Cottingham v. State Bd. of Examiners, 9869

• Decision Date: 15 July 1958
• Docket Number: No. 9869,9869
• Citation: 328 P.2d 907,134 Mont. 1
• Parties: James E. COTTINGHAM, Plaintiff and Appellant, v. STATE BOARD OF EXAMINERS, etc., Defendants and Respondents. Harvey Sanders, Intervenor and Respondent.
• Court: Montana Supreme Court

Page 907

328 P.2d 907

134 Mont. 1

James E. COTTINGHAM, Plaintiff and Appellant, v. STATE BOARD OF EXAMINERS, etc., Defendants and Respondents Harvey Sanders, Intervenor and Respondent.

No. 9869.

Supreme Court of Montana.

Submitted Jan. 13, 1958.

Decided July 15, 1958.

Floyd O. Small, Clayton R. Herron, Helena, for appellant. Floyd O. Small argued orally.

Forrest H. Anderson, Atty. Gen., and Gordon R. Bennett, Asst. Atty. Gen., argued orally for respondent.

Gene Picotte and C. E. Pew, Helena, argued orally for intervenor.

HARRISON, Chief Justice.

This is an appeal from the judgment of the district court of the first judicial district dismissing the action of the plaintiff and dissolving the temporary restraining order theretofore granted.

Initiative Measure No. 54 (Laws of 1951, p. 781), hereinafter referred to as 'Initiative 54', adopted by the general electorate at the 1950 general election, provided for payment of an honorarium to Montana venterans of World War II; the sale of bonds to provide funds for such payment; and the levy of a cigarette tax, the proceeds of which were to be used to redeem and pay interest on the bonds. The constitutionality of Initiative 54 was established in the case of State ex rel. Graham v. Board of Examiners, 125 Mont. 419, 239 P.2d 283.

The Thirty-fifth Montana Legislative Assembly enacted an amendment to Initiative 54 by passage of Substitute House Bill No. 3 (Chapter 44 of the Laws of 1957, hereinafter referred to as 'Chapter 44') providing for payment of an honorarium to Montana veterans of the Korean war on substantially the same basis as veterans of World War II were paid under Initiative 54; the sale of $6,000,000 worth of bonds to provide funds for such payment; and the levy of an additional cigarette excise tax, the proceeds of which were to be used to redeem and pay interest on the bonds.

Pursuant to Chapter 44, collection of a one cent per package excise tax was commenced on February 26, 1957, and has continued to the present time. On the authority of Chapter 44, respondent, State Board of Examiners, passed a resolution on June 12, 1957, authorizing issuance and sale of certain described bonds in the amount of $6,000,000 for the purpose of providing funds for the payment of the Korean veterans' honorarium, the bonds to be redeemed with funds collected from the cigarette excise.

On July 23, 1957, appellant filed a complaint and petition for writ of injunction in the district court of the first judicial district, in which he alleged Chapter 44 is invalid and cannot ever become effective in that:

(1) It creates a debt or liability in excess of $100,000 without having been submitted to the people at a general election as required by section 2, Article XIII, of the Montana Constitution;

(2) It creates a debt or liability without having been submitted to the taxpaying electors of the State of Montana at an election as required by section 2, Article IX, of the Montana Constitution;

(3) It violates section 27, Article III, of the Montana Constitution and section 1 of the Fourteenth Amendment to the Constitution of the United States, in that it deprives persons of their property without due process of law by levying an excise tax on cigarettes which is excessive;

(4) It impairs the obligation of the State of Montana to the holders of War Veterans' Compensation Bonds dated April 1, 1952, issued under the provisions of Initiative 54, in violation of section 2, Article III of the Montana Constitution;

(5) It is void for uncertainty in that it provides in section 14-A, added to Initiative 54 by section 6 of said Chapter 44, that the money arising from the sale of the $6,000,000 bonds authorized thereby shall be used to pay the expense of administration of Chapter 44, and also provides in the amendment of section 84-5621 of the Revised Codes of Montana of 1947, made by section 7 of Chapter 44, that the War Veterans' Compensation Bond Retirement Fund No. 2, into which the proceeds of the additional cigarette excise tax levy are to be paid, shall be used not only for payment of the bonds and the interest thereon but also for the payment of the expenses of administration of Chapter 44; and

(6) It provides in the amendment of section 84-5621, R.C.M.1947, which amendment is made by section 7 of said Chapter 44, that the War Veterans' Compensation Bond Retirement Fund No. 2 shall be used for the payment of the expenses of administration of Chapter 44, thereby requiring payments out of the state treasury without appropriation therefor, in violation of section 34, Article V, of the Montana Constitution, and, if held, to be an appropriation for a longer term than two years, in violation of section 12, of Article XII, of the Montana Constitution.

