Bee v. Huntington , 114 W. Va. 40 ( 1933 )

In the case of Finlayson v. City of Shinnston, 113 W. Va. 434,168 S.E. 479, we held that levies for bonded indebtedness created subsequent to the adoption of the amendment of section 1, Article X, West Virginia Constitution, must be within the maximums prescribed by said amendment. Also, that levies for pre-existing bonded indebtedness must be made within the said maximums except where greater levies are necessary to prevent impairment of the obligations of contracts. The distinction between subsequent indebtedness and pre-existing indebtedness is obvious. In the case of Dickinson v. Talbott, Treas., 114 W. Va. 1,170 S.E. 425, we re-emphasized the non-violableness of contractual obligations existing at the time of the adoption of the amendment by saying: "The levy limitations prescribed by said amendment cannot be destructive of contractual obligations." In that case we also said, in further conformity with general law, "The state's constitutional requirements are for the preservation of the state and the maintenance of its integrity and for the protection of the people. Constitutional limitations must not be so construed as to be subversive of their very purpose." That case is also authority for the proposition that the non-impairment of the obligation of contracts is not limited to bonded indebtedness. The Finlayson case involved only bonded indebtedness. The Dickinson case involved indebtedness not bonded.

Since the Finlayson case was decided the legislature has passed certain acts for the raising of revenue by indirect taxation and has passed the act in question (Acts 1933, chap. 38).

While ordinarily the question of the impairing of the obligation of contracts may be raised only by a party in interest (12 Corpus Juris, p. 1057), that rule must not be so strictly applied as to prevent a court of last resort from resolving a question of great public importance in conformity with the said requirement of the federal and state Constitutions. For us to fail to give recognition at this time to the paramount law because, forsooth, the question of the impairment of the obligation of contracts has not been pleaded by a litigant who asserts that a contract in which he is interested has been impaired, would mean that we would simply gloss over that vital question at this time and leave it for determination on what might be conceived to be more opportune occasions, though the delay would involve great public detriment.

However drastic may be the program of retrenchment in expenditures of public funds, the fact remains that large amounts of revenue must be raised by the state, counties, school districts, magisterial districts and municipalities in order that governmental activities may function, though on a most conservative basis.

It is a matter of common knowledge, of which this Court must take judicial notice, that in many of the taxation units of the state the restricted levies will not produce enough revenue to meet interest charges and sinking fund requirements of bonded indebtedness in addition to providing for necessary governmental activities, even on a basis of emphasized conservatism. In the instant case of Eakle v. County Court ofBraxton County, such facts appear from the record, uncontradicted. This condition, with respect to the state at large, must be considered to have been known to the legislature and to have been taken into consideration by the people when they adopted the amendment at the general election of 1932. To hold that the amendment should be construed to mean that both bonded indebtedness (existing prior to the adoption of the amendment) and current expenses must, in all events, be taken care of within the limits fixed by the amendment would create an impossible situation. And, in my judgment, it equally tends to confusion to hold that bonded indebtedness must be given preference over the necessary expense of constitutional government. With routine governmental activities handicapped and demoralized by a shortage or lack of funds, the collecting of taxes to meet the requirements of preexisting indebtedness would be seriously interfered with or wholly subverted. The value of the debts whether bonded or otherwise would be impaired or destroyed. As was forcefully said by the Supreme Court of the United States in Von Hoffman v. Quincy, 4 Wallace (71 U.S.) 535, 552: "Nothing can be more material to the obligation than the means of enforcement."

The people of the state must be deemed not to have intended to adopt an amendment which could only be so construed as to involve (1) practical abdication of the functions of government, or (2) the impairment of the obligation of contracts of many governmental subdivisions. It is not a sufficient answer to say under such narrow construction that the duty would devolve upon the legislature to provide other means for raising public revenue, particularly for current expenses of government. Such other means may be available, or they may not. That is strictly a legislative matter. The question in hand must be determined in the light of existing conditions.

