Appeal by intervening petitioners from the Circuit Court of
Douglas county; the Hon. CHARLES E. KELLER, Judge, presiding.
Heard in this court at the October term, 1953. Reversed and
remanded with directions. Opinion filed October 26, 1953.
Released for publication December 1, 1953.
MR. JUSTICE WHEAT DELIVERED THE OPINION OF THE COURT.
The facts and trial court proceedings in regard thereto from which this appeal arises are stated in the Supreme Court opinion (Strader v. Board of Education, 413 Ill. 610) transferring the cause to this court. A somewhat more detailed statement of the case is deemed desirable for decision of the issue which the Supreme Court found properly raised.
Plaintiffs, the Township Treasurer and the Trustees of Schools of Township 14, Range 9, Douglas county, Illinois, filed their complaint in interpleader in the circuit court of that county, naming as defendants three community unit school districts located in Douglas and Coles counties and hereinafter referred to as "Charleston District," "Oakland District" and "Arcola District."
The complaint alleged that prior to July 1, 1948, plaintiffs had title to school property and custody of school funds of six school districts or parts thereof then existing in said township, one of which old districts was commonly known and is hereinafter referred to as "Hindsboro District"; that as of July 1, 1948, all of said old districts were automatically dissolved and became a part of one or more of the three defendant new districts; that in particular, upon formation of the new districts, a part of the old Hindsboro District became included in each of the defendant districts; and that based upon the amount of taxes collected in 1947, the property of the old Hindsboro District should be divided as follows among the new districts:
Arcola District 51.7% Oakland District 35.6% Charleston District 12.6%
The complaint further alleged in substance that plaintiffs had on hand and undistributed in excess of $150,000, being the proceeds of sale of certain bonds issued by the old Hindsboro District prior to July 1, 1948, and in addition thereto approximately $3,350 in taxes levied on property in the Hindsboro District for the purpose of paying principal and interest on said bond issue. Finally, the complaint alleged that plaintiffs were ready and willing to distribute said property to such of the defendant districts as might be entitled thereto but that there was a conflict among the defendants as to the manner in which such distribution should be made. Leave was therefore prayed to pay the funds and deliver the property into court for distribution as the court might direct, upon the defendants' interpleading with one another to determine their respective rights therein.
The defendant Oakland District thereafter filed its answer and cross-complaint alleging that the bonds referred to in the complaint, in the amount of $150,000, had been issued prior to July 1, 1948, pursuant to an election held in Hindsboro District for the purpose of building an addition to its then existing school building, that the proceeds of the bond issue had never been used or committed for the intended purpose which could no longer be accomplished, and that the taxpayers of the old Hindsboro District were paying taxes levied on their property for retirement of the bonds. The pleading further denied that the assets of the old districts should be divided as alleged in the complaint and prayed that plaintiffs be ordered to retire the Hindsboro District bond issue by using the bond sale proceeds, interest from securities in which the proceeds had been invested, and tax moneys on hand.
The defendants Arcola District and Charleston District thereafter filed their respective answers which in substance admitted the factual allegations of the complaint but denied that the funds and property in plaintiff's hands should be distributed as alleged in the complaint.
On the date the matter was set for hearing before the court, nine residents, citizens and taxpayers of the old Hindsboro District filed, on behalf of themselves and all others similarly situated, a written petition asking leave to intervene in the principal suit. The petition alleged in detail the facts relating to the Hindsboro District bond issue, in substance as alleged in the answer and cross-complaint of the defendant Oakland District, and prayed that petitioners be made parties defendant and be granted leave to file their answer to the complaint.
This petition for leave to intervene was denied and the matter proceeded to hearing, the court indicating that if it should change its opinion, leave to intervene would be granted at a later date. Upon the hearing a stipulation entered into by plaintiffs and the defendant districts was admitted in evidence by which the parties stipulated in substance that the allegations of fact contained in the complaint and in the cross-complaint of the Oakland District as hereinabove detailed were true. In addition the defendant districts by separate stipulation effectively agreed that the complaint sets forth the proper distribution of funds among the three districts.
