Court Opinion

ID: 3542177
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:53:44.554486+00
Date Added: 2024-06-11T13:28:32.725022
License: Public Domain

Taxing Districts. As to all taxation apportioned upon property there must be taxing districts. The taxing district
may be the entire state, or it may be a county, a city, a town, a township or a school district. A state tax is to be apportioned through the state and a county tax through the county. School districts are taxing districts for the special and peculiar purposes for which they exist.
Uniformity Required. Within these taxing districts the rule of absolute uniformity must be applicable. *Page 330 
Two essentials are required to render taxation uniform.
The first essential is that each taxing district shall confine itself to the objects of taxation within the limits of the taxing district. Otherwise there may be duplicate taxation resulting in inequality. Therefore assessments upon real property not situate within the taxing district would be void, and assessments for personal property against owners not residing in the district would be void unless made upon personal property actually present within such taxing district.
The second essential is that there should be a uniform manner of assessment and approximate equality in the amount of tax exactions within the taxing district.
The rule of apportionment must be uniform throughout thetaxing district, applicable to all alike and the legislature does not possess the power to create or establish taxingdistricts arbitrarily, and without reference to the fundamental principle that the burden of taxation must be borne by those upon whom it justly rests. Thus the property which is properly included within the limits of the taxing district should be so included by the legislature because such property justly belongs there as being fairly within the taxing district which is benefited by the local government and which therefore ought to contribute to its tax burdens.
The Constitution of Montana prohibits various commonly recognized local taxing districts from creating an indebtedness in excess of three per centum of the value of the taxable property in such district. The taxing districts mentioned are cities, towns, townships and school districts. Section 6 of Article XIII declares: "No city, town, township or school district shall be allowed to become indebted in any manner orfor any purpose to an amount including existing indebtedness, in the aggregate exceeding three (3) per centum of the value of the taxable property therein." (Emphasis mine.) An exception is provided for towns and cities to construct a sewerage system or procure a water supply. The penalty provided for violating the above section of the Constitution *Page 331 
is that all bonds or obligations in excess of such amount given by or on behalf of the taxing district shall be void.
The words used in section 6 of Article XIII of the Constitution are simple words having well understood meaning. "City" and "town" include all classes of cities and towns astaxing districts. "School districts" includes all kinds of public school districts and public common schools as taxingdistricts. The words "in any manner or for any purpose" apply to any plan, scheme or device whereby taxes are to be imposed for school purposes of any kind upon the property lying within a school district to meet or pay an aggregated debt "including existing indebtedness" of three per centum of the value of the taxable property in such school district.
"A public school is a school established and maintained under the laws of this state at public expense and comprising the elementary grades, and, when established, the kindergarten andthe high school including all the junior and senior grades ofhigh school work." (Emphasis mine. Section 1053, Revised Codes.)
"A high school is a public school as defined in the general school laws and is an integral unit of the public school system which comprises some one or more of the grades of school work intermediate between the elementary schools and the institutions of higher education of the state of Montana, and which has its own administrative head and corps of teachers under the direct supervision either of a district superintendent and the board of trustees of a school district, or of a county high school principal and board of trustees of such county high school, as the case may be." Section 1262.1, Revised Codes of 1935. See also Young v. Board of Trustees, 90 Mont. 576, 4 P.2d 725; and the Note in 113 A.L.R. 702.
"A school district is merely a political subdivision of the state, created for the convenient dispatch of public business. In the absence of constitutional limitations, the Legislature may create or abolish a district or change or rearrange the boundaries of *Page 332 
an existing district, and by the same token it may create joint districts from territory lying in adjacent counties." State ex rel. Redman v. Meyers, 65 Mont. 124, 127, 210 P. 1064, 1065. However, the legislature is bound by the restrictive limitation upon the power of a school district to create debt imposed by section 6 of Article XIII of the Constitution and it is powerless to relieve the school district of such limitation.
Had the framers of the Constitution intended that property lying within high school districts or within school districts included within the boundaries of high school districts could be excepted from the three percent restriction imposed by section 6 of Article XIII of the Constitution, they would have written in such exception as was done in the special provision relating to the construction of sewerage systems and to the procuring of a supply of water for municipalities. The rule "expressio unius est exclusio alterius" applies. See 35 C.J.S. p. 283, Note 57, and case cited; 59 C.J., sec. 582, p. 984; Sutherland, Statutory Construction, 3rd Ed., sec. 4916 and cases in note 2 thereof; State v. State Board of Equalization, 100 Mont. 72,45 P.2d 684.
