40 Wash. 95 | Wash. | 1905
This is an application for a writ of mandamus, instituted by the city of Port Townsend against O. W. Clausen, as auditor of the state of Washington, to compel him to draw a warrant upon the state treasurer in payment of certain bonds, purchased by the board of state land commissioners as an investment for the permanent school fund. That the nature of the controversy between the parties may be understood, it is necessary to make a brief statement of the facts out of which it arises.
By the act of March 16, 1901 (Laws 1901, p. 177), the legislature of the state of Washington enacted that, whenever the city council or other corporate authority of a city shall deem it advisable to exercise the authority conferred upon cities in relation to water works, sewerage, and works for lighting, heating, fuel and power purposes, or any or all of these, the city council or other corporate authority shall provide therefor by ordinance in which a system or plan for the proposed work shall be adopted and the costs thereof estimated as near as may be, all of which shall be submitted to the qualified electors of the city or town, at a general or special election, for ratification or rejection. The act further provides that, if an indebtedness is to be created by the construction of the proposed public works, such indebtedness and the amount thereof shall likewise be
Two forms of indebtedness are provided for in the act. The one provides for a general indebtedness of the city, for which general municipal bonds may be issued to an amount not exceeding five per centum of the taxable property of the city, as shown on the last assessment roll made for municipal purposes. The other form is best described in the words of the act itself; namely,
“(b) A special fund may be created for the sole purpose of defraying the cost and expense of construction or acquirement of each class of improvements or lands contemplated, or any condemnation thereof, together with such interest as shall accrue upon the obligations issued therefor, into which said funds the authorities of said city or town may obligate and bind the city or town to set aside and pay a fixed proportion of the revenue or proceeds to be derived from the plan or system, lands or uses of which the said improvement forms the whole or part, so. long as any obligations are outstanding against said fund. In fixing said proportion, the authorities of such city or town shall have due regard to the cost of operation and maintenance of the plan or system as constructed or added to, and shall not set aside into the special fund a greater proportion of the revenue and proceeds than, in their judgment, will be available over and above such cost of maintenance., and operation. The city or town authorities may from time to time, by ordinance, transfer to any such special fund any other available funds of said city. Bonds or warrants may be issued against any such special fund to the amount of the cost or charges to he met therefrom. Such bonds or warrants shall be issued iu denominations of not less than one hundred and not more than one thousand dollars, shall be numbered from one up consecutively, and shall bear interest not exceeding six per cent, payable semi-annually, the principal of any such bonds being payable upon call of the
For the purpose of acquiring funds to construct the works, it was proposed by the ordinance to issue .bonds against, and payable solely out of, this special fund, in the sum of two hundred and fifty thousand dollars, in denominations as fixed by the statute, and payable at the call of the city treasurer, the same to bear interest not to exceed six per centum per annum, payable semi-annually; such bonds to be sold in such manner and at such rate of interest, not exceeding six per centum, as the city council should deem to the best interest of the city. In short, it was the purpose of the city authorities to provide for. the construction of a system of water works for the benefit of the city, and to pay for the same out of a special fund, derived from the revenues of the system when completed, in accordance with the tertas of the statute above cited.
The plan proposed by the ordinance was thereafter submitted to the qualified electors of the city of Port Townsend, and was ratified and adopted by the requisite majorities of the electors voting at such election. Bonds were subsequently issued pursuant to this authorization, and on March 20, 1905, the proper city authorities of the city of Port Townsend tendered the bonds to the state of Wash
The auditor, in his return to the alternative writ, bases his refusal to issue the warrant on several grounds, the principal one, and the only one we have found it necessary to consider, being that the attempted investment is in violation of art. 16, § o, of the state constitution, which, as amended in 1894, provides that “none of the permanent school fund ef this state shall ever he loaned to private persons or corporations, hut it may he invested in national, state, county, municipal or school district bonds.”
