Lauderdale County School District Ex Rel. Board of Education v. Enterprise Consolidated School District Ex Rel. Board of Education

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________

No. 92-7501
_______________

THE LAUDERDALE COUNTY SCHOOL DISTRICT,
By and Through Its Board of Education,
JOHN L. KNIGHT, WANDA McPHAIL, and
ARNOLD M. TREAT,

Plaintiffs-Appellees
Cross-Appellants,

VERSUS

ENTERPRISE CONSOLIDATED SCHOOL DISTRICT,
by and Through Its Board of Education,

Defendant-Appellant
Cross-Appellee.

* * * * * *
*

QUITMAN CONSOLIDATED SCHOOL DISTRICT,

Plaintiff-Appellant
Cross-Appellee,

VERSUS

ENTERPRISE CONSOLIDATED SCHOOL DISTRICT,

Defendant-Appellee
Cross-Appellant.

_________________________

Appeals from the United States District Court
for the Southern District of Mississippi
_________________________
(June 16, 1994)
Before WOOD,1 SMITH, DUHÉ, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

This is a consolidated case involving three Mississippi school

districts: the Lauderdale County School District ("Lauderdale"),

the Enterprise School District ("Enterprise"), and the Quitman

School District ("Quitman"). The magistrate judge ordered the

transfer of certain students from Enterprise to Lauderdale and from

Quitman to Enterprise. We reverse these transfers, but we affirm

the other portions of the judgment, regarding interdistrict

payments and the annexation of the Stonewall area by Quitman.

I. Facts.

In 1953, the Mississippi legislature passed a law reorganizing

the state school system in order to provide separate but equal

education for white and black students. 1953 Miss. Laws, Extraor-

dinary Session, ch. 12. All of the school districts in Mississippi

were reorganized by July 1, 1957. The three school districts that

are parties to this case are Lauderdale, which encompasses all of

Lauderdale County except for the City of Meridian; Enterprise,

which encompasses the northern third of Clarke County; and Quitman,

encompassing the southern two-thirds of Clarke County. Lauderdale

County borders Clarke County on the north.

1
Circuit Judge of the Seventh Circuit, sitting by designation.

2
 A. Clarkdale School: Pre-desegregation.

Under the 1953 reorganization, Lauderdale County was divided

into two school districts, the Meridian Municipal Separate School

District, encompassing the City of Meridian and the surrounding

area, and Lauderdale, encompassing the remainder of Lauderdale

County. The pre-reorganization Clarkdale Line Consolidated School

District, which had included territory in both Lauderdale and

Clarke counties, was abolished and its territory placed under

control of Lauderdale. The unincorporated area of Meehan, located

in Lauderdale County along the border of Clarke County, was also

brought under Lauderdale's control.

The Clarkdale school,2 a de jure white school during segrega-

tion, straddles the border between Lauderdale County and Clarke

County. For a number of years, Enterprise and Lauderdale entered

into one-year agreements regarding the ownership and operation of

Clarkdale. On February 13, 1962, Lauderdale and Enterprise entered

into a twenty-five-year agreement (the "Clarkdale agreement")

providing that white students from northeastern Clarke County would

attend the Clarkdale school and that approximately 100 students in

the Meehan area in Lauderdale would attend the all-white Enterprise

school in the western part of the Enterprise district.3

2
The parties sometimes refer to a school as an "attendance center," e.g.,
"the Clarkdale Attendance Center."
3
The Clarkdale agreement provided, among other things, that Lauderdale
would operate the Clarkdale school; that Enterprise would take over the operation
of the school if Enterprise acquired a 51% or greater ownership of the property
of the school; that before any principals or teachers were hired at Clarkdale,
Lauderdale would submit their names to Enterprise 30 days before hiring them;
(continued...)

3
 Before desegregation, Lauderdale had one black school,

Middleton, which served the entire district. It had four white

schools: Northwest (now West), Northeast, Southeast, and

Clarkdale.

B. Stonewall: Pre-desegregation.

Under Mississippi's 1953 reorganization plan, Clarke County

was reorganized into two districts: the Clarke County Consolidated

School District (later Enterprise) and Quitman. Enterprise

comprised the northern part of the county, including an area called

"Northeast Clarke County," the town of Enterprise, the town of

Stonewall, and the area surrounding Stonewall.4 Quitman comprised

3
(...continued)
that Enterprise could object to the hiring of any principals or teachers at
Clarkdale; that if Lauderdale refused to consider any such objections, the matter
would be submitted to binding arbitration; that the Clarkdale school would be
jointly owned by the Lauderdale County Board of Education and the Board of
Trustees of the Clarke County Consolidated School District (later the Enterprise
school district); that the proportion of ownership would be based upon the
respective amounts of money contributed to the school by citizens in the
respective counties, the amount contributed by Lauderdale and the Clarke County
Consolidated School District, and the amount of state funds allocated to either
county district based upon attendance at Clarkdale; that the Clarkdale school
should be a "white attendance center" for grades one through twelve; that all
"eligible school children" in Northeast Clarke County would be assigned by the
Clarke County Consolidated School District to attend Clarkdale; that all
"eligible school children" in the Meehan area of Lauderdale County would attend
the Enterprise attendance center in the Clarke County Consolidated School
District; that each school district would pay for transportation of its students
attending Clarkdale; that "[a]ll state funds of every description, except
transportation funds, shall follow the child, and shall accrue to and be paid
directly by the state to the district in which the child actually attends school,
and for this purpose the Clarkdale Attendance Center shall be considered to be
in the Lauderdale County School District so long as it shall operate the same";
that the total cost of the school would be divided between the districts on the
basis of the average daily attendance of students; that the contract would be
effective upon approval by the necessary parties and would run for a period of
25 years; and that breach of one part of the agreement would not affect the
binding effect of the agreement.
4
Stonewall and the surrounding area are referred to as the "Stonewall
area."

4
the southern part of the county, including the town of Quitman. In

addition to the two school districts, there was the Clarke County

Board of Education, which had limited supervisory authority over

the transportation of Enterprise and Quitman students and the

authority to hear transfer appeals.

Enterprise had a white elementary school, a white high school,

a black elementary school, and a black high school.5 Quitman had

two black elementary schools, one black high school, one white high

school, one white lower elementary school, one white upper

elementary school, and the Stonewall School.

In 1962, Enterprise announced that it would convert the

Stonewall school, an all-white school, from grades 1-12 to grades

1-6. White parents in Stonewall petitioned to have the Stonewall

area detached from Enterprise and annexed to Quitman. The Quitman

district passed a resolution to annex the Stonewall area. The

Clarke County Board of Education tabled the Enterprise school

district's plan to convert the Stonewall school from grades 1-12 to

1-6 and adopted a resolution detaching the Stonewall territory from

Enterprise and annexing it to Quitman.

Enterprise and Quitman approved a twenty-five-year agreement

providing that all blacks in Stonewall would attend the all-black

school in Enterprise and that all state funds would be paid to the

district where the student attended school. This agreement was

part of a larger compromise agreement that settled litigation over

5
Enterprise Elementary School, Enterprise High School, Central Elementary
School, and Central High School, respectively.

5
ownership of Stonewall.

C. Desegregation.

In 1963, the United States brought a desegregation suit

against Lauderdale. United States v. Lauderdale Sch. Dist.,

No. 1367(E) (S.D. Tex.). In the same district court in 1965,

private plaintiffs filed a desegregation suit against Quitman,

Enterprise, and the Clarke County Board of Education.

Killingsworth v. Enterprise Consol. Sch. Dist., No. 1367(E) (S.D.

Miss.).

In 1967, the district court in Killingsworth instructed

Quitman and Enterprise to file desegregation plans. The court

tentatively accepted the "freedom of choice" desegregation plan

filed by the school districts but, on July 19, 1967, rejected the

"freedom of choice" plans and entered a final order that

(1) enjoined Enterprise, Quitman, and the Clarke County Board of

Education from discriminating on the basis of race or color,

(2) held that Enterprise, Quitman and the Clarke County Board shall

take affirmative action "to establish all school segregation and to

eliminate the effects of the dual system," (3) allowed all

students, irrespective of race or color, to exercise, every year,

the choice of which school in their district to attend, (4) held

that overcrowding of the particular school chosen will be the only

reason for denying the student's choice of which school to attend,

and (5) held that there will would be no more interdistrict

transfers between Enterprise and Quitman "except on terms and by

6
procedures generally applicable regardless of race." Although

asked to do so by plaintiffs in Killingsworth, the court did not

find the contract of June 11, 1962, between Enterprise and Quitman

unconstitutional.

The district court consolidated Killingsworth, Lauderdale, and

other pending desegregation cases. After consolidation, the cases

were reported as United States v. Hinds County School Board. On

July 3, 1969, in a consolidated appeal that included Lauderdale and

Killingsworth, this court reversed and remanded, directing the

district courts to request the United States Department of Health,

Education, and Welfare ("HEW") to collaborate with the school

boards to develop desegregation plans. United States v. Hinds

County Sch. Bd., 417 F.2d 852, 856-59 (5th Cir. 1969), cert.

denied, 390 U.S. 1032 (1970). If an individual school board and

HEW agreed to a desegregation plan by August 11, 1969, the district

courts were to implement the plan if it met constitutional

standards. Id. at 858. If no such agreement could be reached, the

district courts were to implement the HEW plan if it met

constitutional standards. Id. at 858-59.

HEW filed its plans for all three districts on August 11,

1969. On August 28, 1969, this court extended, at the government's

request, the deadline for filing plans from August 11 to

December 1. In effect, this allowed the parties additional time to

redraft the plans. On October 29, 1969, the Supreme Court vacated

the extension of the deadline, directing this court to issue

desegregation orders immediately. Alexander v. Holmes County Bd.

7
of Educ., 396 U.S. 19, 20 (1969) (per curiam). At its discretion,

this court could modify and implement the government plans. Id.

In response to Alexander, this court ordered that all thirty

permanent HEW plans prepared for school districts in the Southern

District of Mississippi, including Lauderdale, Enterprise, and

Quitman, be implemented immediately. United States v. Hinds County

Sch. Bd., 423 F.2d 1264, 1267-68 (5th Cir. 1969), cert. denied, 396

U.S. 1032 (1970).6

The August 11, 1969, HEW plan for Lauderdale contained the

following majority-to-minority transfer provision:

Whenever there shall exist schools containing a majority
of Negro students, this school district shall permit a
student (Negro or white) attending a school in which his
race is in the majority to choose to attend another
school where space is available, and where his race is in
a minority.

Thus, transfers between schools can occur if the student seeking

transfer is a minority in the transferee school. The plan also

contained a Singleton provision prohibiting the interdistrict

transfer of students unless the transfers are done on a

6
This court delayed implementation of a permanent plan for Quitman for one
year:
It appearing that the lack of buildings prevents the immediate
implementation of the permanent plan of the Office of Education
suggested for the Quitman Consolidated school district, the pupil
attendance interim plan of the Office of Education for this district
is authorized for use during the remainder of this school term
(App. 5). The permanent plan shall be effectuated commencing in
September, 1970. This relief is appropriate in view of the
similarity between the proposed attendance plan of the school
district and that of the Office of Education.
423 F.2d at 1268.

