Court Opinion

ID: 9654026
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:02:35.1446+00
Date Added: 2024-06-11T18:13:04.949622
License: Public Domain

MONTGOMERY, Judge
(dissenting).
I respectfully dissent from the majority opinion of the Court.
The Act in question is unconstitutional, in that it violates two provisions of Section 50 of the Constitution. It fails to provide for the levy and collection of an annual tax to pay the interest stipulated and to discharge the debt created. The question submitted to the people at the general election was misleading and was neither fair nor adequate to inform them of the issue presented. The proper construction of the language of this section of the Constitution is decisive.
The pertinent portion of Section 50 of the Kentucky Constitution is quoted:
“No act of the General Assembly shall authorize any debt to be contracted on behalf of the Commonwealth * * * unless provision be made therein to levy and collect an annual tax sufficient to pay the interest stipulated, and to discharge the debt * * * nor shall such act take effect until it shall have been submitted to the people at a general election, and shall have received a majority of all the votes cast for and against it * * * ”.
Section 50, together with its companion, Section 49, have been a part of the organic law of this Commonwealth since 1850. Hager v. Gast, 119 Ky. 502, 84 S.W. 556, 27 Ky.Law Rep. 129. See Kentucky Constitution, 1850, Article 2, Sections 35 and 36. Respect and veneration for age require that every consideration should be exerted to ascertain its meaning. As a safeguard of governmental solvency, it stands as a foundation rock on an equal plane with the Bill of Rights and the principle of separation of governmental powers. The success of this protective device against fiscal folly is shown by the fact that only two efforts have been made during its history to create a debt under its provisions. Until now, the Commonwealth of Kentucky has maintained the freedom of its citizens from bonded indebtedness under this bar. In view of its history, the bar should not lightly be cast down.
The people are the source of all authority in a state. By the adoption of a constitution, the people grant authority to be exercised in accordance with the separation of the three fundamental branches of government: executive, legislative, and judicial. In the exercise of the respective functions of government, each branch is limited in the performance of its particular function only by the state and federal constitutions, subject to control by the people.
Under the principle of separation of governmental powers, the legislative power of the state is vested in the state legislature, our General Assembly. The power of the legislature is derived from the people through the Constitution. It is a generally recognized and oft repeated principle that except where limitations have been imposed, either by the federal or state constitution, the power of the state legislature is unlimited and practically absolute, covering the whole range of legitimate legislation. Griswold v. Hepburn, 2 Duv. 20, 63 Ky. 20. Such is the authority conferred upon the General Assembly by the people oí the Commonwealth under our Constitution since 1850. Banks v. Commonwealth, 145 Ky. 800, 141 S.W. 380; McCreary v. Field, 148 Ky. 730, 147 S.W. 901; Scott v. McCreary, 148 Ky. 791, 147 S.W. 903. Any and every act of the legislature repugnant to or prohibited by either the state or federal constitution is null and void. The specific restraints imposed by the Constitution upon the legislature must be respected. 49 Am. Jur., Constitutional Law, Sections 33 and 36, pages 250 and 252.
Sections 49 and 50 of the Kentucky Constitution are restraints upon the General Assembly. In Rhea v. Newman, 153 Ky. 604, 156 S.W. 154, 158, 44 L.R.A.,N.S., 989, this Court, speaking through Miller, J., said:
“It will be noticed that the Constitution nowhere restricts the debt-creating *358power of the state; at most, it merely regulates the method of using the power. * * * the state, * * * being the sovereign political power, may create debts without limit, and has an unlimited taxing power for use in the discharge of the debt. The only regulations put upon the state’s power to create a debt are found in sections 49 and SO, supra; the first of said sections providing that the Legislature alone may create an indebtedness of $500,-000; and any indebtedness beyond that limit must, under section 50, have the approval of the people at a general election, and a specific tax levied for its payment.”
The purpose of these sections is “to curb the extravagant spirit of the people”, as expressed by Thomas, J., in Crick v. Rash, 190 Ky. 820, 229 S.W. 63. It is to prevent the creation of a debt to be paid by the taxpayers of this Commonwealth except as incurred specifically in the manner provided therein. In view of the objective to be attained, the language of these sections should be strictly construed to carry out their purpose. Otherwise, the sections may be emasculated by the knife of liberal construction. The majority opinion accomplishes such a result.
The effect of the opinion is to hold that licenses, fees, and excise taxes collected in connection with the operation of motor vehicles and the use of motor fuels on the public highways in Kentucky are annual taxes within the meaning of Section ' 50. This strained construction of the phrase “an annual tax”, as used in that constitutional section, is illogical and without basis in legal precedent. The only suggested legal precedents are Allen v. Cromwell, 203 Ky. 836, 263 S.W. 356, and Crick v. Rash, supra.
The attack upon the validity of the Act authorizing a bond issue in Allen v. Cromwell was based on alleged violations of Section 51 of the Constitution. The following statement of the issue contained in the opinion of Clarke, J., is conclusive of the question decided:
“The lower court assigned three reasons for holding the act violative of this section, and counsel for appellees list separately nine other alleged grounds of invalidity, but all of the court’s reasons and many of appellee’s are found upon analysis to be but variant statements of the single contention that the act, in both its title and body, embraces more than a single subject.”
