Title: Kelly v. Guy

State: north-dakota

Issuer: North Dakota Supreme Court

Document:

133 N.W.2d 853 (1965) Harold J. KELLY, on behalf of himself and all other taxpayers of the State of North Dakota, Plaintiff and Appellant, v. William L. GUY, Heigi Johanneson and Math Dahl, as the Industrial Commission of the State of North Dakota, and Robert Huey, Director of Economic Development, Defendants and Respondents. No. 8191. Supreme Court of North Dakota. March 19, 1965. *854 Duffy & Haugland, Devils Lake, for appellant. Paul M. Sand, First Asst. Atty. Gen., Bismarck, for respondents. EUGENE A. BURDICK, District Judge. In this action the Plaintiff, in behalf of himself and all other taxpayers of the State of North Dakota, seeks to enjoin permanently the members of the State Industrial Commission and the Director of Economic Development from making an industrial development loan pursuant to the provisions of Article 76 of the Constitution and Chapter 206 of the 1963 Session Laws of North Dakota. The case was submitted to the trial court upon an agreed statement of facts, the following of which are material. Minnekota Power Co-operatives, Inc. of Grand Forks, North Dakota filed an application with the Economic Development Commission of the State of North Dakota to borrow $7,000. for the purpose of extending the transmission of power generated *855 from the use of lignite coal, pursuant to the provision of Chapter 206 of the 1963 Session Laws of North Dakota. On July 9, 1963 the Economic Development Commission, of which the appellant is a member, approved this application in his absence. Chapter 206 of the 1963 Session Laws, hereinafter referred to as the Act, appropriated fifty thousand dollars as a continuing appropriation to the State Industrial Commission under the provisions of the Act for the purpose of making loans of the nature sought by Minnekota Power Co-operative, Inc. No other application has been made for any part of the funds appropriated. Under the provisions of the Act, if the State Industrial Commission finds that the approved loan application has been filed and processed in the required manner and the proposed loan agreement is in proper legal form and the amount to be disbursed does not exceed the funds appropriated for that purpose, it shall authorize the execution of the loan agreement with the applicant by the director of the economic development on behalf of the state. The State Industrial Commission has formally approved the loan application and is in the process of determining the legal rate of interest and other provisions of the bonds. Unless restrained from so doing, the State Industrial Commission will authorize the execution of the loan agreement and the Director of Economic Development will loan the funds of the state in accordance with the loan application and the provisions of the Act. Each of the parties moved for summary judgment. The trial court granted the defendants' motion and dismissed the case. The case is before us on appeal by the plaintiff from the summary judgment of dismissal and upon a cross-appeal by the defendants from a provision of the judgment holding that the Act is subject to the limitations of Section 182 of the North Dakota Constitution. The plaintiff contends that the Act and Article 76 of the North Dakota Constitution violate the Fourteenth Amendment to the United States Constitution. The plaintiff reasons that the proposed loan of public funds derived from taxation is not a public purpose and therefore deprives him of property without due process of law. Article 76 of the North Dakota Constitution reads as follows: This court has already held that Section 185 of the North Dakota Constitution authorizes the state and any county or city to engage in any industry, enterprise, or business, except the business of dealing in intoxicating liquor. Gripentrog v. City of Wahpeton, N.D., 126 N.W.2d 230. In Gripentrog we reviewed the "public purpose" test applied by the United States Supreme Court in determining whether a particular use of public funds derived from taxation offended the Fourteenth Amendment to the United States Constitution. It seems clear that if the state were to engage directly in the business of transmitting power generated by lignite generation plants as a means of making electric power available to the consuming public, the public purpose test would be met. The making of a loan to further the same purpose, i.e. the generation of electric energy and distribution of the same to the consuming public attains the same goal. This becomes evident in a case where a loan made by the state is defaulted and the state acquires the properties upon foreclosure of its security. If operation of the transmission facility is a public purpose when conducted by the state after acquisition upon foreclosure of the security, surely the making of a loan to construct and operate the facility prior to foreclosure serves the same public purpose. *857 The legislative intent, embraced within Section 1 of the Act, is expressed as follows: The safeguards provided for throughout the Act to insure the