State ex rel. Blume v. State Board of Education of Montana

• Citation: 34 P.2d 515,97 Mont. 371
• Decision Date: 02 July 1934
• Docket Number: 7300.
• Parties: STATE ex rel. BLUME v. STATE BOARD OF EDUCATION OF MONTANA et al.
• Court: United States State Supreme Court of Montana

34 P.2d 515

97 Mont. 371

STATE ex rel. BLUME v. STATE BOARD OF EDUCATION OF MONTANA et al.

No. 7300.

Supreme Court of Montana

July 2, 1934

Original proceeding in the Supreme Court for injunction by the State on the relation of W. A. Blume, against the State Board of Education and others.

Case dismissed.

H. C Crippen, of Billings, for relator.

Raymond T. Nagle, Atty. Gen., and Johnston, Coleman & Jameson, of Billings, for respondents.

ANDERSON Justice.

This is an original proceeding brought against the State Board of Education and the members thereof as such, by the plaintiff on behalf of himself and all others similarly situated seeking an injunction against the issuance and disposition of bonds for the erection and construction of buildings for the Eastern Montana State Normal School located at Billings, pursuant to the provisions of chapter 7 of the Extraordinary Session of the Twenty-Third Legislative Session. The case is before us on the complaint of the plaintiff, and the answer of the defendants admitting the facts, denying the conclusions of law, and alleging affirmatively certain additional facts as further defenses. No reply was filed.

The plaintiff is a qualified resident taxpaying freeholder and elector of the state. The individual defendants are the members of the State Board of Education either by reason of their election to certain state offices or their appointment as such.

Chapter 7, supra, was approved by the Governor on December 19, 1933. Section 1 thereof provides that the State Board of Education is authorized to erect one or more buildings at this school at a cost not to exceed $250,000, for the purpose of providing the necessary administration offices, class rooms, laboratories, auditorium, and gymnasium, and for such other purposes as in the judgment of the board may be proper for the conduct, management, and operation of the school. In carrying out these powers the board is authorized to borrow money and to pledge all the earnings of the institution, and one-half of all the income and interest derived from the land grant made by the United States to the state of Montana for normal schools, under section 17 of the Enabling Act, approved February 22, 1889.

The board is authorized to issue and dispose of bonds of the normal school for money borrowed, or to contract with the United States of America, or other governmental agency, for the repayment of money borrowed, the bonds or contract obligations to mature in not less than forty years; they may mature serially or be amortized over a period of years not exceeding forty, and may bear interest at not to exceed 6 per cent. The board is directed to prescribe the form and denominations of the bonds. These bonds may be disposed of in such manner as the board deems for the best interests of the school, provided they are sold for not less than par value with accrued interest, or they may be sold or contracted to the United States or other governmental agency.

To provide for the payment of interest and principal, a fund is created by the terms of the act, into which shall be paid annually one-half of the income and interest realized under the land grant, and all earnings of the institution until the amount paid into the special fund equals the amount of maturing bonds and interest for each year. Provision is made for the deposit of the special fund with the state treasurer and for the disbursement of the proceeds of the bonds, and the supervision of the construction of the buildings. It is specifically provided that "no obligation created hereunder shall ever be or become a charge against or obligation, debt, or liability of the State of Montana, but all such obligations, including principal and interest, shall be payable solely from the aforesaid Eastern Montana State Normal School fund. Nothing in this Act shall be so construed as to in anywise hold the state of Montana liable for the payment of bonds or contract obligations herein authorized, or the interest thereon." Section 11. It is further provided that the lien created under the terms of the act is upon the one-half of the income and interest from the land grant, and the earnings of the school.

