Arnold v. Bond

• Decision Date: 19 June 1934
• Docket Number: 1877
• Citation: 34 P.2d 28,47 Wyo. 236
• Parties: ARNOLD, ET AL. v. BOND, ET AL
• Court: Wyoming Supreme Court

34 P.2d 28

47 Wyo. 236

ARNOLD, ET AL. v. BOND, ET AL

No. 1877

Supreme Court of Wyoming

June 19, 1934

APPEAL from the District Court of Albany County; VOLNEY, J. TIDBALL Judge.

Action by C. P. Arnold and others against Wallace C. Bond and others comprising the Board of Trustees of the State University, the Board of Land Commissioners, the Commissioner of Public Lands, the State Auditor and State Treasurer for a declaratory judgment as to the constitutionality and validity of Chapter 21, passed at the Special Session of the Legislature of 1933. A demurrer was filed to the petition and sustained. Plaintiffs having elected to stand on their pleading, appeal from a judgment of dismissal.

Affirmed.

For the appellants, there was a brief and oral argument by Mr. W. O Wilson, of Cheyenne.

The questions to be decided in this case are: (1) Has the University the right to comply with Chapter 21, Laws of Wyoming, Special Session of 1933? (a) By accepting said grant or loan; (b) By issuing bonds; (c) By contracting for the repayment of said loan by the creation of a first lien. (2) Whether the words "support" and "university purposes" includes the erection of buildings out of income of the permanent fund. (3) Whether the contracting for the re-payment of the loan creates a state debt. A. (1) The State of Wyoming in dealing with the land grants and the proceeds and the income thereof is exercising a trust. Ross v. University, 31 Wyo. 464; Rider v Cooney, (Mont.) 23 P.2d 261; State v. Court, (Mont.) 112 P. 706; State v. Stewart, (Mont.) 137 P. 854; Board v. McMillan, (N. D.) 96 N.W. 310. (2) The University of Wyoming while created a body corporate is but a department of the State. State ex rel Irvine, 14 Wyo. 318; Hjorth Royalty Company v. Trustees of University, 30 Wyo. 309; McClain v. Regents, (Ore.) 265 P. 412; State v. Brian, (Neb.) 120 N.W. 916; State v. Board, 20 Wyo. 162; Evans v. Van Deusen, (Ida.) 174 P. 122. (3) Funds in land grants were taken by state as trustee for benefit of University, and beneficiary is not fettered by constitutional provision. State v. Brian, (Neb.) 120 N.W. 916. (4) States with land grants are controlled relative thereto by the land grant acts. State v. Board, 20 Wyo. 162. (5) Such land grant funds are not strictly speaking subject to appropriation, but legislature is required to provide method by which the funds are made available. Evans v. Van Deusen, (Ida.) 174 P. 122. B. The income of the University Permanent Land Fund cannot be used for the purpose of erection of buildings. Roach v. Gooding, (Ida.) 81 P. 642; District v. Pfost, (Ida.) 4 P.2d 893; Warner v. White, (Ariz.) 4 P.2d 1000; Mitchell v. Colgan, (Cal.) 54 P. 905; Love v. District, (Tex.) 194 S.W. 659; Sheldon v. Purdy, (Wash.) 49 P. 228. C. The income of the Permanent Land Fund can be used for the erection of buildings. State v. Clausen, (Wash.) 148 P. 28; State v. Rice, (Mont.) 83 P. 874; State v. Maynard, (Wash.) 71 P. 775; State v. Commissioners, 8 Wyo. 104. D. The following cases supporting such principle are analyzed under the heading that a state debt is not created by obligations payable out of special funds only and are not obligations of the State. State v. Cook, (Mont.) 43 P. 926; State v. Collins, (Mont.) 53 P. 1114; State v. University, (N. M.) 258 P. 571; State v. Clausen, (Wash.) 235 P. 364. E. Constitutional provisions of Wyoming establishing debt limit. Art. XVI, Sec. 1. Limitation of state debt. 2. Creation of state debt restricted. F. Bond issues payable out of "special funds" create liabilities against the State and other public corporations. State v. McMillan, (N. D.) 96 N.W. 310; State v. Candland, (Utah) 24 L. R. A. (N. S.) 1260; State v. Board, (Wash.) 268 P. 862; State v. Highway Commission, (Mont.) 296 P. 1033. G. Bonds or other obligations payable out of special funds of cities create debts, obligations or liabilities of such public corporations. Garrett v. Mayor, (Cal.) 13 P.2d 725; Feil v. City, (Ida.) 120 P. 643; Mitchell v. City, (Ida.) 284 P. 843; Rorick v. City, (Ore.) 12 P.2d 762. H. Debt payable out of income from permanent land grant funds is not an obligation of the state but only on the special fund against which the obligation is created. State v. Cook, (Mont.) 43 P. 928; Stein v. Morrison, (Ida.) 75 P. 246; Lewis v. Brady, (Ida.) 28 L. R. A. (N. S.) 152; State v. Collins, (Mont.) 53 P. 1114; Barbour v. Board, (Mont.) 13 P.2d 225; State v. University, (N. M.) 258 P. 771; State v. Clausen, (Wash.) 235 P. 364; Fanning v. University, (Minn.) 236 N.W. 217; State v. State Treasurer, (Mont.) 66 P. 504. I. Bonds issued by a city payable out of special fund are not a liability of the city. Seward v. Mayor, (N. M.) 24 P.2d 253.

