Dermott Special School District v. Brown

J. Fred Jones, Justice. Four school districts in Chicot County and nine citizens and taxpayers of that county, hereafter referred to as appellants, instituted the present action in the Chicot County Chancery Court against Max Brown individually and as sheriff and collector of Chicot County, hereafter referred to as sheriff, seeking injunctive relief for unlawfully diverting school monies to other purposes, and to recover judgment against him for monies diverted and lost to the school districts for the years 1967 and 1968. The chancellor restrained and enjoined the sheriff from using the statutory commissions charged for the collection of school taxes to pay the expenses of the office of sheriff, but refused to enter judgment against the sheriff for any sums so used. On appeal to this court the appellants designated five points upon which they rely for reversal, but they are all covered by the appellants’ fourth point as follows: "The lower court erred in refusing to grant a money judgment.” The sheriff has cross-appealed contending that the chancellor erred in restraining and enjoining him from using the statutory commissions charged for the collection of school taxes less only the actual separate expenses in collecting taxes and pro rata salary of the shefiff. The sheriff argues in support of his cross-appeal that the offices of sheriff and collector are two separate offices, the duties of which are combined under one elective officer (the sheriff) and that if the separate duties are to be performed by the sheriff without co-mingling the fees collected in the performance of the combined duties, and if the salaries and expenses of general operation of the two officers are to be separated and charged separately to the duties performed in the separate offices as decreed by the chancellor, the net result would be a separation of the office of sheriff from the office of collector in violation of Art. 7, § 46 of the Constitution. The facts of this case appear as follows: The sheriff and collector of Chicot County, as well as many other counties in the state of Arkansas, is still on a fee basis, and the two offices of sheriff and ex-officio collector are still combined under Art. 7, § 46 of the Constitution which provides.: “The qualified electors of each county shall elect one sheriff, who shall be ex-officio collector of taxes, unless otherwise provided by law. . .” The salary of the sheriff of Chicot County is limited to $5,000 per year by Art. 19, § 23 which is as follows: “No officer of this State, nor any county, city or town, shall receive, directly or indirectly, for salary, fees and perquisites more than five thousand dollars net profits per annum in par funds, and any and all sums in excess of this amount shall be paid into the State, county, city or town treasury as shall hereafter be directed by appropriate legislation.’’ The fees from which the sheriff’s salary is to be paid have been changed from time to time by statutory amendment and by Act No. 32 of the Acts of 1957, now appearing as Ark. Stat. Ann. § 12-1722 (Repl. 1968), as follows: “The sheriffs of the several counties of the State of Arkansas shall be allowed fees as follows: For serving every capias, simmons scire facias or attachment for each defendant and garnishee — $2.00. Then follows the numerous duties for which the sheriff is to receive separately designated fees. The fees payable to the collector of revenue have also been amended from time to time by the legislature and Ark. Stat. Ann. § 12-1726 (Repl. 1968) provides as follows: “Said Collector shall be allowed commissions for collecting the revenue in the year 1949 and thereafter as follows: For the first Ten Thousand Dollars [$10,000] collected 5 per cent in kind; for all sums over Ten Thousand Dollars [$10,000] and under Twenty Thousand Dollars [$20,000] collected 4 1/2 per cent in kind; for all sums over Twenty Thousand Dollars [$20,000] collected, 4 per cent in kind; provided, however, that in counties whose population is not less that 8,597 and not more than 8,610, according to the last Federal census, said Collector shall be allowed a commission of five per cent [5%] upon all funds collected by him. Provided that the increased Commission herein provided shall not apply to taxes levied for school purposes.” (Emphasis added). Ark. Stat. Ann. § 84-901 (Repl. 1960) provides as follows: “The sheriff of each county shall be ex-officio collector of all taxes of his county until otherwise provided, and after giving bond as hereinafter prescribed in this act, and upon receiving the tax books of his county, he shall proceed to collect the same according to law. Each collector may appoint one or more deputies to assist him in the collection of taxes, and shall take such bond and security from the person appointed as he deems necessary for his indemnity, and shall in all cases be liable for the proceedings and misconduct of his deputies.” Ark. Stat. Ann. § 84-933 (Repl. 1960) provides for the kind and manner of