State v. Erickson

• Decision Date: 18 February 1933
• Docket Number: 7125.
• Citation: 19 P.2d 227,93 Mont. 466
• Parties: STATE ex rel. TIPTON v. ERICKSON et al.
• Court: Montana Supreme Court

19 P.2d 227

93 Mont. 466

STATE ex rel. TIPTON v. ERICKSON et al.

No. 7125.

Supreme Court of Montana

February 18, 1933

Original injunction suit by the State on the relation of W. D. Tipton against J. E. Erickson and others constituting the State Board of Examiners.

Suit dismissed.

T. B Weir and Albert J. Galen, both of Helena, for plaintiff.

Raymond T. Nagle, Atty. Gen., and Jeremiah J. Lynch, Asst. Atty Gen., for defendants.

PER CURIAM.

This is a taxpayer's suit to enjoin the state board of examiners and the members thereof from carrying into execution the provisions of House Bill No. 22, approved February 9, 1933. The complaint alleges that the act is unconstitutional in various respects, but that nevertheless, unless restrained the board will proceed thereunder. The defendant board has demurred to the complaint upon the ground that the same does not state facts sufficient to entitle the plaintiff to the relief sought.

The act empowers the state board of examiners to issue and sell bonds of the state of Montana in an amount sufficient to pay all outstanding general fund warrants, not exceeding the sum of $4,500,000. Section 2 thereof provides that the bonds shall bear interest at a rate not exceeding 4 per cent, payable semiannually on the first days of January and July respectively. Definite amounts of the principal sum mature on January 1st of each year, commencing with January 1, 1936, and ending January 1, 1953, on which dates definite amounts fall due. Bonds maturing after January 1, 1944, are redeemable at the option of the defendant board on any interest paying day thereafter.

Section 3 of the act provides: "That there shall be and there is hereby levied annually upon all property in the state of Montana subject to taxation, an ad valorem tax on each dollar of the assessed valuation of such property, sufficient in amount to pay the principal and interest on said bonds as the same become due and payable, which tax when collected shall be placed by the State Treasurer in a fund to be known as the 'Funding Bond Sinking and Interest Fund,' and used for the payment of the principal and interest on such bonds and for no other purpose, which tax shall be computed against the different classes of taxable property on the percentage value thereof for taxation purposes as such percentage may be provided by law. ***" This section provides further that the taxes collected during each fiscal year other than certain gasolene taxes, specifically enumerated in the bill (which are already impounded for the payment of other obligations), beginning with the first day of July, are required to be set aside and kept by the state treasurer in a special and separate fund for the "payment of the principal and interest of such bonds as such principal and interest become due and payable during the next following fiscal year or within thirty days after the end thereof." And if during the course of such fiscal year sufficient funds are received from the license taxes to pay the maturities of principal and interest during said fiscal year, and thirty days thereafter, the excess of licenses collected during the residue of the year are no longer to be impounded until the commencement of a new fiscal year.

The state board of equalization is required between the first and second Mondays of August of each year to calculate and determine the rate of tax levy required, if any, to produce the amount necessary to pay the interest due and the maturities of principal during the then current fiscal year and thirty days thereafter, in addition to the funds already impounded from license taxes collected during the preceding fiscal year, and to certify the same to the county clerks of the several counties, who shall compute the tax and enter the same on the assessment books, to be collected as other taxes for state purposes are collected and transmitted.

In the determination of the question of the constitutionality of any act, a statute, if possible, will be construed so as to render it valid. Hale v. County Treasurer, 82 Mont. 105, 265 P. 6. It is presumed to be constitutional, and all doubts will be resolved in favor of its validity if it is possible so to do. State ex rel. Toomey v. Board of Examiners, 74 Mont. 1, 236 P. 316, 320.

The invalidity of a statute must be shown beyond a reasonable doubt before the court will declare it to be unconstitutional. Herrin v. Erickson, 90 Mont. 259, 2 P.2d 296. And a statute will not be held unconstitutional unless its violation of the fundamental law is clear and palpable. Hill v. Rae, 52 Mont. 378, 158 P. 826, L. R. A. 1917A, 495, Ann. Cas. 1917E, 210.

