Title: Campbell County School Dist. No. 1 v. Board of County Com'rs of County of Campbell

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Campbell County School Dist. No. 1 v. Board of County Com'rs of County of Campbell1994 WY 122884 P.2d 960Case Number: 93-245Decided: 11/07/1994Supreme Court of Wyoming
CAMPBELL COUNTY SCHOOL 
DISTRICT NO. 1,

Appellant 
(Plaintiff),

v.

The BOARD OF COUNTY 
COMMISSIONERS OF the COUNTY OF CAMPBELL; and Campbell County Treasurer, in her 
official capacity,

Appellees 
(Defendants).

Appeal from District 
Court, Campbell County, Dan R. Price, II, J.

 

Representing 
Appellant:

Francis E. Stevens of 
Stevens, Edwards and Hallock, P.C., Gillette.

Representing 
Appellees:

Russell A. Hansen, 
Campbell County Atty., Gillette.

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

*Retired 
July 6, 1994.

**Chief 
Justice at time of oral argument.

BROWN, Justice, 
Retired.

[¶1]      This case 
involves litigation between Campbell County School District No. 1 and the Board 
of County Commissioners of the County of Campbell and the Campbell County 
Treasurer with respect to the proper allocation of interest paid by taxpayers on 
delinquent taxes collected by the county treasurer.

[¶2]      Appellant, 
Campbell County School District No. 1 (School District), filed a complaint 
according to the Wyoming Declaratory Judgment Act against appellees, The Board 
of County Commissioners of the County of Campbell (Board) and the Campbell 
County Treasurer (County Treasurer). The complaint set forth claims regarding 
delinquency interest on taxes collected by the County Treasurer. The parties 
submitted stipulated facts and filed a joint motion for certification of issues 
to this court. The district court certified the issues specified by the parties 
to this court. The certified questions are:

ISSUE 1. Is Campbell 
County School District entitled to its proportionate share of the delinquency 
interest on taxes collected pursuant to Wyo. Stat. § 39-3-101, (Supp. 
1990)?

ISSUE 2. If the answer to 
Issue 1 is in the affirmative, is Campbell County School District entitled to 
judgment against the Board of County Commissioners of Campbell County for its 
proportionate share of interest received by the county since July 1, 
1989?

ISSUE 3. If the answer to 
Issue 2 is affirmative, is Campbell County School District entitled to 
prejudgment interest?

ISSUE 4. Does the 
Governmental Claims Act, Wyo. Stat. § 1-39-101, (Supp. 1988), et seq., apply to 
Issues 1, 2, and 3?

[¶3]      The County 
Treasurer is charged with receiving and distributing taxes from levies provided 
by statute for various entities within Campbell County, including the School 
District. Interest on delinquent taxes is provided for at eighteen percent per 
annum pursuant to Wyo. Stat. § 39-3-101(b) (1994). Before July 5, 1989, the 
County Treasurer was paying the School District its proportionate share of the 
interest received on the delinquent taxes.

[¶4]      On July 5, 1989, 
the Board voted to change the policy of allocating interest collected with 
delinquent taxes to various entities, including the School District. A 
determination was made that the delinquent interest collected by the County 
Treasurer should be credited to the county's general fund. The School District 
was notified of that decision by a letter dated July 14, 1989 from the County 
Treasurer. From July 1, 1989 to the present, the County Treasurer has received 
interest paid by taxpayers on delinquent taxes pursuant to Wyo. Stat. § 
39-3-101.1 The interest received has been 
placed in the county's general fund and not paid to the School 
District.

[¶5]      Since July 1, 
1989, the County Treasurer has received interest on delinquent taxes on school 
district bond levies for principal sums established pursuant to Wyo. Stat. § 
21-13-713 (1992). The interest for those delinquent taxes has also been placed 
in the county's general fund and not paid to the School District's bond and 
interest accounts.

