Rowley v. Clarke

• Decision Date: 15 December 1913
• Parties: ROWLEY ET AL. v. CLARKE ET AL.
• Court: Iowa Supreme Court

162 Iowa 732

144 N.W. 908

ROWLEY ET AL.

v.CLARKE ET AL.

Supreme Court of Iowa.

Dec. 15, 1913.

Appeal from District Court, Polk County; J. H. Applegate, Judge.

Action by citizens of Van Buren and Wapello Counties to enjoin the executive council of the state from purchasing certain real estate and from issuing interest-bearing certificates in payment thereof as authorized by chapter 14 of the Acts of the Thirty-Fifth General Assembly. Decree was entered enjoining the issuance of certificates in payment of said property; otherwise the relief prayed was denied. Both parties appeal, that of defendants being first perfected. Reversed.George Cosson, Atty. Gen., Henry E. Sampson and C. A. Robbins, Asst. Attys. Gen., O. S. Thomas, Special Counsel, of Des Moines, and Parker, Parrish & Miller, of Des Moines, for appellants.

J. C. Mitchell and McNett & McNett, all of Ottumwa, and J. C. Calhoun and Walker & McBeth, all of Keosauqua, for appellees.

LADD, J.

The executive council of the state consists of the Governor, Secretary of State, Treasurer of State, and the Auditor of State. It employs a secretary. The object of this action is to enjoin the executive council as such and each member thereof from acquirng for the state the property described in and issuing the certificates authorized by chapter 14 of the Acts of the Thirty-Fifth General Assembly, for that, as is contended, the provisions thereof are in violation of sections 2 and 5 of the seventh article of the Constitution of the state. Section 2 of the act in question authorizes and directs the executive council, for the purpose of extending the capitol grounds, to “purchase from time to time within said period of ten years any or all of the real estate not already owned by the state” appearing on the annexed plat:

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Lots 1 to 6, inclusive, in block 5, four lots in block 4, and five lots in block 7 belong to the state as, of course, does the tract on which the capitol building is located. The purchase directed is of all other lots in the plat. With streets vacated there are over 50 acres in all and, if laid out and improved, as required, in accordance with the Allison Memorial Commission plan on file in the office of the Secretary of State made a part of the act by section 3, the grounds undoubtedly would be artistic and of great beauty. For the purpose of acquiring the land necessary and improving the grounds, section 1 of the act provides that “there shall be levied annually for a period of ten (10) years, commencing with the first levy made after the passage of this act, a special tax as follows; in each of the years 1913 and 1914, one-half mill on the dollar of the taxable property in the state, and in each of the remaining eight years such rate of levy to be fixed by the executive council as will yield approximately one hundred and fifty thousand dollars ($150,000) annually. The proceeds of such levies shall be carried into the state treasury to the credit of a fund to be called the capitol grounds extension and improvement fund. The amount so realized by said levies shall be in lieu of all of the appropriations for said purposes during the said period of ten years.” Section 4 authorizes the executive council to acquire any or all of said real estate for the state and in so doing purchase same “on option, contracts or in any other way which said council may deem expedient, * * * at any time within said period of ten years at its discretion and as the amount of money in said fund at any time may enable them to do. Payment for said real estate may be made by said executive council certifying to the State Auditor the amount due to any person at any time and the auditor then drawing a warrant in his favor on the State Treasurer out of the fund herein created.” Section 5 relates to condemnation of any property the council is unable to purchase, and section 6 to the leasing of property purchased until buildings thereupon are removed and the disposition of said buildings, the proceeds to be included in the said fund. Section 7 directs the sale of a tract of land known as Governor Square, the proceeds to be turned into said fund, and section 8 declares that no part of the purchase price nor warrants or certificates issued therefor or interest thereon shall be paid otherwise than from said fund.

