefore, under Wyo. Stat. § 39-4-101(a)(iv), 
county treasurers must distribute all school district levies pursuant to Wyo. 
Stat. § 21-13-207; i.e., on the second Monday of each month and with interest 
earned thereon.

[¶30]   It seems reasonably clear that the 
interest earned from several categories of taxes constituting elements of the 
"county school fund" and interest earned from taxes resulting from levies by the 
school district must be distributed by the county treasurer to the school 
district according to the mandate of Wyo. Stat. § 21-13-207. Other taxes, 
interest and revenues belonging to the School District are property tax 
substitutes and reimbursements, school district property tax levies for school 
bond retirement and the school district's proportionate share of delinquent 
interest.

[¶31]   The distribution of these other 
taxes, interest and revenues belonging to a school district is not as clearly 
set out by statute. Rather than articulating several rationales for our 
determination that interest generated by these taxes and revenues should 
go to the School District, we choose to adopt the common law principle 
that interest on public funds follows those funds. 

[¶32]   We are persuaded that the reasoning 
and holding in Grand Rapids Public Schools v. City of Grand Rapids, 146 
Mich. App. 652, 381 N.W.2d 783 (1985) is proper and should be applied in 
Wyoming. The Michigan court stated:

Since the statute and 
legislative history are silent, we must turn to established common-law 
principles to resolve the issue before us. In absence of a clear statutory 
provision to the contrary, the general principle is that interest on 
public funds designated for a specific purpose follows those funds. 
Anno: Rights and liabilities of municipality as to interest earned on 
improvement assessments or other special funds collected or held by it, 143 
A.L.R. 1341, 1342; State Highway Comm. v. Spainhower, 504 S.W.2d 121 
(Mo., 1973); Bd. of Law Library Trustees of Los Angeles County v. Lowery, 
67 Cal. App. 2d 480, 154 P.2d 719 (1945). In general, interest is merely an 
incident of the principal fund, making it the property of the party owning the 
principal fund. Pontiac School Dist. v. City of Pontiac, 294 Mich. 708, 
715-716, 294 N.W. 141 (1940); University of South Carolina v. Elliott, 
248 S.C. 218, 149 S.E.2d 433 (1966). Earnings of a trust fund belong to the 
beneficiary and not the municipal official who acts as trustee or custodian. 
Brown v. Vidro, 260 Mich. 54, 244 N.W. 227 (1932); Bd. of Supervisors 
of Kent County v. Verkerke, 128 Mich. 202, 87 N.W. 217 (1901).

In accord with these 
rules, other courts which have considered the issue have held that interest 
income on school tax collections belongs to the school district, and not to the 
county or municipal official who collected the funds. Pomona City School 
Dist. v. Payne, 9 Cal. App. 2d 510, 50 P.2d 822 (1935); State ex rel. Fort 
Zumwalt School Dist. v. Dickherber, 576 S.W.2d 532 (Mo., 1979). 
Similarly, in the case of interest on delinquent school taxes, the rule is 
that interest follows principal and belongs to the taxing body. 16 
McQuillin, Municipal Corporations, § 44.188, p. 617; New Orleans v. 
Fisher, 180 U.S. 185, 197, 21 S. Ct. 347, 352, 45 L. Ed. 485 (1901); 
Pontiac School Dist., supra.

Grand Rapids 
Public Schools, 381 N.W.2d  at 785-86 
(emphasis added).

[¶33]   There is also a constitutional 
basis for the common law rule that we have adopted. Wyo. Const. art. 15, § 13 
states: "No tax shall be levied, except in pursuance of law, and every law 
imposing a tax shall state distinctly the object of the same, to which 
only it shall be applied." (Emphasis added.) This provision is based on 
the general proposition that "a taxpayer has a right to know the purposes for 
which his money is appropriated[.]" Thomas L. Whitley, Comment, Defeating Tax 
Levies to Recover Excess Taxes, 4 Wyo.L.J. 233, 235 (1950).

[¶34]   By its own terms, Wyo. Const. art. 
15, § 13 prevents a county treasurer from diverting the principal amounts of 
taxes collected for a school district. Courts in other states have also 
interpreted such provisions to bar the diversion of the interest earned on such 
principal.

