Case Name: Edwin W. EDWARDS, Governor of the State of Louisiana v. Mary Evelyn PARKER, Treasurer of the State of Louisiana, Fenner, et al., Intervenors; Darwin S. FENNER et al. v. Mary Evelyn PARKER, Treasurer of the State of Louisiana
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1976-05-05
Citations: 332 So. 2d 175
Docket Number: No. 57742
Parties: Edwin W. EDWARDS, Governor of the State of Louisiana v. Mary Evelyn PARKER, Treasurer of the State of Louisiana, Fenner, et al., Intervenors. Darwin S. FENNER et al. v. Mary Evelyn PARKER, Treasurer of the State of Louisiana.
Judges: SUMMERS, J., assigns additional concurring reasons.
Reporter: Southern Reporter, Second Series
Volume: 332
Pages: 175–203

Head Matter:
Edwin W. EDWARDS, Governor of the State of Louisiana v. Mary Evelyn PARKER, Treasurer of the State of Louisiana, Fenner, et al., Intervenors. Darwin S. FENNER et al. v. Mary Evelyn PARKER, Treasurer of the State of Louisiana.
No. 57742.
Supreme Court of Louisiana.
May 5, 1976.
Rehearings Denied May 25, 1976.
Camille F. Gravel, Jr., Gravel, Roy & Burnes, Alexandria, Frank L. Maraist, Baton Rouge, Robert G. Pugh, Pugh & Nelson, Shreveport, John L. Avant, Dodd & Barker, Michael S. Baer, III, Baton Rouge, William D. Brown, Brown & Wicker, Monroe, for plaintiff-applicant Edwin W. Edwards, etc.
William J. Guste, Jr., Atty. Gen., Kendall L. Vick, Louis M. Jones, Asst. Attys. Gen., Donald Ensenat, Sam L. Levkowicz, Dept, of Justice, New Orleans, for defendant-respondent, Mary Evelyn Parker.
Harry B. Kelleher, Lemle, K'elleher, Kohlmeyer & Mathews, David J. Conroy, Milling, Benson, Woodward, Hillyer & Pierson, New Orleans, Thomas W. Leigh, Theus, Grisham, Davis & Leigh, Monroe, Thomas L. Raggio, Raggio, Farrar, Cappel & Chozen, Lake Charles, Victor A. Sachse, Jr., Frank P. Simoneaux, Breazeale, Sachse & Wilson, Baton Rouge, Thomas M. Berg-stedt, Lake Charles, for plaintiffs Fenner, and others.
B. B. Taylor, Jr., Taylor, Porter, Brooks & Phillips, Baton Rouge, for intervenor-appellee La. State University and Agricultural and Mechanical Collegé'.
William J. Guste, Jr., Atty. Gen., Frederick W. Ellis, Special Asst. Atty. Gen., Lands and Natural Resources Section, in-tervenor for Governor Edwards.

Opinion:
DIXON, Justice.
We granted writs in these consolidated cases to determine disputes which have arisen concerning the disposition of funds received from the United States government as part of the settlement of the tidelands litigation.
Because of the importance of the questions to the State of Louisiana and to the operation of its government, all parties have requested expeditious treatment and determination of the issues.
On September 15, 1975 the State of Louisiana received two checks from the federal government. One was in the amount of $96,138,938.68, and the other was in the amount of $40,157,076.75. In the summer of 1975, when it became known that the tidelands funds would be forthcoming in the fiscal year 1975-1976, the Governor and the Treasurer of the State of Louisiana requested opinions from the Attorney General of Louisiana concerning the disposition of the funds. In the first opinion, to the Governor, the Attorney General concluded that the funds may be used to pay currently maturing bonded indebtedness, as well as that which would mature in future years. The Legislature subsequently added approximately $90,000,000 to the appropriations and capital outlay bills. After that legislative action, on August 5, 1975, the Attorney General's opinion to the Treasurer informed her that she could only make from the tidelands funds to be received, certain dedicated payments and pay bonds which matured during the fiscal year in which they were received, and only after that to pay for bonds in advance of maturity.