application of the proceeds of the loan to the purposes intended are unique in preventing the making of a loan for an unauthorized purpose. The Act provides for many supervisory controls to insure that the public objectives of the loan are realized. The court also takes judicial notice of the fact that the vast lignite coal resources underlying the western half of this state have attracted relatively meagre amounts of private capital during the first seventy-five years of statehood. Current enterprise in the development of lignite coal as a major natural resource in the generation of electrical energy is largely dependent on loans made to cooperative electric companies by the federal government. The development of a major natural resource of the state for the common good where adequate amounts of private capital are lacking would seem to be the highest order of public purpose. The electorate in adopting Article 76 of the North Dakota Constitution must have come to the same conclusion. The application under consideration clearly meets the public purpose test. For a general discussion of the subject, see 42 Am.Jur., Public Funds, Sec. 57 and 81 C.J.S. States § 133. The plaintiff further contends that the Act and Article 76 of the North Dakota Constitution are controlled by Section 185 of the North Dakota Constitution which prohibits the state and any of its political subdivisions from loaning or giving its credit to or in aid of any individual, association or corporation, except for reasonable support of the poor. This argument fails for the reason that the Article 76, pursuant to which the Act in question was enacted, was approved[1] subsequent to Section 185, and thus creates an additional exception to the lending power. The plaintiff further contends that the Act and Article 76 of the North Dakota Constitution are controlled by Section 182 of the North Dakota Constitution with respect to the bonding limit of the state. Section 182 of the North Dakota Constitution provides as follows: It is argued by the plaintiff that the clause, "but nothing herein shall increase or diminish the limitations established by other provisions of the constitution on the amount of bonds therein authorized to be issued" constitutes a direct recognition of the limits provided for in Section 182. The trial court agreed with the plaintiff in this one respect. This argument of counsel ignores the significance of the key words "other" and "therein" as used in the clause above quoted. The clause quoted is merely a disclaimer of the effect of Article 76 with respect to bonds issued pursuant to "other (emphasis supplied) provisions of the constitution on the amount of bonds therein (emphasis supplied) authorized to be issued." With respect to bonds issued pursuant to Article 76, the Article provides its own special limitations. These limitations, being later in adoption[2] constitute exceptions to those provided for by Section 182 and control in the case at bar. The plaintiff further contends that the Act violates Section 22 of the North Dakota Constitution in providing an unreasonably short period of thirty days within which an action must be brought to test the validity of any bonds issued or taxes levied in support of the same. The plaintiff having commenced his action within the time specified by the Act is not aggrieved by the limitation of which he complains and, therefore, cannot challenge its constitutionality in this regard. A party who is not harmfully affected by a particular feature of a statute alleged to be unconstitutional may not urge the unconstitutionality of the statute. Tooz v. State, 76 N.D. 599, 38 N.W.2d 285. The plaintiff further contends that the Act violates Section 61 of the North Dakota Constitution which reads as follows: The plaintiff argues that the title of the Act embraces more than one subject. The title of the Act reads as follows: Counsel's argument could hardly be less tenable. We have no difficulty in holding that the title of the Act embraces but a single subject, viz.: "To implement the provisions of the initiated constitutional amendment approved at the general election of November 6, 1962, authorizing the state of North Dakota to issue its bonds and to use the proceeds thereof to make loans to privately or cooperatively owned enterprises for facilities to convert North Dakota natural resources into low cost power and to generate and transmit such low cost power." All other provisions of the title to this Act are germane to its fundamental subject matter and expressed purposes. Lapland v. Stearns, 79 N.D. 62, 54 N.W.2d 748. The judgment of the district court is modified so as to delete the determination that Chapter 206 of the 1963 Session Laws is governed by and is subject to the limitations of Section 182 of the North Dakota Constitution, and as modified it is affirmed. BURKE, C. J., and TEIGEN and ERICKSTAD, JJ., concur. KNUDSON, J., not having been a member of the Court when the case was submitted, did not participate. [1] Approved at General Election November 6, 1962. [2] Section 182 was adopted as Article 42 March 18, 1924.