8
nondiscriminatory basis and do not increase segregation.7

The rest of the segregation plan, which dealt with attendance

patterns, was amended by this court so that Lauderdale would be

divided into four separate attendance zones of West Lauderdale,

Clarkdale, Southeast, and Northeast. United States v. Lauderdale

County Sch. Dist., No. E88-0059(L) (5th Cir. 1969) (unpublished).

All students living in the zones associated with the West

Lauderdale, Clarkdale, and Southeast schools would attend the

schools in each of the zones. The students residing in the

Northeast zone, which contains both the Middleton school and the

Northeast school, would attend the Middleton school if they were in

grades 1-6 and the Northeast school if they were in grades 7-12.

In the 1969-70 school year, when the desegregation plans were

formulated, Quitman contained 2,929 students, 1,458 (50%) black and

1,471 (50%) white. The desegregation plan projected that Quitman's

student population would total 3,146 students, 1,490 (47%) black

and 1,656 (53%) white. Enterprise's actual enrollment for the

1970-71 school year was 858 students, 339 (40%) black and 519 (60%)

white. Enterprise was projected to contain 768 students, 363 (47%)

black and 405 (53%) white, in 1969. Clarkdale's actual enrollment

as of April 15, 1970, was 553 (80%) white and 142 (20%) black,

7
"If the School District grants transfers to students living in the
district for their attendance at public schools outside the district, or if it
permits transfers into the district of students who live outside the district,
it shall do so on a non-discriminatory basis, except that it shall not consent
to transfers where the cumulative effect will reduce desegregation in either
district or reinforce the dual school system." This provision is named for
Singleton v. Jackson Mun. Separate Sch. Dist., 419 F.2d 1211 (5th Cir. 1969) (en
banc), rev'd in part sub nom. Carter v. West Feliciana Sch. Bd., 396 U.S. 290
(1970).

9
totaling 695. The HEW plans had projected that Clarkdale's

population would be 788 students, 203 (26%) black and 585 (74%)

white. Lauderdale's actual student population, as of April 15,

1970, totaled 4,583, of which 1,716 (37%) were black and 2,867

(63%) were white. The projected student population for Lauderdale

was 5,078 total, of which 1,926 (38%) were black and 3,150 (62%)

were white.

The HEW plans for Enterprise, Lauderdale, and Quitman called

for immediate desegregation of all schools. Like the Lauderdale

plan, the Enterprise and Quitman plans contained a majority-to-

minority transfer provision and a Singleton provision.

D. Clarkdale School: Post-desegregation.

After desegregation, the Northeast Clarke County students

continued to attend the Clarkdale school. Pursuant to the

Clarkdale agreement, Enterprise paid money to Lauderdale for

educating its students. But two years before the twenty-five-year

agreement expired, Enterprise stopped paying Lauderdale.

When the agreement expired, Enterprise refused to allow any

more transfers of its students to Lauderdale. The transfers

nonetheless continued to be made under the authority of the Clarke

County Board of Education, which overruled Enterprise's denials of

requests for transfer.

In the 1991-92 school year, Lauderdale approved the transfer

of 50 students from the old Meehan area, consisting of 36 white

students, 13 black, and one other. Similarly, the Clarke County

10
board approved the transfer of 309 Northeast Clarke County

students, 285 white and 24 black, for attendance at the Clarkdale

School in the 1991-92 school year. Enterprise had also accepted

transfers under an arrangement with Jasper County under which some

83 white students were currently allowed to transfer into

Enterprise.

Beginning with the 1991-92 school year, the magistrate judge

forbade any transfers from Jasper County to Enterprise and forbade

the transfer of Alabama residents to either Jasper County or

Enterprise. Effective January 1, 1992, the Clarke County board was

eliminated under a state-wide reorganization. In 1991-92,

Clarkdale had some 1,052 students on its rolls, 10% black and 90%

white.

E. Stonewall: Post-Desegregation.

Beginning with the school year 1968-69, Quitman refused to pay

Enterprise for educating students transferred from Stonewall and

expressly repudiated the June 11, 1962, agreement in 1977. In that

school year, 135 black students from the Stonewall area attended

schools in Enterprise.

From 1984-85 to 1990-91, an average of 99 black students per

year have transferred to Enterprise. The total number of transfer

students has grown steadily over the years, with approximately 331

students transferring to Enterprise for the 1991-92 school year

(including 31 students who reside in Quitman but attend Enterprise

because their parents or legal guardians are Enterprise instructors

11
or certificated employees). Quitman had denied each requested

transfer but was overruled by the Clarke County Board of Education.

On January 1, 1992, the Clarke County board was eliminated, and

Quitman's denials of the transfers stood.

In 1991-92, Quitman's student population was 2,609; its black

student population increased from 50% in 1969 to 54% in 1991-92.

Quitman now has four schools: a lower elementary school, an upper

elementary school, a junior high school, and a senior high school.

In 1991-92, Enterprise educated 819 students, 29% black and 71%

white. Of Enterprise's enrollment on September 30, 1991, 47% (396)

resided in Enterprise, 37% (300) resided in Stonewall, and 6%

resided in Meehan in Lauderdale County.

II. District Court Proceedings.

A. The Litigation.

Lauderdale filed an action in state court against Enterprise

and the Clarke County board, seeking a judgment against Enterprise

for failing to pay Lauderdale during the final two years of the

Clarkdale agreement and during the years after the agreement

expired. Enterprise removed the case to federal court and filed a

counterclaim, arguing that (1) the Clarkdale agreement had been

materially breached by Lauderdale, (2) the Clarkdale agreement was

unconstitutional, and (3) the transfer of Enterprise students to

Clarkdale violated Lauderdale's 1969 desegregation plan.

Enterprise also sought an injunction against future transfers of

Enterprise students to Clarkdale.

12
 Quitman filed suit in federal court against Enterprise and the

Clarke County board, seeking injunctive relief to prohibit the

transfer of Quitman students to Enterprise. Enterprise filed a

counterclaim alleging (1) that the annexation of Stonewall by

Enterprise was constitutionally void and (2) that Quitman owed

Enterprise for educating the Stonewall students since 1968.

The parties agreed to have the matters tried by the magistrate

judge, who consolidated the cases on October 26, 1989. The

Concerned Citizens of Stonewall, Clarke County, Mississippi

("Concerned Citizens"), earlier had moved to intervene in the

Quitman v. Enterprise case, No. E88-0065(L). On October 2, 1989,

the magistrate judge denied Concerned Citizens's motion to

intervene but granted it amicus curiae status. On December 15,

1989, Concerned Citizens filed a motion for relief from the order

denying intervention and appealed the denial to this court, which

dismissed the appeal of the denial of motion to intervene.8 The

magistrate judge denied Concerned Citizens's motion for relief.9

Because of numerous inaccuracies regarding transfers and

student addresses, the magistrate judge directed all parties to

prepare a statistical compilation of all affected students residing

in the respective school districts and required accurate address

information regarding all transfers. On July 5, 1991, the

magistrate judge issued his first opinion, concluding (1) that the

8
February 13, 1990 (Concerned Citizens had failed to file a timely
appellate brief.).
9
March 1, 1990.

13
Stonewall area was legally annexed to Quitman; (2) that students

residing in Northeast Clarke County but who attended Clarkdale

should be considered transfer students under Mississippi law; and

(3) that Enterprise should be maintained as a viable school

district.

On June 1, 1992, the magistrate judge issued a second opinion,

concluding (1) that 100-125 black students must be allowed to

transfer from the Stonewall area to Enterprise in order to preserve

the viability of the Enterprise district, to preserve racial

balance, and to perpetuate Killingsworth; (2) that Enterprise

should recover from Quitman for the years 1987-88 and 1988-89 under

MISS. CODE ANN. § 37-19-33, which then required payment of transfer

funds between districts in the same county; and (3) that Lauderdale

should recover fees from Enterprise for the 1985-86, 1986-87, 1987-

88, 1988-89 years, but for no other years.

On July 10, 1992, the magistrate judge issued the final

judgment, which adopted by reference the two previous opinions.

Under the final judgment, the Stonewall territory was deemed to be

part of Quitman. Beginning with the 1992-93 school year, all white

students residing in Stonewall would begin attending Quitman

schools rather than Enterprise schools. Any white student in

Stonewall desiring to attend Enterprise would have to submit a

transfer request in accordance with state law. High school

sophomores, juniors, and seniors enrolled in Enterprise schools in

the 1991-92 school year could continue to remain in Enterprise

until they graduated.

14
 The magistrate judge ordered that, beginning with the 1992-93

school year, Quitman must transfer between 100 and 125 black

Stonewall area students to Enterprise.10 Quitman would pay

Enterprise for the students transferred because of the court

judgment (i.e., all white students from Stonewall attending Quitman

during the transition years of 1992-93 through 1994-95, and 100 to

125 black students transferred in the years 1992-93 and following

years). The magistrate judge ordered Quitman to pay Enterprise

$205,596.91 for Stonewall area students who had attended Enterprise

schools in the years 1987-88 and 1988-89 ($81,022.00 for 1987-88

and $124,574.91 for 1988-89).

The area of Northeast Clarke County area, as defined in the

Clarkdale agreement of February 1962, was deemed to be part of

Enterprise. Those students residing in Northeast Clarke County,

but attending Clarkdale School, were deemed to be transfer

students. The judgment provided for transfers of certain students

in Northeast Clarke County to the Clarkdale school. Beginning with

the 1992-93 school year, a maximum of 125 whites would be allowed

to transfer to Clarkdale. Beginning with the 1992-93 school year,

all white students attending Clarkdale during the 1991-92 school

year, and all white kindergartners, would attend school in the

Enterprise school, with the exception of 10th, 11th, and 12th

graders, who could remain at Clarkdale. Any black student who

attended Clarkdale could continue to attend Clarkdale if he

10
Quitman and Enterprise had to allow all requests for transfer by black
students up to 125. At least 100 black students had to be transferred, even if
fewer than 100 requested a transfer.

15
requested a transfer. Enterprise would pay Lauderdale $302,562.30

for educating Enterprise's students during the 1985-86, 1986-87,

1987-88, and 1988-89 years.

On July 23, 1992, Concerned Citizens made a FED. R. CIV.

P. 59(e) motion to alter or amend the judgment. Quitman filed a

notice of appeal on July 27, 1992; Enterprise filed a notice of

appeal on August 7, 1992, and an amended notice three days later;

Lauderdale filed a notice of cross-appeal on August 20, 1992.

On November 16, 1992, the magistrate judge entered an order on

various post-judgment motions, granting a FED. R. CIV. P. 60(b)

motion by Lauderdale for relief from the final judgment, denying

Concerned Citizens's rule 59(e) motion, granting in part and denied

in part Enterprise's motion for modification of injunction pending

appeal and regarding assignment and transportation of students, and

denying a motion by Lauderdale concerning enforcement and/or

clarification of the first opinion and the final judgment.

Specifically, the court ordered that, first, the word "maximum"

would be replaced by the word "minimum" in the final judgment

regarding the number of white Northeast Clarke County students to

be transferred by Enterprise to the Clarkdale school. Second, up

to forty students in Meehan in Lauderdale County would be

transferred to Enterprise.

