Rein v. Johnson

• Decision Date: 26 December 1947
• Docket Number: 32275.
• Citation: 30 N.W.2d 548,149 Neb. 67
• Parties: REIN v. JOHNSON et al.
• Court: Nebraska Supreme Court

30 N.W.2d 548

149 Neb. 67

REIN v. JOHNSON et al.

No. 32275.

Supreme Court of Nebraska

December 26, 1947

[Copyrighted Material Omitted]

Syllabus by the Court

1. An action against state officers attacking the constitutionality of a statute and seeking to enjoin its enforcement or otherwise obtain relief from an alleged invalid act or abuse of authority by such officers is not ordinarily a suit against the state.

2. Resident taxpayers of the state may maintain an action in any court having jurisdiction to enjoin an alleged unlawful transfer, diversion, or expenditure of public funds by public boards or officers, without showing any interest or injury peculiar to themselves.

3. Section 25, article III, Constitution of Nebraska, prohibits the drawing of any money from the state treasury except in pursuance of a specific appropriation made by law and on the presentation of a warrant isued by the Auditor of Public Accounts thereon, and prevents the diversion of money from any appropriation made for any purpose or the taking thereof from any fund whatever by legislative resolution as distinguished from legislative law enacted by bill in conformity with constitutional requirements.

4. A constitutional provision requiring the existence of specific appropriations made by law is conservative, and, except as limited by the Constitution, secures to the Legislature plenary power to constitutionally enact laws prescribing how when, and for what purposes public revenue derived from taxation shall be applied in carrying on the government of the state.

5. The purpose or design of an appropriation bill is to make provision for lawfully taking money out of the state treasury as distinguished from lawfully putting money into the state treasury, there to be allocated to a particular fund.

6. Section 22, article III, Constitution of Nebraska, is prohibitive of continuing legislative appropriations, and unless reappropriated, all unexpended balances of appropriations of public revenue derived or to be derived from taxation and paid into the state treasury, automatically lapse into the general fund at the end of the fiscal quarter after adjournment of the next regular session of the Legislature.

7. Public revenue derived from taxation and lawfully allocated to a special fund, or appropriated for any purpose, cannot be administratively or by legislative resolution diverted or taken therefrom, but otherwise all such public revenue in the state treasury is under the plenary control of the Legislature and subject to its constitutionally enacted laws.

8. Chapter 242, Laws 1945, page 723, relating to appropriations for state government during the biennium ending June 30, 1947, is not unconstitutional as in violation of section 14, article III, section 22, article III, and section 3, article I, Constitution of Nebraska, or section 1, article XIV, of the Amendments to the Constitution of the United States.

9. The opinions in State ex rel. Ridgell v. Hall, 99 Neb. 89, 155 N.W. 228, and 99 Neb. 95, 156 N.W. 16, are overruled insofar as they are in conflict with this opinion.

William Niklaus and Herbert W. Baird, both of Lincoln, for appellant.

Walter R. Johnson, Atty. Gen., and Homer L. Kyle, Asst. Atty. Gen., for appellees.

Heard before SIMMONS, C. J., PAINE, YEAGER, CHAPPELL, and WENKE, JJ., and KROGER, District Judge.

CHAPPELL Justice.

This action in equity was prosecuted by plaintiff for himself and others similarly situated, who, as taxpayers, allegedly contributed to the State Assistance Fund. Plaintiff sought thereby to enjoin the State Auditor and the State Treasurer from paying out any of such funds except for assistance purposes, have an accounting of the fund, and obtain ancillary relief.

The trial court, after hearing upon the merits, entered its decree, finding generally for defendants and dismissing plaintiff's action. Motion for new trial was overruled, and plaintiff appealed. His assignments of error were substantially that: (1) The trial court erred in failing to adjudge that the State Assistance Fund was a special fund impressed with a trust for assistance purposes which could not be diverted in whole or in part to other uses or purposes of the state government; and (2) erred in finding and adjudging that chapter 242, Laws 1945, page 723, was enacted in compliance with constitutional requirements. We conclude that plaintiff's assignments cannot be sustained.

This court is confronted at the outset with two alleged jurisdictional questions, appropriately raised and preserved by defendants. The first such question is whether or not the action was one against the state, which could not be maintained in the absence of appropriate legislative authority. We conclude that the case at bar was not one against the state.

