Court Opinion

ID: 7990184
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:30:09.083872+00
Date Added: 2024-06-11T16:35:20.229467
License: Public Domain

Mayes, J.,
delivered the opinion of the court.
The object of this suit is to test the constitutionality of chapter’ 96, Laws of 1908, providing for the removal of the state funds from the vaults of the treasury by tbe establishment of state depositories. By section 1 of the act it is provided that “the state treasurer shall deposit and at all times keep on deposit in the state or national bank, or some of them doing business in this state, the amount of money in his hands belonging to the several current funds in the state treasury, and any such banks may apply for the privilege of keeping on deposit such funds or some part thereof.” Eor the purpose of deciding the question involved, this is the only part of the act we need quote, since it is by this section that the funds are authorized to be removed from the vaults of the treasury, and all other features of the act are addressed merely to the administration of the law.
*708It is claimed that this act violates section. 137 of the constitution of the state, which is as follows, viz.: “It shall be the duty of the state treasurer, within ten days after the 1st day of January and July of each year, to publish a statement under-oath, in some newspaper published at the seat of government, showing the condition of the treasury on said days, the balance on hand and in what funds, together with a certificate of the governor that he has verified the count of the funds in the treasury, and found the balance, stated by the treasurer, actually in the vaults of the treasury,- or as the truth may be. And it shall be the duty of the governor, at such times as he may deem proper, to go to the treasury, without giving notice to the treasurer, and verify the cash balance as shown by the books, and to publish the fact that he has done so, and whether the amount called for by the books be actually in the treasury, and stating whether the treasurer had any notice whatever that the verification would be made.” If the act in question is in conflict with the organic law of the state, it can only be in conflict with section 137, because that is the only provision of the constitution which deals with the question involved in this act.
All laws passed by the legislature of the state are presumably valid in any case, and the presumption is a conclusive one, unless there is to be found in the constitution of the United States or the constitution of the state a prohibition on the power of the legislature to pass the particular law. Under this act there-can arise no question under the federal constitution. The act deals- with a purely state matter. The legislature represents the-sovereign power, and is vested with full control and disposition of the state’s funds, except in such instances as the constitution prohibits. Thus by section 92 of the constitution the legislature-is prohibited from making payment to any person of the salary of a deceased officer beyond the date of his death. By section 93 the legislature cannot retire any officer on pay, or part pay, or make any grant to such retiring officer. By section 96 the *709legislature cannot grant extra compensation, fee, or allowance to any public officer, agent, servant, or contractor, after service rendered, etc. These are the only restrictions thrown around the sovereign power of the legislature to control and dispose of the funds of the state, and it is apparent that these restrictions are against private, and in favor of the public, interest. There is not to be found in the constitution any prohibition on the legislature to pass a depository law. Section 137 of the constitution was never intended to hamper or hinder the sovereign power from enacting laws for the regulation and control of the state funds for the best interest of the state. Its purpose was to control the treasurer in dealing with the funds as treasurer. When it was adopted, it was in view of the then unbroken custom of the state to keep its money in the vaults. Its object was to prevent the treasurer, either for profit or accommodation, from moving the funds committed to his care from the place where the law designated for the keeping of same. It had no purpose other than to restrain the custodian of the funds from making profit by loaning the state’s money, or jeopardizing the funds by removing same from the treasury without authority, and any other construction is beyond the purpose of the constitutional section in question. The requirement of section 137 that the treasurer publish a statement under oath, etc., showing the condition of the treasury, etc., the balance on hand, etc., and that the governor make a certificate that he has verified the count o f the funds in the treasury, and found the balance, stated by the treasurer, actually in the vaults of the treasury, presents no difficulty whatever, nor does it make doubtful the power of the legislature to pass a depository law. The books of the treasurer must show only such sums of money and other funds as must be there after making such disposition of the funds as the law requires, and due credit is to be given for all funds on deposit with the banks in obedience to the law, just as the treasurer is entitled to credit for any other lawful disbursement. The *710amount required to be actually in the treasury is only such amount as is left after the treasurer bas made lawful disposition of the funds.
The act in question is subject to many criticisms as applied to its practical administration. It is in many respects very imperfect, and tbe character of some of the security authorized to be taken by it is of a most unsatisfactory nature. In the acts of 1908 are to be found two depository laws. These laws are contained in chapters 96 and 97. Chapter 96 provides for the establishment of state depositories, and chapter 97 provides for the establishment of depositories for the levee district funds. By section 2 of the act in relation to the state depository the security authorized to be taken for the loan of the state’s fundáis; required to be state bonds, levee bonds, county bonds, municipal bonds, United States bonds, or surety bonds of any surety company authorized to do business in the state of Mississippi. The act further provides that “no bonds- shall be accepted as security if worth less than par in the market.” By section 2 of- the act two classes of security may be taken — that is, bonds of the state, levee bonds, etc., all of which have a market value; and, secondly, the surety bonds of any surety company authorized to do business in the state. In the nature of things,, a mere surety bond has no market value. Eor this last character of security the state gets nothing but a mere right to- sUe on the bond, in case the depository using this character of security fail to pay over the money when required by the state to do so-, and we apprehend that the state would experience much difficulty in realizing anything on the surety bond in open market. By section 11 it is provided that “in the event of the failure of any state depository to pay any warrant lawfully issued by the auditor of public accounts; on any funds on deposit belonging to the state in such depository, the treasurer is hereby empowered to sell such securities as are not placed with him by such depository,” etc. It is thus seen that all bonds taken as security are required to> be worth their par in the market. Of *711course, section 11 can have no application-to security bonds, since the surety bond has no commercial value. We merely point out these features of the law to emphasize its crudities and uncertainties. The whole act shows that it was the intent and purpose of the legislature to require as security for the loan of the state’s money a character of collateral readily convertible on the market, to the end that the state might not be embarrassed in collecting its funds, and yet the act authorizes one character of security which has no market value whatever and is but a mere right to sue. While section 11 provides for a sale of the bonds deposited as collateral, in order to realize on the security when necessary, nothing is said in the act about the method of realizing where the security is a surety bond. Of course it would follow necessarily that the state could sue on the bond; but it might take years to thus collect its funds, and we merely point out thpse things as emphasizing the many defects of the law. Where surety bonds are accepted as security, no form of bond is given by the statute which it is required that the surety company shall give; but the board authorized by law to supervise the loans are left to adopt their own form of bond. We hardly think that any banking institution would regard a surety company’s bond as constituting any valuable security as the basis of a loan.
A comparison of the act creating the state depository with the act creating the levee depository shows that much more care was taken for the safety of the levee funds than for the state funds. Section 3 of. the levee depository law only authorized the taking of United States bonds, state bonds, levee bonds, county bonds, and municipal bonds; the municipal and county bonds of a county or municipality located in the levee district. The act does not authorize the taking of the bonds of a surety company as collateral. Such bonds may be used as security additional to that authorized to be taken by the act; but even then two or more of the surety companies are required to sigh the bond, when used'to obtain a loan of the levee funds. No *712funds of the levee may be loaned out on the security named in the act alone, but in every case an additional security bond is required to be signed by four or more individual securities or two or more surty companies authorized to do business in the state. The loan of the levee fund is still further secured by making all stockholders of a depository liable for any loss sustained on account of the failure of the depository, etc.
We are forced to approve this act, because it violates no constitutional provision of the state or United States; but in its present imperfect and unsatisfactory'condition we reluctantly yield our assent to this conclusion. We might indulge in many other criticisms of the act in question; but the criticisms would only be of such’ features as must be corrected by the legislature and could serve no purpose here.

Affirmed and bill dismissed.