Court Opinion

ID: 3823550
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:57:29.559094+00
Date Added: 2024-06-11T13:58:37.299968
License: Public Domain

This action tests the legality and validity of an appropriation made by the State Legislature to the Veterans of Foreign Wars, S.B. 245, S.L. 1945, page 436. The State Auditor, the State Treasurer, and the Attorney General took the position that the appropriation was not legal and valid, and thereupon approval of presented claims was denied. The claims were in proper form and mandamus should be granted if the appropriation is legal and valid, and must be denied if the illegality and invalidity of the appropriation is shown.
For the defendants it is contended that an appropriation in this form and substance, and that this appropriation, is prohibited by, and is violative of, several provisions of our Constitution; *Page 332 
and that since this is the first time any effort has been made to make an appropriation to such a corporation rendering such services the appropriation act should be carefully measured by the various provisions of the Constitution.
Among other constitutional provisions relied upon it is expressly urged that this appropriation act is in violation of sections 14 and 15 of article 10.
The pertinent portion of section 14, supra, provides, "Taxes shall be levied and collected by general laws and for public purposes only. . . ."
The pertinent portion of section 15 provides:
"The credit of the State shall not be given . . . to any individual, company, corporation, or association, nor shall the State . . . make donation by gift. . . . to any company, association or corporation."
There is no issue or controversy as to any fact, and insofar as we refer to any fact situation, foundation therefor will be the pleadings of the parties and statements made in oral argument.
The named beneficiary of this appropriation, The Veterans of Foreign Wars, is a corporation created a number of years ago under the laws of the United States, 36 U.S.C.A. §§ 111 to 120. Among other stated wholesome and worthwhile purposes is the purpose to assist worthy comrades of the armed services and their relatives and dependents. For some years the organization has functioned well in the nation and in Oklahoma, and among its activities has maintained service agents at various points in the state, and has maintained at Muskogee a service agent rendering service to claimants who had business there with and before the Federal Veterans Administration.
It was in connection with, and by way of assistance to, this last stated function or activity, that this appropriation was made.
The title of the act adopted by the Legislature reads as follows:
"An act making appropriations to the Veterans of Foreign Wars for the employment of a service officer to assist members of the armed forces, veterans, their families and dependents, and to pay other expenses necessary and incident to such service work and declaring an emergency."
And the first sentence of the body of the act, the sentence which completely makes the appropriation, reads as follows:
"In order to assist members of the armed forces, veterans, their families and dependents, to obtain the benefits of Federal and State legislation enacted in their behalf, there is hereby appropriated to the Veterans of Foreign Wars, Department of Oklahoma, out of the State General Revenue Fund the sum of Five Thousand Dollars ($5,000.00) for the fiscal year ending June 30, 1946, and the sum of Five Thousand Dollars ($5,000.00) for the fiscal year ending June 30th, 1947."
The Attorney General contends that it is shown by the act itself that the appropriation is not made "for a public purpose" within the meaning and intendment of section 14, art. 10, of the Constitution.
It is not contended that the purpose of the service rendered by the corporation is other than a wholesome purpose and quite valuable and beneficial to the people served, and therefore of course to the public as a whole. But it is contended that when a private corporation, association or organization is created, incorporated or chartered to render a service to the public or to work for the welfare generally or specifically, of the public as a whole, or of some particular class of the whole people, that the purpose so far as the government is concerned is a private one, and public monies of the state may *Page 333 
not be appropriated to such an organization to aid it in carrying out the function for which it is chartered and has its existence. That is, that while any private organization or corporation of a purely charitable, fraternal, patriotic, historical or educational nature might operate for the good of the public or that portion of the public with which it came in contact, and in fact might be for a public purpose so far as the public is concerned, yet it would nevertheless be a private organization and a private purpose insofar as concerns the state and the public monies of the state. We observe that in part the purposes of this particular organization are stated as follows:
"The purpose of this corporation shall be fraternal, patriotic, historical and education; to preserve and strengthen comradeship among its members, to assist worthy comrades; to perpetuate the memory and history of our dead and to assist their widows and orphans," etc.
We know, of course, that there are many other corporations, organizations, and societies which are organized and operate for all or various of these same stated purposes. All of them, as this corporation, are free of any control or management of or by the state or any officer or agency of the state, and of course they are not in any sense agencies of the state.
