*1
639
Hоwever,
Wisconsin,
proper
demic.
we think it
to observe that
230.45(2)
ours,
part
230.45(3),
which has a statute in
like
Stat.
joint
applied
has
occasions
their statute bank accounts. In
Estate,
74,
Schley's
Gray's
re
271 Wis.
N.W.2d
and In re
Estate,
27 Wis.2d
The thrust is that we should re- theory, cede the contract deposit at least insofar as the unwilling question here in is concerned. we This do. to We Estate, think it a 382, rule. In wholesome re Michaels' 26 Wis.2d 132 N.W.2d the rationale of the Barbour decision is language: cogently stated in this joint comparatively
"The bank account is a new long development device in the law. While the joint joint payees of such account are termed tenants terminology, lack of better the account has differ- joint tenancy. ent than a true attributes Such ac- provides transferring technique count a useful prop- erty, and need not fit of the historical and traditional property concepts associated with law of inter vivos gifts joint tenancy. ignore It would be a mistake to deposit parties contract and the intent of the in order apply concepts." such judgment Accordingly, We concur the stated conclusion. of the trial court is affirmed. Judges
All the concur. McFARLAND, al., Plaintiff v. BARRON et Defendants
(164 607) N.W.2d (File Opinion 1969) February No. 10602. filed *2 Matthews, Falls, plaintiff. Acie W. Sioux Danforth, Johnson, Falls, Danforth & Sioux for defendants. ROBERTS, Judge. acting pro-
The South Dakota under 1967, by visions of Ch. Laws resolution indicated its in- $1,325,000 pro- tention issue bonds a sum not exceed equipping funds vide the construction of a classroom *3 College and auditorium at Northern State and a cen- dining Training facility tral kitchen and at the State School. taxpayer-seeks as Plaintiff a citizen and in this court a writ enjoining prohibition proposed of the issuance of the bonds as- serting obligation the that bonds would constitute a debt or of State in excess of of the the amount indebtedness authorized XIII, 2, provisions of under the Art. of the Constitution of this § Defendants, Building Authority, State. who are members of the application to the proceed- moved dismiss for the writ and the ings ground herein on the that the statute valid and not sub- ject objections to the constitutional asserted. Building Authority,
The which consists of seven members appointed Senate, the with Governor consent of the i-s de- "body corporate politic". empowered to be a and clared It is to (including acquire power build or otherwise of condemna- tion) fаcility legis- or for the use of the State as the public lature law declares interest and in- vestigate legislature report and and recommend the build- ing and needs of State to obtain estimates of costs. Chapters 218, the enactment of 217 and 1968, report in the concurred
Laws recommendations of construction, and authorized furnish- ing equipping of the aforementioned and the is- bonds, expressly obligation but declared that suance no in- lien, charge liability against be or become "shall or curred Dakota, against property or funds of of South nor the State meаning of South Dakota within of the Constitu- the State creating the Build- or Statutes of South Dakota." statute tion ing Authority provides with reference to issuance bonds (1) only they payable from shall be revenues to be derived any facility acquired operation of or constructed with from the (2) bonds, proceeds to be derived rental of the income from leases departments, or boards or commissions from state leases (3) and, funds in the Educational Facilities Fund other- others provided pledged. appropriated It is or further each wise payable solely upon its face that from shall state rev- bond operation facility or from from income enues derived leases and that it does not constitute derived rental be obligation meaning within
of the State its Constitution or statutes. XIII, provides Constitution of this State Art.
