Davis v. Pensioners Protective Ass'n

• Court: Colorado Supreme Court
• Writing for the Court: YOUNG, Chief Justice.
• Citation: Davis v. Pensioners Protective Ass'n, 110 Colo. 380, 135 P.2d 142 (Colo. 1943)
• Decision Date: 23 February 1943
• Docket Number: 15140.
• Parties: DAVIS et al. v. PENSIONERS PROTECTIVE ASS'N et al.

135 P.2d 142

110 Colo. 380

DAVIS et al. v. PENSIONERS PROTECTIVE ASS'N et al.

No. 15140.

Supreme Court of Colorado, En Banc.

February 23, 1943

Error to District Court, City and County of Denver; Floyd F. Miles Judge.

Mandamus proceeding by Pensioners Protective Association a corporation and others against Roy A. Davis, and others as members of the State Board of Public Welfare of the State of Colorado, and others. To review a judgment for plaintiff, defendants bring error.

Judgment affirmed in part and reversed in part.

Gail L. Ireland, Atty. Gen., H. Lawrence Hinkley Deputy Atty. Gen., and Theodore A. Chisholm and Donald H Meyer, Ass't. Attys. Gen., for plaintiffs in error.

Chutkow and Atler, and L. F. Crawford, all of Denver, for defendants in error.

YOUNG Chief Justice.

Defendants in error, herein designated as plaintiffs, instituted an action in mandamus in the district court of the City and County of Denver to compel plaintiffs in error, defendants in the district court and herein designated as defendants, to transfer to the old age pension fund of the State of Colorado, certain sums of money aggregating in amount, $687,757.67, alleged to have been improperly diverted from the old age pension fund to other and illegal uses. Judgment was for plaintiffs. To reverse the judgment defendants prosecute a writ of error in this court.

Plaintiff, Pensioners Protective Association, is a nonprofit corporation organized under the laws of the State of Colorado for the purpose of protecting the rights of old age pensioners. The other individual plaintiffs are resident citizens, recipients of the old age pension, said to be injuriously affected by the alleged illegal diversion from the old age pension fund. Plaintiffs prosecuted the action for themselves and for all others whose situations are similar to that of the individual plaintiffs. The defendants are the members of the State Board of Public Welfare, the State Auditor, State Treasurer, Governor of the State, Secretary of State, and Attorney General. The action is against them in their official capacities respectively, as members of the State Board of Public Welfare, and as holders of the various state offices mentioned.

The issues Before us for determination arose in the following manner:

In their complaint plaintiffs alleged certain diversions by defendants of surpluses in the welfare fund to the emergency and contingent fund, and alleged that the statute upon which they were made was unconstitutional. Plaintiffs do not allege that there were sufficient funds in the hands of or under the control of defendants to comply with a mandamus order in accordance with the prayer of the complaint that defendants return the diverted funds to the old age pension fund. Defendants moved to dismiss the complaint on the ground that it failed to state a claim against defendants upon which relief could be granted. The district court overruled the motion. Defendants elected to stand on their motion. Judgment was then entered in favor of plaintiffs as above stated. The issues raised under the specification of points which are the subject of the principal arguments in the briefs are: (a) whether the statute, in reliance upon which the funds were diverted, is constitutional; (b) whether mandamus should issue in the absence of an allegation in the complaint of available funds in defendants' hands, or under their control, to enable them to comply with an order for transfer to the pension fund, and (c) whether the supplemental complaint, if the original complaint is defective, can stand, and relief be granted thereon.

A knowledge of the factual background is necessary to an understanding of the controversy that culminated in the action Before us for review, and for this reason we set it forth fully.

In 1936, the people of the state adopted Article XXIV of the Constitution, commonly referred to as the Old Age Pension amendment. This amendment created and established in the treasury of the State of Colorado a fund to be known as the Old Age Pension fund, and allocated certain revenues to that fund. Section 2(a), so far as material to the controversy, provides:

'§ 2. There is hereby set aside, allocated and allotted to the old age pension fund sums and money as follows:

'(a) Beginning January 1, 1937, eighty-five per cent. of all net revenue accrued or accruing, received or receivable from [and here are enumerated various specific sources of revenue].'

