November 3, 1982

Senator Carl Ham 
South Dakota State Senator 
Caputa, South Dakota 57725

Official Opinion No. 82-59

Annexation of land by a municipality causing a boundary change of a rural fire district with a bonded indebtedness

Dear Senator Ham:

You have requested an official opinion from this office in regard to the following factual situation:

FACTS: 

The Rapid Valley Fire District was formed in accordance with SDCL ch. 34-31A.  Since that time a ten year indebtedness has been incurred by the district for the purchase of fire equipment.  A portion of the original fire district has been annexed by the City of Rapid City since this indebtedness occurred.

Based on the above facts, you have asked the following questions:

QUESTIONS: 

1.  Are the property owners in the annexed area still liable for their portion of the debt that was incurred before they were annexed into the city? 

2.  If the answer to the first question is yes, is their liability retroactive back to the date of the annexation of the city? 

3.  If the answer to the first two questions is yes, is the county auditor obligated to collect the back taxes and transmit them to the secretary- treasurer of the fire district pursuant to SDCL 34-31A-25?

IN RE QUESTION NO. 1:

SDCL ch. 34-31 A governs rural fire protection districts.  None of the provisions contained therein, however, expressly address the factual situation you have presented.  The only statutory provision which might be argued to apply is contained in SDCL 34-31A-35: 

The boundaries of any rural fire protection district organized under the provisions of this chapter may be changed in the manner prescribed by § §  34- 31A-5 to 34-31A-11, inclusive, but the changes of boundaries of any such district shall not impair or affect its organization or its right in or to property; nor shall it impair, affect or discharge any contract, obligation, lien, or change for or upon which it might be liable had such change of boundaries not been made.

The above statute does not extend to the facts you have presented.  It says nothing about imposing liability for a fire district's indebtedness on property owners who have been annexed by a municipality.  The provision merely speaks of the ramifications of a district boundary change on the district's liabilities and obligations.  Without some express legislation imposing a liability upon the landowners who have been annexed by the City of Rapid City, those landowners cannot be held liable at law for the debts of the Rapid Valley Fire District.  Authority for this position can be found in the case of Livingston v. Brookings, 9 S.D. 102, 68 N.W. 167 (1896).  That case considered the question of whether a new school district formed from part of an  old school district should be held liable for its pro rata share in the present bonded indebtedness of the old school district.  In that case the Court said: 

[W]ithout some express legislation imposing a liability upon the new districts, they cannot be held liable at law for the debts of the old district, and certainly there are in this case no equitable grounds alleged for imposing a liability for the debt of the old district upon the new.  When the inhabitants of the new districts ceased to receive benefits from the school building in the old district, and were compelled to provide new buildings for themselves, they, in justice, were entitled to be relieved from liabilities incurred by the old district for school buildings no longer of any use to them.  As between themselves, therefore, there was no liability for which the new districts could be held.  But it is contended that it is a creditor who insists upon holding the new districts liable, and that he stands upon different ground than that occupied by district No. 7, if it were seeking to recover in this action.  Possibly, if it were shown that school district No. 7 had ceased to exist, or had practically been deprived of its available property, a creditor might, in equity, obtain relief against the new districts. 

Id. at 169.  It is my opinion therefore that in the absence of a statutory provision providing for apportionment of a rural fire district's indebtedness the territory annexed by the City of Rapid City is no longer  liable for the payment of a bonded indebtedness of the rural fire district. This is not to say, however, that the Rapid Valley Fire District cannot raise equitable grounds in the courts to support its claim that the annexed territory should continue to pay its pro rata share of the district's indebtedness.  Because the answer to the first question is No, the other two questions need not be addressed.

Respectfully submitted,

Mark V. Meierhenry
Attorney General