In re State Treasury Note Indebtedness

• Decision Date: 24 April 1939
• Docket Number: 29179.
• Citation: 90 P.2d 19,185 Okla. 10,1939 OK 218
• Parties: In re STATE TREASURY NOTE INDEBTEDNESS. In re FUNDING BONDS OF 1939, SERIES A.
• Court: Oklahoma Supreme Court

90 P.2d 19

185 Okla. 10, 1939 OK 218

In re STATE TREASURY NOTE INDEBTEDNESS. In re FUNDING BONDS OF 1939, SERIES A.

No. 29179.

Supreme Court of Oklahoma

April 24, 1939

Rehearing Denied April 25, 1939.

Syllabus by the Court.

1. The Court finds and determines that notice of the hearing on the application to fund was published and given in conformity to the provisions of Section 4, of Senate Bill No. 239, 17th Okl.Leg., approved April 10, 1939, 62 Okl.St.Ann. § 132c, and that the same constitutes due and proper notice of this proceeding.

2. In all matters of general public interest, matters which directly affect the sovereign rights and powers of the State the Legislature has power under Section 2, Article 7 Oklahoma Constitution, Okl.St.Ann., to confer original jurisdiction upon this Court.

3. Senate Bill No. 239, 17th Okla. Leg., approved April 10 1939, 62 Okl.St.Ann. §§ 132-132m, embraces but one general subject, the funding of certain State Indebtedness, and does not violate Section 57, Article 5, Oklahoma Constitution.

4. There is no legal inhibition against the Legislature making the Attorney General a member of the Oklahoma Funding Bond Commission and requiring him to execute a certificate on the back of each State Funding Bond that they are issued pursuant to law and are within the debt limitation.

5. Bonds which are issued to fund a valid indebtedness neither create nor increase the debt of the State, but merely change the form of existing indebtedness, and Senate Bill No. 239, 17th Okl.Leg., approved April 10, 1939, providing for the issuance of such bonds, became effective without having been submitted to the people for their sanction.

6. State of Oklahoma "Funding Bonds of 1939, Series A," dated May 1, 1939, and maturing $750,000, on June 30, of each of the years 1940 to 1946, inclusive; $1,600,000 on June 30, 1947 to 1953, inclusive; and $1,706,681 on June 30, 1954, mature as authorized and provided by Sections 3 and 9 of Senate Bill No. 239, 17th Okl.Leg., Approved April 10, 1939, 62 Okl.St.Ann. §§ 132b, 132h.

7. The provision of Section 3, Article 10, Oklahoma Constitution, for paying deficiencies which may arise during any fiscal year, where the ordinary current expenses of the State exceed its income from current taxation and other resources, is not exclusive.

8. The "Funding Bonds of 1939, Series A" of the State of Oklahoma, dated May 1, 1939, are to be paid from the revenues provided in Section 9 of Senate Bill No. 239, 17th Okla. Leg., approved April 10, 1939, 62 Okl.St.Ann. § 132h, and the provisions of said section constitute a valid pledge of the revenues of the State therein referred to, for the payment of the principal and interest of said bonds.

9. No provision of the State Constitution is violated by the Legislature pledging the full faith, credit and resources of the State to the payment of an obligation which the State is legally bound to pay.

10. The issuance of bonds for the purpose of funding a valid debt does not create a new indebtedness, although they are sold and their proceeds devoted to the discharge of the outstanding debt, rather than exchanged for the evidence of such debt.

11. The State Treasury Note indebtedness of the State of Oklahoma funded by the "Funding Bonds of 1939, Series A" of said State is valid, and said funding bonds are issued in conformity to the provisions of Senate Bill No. 239, 17th Okla. Leg., approved April 10, 1939, 62 Okl.St.Ann. §§ 132-132m, and are approved in the total sum of $18,156,681.

Original application of the State of Oklahoma to determine the existence, validity and amount of certain of its outstanding State Treasury Note Indebtedness and to approve $18,156,681 of "Funding Bonds of 1939, Series A" of the State of Oklahoma issued for the purpose of funding said State Treasury Note indebtedness.

Protest denied and bonds approved.

Mac Q. Williamson, Atty. Gen., and Randell S. Cobb, Asst. Atty. Gen., for the State.

D. D. Archer and Fred M. Black, both of Oklahoma City, for protestant.

OSBORN Justice.

