Splonskofsky v. Minto

Mr. Justice Burnett

delivered the opinion of the court.

The statute relating to union high schools is found in Sections 4192 to 4210, inclusive,- L. O. L. It was stipulated at the hearing that the three districts mentioned are all districts of the third class; each having less than 200 children of school age within its boundaries. To initiate a scheme for a union high school composed of districts of the third class, it is required that a petition, signed by no less than one-third of the legal voters of *566 each district, shall be addressed to the district boundary board, requesting that board to require the school boards of each of the districts to state in the notice for the next annual school meeting or election that the question of uniting the districts for high school purposes only will be submitted. The district boundary board is required to direct the school board to give the notices as requested in the petition, and the form of ballot is prescribed: “For Union High School — Yes and No.” Provision is made for the returns of the election to the district boundary board, which canvasses the result; and, if it finds that a majority of all votes cast on the high school subject in each district voting thereon is in favor of uniting the districts for high school purposes, it shall immediately notify the respective school boards concerned of the result, and shall declare the territory comprising such district to be a union high school district, giving it a number in the order of their formation in the county. Section 4194, L. O. L.

1. It is said in the complaint, in substance, that the district boundary board did not direct the notices to be given of the election in the manner provided by law, and did not notify the respective districts in the manner provided by law of the establishment of the union high school district. These allegations, already quoted in the statement of the case, are not sufficient to call upon the defendant'to make his defense in that respect. To say that the matter was done or not done in accordance with the provisions of the law is only stating a conclusion, and not a fact. It is better to state the facts and allow the court to draw the- conclusions sought.

2. It appears in evidence that an election was actually held in each of the districts, and that the majority of all the votes cast in each district was in favor of the project of a union high school district. It appears, also, that *567 the district boundary board declared the three districts to be union high school district No. 1. By Section 4198, L. O. L., it is provided that, if the union high school district is formed by three or more districts of the third class, the member of each of such boards who has served longest since his last election shall be ex officio a member of the union high school board. Such are the men in this instance who organized and acted as members of the high school board. Thus it is that in the organization of high school districts out of three districts of the third class the board of directors of the new organization is created by operation of law, and an appointment is not necessary for.its existence.

3. The duties of a union high school board are thus prescribed in Section 4206, subd. 2, L. O. L.:

“They shall prepare annually an estimate of the amount of funds necessary to carry out the purposes for which the union high school district was established, and shall notify the board of each school district of its proportion of such expense not later than thirty days before the date on which a district must report its tax levy to the county clerks. The basis for estimating the proportion of expense each district shall pay shall be the assessed valuation for the school district for the current year. School districts forming a part of a union high school district shall, not oftener than once a year, levy a sufficient tax, not to exceed ten mills on the taxable value of the respective districts, to meet the pro rata share of expense apportioned to it by the union high school board, and should any district fail to levy such tax the high school board is hereby authorized to levy such tax on such district. Should the union high school board in any high school district fail to make the estimate provided for in this section, it shall be the duty of the district boundary board to make such estimate. * * ”

By other paragraphs of the same section, when authorized by a majority vote of the legal voters present at any legally called school meeting in a union high school *568 district, the board may contract a debt on behalf of the district by borrowing money or otherwise, and issue negotiable, interest-bearing warrants and levy a tax on the taxable property of the district to pay interest, and may, when legally authorized, secure land and cause to be erected thereon a suitable building. After various other provisions, not necessary to mention, the chapter on high school ends with Section 4210, as follows:

“All laws governing regular school districts and officers shall apply to union high school districts and officers so far as applicable.”

Relating to regular school districts, Section 4026, L. O. L., reads thus:

“All school districts now existing or that shall be organized in pursuance of this act shall be to all intents and purposes bodies corporate, competent to transact all business coming under their jurisdiction, and sue and be sued. * * ”

Taking all these statutory provisions together, it is manifest that, for all the purposes of the statutes quoted, a union high school district is a body corporate. The plaintiffs argue that it is impossible for two corporations with like purposes to exist in the same territory. This principle, sound as it may be, does not apply to the present contention. The high school is not concerned with the primary branches of education taught in the common schools. Its field of activity is enlarged and different in scope from that of the ordinary districts. With the design of promoting advanced education, the legislative power has provided for an organization upon which it has conferred the characteristics of the ordinary body corporate engaged in similar undertakings. The two classes of districts complement one another, but do not conflict in their organization. In that they are all branches of the government, we might as well say that *569 road districts, school districts, and drainage districts conflict with each other, because they operate in the same territory.

