State ex rel. Kerr v. Grand River Dam Auth.

• Decision Date: 09 January 1945
• Docket Number: Case Number: 31745
• Citation: 154 P.2d 946,195 Okla. 8,1945 OK 9
• Parties: STATE EX REL. KERR v. GRAND RIVER DAM AUTHORITY
• Court: Oklahoma Supreme Court

1945 OK 9

154 P.2d 946

195 Okla. 8

STATE EX REL. KERR v. GRAND RIVER DAM AUTHORITY

Case Number: 31745

Supreme Court of Oklahoma

Decided: January 9, 1945

Syllabus

¶0 1. STATES-Budget Balancing Amendment of 1941 to Constitution-Word "revenues" defined.

The word "revenues," as used in that provision of the amendment to section 23, art. 10, of the Constitution of the State of Oklahoma (adopted at special election held March 11, 1941), wherein agencies of the state are inhibited from incurring indebtedness in excess of revenues immediately available, has reference to yields from the exercise of the taxing power of the state.

2. SAME-"Debt or obligation" defined.

The inhibition of the amendment to section 23, art. 10, of the Constitution of the State of Oklahoma (adopted at special election held on March 11, 1941), against the state authorizing any agency of the state to create any debt or obligation or fund or pay any deficit, applies solely to such debt, obligation, or deficit for the payment of which resort, but for such amendment, might properly be had to the taxing power of the state.

3. SAME-"Agencies of state" which are not affected by amendment.

Neither the provision of the amendment to section 23, art. 10, of the Constitution of the State of Oklahoma (adopted at a special election held on March 11, 1941), inhibiting agencies of the state from incurring indebtedness in excess of revenues immediately available, nor the provisions thereof inhibiting the state from authorizing any agency of the state to create any debt or obligation or fund or pay any deficit, has application to an agency of the state where such agency was created without the appropriation therefor of state revenue and operates on revenues that are not in whole or in part derived through or under the taxing power of the state and is without right to incur indebtedness for the payment of which resort, but for said amendment, might properly be had to the taxing power of the state.

4. SAME--Grand River Dam Authority not affected by amendment and its power to issue and sell revenue bonds pursuant to legislative act not impaired thereby.

The defendant, Grand River Dam Authority by reason of its adjudicated present status as a self-liquidating governmental agency (Sheldon v. Grand River Dam Authority, 182 Okla. 24, 76 P.2d 355), is not within the class of agencies of the state whose power to incur indebtedness of its own will, or under state authority, is restricted by the amendment to section 23, art. 10, of the Constitution of the State of Oklahoma (adopted at special election held March 11, 1941), and the power of said Authority to issue and sell revenue bonds in pursuance of legislative act (S. L. 1939, p. 561; O. S. 1941, Tit. 82, § 870) is in no wise impaired thereby.

Original action by the State of Oklahoma on relation of Robot S. Kerr, Governor, to enjoin the issuance of revenue bonds by the defendant, Grand River Dam Authority. Injunction denied.

Randell S. Cobb, Atty. Gen., and S. H. King, Asst. Atty. Gen., for plaintiff.

Edward P. Marshall, of Tulsa, for defendant.

GIBSON, C.J.

¶1 This is an original action in this court to enjoin a proposed bond issue upon the ground that the legislative grant of authority to issue such bonds was repealed by an intervening constitutional amendment.

¶2 Under the legislative act creating the Grand River Dam Authority, a conservation and reclamation district ( S. L. 1935, p. 354), said Authority was authorized to issue $15,000,000 of revenue bonds, of which amount $14,000,000 has heretofore been issued. By amendatory act in 1939 (S. L. 1939, p. 561, sec. 1; O. S. 1941, Tit. 82, sec. 870) the maximum limit of the authorized bond issue was raised to $25,000,000, and it was therein provided that $10,000,000, which represented the amount of such increase, should be applied chiefly to the erection of Markham Ferry and Fort Gibson dams, the same to be constructed and completed in accordance with the laws relating to the Pensacola Dam then under construction by said Authority.

¶3 At the time of said leglislative enactments the provision of the State Constitution pertinent to the question here involved was article 10, sec. 23, as follows:

"The state may, to meet casual deficits or failures in revenues, or for expenses not provided for, contract debts; but such debts, direct and contingent, singly or in the aggregate, shall not, at any time, exceed four hundred thousand dollars, and the moneys arising from the loans creating such debts shall be applied to the purpose for which they were obtained or to repay the debts so contracted, and to no other purpose whatever."

