Green v. Frazier

• Decision Date: 02 January 1920
• Docket Number: 1915
• Citation: 176 N.W. 11,44 N.D. 395
• Court: North Dakota Supreme Court

176 N.W. 11

44 N.D. 395

E. A. GREEN, N.W. Voight, E. M. Christianson, and F. D. Woodworth, Appellants, v. LYNN J. FRAZIER, Governor, William Langer, Attorney General, John N. Hagan, Commissioner of Agriculture and Labor, and Obert Olson, Treasurer of the State of North Dakota and the Industrial Commission of North Dakota, Respondents

No. 1915

Supreme Court of North Dakota

January 2, 1920

Appeal from the District Court of Burleigh County, Honorable W. L Nuessle, Judge.

From an order sustaining a demurrer to the complaint plaintiffs appeal.

Order affirmed.

Affirmed. Case remanded.

Harry Lashkowitz, for appellants.

"When a government becomes a partner in any trading company it devests itself, so far as concerns the transactions of that company, of its sovereign character and takes that of a private citizen. Instead of communicating to the company its privileges and prerogatives, it descends to the level with those with whom it associated, and to the business which is to be transacted. . . . The government by becoming a co-operator lays down its sovereignty so far as respects the transactions of the corporation, and exercises no power or privilege which is not derived from the charter." United States v. Planters Bank, 9 Wheat. 905; Osborne v. United States, 9 Wheat. 240; Bank v Whister, 2 Pet. 318; Bank v. Ashley, 2 Pet 328; Darrington v. State Bank, 13 How. 12; Briscoe v. Bank of Kentucky, 7 Pet. 257; Curran v. Bank of Arkansas, 15 How. 304.

Taxation, except for public purposes, would be in violation of the 14th Amendment of the Federal Constitution. Loan Asso. v. Topeka, 20 Wall. 655; State v. Nelson County, 1 N.D. 96; Manning v. Devils Lake, 13 N.D. 47; Jones v. Portland, 245 U.S. 220; Cole v. LaGrange, 113 U.S. 1; Parkersburg v. Brown, 106 U.S. 487; Dodge v. Township, 107 F. 827; 2 Dill. Mun. Corp. 738 (587); 2 Beach, Pub. Corp. § 1440; Lowell v. Boston, 111 Mass. 454, affirmed on appeal to the Supreme Court of the United States.

The doctrine of the Massachusetts case was approved in the cases of Loan Asso. v. Topeka, 20 Wall. 654; Whitney v. Fon du Lac, 25 Wis. 188; Olcott v. Supervisors, 16 Wall. 689; People v. Salem, 20 Mich. 452; Jenkins v. Andover, 106 Mass. 94; Cooley, Const. Lim. 129, 174, 487; Rippe v. Becker, 57 N.W. 331; Davies v. State, 78 N.E. 995; Hackett v. Ottawa, 99 U.S. 86; Re Opinion of Justices (Mass.) 98 N.E. 611.

"The legislature has no rightful power to impose taxes on the people for any other than a public purpose. It is not legal taxation if the power is exercised for the benefit of private persons, or in aid of private uses and enterprises, even where there is no express constitutional prohibition." 37 Enc. Law, 721.

It is not sufficient to justify such taxation, that the private enterprises made incidentally or indirectly inure to the public benefit. Ibid.; Deal v. Mississippi, 18 S.W. 24.

When the expression is used that the property must be used for a public purpose, it is meant "governmental purpose." Covington v. Kentucky, 173 U.S. 237; Loan Asso. v. Topeka, supra.

It is not sufficient to justify such taxation, that the private enterprises may incidentally or indirectly inure to the public benefit. 37 Enc. Law 721; Deal v. Mississippi, 18 S.W. 24.

The words "public purpose" mean "governmental purposes." Covington v. Kentucky, 173 U.S. 237.

William Langer, for respondents.

An act of the lawmaking power will not be held unconstitutional unless it is clearly and palpably so; all reasonable presumptions are to be indulged in favor of the constitutionality of the given act. Laughlin v. Portland, 111 Me. 486, 90 A. 318.

"The determination by the legislature that the use for which property is authorized to be taken is a public one is, undoubtedly, subject to review by the court. But all reasonable presumptions are in favor of the validity of such determinations by the legislature, and the act must be regarded as valid unless it can be clearly shown to be in conflict with the Constitution." Jones v. Portland, 235 U.S. 217; Union Lime Co. v. Chicago R. Co. 223 U.S. 211.

A decision of the highest court of a state declaring a use to be public in its nature would be accepted unless clearly not well founded. Falbrook Irrigation v. Bradley, 164 U.S. 112; Clark v. Nash, 198 U.S. 361, 389; Strickley v. Hyland Boy Min. Co. 200 U.S. 527; Offield v. New York R. Co. 203 U.S. 272-277; Hairston v. Danville, etc. R. Co. 208 U.S. 598-607.