4. In Yamhill County v. Foster, 53 Or. 124 ( 99 Pac. 286 ), this court laid down the-principle that “it is a general rule that a court of equity will not interfere to restrain the collection of public revenue for mere illegality or irregularity in the proceeding; but its jurisdiction is confined to cases where the tax itself is not authorized by law, or is assessed on property not subject to taxation, or the persons exacting it are without authority in the premises, or have proceeded fraudulently, or some other ground of equitable interference is shown.” We have quoted the statute authorizing such a tax as the one now in question, and it is made assessable on property within the respective school districts. It is not pretended in the complaint that the defendant or any of the school officers acted fraudulently. Under the rule laid down, the question, then, is reduced to this: Whether or not the persons exacting the tax are without authority in the premises. The grievance of the plaintiffs centers in the contention that the high school district is not properly organized, so as to empower it to levy the taxes in question. Judge Thompson, writing in 10 Cyc. 252, says:

“A corporation de jure is said to be one whose right to exercise a corporate function would prove invulnerable if assailed by the State in a quo warranto proceeding. * * A corporation de facto exists when there is (1) a charter or statute under which a corporation with the powers assumed might have been organized; (2) a bona fide attempt to organize a corporation under such a charter or statute; (3) an actual user of the corporate powers, or some of them, which might have been rightfully used by such an organization. Such being the proper conception of a corporation de facto, it follows that a substantial compliance with the law in effecting *570 a corporate organization is not necessary to constitute the body a corporation de facto, because that makes it a corporation de jure.”

In addition to what has already been said, we learn from the testimony that the high school was in actual operation for a term of eight months in the high school district in question under charge of the board of directors, upon whom this duty was cast by operation of law, as we have already seen. Thus are present all the elements laid down in the rule by Judge Thompson constituting a de facto corporation.

In Umatilla Water Users’ Association v. Irvin, 56 Or. 414 ( 108 Pac. 1016 ), this court, speaking through Justice McBride, says: “In order to secure the peaceful and orderly government of the community, the rule has been established that the right of a de facto public officer to exercise the powers of his office cannot be investigated in a collateral proceeding. It must be determined once for all time in a direct proceeding to oust the officer.”

In Hamilton v. San Diego County, 108 Cal. 273 ( 41 Pac. 305 ), it is stated: “Where a board of supervisors, believing that certain territory within the limits of a city is outside of such limits, forms a school district out of the same, and the trustees appointed exercise the powers of school trustees, and taxes are levied for the district, and on an election, by voters of the' district, bonds are issued to buy land and build a schoolhouse, one who paid taxes so levied cannot recover the same out of funds in the hands of the county treasurer to the credit of the district, on the ground that the board of supervisors had no authority to organize the district, as the district had at least a de facto existence.”

The following authorities illustrate the principle that, unless challenged by a direct proceeding, the acts of a *571 cle facto corporation cannot be attacked collaterally by injunction: Trumbo v. People, 75 Ill. 561 ; Munson v. Miner, 22 Ill. 594 ; Samuels v. Drainage Com’n, 125 Ill. 536 ( 17 N. E. 829 ) ; People v. Knopf, 183 Ill. 410 ( 56 N. E. 155 ) ; Rosell v. Board of Education, 68 N. J. Law, 498 ( 53 Atl. 398 ) ; Hoey v. Collector, 39 N. J. Law, 75; Sudbury v. Heard, 103 Mass. 543 ; Koontz v. Hancock, 64 Md. 134 ( 20 Atl. 1039 ). Many authorities on this question are collected in the note to Holland v. Mayor of Baltimore, 11 Md. 186 ( 69 Am. Dec. 199 ).

The precedents cited by the plaintiffs in support of their contention are, almost without exception, either quo warranto cases or in certiorari to review the attempted formation of the corporation involved. These are both direct attacks upon the validity of the organization, while the present litigation is clearly a collateral onslaught. They also cite a few cases where the attempt was made to set up a corporation under a plainly unconstitutional statute, and it was held that the proceeding was void on its face, and hence open to collateral attack. Here, however, the statute is not assailed on constitutional grounds or oherwise, so that the latter mentioned citations are not controlling in the present instance.