Third, Enterprise would be responsible, until further notice,

for transporting those students from Northeast Clarke County

attending the Clarkdale School. Fourth, all siblings of children

transferred either from Enterprise to Clarkdale or from Stonewall

16
to Enterprise under the magistrate judge's authority would also be

allowed to be transferred. Fifth, all students with parents

working in the Clarkdale School or the Enterprise schools would be

allowed to transfer to the school where their parents are employed.

On November 30, 1992, Quitman filed a rule 59(e) motion to

alter or amend the November 16 order. The magistrate judge has not

yet disposed of Quitman's rule 59(e) motion. Each party has filed

notices of appeal of the November 16 order.

The judgment went into effect at the beginning of the 1992-93

school year. Its transfer provisions were phased in during the

school years 1992-93 and 1993-94 and were to be fully applied in

the 1994-95 school year.

B. The Parties' Positions on Appeal.

Lauderdale's position on appeal is that we should affirm the

transfer of students to Clarkdale and, furthermore, that Enterprise

owes it money for students transferred during the 1989-90 and 1990-

91 academic years, not just during the 1985-89 years. Enterprise

argues that the magistrate judge erred by ordering transfers from

Northeast Clarke County to the Clarkdale school, that it should not

be required to pay money to Lauderdale for educating its students,

and further, that it should not be required to bus students to

Clarkdale. Quitman argues that the magistrate judge erred by

transferring 100 to 125 black students from the Stonewall area to

Enterprise and that it does not owe any money to Enterprise for

previous transfers. Quitman agrees with the magistrate judge's

17
decision to allocate the Stonewall area to the Quitman district.

With respect to the Stonewall area, Enterprise argues that the

magistrate judge erred in holding that the annexation to Quitman

was valid. In the event that the annexation is affirmed,

Enterprise contends that the transfer of black students from

Stonewall to Enterprise should be affirmed. Enterprise would even

want the transfers increased. Concerned Citizens, as amicus,

argues that the Stonewall annexation is invalid and that the

Stonewall area should be returned to Enterprise.

III. Appellate Jurisdiction.

A. Finality.

The July 10, 1992, judgment is a final judgment and, as such,

is reviewable on appeal. Under 28 U.S.C. § 1291, a court of

appeals has jurisdiction over final, appealable orders of a

district court. 28 U.S.C. § 1291. In order for a judgment to be

final, it must dispose of all claims of the parties:

In the absence of [a Rule 54(b) action], any order or
other form of decision, however designated, which
adjudicates fewer than all the claims or the rights and
liabilities of fewer than all the parties shall not
terminate the action as to any of the claims or parties,
and the order or other form of decision is subject to
revision at any time before the entry of judgment
adjudicating all the claims and the rights and
liabilities of all the parties.

FED. R. CIV. P. 54(b).

An examination of the July 10 judgment reveals that it

disposed of all claims of all parties. Regarding Quitman v.

Enterprise, the magistrate judge adjudicated the validity of the

18
Stonewall annexation, ordered a transfer of 100-125 black students

from Stonewall to Enterprise, and resolved all monetary issues

between Quitman and Enterprise. Regarding Lauderdale v.

Enterprise, the magistrate judge ordered that Northeast Clarke

County was part of Enterprise, directed the transfer of students

from Northeast Clarke County to Lauderdale, required that those

students would be considered transfer students, and resolved all

monetary issues between Lauderdale and Quitman.

Although the magistrate judge granted two post-judgment

motions on November 16, 1992,11 the original July 10 judgment

covered all the subject matter of the parties' claims. Therefore,

the July 10 judgment was final and appealable.

For purposes of finality, we need not consider whether the two

cases, Lauderdale v. Enterprise, No. E88-0059(L), and Quitman v.

Enterprise, No. E88-0065(L), are one suit or two. The July 10

judgment disposes of all issues in both of the cases. The judgment

therefore is final, whether the suits are treated as one case or

two.

B. Notices of Appeal.

In determining whether the notices of appeal were proper, we

apply the recent amendments to the Federal Rules of Appellate

Procedure. Although this appeal was filed before the effective

date of the amendments, courts should apply the amendments "to the

11
The two post-judgment motions were Lauderdale's rule 60(b) motion for
relief from the final judgment and Enterprise's motion for modification of
injunction pending appeal.

19
maximum extent possible" if such application would not "not work

injustice." Burt v. Ware, 14 F.3d 256, 259 (5th Cir. 1994).12

If the two cases are considered as one, then the operative

notices of appeal are as follows: Quitman's July 27, 1992, notice

of appeal of Quitman v. Enterprise, Enterprise's August 7, 1992,

notice of appeal of both cases, and Lauderdale's August 20, 1992,

notice of appeal of Lauderdale v. Enterprise. Quitman's and

Enterprise's notices were filed within thirty days of the July 10,

1992, judgment. Lauderdale's notice of cross-appeal was filed

thirteen days after Enterprise's notice of appeal. Therefore,

Lauderdale's notice of appeal was valid under FED. R. APP. P.

4(a)(3), which provides that

[i]f one party timely files a notice of appeal, any other
party may file a notice of appeal within 14 days after
the date when the first notice of appeal was filed, or
within the time otherwise prescribed by this Rule 4(a),
whichever period last expires.

If the two cases are considered separately for notice of

appeal purposes, the notices were proper in both cases. In

Lauderdale v. Enterprise, the parties filed their notices of appeal

as follows: Enterprise on August 7, 1992, and Lauderdale on

August 20, 1992. Enterprise's notice was filed within thirty days

of July 10. Lauderdale timely filed its notice of appeal on

August 20, within fourteen days of Enterprise's.

Notices of appeal were also proper in Quitman v. Enterprise.

The parties filed their notices of appeal as follows: Quitman on

July 27, 1992, and Enterprise on August 7, 1992. Both notices of

12
The effective date of the amendments was December 1, 1993.

20
appeal were timely filed within thirty days of July 10. Thus,

whether the two cases are considered together or separately, the

notices of appeal are timely.

C. Concerned Citizens's Rule 59(e) Motion.

Concerned Citizens is not a party to the case, having been

denied intervenor status on two occasions. Enterprise and Quitman

argue, therefore, that Concerned Citizens's rule 59(e) motion is

invalid and does not affect the validity of the notices of appeal.

FED. R. APP. P. 4(a)(4) provides that the time for appeal,

usually thirty days, runs from the entry of an order disposing of

certain motions, including a motion to alter or amend judgment

under rule 59. Because rule 4(a)(4) applies only if a "party makes

a timely motion of a type specified immediately below" (emphasis

added), it would seem that a motion by a non-party would not defer

the thirty-day window.13 We need not determine whether Concerned

Citizens's motion was valid, however, as under the amended

appellate rules the validity of Concerned Citizens's motion does

not affect the notices of appeal.

If a party makes a rule 59(e) motion, the thirty-day period

starts on the day the district court disposes of the motion. See

FED. R. APP. P. 4(a)(4). Any notice of appeal filed after the final

13
But see Thurman v. FDIC, 889 F.2d 1441, 1448 (5th Cir. 1989) (holding
that a motion for new trial filed by a person who was later determined to have
been improperly denied intervenor status was sufficient to trigger the provisions
of rule 4(a)(4)); Boggs v. Dravo Corp., 532 F.2d 897, 900 (3d Cir. 1976) (the
word "party" in FED. R. APP. P. 4(a)(4) "was never intended to operate as a
restrictive rule limiting those who could bring a motion which would have the
effect of terminating the time for appeal.").

21
judgment, but before the disposition of the rule 59(e) motion,

automatically becomes effective when the district court disposes of

the rule 59(e) motion. Id. ("A notice of appeal filed after

announcement or entry of the judgment but before entry of any of

the above motions is ineffective to appeal from the judgment or

order, or part thereof, specified in the notice of appeal, until

the date of the entry of the order disposing of the last such

motion outstanding.").

Therefore, even if the rule 59(e) motion were valid, the

thirty-day period would have commenced on November 16, 1992, the

day the district court disposed of the rule 59(e) motion. The

three notices of appeal were effective on November 16, 1992.

D. The Post-judgment Order.

The magistrate judge entered a post-judgment order on

November 16, 1992. On November 30, 1992, Quitman filed a

rule 59(e) motion to alter or amend the order. Soon afterward,

each party filed a notice of appeal of the post-judgment order.14

As the magistrate judge has not yet disposed of Quitman's rule

59(e) motion, these notices of appeal are ineffective. FED. R. APP.

P. 4(a)(4). Thus, we are unable to review the magistrate judge's

post-judgment order of November 16, 1992.

Our answer would not be different if the rule 59(e) motion by

Concerned Citizens were a valid rule 59(e) motion for purposes of

14
Enterprise filed a notice of appeal on December 1, 1992, Quitman on
December 16, and Lauderdale on December 18.

22
rule 4(a)(4)(C). Such a motion would have deferred the

effectiveness of the notices of appeal until the motion's

disposition on November 16, 1992. On that date, the final judgment

would be immediately reviewable on appeal. Because of Quitman's

rule 59(e) motion of November 30, 1992, we would still be unable to

review the post-judgment order.

One might argue that Quitman's rule 59(e) motion, ostensibly

filed in the Quitman v. Enterprise case, defers the notices of

appeal only in that case and this court still would have appellate

jurisdiction over that portion of the post-judgment order

pertaining to the other consolidated suit, Lauderdale v.

Enterprise. We reject such a contention. The two cases were

consolidated for the purposes of trial and final judgment. Suits

that are consolidated in district court for trial and disposed of

by one final judgment are considered the same case for the purposes

of notices of appeal. Barnett v. Petro-Tex Chem. Corp., 893 F.2d

800, 805 (5th Cir.), cert. denied, 497 U.S. 1025 (1990).

Therefore, we cannot review the contents of the post-judgment

order, whether those contents relate to Lauderdale v. Enterprise,

Quitman v. Enterprise, or both. Specifically, we cannot review the

replacement of the word "maximum" with the word "minimum," the

transfer of forty students from Meehan to Enterprise, the

allocation to Enterprise of the responsibility for busing students

from Northeast Clarke County to the Clarkdale school, the transfer

of siblings, or the transfer of children with parents employed by

the Clarkdale school or the Enterprise school.

23
 IV. Clarkdale Transfers.

The magistrate judge ordered the transfer of a maximum of 125

white students, and all black students requesting transfers, living

in Northeast Clarke County, to attend Lauderdale's Clarkdale

school. The magistrate judge reasoned that, first, the students

were closer to Clarkdale and, second, the 1969 desegregation plans

for Lauderdale and Enterprise assumed that the transfers would

continue.15 Enterprise argues that the magistrate judge's transfer

of students to Clarkdale should be reversed because (1) Enterprise

was not a party to the Lauderdale litigation, (2) the transfers

violated the Lauderdale desegregation plan, (3) there is no

evidence of a constitutional violation by Enterprise, and (4) the

15
The magistrate judge stated:

Although we have decided that the Northeast Clarke County students
attending Clarkdale are transfer students, this will not prohibit
transfers to Clarkdale. Initially, it would make little sense from
an academic standpoint to require all Northeast Clarke County
students to travel multiple distances to attend Enterprise School
when a school constructed for their benefit is located several miles
away. Further, this Court finds that the transfer issue was
properly before the Court in USA v. Lauderdale County School
District, Cause No. 1367. During the litigation of Lauderdale
County School District, students residing in Northeast Clarke County
were attending Clarkdale. Interrogatories submitted by Lauderdale
showed the total number of students residing in Northeast Clarke
County and attending Clarkdale. During the Killingsworth
litigation, Enterprise represented to the Court and submitted a map
showing the Northeast Clarke County students attending Clarkdale.
Moreover, Enterprise stipulated that its school district is divided
into two (2) attendance areas )) Enterprise and Clarkdale. Lastly,
as part of an objection to its HEW desegregation plan, Enterprise
submitted statistical compilations showing Northeast Clarke County
students attending Clarkdale. In short, the Court finds sufficient
evidence to conclude that both the district court and the Fifth
Circuit Court of Appeals were aware that Northeast Clarke County
students were attending Clarkdale when desegregation plans were
approved for Enterprise and Lauderdale and the Court envisioned such
transfers would continue.

