[Cite as Tobacco Use Prevention & Control Found. Bd. of Trustees v. Boyce, 127 Ohio St.3d 

511, 2010-Ohio-6207.] 

BOARD OF TRUSTEES OF THE TOBACCO USE PREVENTION AND CONTROL 

FOUNDATION; AMERICAN LEGACY FOUNDATION ET AL., APPELLANTS, v.

BOYCE, TREASURER, ET AL., APPELLEES. 

[Cite as Tobacco Use Prevention & Control Found. Bd. of Trustees v. Boyce, 

127 Ohio St.3d 511, 2010-Ohio-6207.] 

Constitutional law — Custodial accounts — Retroactivity Clause — Contract 

Clauses — Tobacco Use Prevention and Cessation Trust Fund — 

Reallocation of funds — 2008 Sub.H.B. No. 544. 

(No. 2010-0118 — Submitted July 6, 2010 — Decided December 22, 2010.) 

APPEAL from the Court of Appeals for Franklin County, 

Nos. 09AP-768, 09AP-769, 09AP-785, 09AP-786, 09AP-832, and 09AP-833, 

185 Ohio App.3d 707, 2009-Ohio-6993. 

__________________ 

PFEIFER, ACTING C.J. 

{¶ 1} The issue in this case is whether certain sections of 2008 

Am.Sub.S.B. No. 192 (“S.B. 192”) and 2008 Sub.H.B. No. 544 (“H.B. 544”) are 

constitutional. We conclude that the sections are constitutional and affirm the 

judgment of the court of appeals. 

Factual and Procedural Background 

{¶ 2} In November 1998, the Ohio attorney general entered into a master 

settlement agreement ("MSA") with the largest tobacco-product manufacturers in 

the United States that resolved litigation to recover healthcare expenses incurred 

by the states as a result of tobacco-related illnesses. Pursuant to the MSA, Ohio 

was to receive $10.1 billion in payments through 2025; there was no restriction on 

how the money could be spent. 
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2 

{¶ 3} In 2000, the General Assembly enacted Am.Sub.S.B. No. 192, 148 

Ohio Laws, Part V, 10767, creating R.C. Chapter 183. The new law distributed 

proceeds from the MSA to eight different funds, including $235 million to the 

newly created Tobacco Use Prevention and Cessation Trust Fund. Money from 

the trust fund was to be appropriated to an endowment fund, which was to “be in 

the custody of the treasurer of state but * * * not be a part of the state treasury.” 

Former R.C. 183.08, 148 Ohio Laws, Part V, at 10785. The endowment fund was 

to fund programs and research related to tobacco-use prevention and cessation. 

Former R.C. 183.07, 148 Ohio Laws, Part V, at 10784. Former R.C. 183.08 

directed that a newly created Tobacco Use Prevention and Control Foundation 

(“foundation”) would serve as trustee of the endowment fund. 

{¶ 4} On April 2, 2008, the governor and legislative leaders announced a 

bipartisan agreement to spend state funds to stimulate the economy. The 

agreement called for reallocating approximately $230 million then in the 

endowment fund to the stimulus package. On April 8, 2008, the General 

Assembly passed S.B. No. 192, which liquidated the endowment fund. On the 

same day, the executive director of the foundation, pursuant to a motion passed by 

the board of the foundation, executed a contract with American Legacy 

Foundation ("ALF") to transfer $190 million from the endowment fund to ALF. 

The following day, the foundation filed a complaint against the treasurer seeking 

to enjoin the enforcement of S.B. 192 and asking that the statute be declared 

unenforceable. The board then rescinded its resolution authorizing the $190 

million transfer to ALF. ALF moved to intervene as a plaintiff in the lawsuit 

brought by the foundation and filed a complaint requesting a declaration that H.B. 

192 be declared unconstitutional and an injunction to stop the state treasurer from 

transferring the money in the endowment fund to the jobs fund. 
January Term, 2010 

3 

{¶ 5} On May 6, 2008, the General Assembly enacted H.B. 544, which 

abolished the foundation and gave the Ohio Department of Health (“ODH”) 

responsibility for any residual matters, including legal obligations. Section 4 of 

H.B. 544 directed the state treasurer to liquidate the endowment fund, deposit the 

lesser of $40 million or 14.8 percent of the proceeds into the state treasury to the 

credit of a tobacco-use-prevention fund, and deposit the remaining proceeds from 

the liquidation (approximately $190 million) into the state treasury to the credit of 

a jobs fund. On May 9, 2008, ALF amended its complaint to contest the 

constitutionality of H.B. 544 as well as S.B. 192. 