[¶35]   A case from Oklahoma is 
instructive. Independent School Dist. No. 1 of Tulsa County v. Board of 
County Com'rs of Tulsa County, 674 P.2d 547 (Okla. 1983). In 1976, the Board 
of County Commissioners of Tulsa County, Oklahoma passed a resolution requiring 
the county treasurer "to distribute the entire interest amount earned on the 
deposited but unapportioned and undistributed, local tax and state tax and 
revenue funds to the Tulsa County General Fund, rather than to the units of 
local government within the county * * *." Id. at 548. After this 
diversion of interest continued for three years, a school district sued to 
recover the interest and requested declaratory relief and injunction. The 
Oklahoma Supreme Court held that it was improper for the county treasurer to 
divert interest he earned on school district funds. The court based its decision 
on Okla. Const. Art. 10, § 19:

Further, the rule of law 
that interest is an accretion or increment to the principal fund earning it 
absent legislation, indicates this result - for Okla. Const. Art. 10, § 19, 
provides that no tax levied and collected for one purpose shall ever be devoted 
to another purpose.

Independent 
School Dist. No. 1, 674 P.2d  at 550 
(footnote omitted).

[¶36]   In 1980, the Supreme Court of 
Arkansas reached the same result in Mears v. Little Rock School Dist., 
268 Ark. 30, 593 S.W.2d 42 (1980). There, county authorities passed an 
ordinance

authorizing the county 
collector to deposit into the County General Fund all interest earned on tax 
monies held by the county collector prior to transfer of these funds to the 
county treasurer. In effect, the ordinance provided that the county could 
use the tax money to earn money for the county - the interest earned not being 
passed on to the school districts.

Id., 593 S.W.2d  at 43 
(emphasis added). Two school districts sued to enjoin this diversion of 
interest. The Arkansas Supreme Court held that "there is no doubt that the 
interest belongs to the school districts." Id. at 44 (emphasis 
added). They based this decision on Article 16, Section 11 of the Arkansas 
Constitution, which is almost identical to Wyo. Const. art. 15, § 
13:

"No tax shall be levied 
except in pursuance of law, and every law imposing a tax shall state distinctly 
the object of the same; and no moneys arising from a tax levied for one purpose 
shall be used for any other purpose."

Mears, 593 S.W.2d  at 
44.

[¶37]   Wyo. Const. art. 15, § 13 is 
authority for the proposition that interest earned on bond taxes must go only to 
the purpose of retiring bonds. See Glendale Union High School Dist. v. Peoria 
School Dist. No. 11, 55 Ariz. 151, 99 P.2d 482, 484 (1940) (under a 
constitutional provision identical to Wyo. Const. art. 15, § 13, taxes collected 
to retire bonds should be used for that purpose; county treasurer who collects 
taxes to retire school bonds is a trustee of an express trust in favor of the 
school district).

[¶38]   The principles described above are 
applicable to the interest paid by taxpayers on delinquent taxes. In Riverton 
Valley Drainage Dist. v. Board of Com'rs of Fremont County, 52 Wyo. 336, 74 P.2d 871, 873 (1937) (quoting 61 C.J. 1528), this court held that 
"`interest, penalty and costs collected on delinquent taxes follow the tax[.]'" 
This is the majority rule across the country. City of Bisbee v. Cochise 
County, 44 Ariz. 233, 36 P.2d 559, 563 (1934); Community Redevelopment 
Agency of City of Los Angeles v. Bloodgood, 182 Cal. App. 3d 342, 226 Cal. Rptr. 924, 925-26 (1986); Board of Com'rs of Greenwood County v. School 
Dist. No. 4 of Greenwood County, 139 Kan. 297, 31 P.2d 723, 724 (1934); 
School Dist. No. 18 of Pondera County v. Pondera County, 89 Mont. 342, 
297 P. 498, 500 (1931).

