Argued on the merits September 12; affirmed October 2, 1934 ON THE MERITS (36 P.2d 179) IN BANC. Proceeding in quo warranto by the State, by A.E. Hagglund, as District Attorney for Tillamook county, on the relation of the Security Savings Trust Company, as trustee for the heirs of Warren E. McCord, *Page 282 deceased, and others, against School District No. 9 of Tillamook county and others to test the validity of the orders of the District Boundary Board of Tillamook county purporting to add a large body of relator's land to School District No. 9 in such county. From a judgment of dismissal, relators appeal.
AFFIRMED. As stated by Mr. Chief Justice RAND, in overruling defendants' motion to dismiss relators' appeal, this proceeding is based upon section 5-604, Oregon Code 1930. Among other things, that section 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 the person offending when any person shall unlawfully hold or exercise any franchise within this state.
Relators contend that the exercise of control by defendants over certain portions of relators' lands for school purposes by levying taxes thereon for such purposes is unlawful. Defendants seek to justify by reason of certain orders of the district boundary board of Tillamook county whereby said portions of relators' lands were added to and included within the limits of said defendant, School District No. 9 of said county. *Page 283
Defendants also defensively plead the statute of limitations, laches, acquiescence and estoppel.
Relators urge that the orders of said district boundary board are invalid because in contravention of the statute requiring the county to be divided into convenient subdivisions to be known as school districts (sections 35-601 and 35-901, Oregon Code 1930), and requiring all school districts to be formed of contiguous territory (section 35-905, Oregon Code 1930). Relators insist that in respect to their lands, in said school district, said district is not a convenient subdivision; that their property is not contiguous to the other portion of said district; and that the addition to said school district of their lands was made only for the purpose of increasing the amount of taxes to be collected by said school district.
The major portion of relators' lands now in said School District No. 9 was added thereto by an order made March 8, 1912.
On April 5, 1912, a comparatively small portion included in the area of relators' lands added the month before was excluded from School District No. 9, and a different portion from any theretofore included, which was also comparatively small, was added thereto. By this order of April 5, 1912, a strip approximately 10 rods wide was taken from School District No. 1 and added to School District No. 9. This strip comprises the connection between district No. 9 as originally formed and relators' lands.
On September 10, 1921, an order again was made excluding a small portion and including a different portion of relators' lands. On April 14, 1922, an order was made adding a comparatively small portion of relators' lands to said district. On September 28, 1931, *Page 284 approximately nine-sixteenths of a section of relators' lands, not theretofore included, were added to said school district. We avoid the prolixity of attempted greater exactitude and more specific description, because we think that inasmuch as the strip connecting relators' lands with the remaining part of said school district remained the same and the general form, location and condition of relators' lands in said district were unchanged, the same questions as to contiguity and convenience with respect to relators' lands attend and appear upon each of the orders above mentioned. In saying this, we are not unmindful that upon the advent of the railroad in 1911, most of the people, who had lived in the vicinity of relators' lands and upon them in said district, moved away leaving but a very few children, not more than half of a dozen of school age in that part of said district.
Since 1912 up to and including the year 1931, relators have paid the taxes on their lands in said School District No. 9, including the special taxes levied in said school district.
Upon the question of statute of limitations, defendants argue that the amendment of 1903, which changed the statute of 1862, merely restored the rule of the common law. The statute of 1862 subjected actions by the state to the bar of the statute of limitations. Our present statute, which comprises the amendment of 1903, is as follows:
"The limitation prescribed in this title shall not apply to actions brought in the name of the state, or any county, or other public corporation therein, or for its benefit, but causes of action that have heretofore become barred by virtue of any statutory provision are not intended to be revived hereby. "Section 1-211, Oregon Code 1930. *Page 285
We think that the amendment above quoted went further than merely to reinstate the common law rule. It plainly exempts from the statute actions brought in the name of the state to which class the case at bar belongs.
Relators urge that the defense of laches and acquiescence are available in suits of equity only, and that, inasmuch as the instant case is an action at law, those defenses cannot be interposed herein.
