Court Opinion

ID: 3542593
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:54:08.170568+00
Date Added: 2024-06-11T14:22:06.373467
License: Public Domain

A cash surplus of $4,859,500.97 was in the general fund of this state on February 1, 1945. This money has accumulated during the past four years. It is revenue of the state that was paid into the treasury to pay the public debt or defray the general expenses of government. This money was exacted from the people. These exactions have exceeded the needs of the state government for the ostensible purposes for which they were collected by almost five millions of dollars. This money belongs to the people of the state. It was paid into the treasury by them for the purpose of defraying the general and ordinary expenses of their government. It is now proposed that this $4,859,500.97 belonging to the people be paid out of the treasury.
The people of this state prescribed certain definite and positive limitations on the taking of their money, to pay into
the treasury, as well as upon the paying of this money out of the treasury.
Despite the tuneful appeal of "Don't Fence Me In," the fact remains that the power to raise money by state taxation and the power to appropriate and expend that money after it is raised was, by the framers of our Constitution, very closely fenced in.
The people of this state not only built a hog-tight fence to keep its servants within bounds on the matter of state finances but it attached the constitutional fence to steel posts set in concrete.
Here are some of the anchoring posts provided by our Constitution: (1) The necessary revenue for the support and maintenance *Page 596 
of the state shall be provided by the legislative assembly; (2) taxes shall be levied and collected by general laws and forpublic purpose only; (3) all taxes levied for state purposes shall be paid into the state treasury; (4) no money shall be paid out of the treasury except upon appropriations made by law; (5) no money shall be drawn from the treasury but in pursuance of specific appropriation made by law; (6) the general appropriation bills shall embrace nothing but appropriations forthe ordinary expenses of the legislative, executive and judicial departments of the state, interest on the public debt and for public schools; (7) all other appropriations shall be made by separate bills, each embracing but one subject; (8) no appropriation of public moneys shall be made for a longer term than two years; (9) the rate of taxation on real and personal property for state purposes shall not exceed two mills on each dollar of valuation unless the proposition to increase such rateshall have been submitted to the people at the general election
and shall have received a majority of all votes cast for andagainst it at such election; (10) no debt or liability shall be created by the legislative assembly which shall singly, or in the aggregate with any existing debt or liability, exceed the sum of $100,000 unless the law authorizing the same shall have beensubmitted to the people at a general election and shall havereceived a majority of the votes cast for and against it at suchelection; (11) no appropriation shall be made by the legislative assembly whereby the expenditures of the state during any fiscal year (i.e. from July 1 to the next June 30) shall exceed the total tax then provided for by law and applicable to such appropriation unless the legislative assembly shall provide for levying a sufficient tax to pay such appropriation within such fiscal year; (12) no expenditures shall be authorized by the legislative assembly whereby the expenditures of the state during any fiscal year shall exceed the total tax then provided for by law and applicable to such expenditure, unless the legislative assembly shall provide for levying a sufficient tax to pay such expenditures during the fiscal year. The only gap in the fence *Page 597 
so built by the framers of our Constitution is at fence posts numbers 10, 11 and 12 above and the gap can exist only for emergency appropriations or expenditures "to suppress insurrection, defend the state or assist in defending the United States in time of war."
A general election is held in this state each two years at which representatives in the legislative assembly are elected for the term of two years and, since no appropriation of public moneys shall be made for a longer term than two years, Article XII, section 12, the Constitution requires that those entrusted with providing for the revenues and expenditures of the state must, each two years, stop, look and listen to the needs of the state so far as concerns its fiscal affairs and management, remembering that the provisions of our Constitution in relation to taxation are not grants of power but are limitations on the taxing power of the state.
By House Bill No. 45, the legislative assembly recognizes and declares that it has a post-war obligation for the care, rehabilitation and employment of its citizens and, "In order that a beginning may be made in translating that obligation into performance, the State Board of Examiners is hereby authorized and directed to employ an architect or architects for such period of time as it may deem proper, not exceeding two years from the effective date of this Act, for the purpose of preparing plans and specifications for the construction of a needed office building or addition to the present State Capitol building at Helena."
