McKee v. Hogan

110 So. 775, 145 Miss. 747, 1926 Miss. LEXIS 35

• Court: Mississippi Supreme Court
• Decided: November 22, 1926
• Docket: No. 25876.
• Status: Published

Opinion

Ethridge, J.,

delivered tlie opinion of the court.’

The appellee was complainant in the cotirt below, and filed a bill for an injunction against the trustees of the Starkville separate school district, alleging’ that the complainant was a resident of the said school district and a taxpayer thereof; that on or before the 15th day of August, 1925, said separate school district issued and sold, as provided by law, negotiable bonds of said district for one hundred thousand dollars for the construction of a high school building for the said separate school district. It was further alleged that the Merchants’ & Farmers ’ Bank was a depository for such funds, and that the said funds realized from the sale of the bonds were deposited in said depository.

It was further alleged that the board of trustees had recently selected a site owned by certain private citizens for the location and construction of the said school building, at and for the sum of eight thousand five hundred dollars, to be paid from the proceeds of the bond issue on deposit in the said depository, and that the board of trustees had directed the city clerk to issue a warrant for the payment thereof, and that deeds had been executed and' deposited in escrow in the bank to be delivered upon payment of the purchase price. It was then alleged that the trustees had no legal authority for the selection and purchase of such property for said school building, and that the payment of such money for such school lot would be a diversion and misappropriation of the public funds of the separate school district.

It is further alleged that the defendants, unless re strained, will consummate the purchase of said property, and that such act is ultra vires. It is further alleged that the complainant had no adequate and efficient remedy except through injunction, and, as a taxpayer of the said district, he had the right to protect his interest in said public funds from misappropriation to an improper, unauthorized, and unlawful purpose as contemplated by the said board of trustees, and prayed for an injunction.

Tbe defendants demurred to tbe bill and filed a motion to dissolve tbe injunction. In tbe motion to dissolve tbe injunction a pending suit in tbe circuit court was alleged to be pending, in which tbe legality of tbe act of tbe board was being litigated between tbe board of trustees and tbe town clerk. Copies of all papers in reference to tbe buying of tbe school lot and issuing of tbe bonds, including a copy of tbe mandamus petition and all of the proceedings in the circuit court, were attached to the motion, which suit in tbe circuit court showed that the trustees bad ordered tbe clerk to issue tbe warrant for eight thousand five hundred dollars, and that deeds bad been executed by tbe owners of tbe property and placed in escrow in tbe bank to be delivered on payment of tbe purchase price, and that the board of trustees bad directed the clerk to issue such warrant on such funds derived from such bond issue in the depository, and that the clerk bad refused to do so and bad challenged tbe authority of the board of trustees to purchase said-property and pay therefor out of tbe proceeds of tbe bond issue. These pleadings in the circuit court showed that the matters at issue involved tbe right and power of the school trustees to purchase the said property and pay for it with money derived from the sale of bonds, tbe money for which was on deposit, and that they were being litigated in a competent court of jurisdiction between the trustees and the town clerk.

It will be noted that tbe bill filed by tbe complainant, Hogan, is an individual proceeding, and not a proceeding for and on behalf of tbe general public. Tbe injuries be seeks to prevent are the injuries to himself as a patron and taxpayer of the school district, which are not shown to be different from other patrons and taxpayers, and he does not allege in his bill that he has sought to have the proper authorities institute the suit, or permit him to do so on behalf of the public, nor does his bill state that it'is. filed on behalf of all the taxpayers and patrons of the' school of such district, nor does it invite others to join therein.

The court below overruled the demurrer to the hill and granted an appeal to settle the principles of the case, and the cause was argued before the court and brief filed addressed mainly to the power of the board of trustees to purchase the school lot from such funds. The right of the complainant to maintain the injunction suit was also challenged in the argument and brief, and, after the submission of the cause, additional briefs were called for by the court addressed to the right of the complainant to bring individually a suit of injunction to restrain said purchase, and also whether the bill of injunction could be maintained even if he had such right to bring it individually, in view of the pending suit in the circuit court between the trustees and the town clerk.

It will be seen from the statement of the pleadings that the funds derived from the bond issue are in the public depository, and that no question of the rightfulness of the issuance of the bonds is involved here; the proceeds derived from them are public funds belonging to the separate school district as a legal entity, and the complainant in the bill has no right or interest in such funds whatever from that of the general public.

