Douglas v. Judge.

• Decision Date: 22 August 1977
• Docket Number: No. 13627,13627
• Citation: 174 Mont. 32,34 St.Rep. 975,568 P.2d 530
• Parties: Karen M. DOUGLAS, Plaintiff and Appellant, v. Thomas L. JUDGE, Governor, et al., Defendants and Respondents.
• Court: Montana Supreme Court

Page 530

568 P.2d 530

174 Mont. 32

Karen M. DOUGLAS, Plaintiff and Appellant, v. Thomas L. JUDGE, Governor, et al., Defendants and Respondents.

No. 13627.

Supreme Court of Montana.

Submitted June 13, 1977.

Decided Aug. 22, 1977.

Garrity & Keegan, Donald A. Garrity (argued), Helena, for appellant.

Michael T. Greely, Atty. Gen., Walter S. Murfitt, Special Asst. Atty. Gen. (argued), Helena, for respondents.

HASWELL, Justice.

Appellant brought this action in the district court, Lewis and Clark County, seeking a declaratory judgment that Chapter 533, Laws of 1975, is unconstitutional. On cross motions for summary judgment, the district court held the challenged legislation to be valid and enforceable. Appellant appeals the district court ruling to this Court.

Appellant is a citizen of the United States and the State of Montana and is a resident of Lewis and Clark County, Montana. Appellant owns both real and personal property in Lewis and Clark County, and pays taxes thereon. Appellant is also a registered elector within the county.

Respondents were at all times relevant to this action the duly elected, qualified and acting members of the Board of Examiners of the State of Montana. The Board of Examiners is the body authorized to issue and sell state revenue bonds.

Chapter 533, Laws of 1975, was enacted by the 1975 Montana Legislature. This act, now codified as Title 89, Chapter 36, R.C.M.1947, is an act providing for the development of renewable natural resources. The purpose of this act and the policies to be promoted thereby are set forth in section 89-3601, R.C.M.1947, as follows:

"In the development of the natural resources of the state it is essential to distinguish between those which are and those which are not renewable; to make proper charges through taxation and otherwise for the depreciation of nonrenewable resources; and to invest a proper proportion of the tax and other revenues from nonrenewable resources in the replacement thereof with developments of renewable natural resources that will preserve for the citizens the benefit of the state's natural heritage and to ensure that the quality of existing public resources such as land, air, water, fish, wildlife and recreational opportunities are not significantly diminished by developments supported by this act. In order to finance such developments it is necessary to borrow in anticipation of the receipt of the revenues, so that replacement will not lag behind consumption. The purpose of this act is to provide a procedure for borrowing in the most economical way for this purpose, and to authorize the creation of debt to finance the first stage of the program, and to describe the types of projects, loans, and grants to be included in the program."

Three distinct programs for the development of renewable resources are contemplated by this act: (1) renewable resource development loans to farmers and ranchers, section 89-3603, R.C.M.1947; (2) state renewable resource development grants to public agencies, section 89-3604, R.C.M.1947; and (3) state and local renewable resource development loans to public agencies, section 89-3605, R.C.M.1947. Only the first program is challenged by appellant in this action and therefore, all discussion found herein specifically relates only to this program.

In furtherance of the stated purposes and policies, the act authorizes respondents, upon the request of the Department of Administration or the Board of Natural Resources and Conservation, to issue and sell general obligation bonds of the state in an amount not to exceed five million dollars. The purpose of the bond sale is to finance the renewable resource development program as described in and pursuant to the terms and conditions of the act. The full faith and credit and taxing powers of the state are pledged for the prompt and full payment of all renewable resource development bonds issued pursuant to this act.

The proceeds of all renewable resource development bonds issued pursuant to this act, other than refunding bonds, are required to be deposited as received in a clearance fund account. The moneys on hand in this account may be used only to pay costs of the renewable resource development program upon the order of the Department of Administration or the Board of Natural Resources and Conservation.

