KANSAS CITY SOUTHERN RY. CO. v. EXCISE BD. OF LEFLORE COUNTY

KANSAS CITY SOUTHERN RY. CO. v. EXCISE BD. OF LEFLORE COUNTY
1934 OK 342
33 P.2d 493
168 Okla. 408
Case Number: 24783
Decided: 06/05/1934
Supreme Court of Oklahoma

KANSAS CITY SOUTHERN RY. CO.
v.
EXCISE BOARD OF LEFLORE COUNTY.

Syllabus

¶0 1. Schools and School Districts--Budget or Estimate of Needs for Separate School Within Independent District--Tax Levy by Excise Board on Property in County.
Under the proviso in section 7040, O. S. 1931, in all independent school districts where separate schools for white and colored children are maintained, it shall be the duty of the board of education therein at the time of the preparing of Its annual budget or estimate to prepare a separate budget or estimate of the amount of money that will be required to be raised by taxation for the support and maintenance of such separate schools, including the amount necessary to purchase sites and to erect school buildings for such separate schools for the coming fiscal year, which said estimate shall be delivered by said board of education to the board of county commissioners of the county in which said separate school is located, and said estimate so made shall be published by the board of county commissioners of said county in the same manner as the financial statement and estimate for the county is published under section 12674, O. S. 1931, and such budget or estimate shall then be certified by the board of county commissioners to the county excise board, and it shall thereupon be the duty of the county excise board in such county to levy a tax on all taxable property in such county to pay the costs of support and maintaining such separate schools and purchasing sites and erecting school buildings for such separate schools as shown by such budget or estimate, in the same manner and subject to the limitations governing appropriations for other county purposes and separate schools in the county outside of independent school districts.
2. Counties--Taxation--Levy Required for Payment of Judgments Purchased with Money From Sinking Fund.
An appropriation must be made for the payment of judgments and interest thereon in the manner required by law, though the judgments have been purchased with funds from the sinking fund, there being no authority of law to pay a judgment from a sinking fund until the levies therefor have been made and proceeds collected.
3. Townships -- Taxation--Levy Required for Maturities and Interest on Bonds Paid for out of Sinking Fund.
Appropriations must be made for maturities and interest on bonds though the bonds have been purchased with funds from the sinking fund.
4. Municipal Corporations--Counties--Taxation--Levy for Sinking Fund to Pay Judgments--Statutory Limitation.
The provisions of section 5913, O. S. 1931, constitute a limitation on the amount of levy for a sinking fund for the purpose of paying judgments, but they do not constitute a limitation on the number of annual levies for that purpose.
5. Same--Validity of Judgments--Action on Warrants Held not Action on "Contract" Under Statute Prescribing Showing as Prerequisite to Judgment.
An action based upon warrants issued by a municipal corporation is not an action based upon contract within the meaning of chapter 106, Session Laws 1925.
6. Same--Judgment--Valid Judgment Based on Defective Petition.
Though a petition does not perfectly state a cause of action, a valid judgment may be rendered thereon.
7. Same--Collateral Attack.
Where the district court had jurisdiction of the subject of the action, and of the parties, its judgment cannot be attacked collaterally on the ground that the petition in said action either defectively stated a cause of action or failed to state one.
8. Same-Jurisdiction to Render Judgment Against Municipality.
If a political subdivision of the state is sued in a court of competent jurisdiction having jurisdiction of the subject-matter of the action, and that political subdivision is brought before the court by proper service of summons, or if it files its answer which, by its terms, contests the claims and in no wise confesses the claim or the facts upon which the claim is based, and the court renders a judgment thereon within its jurisdiction, that judgment, unappealed from, is binding and conclusive upon the political subdivision of the state and upon the taxpayers thereof, subject only to the right to have the same vacated, set aside, or held for naught in a proper proceeding. Such a judgment may not be collaterally attacked. It must be given full force and effect by the municipal officers, the excise board, and the courts.

Appeal from Court of Tax Review; Porter Newman, Asa E. Walden, and O. C. Wybrant, Judges.

Appeal by the Kansas City Southern Railway Company from judgment dismissing protests as to certain tax levies made by the Excise Board of Le Flore County. Affirmed.

Frank H. Moore, J. B. McDonough, Jos. R. Brown, and A. F. Smith, for plaintiff in error.
A. G. Windham, Co. Atty., and Clyde Followell, Asst. Co. Atty., for defendant in error.

ANDREWS, J.

¶1 This is an appeal by the protestant, the Kansas City Southern Railway Company, from a judgment of the Court of Tax Review dismissing protests as to certain tax levies made by the excise board of LeFlore county for the fiscal year 1932-1933.

¶2 One of the levies protested was a levy for the independent school districts Nos. 2, 29, and 52, in the total sum of $ 3,484. The protest is based upon the alleged failure of the independent school districts to make and file with the county commissioners a statement of the financial condition and estimate of the needs of the separate schools. Section 12676, O. S. 1931, is cited as authority for the contention. That section is a general statute requiring officers, board or commission of any county, city, township, or school district to file with the county commissioners, on or before the first Monday in July of each year, a financial statement and itemized estimate of its needs for the fiscal year. By section 12677, O. S. 1931, subdivision (a), under "County Appropriations," it is required that the appropriation shall contain, among other appropriations, items "* * * for the separate schools of the county, if any, with amounts for the purchase of buildings in each district, the erection or purchase of buildings in each district, the salaries of teachers, and all other maintenance expense in each district, separately stated. * * *" The financial statement and estimate is required under section 12676, supra, to be made by the county commissioners. The record shows that a written estimate of needs of the independent school districts was furnished the county commissioners: that it was properly itemized by the county commissioners, and that it was filed with the excise board. It is presumed that that part of the county estimate was published along with the other portions thereof, and there is no contention that it was not so published.

