No. 13552 INTHE SUPREME COURT OF THE STATE OF MONTANA

CHARLES W. HUBER, Plaintiff and Appellant,

WILLIAM A. GROFF

## ,VIRGINIA JELT,ISON

## , PAUL A. JOHNSON, JAMES J

# .LEARY

## ,DAN K. MIZNER, PAUL E. POLZIN, WARREN F. VAUGHAN, asmembers of and constituting the Bonrd of Housing of the Stateof Montana, Defendants and Respondents.

ORIGINAL PROCEEDING: Counsel of Record: For Appellant: Patrick F. Hooks argued, Townsend, Montana For Respondents: Moulton, Bellingham, Longo and Mather, Billings,

Montana Fredric D. Moulton argued, Billings, Montana Walter S. Murfitt appeared, SpecialAssistant

Attorney General, Helena, Montana

Submitted:October 25, 1976 Decided

### BE629

## 3976 Filed

# :mc28

### f2T7Mr. JusticeJohn Conway Harrison delivered the Opinion of the Court.

This is an originalproceeding brought by CharlesW. Huber, plaintiff, against themembers of the Board of Housing of the stateof Montana seeking a declaratoryjudgment pursuant to Chapter 89, Title 93, Revised Codes of Montana 1947. The Court accepted original jurisdiction pursuant toRule 17(a), M.R.App.Civ. P. because the shortness of time before the next meeting of the legislature made "due consideration inthe trialcourt and due appeal tothis Court an inadequate remedy." The plaintiff seeks tohave the "Housing Act of 1975" which was passed as Chapter 461, Laws of 1975, by the Forty-fourth Legislature declared unconstitutional on several grounds: First, plaintiff alleges the Act does not serve a public purpose as required by Art. VIII, Section 1, 1972Montana Constitution. Second, plaintiff alleges the bonds theHousing Board intends to sellare statedebt and violate the requirements of Art. VIII, Section 8, 1972Montana Constitution. Third, plaintiff alleges that even if thebonds arenot state debt, section 35-517, R.C.M., violates the separation of powers section of the 1972Montana Constitution and impinges on the powers of the executive violating Art. 111, Section 1and Art. VI, Section 9. Fourth, plaintiff alleges the entireAct, and especially section 35-517, violates Art. V, Section ll(5). Fifth, plaintiff alleges theAct entails an unconstitutional delegation of the legislative power.Sixth,plaintiff alleges the statutory flow of funds violates Art. VIII, Section 12, Section 13 and Section 

### 14. Seventh,plaintiff requests the Court resolve the statutory conflict between section 5-1037,R.C.M. 1947,and the Housing Act

A brief look at the function of the proposed programs of the Housing Board is necessary as background. The Housing Board intends to issuewhat are basically revenuebonds. The legislature granted these bonds tax exempt status and this status,along with the fact that the bonds are issued by a carefully supervised. governmental body, should reduce the risk factor resulting in a significantly lower interest rate. The Housing Board's plan is to take this low interestmoney and inject it into the state's mortgage money market to make mortgage money available to "persons and families of lower income." The Housing Board currently plans to use only two of the statute's programs, the loan to lender program and the mortgage repurchase program. Both programs operate in a similarmanner. The first program loansmoney to lending institutions on the condition they loan that money within a specified time period to "persons or families of lower income". The second program provides for the purchase ofmortgages on the condition that the money be lent to "persons or families of lower income.'' Bothprograms have financial incentiveswhich encourage lending institutions to participate

# . Before beginning discussion of plaintiff's specific allegations we note the adoption of the 1972Montana Constitution resulted in a significant change in the constitutional framework in the

revenue and finance provisions. That changewas the result of the deletion of the 11889 Constitution's Art. XIII, Section 

### 1which prohibited the

lending of credit of the state to individuals and corporations.This prohibition serves as the background formany of the older

cases inMontana and most cases in other states even today. First. Plaintiff contends the Housing Act of 1975, sections 35-501 through 35-526,R.C.M.1947, does not serve a public purpose. Art. VIII, Section 1, Montana Constitution requires:. "Tax purposes. Taxes shallbe levied by general laws forpublic purposes .It This Court inMills 