The Board of Natural Resources and Conservation is authorized upon proper application and upon recommendation of the Department of Natural Resources to make renewable resource development loans from the account established by this act to farmers and ranchers of the state who, without regard to their form of business organization:

(a) Are citizens of the United States and are citizens and residents of the State of Montana;

(b) have sufficient farming or ranching training and experience which, in the opinion of the Department, is sufficient to assure the likelihood of the success of the proposed operations; and (c) are or will become owner-operators of farms and ranches.

These private loans to farmers and ranchers may be made for any worthwhile project for the conservation, management, utilization, development or preservation of the land, water, fish, wildlife, recreational and other renewable resources in the state; and for the refinancing of existing indebtedness incurred in the expansion or rehabilitation of projects for those purposes. The loans may not exceed the lesser of $100,000 or 80 percent of the fair market value of the security given therefor, may not exceed a term of thirty years, and shall bear interest at a rate established by the Board of Natural Resources and Conservation not to exceed one percentage point greater than the prevailing interest rate on renewable resource development bonds authorized by the act. Private loans are to be secured by a lien upon the project constructed with the proceeds thereof.

By a resolution adopted December 5, 1975, the Board of Natural Resources and Conservation requested the Board of Examiners to issue and sell bonds of the state to implement this act. This action was filed thereafter and the sale and issuance of the bonds has been stayed during the pendency of this appeal.

Three issues are before this Court on appeal:

(1) Whether the use of the bond moneys authorized by Chapter 533, Laws of 1975, for the purpose of lending money to private individuals is a violation of Article VIII, Section 1, 1972 Montana Constitution, as authorizing the levy of taxes for other than a "public purpose"?

(2) Whether the use of the proceeds of said bonds for loans to private individuals violates Article V, Section 11, 1972 Montana Constitution, as an appropriation to a private individual not under control of the state?

(3) Whether Chapter 533, Laws of 1975 constitutes an invalid delegation of legislative authority to the Department of Natural Resources and Conservation?

Article VIII, Section 1, 1972 Montana Constitution provides:

"Taxes shall be levied by general laws for public purposes."

The crux of this issue is a determination of what is a "public purpose" within the framework of this action.

The clear purpose of this act is to provide for the development of renewable resources in order that future generations of Montanans may enjoy such resources.

In view of the mandate of Article IX, § 1, 1972 Montana Constitution that: "The state and each person shall maintain and improve a clean and healthful environment in Montana for present and future generations" we feel the purpose of this act is a "public purpose". Furthermore, we have previously stated that " * * * What is a public purpose is a question primarily for legislative determination, with which we will not interfere unless there has been a clear abuse of power. * * * " Willett v. State Board of Examiners, 112 Mont. 317, 322, 115 P.2d 287, 289; Huber v. Groff, Mont., 558 P.2d 1124, 33 St.Rep. 1304. We find no hint of such abuse of power in the instant case.

Appellant further charges that the renewable resource development act violates Article V, Section 11(5), 1972 Montana Constitution. This section provides:

"No appropriation shall be made for religious, charitable, industrial, educational or benevolent purposes to any private individual, private association, or private corporation not under control of the state."

In effect, appellant argues that the sale of the renewable resource development bonds and the lending of the proceeds therefrom to farmers and ranchers constitutes an appropriation of money for persons not under the control of the state.

There can be no doubt that Article V, Section 11(5), 1972 Montana Constitution, prohibits the appropriation of funds for the use of any private individual, association or corporation not under state control. We have previously held, however, that the sale of revenue bonds in order to raise money for residential loans to low income citizens under the supervision of the Montana Housing Board, a public corporation, was not a violation of this section. Huber, supra. We are confronted with a similar situation herein and the result must be the same.

Initially it is important to recognize that the funds in question herein are not appropriated for the use of private persons, corporations or associations. The funds are appropriated for the use of the Department of Natural Resources and Conservation. This department is then in turn directed by the renewable resource development act to dispose of these funds as directed by this act.

All funds derived from the sale of the renewable resource development bonds are to be deposited in the clearance fund account. Sections 89-3606 and 89-3609, R.C.M.1947. These moneys are to be used by the Board of Natural Resources and Conservation to make loans to farmers and ranchers for the development and preservation of renewable resources. The loans may be made only upon the proper application and recommendation of...