[¶6]      The July 1989 
decision to deposit delinquent tax collections into the county general fund was 
counselled by an Attorney General's memorandum opinion and by a formal Attorney 
General's opinion expressing similar guidance to state governmental officers. 
With the circulation of the memorandum opinion, the School District requested 
assurance that the County Treasurer was adhering to the specifications of that 
memorandum opinion. The opinions from the Attorney General, especially the 
formal opinion to the State Treasurer and State Auditor, resulted in an open 
meeting consideration of the resolution of July 5, 1989. Delinquency interest 
collections by the County Treasurer were thereafter placed in the county's 
general fund and budgeted and spent accordingly.

[¶7]      Correspondence 
dated February 14, 1991 was sent from Ed L. Wright, the School District's 
Associate Superintendent for Instructional Support, to the Board and the County 
Treasurer questioning their policy with respect to the delinquency interest. On 
July 16, 1993, the School District submitted an itemized demand for those sums 
claimed to be due as interest on delinquent taxes. The claim was denied by the 
Board. The School District's complaint was filed and the issues were certified 
to this court.

[¶8]      Bd. of Co. 
Com'rs of the County of Laramie v. Laramie County Schl. Dist. No. One, 884 P.2d 946 (Wyo. 1994) (hereinafter referred to as "Laramie County School Dist. 
No. One") was published contemporaneously with this case. Laramie County 
School Dist. No. One involved interest earned when the county treasurer 
collects a wide variety of taxes and interest on other revenues belonging to a 
school district. The case before us concerns a narrower issue; that is, the 
additional amount paid by taxpayers when delinquent taxes are paid. However, 
many of the things said in Laramie County School Dist. No. One are 
applicable here.

INTEREST ON DELINQUENT 
TAXES

[¶9]      In certified 
question number one, we are asked:

Is Campbell County School 
District entitled to its proportionate share of the delinquency interest on 
taxes collected pursuant to Wyo. Stat. § 39-3-101, (Supp. 1990)?

[¶10]   In Laramie County School Dist. 
No. One, we considered the problem of interest with respect to seventeen or 
more different funds belonging to school districts. Laramie County School 
Dist. No. One, 884 P.2d  at 951 n. 2. We held that interest earned from taxes 
constituting elements of the "county school fund" and interest 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 (1992). Laramie County School Dist. No. One, 884 P.2d  at 
952.

[¶11]   In Laramie County School Dist. 
No. One, we identified interest from taxes and other revenues, the 
disposition of which was not specifically provided for by statute. Id. at 952. 
The disposition of interest on delinquent taxes, Wyo. Stat. § 39-3-101, is not 
specifically provided for by statute. In Laramie County School Dist. No. 
One, 884 P.2d  at 952, we determined that the disposition of interest not 
specifically provided for by statute, including delinquency interest, was an 
accretion or increment to the fund earning such interest and follows those 
funds.

[¶12]   Tacoma School Dist. No. 10 v. 
Hedges, 13 Wn. 69, 42 P. 522 (1895) supports our determination. The 
Washington Supreme Court, after stating the general rule that absent any statute 
to the contrary, the penalty and interest follow the tax, succinctly stated: "It 
follows that the rule first stated must obtain, and that it must be held that 
the penalty and interest are a part of the tax collected, and must be disposed 
of with it." Id. at 523.

[¶13]   A function of the legislature is to 
allocate and direct the payment of interest on delinquent taxes. Riverton 
Valley Drainage Dist. v. Board of County Com'rs of Fremont County, 52 Wyo. 
336, 74 P.2d 871, 875 (1937). In Riverton Valley Drainage Dist., 74 P.2d  
at 873 (quoting 61 C.J. 1528), we held that "`unless otherwise directed, 
interest, penalty and costs collected on delinquent taxes follow the tax, and go 
to the state, county or city, according as the one or the other is entitled to 
the tax itself.' That has been held to be true in the case of a drainage or 
similar district."