[¶39]   State reimbursements for the 
veteran's property tax exemption and the homeowner's tax credit are not 
distributed pursuant to Wyo. Stat. § 21-13-207 and are not "taxes" subject to 
Wyo. Const. art. 15, § 13. See Wyo. Stat. §§ 39-1-201(a)(xxiv), 39-1-202, and 
39-1-204 (1994). These exemptions and credits reduce the tax base of school 
districts, cities, counties and other taxing districts. Under the principles 
discussed above, the interest earned on those funds, if any, belongs to the 
school district and must be distributed to the school district by the county 
treasurer.

[¶40]   Wyo. Const. art. 15, § 13 forbids a 
county treasurer from diverting to the county, or any other entity, either the 
principal amounts of taxes collected for a school district or the interest 
earned thereon. Wyo. Const. art. 15, § 13; see also, Mears, 593 S.W.2d  at 
44 and Independent School Dist. No. 1, 674 P.2d  at 550. We hold that 
interest is an accretion or increment to the fund earning such interest and 
follows those funds.

[¶41]   The Board and the County Treasurer 
make a sophisticated but unpersuasive argument that the phrase "belonging to" in 
Wyo. Stat. § 21-13-207 is ambiguous and requires interpretation and, thus, 
partial summary judgment was improper. The Board and the County Treasurer 
suggest an interpretation to the effect that interest would be payable only if 
the County Treasurer was delinquent in making payments on the second Monday of 
each month as required by Wyo. Stat. § 21-13-207.

[¶42]   The rules to be followed in 
construing a statute are summarized in Allied-Signal, Inc. v. Wyoming State 
Bd. of Equalization, 813 P.2d 214, 219-220 (Wyo. 1991):

We must invoke the rule 
that this court looks only to the intent of the legislature when enforcing or 
construing statutes. * * * The rule is absolute and controlling. Strict 
adherence to our Wyoming constitution demands that the judicial branch of 
government recognize that it is without discretion, nor does it have any 
latitude, to apply statutes contrary to legislative intent once that intent has 
been ascertained.

Legislative intent must 
be ascertained initially and primarily from the words used in the statute. * * * 
When the words used are clear and unambiguous, a court risks an impermissible 
substitution of its own views, or those of others, for the intent of the 
legislature if any effort is made to interpret or construe statutes on any basis 
other than the language invoked by the legislature. Our precedent demonstrates 
that this rule also is an absolute. If the language selected by the legislature 
is sufficiently definitive, that language establishes the rule of law. Any 
additional construction can be resorted to only if the wording is ambiguous or 
unclear to the point of demonstrating obscurity with respect to the legislative 
purpose or mandate. * * * This inhibition upon statutory construction offers 
assurance that the legislative efforts and determinations of elected 
representatives will be made effective without judicial adjustment or 
gloss.

We previously have 
articulated the proposition that a statute is ambiguous only if it is found to 
be vague or uncertain and subject to varying interpretations. * * * The converse 
of this proposition is that the statute is unambiguous if its wording is such 
that reasonable persons are able to agree to its meaning with consistency and 
predictability. The question of whether an ambiguity exists in a statute is a 
matter of law to be determined by the court.

[¶43]   Applying the rules set forth in 
Allied-Signal, Inc., we construe Wyo. Stat. § 21-13-207 to mean what it 
says, not a strained interpretation. Reasonable persons would consistently agree 
to the meaning of the language employed by the legislature. The words "belonging 
to" are commonly used and easily understood. So are the other words used in the 
statute, including the words "including all interest earned thereon." Wyo. Stat. 
§ 21-13-207.

[¶44]   There is no persuasive authority 
supporting the notion that a school district does not at all times own the funds 
collected by a county treasurer. The Board and the County Treasurer contend that 
the express mention of the payment of interest to community colleges in Wyo. 
Stat. § 39-4-101(a)(v) is a directive to not pay interest to the school 
districts.4 The School District contends that 
this argument overlooks the fact that Wyo. Stat. §§ 21-13-207 and 39-4-101 were 
both a part of the same act; i.e., Wyo. Sess. Laws ch. 136 (1983). In other 
words, the legislature provided for payment to the school districts "with 
interest earned thereon" at the same time it provided for payment of property 
taxes in accordance with Wyo. Stat. § 21-13-207. It would have been redundant, 
according to the School District, to include interest in Wyo. Stat. § 
39-4-101(a)(iv).