Plaintiff alleges the passage of a resolution by the State Board of Education, reciting the need of buildings at the various units of the University of Montana, the possibility of securing loans for this purpose under the provisions of the National Industrial Recovery Act (48 Stat. 195), the approval of the policy of requesting such loans, the delegation to a special committee for each unit of the State University of the authority to make application for the loans. Pursuant to this resolution application was made by the proper committee to the Federal Emergency Administration of Public Works for a grant and loan of $250,000 for the purpose of constructing two buildings for the Eastern State Normal School, one building to provide administration offices, class rooms, rooms for library, laboratories, and music; the other building to be a combination auditorium and gymnasium. In this application it is estimated that $68,000 of the sum applied for will be a grant, and $182,000 of the same will be a loan to bear interest at the rate of 4 per cent. amortized over a period of thirty-four years, and that the payment of $10,000 annually for thirty-three years, plus the payment of $1,986.46 in the thirty-fourth year, will retire the proposed loan, including principal and interest.

It is alleged that unless enjoined, the loan as applied for will be made by the Administrator of the Federal Emergency Administration of Public Works, and that the defendant board will issue bonds under the provisions of chapter 7 in the sum of at least $182,000, and as security for the payment of the loan it will pledge the earnings of the school and one-half of the income derived from the federal land grant.

It is alleged that there are two normal schools in the state--one at Dillon and the other at Billings--and that the annual income derived from the land grant is in excess of $32,000, accruing from rentals on lands and interest on investments; that the earnings of the school for the college year ending June 30, 1933, amounted to $15,217.30, and that they will be slightly in excess of that amount for the year ending June 30, 1934; that these earnings consist of matriculation, registration, incidental, miscellaneous, and nonresident fees, which include fees for breakage, replacement, janitor supplies, diploma fees, and other numerous small items.

Plaintiff asserts that chapter 7 and the proceedings thereunder are in violation of numerous constitutional provisions which we will presently notice.

Defendants by their answer deny the violations of the constitutional provisions alleged, and admit the facts alleged in the complaint. They affirmatively allege the enactment on June 16, 1933, of the National Industrial Recovery Act providing, among other things, that the government of the United States shall have the power and right to make grants to the state for the construction, repair, and improvement of any public project, and to purchase securities to be issued by any public body for the construction of such project, and for the grant of not to exceed 30 per cent. of the cost of material and labor employed upon a project; that if the proposed loan is made, a grant will be made of 30 per cent. of the cost of materials and labor; that although under the regulations of that act the cost of the buildings will be somewhat in excess of the cost otherwise necessary for their construction, a saving of from $40,000 to $50,000 will be realized over what would be necessary to repay the indebtedness if bonds were sold elsewhere.

It further appears from the answer that at the time of the location of the institution at Billings a site of fifty-two acres was purchased at a cost of $25,000 by the citizens of Billings and conveyed to the state of Montana for the sole purpose of a site and campus for the normal school; that no buildings have been constructed by the state for the use of this institution; that during the seven years the school has been in existence it has been conducted in rented buildings at a cost of from $5,000 to $7,700 a year; that the present rented quarters are wholly inadequate properly to accommodate the students in attendance at the school, and that until further accommodations are secured many of the students now desirous of attending the school are unable to do so; that the owners of the present building occupied by the school are desirous of selling the building, and that if it be sold there is no other building or buildings in the city of Billings available as quarters for the school, and thereupon it will cease to exist; that the institution had 386 students in the winter quarter of 1934, and that although it only has a two-year course, it ranks third in point of attendance among the six units of the State University; that the rental heretofore paid for quarters for the school is from one-half to three-fourths of the amount necessary to be paid each year in order to retire the proposed loan.

Plaintiff contends that chapter 7, providing for the issuance of the bonds and the pledging of the earnings of the school and one-half of the income from the land grant, is in violation of section 33 of article 5 of the Constitution, in that the act is in substance and effect an appropriation bill wherein is attempted to be appropriated, set aside, and dedicated moneys belonging to the state of Montana, containing other subjects than the appropriation of money. This section of the Constitution requires that appropriations other than the ordinary expenses of the three coordinate departments of the state government "shall...