Crawford v. Johnston

• Decision Date: 10 September 1935
• Docket Number: 14136.
• Parties: CRAWFORD v. JOHNSTON, Governor, et al.
• Court: South Carolina Supreme Court

181 S.E. 476

177 S.C. 399

CRAWFORD v. JOHNSTON, Governor, et al.

No. 14136.

Supreme Court of South Carolina

September 10, 1935

Original proceeding on the petition of Geddings H. Crawford against Olin D. Johnston, Governor, and another.

Petition dismissed.

R. E Carwile and F. Ehrlich Thomson, both of Columbia, and J. C Long, of Charleston, for petitioner.

John M Daniel, Atty. Gen., and J. Ivey Humphrey and M. J. Hough, Asst. Attys. Gen., for respondents.

STABLER Chief Justice.

The purpose of this proceeding, instituted in the original jurisdiction of the court by a citizen and taxpayer of the state, is to have a certain act of the General Assembly (38 Stat. at Large, p. 2269), approved April 16, 1934, declared unconstitutional and void, and to have the respondents permanently enjoined from carrying out its provisions.

By the terms of the act, the Governor and the state treasurer are authorized "to issue bonds of the State of South Carolina in the following maximum amounts for the purposes of the following State institutions, respectively: South Carolina State Hospital for Insane, $500,000.00; State Training School for the Feeble Minded, $125,000.00; School for the Deaf and the Blind, $25,000.00; South Carolina Sanitorium, $50,000.00." Section 1.

Section 2 is as follows:

"Bonds issued under this Act shall be made payable in the first instance from one of the two following sources of revenue, as may be determined by the Governor and State Treasurer and stated on the face of the bonds, viz: First, the gross revenues of the particular State institution for which they are issued, derived from services rendered or facilities afforded by such State institution, or from sales or products of such institutions, or, second, from the gross receipts from any excise, license or privilege tax levied by the State of South Carolina upon persons, firms or corporations engaged in the business of manufacturing, generating or selling electric power in this State. In either case the bonds shall constitute general obligations of the State of South Carolina, and the full faith, credit and taxing power of the State are hereby pledged for their payment. No bonds shall be issued under this Act, however, unless and until the Governor and the State Treasurer shall determine, in writing, that the revenues or taxes from which they are made payable in the first instance, as above provided, will be sufficient to pay the principal of and interest on said bonds, as such principal and interest become due, without resorting to any other taxes or revenues of the State. Such written determination shall be filed in the office of the Secretary of State, before the bonds are issued. After the issuance of any bonds under this Act, the revenues or taxes from which they are made payable in the first instances, as herein provided, shall, as collected, be paid into the State Treasury of South Carolina, and placed by the State Treasurer in a separate and special fund to be used exclusively for the payment of said bonds; Provided, However, That whenever and for so long as the amount of money in any such special fund shall be sufficient to pay the amount of such principal and interest falling due within one year thereafter, it shall not be necessary to make further contributions to said special fund."

It is also provided (section 6) that "bonds issued under this Act shall be sold only to the Federal Government or to any agency or department thereof, the purpose of this Act being to enable the State and its institutions to avail themselves of the benefit of the National Industrial Recovery Act, approved June 16, 1933." Pursuant to the provisions of the statute, and for the purposes named therein, the respondents have filed with the Federal Emergency Administraction of Public Works an application for a loan of $700,000 for which bonds would be issued as provided by the act; and, should such loan be consummated, the federal agency has agreed to give as a grant an additional sum of $276,000. The respondents have also filed with the secretary of state their written purpose to issue such bonds, stating that they had "determined that the aforesaid bonds shall be payable in the first instance from the gross receipts from any excise, license or privilege tax levied by the State of South Carolina upon any persons, firms or corporations engaged in the business of manufacturing, generating or selling electric power in the State of South Carolina * * * and that the revenues derived from the receipts of the aforesaid license or privilege tax will be sufficient to pay the principal of and interest on said bonds as such principal and interest become due without resorting to any other tax or revenues of the State."