To discharge the above "obligation" and to pay the architects to be so employed, the bill appropriates $30,000 "out of the unexpended surplus moneys at present in the general fund of the State of Montana."
The appropriation provided for in House Bill No. 45 is not for the purpose of paying any of the regular and ordinary expenses of government but it is for the payment of an expense wholly foreign to the purpose for which the contributors, whose money makes up this surplus, were asked to contribute. To *Page 598 
appropriate and expend the peoples' money for other than the regular and ordinary expenses of government, the questions of purpose and amount should be first submitted to and approved by the people at a general election under section 2 of Article XIII of the Constitution when the contemplated appropriations and expenditures exceed $100,000.
The creation of an obligation payable from these funds is a liability of the state and its effect is to divert a large part of the revenues of the state out of the channel of the ordinary and regular expenditures of running the government when such monies were raised and paid into the treasury for the ostensible purpose to pay the public debt or to defray the general expenses of government, thus relieving the heavy burden of taxes levied upon property. (State ex rel. Diederichs, Relator v. StateHighway Commission, 89 Mont. 205, 296 P. 1033, 1034.)
In the case just cited the legislature attempted to authorize the sale of state highway debentures in the sum of $6,000,000. This court held that since the legislative assembly there sought to create a debt or liability in excess of $100,000 same was void under section 2 of Article XIII of the Constitution which requires that the matter first be submitted to and that it receive the approval of the people at a general election.
In its opinion in the Highway Debenture Case, supra, this court said:
"It is legislative power, not policy, that is drawn in question. And while we are mindful of the presumptions in favor of legislative Acts, yet, being bound to support, protect, and defend the Constitution, when an enactment transgresses the constitutional limitations beyond a reasonable doubt, it is our solemn and sworn duty to so declare it. We are mindful, too, that the declarations of Constitutions are placed therein to be obeyed, and are not to be frittered away by construction. (Less
v. City of Butte, 28 Mont. 27, 72 P. 140, 61 L.R.A. 601, 98 Am. St. Rep. 545), * * *. As stated by that able jurist, Chief Justice Taney of the United States Supreme Court, in the famous Dred Scott decision (Scott v. Sandford, 19 How. (U.S.) 393,
 *Page 599 15 L. Ed. 692): "No change in public opinion on questions of public policy can ever be given any weight in construing the provisions of a Constitution where the meaning is clear, for the adoption of a Constitution that might be deemed wise at one time and unwise at another would abrogate the judicial character of the court and make it the reflex of the popular opinion or passion of the day." If the Act in question authorizes the creation of a debt or liability in excess of $100,000, there are two available methods of accomplishing what the act proposes: One is to amend the Constitution, and the other is to obtain the consent of the people at an election for that purpose.
"* * * The framers of the Constitution provided two methods of raising revenue for public purposes: One the taxation system, and the other the license system. (State v. Camp Sing, 18 Mont. 128,44 P. 516, 32 L.R.A. 635, 56 Am. St. Rep. 551.) Knowing the tendency of governments to run in debt, to incur liabilities, and thereby to affect the faith and credit of the state in matters of finance, thus imposing additional burdens upon the taxpaying public, the framers of the Constitution placed positive limitations upon the power of the Legislative Assembly to incur a debt or impose a liability upon the state beyond the limit prescribed, without referring the proposition to the electorate for its approval. As to this, the comprehensive language of the section leaves no doubt. The first two sentences employ the word `debt' and refer to debt alone, but the third adds the word `liability,' a much broader term than `debt.' Liability is a broad term, of large and comprehensive significance. * * * The authors of the Constitution used the term advisedly, with a definite purpose. In construing a constitutional provision it is our duty to give meaning to every word, phrase, clause, and sentence therein, if it is possible so to do. So, whether the law authorizing a contract for the sale of these debentures creates a debt, such as is contemplated by the first two sentences of section 2, is not material. It certainly creates a liability, which includes a debt, for the state is expressly obligated not to reduce the excise taxes on motor fuels fixed by the Twenty-Second *Page 600 
Legislative Assembly and to cause the tax to be collected and paid to the debenture holders. This is prohibited by the plain terms of the Constitution, unless approved by the people.