records to be kept by the tax collector, and § 84-936 authorizes the director of local audits to require tax collectors to keep any and all tax money collected in a separate account from all other money coming into their possession, and provides that no collector shall be authorized to check on such account except in favor of a treasurer or depository to whom he is required to pay such money, or to himself for commission or salary already earned. This section then provides for the preparation of the tax collector’s report for the purpose of audit and approval and provides for final settlement with the state. Ark. Stat. Ann. § 84-1401 (Repl. 1960) provides as follows: “The County and Probate Clerk, Circuit Clerk, Constables, Sheriff and Collector of each County in the State of Arkansas are required to pay over to the County Treasurer of each County on the first and fifteenth of each month and within two [2] days thereafter all funds in each of their hands belonging to said County or its subdivision that is by law required to be paid into the County treasury, whether taxes, fines or any moneys that are collected for any purpose by law and belonging to said county; providing further that the collector shall pay to the state treasurer all moneys belonging to the State of Arkansas on the days above mentioned. This section does not mean that the Collector shall make a distribution of taxes to all funds, but that he shall settle with the County Treasurer in a lump sum and the County Treasurer shall credit the same to the Colllctor’s unapportioned account. Provided, further, that upon a certificate of the County Clerk the County Treasurer will transfer to the various funds ninety per cent [90%] of the advance payments made by the Collector from time to time during the collecting period and upon final settlement the proper adjustments will be made with the various accounts and the balance remaining in the unapportioned account will be distributed upon order of the County Court approving the final settlement of the Collector.” Now turning for a moment to the levying of taxes, Art. 16, § 11 of the Constitution provides. “No tax shall be levied except in pursuance of law, and every law imposing a tax shall state distinctly the object of the same; and no moneys arising from a tax levied for one purpose shall be used for any other purpose.” Ark. Stat. Ann. § 80-602 (Repl. 1960) provides for the levying of tax for school purposes and Ark. Stat. Ann. § 80-603 (Repl. 1960) provides as follows: “Rates voted for different funds of district school tax shall not be shown separately on the county tax books, but shall be shown there only in the total amount of district tax to be levied. Such school tax shall be collected in the same manner as county taxes are collected, at the same time and by the same person, and be paid into the county treasury. The county treasurer shall separate the proceeds of such taxes into the several funds as is provided by law, or by the county board of education as has been stated, or the school directors as is authorized by law.” Article 14, § 2, of the Constitution provides: “No money or property belonging to the public school fund, or to this State for the benefit of schools or universities, shall ever be used for any other than for the respective purposes to which it belongs.” Amendment No. 40 to Amendment No. 11 of Art. 14, § 3, of the Constitution removes the 18 mills limitation on the levying of taxes for school purposes and also ends with the following: “Provided, that no such tax shall be appropriated for any other purpose nor to any other district than that for which it is levied.” The facts as evidenced by the record in this particular case are to the effect that the sheriff and ex-officio collector of Chicot County deducted his salary of $5,000 and the expenses of both the offices of sheriff and tax collector from the statutory fees allowable for the services pertaining to both offices, and settled his account with the county treasurer after deducting his salary and expenses of both offices. The conclusion we reach in this case does not justify an attempt by this court to itemize, segregate and pro rate the fees and expenses involved in Chicot County. It is apparent from the record that the sheriff’s statutory fees derived from the performance of his duties as sheriff amounted to far less than his salary as sheriff and the actual expenses properly chargeable to the duties of his office as sheriff; whereas his statutory fees on the funds derived from tax collections appear to be considerably more that the actual cost properly chargeable to tax collections, so the sheriff simply paid the expenses of both offices from the fees allowable from both sources and paid the balance of his collections to the county treasurer as required by statute. It is obvious from the above constitutional amendments and amendments to amendments, as well as the above statutes relating to the sheriff’s office, the collector’s office, and taxation for various purposes, that the