This suit is brought by the complainant to restrain the consummation of this purchase because of the injury that would result to the complainant alone. The title to the funds being in the separate school district, the municipality has the legal title thereto and the right to maintain whatever suit is necessary for the protection of such funds. It is settled law in this state that a person has a right to maintain an action to restrain the infliction of an injury to his property, person, or reputation regardless of whether that injury is done by public officers claiming to act under lawful authority. Hobbs v. Germany, 94 Miss. 469, 49 So. 515, 22 L. R. A. (N. S.) 983; Laurel v. Turner, 96 Miss. 631, 51 So. 403; Town of Clinton v. Turner, 95 Miss. 594, 52 So. 261; and numerous other cases of this and other states.- But an entirely different question is presented when an individual undertakes to restrain officers from doing an act that only affects the title of the county, city, or state. Ordinarily, the authorities charged with the duty of bringing a suit to pro tect the funds and property of the state, or its subdivision or municipalities, are public officers having legal authority so to do. Municipalities have the power by statute to sue and be sued in all cases affecting their public rights and the duties of their servants and officers. If the separate school district is a separate entity from the municipality, being an agency of the state for state purposes or county purposes, other officers are given power to bring suits for and on behalf of the public to protect such interest. By section 310, Code of 1906 (section 3683, Hemingway’s Code), it is provided that .suit may bo brought, in the name of the county, where only a part of the county or of its inhabitants are concerned, and where there is a public right of such party to be vindicated. Unless some sufficient showing is made that public officers who are charged with the duty of bringing suits to protect the public interest will not act on being applied to, or on their own initiative, such bodies should bring such suits. They are selected with a view to their fitness and qualifications to so protect the public interest. A very instructive case involving matters of that kind is that of Merrimon v. Paving Co., 142 N. C. 539, 55 S. E. 366, 8 L. R. A. (N. S.) 574. In the first syllabus of this case, it is stated that a citizen of a municipal corporation cannot, in the absence of statutory authority, maintain an action to prevent the payment of money on a completed contract, which is alleged to have been defectively performed, but which was within the contracting power of the municipality, until he has presented the matter to the governing body of the municipality. It was also held in the third syllabus of this case that to entitle a citizen to maintain an action to enjoin further payment on a public contract because of lack of opportunity to present the matter to tlie board of aldermen, lie must attempt to secure a called meeting for tliis purpose. In this opinion the court'said:

“A citizen, in Ms own behalf and that of all other taxpayers, may maintain a suit in the nature of a bill in equity to enjoin the governing body of a municipal corporation from transcending their lawful powers or violating their legal duties in any mode which will injuriously affect the taxpayers — such as making an unauthorized appropriation of the corporate funds, or an illegal or wrongful disposition of the corporate property, etc. — is well settled [citing authorities]. Judge DilloN says that the right to maintain such action is sustained by analogy to the principle applicable to the rights of shareholders in private corporations. ‘In these the ultimate cestuis que trust are the stockholders. In municipal corporations the cestuis que trust are, in a substantial sense, the inhabitants embraced within their limits. In each case the corporation, or its governing body, is a trustee. If the governing body of a private corporation is acting ultra vires or fraudulently, the corporation is ordinarily the proper party to prevent or redress the wrong by appropriate action or suit in the name of the corporation.’ ”

It is stated at page 578, L. R. A. (142 N. C. 547, 55 S. E. 368), of this case:

“The basic principle is that the corporation is a distinct entity, and not a mere copartnership, composed of individuals. That by its charter certain powers are conferred upon this legal person or entity, to be exercised by the board of directors and other officers and agents provided for and elected in the manner prescribed. That when contracts are made by such boards or agencies they are the acts of the corporation, and the duties assumed and rights acquired are corporate. That so long as the corporate acts are intra vires and the officers are in the execution or discharge of such duties exercising an honest judgment and discretion, the courts will not, except within the limitations prescribed, interfere at che suit of one -or more stockholders. The reason and policy upon which these limitations are based are so just and necessary to the existence of the efficient operation of corporate powers and functions that they require no vindication.”

The court reviewed a number of authorities, and at page 579, said:

“ ‘The case just cited (Hawes v. Oakland) was after-wards cited and fully approved by the same court in Dimpfel v. Ohio & M. R. Co., 110 U. S. 202, 3 S. Ct. 573, 28 L. Ed. 121, and it was therein further held that it must appear that the plaintiffs had exhausted all the means in their power to obtain redress of the grievances within the corporation itself.’ The learned justice further says: ‘It is not alleged, nor does it appear in any way, that the plaintiff had ever taken steps, within the company last mentioned, to correct the grievances of which he complained, although he had known of them for years; nor does it appear that he has even demanded and required of its officers that they take proper action to prevent them, or obtain redress on account of the same.’ Mr. Clark, in his excellent work on Corporations (pages 389, 390'), states the doctrine as laid down by Judge Miller,, and adds: ‘In addition to the existence of grievances calling for equitable relief, it must appear that the complainant has exhausted all the means within his reach to obtain, within the corporation itself, the redress of his grievances. He must apply to the managing officers to take action in the corporate name,' and, if he fails with them, he must, if the matter will admit of the delay, seek to obtain action by the stockholders as a body, unless for some reason such attempt would be useless.’ Brewer v. Boston Theater, 104 Mass. 378.”