[¶45]   Litigants and courts frequently 
employ convoluted, strained, and anomalous reasoning and theories in an effort 
to fathom and explain the "doings" of the legislature. We often impute some 
intent to the legislature when there was no intent one way or another. Stated 
another way, the legislature just did not think about the problem that the 
litigants or courts conjured up.

[¶46]   It may be more honest if we are 
straightforward about what the legislature intended and simply say we do not 
know. There is no useful legislative history in Wyoming. The simple reading of 
Wyo. Stat. §§ 21-13-207 and 39-4-101 does not suggest to us any manifest intent 
with respect to the disposition of interest on taxes. Approaching these statutes 
from another direction, we may get a better idea what the legislature did not 
intend. We do not think it intended to countermand the common law rule that 
interest follows the tax funds that earned the interest. Nor do we believe that 
the legislature intended to create a special rule with respect to community 
colleges' entitlement to interest to the exclusion of other entities entitled to 
tax funds and interest or penalties by way of interest that may accrue. There is 
no rational reason for making a special rule for community colleges unless they 
have a more effective lobby.

[¶47]   In summary, we determine that at 
the moment of collection, School District monies in the County Treasurer's 
possession, including all interest earned thereon, belong to the School District 
and not to the county. State ex rel. Board of Com'rs of Goshen County v. 
Snyder, 30 Wyo. 468, 222 P. 40 (1924); McCague Inv. Co. v. Mallin, 25 
Wyo. 373, 170 P. 763 (1918); School Dist. No. 21 in Fremont County v. Board 
of Com'rs of Fremont County, 15 Wyo. 73, 86 P. 24 (1906); State v. Board 
of Com'rs of Laramie County, 8 Wyo. 104, 55 P. 451 (1898); Powder River 
Cattle Co. v. Board of Com'rs of Johnson County, 3 Wyo. 597, 31 P. 278 
(1892).

[¶48]   The majority rule, which has been 
adopted by this court, is that the "`interest, penalty and costs collected on 
delinquent taxes follow the tax * * *.'" Riverton Valley Drainage Dist., 
74 P.2d  at 873 (quoting 61 C.J. 1528). School district funds belong to the 
school district from the moment a county treasurer receives them; the interest 
earned on any such funds being merely an increment or accretion which also 
belongs to the school district entitled to said funds. Id.; see also 
Mears, 593 S.W.2d  at 44; State v. Swanson, 182 Ind. 582, 107 N.E. 275, 277 (1914); Bordy v. Smith, 150 Neb. 272, 34 N.W.2d 331, 334 (1948); 
State ex rel. Bd. of County Com'rs of Bernalillo County v. Montoya, 91 
N.M. 421, 575 P.2d 605, 607 (1978); City of Oklahoma City v. Oklahoma Tax 
Com'n, 789 P.2d 1287, 1291-92 (Okla. 1990); and Independent School Dist. 
No. 1, 674 P.2d  at 550.

[¶49]   An alternative construction of Wyo. 
Stat. § 21-13-207 urged by the Board and the County Treasurer appears to be 
based upon affidavits and testimony that the county treasurers throughout 
Wyoming have varied in their interpretation of this statute. The County 
Treasurer testified that a School District employee advised her that his 
understanding of the intent of the statute was to impose interest only on 
delinquent payments from county treasurers. The County Treasurer further 
testified that it would be difficult to follow the directive in the statute and 
that she would have to hire additional employees to keep track of interest 
earned from tax payments in order to comply with the statute as interpreted by 
the district court.

[T]he burden is on the 
moving party to demonstrate that there is no genuine issue of material fact 
before a motion for summary judgment should be granted. * * * However, once the 
movant has established a prima facie case, the burden then shifts to the 
opposing party to come forward with competent evidence of specific facts 
countering the facts presented by the movant. General allegations and conclusory 
statements are not sufficient.

Jones Land 
and Livestock Co. v. Federal Land Bank of Omaha, 733 P.2d 258, 263 (Wyo. 
1987).

