FOOTHILL JUNIOR COLLEGE DISTRICT OF SANTA CLARA COUNTY, Plaintiff and Appellant, v. BOARD OF SUPERVISORS OF SANTA CLARA COUNTY, Charles R. Timpany, County Superintendent of Schools of Santa Clara County, Edward Glaeser, Controller of Santa Clara County, Ed J. Ferguson, Treasurer of Santa Clara County, Hayden W. Pitman, Assessor of Santa Clara County, et al., Defendants and Respondents. *
Plaintiff district appeals from a summary judgment in favor of defendants, and from the order denying plaintiff's motion for judgment on the pleadings.
1. Is plaintiff a real party in interest?
2. When the junior college tuition tax is collected from the territory within a junior college district during its first year as an entity, is the district entitled to a credit for a proportionate share of the surplus remaining after payment of tuition for the prior year by the non-junior college district of which it was formerly a part?
There is no dispute as to the facts. Plaintiff district was established July 1, 1957, pursuant to an election theretofore held. Prior to that time and particularly during the school year July 1, 1956, to June 30, 1957, residents in the territory now comprising plaintiff district sent their children to various junior college districts outside of such territory. It is conceded that under the then law if an area is not within a junior college district then the board of supervisors of the county in which that area is situated must impose a tax on the residents of that area to establish a junior college tuition fund. From this fund tuition is paid to the junior college districts attended by children resident in the non-junior college district area. The tax for that fund is imposed to pay for attendance during the preceding year and not for the year in which the tax is imposed. In theory the tax imposed should yield the amount necessary to pay the various junior college districts full tuition for the children from the non-junior college district area attending said junior college respectively.
Prior to the formation of plaintiff district, in the spring of 1957, the area which later comprised said district constituted 44 per cent of the assessed taxable value of the area of Santa Clara County not within a junior college district upon which the board of supervisors levied the tax in question. During the school year July 1, 1957—June 30, 1958, the board levied two sets of taxes of junior college education. One was for the support of the new junior college district for that year. The tax was confined to the taxable property within the area of the new district. The other tax, imposed on the entire area formerly constituting the non-junior college district area, was for those obligations incurred July 1, 1956, to June 30, 1957, for payment of tuition to other college districts for children from such entire area. After reimbursement was made to the other college districts for such tuition, the board of supervisors held an unexpended sum of $35,793.23; 44.43 per cent of this surplus or $15,902.93 was apparently attributable to the area of plaintiff district. It is of this latter sum that plaintiff seeks recovery in this action.
The complaint contains three counts: The first is to quiet title to the sum last named; the second is for injunction to restrain the board of supervisors from using these moneys; and the third is for declaratory relief. Plaintiff moved for judgment on the pleadings. Defendants moved for a summary judgment. The court denied plaintiff's motion and granted defendants' motion. Plaintiff concedes that under the circumstances of this case, it may seek recovery only under the declaratory relief allegations of its complaint, and that the other two alleged causes of action will not lie.
1. Plaintiff is a Real Party in Interest.
Defendants contend that plaintiff is not a real party in interest and therefore has no right to sue. Defendants base their contention on Gridley School District v. Stout (1901) 134 Cal. 592, 66 P. 785, holding that a school district has no proprietary right to school funds. However, Butler v. Compton Junior College Dist. (1947) 77 Cal.App.2d 719, 729, 176 P.2d 417, holds that the district holds legal title to school district property as trustee. To the same effect, see Hall v. City of Taft (1956) 47 Cal.2d 177, 182, 302 P.2d 574. In Pomona City School Dist. v. Payne (1935) 9 Cal.App.2d 510, 50 P.2d 822, the district sued to recover interest on its funds deposited with the county treaturer which interest was received by the treasurer from banks acting as depositaries of such funds. The court held that the county was not the owner of the funds entrusted to it and that the interest belonged to the district. In Pacific Mut. Life Ins. Co. v. San Diego County, 112 Cal. 314, 41 P. 423, 424, 44 P. 571, it was held that taxes collected “as and for a special school tax for the city of San Diego school district” were “* * * neither county or state taxes, nor any taxes under the control of * * *” the county. A trustee holding the legal title is considered a real party in interest and may sue even without joining the person for whose benefit the action is prosecuted. (Code Civ.Proc. § 369; 2 Witkin, Cal.Proc., p. 1027.)