[¶14]   The Wyoming legislature, however, 
has made no provision for any allocation of the interest on delinquent taxes in 
Wyo. Stat. § 39-3-101 or in any related provisions. Absent that direction, the 
general rule applies which, logically, is that the interest on the delinquent 
taxes follows the tax. The reason for the rule that the interest follows the tax 
is that the entity entitled to the tax monies suffers the loss of revenue from 
nonpayment of taxes.

[¶15]   The rule was addressed in an action 
involving the allocation of interest on delinquent taxes between the State of 
Colorado and a county within Colorado. The Court of Appeals of Colorado followed 
the general rule in stating:

As the state owns the tax 
withheld, as it suffers the loss and inconvenience through its being in default, 
as our statute makes no express disposition of the interest accruing during the 
delinquency, we think it reasonable, just, and in accordance with the 
legislative intent that the interest should follow, and does follow, the tax * * 
*.

Board of 
Com'rs of County of Prowers v. People, 17 Colo. App. 519, 69 P. 73, 74 (1902).

[¶16]   The interest on the delinquent 
taxes is not the revenue of the county and the county is without authority to 
withhold this interest from the school district. On those taxes assessed for 
separate entities such as the school district, the county merely acts as a 
trustee and agent for collection. As trustee and agent for collection, it must 
pay over all sums collected. City of New Orleans v. Fisher, 180 U.S. 185, 
195-98, 21 S. Ct. 347, 352, 45 L. Ed. 485 (1901); Board of Educ. of Granite 
School Dist. v. Salt Lake County, 659 P.2d 1030, 1035 (Utah 
1983).

[¶17]   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." Taxes must be "applied" for the purpose for which they are levied. As 
the authority cited herein establishes the general rule that the interest is 
part of the taxes, the interest on the taxes must be "applied" for the same 
purpose.

[¶18]   Courts in other states have applied 
similar constitutional provisions and set aside the diversion of interest on 
school district funds as being improper. Mears v. Little Rock School 
Dist., 268 Ark. 30, 593 S.W.2d 42 (1980); Independent School Dist. No. 1 
of Tulsa County v. Board of County Com'rs of Tulsa County, 674 P.2d 547 
(Okla. 1983). These cases, although not distinguishing between general school 
taxes, school bond taxes, or addressing interest on delinquent taxes, held that 
interest, whether it be earned on the tax while held by the treasurer or paid 
with delinquent taxes by the taxpayer, is part of the tax levied and should be 
applied in the same manner. Mears, 593 S.W.2d  at 44; Independent 
School Dist. No. 1 of Tulsa County, 674 P.2d  at 550.

[¶19]   The Board contends that the express 
mention of the payment of interest to community colleges in Wyo. Stat. § 
39-4-101(a)(v) (1994) is a directive to not pay interest to the school 
districts.2 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). 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. The 
School District contends that it would have been redundant to include interest 
in Wyo. Stat. § 39-4-101(a)(iv).

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.

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.

Laramie 
County School District No. One, 884 P.2d  at 
956.

[¶20]   We answer certified question number 
one as: Yes, the School District is entitled to its proportionate share of the 
delinquency interest collected pursuant to Wyo. Stat. § 39-3-101.

[¶21]   In certified question number two, 
we are asked:

If the answer to Issue 1 
is in the affirmative, is Campbell County School District entitled to judgment 
against the Board of County Commissioners of Campbell County for its 
proportionate share of interest received by the county since July 1, 
1989?

[¶22]   We have recognized the propriety of 
judgments regarding tax allocation questions between governmental entities. 
Simons v. Laramie County School Dist. No. One, 741 P.2d 1116, 1117 (Wyo. 
1987); Board of Com'rs of Big Horn County v. Byron Drainage Dist., 52 
Wyo. 417, 75 P.2d 759, 764 (1938); Riverton Valley Drainage Dist., 74 P.2d  at 876. A judgment against the Board would be proper in this case except we 
have decided, for reasons we will explain, that our decision here should be 
prospective.