{¶ 6} On May 27, 2008, Robert G. Miller Jr. and David W. Weinmann, 

former smokers who had participated in the foundation’s cessation programs, filed 

a complaint for declaratory relief, claiming that the enactment of R.C. Chapter 

183 and the transfer of money into the endowment fund had created a trust that the 

General Assembly did not have the power to change. Miller and Weinmann 

claimed that they were beneficiaries of the trust because they were participants in 

programs funded by the foundation, and they sought a judgment declaring that (1) 

H.B. 544 is unconstitutional under the Contract Clauses of Section 10, Article I of 

the Constitution of the United States and Section 28, Article II of the Ohio 

Constitution and (2) H.B. 544 illegally attempts to appropriate nontreasury funds 

in breach of an irrevocable trust. Their action was consolidated with ALF's 

lawsuit in May 2008. 

{¶ 7} On August 11, 2009, the trial court entered judgment against ALF, 

finding that the contract between it and the foundation was invalid. The court also 

entered final judgment for Miller and Weinmann on their claims, finding that the 

endowment fund was an irrevocable trust and that the portions of H.B. 544 that 

transferred money from the endowment fund violated the Retroactivity Clause of 

Section 28, Article II of the Ohio Constitution and the Contract Clauses of the 
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United States and Ohio Constitutions. Accordingly, the trial court permanently 

enjoined the state of Ohio, the treasurer, the attorney general, and ODH 

(“appellees”) from enforcing any provision of H.B. 544 and S.B. 192 that related 

to the endowment fund. 

{¶ 8} On appeal, the court of appeals held that the endowment fund was 

not an irrevocable charitable trust and that appellees had no vested rights that 

could be violated. Tobacco Use Prevention & Control Found. Bd. of Trustees v. 

Boyce, 185 Ohio App.3d 707, 2009-Ohio-6993, 925 N.E.2d 641, ¶ 41-46. The 

court reasoned that the appellants offered no authority supporting the proposition 

that custodial funds, once created, cannot be abolished or transferred by the 

General Assembly. Id. at ¶ 34 (a custodial account is an account that is in the 

custody of the treasurer of the state but that is not part of the state treasury. R.C. 

113.05(B). For an example, see former R.C. 183.08(A)). The court also affirmed 

the decision of the trial court that the contract between ALF and the foundation 

was invalid, stating that the resolution approving the contract had been improperly 

discussed only in executive session, in violation of R.C. 121.22, Ohio’s Open 

Meetings Act, and thus the executive director had no authority to enter into the 

contract with ALF. Id. at ¶ 27. 

{¶ 9} We accepted the discretionary appeal of Miller, Weinmann, and 

ALF (“appellants”). 

Analysis 

{¶ 10} The General Assembly has plenary power to enact legislation; it is 

limited only by the Ohio Constitution and the Constitution of the United States. 

Section 1, Article II, Ohio Constitution. See Williams v. Scudder (1921), 102 

Ohio St. 305, 307, 131 N.E. 481. "[B]efore any legislative power, as expressed in 

a statute, can be held invalid, it must appear that such power is clearly denied by 

some constitutional provision." Id. See Lehman v. McBride (1863), 15 Ohio St. 
January Term, 2010 

5 

573, 592 (when the power of the General Assembly to enact a law is questioned, 

the proper inquiry is whether the law is clearly prohibited by the Constitution). 

Our inquiry, then, is whether the portions of H.B. 544 and S.B. 192 liquidating the 

endowment fund and placing the money in the jobs fund are clearly prohibited by 

the Ohio Constitution. 

{¶ 11} The General Assembly's legislative power enables it to "pass any 

law unless it is specifically prohibited by the state or federal Constitutions." State 

ex rel. Jackman v. Cuyahoga Cty. Court of Common Pleas (1967), 9 Ohio St.2d 

159, 162, 38 O.O.2d 404, 224 N.E.2d 906. See State ex rel. Poe v. Jones (1894), 

51 Ohio St. 492, 504, 37 N.E. 945 ("whatever limitation is placed upon the 

exercise of that plenary grant of [legislative] power must be found in a clear 

prohibition by the constitution"). No constitutional amendment was adopted in 

Ohio restricting the use of the tobacco settlement money. In the absence of a 

constitutional provision, the General Assembly had the power to change the use of 

the settlement money by enacting H.B. 544 and S.B. 192. 

The Retroactivity Clause 

{¶ 12} Section 28, Article II of the Ohio Constitution states that "[t]he 

general assembly shall have no power to pass retroactive laws." In Van Fossen v. 