Section making improvements, purpose public or to for meet revenue, extraordinary expenses, or deficits failure may previous to exceed with contract debts never debts State $100,000, greater except no indebtedness shall be incurred College purposes not here which are relevant. State De Nissen, vеlopment S.D. this Ass'n v. N.W. court the issuance bonds the construction of two dor held *4 college, payable net a out of revenues the at state of mitories meaning buildings, an indebtedness within did not create the special debt This limitation. fund doctrine of the constitutional by subsequently this court in considered relation to the is was by municipalities ap and was of bonds followed and suance Yankton, 435, 460; City of plied. v. S.D. 25 N.W.2d Mettet Yankton, 386, City of 83 S.D. 125. N.W.2d Clem Foss, 295, places much reliance Boe v. 76 S.D. Plaintiff case, Regents by In the Board of 1. resolution 77 N.W.2d authority to it intended exercise the vested had indicated buildings construct three Laws Ch. at an in its control and institution under to finance their educational buildings by pledging net revenue of the the new construction revenues, the thereto net an amount in addition of not and $500,000, college. of then use less than the dormitories at the sought enjoin prohibition a writ of the from Plaintiff board taking pursuant action to the resolution. This court held existing pay- the transfer of net revenues of the dormitories principal of ment of the and interest the bond's and the need replacement of with tax monies created a debt within the con- templation of of Art. XIII This test Constitution. § present proceeding. applicable statutory in the There are dif- proposed proceeding ferences. Under in the instant contract obligation expressly provided it is of the State to optional will rentals be and for that reason no enforceable ob- ligation results. question principal to be determined is whether the ren- Building plan Authority anywise
tal in the Act violates Building provisions debt limitation Constitution. The Auth- ority power vested with or par- lease facilities agencies ticipating of the State. The leases must contain payable solely appropriations that rents shall be from to be made and revenues derived from operation premises. nonpay- of the leased the event of State, building facility may ment rents be leased purposes. may to others for suitable A lease be made for a year building term one from completed the time a and ready occupancy, option for with to the lessee to extend the original year expiration term one from the for term and year expiration for one of each extended term until original term of the lease has beеn extended for a total agreed years which, upon number be at a paid rental if original term for years and each of the full number extended, may which the term the lease will amortize appurtenances. the total cost of the erection of the proposed contract between necessarily embody will bondholders the limitations contained in the restrictions Act and the *5 payment statutes above cited. The 1968 source of of the bonds payable appropriations rents from will be made or to be made legislature. proposed The leases to be entered into be- 644 agencies participating of and the
tween the payment provide annual will for the of rentals the State automatically appropriations and will be renewed if available purpose They appropriation is made. would not for such an creating liability in an immediate debt or have the effect general aggregate the future rents. rule amounts obligation pay rent is due is no until under that there 166; Tenant, Tiffany, Landlord & 1 Gardiner terms of a lease. § 505; Co., 603, 214, 38 62 L.Ed. & 245 U.S. S.Ct. v. William Butler 473, 635, Eveleth, City Minn. 274 N.W. 112 v. 200 Ambrozich concept common law has been fоllowed in A.L.R. 269. This dealing provisions. City of limitation Walla with debt cases Co., 1, 77, Water 172 19 S.Ct. 43 Walla U.S. Walla v. Walla Reuter, 384, 341; 33 147 rel. LaFollette v. Wis.2d L.Ed. State ex 304; Jefferson-Craig Corp., School Protsman v. Consol. N.W.2d 889; Kervick, 527, 138, Clayton v. 52 244 109N.E.2d 231 Ind. N.J. 328, 428; Smallwood, 281; v. Ark. 281 S.W.2d A.2d McArthur Bldg. 562, Authority, Detroit-Wayne 325 Mich. Walinske v. Joint 73. 39 N.W.2d meticulously pro under consideration statute subject may appropria made available
