Court Opinion

ID: 4127427
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:27:18.186121+00
Date Added: 2024-06-11T14:33:55.498404
License: Public Domain

TO BE PUBLISHED IN THE OFFICIAL REPORTS

                           OFFICE OF THE ATTORNEY GENERAL

                                     State of California

                                     JOHN K. VAN DE KAMP

                                        Attorney General

                                     ------------------------------
                                                   :
                             OPINION                :
                                                    :
                                  of                :
                                                    :
                JOHN K. VAN DE KAMP                 :       No. 87-1204
                    Attorney General                 :
                                                     :      JULY 20, 1988
                RODNEY O. LILYQUIST                  :
                 Deputy Attorney General              :
                                                     :
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               THE HONORABLE TOM BANE, MEMBER OF THE CALIFORNIA ASSEMBLY,
has requested an opinion on the following question:

            Does the State Controller have the authority to audit the expenditures from the
Assembly Contingent Fund?

                                           CONCLUSION

            The State Controller has constitutional authority to audit the expenditures from the
Assembly Contingent Fund to determine whether issuance of a warrant would be lawful.

                                             ANALYSIS

                The Assembly Contingent Fund ("Fund") is part of the State Treasury "available for
the expenses of the Assembly and legislative committees thereof." (Gov. Code, § 9127.)1
Expenditures from the Fund pay for such expenses as office supplies, telephone, newsletters, and
postage. (See § 9133.)2 The question presented for resolution is whether the State Controller has
the authority to audit Fund expenditures. We conclude that he does.

   1
    All references hereafter to the Government Code are by section number only.
   2
    The Senate has a similar fund. (§ 9126.)
               The State Controller holds an elected, constitutional office (Cal. Const., art. V, § 11)
responsible for drawing warrants upon the State Treasury. Section 7 of article XVI of the
Constitution states: "Money may be drawn from the Treasury only through an appropriation made
by law and upon a Controller's duly drawn warrant."

              By statute the State Controller is required to audit virtually all claims filed against
the Treasury. Section 925.6 provides:

               "The Controller shall not draw his warrant for any claim until it has been
       audited by him in conformity with law and the general rules and regulations adopted
       by the board, governing the presentation and audit of claims. Whenever the
       Controller is directed by law to draw his warrant for any purpose, the direction is
       subject to this section, unless it is accompanied by a special provision exempting it
       from this section."3

                 An "audit" involves the examination of a claim or expenditure to determine whether
it is correct and proper. The extent of any audit depends upon the individual circumstances as well
as legal requirements and applicable professional standards. A full and complete audit by the State
Controller would ascertain that the claim is numerically correct, actually incurred by the appropriate
person or entity for a lawful purpose, and that sufficient funds exist for payment from an
appropriation made by law. (See §§ 9133, 10520, 12400; Cal. Code of Regs., tit. 2, §§ 620-625;
Madden v. Riley (1942) 53 Cal. App. 2d 814, 818-821; Brandt v. Riley (1934) 139 Cal. App. 250,
256-257.) In short, the audit of a claim by the State Controller constitutes the investigation
necessary to determine whether issuance of a warrant for the claim would be lawful.

              The mandatory audit procedure of section 925.6, however, is inapplicable to
expenditures made from the Fund. Section 9130 states:

              "Expenditures from the Senate Contingent Fund, the Assembly Contingent
       Fund, and from appropriations made for legislative printing are not subject to the
       provisions of Section 925.6 or 13320 of this code, except that the State Controller is
       not required to draw warrants thereon until the original claims and vouchers,
       itemized and properly sworn to, are filed with him."4

   3
    The "board" is the State Board of Control. (§ 925.) Its regulations governing the
presentation and auditing of claims are found in California Code of Regulations, title 2, section
601 et seq.
   4
   Section 13320 specifies that state agencies are to submit budgets "setting forth all proposed
expenditures and estimated revenues for the ensuing fiscal year."