24
transfers threaten Enterprise's viability as a district.16 Because

there has been no finding of a interdistrict segregative act with

a substantial, direct, and current segregative effect, and because

the 1969 court orders do not compel student transfers, we reverse

the magistrate judge's transfers.

In 1962, Lauderdale and Enterprise agreed that white students

from the northeastern Clarke County area in Enterprise would attend

Clarkdale and that approximately 100 students in the Meehan area in

Lauderdale would attend the Enterprise school. When the agreement

expired, Enterprise refused to allow any more transfers of its

students to Lauderdale. Enterprise's denials of requests for

transfer were overruled by the Clarke County Board of Education

until the board was eliminated in 1991.

The magistrate judge ordered interdistrict transfers, even

though neither party had requested it to do so.17 Lauderdale asked

only for monetary damages in its state court action. Enterprise in

its counterclaim requested only that the 1962 Clarkdale agreement

be declared void and that Lauderdale and the Clarke County board be

enjoined from ordering the transfer of students to Clarkdale. But

the fact that neither party requested interdistrict transfers does

not by itself preclude the district court from ordering such

16
Apparently, neither party challenges the Meehan transfers, which, as we
have pointed out earlier, are not reviewable by this court.
17
See Milliken v. Bradley, 418 U.S. 717, 745 (1974) ("With no showing of
significant violation by the 53 outlying school districts and no evidence of any
interdistrict violation or effect, the court went beyond the original theory of
the case as framed by the pleadings and mandated a metropolitan area remedy.")
(emphasis added).

25
transfers. The district court retains jurisdiction to desegregate

the schools of Lauderdale and Enterprise.18 The district court also

has the power to enforce the HEW plan for Lauderdale as well as

this court's amendments to the plan.

There is no question that federal courts can stop segregation-

promoting transfers of students between school districts, place

restrictions upon the transfers such as the Singleton provision

contained in many of the HEW plans, and remedy violations of

Singleton clauses. It is a different question, however, whether a

court can order the interdistrict transfer of students. For

example, if a school district violates the Singleton provision, the

appropriate remedy is to end the illegal transfers, not to order

broad interdistrict relief:

A finding that a school district has accepted transfer
students in violation of a Singleton clause customarily
supports injunctive relief forcing an end to such
transfers and compliance with the terms of the
desegregation order. A finding that a district has
violated a Singleton transfer provision included in its
desegregation order does not, in and of itself, support
a broader, interdistrict remedial order unless the
conduct which violated the Singleton clause also
comprised an interdistrict constitutional violation when
evaluated under Milliken.

Lee v. Lee County Bd. of Educ., 639 F.2d 1243, 1261 (5th Cir. Mar.

1981).

We evaluate the propriety of court-ordered transfers between

districts under the standard enunciated in Milliken v. Bradley, 418

18
See Davis v. E. Baton Rouge Parish Sch. Bd., 721 F.2d 1425, 1434 (5th
Cir. 1983) ("Until [a] unitary system has been achieved, a district court
overseeing the desegregation effort must retain jurisdiction to insure that the
present effects of past segregation are completely removed." (citing Green v.
County Sch. Bd., 391 U.S. 430, 439 (1968))).

26
U.S. 717 (1974),19 in which the Court considered the district

court's plan to integrate the city of Detroit district, a

predominantly black district, with the predominantly white school

districts in the surrounding suburbs. The Court reversed the

segregation plan. Although de jure segregation existed in Detroit,

the district court had made no finding that the suburban school

districts had violated the constitution or that such a violation

had an interdistrict effect:

Before the boundaries of separate and autonomous school
districts may be set aside by consolidating the separate
units for remedial purposes or by imposing a cross-
district remedy, it must first be shown that there has
been a constitutional violation within one district that
produces a significant segregative effect in another
district. Specifically, it must be shown that racially
discriminatory acts of the state or local school
districts, or of a single school district have been a
substantial cause of interdistrict segregation. Thus an
interdistrict remedy might be in order where the racially
discriminatory acts of one or more school districts
caused racial segregation in an adjacent district, or
where district lines have been deliberately drawn on the
basis of race. In such circumstances an interdistrict
remedy would be appropriate to eliminate the
interdistrict segregation directly caused by the
constitutional violation. Conversely, without an
interdistrict violation and interdistrict effect, there
is no constitutional wrong calling for an interdistrict
remedy.

Id. at 744-45.

This court has noted that Milliken requires that an

interdistrict remedy be imposed only upon "proof of

unconstitutional governmental action that has been a substantial

cause of a significant interdistrict segregative effect." Lee, 639

19
The magistrate judge held that under Mississippi law, students in
Northeast Clarke County attending Clarkdale are considered interdistrict transfer
students. Neither party contests this holding.

27
F.2d at 1256 (internal quotations omitted). In Lee, a school

district comprising the city of Auburn, Alabama, had been carved

out of the larger school district encompassing Lee County. The

county and city school districts reached an agreement whereby some

county students would be transferred to city schools. Because a

dual school system existed in both districts, the black students

were transferred from their all-black county schools to all-black

city schools. Likewise, the white students were transferred from

all white schools in the county to all-white schools in the city.

We held that these past interdistrict transfers did not justify

continuing interdistrict remedies:

[T]he fact that an interdistrict transfer program was
formerly used in order to maintain racial segregation in
districts operating dual school systems does not support
an interdistrict remedial order unless it is established
that these transfer programs have a substantial, direct
and current segregative effect. In the absence of such
a showing of current segregative effect, . . . no
interdistrict remedy is appropriately ordered upon the
basis of earlier interdistrict transfer programs.

Id. at 1260.

In the past, Enterprise transferred only its white students to

Clarkdale. With the adoption of the HEW plan in 1969, transfers

could occur only if done on a nondiscriminatory basis and if they

did not reduce desegregation. There is no record evidence that the

pre-desegregation transfers have a "substantial, direct, and

current segregative effect."

Neither the Enterprise desegregation plan nor the Lauderdale

desegregation plan, as amended, requires that students continue to

be transferred from Enterprise to Lauderdale. The plans make no

28
mention of any transfers from Enterprise to Clarkdale. From this

silence, Lauderdale urges us to infer that the plans intended the

transfers to continue, even after the Clarkdale contract had

expired. We infer the opposite. The courts and the HEW in 1969

knew that the contract would expire at the end of school year

1986-87, and yet they made no provision to mandate the transfers.

We conclude that the 1969 desegregation plans do not mandate the

continued transfer of students from Northeast Clarke County to the

Clarkdale school.

Enterprise makes a number of other arguments that we need not

consider. It contends that the continued viability of the

Enterprise school district is essential to the desegregation plan,

that the magistrate judge's transfer of students from Enterprise to

Clarkdale violates the desegregation plan, that the transfers are

void because they significantly contribute to the segregation of

the Clarkdale school, and that Enterprise should not be affected by

Lauderdale's desegregation order.

Because there is no proof that the pre-desegregation transfers

of students from Northeast Clarke County to Clarkdale had any

substantial, direct, and current segregative effect, we reverse the

magistrate judge's order transferring students from Northeast

Clarke County to Clarkdale. We do not, of course, bar Lauderdale

and Enterprise from agreeing to future transfers as provided by

Mississippi education law. Such transfers, though, must comport

with the Singleton provisions of the desegregation plans.

29
 V. Payments for Clarkdale Transfers.

Lauderdale and Enterprise honored the Clarkdale agreement for

twenty-three years of its twenty-five-year term. One notable

change during that period was that, beginning with the January 1970

semester, all students, not just white students, residing within

the Northeast Clarke County area of Enterprise were transferred for

attendance at the Clarkdale school, and all students, not just

white students, residing within the Meehan area of Lauderdale

desiring to attend were transferred to Enterprise.

Sometime in the 1970's, Lauderdale refused to transfer

students in the Meehan area to Enterprise, in violation of the

Clarkdale agreement.20 Beginning with the academic year 1985-86,

Enterprise refused to pay Lauderdale for the students transferred

from Northeast Clarke County to Clarkdale.21 Lauderdale demanded

attendant funds from Enterprise for a six-year period commencing

with the 1985-86 school year and continuing through the 1990-91

school year.22

In determining how much money was in dispute, the magistrate

judge was aided by the fact that the formula for determining

attendant funds for the first two of the six school years was

contemplated by the parties in their February 13, 1962, contract.

Furthermore, Lauderdale and Enterprise have stipulated to the

contract formula, figures, calculations, as well as the accuracy of

20
So stipulated by the parties.
21
The parties have so stipulated.
22
Its first demand was made in February 1988.

30
the compilation for those two years. They have also stipulated to

the average daily attendance ("ADA") figures for the academic years

1985-86 through 1991-92 as follows:

ADA of Northeast Clarke County students attending Clarkdale

1985-86 - 248.32
1986-87 - 265.75
1987-88 - 263.15
1988-89 - 277.92
1989-90 - 278.31
1990-91 - 266.44

ADA of Meehan area (Lauderdale) students attending Enterprise

1985-86 - 39.37
1986-87 - 38.85
1987-88 - 37.94
1988-89 - 38.10
1989-90 - 31.19
1990-91 - 40.91

The magistrate judge ordered that Enterprise pay Lauderdale

for Clarkdale transfer students during the academic years 1985-86

and 1986-87 and during academic years 1987-88 and 1988-89, but not

during 1989-90 and 1990-91. The magistrate judge ordered

Enterprise to pay for those interdistrict transfers ordered by the

district court for the years 1991-92 and subsequent years. Finding

no error, we affirm.

A. 1985-86, 1986-87.

The magistrate judge held that Lauderdale had breached its

duty to pay attendant funds to Enterprise and ordered Lauderdale to

pay Enterprise $29,237.54 for the year 1985-86 and $74,355.05 for

the year 1986-87. These amounts were readily calculated under the

Clarkdale agreement.

31
 1. No Material Breach by Lauderdale.

Enterprise argues that Lauderdale breached the Clarkdale

agreement because it failed to transfer all of its Meehan area

students to Enterprise as agreed.23 This breach, Enterprise argues,

voided the agreement and relieved Enterprise of its obligation to

pay Lauderdale.

Under Mississippi law, material breach by either party

terminates a contract. A breach is material if (1) a party fails

to perform a substantial part of the contract or one or more of its

essential terms or conditions, (2) the breach substantially defeats

the contract's purpose, or (3) the breach is such that upon a

reasonable construction of the contract, it is shown that the

parties considered the breach as vital to the existence of the

contract. UHS-Qualicare v. Gulf Coast Community Hosp., 525 So. 2d

746, 756 (Miss. 1987).