On September 26, 1975 the district court rendered judgment in favor of the plaintiff taxpayers and against the Treasurer, granting a preliminary injunction prohibiting the Treasurer from the disposition of the tidelands funds, except for their investment, for any purpose other than the payment of bonded indebtedness maturing after the end of fiscal year 1975-1976.
On March 23, 1976 the Treasurer filed an answer in the injunction suit, admitting the allegations of fact therein and praying for judgment according to law. That same day, the district court ordered the consolidation of the taxpayer suit with a suit for declaratory judgment filed by the Honorable Edwin W. Edwards, Governor, on March 16, 1976. The declaratory judgment action sought a declaration of the powers, authority and duties of the Governor, the Legislature and the Treasurer with respect to the receipt, deposit, distribution and use of the tidelands funds. Constitutional responsibilities of the Governor and the Legislature with respect to the operating budget and the capital outlay budget and the pressing need for certainty as to the proper disposition of the tidelands funds in time for the 1976 session of the legislature, due to convene May 10, 1976, justify the exercise of the supervisory jurisdiction of this court and the expeditious termination of the causes.
The principal question to be decided is whether the funds received by the State in the tidelands settlement are available to pay the obligations of the State which fall due in the year in which the tidelands funds are received, thus freeing current revenues of the State, otherwise allocable for the payment of current debt, for other uses by the Legislature. Article 7, § 9 of the La. Const, of 1974 (see appendix for text) provides that, "All money received by the state . . . shall be deposited immediately upon receipt in the state treasury . . . ," and that the tidelands funds are not excepted. Once deposited, all money is credited to a special fund — the Bond Security and Redemption Fund — with certain exceptions. Thence each year there is an allocation sufficient to pay all current obligations secured by the full faith and credit of the State. The balance is then credited to the State general fund.
Article 7, § 9 of the La.Const. of 1974 was first adopted by the Convention on Monday, December 17, 1973. (Official Transcript of the Constitutional Convention, 1973, p. 41 of the 102nd day of the proceedings). Although there was considerable debate about which funds were to be covered and which excluded from the operation of this section, there was no mention of tidelands funds.
On the next day, December 18, 1973, debate commenced on what is now Article 14, § 10 of the La.Const. of 1974, and continued to December 19. (Official Transcript, p. 123ff., 103rd day; 104th day, p. 2). Article 14, § 10 is relied on by the taxpayers for the position that the tidelands moneys, when deposited in the treasury, should constitute a separate fund allo-cable generally to the prepayment of the bonded indebtedness of the State. Art. 14, § 10 provides:
"Funds derived from offshore mineral leases and held in escrow under agreement between the state and the United States pending settlement of the dispute between the parties shall be deposited in the state treasury when received. Upon such settlement, these funds and the interest from their investment, except the portion otherwise allocated or dedicated by this constitution, shall be used by the state treasurer to purchase, retire, or pay in advance of maturity the existing bonded indebtedness of the state or shall be invested for that purpose. If any of these funds cannot be so expended within one year, the legislature may appropriate annually, for capital improvements or for the purchase of land, ten per cent of the remaining funds, not to exceed ten million dollars in one year."
Several reasons support the interpretation of the taxpayers — that the tidelands money fell into a special fund and not into the Bond Security and Redemption Fund. The first is the disclosure in the Official Transcript of the Constitutional Convention on p. 134 of the 103rd day that a delegate, Senator DeBlieux, proposed an amendment which would have placed the tidelands moneys in the bond and redemption fund. His amendment would have deleted all language in Art. 14, § 10 following the first sentence, and his argument was:
"I certainly feel like that the proper portion of this is to get those funds and deposit them in the state treasury and then let the set-up that we have that we have enacted by a statute, now incorporated into our law by constitutional amendment, manage those funds so that we can get the best use out of them. Now, here, if you take these funds and use them for retirement of the state debt as has been indicated, as Senator Rayburn told you, we are just going to lose the management of our funds and possibly lose a great deal of interest which the state is now being able to get from these funds if they should ever come into the state treasurer. So, I ask that you adopt this amendment and, therefore, you might say undedicate these funds so that we can get the best management out of our funds."
