Taos County Board of Education v. Sedillo , 44 N.M. 300 ( 1940 )

Section 11 of Article 9 of the State Constitution provides: "No school district shall borrow money, except for the purpose of erecting and furnishing school buildings or purchasing school grounds, and in such cases only when the proposition to create the debt shall have been submitted to the qualified electors of the district, and approved by a majority of those voting thereon. * * *"

If not a grant of power, it is a limitation that prohibits such districts from incurring indebtedness unless certain formalities are followed. This court considered the precise question in Lanigan v. Gallup, 17 N.M. 627, 131 P. 997, 999, except that it had reference to the authority of cities and towns to incur such indebtedness. We stated:

"The limitations contained in said sections upon the debt-contracting power of such municipalities are certainly self-executing. * * *

"Under section 12, before such debt can be incurred, the question must first be submitted to a vote of the qualified electors of such municipality, who have paid a property tax therein during the preceding year. By whom, or what board orbody, is the question to be submitted? No provision is made as toany notice to be given the electors that such a question will besubmitted. While such question must be determined by ballot,deposited in a separate ballot box, no provision is made as towhat said ballot shall contain, or how the voter shall expresshis desire. How is the vote to be canvassed, and to whom shallthe return be made? Again, when it comes to issuing the bonds, for what length of time shall they run? Who is to execute thebonds? What rate of interest shall they bear? In what denominations shall they be issued? How shall they be sold? If it be argued that many of these questions are already provided for by existing laws, such argument would only tend to demonstrate that the provisions in question are not self-executing; for it would be evident that it was necessary to supplement such provisions by law, and all the reasoning advanced for sustaining the validity of the bonds in this case would fall.

"Here no contention is made that the town authorities complied with the existing statutes upon the subject; but the broad claim is made that it is unnecessary to comply with any of the statutory provisions theretofore existing and continued in force by the Constitution, because the constitutional provisions were self-executing and provided a full and complete method of procedure, and in and of themselves authorized the creation of the indebtedness. We do not think the provisions in question are self-executing, but legislation is necessary for the enjoyment of the rights given." (Emphasis mine.)

The effect of this decision is that the limitation on the power to contract debts, contained in the Constitution, is self executing; but the grant of power to contract (if it is such grant) is not self executing, "but to make them operative legislation is necessary." As I understand the opinion, in the absence of legislation providing for an election, which must be followed, the authority to issue bonds at all is denied. The legislature enacted such statutes, and they were ignored through mistake.

Provision is made for the calling of the election, the form of ballot, the appointment of election judges, delivery of the ballot boxes, certification of the result of the election by the judges, and the canvass of the vote by the authority calling theelection, and its certificate of the result, none of which were followed.

If, as we said in the Lanigan Case, these statutes are "necessary to the enjoyment of the right given," does it not follow that the failure to utilize them is as fatal to the power as the failure to enact them? In other words, the power to thus contract is dependent upon whether the interested electors have expressed their approval at an election held under statutes enacted to vitalize the power to issue bonds; that is, at an election provided for that purpose by law. That was the effect of our decision in the Lanigan case and in Barry et al. v. Board of Education of Clovis, 23 N.M. 465, 169 P. 314, 315, in which it was held that a like election was without authority of law and void. This court stated: "From the foregoing authorities it is apparent that the election in question was called and notice thereof given by the wrong agency, and the bonds authorized by such election are invalid."

This seems to be admitted, but it is said that since those decisions were handed down, certain statutes have been enacted that have the effect of validating or "curing" invalid bonds; vitalizing something that never lived or could live, according to my construction of the higher and controlling law.

These statutes are as follows:

"Any time prior to five days preceding the day set for an election, but not afterwards, any person or corporation may attack the validity of the petition asking for the election or the resolution approving said petition, or both, by action in the district court of the county of the district affected and the court shall have power to require appearance and answer therein in such time as it shall elect. All such cases shall take precedence over all other court business." Sec. 120-711, N.M.Sts. 1929.

"Any person or corporation may institute in the district court of the county of the district affected an action or suit to contest the validity of all proceedings taken subsequent to those mentioned in the last preceding section, but no such suit or action shall be maintained unless the same be instituted within ten days after the publication of the certificate specified in section 709 * * * hereof." Sec. 120-712, Id.

