No obligation or liability of any person, association or corporation held or owned by or owing to the state, or any municipal corporation therein, shall ever be exchanged, transferred, remitted, released, postponed or in any way diminished by the legislature, nor shall any such obligation or liability be extinguished except by the payment thereof into the proper treasury, or by proper proceeding in court. Provided that the obligations created by Special Session Laws 1955, Chapter 5, running to the state or any of its agencies, remaining unpaid on the effective date of this amendment are void. (As amended November 4, 1958.)

ANNOTATIONS

The 1958 amendment, which was proposed by H.J.R. No. 1 (Laws 1957) and adopted at the general election held on November 4, 1958, with a vote of 58,347 for and 28,802 against, added the second sentence.

Compiler's notes. — Laws 1955 (S.S.), ch. 5, which provided for the recovery of public assistance payments via claims against recipients' estates and liens against their realty, was repealed by Laws 1957, ch. 56, § 1.

Comparable provisions. — Wyoming Const., art. III, § 40.

District attorney's authority to settle tax suits is not restrained by this section. State v. State Inv. Co., 1925-NMSC-017, 30 N.M. 491, 239 P. 741.

The trial court erred in declining to lend approval to stipulation of settlement entered into by the attorney general prior to entry of judgment in declaratory judgment suit relating to assessment of emergency school taxes against insurance adjusters. Lyle v. Luna, 1959-NMSC-042, 65 N.M. 429, 338 P.2d 1060.

Tax lien dischargeable. — Laws 1921, ch. 133, § 474, offended this section insofar as it attempted to discharge personal liability for taxes duly assessed, or barred suit therefor, but not insofar as it discharged the lien of taxes. State v. Montoya, 1927-NMSC-033, 32 N.M. 314, 255 P. 634.

Extension of tax sale redemption period permissible. — Laws 1913, ch. 84, § 38 (repealed), extending the time for redemption from tax sales made to the county, did not violate this section. Lewis v. Tipton, 1924-NMSC-010, 29 N.M. 269, 222 P. 661.

Head of family and veteran exemptions. — The amendment of N.M. Const., art. VIII, § 5, in 1921 effected an exception to this section to the extent that the legislature is authorized to exempt the qualified property from a tax already a fixed liability or obligation, but this right to exempt did not extend to accrued road taxes. Asplund v. Alarid, 1923-NMSC-079, 29 N.M. 129, 219 P. 786.

Poll tax. — Laws 1923, ch. 148, §§ 621 and 622 (since repealed), making poll tax applicable to women, was inoperative for the year 1923 because of this section. Board of Educ. v. McRae, 1923-NMSC-074, 29 N.M. 85, 218 P. 346.

Constitutional provision construed. — The first clause of N.M. Const. Art. IV, Sec. 32 restricts only the legislature from diminishing obligations owed to the state. Hem v. Toyota Motor Corp., 2015-NMSC-024, overruling in part Gutierrez v. Gutierrez, 1983-NMSC-016, 99 N.M. 333, 657 P.2d 1182.

In interpleader proceeding, where plaintiff’s initial attorney agreed to give up his statutory priority over settlement funds, so the university of New Mexico hospital (UNMH) would be paid first, in exchange for the hospital agreeing to accept a lesser amount for plaintiff’s outstanding medical bills, the New Mexico supreme court held that the first clause of N.M. Const. Art. IV, Sec. 32 is strictly a limitation on the legislature, and UNMH, as a state hospital, is not constitutionally prohibited from reducing undisputed obligations with patient-debtors. Hem v. Toyota Motor Corp., 2015-NMSC-024, overruling in part Gutierrez v. Gutierrez, 1983-NMSC-016, 99 N.M. 333, 657 P.2d 1182.

Hospital cannot accept part payment as satisfaction. — The New Mexico constitution prohibits a public hospital from accepting payment of less than the full amount of an undisputed legal obligation as a satisfaction. The state cannot compromise the amount owed to it for providing medical services unless a good faith dispute exists as to the amount of indebtedness or liability. Gutierrez v. Gutierrez, 1983-NMSC-016, 99 N.M. 333, 657 P.2d 1182.

Cancellation of purchase contracts. — There is nothing in this section which prevents the cancellation of land purchase contracts, which contracts provide that upon default the state's only recourse is cancellation and retention of payments as liquidated damages, and nothing to prevent their lease to the defaulting contract holder. Vesely v. Ranch Realty Co., 1934-NMSC-067, 38 N.M. 480, 35 P.2d 297.