                                                  2.                                          87-1204

Under section 9130, then, the State Controller appears to be restricted in his audit procedures to
requiring the submission of original claims and vouchers that are "itemized and properly sworn to."5

              We note that Fund expenditures are subject to a detailed audit "in accordance with
generally accepted auditing standards established by the American Institute of Certified Public
Accountants" performed by an independent auditor. Section 9133 provides:

              "(a) The Joint Rules Committee shall annually contract for an independent
       audit or audits of the expenditures of the Assembly Contingent Fund, the Senate
       Contingent Fund, the Contingent Funds of the Assembly and Senate, expenditures
       for legislative printing, and General Fund expenditures for reimbursement of
       Members of the Legislature pursuant to Sections 8902 and 8903. These audits shall
       be made in accordance with generally accepted auditing standards established by the
       American Institute of Certified Public Accountants.

               "(b) These audits shall each include, but need not be limited to, an evaluation
       of:

               "(1) The expenditures in the following categories:

               "(A) Out-of-state travel and living expense reimbursement and in-state travel
       and living expense reimbursement.

               "(B) Automotive expenses.

               "(C) Rent.

               "(D) Telephone.

               "(E) Postage.

               "(F) Printing.

               "(G) Office supplies.

   5
    Similar to section 9130 is section 925.2 which provides:

          "Claims for expenses of either house of the Legislature or members or
       committees thereof, and claims for official salaries fixed by statute, are exempt
       from this chapter and Section 13920."

"This chapter" contains sections 925-926.10; "section 13920" concerns the rule-making authority
of the State Board of Control.

                                                 3.                                          87-1204

               "(H) Newsletters.

               "(I) Per diem for attendance at legislative sessions.

             "(2) The accuracy of the annual fiscal year financial statements of the rules
       committees.

               "(c) These independent audits shall be completed, and reports thereon made
       to the respective houses of the Legislature, by November 30 of each year for the
       previous fiscal year ending June 30."

               Section 9133, however, does not assure that a warrant drawn by the State Controller
in payment of a claim against the Fund will be for a lawful amount. The additional requirements
of section 9130 for "the original claims and vouchers, itemized and properly sworn to" do not
guarantee correctness of the claim or the lawfulness of the State Controller's warrant. Indeed, the
Legislature has recognized that a claim filed against the Fund may be materially false. (See §
9130.5.) Not only may an excessive claim violate statutory law, its payment may violate the
Constitution. (See Cal. Const., art. IV, §§ 4, 17; Giss v. Jordan (1957) 82 Ariz. 152 [309 P.2d 779,
781, 788].)

                It cannot be seriously argued that the Legislature may direct the State Controller to
draw a warrant for an improper and excessive claim filed against the Fund. We believe that the
Constitution prohibits him from paying such a claim. "Money may be drawn from the Treasury only
. . . . upon a Controller's duly drawn warrant." (Cal. Const., art. XVI, § 7.) The term "duly"
commonly means "as is right and fitting." (Webster's New Internat. Dict. (3d ed. 1971) p. 700.) It
signifies correctness, propriety, validity, and that which is legally required. (See Van Denburgh v.
Goodfellow (1941) 19 Cal. 2d 217, 222; Bienfield v. Van Ness (1917) 176 Cal. 585, 589; Matter of
Application of Clary (1906) 149 Cal. 732, 735; Williams v. Bergin (1900) 127 Cal. 578, 580;
Freshour v. Hihn (1893) 99 Cal. 443, 446.) A duly drawn warrant is one that is drawn for a lawful
amount.

                In Flournoy v. Priest (1971) 5 Cal. 3d 350, the Supreme Court described the
constitutional requirement of a "duly drawn warrant" as follows: "The obvious purpose of this
requirement is to insure the Controller's concurrence in the expenditure of state funds." (Id. at p.
354.) If the expenditure is "authorized and approved by the Controller," the constitutional
requirement is met. (Ibid.)

                The State Controller thus has constitutional authority to concur in all expenditures
from the Treasury. In order to perform his constitutional duties, he necessarily is required to
examine each claim, investigate it, and make the determination that it is lawful. In short, the State
Controller has the constitutional authority to audit claims filed against the Treasury including those
filed against the Fund.