### v. Stewart, 76 Mont. 429, 438, 247 

### P. 332, held: "The power to appropriate public funds and the power to levy and collect taxes are identical. (Panchot v. Leet, 50Mont. 314, 146 Pac. 927;Gem Irrigation District v. Van Deusen, 31 Ida. 779, 176 Pac.. 887;College v. Hager, 121Ky. 1, 87 S.W. 1125; 

### 1Cooley on Taxation 4th ed. sec.177.)" The question is twofold: (1) Is the purpose of the legislation a public purpose? (2) Are the means selected reasonably likely to accomplish that public purpose? The purpose of the Housing Act of 1975.i~ set out in section 35-502: "The legislature finds and declares that there is a shortage inMontana of decent, safe, and sanitary housing which iswid.rtn the financial capabilities of lower income persons and families. In order to alleviate the high cost of housing for these persons, the legislature believes that it is essential that additional public moneys be made available,through the issuance of revenue bonds, to assist both private enterprise and governmental agencies inmeeting critical housing needs.It Thebasic means to be used to accomplish this purpose are set out in section 35-505: 

### "(1) Theboard may: (a) make loans to lending institutions under terms and conditions adopted by the board requiring the proceeds to be used by the lending institution for the making ofmortgage loans for housing developments in the state for persons and families of lower income; "(b) invest in,purchase or make commitments to purchase, and take assignments from lending institutions,of notes,mortgages and other securities evidencing loans for the construction, rehabilitation, purchase, leasing or refinancing ofhousing developments for persons and families of lower income in this state, under terms and conditions adopted by the board; "(c) make, undertake commitments to make, and participate in themaking of mortgage loans, including federally insured mortgage loans,and to make temporary loans ' and advances in anticipation of permanent mortgage loans to housing sponsors to finance the constructionor rehabilitation of housing developments designed and planned for occupancyby persons and families of lower income in this state,under terms and conditions adopted by the board; "(d) make, undertake commitments tomake, and participate in the making of loans to persons and families of lower income for housing development, including without limitation persons and families of lower incomewho are eligible or potentially eligible for federally insured loans, federalmortgages or other federalhousing assistance, when the board determines that mortgage loans arenot otherwise available,wholly or in part, fromprivate lenders upon reasonably equivalent terms and conditions,and under terms and conditions adopted by the board. 

# *

# **" The Housing Board has taken necessary administrative steps to activate subsections (a) and (b), section 35-505 and these programs are ready to begin. As this Court pointed out in Cottinghamv, StateBoard of Examiners, 134Mont. 1, 10, 11, 328 P.2d 

### 907: "The constitutionality of a legislative act is presumed, and this presumption must be overcome beyond a reasonable doubt before this court may overturn an expression of legislative will.

# ** *

"'As we have observed hitherto, the Constitution must receive a broad and liberal interpretation consistent with the purpose of the framers and the people in adopting it, that itmay serve the needs of a growing state; "the proper interpretation of any constitutionalprovision requiresus to remember that it is a part of the organic law---organicnot only in the sense that it is fundamental, but also in the sense that it is a living thing designed to meet the needs of a progressive society,amid all the detail changes to which a progressive society is subject."'" InWillett v. State Board of Examiners, 112Mont. 317, 322, 115 P.2d 287, the Court said:'I* 

# * What is a 'public purpose' is a question primarily for legislative determination, with which we willnot interfere unless there had been a clear abuse of power. 

## *

# **" A great majority of other st8teswhich have considered nearly identical legislation found housing tobe for a public purpose. Stateex rel. Warren v. Nusbaum, 59 Wisc.2d 391, 208 N.W.2d 780; Minnesota Housing Finance Agency v. Hatfield, 297 Minn. 155, 210 N.W.2d 298; Vermont Home Mortgage Credit Agency

v. Montpelier National Bank, 128Vt, 272, 262 A.2d 445; New Jersey Mortgage Finance Agency v. McCrane, 56 N.J. 414, 267 A.2d 24; Maine StateHousing Authority v. Depositors Trust Co., (Maine 1971), 278 A.2d 699; Opinion to the Governor, 112 R.I. 139, 308 A.2d 802; Johnson v. Penn. Housing Finance Agency, 453 Pa. 329, 309 A.2d 528; Massachusetts Housing Finance Agency v. New England Merchant's National Bank, 356 Mass. 202, 249 N.E.2d 599 (overruling advisory opinion Opinion of the Justices, 251Mass. 716, 219 N.E.2d 18); Walker v. Alaska StateMortgage Association (Alaska 1966), 416 P.2d 245; Gibson v. Smith, 

