Title: Sanders v. Folsom
Citation: 104 Ariz. 283, 451 P.2d 612
Docket Number: 9463
State: Arizona
Issuer: Arizona Supreme Court
Date: March 6, 1969

104 Ariz. 283 (1969) 451 P.2d 612 Charles E. SANDERS, Jr., Gloria Willson and Canuto Sena, President, Clerk and Member respectively of the Board of Trustees of Naco Common School District No. 23, Cochise County, Arizona, ex rel. Naco School District No. 23, Cochise County, Arizona, a body politic, Petitioners, v. Sarah FOLSOM, State Superintendent of Public Instruction, Respondent. No. 9463. Supreme Court of Arizona. In Banc. March 6, 1969. *285 Richard J. Riley, Cochise County Atty., Alan L. Slaughter, Deputy County Atty., Bisbee, for petitioners. Gary K. Nelson, Atty. Gen., Alvin E. Larson, Special Asst. Atty. Gen., Phoenix, for respondent. McFARLAND, Justice. The Board of Trustees of Naco Common School District No. 23, Cochise County, Arizona, hereinafter referred to as Naco, filed an application for writ of mandamus, seeking to compel the State Superintendent of Public Instruction, hereinafter referred to as Superintendent, to provide Naco with $90,957.01 which was tentatively allocated by the Superintendent to Naco as "state financial assistance" under A.R.S. § 15-1223. The Superintendent refused to disburse the above stated amount of "financial assistance" because the board of supervisors had levied a tax rate of only three cents per one hundred dollars of assessed valuation on the taxable property in the Naco School District. The Superintendent justified withholding disbursal of the funds because she interpreted the pertinent statute as requiring an actual levy of twenty cents per one hundred dollars of assessed valuation in order for a school district to qualify for "financial assistance". The pertinent provision of the statutes is found in A.R.S. § 15-1221, subsec. 6 and reads as follows: On question to be answered is whether the above statutory provision requires an actual levy of a tax rate of at least twenty cents per one hundred dollars assessed valuation in order for a school district to qualify for state "financial assistance". We must construe the meaning of that part of A.R.S. § 15-1221, subsec. 6 which reads, "The district tax rate used for determining eligibility for financial assistance shall be computed exclusive of any financial assistance received by the district." The sentence implies that a "tentative" tax rate should be calculated for the current year exclusive of "financial assistance". Then the actual tax rate could be calculated based on the amount of "financial assistance" to be received by the district. The above meaning is contradicted, though, by the mandate that the minimum qualifying tax rate be levied "* * * as a condition the district must meet to be eligible for participation in the state school financial assistance monies for the current year." (Emphasis added.) Also, elementary districts that are not in a high school district "* * * shall have levied an additional ten cents levy in each such district, if the district is to qualify for financial assistance to pay tuition for high school pupils." (Emphasis added.) See also A.R.S. § 15-1224. In construing a revenue statute, this Court has said: The conclusion, then, to be drawn from the above provisions is that a school district be required to pay either ten cents or, as in this case, twenty cents per one hundred dollars assessed valuation to qualify for "financial assistance" in the current year. This interpretation is verified by reading the pertinent provision in A.R.S. § 15-1223, subsec. B 4: Obviously this can only mean that the minimum amount set forth in A.R.S. § 15-1221 must be levied and collected. It is provided in A.R.S. § 15-1225 that: This provision would be surplusage if it wasn't the legislative intent that the school districts share the burden of education by paying a minimal rate of tax and there could be no "overage" if there was no limitation on the amount to be disbursed. Therefore, no matter what amount may be appropriated for any district, it is incumbent on the Superintendent to disburse no more than that amount which will reduce a district tax rate to the minimum set forth in A.R.S. § 15-1221. This is made clear by a subsequent article of the Education Act which concerns "state equalization aid". In A.R.S. § 15-1228.01, prescribing the formula for distribution of equalization monies, we find the following provision: We could hardly ascribe to the legislature an intent to limit state funds to an amount calculated to reduce the district tax rate to a "floor" of ten cents per hundred