296 P. 1033 | Mont. | 1931
Lead Opinion
In this proceeding the relator seeks an injunction restraining the State Highway Commission, the Governor, Secretary of State and State Treasurer from issuing or selling any of the debentures provided for in Chapter 1 of the 1931 Session Laws, which is called the "State Highway Treasury Anticipation Act of 1931."
For the purpose of matching funds set apart by the government in order to build Federal Aid Highways, the Act authorizes the sale of debentures, to be paid from motor fuels' excise taxes, the collection of which is anticipated. It is already provided by statute that all moneys received by the State Treasurer from the collection of motor fuels' excise taxes are to be deposited by him in the state highway fund, and, less refunds, shall be expended by the State Highway Commission "in the construction, reconstruction, betterment, maintenance, administration and engineering on the Federal Highway system of Highways" in this state. (See Chaps. 18 and 19, Session Laws 1927.) The anticipated revenues are greatly in excess of the amount of debentures to be sold.
Chapter 1, Session Laws of 1931, authorizes the sale of State Highway Debentures in the sum of $6,000,000 at the rate of $1,500,000 for each year from 1931 to 1934, inclusive. The proposed debentures bear interest not exceeding five per cent, payable semi-annually, and are to mature serially at the rate of $858,000 during each of the years 1934 to 1939, inclusive, and $852,000 in the year 1940. To pay the principal and interest *209 the Act provides that the excise tax on motor fuels as provided by the twenty-second legislative assembly shall not be reduced so long as any of the debentures are outstanding and unpaid, and a sufficient sum is set aside each year from the proceeds of this tax to meet the debentures maturing the next succeeding year. Chapter 6 of the Laws of 1931 fixes the excise tax on motor fuels at five cents per gallon.
The principal contention made by relator is that Chapter 1 attempts to authorize the creation of a debt or liability in excess of $100,000 without submitting the law to the people, as required by section 2 of Article XIII of our state Constitution, which provides: "The legislative assembly shall not in any manner create any debt except by law which shall be irrepealable until the indebtedness therein provided for shall have been fully paid or discharged; such law shall specify the purpose to which the funds so raised shall be applied and provide for the levy of a tax sufficient to pay the interest on, and extinguish the principal of such debt within the time limited by such law for the payment thereof; but no debt or liability shall be created which shall singly, or in the aggregate with any existing debt or liability, exceed the sum of one hundred thousand dollars ($100,000) except in case of war, to repel invasion or suppress insurrection, unless the law authorizing the same shall have been submitted to the people at a general election and shall have received a majority of the votes cast for and against it at such election."
At the threshold we bear in mind that every presumption[1] must be indulged in favor of the constitutionality of the Act; every reasonable doubt must be resolved in favor of legislative action. The question for the court's determination is not whether it is possible to condemn but whether it is possible[2] to uphold the Act. When two constructions are possible, one which will result in declaring the statute constitutional and the other unconstitutional, the court without hesitation will pronounce in favor of its constitutionality. (State ex rel.Public Service Com. v. Brannon,
Nor is it any concern of the court whether the Act is[3] expedient, wise or unwise. (State ex rel. Bonner v.Dixon,
Whether the Act before us, strictly speaking, creates a debt within the purview of this section 2, Article XIII, a question upon which respective counsel have spent much effort, we think it unnecessary to decide, for in our opinion the Act clearly imposes a liability within the contemplation of the section. The *211 [4] framers of the Constitution provided two methods of raising revenue for public purposes: one the taxation system and the other the license system. (State v. Camp Sing,
The fact that a special fund is created by the imposition of[7] the license or excise tax on motor fuels with which to pay the debentures is of no importance.
