Eastern & Western Lumber Co. v. Patterson

CourtSupreme Court of Oregon
Citation258 P. 193,124 Or. 112
PartiesEASTERN & WESTERN LUMBER CO. ET AL. v. PATTERSON, GOVERNOR, ET AL.
Decision Date12 July 1927

In Bank.

Appeal from Circuit Court, Marion County; L. H. McMahan, Judge.

Proceeding by the Eastern & Western Lumber Company and others against Isaac L. Patterson, Governor, and others, to test the validity of a statute. From the judgment, defendants appeal. Affirmed.

Coshow McBride, and Belt, JJ., dissenting.

This proceeding is prosecuted to test the validity of chapter 322, General Laws of Oregon 1927, authorizing the use of the state industrial accident fund for the construction of a state office building. The act is entitled:

"An act providing for the construction of an office building for the state of Oregon and the investment of part of the industrial accident fund for that purpose, and for the security of said fund, and declaring an emergency."

Section 1 of the act empowers and directs the state board of control to construct, in Salem, Or., and office building for the state, and to invest in such building the state industrial accident fund in an amount not exceeding $600,000. Section 2 provides for the creation of a state office building fund from the sale of bonds in which the industrial accident funds may be invested, and from other uninvested parts of the industrial accident fund, and appropriates this fund, which shall not exceed the sum of $600,000, for the purpose of constructing the above-mentioned office building to be used by the various departments of the state of Oregon. Section 3 directs the secretary of state to audit all approved claims incurred in pursuance of law and the foregoing appropriation, and to draw his warrant upon the state treasurer in payment thereof. Section 4 provides that the office building shall stand for and be an investment of the industrial accident fund to the extent that such fund is used in the construction of that building. Section 5 provides that, on the 1st day of July, 1927, and the 1st day of January and July of each year thereafter, the state treasurer shall prepare and submit to the secretary of state verified vouchers for the amount of interest computed at 4 1/2 per cent. per annum, on the unrefunded amount of the industrial accident fund diverted for the construction of the building interest to run from the date of transfer to the state office building fund. Section 6 provides for an appropriation from the general fund semiannually, beginning with July, 1927, of the sum of $30000, for repayment to the industrial accident fund, and that the secretary of state, on the 1st day of July, 1927, and the 1st day of January and July of each year thereafter, shall, by warrant, transfer from the general fund to the industrial accident fund the amount of such appropriation, the same to be applied, first, to the payment of the amount of the verified vouchers submitted to the secretary of state by the state treasurer pursuant to the preceding section thereof, and the remainder, so far as may be required, to be applied in refunding the principal of the industrial accident fund until the entire amount, including interest, shall have been repaid. Section 7 enacts an emergency clause.

The validity of the assailed act is challenged upon the following grounds:

(1) That it creates a debt in excess of $50,000, in violation of section 7, art. 11, Oregon Constitution.

(2) That it appropriates a fund for current expenses and likewise contains provisions upon other subjects, in violation of section 7, art. 9, Oregon Constitution.

(3) That its title embraces more than one subject, in violation of section 20, art. 4, Oregon Constitution.

(4) That it impairs contractual obligations, in violation of section 21, art. 1, Oregon Constitution.

The defendants demurred to plaintiffs' complaint, upon the ground that it failed to state facts sufficient to constitute a cause of suit. The demurrer was overruled, and, the defendants refusing to plead further, decree was entered restraining and enjoining the defendants, and each of them individually, and in their official capacity, from diverting any part of the state industrial accident fund from its present custody or investment and from investing any part thereof in the office building of the state of Oregon. The defendants appeal.

Willis S. Moore, Asst. Atty. Gen. (I. H. Van Winkle, Atty. Gen., on the brief), for appellants.

James B. Kerr and James G. Wilson, both of Portland (Carey & Kerr and Wilson & Reilly, all of Portland, on the brief), for respondents.

Roy F Shields, of Portland, amicus curiæ.

BROWN, J. (after stating the facts as above).

The plaintiffs specifically point out that the act in question offends against the constitutional provision reading:

"The Legislative Assembly shall not lend the credit of the state nor in any manner create any debt or liabilities which shall singly or in the aggregate with previous debts or liabilities exceed the sum of $50,000. * * *" Oregon Constitution, art. 11, § 7.

Are the plaintiffs proper parties to question the validity of the act under consideration? This is the first question to be determined. It is well settled in this state that only persons who may be injured by its operation may question the validity of a statute. McKinney v. Watson, 74 Or. 220, 145 P. 266. The constitutionality of a legislative enactment will not be adjudged when the party who asserts its invalidity has no interest therein and the question is merely academic.

