State v. Marron

Decision Date17 December 1913
Citation18 N.M. 426,137 P. 845
PartiesSTATEv.MARRON, STATE TREASURER.
CourtNew Mexico Supreme Court

OPINION TEXT STARTS HERE

Syllabus by the Court.

The deposit of the permanent school fund of the state in interest-bearing deposits in banks, under the provisions of Joint Res. No. 14 (Laws 1913, p. 174), is an investment of the same (citing Words and Phrases, vol. 4, pp. 3755-3758).

Whether the word “securities” as used in the Enabling Act (Act June 20, 1910, c. 310, 36 Stat. 557) and the Constitution is not limited to public obligations, for the payment of which the taxing power is available, is not decided, because its decision is not necessary to a determination of this case, and is not discussed by counsel.

Said Joint Res. No. 14 (Laws 1913, p. 174), in so far as it requires the deposit of these funds in banks, is beyond legislative power and void.

The Governor, Secretary of State, and Attorney General have power to eliminate by means of disapproval any given form or forms of investment, and thereby bring the State Treasurer to one single form of investment, and in such event he is subject to mandamus to perform all acts necessary to accomplish the same. Whether he does not possess discretion, as to the safety of the investment, which he may exercise independent of control by mandamus not decided, because not involved.

The alternative writ of mandamus in this case examined and found to be inadequate to justify the issuance of a peremptory writ.

Original proceeding in mandamus by the State against Owen N. Marron, State Treasurer. Writ denied.

The Governor, Secretary of State, and Attorney General may by elimination limit the State Treasurer to a single class of securities in which he may invest permanent school funds.

Frank W. Clancy, Atty. Gen., for the State.

Francis E. Wood, of Albuquerque, for respondent.

PARKER, J.

This is a proceeding in mandamus to compel the investment of the permanent school funds of the state in the state highway bonds. It appears that respondent, as State Treasurer, received from the Territorial Treasurer, at the inception of the state government, the sum of $110,453.52, the result of the sales of public lands of the United States in the territory, under the terms of the act of Congress of June 21, 1898, c. 489, 30 St. L. 484, 6 Fed. St. Ann. 482. These funds, at the time respondent took office, were deposited in banks, in pursuance to the provisions of section 36 of chapter 104, Laws of 1907, where they still remain. Since statehood respondent has received funds of the same class and from the same source in the amount of $10,587.31 and $3,825.86 as proceeds of the sale of school lands in the state. All of these funds constitute the permanent school funds of the state.

Chapter 104, Laws of 1907, was repealed by section 79 of chapter 82 of the Laws of 1912, leaving no statutory authority for the deposit of these funds in banks, until the session of the state Legislature of 1913.

By section 10 of the Enabling Act (36 St. L. 557, c. 310, 1 Supp. 1912, Fed. St. Ann. 362) it was provided as follows:

Sec. 10. That it is hereby declared that all lands hereby granted, including those which, having been heretofore granted to the said territory, are hereby expressly transferred and confirmed to the said state, shall be by the said state held in trust, to be disposed of in whole or in part only in manner as herein provided and for the several objects specified in the respective granting and confirmatory provisions, and that the natural products and money proceeds of any of said lands shall be subject to the same trusts as the lands producing the same. * * * A separate fund shall be established for each of the several objects for which the said grants are hereby made or confirmed, and whenever any moneys shall be in any manner derived from any of said land the same shall be deposited by the State Treasurer in the fund corresponding to the grant under which the particular land producing such moneys were (sic) by this act conveyed or confirmed. * * * The State Treasurer shall keep all such moneys invested in safe, interest-bearing securities, which securities shall be approved by the Governor and Secretary of State of said proposed state, and shall at all times be under a good and sufficient bond or bonds conditioned for the faithful performance of his duties in regard thereto as defined by this act and the laws of the state not in conflict herewith.”