Despite Lauderdale's failure to transfer its Meehan students,

Enterprise continued to meet its obligations under the contract

without objecting to the method of transportation of the Meehan

students for several years. As a result, the magistrate judge held

that the failure to transport must not have been a breach of an

essential term or condition of the contract, that the failure did

not substantially defeat the purpose of the contract, and that the

23
The pertinent provision of the Clarkdale agreement is article VIII,
which reads, "The eligible school children of the Lauderdale County School
District residing in [the Meehan area] shall be and they are hereby assigned and
legally transferred by [the Board of Trustees of the Clarke County Consolidated
School District of Lauderdale County, Mississippi, later the Enterprise school
district] to the Enterprise Attendance Center of the Clarke County Consolidated
School District or its successor for the full term of this agreement."

32
parties did not consider the term to be vital to the existence of

the contract. We agree. In addition, article XVI of the Clarkdale

agreement provides that breach of one part of the agreement does

not justify breach of its other parts.24

2. Enterprise's Offset Argument.

Enterprise argues that it should recover damages for

Lauderdale's failure to transfer the Meehan students and that these

damages should offset any damages awarded to Lauderdale. We reject

Enterprise's argument on procedural grounds.

In its original answer in state court, Enterprise argued that

Lauderdale's breach provided Enterprise with an affirmative defense

to its own contract breach:

Third Defense

Affirmative

The plaintiff has failed to perform as required by
said contract. The plaintiff has wholly failed for
approximately ten years to perform pursuant to Paragraph
III of said agreement. The plaintiff has wholly failed
to perform pursuant to Paragraphs VIII and IX of said
agreement for at least a twenty year period in that it
did not assign, transfer and transport all children in
the geographical area eligible under the agreement to the
Enterprise School District.

And now having fully answered said complaint, these
defendants respectfully pray that the Complaint for
Declaratory Judgment filed herein against them be
dismissed at the cost of the plaintiff.

The next section of Enterprise's answer is labeled "Counterclaim,"

24
Article XVI provides, "The breach of any part of this agreement by
either party thereto shall not alter the binding effect of all other covenants
and agreements herein contained upon both of said parties."

33
thus indicating that Enterprise meant to raise the Meehan breach as

an affirmative defense rather than a counterclaim. The

counterclaim section ended with the following requests for relief,

none of which relates to the Meehan transfers: that the Clarkdale

agreement be declared null and void, that attempts by the Clarke

County board and by Lauderdale to transfer Northeast Clarke County

students be declared null and void, that Lauderdale be enjoined

from accepting such students, that the Clarke County board be

enjoined from transferring or transporting such students, and that

Enterprise be awarded reasonable attorneys' fees and court costs.

Ordinarily we would need to consider whether Enterprise's

claim against Lauderdale for breach of contract is a counterclaim,

and, if so, whether Enterprise's failure to raise the counterclaim

waives the claim under FED. R. CIV. P. 13(a). Furthermore, we might

need to consider whether Enterprise's argument was erroneously pled

as an affirmative defense and whether the district court abused its

discretion in refusing to treat the argument as a counterclaim.

See FED. R. CIV. P. 8(c). We need not address these issues,

however, as Enterprise raises the argument that it should recover

damages for the Meehan breach for the first time on appeal, so we

decline to consider the argument. See Oliver v. Collins, 914 F.2d

56, 60 (5th Cir. 1990).

3. Void As Unconstitutional.

Enterprise alleges that the Clarkdale agreement is

unconstitutionally void because it provided that Clarkdale would be

34
a "white attendance center." Before 1970, only white students in

Northeast Clarke County were able to transfer to Clarkdale; black

students continued to attend the segregated black school in

Enterprise.

In September 1970, this course of conduct changed. Lauderdale

and Enterprise began to transfer students of both races, presumably

in order to comply with the Singleton provision of the HEW plans

for each respective school district.

Under Mississippi state law, the subsequent actions of the

parties may modify the contract to an extent consistent with the

subsequent course of conduct. Broome Constr. Co. v. Beaver Lake

Recreational Ctr., 229 So. 2d 545, 547 (Miss. 1969). We believe

that the Clarkdale agreement was modified so as to permit the

transfer of blacks. Therefore, the agreement is not

unconstitutionally void, and the magistrate judge did not err in

relying upon the agreement to award Lauderdale recovery for the

1985-86 and 1987-87 academic years.

B. 1987-88, 1988-89.

The Clarkdale agreement expired at the end of the 1986-87

year. Thereafter, any rights of Lauderdale to payment were

governed by Mississippi law. During the school years 1987-88 and

1988-89, MISS. CODE ANN. § 37-19-27 read:

Legally transferred students going from one school
district to another shall be counted for supportive
services by the school district wherein the pupils attend
school, including maintenance costs, but shall be counted
for transportation allotment purposes in the school
district which furnishes or provides the transportation.

35
 When such transfer shall be from school district to
another, the superintendent of schools of the school
district from which said students are transferred shall,
within thirty (30) days after a request in writing to do
so by the superintendent of schools of the other school
district, issue his warrant in an amount equal to the
total number of pupils attending the school from such
school district multiplied by the average expenditure
pupil in the school district from which the pupils are
transferred, on the maintenance fund to pay any sums due
hereunder to the said school district wherein the said
students are attending. His failure to do so shall
render him liable therefor in the amount thereof on his
official bond.

1986 Miss. Laws ch. 492, § 104 (amended 1989).

The basic purpose of the statute was to require local funds to

follow transfer students. To that end, the statute required the

district superintendent of the transferring school district to

request in writing that the superintendent of the receiving school

district issue his warrant identifying the funds requested.

Lauderdale did make such a request in writing for the funds

due from Enterprise. Enterprise District Superintendent Michael

Taylor brought the request to the attention of the Enterprise

board, which unanimously voted not to pay funds to Lauderdale. As

a result, Taylor failed to issue his warrant.

The magistrate judge held that a forfeiture of Taylor's

official bond would be inequitable because his actions were

controlled by his school board. The magistrate judge awarded

Lauderdale $96,731.95 for the 1987-88 school year and $102,237.76

for the 1988-89 school year. Enterprise does not dispute this

award on appeal.

36
 C. 1989-90 and 1990-91.

The magistrate judge refused to award Lauderdale any student

money for 1989-90 and 1990-91.25 In 1989, § 37-19-27 was amended

to require school boards approving student transfers to enter into

contracts for the payment or nonpayment of any portion of their

local maintenance funds that they deem fair and equitable. Because

Lauderdale and Enterprise did not enter into any such arrangement,

the magistrate judge held that neither party was obligated to pay

transfer funds for the years beginning with the year 1989-90.

Lauderdale does not dispute the magistrate judge's

interpretation of MISS. CODE. ANN. § 37-19-27 but argues that it

should recover funds under the theory of quantum meruit. In order

to recover under quantum meruit, a plaintiff must show (1) that it

rendered services under the reasonable expectation that it would be

paid and (2) that the defendant knew that the services were being

performed with the expectation that it would pay for the work.

Redd v. L & A Contracting Co., 151 So. 2d 205, 209 (Miss. 1963).

Lauderdale argues that Enterprise should have known that

Lauderdale expected payment because Lauderdale had made written

demands on Enterprise. The Mississippi statutory scheme belies

Lauderdale's argument. The Mississippi statutes, beginning in

1989, required school boards to enter into agreements to divide

money allocated to transfer students. MISS. CODE ANN. § 37-19-27.

Because the Clarke County board failed to enter into an agreement,

25
Apparently, no question of attendant funds for the years 1991-92 was
litigated.

37
and because the twenty-five-year contract had expired, it had no

reasonable expectation of payment from Lauderdale.

D. 1992-93 and Subsequent Years.

For 1992-93 and subsequent years, the district court ordered

Enterprise to transfer certain students to Clarkdale and ordered

Enterprise to make payments to Lauderdale for the transfers.

Although we reverse the transfers, we affirm that Enterprise should

pay for any transfers made under the authority of the magistrate

judge.

VI. Stonewall Annexation.

The magistrate judge held that the Stonewall area had been

validly annexed by Quitman for two reasons. First, Enterprise was

equitably estopped from arguing that the Stonewall area was

improperly annexed to Quitman. Second, Quitman's control over the

Stonewall area would comport with Killingsworth. We agree.

In 1956, pursuant to 1953 Mississippi Laws, Extraordinary

Session, chapter 12, the schools of Clarke County were reorganized

into the Enterprise and Quitman districts. Enterprise (then the

Clarke County Consolidated School District) comprised the northern

third of Clarke County, including the Stonewall area. Quitman

(then the Quitman Consolidated School District) comprised the

southern two-thirds of Clarke County. The state laws created a

county school board with limited authority over both districts.

After reorganization, Enterprise's two de jure black schools,

38
an elementary school and a high school, served black students in

Enterprise and Stonewall. The two de jure white schools in

Enterprise, an elementary school and a high school, served all the

white students in the district, with the exception of the white

students living in the Stonewall area, who attended the Stonewall

school.

In March 1961, the Enterprise board announced an intention to

convert the Stonewall school to an elementary school for grades one

through six.26 Stonewall students in grades seven through twelve

would be required to attend the de jure white Enterprise high

school. Upon learning of the Enterprise board's intent to convert

the Stonewall school, parents and community members of Stonewall

filed a petition requesting the detachment of the Stonewall area

from Enterprise and annexation to Quitman.27 The petition contained

a total of 639 qualified electors of the Stonewall area.

The Quitman board unanimously passed a resolution approving

the annexation of the Stonewall area, which would "become effective

when approved as required by law, on July 1, 1962."28 Over the

objections of some of the citizens of the Stonewall area, the

Enterprise board adopted a long-range plan providing for the

conversion of the Stonewall school.29 The next day, Enterprise met

with the Clarke County board concerning the long range plan and the

26
March 5, 1962.
27
March 10, 1962.
28
March 12, 1962.
29
March 13, 1962.

39
annexation of the Stonewall area to Quitman. At this meeting, the

Clarke County board tabled Enterprise's long-range plan and adopted

a resolution detaching the Stonewall territory from Enterprise and

annexing it to Quitman.

Enterprise appealed the Clarke County board's annexation

decision to the Circuit Court of Clarke County. Griffin v. Clarke

County Bd. of Educ., No. 6176 (Miss. Ch. filed Mar. 23, 1962). The

citizens of the Stonewall area filed an injunction against

Enterprise in the Chancery Court of Clarke County. Green v.

Cooper, No. 6788 (Miss Ch. filed Mar. 30, 1962). The complaint

alleged that Enterprise, in seeking to convert the Stonewall

school, acted arbitrarily, capriciously, and without regard to the

general welfare, health, and morals of the affected students.

Moreover, the complaint alleged that Enterprise did not have the

facilities to accept the 216 white Stonewall students in grades six

to eleven who would be required to attend the white Enterprise

school.

The Clarke County board adopted a resolution disapproving the

conversion of the Stonewall school. The resolution stated that

Enterprise did not have sufficient existing facilities properly and

adequately to teach students in grades seven through twelve without

the Stonewall high school.30 The Clarke County board was granted

leave to intervene in the Green v. Cooper, No. 6788 (Miss Ch. filed

Mar. 30, 1962), to enjoin Enterprise from converting the Stonewall

30
April 2, 1962.

40
school.31 Enterprise filed a petition for writ of certiorari

against the Clarke County board, seeking to set aside the board's

resolution disapproving the conversion of the Stonewall school.