Under this contention the legislature, or the debt-contracting authority, could divide the public revenue into numerous subdivisions, calling one the "road fund," another the "school *212
fund," another the "agricultural fund," another the "public health fund," and others almost without limit. Debts could then be contracted in unlimited amounts and payable in the far distant future, and still be immune from attack as violating constitutional provisions limiting indebtedness provided each debt was made payable out of some one of the specially designated funds into which all of the revenue collected by taxation from the people had been divided. A mere statement of the proposition carries with it, it seems to us, its own refutation. (Crick v.Rash,
The fund raised from the motor fuels' excise tax results from one of the constitutional methods of raising public revenues. (State v. Sunburst Refining Co.,
State ex rel. Rankin v. State Board of Examiners,
The supreme court of Iowa, in a well considered and powerful opinion, declared a somewhat similar Act unconstitutional (Stateex rel. Fletcher v. Executive Council,
The creation of an obligation, payable from these funds, is a liability of the state; its effect is to divert a large part of the revenues of the state into the State Highway Fund for a period of ten years, which otherwise might be used to pay the public debt or to defray the general expenses of the government, thus relieving the heavy burden of taxes levied upon property. If the process designed by Chapter 1 does not create a state liability then the legislature undoubtedly could do the same thing with other license taxes, the inheritance taxes, and the net proceeds of mines taxes, all of which are properly considered in determining the limitation of expenditures and appropriations under section 12 of Article XII of our Constitution (State exrel. Toomey v. State Board of Examiners, supra), and thus accomplish by indirection what the Constitution prohibits to be done directly.
The people are gravely concerned as to how and the purposes for which their money is spent. They may eagerly desire to sell the proposed debentures, thereby matching the sums provided by a generous Congress, to the end that our state may be afforded good roads without delay; but another measure *214 pledging excise taxes in large amounts for some special purpose might encounter their definite disapproval.
These examples demonstrate, if any demonstration is needed, the salutary purpose of the constitutional provision here under consideration.
We have reached this decision with a due sense of its great importance and only after a faithful effort to sustain the law. Each member of the court has labored upon this case to the exclusion of other court business ever since it was submitted to us. In the language of the supreme court of Iowa, in State exrel. Fletcher v. Executive Council, supra: "The responsibility thus facing us is one not of our seeking, nor of our liking, nor yet one which we would dare evade. We are assured, too, that in the long event the duty we owe, not only to the litigants, but to our co-ordinate departments of government, is to undertake frankly the judicial responsibility which litigation casts upon us, and to declare faithfully our judicial convictions therein. In such a case our primary concern is, and must be, directed to the soundness of our conclusion, and not to its consequences. Consequences are inevitable in every litigation and are commensurate with the magnitude thereof. They are not judicially made nor can we make them less or more." As the great Justice Story said in the Dartmouth College Case (4 Wheat. (U.S.) 518,
The upshot is that in order to validate the Act it must receive the approval of the electorate.
The last part of section 2, Article XIII, requires that such a[8, 9] law be submitted to the people "at a general election." This provision was a part of the Constitution as originally adopted and was framed at a time when the referendum was comparatively unknown. We think, considering the subject matter of the section, the term "general election" does not mean necessarily the general biennial election. The Constitution *215 does not say so, and Constitutions ordinarily do not provide the machinery for carrying out their commands; they simply declare what may (or must), and what may (or must) not, be done. We think the "general election" named means a state-wide election at which all the people entitled to vote may vote upon a question affecting them as a whole. Should a great calamity occur requiring the immediate expenditure of funds over $100,000 for the public welfare and safety, can one believe that the legislative assembly, being convened to act in the emergency, cannot fix an election prior to the biennial general election? Common sense denies the supposition.
We now advert to section 1 of Article V of the Constitution as amended in 1905 (see Chap. 61, Laws of 1905), which became effective December 7, 1907, by proclamation of the governor. As amended that section declares that "all elections on measures referred to the people of the state shall be at the biennial regular general election, except when the legislative assembly, by a majority vote, shall order a special election." The special election here named means, of course, a special general election, a state-wide election. It will be noted that the provision refers to all measures and no exception is made as to the laws contemplated by section 2 of Article XIII. Indeed, we are inclined to think this amendment is, in a measure, complementary to the provision of section 2, Article XIII, concerning a general election.