We have held that these are statutes of limitation, Board of Education, etc., v. Patton, 43 N.M. 107, 86 P.2d 277, and cases cited therein; that the words "any person or corporation" as used in these statutes, do not enlarge the class of those "who, having legitimate ends to accomplish or rights to protect, without this statute would have been qualified to seek the aid of the courts," Griggs v. Board of County Com'rs, 39 N.M. 102, 41 P.2d 277, 280; that they foreclosed the right of questioning the validity of a proposed bond issue upon the ground that the petition, notice and ballot submitted a double proposal, White v. Board of Education,42 N.M. 94, 75 P.2d 712, 716, but we were careful to say "the objection points out no constitutional defect in the proceedings and, if valid, should have been urged within the time limited by the statute." We have held that where the petition for an election had been changed after it was signed, that the limitation statutes effectively prevented an attack upon the bonds because it was within the power of the legislature to have omitted the petition altogether, White v. Board of Education,36 N.M. 177, 10 P.2d 590; we held in Board of Education v. Patton, supra: "That the rule adopted with reference to this statute isthat mere regulatory provisions of the exercise of the right or power to borrow money and which do not render the proceedings anullity are controlled by the limitation statute quoted above." (Emphasis mine.)

The above was the last pronouncement of this court on the question; and correctly states the law.

That the election was absolutely void there can be no question. Barry v. Board of Education, supra; Seaboard Airline R. Co. v. Townsend, etc., District, 44 Ga. App. 705, 162 S.E. 837; Marshall County v. Cook, 38 Ill. 44, 87 Am.Dec. 282. The distinction is that mere defects or irregularities in bond elections do not necessarily invalidate the bonds, but if the election is ordered by a person or tribunal having no authority, the whole proceeding is absolutely void and every subsequent step is void, and incapable of ratification.

"There is no inherent right in the people, whether of the state or of some particular subdivision thereof, to hold an election for any purpose. Such action may be taken only by virtue of some constitutional or statutory enactment which expressly or by direct implication authorizes the particular election. The rule is firmly established that an election held without authority of law is void, even though it is fairly and honestly conducted." 18 Am.Jur. "Elections" Sec. 100.

"* * * it is essential to the validity of the election that it be called and the time and place fixed by the agency designated, and by no other. If not called by the proper officers, such an election is without authority of law, and is void. State Constitutions and statutes have designated, as the proper agencies for the issuing of orders and calls for elections, various officers and bodies, such as judges, the county court, and municipal officers. * *" 18 Am.Jur. "Elections" Sec. 101.

Was the failure to hold an election (and the pretended election was no election) immaterial because of the existing limitation statutes? I am satisfied it was not.

The legislature has power to cure defects in proceedings which it might have dispensed with in the first instance, by validating acts; but it cannot, even by validating or curative statutes (and we have none here), validate a bond issue that was absolutely void because of the failure to submit the question to a vote of the interested electorate, as required by the Constitution.

"Finally, respondent invokes the provisions of section 9, chapter 142, Laws of 1915, as curative of all the defects pointed out in the complaint. For present purposes it may be assumed that these provisions are ample to cure all mere irregularities, and that they cover with their protecting mantle all such failures as are here recorded when they occur after proceedings sufficient to confer jurisdiction; yet, certain it is that the Legislature cannot breathe the breath of life into a dead thing." Cooper et al. v. City of Bozeman, 54 Mont. 277, 169 P. 801, 803.

"It is further contended that the validating act of 1925 (Laws of 1925, p. 565), had the effect to make valid the school tax in question. The power of the Legislature to validate by curative law any proceedings which it might have authorized in advance is limited to the case of the irregular exercise of power. It cannot cure the want of power to act." People ex rel. Kjellquist v. Chicago, etc., R. Co., 321 Ill. 499, 152 N.E. 560, 562.

Also see: Simpson v. Teftler, 176 Ark. 1093, 5 S.W.2d 350; Hall v. Mitchell, 175 Ark. 641, 1 S.W.2d 59; McGillic v. Corby et al.,37 Mont. 249, 95 P. 1063, 17 L.R.A., N.S., 1263; Anderson et al. v. Lehmkuhl, 119 Neb. 451, 229 N.W. 773; Roberts et al. v. Eyman et al., 304 Ill. 413, 136 N.E. 736; Booth v. Hairston,195 N.C. 8, 141 S.E. 480.

The majority, by the specious reasoning that because the legislature might have provided a different method or board for the calling and holding of an election, conclude the bonds were legalized by these statutes of limitation. In other words, they are held to be a valid substitute for an election which the Constitution requires to be held before bonds can be issued. The legislature could not, and did not by these statutes, validate bonds that were to be issued in the future in violation of a constitutional inhibition. By them certain persons and corporations were deprived of a remedy theretofore existing to contest the validity of the proposed bond issue, but that did not legalize that which was void.