By section 7 of Article 12 of the Constitution of the state, it was provided as follows:

Sec. 7. The principal of the permanent school fund shall be invested in the bonds of the state or territory of New Mexico, or of any county, city, town, board of education or school district therein. The Legislature may by three-fourths vote of the members elected to each house provide that said funds may be invested in other interest-bearing securities. All bonds or other securities in which any portion of the school fund shall be invested must be first approved by the Governor, Attorney General and Secretary of State. All losses from such funds, however occurring, shall be reimbursed by the state.”

In pursuance of the provisions of this section of the Constitution, the state Legislature of 1913 (by a required three-fourths vote of each house, it is assumed by counsel on both sides) passed joint resolution No. 14, which is as follows:

Section 1. That the principal of the permanent school fund may be invested in an interest-paying deposit in any bank or banks in this state, in the manner hereinafter provided.

Sec. 2. It is hereby made the duty of the Governor, State Treasurer, Attorney General and Secretary of State, to ascertain which bank or banks in the state will pay the highest rate of interest for the deposit of the said permanent school fund and deposit the same therein upon said bank or banks giving a bond as hereinafter required.

Sec. 3. Before the making of the deposit of the said permanent school fund in any bank or banks applying therefor, the said bank or banks shall make, execute and deliver a bond to the state of New Mexico in a penalty which shall not be less than one and one-fourth the amount of the deposit applied for and which it is to receive, conditioned that such bank will promptly pay out, to the parties entitled thereto, all such public moneys in its hands upon lawful demand made therefor and will whenever thereunto required by law, pay over to the State Treasurer such moneys. The surety on such bond shall be a surety company authorized to do business under the laws of the state and such bond shall be approved as to form by the Attorney General, and as to the sufficiency by the Governor, State Treasurer and Secretary of State.”

In pursuance of said joint resolution No. 14, the Governor, Secretary of State, Attorney General, and State Treasurer met on June 16, 1913, and decided to request bids from banks for the deposit of the entire permanent school fund, amounting to $121,040.78, and accordingly the State Treasurer requested bids for the deposit of the same from the banks of the state to be received up to July 1, 1913. Many of the banks responded, and offered to pay interest at rates ranging from 3 1/2 per cent. to 7 5/8 per cent. per annum.

At a meeting of said officers, held on July 1, 1913, for the purpose of opening and passing on said bids, the following resolution was adopted, the respondent, as said treasurer, voting in the negative, viz.: “Resolved, that all of the bids received from the various banks for deposits of the permanent school fund be rejected for the purpose of investing said funds in the state highway bonds, the difference in the rate of interest received, which would be about four cents per annum per capita of school children as shown by the last enrollment, being so small as to be more than offset by the benefits to be derived from the construction of highways to the schools themselves as well as to all other interests.”

On July 7, 1913, the respondent addressed a letter to the Governor, Secretary of State, and Attorney General, which is as follows: “Dear Sir: I am firmly of the conviction that the investment of the permanent school fund of the state in the securities offered under House Joint Resolution No. 14, by the banks offering the highest rate of interest in the bids opened on Tuesday last, the first of July, is the best and safest investment that could be made of these funds. In the resolution rejecting these bids, which is as follows (the preceding resolution), you do not base your disapproval of these securities upon the ground that they are not safe nor that they would not bring the largest returns to the permanent school fund, but solely upon the ground that it was for the purpose of investing these funds in the highway bonds. I deem it to be my duty, under the law, to most respectfully decline to invest these funds in the highway bonds for the reason that the highway bonds yield only 4% while the bank securities offered will average more than 6%, and for the further reason that the value of the highway bonds, measured by the best bids obtained therefor, is only 77, while we would be required to pay par or 100. I respectfully request, therefore, that you indicate to me whether or not you deem these bank securities offered to be unsafe. In the event that you approve the same as to their safety, I will make the investment in the proper bank securities. Yours very truly.”

On July 10, 1913, the Governor, Secretary of State, and Attorney General addressed to the respondent a letter, in reply to his letter of July 7th, as follows: We decline to pass upon the question as to whether the bank securities are unsafe or not, as it is not part of our duty to do so, nor have you any right to demand of us that we should pass on that question, especially after we have united in rejecting the bids of the banks for the avowed purpose of investing the funds in the state highway bonds. We cannot find any...

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