2. Who Gets The Surplus?
Plaintiff's contention is based upon the fact that the tax for payment of tuition for the year prior to the formation of a junior college district is imposed not by any specific statute, but because of an interpretation of the statutes in Pasadena Junior College Dist v. Board of Supervisors (1932) 216 Cal. 61, 13 P.2d 678. There the court declared that since benefits were received by the residents of the district before its formation,1 it was inequitable for the area not to pay the obligations incurred during the preceding year for the education of the junior college students of the area. The court ordered the board of supervisors (which, in its levy of taxes for payment of costs of education to outside junior colleges for the previous year, had omitted to levy upon the taxable property in the newly formed junior college district) to levy taxes upon such property. Plaintiff's contention is that because the court, in interpreting statutes which did not provide specifically for the levy upon property of a newly fromed district to pay obligations of the prior year, required such levy because of equitable considerations, then the disposition of any surplus should also be dealt with in an equitable manner, and the courts should determine that the Legislature intended that the surplus be transferred to the newer formed district.
Plaintiff claims that the sums collected from the inhabitants of its area should be used strictly for their benefit. It has been held that the trustee of school funds can be changed, such as in the transfer of property from one school district to another (Pass School Dist. of Los Angeles County v. Hollywood City School Dist. (1909) 156 Cal. 416, 419, 105 P. 122, 26 L.R.A., N.S., 485), and when a county holds the school funds the interest increment must still go to school purposes and not into the county coffers (Pomona City School Dist. v. Payne, supra, 9 Cal.App.2d 510, 516, 50 P.2d 822). In our case the district claims that since the funds arose from a collection of taxes from its area, the county being merely one possible trustee of the funds, there is no reason why the funds cannot be transferred to the new district.
In determining this matter it is necessary to consider the purpose of the fund created by the tax levy. The money is collected on a levy of a special tax at the same time as the tax levy for county purposes. (§ 7232 (now § 20202).) It is not a part of the general county tax. The proceeds are placed in the junior college tuition fund. (§ 7234 (now § 20204).) School funds are particular funds set aside for specific purposes. (Nielsen v. Richards (1924) 69 Cal.App. 533, 545, 232 P. 480.) Indeed, school district funds are trust funds, the beneficial ownership of the fee title to such funds belonging in the State of California, and legal title being in the school district, a party to the trust. (Hall v. City of Taft (1956) 47 Cal.2d 177, 181–182, 302 P.2d 574.)
The purpose of the fund is to pay junior college districts for the education of children from non-junior college areas. (Plaintiff district comprises merely a portion of that area.) The statute expressly declares that it is to defray the costs during the preceding school year of educating all the junior college students residing in such county and not in any junior college district.
The method by which the surplus has grown is apparently the result of a reasonable policy of insuring the collection of sufficient funds to meet the requirements of paying for junior college education costs. After the county superintendent of schools has computed the total cost of education for the preceding year of the students living in nondistrict areas, the county controller deducts from this amount the surplus that is currently in the fund, and thus obtains the sum which must be raised in the tax levy. He deducts from the total assessed valuation of all taxable property on the secured roll a figure that is 2 per cent of the assessed value. This is the delinquency factor. The resulting figure is divided into the amount that must be raised; the quotient is the rate of tax to be levied. Under this method, it is obvious that while the 2 per cent delinquency factor may be reasonable, it is conceivable that either the actual delinquency will be less or that delinquency of previous years will be paid. Thus of the moneys collected in 1957, some $41,000 was for delinquent taxes. By deducting from the sum needed each year the surplus from the previous year, the amount collected will not greatly outstrip the actual needs. An exact amount of money cannot be raised by taxation and a residual will usually result. (See Otis v. Los Angeles County (1937) 9 Cal.2d 366, 373, 70 P.2d 633.) Thus, the surplus comes from the fact that the delinquency for the current year is less than the 2 per cent estimated plus the receipt of delinquency payments from prior years.
