Robbins v. School District No. 1

By the Court — McMillan, J. — The first question presented in this case for our determination is whether School District No. 2 of Anoka County, the original contracting party, had power to incur the indebtedness for which this action is brought. The statute in force at the time of making the contract set forth in the complaint, in defining the powers of school district meetings, prescribes among other things that they shall have power “ to designate a site for the district school house; to levy such tax (not exceeding six hundred dollars in any one year) on the taxable property in the district as the meeting shall deem sufficient — 346 — to purchase or lease a suitable site for a school house, and to build, hire or purchase such school house, and keep in repair and furnish the same with necessary fuel and appendages.” Comp. Stat., p. 358, sec. 64, subdiv. 4, 5. The same statute prescribes, among other things, as the duty of the trustees: “ To purchase or lease a site for the district school house, as designated by a meeting of the district, and to build, hire or purchase, keep in repair- and furnish such school house with necessai’y fuel and appendages out óf the funds collected and paid to them for such purpose, and to have the custody and safe keeping of the district school house.” Comp. Stat., p. 360, seC. 70, subdiv. 4. It is evident from the sections cited that the directions to contract for the erection or lease of a school house must come from the district meeting, and in the poAvers conferred on that meeting there is no limitations as to the amount which shall be expended for the purposes designated, the only limitation being as to the amount of tax which may be levied in any one year, namely, six hundred dollars. With this restriction it is left to the inhabitants of the district to determine whether their necessities will require thbm to incur a greater amount of expense for the objects mentioned than can be defrayed in any one year. So far, therefore, as the district meeting is concerned, in our opinion, there is nothing in the statute preventing them from directing the trustees to incur’ a greater indebtedness than may be met by the tax levied for one year. Nor does the section prescribing the duties of the trustees, conflict with this view. It cannot be doubted that the poAver to lease a site for the'erection of a school house is conferred on the trustees. It is not reasonable to suppose that it was intended by the statute to confine them to a single year, or the fraction of a year, as the term of the lease of a site upon Avhich the district would incur the expense of erecting a school house, nor that the school district should be placed at the disadvantage of not being able to contract a lease by the terms of which the rent should be payable in installments, yet if the collection and possession of the funds is a condition precedent to the right of the trustees to — 347 — contract, they could not lease a school house or a site for a school for a term of years without paying in advance all the rent which would accrue during the term; nor could they contract a lease for any term of. years by which the aggregate amount of rent reserved should exceed six hundred dollars. Indeed, the district could do nothing whatever in the accomplishment of the purposes for which it was organized until a tax was levied, assessed, collected and paid to the trustees. Such could not have been the intention of the statute. The restriction is general and applies alike to leasing and building — both are in the same category. We think, therefore, the effect of the statute' is to limit the fund out of which payment for the purposes -specified therein shall .be made by the trustees, but it does- not require that the funds shall be collected and paid to them before they can contract or purchase. "We are of opinion, therefore, that the trustees, in this instance, had authority to incur the indebtedness sued upon, and postpone the payment of.it to a future day, and to contract for interest as the consideration of the forbearance. As this action is brought upon the accounting between the plaintiff and the trustees of the school district, and the evidence of indebtedness given by them thereon, which is still in the hands of the promisee, it is not necessary to determine, nor are we to be understood as deciding, that the trustees have power to execute negotiable paper. The instruments, however, are valid between the parties, as a contract for forbear'ance and a promise to pay the amount specified, which will bind the successors of -the original trustees, and upon which suit may be brought against the district. comp. Stat., page 616, Secs. 15, 16; Hart & Munson vs. Regents of the University, &c., 7 Minn., 61. And this whether the trustees are in possession of the particular fund out of which the debt is payable or not. In New York under a statute similar to our own, in an action of assumpsit for work, labor and material in building a school house for a school district, when, the work was done under a written contract between the plaintiff and the trustees of the school district, and the a'ction was brought against the successors of the trustees who made the contract, .it was held by the Court of Appeals, Justice — 348 — Bronson delivering the opinion, that the defendants were liable on the valid contract of their predecessors in office whether they had funds