In Vette v. Childers, State Auditor, 102 Okla. 140,228 P. 145, an attempt was made by the Legislature to appropriate money to a private organization to assist it in performing a service which, while it was a service for the public good, was nevertheless to be performed, not by the state itself or any agency of the state, but was to be furnished and provided by the private organization or corporation. In that case, after reviewing the various arguments of the parties and considering well reasoned authorities from other jurisdictions, the court announced this rule in the fourth paragraph of the syllabus:
"Under sections 14 and 19, art. 10, of the State Constitution, money in the State Treasury can only be appropriated and used for public purposes, and in order to constitute a public purpose within the meaning of this constitutional provision, such purpose must not only be affected with a public interest, but must be performed by the state in the exercise of its governmental functions, and public funds cannot be used to assist individuals in a business which is affected with a public interest, as the Constitution neither authorizes nor contemplates the exercise of governmental functions by any person, association, or corporation, except the duly constituted officers of the state."
Of course, that case differs in fact situation from this one, as is nearly always true of quoted authorities, for no two cases are ever alike in exact detail, yet the rule there stated and above quoted was the same as in other states, and upon that rule this court struck down the appropriation act there considered, though observing that the purpose for which the corporation would have used the appropriated money would have been of great benefit and value to the public. That rule would seem to be wholly applicable here and perhaps dispositive of the question. But the exact question before us is an important one to the named corporation and other similar ones, and to all our service personnel, and to all taxpayers; and in view of that importance we have again examined the decisions of other jurisdictions, including those pointed out in our own cited former decision.
And in Detroit Museum of Art et al. v. Engel, Comptroller, etc., 187 Mich. 560, 153 N.W. 700, it was held (emphasis ours):
"The Detroit Museum of Art was incorporated under Pub. Acts 1885, No. 3, as a private corporation; and Loc. Acts 1899, No. 429, amended the city's charter, and empowered its common council to appropriate for the support of the museum a sum not to exceed $20,000 annually, and Loc. Acts 1903, No. 489, Sec. 66, empowered the common council to appropriate such sum payable from *Page 334 
its general fund, on the express condition that the museum should be free to the public, subject to reasonable regulations of its trustees. Thereafter the museum conveyed its property to the city retaining control in the hands of a board of trustees, serving without pay, a minority of whom were to be appointed by the board of aldermen. Const. Art. 10, Sec. 12, declares that the credit of the state shall not be granted to or in aid of any person or corporation, public or private. Held, that thecorporation remained a private corporation, and that while itsobject was a public one in the sense of being conducted for thepublic benefit, it was not a 'public corporation,' within themeaning of the taxing laws, unless managed and controlled bythe city, and that Loc. Acts 1903, No. 489, violated the constitutional provision, so that mandamus would not lie to compel the city comptroller to pay the director's salary for which appropriation has been made."
In the body of the majority opinion of said case, at page 703, it is stated:
"A similar attempt was made in St. Louis, Mo., to extend public aid to an art museum under similar conditions, and one of the claims of the relator there, was that:
"'The said St. Louis School and Museum of Fine Arts is established, regulated, and conducted in the same manner and upon the same general plan and scheme as are all of the art museums of the world, and particularly the art museums of the cities of New York, Buffalo, Chicago, Cleveland, Detroit,' etc.
"But the courts of that state withheld their sanction on the ground that money could not be legally collected as taxes andturned over to a private corporation to disburse. State ex rel. v. St. Louis, 216 Mo. 47, 115 S.W. 534. A like conclusion was reached under similar constitutional provisions in the case of St. Mary's Industrial School for Boys v. Brown et al.,45 Md. 310. Every argument made in behalf of relators in the case at bar is answered in those cases adversely to their contention.
"The object and purpose of relator is a public purpose in the sense that it is being conducted for the public benefit, but it is not a public purpose within the meaning of our taxing laws,unless it is managed and controlled by the public. As matters now stand, the people who are called upon to pay the taxes and furnish the money have no voice in the selection of theservants of relator; neither have they any voice in the selection of a majority of the board of directors who control and manage its affairs. It was said by Mr. Justice Campbell that:
" 'Taxes and loans, when authorized to be raised by any public body, must be raised under the implied condition that they are to be applied to the public uses under the control or care of that body." Atty. Gen. v. Bd. of Supervisors of Bay County, 34 Mich. 46."