Babcock & Wilcox Co. (1988), 36 Ohio St.3d 100, 522 N.E.2d 489, paragraph one 

of the syllabus, this court stated, "The issue of whether a statute may 

constitutionally be applied retrospectively does not arise unless there has been a 

prior determination that the General Assembly specified that the statute so apply." 

See Smith v. Smith, 109 Ohio St.3d 285, 2006-Ohio-2419, 847 N.E.2d 414, at ¶ 6, 

quoting Bielat v. Bielat, 87 Ohio St.3d 350, 353, 721 N.E.2d 28 ("To determine 

whether a law is unconstitutionally retroactive, we must first 'determine whether 

the General Assembly expressly intended the statute to apply retroactively' "). 

Appellants argue that Section 4 of H.B. 544 clearly indicates that the act is 
SUPREME COURT OF OHIO

6 

retrospective in its application. However, the language of Section 4 does not 

indicate that the General Assembly expressly intended the act to apply 

retroactively. Instead, the language demonstrates the General Assembly’s 

intention that the act be applied prospectively: "Notwithstanding any provision of 

law to the contrary, on the effective date of this section, the Treasurer of State 

shall liquidate the Tobacco Use Prevention and Control Foundation Endowment 

Fund created by section 183.08 of the Revised Code in a prudent manner. The 

Treasurer of State shall deposit into the state treasury to the credit of the Tobacco 

Use Prevention Fund (Fund 5BX0), which is created in section 3701.841 of the 

Revised Code, the lesser of $40 million or 14.8 per cent of the proceeds from 

liquidation. The Treasurer of State shall deposit the remaining proceeds from 

liquidation into the state treasury to the credit of the Jobs Fund (Fund 5Z30), 

which is hereby created." 

{¶ 13} On its face, the statute applies only from the date of its enactment, 

not to acts, events, or cases that predate its enactment. Van Fossen, 36 Ohio St.3d 

at 105, 522 N.E.2d 489. In E. Liverpool v. Columbiana Cty. Budget Comm., 114 

Ohio St.3d 133, 2007-Ohio-3759, 870 N.E.2d 705, ¶ 31, we stated that "when the 

application of a statute to the case before us involves only a prospective operation, 

we will not entertain a retroactivity claim under Section 28, Article II. State v. 

Hawkins (1999), 87 Ohio St.3d 311, 314, 720 N.E.2d 521. That doctrine bars 

East Liverpool's retroactivity claim." 

{¶ 14} The doctrine bars appellants' claim in this case. We have also 

stated that the "retroactivity clause nullifies those new laws that 'reach back and 

create new burdens, new duties, new obligations, or new liabilities not existing at 

the time [the statute becomes effective].' Miller v. Hixson (1901), 64 Ohio St. 39, 

51, 59 N.E. 749, 752." Bielat, 87 Ohio St.3d at 352-353, 721 N.E.2d 28. In Van 

Fossen, this court stated that the constitutional limitation against retroactive laws 
January Term, 2010 

7 

" ‘include[s] a prohibition against laws which commenced on the date of 

enactment and which operated in futuro, but which, in doing so, divested rights, 

particularly property rights, which had been vested anterior to the time of 

enactment of the laws.’ " 36 Ohio St.3d at 105, 522 N.E.2d 489, quoting Smead, 

The Rule Against Retroactive Legislation: A Basic Principle of Jurisprudence 

(1936), 20 Minn.L.Rev. 775, 781-782. In E. Liverpool, after stating that the law 

operated prospectively, this court addressed East Liverpool's contention “that the 

statute ‘permitted the retrospective extinguishment of East Liverpool’s * * * 

preexisting legal right under former R.C. 5747.53 and 5747.63.’” 114 Ohio St.3d 

133, 2007-Ohio-3759, 870 N.E.2d 705, at ¶ 33. Accordingly, we now address 

appellants' claim that H.B. 544 extinguished their preexisting property rights. 

Does H.B. 544 Affect Preexisting Property Rights? 

{¶ 15} Appellants first argue that the funds held by the foundation do not 

belong to the state, citing former R.C. 183.08(A), which stated that the 

“endowment fund * * * shall be in the custody of the treasurer of state but shall 

not be a part of the state treasury." According to appellants, the creation of a 

custodial account that was not part of the state treasury indicated that the General 

Assembly intended to create a trust setting the funds permanently outside the 

control of future legislation. 

