Opinion ID: 1097000
Heading Depth: 1
Heading Rank: 2

Heading: On its Merits.

Text: We have observed that the surety insurance fund, to which we have referred, originated in an Act of September 7, 1935, General Acts 1935, page 782. Section 8 of that Act is That this Act shall become effective upon the proclamation of the Governor. As the Act went into the Code of 1940, section 338 of Title 28, provides: The provisions of this article shall not be effective except upon a proclamation issued by the governor declaring that such chapter is in force and effect. The bill alleges that this proclamation was issued by the governor on the 25th day of November, 1949. So that according to its terms the Act was dormant and ineffective until that time, both under the terms of the original Act and under the terms of the Code section. It is our view that that status amounts to a delegation of legislative power, in violation of sections 43 and 44 of the Constitution. The Act did not provide that upon the finding by the governor of certain facts or circumstances to exist, and upon the basis of such finding he should make a proclamation thereof, thereby rendering the Act effective. The legislature cannot confer upon any person or authority the right, in its discretion to be exercised without regard to fixed standards set up by the Act, to declare when an enactment shall become effective. It can only delegate to such person or authority the right to determine the facts and circumstances, whose finding shall determine the effective date of the Act. 16 C.J.S., Constitutional Law, § 133, p. 342, note 28; Ward v. State ex rel. Parker, 154 Ala. 227, 45 So. 655; Porter Coal Co. v. Davis, 231 Ala. 359, 362, 165 So. 93; Morton v. Lusk, 248 Ala. 110(23), 26 So.2d 849; In re Opinion of the Justices, 249 Ala. 389(3), 31 So.2d 558; Hawkins v. State Board of Adjustment, 242 Ala. 547(4), 7 So.2d 775; Patterson v. Jefferson County, 238 Ala. 442, 191 So. 681; Opinion of the Justices, 244 Ala. 386(4), 13 So.2d 674. Of course this has no reference to the constitutional requirement of approval of legislative enactments as contained in section 125. The legislature may make an appropriation and set up a board to determine the facts on which it is declared to operate. John E. Ballenger Const. Co. v. State Board of Adjustment, 234 Ala. 377, 175 So. 387; Dunn Const. Co. v. State Board of Adjustment, 234 Ala. 372, 175 So. 383; State ex rel. v. State Board of Adjustment, 249 Ala. 542, 32 So.2d 216; Opinion of the Justices, 244 Ala. 386, 13 So.2d 674; Walls v. City of Guntersville, 253 Ala. 480(6), 45 So.2d 468. Section 43 and 44, Constitution, do not invalidate local option laws. Opinion of the Justices, 232 Ala. 60, 166 So. 710; State, ex rel. Crumpton v. Montgomery, 177 Ala. 212, 59 So. 294; Ward v. State, supra; Phenix City v. Alabama Power Co., 239 Ala. 547(3), 195 So. 894; Opinion of the Justices, 253 Ala. 111, 43 So.2d 3. We know of no authority in this state which justifies a delegation to the governor of the power to declare what shall be the effective date of an act duly passed, when such declaration is merely the result of his own will and not of his determination of the facts upon which the act itself declares it to be effective. In Re Opinion of the Justices, 242 Ala. 57, 4 So.2d 654, the members of the Court were equally divided in opinion as to whether an act was mandatory requiring the governor to make proclamation when a certain state of facts shall occur, or whether it conferred on him power to exercise his discretion in that event. Some of them held it did not impose a duty but a discretion and, therefore, was a delegation of legislative power, in violation of the Constitution. Other members of the Court held the act merely delegated the power to ascertain a fact upon which the statute operated ipso facto. There was no difference of opinion among the justices as to what constitutes a delegation of legislative power, or that the result was properly declared by both groups of the Court upon the basis of their respective judgment as to the proper interpretation of the act. In the case of Smith v. Speed, 50 Ala. 276, it is said that the purpose of the Constitution in respect to appropriations was to prevent the executive power from controlling the public moneys. We do not find from a study of appropriations acts in this state that this theory has not been generally observed by the legislature. Section of 14½ of the Equalization Act of 1927, General Acts 1927, page 449, makes the respective appropriations payable upon a finding by the governor that the condition of the treasury shall warrant it. We have not found that appropriations by acts duly passed and approved were made dependent upon the mere discretion of the governor not based upon some defined circumstances. Objection is also made to this statute upon other grounds: one is that it is vague, uncertain and ambiguous, and that it is inconsistent with our constitutional form of government. Attention is called to the fact that under section 337, Title 28, Code, in order to make an amount payable out of the