                                                 4.                                          87-1204

                 The Supreme Court has long recognized and upheld the inherent and traditional
duties of state officers even where they are not expressly provided for in the Constitution. In Love
v. Baehr (1874) 47 Cal. 364, for example, the court examined a requirement of the Constitution of
1849 that the compensation of certain state officers, including the Attorney General, "shall not be
increased or diminished during the term for which they shall have been elected." (Id. at p. 367.)
The State Treasurer refused to pay the Attorney General for services rendered as a member of the
State Board of Examiners since the Legislature had separately established the compensation for such
services during the Attorney General's term of office. The court stated the State Treasurer's
argument as follows:

                "The argument for the respondent is, that the duties imposed by law upon the
       Attorney-General as a member of the Board of Examiners constitute a part of his
       official duties as Attorney-General, and that under the clause of the Constitution just
       quoted, it is not competent for the Legislature to increase his compensation during
       the term for which he was elected." (Ibid.)

In response to this argument, the court observed:

              "The Constitution provides for the election of a Secretary of State, Controller,
       Treasurer, Attorney-General and Surveyor-General, but is wholly silent in respect
       to the duties to be performed by either, leaving these to be prescribed by the
       Legislature. The first question to be determined is whether the Legislature has an
       unlimited discretion in respect to the nature of the duties which it may require to be
       performed by these officers?" (Ibid.)

The court answered this question as follows:

               "It is admitted that the Constitution contains no express limitation on the
       power of the Legislature in this particular. But we think a limitation is necessarily
       implied from the definition of the office. From the earliest period of our history as
       a nation, almost every State in the Union had a Secretary of State, Controller,
       Treasurer, and Attorney-General; and the general nature of the duties pertaining to
       each were perfectly well known to the framers of our Constitution. It is clear beyond
       controversy, that in establishing similar offices here, the framers of that instrument
       had reference to the same general class of duties, which it was well known pertained
       to such offices elsewhere. The Constitution provides for the election of a
       Superintendent of Public Instruction, whose duties are not defined; and might have
       provided for the election of a State Geologist. Can it be claimed with any show of
       reason, that the Legislature could compel either of them to become ex officio Warden
       of the State Prison or Superintendent of the State Lunatic Asylum? It is not usual in
       State Constitutions to define the particular duties of subordinate officers; that being
       the peculiar province of the Legislature, which, it is presumed, will prescribe only
       such duties as in their nature have heretofore appertained to similar offices
       elsewhere. In the performance of this duty, the Legislature may rightfully exercise

                                                 5.                                          87-1204

       a wide discretion. It may assign to each of these officers any duties, which, by the
       most liberal interpretation, can be held to come within the general scope of that class
       of duties which have usually appertained to such offices, as they were understood by
       the framers of the Constitution. In cases of doubt, it would be the duty of the Courts,
       in deference to the legislative authority, to solve the doubt in favor of the power as
       exercised; and they ought to interfere only in a clear case, when the Legislature has
       manifestly transcended its authority by imposing upon one of these officers duties
       which, in their nature, are wholly foreign to his office." (Id. at pp. 367-368.)

The court then contrasted the specified duties given to the members of the State Board of Examiners
with the traditional and usual duties of the Attorney General. It concluded:

                "Some of these services [rendered by the State Board of Examiners] have not
       the slightest relation, even upon the most liberal construction, to the duties of an
       Attorney General, as such duties were generally understood at the adoption of the
       State Constitution, and as they were doubtless understood by the framers of that
       instrument. The business of counting money in the treasury, examining books of
       account, requiring the skill of an expert accountant rather than the professional
       learning of a lawyer, and the investment of public money in bonds, is wholly foreign
       to the duties of an attorney, and is no more cognate to them than the management of
       a State prison or lunatic asylum. The Legislature has no more power to compel the
       Attorney-General to perform such service as a part of the duties of his office, than
       it has to compel the Superintendent of Public Instruction to take charge of the State
       prison, or to perform the duties of State Gauger. The Attorney-General is, therefore,
       under no obligation to perform such services, and he may decline to perform them,
       without any breach of his official duty as Attorney-General." (Id. at p. 370.)

