Court Opinion

ID: 5585839
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:53:13.709228+00
Date Added: 2024-06-11T08:36:14.598628
License: Public Domain

Atkinson, J.
The Board of Education of Monroe Coiinty in past years borrowed money from the Citizens Bank of Eorsyth, for the purpose of paying teachers and operating the public schools in the county. In this manner debts were accumulated. At the beginning of September, 1924, the schools were opened while the accumulated debts were outstanding, and in November the bank loaned an additional sum of $25,200, a part of which was applied to payment of interest on the accumulated debt and the balance to payment of the teachers. The sum thus applied to the payment of teachers was insufficient to pay them to the end of the year; and $3000, derived from discount in another bank of warrants issued to the board of education from the State public school fund, was used to finish paying what was due the teachers in the year 1924. Other sums derived from the discount of the above-mentioned State warrants were used to pay the teachers and operate the schools in January and February, 1925. The board of education in obtaining loans from the Citizens Bank of Forsyth did so on agreement to turn over all revenues derivable from local taxation and from the State for payment on the existing indebtedness and such future advances as should be made by the bank for payment of teachers and operating the schools. In 1925' the bank became dissatisfied with the attitude of the county school superintendent in failing to turn over - warrants received from the State, and in March refused to make any other advances or loans for the purposes above mentioned. In these circumstances the board of education on March 13, 1925, after the term of school commencing in September had been conducted for more than six months, passed a resolution closing the schools for the *60term. Several days prior to closing the schools the board had passed other resolutions directing application of all revenues derivable from local taxation and from the State, during the years 1925 and 1926, to payment of the existing indebtedness to the Citizens Bank of Forsyth, in order that such indebtedness might be reduced to such an extent as that the bank would make further advancements necessary to pay teachers and operate the schools. Among the resolutions was one directing thé tax-collector of the county to pay all sums collected from local taxation directly to the bank, to be credited on such existing indebtedness. At the time of closing the schools and passing, such resolutions there was sufficient money in the tax-collector’s hands and in the process of collection from the local tax levy of 1924 to pay the teachers and operate the schools for a full term of nine months from September 1, 1924, if such funds should be applied to such purpose instead of applying them towards reduction of the accumulated indebtedness to the Citizens' Bank of Forsyth. Prior to 1924 the board of county commissioners had been levying a local tax of five mills for support of the schools; but in the fall of 1924 the board of education requested the board of county commissioners to levy an additional tax of three mills in order that the schools might be operated for a full term of nine months. Upon such application the board of county commissioners levied a local tax of eight mills, which constituted the local tax that the tax-collector was engaged in collecting as above indicated. The county school superintendent and certain citizens and taxpayers and patrons of the schools brought suit against the county board of education, the tax-collector, and the Citizens Bank of Forsyth, for the writ of mandamus to compel the board of education to rescind the resolutions above indicated, and to cause the money being collected by the tax-collector from local taxation to be paid to the treasurer of the board of education, for the purpose of paying the teachers and operating the schools for the full term of nine months from September, 1924.
The defendants filed separate answers, which, among other things, alleged the right of the board of education to apply the revenues of the board to payment of the accumulated indebtedness to the bank which arose prior to the year 1925; also that it was necessary to apply such revenues to reduction of the accumulated *61indebtedness to the bank in order to finance the schools; also that it was in the power of the board of education to close the schools before the expiration of nine months, and that in the circumstances there was no abuse of discretion in applying the revenues to the past-due indebtedness and in closing the schools. The answers also denied the making and validity of the alleged contract with the board of county commissioners to operate the schools for nine months. At the first term of the court the case was submitted by consent to the judge for decision on all questions of law and fact without a jury. The judge rendered a decision holding, in effect, that it was unlawful for the board of education to apply the funds arising from local taxation levied in 1924 on payment of the debts to the bank which had accumulated prior to that year; that a certain amount remained due to the bank for money advanced to pay the teachers and operating the schools during the term commencing September 1, 1924; that the funds now in hand derived from and funds to be collected from the local tax levy of 1924 be distributed pro rata towards payment of such amount so found to be due the bank for money advanced in 1924 and the amount necessary to pay the teachers for the balance of the full term of nine months from September 1, 1924, and if there should be an excess it should be applied to any lawful school purpose or obligation; that so much of the resolution of the board of education as seeks to dispose of school funds for 1925-1926 by transferring the same to the Citizens Bank of Forsyth as a credit on or in payment of debts due to it is contrary to law and void, and the same is annulled; that the resolution of the board of education closing the schools was void as in violation of the agreement of the board of education with the board of county commissioners to operate the schools for nine months; and it was ordered that “the mandamus nisi is made absolute as to the matters herein ruled.” The board of education and the Citizens Bank of Forsyth excepted. It appeared on the trial that after the passage of the resolutions by the board of education, closing the schools for the term, the superintendent of schools, without authority from the board of education, continued to operate the schools without paying the teachers. It was alleged in the petition that the board of education had made' contracts employing the teachers for a full term of nine months, but this was denied in the answers filed by *62the board of education, and there was no' evidence to show such contracts.
