Case Name: State of Mississippi ex rel. Myron S. McNeil, District Attorney v. George R. Edwards, State Treasurer, et al.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1908-10
Citations: 93 Miss. 704
Docket Number: 
Parties: State of Mississippi ex rel. Myron S. McNeil, District Attorney v. George R. Edwards, State Treasurer, et al.
Judges: 
Reporter: Mississippi Reports
Volume: 93
Pages: 704–718

Head Matter:
State of Mississippi ex rel. Myron S. McNeil, District Attorney v. George R. Edwards, State Treasurer, et al.
[46 South. 964.]
Constitutional Law. State depositaries. Laws 1908, eh. 96, p. 77. Constitution 1890, sec. 137. Published statements of condition of treasury.
Laws 1908, ch. 96, p. 77, providing for state depositories and requiring the state treasurer to keep the state’s moneys on deposit in the banks selected as depositories is constitutional; it does not violate Constitution 1890, see. 137, requiring the state treasurer to publish semi-annual statements showing the condition of the treasury and the balance on hand, with a certificate of the governor as to their correctness.
From; the chancery court, first district, Hinds county.
EIon. G. Garland Lyell, Chancellor.
The state of Mississippi, suing on the relation of the district attorney, appellant, was complainant in the court below; Edwards, state treasurer, and others, appellees, were defendants-there. The object of the suit was to enjoin the defendants, state officers, from carrying into effect the provisions of the act, Laws 1908, ch. 96, p. 77, providing for state depositories. The court below dissolved the preliminary injunction which had been obtained and the complainant appealed to the supreme court. The facts are stated in the opinion of the court.
Myron S. McNeil, district attorney, for appellant.
Is the act constitutional? I maintain it is not. The pole star for constitutional interpretation and construction is the intent of the people in adopting it. Cooley Con. Lim. 89.
The people in forming the constitution committed to the legislature the whole law making power of the state which they did not expressly or impliedly withhold. Cooley Con. Lim. 99, 127, 240, 242.
And to ascertain this legislative intent we are to examine the state of things existing when the constitution was adopted, to ascertain the old law, the mischief and the remedy. Cooley Con. Lim. 100.
"What was the old law — the constitutional provision? All prior constitutions of the state had been silent on the subject. What was the condition of things ? $315,000 of the state’s money lost and suits then pending for its recovery. How lost ? By being in some way suffered and permitted to leave the vaults of the treasury, and no one thought the treasurer himself had squandered the money for his personal use. The remedy ? To require the money at all times to be “in the treasury.” “Actually in the vaults of the treasury.”
It is conceded that this section of the constitution was framed in view of the known habit or custom of the state to keep its money in the vaults of the state treasury. In fact it is admitted that the convention contemplated that the money should at all times be actually in the vaults of the treasury. This admits the case. It is a well recognized canon of constitutional construction, that it matters not what terms are employed. When the intent is made out it must govern. And if at the time the constitution was adopted there were known and settled rules and usages or other laws of the country,- in reference to which the constitution has evidently been formed, these in effect .became a part of the constitution itself.
It matters not whether it be common law, custom or statutory provisions. Cooley Con. Lim. 100, 186; Lewis v. Beatty, 32’ Miss. 50; Beck v. Allen, 58 Miss. 177.
In the light of history and the prior state of the law it will not do to say, th'at this provision had no purpose other than to restrain and control the custodian himself. The purpose was to provide for the safety and prevent the loss of the public moneys. And to accomplish this purpose the sovereign deemed it wise to, and did, provide that the money should remain “in the vaults of the treasury” “actually in the vaults of the treasury,” so long as the legislature said nothing to the contrary. If this, no constitutional provision was required, its regulation might well have been left to statutory enactment exclusively if, notwithstanding this expression of the sovereign, the treasurer when divested could farm out the public money. The sovereign has said to the treasurer that the moneys shall be kept in the treasury, and by the act, tire legislature assumes to- say that notwithstanding the constitution you keep the moneys thus and notwithstanding tire fact, that you are the custodian of the public moneys, we will make a way for the evasion of the supreme law, hy letting out the money to certain banks, for which you shall take certain securities, and this shall to all intents and purposes be considered as money and when kept in the treasury, a compliance with the mandates of the constitution. The history of this act shows that notwithstanding an over-public sentiment for such a law, the legislature itself had grave doubt of its power— no matter how anxious.it might be to yield to this demand to exact a law.