¶4 In Sheldon v. Grand River Dam Authority, 182 Okla. 24, 76 P.2d 355, we held that said Authority was not a political corporation or subdivision of the state within the meaning of section 26 of article 10 of the State Constitution but was a governmental agency as declared in the act of its creation. We further held that the project within the terms of the act was purely self-liquidating, and, thus falling within the scope of the special fund doctrine announced in Baker v. Carter, 1933, 165 Okla. 116, 25 P.2d 747, and further defined and limited in the case of Boswell v. State, 1937, 181 Okla. 435, 74 P.2d 940, the then authorized bond issue of $15,000,000 would not operate to create a debt within the inhibition of said article 10, sec. 23, of the Constitution, quoted supra.

¶5 The amendment of article 10, sec. 23, commonly known as the Budget Balancing Amendment, adopted by the voters of the state at an election held on March 11, 1941, was proposed by House Joint Resolution No. 10 of the Eighteenth Legislature of the state. The ballot title under which the question was submitted was as follows:

"Amending Section 23, Article 10, Oklahoma Constitution, prohibiting Legislature appropriating in excess of legal estimate of revenues, making parts of appropriations in excess of revenues collected void, prohibiting expenditures exceeding pro rata allocation of revenues, requiring legislation for reduction of all appropriations to come within revenues collected, authorizing issuance of deficiency certificates not exceeding $500,000.00 annually, prohibiting any debt or deficit except as provided in this amendment and Sections 24 and 25, Article 10, Oklahoma Constitution, and providing Legislature may fund debt arising prior to July 1, 1941."

¶6 The concluding paragraph of the amendment, stressed by plaintiff as peculiarly applicable, is as follows:

"The State shall never create or authorize the creation of any debt or obligation, or fund or pay any deficit, against the State, or any department, institution or agency thereof, regardless of its form or the source of money from which it is to be paid, except as provided in this amendment and in Sections Twenty-four (24) and Twenty-five (25) of Article Ten (X) of the Constitution of the State of Oklahoma. Provided, that the Legislature may fund or refund the State debt arising prior to July 1, 1941."

¶7 Subsequently to the adoption of said amendment, said Authority accepted an offer of the United States to purchase $1,300,000 of its originally authorized issue of $15,000,000, of which there then remained unsold $2,300,000. The sale and delivery was sought to be enjoined upon the sole ground that said amendment operated to cancel and annul the power and authority of defendant to issue and sell said bonds. That case was tried upon a stipulation of facts, and it appearing therefrom that a withdrawal of the authority previously granted to sell its bonds to the maximum of said $15,000,000 would impair the obligation of contracts in contravention of the inhibition of the Federal Constitution, this court held that by reason thereof said amendment could have no operative force as to the proposed issue and found it unnecessary to determine whether the amendment if unimpeded by previous contract would nullify the previous legislative grant of authority to issue bonds. Wickham v. Grand River Dam Authority, 189 Okla. 540, 118 P.2d 640.

¶8 The proposed bond issue involved herein is of the amount of $11,000,000, which includes the unsold $1,000,000 authorized under the Grand River Dam Act (S. L. 1935, p. 354, sec. 10) and $10,000,000 authorized under said Act of 1939 (O. S. 1941, Tit. 82, sec. 870).

¶9 As tersely stated in brief for plaintiff, "The issues involved in this case are whether or not said constitutional amendment prohibits the defendant from issuing and delivering any of its revenue bonds, which have not been issued or sold, or which it is not obligated to issue under contracts and agreements entered into prior to the adoption of said constitutional amendment to section 23, art. 10, of the Constitution," the affirmative of which is urged by plaintiff and denied by defendant. It is further urged by defendant that, by reason of the contractual relation theretofore existing between defendant Authority and United States, the proposed purchaser of the bonds sought to be issued, the permitting of said amendment to operate as claimed would impair the obligations of such contracts. Except to the extent such contention applies to the $1,000,000 of the proposed issue which is issuable under authority of the act creating the Authority, touching which it is conceded by plaintiff the doctrine announced in Wickham v. Grand River Dam Authority (supra) may apply, such contention is challenged by plaintiff.

¶10 In view of the conclusion we reach herein that said amendment in no wise impairs the legislative grant of power to said Authority under said amendatory act of 1939 to issue said bonds, we deem it unnecessary to discuss the question of impairment of contract.

¶11 It is urged on behalf of plaintiff that the second paragraph of said amendment in providing "any department, institution or agency of the state operating on revenues derived from any law or laws which allocate the revenues thereof to such department, institution or...