                 As stated in Love v. Baehr, the official duties of the Attorney General "were
generally understood at the adoption of the State Constitution" of 1849. The same may be said of
the duties of the State Controller, then known as the Comptroller. On September 20, 1849, the
delegates at the Constitutional Convention debated whether a Comptroller should be included among
the designated constitutional officers:

               "Mr. GILBERT moved to strike out the words 'a Comptroller,' He thought
       it absolutely necessary that we should have as few State officers as possible . . . .
       Such an officer was not required here where our public improvements and the
       amount of public funds would be so limited for several years.

               "Mr. SHERWOOD hoped the motion would not prevail. The Comptroller
       is auditor of public accounts, and is a very important officer in that light. As for
       public improvements, he trusted we would have some before long.

              "Mr. McCARVER suggested that the Secretary of State be required to
       perform the duties of Comptroller.

                                                 6.                                          87-1204

               "Mr. GILBERT said that the business of the Comptroller was simply to audit
       the accounts of the State Treasurer. In some States there is a Committee of the
       Legislature to audit the accounts of the Treasurer. In the State of New York a
       Comptroller is absolutely necessary. The Treasurer in that State is a mere Cashier.
       The Comptroller is the principal officer. But in California for many years we shall
       not need an office of this kind. He hoped the House would strike it out and provide,
       if necessary, for a board of officers of both Houses of the Legislature.

               "Mr. McCARVER thought this matter should be left to the Legislature. It is
       usual in legislative bodies in the States to have frequent settlements with the auditor
       of public accounts, by a committee appointed for that purpose.

               Mr. BOTTS hoped the motion would not prevail. He was in favor of
       retaining this officer, not only because the Constitution of New York has a
       Comptroller in it, but because his duties are extremely important. In some of the
       States they are so important as to be divided between two - a first and second
       Comptroller. A most wholesome and useful check is created by the union of the two
       officers; the one is a check upon the other. It is absolutely necessary to have some
       officer to keep a check upon the public accounts.

             "The question was taken on Mr. Gilbert's motion to strike out the words 'a
       Comptroller,' and decided in the negative." (Browne, Report of the Debates in the
       Convention of Cal. on the Formation of the State Constitution (1973) p. 162,
       emphases added.)

Accordingly, the framers of the Constitution of 1849 clearly understood that the significant and
primary function of the Comptroller was to "audit the accounts of the State Treasurer."

                 While the debates leading to the adoption of the Constitution of 1879 with respect
to the duties of the State Controller are not particularly helpful (see Willis & Stockton, Debates and
Proceedings of the Constitutional Convention of the State of Cal. (1881) pp. 363, 740, 783-793,
1252-1254, 1444-1445, 1496-1497, 1512, 1521), the convention delegates did expressly add the
requirement of a "duly drawn warrant" for expenditures from the Treasury. As found by the
Supreme Court in Flournoy v. Priest, supra, 5 Cal. 3d 350, 354, this language was specifically
incorporated into the Constitution "to assure the Controller's concurrence in the expenditure of state
funds." Meaningful concurrence necessarily requires the development of information through
normal auditing procedures concerning the claims filed for payment.

               The Legislature may not by statute defeat or materially impair the constitutional
powers of state officers. (See Hustedt v. Workers' Comp. Appeals Bd. (1980) 30 Cal. 3d 329, 338;
Solberg v. Superior Court (1977) 19 Cal. 3d 182, 191-192; Estebar v. Municipal Court (1971) 5 Cal.3

                                                  7.                                         87-1204

119, 127.) We believe that if section 9130 were interpreted in a restrictive manner so as to remove
the State Controller's constitutional powers to audit claims, it would be void and unenforceable.6

                In 2 Ops.Cal.Atty.Gen. 360, 361 (1943), Ops.Cal.Atty.Gen. NS 3774 (1941), and
Ops.Cal.Atty.Gen. 10907 (1936), we recognized the principle that the State Controller has implied
constitutional duties beyond the reach of the Legislature.

