Almond v. Gilmer
| Decision Date | 08 September 1948 |
| Docket Number | Record No. 3424. |
| Citation | 188 Va. 1 |
| Parties | J. LINDSAY ALMOND, JR., ETC. v. HENRY G. GILMER, ETC., ET. AL. |
| Court | Virginia Supreme Court |
1. SCHOOLS — Use of Literary Funds — Purchase by Trustees of Retirement System of Bonds of State Board of Education for Loans to Be Made by State Board to School Boards — Case at Bar. — The instant case was a proceeding by mandamus to determine the proper construction and constitutionality of the Acts of 1946, page 522, appearing as section 2672(20) of the Code and of the Acts of 1947, page 68, amending section 643 of the Code. By resolution the Board of Trustees of the Virginia Retirement System agreed to purchase from the State Board of Education five million dollars face value of bonds, notes and other evidences of debt to be issued to and acquired by the State Board of Education for loans to be made by it out of the literary fund to various school boards. It was contended that the acts above cited when read together authorized their purchase by the State Board of Education, on behalf of the literary fund, and their transfer and sale to the trustees of the Virginia Retirement System. Section 115-a of the Constitution forbids the incurring by a county of a long-term bonded debt except upon proper referendum. The act cited authorized the transactions and payments without the approval of the qualified voters of the respective counties or districts affected thereby. Section 135 of the Constitution requires that the General Assembly shall apply the annual interest on the literary fund to the schools of the primary and grammar grades for the equal benefit of all of the people of the State.
Held: That the transaction and attempted use of the vast resources of the retirement fund for investment as literary funds was in violation of the spirit and letter of section 115-a and section 135 of the Constitution. It imposed a debt forbidden by the former and directed the payment of interest into a fund not allowed by the latter.
2. SCHOOLS — Loans to School Boards — Loans from Sources Other Than Literary Fund. — Section 115-a of the Constitution of Virginia applies to and prohibits loans to county school boards when the same are made otherwise than from the literary fund and are not within the express exceptions contained in section 115-a such as to meet casual deficits in the revenue, etc.
3. STARE DECISIS — Where Case Distinguishable. — Where the facts of one case are materially distinguishable from those of another and the issue or point decided is fundamentally different, the doctrine of stare decisis does not apply.
4. SCHOOLS — Use of Literary Funds — Purchase by Trustees of Retirement System of Bonds of State Board of Education for Loans to Be Made by State Board to School Boards — Case at Bar. — The instant case was a proceeding by mandamus to determine the proper construction and constitutionality of the Acts of 1946, page 522, appearing as section 2672(20) of the Code and of the Acts of 1947, page 68, amending section 643 of the Code. By resolution the Board of Trustees of the Virginia Retirement System agreed to purchase from the State Board of Education five million dollars face value of bonds, notes and other evidences of debt to be issued to and acquired by the State Board of Education for loans to be made by it out of the literary fund to various school boards. Section 115-a of the Constitution forbids the incurring by a county of a long-term bonded debt except upon proper referendum. It was contended that the obligations did not constitute debts because they could not be sold by the trustees of the Retirement System, "except to a State Governmental agency."
Held: There was no merit in the contention since an obligation in a fixed and certain amount bearing interest at a predetermined rate, principal and interest of which are made payable at stated intervals, is no less a debt because its holder or holders are classified and its negotiability is limited.
5. STATUTES — Construction — Necessity for Ambiguity. — The province of construction lies wholly within the domain of ambiguity.
