State ex rel. Thomson v. Giessel

• Decision Date: 28 July 1954
• Citation: 65 N.W.2d 529,267 Wis. 331
• Parties: STATE ex rel. THOMSON, Atty. Gen. v. GIESSEL, Director of Budget and Accounts.
• Court: Wisconsin Supreme Court

Page 529

65 N.W.2d 529

267 Wis. 331

STATE ex rel. THOMSON, Atty. Gen. v. GIESSEL, Director of Budget and Accounts.

Supreme Court of Wisconsin.

July 28, 1954.

Rehearing Denied Oct. 5, 1954.

The petitioner Attorney General by his complaint herein seeks: (1) a peremptory writ of mandamus directed to respondent, E. C. Giessel, as director of the state Department of Budget and Accounts, commanding him to honor, audit and approve the voucher presented to him by the State Investment Commission in the amount of $974,499.40 to restore to the State Insurance Fund moneys previously appropriated from said fund by the legislature for the construction of the present State Office Building, which amount represents the unpaid balance on said building, the honoring of said voucher being the first step in the construction and financing of the third unit to the State Office Building, pursuant to sections 14.86 and 14.88, Stats. 1953; (2) for a declaratory judgment adjudging that sections 14.86 and 14.88, Stats.1953, were and are valid enactments, have become and are law and in force, that the proposed steps of financing and constructing the third unit of the State Office Building as described in the complaint are valid and lawful; and (3) that the State Investment Board has the authority to transfer the said loan or any part thereof to the Allstate Insurance Company in fulfillment of a commitment by it to take the same at the option of the Investment Board.

Respondent filed a general demurrer putting in issue the constitutionality of the statutes relied upon and the validity of the acts purported to have been and to be taken pursuant thereto.

Under the provisions of section 13.351, Stats. (created by ch. 563, Laws of 1949), the State Building Commission (hereinafter referred to as 'the commission') is entrusted with the power of constructing any new building, or addition to an existing building, for housing state offices, and the assigning of space therein to various state agencies. Such commission is authorized by section 14.86(1), Stats. (created by ch. 604, Laws of 1949) to incorporate a non-profit corporation to be known as the Wisconsin State Public Building Corporation, and pursuant to such authority on or about November 14, 1949, the commission incorporated such a corporation (which will hereinafter be referred to as 'the corporation').

Section 14.86 (as amended by section 8 ch. 61, Laws of 1953) further provides:

'* * * When so requested by the state building commission, such corporation shall have authority to lease any state-owned land that may be available for the purposes of this section and to construct thereon such building projects, including all necessary buildings, improvements, facilities, equipment and other capital items as are required for the proper use and operation of such building projects after their completion. The corporation may mortgage such interests in land and the building projects thereon to funds invested by the state of Wisconsin investment board to secure loans of funds borrowed by it from the board.

'(2) Commission may acquire and lease lands. For the purpose of providing housing for general state purposes and not specially for any particular state agency, including housing for state offices and the completion of the state office building, and to enable the construction, financing and ultimate purchase thereof by the state, the state building commission is authorized and empowered to acquire any necessary lands, and to lease and re-lease any lands owned by the state and available for the purpose to the Wisconsin state public building corporation for terms not exceeding 50 years each, on condition that such corporation shall construct and provide on such leased lands such building projects, including buildings, improvements, facilities or equipment or other capital items, as the commission may require, and shall re-lease the same to the commission upon satisfactory terms as to the rental, maintenance and ultimate purchase by the state as may be in its best interests in the judgment of the commission. After such leases and re-leases are executed and until the projects are acquired by the state, they shall be operated by the commission through the bureau of engineering, which shall have charge of such property as provided in section 15.77. Such operation shall be designed to provide revenues that will pay the costs of operation and maintenance, meet the interest when due, and yield a surplus sufficient to pay the principal amount in not more than 50 years. Revenues derived from such operation shall be placed in the general fund and are appropriated to the state building commission to be used to pay the cost of operation and maintenance and to meet payments due the Wisconsin state public building corporation on account of such project. After the interest has been paid, any surplus that may accrue shall be applied toward the purchase of the projects or accumulated for subsequent application upon the purchase price. The commission shall annually determine and fix the rate of such annual rental and the share which shall be paid by each state agency occupying such building project. Such share shall be computed on a basis of square feet of floor space occupied or used by each such agency, giving proper weight to the quality of space occupied. Plans for buildings and all contracts and leases and re-leases made pursuant to this section shall, before becoming effective, have the written approval of the state engineer and the governor. Nothing herein contained shall authorize the commission to incur any state debt for the construction of such buildings, improvements, facilities or equipment for general state purposes.' (Italics supplied.)