vides that leases operation derived from the leased revenues tions and money appropriation which is property. An to be satisfied year for the does create an indebt revenues out current referring appropriation in to an cur This court edness. obligations anticipation of uncollected revenues rent considered, may "Critically early it opinion constitute observed: indebtedness; incurring but is not an of an indebtedness constitution, payment legally repugnant because its to the constructively treasury." in the provided for funds re State 852; 101, Warrants, Am.St.Rep. 62 N.W. also 6 S.D. see sug Law, S.D. 162 N.W. 536. Credits Some In re Rural obligation gestion State would have a moral made obligation. discharge While the the bonded legal obliga may making appropriations confined not be recognize оbligations tions, may equitable (Payne moral or but 472), Jones, 199 N.W. there would exist 47 S.D. under binding legal obligation no proposed leases ex- authorize *6 availability appropriations, penditures for rent. The other legislature. words, control of the is within the exclusive' In nonpayment ap- of rent or failure of the event to empowered propriate funds is to lease building facility purposes to or others for suitable to meet ac- cruing payments. Berger Howlett, 25 Ill.2d 182 N.E.2d ac injunctive declaratory
tion was for relief and decree that state, Authority Act of that after which the statute patterned, in this State is was unconstitutional and void. The "* * * determining court the act to be constitutional observed: Assembly money appropriate that the fact that the General will during regular debt; pay to its sessions rent does not create a statutory authorizing provisions pledge and that in- property Authority, come and the sole sources to which the look, against State, may bondholders does not create a debt * * * charges, or fees rentals to be established Authority are limited to amounts sufficient at all times to principal of and interest on the bоnds and cost of main- provides tenance. act Here the that leases the State its or agencies provide payable ap- shall that shall rents propriations Assembly made the General at each session and, purpose, such unpaid, in case such rental is en- tirely against preserved clear that no claim is the State inas- given power much as to lease the facility purposes." others for suitable argued subterfuge plan It is the lease is a and device circumvent the Constitution. The authorities are reviewed A.L.R. 1326 and the conclusion stated: urgеd "If option it be a bona pur- fide lease with palpable chase is a scheme or device to evade the con- indebtedness, stitutional limitation of it must be answered arrangement that, designed while this to avoid the provision, of such a effect constitutional it is intended lawfully, by keeping prohibited to do so out of territory altogether, by attempting rather than to cross this ter- designed plan disquise; ac-
ritory is not this indirectly dir- complish which could not be done accomplish legally ectly, that which could rather but *7 For it in unlawful must be done an manner. not purpose kept оf limitation is not in mind the a debt that municipality acquiring prevent the works, place public a on limitation the extent or but may pledge its credit and hence burden the which it acquire property taxpayers. And without if it can such becoming exceeding the therefor or constitu- indebted limitation, spirit neither the nor the letter of the tional is, typical provision in has violated. There been case, acquire property, an intention to the leased but obligation to no do so." annotation, supplemental 145 A.L.R. it is said:
In a gen- point confirm recent cases on the tend tо "The original annotation, principle in stated eral leasing city, property county, political or other a subdivision, same, purchase option with an does give liability pub- rise an indebtedness not optional purchase price body stipulated for the or for lic aggregate term, pro- rentals entire of all the lease, a instrument is in fact and not a contract vided plan." purchase on the instalment throughout recognize country We that courts financing validity harmony plans basically as to the not in weight now We think that of auth to that before us. similar ority priоr validity. of this court We must decisions sustain and expediency of a the wisdom and statute is for be mindful legislature elementary for this It if and not court. a valid, appears to be we its face constitutional and statute may inquire into the motives of the that all validity. favor in be resolved in of its We concur doubts must illegal never evasion to accom the observation "[i]t legal result, itself, discovering plish lawful a desired Allegheny County Authority, way it." Tranter v. 316 Pa. to do A. 289. stipulation to the Build- State to rents Since the subject ing Authority appropriations will be to available revenues, provisions limitation current the inhibition the debt apply. of the Constitution will not granted. public A
The motion to dismiss is therefore being involved, question will no costs be taxed. HOMEYER, JJ„
HANSON and concur.
RENTTO, J„ J„ BIEGELMEIER, P. dissent.
