Court Opinion

ID: 7057851
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:08:32.119283+00
Date Added: 2024-06-11T16:12:03.747168
License: Public Domain

Dissenting Opinion.
Ewbank, J.
Appellant sued as a taxpayer, on behalf of all the taxpayers of the state, to enjoin the execution by the appellee board, a.nd the individuals who compose it, including the Governor of the state as an ex-officio member, of certain bonds and a mortgage on the “State Fair Grounds” at Indianapolis, to secure them, and against the auditor of Marion county, Indiana, to enjoin *331him from levying a tax to pay the interest and provide a sinking fund for payment of the principal of any such bonds, if issued. The trial court made a special finding of facts and stated its conclusions of law, to each of which appellant excepted, and has assigned as error each of such conclusions of law. The special finding recited, in substance, that appellant was a taxpayer, and that the appellee board was created by Acts' 1921 p. 166-174, and was organized under the terms of that act; that the Indiana State Board of Agriculture, a private corporation, had previously owned property, including said “State Fair Grounds,” which'had been used by it for the purpose of conducting an annual agricultural ex-‘ hibit commonly known as the “State Fair;” that after the passage of said act, on May 31, 1921, said Indiana State Board of Agriculture conveyed and warranted to the State of Indiana all of its property, including the “State Fair Grounds,” by a deed which recited that it was executed pursuant to said act, that the consideration was $1 and the assumption by .the state of all the grantor’s indebtedness, that the conveyance was subject to a certain mortgage on the land which, by the acceptance of the deed, the grantee assumed and agreed to pay, and that: “This conveyance of real estate and transfer of other property is made upon the further condition that the property, real and personal, herein described, is to be held by the State in trust for the uses and .purposes for which such property has been heretofore held and used by Indiana State Board of Agriculture (the grantor). The State of Indiana, however, shall have the right to sell and dispose of the same ' whenever deemed wise, but must apply the proceeds derived therefrom to the uses and purposes for which the said property has been held and used by the Indiana State Board of Agriculture.” That said property so conveyed to the state is of the value of more than *332$2,000,000; that thereupon all the debts of said Indiana State Board of Agriculture were paid by the state out of an appropriation made by the general assembly for that purpose; that the appellee board had resolved to borrow $1,000,000, to be evidenced by bonds secured by a mortgage on said property, to reimburse the state for payment of said debts and to make improvements thereon for use in holding “State Fairs;” that a bid for such bonds, duly received, had been accepted, and that if not enjoined the appellee board intended to and would execute and issue such bonds and a mortgage on said property securing them, and the appellee auditor of Marion county, Indiana, would extend upon the tax duplicates for the year 1923 a tax (payable in 1924), as provided by said act, and transmit it to the county treasurer for collection. But the finding further recited that under said deed the State of Indiana took and holds title to said ■ property only as trustee, and holds it in trust for the uses and purposes for which its said grantor held it, and that the only interest which the State of Indiana or the appellee board has therein is as trustee thereof for the use of such of the people, citizens and taxpayers of Indiana, as are interested in the science of agriculture and kindred pursuits, and desire to profit by the activities of the appellee board in connection therewith; and that the proposed issue of mortgage bonds will be merely the bonds of the trustee, secured by a mortgage on the property so held in trust by it, and that the proceeds from the sale of the bonds were intended to be used only in paying debts which are now liens against said property and debts of the grantor at the time it was deeded to the-state, which were proper charges against the property and have been paid by the state as such charges, and in making improvements on such property, the better to fit it for use in carrying out the purposes of the trust. Conclusions *333of law were stated to the effect that the plaintiff (appellant) should recover nothing.