The construction of the present state office building consisting of two units was financed in whole or in part through a loan from the state insurance fund, and to secure such loan a deed of trust conveying title to the building and land upon which it is situated (said land also being of ample size to permit the erection of the contemplated addition of a third unit to said building) was executed to the commissioner of insurance under that of December 31, 1931. The balance now due on such loan to the state insurance funds aggregates nearly on million dollars. The 1953 legislature determined to proceed with the erection of the contemplated third unit of the building and to finance the cost of the same, and also to refund the balance due on said existing loan, through the device of leasing the existing building and land to the corporation, and having the corporation borrow the amount needed from the Wisconsin Investment Board (hereinafter referred to as 'the investment board'), such loan to be secured by the corporation's interest in the existing building and land as well as the new structure. To that end the legislature by ch. 168, Laws of 1953, enacted section 14.88, Stats., reading in part as follows:

'The state building commission is authorized to proceed with the completion of the state office building. The project shall be effected in accordance with the provisions of s. 14.86.

'(2) In carrying out this project the state building commission is authorized to refinance the present state office building so that the existing encumbrance in favor of the state insurance fund, which is secured by a deed in trust from the state to the commissioner of insurance executed on December 31, 1931, shall be paid in full to the state insurance fund. Any mortgage made by the Wisconsin state public building corporation to effect such refinancing and construction may be secured by the existing state office building and land as well as the proposed addition. The entire property including the existing building and land and the proposed addition shall be operated by the state building commission through the bureau of engineering as provided in s. 14.86(2). The provisions of s. 14.86 shall apply to the existing land and building as well as to the proposed addition.

'(3) In consideration and upon the payment in full of the existing indebtedness on the state office building to the state insurance fund as provided for by sub. (2), the commissioner of insurance shall convey the state office building property to the state.' (Italics supplied.)

Pursuant to section 14.86, Stats., the corporation on April 23, 1954, applied to the investment board for a loan of approximately $4,200,000 to finance the cost of erecting the third unit to the State Office Building and repaying to the insurance fund the balance due on the existing encumbrance. Such application was considered at a regular meeting of the investment board held on such day, and a resolution was thereupon adopted by the board granting the loan application of the corporation contingent upon the agreement hereinafter described being consummated with the Allstate Insurance Company hereinafter referred to as 'Allstate') for the taking over of the loan. Such resolution also directed the commission to present to the respondent Giessel, as director of Budget and Accounts, a voucher in the amount of $974,499.40, payable to the state insurance fund to cover the balance owing upon the existing encumbrance.

Under date of May 1, 1954, an agreement was entered into between the investment board and Allstate whereby the latter agreed to take over said loan commitment upon the terms stated in such agreement subject to the condition that a decision of the Wisconsin supreme court is rendered which establishes to the satisfaction of Allstate 'that all transactions with reference to the acquisition, construction and financing of the state office building project, including the provisions of this commitment, the statutes underlying such transactions and the security to be given securing the loan to be made to the Corporation are valid, subsisting and enforceable in the hands of Allstate.' There was incorporated into such agreement by reference...