For the respondents, there was a brief by Ray E. Lee, Attorney General, O. O. Natwick, Deputy Attorney General and Wm. C. Snow, Assistant Attorney General, and oral argument by Mr. Lee.

The questions presented by this appeal are: (a) Has the Board of the State University authority under Chapter 21, Laws 1933, Special Session, to accept grants and borrow money? (b) Has the Board of the State University authority to issue bonds or other evidence of indebtedness to the Federal Government to secure said loan? (c) Has the Board of the University of Wyoming authority to contract for the repayment of any loan or loans obtained pursuant to said Act solely by the creation of a first lien on the income of said fund, known as the University Permanent Land Fund? (d) Whether a contract for the repayment of a loan obtained pursuant to said Act creates a State debt? Statutes and authorities pertinent to the first question are Section 8 of the Act of Admission; Chapter 81, Laws 1886; Act of Congress of February 18, 1881 granting the University lands aggregating seventy-two sections. Wilcox v. Jackson, 13 Pet. 498. The Trustees of the University is a body politic and corporate. Limitations of public indebtedness are prescribed by Article XV, Section 4 of the Constitution. Special levies for public institutions are not within the limitation provided in said section. State v. Board of County Commissioners, 8 Wyo. 104. The subject of educational grants is referred to in State v. Fisk University, 10 S.W. 284; People v. Mezger, 90 N.Y.S. 488; State v. Johnston, 214 Mo. 656; Church v. New York, 23 Jones and S. 160; State v. Orleans, 26 So. 872; Yale University v. New Haven, (Conn.) 32 A. 87; Cathedral v. County, (Colo.) 68 P. 272; State v. Regents, (N. M.) 258 P. 571; Bickford v. Cook, (Mont.) 43 P. 928; State v. Maynard, (Wash.) 71 P. 775. The only decision found holding that the legislature is without power to pledge the income from university lands, is Roach v. Gooding, 11 Idaho 244, 81 P. 642. Land grants made to western states differ somewhat in phraseology. We append a table indicating some of these differences, but in the main this table discloses that the Wyoming grants followed a general plan put into effect with reference to all western states. The phrase "university purposes," appearing in the grant, indicates authority to use income for the construction of university buildings. The Idaho Constitution limits the use of all funds, school and university alike, to the maintenance of schools of the State of Idaho, thereby excluding buildings, but no such limitation is found in the Wyoming Constitution. The Idaho case is distinguishable from other cases because of peculiar phraseology in the terms of the grant, State v. Rice, (Mont.) 83 P. 874, and is not followed in other states. The University lands were granted to Wyoming by the Act of February 18, 1881, and not by the Act of Admission. Confirmation neither adds nor detracts from the original title, but is merely a recognition of a title which existed. Jones v. Cattle Co., 232 U.S. 355; see also State v. Candland, (Utah) 104 P. 285. Other decisions interpreting the word "support" in this sense will be found in State v. Clausen, (Wash.) 148 P. 28; Com'rs. v. Spitzer, (N. C.) 91 S.E. 707. The Act of 1933, above referred to, authorizes the creation of a first lien upon the income from the land fund to secure loans. This should be broad enough to authorize the issuance of bonds since the power is implied. Young v. Regents, (Kan.) 124 P. 150. A loan under the Act of 1933 does not create a state debt. State v. Collins, 53 P. 1114; State v. Regents, (N. M.) 258 P. 571; Stein v. Morrison, (Ida.) 75 P. 246; State v. Candland, supra; State v. Clausen, supra; see also: 13 P.2d 228; 236 N.W. 220; 24 P.2d 254; 25 P.2d 755; Eastern Lumber Company v. Patterson, (Ore.) 264 P. 441. It is respectfully submitted that the Legislature may authorize the Board of Trustees of the University to pledge the income from its Permanent Land Fund to secure the payment of a loan to provide money for the construction of a Liberal Arts Building; that such pledge is not the creation of a state debt within the constitutional limitation on state debts, and that the Board of Trustees has authority to execute bonds or such other contracts or evidence of indebtedness as may be required by the Public Works Administration in connection with the making of the loan authorized by the Legislature of Wyoming.

BLUME, Justice. KIMBALL, Ch. J., and RINER, J., concur.

OPINION

BLUME, Justice.

This case was brought by plaintiffs, citizens and taxpayers of this State, on behalf of themselves and all other persons similarly situated, against the Board of Trustees of the University of Wyoming, the Board of Land Commissioners, the Commissioner of Public Lands, and the State Auditor and the State Treasurer. Plaintiffs ask that the court declare and determine the constitutionality and validity of Chapter 21 of the Session Laws of Wyoming, passed at the Special Session of 1933; to declare, determine and...