In re Op. of the Judges

• Decision Date: 12 April 1917
• Citation: 162 N.W. 536,38 S.D. 635
• Parties: In re OPINION OF THE JUDGES.
• Court: South Dakota Supreme Court

38 S.D. 635

162 N.W. 536

In re OPINION OF THE JUDGES.

Supreme Court of South Dakota.

April 12, 1917.

Advisory opinion relative to Rural Credits Law in response to request by the Governor of South Dakota.

To the Honorable the Judges of the Supreme Court of the State of South Dakota.

May it please Your Honors:

The people of the state of South Dakota, by their respresentatives in Legislature duly assembled, being desirous of providing in this state a system of rural credits, at the Fourteenth session submitted for the approval of the electors of the state a proposed amendment to section 1 of article 13 of the state Constitution by incorporating therein additional provisions in language as follows, to wit:

“Provided, further that the state or any county or two or more counties jointly may establish and maintain a system of rural credits and thereby loan money and extend credit to the people of this state upon real estate security in such manner and upon such terms and conditions as may be prescribed by general law.”

And this constitutional amendment was at the general election held in this state on November 7, 1916, duly ratified.

Agreeable to the language of this amendment the Legislature of this state, at its Fifteenth session, enacted House Bill No. 414 and Senate Bill No. 288, which were approved by the Governor and are now laws of this state, creating a state system of rural credits under the control and management of a South Dakota rural credit board to consist of the Governor and four members to be appointed by him. Said laws in terms provide for the establishment not later than July 1, 1917, and the maintenance thereafter at the seat of state government, of a system of rural credits, and empower the said board, among other things, to receive applications for farm loans, to appraise the property on which such loans are sought to be placed, to examine the titles, ascertain the loan value of said real estate, and, these things being accomplished, to approve the loans and thereupon borrow money on warrants or bonds issued by said board, payable by the state, on the good faith and credit of the state, to be used in completing the loans to the persons from whom such applications are received.

The details as to the organization of the board and its method of transacting business, as well as the face or par value of the bonds or warrants to be issued by the board, are fully comprehended within the provisions of these laws. It was clearly the intention of the electors of this state in ratifying the said constitutional amendment to pave the way and lay the foundation for the creation by the state Legislature of a state system of rural credits, and the Legislature, fully intending to effectuate the intent of the voters and to bring into being the necessary provisions and machinery to establish and maintain a state system of rural credits, placed on the statute books of this state House Bill No. 414 and Senate Bill No. 288 aforesaid.

Both state laws were passed with emergency clauses and are now in full force and effect as laws of this state, and the undersigned, as Governor of this state and its chief executive, was about to exercise the authority conferred upon him by the acts and to appoint the four members of the South Dakota rural credit board under the provisions of said laws, when the constitutionality of said laws was called in question. The contention is that, under the provisions of section 2 of the same article of the state Constitution, which reads as follows:

“For the purpose of defraying extraordinary expenses and making public improvements, or to meet casual deficits or failure in revenue, the state may contract debts never to exceed with previous debts in the aggregate $100,000, and no greater indebtedness shall be incurred except for the purpose of repelling invasion, suppressing insurrection, or defending the state or the United States in war and provision shall be made by law for the payment of the interest annually, and the principal when due, by tax levied for the purpose or from other sources of revenue”

-the said laws and the provisions thereof as to the issuance of bonds and warrants on the good faith and credit of the state, and the appropriation made for the purpose of carrying said act into effect, are unconstitutional and void.

While it is true that there was no express provision in the amendment to section 1 of article 13 for the repeal of section 2 or any part thereof, of the same article, it was the intent and belief of the electors and of the Legislature that the limitation in said section 2 did not apply to the obligations to be issued under section 1 as amended for the purpose of completing loans for which applications had been made to the said rural credits board. The primary idea of the amendment and of the laws was to obtain funds upon the good faith and credit of the state by the issuance of bonds or warrants at low rates of interest to complete loans for which applications had been made and approved. In other words, the state was to merely act for the benefit and behoof of and obtain for its citizens, in order to promote the agricultural development of the state, money at the very lowest rate of interest possible, and if it shall come to pass that the state is unable to make these loans on its good faith and credit, the entire plan must fail. It is necessary also, in order to obtain loans for long periods of time and at low rates of interest, that there shall be no uncertainty in the mind of the lender as to the legality of the bonds or warrants.

There is therefore presented before me, in the exercise of my powers as Governor and chief executive of this state, very grave and important questions of law, and before making the appointment of the additional four members of said board and completing the organization of said South Dakota rural credit board, and to the end that any and all questions as to the legality of said statute and the appointment of the members of said board and the validity of the bonds or warrants and the appropriations made to carry into effect the provisions of the act may be settled and adjudicated by the decision of this court, and in order that I may be advised as to my duties upon these grave and important questions of law involved in the exercise of my executive powers, may it please your honors to prepare and submit to me your opinion upon the following questions:

(1) May the state, through a South Dakota rural credit board, receive applications for farm loans, examine the titles, appraise and fix the loan value of the land on which said loans are sought to be placed, and, these things being accomplished, borrow money on bonds or warrants on the good faith and credit of the state to be used in completing the loans for which applications have been made to said board?

(2) Are the provisions of section 1 of article 13 of the state Constitution and House Bill No. 414 and Senate Bill No. 288 in conflict with the provisions of section 2 of said article 13 of the state Constitution?

(3) If the first question herein propounded is answered in the affirmative, are there any limitations on the amount of money that may be borrowed by the South Dakota rural credit board on the good faith and credit of the state on bonds or warrants payable by the state, to complete loans for which applications have been received by the said board.

Respectfully submitted,

Peter Norbeck.

Governor of South Dakota.

To His Excellency Peter Norbeck, Governor:

We have the honor of acknowledging the receipt of your communication referring to two acts, “H. B. 414” and “S. B. 288” which have but recently been enacted, being chapters 333 and 334, respectively, of the Laws of 1917, and propounding to us the following questions pertaining to such acts:

“(1) May the state, through a South Dakota rural credit board, receive applications for farm loans, examine the titles, appraise and fix the loan value of the land on which said loans are sought to be placed, and, these things being accomplished, borrow money on bonds or warrants on the good faith and credit of the state to be used in completing the loans for which applications have been made to said board?

“(2) Are the provisions of section 1 of article 13 of the state Constitution and House Bill No. 414 and Senate Bill No. 288 in conflict with the provisions of section 2 of said article 13 of the state Constitution?

“(3) If the first question herein propounded is answered in the affirmative, are there any limitations on the amount of money that may be borrowed by the South Dakota rural credit board on the good faith and credit of the state on bonds or warrants payable by the state, to complete loans for which applications have been received by the said board?”

[1] Your letter calls to our attention the fact that, under said acts, it is your duty to appoint the members of the rural credit board therein provided for. It is clear that the advisability of appointing such board and of incurring the expenses incident to its organization and compensation depends upon the proper answer that may be made to the questions you have propounded. We are therefore of the opinion that the questions propounded are “important questions of law involved in the exercise of (your) his executive powers,” and therefore that there is presented an occasion authorizing you to call upon us for our opinions upon such questions.

[2] The importance of the Constitution in our form of government cannot be overestimated. Through it the people enter into a solemn compact, each with each and all of the others, that ours shall not be a mere government of men, but that it shall be a government of laws, which laws shall conform to the terms of such compact. Therefore, while there is vested and must always remain in a sovereign people, unless they have surrendered some part of their sovereignty, absolute plenary power, yet, when such a sovereign people see...