Summary
In Williams v. State, 230 Ala. 395, 161 So. 507 (1935), this court decided that public school funds held in bankrupt banks were state funds whether they came from the state treasurer or local taxation.
Summary of this case from Mobile, Alabama-Pensacola, Florida Building & Construction Trades Council v. WilliamsOpinion
6 Div. 729.
May 16, 1935.
Appeal from Circuit Court, Pickens County; Benj. F. Elmore, Judge.
Suit in equity by the State of Alabama, for itself and for the Use and Benefit of Pickens County, and C. M. Glass, as Tax Collector for Pickens County, for the Use and Benefit of the State and of Pickens County, against J. H. Williams, as Superintendent of Banks and the Bank of Carrollton. From a decree for complainants, respondents appeal.
Affirmed.
D. D. Patton, of Carrollton, and R. B. Patton, of Athens, for appellants.
Adams Gillmore, of Grove Hill, amici curiæ.
The state of Alabama and Pickens county are the real and only beneficial parties complainant. Montgomery v. State, 228 Ala. 296, 153 So. 394; Montgomery v. Sparks, 225 Ala. 343, 142 So. 769. The county board of education is an independent governmental agency and is a quasi corporation with the right to sue and be sued. The taxes levied for school purposes are under the control of the county board. School Code 1927, §§ 86, 94, 95, 132, 250, 259, 287; Board of Education v. Watts, 19 Ala. App. 7, 95 So. 498; Kimmons v. Jefferson County Board, 204 Ala. 384, 85 So. 774; Askew v. Hale County, 54 Ala. 639, 25 Am. Rep. 730; Mobile County v. Kimball, 54 Ala. 56. Judgment for commissions due the tax collector may not be rendered. Code 1923, § 3048. Preference or lien created by law against the assets of an insolvent bank for state and county taxes does not extend to municipalities nor to school districts voluntarily created. Montgomery v. Athens, 229 Ala. 149, 155 So. 551; School Code, 1927, §§ 132, 261; Hassett v. Carroll, 85 Conn. 23, 81 A. 1013, Ann. Cas. 1913A, 333; Kuhn, Attorney General v. Board of Education, 175 Mich. 438, 141 N.W. 574, 45 L.R.A. (N.S.) 972. Equity will not lend its aid to a litigant who has been guilty of illegal conduct. Montgomery v. Wadsworth, 226 Ala. 667, 148 So. 419; Montgomery v. Ward, 227 Ala. 641, 151 So. 583; Montgomery v. State, 228 Ala. 296, 153 So. 394.
A. A. Carmichael, Atty. Gen., and Foster, Rice and Foster, of Tuscaloosa, for appellees.
Maintenance of a liberal system of public schools is a governmental function. Constitution, §§ 256-261; School Code 1927, §§ 6-11. Supervision of the entire school system is under the state superintendent of education. Constitution, § 262; School Code 1927, §§ 6, 7, 131, 170, 298, 299. The county board is a mere agency of the state created for the purpose of operating the public school system of the state. Kimmons v. Jefferson County Board, 204 Ala. 384, 85 So. 774; Board of Education v. Watts, 19 Ala. App. 7, 95 So. 498; Turk v. Board of Education, 222 Ala. 177, 131 So. 436; White v. Ala. Insane Hospital, 138 Ala. 479, 35 So. 454; Askew v. Hale County, 54 Ala. 639, 25 Am. Rep. 730. Special school tax moneys belong either to the state or to the county as a political subdivision of the state. Montgomery v. State, 228 Ala. 296, 153 So. 394; Pickens County v. Williams, 229 Ala. 250, 156 So. 548; City of Birmingham v. Hawkins, 208 Ala. 79, 94 So. 62. School districts are not voluntary associations but are governmental agencies of the state for school purposes. Kyle v. Wiggins, 212 Ala. 116, 102 So. 145; Shanks v. Winkler, 210 Ala. 101, 97 So. 142; School Code 1927, §§ 154, 170. County-wide and local district special school tax moneys are public funds of such character that they fall within the rule giving the state and county preferences and liens for their funds on deposit in an insolvent bank. School Code 1927, §§ 86, 87, 88, 96, 246, 250, 253, 258, 261, 265, 280; Montgomery v. Sparks, 225 Ala. 343, 142 So. 769; Constitution, §§ 256-269; Amendment to Constitution, III; State v. Board of Education of Russell County, 214 Ala. 620, 108 So. 588. State and county may maintain this action. Code 1923, §§ 854, 5647, 5649; Bradford v. State, 201 Ala. 170, 77 So. 696; Montgomery v. Sparks, supra; White v. Ala. Insane Hospital, supra; Montgomery v. State, supra; Pickens County v. Williams, supra. When the tax collector has made no payment of tax moneys collected by him into the state treasury, he is not entitled to commissions for such collections, and no such commissions are due him. Where the collected tax moneys are on deposit to the account of the tax collector in a bank and have never been paid by him to the officials entitled to receive same, no part of said moneys are his property as commissions. Code 1923, § 3048; Revenue Laws 1929, § 204.