A further argument put forth by relator must be noticed. It is[10, 11] that the Act is void because it attempts to bind future legislative assemblies. The statement that one legislative assembly cannot enact a statute which a subsequent assembly may not repeal is correct as an abstract proposition. But one legislative assembly, if not limited by the terms of the Constitution, may enact a statute authorizing a lawful contract, which, if entered into, will be beyond the repealing power of a subsequent assembly. It is true, of course, that a subsequent assembly may, if it sees fit, reduce the exaction of five cents per gallon, if a less exaction will be sufficient to pay the debentures. *216
(State ex rel. Malott v. Board of County Commissioners, ante, p. 37,
It follows that the injunction prayed for must issue, to be in force unless the law be submitted to, and receive the approbation of, the people. And it is so ordered.
Concurrence Opinion
Having participated in the preparation of the court's opinion, I agree with what is said in it. But in my opinion, determination of this case does not require the drawing of distinctions between debts and liabilities. Chapter 1 clearly attempts to authorize the creation of a debt in excess of $100,000, within the meaning of section 2, Article XIII, of our Constitution, and to be effective, must have the approval of the electors. The word "debt" has no strange and peculiar meaning in section 2. Like any other word in the Constitution it must be given its usual and ordinary meaning, and in construing the Constitution the courts should ascertain and give effect to the intention and purpose, not only of its framers, but of the people who adopted it. (Cooley's Constitutional Limitations, 8th ed., p. 124; Amos v.Matthews,
The reasons stated in the court's opinion supporting the conclusion that the creation of the special fund for the payment of the debentures does not prevent the Act from creating a liability are my reasons why the provision for a special fund does not save the Act from creating a debt. The scheme provided by Chapter 1 diverts public revenues to the payment of a loan by the state as effectually as if the full faith and credit of the state were actually pledged in payment of the debentures. *217
The fact that it creates a debt within the purview of section 2, Article XIII, is the justification for attempting to make the law imposing the excise tax irrepealable. Much was said by learned counsel for respondents in the brief and oral arguments to the effect that section 2, Article XIII, in the use of the words "levy a tax" means only an ad valorem tax. If this were so, then this Act is in conflict with section 2 and a vote of the people would be useless. If that is the correct interpretation to be placed upon section 2, then that section, by construction, would contain this command to the legislature: "You shall not create a debt in any manner unless you provide for the levy of anad valorem tax sufficient to pay the principal and interest within the time provided." Confessedly no ad valorem tax has been levied. That construction of section 2 would make it read substantially as the Iowa Constitution which requires "the collection of a direct annual tax." Under such a provision the Iowa supreme court has held that the legislature was without authority to exercise a mortgaging power over future gasoline and motor vehicle license taxes. (State ex rel. Fletcher v.Executive Council,
In my opinion, however, the words "levy of a tax" as used in section 2 contemplate only that the legislature when creating a debt shall provide for raising sufficient revenues to pay the principal and interest by either of the constitutional methods of raising revenues for public purposes and that it includes the levy or imposition of a license or excise tax, as here.
This was the construction placed upon similar language appearing in section 12, Article XII, of our state Constitution, in State ex rel. Toomey v. Board of Examiners,
Dissenting Opinion
I cannot concur in the conclusion reached by my learned associates that section *218 2 of Article XIII of the Constitution requires a submission of the Act before us to a vote of the people, nor in the method of treatment by which they have arrived at that conclusion.
To my mind the basic error manifest in the opinion is in brushing aside the principal question presented, i.e.: Does the "debt" which the Act admittedly authorizes to be created and which will exceed $100,000, fall within the purview of section 2 of Article XIII of the Constitution, and considering only the term "liability" as though independent of the term "debt," as employed in the prohibition?
As the broad term "liability" includes "debt," and the Act provides for the creation of a debt, clearly it also provides for the creation of a liability, but as I read the constitutional prohibition in the light of its context and coexisting provisions on the same subject, no further liability is authorized by the Act than the admittedly authorized debt.