[¶50]   Such materials must be evidence 
that would be admissible at trial. Stauffer Chemical Co. v. Curry, 778 P.2d 1083, 1095 (Wyo. 1989); Sanders v. Lidle, 674 P.2d 1291, 1292 (Wyo. 
1984). Statements regarding a different interpretation of the statute, the 
understanding of a former School District employee regarding the meaning of the 
statute, and the supposed difficulty in following the directive of the statute 
are not evidence that would be admissible at trial. All are incompetent and 
irrelevant.

DUTIES OF COUNTY 
TREASURER

[¶51]   The issue of the duty of a county 
treasurer came before the district court upon the Board's and the County 
Treasurer's motion for summary judgment requesting that the district court 
declare that a county treasurer has no duty to invest and earn interest on the 
funds collected and held for a school district.

[¶52]   A county treasurer has the duty to 
collect taxes and other monies belonging to the county and pay over to the 
proper entity any monies received. Wyo. Stat. §§ 18-3-802 and 18-3-805 (1977). 
In carrying out the duties provided for by statute, Wyo. Stat. § 18-3-803 (1977) 
imposes the duty on a county treasurer to exercise "reasonable skill, diligence, 
good faith and honesty * * *."

[¶53]   A county treasurer has the further 
duty to deposit monies collected in an appropriate financial institution, with 
interest to be paid by the institution upon amounts deposited in a time deposit, 
open account. Wyo. Stat. § 9-4-817 (Cum.Supp. 1994).

[¶54]   The Board and the County Treasurer 
contend that the summary judgment order imposed a statutory and fiduciary duty 
on the County Treasurer to earn interest on funds in her possession. That is not 
exactly what the district court held. In its summary judgment, the district 
court held that the County Treasurer has a duty to act with reasonable skill, 
diligence, good faith and honesty with respect to the funds collected on behalf 
of the School District. In addition, the district court held that the County 
Treasurer is a fiduciary with respect to such funds and must exercise the 
judgment and care under the circumstances then prevailing which persons of 
prudence, discretion and intelligence exercise in the management of their own 
affairs, not in regard to speculation but in regard to the permanent disposition 
of their funds and considering the probable income as well as the probable 
safety of their capital.

[¶55]   In Grand Rapids Public 
Schools, 381 N.W.2d  at 784, a school district brought suit against the city 
treasurer seeking a declaratory judgment that interest earned on tax collections 
belonged to the school district and that the treasurer had a duty to 
advantageously invest amounts collected while they remained in defendant's 
hands. The Michigan court noted that a city or county treasurer is a fiduciary 
in the management and application of public funds. Id. at 786. 
Additionally, that court recognized that as a fiduciary, the treasurer has 
fiduciary and trust responsibilities when dealing with school taxes. 
Id.

[¶56]   A county treasurer acts as a 
trustee in the management of funds held by that office on behalf of others. 56 
Am.Jur.2d, Municipal Corporations, Counties, and Other Political 
Subdivisions, §§ 277, 283, and 288 (1971). Placing or allowing substantial 
sums of money to be in non-interest bearing accounts for significant periods of 
time does not comport with the "reasonable skill, diligence, good faith and 
honesty" mandated by Wyo. Stat. § 18-3-803. The standard of care established by 
the statute will, under certain circumstances, require a county treasurer to 
invest and earn interest on the monies collected and held for a school 
district.

[¶57]   A county treasurer, as a matter of 
law, has a statutory duty and a common law fiduciary duty to act with reasonable 
skill, diligence, good faith and honesty with regard to monies held on behalf of 
a school district. Depending upon the circumstances, including the amount of the 
monies held and the length of time they are held, investing these funds may be 
required in order to comply with these duties.

PROSPECTIVE APPLICATION 
OF DECISION

[¶58]   The Board and the County Treasurer 
strongly urge that, in the event we agree with the district court with respect 
to the School District's right to interest, we provide that our decision be 
prospective only.

[¶59]   We know of no strict legal barrier 
which would prevent our decision to be either retroactive or prospective. We 
must consider equitable and other principles with regard to whether our decision 
will be prospective or otherwise. 