The writ of quo warranto is an ancient common law writ and remedy. The history of its origin is obscured in antiquity. It first appeared upon the English statute books in the statute 6 Edw. 1, known as the Statute of Gloucester. Quo warranto had its origin in the theory that all special privileges (franchises) which are conferred upon an individual or corporation and do not belong to the citizens of the county generally as a matter of common right are the gift or grant of the King.
When, therefore, it was claimed that such special privilege had been usurped without gift or grant thereof from the sovereign, or where the privilege so conferred was alleged to have been abused, or the conditions thereof had not been observed, a writ was issued at the suit of the crown requiring the party charged with the usurpation to appear and show by what warrant or authority he assumed to exercise the privilege thus challenged. It issued from a court of chancery: 51 C.J. 309-310, Subject, Quo Warranto, sections 2 and 3, and notes. Issuing from a court of chancery and commanding a return of a nature foreign to the writs of the courts of law, it follows that by the common law quo warranto was an authorized process for the assertion of a remedy in its nature equitable, namely, the disclosure by defendant *Page 286 of the claim under which he exercises the franchise in question.
The statute of Oregon gives a remedy in lieu of the common law writ of quo warranto and calls that remedy an action at law. It is in truth merely a statutory proceeding for the exercise of the equitable right to compel disclosure as above mentioned, as well as to determine whether the franchise in question is being legally exercised.
In 1912, this court decided the case of State ex rel. v. Portof Tillamook, 62 Or. 332, 334 (124 P. 637, Ann. Cas. 1914C, 483), in which Mr. Justice BEAN, speaking for the court, said:
"It is seldom that laches are imputed to a state in a quo warranto action to test the legality of an incorporation where the rights of the public are involved."
The interval which had elapsed in that case was less than two years. Moreover, the language used by the learned and experienced jurist clearly implies that there are cases, though infrequently arising, where the state has been precluded by laches from maintaining quo warranto proceedings: State v. Town ofMansfield, 99 Mo. App. 146 (72 S.W. 471); State v. Bailey,19 Ind. 452; State v. Lathrop School District, 314 Mo. 315 (284 S.W. 135); State v. Missouri Utilities Co., 331 Mo. 337 (53 S.W.2d 394, 399, 89 A.L.R. 607); State v. Kinkade,192 Iowa, 1362 (186 N.W. 662).
In O'Leary v. Reiner, 9 N.J. Misc. 950 (156 A. 120), the supreme court of New Jersey say:
"Although it may be conceded that lapse of time will not bar the state through its attorney general from successfully prosecuting a quo warranto proceeding where the rights of the state are involved, this doctrine has no application where the writ is sued out by a private relator. In such a case, unreasonable delay *Page 287 on the part of the relator may properly preclude him from maintaining the proceeding."
In 1918, this court decided the case of State v. Hyde,88 Or. 1 (169 P. 757, Ann. Cas. 1918E, 688). There, in a characteristically exhaustive and scholarly opinion, Mr. Justice McCAMANT, speaking for the court, announces that this court is committed to the principle that the doctrine of laches is applicable to the state. He cites the cases of State v. WarnerValley Stock Co., 56 Or. 283, 304 (106 P. 780, 108 P. 861);United States v. White, 17 Fed. 561, 565 (9 Sawy. 125); andCommonwealth v. Bala Etc. Turnpike Co., 153 Pa. 47, 53 (25 A. 1105, 1106), and quotes from the case last cited as follows:
"Time, together with other elements, may make up a species of fraud, and estop even sovereignty from exercising its legal rights."
The record discloses that in 1912, the defendants, school district, issued bonds in the sum of $35,000 from the proceeds of which a high school building was erected. In 1921, bonds were issued in the sum of $17,000 from the proceeds of which a gymnasium was erected. In 1923, a building was erected known as the Liberty School building at an expense of $97,000. In 1924, the amount of bonds outstanding was about $150,000. In 1927, bonds were issued in the sum of $20,000; and another school building was erected at an expense of $72,000. At the time of the trial in the circuit court the outstanding bonded indebtedness of said district was approximately $59,000, which was offset by a sinking fund of approximately $26,000; and there was a warrant indebtedness of approximately $55,000. The warrants of said district are not marketable because of the pendency of this proceeding. To pay said bonds *Page 288 and warrants said defendant, school district, depends entirely upon the taxes derived from the assessable property within said district.