Were the lots to be paid only from this fund known as the capitol extension and improvement fund derived from the source mentioned on warrants drawn on the state treasury, the foregoing sections, it will be noted in passing, are complete in themselves and adequate for the objects intended. The sections following relate entirely to the anticipation of part or all of said fund. Section 9 enacts: “That for the purpose of accomplishing the earliest possible completion of the work contemplated herein and the carrying out of the plans provided for in this act, the executive council may anticipate the collection of the tax herein authorized to be levied for the extension and improvement of the capitol grounds, and for that purpose may issue interest-bearing warrants or certificates carrying a rate of interest not to exceed five per cent. per annum to be denominated ‘capitol grounds extension and improvement warrants or certificates' and said warrants or certificates and interest thereon shall be secured by said assessment and levy and shall be payable out of the respective funds hereinbefore named, pledged to the payment of the same, and no warrants shall be issued in excess of taxes authorized or to be levied to secure the payment of the same. It shall be the duty of the State Treasurer to collect said several funds and to hold the same separate and apart in trust for the payment of said warrants or certificates and interest and to apply the proceeds of said funds pledged for that purpose to the payment of said warrants or certificates and interest. Such warrants or certificates shall be issued in sums of not less than one hundred nor more than one thousand dollars each running not more than ten years bearing interest not exceeding five per cent. per annum, payable annually or semiannually and shall be substantially in the following form.” Following this is a form of such certificate, not necessary to be set out. Section 10 directs that the certificates be issued only in pursuance of a resolution of the executive council specifying conditions as to amount, rate of interest and the like. Section 11 provides for the registry of said certificates, with the Treasurer of State, and section 12 authorizes the sale thereof at not less than par value. The contention of the plaintiffs is that the entire act is in violation of sections 2 and 5 of article 7 of the Constitution of the state, in that it authorized the creation of an indebtedness in excess of that therein permitted, without submitting the question to a vote of the people. These constitutional provisions may as well be set out:

“Sec. 2. The state may contract debts to supply casual deficits or failures in revenues; or to meet expenses not otherwise provided for; but the aggregate amount of such debts, direct and contingent whether contracted by virtue of one or more acts of the general assembly, or at different periods of time, shall never exceed the sum of two hundred and fifty thousand dollars; and the money arising from the creation of such debts shall be applied to the purpose for which it was obtained, or to repay the debts so contracted, and to no other purpose whatever.”

“Sec. 5. Except the debts hereinbefore specified in this article, no debt shall be hereafter contracted by, or on behalf of this state, unless such debt shall be authorized by some law for some single work or object, to be distinctly specified therein; and such law shall impose and provide for the collection of a direct annual tax, sufficient to pay the interest on such debt, as it falls due, and also to pay and discharge the principal of such debt, within twenty years from the time of the contracting thereof; but no such law shall take effect until at a general election it shall have been submitted to the people, and have received a majority of all the votes cast for and against it at such election; and all money raised by authority of such law, shall be applied only to the specific object therein stated, or to the payment of the debt created thereby; and such law shall be published in at least one newspaper in each county, if one is published therein throughout the state, for three months preceding the election at which it is submitted to the people.”

In determining whether the act in authorizing the issuance of interest-bearing certificates or warrants is inimical to these provisions of the Constitution, several questions necessarily are involved: (1) Would these certificates, if issued, constitute “expenses not otherwise provided for” within the meaning of section 2 of article 7 of the Constitution? (2) Can the executive council anticipate the revenues collectible within the biennial period by the issuance of certificates in advance payable therefrom as authorized without creating a debt within the meaning of these sections? (3) If these inquiries be answered in the affirmative, should the act be interpreted as empowering the executive council to issue certificates in anticipation of current revenues and in an amount beyond these not exceeding $250,000, or equaling the collectible taxes during the entire ten years within which levies are directed to be made? (4) If the latter be the true construction, then does the act authorize the creation of a debt in excess of the constitutional limitation?

[1] I. Plainly enough, the certificates contemplated in section 9 of the act were not intended “to supply casual deficits or failure in revenues.” Might they be issued “to meet expenses not otherwise provided for”? The state was created by the people to perform for them certain functions, the necessity for the performance of which was the...