Illinois Cases. The majority opinion herein cites with approval certain decisions of the Illinois Supreme Court including Wilson v. Board of Trustees of Sanitary District,133 Ill. 443, 27 N.E. 203, 210 and Fiedler v. Eckfeldt, 335 Ill. 11,166 N.E. 504.
The Wilson case, supra, involved an act for the creation of a sanitary drainage district and the opinion is based upon the construction of section 9 of Article 9 of the Illinois Constitution, giving cities and towns power to make local improvements by special assessments of contiguous property or otherwise, rather than on section 12 of Article 9 of the Constitution of Illinois which is similar in its provisions to section 6 of Article XIII of the Constitution of Montana except that the limit in Illinois is five per cent instead of three per cent as in Montana and the Illinois section contains no provision empowering the legislature to extend the limit mentioned by authorizing municipal corporations *Page 333 
to incur additional indebtedness for the construction of sewers and procuring a supply of water. It would appear that the majority opinion in the Wilson case, supra, is either erroneous or dictum in its statements respecting section 12 of Article 9 of the Constitution of Illinois and that thereafter the court erred in following the Wilson case as a precedent on this question in the Fiedler case, supra.
The Wilson case, supra, was distinguished in the subsequent case of Russell v. High School Board, 212 Ill. 327, 72 N.E. 441,443, wherein the court held that a statute authorizing a school district having a population of at least 2,000 to establish and maintain a high school, was ineffectual to authorize the district to incur a debt for such purpose where the amount, plus the existing indebtedness of the school district, would exceed the constitutional limit of five per cent. The issuance of the bonds was enjoined, the court saying: "If the Legislature, by authorizing a school district to establish a high school, can also authorize it to incur indebtedness beyond the constitutional limit, they could get rid of all the restrictions of the Constitution by authorizing the management of each grade or department of the public school by a different board of education, with different buildings. Such a construction of our Constitution has never been adopted."
The Russell case, supra, was approved and the rule there announced, quoted and followed in People v. Read, 233, Ill. 351,84 N.E. 214. Again the Russell case was cited with approval in People v. Young, 309 Ill. 27, 139 N.E. 894, 896.
In Fiedler v. Eckfeldt, supra, 335 Ill. 11, 166 N.E. 504 at page 511, the Illinois court attempts to distinguish, but does not overrule either the Russell case, supra, or the Read case, supra, both of which are applicable to the facts in the case now before this court.
Again, in Kocsis v. Chicago Park Dist. 362 Ill. 24,198 N.E. 847, at page 854, 103 A.L.R. 141, the Illinois court distinguishes the Russell and the Read cases, but does not overrule them and, after quoting section 12, Article 9 of the Illinois Constitution *Page 334 
at page 852, of 198 N.E., said: "This court has frequently stated that the object of the constitutional provision against any municipal corporation becoming indebted in excess of 5 per cent. of the assessed valuation of property is to protect the property of citizens from being burdened with such excess indebtedness extending into the future. Any plan or scheme which has the effect of creating such a burden is prohibited, no matter how the indebtedness is created. Green v. Hutsonville Tp. High School District, 356 Ill. 216, 190 N.E. 267; Wade v. East Side Levee Dist., 320 Ill. 396, 151 N.E. 260; People v. Chicago  Alton Railroad Co., 253 Ill. 191, 97 N.E. 310."
In Green v. Hutsonville Tp. High School Dist. cited in the above quotation and involving the indebtedness of a schooldistrict, the court said [356 Ill. 216, 190 N.E. 268]: "In discussing this constitutional prohibition, this court has made itself very clear, and there can be no reason for doubting our position in the matter. We have held that it makes no difference under what guise or by what sort of trick the attempt is made, an indebtedness in excess of the constitutional limit cannot be voluntarily created. It was the intention of the framers of our Constitution that the property of citizens should not be burdened beyond the 5 per cent. limitation, and that no plan or scheme can be permitted to create an indebtedness in excess of that amount."