Section 366, L. O. L., provides that “an action at law may be maintained in the name of the State upon the information of the prosecuting attorney or upon the relation of a private party against a person offending, in the following cases: (1). When any person shall usurp, intrude into or unlawfully hold or exercise any public office, civil or military, or any franchise within this State, or any office in a corporation, either public or private, created or formed by or under the authority of this State, or * * (3) When any association or number of persons act within this State as a corporation without being duly incorporated.”

*572 It is said in Section 369, L. O. L., that “* * in all other actions provided for in this chapter it shall be the duty of the proper prosecuting attorney to commence such action upon leave given, where leave is required, in every case of public interest, whenever he has reason to believe that a cause of action exists and can be proven, and also for like reasons in every case of private interest only in which satisfactory security is given to the State to indemnify it against the costs and expenses that may be incurred thereby.”

Without any showing of an attempt to commence an action, or that the district attorney has refused to countenance such a proceeding, we cannot justify the plaintiffs in ignoring this remedy at law and seeking the aid of government by injunction, especially since it appears in the testimony that many of these plaintiffs participated in the formation of the corporation by attending the election and voting at the same, and that one of them was a member of and participated in the organization of the union high school board.

5. Referring to the allegations of the complaint, we find it there alleged “that at a pretended meeting of the pretended union high school board of district No. 1, it was attempted to be called to order by the alleged chairman, J. E. Coulson, and it was attempted to be ordered that the alleged high school board of said pretended union high school district No. 1 levy the said pretended required four-mill special tax on the taxable property of each regular school district included in the said pretended high school district that should fail to make such pretended levy by December 10, 1910.” A review of the proceedings has shown that there exists a statute under which such corporation might have been organized. It also appears that there was a bona fide attempt to organize a corporation under such a statute, and that there *573 has been an actual user of the corporate powers which rightfully might be exercised by such an organization, in that it has maintained a school for at least eight months. Enough is shown, therefore, to constitute a de facto corporation, so that the pretense mentioned in the excerpt from the complaint, above quoted, becomes a reality, with the result that with this amendment the allegation is to the effect that the board itself resolved to levy the four mills special school tax, unless the regular school district should make the levy by December 10, 1910.

It is objected that the high school board had no right to make the levy in the first instance, and that no showing has been made that the regular board of district No. 97 was notified that such a levy would be required. To the union high school board, in the first instance, is committed the power to annually estimate the amount of funds necessary to carry out the purposes of the organization, and this must be calculated upon the assessed valuation of the school district for the current year. The regular school district is- required to levy a sufficient tax, not to exceed ten mills per dollar, on the taxable value of the respective districts to meet this pro rata share thus apportioned to it by the union high school board, with the condition that, should it fail to levy such tax, the high school board itself shall levy the tax, and in default of action of both of them the district boundary board is entitled to make the estimate. When the requisition is thus made by the high school board, it is the duty of the regular district to make the necessary levy; the only limit on the power being the ten-mill maximum per annum mentioned in the statute. A fair and practical construction of this statute is to the effect that there are three sources from which a levy of the kind may come, each with concurrent jurisdiction to make the same, viz., *574 the regular district board, the high school board, and the district boundary board. It is not pretended that district No. 97 made the required levy. It can make no difference to plaintiffs whether the levy is made by the high school board or the regular district board. The latter cannot lawfully do less or more than what is required of it by the high school board within the ten-mill limit. The demand upon the individual taxpayer would be the same in amount, whether it came from either of the three sources above mentioned.

6. Besides all this, the plaintiffs, qualifying themselves to commence 'this suit, allege, in substance, that they are residents, inhabitants, and legal voters within district No. 97, and have real and personal property situate therein. This allegation is denied. Conceding that this states grounds authorizing them to prosecute the suit, it has utterly failed of proof, because there is no testimony whatever on that subject. Although they may have alleged sufficient to qualify them as parties plaintiff, they have utterly failed to prove the same; and hence upon this, if upon no other grounds, their suit should fail.

Upon the whole case, we are of the opinion that the plaintiffs have not shown a cause of suit; and hence the decree of the court below must be reversed, and one here entered, dismissing the complaint.

Reversed: Suit Dismissed.