# - Or. App. -9 531P.2d 724; In the Matter of the Constitutionality of O.R.S. 456.720, 

# - Or. 

## , 537 P.2d 542; California Housing Finance Agency v. Elliot, 

# - Cal. 

## ,!!T tipre. 3 555 P.2d &9; Stateex rel. West Virginia Housing Development Fund v. Copenhaver, 153W.Va 636, 171S.E.2d 545; Rich v. Georgia, 

# - Ga

# . , 227 S.E.2d 761; West v. Tennessee Housing Development Agency, (Tenn. 1974), 512 S.W.2d 275. The lone state that found this legislation isnot for a public purpose isMichigan where inIn reAdvisory Opinion, 380 Mich. 554, 158N.W. 2d 416, the Supreme Court of that state found the actwas for a public purpose except as it related to a unique stateconstitution provision which relates toconstruction of internal improvementsand which prohibited the state frombeing a party to such improvements. TheMichigan court ruled the statewas not a party to the improvements. The housing statutewas not found to violate any other provision and was for a public purpose for all other constitutionalprovisions. This Court in Rutherford v. City of Great Falls, 107Mont. 512, 86 P.2d 656, found a housing authority statute that allowed the city to begin slum clearanceprojects was for public purpose. The only difference between Rutherford and the instant case is the means chosen to accomplish that end. InMinnesota Housing FinanceAgency v. Hatfield, 297Minn. 155, 210N.W.2d 298, 307, it was pointed out: "An interest subsidymechanism is perhaps the most unobtrusivemethod for the government to subsidize housing costs and housing so subsidized is less likely to be stigmatizedwith the tarnished image often associated with public housing operated by housingredwklopment authorities

# ."

It is commendable the Montana legislatureand the Housing Board chose the interest subsidymeans to assist persons in attaining safe, sanitary and hedthful housing because it involves very little direct government interferencewith the individual's choice of the type of housing he wishes to live in. Because this

means is different from that chosen in Rutherford in no way alters the fact the legislationwas enacted to accomplish a public purpose and is reasonably structured to accomplish this end. For this reason the legislation does not violate Art. VIII, Section 1, 1972Montana Constitution. Second. Plaintiff questions whether the bonds the Housing Board proposes to sell are state debt and therefore subject to the provisions ofArt. VIII, Section 

### 8,1972Montana Constitution which states:"No statedebt shallbe created unless authorized by a two-thirds vote of the members of each house of the legislature or a majority of the electors voting thereon. No statedebt shallbe created to cover deficits incurred because appropriations exceeded anticipated revenue

# ." The legislature passed the Housing Act of 1975 by a twothirds vote of the members of each house, but it is clear that the

means taken by the sponsors of this legislation to avoid a conflict with the provisions of Art. VIII, Section 8 was tohave the Housing Board finance its projects by revenue bonds, which arenot state debt; If the legislationwas intended to create state debt that intentwould be clearly expressed inthe bill's title, or it would run contrary toArt. V, Section ll(3) which requires: "Each bill, except general appropriationbills and bills for the codification and general revision of the laws, shallcontain only one subject, clearly expressed inits title, If any subject isembraced inany act and isnot expressed inthe title, only so much of the act not so expressed isvoid." The titleof the billinquestion reads: "AN ACT TO BE KNOWN AS THE HOUSING ACT OF 