In People v. Orvis, 374 Ill. 536, 30 N.E.2d 28, 132 A.L.R. 1382, an act of the legislature attempting to validate the bonds held void in the Green case, supra, approved the latter case and held such act unconstitutional. The Green case, supra, was also approved on this point in Leviton v. Board of Education of City of Chicago, 374 Ill. 594, 30 N.E.2d 497, 501.
In Board of Education v. Upham, 357 Ill. 263, 191 N.E. 876, 94 A.L.R. 813, cited by the majority opinion herein the Illinois court again cites the Wilson case, supra, as supporting its position. The Upham case, supra, is clearly distinguishable. There the board of education was authorized to issue bonds and it was contended such bonds would be an indebtedness of the city and *Page 335 
that, when added to the city's indebtedness, such bonds would exceed the city's 5% limit authorized by section 12, Article 9 of the Illinois Constitution. The court merely held that the board of education was a separate corporation from the municipal corporation and that the city's indebtedness could not be included in determining whether the school authority had exceeded the 5% limit imposed upon school districts. It is manifest that under section 6, Article XIII of the Montana Constitution, a city as a taxing district for municipal purposes, and a school district as a taxing district for school purposes, may each incur indebtedness up to three per cent and that the indebtedness of the one can not be considered in determining the limit of indebtedness of the other. See: Leply v. City of Fort Benton,51 Mont. 551, 154 P. 710; Farbo v. School District, 95 Mont. 531,28 P.2d 455.
In the case at bar it is not a question of including the indebtedness of a city or town for municipal purposes with indebtedness of a school district for school purposes, as in said Upham case, supra, but, in the case now before us, all the indebtedness to be incurred is for school purposes only in the territory embraced in such district, which, with existing indebtedness for such purpose, exceeds the constitutional limit of three per cent. Under our Constitution this cannot be done, "in any manner or for any purpose" to an amount in the aggregate "exceeding three per centum (3) of the value of the taxable property therein." In Butler v. Andrus, 35 Mont. 575,90 P. 785, 786, in construing this section, Chief Justice Brantly, speaking for the court, said: "The constitutional limitation in question is clear and unambiguous, and means just what it says, to wit, that no indebtedness may be contracted in any manner or amount, for any purpose, in excess of the prescribed limit."
In the note to the case of the Board of Education of the City of Chicago v. Upham, supra, 94 A.L.R. 818-826, the author says the general rule is that the indebtedness of "separate anddistinct political units with identical boundaries, exercisingdifferent *Page 336 functions, only the indebtedness of the political unit in question can be considered" (94 A.L.R. at page 819) and that this same general rule applies to overlapping boundaries (94 A.L.R. at page 824). Most of the cases cited in this note are based on this general rule. The Montana Constitution classifies these distincttaxing districts or political units as "city, town, township or school district." Sec. 6, Art. XIII, Const. A public school, whether a district school, a junior high school, a district high school, or a county high school, is one taxing district for school purposes and one political unit under the broad term "school district" as used in our Constitution. See: Russell v. High School, supra, discussed above. It is as broad as the term "common school," defined in School District No. 20 v. Bryan,51 Wn. 498, 99 P. 28, 29 L.R.A., N.S., 1033. See also sections 1053 and 1262.1, Revised Codes of Montana, 1935.
In People v. Chicago  N.W.R. Co., 286 Ill. 384, 121 N.E. 731,733, the court in construing a constitutional provision like section 1, Article XI of our Constitution said: "The high school is as much a part of our system of free schools as the district or grade schools." Citing several Illinois cases. See also: People v. Pinari, 332 Ill. 181, 163 N.E. 385; State v. Dawson County, 87 Mont. 122, 286 P. 125; Young v. Board of Trustees,90 Mont. 576, 4 P.2d 725; Fitzpatrick v. State Board of Examiners, 105 Mont. 234, 70 P.2d 285; State v. Meyers,65 Mont. 124, 210 P. 1064; Note in 113 A.L.R. 702-707.
In the instant case it is not a question of the debt being that of the Park County High School only or of School District #4 in Park county only, in determining whether the constitutional limitation has been exceeded. The question is, does 59% of the debt of the Park County High School, based on 59% of taxable property in School District #4 in Park County, plus the debt created by the proposed bond issue of said district in the aggregate, exceed 3% of the value of the taxable property included in such school district?
