
    Behrle, Jr., v. Board of Education of City School District of City of St. Bernard et al.
    
      (Decided June 24, 1935.)
    
      Messrs. Naylor & Pulse, for plaintiff.
    
      Mr. Wilbur H. ApMng, for defendants.
   Hamilton, J.

This is a taxpayer’s suit and comes into this court on appeal. It originated in the Court of Common Pleas of Hamilton county, where the plaintiff, Henry Behrle, Jr., sought to enjoin the payment of certain bonds issued by the Board of Education of the City School District of the city of St. Bernard, Ohio. At the trial of the case the Court of Common Pleas granted the injunction as prayed for.

The facts disclosed by the record are: That on or about October 1, 1932, the defendant, the Board of Education of the City School District of the city of St. Bernard, issued school bonds of the City School District totaling $17,500, to establish a fund for the purpose of furnishing and installing a certain heating system in the public school buildings in said school district; that the bonds were issued without submitting the proposal to the voters of said City School District; that said bonds were offered to the Sinking Fund Commissioners of the eity of St. Bernard; and that said Sinking Fund Commissioners in their official capacities purchased said bonds, and that said bonds are now held by them. It is further disclosed that the proceeds of the sale of the bonds were used in the furnishing and installing of the heating equipment, and that after the money had been expended for the purpose named, Henry Behrle, a taxpayer, filed this action seeking to enjoin the payment of the principa! and interest on the bonds, on the ground that the bond issue exceeded the limitations of the statutes of Ohio.

At the time the bonds in question were issued, the total net indebtedness of the City School District of the city of St. Bernard was approximately equal to one-tenth of one per cent, of the total value of all property in the school district, as listed and assessed for taxation.

Section 2293-15, General Code, provides:

“The net indebtedness created or incurred by any school district without a vote of the people shall never exceed one-tenth of one per cent of the total value of all property in such school district as listed and assessed for taxation.”

It is admitted that the proposal to issue the bonds in question was not submitted to a vote of the people, and that the bonds exceeded the limitations prescribed by the section above named. The bonds were, therefore, improperly issued, were issued without warrant of law, and are, therefore, invalid.

Something is claimed for the respondent under Section 2293-37, General Code. This section provides that when bonds are issued pursuant to the uniform bond act, they shall be incontestable. The pertinent part of the section is as follows:

“Any bonds reciting that they are issued pursuant to this law, complying on their face with the provisions thereof, issued for a lawful purpose within the limitations prescribed by law, * * * shall he incontestible unless such action or proceeding is begun prior to the delivery of such bonds.” (Italics ours.)

We call attention to the provision that the incontestable feature applies only where the bonds are issued for a lawful purpose within the limitation prescribed by law. The bonds in question were not issued within the limitation prescribed by law, and are, therefore, not protected by the incontestable defense.

The other proposition is that the school district having received the benefits of the bonds is now estopped to deny their validity.

There are many cases in the books holding that an innocent purchaser of bonds which contain recitations to the effect that all laws applicable have been complied with is protected by this recital, and that the corporation or quasi-corporation will be estopped to challenge the validity of the bonds when presented for payment in the hands of such innocent purchaser. There are also many cases holding the contrary. The cases on the question are collated in 86 A. L. R., 1057 et seq. However, we find no case involving the same state of facts as presented here. The action here is by a taxpayer, who is required to pay all legal taxes. The limitation is for his protection. He had no knowledge of the action of the school board in issuing bonds beyond the limitation allowed by law. The bonds were purchased by the Sinking Fund Commissioners, and the commission constitutes an arm of the same government under which the bonds were issued. The Sinking Fund Commissioners ought to be chargeable with notice of the bonded indebtedness of the subdivision. It is their duty, enjoined upon them by statute, to take care of the discharge of the bonded indebtedness, and we do not think they are innocent purchasers within the meaning of the law, as pronounced by those cases holding that estoppel would lie where the bonds were held by innocent purchasers.

It is suggested to show the good faith on the part of the Sinking Fund Commissioners in making the purchase of the bonds that they first sought the opinion of the City Solicitor as to the legality of the bonds. He reported to them in writing that the bonds were legal and complied with the laws in every respect. The opinion of the City Solicitor is no more protection to the Sinking Fund Commissioners than is the recital in the bonds. The commissioners had the bond records before them. They undoubtedly had in the city offices the assessed valuation of all the taxable property in the district. They had every opportunity to examine the figures for themselves, and may not now shift the duty enjoined upon them by statute to the City Solicitor, whom they considered their legal adviser.

The refusal to grant the relief asked for in this case .would make it possible for the officers of any subdivision through manipulation with the Sinking Fund Trustees to ignore and set aside all limitations as to the issuance of bonds without a vote of the people.

Our conclusion is that the plaintiff is entitled to the relief sought, and a decree may be presented accordingly.

Decree for plaintiff.

Ross, P. J., and Matthews, J., concur.  