Appellant’s exceptions to the several conclusions of law are based wholly upon the proposition that Acts 1921 p. 166, is unconstitutional. That act creates and establishes the Indiana board of agriculture (an appellee) , to consist of sixteen members, in addition to whom the Governor of the state and the dean of agriculture of Purdue University are ex-officio members with power to vote on all questions except the choice of new members representing the respective congressional districts. The original members were all appointed by the governor, said act designating who they should be. Of their successors at the expiration of their respective terms, one from each congressional district has been or is to be chosen for stated terms by the annual conference of officers of the different associations of breeders of domestic animals, poultry and bees, and societies for the promotion of farming, horticulture, com growing, cattle feeding and kindred purposes, organized or to be organized in the State of Indiana; the others, except said ex-officio members, shall be appointed by the Governor, who may also fill by appointment the unexpired term of any member who may die or resign before the date of the regular meeting at which his successor is to be chosen. This board shall elect officers, employ assistants, manage the “State Fair Grounds” at Indianapolis, hold state fairs at times and places fixed by it, fix and pay premiums for exhibits, purchase additional equipment and material, erect buildings or make improvements thereon, and exercise entire control over the grounds, the property, and the state fair, subject only to law. It shall have offices in the state house, and is expressly authorized by the language of the act to issue the bonds in question, and to secure them by a mortgage on the state fair grounds property, acting by *334and with the advice and consent of the. Governor, which bonds and mortgage are declared by the act to be exempt from taxation. The board is required annually to file with the Governor of the state a report of its receipts and expenditures, with a summary of its activities and work done. Sections 5 and 10, Acts 1921 p. 166, provide (in part) as follows:
“Sec. 5. The Governor on behalf of the State of Indiana is hereby authorized and empowered to take from the Indiana State Board of Agriculture, and said board is hereby authorized to execute and deliver to the Governor a deed of conveyance and bill of sale, which conveyánce and bill of sale shall place in the name of the State of Indiana a fee simple title to the real estate belonging to said board, known as the Indiana state fair grounds * * * and a good legal title to all other property and rights- of whatsoever kind and wherever situated, which may at the time of such transfer be the property of the Indiana State Board of Agriculture; Provided, however, that such conveyance and transfer of property shall be made and accepted subject to any valid outstanding mortgage or other liens or obligations of said Indiana State Board of Agriculture, and on condition that the said grantee named in such conveyance assume the payment thereof, and- that such property is to be held by the state for the uses and purposes for which such property has been heretofore held and used by the Indiana State Board of Agriculture, the state reserving the right, however, to sell and dispose of the same and apply the proceeds derived therefrom to the purpose for which such property has been held and used by said Indiana State Board of Agriculture. (My italics.)
“Sec. 10. In order to create a fund with which to pay premiums and to meet interest obligations on any outstanding bonds or other evidences of indebtedness issued *335or assumed by said board, as well as to provide a contingent sinking fund for the payment of any such obligation, there is hereby levied an annual tax of one-fourth of one cent on each one hundred dollars upon all of the taxable property in the State of Indiana, beginning with the year 1923 * * * $25,000 shall be available annually for the purpose of paying premiums * * * Such further sums shall be available for the-purpose of meeting interest obligations on the outstanding bonds * * * issued or assumed by said board, and the balance of said funds if any shall be used to create a sinking fund for meeting the principal sums due on any such bonds or other evidences of indebtedness as they fall due: Provided * * * (any excess shall go into the general fund of the State treasury; the annual appropriation of $1.0,000 for premiums at the State Fairs after 1923 is repealed. * * *)” Acts 1921 p. 166, §§5, 10.
The only questions presented as to the validity of this act relate to the constitutionality of those provisions which purport to authorize the issue and sale of bonds for the purposes above stated, secured by a mortgage on the property conveyed by the Indiana State Board of Agriculture to the State of Indiana by the deed mentioned above, and the' collection of taxes under the provisions of §10, supra.
The first point made by appellant is that said provisions violate Art. 11, §13, of the Constitution of Indiana (§212 Burns 1914), which forbids the creation of corporations, other than banking, by special act. But no question arises or can arise under the issues in the case at bar, as to whether the appellee board is a corporation or an unincorporated body, or, in case it be a corporation, whether the law under which it was organized was valid. Such matters are wholly collateral and immaterial. Whether the eighteen men who compose the *336appellee board are legally organized as a corporation or not makes no difference in their power to represent the state, as trustee, by authority of such trustee, if this be trust property, or to act as agents of the state, under statutory authority, in the management of such property on its behalf, if it belongs to the state in some other capacity than that of a trustee.
The next point urged by appellant is based upon the contention of counsel that an absolute title to the property in question was conveyed to the state in consideration that it should assume the debts of the grantor in its political capacity, and that it thereby undertook to assume the debts of a private corporation. While counsel for the appellees insist that the State of Indiana took title under said deed only in trust for certain purposes, and that the bonds and mortgage, if executed, will be only the obligations of the trust estate, payable out of the trust property covered by the mortgage.
