Opinion
No. 37709
Decided November 7, 1969.
Schools — Transfer of territory or division of funds and indebtedness — Statutory manner prescribed — Section 3311.06, Revised Code — Statutory construction — Statutes in pari materia.
1. Section 3311.06, Revised Code, clearly expresses the legislative intent that no transfer of school district territory or division of funds and indebtedness incident thereto, shall be completed in any other manner than that prescribed by this section. And this language requires that funds received by a school district for real property lost to the district by reason of annexation, shall be deposited in the bond retirement fund of said district.
2. Sections 3311.06, 5705.14 and 5705.15, Revised Code, being the statutes involved in the instant case, must be construed as laws in pari materia, and accordingly, the funds received for the property lost to the petitioner district herein, having been properly deposited in the bond retirement fund, any application for an order to transfer funds therefrom shall be brought pursuant to the provisions of Section 5705.14, Revised Code.
Mr. Paul E. Work, prosecuting attorney, and Mr. William E. Didelius, for petitioner.
Messrs. Tone, Maddrell, Eastman Grubbe and Mr. Herbert P. Eastman, for defendant Finney.
This cause came on to be heard on the petition of the petitioner, Board of Education of the Margaretta Local School District, Erie and Sandusky Counties, for an order of this court ordering the transfer of the sum of ninety thousand eight and 20/100 dollars ($90,008.20) from the bond retirement fund to the general fund of the Margaretta Local School District, the demurrer of the defendant, the briefs of the parties and the evidence.
On June 29, 1968, the petitioner, board of education, entered into a contract for the purchase of certain real estate to be used as a site for a new school building, or buildings, for the purchase price of $100,000. The purchase was challenged by Fanchion Finney (the intervenor-defendant herein) and a declaratory judgment regarding the rights of the parties with respect to the validity and effect of the purchase contract was sought of this court in case No. 37765.
In that case, reported as Board of Education v. Strausser (decided July 29, 1969), 20 Ohio Misc. 1, this court held: that the purchase contract was valid and binding upon the parties; that the board was obligated to pay the balance of the purchase price for the land in question; and that for such purpose the board could use funds which could be obtained from any source legally available for such use, excluding, however, any portion of the balance in the building fund as was derived from the sale of bonds which were issued for a stated purpose other than for purchase of the land in question.
On December 28, 1968, the petitioner, Board of Education of the Margaretta Local School District, adopted a resolution declaring it necessary to transfer the sum of $90,008.20 from the bond retirement fund to the general fund of the school district; authorizing the filing of a petition with this court for authority to make such transfer; and authorizing such transfer to be made if, and when, approved by the court.
The resolution, by way of explanation of the necessity for the transfer of the aforesaid funds, states that on September 7, 1954, a freeholder's petition was filed with the County Commissioners in Erie County, Ohio, for annexation to the city of Sandusky, Ohio, of certain territory in Margaretta Township constituting part of the territory of the Margaretta Local School District. The resolution goes on to state that the proposed annexation of territory was approved by the Board of County Commissioners and became effective on December 31, 1962, by virtue of the passage by the City Commission of the city of Sandusky Ordinance No. 5397-C and Ordinance No. 6074-C; and that on July 8, 1968, the State Board of Education approved the transfer of the aforesaid territory from the Margaretta Local School District to the Sandusky City School District pursuant to the provisions of Section 3311.06, Revised Code; that the transferred territory included certain real property owned by the Margaretta Local School District consisting of a school building and certain auxiliary buildings, together with the tract of land on which the same are situated; and that the true value of such real property was determined by the State Board of Education to be $156,400.
The resolution also stated that the Board of Education of the Sandusky City School District paid to the Board of the Margaretta Local School District the sum of $90,008.20 which was the amount equal to 57.55% of such true value of the aforesaid real property as required by Section 3311.06, Revised Code, and that said funds were deposited in the bond retirement fund of the Margaretta Local School District on July 11, 1968.
Further, the aforesaid resolution states that no indebtednes, interest or other obligation, incurred for the acquisition of the aforesaid real property or for the construction or improvement of the buildings situated thereon, presently is outstanding; and that funds in the amount of $90,008.20 are needed to be used solely for the payment of part of the cost and expense of the acquisition by the board of education of the real estate to be used as the site for a new school building, or buildings.