The petition in this case does not allege that any of the money borrowed from the bank was illegally borrowed, and the court did not decide that any of the money was illegally borrowed. In these circumstances, for all purposes of this case, the unpaid balance of the money borrowed from the bank will be deemed to be a valid debt of the board of education. A fundamental contention made by the petitioners is that the board of education could not apply the funds in the hands of the tax-collector, collected and to be collected under the levy of the local tax in the fall of 1924, to payment of the accumulated indebtedness to the bank for moneys previously loaned that did not go to pay the teachers and operate the schools during the calendar year 1925.. The Code of School Laws (Acts 1919, p. 288) contains the following:
“Sec. 95. . . The county boards of education of the several counties of this State shall have the power and authority, whenever they deem it necessary, to borrow sufficient amounts of money, and no more, to pay for the operation of the public schools of their counties,; provided, that no board of education shall have authority under this law to borrow a sum of money greater in the aggregate than the sum to which the county may be entitled from the public-school fund.
“Sec. 96. . . In order for any board of education to borrow money for the purposes hereinbefore stated, there shall be passed by said board a resolution authorizing said money to be borrowed, in which resolution it shall be stated the amount of money to be borrowed, the length of time the same is to be used, the rate of interest to be paid, and for what purpose borrowed and from whom the same is to be borrowed, which resolution shall be by the county school superintendent recorded on the minutes of the meetings of said board of education.
“Sec. 97. . . -No money shall be borrowed for any longer time than is necessary, and the same shall be paid back out of any funds coming into the hands of the county school superintendent that can be legally applied to the payment of the same.
“See. 98. . . Said board of education so borrowing money shall borrow the same at as low a rate of interest as possible, and *63they are authorized to pay the interest on said money out of the public-school fund for said county.
“See. 99. . . At the opening term of the superior court of each county in this State where money has been borrowed by the board of education under the provisions of this law, the county school superintendent shall include in'his report to the grand jury the amount of money so borrowed during the preceding year, from whom borrowed, the rate of interest paid, the date or dates the same was borrowed, and when paid back.
“Sec. 100. . . After the resolution aforesaid has been passed by any board of education, the president of the board of education, together with the county school superintendent, shall have the right to execute a note or notes in the name of the board of education of said county, for any money that is authorized to be borrowed under the resolution passed by said board of education.
“See. 101. When any money shall be borrowed under the provisions of this law, the same shall be paid over to the county school superintendent and become a part of the public-school fund of said county, and the same shall be by the county school superintendent paid out to the teachers of said county; and the county school superintendent shall be responsible for any money borrowed under the authority of this law and paid into his hands, in the samé way and to the same extent that he is responsible for any other public-school funds coming into his hands.
“Sec. 102. . .'It shall be unlawful for any board of education to make any contract involving the expenditure of funds in excess of the total appropriation for the current fiscal year. Any indebtedness created, contract made, or order or draft issued in violation thereof shall be void.
“Sec. 112. . . As soon as the county board shall communicate satisfactory evidence to the State school superintendent that arrangements have been made, by taxation or otherwise, for continuing the common schools, free to all, for at least six months in the year, throughout the entire county, said county shall be deemed and held entitled to draw her proportionate part of the State funds.
“Sec. 113. . . Whenever a board of education shall fail in any year to make arrangements to put schools in operation, it shall forfeit all rights to participation in the school funds of that *64year, unless the failure to arrange for such schools was from providential cause, or other good and sufficient reason to be judged of by the State board of education.”
These laws contemplate necessity to anticipate' revenues provided by law for operating the public schools before such funds come into the hands of the boards of education, and authorize boards of education to borrow money for the purpose of paying teachers and operating public schools. Ordinarily the power to borrow money necessarily implies power to repay the debt. The above-quoted laws, while authorizing the borrowing of money for the purposes above indicated and the manner in which contracts for the borrowing of money shall be made, do not limit the power of the board of education in the matter of repayment. On the contrary, under section 97 the money should not be borrowed “for any longer time than is necessary,” and it should be “paid back out of any funds coming into the hands of the county school superintendent that can be legally applied to the payment of the same.” Assuming that a debt had been lawfully created for the loan of money for purposes as above indicated, the board of education is bound to pay it back out of any funds that can be legally applied to such payments. Funds that can be legally applied to such payments are such as come into the hands of the board of education for the purpose of paying teachers and operating the public schools. Repayment of money borrowed for the purposes should be made out of the revenues appropriated to the schools for the year in which the borrowed money is to be used, but the statute does not limit repayment to the funds so appropriated. It recognizes the dirty of the board of education to repay the money out of any funds which may be lawfully applied to such purposes. Money appropriated for the public schools of the county is lawfully applied when applied to repayment of money borrowed to pay teachers and operate the schools. The proper construction of the statute is that it authorized repayment out of any funds that should be appropriated to the board of education at any time for the payment of teachers and operating the schools. The legislative intent was not to create a device, but to make a wise provision whereby the schools could attain the advantages of borrowed money, and to impose upon the schools the duty of repaying money out of funds that might be appropriated to the purposes for which the *65loaned money was intended to be used. So construing the law, it was in this case in the power of the board of education to apply money collected and to be collected from the local tax levy made in 1924 for the purpose of maintaining- the schools during the term commencing on September 1, 1924, to payment of debts for the loan of money for payment of teachers and support of the schools which had accumulated prior to the year 1924.