We deem it unnecessary to lengthen our opinion by extended quotations from other authorities. The legal philosophy appears to be followed in all of the states, and even in municipalities where the basic law is the same or similar to our Constitution, that when the constituted authorities raise money by taxation they are charged with the duty not only of expending such money for that which is ultimately in the public good and therefore for a public purpose, but also of expending it by, or through public officers or public agencies. Thus the expenditures are fully controlled by those persons or agencies which in turn are subject to the control of the public which pays taxes and thereby creates the public funds.
Of course, the state may by proper appropriation act appropriate public monies to the assistance of persons in or separated from military service and their dependents and families. The state has done so quite substantially in its various appropriations to the "Soldiers Relief Commission." See H. B. 228, page 369, S. L. 1945. But that appropriation was made to a specific state agency specifically created by state law and fully managed and controlled by the state, and it is in no sense a private corporation or private agency. Incidentally, that state agency itself maintains *Page 335 
a full time service agent at Muskogee to render aid and assistance in all respects similar to that rendered by the corporation named in the appropriation act here involved.
And it is the consensus of opinion in all other jurisdictions that public money may not be appropriated to a private corporation or organization, operating entirely without governmental supervision or control, no matter how wholesome may be the purpose or function of such organization nor how beneficial its acitivities may be to that portion of the public with which it comes in contact.
The plaintiff corporation cites one case from Kentucky asserted to support its contention here. Hager, Auditor, v. Kentucky Children's Home Society, 26 Ky. L. 1133, 83 S.W. 605. But upon analysis, that decision does not exactly sustain the contention made, for there, although the appropriation was made to the private organization, the act at least established some control over the private institution by creating a contractual relationship with penalty obligation, a bond, and with requirements for regular and detailed settlement and accounting to the state which would furnish some measure of control over the detailed functioning of the institution in the use and expenditure of the public money. We do not mean to imply that such character of supervision and control in Oklahoma would of itself be sufficient, under our constitutional provisions, to sustain an appropriation such as here considered, but we do observe that the Kentucky decision does not indicate that even in that state such an appropriation will be sustainable in the absence of the bond and supervision there provided and required.
For the plaintiff it is contended that if the ultimate result to be aided or in part paid for by the state fund is a wholesome result and for the good of the people, that then and in that event the appropriation is for a public purpose within the meaning of the Constitution. Upon brief reflection it must be apparent that this conclusion would be unsound, otherwise appropriation of public funds would be authorized to a great number of organizations never thought to be entitled to look to the public treasury for funds, nor to be proper recipient of such funds by legislative appropriation. We note the numerous well known health organizations to aid specifically as to tuberculosis, cancer, and polio and others. Those and many similar organizations exist solely for the public good in the aid of health, but they are nevertheless private organizations and state appropriations of public money direct to them or to be spent by and through them to accomplish their purpose and their functions would be unconstitutional. In past years we have had numerous highway organizations of citizens in various parts of the state created to promote and in some cases to do actual, though volunteer, construction or repair work on the highways. That ultimate result was, of course, for the public good and their functions were to that extent for public purpose, but the state monies could not be appropriated to them or be used by them to carry out their plans of road repair and road construction.
There are many provisions of the statute providing rules applicable to claimants and as to approval of claims against public funds and the like which are wholly applicable to and enforceable against public officers or agencies and public boards with authority to approve claims which, of course, could not be applied to boards or commissions of private organizations or corporations when they are given the approving authority or claims against public funds. All these stated provisions emphasize the constitutional policy and reiterate and follow it requiring that public funds be administered and expended by and through state officers or agencies.