[¶60]   All parties in this appeal make 
compelling arguments in support of their positions. The Board and the County 
Treasurer urge restitution principles set out in the Restatement of Restitution 
and the so-called "budget defense." They also bring to our attention the 
doctrine of laches and statutes of limitation. Finally the Board and the County 
Treasurer contend that a retroactive application of our decision would result in 
a great financial burden on the county and spawn a multitude of claims and 
lawsuits by other taxing entities in the county and throughout the entire state. 
A combination of several of these principles leads us to conclude that our 
decision on interest should be prospective only.

[¶61]   Restatement of Restitution § 142 
(1937) provides, in part:

(1) The right of a person 
to restitution from another because of a benefit received is terminated or 
diminished if, after the receipt of the benefit, circumstances have so changed 
that it would be inequitable to require the other to make full 
restitution.

(2) Change of 
circumstances may be a defense or a partial defense if the conduct of the 
recipient was not tortious and he was no more at fault for his receipt, 
retention or dealing with the subject matter than was the claimant.

Restatement of 
Restitution, supra, § 142, comment b provides, in part:

Any change of 
circumstances which would cause or which would be likely thereafter to cause the 
recipient entire or partial loss if the claimant were to obtain full 
restitution, is such a change as prevents full restitution if the recipient was 
not guilty of a tort nor substantially more at fault than the 
claimant.

[¶62]   The County Treasurer contends she 
acted in good faith in interpreting Wyo. Stat. § 21-13-207. Her interpretation 
was consistent with the interpretation of the former supervisor of accounting 
for the School District, to the effect that no interest on school funds would be 
payable to the School District unless payment was not made on the second Monday 
of each month when funds are required by statute to be apportioned to school 
districts.5 Wyo. Stat. § 21-13-207.

[¶63]   It appears that the Board and the 
County Treasurer are not "substantially more at fault" than the School District 
and that it would be inequitable to require the Board and the County Treasurer 
to now reimburse the School District for interest earned on tax collections 
which the Board and the County Treasurer in good faith believed they were 
entitled to and after the Board and the County Treasurer changed their position 
by budgeting and spending interest earnings for the benefit of taxpayers in the 
county.

[¶64]   Wyo. Stat. § 21-13-207 was amended 
in 1983; however, the School District did not make any request for interest on 
school funds until April 13, 1987. Arguably, the School District is guilty of 
laches which would militate against recovery of the interest that was earned 
between June 1983 and April 1987.

[¶65]   Restatement of Restitution § 62 
(1937) provides:

A person otherwise 
entitled to restitution of a benefit conferred by mistake is disentitled thereto 
if restitution would seriously impair the protection intended to be afforded by 
common law or by statute to persons in the position of the transferee or of the 
beneficiary, or to other persons.

[¶66]   Comment a to the Restatement 
states, in part:

A person who has 
benefited at the expense of another ordinarily is under a duty of restitution * 
* *. There are some situations, however, where a person who has knowingly 
benefited at the expense of another is entitled to keep what he has received 
without liability * * *. The rule stated in this Section is * * * for the 
protection of the recipient * * *.

(Emphasis 
added.) Comment b to the Restatement provides, in part:

The rule may also apply 
in the protection of the citizens of a community where a contract which is 
contrary to the provisions of a statute has been made by its officers on its 
account. * * * Likewise, where a statute provides a debt limit beyond which it 
is illegal for a municipality to go, a person lending money to a municipality in 
excess of such limit may not be entitled to restitution. * * * [W]here a 
municipality has received money in excess of the debt limit, restitution may be 
granted if the money has not been used * * *.

(Emphasis 
added.) The committee who wrote Restatement of Restitution, supra, § 62 
may not have had circumstances in mind similar to the case before us; however, 
the general principles discussed have some application.

[¶67]   The "budget defense" is an 
application of general restitution principles to specific circumstances. The 
"budget defense" may be defined in several ways. "A good faith recipient of a 
benefit can be excused from restitution if he has, albeit only partially, 
changed his position in such a way as to make it inequitable that he should 
restore it." Graham Douthwaite, Attorney's Guide to Restitution, § 9.2 at 
369 (1977) (footnote omitted). See also, Messersmith v. G.T. Murray & 
Co., 667 P.2d 655 (Wyo. 1983); Westamerica Securities, Inc. v. 
Cornelius, 214 Kan. 301, 520 P.2d 1262 (1974); Moritz v. Horsman, 305 
Mich. 627, 9 N.W.2d 868 (1943); and Restatement of Restitution, supra at 
§§ 69 and 142.