The debate that followed expressed the fear of political factors that might prevent retirement of the bonded indebtedness by the legislature, confidence that the committee proposal would insure fiscal responsibility, a realization that tidelands money would be non-recurring income, that the sum involved was about $150,000,000, and that the Treasurer should be able to invest the money to make the most advantageous arrangement for the State in retiring the indebtedness.
The DeBlieux amendment was defeated by a vote of 16 to 73.
Other portions of the debate support the taxpayers' interpretation. One delegate said: "But, I think the intent is clear, the intent is to avoid the possibility of a legislature expending moneys that are suddenly received in one year in a great windfall for something other than first seeing to it that this State's debt is taken care of." (Supra, p. 130). On the next page a delegate referred to the matter as "dealing with a special fund."
Throughout the debate it was emphasized that, with small exceptions, Art. 14, § 10 of the 1974 La.Const. was a condensation of Art. 4, § 2(d) of the 1921 Constitution. (See appendix for text). At the time of the adoption of that article (added by Act 170 of 1965), it was hoped that funds recovered might be sufficient to retire the entire bonded debt of the State. Its essential provisions were: "Notwithstanding any other provision of this Constitution or of the laws of this state, all funds received . . . from revenues derived from tidelands mineral leases . . . held in escrow shall be credited by the state treasurer to a special fund in the state treasury. So much . as are needed shall be expended . to purchase and retire in advance of maturity the callable bonds . . . Monies thereafter remaining . . . which cannot be expended immediately as hereinabove provided shall be invested . . . Out of the total funds remaining in the said special fund on the last day of each calendar year there shall be set aside such amount as is needed to pay the principal and interest on the outstanding bonded and other indebtedness . in the next succeeding calendar year . . . Thereafter . . . "
The 1921 constitutional provision clearly contemplated that the tidelands money would constitute a special fund, notwithstanding any other provision of law. A fair reading of the provision required the prepayment of all the State debt possible on receipt of the funds and the investment of that money which could not be so spent, which would then be used to pay what fell due in the next year. At the time of the adoption of this provision there was in effect R.S. 39:451, the statutory antecedent of Art. 7, § 9 of the 1974 Constitution which created the Bond Security and Redemption Fund.
Even in the absence of rather clear evidence of the intent of the drafters of the 1974 Constitution from the transcript of the proceedings, an appropriate and common method of interpretation would lead to the conclusion that the tidelands funds were not to be included in the Bond Security and Redemption Fund. Art. 7, § 9 and Art. 14, § 10 are in pari materiae. They should be interpreted to be complementary. Art. 7, § 9 was adopted first. Art. 14, § 10 is in the transition articles. Art. 14, § 10 is a special section dealing with a special situation. The! organiza tion of the Constitution and the procedure of its adoption seem to make it clear that the tidelands funds were not intended to fall within the provisions of Art. 7, § 9.
The Governor's contention that the tidelands money may be used to reduce the bonded indebtedness of the State which matures in the fiscal year of receipt is based in part on the use of the word "or" in the phrase "purchase, retire, or pay in advance of maturity." The argument is in Art. 14, § 10 that the Constitution provides for three separate and distinct uses of the tidelands money: (1) purchase of outstanding bonds, including those that mature in the fiscal year of receipt; (2) retirement of outstanding bonds at maturity, including those maturing during the current fiscal year; and (3) payment in advance of maturity of outstanding bonds.