[¶23]   In Laramie County School Dist. 
No. One, 884 P.2d  at 956, we determined that the school district was 
entitled to interest earned by tax revenues and delinquencies. In that case, 
however, we determined our decision should be prospective. In support of the 
prospective application, we considered restitution principles set out in 
Restatement of Restitution §§ 62 and 142 (1937). Laramie County School Dist. 
No. One, 884 P.2d  at 957-959. We also considered a variation of the 
so-called "budget defense." Id. at 959. Finally, we took into 
consideration the financial burden on the county and the potential for a 
proliferation of litigation. Id. at 957-959. A combination of these 
principles caused us to determine that our decision regarding interest be 
prospective. Id. at 959.

[¶24]   In addition to the combination of 
principles contained in Laramie County School Dist. No. One, we must 
consider the good faith reliance by the County Treasurer upon advice from the 
Attorney General to the effect that the County Treasurer was in fact 
distributing monies in compliance with the law. We conclude, therefore, a 
fortiori that our opinion here be prospective.

[¶25]   In certified question number three, 
we are asked:

If the answer to Issue 2 
is affirmative, is Campbell County School District entitled to prejudgment 
interest?

We have not 
provided for a money judgment in this case; it necessarily follows that 
prejudgment interest need not be considered.

WYOMING GOVERNMENTAL 
CLAIMS ACT

[¶26]   The fourth certified question asks 
whether the Governmental Claims Act is applicable to the School District's 
claims. In Laramie County School Dist. No. One, 884 P.2d  at 951, we held 
that the Wyoming Governmental Claims Act (Wyo. Stat. §§ 1-39-101 through 
1-39-120 (1988 & Cum.Supp. 1994)) was not applicable to an action between 
two governmental entities (Laramie County School District No. One and Laramie 
County) when the relief sought was a declaration of rights and liabilities and 
for the recovery of monies that should have been distributed to the school 
district in the first instance. In support of our determination in that case, we 
cited Simons, 741 P.2d  at 1119.

[¶27]   Consistent with our decision in 
Laramie County School Dist. No. One, we hold that the Wyoming 
Governmental Claims Act is not applicable to the claims in this 
case.

SUMMARY

[¶28]   We answer the certified questions 
as follows:

ISSUE 1. Is Campbell 
County School District entitled to its proportionate share of the delinquency 
interest on taxes collected pursuant to Wyo. Stat. § 39-3-101, (Supp. 
1990)?

ANSWER: 
Yes.

ISSUE 2. If the answer to 
Issue 1 is in the affirmative, is Campbell County School District entitled to 
judgment against the Board of County Commissioners of Campbell County for its 
proportionate share of interest received by the county since July 1, 
1989?

ANSWER: Yes, but for 
equitable reasons, judgment not proper.

ISSUE 3. If the answer to 
Issue 2 is affirmative, is Campbell County School District entitled to 
prejudgment interest?

ANSWER: Not 
applicable.

ISSUE 4. Does the 
Governmental Claims Act, Wyo. Stat. § 1-39-101, (Supp. 1988), et seq., apply to 
Issues 1, 2, and 3?

ANSWER: 
No.

Footnotes

1 The tax levies involved 
are:

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

(D) A school capital 
maintenance levy authorized by Wyo. Stat. § 21-13-102(a)(i)(C).

(E) A Board of 
Cooperative Educational Services (BOCES) levy authorized by Wyo. Stat. § 
21-20-109(a) (1992).

(F) A general county 
school tax authorized by Wyo. Stat. § 21-13-205 (1977) (repealed by Wyo. Sess. 
Laws ch. 43, § 2 (1981)).

2 Wyo. Stat. § 39-4-101 
provides, 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 case 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.

(Emphasis 
added.)