The tax in question is an ad valorem tax. (See Northwestern, etc., Co. v. State Bd. of Equalization (1946) 73 Cal.App.2d 548, 166 P.2d 917; Wells v. Union Oil Co. (1938) 25 Cal.App.2d 165, 166, 76 P.2d 696.) Being an ad valorem tax the law is established that the burden need not be in proportion to the benefit derived. ‘* * * it is not within the province of the courts to hold that a tax amounts to a taking without due process of law solely on the ground that the property or person taxed is in a position where a proportionately small or even minute amount of benefit may be received.’ (Anaheim Sugar Co. v. County of Orange (1919) 181 Cal. 212, 217, 183 P. 809, 811.) General benefit to the area taxed is sufficient since there are legally presumed intangible benefits resulting from the privilege of being a part of the area taxed. (People ex rel. Averna v. City of Palm Springs (1958) 51 Cal.2d 38, 47–48, 331 P.2d 4.) There is nothing in the record to show just how much of the 1957 surplus represents payments actually made by residents of the new district although the district was assessed for 44 per cent of the tax levied, it does not necessarily follow that 44 per cent of the delinquent payments for either the current or past years came from the district. While probably the 44 per cent figure is a fair rule-of-thumb figure, the fact that the district receives no benefit from the surplus is not a sufficient ground for a court to apportion the surplus, where no provision therefor is provided by law. The taxpayers of the district are in no different situation than are the taxpayers of any portion of the taxed area that did not send students to a junior college.
The Legislature has provided for the distribution of school funds in other situations. Thus section 1880 of the Education Code provides that the funds of a lapsed elementary school district shall be transferred to the credit of the district into which it is merged. Section 20104 provides, with a certain exception, for transfer by the county superintendent of schools of 80 per cent of any surplus from the school fund of any school district to the county school service fund. Section 20162 provides that he may transfer to the last mentioned fund any unnecessary surplus in the county school tuition fund. Section 7202 provides for the transfer of school district library funds and property to the county library when the school library becomes a branch of the county library. The fact that the Legislature has made such provisions as to other types of school districts but has made no similar provision for junior college districts, is some indication that it was intended that any surplus in the junior college tuition fund remain in that fund.
In 1959 (Stats.1959, p. 4761) section 20211 of the Education Code was adopted. This section provides, in effect, that for the first year of a newly formed junior college district's existence, the cost of educating its students for the year prior to the formation of the district shall be paid by the state instead of, as theretofore, by the levy of the tuition tax in question here. The section provides that under certain circumstances there shall be a levy of this tax for a portion of that cost. In determining whether the Legislature purposely has not provided for the transfer to a newly formed junior college district of a surplus such as we are considering, the adoption of section 20211 is of some significance. Surely if the Legislature did not intend that the surplus be left in the tuition fund for which it was levied, it would have made provision for the transfer of the surplus to the new district at the time it was providing that the state should pay for the cost of the prior year's education of the district's students, or, under certain circumstances, that a portion only of that cost should be levied on the district. A surplus transferred to the new district would have relieved considerable of the state's burden or the tax to be levied. In fact, in the latter situation, the surplus might have relieved the necessity of any tax at all.
The judgment is affirmed. The appeal from the order denying plaintiff's motion for judgment on the pleadings is dismissed.
1. In the Pasadena case, the court considered sections 4.270 and 4.271, Stats.1931, pp. 2575, 2576, which, as to the questions with which we are concerned, were substantially the same as sections 20201 and 20202 of the Education Code as they existed in 1957. Section 20201 provided that not later than August 8 of each year, the superintendent of schools of each county in which there is not a county junior college shall certify to the board of supervisors and the county auditor the total expense of education ‘during the next preceding fiscal year of all junior college pupils in grades 13 and 14 residing in the county and not in any school district maintaining a junior college * * *’ and also certain other sums. He shall also certify the estimated amounts needed for the same purposes for the current year. Section 20202 provided that ‘The board of supervisors with whom the certificate is filed shall at the time of making the tax levy for that year for county purposes, levy a special tax upon all taxable property in the county not situated in any school district maintaining a junior college, sufficient in amount to defray all amounts specified * * *.’ These sections, if literally construed, do not provide for levy of this type of tax upon the property within a newly formed district.
BRAY, Presiding Justice.
TOBRINER and SULLIVAN, JJ., concur.