Chandler v. Board of Trustees of Teacher Retirement System

• Decision Date: 11 March 1963
• Docket Number: No. 5-2922,5-2922
• Citation: 365 S.W.2d 447,236 Ark. 256
• Parties: Winston G. CHANDLER, Appellant, v. BOARD OF TRUSTEES OF the TEACHER RETIREMENT SYSTEM of the State of Arkansas, et al., Appellees.
• Court: Arkansas Supreme Court

Page 447

365 S.W.2d 447

236 Ark. 256

Winston G. CHANDLER, Appellant, v. BOARD OF TRUSTEES OF the TEACHER RETIREMENT SYSTEM of the State of Arkansas, et al., Appellees.

No. 5-2922.

Supreme Court of Arkansas.

March 11, 1963.

Roy Finch, Jr., Little Rock, for appellant.

Warren & Bullion, Little Rock, Bruce Bennett, Atty. Gen., by Jack L. Lessenberry, Asst. Atty. Gen., Little Rock, for appellees.

GEORGE ROSE SMITH, Justice.

This is a taxpayer's suit by which the appellant attacks the constitutionality of those statutes that permit the employees of the Arkansas Education Association (the AEA) and the Arkansas Teacher Association (the ATA) to participate in the State Teacher Retirement System. The defendants were the trustees of the Retirement System, the State Auditor, and the State Treasurer. The AEA and the ATA were permitted to intervene and become the real defendants. The chancellor found the statutes to be valid and accordingly dismissed the complaint. The principal issue is whether this use of state funds is for a public purpose.

The teacher retirement system was created by Act 266 of 1937. Under that act retirement benefits were available to public school teachers only. The plan was financed by deductions from the teachers' salaries and by equal matching contributions on the part of the State. By Act 80 of 1949 the employees of the AEA and of the ATA were permitted to participate in the plan, their contributions also being matched by the State. This arrangement was continued in force when the statutes were recodified by Act 93 of 1957. Ark.Stats.1947, § 80-1437 et seq. The funds of the retirement system are kept in various accounts in the State treasury, the State's annual contribution being transferred from the Public School Fund to the Employers Accumulation Account. Ark.Stats. § 80-1442.

The institution of this suit on February 14, 1961, seems to have been the immediate cause for an amendment to the statute. By Act 210 of 1961, approved one month after this proceeding was filed, the State discontinued its practice of using public funds to match the AEA and ATA contributions and required instead that the matching funds be provided by those organizations as a condition to their continued participation in the retirement system. Ark.Stats. § 80-1442(6.3). In view of this amendment to the statute the appellant now makes two contentions: First, the State's former practice of using tax moneys to match the contributions of the AEA and ATA employees should be declared unconstitutional, and the State Treasurer should be directed to set the matter right by making the necessary book entries to transfer those matching funds (about $18,750) from the Employers Accumulation Account back to the Public School Fund. Secondly, the AEA and ATA employees should be declared to be ineligible to participate in the State Teacher Retirement System.

After studying the matter with much care we have concluded that the appellant is right in both his contentions.

The parties have argued the constitutional questions largely with reference to only two provisions in the State Constitution--the privileges and immunities clause (Art. 2, § 18) and the illegal exactions clause (Art. 16, § 13). We have no hesitancy in considering the due process clause as well (Art. 2, § 8), for in a taxpayer's suit the plaintiff represents the citizens as a whole and cannot be permitted to waive contentions that should be asserted. See McCarroll v. Farrar, 199 Ark. 320, 134 S.W.2d 561, and Pafford v. Hall, 217 Ark. 734, 233 S.W.2d 72.

No principle of constitutional law is more fundamental or more firmly established than the rule that the State cannot, within the limits of due process, appropriate public funds to a private purpose. A century ago the basic doctrine was simply stated in the leading case of Brodhead v. City of Milwaukee, 19 Wis. 624: 'The legislature cannot create a public debt, or levy a tax, or authorize a municipal corporation to do so, in order to raise funds for a mere private purpose. It cannot in the form of a tax take the money of the citizens and give it to an individual, the public interest or welfare being in no way connected with the transaction. The objects for which money is raised by taxation must be public, and such as subserve the common interest and well being of the community required to contribute.'

Our own decisions are to the same effect. Since it is tacitly conceded in the case at bar that the controlling issue is that of public purpose, we think it necessary to quote from only one of our cases, Texarkana-Forest Park Paving etc. Dist. v. State, 189 Ark. 617, 74 S.W.2d 784: 'The power to pay gratuities to individuals is denied to the Legislature generally by constitutional mandate and usually a gift of money to an individual would be an appropriation of public funds to private use, which cannot be justified in law.'

The question before us centers upon the essential nature of the AEA and the ATA: Are these organizations public or private in character? The testimony relates almost wholly to the AEA, the ATA being its counterpart among the Negro teachers and actually having no employees at present who participate in the teacher retirement system.

The AEA is a voluntary association, organized as a nonprofit corporation and having as its members active and retired public school teachers, administrative and clerical employees...