Definitions of the term "liability" are almost as numerous as the cases in which the term is considered (see 36 C.J. 1050), but in construing a constitutional provision, the court must first ascertain its purpose and intent, "taking in its obvious sense the language used" (State ex rel. Gleason v. Stewart,
Technically, of course, the term "liability" is broad enough to include the duty imposed upon the state officers to carry out the provisions of the trust imposed upon them by the Act, but was the term employed in the constitutional prohibition in that sense? "Narrow and technical reasoning is misplaced when it is brought to bear upon an instrument framed by the people themselves, for themselves, and designed as a chart upon *219 which every man, learned or unlearned, may be able to trace the leading principles of government." (1 Cooley's Constitutional Limitations, 132.)
The "context" of the article in which the prohibition applied is found is "Public Indebtedness," and the purpose of such a prohibition in a Constitution is to prevent the overburdening of the people by taxation. (Shields v. City of Loveland,
Speaking for this court, Mr. Justice Galen has correctly construed the two terms here under consideration, as follows: "In construing our constitutional provision applicable, we have under consideration the words `debt or liability' and, in our view, the prohibition intended by these words is the creation of a debt or obligation of the state * * *; the words `debt' and `liability' as used in this connection are not employed in a technical sense, but have specific reference to the basic warrant and legislative authority on which a state contract must rest and on which alone a public debt must find sanction in order to obligate the state to pay." (State ex rel. Rankin v. State Board of Examiners,
As I read the prohibition considered, and as I think the "man on the street" would read it, the legislature is prohibited from either providing for the creation of a debt, which the state must in any event pay out of the public funds of the state, or a liability on the part of the state to pay, on failure of other means provided, or other contingency, "in excess of $100,000," unless the Act is first submitted to a vote of the people. As the Act under consideration does not pledge the faith and credit of the state but provides for the payment of interest and principal of the debentures solely from the "Highway Fund," there is no contingent liability imposed upon the state, and the Act provides for, and authorizes only, the creation of a debt." Should the source of repayment provided for in the Act fail, the holders of the debentures sold "will be limited in their rights to the requirement of the proper officers to perform their duties as prescribed by the statutes." (Allen v. Grimes,
The Bickford Case, followed by State ex rel. Armington v.Wright,
What is said in the majority opinion with respect to the fund considered in the Bickford Case, does not apply to the fund under consideration in the Armington Case, where the same conclusion was reached. These cases are in line with the holding generally that where money is borrowed, with the provision of repayment from special funds, such as special assessments for street improvements, construction and maintenance of piers, *221
canals and the like, in special districts (Hamilton v. PierDistrict,
It is, however, asserted that the gasoline tax receipts are in fact a part of the general fund of the state, or could be made such by subsequent action of the legislature, and are a source of revenue to the state which must be taken into consideration in making appropriations and, therefore, the rule does not apply. It is true that when the legislature first determined to impose a gasoline tax and throughout subsequent legislation, until the present highway policy was adopted, not all of the receipts from the tax were assigned to the Highway Fund; and it is also true that in State ex rel. Toomey v. State Board,
Answering the suggestion that the fund here considered is not such a special fund as considered in the cases cited, because *222
it was once, in part, diverted to the general fund and might again be so used, in whole or in part, I quote from People v.Murray,
Here is the key to the situation: The moneys diverted, now wholly, to the Highway Fund are the receipts from excise taxes imposed for a specific purpose. On this point it is said inPeople v. Murray, above, that the constitutional prohibition against "appropriation" of "public moneys" without a two-thirds vote of the legislature — in principle the same as the prohibition considered here — has to do only with "public moneys of the state as contradistinguished from public revenues levied for local purposes by cities * * * under state authority, or moneys which by a long course of legislation, as in the case of excise moneys, have been treated as standing in the same situation." The purpose of the constitutional prohibitions is the protection of those funds in which the general public has a beneficial interest. (B.F. Sturtevant Co., v. IndustrialCommission,
As clearly pointed out early in the history of the state, our Constitution contemplates two systems of raising funds for the conduct of the state affairs, "(1) the taxing system, and (2) *223
the license system." (State v. Camp Sing,
Here the legislative assembly was not dealing with revenue derived from the taxation system, nor even with the ordinary revenue derived from the application of the "license system," but with a properly designated "special fund" brought into being for a special purpose, the relation of purpose and fund being marked.
