Case Name: STATE v. WEST, Governor
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1914-12-29
Citations: 74 Or. 112
Docket Number: 
Parties: STATE v. WEST, Governor.
Judges: Mr. Justice Moore and Mr. Justice Eakin concur in this dissent.
Reporter: Oregon Reports
Volume: 74
Pages: 112–126

Head Matter:
Argued September 21,
affirmed December 29, 1914.
STATE v. WEST, Governor.
(145 Pac. 15.)
States — Appropriations—Funds.
1. For the years 1911 and 1912 the legislature appropriated $142,000 for the maintenance of the penitentiary. Of this, $80,000 was spent, and the sum of $20,000 derived from sales of brick made by the convicts was deposited as a revolving fund, out of which sum $16,000 was spent for the maintenance of the penitentiary. Held, that, as, except in the ease of school or other funds raised by special taxation, there is no segregation of moneys in the treasury, the money derived from the sale of brick made by the eonviets could not be deposited in a special fund, subject to warrants drawn for penitentiary purposes, but, as the full appropriation for the penitentiary was not expended, warrants paid out of the so-called revolving fund should be treated as paid out of the appropriation for the penitentiary, and the state, not having been damaged by payments out of the so-called revolving fund, could not recover the same from the state officers making sueh payments.
From Marion: Percy R. Kelly, Judge.
In Banc. Statement by Mr. Chief Justice McBride.
In substance, it is stated in the amended complaint that during the period involved in this controversy the defendant West was Governor, the defendant Olcott, Secretary of State, and the defendant Kay, Treasurer of the State of Oregon; that they assumed to act as a board purporting to have control of what they termed the “Oregon State Penitentiary Revolving Fund,” consisting of rent of a foundry plant at the prison and of money derived from sales of brick made by the convicts, aggregating during that time $16,905.92; that, without the same having been appropriated by any act of the legislative assembly, they expended, of that amount, by a pretended process of auditing alleged claims and drawing warrants and payment thereof in form as if regularly appropriated, $16,518.83, without any authority of law, for services rendered, materials and supplies furnished, and land purchased for the penitentiary, all in excess of the moneys appropriated by law for any purpose connected with that institution during the period mentioned; and that the moneys actually appropriated by the legislative assembly for that purpose were otherwise expended. Alleging that the state is damaged in the sum so wrongly disbursed, the plaintiff demands judgment for $16,518.83. The allegation of damage to the state and that the payments in question were in excess of lawful appropriation therefor are denied by the answer. The official character of the defendants is admitted. All other allegations of the complaint are denied, except as stated in the answer. After alleging, in substance, that the money derived from rent of foundry and sale of brick made by the convicts had been carried in the accounts of the state treasury under the head of “Oregon State Penitentiary Revolving Fund,” the answer alleges:
“That during the year 1911 large numbers of the prisoners and convicts confined at said penitentiary were employed under the direction and control of the superintendent of said penitentiary in useful and profitable labor, as making bricks, repairing and constructing buildings and other equipment in and about said institution for the maintenance and betterment of said penitentiary, all pursuant to rules and regulations prescribed by defendant Oswald West, Governor of the State of Oregon. That, in the course of said employment of said prisoners and convicts, it became necessary to engage the services of men and to purchase the materials, supplies and land as described in the amended complaint for the more useful, profitable and efficient employment of said prisoners and convicts, and for the enlargement of their employment, and for the maintenance and betterment thereby of said penitentiary. That said services, materials, supplies and land were engaged and purchased by said superintendent for the State of Oregon for the use and benefit of said institution; that payment was made therefor in the following manner, to wit: Vouchers specifying the items for said claims were duly certified by said superintendent, and by him transmitted to defendants, who examined and approved the same and thereafter transmitted the same to defendant Ben W. Olcott, Secretary of State. Said defendant Ben W. Olcott, Secretary of State, thereafter duly audited, approved and allowed said claims and drew warrants in payment of the same on said defendant Thos. B. Kay, said warrants purporting to direct said defendant Thos. B. Kay to pay the same out of said ‘Oregon State Penitentiary Revolving Fund.’ Said defendant Thos. B. Kay, paid said warrants and charged the same to said ‘Oregon State Penitentiary Revolving Fund. ’ That said rents and proceeds of said labor, inclusive of said balance of $1,006.34, aggregated in moneys from January 1, 1911, to September 3, 1912, the sum of $20,808.26. That the cost of said services, materials, supplies and land for which said warrants were drawn and paid, as alleged, aggregated $16,191.33. * * Said expenditures were found necessary in order to insure the safe custody of the inmates, promote the welfare of the said institution, and carry out the purposes for which it was established.”
By whom it was found necessary to do all these things is not stated.
In a second defense, after stating that the legislature had appropriated for the biennium of 1911 and 1912, $142,000 for the salaries of officers and employees and for the general maintenance and contingent expenses of the penitentiary, the answer contains this allegation:
‘ ‘ That the salaries of the officers and employees and the general maintenance and contingent expenses of said penitentiary for the year 1911 over and above, and for other purposes than those expenditures described in the amended complaint, aggregated the sum of $80,375.45; and obligations were incurred and warrants drawn pursuant to said act and appropriation during the whole of said year 1911 over and above said expenditures described in the amended complaint for no other or greater sum than $80,375.45; and there was in the hands of defendant Thos. B. Kay, State Treasurer, on January 1, 1912, unexpended of said appropriated sum and over and above all warrants drawn or obligations incurred pursuant to said act and appropriation, exclusive of said expenditures described in said amended complaint, the sum of $61,624.55.”