{¶ 16} Although the General Assembly's plenary legislative power is 

expansive, it is not all-inclusive. It does not include the ability to bind future 

General Assemblies. "No general assembly can guarantee the continuity of its 

legislation or tie the hands of its successors." State ex rel. Public Institutional 

Bldg. Auth. v. Griffith (1939), 135 Ohio St. 604, 619, 14 O.O 533, 22 N.E.2d 200. 

This court relied on State ex rel. Fletcher v. Executive Council of the State of Iowa

(1929), 207 Iowa 923, 223 N.W. 737, 740, in which the Supreme Court of Iowa 

stated that "no General Assembly has power to render its enactment irrevocable 
SUPREME COURT OF OHIO

8 

and unrepealable by a future General Assembly. No General Assembly can 

guarantee the span of life of its legislation beyond the period of its biennium. The 

power and responsibility of legislation is always upon the existing General 

Assembly. One General Assembly may not lay its mandate upon a future one. 

Only the Constitution can do that. * * * The power of a subsequent General 

Assembly either to acquiesce or to repeal is always existent." 

{¶ 17} In Section 17 of S.B. 192, 148 Ohio Laws, Part V, at 10802, the 

General Assembly acknowledged "the right of each General Assembly to evaluate 

independently the budgetary priorities of the state." Furthermore, the creation of 

custodial accounts is a rather routine business. R.C. 113.05(B). State 

appropriations that are not spent by an agency must be returned to the funds from 

which the appropriations were made at the end of the appropriation period. R.C. 

131.33. The General Assembly uses custodial accounts to operate outside the 

strictures of R.C. 131.33. We consider the creation of a custodial account 

evidence that the General Assembly did not expect all the funds appropriated to 

the foundation to be spent within the biennium and that it did not want the 

unexpended funds to revert pursuant to R.C. 131.33. 

{¶ 18} Custodial accounts have been used in a variety of circumstances 

without violating the Constitution or removing the funds from the reach of the 

General Assembly. In Griffith, we stated that although payments made by patients 

in state-run hospitals might be used by the Department of Public Welfare to run 

the hospitals it operated, those payments were "public funds, at all times subject to 

legislative control." 135 Ohio St. at 619, 14 O.O. 533, 22 N.E.2d 200. Even if the 

payments were earmarked by the Department of Public Welfare to pay off bonds 

issued to provide money for the repair or construction of state welfare institutions, 

the General Assembly could default on the bonds and "divert these funds to other 

purposes." Id. 
January Term, 2010 

9 

{¶ 19} In State ex rel. Hoffman Candy & Ice Cream Co. v. Defenbacher

(1951), 154 Ohio St. 429, 43 O.O. 351, 96 N.E.2d 295, we examined the rotary 

fund of the Department of Liquor Control, the funds of which were not in the state 

treasury but were in the custody of the state treasurer. We noted that pursuant to 

statute, funds in excess of those necessary for operating the department were to 

"be paid into the general revenue fund." Id. at 431. Appellants also argue that 

once the General Assembly appropriated the funds to the foundation fund, the 

funds were spent and thus were beyond the reach of subsequent legislation. This 

argument makes sense only if the foundation is a trust, which we conclude it is 

not. It is axiomatic than an appropriation to a state agency is not an expenditure; 

thus appropriation of money to the foundation does not place the money beyond 

the reach of the General Assembly. 

{¶ 20} Appellants also argue that by allowing the money in the 

endowment fund to be invested in corporate stocks, the General Assembly 

intended that the fund not be considered state money because the Constitution 

prohibits the investment of state funds in corporate stocks. Although this 

argument is plausible, the better explanation is that the General Assembly allowed 

unexpended funds to be invested in stocks because it knew that expenditures in 

the biennium would be significantly less than the appropriation. Generally, state 

funds must be spent within the biennium in which they are appropriated, and thus 

cannot be invested in corporate stocks, which are long-term investments. 

Investing the money in the endowment fund in corporate stocks allows the 

foundation to augment the fund. Allowing the endowment fund to be invested in 

stocks is not evidence of the creation of a trust. 

{¶ 21} Several states have passed constitutional amendments preventing 

the reallocation of funds that were allocated from the proceeds of the MSA to 

tobacco-use cessation and prevention. Section 27, Article X, Florida Constitution; 
SUPREME COURT OF OHIO

10 

Section 18, Article VII, Idaho Constitution; Section 10.8, Article VII, Louisiana 

Constitution; Section 4, Article XII, Montana Constitution; Section 40, Article X, 

Oklahoma Constitution. The Ohio Constitution, however, has not been amended 

to prevent the reallocation of tobacco-settlement proceeds, although it has been 

amended to ensure that lottery revenue is used solely for educational purposes, 

Section 6, Article XV, Ohio Constitution. 