Appellant prayed that Chapter 44 be declared null and void and not a law of the State of Montana; that the court temporarily restrain respondents from issuing bonds under the authority of Chapter 44; and that respondents be directed to show cause why said temporary restraining order should not be made permanent.

The court below issued the temporary restraining order prayed for by appellant and granted an order to show cause returnable August 15, 1957.

On his petition and by stipulation of the parties, the court allowed intervention of Harvey Sanders in behalf of the respondents.

On August 15, respondents demurred generally to appellant's complaint, and argument of counsel for respondents, appellant, and intervenor was duly heard.

Respondents' demurrer was sustained August 20, and, appellant electing not to plead further, judgment was given for respondents, the court dismissing the action with prejudice and dissolving the temporary restraining order. Appellant now appeals from the judgment of the district court. The issues presented are set out in the appellant's complaint above.

The pertinent parts of Chapter 44 necessary to be considered are as follows:

'Whereas, the Korean war began before the submission of Initiative No. 54, Adopted by the vote of the people of Montana at the regular general election of November 7, 1950, but too late to permit the inclusion in the provisions of said act of persons in the military service during said Korean war; and

'Whereas, it was the intent of the people of Montana to recognize by the honorarium provided in said Initiative No. 54 all residents of Montana rendering military service on behalf of said state in the them emergency; and

'Whereas, said Korean war was a recrudescence of said world war II and properly includable within the provisions of said Initiative No. 54, Now Therefore,

'Be it enacted by the Legislative Assembly of the State of Montana:

* * *

* * *

'Section 5. That Section 12 of said Initiative No. 54 be, and the same is hereby amended so as to read as follows:

"Section 12. For the purpose of providing for the payment of the honorarium, or adjusted compensation, herein provided for and for paying the expenses of administration of this law, there shall be issued and sold under the direction and supervision of the board of examiners, limited obligations bonds of the State of Montana in the sum of twenty-two million dollars ($22,000,000.00) or in such sum within that amount as may be necessary for such purposes. Such bonds shall distinctly state that they are not and shall never be or become a general obligation of the State of Montana, but shall be payable only from the proceeds of a cigarette tax in the manner in this law provided; shall contain the pledge of the State of Montana to continue to levy and collect the cigarette tax in this law provided for and place the proceeds thereof in the War Veterans' Compensation Bond Retirement Fund, until all bonds issued hereunder, and the interest accruing thereon, shall have been paid; shall draw interest at the rate of not more than four and one-half percent (4 1/2) per annum, payable semiannually; * * * Such bonds shall be signed by the members of the board of examiners and be issued under the great seal of the State of Montana, and a record of all such bonds issued and sold shall be made in the office of the state treasurer. * * * Provided, however, that if the moneys derived from said first issue of twenty-two million dollars ($22,000,000.00) of bonds as in this Section above provided shall be insufficient to pay all claims heretofore filed with and heretofore or hereafter allowed by said board of examiners under the original provisions of said Initiative No. 54 as heretofore amended, and to pay all claims filed and allowed under this amendatory act, together with the expenses of administration of this amendatory act, there shall be issued and sold under the direction and supervision of the board of examiners of the State of Montana limited obligation bonds of the State of Montana in the further sum of six million dollars ($6,000,000.00) or in such sum within that amount as may be necessary for such purposes. The issuance of such bonds shall be made in the same manner and such bonds shall be subject to the same limitations, restrictions, and provisions as apply to said original issue of twenty-two million dollars ($22,000,000.00), except that such bonds shall draw not more than four and one-half per cent (4 1/2) interest and shall be payable only out of a cigarette tax as hereinafter provided in this amendatory act.'

'Section 6. That there is hereby added to said Initiative No. 54 a new section to be numbered Section 14-A, to read as follows:

'Section 14-A. The money arising from the sale of such said additional bonds in the amount of six million dollars ($6,000,000.00) in this amendatory act above-provided for as may be sold as herein provided shall be deposited in the state treasury to the credit of the special fund created by said Initiative No. 54 and known as the 'War Veterans' Compensation Fund,' and the moneys now in said fund, after payment of all claims heretofore filed with and heretofore or...