Sections 5 and 6, Art. 10, of the Constitution of Indiana read (in part) as follows: “§5. No law shall authorize any debt to be contracted on behalf of the State, except in the following cases: To meet casual deficits in the revenue; to pay the interest on the state debt; to repel invasion, suppress insurrection, or, if hostilities be threatened, provide for the public defense. §6. * * * nor shall the general assembly ever, on behalf of the state, assume the debts of any county, city, town or township, nor of any corporation whatever.”
It appears.from the facts found by the court that all debts of the Indiana State Board of Agriculture were fully paid by the state before this action was commenced. An injunction could not issue to forbid what was already done, nor does the appellant seek an injunction to prevent the state from assuming and paying those debts, which it has already paid, but he seeks to *337prevent the issue and sale of bonds secured by a mortgage on the real estate in question for the purpose, among others, of reimbursing the state for money already expended. Therefore the section of the statute under consideration which forbids the state to assume the debts of any corporation does not apply to the facts of the case before the court.
It is obvious that the debt to be created by the proposed issue and sale of bonds and the execution of a mortgage securing them, for the purposes stated, will not be “to meet casual deficits in the revenue, to pay the interest on the state debt, to repel invasion, suppress insurrection, or * * * provide for the public defense.” And if it will constitute a debt of the state, within the meaning of the Constitution, then the proposed acts intended to be done by the appellees, tending to create such a debt, may be enjoined. But if it will not be a debt of the state, then the trial court properly refused to issue an injunction. As was stated above, §5 of said act (Acts 1921 p. 166) authorized the execution and acceptance of a conveyance to the state of the property proposed to be mortgaged, “to be held by the state for the uses and purposes for which such property has been heretofore held and used by the Indiana State Board of Agriculture * * * (and in case it be sold) * * * to apply the proceeds derived therefrom to (such) purpose.” (Acts 1921 p. 166, §5.) And the deed of conveyance recited that the property was conveyed to the State pursuant to the terms of said act, and upon the condition (among others) that the property conveyed was “to be held by the state in trust for the uses and purposes for which such property has been heretofore held and used by the Indiana State Board of Agriculture,” but with power to sell and convey, in which *338event the state “must apply the proceeds derived therefrom to the (said) uses and purposes.”
A sovereign state may become the trustee of property to be used in carrying out a purpose for which the state was organized, if it consents to serve in that capacity. Perry, Trusts (6th ed.) §§40, 41; Lewin, Trusts (9th ed.) p. 28; Yale College Appeal (1896), 67 Conn. 237, 34 Atl. 1036; State v. Blake (1897), 69 Conn. 64, 36 Atl. 1019; Bedford v. Bedford, Admr. (1896), 99 Ky. 273, 35 S. W. 926; Pinson v. Ivey (1830), 1 Yerg. (Tenn.) 296, 309; Penn v. Lord Baltimore (1750), 1 Vesey, Sr. (Eng.) 444, 453.
The constitution under which the State of Indiana was organized in 1816 contained a recital that: “knowledge and learning, generally diffused through a community, being essential to the preservation of a free government,” and a command that provision be made for the support of public schools and seminaries, and that: “the general assembly shall, from time to time, pass such laws as shall be calculated to encourage intellectual, scientific, and agricultural improvements, by allowing rewards and immunities for the promotion and improvement of arts, sciences, commerce, manufactures, and natural history.” Indiana Constitution 1816, Art. 9, §1; R. S. 1843, pp. 57, 58. While that constitution was in force the Indiana State Board of Agriculture (said grantor) was chartered by act of the legislature, the charter giving it power “to hold state fairs at such times and places as they may deem proper and expedient, and have the entire control of the same, fixing the amounts of the various premiums offered, embracing every article of science and art, or such portions of them as they may deem expedient, and proper, calculated to advance the interests of the people of the State.” Acts 1851 p. 7, §9; Downing v. Indiana State Board, etc. *339(1891), 129 Ind. 443, 446, 28 N. E. 123, 28 N. E. 614, 12 L. R. A. 664.