Williams v. Riley, No. 6182 (Miss. Cir. Ct. filed May 1, 1962).

After these suits were filed, Enterprise and Quitman entered

into extensive negotiations in an attempt to resolve the problems

surrounding the Stonewall area. On May 15, 1962, the Enterprise

and Quitman boards, Clarke County's and Quitman's superintendents,

a member of the State Educational Finance Commission, the Executive

Secretary of the State Educational Finance Commission, four members

of the Clarke County board, and two citizens of the Stonewall

territory met and discussed at length the annexation of Stonewall

and other proposals for the continued education of the students

living in the Stonewall area.

Enterprise and Quitman entered into a compromise memorialized

in scattered documents, school board minutes, and an agreement

dated June 11, 1962.32 The magistrate judge found that the

31
April 13, 1962.
32
The most important sources of the agreement are a proposal by the
Enterprise superintendent, a counterproposal by the Quitman superintendent, and
the agreement of June 11, 1969, between Enterprise and Quitman. The proposal of
the Enterprises superintendent reads:
I The suit of Green vs. Cooper (Injunction) to be dismissed.

II Williams vs. Riley (6182) in Circuit Court dismissed (Appeal
from order of County Board of Education April 2 disapproving
District Board order of March 5).
III Order of April 2 of County Board to be rescinded.

IV Order of March 5 of Clarke County District Board to be amended
in Section I(b) to read as follows: "Grades 1 through 8 to be
taught at Stonewall".
(continued...)

41
compromise consisted of six major parts: (1) The Stonewall

territory would be detached from Enterprise and annexed to Quitman,

(2) all black students residing in the Stonewall area would be

transferred to the all-black schools located in Enterprise;

(3) state funds would be paid to the school district where the

32
(...continued)
V Griffin vs. Board of Education (6176) Appeal on Bill of
Exceptions from transfer of territory dismissed.

VI Order of County Board of Education of March 14 to be rescinded
(Transfer of Territory).

VII Stewart vs. Rathburn dismissed.

VIII All high school students now attending Stonewall to be
transferred to any attendance center which will accept them
and pro rata share of District and state funds and teacher
units to follow child. Buses to be run to Enterprise and
Quitman, all other transfers will furnish their own
transportation.
IX Long Range Plan of March 13th to be amended as follows and
approved by district and county boards.
1. Stonewall School to have grades 1-8.

2. Construction and renovation immediately with
equal priority of Items 2, 3, 5, 6 and 7, total
cost - $110,000.00.
3. Item 4 next priority.

X State funds, 16th Section Funds and $45,000.00 negotiable
notes to be used to finance improvements to be made this
summer.

The counter-proposal from the superintendent of Quitman to the president of the
Clarke County board proposed an agreement whereby, among other things, Quitman
agreed that it would transfer children living in the Stonewall area to the black
school in the Clarke County district and that Quitman would agree not to operate
a high school in Stonewall during the 1962-63 school year. The letter began,
"Relative to the proposed annexation of the former Stonewall Consolidated School
District to the Quitman Consolidated School District." The letter noted that the
Quitman school board had adopted, by motion, the contents of the letter on
June 5, 1969.

The June 11, 1969, agreement provided that all blacks in the Stonewall area
would be transferred from Quitman to Enterprise, that state funds for each
student should be paid to the district at which the child attends, that the
agreement would be effective upon approval by the Board of Education of Clarke
County and the State Education Finance Commission, and that the agreement should
continue for 25 years.

42
student attends school, (4) the agreement would be effective upon

approval by the Clarke County board and the State Education Finance

Commission, (5) Griffin v. Clarke County Board of Education,33 Green

v. Cooper,34 and Williams v. Riley35 would be dismissed, (6) and the

agreement would continue for a period of twenty-five years.

On June 11, 1962, the Enterprise and Quitman boards approved

the transfer of blacks from Quitman to Enterprise. On June 12,

1962, the Clarke County board approved the June 11, 1962,

agreement. On June 18, 1962, the Mississippi Educational Finance

Commission approved the annexation of the Stonewall territory and

the June 11, 1962, agreement. For ease of discussion, we refer to

the entire compromise as the "Stonewall compromise agreement" and

the June 11, 1962, agreement related to transfers as the "June 11,

1962, agreement."

On May 21, 1965, suit was filed in federal district court

against Enterprise, Quitman, and the Clarke County board, seeking

to dismantle the dual school system being operated in Clarke

County. Killingsworth v. Enterprise Consolidated Sch. Dist., No.

1302(E). Quitman and Enterprise, pursuant to the preliminary

orders entered in the Killingsworth case, submitted desegregation

plans that incorporated a grade-by-grade "freedom of choice"

concept. These plans were tentatively accepted on August 5, 1965,

33
No. 0176 (Miss. Ch. filed Mar. 23, 1962) (the annexation appeal case).
34
No. 6788 (Miss. Ch. filed Mar. 30, 1962) (the Stonewall injunction
case).
35
No. 6182 (Miss. Cir. Ct. filed May 1, 1962) (Enterprise's petition for
certiorari).

43
and revised on September 22, 1966.

Through discovery, the Killingsworth plaintiffs were made

aware of the June 11, 1962, agreement. On June 14, 1967, the

plaintiffs filed for supplemental relief, requesting the district

court to declare the June 11, 1962, agreement unconstitutional. In

its final order, issued July 19, 1967, the district court in

Killingsworth did not decide the constitutionality of either the

June 11, 1962, agreement or the annexation of Stonewall by Quitman.

The Killingsworth court's final order held that the previously

approved "freedom of choice" plans failed to meet the standards for

desegregation. The court specifically enjoined Enterprise,

Quitman, and the Clarke County board from discriminating on the

basis of race or color, ordered Enterprise, Quitman and the Clarke

County board to take affirmative "action to disestablish all school

segregation and to eliminate the effects of the dual school

system," allowed all students irrespective of race or color to

exercise their choice of which school to attend in their respective

school districts, held that overcrowding of the particular school

chosen would be the only reason for denying a student's choice of

which school to attend, and held that there would be no

interdistrict transfers between Enterprise and Quitman "except on

terms and by procedures generally applicable regardless of race."

On July 3, 1969, this court reversed and remanded

Killingsworth, requiring desegregation plans to be filed by August

27, 1969. The court further ordered that if no plan were submitted

by the respective school districts, HEW could file a desegregation

44
proposal on August 11, 1969, and the parties could object thereto.

On August 11, 1969, HEW filed separate desegregation plans for

Enterprise and Quitman. Enterprise objected to its HEW plan,

filing a motion to strike and to stay action on the plan.

The HEW plans for both Enterprise and Quitman called for

immediate desegregation of all schools, including teachers and

staff members. Intradistrict transfers are not allowed under the

plans unless the student seeking the transfer would be a minority

in the transferee school. The Singleton provisions in the plans

permitted a school board to grant interdistrict transfers only "on

a non-discriminatory basis, except that it shall not consent to

transfers where the cumulative effect will reduce desegregation in

either district or reinforce the dual school system." On

November 6, 1969, this court ruled that the desegregation plans

filed by HEW would be implemented immediately.

For each school year between 1968-69 and 1990-91, some

students residing in the Stonewall area filed petitions requesting

transfers from Quitman to Enterprise. The procedure has been as

follows:

(1) Quitman for each school year after 1968-69 has
consistently denied such requests for transfer by
Stonewall students to attend school in the Enterprise
School District.

(2) Such Stonewall students, upon being denied approval
of their transfer requests by Quitman, have appealed to
the Clarke County Board of Education to overrule the
action of Quitman in denying such requests for transfer;
and

(3) In each and every case after 1968-69 the Clarke
County Board of Education has overruled Quitman and
approved the requests for transfers.

45
The Mississippi legislature phased out county-wide boards of

education effective January 1, 1992. Consequently, the appeal

process by which some Stonewall students attended Enterprise was

eliminated.

The magistrate judge held that Enterprise was equitably

estopped from arguing that Stonewall was not annexed to Quitman and

that the annexation was resolved in Killingsworth. Enterprise

argues that the entire 1962 Stonewall agreement is void because it

is unconstitutional. Enterprise contends that the annexation of

Stonewall by Quitman cannot be legally separated from the transfer

of all black Stonewall children to Enterprise and that both actions

should be voided. We agree. The annexation should be viewed

separately from the rest of the agreement. By itself, the

annexation is constitutional.

A. Equitable Estoppel.

Equitable estoppel requires three elements: "(1) Belief and

reliance on some representation; (2) Change of position as a result

thereof; (3) Detriment or prejudice caused by the change of

position." Suggs v. Town of Caledonia, 470 So. 2d 1055, 1057

(Miss. 1985) (citing Covington County v. Page, 456 So. 2d 739

(Miss. 1984)). The magistrate judge held that Quitman made a

representation that the Stonewall territory was lawfully a part of

Quitman, that Quitman had sufficiently relied upon these

representations, and that Quitman suffered detriment as a result of

Enterprise's representations.

46
 Enterprise admitted that Stonewall belonged to Quitman during

the pendency of Killingsworth. During a December 3, 1969, hearing,

Enterprise submitted as evidence a map showing the Stonewall area

as part of Quitman. Enterprise's superintendent testified under

oath that the Stonewall territory was annexed to Quitman in 1962.

The transcript of the hearing reads:

Q: We've indicated on the map introduced into evidence
by stipulation known as the Stonewall area, when
was that area detached from the Enterprise School
District and made a part of the Quitman district?

A: I believe this was in 1962.

Furthermore, in its objection to HEW's desegregation plan for

Enterprise, Enterprise admitted that Stonewall was part of Quitman.

Enterprise's objection reads:

The foregoing facts demonstrate beyond doubt that
[Enterprise] is dependent for its financial solvency, the
quality of its educational program and its very existence
upon pupils who reside outside of [Enterprise] but who
have elected to attend the schools administered by
[Enterprise].

If and when Stonewall Elementary School is closed, the
Enterprise Elementary School must be prepared to
accommodate additional students from the Stonewall
Attendance Zone of the Quitman Consolidated School
District, who will, without doubt, elect to attend school
at Enterprise.

(emphasis added). For over twenty-six years, from June 1962 until

June 17, 1988, when suit was filed, Enterprise did nothing to

indicate that the Stonewall area had not lawfully been annexed to

Quitman.

On appeal, Enterprise asserts that a representation may not be

used as a basis for equitable estoppel unless the other party is

47
ignorant of the true facts. See Chapman v. Chapman, 473 So. 2d

467, 470 (Miss. 1985). Although it is true that Quitman was fully

aware of the facts surrounding the annexation, Quitman was unaware

that Enterprise would suddenly challenge the annexation after

decades of acquiescence. Equitable estoppel applies to parties who

take inconsistent positions. See United States v. Dallas County

Commission, 548 F. Supp. 794, 872-75 (S.D. Ala. 1982), aff'd in

part, rev'd in part on other grounds, 739 F.2d 1529 (11th Cir.

1984), and authorities cited therein.

