Stene v. School Board of Beresford Ind. School Dist., No. 68

WINANS, Justice

(On Reassignment).

The respondent school board passed two similar resolutions dated March 1, 1972 and March 13, 1972, respectively, declaring *236a surplus to exist in the district’s general fund. Each resolution authorized the transfer of $100,000 from the general fund to the capital outlay fund. The appellant taxpayers appealed from the dismissal of their appeals by the circuit court. Appellants contend that such transfers violate Art. XI, § 8 of our Constitution which reads in part:

“No tax shall be levied except in pursuance of a law, which shall distinctly state the object of the same, to which the tax only shall be applied, * * *”

The transfers were made pursuant to SDCL 13-16-26 as amended, which reads as follows:

“All or any part of a surplus of any school district fund, except the capital outlay fund provided by SDCL 13-16-6 to 13-16-9, inclusive, and the special education fund provided by SDCL 13-37-16 may be transferred to any other school district fund.”

From statehood to the present time this court has consistently applied Art. XI, § 8 to local property tax levies. Aldrich v. Collins, 3 S.D. 154, 52 N.W. 854; Howard v. City of Huron, 6 S.D. 180, 60 N.W. 803; Western Town-Lot Co. v. Lane, 7 S.D. 1, 62 N.W. 982, rehearing 7 S.D. 599, 65 N.W. 17; State ex rel. City of Huron v. Campbell, 7 S.D. 568, 64 N.W. 1125; City of Centerville v. Turner County, 25 S.D. 300, 126 N.W. 605; Hughes v. Board of Commissioners, 25 S.D. 480, 127 N.W. 613; Lasell v. Yankton County, 67 S.D. 507, 295 N.W. 283; In Re Opinion of the Judges, 59 S.D. 469, 240 N.W. 600; State ex rel. Widdoss v. Esmay, 72 S.D. 270, 33 N.W.2d 280.

Our application of Art. XI, § 8, was followed by the Supreme Court of Wyoming in School Dist. No. 2 v. Jackson-Wilson High School Dist., 1935, 49 Wyo. 115, 52 P.2d 673 at 677:

“So In re Opinion of the Judges, 59 S.D. 469, 240 N.W. 600, 601, the court said: ‘Secondly, and with particular reference to the possibility of employing moneys (either state or county) now on hand or to *237accrue under present levies, for the furnishing of feed or making of feed loans, article 11, § 8, Constitution of the state, provides: “No tax shall be levied except in pursuance of a law, which shall distinctly state the object of the same, to which the tax only shall be applied.” Under this section we are of the opinion that moneys now on hand (or hereafter to be received) as the result of payment of taxes * * * already levied, and the proceeds of which have already been appropriated, must be applied to the purposes for which they were levied * * * and we think the same could not now be diverted, even by legislative action, to any other purpose.’
The court cites White Eagle Oil & Refining Co. v. Gunderson, 48 S.D. 608, 205 N.W. 614, 43 A.L.R. 397, which holds to the same rule, citing many cases. There are some cases which are seemingly in conflict with the cases cited, holding that the constitutional provisions heretofore quoted relate only to taxes levied for general state purposes. 61 C.J. 98. But the conflict, we think, is more apparent than real. In some of the states, as in New York, the Constitution differs from ours. And the holding of Stinson v. Thorson, 34 N.D. 372, 385, 158 N.W. 351, that the North Dakota Constitution, reading exactly like ours, differs from the Kansas Constitution, is clearly wrong. The statement in Sheldon v. Purdy, supra [17 Wash. 135, 49 P. 228], stating that courts hold to the rule that a fund, raised by taxation for one purpose, cannot be diverted to another even without reference to the constitution, is borne out by 56 C.J. 752; 61 C.J. 751, and subsequent pages; and see Burbank Irr. Dist. v. Douglass, 143 Wash. 385, 255 P. 360, 259 P. 881, and cases cited. The funds so raised are held to be trust funds, and that it is inequitable to divert them to a different purpose. Hence it is clear that money raised by the plaintiff district at its annual school meeting for certain purposes, and other taxes raised under the law for specific purposes, cannot be diverted, unless the purpose is fully satisfied and a surplus remains. There can be no justice or equity in taking from a district money raised by them through taxation, *238intended by them, or by the law, to be applied to certain specific ends, and divert the proceeds to a different purpose, thereby depriving the district of meeting needs perhaps far greater than sending pupils to a high school in another district. But school districts have money not raised by taxation. That is true particularly with money distributed to them by the state, and it has been held that such money may be devoted by the Legislature to such school purposes as it deems proper.”

It appears from the records before us that there was in the general fund approximately $221,000 received from sources other than local property tax levies. As to these funds, Art. XI, § 8 of the Constitution has no application.

In School District No. 58 v. School District No. 56, 1934, 169 Okl. 613, 38 P.2d 919, the Oklahoma court held:

“From the record in this case, it appears that the appropriation for transfer fees in the sum of $535 was made in contemplation of available funds from ‘surplus revenue from previous year’ and
‘Estimated income — from sources other than tax levy.’ There is no indication that the appropriation for transfer fees during the fiscal year 1927-1928 was based upon funds derived from a tax levy during the preceding year for some cither purpose, and, in fact, the contrary definitely appears from the defendant district’s financial statement in the record. Article 10, § 19, Oklahoma Constitution, has no application to funds derived from sources other than tax levy.”

The transfers made by the school board were less than the amount derived from nontax sources. The trial court found that a surplus did. exist in the general fund on the dates of the school board’s resolutions transferring the surplus from the general fund to the capital outlay fund. This finding of the court is supported by the record.

*239Nowhere in the record does it appear that the proceeds transferred by the respondent school district were proceeds which were raised by taxes from local tax levies, as distinguished from proceeds which came from “other sources”, as defined in SDCL 13-16-1. We conclude, therefore, that the transfers were not contrary to any constitutional prohibition.

Appellants contend further that a surplus did not exist in the general fund when the transfers were made. On this feature the finding of the court was to the contrary. The evidence was that at the end of the 1972 fiscal year there would be a balance in the fund of $416,000, after payment of all operational costs for the year. Appellants do not appear to question this but claim that it resulted from excessive tax levies made by the school board for that and several preceding fiscal years. Their argument is that such excessive levies were illegal rendering the claimed surplus not a legal surplus.

The school board in a special meeting held on August 31, 1971, approved the district budget for its general, capital outlay and special education funds for the 1972 fiscal year and adopted a levy in dollars sufficient to meet them.

The approval of the budgets and the adoption of the accompanying levies were decisions of the school board from which appellants could have appealed. This they failed to do. SDCL 13-46-1 provides for appeals from a decision by a school board within 90 days after the rendering of such decision. This section provides the only means by which they could secure judicial review of their contention that the levies were excessive. Olson v. Pulaski Common School District, 77 S.D. 416, 92 N.W.2d 678; Thies v. Renner, 78 S.D. 617, 106 N.W.2d 253. The fact that their appeals were timely taken from the board’s transfer decisions does not afford them another opportunity to challenge the levy decisions. Keiner v. Brule County Board of Education, 84 S.D. 50, 166 N.W.2d 833. Consequently in this proceeding we do not reach their claim of excessive levies.

Affirmed.

HANSON and WOLLMAN, JJ., concur. *240RENTTO, Associate Judge, sitting for BIEGELMEIER, C. J., concurs specially. DOYLE, J., not participating.