Suppose it had been suggested to the constitutional convention that the depositories be provided for, does any one doubt for an instant, in view of the recent loss to the state and the scandal attendant, the lack of confidence in banks then existing, that for one moment it would have received favorable consideration?
Read this act as we may, it is simply a scheme for the loaning by the state treasurer of the public moneys — all of them, non tr ary to the clear .and manifest provisions of the constitution.
Unless it be said that these banks shall constitute the “treasury” and evidence of indebtedness constitutes “funds” within the meaning of section 137, then the governor cannot comply with the constitutional mandate — and even then he cannot, for if the act is complied with, there will be no “balance stated by fire treasurer actually in the, vaults of the treasury” and an impossibility to “verify the cash balance as shown by tbe books” and in all cases the cash balance as called for by the books, must necessarily be published as not actually in the treasury.
The act cannot be held constitutional without paring away the language and intent of section 137 and this should never be done.
Whether the opinion of Judge Campbell in the case of Bech v. Allen, 58 Miss. 177, is right or wrong as to the particular construction there involved, it is full of irrefutable logic, and if the rules of construction by him there laid down are to be .followed, this act must be declared unconstitutional.
B. V. Fletcher, attorney general, for appellees.
This litigation was instituted for the purpose of testing the constitutionality of chapter 96, Laws 1908, known as the State .Depository Law. Grave reasons of public policy demand that the constitutionality of this act should be judicially determined before the act is put into effect. There can be nothing in the act itself which is subject to attack on constitutional grounds, provided any act can be constitutional.

Opinion:
Mayes, J.,
delivered the opinion of the court.
The object of this suit is to test the constitutionality of chapter' 96, Laws of 1908, providing for the removal of the state funds from the vaults of the treasury by tbe establishment of state depositories. By section 1 of the act it is provided that "the state treasurer shall deposit and at all times keep on deposit in the state or national bank, or some of them doing business in this state, the amount of money in his hands belonging to the several current funds in the state treasury, and any such banks may apply for the privilege of keeping on deposit such funds or some part thereof." Eor the purpose of deciding the question involved, this is the only part of the act we need quote, since it is by this section that the funds are authorized to be removed from the vaults of the treasury, and all other features of the act are addressed merely to the administration of the law.
It is claimed that this act violates section. 137 of the constitution of the state, which is as follows, viz.: "It shall be the duty of the state treasurer, within ten days after the 1st day of January and July of each year, to publish a statement under-oath, in some newspaper published at the seat of government, showing the condition of the treasury on said days, the balance on hand and in what funds, together with a certificate of the governor that he has verified the count of the funds in the treasury, and found the balance, stated by the treasurer, actually in the vaults of the treasury,- or as the truth may be. And it shall be the duty of the governor, at such times as he may deem proper, to go to the treasury, without giving notice to the treasurer, and verify the cash balance as shown by the books, and to publish the fact that he has done so, and whether the amount called for by the books be actually in the treasury, and stating whether the treasurer had any notice whatever that the verification would be made." If the act in question is in conflict with the organic law of the state, it can only be in conflict with section 137, because that is the only provision of the constitution which deals with the question involved in this act.
All laws passed by the legislature of the state are presumably valid in any case, and the presumption is a conclusive one, unless there is to be found in the constitution of the United States or the constitution of the state a prohibition on the power of the legislature to pass the particular law. Under this act there-can arise no question under the federal constitution. The act deals- with a purely state matter. The legislature represents the-sovereign power, and is vested with full control and disposition of the state's funds, except in such instances as the constitution prohibits. Thus by section 92 of the constitution the legislature-is prohibited from making payment to any person of the salary of a deceased officer beyond the date of his death. By section 93 the legislature cannot retire any officer on pay, or part pay, or make any grant to such retiring officer. By section 96 the legislature cannot grant extra compensation, fee, or allowance to any public officer, agent, servant, or contractor, after service rendered, etc. These are the only restrictions thrown around the sovereign power of the legislature to control and dispose of the funds of the state, and it is apparent that these restrictions are against private, and in favor of the public, interest. There is not to be found in the constitution any prohibition on the legislature to pass a depository law. Section 137 of the constitution was never intended to hamper or hinder the sovereign power from enacting laws for the regulation and control of the state funds for the best interest of the state. Its purpose was to control the treasurer in dealing with the funds as treasurer. When it was adopted, it was in view of the then unbroken custom of the state to keep its money in the vaults. Its object was to prevent the treasurer, either for profit or accommodation, from moving the funds committed to his care from the place where the law designated for the keeping of same. It had no purpose other than to restrain the custodian of the funds from making profit by loaning the state's money, or jeopardizing the funds by removing same from the treasury without authority, and any other construction is beyond the purpose of the constitutional section in question. The requirement of section 137 that the treasurer publish a statement under oath, etc., showing the condition of the treasury, etc., the balance on hand, etc., and that the governor make a certificate that he has verified the count o f the funds in the treasury, and found the balance, stated by the treasurer, actually in the vaults of the treasury, presents no difficulty whatever, nor does it make doubtful the power of the legislature to pass a depository law. The books of the treasurer must show only such sums of money and other funds as must be there after making such disposition of the funds as the law requires, and due credit is to be given for all funds on deposit with the banks in obedience to the law, just as the treasurer is entitled to credit for any other lawful disbursement. The amount required to be actually in the treasury is only such amount as is left after the treasurer bas made lawful disposition of the funds.