For the plaintiff it is contended "that the state may make use of a private agency for the public use." That statement is correct if qualified by "in a proper manner." Very often the state *Page 336 
does make use of a private agency for the public use and therefor and thereby pays out public money to a private agency, as where the state, by its Highway Commission, contracts with a private corporation to build a road or bridge, or contracts with an individual to render specific service as in Carter v. Miley, 187 Okla. 530, 103 P.2d 933. And many such instances are well known. Quite recently this court decided the cases of Children's Home v. Childers, 197 Okla. 243, 171 P.2d 613, and Murrow Orphans Home v. Childers, 197 Okla. 249, 171 P.2d 600. There the state having money appropriated for care of orphan children, by specific authority, the State Board of Affairs contracted with the orphan homes involved to care for certain orphan children who had become wards of the state, and in that manner properly made use of private agencies to accomplish a public use or purpose. If the appropriation had been made directly to those organizations to aid them in their fixed function, as here, the Constitution would have been violated as here. Thus we conclude that while the state may in a proper manner make use of a private agency for a public use, that philosophy does not aid plaintiff in this case.
The plaintiff makes reference to the second and concluding sentence of the appropriation act, which reads as follows:
"Said monies shall be expended and disbursed on claims approved by the Council of Administration of the Veterans of Foreign Wars, Department of Oklahoma, for the employment of a Service Officer to be stationed in the service office of the Veterans of Foreign Wars in the Regional Office of the Veterans Administration Facilities of Oklahoma, and to pay other expenses necessary and incident to such service work by said Service Officer."
An argument for plaintiff is made that the appropriation is really not made to the Veterans of Foreign Wars on account of the stated provisions for method of expenditure. But that argument is answered by the quoted language itself because expenditure is made upon claim of the corporation itself, or on claims of its employees exclusively selected and directed by it, with the claims approved by the corporation itself through its "Council of Administration." The corporation itself or its Council of Administration will thus determine what portion of the appropriation is to be expended as salary for its service officer or his aids or assistants, and what portion is to be expended for supplies or any other expenses which the corporation may approve as "other expenses necessary and incident to such service work." Thus it is apparent the real control over the spending of the money is fully placed in the designated corporation which also has control of the selection and direction of the service officer; and that the appropriation is in fact "to the Veterans of Foreign Wars" as stated in the title of the act, and as stated in the first sentence of the body of the Act as heretofore quoted in full.
On behalf of plaintiff there is some suggestion that the appropriation is really made to the service officer himself, but that argument is not greatly stressed, and we observe no controlling merit in it. While the appropriated money would go in such part as the corporation decided to the service officer as or in part payment of his personal salary, yet he himself would have no discretion or control in the approval of any claim or the expending of any portion of the money.
As to the suggestion that this is an appropriation to the service officer of the plaintiff corporation, we have observed it is not that, by its own express terms. But if it were, it would be nonetheless inhibited. See 59 C. J. p. 202, § 343b, as to unconstitutionality of providing public funds for payment of the salary of one not an officer or employee of the state.
For the plaintiff it is also pointed out that claims against this appropriation would be subject to audit and check by the State Auditor as to form and *Page 337 
amount, etc. That is true, of course, as to every claim presented against every state appropriation. But that does not in any case substitute the Auditor as control agency over expenditure of money in place of the control agency specifically set up in various appropriation acts in appropriating money to and for specific state agencies. Likewise in this case that would not substitute the Auditor as control agency for expenditure under this appropriation in lieu of the named corporation or its chief officers or its Council of Administration, as specifically set up in the act and specifically clothed with authority to approve the claims.
The Attorney General also points out that section 15, heretofore set out in part, and section 19, art. 10, are violated. Section 19, supra, is violated when tax money raised for general purposes is diverted to this corporation without constitutional authority. Section 15 is violated since this is a gift in a legal sense to this corporation, not a state agency. Of course, this is not a gift in the general sense of being a pure gratuity reward or bonus or donation, given for the sole private benefit of the donee, as an individual gift to a relative or friend. But the contention is that it is a gift within the meaning of constitutional provisions, since it is an expenditure of public money, but not by the state in the manner and with the supervision, and character of public purpose, set out and authorized and required.
Having no connection with the state, this organization has no right to look to the state for financial maintenance, and having no claim on the state, money received by it is a gift within the constitutional intent as shown by the language of the court in Carter v. Thomas, 172 Okla. 558, 46 P.2d 460. There it was said:
"But plaintiff insists that, regardless of any legal liability, the Legislature of Oklahoma, with full knowledge of the law announced by this court and of all of the facts of the case, nevertheless, has appropriated the money with which to pay plaintiff's claim, and that the Legislature's discretion and power to appropriate is without limit in our state.