This is an original proceeding brought in the Supreme Court through the Oklahoma Funding Bond Commission, pursuant to the provisions of Senate Bill No. 239, enacted by the Seventeenth Legislature of the State of Oklahoma, approved by the Governor April 10, 1939, 62 Okl.St.Ann. §§ 132-132m, for the purpose of funding $18,000,000, of outstanding and unpaid State Treasury Notes of the State of Oklahoma, issued in anticipation of the general revenues of the State, pursuant to the provisions of Article 3, Chapter 27, Oklahoma Session Laws of 1937, page 123, 62 Okl.St.Ann. §§ 252-252d, which with the interest due thereon to May 1, 1939, amount in the aggregate to the sum of $18,156,681. It is made to appear from the application and evidence submitted in support thereof that it is the purpose of the Oklahoma Funding Bond Commission to fund said State Treasury Note indebtedness by the issuance of negotiable coupon bonds of the State of Oklahoma, designated "Funding Bonds of 1939, Series A", in the sum of $18,156,681, dated May 1, 1939, and maturing $750,000 on June 30 of each of the years 1940 to 1946, inclusive; $1,600,000 on June 30 of each of the years 1947 to 1953, inclusive; and $1,706,681 on June 30, 1954. $12,145,000 of said bonds are to be exchanged for the simultaneous surrender and cancellation of $12,145,000 of State Treasury Notes; and $6,011,681 of said Funding Bonds have been sold for delivery on May 1, 1939, for $6,011,681 and a premium of $10 which amount of money is to be used in paying the interest due on said $12,145,000 of State Treasury Notes on May 1, 1939, and in paying the principal and interest due on $5,855,000 of State Treasury Notes due on May 1, 1939.

All of the $18,156,681 of bonds were sold at an advertised sale held on April 14, 1939, to the highest bidder agreeing to pay par and accrued interest for the bonds and bidding the lowest rate of interest the bonds are to bear, except that the Oklahoma Funding Bond Commission required the successful bidder to permit the exchange of $12,145,000 of said bonds for notes, making the amount of bonds to be delivered to the purchaser amount to $6,011,681. The bonds were sold to The Chase National Bank of New York, N. Y., and associates. The bonds bear the rate of interest fixed by said sale as follows:

The bonds maturing June 30, 1940 to June 30, 1948, inclusive, bear interest at the rate of 2 1/4 per cent per annum, and

The bonds maturing June 30, 1949, to June 30, 1954, inclusive, bear interest at the rate of 2 per cent per annum.

The average rate of interest the bonds are to bear is 2.07176 per cent.

Section 4, of Senate Bill No. 239 of the Seventeenth Legislature, approved April 10, 1939, conferred exclusive original jurisdiction upon the Supreme Court to hear and determine this application to fund. Notice was published in a legal newspaper on April 11, 1939, and in each daily issue of said newspaper to and including April 20, 1939, that the application would be presented to the Supreme Court for a hearing thereon on the 21st day of April, 1939, at 10 o'clock A. M., and that the Attorney General would present for and on behalf of the State of Oklahoma and the Oklahoma Funding Bond Commission an application to the Supreme Court of Oklahoma to approve $18,156,681 of State Funding Bonds of 1939, Series A, dated May 1, 1939, for the purpose of funding and paying $18,156,681 of Treasury Notes of the State of Oklahoma. The notice further stated that all persons interested might file a protest against the issuance of said bonds and be present at said hearing and contest the issuance of said Funding Bonds or any part thereof. This notice was sufficient to put any person interested upon inquiry. The fact that the notice stated that an application would be presented to the Supreme Court to approve $18,156,681, of State Funding Bonds for the purpose of funding and paying $18,156,681 of Treasury Notes of the State of Oklahoma, instead of the principal and interest on $18,000,000 of State Treasury Notes, does not make the notice defective.

"Mere informalities in a notice which do not mislead will not vitiate it; and, while a particular form of notice required by statute must usually be followed with reasonable strictness, it is generally sufficient if the notice proceeds from an authentic source and fully informs the party to be notified of the substance of the matters required to be noticed (citing 5 Words and Phrases [First Series], pp. 4842 to 4844; see, also, vol. 8 [Words and Phrases, First Series], p. 7733)." Tooele Meat & Storage Co. v. Morse, 43 Utah 515, 136 P. 965; Foster v. Focht, 102 Okl. 261, 229 P. 444; 46 Corpus Juris 554.

It should be noted that in Section 2 of Senate Bill No. 239 the State is authorized to issue its negotiable coupon bonds for the purpose of funding Treasury Notes, plus the accrued interest thereon to the date of the bonds issued to fund the same. We find and determine that the notice which was published is a sufficient and legal notice; that the same was published and given in conformity to the provisions of Section 4 of Senate Bill No. 239; and that the same constitutes due and proper notice of this proceeding.

A protest was filed against the issuance of the bonds by A. V Boswell, a citizen and taxpayer of the State. On the 21st day of April, 1939, the parties appeared before the Court and the matter was referred to Justice Osborn for the taking of testimony. The applicant, the State of Oklahoma, through the Oklahoma Funding Bond Commission, appeared by the Attorney General and submitted testimony in proof of the existence, validity and amount of the State Treasury Notes sought to be funded and requested the Court to approve...