RENTTO, Judge (dissenting). question
The debt limitation here was last dis- Foss, cussed us Boe 76 S.D. N.W.2d 1. That *8 concerning principles provision case states some basic this kept approaching our Constitution which must in in be mind the matter in issue. As therein indicated our Constitution re- go you policy veals a in as fiscal affairs of our state. purpose policy tendency The of such is to counteract living genera- expense to obtain conveniences at the of unborn designed casting prevent is upon tions. It the shoulders by today. of tomorrow the burdens should be borne In con- struing applying provision duty such it is our to effectuate purpose. its objective accomplish
To
this
the word "debt"
as used in
provision
must be
in
viewed
the sense in
it
which
is com-
monly
legalistic
understood
rather
than as a technical or
term.
concept
"Obligations
Our
of it should not be doctrinaire.
which
subject
paid
appropriation
from
are
revenue
future
Legislatures
subject
provision."
are
the state debt
limitation
Neb.,
Steen,
State v.
P.2d In we 434. Boe said "that a short of ap- limitation every plicable taxpayer debts kind can adequate afford a protection." obligations I think it must be held to include buildings. assumed behalf of the state in relation to these majority applied by future rents The rule Concerning validity. in en- it an article a debt of doubtful "Evading Authori- titled Debt Limitations with Public Costly Vol. ties: of State Constitutions" in Subversion Journal, p. Yale Law the author comments: are not debts "The view —that future rents Wisconsin prece- from ancient as a matter of common law —derives mystery pronounced of the com- dents: the rule is as a unchanged from Coke's Littleton. mon law inherited origins, appears ques- its the rule However venerable tionable, has all attributes of an im- for future rent when due. mature debt will become actionable fact, poor possibly rule was even in Lord Coke's law rate, certainly contrary day. to modern At it seems understanding. ignores clearly apply Boe.
To in this what this court said in case Limitations, Ed., Quoting Cooley 7th on Constitutional construing question in "Nar- we said that case brought reasoning misplaced row whеn it is and technical themselves, people upon framed to bear an instrument designed themselves, upon every as chart which leading man, unlearned, may to trace learned and be able go government." principles which should extent we protecting taxpayer application limita- in our the debt language *9 opinion: this tion is clear made concluding practical can be for the "What reason advanced adopted compact who framed and this men common sense they protection pro- could intended less than the most effеctive majority taxpayer." I for Because think the view the vide salutary principles keeping com- not in with these basic I feel is pelled to dissent. majority opinion premised proposition is on the
The arrangements Authority into and entered between concerning building Regents campus at on the Board of Northern, Cor- and between it and the Board of Charities and Training leases. School are at rections as to the through Practically speaking accept. state This I am unable to legislature, agencies, buying is of the these with the sanction leases, arrangements buildings. not but are fact these purchase. rather contracts of Justices, Supreme Opinion Court of Maine in 183, 186, 753, expresses A.2d the same view in these
Me. legal lease, terms. lease not effect a it is "The so-called is rent, purchase. true a contract The so-called rental wit, payment property. for the The total amount of so- use purchase price pay called rental is the the State is to for the compensation property, property." Rent is for the use of not the purchase. consideration for its payments which
In this case be noted that annual agencies must commit the state to make are not related to property, precise value of the but are in the amount marke necessary provide payment income for the of said "to rev- bonds, payment for and enue and of interest thereon the establish- legal, financing, necessary ment of reserves therefor and pro- administrative and other costs incidental thereto". The act payments that when vides these are sufficient the cost including facility, project opera- each maintenance and еxpenses proportion expense tion of the administrative Authority provided property of the as the lease the shall charge conveyed obviously without to the lessee. This Authority limited state to the because isn't authorized convey anyone property to else.