By way of dictum, the opinion discussed an objection raised under Section 50 but did not discuss or decide the precise question with which we are now confronted as to what is meant by “an annual tax”, which the Court, in the majority opinion in the instant case, says is the “most troublesome question” to be considered. The majority opinion, in discussing the Cromwell opinion, says: “The court did not consider the character of the taxes.” Obviously, Allen v. Cromwell cannot be considered as an authority for the construction of the phrase in question.
There was no question of the meaning of “an annual tax” considered in Crick v. Rash, supra, and it does not sustain the majority opinion. In fact, Sections 157 and 157a, considered in Crick v. Rash, provide for an annual tax and refer to an ad valo-rem tax on property. Thus, we are confronted with a “substantial compliance” without sound basis.
The conclusion in the majority opinion is reached that a pledge or commitment has been made to provide “a tax in each of the thirty years as may be deemed annually sufficient to pay annual * * * requirements of the bond issue * * * This is the view taken by the dissenting Judge in State ex rel. Capitol Addition Bldg. Comm, v. Connelly, 39 N.Mex. 312, 46 P.2d 1097, 100 A.L.R. 878. The majority opinion in the New Mexico case is adverse to the majority opinion of this Court, as is State ex rel. Fletcher v. Executive Council of State, 207 Iowa 923, 223 N.W. 737, also cited.
As pointed out in the majority opinion, citing the Iowa case, the pledge of motor *359vehicle licenses, etc., is not binding upon any subsequent General Assembly. Billeter & Wiley v. State Highway Commission, 203 Ky. 15, 261 S.W. 855. The Iowa case was concerned with “a direct annual tax”, with the Court holding that motor vehicle licenses, etc., were not direct taxes. It did not consider whether they were annual taxes. The 'New Mexico case expressly held that “annual tax levy” referred to a tax on property which recurs periodically and is based on ownership of wealth as a measure of ability to pay and did not refer to an excise tax.
In State ex rel. Boynton v. Kansas State Highway Commission, 138 Kan. 913, 28 P.2d 770, 773, sections of the Kansas Constitution concerning debt limitation were considered. These sections are strikingly similar to our Sections 49 and 50. The Kansas constitutional section Article 11, § 5, refers to the “levying of an annual tax sufficient to pay the annual interest of such debt, and the principal thereof.” The Supreme Court of Kansas, in construing this section of their Constitution, held that an annual tax was a general property tax; property was considered as the basis of taxation; and the purpose of such debt limitation sections was to guard against incurring debts in excess of the stated limitation payable by a general property tax without the question having been submitted to and adopted by the people. It said:
“They were not dealing with the question of obligations to be paid only by special tax, such as on motor vehicles or motor fuels, or from funds raised in some manner other than by general property tax.”
The word “annual” is one of common and ordinary usage. Welch v. Board of Education of Magoffin County, Ky., 247 S.W.2d 536. “The rule for the interpretation of Constitutions, as universally applied, is that the language therein is to receive its plain and ordinarily understood meaning by the generality of the people”, so said Thomas, J., in Crick v. Rash, supra [190 Ky. 820, 229 S.W. 68], In Jefferson County ex rel. Grauman v. Jefferson County Fiscal Court, 273 Ky. 674, 117 S.W.2d 918, 924, it was said:
“Neither legislatures nor courts have the right to add to or take from the simple words and meaning of the constitution.”
“Annual” has been defined as occurring once a year or yearly. Horne v. Kenosha Lincoln-Mercury, Inc., 265 Wis. 496, 61 N.W.2d 893; People ex rel. Will County Fair Association v. Stanard, 9 Ill.App.2d 550, 133 N.E.2d 757; Rolerson v. Standard Life Insurance Company, Tex.Civ.App., 244 S.W.2d 845; Southern Service Company v. Los Angeles County, Cal., 82 P.2d 397.
The conclusion reached after consideration of the authorities cited herein and in the majority opinion is that the phrase “an annual tax” as used in Section 50 of the Kentucky Constitution by its framers meant an ad valorem tax on property to be levied and collected once each year and did not mean licenses, fees, or excise taxes. Reference to various sections of the Constitution bolsters this conclusion. Section 171 refers to “annual tax” on “property”. Section 172 provides a basis for assessment of property for taxation. Sections 174 and 181 make a distinction between taxation of property and “taxation * * * based on income, licenses, or franchises”. Sections 180 and 181 specifically provide for excise and license taxes. Reference to KRS Chapter 66, concerning the issuance of bonds by counties, cities, and districts, indicates a legislative construction that voted bonds should be made payable from an annual ad valorem tax levy on property as distinguished from licenses, fees, and excise taxes.