dollars assessed valuation and simultaneously to give, under A.R.S. § 15-1221, state funds in such an amount as to "wipe out" any tax responsibility by the school districts. It is our construction that the statutes involved here were intended to raise the standards of education to an equal plane throughout the entire state and, similarly, to establish a uniform rate of tax in every school district in the state ten cents per one hundred dollars assessed valuation in every "common school district" and "high school district" and twenty cents per one hundred dollars assessed valuation in every "common school district not in a high school district that pays tuition for high school pupils residing in such district." Thus, it is the obligation of the Superintendent to distribute funds, under both Article 2.1 and Article 2.2 of Chapter 12, *287 15 A.R.S., only in such amounts as to maintain the foregoing standard tax rates. This construction requires a levy of ten cents for common school districts not in a high school district and an additional ten cents where such district pays high school tuition, which makes the total of twenty cents per one hundred dollars assessed valuation. This is proper for it places those taxpayers, such as in the Naco School District, on the same footing as taxpayers in a "common school" and "high school" district who pay ten cents on one hundred dollars assessed valuation to each district. Thus, as we have stated, it is the administrative duty of the Superintendent to disburse "financial assistance" and "equalization" funds in a manner calculated to maintain the minimum tax obligations of the various school districts. The question then is whether the Naco School District should now be deprived of the benefits of the state funds when it fully complied with all the provisions of the act. A.R.S. § 15-1201, as amended, provides: In accordance with A.R.S. § 15-1201, as amended, the Naco School District prepared, on the form furnished by the State Superintendent of Public Instruction, a proposed budget for the current fiscal year, which contained all the information required by A.R.S. § 15-1201 and other information required for county, state and special assistance. This budget was presented to the taxpayers as provided for in A.R.S. § 15-1202, as amended, at a meeting of the board of trustees and, in accordance with § 15-1202, was adopted by the board of trustees before the 10th day of July and filed by the board of trustees prior to the 12th day of July, in triplicate, with the county school superintendent, who immediately transmitted a copy to the Board of Supervisors of Cochise County and a copy to the Superintendent. The budget also included anticipated revenues from all sources, as provided for in the form supplied by the Superintendent, including the anticipated $90,957.01 figure which had been supplied by the Superintendent. This budget was transmitted to the board of supervisors for levy as provided for in A.R.S. § 15-1236, which reads as follows: Therefore, the district completed all of the steps for the action of the board of supervisors before the 12th day of July, 1967, evidently with the full expectation that the board of supervisors would make the proper levy under A.R.S. § 15-1221. It then became the duty of the board of supervisors under A.R.S. § 15-1236 to have made a levy to meet this budget and to fully comply with A.R.S. § 15-1221, subsec. 6, which required a levy of ten cents per one hundred dollars assessed valuation for common school purposes and ten cents per one hundred dollars assessed valuation for high school purposes. They then could have anticipated the balance of the budget would be supplied from the Financial Assistance Act under A.R.S. § 15-1223. The law was new and the board of supervisors, through a misunderstanding from information *288 furnished, made a mistake and did not make the proper levy. Under A.R.S. § 15-1225, as amended, the district would have received the difference of the monies received from the regular state and county assistance plus the amount of money provided for in the levy of twenty cents per one hundred dollars assessed valuation up to and including the total sum of the budget. However, the board of supervisors failed to make the levy in accordance with the law. They used the $90,957.01 figure supplied by the Superintendent contrary to A.R.S. § 15-1221, and only levied three cents per one hundred dollars assessed valuation contrary to the duty imposed upon them under A.R.S. § 15-1225 to fix a levy of twenty cents per one hundred dollars assessed valuation. The question