"As the terms are used in reference to taxation, what is for the 'public good,' and what are 'public purposes,' and what does constitute a 'public purpose,' are questions which the legislature must decide upon its own judgment, and in respect to which it is vested with a large discretion which cannot be controlled by the courts, except perhaps where, under pretense of a lawful authority, it has assumed to exercise one that is unlawful." Walker v. Cincinnati, 21 Ohio St. 14; Jarrott v. Moberly, 13 Fed. Cas. 366, 367.

"Courts cannot say that a statute authorizing a city to borrow money, etc., for building a railroad to be owned by it, is not for a 'public purpose.'" Walker v. Cincinnati, 21 Ohio St. 14, 42, 8 Am. Rep. 24; Saunders v. Arlington, 147 Ga. 581, 94 S.E. 1022, decided in Jan. 1918; Andrews v. South Haven, 187 Mich. 294, 153 N.W. 827; Louisiana in Union Ice & Coal Co. v. Ruston, 125 La. 898, 66 So. 262.

"Where a statute may or may not be in violation of constitutional rights according to circumstances, in the absence of a countershowing, the existence of circumstances necessary to support it will be presumed." Boutwell v. Champlain Realty Co. 89 Vt. 80.

William Lemke (W. S. Lauder, S. L. Nuchols, and Frederic A. Pike, of counsel) also for respondents.

GRACE, J., CHRISTIANSON, Ch. J. ROBINSON and BRONSON, JJ., BIRDZELL, J., concurring.

OPINION

GRACE, J.

This action was commenced by the plaintiffs, in the county of Cass, to procure an injunction to restrain the defendants, each of whom is a state officer of the state of North Dakota, from disbursing certain public funds in the state treasury, aggregating perhaps several hundred thousand dollars; and, further, to restrain the defendants from issuing certain state bonds, and to have declared invalid, null and void, certain amendments of the state Constitution, and certain statutes authorizing the disbursing of such money, and the execution, sale, and delivery of such bonds. The venue of the action was changed by a proper order to the county of Burleigh.

The plaintiffs are taxpayers of this state, and as such bring this action. The decisions in this case, in so far as it interprets the provisions of the Constitution and laws of this state, will be binding upon not only these taxpayers, but all others of this state.

At a general election in this state, there were ten proposed constitutional amendments to the Constitution of the state of North Dakota, legally submitted to the electors for adoption or rejection. Each of them received a majority of the votes cast at such election, and thus they were duly adopted by the electors. They were then duly presented to the legislature of the state of North Dakota, and, by resolution of the House of Representatives of the state of North Dakota, the Senate concurring, agreed to and declared a party of the Constitution of the state, and each of said amendments was duly adopted, and thus became effective as part of the Constitution of the state of North Dakota.

The validity of two of such constitutional amendments is challenged by this action, and claimed, thereby, to be null and void.

Section 182 of the Constitution, prior to its amendment, is as follows: "The state may, to meet casual deficits or failure in the revenue or in case of extraordinary emergencies contract debts, but such debts shall never in the aggregate exceed the sum of $ 200,000, exclusive of what may be the debt of North Dakota at the time of the adoption of this Constitution.

"Every such debt shall be authorized by law for certain purposes to be definitely mentioned therein, and every such law shall provide for levying an annual tax sufficient to pay the interest semiannually, and the principal within thirty years from the passage of such law, and shall specially appropriate the proceeds of such tax to the payment of said principal and interest, and such appropriation shall not be repealed or the tax discontinued until such debt, both principal and interest, shall have been fully paid.

"No debt in excess of the limit named shall be incurred except for the purpose of repelling invasion, suppressing insurrection, defending the state in time of war, or to provide for public defense in case of threatened hostilities; but the issuing of new bonds of refund existing indebtedness, shall not be construed to be any part or portion of said $ 200,000."

As amended, § 182 is as follows:

"The state may issue or guarantee the payment of bonds, providing that all bonds in excess of $ 2,000,000 shall be secured by first mortgages upon real estate in amounts not to exceed one half of its value; or upon real and personal property of state-owned utilities, enterprises or industries in amounts not exceeding its value, and, provided further, that the state shall not issue or guarantee bonds upon property of state-owned utilities, enterprises or industries in excess of $ 10,000,000.

"No future indebtedness shall be incurred by the state, unless evidenced by bond issues, which shall be authorized by law for certain purposes, to be clearly defined.

"Every law authorizing a bond issue shall provide for levying an annual tax, or may make other provisions, sufficient to pay the interest semiannually, and the principal within thirty years from the passage of such law, and shall specially...