In Hawes v. Contra Costa Water Co., 104 U. S. 450, 26 L. Ed. 827, reviewed also in the above opinion, Justice Miller, of the United States supreme court, in a case involving a suit by a stockholder against a corporation, discussing the question of the right of a stockholder on behalf of a corporation to interfere with its management, fully and elaborately reviewed the authorities upon that subject. After so reviewing them, he held as follows:

“We understand that doctrine to he that to enable a stockholder in a corporation to sustain in a court of equity in his own name, a suit founded on a right of action existing in the corporation itself, and in which the corporation itself is the appropriate plaintiff, there must exist as the foundation of the suit: Some action or threatened action of the managing board of directors or trustees of the corporation which is beyond the authority conferred on them by their charter or other source of organization; or such a fraudulent transaction completed or contemplated by the acting managers, in connection with some other party, or among themselves, or with other shareholders as will result in serious injury to the corporation, or to the interests of the other shareholders.; or where the board of directors, or a majority of them, are acting for their own interest, in a manner destructive of the corporation itself, or of the rights of the other shareholders; or where the majority of shareholders themselves are oppressively and illegally pursuing a course in the name of the corporation, which is in violation of the rights of the other shareholders, and which can only be restrained by the aid of a court of equity.

“Possibly other cases may arise in which, to prevent irremediable injury, or a total failure of justice, the court would be justified in exercising its powers, but the foregoing may be regarded as an outline of the principles which govern this class of cases. But, in addition to the existence of grievances which call for this kind of relief, it is equally important that before the shareholder is permitted in his own name to institute and conduct a litigation which usually belongs to the corporation, he should show to the satisfaction of the court that he has exhausted all the means within his reach to obtain, within the corpo ration itself, the redress of Ms grievances, or action in conformity to Ms wishes. He must make an earnest, not a simulated, effort, with the managing body of the corporation, to induce remedial action on their part, and this must be made apparent to the court. If time permits or has permitted, he must show, if he fails with the directors, that he has made an honest effort to obtain action by the stockholders as a body, in the matter of which he complains. And he must show a case, if this is not done, where it could not be done, or it was not reasonable to require it.

“The efforts to induce such action as complainant desires on the part of the directors, and of the shareholders when that is necessary, and the cause of failure in these efforts should be stated with particularity, and an allegation that complainant was a shareholder at the time the transaction of which he complains, or that his shares have devolved on him since by operation of law, and that the suit is not a collusive one to confer on a court of the United States jurisdiction in a case of which it could otherwise have no cognizance, should be in the bill, which should be verified by affidavit.”

If the complainant seeks to restrain final action on behalf of the public rather than for his personal injuries, as distinguished from the public, he should so state and invite other interested persons to join in the suit. The right to such injunctions is discussed in 14 R. C. L., p. 329, section 30. It is there said:

“It is only where the injury is general and public in its effects, and no private right is violated, in contradistinction to the rights of the rest of the public, that individuals are precluded from bringing private. suits for the violation of their individual rights. It has long been settled that a private citizen may maintain an action for a public wrong if he suffers an injury peculiar to himself, and not sustained by the public in general. Thus, a citizen may, in his own behalf and that of all other taxpayers, maintain a suit in the nature of a bill in equity to enjoin the governing body of a municipal corporation from acting in excess or in violation of the powers conferred on it by law so as to canse a resulting injury to taxpayers. So property holders and taxpayers are proper parties, in a proceeding to enjoin the performance by public authorities of a municipality of a contract for street grading and paving, where such contract is illegal because entered into without sufficient advertisement. Similarly, where a statute amending a railroad charter provides that the road shall run in and through the corporate limits of a town, on certain conditions, the citizens of the town, on offering to comply with their part of the conditions, have, as a class, such special and particular interest in the matter involved as will support an application for an injunction to protect that interest. Such interest being common to all of such class as a community, «.nd it being composed of numerous individuals, some may sue in behalf of all. In the same way persons belonging to a voluntary society and having a common interest, may sue in behalf of themselves and others having the like interest as part of the same society for purposes common to all and beneficial to all.”

In American Oil Co. v. Interstate Wholesale Grocers, 138 Miss. 801, 104 So. 70, this court held that a private citizen could not bring a suit to enjoin the board of supei-visors from leasing the property of the county where he did not have a personal or property interest in the subject-matter of the suit. The court there said:

“It would be manifestly confusing to public business and troublesome to the officers charged with the administration of public affairs if any citizen of a county may at any time challenge the legality of the actions of the board of supervisors or of any of its contracts. Where the board undertakes to impose a burden iipon a citizen without authority of law, ho may then contest the legality of the action, not on behalf of the county, but to vindicate his own rights if he be affected by such action; that is to say, if he would have an additional burden imposed on Mm by snob, act of the board. But this does not au • thorize him to litigate contracts made by the county in which be has no property or financial interest.”