The petitioner challenges the constitutionality of the act on several grounds, the first of which is that it creates a debt of the state without submitting the question to the qualified electors thereof, in violation of sections 7 and 11 of article 10 of the Constitution.

These sections read as follows:

7. "No scrip, certificate or other evidence of State indebtedness shall be issued except for the redemption of stock, bonds or other evidence of indebtedness previously issued, or for such debts as are expressly authorized in this Constitution."

11. "To the end that the public debt of South Carolina may not hereafter be increased without the due consideration and free consent of the people of the State, the General Assembly is hereby forbidden to create any further debt or obligation, either by the loan of the credit of the State, by guaranty, endorsement or otherwise, except for the ordinary and current business of the State without first submitting the question as to the creation of such new debt, guaranty, endorsement or loan of its credit to the qualified electors of this State at a general State election; and unless two-thirds of the qualified electors of this State, voting on the question, shall be in favor of increasing the debt, guaranty, endorsement, or loan of its credit, none shall be created or made. * * *"

While it is true, as is seen from a reading of the act, that it provides that the bonds so issued (section 2) "shall constitute general obligations of the State of South Carolina, and the full faith, credit and taxing power of the State are hereby pledged for their payment," it also provides that "no bonds shall be issued," unless and until the Governor and the state treasurer shall determine that the revenues or taxes from the source adopted by them, as provided by the act, shall be sufficient to pay such bonds, principal and interest, "without resorting to any other taxes or revenues of the State." As already indicated, the Governor and the state treasurer have filed such determination, in writing, with the secretary of state, and have complied with all the necessary requirements of the act for the issuance of the bonds. It is not seriously contended that the special fund to be pledged for the payment of the obligations may not reasonably be expected, as determined, to be sufficient to meet their payment without resort to a property tax. It is clear, therefore, under the admitted facts, that this case is controlled by the following decisions, and that the question presented must be resolved against the petitioner: Lillard v. Melton, 103 S.C. 10, 87 S.E. 421; Brownlee v. Brock, 107 S.C. 230, 92 S.E. 477; McIntyre v. Rogers, 123 S.C. 334, 116 S.E. 277; Barnwell v. Matthews, 132 S.C. 314, 128 S.E. 712; Sullivan v. City Council of Charleston, 133 S.C. 189, 133 S.E. 340; Briggs v. Greenville County, 137 S.C. 288, 135 S.E. 153; Evans v. Beattie, 137 S.C. 496, 135 S.E. 538; Thomson v. Christopher, 141 S.C. 92, 139 S.E. 178; State ex rel. Richards v. Moorer, 152 S.C. 455, 150 S.E. 269, 282.

In the Moorer Case, in which the constitutionality of the State Highway Bond Act was attacked-an act similar in principle to the one before us-the court, in disposing of the same question there raised, quoted and applied the following from the Briggs Case: "This court has held a number of times that obligations of the same character as these bonds, secured by the pledge of a fund which might reasonably be expected to be sufficient to meet the obligations without resorting to the levy of a property tax, did not constitute bonded debt within the meaning of the constitutional limitations, notwithstanding that the full faith, credit, and taxing power of a political subdivision were pledged for the payment of the obligations."

Counsel for the petitioner endeavor to distinguish the case at bar from the several cases cited, but the contention made is without substantial merit.

It is also argued that the Act in question violates section 34 of article 3 of the Constitution, which forbids the enactment of a special law where a general one can be made applicable. The contention is that the statute does not affect the state-supported charitable institutions equally, some of them not being benefited at all, and for that reason the act is invalid.

The objection is without merit. None of the inhibitions named in section 34 of article 3 appears to be applicable here. Furthermore, it is doubtful if a general law would meet the situation presented, as the institutions named in the act have their own peculiar requirements.

Nor do we agree with the petitioner that the act is unconstitutional, for the reason, as claimed by him, that the Legislature thereby delegated to the respondents its power to make laws. In State ex rel. Richards v. Moorer, supra, where this question was fully discussed, the court said, citing numerous authorities in support of the conclusion reached "There is a distinction, however, between delegating power to make a law and conferring authority...