Fuselier v. State Market Commission
| Decision Date | 07 June 1971 |
| Docket Number | No. 50882,50882 |
| Citation | 249 So.2d 569,259 La. 185 |
| Parties | Harvey FUSELIER v. STATE MARKET COMMISSION et al. |
| Court | Louisiana Supreme Court |
Nolan J. Edwards, Crowley, for plaintiff-appellant-respondent.
Jack P. F. Gremillion, Atty. Gen., Don M. Arata, Bogalusa, Sp. Counsel for State Bond and Building Commission.
Benton & Moseley, Fred G. Benton, Sr., Fred G. Benton, Jr., Baton Rouge, for defendant-appellee-applicant.
Plaintiff, Harvey Fuselier, a citizen and taxpayer residing in Acadia Parish, brought this class action attacking the constitutionality of Act 172 of 1969 which authorizes the State Bond and Building Commission to borrow money and issue bonds therefor, the funds thus derived to be made available to the State Market Commission for a loan to Crowley Grain Drier, Inc. and others. Defendants are the State Market Commission its Chairman and Secretary; the State Commissioner of Agriculture and Immigration, an ex-officio member of the Commission; and Crowley Grain Drier, Inc., a business corporation organized under Louisiana law. The suit seeks to enjoin defendants from utilizing bond proceeds to be issued under authority of the Act for the purpose of making a loan to Crowley Grain Drier, Inc.
Defendants filed an exception of no cause of action which the trial court sustained. On appeal to the Third Circuit that court noticed that the State Bond and Building Commission was an indispensable party who should be joined in the action. La.Code Civil Proc. art. 646. The trial court judgment was, therefore, set aside, and the case was remanded to permit the plaintiff to amend his petition to make the State Bond and Building Commission a party. 231 So.2d 652 (La.App.1970).
On remand, by supplemental petition, the State Bond and Building Commission was made party defendant and an exception of no cause of action was again filed by all defendants and maintained by the trial court. A second appeal was taken to the Third Circuit where the trial court judgment was reversed. 238 So.2d 243 (La.App.1970). We granted certiorari on application of defendants. 256 La. 852, 239 So.2d 357 (1970).
The State Market Commission was created in 1940 (La.R.S. 3:401, et seq.) to implement the constitutional mandate directing the legislature to enact laws fostering agriculture and immigration and preventing the spread of pests and disease injurious to plants and domestic animals. La.Const. art. 6, § 14. Article IV, Section 12--b of the Constitution was adopted in 1944 to enlarge the power and authority of the Commission, giving that body the authority to make loans as follows:
The State Market Commission shall have the power and authority to lend or underwrite, participate in or guarantee the repayment of twenty-five (25%) per centum of any loan made by any bank, financial institution or Federal agency for the purchase, expansion, improvement or construction of any agricultural plant, which, in the judgment of said Commission, may provide additional facilities for the processing, marketing, distributing or storing of agricultural products of the State, to the end that agricultural products of the state may be better preserved and marketed, And the Legislature is authorized to make such appropriations as it may deem necessary to effectuate the provisions of this paragraph. (Emphasis added.)
Acting upon this authorization the legislature enacted Act 113 of 1944 (La.R.S. 3:410) setting out in broad terms the conditions under which the loan transactions authorized by the constitution would be undertaken. Insofar as pertinent here, the Act provides:
To encourage the construction, expansion, improvement, or betterment of agricultural plants for the processing, marketing, distributing, or storing of agricultural products, the commission may:
(1) Lend or advance to any person, firm, corporation, partnership, or association of this state engaged in the operation of any agricultural plant as is described in this Section, a sum not in excess of twenty-five per centum of the amount to be expended for the expansion, improvement, or betterment of the plant and for any such loan the borrower shall execute a note payable to the commission within such time and on such terms, together with such endorsement and security, as the commission may require.
Thereafter the contested Act 172 of 1969 (See Appendix) was enacted authorizing the State Bond and Building Commission to borrow money and issue bonds or other obligations in an amount not exceeding two million dollars, the bond proceeds to be made available to the State Market Commission for use in accordance with Act 113 of 1944 (La.R.S. 3:410) as authorized by Article IV, Section 12--b of the Constitution. Included within the Act was a provision that all proceeds of the bonds were to be deposited in the State Treasury by the State Bond and Building Commission to be made available to the State Market Commission to carry out its purposes under Act 113 of 1944 (La.R.S. 3:410) and Article IV, Section 12--b of the Constitution for certain enumerated projects, included among which was $40,000 for a rice drier at Crowley, Louisiana.