[¶68]   The broad general principle of the 
"budget defense" indicated above is adopted in this case but limited to the 
situation here involving two taxing units litigating over entitlement to funds 
under circumstances where both units have received and expended that for which 
they budgeted.6 Messersmith, 667 P.2d  at 657 
stated:

[M]oney paid under a 
mistake of fact, which would not otherwise have been paid, may be recovered 
unless the payee has changed his position to the extent that it would be unjust 
to require a refund. Akerson v. Gupta, 458 F. Supp. 189 (E.D.Mo. 1978). * 
* * So long as the parties can be returned to the status quo, courts should 
strive to achieve such a result. However, if the payees suffer damage as a 
result of a mistake made by the broker, recovery by the broker may be barred to 
the extent of the damage.

In the case 
before us, however, the Board and the County Treasurer have changed their 
position in that they have budgeted for and expended the interest improperly 
withheld. Messersmith seems to support the reverse of the circumstances 
in that case.

[¶69]   In Oklahoma Tax Com'n, 789 P.2d  at 1289-90, on facts similar to the case here, Oklahoma City sued to 
recover interest earned on city taxes collected by the Oklahoma Tax Commission. 
The court held that a state constitutional provision required that interest 
earned by investment of tax revenues must be used for the same purpose as the 
tax. Id. at 1292. With respect to interest previously earned, the 
Oklahoma court did not make its decision retroactive, and explained: "[A]ll 
monies representing interest earned from the investment of municipal sales taxes 
have been appropriated. There is no fund from which the interest earned can be 
recovered. Therefore, although the cause is reversed, there is no remedial 
action which could be taken on remand." Id. at 1295.

[¶70]   In Choctaw Nation v. State, 
490 F.2d 521, 525-26 (10th Cir.), cert. denied, 417 U.S. 946, 94 S. Ct. 3070, 41 L. Ed. 2d 666 (1974), investment income realized on money in the 
permanent school fund had been periodically distributed to and spent by schools. 
The Tenth Circuit Court of Appeals held against the claimant. Since the interest 
earnings had been distributed and spent by the schools, no claim for damages was 
allowed. Id. at 525-26.

[¶71]   We are cognizant of the Board's and 
the County Treasurer's other arguments against retroactive application of our 
decision, such as statutory budget and audit procedure and receipt of money not 
budgeted for. In view of our holding against retroactive application, we need 
not address other arguments against retroactive application. The county 
treasurers in Wyoming's twenty-three counties collect taxes for numerous 
entities. The various school districts receive large amounts of revenues 
collected by the county treasurers. However, other entities, such as cemetery 
districts, fire protection districts, weed and pest control districts and 
others, also receive funds collected by county treasurers. Were we to provide 
for retroactive application to our decision, scores of taxing entities may have 
a claim for interest earned on funds belonging to such taxing entities. The 
result of retroactive application may be numerous accounting and auditing 
problems; also, a multitude of claims and litigation, some of which may not be 
cost effective insofar as the taxpayer is concerned. Our decision is to have 
prospective application.

CONCLUSION

[¶72]   Interest is an accretion or 
increment to the principal fund earning it and the interest follows the fund. As 
soon as funds are collected by the County Treasurer, they belong to the School 
District and interest earned on those funds also belongs to the School 
District.

[¶73]   Depending on the circumstances, 
including the amount of monies held and the length of time they are held, 
investing these funds may be required in order to comply with the County 
Treasurer's fiduciary duties. Because of equitable considerations and the 
practical aspect of eliminating or reducing litigation, this decision is to be 
applied prospectively.

[¶74]   Affirmed with prospective 
application.

Footnotes

*Retired July 6, 1994.