Moreover, duty the act it the makes to en- arrangements with the ter into these state. It has no choice. leasing provision for While there is to others in case of default dressing. plans window the state this is Under the law the specifications prepared by agency for these design special involved. Because of the of these structures location, anyone their it is unrealistic to believe that else would them, permit happen. lease or that the state would such to *10 all, agencies continuing responsibility
After these have provide buildings being the functions for which these ac- quired. Is it reasonable to believe that the state will not continue payments? not, Authority these If it does is out of business only because the certain source of income available to it for repayment borrowings pay- of its and interest thereon are the ments made to occupation acquisition the state for the provided the facilities it. reading A careful of the act me convinces that it is a studied Washington effort to circumvent the Constitution. State ex rel. Martin, 645, State Finance Committee v. 62 Wash.2d 384 P.2d Washington Washing- 833. That same court in State of ex rel. Building Financing Yelle, 705, ton State 47 Wash.2d 355, 289 P.2d said of a somewhat similar strip act "When we plan fundamentals, leasing down to we find that it is not a ar- rangement tenant, between landlord and but the installment purchase by the state of certain and facilities with moneys taxation, state raised far in excess of the constitutional limitation". Authority, See also McCutcheon v. State 46, 663; Ayer 97 A.2d v. Commissioner of Administra- N.J. tion, 586, 885; City 340 Mass. 165 N.E.2d of Phoenix v. Phoenix Association, Civic Auditorium and Convention Center 99 Ariz. P.2d 818. To hold otherwise would be to "exalt artifice reality". Ayer Administration, over v. Commissioner supra. legislature may It is fundamental accomplish in- directly permitted determining directly. what it is not do being through whether this is done we must look form the substance of a transaction. "Lease-Financing by
In an Municipal article entitled Corp- Limitations", Way orations as a Around Debt Vol. Geo.Wash. Rev., p. "Lease-financing really Law author writes: is not objections renting, borrowing. cоnsequences but is lie in the of this fiction. Intent of constitutional debt limitations sub- litigation invited, bringing verted and in its wake costs and * * * uncertainties, standing. and loss of credit A far bet- sophistic ter solution to these difficulties lies not in and strained justifications lease-financing, pub- but in revision of outmoded *11 thought provision lie debt limitations." If our for debt limitation is longer go keep- you policy to be outmoded and our as no ing times, with the the the should be abandoned electors of the state and The wisdom of it is the courts. concern, their not ours. Building Washington Washington
In of State ex rel. State Financing Yelle, Washington Authority supra, Supreme recognize housing problem Court wrote: with which "We Nevertheless, permit the state confronted. can not the exi- we safeguard gency of the situation to override the constitutional against improvidence economy. integrity and the state's of the judicial thinking dexterity We can not resort in order to problem. eyes assist the state its our We can not close being actually summary attempted." what I this whole- heartedly Accordingly, deny concur. I would the motion to dis- grant requested prohibition. miss and writ of BIEGELMEIER, Presiding Judge (dissenting). Judge Rentto, impelled
I concur with the dissent аnd am If, $1,325,000 (the appropriating to comment further. instead of cost) facilities, legislature may actual to build the constitu government tionally create an arm of state so to do and finance proceeds paid them from of bonds in that amount to be over a $2,460,590 25-year period for a total cost of on the assumed 4% ($2,886,423 proposed interest rate stated construction lease Building Authority on the rate in 51/2% Resolution authoriz ing bonds), then it is for it to make that choice. It is indeed expediency for the to determine the wisdom and enact; power responsibility a stаtute within its it is the courts if determine the statute is within or without the con legislature.. authority stitutional Discussion of the statute pages single-spaced typewritten pages and over 40 of resolu tions, leases, papers by proposed bonds and other which it Building Regents Authority, the State the Boards of and Charities carry plan and Corrections are to act out the authorized require the statute under consideraion would an extensive trea Judge give majority opinion and Rentto's dissent tise. The purpose. outline assuming purposes
For Alice in Won- of discussion and dividing parties, derland we have of the State into three State, it created on one its Boards and a created one side and the other. The State Bondholders Building Authority; causes build- ing (pays proceeds to be erected for it it issues to of bonds Bondholders) then leases another Board for a fixed State *12 Building money required paid sum of which Auth- to be ority appropriations by out taxes levied later be made and legislatures, money paid which in turn is then over to the Bond- by completing cycle. holders thus Drawing ingeniously cycle, the veil from this the State contrived building, issuing initially pays pays erects а for it bonds and them out of what is called rents for a it owns but which appropriations period made and taxes a levied over years. pro- Section 1 Art. XVII of the South Dakota Constitution * * *