Other provisions of the charter appropriated money for the use of said board, and authorized it to receive contributions and donations. This charter was amended from time to time, and frequent contributions were made for the support of the state fairs and the improvement of the grounds on which they were held, by appropriations from the state treasury. But the said board was a private corporation, with perpetual succession in the members chosen at the times and in the manner prescribed by the charter. , Downing v. Indiana State Board, etc., supra.
The state constitution now in force, framed in 1851 by a convention the delegates to which had been chosen under statutory authority before the act creating said state board of agriculture was passed, after repeating the declaration above quoted from the constitution of 1816 as to knowledge and learning, generally diffused throughout a community, being essential to the preservation of a free government, ordained that, “It shall be the duty of the general assembly to encourage, by all suitable means, moral, intellectual, scientific, and agricultural improvement, and to provide, by law, for a general and uniform system of common schools, wherein tuition shall be without charge, and equally open to all” (My italics). Art. 8, §1, Constitution, §182 Bums 1914. That this authorized and commanded the legislature to provide for the support of schools and other means of diffusing knowledge by the use of taxes levied for that purpose does not admit of doubt. Robinson v. Schenck (1885), 102 Ind. 307, 1 N. E. 698; Shepardson v. Gillette (1892), 133 Ind. 125, 31 N. E. 788; School City of Marion v. Forrest (1906), 168 Ind. 94, 78 N. E. 187.
The language of the act of 1921 above quoted, by *340which the conveyance of the property in question to the state and its acceptance on behalf of the state was authorized, and of the deed by which it was so conveyed, impressed such property and any proceeds which may be derived from its sale with the trust that they shall be used only for encouraging and promoting agricultural improvement, and carrying out the purposes to which it had been devoted by the Indiana State Board of Agriculture, by whom it was conveyed to the state. And since the Constitution of Indiana gives the state the right and imposes upon it the duty to encourage and promote agriculture improvement, science, manufactures, and the arts, and it has accepted the trust expressed in the deed as above set out and the conveyance of the trust property, by express action of its legislative and executive departments, the state now owns and holds such property as a trustee, with all the rights and powers of a trustee.
That a trustee may encumber the trust property, so far as authorized by law, to- obtain money with which to discharge existing valid liens thereon, and to reimburse himself for what he has paid to protect it by satisfying such liens, and also to obtain money with which to make improvements thereon which are needed _ in order to carry out the purposes of the trust, and that the debts of the trust estate thereby created are not the personal debts of the trustee, but are only binding on him in his trust capacity, is elementary.
It follows that the proposed issue of bonds and the proposed mortgage to secure them, if executed for the purposes alleged, will be binding upon the State of Indiana only as a trustee, and upon the trust property covered by the mortgage, but will not constitute a debt of the state; and that said section of the act of 1921 (Acts 1921 p. 166) which authorizes them to be executed and issued is not unconstitutional.
*341Said act, as above recited, appropriates $25,000 annually for the purpose of paying premiums at the state fairs to be held in 1924 and thereafter, and also appropriates money in 1924 and thereafter, with which to' pay the interest on the bonds proposed to be issued, and for the creation of a sinking fund to meet such bonds as they shall become due. And a tax of one-fourth of one cent on each $100 is levied by said act and ordered to be cpllected for such purposes, (beginning in 1923, payable in 1924) as above stated. Appellant insists that if this property is trust property, in the hands of the state as a trustee, and not the property of the state, and if the bonds, when executed and issued, will be the debt of the trust and not of the state, an appropriation of money raised by general taxation to pay liens on such property or to make improvements, thereon, or to pay debts of such trust incurred for those purposes, violates the rule of constitutional law above quoted, which forbids the state to incur debts for such purposes, and also the rule that public revenue raised by general, taxation can only be used for public purposes.
If the statutory provisions for levying taxes and using the money to pay these bonds and the interest thereon were construed as an assumption by the state of the debt thereby evidenced, and as creating a debt of the state, for purposes forbidden by the constitution we should be bound to hold them void as being in conflict with the constitution. If construed and understood as binding the state to collect the tax of one-fourth of one cent on each $100 annually, and to use the money collected, or a substantial part of it, in paying the interest on the proposed bonds, and in creating a sinking fund with which to pay the principal as the bonds mature, the statute cannot be upheld. Being forbidden to bind itself by contract to assume the debts of the Indiana State Board of Agriculture, or to incur a debt for *342the purpose of improving real estate not owned by it in any other than a trust capacity, the state cannot bind itself by contract to collect taxes and to use the money so collected for those purposes.