It is to be noted that the aforesaid real estate sought to be purchased is the same property that was the subject of case No. 37765, hereinbefore referred to.
Under date of January 6, 1969, the Board of Education of the Margaretta Local School District filed its petition in this court and on the 7th of January, 1969, the Board of Education of the Margaretta Local School District filed its petition in this court and on the 7th of January, 1969, pursuant to the provisions of Section 5705.16, Revised Code, mailed a copy of said petition to the Board of Tax Appeals, Columbus, Ohio. In entry No. 74229, dated September 3, 1969, the Board of Tax Appeals stated:
"For lack of jurisdiction of funds falling under the provisions of Section 5705.14, Revised Code, and for the reason set forth herein making such transfer illegal the application is dismissed."
Thereafter, on the 26th day of September, 1969, petitioner filed its supplemental petition wherein it was alleged that a copy of its petition was duly filed with the Board of Tax Appeals of the state of Ohio pursuant to the provisions of Section 5705.16, Revised Code; and that on the 3rd day of September the Board of Tax Appeals disapproved the petition on the grounds that it is without jurisdiction in this matter and that the proposed transfer of funds would be illegal.
On January 16, 1969, intervenor-defendant, Fanchion Finney, demurred to petitioner's petition on the ground that the petition does not state facts which entitle petitioner to the relief demanded and does not state a cause of action.
On October 20, 1969, the date fixed for hearing the petition for the transfer of funds, the court at the commencement of the proceedings announced that ruling on defendant's demurrer would be deferred, whereupon, by agreement of the parties, the within cause was heard on the merits.
With respect to intervenor-defendant's demurrer, said defendant contends that the funds received by the petitioner school district from the Sandusky City School District as payment for the territory lost to the petitioner district by reason of the aforesaid annexation were deposited in the petitioner district's bond retirement fund pursuant to the provisions of Section 3311.06, Revised Code, which reads in part as follows:
"* * * The school district receiving such payment shall place the proceeds thereof in its sinking fund or bond retirement fund.
"* * *
"No transfer of school district territory or division of funds and indebtedness incident thereto, pursuant to the annexation of territory to a city or village shall be completed in any other manner than that prescribed by this section * * *."
The defendant contends further that funds of a school district once deposited in a bond retirement fund can only be transferred from such fund to another in accordance with the provisions of Section 5705.14, Revised Code. The defendant states that Section 5705.15, Revised Code, provides for transfers in addition to those authorized in Section 5705.14, provided, among other things, the money to be transferred is not an unexpended balance in a bond retirement fund. Since Section 5705.14 (C), Revised Code, specifically requires that all indebtedness, for which the bond retirement fund exists, must be paid before any transfer can be made out of the bond retirement fund, and since petitioner's petition contains no allegation to the effect that there is no outstanding indebtedness of the district, the petition does not state a cause of action and is demurrable.
On the other hand petitioner herein contends there are two statutes that relate to the transfer of funds, namely, Sections 5705.14 and 5705.15, Revised Code. Petitioner contends that Section 5705.14, Revised Code, is not applicable to the funds in question and accordingly states that its petition is filed in accordance with the provisions of Section 5705.15, which reads:
"In addition to the transfers authorized in Section 5705.14 of the Revised Code, the taxing authority of any political subdivision may, in the manner provided in this section and Section 5705.16 of the Revised Code, transfer from one fund to another any public funds under its supervision, except the proceeds or balances of loans, bond issues, special levies for the payment of loans or bond issues, the proceeds or balances of funds derived from any excise tax levied by law for a specified purpose, and the proceeds or balances of any license fees imposed by law for a specified purpose."
Petitioner's position is that the transfer of funds sought is authorized by Section 5705.15, Revised Code, because the funds in question are not funds which are the proceeds or balances of:
(a) a loan or loans;
(b) bond issue or issues;
(c) special levies for payment of loans or bond issues;
(d) funds derived from any excise tax levied for a special purpose;
(e) any license fees imposed for a specified purpose; but, on the contrary, are funds derived from the sale of a building and that accordingly, the transfer requested from the bond retirement fund to the general fund of the petitioner is permissible.