{¶ 22} Appellants have compared the foundation with various state 

pension plans. They argue that the foundation and the pension plans are similar, 

but they are not. The endowment fund is not intended for the benefit of named 

beneficiaries; the pension plans allocate funds for the benefit of named 

beneficiaries. The retirement boards were given authority to establish separate 

legal entities to hold funds, see, e.g., R.C. 145.11, the foundation was not. We 

conclude that the foundation and the various pension plans are not equal. 

{¶ 23} There is a long-standing principle in American law that "[n]o 

person has a vested interest in any rule of law, entitling him to insist that it shall 

remain unchanged for his benefit." New York Cent. RR. Co. v. White (1917), 243 

U.S. 188, 198, 37 S.Ct. 247, 61 L.Ed. 667. See Fuller, The Morality of Law 

(1964) 60 (if reliance on existing law made a person "secure against any change in 

legal rules, the whole body of our law would be ossified forever"). No irrevocable 

trust was created; indeed, no trust was created. Instead, we conclude that in 2000, 

a state agency was created that was abolished in 2008. We conclude that the law 

enacted in 2000 did not create a right that was terminated by H.B. 544 and, 

therefore, that H.B. 544 is not an unconstitutionally retroactive law. 

Contract Clause 

{¶ 24} Section 10, Article I, United States Constitution states, "No State 

shall * * * pass any * * * Law impairing the Obligation of Contracts * * *." 
January Term, 2010 

11 

Section 28, Article II, Ohio Constitution states, "The general assembly shall have 

no power to pass * * * laws impairing the obligation of contracts * * *.” 

{¶ 25} Appellants make two contract-clause arguments. The first is that 

because the foundation is a trust, reallocating the funds appropriated to the 

endowment fund is a violation of a trust contract. We reject this argument based 

on our conclusion that the foundation is not a trust. 

{¶ 26} The second argument addresses the attempt by the foundation to 

place funds beyond the reach of the General Assembly by transferring 

approximately $190 million to ALF. Appellants contend that the foundation and 

ALF entered into a contract for the transfer of funds and therefore that H.B. 544 

violates that contract by not allowing the transfer called for by the contract. For 

the following reasons, we conclude that there is no violation of the state and 

federal contract clauses because no contract was formed. 

{¶ 27} R.C. 121.22(A) states, "This section shall be liberally construed to 

require public officials to take official action and to conduct all deliberations upon 

official business only in open meetings unless the subject matter is specifically 

excepted by law." 

{¶ 28} R.C. 121.22(H) states, "A resolution, rule, or formal action of any 

kind is invalid unless adopted in an open meeting of the public body. A 

resolution, rule, or formal action adopted in an open meeting that results from 

deliberations in a meeting not open to the public is invalid unless the deliberations 

were for a purpose specifically authorized in division (G) or (J) of this section and 

conducted at an executive session held in compliance with this section." 

{¶ 29} The trial court and the court of appeals concluded that the board 

had violated R.C. 121.22 because the resolution to contract with ALF resulted 

from nonpublic deliberations. Tobacco Use Prevention & Control Found., 185 

Ohio App.3d 707, 2009-Ohio-6993, 925 N.E.2d 641, ¶ 77. Appellants do not 
SUPREME COURT OF OHIO

12 

dispute this conclusion; instead, they contend that the board's attempts to comply 

with R.C. 121.22 were sabotaged by the attorney general’s office. They argue that 

the board would have been exempt pursuant to R.C. 121.229(G)(3) if the attorney 

general had not prevented the board's attorney from being present. Based on our 

review of the record, we conclude, as did the trial court and the court of appeals, 

that the board was not set up to violate the Open Meetings Act. Even if it had 

been, the board had at least one unassailable option available: it could have 

discussed all relevant matters openly. It did not. Accordingly, we agree with the 

court of appeals that "the board violated R.C. 121.22 by deliberating in executive 

session upon matters that it was required to discuss in open session." Tobacco 

Use Prevention & Control Found., 185 Ohio App.3d 707, 2009-Ohio-6993, 925 

N.E.2d 641, ¶ 74. We affirm the judgment of the court of appeals, which held that 

no contract was formed. 

