City of Montpelier v. Gates

• Decision Date: 13 January 1934
• Citation: 170 A. 473
• Court: Vermont Supreme Court
• Parties: CITY OF MONTPELIER v. GATES et al.

170 A. 473

CITY OF MONTPELIER

v. GATES et al.

Supreme Court of Vermont. Washington.

Jan. 13, 1934.

Petition for a writ of mandamus by the City of Montpelier and certain interveners against Benjamin Gates, as Auditor of Accounts, and others.

Writ granted.

Argued before POWERS, C. J., and SLACK, MOULTON, THOMPSON, and GRAHAM, JJ.

George L. Hunt, City Atty., of Montpelier, for petitioners.

Lawrence C. Jones, Atty. Gen. (H. H. Blanchard and James Brownlee, both of Springfield, of counsel), for petitionees.

POWERS, Chief Justice.

This is a petition for a writ of mandamus to compel the fiscal officers of the state to pay to the petitioner and certain interveners their respective claims under section 48, part 1, of the Income and Franchise Tax Act of 1931 (Acts 1931, No. 17, pt. 1, § 48). The petition is answered and demurred to. In view of the importance of the case to the state and its officers, and the facts being conceded, the demurrer will be construed as a motion, Clement v. Graham, 78 Vt. 290, 306, 63 A. 146, Ann. Cas. 1913E, 1208, and the merits of the controversy disposed of without regard to the technical sufficiency of the pleadings.

As is shown in Town of Brandon v. Harvey (Vt.) 168 A. 708, 710, prior to the passage of the act above referred to, the towns of the state were enjoying the benefit of whatever revenue was derived from the taxation of intangibles, but were required to pay to the state certain state taxes assessed by law. But by the act of 1931, a radical change was made in the state's taxing scheme. The taxi on intangibles was made payable to the state by way of a tax on incomes, and to compensate the towns for this loss of revenue, the state taxes were abolished. And as ai further compensation to such towns as had been receiving more intangible taxes than their state taxes amounted to, section 48 was written into the act. By the terms of that section various sums were the subject of reimbursement to the towns here standing as petitioners and were to be paid upon certificates issued by the tax commissioner. Such certificates have been issued and presented for payment—which was refused. Thereupon, this proceeding was instituted.

The defendants insist that payment of these claims should not be ordered because the Legislature has made no valid appropriation therefor.

That authority of law is indispensably necessary to an expenditure of state funds is unquestionable. Section 27 of chapter 2 of our state Constitution provides that "no money shall be drawn out of the Treasury, unless first appropriated by act of legislation." It is to be noticed that this provision is couched in general terms. No particular requirements are specified. Its purpose is "to secure regularity, punctuality and fidelity in the disbursements of the public money." Story, Const. § 1342. It is not, and was not Intended to be, a restriction of the power of the Legislature over the public' revenue. It is the province of that body to cast the appropriation in a mold of its own making. Under it, no particular form of expression is necessary. No technical words are required. All that is essential is that the Legislature, by a valid enactment, shall assign to a particular use a sum of money from the public revenues. Grout v. Gates, 97 Vt. 434, 448, 124 A. 76. Such an act authorizes the proper officers to draw and use the same accordingly. Merely authorizing such officers to pay a certain claim amounts to an appropriation. People ex rel. McCauley v. Brooks, 16 Cal. 11, 29; Bosworth v. Harp, 154 Ky. 559, 157 S. W. 1084, 45 L. R. A. (N. S.) 692, Ann. Cas. 1915C, 277; Carr v. State et al., 127 Ind. 204, 26 N. E. 778, 11 L. R. A. 370, 372, 22 Am. St. Rep. 624; State v. Jorgenson 25 N. D. 539, 142 N. W. 450, 49 L. R. A. (N. S.) 67.