"The fact that a special fund is created by the imposition of the license or excise tax on motor fuels with which to pay the debentures is of no importance.
"Under this contention the Legislature, or the debt-contracting authority, could divide the public revenue into numerous subdivisions, calling one the `road fund,' another the `school fund,' another the `agricultural fund,' another the `public health fund,' and others almost without limit. Debts could then be contracted in unlimited amounts and payable in the far distant future, and still be immune from attack as violating constitutional provisions limiting indebtedness provided each debt was made payable out of some one of the specially designated funds into which all of the revenue collected by taxation from the people had been divided. A mere statement of the proposition carries with it, it seems to us, its own refutation. (Crick v.Rash, 190 Ky. 820, 229 S.W. 63.) * * *
"State ex rel Rankin v. [State] Board of Examiners,59 Mont. 557, 197 P. 988, also presented an entirely different situation. In that case the debt or liability was already in existence, represented by outstanding warrants when the treasury notes were issued. The issuance of the treasury notes simply changed the form of the existing indebtedness or liability, and did not create one. (Hotchkiss v. Marion, 12 Mont. 218,29 P. 821; Parker v. City of Butte, 58 Mont. 531,193 P. 748; Edwards v. Lewis  Clark County, 53 Mont. 359,165 P. 297; State ex rel. Toomey v. State Board of Examiners,74 Mont. 1, 238 P. 316.) * * *
"The creation of an obligation, payable from these funds, is a liability of the state; its effect is to divert a large part of the revenues of the state into the state highway fund for a period of ten years, which otherwise might be used to pay the public debt or to defray the general expenses of the government, thus relieving the heavy burden of taxes levied upon property. * * * *Page 601 
The people are gravely concerned as to how and the purposes for which their money is spent. * * * As the great Justice Story said in the Dartmouth College Case, 4 Wheat. (U.S.) 518, 713,4 L. Ed. 629: `We have nothing to do but pronounce the law as we find it; and having done this, our justification must be left to the impartial judgment of our country.'
"The upshot is that in order to validate the Act it must receive the approval of the electorate."
It would seem that the money to pay "for the construction of a needed office building or addition to the present State Capitol building at Helena" and for the payment of an architect for the purpose of preparing plans and specifications for such construction should be appropriated from the trust fund provided for that purpose and known as the "State Capitol Building Fund" rather than to be appropriated from the General Fund of the state. If the appropriation were made from the former fund, the restrictions of section 12 of Article XII of the Constitution would not apply, as this court long ago (1896) held, speaking through Mr. Justice Hunt in State ex rel. Bickford v. Cook,17 Mont. 529, 43 P. 928.
Since the power to appropriate is co-extensive with the power to tax, it is subject to fundamental and inherent limitations. In my opinion, section 12 of Article XII of the Constitution not only limits and restricts appropriations but also authorizations. It does not freeze the surplus monies which are now in the general fund. It merely requires that before over four millions of dollars exacted from the taxpayers and paid into the public treasury for one purpose shall be expended for a wholly different purpose, the taxpayers shall be consulted and that the proposed expenditure be, by the taxpayers, authorized and approved at a general election before the money is spent. The other alternative is that the legislature submit to the taxpayers an amendment to section 12 of Article XII of the Contsitution permiting it to spend the money.
In the meantime, even though we "can't look at hobbles" and though we "can't stand fences," still the fence erected by *Page 602 
the framers of our Constitution stands between us and the appropriating, expending and paying out of the general fund in the public treasury monies in an amount which shall "exceed the total tax then provided for by law, and applicable to such appropriation or expenditure." *Page 603