### 1975; CREATING A BOARD OF HOUSING AND PROVIDING FOR ITS POWERS AND DUTIES RELATING TO FINANCING TO ASSIST PRIVATE ENTERPRISE AND GOVERNMENTAL AGENCIES TO MEET HOUSING NEEDS," [Chapter 461, Laws of 1975.1 A two-thirds vote of the legislature isan alternative to a vote ata general election and this Court willnot find the legislaturehas approved the creation of a statedebt unless it is apparent that was the obvious intent of the legislature. That intent isnot present inthis case. We examine the Act to see if a statedebt was created. The Housing Act of 1975 at section 35-520 reads: "Credit of statenot pledged. Obligations issued under the provisions of this act do not constitute a debt or liability or obligation or a pledge of the faithand credit of the statebut are payable solely from the revenues or assets of the board. An obligation issued under this actshallcontain on the face thereof a statement to the effect that the state of Montana is not liableon the obligation and the obligation is not a debt of the stateand neither the faithand credit nor the taxing power of the state ispledged tothe payment of the principal of, or the interest on, the obligation." In Fickes v. Missoula County, 155Mont. 258, 264, 470 P.2d 287, the Court held that financing projects by the use of revenue bonds did not create. a debt which would be subject to the requirements of the predecessor of Art. VIII, Section 8, 1972Montana Constitution. After citing a series of revenue bond cases this Court, inFickes, pbinted out: "The common quality of allthese projects is that in each there is explicit provision that the public body issuing the bonds does not obligate its taxing power topay for them. The same exact provision iswritten into the law and thebonds involved in this case, so that the same decision must necessarily be made inthis case." That exact language would be applicable here, except the Housing Act of 1975 contains an additional section, section 35-517, which isreferred to as a "moral make-up clause" and reads: "Maintenance of capital reserve account. (1) In order to assure the maintenance of the capitalreserve account, the chairman of the board shall on orbefore September 1 inthe year preceding the convening of the legislature, deliver to the governor a certificate stating the sum, if any, required to restore the capital reserve account to the minimum capital reserve requirement. The governor shall include in the executive budget submitted to the legislature, the sum required torestore the capital reserve account to the sum of minimum capital reserve requirements. Allsums appropriatedby the legislature shallbe deposited in the capital reserve account. "(2) Allamounts appropriated tothe board by the legislatureunder this section constitute advances to the board and, subject to the rights of the holders of any bonds or notes of the board, shallbe repaid to the state's general fund without interest from available operating revenues of theboard in excess of amounts required for the payment of bonds, notes or other obligations of the board, for maintenance of the capital reserve account and for operating expenses."A11 the objections to section 35-517assume the very worst combination of events willhappen---thatthe mortgages invested inwill not provide enough revenue to pay off the bonds; that the governor recommended and the legislature approved the loanprovided for and the land that secures the mortgages has lost value and, the sale of the landwould not cover the amount secured by the mortgage. This is extremely unlikely because land values have generally gone up and mortgagors have generallypaid a portion of the underlying debt before default and the land covers the full amount of the debt remaining. There is little likelihood of resort to the provisions of section 35-517but nonetheless its provisions must meet constitutionalmuster. An Oregon court of appeals case,Gibson v. Smith, O~-APP- 

## , 531 P.2d 724, 728,reviews the difficulties the courts invarious jurisdictionshave had with this provision in its various forms: ''Wehave considered the opinions and conclusions of other courts which have discussed the constitutionality of housing acts with provisions similar to those questioned at bar. All of them consider provisions like those in ORS 456.720(5) to be ineffectual for their purported purpose, but several leave them extant as expressions of what the legislatures hope future legislatureswill do. Some strike suchprovisions because they are nullities. In all cases, the crucial questions are decided on the basis of the particular state's constitutionalprovisions. Inno casewe have found have such acts been totally struck down, and allhold theybear a public purpose. Walker 

### v. Alaska State Mortgage Association, supra; Maine State Housing Auth. v. Depositors Trust Ca, 278A.2d 699 (Me. 1971) (which held that the attempt to bind future legislatures is ineffective, but that the attempt would be interpreted so that the word 'shall' means 'may' in order to give it the effect of expressing a 'hope' or 'aspiration' that future legislatures would appropriate from general funds in the event of revenue deficits); Massachusetts Housing Finance Agency v,N.E. Merchants National Bank, 356 

### Mass. 202, 249 N.E.2d 599 (1969)(where the court interpreted the questioned provision much as did theMaine court inMaine StateHousing Auth, v. Depositors Trust Co., supra); Constitutionality,PA 1966,No. 346, 380Mich. 554, 158 I N.W. 2d 416 (1968) (inwhich the court held invalid a provision like that involved at bar); Minnesota HousingFinanceAgency v. Hatfield, 297Minn. 155, 210N. W.2d 298 (1973); New JerseyMortgage FinanceAgency v. McCrane, 56N.J. 414, 267A.2d 24 (1970); Martin v. Housing Corp., 277N.C. 29, 175 S.E.2d 665 (1970); Johnsonv. Pennsylvania Housing FinanceAgency, 453 Pa. 329, 309A.2d 528 (1973); Vt. Home Mort. Cr. Agcy. v. Mont. Nat. Bank, 128Vt. 272, 262A.2d 445 (1970); State ex rel. 