The Workmen's Compensation Law (Or. L. § 6605 et seq.) is an industrial insurance law, optional in character. It was framed and enacted in response to the demands arising out of modern industrial conditions. It was asserted that it would limit economic waste and that its adoption would be for the common welfare. The law is administered by an agency of the state known as the State Industrial Accident Commission. While the state has appropriated money to forward the purpose of that act, the industrial accident fund largely represents the contributions of employers in the nature of insurance premiums exacted by the provisions thereof. The investment of the fund is secondary; its primary purpose being to compensate workmen on their dependents. With full faith in the promises held forth by the terms of the act, the employer and employee have voluntarily come under its wholesome provisions, and have complied therewith. The workman having elected to substitute this compensation for all other remedies, if any, existing to him against his employer, it follows that he is entitled to compensation from the industrial accident fund for accidental injuries sustained in the course of his employment. Under such a state of facts, the plaintiffs have some interest in the industrial accident fund that cannot be diverted by a mere legislative act.

In the consideration of this case, we commence with the presumption that the statute in question is a valid law. Until overcome, this presumption prevails. In determining the validity of a statute that has been assailed, the courts will resolve all doubts in favor of its constitutionality; and, if the enactment is reasonably susceptible of two constructions, one of which would render it constitutional, the other unconstitutional, the former would prevail. So, throughout our deliberations, we shall bear in mind the following principle underlying statutory construction:

"When courts are called upon to pronounce the invalidity of an act of legislation, passed with all the forms and ceremonies requisite to give it the force of law, they will approach the question with great caution, examine it in every possible aspect, and ponder upon it as long as deliberation and patient attention can throw any new light upon the subject, and never declare a statute void, unless the nullity and invalidity of the act are placed, in their judgment, beyond reasonable doubt." 1 Cooley's Constitutional Limitations (8th Ed.) p. 371.

But the exercise of the power to hold a law to be invalid because of its conflict with the Constitution is the ultimate and supreme function of courts. Chicago, etc., Ry. Co. v. Wellman, 143 U.S. 343, 12 S.Ct. 400, 36 L.Ed. 176, affirming, 83 Mich. 592, 47 N.W. 489.

In determining the validity of this statute, our decision must be predicated upon the terms thereof and by what it authorizes, and not by what has been done or probably will be done thereunder. Hood River Lumbering Co. v. Wasco County, 35 Or. 498, 57 P. 1017; Sterett & Oberle Packing Co. v. Portland, 79 Or. 260, 154 P. 410; Purple Truck Garage Co. v. Campbell, 119 Or. 484, 250 P. 213; State v. Clement Nat. Bank, 84 Vt. 167, 78 A. 944, Ann. Cas. 1912D, 22; Minneapolis Brewing Co. v. McGillivray (C. C.) 104 F. 258; New York v. Kelsey, 158 A.D. 183, 143 N.Y.S. 41; Cleveland v. Watertown, 99 Misc. 66, 165 N.Y.S. 305; McCarthy v. Moore, 215 A.D. 97, 214 N.Y.S. 104; Stuart v. Palmer, 74 N.Y. 188, 30 Am. Rep. 289; People v. Klinck Packing Co., 214 N.Y. 138, 108 N.E. 278, Ann. Cas. 1916D, 1051. See the case of Kinney v. Astoria et al., 108 Or. 514, 217 P. 840. However, in the recent case of Weayer v. Palmer Bros. Co., 270 U.S. 402, 46 S.Ct. 320, 70 L.Ed. 654, Mr. Justice Butler, speaking for the Supreme Court of the United States, said:

"Invalidity may be shown by things which will be judicially noticed ( Quong Wing v. Kirkendall, 223 U.S. 59, 64 [32 S.Ct. 192, 56 L.Ed. 350]), or by facts established by evidence. The burden is on the attacking party to establish the invalidating facts. See Minnesota Rate Cases, 230 U.S. 352, 452 [33 S.Ct. 729, 57 L.Ed. 1511, 48 L. R. A. (N. S.) 1151, Ann. Cas. 1916A, 18]."

A state Constitution is not a grant, but a limitation, of power, and the Legislative Assembly may enact any law not...

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12 cases
  • Johnson v. Saif
    • United States
    • Supreme Court of Oregon
    • October 19, 2005
    ...Several employers and workers covered by the SIAC challenged the lawfulness of that loan. In Eastern & Western Lumber Co. v. Patterson, 124 Or. 112, 258 P. 193 (1927), rev'd on reh'g, 124 Or. 146, 264 P. 441 (1928), affd., 278 U.S. 581, 49 S.Ct. 184, 73 L.Ed. 518 (1929), the Supreme Court c......
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