We cannot agree with this interpretation. Art. 14, § 10, as originally proposed to the delegates, provided that the tidelands money "shall be used by the treasurer in the purchase, retirement, and payment in advance of maturity of the bonded indebtedness of the state." 34 Proceedings (103rd day, December 18), p. 124. It was with the word "and" that the section was debated and adopted without a negative vote. 34 Proceedings (104th day, December 19), p. 12. We therefore conclude that the subsequent change from "and" to "or," proposed by the Committee on Style and Drafting and accepted by the Committee on Natural Resources and Environment (in which the article originated), without any indication of a substantive change, was a stylistic change only.
Therefore, we conclude that the tidelands funds cannot be employed to pay currently maturing bonded indebtedness of the State, and do not fall within the operation of Art. 7, § 9, but must be kept in a separate fund and used by the Treasurer as provided in Art. 14, § 10. Both Art. 7, § 9 and Art. 14, § 10 must be interpreted to be fully operative. The Bond Security and Redemption Fund is to pay current debt; the tidelands moneys are for the prepayment of the State's bonded indebtedness. (As used in this opinion "prepayment" means "purchase, retire or pay in advance of maturity" as used in Art. 14, § 10 of the Constitution of 1974).
One further dispute must be resolved, because the check in the amount of $40,-157,076.75 did not represent income from royalties or other payments under the provisions of the leases, but represented severance taxes. Counsel for the Governor contend that the severance tax fund is different from "funds derived from offshore mineral leases," and should be governed by Art. 7, § 9.
Pursuant to a 1953 statute (now 43 U.S.C. 1336), authority was granted to representatives of the United States to enter into agreements with the States for the operation of oil and gas leases on lands claimed by both the United States and the States. Such agreements were to provide for impounding "rents, royalties, and other sums payable thereunder."
In 1956 such an agreement was made by the United States and Louisiana, under which the lessees of the disputed tracts, operating .under leases from the State of Louisiana, would deposit in escrow, in addition to royalties due the State under the leases, an amount equal to that which would be due the State for severance taxes. Severance taxes in Louisiana are excise taxes imposed upon the right to produce or sever products from the land. Bel Oil Corp. v. Roland, 242 La. 498, 137 So.2d 308 (1962).
The royalties received were due the State of Louisiana from production under leases from the State on lands whose ownership was in dispute, but finally determined to belong to the State. The production of oil under the leases would have created the tax liability to the State in the absence of the disputed ownership. The federal statute and the agreement thereunder provided for the impoundment of the royalties and the severance taxes. Only by a most strained interpretation could it be said that the severance tax funds were not "funds derived from offshore mineral leases and held in escrow under agreement between the state and the United States pending settlement of the dispute . . .''as spelled out in Art. 14, § 10. It is even more certain that royalties and severance taxes must be treated alike when we consider that the 1921 Constitution and the 1974 Constitution provided for the disposition of the same funds, and that the 1974 Constitution only simplified the definition of the funds. The 1921 Constitution, in Art. 4, § 2(d), referred to "all funds received by the state of Louisiana . . . from revenues derived from tidelands mineral leases and now or hereafter held in escrow under an agreement . . " "Revenues," by definition, includes taxes. In the 1974 Constitution "revenues and royalties" appear together, and do not seem redundant. ("Revenues and royalties obtained from minerals located beyond the seaward boundary of the state belong to the state." Art. 9, § 6).
We conclude therefore that both the sums attributable to royalties and to severance are governed by the provisions of Art. 14, § 10, and do not fall within the provisions of Art. 7, § 9 of the 1974 Constitution, and do not fall into the Bond Security and Redemption Fund.
