Hovey v. Foster

• Decision Date: 26 April 1889
• Parties: Hovey, Governor, et al. v. Foster.
• Court: Indiana Supreme Court

118 Ind. 502

21 N.E. 39

Hovey, Governor, et al.

v.Foster.

Supreme Court of Indiana.

April 26, 1889.

Appeal from circuit court, Marion county; L. Howland, Judge.

Suit by Chapin C. Foster to enjoin the governor and other state officers from making a state loan, as authorized by the act of March 11, 1889. From a judgment granting the relief sought the defendants appeal.

L. T. Michener, Atty. Gen., and John H. Gillett, for appellants. Shepard & Martindale and John M. Butler, for appellee.

Mitchell, J.

By an act entitled “An act authorizing the governor, auditor, and treasurer of state to make a loan for the purpose of carrying on the state government, making provisions for the funding of the present outstanding temporary loan at a lower rate of interest, and concerning matters connected therewith, and declaring an emergency,” approved March 11, 1889, the officers named in the above title were authorized to make a temporary loan of $700,000, and, if necessary to meet the appropriations made by the general assembly, to make a further loan of a like sum on or after the 1st day of September, 1889. For the purpose of borrowing the sums mentioned, the governor and other officers named were authorized to issue and sell the bonds of the state, redeemable at the pleasure of the state after five years, and payable in 10 years, bearing interest at 3 per cent. per annum, payable semi-annually. There were other provisions in the act havingreference to the funding of the temporary loan indebtedness of the state at a lower rate of interest. The governor, auditor, and treasurer, proceeding under the authority conferred by the above-mentioned act, caused a certain series of bonds, equal in amount to the loan authorized to be made upon the taking effect of the act, to be prepared, which they were about to negotiate and sell according to the terms of the act, when the relator instituted this proceeding to enjoin the chief executive and the other officers from making the loan, and from issuing or negotiating the bonds. The ground upon which the intervention of the court was asked is that the constitution expressly prohibits the authorization of any debt to be contracted on behalf of the state except in certain enumerated contingencies. It is alleged that the debt about to be contracted was not intended to meet any of the contingencies provided for in the constitution, and that the act was therefore unconstitutional and void. It appears in the record, by the answer of the respondents, that prior to the meeting of the general assembly, in January, 1889, the auditor had made his official report to the governor, in which he exhibited the financial condition of the state. Estimating the probable income to the treasury on the basis that the tax levy would be continued at the existing rate, and computing the amounts required to meet “immediate appropriations,” which the auditor deemed necessary to be made by the legislature soon to assemble, in order to cover existing obligations, and such other appropriations as in his judgment would be required to meet current and necessary expenses, and to complete buildings and improvements for various benevolent and other state institutions then under contract and in course of construction, it appeared that there would be a deficit in the revenues before the succeeding legislature in 1891 would assemble, amounting to $1,650,110. In response to a resolution of the house of representatives, asking the governor for a statement of what deficiencies there would be in the revenues for the fiscal years ending October 31, 1889 and October 31, 1890, and what amount of temporary loan, if any, would be necessary to conduct the business of the state, the executive laid before the house, in an official message, a detailed statement of the estimated receipts and expenditures for the two fiscal years then next to ensue. It appeared in the message and the exhibits therewith submitted that if the tax levy was continued at the rate then fixed by law, it would be necessary, in order to pay the sums appropriated for various purposes by the general assembly, at its session in 1887, which remained undrawn, and the sums appropriated by the legislature then in session, and to defray the current expenses of carrying on the state government for two years, to make a loan of $2,200,000, so as to supply the deficiency in the revenues of the state thus created. After due consideration of the facts thus presented, the act in question, which authorizes a loan of $1,400,000, one-half of which was authorized to be made presently, and the remaining $700,000 on and after the 1st day of September, 1889, if it shall be necessary to meet the appropriations made by the general assembly, was duly passed and approved.

The question presented involves the constitutionality and validity of the act of the general assembly, under which the governor and the other officers therein named were proceeding to make the loan. Upon the subject of creating a debt the constitution contains the following: “No law shall authorize any debt to be contracted on behalf of the state, except in the following cases: To meet casual deficits in the revenues; to pay the interest on the state debt; to repel invasion, suppress insurrections, or, if hostilities be threatened, provide for the public defense.”¹ It is apparent that the purpose with which the provision was framed and adopted was to impose restrictions upon the power of the legislature to authorize debts to be contracted on behalf of the state to an unlimited amount. This is clear from the language employed. It is equally clear, too, that upon the happening of certain contingencies the power of the legislature in respect to creating debts was to remain unfettered. On the one hand, the evils of an enormous public debt, the legacy of the system of public improvements in which the state had theretofore embarked, was fresh in the minds of the people when the present constitution was adopted. This was the mischief that was not to be repeated. On the other hand, it was foreseen that without gathering from the pockets of the people, and carrying a large surplus in the treasury of the state, no human provision could prevent occasional deficits in the revenues. The tax levy could not possibly be so adjusted to the necessary expenses of carrying on the state government, and of providing and maintaining the public buildings and institutions of the state, and for such other appropriations as are clearly within legislative discretion, without an occasional surplus or deficit. It was therefore contemplated that deficits would occur; that an enemy might invade, insurrection arise, or hostilities threaten, making provision for the public defense necessary. A public debt existed at the time, and interest thereon would mature. Upon the happening of either of these contingencies, the discretion of the legislature in providing the means to meet it was, as necessarily it should have been, left without...