Section 2(b) allocates to the old age pension fund revenue from another source. not mentioned in 2(a). Sections 4 and 7 of the amendment are as follows:

'§ 4. The state board of public welfare, or such other agency as may be authorized by law to administer old age pensions, shall cause all moneys deposited in the old age pension fund to be paid out to qualified pensioners, after defraying the expense of administering the said fund, within ten days following the expiration of the calendar year in which deposits are made in said fund.'

'§ 7. All the moneys deposited in the old age pension fund shall remain inviolate for the purposes for which created, and no part thereof shall be transferred to any other fund, or used or appropriated for any other purpose.'

In 1936, the General Assembly, by chapter 5, Session Laws Second Extraordinary Session 1936, sections 13 to 29, chapter 141, '35 C.S.A., created a state department of public welfare and a state board of public welfare, to administer state funds allocated by the state to various forms of public assistance. By chapter 8, Session Laws Second Extraordinary Session 1936, sections 30 to 33, chapter 141, '35 C.S.A., the General Assembly created a state public welfare fund, section 1 of said chapter 8, so far as pertinent here, being as follows:

'Section 1. [Section 30, chapter 141, '35 C.S.A.] A fund to be known as the 'State public welfare fund' is hereby created and established in the treasury of the state of Colorado.

'The 'State public welfare fund' shall consist of all money appropriated, allocated or allotted by the general assembly to said fund, for public welfare activities; all grants-in-aid from the federal government for state public welfare activities and such other funds as may be provided from time to time from other sources.

'The state board of public welfare shall be the trustees of the 'State public welfare fund' and shall be charged with the administration and distribution of money therein. The treasurer of the state of Colorado shall be the treasurer and custodian of said fund. * * * All money therein, or accruing thereto shall be disbursed from the 'State public welfare fund' upon voucher of the state department of public welfare and upon warrant of the state auditor.'

By section 3, chapter 8, supra (Section 32, chapter 141, '35 C.S.A.) the revenues for the payment of old age pensions as then provided for by law (this Act was passed Before passage of the old age pension amendment) were allocated to the state public welfare fund.

By section 2, chapter 223 of the Session Laws of 1937 (Section 32, chapter 141, 1941 Cum.Supp. to '35 C.S.A.), the revenues constituting the old age pension fund created by the old age pension amendment were allocated to the state public welfare fund. The language making such allocation is as follows:

'§ 2. * * * § 32. Revenues and sums allotted state fund.--There is hereby appropriated, allocated, and allotted to the 'state public welfare fund,' to be used for public welfare purposes, sums and money as follows'. Here follows a designation of the revenues comprising, when collected, the old age pension fund, and also a $50,000 annual appropriation for the relief of indigent tuberculars and a blanket provision covering any other funds and money that may be appropriated or allocated by the General Assembly to the state public welfare fund.

Section 3, chapter 223 of the Session Laws of 1937, Section 33, chapter 141, 1941 Cum.Supp. to '35 C.S.A., provides that five per cent of the state public welfare fund, which, as indicated, is made up not only of revenues comprising the old age pension fund, but also of revenues allocated to other relief purposes, shall be deducted for cost of the composite administration of such projects. The clear legislative intent was that five per cent be deducted for this purpose whether or not all of it was expended, for it is further provided that any unexpended portion of the five per cent deducted 'shall be disbursed as the general assembly shall direct.'

The record discloses that at various times, in the manner provided by the General Assembly, distribution was made to the emergency and contingent fund of the five per cent of the hotchpot constituting the state welfare fund, remaining after all administrative expenses of the various public assistance projects, including the old age pension project, had been paid. The contention of plaintiffs is that the cost of administration of the old age pension scheme of relief was much less than the five per cent of such funds allocated from the constitutionally created old age pension fund to the state welfare fund, and that a part of the surplus over and above the actual cost of administration of old age pension relief was expended in the administration of the other forms of relief thrown into the hotchpot with the old age pension scheme of relief, and that the remainder of the surplus was paid over at the various times to the emergency and contingent fund, in violation of the old age pension amendment. It is the surplus of the five per cent of the old age pension fund allocated to the state welfare fund remaining after paying the actual cost of administration of old age pension relief, that plaintiffs seek to have returned to the...