Opinion ID: 2115174
Heading Depth: 1
Heading Rank: 6

Heading: Does Ch. 459, Laws of 1961, Violate Sec. 3, Art. XI, Wisconsin Constitution?

Text: The plaintiff argues that ch. 459, Laws of 1961, is a legislative fiat imposing upon the 26 counties an absolute obligation to pay contributions based on past service and by virtue of sec. 66.905 (2) (a), Stats., to amortize this obligation over a period of forty years in violation of the constitutional provision which requires a county to discharge the principal of a debt within twenty years from the time of its creation. Sec. 3, art. XI, Wis. Const., [7] applies to counties incurring an indebtedness by contractual means. The point of the plaintiff's argument is the legislature, in effect, contracted for the counties and imposed an absolute obligation of indebtedness upon them, dischargeable in forty years. Laying aside for the moment the manner in which the obligation was created, the solution of this argument is the meaning of the word indebtedness as used in the constitution. It is argued that any absolute obligation to pay money from funds to be provided meets the requirement of indebtedness, relying on State ex rel. Owen v. Donald (1915), 160 Wis. 21, 151 N. W. 331. The nature of the county's obligation for the payment of contributions based upon past-service credits is such we cannot hold that it constitutes an indebtedness within the prohibition of this section of the constitution. At most, such obligation is a contingent liability. The amount of the obligation at any given time is not absolute. Farfetched as it may be, if all the employees of a county were discharged or terminated their employment prior to their respective retirement, the liability would cease to exist. The amount of the obligation to finance the pension involves so many variable factors that the obligation of a county must be redetermined each year on an actuarial basis in the light of changing contingencies. The amount deposited in a year or over the years by a county is not necessarily paid to the individual to whose account such payments are allocated and credited. The obligation for past-service credits is not ascertainable for any period of time except for the convenience of making payments during a given year. The best that can be said is that the obligation is to pay some amount which varies. Such an obligation is distinctly different in nature from a bond issue or a contracted obligation whereby the obligor has received the consideration, the principal amount is certain, and is to be paid over a definite period of years, in stated amounts. It has been held the debt is not incurred until its amount is ascertainable for some constitutional purposes, Janes v. Racine (1913), 155 Wis. 1, 143 N. W. 707, and likewise interest on the bond issue, although ascertainable in the sense it will definitely accrue in amount and be payable in the definite future, is not to be considered in its total amount as an indebtedness of the municipality in any one year. Herman v. Oconto (1901), 110 Wis. 660, 86 N. W. 681. See also Stedman v. Berlin (1897), 97 Wis. 505, 73 N. W. 57. The computations used by the plaintiffs for the amount of prior-service-credits contributions and called an absolute obligation are but book or audit figures only and do not represent the total amount and, in fact, are and will be in excess of the actual payments by the county over the years. Even the obligation of the county based on the actuarial reports, while more accurate, does not represent the actual payments which will be required to meet the terms of the pension fund in operation. Thus the prior-service-credit obligation is uncertain and indefinite in amount and necessarily will continue to be so. The nature of such an obligation is not a debt within the meaning of sec. 3, art. XI, Wis. Const. The word debt, as used in constitutions of other states, does not include a contingent liability for the purpose of fixing a debt limit. Fort Dodge Electric Light & Power Co. v. Fort Dodge (1902), 115 Iowa 568, 89 N. W. 7; State Budget Comm. v. Lebus (1932), 244 Ky. 700, 51 S. W. (2d) 965. Nor is the sum payable upon a contingency such a debt until the contingency has happened. Saleno v. Neosho (1895), 127 Mo. 627, 30 S. W. 190. Ward v. Big Spring (Tex. Civ. App. 1942), 161 S. W. (2d) 821. A somewhat-analogous situation was considered by this court in Meier v. Madison (1950), 257 Wis. 174, 183, 42 N. W. (2d) 914, where this court said: Where a municipality contracts for annual services for a series of years, to be paid for by annual payments, such contract does not come within such a prohibition. `In such case the whole amount which may ultimately become due does not constitute a debt, within the meaning of the constitution. To that end, regard is to be had only to the amount that may become due within a certain year or other period.' It is not material that the quid pro quo for the annual payments must be concurrently received. The basic idea was the payments by the municipality were conditioned by the performance of services. In this case, the county's obligation is conditioned upon future contingencies which under the pension plan will affect the amount of the annual payments. Moreover, the manner in which this obligation was created is not prohibited by the constitution. The constitutional limitation is upon a county incurring an indebtedness. This means an indebtedness voluntarily incurred by the county and not an obligation imposed upon the county by law. The word incurring would imply voluntary action by the county. The limitation does not refer to action by the legislature. A like construction was given to a similar provision of a state constitution in Bessemer Investment Co. v. Chester (D. C. Pa. 1938), 22 Fed. Supp. 311. Other courts have construed debt or indebtedness under constitutions to mean created by contract or by express agreement. Levy v. McClellan (1909), 196 N. Y. 178, 89 N. E. 569; O'Bryan v. Owensboro (1902), 113 Ky. 680, 68 S. W. 858. Even the plaintiff must agree the 26 counties have not voluntarily incurred this obligation or contracted it.