Other Considerations

{¶ 30} The question whether it is wise to enact legislation is not the same 

question as whether the legislation is constitutional. Bd. of Health v. Greenville

(1912), 86 Ohio St. 1, 20, 98 N.E. 1019. Several amici curiae filed briefs in this 

case. Some of them argued that the funds at issue would be better used for the 

original intended purpose (tobacco cessation) than the current intended purpose 

(jobs stimulus), and several argued the converse. None of those arguments 

concerns a court of law. The General Assembly has plenary legislative power. In 

the exercise of that power, the General Assembly evaluated Ohio's budget 

priorities and enacted S.B. 192 and H.B. 544. It is not for us to judge the wisdom 

of the General Assembly but to determine whether the exercise of its power 

comports with or violates the Ohio Constitution. We conclude that S.B. 192 and 

H.B. 544 do not violate the Ohio Constitution. 

Conclusion
January Term, 2010 

13 

{¶ 31} We affirm the judgment of the court of appeals. 

Judgment affirmed. 

 LUNDBERG STRATTON, O’CONNOR, O’DONNELL, and LANZINGER, JJ., 

concur. 

 GALLAGHER and HARSHA, JJ., concur separately. 

 SEAN C. GALLAGHER, J., of the Eighth Appellate District, sitting for 

BROWN, C.J. 

 WILLIAM H. HARSHA, J., of the Fourth Appellate District, sitting for CUPP,

J. 

__________________ 

GALLAGHER, J., concurring. 

{¶ 32} I concur in the majority decision and agree that the General 

Assembly retained the power to reallocate the tobacco settlement money by 

enacting 2008 Sub.H.B. No. 544 and 2008 Am.Sub.S.B. No. 192. I write 

separately to more closely address the issues surrounding the actions of the 

General Assembly in creating the Tobacco Use Prevention and Cessation Trust 

Fund and whether such actions created a trust. In my view, the General Assembly 

arguably intended to create a trust and to irrevocably appropriate funds to that 

trust for antitobacco efforts. Though the purpose was noble, the efforts were 

ultimately unsuccessful. 

{¶ 33} Under the statutory scheme that was enacted, the Tobacco Use 

Prevention and Control Foundation was appointed as trustee of the endowment 

fund. Former R.C. 183.08, 148 Ohio Laws, Part V, 10767, 10785. The general 

management of the foundation was vested in a board of trustees. Former R.C. 

183.04, 148 Ohio Laws, Part V, at 10785. The foundation was to establish and 

carry out a plan to reduce tobacco use by Ohioans. Former R.C. 183.07, 148 Ohio 

Laws, Part V, at 10784. Emphasis was to be given to Ohio’s youth and groups 
SUPREME COURT OF OHIO

14 

disproportionately affected by the use of tobacco. Former R.C. 183.07, 148 Ohio 

Laws, Part V, at 10784. The endowment fund was in the custody of the treasurer 

of state, but it was set aside from the state treasury. Former R.C. 183.08(A), 148 

Ohio Laws, Part V, at 10785. The foundation was to be self-sustaining. Former 

R.C. 183.08(B). 148 Ohio Laws, Part V, at 10786. However, even if the General 

Assembly had intended to permanently commit the funds to antitobacco efforts, 

the statutory scheme fell short of placing the funds beyond the reach of future 

legislation. 

{¶ 34} The endowment fund was created solely from state funds that were 

set aside to be administered for the purpose of reducing tobacco use by Ohioans, 

with an emphasis on certain populations. The funds were public and were to be 

used for a specified public purpose for the benefit of all Ohioans. Although 

appellants may have directly benefited from the programs that were created, the 

enabling statutes did not specify any person or entity as the beneficiary of the 

funds or create any private property interest. “This key element is lacking in many 

state funds that set aside money for a specific purpose and are ‘trust funds’ in 

name only. * * * The existence of named beneficiaries is what transforms the 

Fund from money set aside for a purpose into a formal trust.” Wisconsin Med. 

Soc., Inc. v. Morgan, 2010-WI-94, 787 N.W.2d 22, ¶ 69-70. The funds were state 

funds, and because no protected third-party property interests were created, they 

were subject to the legislature’s plenary power over state money. See Arizona 

Farm Bur. Fedn. v. Brewer (Nov. 12. 2010), Ariz. App. No. 1 09-0756, 2010 WL 

4542393 at *7. Further, although the funds were placed outside the state treasury 

and were dedicated to a particular use, the nature of the funds as state money was 

not altered, and the funds were not removed from legislative control. See 

A.B.A.T.E. of Illinois, Inc. v. Giannoulias (2010), 401 Ill.App.3d 326, 341 Ill.Dec. 

109, 929 N.E.2d 1188. 
January Term, 2010 

15 

{¶ 35} I believe that this is not a case where the General Assembly sought 

to encumber funds and bind future legislatures. Rather, the General Assembly 

failed to establish a proper trust to place the funds beyond the reach of subsequent 

legislation. Had a proper trust been created, no two-year encumbrance problem 

would exist. 

