Ford Motor Company, a Corp. v. Baker

• Decision Date: 22 October 1941
• Docket Number: 6744
• Citation: 300 N.W. 435,71 N.D. 298
• Court: North Dakota Supreme Court

300 N.W. 435

71 N.D. 298

FORD MOTOR COMPANY, a Corporation, Appellant, v. BERTA E. BAKER, as State Auditor of the State of North Dakota, Respondent

No. 6744

Supreme Court of North Dakota

October 22, 1941

Syllabus by the Court.

1. Section 186 of the Constitution of North Dakota (Article 53 of the Amendments to the Constitution, p. 497, Laws 1939) provides that no money shall be paid out of the State Treasury except after appropriation by the Legislature, but contains a proviso " that there is hereby appropriated the necessary funds * * * required for refunds made under the provisions of * * * the State Income Tax law." It is held that such proviso operates to appropriate moneys required for the payment of a judgment that had been rendered against the State prior to the time the proviso was adopted as a part of a constitutional amendment.

2. The State cannot be held to the payment of interest on any claim against it unless bound by an act of the Legislature or by a lawful contract of its executive officers made within the scope of their duly constituted authority.

3. The State is not liable to pay interest on a claim for a refund of income taxes illegally assessed against, and paid to the State Treasurer by, a taxpayer under compulsion since there is no legislative enactment which either directly or by implication imposes such liability upon the State or evidences consent by the State to pay such interest. Neither is the State liable to pay interest on a judgment rendered against it for such claim.

Appeal from District Court, Burleigh County; Fred Jansonius, Judge.

Mandamus proceeding by Ford Motor Company against Berta E. Baker, as State Auditor for the State of North Dakota, to compel her to draw a warrant on the State Treasurer for the amount of plaintiff's judgment. From a judgment in favor of the defendant, the plaintiff appeals.

Reversed and remanded.

Cox & Cox, for appellant.

Alvin C. Strutz, Attorney General, and William R Pearce, Assistant Attorney General, for respondent.

Berry Dist. J. Burr, Ch. J., and Nuessle, Burke, and Christianson JJ., concur. Morris, S., being disqualified, did not participate, Hon. H. L. Berry, Judge of Sixth Judicial District, sitting in his stead.

OPINION

BERRY

This is an appeal from an order and judgment of the district court of Burleigh county in a mandamus proceeding in which the plaintiff seeks to require the defendant State Auditor to issue a warrant upon the General Fund of the state of North Dakota, for the payment of a final judgment against the state of North Dakota in the sum of $ 55,580.48. The judgment is based upon an illegal and excessive payment of income taxes paid by the plaintiff under protest in 1923 to avoid the penalties attached to a forcible collection of said taxes by the then State Tax Commissioner.

Different phases of this controversy have claimed our attention on two former occasions. See Ford Motor Co. v. State, 59 ND 792, 231 NW 883, and 65 ND 316, 258 NW 596, for a history of the case.

There is no question about the validity of the claim. Indeed, there could be none for that question has been conclusively determined by the former decision of this court. Ford Motor Co. v. State, 65 ND 316, 258 NW 596.

The principal question presented for determination is whether the Legislative Assembly must make a specific appropriation for payment of the judgment. The defendant contends that under the provisions of § 186 of the State Constitution a specific appropriation is required. The plaintiff, on the other hand, contends that under the provisions of said § 186 of the Constitution, as amended, no specific appropriation is required; that the amendment to said § 186 of the Constitution as approved at the general election in November, 1938, made an appropriation for the payment of all legal claims for refunds under the State Income Tax law.

In its original form, said § 186 read as follows: "No money shall be paid out of the state treasury except upon appropriation by law and on warrant drawn by the proper officer, and no bills, claims, accounts or demands against the state, or any county or other political subdivision, shall be audited, allowed or paid until a full itemized statement in writing shall be filed with the officer or officers, whose duty it may be to audit the same."