It is not necessary that the money be in the treasury at the time the appropriation is made. People ex rel. McCauley v. Brooks, supra. Nor is it necessary that the exact sum be stated by the Legislature. High gate v. State, 59 Vt 39, 49, 7 A. 898. In the eye of the law, that is certain which can be made certain, and it is quite within the province of the Legislature to make an appropriation to cover a claim the amount of which is to be ascertained in the manner specified in the act. This is the law of the case last cited. The plain and simple rule that when the Legislature, referring to a claim that the state should pay, authorizes the auditor to draw his order on the state treasurer for its payment, a constitutional appropriation has been made, has the sanction of many years of legislative practice. For years this was the usual, if not the only, way money was drawn from the treasury to pay the state's bills. This practice grew up under statutes of a most general character, of which section 47, tit. 4, chap. 8, G. S., may be taken as a sample: "It shall be the) duty of the auditor of accounts to examine and liquidate all accounts against the state, * * * and allow such sum as he shall find justly due and proved by proper vouchers or other satisfactory evidence, and draw orders upon the treasurer for the same." It was not until 1874 that what may properly be called a general appropriation bill was passed by the Legislature; and not until 1917, that state expenditures were budgeted. So far as legality goes, the old practice was as good as the new is, for as Field, C. J., says in People ex rel. McCauley v. Brooks, supra: "When the Constitution, therefore, says that 'no money shall be drawn from the treasury but in consequence of appropriations made by law,' it only means that no money shall be drawn except in pursuance of law."

Nor does G. L. 540 stand in the way. Therein it is provided that "unexpended balances" shall be covered into the treasury on the 1st day of July in each year. Assuming that the term "unexpended balances" applies to such cases as the one here presented, the justice of these claims and the rights of these parties are not affected. When a sum is "covered" into the treasury, it ceases to be "earmarked" for the payment of a specific claim, and becomes available for the payment of any just debt against the state for which an appropriation has been made and which is not payable out of a particular fund. But it remains equally available for the payment of the claim for which it was originally appropriated, if funds are in hand when the auditor's order reaches the treasurer. It is all a matter of bookkeeping, and an honest creditor is not to be denied, simply because the payment of his claim may somewhat upset the treasurer's books. Moreover, as we were told at the argument, in a case like this, the "covering" process does not involve bookkeeping entries, even. We cannot accept the defendants' theory that the appropriations here in question lapsed on June 30, 1933. The Illinois case on which they predicate this claim, People v. Brown, 281 Ill. 390, 118 N. E. 67, 5 A. L. R. 563, is noil applicable to this case. The Constitution of that state, article 4, § 18, expressly provides that appropriations shall end on a specified date. Nothing of this kind appears in our Constitution or in any statute of this state that can affect this case. There is nothing in No. 7, Acts 1923, that in any way embarrasses these petitioners. Section 27 of that act provides that, except for money held by the state in trust, no money shall be paid out of the state treasury unless it was specifically appropriated at a biennial session of the Legislature, or a special session within the biennial period. And the auditor is forbidden to draw a warrant upon the treasurer, except for the payment of specific appropriations duly made in pursuance of the provisions of that section. Granting that it was the purpose of this section to put an end to appropriations to continue beyond the biennial period in which they were made, the rights of the petitioners are unaffected. The money for these claims was appropriated in 1931 for the biennial period then beginning. The ascertainment of the various sums due under section 48 were ascertained by the commissioner of taxes and his certificate issued during that) biennium. Whatever obligation resulted from section 48 during that term is covered by the appropriation, though the auditor or treasurer, or both, failed to respond to the demand made legal by the certificate until that period had expired. It appears that the fiscal officers of the state, with the approval of the Governor, had prior to the execution of the certificates herein involved, fixed October 15th as the date on which they should be payable. This was done to make them due at a time when the treasury would be> in condition to pay them. The petitioners acquiesced in this arrangement and held their certificates. It would be highly unjust for them to be prejudiced by this action; happily enough, they are not. We hold that the money specifically appropriated for their payment is now available...