Hays v. McDaniel

• Decision Date: 18 June 1917
• Docket Number: 53
• Citation: 196 S.W. 934,130 Ark. 52
• Parties: HAYS v. MCDANIEL, STATE TREASURER
• Court: Arkansas Supreme Court

196 S.W. 934

130 Ark. 52

HAYS v. MCDANIEL, STATE TREASURER

No. 53

Supreme Court of Arkansas

June 18, 1917

Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor affirmed.

Decree affirmed.

Geo. W Hays, appellant, pro se.

1. The Act is unconstitutional and void. It is violative of Const Art. 16, § 1. The Constitution of 1874 intended to put the State out of the money-borrowing and interest-paying business. There is no provision giving the Legislature power to issue interest-bearing bonds, notes, warrants or scrip. The only authority given was to provide for the outstanding indebtedness that existed at the time of its adoption. Art 16, § 2.

The conditions that existed and the intention of the people at the time should be carefully considered. 10 P. 641; Black on Const. Law (2 ed.) 68, § 48 et seq.; 1 Tiedeman State and Federal Control of Persons and Property, 7 to 21.

The State is prohibited from loaning its credit and from issuing bonds bearing interest except as stated above. Also from issuing any interest-bearing evidences of indebtedness, scrip or warrants. The State is a "municipality."

2. The State Debt Board has long since performed its mission and is now out of existence and is not re-established by the Act. The Act is void for lack of provision for its execution. Kirby's Digest, §§ 6462, 6463, etc. It was not a permanent debt board, but created for certain specific purposes, which being fulfilled it automatically ceased to exist.

3. 102 Ark, 470 is not in point.

John D. Arbuckle, Attorney General, and T. W. Campbell, Assistant, for appellee.

1. The act violates none of the three clauses of Art. 16, § 1, Const. 1874.

The issue of notes to provide for its own credit and purposes is not a "loan of credit" by the State, but is to cover any deficiency in its general revenues. It is for the State's own benefit and use and in no sense a loan of its credit for or to others. 10 Fed. Cas. No. 5756.

2. The State is not mentioned in the second clause, which only applies to counties, cities, towns and municipalities. It does not apply to the State.

3. "Warrants" and "scrip" are synonymous. They are orders on the Treasurer to pay when he has funds available. 8 Wash. 497; 21 F. 699; 46 La.Ann. 714; 60 F. 203. The State is not prohibited from issuing interest-bearing certificates of indebtedness or notes. The Legislature is supreme, and may legislate upon all questions affecting the general welfare of the people, unless prohibited or restrained by the Constitution. It needs no grant of power or authority. 102 Ark. 478-9; 85 Id. 175.

4. The State Debt Board is composed of the Governor, Secretary of State and Auditor. Acts 1887, p. 269; Acts 1889, p. 158; Acts 1891, p. 234; Acts 1899, p. 270. It is a continuing board and has never been abolished.

OPINION

SMITH, J.

The General Assembly, at its 1917 session passed an act, Act No 100, p. 478, entitled, "An Act to borrow money to cover deficiencies in the State's General Revenue Fund, to issue interest-bearing evidences of indebtedness therefor, to levy a tax to create a sinking fund to pay the interest and principal of said loan, and for other purposes." The State Debt Board is charged with the performance of certain duties in the execution of the provisions of the act, but the persons composing this board are not named in this act. The Treasurer of State, eo nomine, is charged with the duty of registering negotiable promissory notes which the act provides shall be issued by the State Debt Board in the negotiation of the loan of money there authorized, and the act imposes certain other duties upon the State Treasurer. Appellant, who is a citizen and taxpayer of the State, filed a complaint, in which he alleged that the Treasurer of the State is about to perform the duties imposed upon him by said act, and will do so unless enjoined from so doing, and the complaint contained a prayer for this relief.

As ground therefor, it is alleged that the act is unconstitutional, being violative of Section 1 of Article 16 of our Constitution. It is further alleged that the act is void for indefiniteness, in that it does not designate the members of the State Debt Board and the membership of said board is not otherwise designated.

The section of the Constitution referred to reads as follows:

"Neither the State nor any city, county, town or other municipality in this State shall ever loan its credit for any purpose whatever; nor shall any county, city, town or municipality ever issue any interest-bearing evidences of indebtedness, except such bonds as may be authorized by law to provide for and secure the payment of the present existing indebtedness, and the State shall never issue any interest-bearing treasury warrants or scrip."

This section contains three inhibitions, as follows:

First, that neither the State, nor any city, county, town or other municipality therein, shall ever loan its credit for any purpose whatever.

The second inhibition is that no county, city, town or municipality shall ever issue any interest-bearing evidences of indebtedness, except such bonds as may be authorized by law to provide for and secure the payment of the indebtedness existing at the time of the adoption of the Constitution.

The third is that the State shall never issue any interest-bearing treasury warrants or scrip.

The act of the Legislature under consideration does not violate the first subdivision of this section 1 of article 16 of the Constitution, because the act does not contemplate any loan of the State's credit. No ordinary definition of the word "loan," nor ordinary construction of the language of the clause in which it appears, can make it cover the act which the State is here seeking to do. The State is not lending its credit, but is proposing to use its credit for its own purposes. The State is not undertaking, in any manner, to assume any obligation for any purpose other than its own use, and this use of its credit can not be called a loan thereof. The construction of the language employed, which we think is ambiguous, is reinforced by a consideration of the contemporaneous history, which discloses the evil against which the Constitution was providing. The State had loaned its credit, and in a manner which had largely destroyed this credit, whether employed for its own use, or loaned in promotion of interests which it had undertaken to foster. It appears that the Constitution-makers have employed a word which denies to the State the right to permit another agency to use its credit, but which does not deny the State its right to use this credit for its own purposes.

The second inhibition is, that no county, city, town or municipality shall ever issue any interest-bearing evidences of indebtedness, except such bonds as may be authorized by law to provide for and secure the payment of the indebtedness existing at the time of the adoption of the Constitution. It is said that the word "municipality" here employed includes the State. But we do not agree with counsel in this contention. If it be conceded that the word municipality has sometimes been used by courts and text-writers as of sufficient breadth to include a sovereign State, it does not follow that it was so employed here. The framers of the Constitution were dealing with a subject of the highest importance and evidently chose their language with great discrimination, and we can not assume that they intended the word "municipality" to embrace the State. To do so would render meaningless and wholly unnecessary...