{¶ 36} There is no doubt that many Ohioans stood to benefit from the 

antitobacco programs that were funded by the endowment fund. Though the 

result may seem unfair to some, the acts of the legislature were permissible and 

are not constitutionally infirm. 

LUNDBERG STRATTON, J., concurs in the foregoing opinion. 

__________________ 

HARSHA, J., concurring. 

{¶ 37} Once the legislature initially placed the proceeds from the master 

settlement agreement (“MSA”) between the state and the tobacco-product 

manufacturers into the state treasury, Section 22, Article II of the Ohio 

Constitution prohibited the legislature from subsequently creating an irrevocable 

public trust with those funds. As a result, the unexpended money in the 

endowment fund was subject to reappropriation by the legislature. 

{¶ 38} Section 22, Article II of the Ohio Constitution states: “No money 

shall be drawn from the treasury, except in pursuance of a specific appropriation, 

made by law; and no appropriation shall be made for a longer period than two 

years.” 

{¶ 39} Under former R.C. 183.02, 148 Ohio Laws, Part V, 10767, 10777, 

the legislature directed that “[a]ll payments received by the state pursuant to the 

tobacco master settlement agreement shall be deposited into the state treasury to 

the credit of the tobacco master settlement agreement fund, which is hereby 

created.” Once deposited into the MSA fund, the General Assembly provided that 
SUPREME COURT OF OHIO

16 

the money was to be shifted into eight different funds, including the Tobacco Use 

Prevention and Cessation Trust Fund, see former R.C. 183.02(A) through (H), 148 

Ohio Laws, Part V, at 10778-10789, which was “created in the state treasury,” 

former R.C. 183.03, 148 Ohio Laws, Part V, at 10782. 

{¶ 40} The legislature then appropriated money from this fund into an 

endowment fund. See former R.C. 183.08(A), 148 Ohio Laws, Part V, at 10785. 

Under former R.C. 183.08(A), the endowment fund was to “be in the custody of 

the treasurer of state but shall not be a part of the state treasury.” Based on this 

language, the majority opinion views the endowment fund as a “custodial fund” 

removed from the biennial appropriation cycle, i.e., unexpended money in the 

endowment fund that did not automatically revert to the treasury after two years. 

However, this interpretation of former R.C. 183.08 overlooks the plain language 

of Section 22, Article II of the Ohio Constitution. 

{¶ 41} In State ex rel. Rothbacher v. Herbert (1964), 176 Ohio St. 167, 27 

O.O.2d 48, 198 N.E.2d 463, Katharina Rothbacher owned a savings deposit in a 

savings and loan company. The company dissolved, and all unclaimed deposits, 

including Rothbacher’s deposit, were placed in a “regular account,” i.e., an 

account of funds held in trust by the state treasurer, subject to the order of the 

superintendent of building and loan associations. Id. at 167. Subsequently, the 

state auditor, pursuant to statute, had the funds transferred into the General 

Revenue Fund. Id. Rothbacher then sought a writ of mandamus to compel the 

state treasurer to return her money. Id. at 168. 

{¶ 42} This court denied the writ, holding that Rothbacher’s funds were 

initially held in the regular account, subject to the order of the superintendent, and 

required no prior appropriation by the General Assembly. Id. at 169. But once 

the funds were transferred and became part of the General Revenue Fund, they 

were no longer subject to the order of the superintendent and “could be expended 
January Term, 2010 

17 

only as provided by law.” Id. Therefore, the funds could not be withdrawn unless 

the legislature made an appropriation under Section 22, Article II of the Ohio 

Constitution. Id. at 170. 

{¶ 43} In this case, the MSA funds were initially deposited into the state 

treasury under former R.C. 183.02, 148 Ohio Laws, Part V, at 10777. Therefore, 

the legislature could not withdraw them except in accordance with Section 22, 

Article II of the Ohio Constitution, i.e., in pursuit of a specific appropriation, not 

to exceed two years. After the MSA funds had been deposited into the general 

fund, the legislature could not circumvent the constitutional limitation by 

appropriating them into a custodial account. State ex rel. Rothbacher, 176 Ohio 

St. at 169-170, 27 O.O.2d 48, 198 N.E.2d 463. In other words, the General 

Assembly could not create a custodial account to indirectly do what Section 22, 

Article II of the Ohio Constitution prohibits it from doing directly. See Taylor v. 

Ross Cty. Commrs. (1872), 23 Ohio St. 22, 34. 