                Our conclusion is supported by numerous cases from other states holding that a
constitutional officer has implied powers inherent and essential to the office which the legislative
branch of government may not abrogate. (See State ex rel. Mattson v. Kiedrowski (Minn. 1986) 391
N.W.2d 777, 780-782; Murphy v. Yates (1975) 276 Md.App. 475 [348 A.2d 837, 846]; Allen v.
Rampton (1969) 23 Utah 2d 336 [463 P.2d 7, 8-12]; Fairbanks v. Stratton (1958) 14 Ill. 2d 307 [152
N.E.2d 569, 571-572]; Tucker v. State (1941) 218 Ind. 614 [35 N.E.2d 270, 291-293]; American
Legion Post No. 279 v. Barrett (1939) 371 Ill. 78 [20 N.E.2d 45, 51]; People v. West Englewood
Trust & Sav. Bank (1933) 353 Ill. 451 [187 N.E. 525, 530-531]; Gaston v. Black (1917) 199 Ala.
321 [74 So. 387, 388]; State v. Douglas (1910) 33 Nev. 82 [110 P. 177, 180]; Ex Parte Corliss
(1907) 16 N.D. 470 [114 N.W. 962, 964]; State v. Gorby (1890) 122 Ind. 17 [23 N.E. 678, 681]; In
re House Resolution Relating to House Bill No. 349 (1889) 12 Colo. 395 [21 P. 486, 487-488].)
With respect to a controller, sometimes referred to as an auditor, the traditional core function of
auditing claims is not subject to curtailment by the legislative body. (See Williams v. State
Legislature of Idaho (1986) 111 Idaho 156 [722 P.2d 465, 466-470]; People v. Brady (1917) 277 Ill.
124 [115 N.E. 204, 205-206]; Hicks v. Davis (1917) 100 Kan. 4 [163 P. 799].) In Giss v. Jordan,
supra, 82 Ariz. 152 [309 P.2d 779, 787-788], for example, the court stated:

               "It is very essential that the sharp separation of powers of government be
       carefully preserved by the courts to the end that one branch of government shall not
       be permitted to unconstitutionally encroach upon the functions properly belonging
       to another branch, for only in this manner can we preserve the system of checks and
       balances which is the genius of our government. The result of attempting to
       withdraw from the state auditor and to place with a member of the legislature the
       right to 'audit' the expense claims of the legislative department--one of the co-

   6
    While section 9130 exempts expenditures from the Fund from the audit requirements of
section 925.6, we note that section 12410 provides:

          "The Controller shall superintend the fiscal concerns of the state. The
       Controller shall audit all claims against the state, and may audit the disbursement
       of any state money, for correctness, legality, and for sufficient provisions of law
       for payment. Whenever, in his opinion, the audit provided for by Chapter 4
       (commencing with Section 925), Part 3, Division 3.6 of Title 1 of this code is not
       adequate, the Controller may make such field or other audit of any claim or
       disbursement of state money as may be appropriate to such determination."

                                                 8.                                          87-1204

       ordinate and equal branches of government--destroys, to that extent at least, this
       system of checks and balances."

              ". . . . . . . . . . . . . . . . . . . .. .

               "There is no question but that the legislature constitutionally has 'the power
       of the purse' as no one may expend public funds without legislative sanction;
       however, we cannot believe that the framers of our constitution ever intended that
       the legislative branch of the government should, as to the expense claims of its own
       members, perform the executive function of 'auditing', nor that it was intended any
       claims for the expenditure of public funds be paid without an audit by some official
       of the executive department. That power, we hold, was delegated by the Constitution
       to the executive branch and impliedly placed in the hands of respondent."

              In Preece v. Rampton (1972) 27 Utah 2d 56 [492 P.2d 1355, 1357], the court
concluded:

               "It thus clearly appears that the auditor at and prior to statehood drew all
       warrants upon the treasurer for the expenditure of money in the state. To take this
       duty away from the state auditor is to detract from the constitutional duties of his
       office, which cannot be done.

               "The actual typing of the warrants is ministerial in nature, and there is no
       basis for the auditor to complain if that work is done by the department of finance.
       However, the presenting of those warrants to the state treasurer calls for discretion,
       and the auditor should be the one to decide if a warrant is to be presented for
       payment. It was, and is, the duty of the state auditor to verify the correctness of
       accounts before they are paid.