Oil and gas lease. — Laws 1931, ch. 18 (19-10-1 NMSA 1978 et seq.), regarding conversion of leases, would be void insofar as it diminished obligation of oil and gas lessee to pay rental to state. Harry Leonard, Inc. v. Vesely, 1934-NMSC-090, 39 N.M. 33, 38 P.2d 1112.

Lien priorities. — Statutes (Laws 1929, §§ 90-1217, 90-1701, now repealed) elevating assessment liens to parity with liens for general taxes did not violate this provision. Waltom v. City of Portales, 1938-NMSC-022, 42 N.M. 433, 81 P.2d 58.

Conservancy districts. — Laws 1927, ch. 45 (73-14-1 NMSA 1978 et seq.), relating to conservancy districts, does not violate this section. Gutierrez v. Middle Rio Grande Conservancy Dist., 1929-NMSC-071, 34 N.M. 346, 282 P. 1, cert. denied, 280 U.S. 610, 50 S. Ct. 158, 74 L. Ed. 653 (1930).

Power of court to compromise or reduce obligation. — The power of a court to extinguish an obligation owing to the state includes the power to compromise or reduce the obligation. White v. Sutherland, 1978-NMCA-076, 92 N.M. 187, 585 P.2d 331, cert. denied, 92 N.M. 79, 582 P.2d 1292.

Development agreements. — A home rule municipality has the authority to enter into a contract with a private developer in order to facilitate the construction of retail business establishments, which contract provides for the reimbursement or forgiveness of impact fees. 2002 Op. Att'y Gen. No. 02-02.

District attorney's authority to settle tax suits. — The authority to release a lien filed upon property to insure payment of delinquent taxes under former emergency school tax act was invested in former commissioner of revenue only after full payment of lien, penalties and interest; the attorney general or a district attorney could, in the event a proper proceeding was filed in court, and wherein the state was a proper party, compromise or settle such suit in the interests of the state. 1962 Op. Att'y Gen. No. 62-112.

Purpose. — This constitutional provision is intended to prevent public officials from releasing debts justly owed to a public body and to discourage collusion between public officials and private citizens. 1970 Op. Att'y Gen. No. 70-88, 1970 Op. Att'y Gen. No. 70-04 and 1969 Op. Att'y Gen. No. 69-69 (debts owed the state).

Section authorizes only two methods of extinguishing obligations owed to a public body; one, payment, and the other a proper proceeding in court; a public body may remit or release debts or uncollectible accounts only by these two methods. 1970 Op. Att'y Gen. No. 70-88.

Obligations owed to a municipality, such as the lien upon a tract of land assessed under the street improvement district, may be properly extinguished in two manners only: either by payment of the penalty and the assessment into the proper treasury or by a proper proceeding in court. 1970 Op. Att'y Gen. No. 70-04.

Compromise or settlement of judgment as "proper proceeding in court". — A compromise and settlement of a judgment which is entered of record as a satisfaction of judgment would be a proper proceeding in court and would alert the public to the action of the district attorney or attorney general. 1969 Op. Att'y Gen. No. 69-69.

Section 36-1-22 NMSA 1978, relating to compromise or release of claims or judgments by attorney general or district attorney, is completely harmonious with this section. 1969 Op. Att'y Gen. No. 69-69.

Tax liability not forgivable. — The legislature can enact no law, by repeal of an existing tax statute or otherwise, which may have the effect of forgiving tax liability due the state or any municipal corporation therein. 1957 Op. Att'y Gen. No. 57-111.

The tax return provided for in former 72-10-2, 1953 Comp., could be required despite repeal of 72-10-1 to 72-10-6, 1953 Comp., by Laws 1957, ch. 66; since the tax was on gross earnings for 1956, it could not be forgiven. 1957 Op. Att'y Gen. No. 57-111.

Delinquent taxes aggregated against property cannot be remitted, even by the legislature, on the expectation that such property is to be improved and used for school purposes. 1929 Op. Att'y Gen. No. 29-117.

Penalty and interest on tax owed not waivable. — Once the tax, penalty and interest has been established as a debt of the state, there was no power in tax commissioner to waive either the penalty or interest. 1958 Op. Att'y Gen. No. 58-126.

Dissolved corporations must pay back due franchise tax before reinstatement, for repeal of Franchise Tax Law did not affect obligations arising before its repeal; but tax should be computed to date of dissolution rather than to date of such repeal. 1932 Op. Att'y Gen. No. 32-518.

