Kanaly v. State By and Through Janklow

• Decision Date: 29 May 1985
• Docket Number: No. 14716,14716
• Parties: 25 Ed. Law Rep. 558 Douglas J. KANALY, Patrick S. Konechne, Dennis L. Lihs, Robert McBride, Donald Van Cleave and Joseph W. Wolf, Plaintiffs and Appellants, v. STATE of South Dakota, By and Through its Governor, William J. JANKLOW, the South Dakota Board of Regents and the Board of Charities and Corrections, Defendants and Appellees.
• Court: South Dakota Supreme Court

Page 819

368 N.W.2d 819

25 Ed. Law Rep. 558

Douglas J. KANALY, Patrick S. Konechne, Dennis L. Lihs,

Robert McBride, Donald Van Cleave and Joseph W.

Wolf, Plaintiffs and Appellants, v. STATE of South Dakota, By and Through its Governor, William

J. JANKLOW, the South Dakota Board of Regents and

the Board of Charities and Corrections,

Defendants and Appellees.

No. 14716.

Supreme Court of South Dakota.

Argued Nov. 27, 1984.

Decided May 29, 1985.

Steven M. Johnson of Brady, Kabeiseman, Reade & Johnson, Yankton, for plaintiffs and appellants; Celia Miner of Brady, Kabeiseman, Reade & Johnson, Yankton, on brief.

Gary F. Colwill of Schmidt, Schroyer, Colwill & Zinter, P.C., Pierre, for defendants and appellees; William Janklow, Governor, State of S.D., Grant E. Gormley, Chief Deputy, John W. Bastian, Asst. Atty. Gen., and James E. Carlon of Gors, Braun & Carlon, Pierre, on brief.

Charles Lacey, Sioux Falls, amicus curiae on behalf of Oscar W. Hagen, Robert R. Weber, and Raymond Martinmaas.

HENDERSON, Justice.

ACTION

This is an appeal from an order granting defendants-appellees partial summary judgment. The trial court held that no genuine issue of material fact existed as to the constitutionality of Senate Bill 221/1984 and that said bill did not violate provisions of the Enabling Act. Senate Bill 221/1984, now found in 1984 S.D.Sess.Laws ch. 138 and hereinafter referred to as S.B. 221, closed the University of South Dakota-Springfield (USD/S) and transferred control of the facilities to the Board of Charities and Corrections without consideration. We affirm in part, reverse in part, modify in part, and remand for hearings as herein ordered.

PARTIES

Plaintiffs Van Cleave, McBride, Konechne, Lihs, Wolf, and Kanaly are resident citizens and taxpayers of the State of South Dakota. Plaintiff Wolf, in addition to the above, was a student enrolled at USD/S for the Spring 1984 semester, who has not completed the educational program for which he enrolled. Plaintiff Kanaly, in addition to the above, was a tenured faculty member at USD/S.

FACTS

In 1881, the Dakota Territorial Legislature created a normal school at Springfield along with other normal schools within its boundaries. In 1883, John A. Burbank deeded twenty acres in fee simple to the territory for the normal school at Springfield. On February 22, 1889, the United States Congress passed the Enabling Act (Ch. 180, 25 Statutes at Large 676), which allowed the territory to be admitted to the Union as a state upon construction and ratification of a state constitution. In November 1889, South Dakota was so admitted to the Union.

Several provisions of the Enabling Act empowered the new state to designate and dedicate various acreages of federal land to different educational institutions on the condition that the proceeds of any disposition constitute a permanent fund for the support of the public schools for which the land had been granted. The South Dakota Constitution, adopted in 1889, mirrored the permanent trust fund requirement of the Enabling Act. Article VIII, Sec. 7, of the South Dakota Constitution provides that all lands or money received for educational or charitable institutions from the United States or other sources, and the proceeds therefrom, shall remain perpetual funds, and shall be inviolably used for the specific objects of the original gifts.

In response to the Enabling Act's educational dedication of lands provisions, the governor and legislature selected and dedicated 40,000 acres for the normal school at Springfield. The school has operated, with changes in curriculum, since this time until the enactment and signing of S.B. 221 on March 9, 1984.

S.B. 221 closed USD/S at the end of the Spring 1984 semester, provided for graduation of those qualified to do so, changed the college into a minimum -security prison, transferred control of the Springfield prison to the Board of Charities and Corrections without payment therefor, gave that Board the power to convey the facilities if done before May 1, 1984, and declared an emergency so the bill would be effective when passed and approved by the Legislature and signed by the governor.