The act in question is subject to many criticisms as applied to its practical administration. It is in many respects very imperfect, and tbe character of some of the security authorized to be taken by it is of a most unsatisfactory nature. In the acts of 1908 are to be found two depository laws. These laws are contained in chapters 96 and 97. Chapter 96 provides for the establishment of state depositories, and chapter 97 provides for the establishment of depositories for the levee district funds. By section 2 of the act in relation to the state depository the security authorized to be taken for the loan of the state's fundáis; required to be state bonds, levee bonds, county bonds, municipal bonds, United States bonds, or surety bonds of any surety company authorized to do business in the state of Mississippi. The act further provides that "no bonds- shall be accepted as security if worth less than par in the market." By section 2 of- the act two classes of security may be taken — that is, bonds of the state, levee bonds, etc., all of which have a market value; and, secondly, the surety bonds of any surety company authorized to do business in the state. In the nature of things,, a mere surety bond has no market value. Eor this last character of security the state gets nothing but a mere right to- sUe on the bond, in case the depository using this character of security fail to pay over the money when required by the state to do so-, and we apprehend that the state would experience much difficulty in realizing anything on the surety bond in open market. By section 11 it is provided that "in the event of the failure of any state depository to pay any warrant lawfully issued by the auditor of public accounts; on any funds on deposit belonging to the state in such depository, the treasurer is hereby empowered to sell such securities as are not placed with him by such depository," etc. It is thus seen that all bonds taken as security are required to> be worth their par in the market. Of course, section 11 can have no application-to security bonds, since the surety bond has no commercial value. We merely point out these features of the law to emphasize its crudities and uncertainties. The whole act shows that it was the intent and purpose of the legislature to require as security for the loan of the state's money a character of collateral readily convertible on the market, to the end that the state might not be embarrassed in collecting its funds, and yet the act authorizes one character of security which has no market value whatever and is but a mere right to sue. While section 11 provides for a sale of the bonds deposited as collateral, in order to realize on the security when necessary, nothing is said in the act about the method of realizing where the security is a surety bond. Of course it would follow necessarily that the state could sue on the bond; but it might take years to thus collect its funds, and we merely point out thpse things as emphasizing the many defects of the law. Where surety bonds are accepted as security, no form of bond is given by the statute which it is required that the surety company shall give; but the board authorized by law to supervise the loans are left to adopt their own form of bond. We hardly think that any banking institution would regard a surety company's bond as constituting any valuable security as the basis of a loan.
A comparison of the act creating the state depository with the act creating the levee depository shows that much more care was taken for the safety of the levee funds than for the state funds. Section 3 of. the levee depository law only authorized the taking of United States bonds, state bonds, levee bonds, county bonds, and municipal bonds; the municipal and county bonds of a county or municipality located in the levee district. The act does not authorize the taking of the bonds of a surety company as collateral. Such bonds may be used as security additional to that authorized to be taken by the act; but even then two or more of the surety companies are required to sigh the bond, when used'to obtain a loan of the levee funds. No funds of the levee may be loaned out on the security named in the act alone, but in every case an additional security bond is required to be signed by four or more individual securities or two or more surty companies authorized to do business in the state. The loan of the levee fund is still further secured by making all stockholders of a depository liable for any loss sustained on account of the failure of the depository, etc.
We are forced to approve this act, because it violates no constitutional provision of the state or United States; but in its present imperfect and unsatisfactory'condition we reluctantly yield our assent to this conclusion. We might indulge in many other criticisms of the act in question; but the criticisms would only be of such' features as must be corrected by the legislature and could serve no purpose here.
Affirmed and bill dismissed.