6. SCHOOLS — Use of Literary Funds — Purchase by Trustees of Retirement System of Bonds of State Board of Education for Loans to Be Made by State Board to School Boards — Case at Bar. — The instant case was a proceeding by mandamus to determine the proper construction and constitutionality of the Acts of 1946, page 522, appearing as section 2672(20) of the Code and of the Acts of 1947, page 68, amending section 643 of the Code. By resolution the Board of Trustees of the Virginia Retirement System agreed to purchase from the State Board of Education five million dollars face value of bonds, notes and other evidences of debt to be issued to and acquired by the State Board of Education for loans to be made by it out of the literary fund to various school boards. It was contended that the acts above cited when read together authorized their purchase by the State Board of Education, on behalf of the literary fund, and their transfer and sale to the trustees of the Virginia Retirement System. Section 115-a of the Constitution forbids the incurring by a county of a long-term bonded debt except upon proper referendum. The act cited authorized the transactions and payments without the approval of the qualified voters of the respective counties or districts affected thereby. Section 135 of the Constitution requires that the General Assembly shall apply the annual interest on the literary fund to the schools of the primary and grammar grades for the equal benefit of all of the people of the State.
Held: There was nothing in the history, purpose and use to which the literary fund has been applied to justify the belief that retirement funds may be made literary funds for a transitory period and purposes; that they can temporarily become literary funds in color and form but not in substance, to the end that they may be momentarily imbued with such literary fund qualities as to allow their investment or loan as such to the local school boards and, upon accomplishment of that undertaking, they shall thereupon return to their former status in full and absolute character. To the contrary, the strong and compelling implications, if not the express terms of those constitutional provisions, definitely negate any such conclusion.
Original petition for writ of mandamus.
The opinion states the case.
J. Lindsay Almond, Jr., Attorney General, Kenneth C. Patty and Walter E. Rogers, Assistant Attorneys General, for the petitioner.
C. O'Conor Goolrick and Stuart G. Christian, for the respondents.
By resolution adopted April 16, 1947, the Board of Trustees of the Virginia Retirement System agreed to purchase from the State Board of Education five million dollars face value of bonds, notes and other evidences of debt to be issued to and acquired by the State Board of Education for loans to be made by it out of the literary fund to various school boards.
It is contemplated and intended that the trustees will use the reserve assets of the retirement fund to purchase the securities and obligations issued by the school boards and from them acquired by the State Board of Education. To effect this, the trustees of the retirement fund will make available to the State Board of Education, as trustee and manager of the literary fund, money to lend the school boards. The Board will, by that means, acquire the bonds for the literary fund. They will then be passed on to the trustees of the Virginia Retirement System for the money so available and such trustees will thereafter be the holders of the securities for the purposes of and on the trusts set forth in the Virginia Retirement Act.
Upon being advised of this commitment on the part of the trustees of the Virginia Retirement System to so purchase that amount of securities and believing that the literary fund's current money might be so augmented from the reserve assets of the retirement fund with which it could actually make loans to the school boards, the State Board of Education approved various loans to school boards in excess of four million dollars. When finally consummated, this contemplated transaction would have imposed longterm financial obligations upon the several counties obtaining such loans. That is proposed to be done without submitting the matter to the qualified voters for their approval or rejection.
Such obligations or debts to be so incurred by the respective school boards, which are in fact county obligations and which are ultimately to be held as a part of the retirement fund, will bear interest at three per cent per annum. This conclusively establishes that they are to be bought with the money of the retirement fund only temporarily colored as literary funds for, under existing law, literary funds proper can only be loaned to school boards at two per cent per annum.
Under Code sec. 2672(20) of the Virginia Retirement Act, as amended, the State Treasurer is made the "custodian of the several trust funds of the Retirement System" and "all payments from said funds shall be made by him on warrant of the Comptroller issued upon vouchers" of the Virginia Retirement Board.
The State Comptroller and the Treasurer were apprehensive of their legal authority to pay to the literary fund for the purchase of such securities money from the State Treasury belonging to the Virginia Retirement Fund. Their apprehension was caused by doubt of the constitutionality in that respect of the recent acts of the General Assembly. These acts undertake to authorize such transactions and payments without the approval of the qualified voters of the respective counties or county districts affected thereby. They declined to make such payments from the treasury and by written communication of April 8, 1948, to the Attorney General of Virginia, requested him to secure an...
To continue reading
Request your trial