This is in accord with the doctrine of contemporaneous construction. In construing the Constitution, the terms employed therein should be given the meaning which had been put upon them and which they *360possessed at the time of the framing and adoption of the Constitution. McKinney v. Barker, 180 Ky. 526, 203 S.W. 303, L.R.A. 1918E, 581; Herold v. Talbott, 261 Ky. 634, 88 S.W.2d 303. Licenses, fees, and excise taxes on- motor vehicles and fuels certainly were not included in the meaning of “an annual tax” by the framers of our Constitution. The Act in question based upon such taxes is invalid for failure to provide for the levy and collection of an annual tax within the meaning of the Constitution.
Turning now to a consideration of the question submitted to the people at the general election, the effect of the majority opinion is a holding that the full faith and credit of the. Commonwealth of Kentucky is pledged to secure the payment of $100,-000,000 and interest. The meaning of this is that any form of taxation may be levied upon the income and property of the people to pay this debt. The full impact of this meaning has not reached the voting public yet. Without agreeing with such a conclusion, it will be discussed in relation to the form of the question which submitted this matter to the vote of the people. The question is contained in the fore part of the majority opinion.
In holding the form of the question to be sufficient, the majority opinion recognized that it did not give notice of the character of the bonds as a general obligation of the Commonwealth.
Section 50 provides that the debt limitation may be exceeded only after approval of the people at a general election. In order that the people may intelligently vote, the question should present the essentials of the proposition. The question should have advised the people that they were voting an indebtedness for which taxes in any form might be placed upon them in order to satisfy it.
The majority opinion refers to “the siren promise of $900,000,000 of ‘free’ federal money”. It is only fair to note that the publicity and propaganda concerning the bond issue was of the same “free ride” tenor. The people were not advised that the bonds to be issued were general obligation bonds of the Commonwealth or that their taxes might be raised to pay them. The word “bond” could just 'as well have referred to revenue bonds, with which the people were probably more familiar than with general obligation bonds. There was nothing in the question to indicate the character of the bonds. The form of the question should have indicated in some way how the debt to be incurred was to be paid.
The phrasing of the question should have made it clear to the voters that they might have to pay additional taxes to satisfy the debt. The framers of the Act apparently were careful to draw it so that the bonds would be general obligations of the Commonwealth and backed by the full taxing power of the state. The phrase “general obligation bonds” was inserted in the title of the Act. The bonds were described in Section 1 as “directly obligating the Commonwealth”. The beginning sentence of Section 4 is: “The bonds herein provided for shall be direct obligations of the Commonwealth of Kentucky, and the full faith and credit of the Commonwealth hereby is pledged for the payment of said bends and the interest thereon.” Thus, every effort appears to have been exerted to make sure that the full taxing power of the Commonwealth would be obligated to pay the bonds.
By inserting the phrase "general obligation bonds” in the title of the Act, this effect of the Act was made known to the legislators, and properly done so. In Frost v. Johnston, 262 Ky. 592, 90 S.W.2d 1045, 1048, the purpose of Section 51 of the Constitution was held “to require titles that will disclose to the reader the nature of the act, and thus prevent vicious legislation being enacted under innocent and misleading titles”. See also State Budget Commission v. Adams, 249 Ky. 680, 61 S.W.2d 314; Anderson v. Wayne County, 310 Ky. 597, 221 S.W.2d 429.
*361By the same reasoning, the question submitting the matter to the people should have included the additional phrase “general obligation” in front of the word “bond” in order to advise them of the obligation undertaken; that is, that they might have to pay for the so-called “free ride” in the end. If it is necessary for the legislators to be advised that they are authorizing “general obligation bonds”, then shouldn’t the question make this known to the people who will have to pay for them?
The question submitted is whether the voter is in favor of a certain Act of the General Assembly instead of creating a debt. It is no answer to say that a reading of or the publication of the contents of the Act would have disclosed its contents and meaning. If this be true, then the question need only have asked whether the voter favored a certain Act, without any details. The conclusion to be drawn is that the form of the question was unfair, inadequate, and misleading, and the bonds, therefore, are invalid as not having been properly approved by the people under Section 50.
The validity of the proposed bond issue is one of the most important matters to concern the people of Kentucky and to be decided by this Court in many years. In considering this case and in' preparing this dissent, it is regrettable that more time is not available. The two objections made herein to the validity of the bonds are not exclusive of others that might be more readily apparent with further time for consideration. The provision in Section 5 of the Act for the sale of the bonds “as and when the money * * * may be needed” presents an equally serious problem. Under the language of the Act, a finding of need is a condition precedent to the advertising and sale of the bonds. This opinion has been unduly prolonged, and I hesitate to extend it on this point.
The following quotation from Varney v. Justice, 86 Ky. 596, 6 S.W. 457, 459, 9 Ky. Law Rep. 743, approved by Carroll, J., in Board of Penitentiary Commissioners v. Spencer, 159 Ky. 255, 166 S.W. 1017, has been used as a guide in construing the Constitution:
“It is an instrument of words, granting powers, restraining powers, .and reserving rights. These words are fundamental words, meaning the thing itself; they breathe no spirit except the spirit to be found in them. To say that these words are directory merely, is to license a violation of the instrument ‘every day and every hour. To preserve the instrument inviolate, we must regard its words, except when . expressly permissive, as mandatory, as breathing the spirit of command."