¶3 The budget required by section 7040, O. S. 1931, to be made by the board of education of independent school districts for the separate schools of the district is not required to be itemized so as to show the separate amounts required for different purposes. Protest of Downing et al., 164 Okla. 181, 23 P.2d 173.

¶4 The issue presented by the second ground of the protest is as to an item of $ 10,779.23 to pay accruals on judgments against the county maturing during the fiscal year. It is contended that judgments against the county are void for failure of the petitions to state a cause of action, and because the board of county commissioners failed to file answers. In support of that contention there are cited the decisions in Faught v. City of Sapulpa, 145 Okla. 164, 292 P. 15; Wood v. Phillips, Trustee, 95 Okla. 255, 219 P. 646, and Protest of Carter Oil Co., 148 Okla. 1, 296 P. 485. There is no contention that the courts rendering the judgments complained of did not have jurisdiction of the parties and the subject-matter. The judgments obtained in the district and justice courts in causes numbered 7469, 7299, 7129, 751, 753, 8101, 8084, 8993, 7508, 8138, 8148, 8140, 770, 773, 7904, and 7826 were obtained upon bills of particulars and petitions filed and service had upon the county. In most of those cases no answer was filed by the county. We know of no rule of law requiring a defendant to file an answer. It was not shown that a full hearing was not had in each case and the claim sued upon proven to be payable out of an estimate duly made for that purpose and within the constitutional and statutory limitations. Most of those suits were upon warrants which showed a prima facie indebtedness against the county. None of the judgments entered in those suits was otherwise questioned or appealed from. See Faught v. City of Sapulpa, supra. In re Protest of St. Louis-S. F. Ry. Co., 157 Okla. 131, 11 P.2d 189, and County Excise Board of Creek County v. Gulf Pipe Line Co., 156 Okla. 103, 9 P.2d 460.

¶5 The third item protested is a levy of $ 7,511.75 to reimburse the sinking fund for a deficit caused by the purchase of certain judgments against the county with money taken from the sinking fund. It is contended that a county may not prepay a judgment against it, and that if it does so illegally, it cannot thereafter lawfully levy for annual accruals due on such judgments. In support of that contention there is cited State ex rel. Hatfield v. Moreland et al., 152 Okla. 37, 3 P.2d 803. The levy complained of is in no way in violation of the holding in State ex rel. Hatfield v. Moreland et al., supra. Section 5913, O. S. 1931, requires, among other things, that a levy be made each year equal to one-third of the original amount of all outstanding judgments against the municipality, when one-third or more of such judgments remains due and unpaid. When the county uses the sinking fund to buy a judgment against the county, it is still an existing judgment against the county to the extent of requiring a levy of one-third of the amount thereof each year for the purpose of replenishing the sinking fund in compliance with the provisions of section 5919, O. S. 1931.

¶6 This court, in City of Shawnee et al. v. City of Tecumseh, 52 Okla. 508, 150 P. 890, held that a treasurer may pay a judgment out of the sinking fund on hand and a levy be made therefor to reimburse the sinking fund as though the judgment had never been paid.

¶7 The fourth item of protest concerns the levy for interest on judgments purchased by the county. This feature of the protest has been given due consideration under the third item of protest, and it will not be necessary to consider it further.

¶8 The fifth item of protest involves a levy for the sinking fund of the township of Poteau to pay interest on $ 10,000 of its bond issue now owned by the Poteau township and purchased with its sinking fund. It is contended that when the township bought $ 10,000 of its $ 20,000 bond issue with its sinking fund, there was only $ 10,000 outstanding for which a levy could be made. It is contended that the bonds purchased were canceled and ceased to be an obligation of the township. We cannot agree with that contention. Under the provisions of section 5914, O. S. 1931, it is the duty of the treasurer of a township to invest its sinking fund in either "United States Bonds, the bonds or warrants of the state or any county, city, town, township, school district, or any other municipality thereof." The treasurer has no power to cancel bonds. Neither can it be presumed that in investing the sinking fund in bonds he intended to cancel them. The same section provides for the purchase of bonds for cancellation, "* * * or the proper officers may buy and cancel the outstanding bonds of the state, county, city, town, township, school district, or other municipalities which they represent. * * *" While the treasurer has authority to "invest," only the proper authority of the township may "buy and cancel." No showing was made in the record to bring the cause within the rule stated in Board of Education of City of Shawnee v. American National Co. 135 Okla. 253, 275 P. 285.

¶9 The sixth item of protest concerns the levy to pay accruals on outstanding judgments for which three levies have previously been made. It is contended that judgments against a municipal subdivision can be paid only as provided in section 5913, O. S. 1931. That question was before this court in Protest of Midland Valley Ry. Co., 167 Okla. 327, 29 P.2d 578, and decided contrary to the contention here presented.

¶10 The seventh item of protest pertains to an appropriation to pay accruals and interest on two certain judgments against the county. That contention was fully covered in the discussion on the second item of protest and need not be further considered here.

¶11 In the last item of the protest it is contended that many of the judgments in question were obtained upon actions on warrants, and that such actions are within the put. view of chapter 106, Session Laws of 1925. It is contended that, since the requirements of that act were not complied with, the judgments are void and no appropriation can be legally made to pay same. That identical question was before this court in Excise Board of Creek County v. Gulf Pipe Line Co., supra, and in Protest of St. Lonis-S. F. Ry. Co., supra, and in each instance this court held:

"An action based upon warrants issued by a municipal corporation is not an action based upon contract within the meaning of chapter 106, Session Laws 1925."

¶12 The judgment of the Court of Tax Review is affirmed.