The only other evidence offered was the testimony of the plaintiff Treasurer who stated that all assets of the old districts, except those mentioned in the complaint, had been distributed to the new districts and that the proceeds of the Hindsboro District bond issue were invested in government securities at 1 3/8%, the interest being deposited in the bond issue fund.
At the conclusion of the hearing the court granted counsel for petitioners-to-intervene leave to submit authority in support of its petition and to prepare such petition as would be filed if leave so to do were granted. Pursuant thereto, petitioners-to-intervene thereafter filed a new written petition to intervene to which was attached a copy of the proposed intervening petition. In addition to the matters alleged in the original petition hereinabove detailed, the new petition set forth that Hindsboro District, being dissolved, had no Board of Education to act in its behalf; that the petitioners could not be fairly represented by the plaintiff Treasurer and Trustees and the defendant unit districts because the interests of the districts, while adverse to one another among themselves with respect to distribution of the funds of the old Hindsboro District, are identical to one another as against petitioners; that to provide for payment of interest and principal on the bond issue in question, there had been levied on all taxable property in the old Hindsboro District a direct annual irrepealable tax in an amount sufficient for payment thereof; that the proceeds of the bond issue could not legally be distributed to the three new districts without first offsetting therefrom the indebtedness of the Hindsboro District; that otherwise the petitioners, as taxpayers of the old Hindsboro District, would be taxed to pay for retirement of the bond issue and in addition thereto would be subject to the general school tax as taxpayers in the defendant districts. The proposed intervening petition further alleged that various provisions of the school code are unconstitutional if interpreted to require distribution of the proceeds of the bond issue to the defendant districts without set-off of the bonded debt or in the alternative without extending the obligation for payment thereof to the defendant districts.
The intervening petition prayed that petitioners be made parties defendant on behalf of themselves and all others similarly situated; that the County Clerks of Douglas and Coles counties, responsible for extending bond issue taxes, be made parties defendant; and that the bond proceeds be used to retire the bond issue and the bond tax levy be abated to such amount as might be necessary to pay interest and expenses of the retirement of the bond issue or in the alternative that the tax levy for payment of interest and principal on the bonds be extended over the entire territory of each defendant district in the same proportion as the bond proceeds might be distributed.
Thereafter, leave to intervene was again denied, and a final order was entered in the principal action, the docket entry being: "Petition for leave to intervene denied. Prayer of complaint allowed as per stipulation. See order." Pursuant thereto, the written order or decree of the court, disposing of the interpleader action on its merits, directed that the proceeds of the Hindsboro District bond issue be distributed to the defendant districts in accordance with the percentages set out in the complaint as detailed above.
The following diagram, not purporting to be geographically accurate in any respect, illustrates the division of the six old districts, shown in dotted outline, among the three new districts, shown in solid outline, and in particular the inclusion of part of the old Hindsboro District in each of the districts which are the defendants in the principal suit.
--------------------------------------------------------------- | . | | | . | A | | . | R | | . | C | | CHARLESTON | O | | . | L | | . | A | |..................................................|............| | | | | DISTRICT . | | | (12.6%) . | | |--------------------------------------------------| | | . HINDS | BORO | | . | (51.7%) | | . DIST | RICT | | OAKLAND . | | |..................................................|............| | DISTRICT . | D | | (35.6%) . | I | | . | S | | . | T | | . | R | | . | I | | . | C | | . | T | ---------------------------------------------------------------
Petitioners-to-intervene thereupon took a direct appeal to the Supreme Court from the order of the circuit court "denying the petition for leave to file taxpayers' intervening petition." Before the Supreme Court, the petitioners attempted to raise questions which that court found "properly relate to the final decree entered by the trial court" in the interpleader action to which petitioners were not parties and from which they accordingly had no standing to appeal. In transferring the cause to this court the Supreme Court stated: "the only issue properly involved in this appeal ...