Plaintiffs-appellants responded to the execution of S.B. 221 by filing a Verified Complaint and Writ of Prohibition on May 28, 1984. The trial court granted an Alternative Writ of Prohibition on that day prohibiting the Board of Regents and the Board of Charities and Corrections from transporting and/or conveying any of the property at, or formerly of, USD/S. The complaint alleged that S.B. 221 was unconstitutional because it violated the perpetual trust fund provisions of the Enabling Act and Article VIII, Sec. 7, of the South Dakota Constitution; violated Article XIV, Sec. 3, of the South Dakota Constitution by transferring control of USD/S from the Board of Regents to the Board of Charities and Corrections; violated Article I, Sec. 10, of the United States Constitution and Article VI, Sec. 12, of the South Dakota Constitution by impairing USD/S bond contracts (impaired obligation of contracts); violated Article III, Sec. 21, of the South Dakota Constitution because it embraces more than one subject in the body of the bill; and violated Article III, Secs. 1 and 22, of the South Dakota Constitution by unnecessarily declaring an emergency.

The trial court on June 13, 1984, entertained a motion to quash the Alternative Writ of Prohibition and decided that it should be vacated except for the provision preventing the sale of USD/S under the authority of S.B. 221, Section 5. The trial court, in its summary judgment decision discussed below, later determined the controversy surrounding Section 5 to be moot because no conveyance had been made before the May 1, 1984 deadline, therefore no Writ of Prohibition remains outstanding. The trial court next entertained appellees' motion for summary judgment and held on September 21, 1984, that no genuine issue of material fact existed as to the constitutionality of S.B. 221 but that certain issues, later dismissed by plaintiffs, should be tried. Those issues dismissed, and thus not before this Court, were a) breach of employment contract rights, b) the unlawful taking of private property, and c) due process considerations. It is from this partial summary judgment that appellants now appeal.

This case is of great constitutional magnitude and importance to education and its funding in the State of South Dakota. We address five separate issues.

DECISION

I.

DOES SENATE BILL 221 VIOLATE THE PROVISIONS OF THE PERMANENT TRUST FUND CREATED BY THE ENABLING ACT AND ARTICLE VIII, Sec. 7, OF THE SOUTH DAKOTA CONSTITUTION? WE HOLD THAT IT DOES.

Section 11 of the Enabling Act provides the conditions under which the lands granted the State of South Dakota for educational institutions by the United States must be held and managed. In part, it provides:

The state may also, upon such terms as it may prescribe, grant such easements or rights in any of the lands granted by this act, as may be acquired in privately owned lands through proceedings in eminent domain: provided, however, that none of such lands, nor any estate or interest therein, shall ever be disposed of except in pursuance of general laws providing for such disposition, nor unless the full market value of the estate or interest disposed of, to be ascertained in such manner as may be provided by law, has been paid or safely secured to the state.

With the exception of the lands granted for public buildings, the proceeds from the sale and other permanent disposition of any of the said lands and from every part thereof, shall constitute permanent funds for the support and maintenance of the public schools and the various state institutions for which the lands have been granted....

The lands hereby granted shall not be subject to pre-emption, homestead entry, or any other entry under the land laws of the United States whether surveyed or unsurveyed, but shall be reserved for the purposes for which they have been granted. (Emphasis supplied.)

Section 17 of the Enabling Act then grants in trust various acreages of land to the different educational institutions and specifically grants 80,000 acres for state normal schools. Section 17 further provides: "And the lands granted by this section shall be held, appropriated, and disposed of exclusively for the purposes herein mentioned, in such manner as the [legislature] ... may severally provide."

The South Dakota Constitution also contains a provision regulating the management of educational land and property. In Article VIII, Sec. 7, the constitution commands:

All lands, money or other property donated, granted or received from the United States or any other source for a university, agricultural college, normal schools or other educational or charitable institution or purpose, and the proceeds of all such lands and other property so received from any source, shall be and remain perpetual funds, the interest and income of which, together with the rents of all such lands as may remain unsold, shall be inviolably appropriated and applied to the specific objects of the original grants or gifts. The principal of every such fund may be increased, but shall never be diminished, and the interest and income only shall be used. Every such fund shall be deemed a trust fund held by the state, and the state shall make good all losses therefrom that shall in any manner occur. (Emphasis supplied.)

That these provisions create a special, permanent and perpetual trust of all land, money, property, and proceeds of the same, donated to the state for educational institutions by the United States and individuals alike and that the state is the trustee is beyond question. Such a conclusion is dictated by the strong and unequivocal language of the provisions themselves and this Court has long acknowledged the permanent trust relationship, In re State Bonds, 7 S.D. 42, 63 N.W. 223 (1895), and that...