Rural Special School District No. 30 v. Pine Bluff

Humphreys, J. Appellant instituted suit against appellee in the Columbia Chancery Court on the 28th day of March, 1918, to enjoin appellee from disposing of four bonds, numbers 6, 7, 8 and 9, issued by appellant, and to cancel them, together with a deed of trust given by appellant to secure them. The gist of the allegations of the complaint is that, while said bonds and deed of trust constitute an apparent obligation in the sum of $2,000 against appellant district, they were issued as four bonds in the sum of $500 each, of a series numbered from 1 to 22, inclusive, to raise money to build and equip a schoolhouse for said district, by the directors of said district without authority and contrary to law; that no money was ever advanced to appellant upon said bonds or deed of trust. Appellee answered, denying that the bonds, were issued without authority in law, and alleging that it was the bona fide holder of said bonds and trust deed for a valuable consideration. The cause was submitted upon the' pleadings, evidence and exhibits, upon which a decree was rendered dismissing the complaint for want of equity, from which an appeal has been duly prosecuted to this court. The facts are practically undisputed. In August, 1916, appellant district was organized under Act 321, Acts of the General Assembly of 1909. The directors of said district, through its president and secretary, issued a series of bonds, numbered 1 to 22, inclusive, of denominations of $500 each, bearing interest at the rate of six per cent, per annum, payable to bearer, and, to secure said bond issue, executed a trust deed upon the real estate owned by said school district for the purpose of raising money to erect and equip a school building upon the property mortgaged. The bonds and deed of trust bore date of October 15,1916. The deed of trust was placed of record in the county of Columbia and the bonds were delivered, with interest coupons attached, to - Scully, agent of J. O. Gunter, upon the understanding that they would be negotiated and the sum of $10,500 deposited to the credit of appellant district, subject to its check as the work of constructing the building progressed; that no fund was placed to the credit of the district or received by it for the construction of a building, and that all the bonds, except the four bonds in question, had been returned to the district. No annual school election was held between the time appellant district was organized and the date of the issue of the bonds and execution of the deed of trust, at which the electors of said district authorized the board of directors to borrow money for the purpose of constructing the school building. Subsequently to this time, J. O. Gunter entered into a contract with the Board of Public Affairs of the City of Pine Bluff to finance that city, and placed the four bonds in question in the hands of the city in lieu of an' indemnity bond to guarantee performance of the contract on his part. According to the contention of the city, J. O. Gunter breached his contract, and the city appropriated the bonds under the forfeiture clause of the contract in which said Gunter agreed to finance the city. The city was afterward financed through the agency of Judge James Gould. Tt is insisted by appellant that the bonds and trust, deed are void because issued by the board of directors of said school district without authority. Act 321 of the Acts of the General Assembly of 1909, under which the district was organized, contains the following provision: “That all school districts created under this act shall have the power to borrow money as any other special or single school district in cities or incorporated towns, when a majority of the legal electors vote for same at any annual school meeting.” This act was a general act, authorizing people in any given territory in any county of this State, other than incorporated cities and towns, to organize their territory into a special or single school district in the manner provided by the act. The school districts provided for by this act were characterized in an-amendatory act of 1911 as “rural special school districts,” as distinguished from special school districts in cities and towns or special school districts created by special act. It goes without saying that if Act 321, Acts 1909, was in force and effect when the bonds were issued and the deed of trust executed on the 15th day of October, 1916, the act of the board of directors in issuing the bonds and executing the deed of trust was ultra vires, and the bonds therefore void in the hands of even a bona fide holder for value. All parties dealing with public officials must take notice of limitations or restrictions upon their power. In this sense, directors of a school district are public officials. It is contended, however, by appellee that Act 321 of the Acts of 1909, and the amendatory act thereto, No. 169 of the Acts of 1911, were repealed by Act 25 of the Acts of 1913. The latter act does not require the approval of a majority of the electors at an annual election in order for the directors to borrow money. It is urged that the latter act is broad enough in its terms to embrace rural special school districts, and, therefore, by necessary implication, repeals Act 321, Acts 1909, which placed such restriction upon the power of the board of directors to borrow' money. The language relied upon in said Act 25, as embracing rural special school districts, is as follows: “All free school districts in the State of Arkansas, ’ ’ etc. The identical language used in the amendatory act aforesaid was used in section 1, act 248, Acts 1905, which it amended, and the original act only included urban special school districts and special school districts created by special act of the Legislature. The purpose of the amending act of 1913 was not to embrace other classes of special school districts not included in Act 248, Acts 1905, but to empower the special school districts already included in said Act 248 to refund any indebtedness which had theretofore been incurred for the erection and equipment of necessary school buildings, and to execute new evidences of indebtedness and mortgages therefor. This intention of the Legislature was clearly evinced in the amendatory act by a repetition of the same language used in the section of the act amended down to the clauses added by way of amendnient, which added clause is as follows: “And to refund such indebtedness and execute new evidences of indebtedness and mortgages therefor.” Again, Act 25, Acts 1913, only purports to amend one section of Act 248, Acts 1905, and does not, as contended by appellee, attempt to take up anew the whole subject of borrowing money by all classes of special school districts in Arkansas and cover the entire ground in relation thereto. The amendatory act of 1913 contains no repealing clause, and, being amendatory of one section of Act No. 248, Acts 1905, will not, by implication, repeal any statute not necessarily in conflict with the section as amended. It was said in the case of Martels v. Wyss, 123 Ark. 184, that, “Repeals by implication are not favored, and when two statutes covering the whole or any part of the same subject-matter are not absolutely irreconcilable, effect should be given, if possible, to both; it is only where two statutes relating to the same subject are so repugnant to each other that both can not be enforced, that the last one enacted will supersede the former, and repeal it by implication. ’ ’ There is no necessary conflict between the section.as amended and Act 321, Acts 1909, because both acts are general and may be considered as referring to different classes of special school districts just as they did by the use of the identical language in describing the classes of districts before the adoption of the amendatory act. Subsequent legislation indicates that we are correct in this conclusion. Act 180, Acts 1917, of the General Assembly of the State of Arkansas, in which the Legislature took up the whole subject of borrowing money by all classes of special school districts, referred to Act 321, Acts 1909, as a live statute and not one that had been repealed by Act 25, Acts 1913. The reference appears in section 1 of said Act li80, and is as follows: “Provided, further, that this act shall not be construed as authorizing any board of directors of any rural special or consolidated school district to issue bonds unless authorized to do so by the vote of the legal electors at the- annual school election as provided in Act 321 of the Acts of 1909 of the General Assembly of-the State of Arkansas.” A court should be slow indeed to construe an act repealed by implication which had been treated by subsequent legislation, touching the same subject-matter, as a living, and not a dead, letter of the law. The court erroneously ruled that the bonds and mortgages were valid subsisting obligations in the hand of appellee against appellant district. For the error indicated, the decree is reversed and the cause remanded with directions to order a surrender of the bonds and to cancel them and the deed of trust and the record thereof securing them.