In that regard, plaintiff first contended that section 68-301, R.S. 1943, created and established in the treasury of the state a fund known as the 'State Assistance Fund' which thereby specifically, absolutely, and continuously appropriated for the purposes of section 68-301 to 68-325, R.S. 1943, all moneys available from certain tax sources legislatively described and defined. A fortiori, plaintiff contended that chapter 242, Laws 1945, page 723, which reappropriated for assistance purposes only a portion of the unexpended balance remaining in the State Assistance Fund as of June 30, 1945, and lapsed or transferred the residue to the general fund, was unconstitutional and of no force and effect whatever. It was obedience to such act by defendants which plaintiff sought to enjoin.

Generally, the applicable rule is that an action against state officers, attacking the constitutionality of a statute of the state and seeking to enjoin its enforcement by such officers, or otherwise obtain relief from an alleged invalid act or abuse of authority by them is not ordinarily a suit against the state, and is not prohibited as such under the general principles governing the immunity of the state from suit. That is true because acts of state officers not legally authorized, or which exceed or abuse the authority conferred upon them, are judicially regarded as their own acts and not acts of the state. 49 Am.Jur., States, Territories, and Dependencies, § 94, p. 307, § 95, p. 310; 59 C.J., States, § 465, p. 310; 43 C.J.S., Injunctions, § 109, p. 626; 32 C.J., Injunctions, § 389, p. 247.

As stated in Burke v. Snively, 208 Ill. 328, 70 N.E. 327, 328: 'In equity the money in the state treasury is the money of the people of the state, and suits by a taxpayer to restrain the misappropriation by public officers of such money to an unauthorized purpose are not suits against the state.'

Also, as stated in White Eagle Oil & Refining Co. v. Gunderson, 48 S.D. 608, 205 N.W. 614, 617, 43 A.L.R. 397, quoting with approval from Mullen & Rouke v. Dwight et al., Regents of Education, 42 S.D. 171, 173 N.W. 645: 'Likewise, state officials may be restrained or prohibited by appropriate action or procedure, in any court having jurisdiction, from performing unlawful acts as such officials, without the consent of the state, as such procedure is not deemed a suit against the state.' See, also, 59 C.J., States, § 466, p. 312.

The court is also required to decide whether or not plaintiff had the right as a taxpayer to maintain the action. We conclude that he did have that right.

Plaintiff contended substantially that defendants, without lawful authority, transferred money from the State Assistance Fund to the general fund and threatened unlawfully to expend it for other than assistance purposes.

In that regard, resident taxpayers of the state have an equitable interest in the public funds of the state and in their proper application. As such, they may enjoin unlawful expenditures thereof by public boards or officers, without showing any interest or injury peculiar to themselves. Woodruff v. Welton, 70 Neb. 665, 97 N.W. 1037; Fischer v. Marsh, 113 Neb. 153, 202 N.W. 422; 59 C.J., States, s. 426, p. 280.

As early as Union Pac. R. Co. v. Dawson County, 12 Neb. 254, 11 N.W. 307, it was concluded that a taxpayer could maintain an action to enjoin the unlawful transfer or diversion as well as the unlawful expenditure of public funds raised by taxation.

Actions brought to enjoin an alleged illegal expenditure, misappropriation, transfer, or diversion of public funds by public boards or officers, are in their nature public proceedings to test the constitutional or statutory validity of official acts, and courts in passing upon the taxpayer's right to maintain such actions will be guided by applicable legal principles and not by the factual question of whether or not the particular taxpayer or the public will actually gain or lose by the relief sought to be awarded.

We turn then to the primary questions involved. Decision depends upon legal principles applicable to undisputed facts. The legislative history of the State Assistance Fund, together with appropriations therefor, becomes important as a foundation for a discussion of plaintiff's contentions.

Chapter 20, Laws 1935 (Special), section 1, page 134, provided: 'A Fund to be known as the 'State Assistance Fund' is hereby created and established in the treasury of the state of Nebraska. There is hereby appropriated for said fund and the purposes of this Act for the period ending June 30, 1937, the following sums: (a) From the state general fund $2,083,000.00; (b) From the one-cent gasoline tax to be collected, as provided in House Roll No. 6, Fifty-first (Special) Session, Legislature of Nebraska, $2,430,000.00; Total $4,513,000.00. Any unexpended balance remaining in said fund on June 30, 1937, shall be transferred and credited to the general fund of the state.'

Chapter 22, ...