### v. Copenhaver, 153

### W. Va. 636, 171 S.E.2d 545 (1969); and State ex rel. Warren v. Musbaum, 59Wis.2d 391, 208N.W.2d 780 (1973) (where the questioned provision included thesentence about the governor including a deficit in the reserve fund in a futurebudget, not the sentence requiring an appropriationby a future legislature. It did require a bill to pay the same to be introduced in future legislatures, which the court saidwas a nullity. Nevertheless, on the theory that the included provision was a legislative attempt to invade executive authority, the provisionwas held to be unconstitutional and a nullity)." InGibson the Oregon court found the equivalent section to section 35-517 in the Oregon statute to be unconstitutional as a violation of that state's constitutional provision equivalent toArt. VIII, Section 8, 1972Montana Constitution. The Oregon Supreme Court in an originalproceeding, In theMatter of the Constitutionality of O.R.S. 456.720, (Ore.1975), 537 P.2d 542, 545, found that the section, after an amendmentwhich removed the mandatory direction to the legislature to appropriate funds and replaced itwith permissive language, was constitutional. It pointed out: "Intervenors regard the presence of a make-up provision as a pledge of the state credit because a bond dealer or vendor of certificates would point to the statute as an assurance to potential buyers of the certificates of indebtedness,that if the source of payment of the certificates should prove insufficient, a future legislature would come to the rescuewith an appropriation of state funds to prevent or overcome a default. Certainly the purchasers of the bonds cannot predicate such an expectation upon any legal obligation of the statebecause the bonds themselves are required to contain a statement to the contrary. If there is a pledge, then, it is at most based upon a moral obligationwhich the members of future legislaturesmight feel to meet the deficiency. We do not interpretArticle XI, $7as prohibiting such a moral and therefore unenforceable pledge.

# ** *"Montana's version of this section is permissive in its direction to the legislature and it is clear the Forty-fourth Legislature did not bind a future legislature appropriatemoney. Third Section 35-517presents a second difficulty due to the mandatory language in its direction that the governor include the Housing Board's appropriation request in his budget

# . In State ex rel. Warren v. Nusbaum, 59Wis.2d 391, 208N.W.2d 780, the Wisconsin Supreme Court found such a mandatory direction violated that state's constitutionalprovisionwhich said the governor "shall communicate to the legislature, at every session, the the condition oflstate, and recommend suchmatters to them for The their consideration as he may deem expedient." /equivalent section the 1972Montana Constitution,Art. VI, Section 9,provides: "Budget and messages. The governor shall at the beginning of each legislative session, and may at other times, give the legislature information and recommend measures he considers necessary. The governor shall submit to the legislature at a time fixed by law, a budget for the ensuing fiscalperiod setting forth in detail for all operating funds the proposed expenditures and estimated revenue of the state." The Constitutional ConventionNotes point out that the difference between this sectionand the corresponding section in the 1889 Montana Constitution' is that: "Makes itmandatory that Governor send budget to legislature. Otherwise no change except in grammar.I I This Court in State ex rel. Normile v. Cooney, 100Mont. 391, 403, 47P.2d 637, stated: "'The separationof the government into three great departments does not mean that there shallbe "no common link of connection,or dependence, the one upon the other in the slightest degree1''(&8tory's Commentaries on the Constitution, sec. 525); it means that the powers properly belonging to one department shall not be exercised by either of the others. (Const. Art.IV, sec.1.) There is no such thing.asabsolute independence.

## ' " 

# - 12

# -Budgeting is one-ofthose common links. The executive depends on the legislature for funding and because the legislature must set the state's budget in a ninety day session every other year, and because this is a period when there are numerous othermatters to attend to, the legislaturemust also rely on the executive to provide the information it needs to budget intelligently. By statute, section 79-1015,R.C.M. 1947, the governor is required to submit the budget in a certain formwith specified contents. The governor is prohibited from altering any legislative appropriation request by section 79-1013,R.C.M.1947. It is this difference, the mandatory budget requirement, that creates the difference between Montana and Wisconsin. There

was no constitutionallyprohibited invasion of the executive's power when the legislature required in section 35-517 that the governor include the Housing Board's request in his budget. Fourth Difficultypresented by section 35-517 is also whether an appropriationmade pursuant to that section would violateArt. V, Section 11(5), 1972Montana Constitutionwhich reads: "No appropriation shallbe made for religious, charitable, industrial, educational, or benevolent purposes to any private individual,private association,or private corporation not under control of the state." This is one of the sections of the 1972Constitution directed to the legislature. Art. V, Section ll(6) allows challenge on the ground of noncompliance with the section onlywithin two years of a statute's effective date. This challenge is within that time period. The predecessor section in the 1889 Constitutionwas Art. 