A third defense is, in substance, that the amount paid for the services, materials, supplies and land mentioned in the complaint was the fair market price such as would have been paid for the same had there been in the hands of the State Treasurer money duly appropriated by the legislative assembly for that purpose, and that no damage was done to the plaintiff by the payments challenged by the complaint. Much to the same effect is the fourth separate defense, in substance, that the materials, land and supplies mentioned were used in the maintenance of the state prison and for the better and more efficient conduct and management thereof. This fourth separate answer concludes with these allegations :
‘ ‘ That all of said matters and things in the answer alleged and set forth in the amended complaint were brought to the full notice and knowledge of the legislative assembly of the State of Oregon for the year 1913, by means of reports made to said assembly pursuant to law by defendants and by reports of investigating committees appointed for such purposes by the legislative assembly; that said legislative assembly took no action toward the repudiation of said matters, transactions or things, but acquiesced therein, and ratified and confirmed the same, and accepted all of the benefits thereof for and on behalf of the State of Oregon.”
A demurrer to the new matter in the answer was overruled by the Circuit Court. The reply denied the allegation of the answer respecting the acquiescence and ratification by the legislative assembly of the acts complained of, and alleges, in substance, that a committee appointed by the legislative assembly at the session thereof held in the year 1913 expressly reported that the expenditures in question were without authority of law and illegal, and that none of them were ever acquiesced in, ratified or confirmed by the legislative assembly or by the direct vote of the people. The pleadings having been thus concluded, both parties moved for favorable judgment on the pleadings according to their respective prayers. The Circuit Court overruled the motion of the plaintiff, and sustained that of the defendants, entering judgment dismissing the action. The plaintiff appeals.
Affirmed.
For the State there was a brief over the names of Mr. Andrew M. Crawford, Attorney General, and Mr. James W. Crawford, Assistant Attorney General, with an oral argument by Mr. Andrew M. Crawford.
For respondents there was a brief with oral arguments by Mr. John H. McNary and Mr. Claude McColloch.

Opinion:
Opinion by
Mr. Chief Justice McBride.
The answer of the defendant contains many conclusions of law and some inconsistencies. From all the pleadings it appears that there came into the hands of the State Treasurer from sales of brick and other products of the state penitentiary during the biennium of 1911 and 1913 the sum of $20,808.26, which, under the direction of the board, was charged in a separate account as a revolving fund, of which $16,191.33 was paid out by warrants drawn upon it for expenditures "found necessary in order to insure the safe custody of the inmates, promote the welfare of the institution, and carry out the purposes for which it was established." It also appears that, for the support and maintenance of the institution, the salaries of officers and employees, and for the general maintenance and contingent expenses of the penitentiary, the legislature appropriated $142,000, of which there was expended $80,375.45 over and above the sum of $16,191.33, before mentioned, making up. a total expenditure for the biennial period of $96,566.78. There is no authority of law for creating this so-called revolving fund, and therefore it did not legally exist. The moneys paid into the treasury from the proceeds of materials manufactured at the penitentiary became legally part of the general funds in the state treasury, and the attempt to maintain and draw warrants upon this so-called revolving fund was not authorized by law. Except in the case of school funds and other funds raised by special taxation and authorized by law for a particular purpose there is no segregation of moneys in the treasury. As to moneys appropriated by the legislature out of the general funds of the state, the separation and designation of the particular sums appropriated as "funds," such as "penitentiary fund," "asylum fund," etc., is largely a matter of bookkeeping, and is done for convenience in ascertaining when the amount appropriated has been exhausted. The amount, therefore, designated by the state's bookkeeper as the "revolving fund" was, in fact, a part of the general funds of the state, and subject to be paid out upon any warrant presented against any so-called fund the amount of which had not been exhausted. It was a mistake, therefore, to designate warrants drawn for the maintenance of the penitentiary as drawn upon the so-called revolving fund and payable out of it. Technically speaking, they should have been drawn upon what was known on the books of the treasurer as the "penitentiary fund"; but, so far as the state is concerned, except for some confusion in bookkeeping which might, but in this case did not, lead to warrants in excess of the amount appropriated by the legislature, the result is exactly the same as though the warrants had been drawn against that portion of the general funds of the state designated for the purposes of bookkeeping "the penitentiary fund." This is too plain for argument. It is admitted that the expenditures made were for the maintenance of the penitentiary's legitimate indebtedness. For that purpose any money which came into the state treasury and was otherwise unappropriated could be drawn upon so long as the amount did not exceed $142,000. This $16,-191.33 did come into the state treasury, and was not otherwise appropriated, and could therefore be legitimately used, along with any other money in the treasury, to answer the demands caused by expenditures at the penitentiary. Had the amount of $142,000 appropriated by the legislature been first consumed, and this $16,191.33 been used in addition to that, the state would have been damaged, but it is an admitted fact that only $96,566.78, including the amount drawn from the revolving fund, was drawn altogether, leaving a balance of $45,433.22 to be returned to the treasury. To say that the state has been damaged in any respect by the irregular manner in which the warrants were drawn and paid is to ignore plain facts and figures which speak for themselves.
The judgment of the Circuit Court is affirmed.
Aeeirmed