Another question is, did the board of education on March 13, 1925, have power to close the term which commenced September 1, 1924? In section 84 of the act of 1919 (Acts 1919, p. 288) it is provided: “The county boards of education shall have the power to define and regulate the length of the public-school terms of their respective counties. . . They shall, as far as practicable, provide the same facilities for both races in respect to attainments and abilities of teachers and for a minimum six months length of term time.” This law confers upon the boards of education plenary power to provide for the duration of the terms of the public schools for periods of not less than six months. The board of education having the power to specify the terms of school as above indicated, such power will authorize them, after having specified a term exceeding six months, by subsequent resolution to close the term before the time specified in the first instance, provided the said time shall not make the term less than six months. Whether or not they will exercise such power is a matter of discretion to be governed by the facts of the particular case. In this case it appears that the schools were operated more than six months in the term which commenced in September, 1924. It was therefore within the power of the board of education to close the term at the time the resolution was passed for that purpose.
It was urged further by the plaintiffs that the board of education could not apply proceeds of the local tax levy for 1924 to payment of accumulated debts as referred to in the first division, or close the term of schools on March 13, 1925, as referred to in the second division, on account of an alleged contract between the board of education and the board of county commissioners, whose duty it was to levy the local tax, to the effect that if the board of county commissioners would levy a tax of three mills additional to the tax of five mills that had been levied in previous years, the board of education would conduct the schools for a full term of *66nine months commencing September 1, 1924. The defendants answer denied that any such contract had been made, and alleged that if made it would not have the effect of binding the board of education, because neither the board of county commissioners nor the board of education had power to make such contract. The evidence was conflicting as' to whether there was any such agreement; but in making the tax levy of eight mills the board of county commissioners did not express that the schools would be operated for the full term of nine months. Assuming that the court was authorized to find that the board of education and board of county commissioners had entered into such a contract, the contract would not be binding or add anything to the law imposing duties or conferring powers upon the two boards. The whole power of the board of county commissioners was to levy the tax for school purposes. There is no provision of law authorizing them to do more than levy the tax. Therefore the so-called contract was lacking in the essentials of having two parties able to contract, and in effect was no more than the equivalent of an ex parte resolution upon the part of the board of education, declaring an intention to apply the tax in a certain way and to conduct the schools for a certain period. Both of these matters were within the discretion of the board of education, as pointed out in the preceding divisions of this opinion, and subject to change or modification.
Having seen that the board of education acted within its power, it remains to be decided whether the board of education acted arbitrarily, and committed an abuse of discretion in seeking to apply the funds derived from the local tax levy of 1924 to the payment of the previously accumulated indebtedness to the Citizens Bank, and in closing the schools on March 13, 1925, being more than six months but less than nine months from the beginning of the term commencing in September, 1924. It indisputably appeared from all the evidence that a large indebtedness to the Citizens Bank of Forsyth had accumulated, that there was a large interest account, and that the bank would not continue advancing to the board of education without reduction of the debt. The board of education deemed it necessary to reduce the debts, and, in order to do so, it was necessary to close the schools at the time above indicated and employ the money that would be required to operate the schools for a longer time towards payment of the debt. There does not *67appear to have been any other reason or motive prompting the board of education to close the schools. In the circumstances it can not be said that there was any abuse of discretion. It is a dangerous practice for a board of education to accumulate large debts; and where it happens that they are accumulated for the purpose of paying teachers and operating the schools, a wise discretion will prompt their payment; and to that end it is not an abuse of discretion, when necessary to do so, to shorten the terms and apply the revenues of the board to payment of the debt. What has been stated is not altered by the fact that the board of education obtained money from the State with which to pay teachers in 1925, on the representation that it had made arrangements to conduct the schools for at least five months during the year 1925. No question was involved as to the State’s right to proceed if the county board of education was not entitled to the allotments from the State school fund.
The foregoing rulings deal with the controlling questions in the case; and it follows that the judge erred in making the mandamus absolute.

Judgment reversed.

All the Justices concur, except Bussell, C. J., and Hines, J., dissenting, and Beck, P. J., disqualified.