{¶ 44} Therefore, despite the fact that former R.C. 183.08(A) directed that 

the endowment fund was to “be in the custody of the treasurer of state but shall 

not be a part of the state treasury,” any unexpended funds the legislature 

appropriated into the endowment fund should have reverted to the treasury after 

two years. And in light of Section 22, Article II of the Constitution, once funds 

are deposited into the state treasury, they cannot be used to create an irrevocable 

public trust. 

{¶ 45} If the General Assembly intended to free the settlement funds from 

the dictates of Section 22, Article II of the Ohio Constitution, it had to place the 

MSA funds directly into a custodial account under R.C. 113.05(B), or the 

treasurer of state’s contingent fund, created in R.C. 113.10, instead of first 

depositing the funds into the state treasury. Clearly the General Assembly knew 

how to create a custodial account — it used specific language to do so in former 
SUPREME COURT OF OHIO

18 

R.C. 183.08. See, e.g., R.C. 148.02, 149.305, and 3334.11. Just as clearly, the 

language in former R.C. 183.02 merely directing that all payments received under 

the MSA be “deposited into the state treasury to the credit of” a specific fund does 

not create a custodial account. 

{¶ 46} Because the funds appropriated to the endowment fund were not 

placed in an irrevocable public trust, the General Assembly was free to 

reappropriate the money to any fund it desired. Far from being unconstitutional, 

2008 Am.Sub.S.B. No. 192 and 2008 Sub.H.B. No. 544 are consistent with the 

constitutional mandate of Section 22, Article II of the Constitution. 

{¶ 47} I agree with the analysis of the majority opinion on the other 

constitutional issues raised by this appeal. 

__________________ 

Zeiger, Tigges & Little, L.L.P., John W. Zeiger, and Stuart G. Parsell, for 

appellants Robert G. Miller Jr., David W. Weinmann, and American Legacy 

Foundation. 

Richard Cordray, Attorney General, Alexandra T. Schimmer, Chief 

Deputy Solicitor General, and Richard N. Coglianese, Michael J. Schuler, Damian 

Sikora, Aaron D. Epstein, and Katherine J. Bockbrader, Assistant Attorneys 

General, for appellees state of Ohio, Attorney General Richard Cordray, Treasurer 

Kevin L. Boyce, and the Ohio Department of Health and its director, Alvin D. 

Jackson. 

Mac Murray, Petersen & Shuster and Helen Mac Murray, urging reversal 

for amici curiae former Attorney General Betty D. Montgomery, former Senate 

President Richard H. Finan, and former Director of Ohio Department of Health J. 

Nick Baird, M.D. 

James E. Arnold & Associates, L.P.A., James E. Arnold, and R. Gregory 

Smith, urging reversal for amici curiae Academy of Medicine of Cleveland and 
January Term, 2010 

19 

Northern Ohio, American Heart Association Great Rivers Affiliate, American 

Lung Association, American Cancer Society Cancer Action Network, Campaign 

for Tobacco-Free Kids, Ohio State Medical Association, American Heart 

Association, American Lung Association of the Midland States, American Cancer 

Society Ohio Division, Association of Ohio Health Commissioners, Ohio Public 

Health Association, and American Medical Association. 

Law Offices of Russell A. Kelm, Russell A. Kelm, and Joanne W. Detrick, 

urging reversal for amicus curiae Citizens' Commission to Protect the Truth. 

Bricker & Eckler, L.L.P., Anne Marie Sferra, and Daniel C. Gibson, 

urging affirmance for amici curiae Ohio Dental Association, Ohio Optometric 

Association, Ohio State Chiropractic Association, and Ohio Association of 

Community Health Centers. 

Richard Cordray, Attorney General, and Jeannine R. Lesperance, Assistant 

Attorney General, urging affirmance for amici curiae President of the Ohio Senate 

Bill Harris and Speaker of the Ohio House of Representatives Armond Budish. 

Squire, Sanders & Dempsey, L.L.P., Pierre H. Bergeron, and Thomas D. 

Amrine, urging affirmance for amicus curiae National Conference of State 

Legislatures. 

Peck, Shaffer & Williams, L.L.P., Thomas A. Luebbers, and Erin A. 

Sutton, urging affirmance for amici curiae County Commissioners Association of 

Ohio, Ohio Job and Family Service Directors Association, Public Children 

Services Association of Ohio, and Ohio Child Support Enforcement Agency 

Directors Association. 

Weston Hurd, L.L.P., and Daniel A. Richards, urging affirmance for 

amicus curiae Voices of Ohio Children. 

______________________