But if a statute be open to two constructions, one of which would bring it in conflict with the constitution and the other would not, the construction which will uphold it is to be preferred. And if its language is capable of a fair and reasonable construction by which it expresses a legislative intent that is not in conflict with the constitution, the courts must adopt such construction in preference to another construction under which it would express an intention to enact what the constitution has forbidden. State v. Barrett (1909), 172 Ind. 169, 174, 87 N. E. 7; School Town v. Heiney (1912), 178 Ind. 1, 6, 98 N. E. 628, 43 L. R. A. (N. S.) 1023, Ann. Cas. 1915B 1136; Crittenberger v. State, etc., Trust Co. (1920), 189 Ind. 411, 425, 127 N. E. 552.
An act of the legislature will not be declared unconstitutional unless the fact that it violates one or more provisions of the Constitution so clearly appears as to exclude all doubt. All presumptions must be indulged in favor of the validity of such an act until a necessary conflict between it and the Constitution is shown. Robinson v. Schenck, supra; Smith v. Board, etc. (1910), 173 Ind. 364, 90 N. E. 881.
Private ownership of property is not conclusive as to whether a use to which it is devoted is public or private. If holding annual exhibitions of agricultural products, live stock, machinery, and other articles, at state fairs, is educational, and a means of intellectual, scientific and agricultural improvement, then it is a public purpose for which the legislature is expressly authorized by the constitution to make provision by law. Art. 8, §1, Constitution.
And if vesting the ownership and control of the state *343fairgrounds in a trusted for the use and purpose to which they have been devoted for many years past, and paying for improvements thereon which are necessary in carrying out the trust purposes, constitute a public purpose, then the legislature may lawfully appropriate money for that purpose, after it shall have been collected by taxation, although not permitted to bind itself in advance to make such payments. The legislative department of the state having decided that satisfying the liens on the state fairgrounds and erecting improve^ ments thereon is a public purpose the courts will accept its decision as conclusive on that question.
This court has repeatedly decided that where money is appropriated out of a public treasury for a use that is public, and is given in such a way and under such restrictions that it can only be devoted to public use, it is for the legislature alone to determine what agency it wil-1 employ to control the expenditure of the money for that purpose. Bullock v. Billheimer (1911), 175 Ind. 428; 94 N. E. 763; State, ex rel. v. Meeker (1914), 182 Ind. 240, 105 N. E. 906; City of Indianapolis v. Indianapolis Home, etc. (1875), 50 Ind. 215.
The • statute under consideration does not bind the state to collect taxes at any time nor in any amount with which to pay the debt in question. It merely enacts that some three years after it took effect, being after the close of the next regular session of the legislature, certain taxes shall be levied and that the proceeds, when collected, shall be paid to appellee board for the uses stated. And purchasers of the proposed bonds, if issued, and other creditors of the trust estate represented by the Indiana board of agriculture, will have no security for payment of the debt evidenced by any such bonds, except the trust property on which it is made a lien, in case those acts are done which appellant is seeking to enjoin. That part of the statute *344which commands the levy of a tax and appropriates money for the use mentioned is subject to be repealed at any time, if the legislature shall so determine, even before any taxes shall have been collected, and purchasers of the bonds will have no cause to complain if this is done. But if the state shall voluntarily collect money by taxation it may voluntarily appropriate it to any public purpose, without incurring a debt or otherwise violating any provision of the constitution.
The appropriation from the public treasury of money to be raised by taxation to aid in the conduct of state fairs annually, as a means of education and agricultural improvement, and putting its expenditure under the control of a board chosen in the manner and charged with the duties as provided in the act under consideration, does not violate the constitution by taking public money from the treasury for private use, or by collecting taxes in the name of the public for private use. With the -expediency of the act the courts have nothing to do. That is a question for the legislature, which has the same power to repeal the law for levying this tax that it had to pass it.
In my opinion the act in question is not open to any of the objections urged against it, but is constitutional.
The judgment ought to be affirmed.