Enterprise also argues that the doctrine of equitable estoppel

cannot be used to bar the invocation of constitutional rights. The

admittedly sparse authority on applicability of equitable estoppel

indicates the opposite. Two district courts have held that parties

were equitably estopped from arguing constitutional violations. In

Williams v. City of Dothan, 745 F.2d 1406 (11th Cir. 1984), the

district court applied equitable estoppel, although the court of

appeals reversed on the ground that the elements of equitable

estoppel had not been met. Id. at 1410. In Dallas County

Commission, the district court, in an alternative holding, held

that a party was equitably estopped from arguing a constitutional

right. 548 F. Supp. at 872-75. The doctrine of laches, which is

similar to equitable estoppel,36 may prevent a plaintiff from

enjoining changes effected without preclearance as required by the

36
A party asserting laches must show "(1) a delay in asserting a right or
claim; (2) that the delay was not excusable; and (3) that there was undue
prejudice to the party against whom the claim is asserted." Save Our Wetlands,
Inc. (SOWL) v. United States Army Corps of Engineers, 549 F.2d 1021, 1026 (5th
Cir.), cert. denied, 434 U.S. 836 (1977).

48
Voting Rights Act of 1965.37 Lopez v. Hale County, 797 F. Supp.

547, 550-52 (N.D. Tex. 1992) (three-judge court), aff'd mem.,

113 S. Ct. 954 (1993); but see Dotson v. City of Indianola, 514

F. Supp. 397, 400-01 (N.D. Miss. 1981), aff'd mem., 455 U.S. 936

(1982). Enterprise therefore lacks legal support for its argument

that equitable estoppel is inapplicable to constitutional claims.

Enterprise argues that equitable estoppel is inapplicable to

a governmental entity that is asserting the constitutional rights

of a large group of people. We have found no authority to support

such a proposition.

Enterprise also claims that, in a suit against a state

political subdivision, the doctrine of equitable estoppel applies

only if the plaintiff is a private individual and not another state

political subdivision. Rye, the case cited by Enterprise, holds,

however, that the doctrine may apply to suits by private individual

against political subdivisions. It does not foreclose application

in other circumstances: "The State, its counties, subdivisions and

municipalities may be equitably estopped under the proper

circumstances." 521 So. 2d at 908-09.

Enterprise argues that Quitman's belief in the validity of the

annexation did not harm Quitman. We disagree. Quitman planned,

budgeted, forecasted, funded, hired teachers and staff members,

paid taxes, and maintained school property since June 11, 1962,

37
Although there appears to be no bar under constitutional law to the use
of the doctrine of laches, under Mississippi law "the State is not responsible
for the laches of its officers." Bd. of Trustees of Monroe County Bd. of Educ.
v. Rye, 521 So. 2d 900, 908 (Miss. 1988).

49
under the assumption that the Stonewall territory was properly

annexed. Although Quitman received tax revenues from property in

the Stonewall district, Quitman was deprived of state funding for

those students who transferred to Enterprise.

Next, Enterprise claims that it affirmatively made demands on

Quitman to pay money to Enterprise. But this has nothing to do

with Enterprise's failure to argue that it owned the Stonewall

area, or its representations that it did not own the Stonewall

area. We therefore agree with the magistrate judge that Enterprise

is equitably estopped from challenging the validity of the

Stonewall annexation.

B. Killingsworth.

The magistrate judge held that Killingsworth adjudicated

ownership of the Stonewall area. Enterprise disagrees, arguing

that the issue of annexation was never directly litigated in

Killingsworth, and therefore it should not be inferred that the

Killingsworth court approved the Stonewall annexation.

The final desegregation orders in Killingsworth were based

upon interdistrict boundaries that assumed the validity of the

annexation of Stonewall by Quitman. Although neither the three-

judge district court nor this court in Killingsworth specifically

ruled on the validity of the annexation, they did not have cause to

do so. All parties, including Enterprise, represented to the court

that the annexation was valid. Thus, it is not surprising that the

record in Killingsworth reveals no debate about the validity of the

50
Stonewall transfers. We agree with the magistrate judge that it is

far too late for Enterprise to protest the annexation.

C. Separability.

Enterprise argues that the annexation of Stonewall is void

because it is tainted by the unconstitutionality of the June 11,

1969, transfer agreement. The magistrate judge treated the

annexation of Stonewall and the transfer of black students from

Stonewall as a part of a larger agreement. The magistrate's

factual finding is not clearly erroneous. See FED. R. CIV. P.

52(a). But even assuming that the Stonewall annexation and June

11, 1969, transfer agreement are linked, the annexation is not

void.

The annexation of Stonewall was completed under procedures

provided by state law. School districts in Mississippi are

political subdivisions, and state law provides procedures for

changing their boundaries. In 1962, the statutory annexation

procedure was contained in MISS. CODE ANN. § 6274-06, which provided:

If a petition signed by a majority of the qualified
electors of specifically described territory of an
existing school district shall be filed with the county
board of education requesting that said described
territory be taken from such existing district and
annexed to an adjacent district, the county board of
education, after consideration thereof, and with the
consent and approval of the board of trustees of the
district to which such territory is to be annexed, shall
have the power and authority, in its discretion to take
such territory from the existing district and annex same
to the adjacent district. However, before doing so, the
county board of education must find and determine that
the taking of the territory from the existing school
district will not seriously interfere with or impair the
efficiency of such school district, and all orders

51
 adopted under the provisions of this section shall be
invalid unless such finding and determination be made.

A review of the record show that the necessary steps were

fulfilled. A petition was filed with the Clarke County

Superintendent of Education on March 10, 1962; the Quitman board

consented to the annexation on March 12, 1960; the Clarke County

board consented to the annexation on March 14, 1960. It was only

later that Enterprise sued to challenge the annexation (Griffin v.

Clarke County Bd. of Educ.). We accept as true the magistrate

judge's finding that Enterprise's court challenge was dropped as

part of the Stonewall compromise agreement, an agreement that

included that June 11, 1969, contract. We are unable to tell from

the record why Enterprise dropped its legal challenge to the

annexation. Perhaps Enterprise believed that its receipt of

transfer students and their attendant funds compensated it for

dropping the lawsuit; or, perhaps Enterprise's appeal had no legal

merit.

An action by a state or its political subdivisions pursuant to

established political procedures is not unconstitutional merely

because the support for such an action is garnered through the

promise of an unconstitutional agreement. Thus, the annexation is

not void merely because Quitman's agreement to transfer the black

Stonewall students may have procured Enterprise's agreement to drop

its lawsuit.

Enterprise argues that if any part of an unconstitutional

agreement is void, all of its provisions must be voided. Even

assuming that the political act of annexation can be linked to the

52
rest of the compromise agreement, we find Enterprise's argument

unpersuasive. None of the authorities cited by Enterprise stands

for the proposition that an entire agreement is void if one of its

parts or provisions is unconstitutional.38

D. Constitutional Validity of Annexation.

A boundary change is void only if it contributes to

segregation.39 The Stonewall annexation did not have the effect of

increasing segregation. Neither before, nor immediately after the

annexation, did any black student in either of the two school

districts go to the same school with a white student. The

Stonewall annexation was no more promotive of segregation than was

any of the other pre-segregation boundary changes among

Mississippi's school districts. As Quitman points out, Stonewall

originally belonged to the Quitman school district and was later

transferred to Enterprise under Mississippi's 1953 school

reorganization. If all school district boundary changes during

segregation were constitutionally void, then both the original

transfer of Stonewall to Enterprise, and its later return to

Enterprise, are void. Thus, Stonewall would belong to Quitman.

38
One case actually seems to show the opposite. In Shelley v. Kraemer,
334 U.S. 1 (1948), the Court held a state could not enforce a restrictive
covenant to prevent a black person from taking possession of a house. It would
have been self-defeating to void the original sale of the house containing the
restrictive covenant, as that would have broken the chain of title, thus
jeopardizing the black purchaser's right of possession. Because this was the
very right vindicated by the Court, we reject the idea that an unconstitutional
clause in a contract automatically voids the entire contract.
39
For example, the annexation of a predominantly white territory by a
predominantly white school district might be void.

53
 E. Material Breach by Quitman.

Enterprise argues that Quitman materially breached the

agreement by failing to pay money to Enterprise for students

transferred from Quitman to Enterprise. Enterprise claims that,

therefore, it is not obligated to honor the part of the agreement

transferring Stonewall to Quitman. But even though Quitman stopped

honoring the transfer agreement in 1968, only now does Enterprise

claim that the annexation is void because of Quitman's "material

breach." Just as Enterprise is equitably estopped from arguing

that the annexation is void as unconstitutional, Enterprise is

equitably estopped from arguing that the annexation is void for

material breach by Quitman.

VII. Transfers from Stonewall to Enterprise.

The magistrate judge ordered the transfer of 100 to 125 black

students from the Stonewall area to Enterprise. Quitman opposes

the transfer, arguing that the transfer is not necessitated by

Killingsworth and that there has been no showing of constitutional

violation. We agree with Quitman and reverse the magistrate judge.

The Stonewall area is lawfully annexed to the Quitman

district. Therefore, the transfer of black students ordered by the

magistrate judge is an interdistrict transfer properly analyzed

under Milliken. There has been no showing of a government action

with substantial direct, or current segregative, effect. See Lee,

639 F.2d at 1260.

54
 The annexation of Stonewall was not an interdistrict act of

segregation, nor was the transfer agreement. Mississippi schools

were completely segregated before the transfers. After the

transfers, they were still completely segregated. Furthermore, the

transfer agreement has no current segregative effect, because it is

no longer operable. Absent a finding of an interdistrict act,

segregative intent, and a continuing segregative effect, the

magistrate judge had no discretion to order the transfer of

students from Stonewall to Quitman.

Killingsworth did not require the interdistrict transfers from

Quitman to Enterprise. The orders of the three-judge court in

Killingsworth were reversed. United States v. Hinds County Sch.

Bd., 423 F.2d 1264 (5th Cir. 1969), cert. denied., 396 U.S. 1032

(1970). This court did nothing more than order immediate

implementation of the HEW plans for Enterprise and Quitman.

Although the HEW plans prohibited certain interdistrict transfers,

they did not affirmatively mandate any transfers.

Merely because the Killingsworth court was aware of

interdistrict transfers does not mean it approved of them. See

United States v. Hinds County Sch. Bd., 516 F.2d 974, 975 (5th Cir.

1975) (holding that the fact that the 1969 order did not dismantle

school bus routes designed for a segregated school system does not

mean that the order approved of the bus routes). Furthermore, the

Killingsworth courts were aware that the transfer agreement would

end in twenty-five years. Thus, if awareness is equated with

approval, Killingsworth actually would require the cessation of

55
interdistrict transfers under the June 11, 1962, agreement.

The magistrate judge believed that the transfers of black

students from Stonewall was essential to maintain Enterprise.

Since the Killingsworth desegregation order, Enterprise has had a

total student enrollment between 768 and 858. The Enterprise

superintendent testified that in order to maintain its

accreditation, the school needs from 900 to 1,110 students. The

magistrate judge crafted his order so that enough students attended

Enterprise for it to remain viable.

The decision of this court eliminating transfers both to and

from the Enterprise will not significantly reduce the Enterprise

school system. Even so, we do not think that Enterprise's

viability should be a dominant factor in drafting interdistrict

transfers. If insufficient students are transferred to Enterprise

by court order, the consequences are not necessarily disastrous.

