Knorr v. Beardsley

• Decision Date: 14 June 1949
• Docket Number: 47486.
• Citation: 38 N.W.2d 236,240 Iowa 828
• Parties: KNORR v. BEARDSLEY, Governor, et al.
• Court: Iowa Supreme Court

38 N.W.2d 236

240 Iowa 828

KNORR v. BEARDSLEY, Governor, et al.

No. 47486.

Supreme Court of Iowa

June 14, 1949

[Copyrighted Material Omitted]

Harold Newcomb, of Des Moines, for appellant.

Robert L. Larson, Attorney General of Iowa, Clarence A. Kading Assistant Attorney General, and Kent Emery, Assistant Attorney General, for appellees.

BLISS Justice.

The title of chapter 59 of the Laws of the 52 G.A. is, 'An Act authorizing the state of Iowa to become indebted in the amount of eighty-five million dollars ($85,000,000) and providing for the issue and sale of bonds of said state in evidence thereof, to procure funds for and pay service compensation to persons who served in the armed forces of the United States at any time between the sixteenth day of September, 1940, and the second day of September, 1945, both inclusive or their successors in interest, providing for a board to administer such payments, providing for additional compensation to persons under disability, providing for the imposition, levy and collection of a direct annual tax sufficient to pay the principal and interest on said bonds, and providing penalties for the violation of the provisions of this act; providing for the application of any surplus to the retirement of the indebtedness herein created; and providing for submission of this act to the people to be voted upon at the general election to be held in the year 1948.' The act was approved May 19, 1947. As provided by the act it took effect immediately upon its adoption and approval at the general election on November 2, 1948, in which 743,447 votes were cast for, and 210,465 votes were cast against, the measure.

We note briefly the sections of the act pertinent to this appeal, I.C.A. § 35A.1 et seq.:

1. the State 'is hereby authorized to become indebted' in the amount of $85,000,000, evidenced by the issuance and sale of negotiable coupon bonds of the state, the proceeds of which shall be paid into the treasury of the state to be expended for payment of service compensation of persons defined in section 4, or for the benefit of persons prescribed in section 10, and for expenses incurred in carrying out the provisions of the act;

2. the state treasurer is directed to prepare bonds of the kind and in the total amount noted, bearing interest at a rate not to exceed 2 1/2% a year, payable semi-yearly, and issued so that the indebtedness shall be payable in 20 equal yearly installments, the last of which shall be within 20 years from the date of issue; the treasurer shall sell the bonds to carry out the provisions of the act;

3. the proceeds of the bonds paid into the state treasury shall constitute a service compensation fund for distribution to the beneficiaries, and said $85,000,000 is hereby appropriated therefrom for the purpose of this act;

4, 5. define the beneficiaries and the amounts of service compensation to be paid to each of them;

6, 7, 8, 9. create the compensation board and prescribe duties, the filing of applications, and the penalties for false statements;

10. provides that after the payment of all claims, and administrative expenses of the board, 'all funds up to and including * * * ($3,000,000) remaining in the hands of * * * service compensation board shall constitute an additional compensation fund to be administered by the said board for the amelioration of the condition of residents of this state within the classes defined in section four (4) of this act who suffer from disability. The cost of the administration of such additional compensation fund shall be paid from such fund. After the payment of all of said claims and expenses of administration of the board herein created all funds remaining in the hands of * * * service compensation board in excess of * * * ($3,000,000) shall revert to and become a part of the permanent school fund of the state.'

11. provides for exemption of all payments and allowances from taxation, and from levy and sale on execution, and exemption from taxation of all bonds issued.

12. 'To provide for the payment of the principal of said bonds so issued and sold and the interest thereon as the same become due and mature, there is hereby imposed and levied upon all of the taxable property within the state of Iowa in addition to all other taxes a direct annual tax for each of the years said bonds are outstanding sufficient in amount for the payment of principal of said bonds as it shall become due, and sufficient in amount to produce additional sums as may be needed to pay the interest on said bonds each year for twenty (20) years. The treasurer of the state shall annually certify to the state tax commission prior to the time for levy of general state taxes the amount of money required to be raised to pay the principal and interest on such bonds maturing in the ensuing year, and said state tax commission shall annually fix the rate percentum necessary to be levied and assessed upon the valuation of the taxable property within this state to produce funds sufficient to pay the principal of an interest upon such bonds as the same become payable, and such additional annual direct tax shall be levied, certified, assessed and collected at the same time and in the same manner as are taxes for general state purposes.'