Since we conclude that Art. 7, § 9 and Art. 14, § 10 are complementary, and that Art. 7, § 9 forms part of the permanent machinery of the government, and that Art. 14, § 10 is part of the transitional material of the Constitution of 1974, it is apparent that Art. 14, § 10 is destined for near self-destruction. Art. 7, § 9 provides for the payment of current obligations secured by the full faith and credit of the State. Art. 14, § 10 provides that the tidelands funds are restricted to the prepayment of such obligations, or the investment of such funds for that purpose. In clear and unmistakable language, it is provided that, if any of the tidelands funds cannot be expended within one year (from receipt), ten percent of the balance remaining each year not to exceed ten million dollars a year is available to the Legislature for appropriation for capital improvement or the purchase of land. There is no room for interpretation in the article that tidelands funds may be used for payment of current debt, in order to free the recurring revenues of the State from the "pledge" of Art. 7, § 9, the payment of current debt.
It is to be noted, of course, that Art. 14, § 10 makes an exception from the requirement that all funds from the tidelands settlement be used for repayment of the State debt: "except the portion otherwise allocated or dedicated by this constitution." We do not understand that there is any controversy at this time about this exception, and therefore express no opinion on the meaning of the phrase.
Many specific and hypothetical questions are propounded in the suit for declaratory judgment. We consider that this opinion has answered the only justiciable issues in the case; we are not authorized to depart from deciding justiciable controversies and enter the area of advisory opinions. C.C.P. 1871, et seq. As we stated in Abbott v. Parker, 259 La. 279, 249 So.2d 908 (La.1971):
"A 'justiciable controversy' connotes, in the present sense, an existing actual and substantial dispute, as distinguished from one that is merely hypothetical or abstract, and a dispute which involves the legal relations of the parties who have real adverse interests, and upon which the judgment of the court may effectively operate through a decree of conclusive character. Further, the plaintiff should have a legally protectable and tangible interest at stake, and the dispute presented should be of sufficient immediacy and reality to warrant the issuance of a declaratory judgment."
Therefore, for these reasons, there is judgment in the taxpayers' suit, Darwin S. Fenner et al. v. Mary Evelyn Parker, No. 185,033 on the docket of the 19th Judicial District Court, affirming the judgment of the district court ordering a preliminary injunction prohibiting the Treasurer of the State of Louisiana from using the funds received from the United States of America pursuant to the Interim Agreement of October 12, 1956 with the State of Louisiana, and pursuant to the decree of the United States Supreme Court, and the interest from their investment, except the portion otherwise allocated or dedicated by the Constitution, for any other purpose than the payment of bonded indebtedness of the State of Louisiana not maturing in the current fiscal year, July 1, 1975 through June 30, 1976, but maturing thereafter, through purchase, retirement, or advance payment, or investing such funds for that purpose, as provided in Art. 14, § 10 of the Constitution.
And further, there is judgment in the declaratory judgment action, Edwin W. Edwards, Governor v. Mary Evelyn Parker, Treasurer, No. 190,239 on the docket of the 19th Judicial District Court, decreeing:
(1) The tidelands funds are not covered by Louisiana Constitution Art. 7, § 9(B), and therefore do not fall into the Bond Security and Redemption Fund, but are covered exclusively by Louisiana Constitution Art. 14, § 10, and form a separate fund within the state treasury for the prepayment of the bonded indebtedness of the State, and as specified in Art. 14, § 10.
(2) Because the tidelands funds do not form part of the Bond Security and Redemption Fund, said funds are not available to pay obligations which are secured by the full faith and credit of the State which become due and payable from the Bond Security and Redemption Fund in any current fiscal year, including principal, interest, premiums, sinking or reserve fund, and other requirements.
(3) The $40,157,076.75, representing severance taxes due the State of Louisiana, are not to be treated differently from the $96,138,938.68, representing royalties, and are therefore excluded from the operation of Art. 7, § 9, and are governed by the provisions of Art. 14, § 10.
Affirmed and rendered.
SUMMERS, J., assigns additional concurring reasons.
TATE and CALOGERO, JJ., concur in part and dissent in part and assign reasons.
MARCUS, J., joins in the additional concurring reasons assigned by SUMMERS, J.
DENNIS, J., concurs in part and dissents in part and assigns reasons.