Enterprise could get more students by transferring more students

from other districts, so long as these transfers comport with the

desegregation orders and Mississippi state law. Enterprise could

attempt to annex more territory, subject to the same conditions.

If these methods fail, the Enterprise district could be dissolved,

provided that the district court is satisfied that the elimination

of the district would not reduce desegregation.

In conclusion, the transfer is not necessary to remedy an

interdistrict violation, to comply with the Killingsworth order, or

to maintain Enterprises's viability. The magistrate judge abused

his discretion in ordering the transfer of students from Stonewall

56
to Enterprise.

VIII. Funds for Students Transferred from Stonewall.

Enterprise seeks to recover money from Quitman for Stonewall

students transferred from Quitman to Enterprise. Because the

applicable Mississippi law has changed over the years, we approach

this issue chronologically.

A. 1968-69 Through 1986-87.

The magistrate judge held that Enterprise should recover from

Quitman for the years 1987-88 but not for previous and subsequent

school years. Finding no error, we affirm.

We briefly explain the relevant facts. Beginning with the

June 11, 1962, agreement, black Stonewall students were transferred

from the Stonewall area to Enterprise. At the end of the 1967-68

school year, Quitman refused to pay Enterprise any transfer funds

and denied the requests by Stonewall students to transfer to

Enterprise. The Clarke County board overruled Quitman's denials of

the transfer requests.

On April 12, 1973, Enterprise's lawyer sent a letter to the

Quitman superintendent requesting payment of "certain funds" the

Enterprise board considered due to Enterprise. On January 9, 1974,

Quitman's superintendent indicated that the Quitman school board

had reviewed Enterprise's letter and had taken no action.40

40
On December 14, 1973, the Enterprise superintendent stated to the
Quitman superintendent that Enterprise considered the June 11, 1962, contract to
(continued...)

57
Enterprise again requested funds on April 10, 1973, September 11,

1973, November 25, 1975, March 8, 1977, June 4, 1987, February 18,

1988, and October 26, 1988.

Beginning in December 1988, the magistrate judge signed a

series of orders staying the collection of transfer funds and

preserving all claims to funds. The entry of these orders did not

relieve the parties of their obligations and liabilities under the

applicable Mississippi Code provisions.

No law allows Enterprise to recover during the applicable time

period. Enterprise cannot recover funds under the June 11, 1962,

agreement because, as Enterprise admits in its brief, the agreement

is void as unconstitutional. The magistrate judge held that during

1968-69 to 1986-87, no Mississippi statute provided for the

interdistrict payment of funds. A review of the applicable law

during this period confirms the magistrate judge's conclusion.

In 1962, the Mississippi legislature enacted a statute

allowing the transfer of individual students from one school

district to another by the mutual consent of the boards of trustees

of all school districts concerned. 1962 Miss Laws, ch. 357, § 1,

codified at MISS CODE ANN. § 6248-07 (effective May 10, 1962). The

section provided that certain state funding would follow a

transferred student:

Legally transferred students going from one school
district to another shall be counted for teacher

40
(...continued)
be valid, except as to the reference to the race of the students. At some time,
Enterprise had submitted a race-neutral contract to Quitman for approval, but
Quitman never approved it.

58
 allotment and allotments for other current costs by the
school district wherein the pupils attend school; but
shall be counted for transportation allotment purposes in
the school district which furnishes or provides the
transportation.

Id. The statute made no provision for payments between districts.

In 1972, the legislature transferred part of the 1962 provision to

a newly-created § 37-19-33 (later renumbered § 37-19-27), entitled

"Counting of legally transferred students." Section 37-19-33

contained the same language in the 1962 law quoted above, except

that if there was a transfer from one county to another, the county

at which a child attended school would pay the county of residence

a fee equal to the average cost of educating a child in the county

of residence multiplied by the number of students transferred.41

In 1978, § 37-19-33 was renumbered as § 37-19-27.

The 1962 statute does not speak to the allocation of payments.

Only in 1987 was § 37-19-27 amended to provide for payments.

Therefore, the magistrate judge was correct in concluding that no

41
Section 37-19-33 provided in full:

Students going from one school district to another, other than a
municipal separate school district shall be counted for teacher
allotment and allotments for other current costs by the school
district wherein the pupils attend school, including maintenance
costs; but shall be counted for transportation allotment purposes in
the school district which furnishes or provides the transportation.
When such transfer shall be from one county to another, the county
superintendent of education of the county from which said students
are transferred shall, within thirty days after a request in writing
to do so by the county superintendent of education of the other
county, issue his warrant in an amount equal to the total number of
pupils attending the school from such county multiplied by the
average expenditure per pupil in the county form which the pupils
are transferred, on the maintenance fund to pay any sums due
hereunder to the said school district wherein the said students are
attending. His failure to do so renders him liable therefore in the
amount thereof on his official bond.
MISS. CODE ANN. § 37-19-33 (1972). Also in 1972, the legislature enacted § 37-15-
31.

59
Mississippi law required Quitman to pay Enterprise for the

Stonewall transfer students.

Enterprise argues that it is entitled to recover funds under

a theory of quantum meruit. Quitman has consistently refused to

pay money since 1968, and it repudiated the entire agreement in

1977. Under these circumstances, Enterprise did not have a

reasonable expectation of compensation, and therefore it should not

recover on a theory of quantum meruit.

The magistrate judge held that Enterprise is equitably

estopped from asserting claims to funds due for the years 1968-69

to 1986-87. The magistrate judge found that Quitman stopped paying

transfer funds in 1968, that Enterprise made its first demand for

payment in 1973, that Enterprise made its second demand in 1987,

and that during the intervening fourteen years, Enterprise never

initiated suit on the debt it alleged to be due from Quitman.

Enterprise argues that the magistrate judge erred in finding

that Enterprise made no demands upon Quitman from 1973 to 1987. It

appears that the magistrate judge failed to note that Enterprise

made additional demands on April 10, 1973, for the 1968-69, 1969-

70, and 1971-72 academic years; on September 11, 1973, for the

1972-73 academic year; on November 25, 1975, for the 1973-74 and

1974-75 academic years; and on March 8, 1977, for the 1975-76

academic year.

We need not reach the issue of whether the magistrate judge

made an erroneous factual finding, or whether any such error

disturbs his conclusion regarding equitable estoppel. We have held

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that Enterprise cannot prevail on its substantive theories of

recovery: contract, state education law, or quantum meruit.

Because Enterprise's arguments are meritless, it does not matter

whether Enterprise is equitably estopped from making the arguments.

B. 1987-88 and 1988-89 Academic Years.

The magistrate judge held that Enterprise should recover from

Quitman for the years 1987-88 and 1988-89 under MISS. CODE ANN.

§ 37-19-27, which required the payment of funds for students

transferred between districts in the same county. The magistrate

judge found the amounts to be paid were $81.022.00 for 1987-88 and

$124,574.91 for 1988-89. Quitman challenges the award, arguing

that the Clarke County board did not consider on an individual

basis the appeals of Quitman's denials of transfer requests, and

that therefore the transfers from Stonewall to Enterprise were

illegal.

In 1987-88 and 1988-89, Enterprise refused requests for

transfer by Stonewall students who made a joint appeal for transfer

to the Clarke County Board. The joint appeal did not contain any

explanation for the transfers of any individual student.

The statute governing transfer payments during the 1987-88 and

1988-89 academic years was MISS. CODE ANN. § 37-19-27. In 1987, the

Mississippi legislature expanded the coverage of § 37-13-27 from

intercounty transfers to interdistrict transfers. 1986 Miss. Laws

1986, ch. 492, § 104 (effective July 1, 1987). Also, § 37-19-27

was amended to require payments to be made only for "legally"

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transferred" students. The transfers from Stonewall to Enterprise

were interdistrict transfers. Therefore, § 37-19-27 applies.

Under § 37-19-27, Enterprise is liable for payments only if the

transfers were valid.

To determine whether the Stonewall students were legally

transferred, we turn to § 37-15-31, which sets out the procedure

for interdistrict transfers. Section 37-15-31 provided that if

either the transferring or the receiving school board refuses a

student's request for transfer,

then an appeal may be had to [the] county board of
education. The said county board of education to which
said appeal is taken shall act thereon not later than the
date of its next regular meeting subsequent to the
disapproval or failure to act by the school board by the
school board of said school district, or not later than
the date of its next regular meeting subsequent to the
filing of such appeal.

MISS. CODE ANN. 37-15-31. Section 37-15-31 did not require the

county school board to consider of transfers "on an individual

basis." We therefore conclude that the actions of the Clarke

County board, and the subsequent transfer of the Stonewall

students, were legal.

Quitman argues that the Stonewall transfers violated Section

37-15-15. Section 37-15-15, which governs intradistrict

assignments, requires school boards to assign students within a

particular district "on an individual basis." It reads in full:

In making assignments of children to schools or
attendance centers, the school board shall take into
consideration the educational needs and welfare of the
child involved, the welfare and best interest of all the
pupils attending the school or schools involved, the
availability of school facilities, sanitary conditions
and facilities at the school or schools involved, health

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 and moral factors at the school or schools, and in the
community involved, and all other factors which the
school board may consider pertinent, relevant or material
in their effect on the welfare and best interest of the
school district and the particular school or schools
involved. All such assignments shall be on an individual
basis as to the particular child involved and, in making
such assignment, the school board shall not be limited or
circumscribed by the boundaries of any attendance areas
which may have been established by such board.

MISS CODE ANN. § 37-15-15. Section 37-15-15 is not applicable to

interdistrict transfers. See Hinze v. Winston County Bd. of Educ.,

103 So. 2d 353, 356 (Miss. 1958) (holding that the predecessor to

§ 37-15-15 does not apply to interdistrict transfers).

C. 1989-90 Through 1991-92.

The magistrate judge held that Enterprise should not recover

for 1989-90 or any subsequent school years because Enterprise and

Quitman did not enter into a contract for the payment of transfer

funds as required by state law. In 1989, section 37-19-27 was

amended to require boards approving transfers to enter into

contracts "for the payment or nonpayment of any portion of their

local maintenance funds which they deem fair and equitable in

support of any transferred students." Absent such a contract, no

such payments can be made. The magistrate judge stated:

[T]his Court is of the opinion that, after 1989, the
applicable Mississippi Code provisions required the
parties to memorialize their transfer agreements. This
Court further finds that Enterprise and Quitman failed to
comply with this code provision, and as a result neither
party was obligated to pay transfer funds to the other
for the years following 1989.

Enterprise urges us to reverse the magistrate judge with

respect to years 1989-90 through 1991-92. Enterprise's only

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affirmative theory of relief for these years would be quantum

meruit. As is discussed above, Enterprise did not have a

reasonable expectation of payment and therefore is not entitled to

recovery.

The magistrate judge required Quitman to make reasonable

payments to Enterprise for court-ordered transfers in the school

years 1992-93, 1993-94, and 1994-95. Quitman does not appeal this

aspect of the district court's decision.

IX. Conclusion.

We REVERSE the magistrate judge's order transferring students

from northeastern Clarke County to Clarkdale and from Stonewall to

Quitman. We AFFIRM all other aspects of the judgment. We REMAND

for further appropriate proceedings.42

42
In light of the resumption of school in the subject districts in the
late summer of 1994, we direct that the mandate shall issue forthwith. See FED.
R. APP. P. 41(a).

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