State ex rel. Crawford v. Stevens

• Decision Date: 22 June 1934
• Docket Number: 13879.
• Citation: 175 S.E. 213,173 S.C. 149
• Parties: STATE ex rel. v. STEVENS et al. CRAWFORD
• Court: South Carolina Supreme Court

175 S.E. 213

173 S.C. 149

STATE ex rel. CRAWFORD v. STEVENS et al.

No. 13879.

Supreme Court of South Carolina

June 22, 1934

Original proceeding by the State of South Carolina, on the relation of Geddings H. Crawford, for injunction against John T. Stevens and others, constituting the members of the State Highway Commission of South Carolina, and others.

Injunction refused.

D. W Robinson, Jr., of Columbia, for petitioner.

John M Daniel, Atty. Gen., and J. Ivey Humphrey and J. Ingram Wilson, Asst. Attys. Gen., for respondents.

BLEASE Chief Justice.

The petitioning taxpayer questions the legality of the proposed issuance of $7,374,700 certificates of indebtedness of the state of South Carolina, maturing in annual installments beginning ten years after date and ending twenty-four years after date, and bearing interest at a rate not exceeding 5 per cent. per annum.

The state proposes to use the proceeds of the sale of these certificates to pay the following 6 per cent. callable obligations of the state:

(1) $407,000 of outstanding one-year state highway notes, dated February 15, 1934, issued pursuant to an Act of February 10th, 1933 (38 St. at Large, p. 58), incorporating a new section in the Code of 1932, to be known as section 5973-A of the Code.

(2) $4,464,000 outstanding state highway certificates of indebtedness, dated February 15, 1933 payable February 15th, 1953, issued pursuant to section 5973-A of the Code.

(3) $2,503,700 of outstanding written evidences of obligation, issued pursuant to Act of February 9th, 1932 (37 St. at Large, p. 1123).

In order to understand the questions presented, a brief history of these obligations is desirable.

In June, 1931, the state highway department, to finance its construction contracts, submitted its written request, supported by the data required by section 5947 of the Code, to the Governor, who, satisfied of the sufficiency of the anticipated revenues, advertised for bids for $10,000,000 certificates of indebtedness. On receiving bids, the Governor and the state treasurer rejected all bids because the prices were not satisfactory.

With the approval of the Governor, the commission proceeded with its road building in anticipation of the subsequent sale of certificates of indebtedness. In this fashion, construction obligations of approximately $7,500,000 in excess of funds available from previous sales of certificates of indebtedness were incurred.

$5,000,000 was raised by the sale of short-term notes, pursuant to section 5948 of the Code. These notes, later refinanced under the Act of February 10th, 1933 (38 St. at Large, p. 58, Code 1932, § 5973-A), are now evidenced by the state highway notes ($407,000) and by the 20-year callable certificates of indebtedness ($4,464,000).

The remaining amount of $2,503,700, due contractors, became the "Written Evidences of Obligation," issued under the 1932 act (37 St. at Large, p. 1123).

The first question presented is whether the State Highway Bond Act authorizes the issuance of certificates of indebtedness of the state to refund or pay the three classes of obligations mentioned above, to wit, the highway notes, the callable certificates of indebtedness, and the written evidences of obligation.

The purposes for which the State Highway Bond Act, originally passed in 1929 (36 St. at Large, p. 670), authorized the issuance of "Certificates of Indebtedness," are stated in chapter 127 of the Civil Code (section 5947 et seq.).

In section 5947, we find that these certificates may be issued "for the purpose of completing the construction of the State Highway System and carrying out the provisions of this chapter."

Section 5948 provides for the issuance of short-term notes for the purpose of anticipating the sale of certificates of indebtedness, for the purpose of paying the principal or interest on any of the certificates of indebtedness, and for the renewal of short-term notes.

Section 5951 provides: "The proceeds of the sale of such highway certificates of indebtedness and of notes issued in anticipation of the sale of such certificates of indebtedness, shall be used by the State Highway Commission only for the construction or reconstruction of highways in the State highway system, or for the purpose of paying notes, including interest, issued under this chapter * * * or for the purpose of paying other expenses authorized by this chapter to be paid out of such proceeds."

As section 5951 expressly authorizes the use of the proceeds of the sale of certificates of indebtedness to pay notes issued under the provisions of section 5948, it is clear that that portion ($407,000) of the obligation, represented by highway notes, may by the express terms of this section be refunded by the issuance of certificates of indebtedness.

The written evidences of obligation given to the materialmen and contractors by the state highway department pursuant to Act No. 601, of the Acts of 1932 (37 St. at Large, p. 1123) are obligations incurred in the "construction or reconstruction of highways," and are hence eligible for payment out of the proceeds of the certificates of indebtedness.

The position is taken by the petitioner that these obligations to the contractors have now taken a different form by reason of the issuance of these evidences of indebtedness under the provisions of the act of 1932. They were, however, incurred by the commission under its duty to construct a state highway system. Sections 5974, 5975. The fact that the commission gave to the contractors and materialmen evidences of the obligation in written form does not alter the fact that these obligations were incurred in the construction of the state highway system. There can be no doubt, therefore, that the proceeds of the sale of the certificates of indebtedness may properly be used to retire the written evidences of obligation.

The important question presented is whether certificates of indebtedness may be issued to refund outstanding certificates of indebtedness.

The petitioner takes the position that no authority is given for such refinancing, either in chapter 127 or in the amendments of 1933 and 1934, and insists upon a narrow construction of section 5951 of the Code.

It will be observed that section 5948 authorizes the issuance of notes to pay the maturing "interest or principal of" any state highway certificates of indebtedness.

Section 5951 expressly authorizes the issuance of certificates of indebtedness to pay notes issued under the act. It is therefore apparent that as the outstanding certificates of indebtedness are callable the state could call these certificates, paying them out of the proceeds of the sale of notes issued under section 5948, and then pay these notes with the proceeds of the sale of new certificates of indebtedness.

It was clearly not the intention of the Legislature to require a circuitous method of refinancing the certificates of indebtedness; yet the narrow construction urged by the petitioner would lead to that result.

Again, in 1933, when the Legislature enacted Section 5973-A of the Code and made these certificates callable, it gave evidence of its intention that the broader construction suggested should be given to the words "construction or reconstruction of highways" found in section 5951.

It is the conclusion of this court that the callable certificates of indebtedness, issued under section 5973-A of the Code, may be refinanced and paid out of the proceeds of the sale of new certificates of indebtedness.

The next question presented is whether the proposed issue of certificates of indebtedness must be payable in accordance with the terms of section 5973-A, inserted in 1933.

That section, amending the Highway Bond Act, provides that certificates of indebtedness issued to retire the notes issued under section 5948 should ""mature on February 15, 1953, but shall be redeemable at the option of the State on any interest date prior to their maturity."

The petitioner's position is that as this section was inserted in 1933 it supersedes the provisions of the 1929 act, section 5964, Code 1932, which provides: "Each separate issue of said certificates of indebtedness shall mature in annual series or installments, the first of which annual series or installments shall mature not more than ten years after the date of the certificates, and the last not more than twenty-four years after said date."

The petitioner emphasizes the word "shall" as contained in the 1933 act, arguing that only a callable certificate of indebtedness as distinguished from the serial form provided in the original act can now be issued.

Bearing in mind that the fundamental rule of statutory interpretation is to give effect to legislative intent (Gregg v Query, 166 S.C. 117, ...