APPENDIX
Section 9. (A) Deposit in State Treasury. All money received by the state or by any state board, agency, or commission shall be deposited immediately upon receipt in the state treasury, except that received:
(1) as a result of grants or donations or other forms of assistance when the terms and conditions thereof or of agreements pertaining thereto require otherwise;
(2) by trade or professional associations ;
(3) by the employment security administration fund or its successor;
(4) by retirement system funds;
(5) by state agencies operating under authority of this constitution preponderantly from fees and charges for the shipment of goods in international maritime trade and commerce; and
(6) by a state board, agency, or commission, but pledged by it in connection with the issuance of revenue bonds as provided in Paragraph (C) of Section 6 of this article, other than any surplus as may be defined in the law authorizing such revenue bonds.
(B) Bond Security and Redemption Fund. Subject to contractual obligations existing on the effective date of this constitution, all state money deposited in the state treasury shall be credited to a special fund designated as the Bond Security and Redemption Fund, except money received as the result of grants or donations or other forms of assistance when the terms and conditions thereof or of agreements pertaining thereto require otherwise. In each fiscal year an amount is allocated from the bond security and redemption fund sufficient to pay all obligations which are secured by the full faith and credit of the state and which become due and payable within the current fiscal year, including principal, interest, premiums, sinking or reserve fund, and other requirements. Thereafter, except as otherwise provided by law, money remaining in the fund shall be credited to the state general fund.
(C) Exception. Nothing in this Section shall apply to a levee district or political subdivision unless the full faith and credit of the state is pledged to the payment of the bonds of the levee district or political subdivision.
2(d). Revenue from tidelands mineral leases; use of
Section 2(d). Notwithstanding any other provision of this Constitution or of the laws of this state, all funds received by the state of Louisiana during the calendar year 1966 and thereafter from revenues derived from tidelands mineral leases and now or hereafter held in escrow under an agreement executed by and between the state of Louisiana and the United States Government pending settlement of the claims of the state of Louisiana with regard to its portion of such revenues, but not including any portion of such funds derived from royalties received by the state from mineral leases which are required by the provisions of Article IV, Section 2 of the Constitution to be placed in the Royalty Road Fund to the credit of the parish from which production is had and not including any portion of such funds now dedicated or allocated to public education purposes, shall be credited by the state treasurer to a special fund in the state treasury.
So much of the monies credited to the special fund hereinabove provided for as are needed for the purpose shall be expended by the state treasurer, when authorized and directed to do so by the Board of Liquidation of the State Debt, to purchase and retire in advance of maturity the callable bonds or other evidences of indebtedness of the state of Louisiana or its agencies, boards and commissions. Monies thereafter remaining on deposit in said special fund, which cannot be extended immediately for the purpose hereinabove provided, shall be invested by the state treasurer, in such amounts.as he in his. discretion may deem advisable and in the best interest of the state. Such funds, including any interest earned thereon, shall be invested and reinvested in time certificates of deposit in state banks organized under the laws of Louisiana or national banks having their principal office in the state of Louisiana and in short-term United States Treasury bills and in bonds and other direct obligations of the United States Government.
Out of the total funds remaining in the said special fund on the last day of each calendar year there shall be set aside such amount as is needed to pay the principal of and interest on the outstanding bonded and other indebtedness of the state and its agencies, boards and commissions in the next succeeding calendar year, as hereinabove provided, and such funds so set aside shall be so used. Thereafter, not more than ten per centum of the total value of the said special fund remaining on the last day of each preceding calendar year, up to but not in excess of Ten Million Dollars, may be appropriated by the Legislature during the first calendar year following the adoption of this amendment in 1966 and in any calendar year thereafter, for capital improvements, including the purchase of land, architect and engineering fees, construction costs and equipment for buildings and other costs.
This Section shall be self-operative and shall require no further or other legislation to place it into effect. (Added Acts 1965, No. 170, adopted Nov. 8, 1966.)