Before proceeding to a notice of the questions argued, however, it is well to state that the contention of the auditor to he here considered raises no question as to the propriety or safety of the proposed investment, and that no such question will he discussed. The authority to determine whether a proposed investment of the permanent school fund is proper or safe is vested by law in tbe board of state land commisr sioners, and tbe -determination of that hoard, unless impeached for bad faith or fraud, is conclusive alike upon tbe auditor and tbe courts, no matter how strongly he or they may be convinced of the unwisdom of the hoard’s action. It may he properly stated here, also, that it is set forth in the return of the auditor, and it stands conceded in the record, that the city of Port Townsend was, at the time it
The first question discussed by the parties relates to the nature of the prohibition contained in this section of the constitution. The relator contends that it was intended to mark a distinction between public and private securities, and forbid the investment of the fund in private securities only, leaving the board free 'to malee investments in any form of public securities that they, in the exercise of their discretion, might select. The auditor, on the other hand, contends that the section in question not only prohibits the investment of this fund in private securities but also defines the character of public securities in which it may be invested, and prohibits its investment in any other.
It seems to us that the auditor’s contention is the correct one. While a Constitution, like any other written instrument, is entitled to a construction in accordance with the intent of its makers, its language, more than that of any other written instrument, is to be taken in its natural and popular sense.. Its makers are the people who adopt it. Its language is their language. And when words, phrases, or sentences are used Which have both a technical and popular meaning, the former must give way to
It may be true, as the relator argues, that, if the last clause of the sentence composing the section is to be held to limit the securities in which the fund may be invested,
But the relator says that the case of State ex rel. School District No. 24, v. Grimes, 7 Wash. 270, 34 Pac. 836, is-contrary to this conclusion. We do not so understand it. While the court held in that case, passing .on this section of the constitution prior to the amendment of 1894, that the term “municipal bonds” as used therein included school district bonds, it did not deny that the clause defining the securities in which the permanent school fund might be invested was a limitation upon the power to invest the fund. On the contrary, it expressly stated that this clause was a limitation upon that power, confessing at the same time that such a construction rendered the special prohibition in a measure useless. But if this case left the question uncertain in that regard, it was set at rest by the subsequent case of State ex rel. Hellar v. Young, 21 Wash. 391, 58 Pac. 220. There the question was squarely presented whether the legislature could authorize the investment of the permanent school fund in public securities other than
The relator contends further that, if it is held that the constitution has limited the securities in which the permanent school fund may be invested to national, state, county, municipal, and school district bonds, these bonds are “municipal bonds” within that limitation. It is said, that the supplying of water to tire inhabitants of a municipality, for domestic and other purposes is within the general powers of the municipality, it is a public purpose, and obligations created for that purpose are of necessity public and municipal obligations, no matter whether the provisions made for paying them binds the municipality generally, or binds only some special fund created by the municipality for that purpose; and that when these obligations taire the form of bonds they are of necessity municipal bonds. But, if it be true at all that bonds issued by a municipality, which are payable out of- a special fund created for that purpose, are municipal bonds, it is true only in a limited and qualified sense; they are such merely because the municipality is instrumental in procuring their issuance, not because they constitute obligations of the municipality. The question before us, however, is much narrower than this line of reasoning would indicate. _ The question is not whether bonds of this special and limited character may properly be called municipal bonds, but is rather, are they municipal bonds within the meaning of that term as used in the constitution.
It may aid our understanding of the meaning of this section to take a short review of the origin and history of the fund with which it deals. Our permanent school fund, as is well known, is derived, in its greater part, from lands granted the state by the general government. The practice of reserving and setting apart for the use of the public
“That the section number sixteen, in every township., and where such section has been sold, granted or disposed of, other lands equivalent thereto, and most contiguous to tbe same, shall be granted to the. inhabitants of such township, for tbe use of schools.”
