Dalton v. State Property and Buildings Commission

• Decision Date: 21 June 1957
• Citation: 304 S.W.2d 342
• Parties: Roscoe R. DALTON, a Taxpayer Suing Individually and on Behalf of All Taxpayers of Kentucky, Appellant, v. STATE PROPERTY and BUILDINGS COMMISSION et al., Appellees.
• Court: United States State Supreme Court — District of Kentucky

Page 342

304 S.W.2d 342

Roscoe R. DALTON, a Taxpayer Suing Individually and on Behalf of All Taxpayers of Kentucky, Appellant, v. STATE PROPERTY and BUILDINGS COMMISSION et al., Appellees.

Court of Appeals of Kentucky.

June 21, 1957.

Dissenting Opinion July 8, 1957.

As Modified Aug. 12, 1957.

John E. Tarrant, Earl S. Wilson, Bullitt, Dawson & Tarrant, Louisville, for appellant.

Jo M. Ferguson, Atty. Gen., Astor Hogg, Hal O. Williams, Asst. Attys. Gen., and Joseph J. Leary, Frankfort, of counsel, for appellees.

STANLEY, Commissioner.

The case tests the validity and strength of the foundation of a proposed issue of bonds of the Commonwealth of Kentucky in the aggregate of $100,000,000, the proceeds of which are to be used to match funds that may be allocated to Kentucky for highway construction by the national government. The proposition was submitted to the voters at the November, 1956, election and resulted in 511,656 votes being cast in favor and 85,635 votes cast against it. The circuit court adjudged the Act constitutional, and the proceedings thereunder proper. The court construed the Act and the resolution of the State Property and Buildings Commission (KRS 56.450) which more particularly prescribes the terms of the bonds and the marketing of them.

The case is before this court on an appeal and a cross-appeal. Twenty-three issues as to validity and construction of the Act pleaded were disposed of below. It may be said that in general outline the attack is upon (1) the Act as a whole, and (2) certain provisions therein. It is then argued that if only part of the Act is invalid, the entire project must fail since the people voted to incur the debt according to all the provisions of the Act and not just part of them. Questions concerning the construction of the Act and the validity of certain parts of the resolution of the State Property and Buildings Commission putting it into effect are also submitted.

At the threshold we deem it appropriate to make some preliminary observations. A challenge of the sufficiency of a law under constitutional provisions is not a technical objection to be treated lightly by the courts. Indeed, it is the sworn duty of the court to enforce provisions of the Constitution irrespective of the consequences. But one of the most firmly established principles of constitutional law, and an oft-repeated mandate of the courts, is that the wisdom or expediency of enactments of the Legislature is not for the courts to pass upon. This may be said to have special pertinency in matters of fiscal policy and authority to levy taxes and to appropriate the revenue. Nor are we concerned with the question of whether this project is based upon sound or unsound economic theories or is the best means to achieve the desired results. That is not within the scope of judicial inquiry. So, the wisdom of imposing the debt of one hundred million dollars and freezing all or as much as may be required of the highway taxes and revenue for the next thirty years is of no concern whatever to the court. All this was within the legislative responsibility and its power provided it was not restricted by the Constitution.

The project is based upon § 50 of the Kentucky Constitution. It prohibits the General Assembly from authorizing a debt to be contracted on behalf on the Commonwealth (with certain exceptions stated in § 49 and an obsolete provision in § 50) 'unless provision be made therein to levy and collect an annual tax sufficient to pay the interest stipulated, and to discharge the debt within thirty years; nor shall such act take effect until it shall have been submitted to the people at a general election, and shall have received a majority of all the votes cast for and against it.' The General Assembly at its Second Extraordinary Session, which convened March 9, 1956, passed an act, Chapter 3, authorizing the execution, sale and delivery of one hundred million dollars ($100,000,000) principal amount of Commonwealth of Kentucky bonds, the proceeds from the sale of which will be used to match federal funds for the construction of highways, bridges and tunnels in the Commonwealth of Kentucky, and providing for the submission thereof to the voters at the general election to be held on November 6, 1956. The Act is now published as § 177.580 et seq. of the Kentucky Revised Statutes.

We abridge general provisions of the Act which are not the object of special attack and state more fully the provisions upon which the challenges are based.