Public general hospital may not forgive any portion of debt owed it by former patients; however, a proper court proceeding may reduce or extinguish such debts. 1966 Op. Att'y Gen. No. 66-18.

In view of this constitutional provision, state hospital has no authority to remit or release any debt or uncollectible account. 1953 Op. Att'y Gen. No. 53-5662.

Outstanding accounts cannot be written off as uncollectible; but where the state hospital finds a patient is indigent but originally committed as a paying patient, the board should have the status of such patient changed by submitting a petition to the district court which committed him, to avoid running uncollectible accounts in the future. 1953 Op. Att'y Gen. No. 53-5662.

Accounts barred by limitations could be removed from ledger of accounts receivable of a joint county-municipal hospital, thereby satisfying the constitutional requirements. 1970 Op. Att'y Gen. No. 70-88.

Collection of debts by credit bureau. — The memorial general hospital in Las Cruces, financed in part by the city of Las Cruces and Dona Ana county, may use the services of a credit bureau to collect bad debts for the hospital and pay for such services from revenues received by the hospital. 1959 Op. Att'y Gen. No. 59-212.

Rentals specified in state land lease contracts cannot be reduced, though a lease holder might surrender his lease and thereafter obtain a new lease containing a unitization agreement and possibly modified rentals without violating this section. 1943 Op. Att'y Gen. No. 43-4210.

State land commissioner cannot order a reduction of rentals on existing state leases; while the prohibition of this section was for the legislature, yet an executive order of the land commissioner has the force of law, and the prohibition would extend to it. 1923 Op. Att'y Gen. No. 23-3705 and 1923 Op. Att'y Gen. No. 23-3730.

Grazing lease may be canceled on petition of lessee and consent of the commissioner, as there is then no obligation due the state on unpaid rental notes, nor is the lessee liable for any difference in the rental contract with a subsequent lessee. 1926 Op. Att'y Gen. No. 26-3878.

Compromise of civil penalties. — A statute allowing the state corporation commission (now public regulation commission) to compromise civil penalties assessed for violations of the Pipeline Safety Act (70-3-11 to 70-3-20 NMSA 1978) would not violate this section. 1971 Op. Att'y Gen. No. 71-16.

Deferment of mortgage payments. — The state investment council may legally enter into an agreement with a mortgagor to defer the payment of principal or interest on a federally insured mortgage investment which is held by the council, so long as the original maturity date of the promissory note securing the mortgage investment is not changed. 1966 Op. Att'y Gen. No. 66-93.

Delinquent liquor license fees. — Neither board of county commissioners nor state comptroller may cancel delinquent liquor license fees inasmuch as these represent obligations owing to the state which cannot be discharged in any manner except by payment or by proper court proceedings. 1941 Op. Att'y Gen. No. 41-3871.

Under second sentence, obligations in question are flatly declared void; no further procedures are necessary to the enjoyment of the privilege conferred. 1958 Op. Att'y Gen. No. 58-242.

Constitutional amendment, adding second sentence of this section, is self-executing. 1958 Op. Att'y Gen. No. 58-242.

Execution of releases permissible. — The constitutional amendment embodied in the second sentence of this section operates to destroy the underlying obligation and to release the lien which secures payment thereof, without more; however, the department of public welfare (now human services department), is authorized to execute and deliver appropriate releases if requested. 1958 Op. Att'y Gen. No. 58-242.

Return of funds received prior to passage of amendment. — Funds being held by the department of welfare (now human services department) which, upon receipt, were subject to the requirement that they be deposited directly and unconditionally into the state treasury could not be regarded as remaining unpaid and could not be returned to the payor; but to the extent that the department held, prior to November 20, 1958, funds which upon receipt were subject to the requirement that they be deposited in a suspense account in the state treasury, pending determination of whether or not they would become the absolute property of the state, such moneys could properly be returned to the payor. 1958 Op. Att'y Gen. No. 58-242.

Installment payments received by the department of public welfare (now human services department) prior to November 20, 1958, could not lawfully be returned to the payor. 1958 Op. Att'y Gen. No. 58-242.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 56 Am. Jur. 2d Municipal Corporations, Counties, and Other Political Subdivisions §§ 807, 819 to 826; 72 Am. Jur. 2d States, Territories and Dependencies § 86.

What amounts to "indebtedness" to state within constitutional or statutory provision as to release or compromise of same, 108 A.L.R. 376.

64 C.J.S. Municipal Corporations §§ 1880, 2073; 81A C.J.S. States §§ 223, 224.