surety insurance fund to some other state agency, it is necessary for such agency to sue the officer in the county of his residence for a breach of the obligation of the bond and judgment must be rendered against such officer. The clerk thereupon certifies the existence and the amount of such judgment to the state comptroller who shall issue a warrant upon the treasury for the payment of the amount of said judgment. No provision is made for the director of the department of finance or other state official to participate in the defense of such a suit. According to the terms of the statute, the official sued might not see fit to make defense or might be in collusion with the head of the department in which he is employed, or not be available in Alabama for service of such a suit. There is no provision in this statute which authorizes anyone to intervene so as to make it a contested case. If it be assumed that such intervention would be authorized under the general statute for intervention, Title 7, section 247, Code; Franklin v. Dorsey-Jackson Chevrolet Co., 246 Ala. 245, 20 So. 2d 220, 157 A.L.R. 154, the result would be a suit in a court of traditional jurisdiction in common law form by one agency of the state against another agency of the state. In that situation apparently it would be the duty of the attorney general both to prosecute and defend the same suit. Section 244, Title 55, Code. It therefore presents a status, as we have said, which is contrary to our constitutional form of government and especially section 14 which prohibits the state from being a defendant in any court of law or equity. This includes state agencies. Dunn Const. Co. v. State Board of Adjustment, 234 Ala. 372(4), 175 So. 383; John E. Ballenger Const. Co. v. State Board of Adjustment, 234 Ala. 377(2), 175 So. 387; State Tax Comm. v. Commercial Realty Co., 236 Ala. 358, 182 So. 31. It is our view that the Surety Insurance Fund Act is merely a method by which the state may set aside and hold for its purposes a certain amount of money, $100,000.00, transferred from the state insurance fund and also amounts charged to the appropriations of various departments of the state for premiums on the official bonds required by law. Being in one aspect but a transfer to one fund from another and prescribing the circumstances which will control such transfer, the situation is no justification for a suit in a duly constituted court between such agencies. The legislature could very well set up a board to determine when such transfer should be made from one fund to another in keeping with the object sought to be accomplished, as was done in respect to the insurance fund, sections 317-328, Title 28, Code; but to put jurisdiction of such a situation on a court of law is entirely out of harmony with our system. It is interesting to note that we find only two states in the Union which have undertaken to set up such a proceeding. One is the state of Nebraska, which was considered by the Supreme Court of that state in the case of Laverty v. Cochran, Governor, 132 Neb. 118, 271 N.W. 354. The opinion in that case referred to the fact that the constitution of Nebraska requires public officials to execute official bonds. (Alabama has no such constitutional requirement.) The question then arose of whether or not a bond executed under such authority as this by the proper officer on behalf of the state surety insurance fund was a bond within the meaning of the constitution. The court held that it was not. That the status was, as we have indicated above, merely to provide the circumstances and standards which will control the transfer of public funds from one public agency to another, and that the situation did not call for a contractual obligation. The act was annulled for other reasons: one being that it imposed judicial powers upon executive officers as well as legislative powers. The court held that judicial powers could not be conferred upon administrative officers. That is not, as we have held, a proper interpretation of our Constitution. Section 139 of our Constitution has been held by us to have a different effect. Boyd v. Garrison, 246 Ala. 122(7), 19 So.2d 385; State Tax Comm. v. Bailey & Howard, 179 Ala. 620, 60 So. 913; State Tax Comm. v. Stanley, 234 Ala. 66, 173 So. 609. While the authority of the Nebraska court is not controlling here, it does serve to express our view of the nature of such a proceeding set up by the legislature and to illustrate, in our opinion, the want of conformity to our constitutional system. North Dakota also has had experience in connection with such legislation. Its first case on that subject is that of State ex rel. Miller v. Taylor, 27 N.D. 77, 78, 145 N.W. 425. The act was declared invalid for one reason that it attempts to give to the commissioner of insurance the arbitrary power to determine how much of the fund shall be applied to the payment of losses and how much to other expenses, and because no limitation is put upon the amount which may be used for expenses, and that it is an unwarranted delegation of judicial power to an administrative