Petitioner in its argument cites, as a corollary, a voluntary sale of school property in accordance with the provisions of Section 5705.10, Revised Code, wherein it is provided that proceeds from such a sale shall be paid into "* * * the sinking fund, the bond retirement fund, or into a special fund for the construction or acquisition of permanent improvements; * * *" and suggests that:
"There would have been no problem if they (petitioner) had voluntarily sold this, so why should there be any earth-shaking difference in a case like this where they (petitioner) were compelled involuntarily to part with the buildings? They put the money in the sinking fund and we suggest under Section 5705.16, with the approval of this court, they (petitioner) have the right to use this money for a legitimate purpose, such as the payment of an already incurred obligation for the purchase price of a new school site."
Obviously, the only issue before the court in the instant case is whether Section 5705.15, Revised Code, is to be distinguished from Section 5705.14 in that it authorizes the transfers of public funds from one fund of a subdivision to any other fund, or whether it is limited strictly to those funds not excepted in paragraphs (A) through (F), Section 5705.14, and not excepted by the language of Section 5705.15:
"* * * except the proceeds or balances of loans, bond issues, special levies for the payment of loans or bond issues, the proceeds or balances of funds derived from any excise tax levied by law for a specified purpose, and the proceeds or balances of any license fees imposed by law for a specified purpose."
The Supreme Court of Ohio in the case of Wachendorf v. Shaver (decided March 17, 1948), 149 Ohio St. 231, stated:
"The court must look to the statute itself to determine legislative intent, and if such intent is clearly expressed therein, the statute may not be restricted, constricted, qualified, narrowed, enlarged or abridged; significance and effect should, if possible, be accorded to every word, phrase, sentence and part of an act, and in the absence of any definition of the intended meaning of words or terms used in a legislative enactment, they will, in the interpretation of the act, be given their common, ordinary and accepted meaning in the connection in which they are used."
As indicated in petitioner's resolution, adopted December 28, 1968, the application for approval of the transfer of funds is brought pursuant to the provisions of Section 3311.06, Revised Code, which provides the procedures for annexation of territory and the division of funds by school districts within the state of Ohio. The other two sections involved in the case at bar are Section 5705.14 and 5705.15 which are included in the taxation chapter of the Revised Code and which specifically relate to the transfer of public funds.
With respect to the validity of school legislation, 48 Ohio Jurisprudence 2d (Pt. 2), at page 673, states:
"Insofar as they do not conflict with the Constitution, the courts have no responsibility or authority in respect to the wisdom or policy of legislation relating to the management and control of the school system * * *."
And again on pages 671 and 672:
"Education is a matter of state concern, and the purpose of the school laws is to give the common school system uniformity, harmony, unity and force throughout the state.
"* * * the public schools and the school system of the state rest primarily in state supervision and control * * *. The power of the General Assembly with reference to the public schools is plenary * * * is without restriction except for the constitutional provision * * *."
Accordingly it is the opinion of this court that the language of the statute ( 3311.06) which says: " No transfer of school district territory or division of funds and indebtedness incident thereto, * * * shall be completed in any other manner than that prescribed by this section * * *." (Emphasis added.) clearly expresses the legislative intent, and this language, given its common, ordinary and accepted meaning, requires that the funds in question be deposited in the bond retirement fund.
As the Supreme Court many years ago pointed out in the case of Bank of Toledo v. City of Toledo (1853), 1 Ohio St. 623, regardless of the exact constitutional power to tax, it is clear that exercise of the taxing power is a legislative function and not a judicial one. And, as the court later said, in the case of Board of Education v. State, 51 Ohio St. 531, the courts should not interfere with the exercise of this legislative function, even in doubtful cases. (See, also, 51 Ohio Jurisprudence 2d pp. 35 and 48.)
It appears, as counsel for the defendant has argued, that the Legislature has placed a severe and tight, but praiseworthy, limitation on the transfer of funds by a board of education out of the bond retirement fund.
It is the opinion of this court that the statutes involved in the instant case, namely, Sections 3311.06, 5705.14 and 5705.15, Revised Code, must be construed as laws in pari materia, and that accordingly, the sum of $90,008.20 received from the Sandusky City Board of Education, having been properly deposited in the bond retirement fund, any application for an order to transfer funds therefrom shall be brought pursuant to the provisions of Section 5705.14, Revised Code.
The court further finds that defendant's demurrer is well taken; that the petition fails to state a cause of action; and that the demurrer is hereby sustained.
The ruling on the demurrer, being dispositive of the issue before this court, further discussion would serve no useful purpose. Counsel for the defendant will prepare the appropriate entry.