As I read Weinberger v. Board of Public Instruction, supra, the Florida case cited by the majority, it supports my conclusion and not the majority opinion. In that case the Board of Public Instruction undertook to issue bonds with maturities fixed contrary to an express and continuing limitation of the Constitution. Thereafter a statutory action was brought in the Circuit Court to test the validity of the bonds and a decree entered validating them. The Weinberger case was thereafter brought by a taxpayer to enjoin the issuance of the bonds. From a decree denying an injunction an appeal was taken. The Florida court held that the bonds were void ab initio and that the validating decree of the Circuit Court did not affect the right of a taxpayer not a party thereto, to contest their validity in a court of equity. The court said:

"The principle is well established that, where the Constitution expressly provides the manner of doing a thing, it impliedly forbids its being done in a substantially different manner. * * * Therefore, when the Constitution prescribes the manner of doing an act, the manner prescribed is exclusive, and it is beyond the power of the Legislature to enact a statute that would defeat the purpose of the constitutional provision. * * *

"The Legislature, by a curative statute, may even validate bonds originally issued without authority, provided the Legislature could have authorized the issuance of the bonds in the first place. See State ex rel Nuveen v. Greer, supra. But when bonds are issued in violation of a mandatory provision of the Constitution, as, for instance, when in excess of the debt limit fixed by the Constitution * * *, or when such bonds have not been authorized by a two-thirds vote of the people, as required by the Constitution * * *, or, as in the case before us, where the maturities fixed by the issuing body are contrary to the express requirement of the Constitution, such bonds are void ab initio, and cannot be validated by curative legislation. * * *

"Although the constitutional provision now under consideration may be designed in part to protect the individual property rights of the taxpayer, it is primarily an express and continuing limitation upon the power to issue the bonds. Such a constitutional provision is a continuing command. It may be satisfied only by strict compliance. It is not subject to or susceptible of legislative regulation or restriction upon the time within which a failure to observe the same may be asserted. Bonds issued in violation thereof are void ab initio." [93 Fla. 470, 112 So. 256.]

The majority opinion does not validate the bonds. They are still invalid, and the question of their validity may be raised in the future because issued in violation of Sec. 11 of Art. 9 of the State Constitution; and no validating or curative statute, and surely no limitation statute, can remedy the constitutional defect that voids them.

"A validating decree authorized only by legislative enactment is therefore ineffectual to bar an affected taxpayer, otherwise entitled so to do, and who did not intervene and raise such objection in the statutory validation proceeding, from subsequently resisting the issuance of the bonds on the ground that one of the essential and indispensable steps in the proceedings by which the bonds are to be issued was had in violation of a mandatory provision of the Constitution, a noncompliance with which the complaining taxpayer cannot waive." Weinberger v. Board, supra.

The effect of the Lanigan decision is that the interested electors must approve the bond issue at an election provided for by law; an election called by the proper board or body after notice given by it. This case is an outstanding decision that has been consistently followed by this court until this time.

We have held in a long line of cases that the curative provisions of our tax statutes with respect to tax sales, cured no jurisdictional defects that could not be dispensed with by the legislature (Williams v. Van Pelt, 35 N.M. 286, 295 P. 418), and surely these limitation statutes are not, and cannot be, more effective regarding the illegal issuance of municipal bonds. Even assuming that validating or curative legislation would have remedied the defect of the failure to submit the question of the issuance of the bonds at an election provided for by law to vitalize Section 12 of Article 9 of the State Constitution, we have no such statute.

These limitation statutes purport to bar suits against the district to contest the validity of the bonds, but have no reference to actions by it, or its right to defend against a suit on void bonds that could not be brought until the bonds mature. Regarding the right of a town to defend against a void contract, this court said in Hagerman v. Town of Hagerman, 19 N.M. 118,141 P. 613, 617, L.R.A. 1915A, 904: "Here we have an express mode provided by statute for the entering of into contracts of the nature we hold this to be, i.e., an approval by the vote of the people of the town, and a further statutory limitation upon the amount of indebtedness to be contracted. Without such vote and approval, the contract or ordinance is a nullity. The rule is well settled that, where one enters with a municipal corporation into a contract, which is void because opposed to the Constitution and laws of the state, and contrary to its settled public policy, complete performance of such contract on the part of such person will not prevent the municipal corporation from pleading its want of powers or the illegality of the contract."

See 1 Jones on Bonds and Securities, Sec. 307.

It would be far better to require municipalities to follow the statute in issuing bonds, though the people are put to the trouble of holding a legal election, rather than permit them to place void securities upon the market, with a limitation statute of doubtful value as a protection to the purchaser.

The Attorney General's opinion on the legality of the bonds is correct, and the decree should be reversed and the cause dismissed.