At the general election in November 1938, a proposed amendment to said § 186 of the State Constitution was approved; and since July 1, 1939, said § 186, so far as pertinent here, has read as follows: "All public moneys, from whatever source derived, shall be paid monthly by the public official, employee, agent, director, manager, board, bureau, or institution of the State receiving the same, to the State Treasurer, and deposited by him to the credit of the State, and shall be paid out and disbursed only pursuant to appropriation first made by the Legislature; provided, however, that there is hereby appropriated the necessary funds required in the financial transactions of the Bank of North Dakota, and required for the payment of losses, duly approved, payable from the State Hail Insurance Fund, State Bonding Fund, and State Fire and Tornado Fund, and required for the payment of compensation to injured employees or death claims, duly approved, payable from the Workmen's Compensation Fund, and required for authorized investments made by the Board of University and School Lands, and required for the financial operations of the State Mill and Elevator Association, and required for the payment of interest and principal of bonds and other fixed obligations of the State, and required for payments required by law to be paid to beneficiaries of the Teachers' Insurance and Retirement Fund, and required for refunds made under the provisions of the Retail Sales Tax Act, and the State Income Tax Law, and the State Gasoline Tax Law, and the Estate and Succession Tax Law, and the income of any State institution derived from permanent trust funds, and the funds allocated under the law to the State Highway Department and the various counties for the construction, reconstruction, and maintenance of public roads."

The meaning and effect of the appropriation provisions of said § 186, as amended, were drawn in question shortly after the amendment had been approved by the people at the general election in 1938. Langer v. State, 69 ND 129, 284 NW 238. Then it was contended "that the State Hail Insurance Fund, the State Bonding Fund, the State Fire and Tornado Fund, and the Workmen's Compensation Fund were not subject to the provisions of § 186 of the Constitution, as amended, and that no appropriation would be needed to carry on those activities" (69 ND 163, 284 NW 256); and that, hence, "no duty existed under the State Budget Law to submit reports" for these funds. 69 ND 162, 284 NW 255. The contentions thus advanced were held to be without merit. The court pointed out that the appropriations from these funds made in said § 186 were "limited to certain definite purposes;" that there was "no general appropriation from any of the funds;" that there was "no appropriation, for instance, for administrative purposes" (69 ND 163, 284 NW 255); that legislative appropriations were necessary in the carrying on of the activities of the funds in question, and that consequently it was the duty of the heads of these funds to file the statements prescribed by the State Budget Law.

In the decision in that case, this court pointed out the binding effect of the appropriations made in the constitutional amendment, as well as the limitations thereof. This court said:

"It is an established rule that constitutional provisions are to be construed as mandatory, unless a different intention is manifested. 12 CJ p 740; 6 RCL p 55. In this state this rule has been embodied in the Constitution in the following express terms: 'The provisions of this Constitution are mandatory and prohibitory unless, by express words, they are declared to be otherwise.' ND Const. § 21.

"There is nothing in § 186 of the Constitution, as amended, or in any other provision in the Constitution, to indicate any intention that the above quoted provisions of said § 186 should not be given the full meaning which they convey. Manifestly, there could be no intention to appropriate moneys to which the section did not apply.

"Attention is called to the general rule that 'constitutional provisions are not to be construed as themselves making appropriations unless they are so clearly intended.' 59 CJ p 237. It is true, it is rather unusual to make appropriations in a constitutional provision. Ordinarily, appropriation is a matter for the legislature. But, if the people determine to make an appropriation in a constitutional provision, and manifest that determination by what is said in the provision, that is an end of the matter.

"'Self-executing provisions of the Constitution specifically appropriating particular funds or sums for designated purposes exempt the matters therein dealt with from the necessity of legislative appropriation established by other provisions of the Constitution, and the constitutional provisions are themselves a sufficient appropriation for the purposes and to the extent comprised within their terms; and no legislation may be enacted such as will impair the operation of a constitutional appropriation.' 59 CJ pp 237, 238.

"The language used in § 186 of the Constitution, as amended clearly manifests an intention to 'appropriate the necessary funds' required for payment of duly approved claims, of the character stated in the Amendment against the State Hail Insurance Fund, the State Bonding Fund, the State Fire and Tornado Fund, and the Workmen's Compensation Fund. But, the appropriation is expressly limited to, and...