vides, corporation by special "No shall be created laws, charitable, educational, except penal those for or reforma- tory purposes, patronage which are to be and under remain specifi- and control of state". This was so cally Governor, appointed created. Its officers are it is only leg- purposes authorized to erect for state as the islature shall law direct. It must therefore held to a be be State, ego. part of an arm of the its alter The statute so reads and no one has otherwise contended. It is hornbook law one indirectly directly. cannot do what par- one cannot do The two reality ties involved are in the State and the Bondholders. There- payable, it is a bond of the provide, fore State as the Resolutions appropriations out of future and taxes. payable "solely
I am mindful the Bond states it is from the college classroom, revenues derived from" a auditorium build- ing training dining facility, school kitchen and and also obligation the bond "shall not constitute an of the State of South meaning any provision Dakota within the of the Constitution similarly or Statutes of the as State" the statute declares. self-serving quoted last clause is a declaration of no effect as legislature authority 'it seems an declare no to so has money state anomaly person for a state to borrow hereby prom- received its "Bond" that the borrower "for value * * * principal pay sum of Five ises to to the bearer though ($5,000.)" special it be оut of Thousand Dollars even obligation yet of the held or debt funds and to be borrower. legislature passed
I which for one do not believe expected permit Act ever State would default to occur payment people nor the of these bonds. Neither (and morally per- of this would countenance default as state general haps legally) appropria- the State is bound to see that they tions are made the bonds as become due. This is general pub- the whole tenor of the Act and the consensus buy, lic and financial world. Brokers who sell and dеal these principal payment bonds advertise source of of "both general obligations these bonds and the State's is the same: legislatures" appropriations from the State and those bodies provided support" "have a clear record of financial for them. *13 majority opinion special refers to cases based on the doctrine, opinion fund but I conclude it does not rest on that hardly doctrine. It could do so in because none of those cases projects paid appropriations, were the to be for out taxes or buildings paid for in Nissen the were to be out rents from college students; bridge in Mettet tolls from users and in paid by private corporation. from rentals Clem a The cited In appropriation dealt with re State Warrants out of taxes levied year constructively treasury, hardly for the current and in the obligation applicable provides appropriations here where the years for 25 in the future.
Judge opinion disposes Rentto's of the taxes —rental device. agreement I cannot subscribe the view the here to rent true, today, not a it is not due but no business will treat debt — сasually $3,650 majority year it as as the does. A lease for a January $3,640 1st is due an accrued debt of on December 31st any present day in business or financial statement. Under such person free of debt
leases or contracts can it said a be day perhaps bankrupt That con- one the next? and in debt or appear clusion does not sound to me. Boards, pursuant to a
The record further shows the two re- authorizing quest Authority, passed and have resolutions directing its estate owned officers to transfer to it described real also shows the the State at the two institutions involved and permitted instrument which made as the transfer is to be 4 of Laws constructed Ch. of 1967. The to be § subject obligation property on this which is to Foss, 1, expressly bonds. Boe v. 76 S.D. 77 N.W.2d held an attempt property presently by the to make income from owned pledge property State was a of additional resources meaning State which created a debt within the of that term as impermissible. used in the constitutional and thus interpretations Reasons for liberal and broad of the na- persuasive tional constitution are not as to our state constitution. incurring people approved have it and amended added desirable; they necessary debt when deemed it in two in- incurring (1920) they approved thirty, stances six debts of (1948). million dollars These actions confirm the observations support made the constitutional convention debates of this easily limitation our constitution was amended and the go saddling cautiously convention should before debt on the submitting people II, p. without it to a vote. Vol. 497. was That obtaining Foss, philosophy supra, in this court in Boe v. when it wrote: organic sincerely
"If as some believe these debt hampering progress, limitations are unrealistic sovereign appeal people. must be to the To amend the *14 constitution not a function of the courts." my philosophy It remains at this time. RENTTO, ].,
I am authorized to state concurs in this dissent.