The Constitution is, as frequently stated by this court, a limitation upon the powers of the Legislature, which in the passage of any law is acting under inherent powers, restricted only by the provisions thereof. State v. State Board of Equalization, 56 Mont. 413, 185 P. 708, 186 P. 697.

From the allegations of the petition it appears that the Twenty-Second Legislative Assembly appropriated certain sums to defray the expenses of the state government for the fiscal year ending June 30, 1932, and also for the fiscal year ending June 30, 1933; that on June 30, 1931, there were outstanding registered and unpaid warrants against the general fund amounting to the sum of $3,489,084; that as the warrants were presented the revenues received during the fiscal years covered by said appropriations were applied in payment of general fund warrants in the order of their registration, and the sums appropriated for each of said fiscal years were slightly in excess of the actual receipts. It is asserted by the plaintiff that by reason of the outstanding overdrafts for which no appropriation was made by the 1931 Legislative Assembly, the registered warrants now outstanding are illegal and void under the provisions of section 12 of Article 12 of the Constitution, providing that "no appropriation shall be made nor any expenditures authorized by the legislative assembly whereby the expenditures of the state during any fiscal year shall exceed the total tax then provided for by law, and applicable to such appropriation or expenditure, unless the legislative assembly making such appropriation shall provide for levying a sufficient tax. ***"

It appears from the record that the appropriations made did not exceed in any substantial sum the revenues received; but the revenues received were not sufficient to pay the outstanding registered warrants on July 1, 1931, in addition to the appropriations made for the ensuing biennium.

The existing exigent reasons for the enactment of House Bill No. 22 may be briefly stated as follows: The menace of the warrants, which have been accumulating for a period of about ten years, has injuriously affected the financial standing and operations of the state. They have embarrassed the fiscal officers, in that income, otherwise available for current expenses, has been directed toward the discharge of a portion of the old warrants and toward the payment of interest on all outstanding warrants. For instance, it is important to note that for the fiscal year ending June 30, 1932, the actual income equaled 99.4 per cent. of the legislative appropriations, and for the fiscal year ending June 30, 1933, the collected income to this date plus the estimated income for the rest of the year equals 97.9 per cent. of the appropriations for the period. These figures indicate about as near a balance between estimated income and appropriations as it would be humanly possible to forecast.

Thus it will be readily seen that if the outstanding warrant indebtedness can be funded (amortized) as in House Bill 22 provided, the greater part of the state income can be devoted to the discharge of current governmental expenses. The advantages of the plan are manifest.

Under the Constitution appropriations may be made estimated upon the receipts from revenues to be collected during the fiscal year for which the appropriation is made. State revenues are derived from property taxes and a large number of license taxes, and estimates, however honestly made, are bound to be mere approximations which may be somewhat greater than the amounts received in the treasury.

The meaning of the term "appropriation," together with the manner of making the same, was the subject of discussion in State ex rel. Toomey v. Board of Examiners, supra, wherein the court said: "The word 'appropriation' is defined by Webster as 'the act of setting apart or assigning to a particular use or person: *** the application to a special use or purpose *** as of money to carry out some public object,' which definition has received the sanction of this court. State ex rel. Rotwitt v. Hickman, 9 Mont. 370, 8 L. R. A. 403, 23 P. 740. This setting apart or designation of the purpose for which public money may be used must be 'made by law.' This provision, however, does not require the introduction in the Legislature of an appropriation bill, but the act may be accomplished in any manner receiving the sanction of the law. [Cases cited.]"

The outstanding warrants having once received the sanction of law, no further legislative approval was necessary or required to continue their validity, in the absence of a showing of the withdrawal of legislative consent to their issuance, if that could be done.

The contention of plaintiff proceeds upon the misconception that an appropriation is a setting apart of general funds for a specific purpose instead of the sanction of the law to the expenditure of a definite amount of such funds in the treasury, or which it is contemplated will be collected under existing revenue laws.

The amount of taxes to be collected as a result of the levy and assessment for any given...