              ". . . . . . . . . . . . . . . . . . . . . .

               "In the recent case of Allen v. Rampton we held that the constitutional duties
       of the state treasurer were those being performed by the territorial treasurer at the
       time of the adoption of the Constitution. In like manner we now hold that the
       constitutional duties of the state auditor are those which the territorial auditor was
       then performing and that the constitutional provision that other duties may be
       imposed upon him does not permit the legislature to relieve him of any of those
       constitutional duties." (Fn. omitted.)

                In Thompson v. Legislative Audit Commission (1969) 79 N.M. 693 [448 P.2d 799,
802], the court observed:

              "Although, as stated, the constitution is silent as to the duties of the office
       (and we would note in passing that there is likewise no specific mention of the duties

                                                 9.                                         87-1204

      of the secretary of state, state treasurer, or attorney general), surely it cannot be
      logically contended that the failure to prescribe specific duties to the office of state
      auditor meant that the constitution makers felt that, with the passage of time, there
      might no longer be any need for such office and that the legislature could, by statute,
      in effect abolish it. It would seem to us that, both historically and fundamentally, the
      office of state auditor was created and exists for the basic purpose of having a
      completely independent representative of the people, accountable to no one else,
      with the power, duty and authority to examine and pass upon the activities of state
      officers and agencies who, by law, receive and expend public moneys."

              In Hudson v. Kelly (1953) 76 Ariz. 255 [263 P.2d 362, 369], the court stated:

             "Who determines whether a valid appropriation has been made for monies
      proposed to be expended and if funds are available for the payment of any specific
      claim and if for a public purpose? The answer is the state auditor provided for in the
      Constitution.

              ". . . . . . . . . . . . . . . . . . . . . .

               "To make a free and independent constitutional officer subservient to the
      dictates of some appointive officer is equivalent to abolishing the office and creating
      another in lieu thereof to exercise the duties and functions belonging to the first
      office. It was long ago determined that the legislature has no power to take from a
      constitutional officer the substance of the office itself, and transfer it to another who
      is to be appointed in a different manner and will hold the office by a different tenure
      from that which is provided for by the constitution. [Citation.] A constitutional
      office cannot be destroyed nor an incumbent legislated out of it in the absence of
      express constitutional authority [citation], and what may not be done directly cannot
      be accomplished by indirection."

              In Wright v. Callahan (1940) 61 Idaho 167 [99 P.2d 961, 964-966], the court
observed:

               "At the time of the adoption and ratification of our Constitution the terms
      'state auditor' and 'controller,' as evidenced by the constitutions and statutes of that
      period, were generally and commonly understood to connote a supervising officer
      of revenue whose duties were to audit all claims against the state. We must presume
      that the framers of our Constitution so employed the term 'state auditor.' [Citations.]

              ". . . . . . . . . . . . . . . . . . . . . .

              "Having concluded the powers and duties conferred upon the territorial
      controller as an auditor and 'superintendent of the fiscal concerns' and affairs of the
      territory were, by the adoption of Section 1 of Article IV, supra, impliedly vested in

                                                10.                                           87-1204

       the State Auditor, the legislature could not, therefore, divest him thereof by creating
       the office of comptroller and vesting in the comptroller the powers and duties which
       the Constitution already affixed to the auditor's office." [Citations.]

               It is true that Ross v. Whitman (1856) 6 Cal. 361, 362-365, supports the contrary
conclusion. Ross, however, dealt with the California Constitution of 1849 with its total absence of
any specified duties for the State Controller. As the Supreme Court has recently interpreted the
California Constitution of 1879 with its prescribed duty to duly draw warrants against the Treasury,
the State Controller impliedly must determine whether the drawing of a warrant would be lawful.

                In answer to the question presented, therefore, we conclude that the State Controller
has the constitutional authority to audit expenditures from the Fund to determine whether issuance
of a warrant would be lawful.

                                             *****

                                                11.                                          87-1204