### V, Sec. 35, which read:"No appropriation shallbe made for charitable, industrial, educational or benevolent purposes to any person, corporation or community not under the absolute control of the state, nor to any denominational or sectarian institution orassociation.I1 The Convention Notes indicate therewas no change between the

new and the old provision except as to grammar. It must'thenbe assumed the 1972Montana Constitution expresses the intent of the framers more precisely. This is significant because there

are differences in the wording of the 1889 and 1972 sections. The 1889 section had the word "ab~olute'~ before the word "control1' and the 1972 section adds the word "private" before person, association, and corporation. InVeterans1Welfare Comm'n v. V.F.W. & D.A.V., 141Mont. 500, 510, 379 P.2d 107, this Court in discussing the differencebetween a line item appropriation to the private veterans' organizations and appropriations to the housing authority inRutherford and to the Montana Armory Board, inGeboski v. Montana Armory Board, 110Mont. 487, 103 P.2d 679, said:

11 1However, the distinction between those cases and the case atbar is the distinctionbetween a private corporation and a public corporation, the functions of the latter of the two being under the control of the state. In allthree of the cases above referred to the court was careful inpointing out that the agency was a public corporation under the control of the stateand in the nature of a municipal corporation. 'I1 The Montana Housing Board isnot a private corporation, it is a public corporation. It received allof itspowers directly from the legislature and its duties and responsibilities are set out clearly by the statutewhich created it. Art. V, Section 11(5), 1972Montana Constitution, isnot applicable to appropriations under section 35-517, R.C.M. 1947.Fifth Plaintiff alleges the Housing Act of 1975 entails

an unconstitutional delegation of legislative power violating Art. 

### V, Section 1, 1972Montana Constitution. The Court stated in Milk Control Board v. Rehberg, 141Mont. 149, 161, 376 P.2d 508: 

# "*** Concerning adequate standards and guides in delegation of legislativepower, this courthas stated the rule as follows: If the legislature fails to prescribe with reasonable clarity the limits ofpower delegated to an administrative agency, or if those limits are too broad, its attempt to delegate is a nullity. "On the otherhand a statute is complete and validly delegates administrative authoritywhen nothing with respect to a determination of what is the law is left to the administrative agency,and its provisions are sufficiently clear, definite, and certain to enable the agency to know its rights and obligations." In this case,plaintiff argues the statute is too vague

as to the term "personsard families of lower income". The legislature set out its definition of this term in section 35-

"'Persons and families of lower income' means persons

and families,with insufficient personal or family incomewho require assistance under this act,'as determined by the board, taking into consideration: "(a) the amount of the total personal and family income available for housing needs;

"(b) the size of the family; "(c) the eligibility of persons and families under federalhousing assistance of any type based on lower income or a functionalor physical disability; "(d) the ability of persons and families to compete successfully in the normal housing market and to pay the amount atwhich private enterprise isproviding decent, safe,and sanitaryhousing; "(e) the availability and cost of housing in particular areas; and If(£) nkeds of particular'persons.orfamiliesdue.to age,orphysical handicaps.I'Allthat is left for the agency to do to place a figure

on the income limitfor "persons and families of lower income'' is to inquire into the facts as the statute directs and make the determinations required by the statute. The agency has heeded this legislative directive and adopted a program rule which sets out these same basic considerations ingreater detail. See: M.A.C. 22-3.18 (6) S1840. Pursuant to this program rule the Housing Board adopted $16,000 as the upper limit. We note here (1) thisAct is aimed at a specific category of persons, those whose income is stable but because of the high price of money cannot afford tobuy a home. It is obvious those with littleorno income cannot afford to purchase

a home no matter how low the interest rate; (2) the factualbases of the determinations made by the Board constantly change and the legislature meets only once every two years. The agency may meet