It is immaterial to the taxpayer in the taxing district for *Page 337 
common public school purposes as to which school district is legally liable on the respective bond issues as the taxpayer is required to pay the taxes assessed by each overlapping school district against his property and if these combined debts, for schools, exceed 3% of the taxable value of his property, his rights guaranteed by section 6 of Article XIII of the Constitution of Montana have been violated as the Constitution says this cannot be done "in any manner or for any purpose." See also Munson v. Looney, 107 Tex. 263, 172 S.W. 1102,177 S.W. 1193.
For example, should the legislature, under section 7 of Article XVI of the Constitution, create a city administrative board or commission and also a separate board each for a park commission, for a fire department, and for a police department, with authority in each department to incur indebtedness and levy taxes for necessary work, improvements or equipment therein, then according to the theory of the majority opinion herein each of these separate city departments could incur a separate indebtedness up to the constitutional limit of 3% of the value of the taxable property in the city and the taxpayer's property would be liable for the full amount of such taxes, for the reason that the separate liability of each of these separate boards would not exceed 3% thereof. Such construction would effectively nullify the constitutional prohibition and limitation in section 6, Article XIII.
The majority opinion herein would permit the taxpayer in the same taxing district for school purposes to be taxed up to three per centum of the value of the taxable property therein for each of the following school districts, namely: (1) For a nursery school district, (2) for a primary school district covering grade one, (3) for an elementary common school district covering grades two to six inclusive, (4) for a junior high school district covering grades seven, eight and nine (Sec. 1262.2, Revised Codes), and (5) for a high school district comprising grades between the elementary schools and the institutions of higher education of the state (Sec. 1262.1, Revised Codes). By such methods *Page 338 
the three per cent limit placed by the people of this state in their Constitution would be read out of the Constitution and the property of the taxpayers in the school district could be subjected, for public common school purposes, to a tax exceeding 15 or more per centum of the taxable value of the property therein. In fact, by simply creating new school districts under new and different names or designations, the entire constitutional limitation imposed by section 6 of Article XIII of the Constitution could be made a dead letter and eliminated from the Constitution. This would be a "manner" of doing things which the Constitution in section 6 of Article XIII says cannot be done to the taxpayers in these separate taxing districts whether the district be a city, town, township or school district.
The proneness of local taxing districts such as municipalities and school districts to incur indebtedness, if its burden can be cast upon posterity, was well known to the framers of our state constitution and they saw the need, in the interest of the public welfare, to regulate, restrict and limit the power of such taxing districts to incur large and unreasonable debts. Divers devices have been resorted to for the purpose of preventing the incurring of inconsiderate, extravagant and onerous indebtedness on the part of such taxing districts. The means to accomplish this end employed by those who drafted our Constitution was by placing a constitutional limitation on the power of each of such taxingdistricts to incur debt. Thus the purpose of section 6 of Article XIII of our Constitution is to serve as a limit on taxation and as a protection to taxpayers. When construed and applied as written it serves to effectually protect persons residing in taxing districts from the abuse of their credit and the consequent oppression of burdensome, if not ruinous, taxation. Such constitutional limitations on indebtedness are construed as prohibitory, mandatory, self-enforcing and are to be observed strictly. A statute may limit a constitutional limit but may not raise or extend it.
The case at bar presents an attempt to evade the debt limit *Page 339 
provisions imposed upon the taxing district designated as a school district by indirect methods and this the Constitution declares shall not be done "in any manner or for any purpose." Sec. 6, Article XIII, Const. of Montana.
It is clear to me that the high school bonds and the proposed issue of bonds by School District #4 in Park County, all being in the same taxing district for public school purposes and in the same district political unit designated in section 6 of Article XIII of the Constitution of Montana, and imposing an aggregate indebtedness on the property of the taxpayers in School District #4 in excess of three per cent of the taxable property therein, are void to the extent that said proposed bond issue exceeds such three per cent limit.
In my opinion, therefore, the complaint states a good cause of action. The defendants' demurrer should have been overruled. The judgment for defendants was erroneous. Such judgment should be reversed.