Section 1 declares that, subject to the provisions of §§ 49 and 50 of the Constitution, 'there is hereby contracted on behalf of the Commonwealth', as a direct obligation 'a debt * * * of one hundred million dollars ($100,000,000)' for the purposes stated.

Section 2 provides that coupon bonds shall be issued in a decribed manner and form. It further declares, 'All of said bonds shall bear interest at such rate, not exceeding three per cent per annum, as said Commission shall determine at the time of such issue. All of said bonds shall bear date of January 1, 1957.'

Section 3 requires that the bonds bear serial numbers and 'shall mature on such dates, with such provisions as to prior redemption including premiums therefor, as may be determined by the State Property and Buildings Commission, providing that all of such bonds shall mature within thirty years from January 1, 1957.'

Section 4, the heart of the Act, is heavily assailed. It is quoted in full.

'Section 4. The bonds herein provided for shall be direct obligations of the Commonwealth of Kentucky, and the full faith and credit of the Commonwealth hereby is pledged for the payment of said bonds and the interest thereon. In order to provide for the payment of the principal of all of said bonds at their maturity and the interest thereon annually as same shall accrue, there shall be levied and collected in each of the thirty years from January 1, 1957, to January 1, 1987, taxes for the benefit of the State Road Fund in the form of license, excise taxes and fees relating to registration, operation and use of vehicles on public highways and excise taxes, use and license taxes relating to gasoline and other motor fuels used upon the public highways in Kentucky at rates not less than the rates now imposed by law or so adjusted as to produce for the Road Fund not less than the amount now derived from all of such taxes. All funds derived from such taxes hereby are appropriated to the extent necessary for the payment of the principal and interest on said bonds. From the funds derived from said taxes in each year, beginning January 1, 1957, there shall be set aside and held inviolable for that purpose, a fund sufficient to pay the principal and interest on said bonds in each year as and when due until all of said bonds and the interest thereon shall have been paid in full. In each year, after setting aside the funds hereinabove provided, the remainder of the funds derived from such taxes may be expended and used for the cost of administration, statutory refunds and adjustment, payment of highway obligations, cost of construction, reconstruction, right of ways, maintenance and repair of public highways, tunnels and bridges and the expense of enforcing state traffic and motor vehicle laws, provided that all the funds collected under KRS Chapter 138 and required by KRS 138.220, 138.565(3) and 138.660(3) to be set aside by the Department of Highways for the construction, reconstruction and maintenance of rural and secondary roads shall be first set aside and used for such purposes.'

Section 5 permits the sale of bonds at different times 'in units of not less than five million dollars principal amount as and when the money to be derived from the issuance and sale of said bonds may be needed. The State Property and Buildings Commission shall determine the time when and the principal amount of said bonds that shall be advertised and sold.'

Section 6 prescribes the manner and time for advertising a proposed sale of bonds and provides that, 'None of said bonds shall be sold at less than par and accrued interest, and each advertisement for bids shall so state. Said Bonds shall be sold to the highest and best bidder. Said State Property and Buildings Commission shall have the right to reject any and all bids. Any premium and accrued interest received shall be deposited in the sinking fund provided by this Act ¹ for the payment of said bonds and interest thereon.'

Section 7 directs that the Commission 'shall specify such terms for the bonds that are not inconsistent with the provisions of this Act.'

Section 8 authorizes the Commission to invest the sinking fund ¹ in bonds of the United States or to purchase bonds authorized by this Act or to deposit the amounts in a Kentucky bank upon adequate security.

Section 9 relates to the holding and investment of the proceeds of the sale of the bonds to be issued under authority of the Act and provides that the same 'shall be used solely and only by the Department of Highways of the Commonwealth of Kentucky to match federal funds allocated to Kentucky for the construction and reconstruction of highways, tunnels and bridges within the Commonwealth of Kentucky.'

Section 10 directs the submission to the people at the general election of 1956 and the notice thereof. It prescribes the form of the question to be placed on the ballot shall be: 'Are you in favor of the Act of the General Assembly known as Senate Bill No. 3, enacted by the Second Extraordinary Session of the General Assembly of 1956, authorizing the Commonwealth to issue and sell bonds of the principal amount not exceeding one hundred million dollars ($100,000,000), to provide funds to match federal aid in the construction and reconstruction of highways, bridges and tunnels in Kentucky?' The section contains provisions that if the majority of the votes cast on the question are in favor of this Act, 'then all provisions of this...