In all laws passed subsequent to this act relating to. the primary disposition of the soil, section number 16,. in every township, has "been reseawed from sale for the use of schools, and in the acts authorizing the admission of new states into the Union, these sections have been granted to tbe state for that purpose. The act creating the territory of Washington, made a like reservation, the reservation, however, including section thirty-six as well as section sixteen; and, when the territory was admitted as a state, these sections were granted it for use of the common schools. But so solicitous was Congress for their preservation and main
The framers of our constitution carried out the evident wishes of Congress in this respect, in both letter and spirit. They not only made ample provision for the education of the children residing within the state, but were equally solicitous for the preservation of the permanent school fund. Article IX of the constitution is devoted entirely to the subject of education. Section 1 of that article declares that it is the paramount duty of the state to make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex; and section 2, that the legislature shall provide for a general and uniform system of public schools. Section 3 provides that the principal of the common school fund shall remain permanent and irreducible; and section 5, that all losses to the fund which shall be occasioned by defalcation, mismanagement, or fraud, of the agent or officers controlling or managing the same shall be audited by the proper authorities of the state, and that the amount so audited shall be a permanent funded debt against the state in favor of the fund, and shall not be counted as a part of the indebtedness authorized and limited elsewhere in the constitution. Then follows; in a subsequent article and section, the provision for investing the fund — the provision in question here.
In the light of the care with which this fund has been nurtured and garnered, it would seem there was no escaping the conclusion that the framers and adopters of the constitution intended to define and fix irrevocably the character of the securities in which the fund might be invested. Doubtless they prohibited the loaning of the fund to private persons and corporations, and selected only the securities of gov
The question then is, are bonds issued under the direction of a municipality, payable solely out of a special fund created by it, and for the payment of which its general credit is not pledged or otherwise bound, municipal bonds within the meaning of that term as used in the constitution. We answer unhesitatingly that they are not. Bonds of this character are of comparatively recent origin. At the time of the adoption of the constitution, they were practically unknown. Ho text work on municipal securities then in existence contained a discussion of them, and but few, if any, courts had then been called on to pass upon their constitutionality. They are the outgrowth of recent municipal exigencies. Hedged in as these corporations are by constitutional limitatións as to the amount of indebtedness they can lawfully incur, they have been compelled, in order to procure some needed public conveniences, to resort to pledges of the income to be derived from the conveniences when con
But notwithstanding it may be true that it has become the settled doctrine of the courts that the legislature may lawfully authorize the issuance of such pledges, prescribe their form, and give them such name as it chooses, it does not follow that they are lawful investments for the permanent school fund. The fact alone that they were unknown at the time of the adoption of the constitution precludes the possibility of their having been included in any definition used in that instrument; but, more than this, the very term “municipal bond” precludes the idea that bonds of the character above mentioned can be bonds such as the constitution describes. The term itself imports a municipal debt or obligation. The common mind understands from the fact that- a municipal bond is issued that a municipal debt has been created, and that the faith and credit of the municipality issuing’ the bond is pledged to its payment. The term, it seems to us, can admit of no other definition. Certainly it cannot have been so loosely used as to include every form of obligation that the ingenuity of the legislature might devise and call municipal bonds; yet, if bonds payable out of a special fund are such simply because a municipality is instrumental in creating that fund, this proposition must stand admitted, for there is no limitation upon the power of the legislature to. authorize the creation of special funds by municipalities, nor is there any limitation as to the source from which the money to create the special fund may be drawn. Indeed, if bonds, of the character here described are municipal bonds, there can be no form of obligation, either public or private, in which the legislature might not, by the legerdemain of making it a municipal special fund, lawfully authorize the investment of the perm'anent school fund. Such was not the intention of the constitution makers, and we cannot so hold.
Measured by these tests, the bonds in question are clearly
The application for the writ is denied.
Mount, O.- J., Hadley, Rudkin, Oeow, Root, and Dunbab, JJ., concur.