sheriffs and ex-officio collectors serving under a fee system are doing so under very difficult conditions. The crux of the complaint in this case is that the sheriff has used some of the tax funds levied for the benefit and maintenance of schools to defray the expenses of the sheriff’s office in carrying out the duties of that office in the area of law enforcement as well as to defray the expenses of the sheriff as ex-officio tax collector in carrying out his duties in the collection of taxes, and as a result the schools have paid more than their pro rata share of the expense of law enforcement and more than their pro rata share of the expense of all tax collections. The record is silent as to the school millage voted by the appellant school districts in this case, but it is apparent from the above statutory and constitutional provisions as well as from common knowledge, that the sheriff and collector of Chicot County collects taxes levied for various purposes upon which he is entitled to the statutory fee for his services as collector. The appellants alleged in their complaint that the four school districts are due the approximate amount of $25,752 in school funds diverted to the maintenance of office of sheriff and diverted from school funds for that purpose and in stating their contention in their complaint on this point, they state the problem and their suggested solution as follows: “The Defendant has transacted a large volume of business and the amount and description of the different items of fees are derived from numerous and different sources, and the expenditures are numerous and varied which renders the account so difficult and intricate that Plaintiffs are unable to allege with certainty the actual amount due the Plaintiffs, but it is believed and therefore alleged that the amount is approximately $25,752.00 as hereinafter set out: Dermott Special School District 4,840.89 Lakeside School District No. 1 8,715.95 Euroda Special School District 10,224.48 Chicot County School District 1,605.82 The account is so voluminous and complicated that only a Court of Equity in an action for accounting can render justice to the parties herein and decide the issues presented. Plaintiffs remedy at law is inadequate.” No fraud is alleged or proven in this case and no one questions the propriety, legality or necessity of the fees collected and expenses paid out by the sheriff, the only question pertains to the funds from which t»e amounts have been paid. It appears from the record that the citizens of Chicot County as well as the school districts have received full benefit for the money spent by the sheriff in maintaining law and order, as well as in collecting taxes through the sheriff’s office in Chicot County; but, the school districts argue that they have paid more than their proportionate share of the cost from taxes levied for their use and benefit under a constitutional prohibition against their use for any other purpose. The same argument, of course, could be made in connection with the collection of any other of the taxes collected by the sheriff in which a millage has been voted or assessed under state law for a specific purpose, but be that as it may, as the Constitution now stands the sheriff was in error in applying the fees allowed him on tax collections to the expenses of the sheriff’s office and in not charging the school districts involved in this case only their pro rata share of the cost and expense of collecting the school and other taxes. We conclude, therefore, that the chancellor was correct in so holding. The chancellor relied on our decision in County Board of Education v. Austin, 169 Ark. 436, 276 S.W. 2, and that case is almost on all fours with the case at bar, but under a special statute. The only practical difference in the Austin case and the case at bar is that in Austin, under a special statute, the fees were first paid into the county general fund and then paid out for various county purposes including sheriff’s salary and other expenses of office, and in the case at bar the funds were used for the same purpose without going through the county general fund. Under a special act of the legislature in the Austin case, certain officers including the sheriff and collector were authorized to deduct their salaries form the fees and commission on tax monies collected; to make a true report and settlement of same into the county treasury after deducting the amount of their respective salaries, and then § 17 of Act 173 of the Special Acts of 1919 provided: “That all money paid into the treasury arising from fees, emoluments and commissions, collected by the county officers under the provisions of this Act shall be paid into the County General Fund.” The question in that case was whether § 17 of the Act violated § 11 of Art. 16 and § 3 of Art. 14 of the Constitution with amendments thereto, and we held that it did because it plainly authorized a diversion of the school funds into the county general fund where it could be used for other than school purposes.