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Southern Pacific Co. v. Pima County

Supreme Court of Arizona

March 2, 1931

SOUTHERN PACIFIC COMPANY, a Corporation, Appellant,
PIMA COUNTY, a Municipal Corporation of the State of Arizona, and J. W. BUCHANAN, Treasurer and Ex-officio Tax Collector of Pima County, Arizona, Appellees

APPEAL from a judgment of the Superior Court of the County of Pima. Fred W. Fickett, Judge. Judgment affirmed.

Messrs. Baker & Whitney and Mr. Francis M. Hartman, for Appellant.

Mr. Claude Smith, County Attorney, and Mr. W. G. Hall, Deputy County Attorney, for Appellees.


[38 Ariz. 12] ROSS, J.

This is an action by the Southern Pacific Company against Pima county and J. W. Buchanan, treasurer and ex-officio tax collector of said county, to recover some school taxes paid to the treasurer under protest.

On June 5, 1928, common school district No. 1 of Tucson and high school district No. 1 of Tucson were by an order of the board of supervisors of Pima county enlarged to take in additional territory in which was included 2.7 miles of plaintiff's railroad. Prior to such annexation the districts' outstanding bonded indebtedness was the sum of $1,469,000 and their taxable property, as shown by the assessment for the year 1927, was valued at $27,911,350. The board of supervisors of Pima county, at the time of making the levy of taxes for county purposes for the year 1928, as provided by law, levied a tax upon the property of such school districts, including the 2.7 miles of railroad recently incorporated into the districts, to be applied on the above outstanding bonded indebtedness of the districts. Such taxes amounted to the sum of $1,435.38, and this action is to recover such sum.

The plaintiff's complaint after giving the facts, of which the above is a resume, charges that the indebtedness of the districts, for the payment of which the taxes were assessed against its property, is in [38 Ariz. 13] excess of four per centum of the 1927 assessed valuation of taxable property of the districts, both before and after enlargement, and for that reason such assessment and levy upon the 2.7 miles of its railroad violates section 8 of article 9 of the state Constitution. It also charges that the 2.7 miles cannot be legally assessed for taxes to pay the outstanding indebtedness incurred by the old districts. It further charges that the assessment is invalid and illegal, particularly that made to apply on the outstanding bonded indebtedness of the high school district, for the reason that such high school district was never legally enlarged to take in the 2.7 miles of its railroad.

To this complaint defendants filed special and general demurrers. The general demurrer was sustained, and the plaintiff has appealed.

Plaintiff makes two assignments of error, but they are of the same import and embody the contention that the property included in the newly added territory cannot legally be taxed to pay any part of the indebtedness of the districts contracted before the annexation. This is the sole question before us.

If the annexed territory was, at the time of its inclusion in said school districts, in or a part of another district, this contention would probably have to be sustained. If, however, it was in what may be designated as unorganized territory for school purposes, a different rule would apply. This conclusion is based upon the language of paragraph 5272 of the Revised Statutes of Arizona 1913, Civil Code, in force at the time of the annexation. Such paragraph reads:

"No political subdivision or municipal corporation other than the subdivision or municipal corporation wherein the election shall be held as above prescribed, for the creation of any indebtedness herein provided for, shall in any manner be responsible for, or [38 Ariz. 14] charged with, the payment of any of the principal sum or interest thereon evidenced by such indebtedness."

The complaint does not allege that the annexed territory is, or ever had been, any part of an organized school district. This omission, it seems, should be taken and treated as an admission that the added territory was unorganized territory. That is an admitted fact.

Page 534

We have no statute providing for a situation like the present, and, in determining whether the property in the annexed territory must contribute its proportion to the liquidation of the indebtedness of the districts, legally incurred before its inclusion therein, we must be governed by general principles and by the decisions of other courts, unless there be found in our constitution a provision that takes care of the situation.