Purportedly acting pursuant to the foregoing constitutional and statutory authority, the Commission adopted a resolution on December 13, 1966 approving a loan to Crowley Grain Drier, Inc., in the sum of $40,000 for building a rice drier in Crowley which would cost in excess of $200,000. Proceeds of the bonds to be issued under authority of Act 172 of 1969 were to be used for the purpose.
This is the action which plaintiff Fuselier seeks to restrain, asserting several grounds to support his attack on the constitutionality of Act 172 of 1969 authorizing the borrowing of money and issuance of bonds from which the funds for the loan to Crowley Grain Drier, Inc. are to be derived.
First, plaintiff contends Act 172 of 1969 is unconstitutional, for it transcends the grant of power in Article IV, Section 12--b of the constitution authorizing the legislature to make 'appropriations' for the Commission to carry out its purposes. This authorization to make 'appropriations' for funds to be used by the Commission does not, it is contended, carry with it an authorization to the legislature to borrow funds and issue bonds for the Commission's use as Act 172 of 1969 purports to do.
The issue is, therefore, whether the incurring of debt and allocation of bond proceeds under Act 172 of 1969 constitutes an 'appropriation' as that word is used in Article IV, Section 12--b, and, further, whether this incurring of debt and allocation of bond proceeds is a 'specific appropriation made by law' as required by Article IV, Section 1 of the Constitution requiring that:
No money shall be drawn from the treasury except in pursuance of specific appropriation made by law; nor shall any appropriation of money be made for a longer term than two years. A regular statement and account of receipts and expenditures of all public moneys shall be published every three months, in such manner as shall be prescribed by law.
As we understand the constitutional authorization (La.Const. art. 4, § 12--b), loans made by the State Market Commission are to be made on the basis of 'appropriations' by the legislature. This means, first, that the loan must be made in 'pursuance of specific appropriation made by law' (La.Const. art. 4, § 1), that is, the legislature must designate the purpose and amount of each loan with sufficient particularity to properly identify the use to which the funds are to be put. Carso v. Board of Liquidation of State Debt, 205 La. 368, 17 So.2d 358 (1944). In short, an appropriation is the setting apart of public moneys by legislative vote or enactment to be applied to specific objects of public expenditures. Trustees of Rutgers College v. Morgan, 71 N.J.L. 663, 60 A. 205 (1905). Thus, an 'appropriation' contemplates that the sums authorized to be paid out by the legislature will be derived from funds in the Treasury of the State at the time it is made. State ex rel. Murray v. Carter, 30 P.2d 700 (Okl.1934); State ex rel. Lee v. Hartman, 69 N.M. 419, 367 P.2d 918 (1961); 81 C.J.S., States, § 165. To this extent, therefore, it may be said that Act 172 of 1969 is within the scope of Article IV, Section 12--b, since it designates with particularity the amount and purpose for which the funds are to be used and authorizes withdrawal from the treasury. However, when a constitutional amendment authorizes the legislature to 'appropriate' funds for a particular purpose, as the constitutional amendment in question does (La.Const. art. 4, § 12--b), this authorization cannot be translated into a license to incur debt and issue bonds in a manner which is contrary to existing established constitutional standards.
This brings us to the plaintiff's contention that Act 172 of 1969 is constitutionally infirm, for the Act authorizes the incurring of debt and the issuance of bonds for loans to business corporations owned by private interests contrary to Article IV, Section 2 of the Constitution. Article IV, Section 2, prohibits the legislature from contracting directly, or through any state board or state agency the incurring of debt or issuance of bonds involving the dedication of all or any part of the tax revenues imposed and collected by the State, except upon the two-thirds vote of the elected membership of each of the Houses and then 'only if the funds are to be used to make capital improvements, repel invasion or suppress insurrection.' The prohibition, however, shall not apply 'to any state board, authority, commission or other state agency empowered by other Constitutional authorization or to any law adopted by the Legislature within the scope of any such other Constitutional authorization.'
At the outset it is quite evident to us that when the constitution prohibits the legislature from incurring debt, except where the funds...
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