Latham v. Hudson

Ed. F. McFaddiN, Associate Justice

(Dissenting). As I understand the majority opinion in this case, it holds on two points:

I. The majority says that there have been a number of Acts passed by recent Legislatures, all looking to the matter of equalizing assessments of values; and, without deciding what is unconstitutional in any of these Acts, the majority says that it finds enough legislative authority from various portions of these enactments to support the legality of the contract here involved. I refer to this point as “the power to contract.”

II. The majority says that the contract here involved does NOT violate the rule that school funds are trust funds and cannot be diverted. I refer to this point as the ‘ ‘ diversion of school funds. ’ ’

I find no occasion to prolong my dissent by discussing point I - i.e., the power to contract — because I feel so deeply about the majority holding on point II — i.e., diversion of school funds — that I prefer to discuss it in some detail.

The complaint of appellants alleged that the total cost of the appraisal services was to be $125,000.00; that this was to be paid by the various taxing units on some predetermined basis; and that various school districts were to pay school funds for such appraisal. The complaint alleged the exact amount that each school district and other taxing unit in Union County was to pay. The complaint then said in Paragraph 9:

“That the said Union School District No. 2 of Union County, Arkansas, by and through the Defendant, Horace Williamson, is making illegal, unauthorized and unlawful payments of tax funds into the G-eneral Fund of Union County, Arkansas, in that Union School District No. 2 has neither the power nor authority to expend its funds for the purpose set forth in the said contract. That he has stated he will continue making such payments unless restrained by this Court.”

Attached to the complaint and made a part was a copy of the Resolution of Union School Board, whereby that School Board was to pay from school funds a total of $1733.83 over a 20-months period and that was to be for the tax appraisal study.1 In the face of the allegations and exhibit to the complaint, I cannot see how this Court can sanction such diversion of school funds. Our laws require that a budget be submitted to the electors of each school district before the annual election; and the school authorities are forbidden to depart from such budget. Yet in the case at bar this Court is now allowing a school board to spend money for a purpose that was never contemplated at the time the school budget was adopted. In my dissenting opinion in the case of Strawn v. Campbell, 226 Ark. 449, 291 S. W. 2d 508 (ease No. 990 in this Court, original opinion delivered May 28, 1956, modified opinion delivered July 2, 1950), I discussed in some detail this matter of school funds being trust funds; and I refer to that dissenting opinion for a full statement of my views. I now say that there is absolutely no law in Arkansas — except for the present judge-made law of the majority in this case — that sanctions such a diversion of school funds as this present opinion now approves. So, without discussion of point I, I have stated my views on point II and my conscience is clear.

The complete Resolution is as follows: “Honorable Frank H. Hudson, Union County, El Dorado, Arkansas. WHEREAS, the Union School Board met in a regular called session on the 3rd day of May,. 1955, and by a majority vote passed the following resolution; and WHEREAS, it was determined by the said School Board that a Tax Appraisal Study of Union County would be to the benefit of our School District and would produce additional revenue over a period of time; and WHEREAS, it is necessary for the County to spend $125,000.00 to pay for the cost of said study; and WHEREAS, a pro rata cost for each taxing unit for such study has been determined based on the 1954 Ad Valorem Tax; and WHEREAS, it has been determined that the pro rata cost part for this School District is the sum of $1,733.83 which sum should be paid over a 20-month period of time, the first payment being due on the 10th day of July, 1955; and NOW THEREFORE, be it hereby resolved that this School Board does hereby agree to pay into the Union County General Revenue Fund the sum of $86.69 per month until the total cost of $1,733.83 be paid, said total cost being apportioned over a 20-month period in equal payments and we do hereby agree to make the first payment of l/20th of the total sum on the 10th day of July, 1955. IN WITNESS WHEREOF, we have hereunto set our hands on this 3rd day of May, 1955. Dean Pritchard, Pres., W. M. Talor, Sec.”