**Chief 
Justice at time of oral argument.

1 The School District's 
complaint also included a mandamus claim.

2 Components of the 
so-called "County School Fund" of Wyo. Stat. § 21-13-207 (1992):

(A) A six mill county 
levy authorized by Wyo. Stat. § 21-13-201 (1992);

(B) Fines and forfeitures 
belonging to the school district authorized under Wyo. Stat. § 21-13-206 (1992); 
Wyo. Const. art. 7, § 5;

(C) Taylor Grazing Act 
funds authorized under Wyo. Stat. § 9-4-402 (1991);

(D) A general county 
school tax authorized by Wyo. Stat. § 21-13-205 (1977) (repealed by Wyo. Sess. 
Laws ch. 43, § 2 (1981)) (some funds before repeal may be involved);

(E) Federal Forest 
Reserve funds authorized under Wyo. Stat. §§ 9-4-501 through 9-4-504 
(1991).

School District Property 
Tax Levies:

(A) A twenty-five mill 
school district levy authorized by Wyo. Stat. § 21-13-102(a)(i)(A) (1992 & 
Cum.Supp. 1994);

(B) An optional school 
district levy of up to three mills authorized by Wyo. Stat. § 
21-13-102(a)(i)(B);

(C) An optional school 
district levy of up to two and one-half mills for vocational and adult education 
authorized by Wyo. Stat. § 21-12-103 (1992);

(D) An additional three 
mill levy for capital facility repair, maintenance or renovation authorized 
under Wyo. Stat. § 21-13-102(a)(i)(C)(I) and (II);

(E) A one-half mill 
special school district tax for Board of Cooperative Educational Services 
(BOCES) authorized under Wyo. Stat. § 21-20-109 (1992).

Property Tax Substitutes 
and Reimbursements:

(A) Motor vehicle taxes 
and fees authorized under Wyo. Stat. § 31-18-201 (1994) and Wyo. Stat. §§ 
31-3-101 through 31-3-103 (1994);

(B) Car company taxes 
levied by the State Board of Equalization and disbursed to the county treasurer 
authorized under Wyo. Stat. § 39-2-207 (1994);

(C) Reimbursements from 
the state treasurer to the county treasurer for home owner's tax credits 
(homestead exemption) authorized under Wyo. Stat. § 39-1-204 (1994);

(D) Reimbursements from 
the state treasurer to the county treasurer for veteran's exemptions authorized 
under Wyo. Stat. § 39-4-103 (1994).

School District Property 
Tax Levies for School Bond Retirement:

(A) A levy for building 
and reserve fund authorized under Wyo. Stat. § 21-13-501 (1992);

(B) Variable school 
district levy for the principal and interest on bonds authorized under Wyo. 
Stat. § 21-13-713 (1992).

The 
school district's proportionate share of delinquency interest collected from 
taxpayers under Wyo. Stat. § 39-3-101 (1994).

3 See footnote two - 
school district property tax levies.

4 Wyo. Stat. § 39-4-101 
states, in pertinent part:

(a) The county treasurer 
shall keep accurate records of taxes collected for each governmental entity for 
which a tax levy is made pursuant to W.S. 39-2-401 and shall pay the taxes 
collected to the treasurer of each governmental unit or settle accounts with the 
county commissioners as hereafter provided:

* * * * * *

(iv) To school districts 
as provided by W.S. 21-13-207;

(v) On the second Monday 
of each month including all interest received in the cases of community 
colleges;

(vi) On November 10, 
January 10 and May 10 for all other governmental entities.

* * * * * *

(c) Upon sale of property 
for the nonpayment of taxes, the proceeds thereof shall be distributed as 
follows:

(i) The portion 
attributable to school district levies is payable to the proper school 
district;

(ii) The portion 
attributable to a levy by a city or town is payable to the proper city or 
town;

(iii) The balance is 
payable to the county general fund.

5 We previously determined 
that the hearsay testimony of the former supervisor of accounting for the School 
District was incompetent regarding the interpretation of Wyo. Stat. § 21-13-207; 
however, it may be relevant and competent to show the good faith of the County 
Treasurer.

6 The "budget defense," 
without denominating it as such, was employed in Fall River Joint Union High 
School Dist. v. Shasta Union High School Dist., 104 Cal. App. 444, 285 P. 1091 
(1930).