"The plaintiff is in error. By section 15, art. 10, Constitution of Oklahoma, the Legislature is prohibited from making a gift of the revenues of the State of Oklahoma. The word 'gift,' as used in our Constitution, has been defined by this court to mean:
" 'A gift, as used in this section, intends all appropriations for which there is no authority or enforcible claim on which rests alone some material equitable obligation which in the mind of a generous or even just individual dealing with his own money might induce him to recognize as worthy of his reward.'
"See Hawks v. Bland, 156 Okla. 48, 9 P.2d 720. We are therefore of the opinion that under the above-cited authorities a part of this appropriation was clearly a gift as defined therein, and as such is clearly prohibited by section 15, art. 10, Constitution of Oklahoma."
In the case of Hawks v. Bland, above, referred to, this court held:
"Where specific constitutional prohibitions against gifts of public money exist, public money cannot be lawfully appropriated to meet an obligation, however just and equitable, unless it is of such a character that it could be enforced in a court of law."
The above Oklahoma cases are supported by the general rule which is set forth in 59 C.J. p. 202, sec. 343b, as follows:
"The Constitution of certain states . . . expressly prohibit the Legislature from making any gift to or in aid of any individuals or corporation . . . statutory provisions . . . have been held unconstitutional in granting or providing for the payment for services of one not an officer of the state . . ."
The plaintiff cites and places reliance upon Carter, State Auditor, v. Miley, 187 Okla. 530, 103 P.2d 933, but the controversy there bears little or no resemblance to the controversy here. *Page 338 
There we were not considering a legislative appropriation made direct to Judge Miley, or an appropriation of money to be expended by him or on claim approved by him. Quite the contrary. There the State Highway Commission, a part of the state government, or a definite state agency, having specific legislative authority, contracted with Judge Miley to render a specific legal service to the State Highway Commission itself. That, as we have heretofore pointed out, was a proper use and in a proper manner of private service for the state itself, with the state establishing a fixed contractual relationship and having complete control of the rendition of the service and the fixing of the amount of compensation therefor, and of course with complete selection of the service agency and the individual service agent by the state itself.
The Attorney General points out with emphasis that this appropriation act represents a sharp departure from past policy of the state without constitutional sanction, and therefore a departure from constitutional policy itself. Also, it is pointed out that upon approval of this policy there would be created many new channels for expenditure of tax monies, having in mind many other corporations, organizations, and clubs which now render similar aid to service personnel and their relatives at many places in the state. Notably, among others, are The American Legion, United States Spanish War Veterans, Marine Corps League, U.S. Blind Veterans of World War, Disabled American Veterans of World War, American Red Cross, and various and numerous civic clubs, Bar Associations, and Chambers of Commerce. At least, several of such organizations other than plaintiff maintain service agents and render similar service at Muskogee. It is pointed out that the sustaining of this appropriation would authorize similar appropriations to many such organizations, and, indeed, might require them in order to avoid legal discrimination. While that argument is not of controlling importance, it does demonstrate the wisdom of a constitutional policy which requires the state to conduct its operations for the public good or purpose through state installations or agencies where the state may have essential control and the power of direction in order to make the expenditure one for a public purpose within the meaning of the Constitution.
Upon the whole consideration we are convinced that this appropriation is in violation of the Constitution in that this public money is not appropriated and disbursed by the state for a public purpose within the intendment of the Constitution, and that the appropriation constitutes a gift of public monies in that it is appropriated to a private corporation or for expenditure by and through the corporation in the furtherance of its particular functions and activity instead of an appropriation and expenditure by and through state officers or state agencies or installations.
It must follow that the writ sued for should be denied, though fully understanding and appreciating the wholly worthwhile efforts and activities of the Veterans of Foreign Wars and the value in Oklahoma of the services rendered by this organization to service personnel and their dependents.
The defendant by answer and brief sets out other provisions of the Constitution with the assertion that they too are, or might be, violated by this exact character of appropriation. We need not dwell on that, as we have demonstrated the appropriation may not stand in view of the constitutional provisions we have pointed out and discussed.
Writ denied.
HURST, V.C.J., and OSBORN, BAYLESS, WELCH, CORN and DAVISON, JJ., concur. RILEY, J., dissents.