13. provides that if any part of the act shall be adjudged invalid by a court of competent jurisdiction such judgment shall affect only the part of the statute involved in the decision;

14. provides for the submission of the measure to the people at the general election in November 1948 for their approval, 'after legal publication'.

Shortly after the election approving the measure, the treasurer of the state, in compliance with the provisions of the statute, issued his departmental order for the preparation, issuance and sale of bonds. Apparently in anticipation of further legislation on the bonus matter by the 53rd General Assembly the sale of the bonds was delayed. There was a large surplus in the general fund in the state treasury not earmarked or appropriated for specific purposes. When the legislature convened in January, 1949, it was urged that legislation be passed to appropriate from said general fund to the 'service compensation fund' required by chapter 59 of the Laws of the 52 G.A., all or a large part of the money required to meet the payments to be made from said fund.

To accomplish this, Senate File 222 was adopted by the 53rd G.A., Chapter 49, approved by the Governor on March 7, 1949, and became effective immediately on its publication. It is entitled, 'An Act relating to the payment of service compensation to persons who served in the Armed Forces of the United States as provided in chapter fifty-nine (59), Acts of the Fifty-second General Assembly; further providing the manner of the sale of bonds therein authorized, by prohibiting the sale of part of the bonds and by appropriating fifty million dollars ($50,000,000.00) to the Service Compensation Fund therein created.' The preamble to the Act after reciting the authorization of the $85,000,000 bond issue and its purpose by said chapter 59, the designation of the form of each $1000 bond, all bearing date of December 2, 1948, as set out in the order of the treasurer, but not offered for sale, continued as follows:

'Whereas, the method of sale is not definitely prescribed in the act and it is deemed necessary to give the treasurer a specific plan of sale; and

'Whereas, it is the will of the General Assembly that * * * ($50,000,000.00) of the general fund be used to pay part of the costs of the compensation provided in chapter * * * (59) * * *; and

'Whereas, it is further the will of the General Assembly that the bonds so issued and sold under the authority of chapter fifty-nine * * * do not exceed Thirty-five million dollars ($35,000,000.00) and that they be sold only in groups as needed to finance the cost of the compensation set out in said chapter. Now Therefore: Be It Enacted * * *.'

The substance of the sections of the act pertinent to the appeal are:

1. the appropriation from the general fund of the state 'not otherwise appropriated' of $50,000,000, to the service compensation fund established by said chapter 59;

2. the treasurer of the state is authorized and directed to sell $35,000,000 of bonds 'as provided in chapter Fifty-nine, * * * and his authority and direction therein to sell in excess of said sum is hereby revoked.'

3. the treasurer is directed to sell the bonds of $1000 each, in four groups of 8,750 bonds each, in the manner provided in section 2 of said chapter 59, towit, group one to be sold immediately with each bond maturing on or before December 2, 1953; group two (No.'s 8751 to 17,500, inclusive) maturing on or before December 2, 1958, but the sales are to be delayed until the funds appropriated in section 1 of the act ($50,000,000) and the proceeds of group one have all been used for the payment of the compensation provided in said act, chapter 59; group three (No's 17,501 to 26,250) maturing on or before December 2, 1963, and group four (No.'s 26,251 to 35,000) maturing on or before December 2, 1968, with the sales of each group (three and four) to be delayed until all of the appropriation and the proceeds of prior group sales shall have been paid out as provided in chapter 59;

4. 'No debt in excess of * * * ($35,000,000.00) shall be contracted by authority of Chapter fifty-nine * * *, and the sale of bonds in excess of said amounts is hereby expressly forbidden.'

5. directs that if any part of the act be adjudged invalid the entire act will be invalidated.

After Senate File 222 became effective and on March 12, 1949, the treasurer of the state made an order, supplemental to his first departmental order of ...