The subject of adequate highways in the state has long been a problem which has increased by reason of new modes of transportation, out of all proportion to the increase in the population and wealth of the state; with changed conditions imperatively calling for better roads and more of them, the taxation system of financing their construction and maintenance becomes wholly inadequate, and, therefore, the legislature fell back upon the licensing power and seized upon a source of revenue for this purpose which lays the burden upon those who directly *224 benefit by the work done, and relieves the public at large of a heavy duty theretofore imposed in a great measure upon it. The fund thus created — not by a division of, or a diversion from, the general fund of the state, but by an impost upon those who derive benefit, business and pleasure from the use of the fund — is as clearly and directly connected with the highway program, to the exclusion of other state activities, as are special improvement assessments to the improvements made, or the revenues from municipally owned water and electric light systems to the construction of such works, and becomes a special fund in the same sense as the funds discussed in the Bickford andArmington Cases, above.
It is stated in the majority opinion that the people have an interest in determining how their money shall be spent. With this I agree, but that interest is confined, in so far as an expression thereof by their vote is concerned, to those laws passed by their representatives, the legislature, as have to do with the disbursement of the general fund of the state. The submission of the Act before us to a vote of the people calls only for an expression of their opinion on an administrative policy, for which submission there is no provision in the Constitution. Attention is called to the fact that the people have already expressed their approval of the diversion of the whole of the gasoline tax to the Highway Fund. (Initiative Measure 31, Laws of 1927, p. 604.)
In the Iowa and Kentucky cases, mentioned in the majority opinion, the fatal defect in similar Acts considered was that the legislature attempted to pledge the faith and credit of the state to the repayment of the loans, in the event the special fund failed. The majority opinion of the supreme court of South Carolina upheld a like Act, in spite of such a pledge, and the dissenting opinion of the Chief Justice of that court clearly indicates that, had it not been for this fact and had he been convinced that the gasoline tax paid into the Highway Fund was a special fund, he would have joined in the majority opinion. His declaration is: "Where there is created no obligation *225
on the part of the state and the proposed improvements are to be paid out of a designated special source of income, the state is but the trustee of an express trust to apply such income to the stated purpose, incurring no liability itself other than what might spring from the discharge of that trust." (State v.Moorer,
No one, knowing the past and present condition of our state highways and being familiar with the piecemeal work heretofore done with limited funds, can doubt but that the full receipts from the gasoline tax would be exhausted each year for the period of the debentures provided for, by a continuation of the piecemeal system necessitated, unless some means are devised for more efficient use of the funds derived from this source, and it must be remembered that by a continuance of the piecemeal work a large part of the federal aid money will be lost to the state. During the constructive period, which has now extended over several years, with but a small portion of our highways constructed, experience has demonstrated that the full amount of the income from this source has been insufficient for the needs of this state "of magnificent distances," and we need not speculate as to whether future legislatures would deem it wise to divert a part, or the whole, of the income from the gasoline tax to the general fund, if such speculation has any bearing on the question before us.
While, therefore, the Act under consideration does tie up the gasoline tax receipts for several years to come, such impounding cannot conceivably injure the public generally by increasing advalorem taxes, nor affect the general fund of the state; it is but a provision for doing now what must ultimately be done, and doing it in an effective and economical manner. What the courts would do in case the legislature *226 should attempt to divert other taxes to special funds, to the disaster of the general fund and for purposes not directly in accord with the purpose of their imposition or levy, should be met when, or if, such an attempt, is made.
The funds allocated to the state are trust funds, and the legislature but adds thereto further trust funds for the same purpose and in order to secure the federal trust funds.
I agree that the Act may be submitted at a special election under the amendment cited.
I have carefully gone into the remaining questions presented on the hearing of this application, but, as they are not discussed in the majority opinion, I will not here discuss them; suffice it to say that, in my opinion, on no question raised is the unconstitutionality of the Act before us demonstrated beyond a reasonable doubt and, therefore, the demurrer should be sustained and the proceeding dismissed.