as often as isnecessary and may change the income level as the facts which serve as the basis for itsoriginal determination change. The delegation of this power does not violate any constitutional prohibitions. It is a clear, definite, and certain direction to the agency which enables the agency to know its rights and obligations. Sixth Plaintiff charges the flow of funds under the Act violates Art. VIII, Sections 12, 13, 14,1972Montana Constitution. The Housing Act of 1975 provides for two methods of creation and issuance of its revenue bonds, by resolution as set out in section 35-508(1), or by trust indenture as set out in section 35-513. The bonds issued under the firstprocedure (section 35-508(1)) would follow a complex procedure for deposit with the statetreasurer in the statefund with accounts in various state fund accounts and parallel act accounts.Bythe alternative provision (section 35-513), the funds would be handled by much the same systembut the proceedsfrom the bond salewould be handled by the trustee. Section 35-513, R.C.M. 1947, provides inpertinent part:

'I* 

# ** A trust indenture may contain provisions for protecting and enforcing the rights and remedies of the bondholders as are reasonable and proper and not in violation of law, including covenants setting for the duties of the board inrelation to the exercise of its powers, the custody, safeguarding and application of all moneys. The board may provide by a trust indenture for the payment of the proceeds of the bonds and the revenues of the trustee under the trust indenture of another depository, and for the method of disbursement, with safeguards and restrictions as it determines. 

## **

# *" This method is consistent with section 79-306(3), R.C.M. 1947, which states: "Nothing in this chapter shall impair or otherwise affect any covenant entered into pursuant to law by any agency or institutionrespecting the segregation, deposit, and investment of any revenues or funds pledged for the payment and security of bonds or other obligations authorized tobe issued by such agency, and allsuch funds shallbe deposited and invested in accordance with such covenants notwithstanding any provision of this chapter." The chapter referred to is entitled "Deposit and Investment of StateFunds". The constitutionalprovisions which plaintiff argues these procedures violate require that the legislature shallby law insure strictaccountability of allrevenue received and money spent. The chapter provides for a unified investment program and requires that therebe an appropriationmade by law, and a warrant drawn by the proper officerbefore money be paid out of the treasury. It is clear the legislature provided by law for strict accountability of the funds. A proper trustee for the bond revenue is required and there are provisions which authorize a legislative audit at any time of the Board's books and a yearly audit. The trust indenture requires a monthly report to the statetreasurer as to allindenture funds and bonds of record and accounts must be kept and be open to inspection by the state treasurer, the trustees and holders of more than five percent of the outstanding bonds.The Constitution's provision for the unified investment fund does not require that all agencies participate regardless of the nature of the agency. Where, as here, the agency is not using state funds and is settingup what amounts to its own specialized investment fundwith a particular purpose, it is reasonable to allow, as the legislature did, the agency to take care of its

own funds in a manner appropriate to its function. The Constitution's provisions forpayment out of the treasury only on a warrant and pursuant to an appropriation presents no problem, for the trust indenture funds are not deposited with the treasurer and the funds received from the sale of the resolution bonds areby statute deemed continuously appropriated. Section 35-52 

# q1 c), R.C.M. 1947. This Court discussed a similar provision in Geboskiv. Montana Armory Board, 110Mont. 487, 493, 103 P.2d 679,where it said: "Section 

### 14 relates to the method of handling the deposits of (f) statemonies. Themoney raised here by the sale ofbonds becomes a special fund to be disbursed for the erection of proposed buildings. This money is not derived by taxation and consequently need not be handled in that manner." Seventh The last issue raised is the conflict between the Housing Act of 1975 and section 5-1037,R.C.M. 1947, which prohibits state banks fromborrowing funds without prior approval of the department of business regulation. Here, recourse to the rule of statutory constructionwhich provides thatwhere a specific statute conflictswith a general statute the specific controls over the general to the extent of any repugnancy. State ex rel. Browman v. Wood, Mont, 

## - ,543 P,2d 184, 

### 32 St. Rep, 1136;Montana Ass'n of Tobacco and Candy Distributors v. State Board of Equalization,



# - 18

# -156Mont. 108, 476 P.2d 775; In re Stevenson's Estate, 87 Mont. 486, 289 P. 566. It is clear that statebanks may participate in the Housing Board's programs without the prior approval of the department of business regulation because the legislatureby its definition of "lending institution'' clearly intended to cover statebanks and thereby made thenecessary determination that state banks may participate. A declaratoryjudgment is entered inaccordance with the foregoing opinion. 

# n

We, Concur: 

### f 

# I

Mr. JusticeFrank I. Haswell, took no part in this Opinion.