then is whether the school district can be deprived of this state assistance because of the failure of the board of supervisors to perform a ministerial duty to make the levy. This Court in interpreting a ministerial duty in the case of Magma Copper Co. v. Arizona State Tax Commission, 67 Ariz. 77, 191 P.2d 169, which was a tax case involving the duties of the State Tax Commission, said: In the State of Kentucky the Supreme Court, in construing the obligations of the fiscal court, which was the equivalent of our board of supervisors, stated that: Because of the failure of the board of supervisors to perform an obligation, an irreparable harm will be done to innocent third parties the children and taxpayers of the school district. It is here that this Court can, and must, exercise its powers in equity. In tax matters there are a long line of cases which hold that the statutes should be so construed as to avoid hardship or injustice and are to be liberally interpreted in favor of the taxpayer. General Petroleum Corp. of Cal. v. Smith, 62 Ariz. 239, 157 P.2d 356, 158 A.L.R. 364; City of Phoenix v. Borden Co., 84 Ariz. 250, 326 P.2d 841; State Tax Commission v. Wallapai Brick &amp; Clay Products, Inc., 85 Ariz. 23, 330 P.2d 988; Corporation Commission v. Equitable Life Assur. Soc. of United States, 73 Ariz. 171, 239 P.2d 360; Arizona Tax Commission v. Dairy &amp; Consumers Co-op Assn., 70 Ariz. 7, 215 P.2d 235; Alvord v. State Tax Commission, 69 Ariz. 287, 213 P.2d 363; State v. Airesearch Mfg. Co., supra; and also giving due regard to the expression of legislative intent, Moore v. Smotkin, 79 Ariz. 77, 283 P.2d 1029, rehearing denied, 79 Ariz. 401, 291 P.2d 216; State Tax Commission v. Miami Copper Co., 74 Ariz. 234, 246 P.2d 871; Hill v. County of Gila, 56 Ariz. 317, 107 P.2d 377. Discussing a penalty clause in General Petroleum Corp. of Cal. v. Smith, supra, this Court said: The loss here is, in substance, no different from a penalty. We cannot, for the sole purpose of avoiding a harsh result, construe the statute in any other manner than as we have above. We can, however, afford equitable relief to the Naco School District by application of the maxim that equity will consider as done that which ought to have been done. This has been defined as: This is particularly true of the act which the board of supervisors here omitted to perform. The United States Supreme Court, in Virginian Ry. Co. v. System Federation No. 40, 300 U.S. 515, 57 S. Ct. 592, 81 L. Ed. 789, stated: So too, here, this Court is constrained to remedy the harm which faces the people of the Naco School District. To do otherwise would be to inflict on those people the very hardship which the legislature sought to avoid. The remedy is available. The appropriated funds are in the possession of the respondent and no intervening rights will be trammeled by distribution to the petitioner. However, in keeping with the equities herein involved, the financial aid should be disbursed only in such an amount as would have been required had the board of supervisors actually levied the minimum *290 tax at twenty cents per one hundred dollars assessed valuation. We, therefore, hold that it is the duty of the Superintendent to treat the application of Naco School District for "financial assistance" as though the levy of twenty cents per one hundred dollars assessed valuation had actually been made and to supply only the difference between the amount had the levy been made and the balance of the budget in accordance with A.R.S. § 15-1223, subsec. B 4. This procedure will require the school district to register warrants in a sum equal to the additional levy of seventeen cents per one hundred dollars assessed valuation in the district and it will be the duty of the board of supervisors to make a levy for this amount at the appropriate time in order that the warrants so registered may be paid. The school district will thereby be required to pay the minimum amount of twenty cents per one hundred dollars assessed valuation, which we have held to be the intent of the legislature. This obligation to levy is a continuing obligation as was stated by the Kansas Supreme Court in Board of Education of City of Pratt v. Eubank, 121 Kan. 562, 247 P. 855: The alternate writ of mandamus heretofore issued is made peremptory only as to the amount of the state funds as comprise the difference between an amount which would have been raised by a twenty cents per one hundred dollars assessed valuation and the current year budget requirements. UDALL, C.J., LOCKWOOD, V.C.J., and STRUCKMEYER and HAYS, JJ., concur.