In Donald et al. v. Stauffer et al., 140 Mass. 752, 106 So. 357, certain taxpayers of the Tutwiler separate school district filed their bill in the chancery court of the Second district of Tallahatchie county against the trustees of the municipal school of said district, appellees in the said case, and sought to enjoin them for discharging a teacher in the said school. In discussing the case in the opinion, Judge ANdehsoN, speaking for the court, said:

“Appellants’ position is that, as taxpayers of the school district, they had the right to resort to injunction to prevent appellees, as trustees of the district from violating their contract with Campbell, because it might entail an additional tax burden on the taxpayers of the district. Appellees’ position is that, even though it be true that in discharging Campbell and employing another in his place they violated their contract which might result in additional burden on the taxpayers, nevertheless such alleged illegal acts cannot be controlled by injunc-tive proceedings; that in the employment and discharge of a superintendent of the school, although they may have acted illegally, still they were acting within the scope of their duties as trustees, within which their judgment and discretion cannot be controlled by injunction. American Oil Co. v. Interstate Wholesale Grocers, 138 Miss. 801, 104 So. 70, although not directly in point, has, in our judgment, material bearing 'on the question. ’ ’

The court said in that case, among other things:

“It would be manifestly confusing to the public business and troublesome to the officers charged with the administration of public affairs ‘ if any citizen of the county ’ may at any time ‘ challenge the legality of the actions of the board of supervisors or of any of its contracts.’ ”

In the case of Baird v. Georgia Pac. Ry. Co. (Miss.), 12 So. 547; Id., 76 Miss. 521, 24 So. 195, a suit was filed by a taxpayer, a citizen of the county, for damages to property involved by a breach of contract between the railroad and county in which the railroad agreed to build and maintain a track at a certain point. In discussing the matter, the court said:

“Waiving further consideration of the points presented on the motion and demurrer, we limit our inquiry to the question at the base of the controversy, and which renders the decision of any other of comparatively little importance. The question is, can any and every citizen of Sunflower county, or every nonresident of the county who owns property situated in the county, maintain such an action as was instituted by the appellant in the case against the Georgia Pacific Railway Company, for the alleged breach by appellee of the contract between said company and the county? If this question is answered in the affirmative, then the action by appellant in this case can be maintained, and then only; for nothing is shown by the record which would entitle the appellant to any preference over the humblest citizen of the county. Let it be admitted that a change was made after the road had been constructed and operated for a term of eight years, from Stoueville, by or near Eureka, to the western bank of Sunflower river, opposite to the town of Johnsonville, as required by the contract, and after that the terminal point was moved a distance of two miles, and located at a point beyond the corporate limits of said town, and that it was done without the consent of the citizens express by an election held to ascertain their will, and also without the sanction of the board of supervisors; and let it be further admitted that such change was a flagrant breach of the very condition upon which the approval of the citizens by said election was obtained to the subscription for stock, and for the issuance of bonds in payment thereof — with all those admissions, can the idea be entertained for a moment that all the inhabitants of the county, and all nonresidents owning property situated in the county, can maintain suits such as the one under review? If so, the maxim ‘inter est republican id sit finis litiwn’ is obsolete, if it ever had any meaning.” 12 So. 547.

It seems to ns that the principles in the foregoing cases are sound and conducive to the public tranquility and welfare; and, before a private citizen can resort to injunction to litigate public questions, he should show that he has applied to the proper parties without redress, and also that he has invited other citizens to join with him in the litigation. The bill here wholly fails to bring this case within that rule, and the demurrer to it should have been sustained. In the next place, the motion to dissolve the injunction, it being already issued temporarily, showed, that a suit was pending between the proper parties in a court of competent jurisdiction to determine the very question to be litigated here. The court should have dissolved the injunction and dismissed the bill, leaving the parties, if they desired to do so, to intervene as parties to the litigation in the circuit court, or to appear as amims curiw in that court.

It will be noted from reading the section of the Constitution conferring jurisdiction upon the circuit court that if has all jurisdiction not vested in some other court, and, as construed by this court, it has all the jurisdiction of the common-law courts of England, including the King’s Bench, which had supervisory jurisdiction over inferior courts and judicial officers exercising jurisdiction not conferred upon them by law. It is a fundamental principle that an injunction, being an extraordinary legal remedy, will not be granted where there is an adequate and efficient remedy at law. There is nothing in the allegation of the bill before us that shows that any irreparable injury would result in awaiting the litigation pending in the circuit court, and therefore, for this reason, the injunction was improper in this case.

For the errors indicated, the judgment of the court below will be reversed and the bill dismissed.

Reversed, and bill dismissed.