Case Name: Park v. Rural Special School District No. 26
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1927-05-02
Citations: 173 Ark. 892
Docket Number: 
Parties: Park v. Rural Special School District No. 26.
Judges: 
Reporter: Arkansas Reports
Volume: 173
Pages: 892–898

Head Matter:
Park v. Rural Special School District No. 26.
Opinion delivered May 2, 1927.
Reed & Beard, for appellant.
Chas. A. Walls, for appellee.

Opinion:
Kirby, J.,
(after stating the facts). Appellant contends, first, that the court should have enjoined the issuance of the bonds by the school district until the petition to the county board of education for dissolution of the district was finally determined. This contention is without merit, since that board had no authority to dissolve a special school district formed by an act of the Legislature. School District No. 25 v. Pyatt Special School Dist., 172 Ark. 602.
It is next contended that the board was without power to issue bonds, not having been given authority to do so by the election held. Section 3 of act 291 of the acts of 1925 provides:
"Said Rural Special School District No. 26 of Lonoke County, Arkansas, shall be governed by all the general laws of the State relative to rural special school districts and shall have all the rights, powers and duties now conferred upon rural special school districts to borrow money, to issue bonds and negotiable evidences of debt, to acquire a site for a school- building or school buildings, and to carry on the general business of said district, and the said board shall possess all other rights now exercised or possessed by. rural special districts under the general law governing said, districts; provided, however, that, if -the board of directors of said Rural Special School District No. 26 of Lonoke County shall deem it necessary and to the best interest of said district to issue bonds or other negotiable evidences of indebtedness, prior to the annual school election to be held in May, 1925, it shall have power and authority to issue said bonds or negotiable evidence of indebtedness in such sum as it finds necessary in order to properly construct and .equip a school building in said district, without submitting the question to the electors in said district, and said board shall have full authority to pledge such part of the annual school tax as may be necessary for that purpose. Any bonds or other negotiable evidences of indebt edness issued under authority of this act otherwise shall be governed by the general laws of the State relating to rural special school districts."
By the terms of this act the. board of directors is given authority to issue bonds or other negotiable evidences of indebtedness, to borrow money for the construction of school buildings for the district, if done before the date of the annual school election to be held in May, 1925, without submitting the question to the electors of the district, and to pledge such part of the annual school tax as might be necessary for that purpose. If the bonds were not issued before that date, however, the board could only acquire authority to issue them by an election held under the general laws relating to rural special school districts, as provided in the last sentence of said § 3. Bonds issued without authority of the electors are absolutely void, of course. Rural Special School Dist. No. 30 v. Pine Bluff, 142 Ark. 279, 218 S. W. 661; Robertson v. Rural Spl. Sch. Dist. No. 9, 155 Ark. 161, 244 S. W. 15.
Section 8840, C. & M. Digest, provides that rural special school districts shall have the power to borrow money for building purposes if authorized by a vote of a majority of the electors of the district. "Such voté may be 'For building fund' or 'Against building fund,' and shall state the amount of the building fund tax which the voter desires levied. If a majority of the votes cast are 'For building fund' it. shall be equivalent to voting a building tax of the amount or rate as determined by this section for each succeeding year until the money borrowed by the board of directors pursuant to such vote, together with all the interest thereon, shall have been fully paid. When a building fund has 'been specially voted for, as provided in this section, the boiard of directors may borrow money and mortgage the real property of the district as security therefor, under such conditions and regulations as to amount, time and manner of payment as the board of directors shall determine, and may, from time to time, renew or extend any evidence of indebtedness or mortgage issued or executed hereunder."
This section also provided a form of a certificate to be issued by the board of directors to the lender of the money, showing the result of the election and the amount of the money borrowed, the terms of the loan, with the rate of interest, and that it is to be paid from funds arising from the amount of tax voted therefor, to be levied annually upon the property of the district.
This certificate is required to be executed in triplicate, signed by a majority of the board, which retains one copy, delivers another to the lender, and must file the third with the clerk of the county court, which court is required to levy, each succeeding year, a building tax of the rate voted for against the property in the district until the amount borrowed, with interest thereon, has been fully paid. Section 8841, C. & M. Digest.
This certificate is not the "bond or other evidences of indebtedness" authorized to be given for the money borrowed under said § 3 of act 291, already set out. Even if it could be held to be the form of bond or evidences of indebtedness intended to be required executed for money authorized to he borrowed by the election held under said section, which wo do not think is the case, and is not necessary to decide, since the said act provides for the issuance of "bonds or other negotiable evidences of indebtedness" for the money borrowed upon the election held authorizing it to be done.
These bonds would ordinarily be issued in commercial form, as usual in the regular course of business, in accordance with the agreement between the parties, secured by the mortgage authorized to be executed, and the lender's copy of the said certificate required to be issued would necessarily be transferred to the holder of the bonds, as additional security and identification of the owner of the bonds, since the county treasurer is authorized to pay the money collected into the treasury from the tax levied for the building fund to the holder of the certificate upon demand.
It is finally contended that the contract for sale of the bonds is in violation of the statute authorizing the money to be borrowed and tlie bonds issued, since it provides for the payment of a brokerage fee. of $400 for sale of the bonds, which, appellant insists, amounts to a sale for less than par value and is an evasion of the law.
The statute gives the board of directors the power to issue and sell the bonds at not less than their par value,, with, interest thereon at 6 per cent., the prescribed rate, which carries with it the implied authority to pay a broker to sell the bonds or to assist the commissioners in doing so, when regarded necessary, and the payment of a reasonable commission is incidental-to the express authority to sell coming fairly within the scope of the power-granted, and does not constitute a sale at a discount, within the meaning of the law. Arkansas Foundry Co. v. Stanley, 150 Ark. 127, 233 S. W. 922.
We find no prejudicial error in the record, and the decree is affirmed.