or not. Williams vs. Keech and others, 4 Hill, 168; Stanton vs. Camp, 4 Barb., 277. It remains to consider whether the action can be maintained against the defendant. The corporation School District, No. 2, of the County of Anoka, which contracted this indebtedness, was formed under Sec. 59, Ch: 23, Comp. Stat., page 357. This act remained in force until its repeal by the act approved March 1, 1861. The latter act created each township organized, or that might thereafter be organized in any county, a school district and body corporate, and vested in it the title to all lands or other property then held or which might thereafter be acquired for school district purposes in any such town, and provided that the several districts should be subdivided into subdistricts creating each subdistrict a body corporate. The 5th section of the act provided that the several school districts organized before the passage of the act, should be subdistricts of the town in which they were situated, and might be altered by the trustees of the district in the manner provided in the act. The 7th” section prescribes the mode of formation and alteration of subdistricts. By the operation of section 5 of the act, school district, No. 2, of Anoka County, the contracting party in this case became sub-district No. 2, of the town of Anoka, the only change being that oí its title. Under the provisions of section 7 of the act, by the action of the trustees of the district of the town of Anoka, it was united with subdistrict No. 1, of the same town, or as the complaint alleges “was merged in subdistrict No. l,”both subdistricts constituting subdistrict No. 1, of the town of Anoka. The act of 1861, under which the union of the two .subdistricts took place, was repealed by the act approved March 6, 3 862. By the last act each subdistrict organized, or set off but not organized, and each district thereafter organized, is declared to be a school district and body corporate, and is vested with the title to all land and — 349 — other property held at the passage of the act, or which may thereafter be acquired for school district purposes in such district. By the operation of the act of 1862, it will be perceived the style of “subdistrict No. 1, of the town of Anoka,” was changed to “school district No. 1, of the county of Anoka,” which is the present defendant, no other change being effected. The mere change of name does not affect the existence or character of the corporation, nor the rights of parties dealing with it. Gould vs. Subdistrict No. 3, &c., 7 Minn., 203. The only substantive change, therefore, in these districts was that effected by the action of the trustees under the act of 1862, in uniting the two subdistricts. W,e will consider the effect of this action. The allegation in the complaint is that subdistrict No. 2, was merged in subdistrict No. 1. This allegation is not denied. If it was the intention of the trustees to preserve the existence of subdistrict No. 1, and merely to incorporate subdistriot No. 2 into it, we apprehend their intention must prevail; we are to arrive at the effect of the action as to the creation of a new corporation, or the continuance of an old one by the intention of the trustees. As the action of the trustees is not in evidence before us, the only way we can arrive at the intention is from the pleading, and as the fact is pleaded as a merger of subdistrict No. 2 in subdistrict No. 1, and.is not denied, we think the effect of the action was to preserve the existence of subdistrict No..l, and incorporate subdistrict No. 2 into it. “To ascertain whether a charter create a new corporation or merely continue the existence of an old one, we must look to its terms and give them a construction consistent with the legislative intent of the corporators.” But regarding the action of the trustees. in the light of a consolidation or union of both subdistricts, we think the effect in this case is the same. The identity or separate existence of each is lost and absorbed in the new corporation created by the consolidation. The property real and personal of each of the original subdistricts is vested in the subdistrict formed from them. The purposes of the new and old corporations are identical; the ter — 350 — ritorial limits of the latter are the same as the former, and while the corporation thus formed must be conceded t& be a new creation, it is not distinct from the old subdistricts, but must be regarded as a legislative merger of the old corporations into the new one. This is to be distinguished from a dissolution in law of the old corporations. By the latter at common law the personal estate of the corporation escheats to the State, and its realty -reverts to the grantor or his heirs; by the former the new corporation succeeds to the rights and liabilities of the old one. Angell & Ames on Corporations, Secs. 779, 790. The saving clause in section 60 of the act preserving the rights of districts, as well as parties dealing with them, whatever may be its extent, we do not think affects this case. The right of action is preserved, but the remedy must be had against the corporation as it now exists. The action, therefore, is properly brought. As the indebtedness sued upon is payable out of a particular fund, the judgment must be executed out of the funds levied, assessed and collected by the trustees, or to be levied, assessed and collected by them for that purpose. Judgment affirmed.