Court Opinion

ID: 9548278
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:00:57.575117+00
Date Added: 2024-06-11T15:18:45.001350
License: Public Domain

KEETON, Justice
(dissenting).
Dissenting opinions are probably of little-general value. However, my conclusions, in this proceeding differ so widely from *155those reached by the majority of the Court, and the question submitted being of general public importance, I shall briefly state my views in the premises.
In November, 1950, the State Board of Education, pursuant to authority, Tit. 33, Ch. 38 I.C., issued $375,000 worth of interest bearing dormitory, special improvement, revenue bonds, to be paid only from revenue pledged for such payment.
The Act authorizing the issuing of the bonds Sec. 33-3810 I.C., specifically provides :
“All bonds issued pursuant to this act shall be obligations of the institution issuing such bonds payable only in accordance with the terms thereof and shall not be obligations general, special or otherwise of the state of Idaho. Such bonds shall not constitute a debt, legal or moral, of the state of Idaho, shall so recite on their face, and shall not be enforceable against the state, nor shall payment thereof be enforceable out of any funds of the institution issuing said bonds other than the income and revenues pledged and assigned to, or in trust for the benefit of, the holder or holders of such bonds.”
The bonds contain the provision:
“The bonds of this issue are obligations of the College payable only in accordance with the terms hereof and -shall not constitute a debt, legal or moral, of the State of Idaho and shall not be enforceable against the State nor shall payment thereof be .enforceable out of any funds of the College other than the income and revenues pledged and assigned to the holder or holders of such bonds.”
Sec. 33-3809, I.C., specifically prohibits any institution named in the Act from contracting debts for which the State shall in any manner be liable.
The bonds thus issued, dated November 1, 1950, are payable over a period of thirty years, starting with 1952, and ending in 1980. Such bonds were sold on the market and thereafter defaulted, the revenues pledged to their payment being insufficient to pay them according to their tenor.
The holders of such defaulted bonds now ask the State to bail them out, and $100,000 was by the Thirty-third Session of the Legislature, 1955 S.L., Ch. 277, p. 663, sec. 3, p. 665, appropriated to pay the defaulted bonds numbered 1 to 25 and accrued defaulted interest due upon all bonds to May 1, 1955. Said Legislative Act further provides that on payment of such sums to the bondholders, the State of Idaho shall be entitled to all rights of the holders, including a lien upon revenues pledged to the payment of said bonds.
Representatives of the bondholders pursuant to the Act presented a claim to the State Treasurer and demanded payment. *156The Treasurer refused to honor'the voucher on the ground that Ch. 277, 1955 S.L., p. 663, Senate Bill No. 214, appropriating said money, is in conflict with Art. 8, Sec. 2, of the Constitution which reads in part as follows:
“The credit of the state shall not, in any manner, be given, or loaned to, or in aid of any individual, association, municipality or corporation; * * (Emphasis supplied.)
It seems to me plain and apparent that the Legislature by Ch. 277, 1955 S.L., converted a debt owed to individuals by a State educational institution into a State obligation, which debt or obligation never existed or could exist. The Legislature has attempted to appropriate public moneys for the payment of bonds, principal and interest which never did and never could create an obligation of the State. The bonds were made collectible and enforceable only out of funds of the College pledged for such purpose and the bonds on their face specifically so provide.
The State thus acquiring such defaulted bonds must of necessity have entered into the bond buying business, which is not a function of State government.
If the State can buy the defaulted bonds I see nothing to prevent the purchase of many other similar special improvement, defaulted obligations and see no reason why-school improvement bonds, Junior College bonds, or any other similar defaulted issue,, if any there are, cannot be transferred to the State under similar Acts of the Legislature. Under similar reasoning the State-could take up special improvement highway bonds issued by road districts, counties or cities on the theory that schools and roads-are a proper function of government.
By the Act the Legislature has ignored the specific terms and conditions under which the bonds in question were issued.
It seems to me that the conclusion is inescapable that the Act aids only the bondholders, and the credit of the State is loaned to such bondholders as individuals. The Act in question being constitutional, as held by the majority, I can visualize continual raids on the State Treasury. Pressure groups and propaganda committees can advance logical arguments for similar future Acts, relieving most anybody from poor investments made on the credit of some State institution.
In my opinion the Act clearly violates Sec. 2, of Art. 8, of the Constitution and the Treasurer, defendant here, was correct in refusing to honor the bill when presented.
The alternate writ should be quashed and the proceeding dismissed.