We think that these circumstances evidence a reliance upon the course taken by relators in paying each year for 19 years the taxes levied upon their lands for the purposes of said defendant, school district, as a representation by conduct that said orders of the district boundary board were valid and that no question would be urged by relators as to their validity and regularity. Reliance is not justified where knowledge to the contrary obtains. In the case at bar, nothing is shown indicating that before the institution of this proceeding relators claimed or asserted that said orders were invalid. While the location, nature, form and other characteristics of relators' property were known, as yet, no holding of this court had been made to the effect that such facts invalidate and render nugatory the order enlarging said district to include such lands.
This court in speaking of "non contiguous" parcels as affecting the right of exemption as a homestead has said:
"* * * there are some cases, where the lots are connected by a private easement across the intervening land, in which the lots can be held to be contiguous, but the easement is an interest in the intervening land itself, and while such holdings seem to be pushing the doctrine of continuity to its extreme extent, yet in view of the benevolent purposes of the statute, it is probably a view that the courts might well acquiesce in." Cabler v.Alexander, 111 Or. 257, 271 (224 P. 1076).
In view of these circumstances, while the present contentions of relators, if seasonably urged, would have been very persuasive to this court, it cannot be said *Page 289 that defendants, whose functions are administrative rather than judicial, had such knowledge that they were unwarranted in believing that said orders were valid and that relators would not question the validity thereof. Certainly the discretion vested by statute in the district boundary board is such that no unworthy motive should be ascribed by the school district or its officers to the district boundary board because of its efforts to divide the county into school districts as required by statute.
Moreover, granting or refusing leave to institute a quo warranto proceeding in jurisdictions, where leave of court must first be had, rests largely in the discretion of the court when the application is made. In exercising its discretion, the court may and should consider all the circumstances of the case, the motives of the relator in having the proceedings instituted, the time which has elapsed since the cause of complaint occurred and whether the public interest will be served by allowing the information to be filed; and it may refuse leave, or decline to entertain the proceedings upon considerations of public policy, interest or convenience or because of long, unexcused and prejudiced delay or acquiescence on the part of the person complaining; and in a proceeding brought for the benefit of the relator primarily, the court's discretion is much greater than where purely public interests are involved: 51 C.J. 328, section 27, and authorities cited in the note, Subject, Quo Warranto.
We think that in jurisdictions, such as ours, where leave of court need not be obtained before the filing of the action, no less discretion is vested in the court in its consideration of the case on its merits. In an early case, the supreme court of Michigan used the following language: *Page 290
"Although there is no statute limiting the time within which proceedings of this nature shall be instituted, yet the court of King's Bench in England, has exercised a sound discretion in this respect, and refused to permit information to be filed, at the instance of private individuals, if there has been unreasonable delay in invoking its extraordinary interposition. When the information is filed by the attorney general, which may be done without a preliminary application to the court, that discretion will be exercised upon the hearing of the cause. This rule we think not only salutary, but reasonable; and it is to be applied to cases as they arise, according to circumstances, until the legislature, (as in England) shall deem it proper to prescribe some uniform rule on the subject." People v. Oakland CountyBank, 1 Doug. (Mich.) 282, 286.
The same principle is announced in State v. Town ofMansfield, 99 Mo. App. 146 (72 S.W. 471).
Considerations of public policy include a regard for the educational system of the commonwealth. All popular governments must depend for their continuance upon the intelligence and intellectual attainments of their citizens. To reduce by 40 per cent the income from taxation of defendant, school district, after 19 years of dependence and reliance thereupon would seriously cripple and impair its efficiency and deprive the school population therein of the opportunity to equip themselves for the duties of citizenship.
The equitable nature of this proceeding renders advisory only and not conclusive on appeal the statements set forth in the judgment of the trial court to the effect that, in adding relators' lands to said school district, the district boundary board acted fraudulently.
Impelled by the views hereinabove expressed, we find that the learned and experienced trial judge arrived at a correct conclusion when he entered an order of dismissal herein, and such order is hereby affirmed. *Page 291