officer, in that it commits to him the sole right to determine the amount to be given to the subdivision involved, whose officers are insured, and also delegates to an auditing board the power to determine when bonds of officers shall be cancelled. The act in question only had application to county, city, school district and township officers required by law to furnish a bond and made it obligatory for such bond to be made by the bonding department fund. Later another act was passed by the legislature of North Dakota in order to relieve the situation of the objections which annulled the previous act, and in the case of State ex rel. Linde v. Taylor, 33 N.D. 76, 156 N.W. 561, L.R.A.1918B, 156, that act was upheld against the constitutional objections which were made. The court went into great particularity in analyzing the act, pointing out that state did not have constitutional requirements as to official bonds (and therefore was not in the status of the Nebraska court). It may be observed that this act as finally upheld had no provision in it for a suit in common form to determine the amount which would be transferred from the fund which was set up, but provided for administrative machinery for that purpose, and largely upon the basis of that status the statute was upheld. See, also, 66 A.L.R. 796-797; 43 Am.Jur. 184, section 413. The bill in the instant case does not allege whether the $100,000.00 has been transferred from the state insurance fund to the state surety insurance fund, referred to in section 333, Title 28, Code. The Act of 1935 did contain a provision by which there was transferred from the state insurance fund to the state surety insurance fund the sum of $100,000.00, but that Act never became operative according to its terms until the governor made his proclamation in 1949, and when the governor did so the Act of 1935 had become superseded by the Code section. So that assuming the validity of the statute, as set out in the Code, there is no direct provision for such transfer to be made. The bill does not allege whether such transfer was in fact made. Section 335 of Title 28, Code, authorizes the director of finance, with the approval of the governor, to make such rules and regulations as are necessary and essential for the proper and full enforcement of this Article, not inconsistent with the Constitution and laws of the state, and section 336 requires said department to provide forms or bonds to be executed, and another section provides that the premium rate shall be based on commercial rates of such transactions as of August 1, 1935. Even if the proclamation of the governor fourteen years after the enactment of this Act had the effect of putting it in operation, it seems clear that it was not the intention of the legislature for it to be operative without a transfer of said $100,000.00, above mentioned, or until the director of finance and the governor shall make the necessary rules and regulations, including a form of the bond to be executed and an ascertainment of the premium rate based upon the commercial status operative August 1, 1935. The bill not alleging anything about such matters, we cannot assume that they did not occur as required by law. But in the event they have not occurred, it is our belief the Act could not be operative until such event. Many of these observations are not necessary to the result of this suit since we find that the statute in question is a delegation of legislative authority in violation of sections 43 and 44 of the Constitution of Alabama. But we think such observations are not inappropriate in the event the litigation should not result as here contemplated or the legislature should see fit to amend the law as now set up. Objection is also made that it violates section 93 of the Constitution, in that it is a lending of credit to an individual, association, or corporation, but we see nothing in the situation which makes it subject to that contention. It is an established policy of this state that section 93, supra, does not prohibit the state from lending its credit to a public corporation organized for the purpose of carrying on public functions. Alabama State Bridge Corp. v. Smith, 217 Ala. 311, 116 So. 695; Rogers v. Garlington, 234 Ala. 13, 173 So. 372. We do not think it is engaging in business by the state in competition with private enterprise in such way as to make it subject to section 93 of the Constitution. The result of the foregoing discussion is that, in our opinion, the demurrer to the bill should have been overruled and the temporary injunction granted. A decree will be entered overruling the demurrer to the bill and ordering the issuance of a temporary injunction against further conduct which is sought to be prohibited in the prayer of the bill upon the execution by complainant of a bond payable to the respondents in the sum of $1,000.00 with sureties to be approved by the register of the Circuit Court, in Equity, of Montgomery County, and conditioned as required by law. Reversed, rendered and remanded. BROWN, LIVINGSTON, LAWSON, SIMPSON and STAKELY, JJ., concur.