The bill was filed by the Attorney General in the name of the state of Alabama, suing on its own behalf, and for the use of Pickens county, to recover public funds unlawfully deposited by the tax collector of Pickens county in the Bank of Carrollton.
To this end, the bill claimed preferential payment out of the funds coming to the hands of the superintendent of banks on failure of the Bank of Carrollton, and now in liquidation. The trial court granted the relief prayed.
Appellants do not challenge the recovery of state funds, nor ordinary county funds so on deposit at the time the bank failed.
The main insistence is, that the preferred charge or lien based on the doctrine of prerogative right of the state does not extend to public school funds derived from collections of the county 1 mill and 3 mill school taxes, or the 3-mill district tax.
"The Legislature shall establish, organize and maintain a liberal system of public schools throughout the State for the benefit of the children thereof between the ages of seven and twenty-one years." Constitution of Alabama, 1901, § 256.
Article 14 of the Constitution is devoted to the subject of education.
Supervision of the public schools is vested in a superintendent of education, a constitutional officer, section 262; specific funds are segregated, set apart for this purpose only. Among these is the 1-mill county tax for public schools when voted by the qualified electors. Section 269.
The 3-mill county school tax and 3-mill district school tax are also of constitutional origin. Article 19, Amendment No. 3.
Without question, public education through a system of public schools is, by the Constitution, as well as by the statutes, a government function in Alabama; indeed a major activity of the state government.
County boards of education, county superintendents of education, county treasurer of public school funds, school district organizations, are all parts of the state set-up in maintaining a system of public schools throughout the state.
In the nature of the case, schools must be located and conducted in districts where the children reside.
Every public school is a state school, created by the state, supported by the state, supervised by the state, through state wide and local agencies, taught by teachers licensed by the state, employed by agencies of the state.
County and district school taxes, therefore, go to maintenance of state schools, parts of the system of state schools, just as other public school funds. A loss of such funds would cripple the state school enterprise, just as the loss of any other school funds. This is the real test in the application of the prerogative doctrine; the necessity to conserve the public funds, the means whereby the state functions in its governmental undertakings. Pickens County et al. v. Williams, Superintendent of Banks, et al., 229 Ala. 250, 156 So. 548; Montgomery, Superintendent of Banks, v. State et al., 228 Ala. 296, 153 So. 394, and cases there cited.
It is of no moment that the taxes are paid by local subdivisions, earmarked for the schools in which the taxpayers are directly interested, and designated as county and district funds; nor that local custodians and administrative agencies with corporate powers are made a part of the state educational set-up.
It would seem no argument is required to demonstrate that such funds should be held not less sacred because they are levied at the volition of a majority of the qualified electors. Nothing in Montgomery, Superintendent of Banks, v. City of Athens, 229 Ala. 149, 155 So. 551, should be construed to the contrary.
A suit in equity in the name of the state, authorized by Code, § 5647 et seq., may include all such funds; cause them to be returned to their lawful custodians and to be devoted to the purposes of their creation. Bradford et al. v. State, 201 Ala. 170, 77 So. 696; Bradford, County Superintendent of Education, et al. v. State, 204 Ala. 46, 85 So. 435; State v. Clements et al., 217 Ala. 685, 117 So. 296; National Surety Co. v. State et al., 219 Ala. 609, 123 So. 202.
The trial court did not err in denying a deduction for the tax collector's commissions on the funds so unlawfully converted. The tax collector's duties and services as to public funds are not completed by their collection merely. His duty to pass them on in regular course to the lawful custodian is just as important and imperative. The law of commissions as to him should not be less severe than that applied to executors and administrators in the execution of their trusts. 7 Michie's Digest, page 294, § 377.
The statute, Code, § 3048, authorizing the tax collector to retain his commission when he does make payment into the state treasury, implies nothing opposed to the views above expressed, but rather supports the same.
Affirmed.
GARDNER, FOSTER, and KNIGHT, JJ., concur.