Moses v. Baker

• Decision Date: 21 July 1941
• Docket Number: No. 6726.,6726.
• Citation: 71 N.D. 140,299 N.W. 315
• Parties: MOSES, Governor et al. v. BAKER, State Auditor, et al.
• Court: North Dakota Supreme Court

71 N.D. 140

299 N.W. 315

MOSES, Governor et al.

v.BAKER, State Auditor, et al.

No. 6726.

Supreme Court of North Dakota.

July 21, 1941.

Syllabus by the Court.

1. The Board of University and School Lands is a constitutional board, charged with the duty of directing the investment of the moneys of the permanent school fund and vested with discretion in the performance of that duty.

2. The Board of University and School Lands may purchase securities for investment at a premium if, in the exercise of its discretion, it is deemed proper to do so.

3. Where the Board of University and School Lands purchases securities for investment of moneys in the permanent school fund at a premium and interest accrued to the date of the purchase, the amount of the interest accrued is a part of the purchase price and the payment therefor must be made out of the permanent fund.

Appeal from District Court, Burleigh County; Jansonius, Judge.

Mandamus proceeding by John Moses, Governor of the state of North Dakota, and others, against Berta E. Baker, as State Auditor, and Carl Anderson, as State Treasurer of the state of North Dakota, to compel the State Auditor to issue warrants in payment of certain bonds bought by the Board of University and School Lands, and to direct the State Treasurer to pay the bonds when presented. From a judgment in favor of the plaintiffs, the defendants appeal.

Judgment modified, and, as modified, affirmed.

Robert Birdzell, of Bismarck, for appellants.

Alvin C. Strutz, Atty. Gen., and P. O. Sathre, Asst. Atty. Gen., for respondents.

NUESSLE, Judge.

This proceeding in mandamus was brought to compel the defendant, state auditor, to issue warrants in payment of certain bonds bought by the Board of University and School Lands, and to direct the defendant, state treasurer, to pay the same when presented. The case was tried to the court. The facts were stipulated and the court ordered judgment directing the issuance of warrants and the payment thereof as prayed. Judgment was entered accordingly, and the defendants perfected the instant appeal.

The Board of University and School Lands, seeking investment for a portion of the money in the permanent school fund, arranged to buy certain United States government bonds. These bonds bore interest at the rate of two and three-fourths per cent, payable semi-annually. The price of the bonds at the time the board decided to purchase the same was $103 28/32, and accrued interest. The yield was figured at approximately 2 and 59/100ths per cent to the maturity of the bonds.

The State Land Commissioner, the secretary and agent of the Board, pursuant to their direction, drew vouchers on the permanent school fund for the purchase price of the bonds, less accrued interest, and on the interest and income fund for the amount of the accrued interest. These vouchers were presented to the state auditor and she was requested to issue her warrants on the respective funds for the amounts for which said vouchers were drawn. The auditor refused to do this, assigning as reasons therefor, first, that the board had no power to purchase bonds at a price greater than par, and, second, that in any event, the whole price paid, including the amount of the accrued interest, must be paid out of the permanent fund, and accordingly the amount of the accrued interest could not be paid out of the interest and income fund.

The district court held that the board was vested with a discretion in the matter of investments; that the proposed purchase was one which, although a premium was paid for the bonds, nevertheless netted an income return, and accordingly the board was acting within its powers when it purchased the bonds; that the vouchers were properly drawn-the one against the permanent fund for the par value of the bonds, plus the premium, and the one against the interest and income fund for the amount of the accrued interest. So the court ordered judgment, directing the issuance of the warrants as prayed in the plaintiffs' application.

[1] The Board of University and School Lands (see section 284, Comp.Laws N.D.1913) is a constitutional board charged, among other things, with the duty of directing the investment of funds derived from the sale of lands granted by the United States to the state of North Dakota for support of the common schools and from other sources. See section 156, Constitution of North Dakota; State ex rel. Sathre v. Board of University and School Lands, 65 N.D. 687, 262 N.W. 60. It is vested with discretion in the performance of its duties. Fuller v. Board of University and School Lands, 21 N.D. 212, 129 N.W. 1029.

The permanent school fund is a trust fund. It must be preserved intact. If there is any loss, the State is required to make it good. See sections 153 and 154, Constitution. The Constitution designates the securities in which the money in the fund may be invested. In that behalf, section 162, Constitution (Article 39 of Amendments, page 260, 1921 Session Laws), provides: “The moneys of the permanent school fund and other educational funds shall be invested only in bonds of school corporations or of counties, or of townships, or of municipalities within the state, bonds issued for the construction of drains under authority of law within the state, bonds of the United States, bonds of the State of North Dakota, or on first mortgages on farm lands in this state, not exceeding in amount one-half of the actual value of any sub-division on which the same may be loaned, such value to be determined by the board of appraisal of school lands.”

The statute, section 287, 1925 Supplement to the 1913 Comp. Laws, as amended by chapter 215, Session Laws 1929, likewise so provides. Thus it is seen that United States government bonds are securities in which investments may be made by the board. The thought both of the Constitution and of the statute is that there shall be, first, security for the fund, and, second, investment so there may be income to be devoted to the purposes named in the Constitution.

[2] There is no word in either the Constitution o...