Plaintiff points to section 8, article 9, and section 13, article 7, of the state Constitution, as controlling. Section 8 limits the power of a county, city, town, school district and other municipal corporations to become indebted in any manner to an amount exceeding four per centum of its taxable property, without the assent of a majority of the property taxpayers, legally entitled to vote, voting at an election; but, if such majority gives its assent, a school district may become indebted to an amount not exceeding ten per centum of its taxable property, ascertained by the last assessment for state and county purposes previous to incurring such indebtedness. Plaintiff admits in its complaint and in its brief that the indebtedness of said school districts, towards the payment of which its property is assessed, is valid; that it was incurred by the districts in the manner provided by the Constitution and the law supplementary thereto.

[38 Ariz. 15] Section 13, supra, provides that questions upon bond issues shall be submitted to a vote of the property taxpayers who are qualified electors of the political subdivision of the state affected by such question. It is not contended that said school districts did not conform their action in incurring the indebtedness with the provisions of this section of the Constitution. The assent to the districts' incurring the indebtedness of a majority of the property owners of the districts legally entitled to vote at the time being confessed or admitted, the question is, Must the property of only those who assented, or had the opportunity to assent, be taken to pay the indebtedness, or may the property of others later brought into the districts by annexation in the manner provided by law be also taken to pay the indebtedness?

Under the above provisions, the right and opportunity to vote on bond issues of a school district is limited to those legal voters who have property in the district at the time that will be subject to a tax to pay the bonds, and not those whose property is later by lawful methods incorporated into the district.

And the fact that plaintiff's property was annexed to the school districts without its consent is immaterial. Subject to such constitutional limitations as may exist, the power of the legislature over school districts is plenary. It may divide, enlarge, diminish or abolish them at pleasure. Pass School Dist. v. Hollywood City School Dist., 156 Cal. 416, 20 Ann. Cas. 87, 26, L.R.A. (N.S.) 485, 105 P. 122; 1 Dillon on Municipal Corporations, p. 54; 24 R.C.L. 562, § 6.

There is no serious contention, at least the question is not presented by an assignment, that the change of the boundaries of the districts was not effected in the manner provided by paragraphs 2721 and 2722 of the Revised Statutes of Arizona 1913, Civil Code, [38 Ariz. 16] nor that such change was not lawfully made. In Adriaansen v. Board of Education, 222 A.D. 320, 226 N.Y.S. 145, 149, the court, after stating ". . . it is conceded that there is no express provision of statute making the property in the annexed [school] districts subject to assessment for the payment of the bonds issued by old district No. 1 before the annexation of the other districts," said:

"We do not understand that an express provision of statute is necessary to accomplish that result.

"The law applicable to such a situation, as stated in many authorities, is that property in the territory annexed is liable to assessment for the payment of bonds and liabilities of the municipal corporation or district to which the territory is annexed. The authority of the Legislature over the boundaries of subdivisions of the state is absolute. It may consolidate, add to, or take from the territory of a municipality or district, without the consent of the municipality or district affected. By such action the rights of individuals in the territory affected are not violated. The fact that persons and property in the territory annexed may be subject to taxation to pay bonds and obligations theretofore voted, without their having had any voice or vote in creating the liability, does not render the act of annexation void. There is no contract between citizens of a particular municipality and the corporation that the property within the particular territory shall not be taxed for the benefit of another municipal corporation or district to which it may be annexed, even though the tax is assessed to raise money to pay bonds or obligations voted and incurred by the municipality or district before the annexation. 43 Corpus Juris, p. 143, § 122, reads:

"'Debts of a municipality contracted before an annexation of territory become a burden upon the added territory as well as upon the original territory in the absence of statutory provision to the contrary.'

"See, also, section 123, same.

"Similar statements are contained in other textbooks. 20 Am. & Eng. Enc. of Law (2d ed.) 1152; 26 Cyc. 224; 19 Ruling Case Law, 732; Dillon on [38 Ariz. 17] Municipal Corporations (4th ed.), p. 268. Many cases are collated, in those authorities, sustaining the statements of the texts. There is also an exhaustive note to the ...

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