The deterioration of the functioning of the essential activities of government would produce a condition which would jeopardize personal safety and property as well as existing obligations. Of course, the people did not mean to do that. It must therefore be considered that the people intended that constitutional government should continue to function and that the necessary costs thereof should be paid, including reasonable expenditures for the education of the youth.

What then must be said with reference to bonded indebtedness existing at the time of the adoption of the amendment? Honorable people do not repudiate debts. This is true of commonwealths as of individuals. That the people of this state did not intend to repudiate any solemn obligation is not open for discussion. Not only was there no desire for such repudiation but it could not be accomplished if attempted. "It admits of no dispute now, that taxation for state and county purposes combined, cannot exceed the constitutional limitation, for their necessary expenses and new debts. It is equally well settled that there is no limitation of the power of taxation, upon either state or county, for the payment of their lawful debt, created prior to the adoption of the constitution."French et al. v. Board of Commissioners, 74 N.C. 692. In an earlier North Carolina case wherein the constitutional tax limitation of that state was under consideration, the judge speaking for the court said: "I agree that if, under this equation, carried to its limits, the amount is not enough to meet current expenses, and also to pay the interest on the public debt, then for the excess needed it is not only within the power, but it is the duty of the General Assembly to disregard the equation; for this protection to property must be taken to be subject to the injunction, 'to maintain the honor and good faith of the State untarnished in regard to the public debt * * *'." University R. R. Co. v. Holden and Jenkins,63 N.C. 410, 414. The background of that thought is, of course, that orderly government must be maintained. It is the ne plusultra of organized society. Without it, solemn obligations become mere scraps of paper.

It must be remembered that throughout the years bonded indebtedness of the respective units of government could be, and was, created only by the vote of the people. Lawson v.County Court, 80 W. Va. 612, 620, 92 S.E. 786. The people voluntarily assumed the burden. It is fixed. It cannot be avoided by later constitutional amendment of whatever character. If, therefore, a later amendment fixes levy limitations which will not raise funds sufficient to support essential constitutional government and to meet the requirements of bonds, or other proper indebtedness, I think the plain logic as well as the necessities of the situation require that there be additional levies for the protection of the obligation of the contracts. This, in my judgment, is in accord with the principle applied in the Finlayson case. It accords also with the law recognized and applied in the case ofWater Company v. Town of Welch, 64 W. Va. 373, 62 S.E. 497. Syllabus one reads: "A town makes a contract for furnishing it for public use light and water. At the date of the contract statute gives the town power to tax up to a certain rate or limit. A later retroactive statute limits the power of the town to tax to a lower rate. The later statute is void as to such prior contract under Federal and State Constitutions, because impairing the obligation of the contract, and the courts will compel the town to impose taxes at a rate sufficient to meet such contract, notwithstanding such later act, so its levy do not exceed the limit fixed by the statute in force at the date of the contract."

I cannot agree with the statement in the majority opinion that "the interpretation of the amendment by the legislature is incompatible with the previous interpretation of this Court in the Finlayson case." The opinion in the Finlayson case makes plain the proposition that levies in excess of the constitutional maximums may be laid to prevent the impairment of pre-existing contracts. I now say that the preserving of essential governmental activities must be deemed an element of the inviolability of governmental contracts. I think this is plainly within the meaning of the Finlayson holding. That case is authority for the proposition that bonded indebtedness shall be discharged out of the maximum levies prescribed by the amendment, if possible, but it does not hold that such indebtedness shall have priority over necessary governmental operating expenses. Note this language from the Finlayson opinion:

"With respect to existing bonded indebtedness, it is alleged in the bill that 'the Mayor and Common Council of the City of Shinnston will levy such a proportion of the maximum rates provided by the constitutional (amendment) as may be set aside by the Legislature for municipal purposes and for the purpose of carrying on the necessary functions of government; that an additional amount will be levied by said Mayor and Common Council for the purpose of providing the necessary sinking fund and interest payment on bonded indebtedness heretofore created as provided by law. * * *' Under that allegation, there appearing no necessity to make such levy in addition to the maximum levies permitted under the constitutional amendment, there must likewise be an injunction restraining the mayor and the common council from laying a levy on account of existing bonded indebtedness over and above the maximums permitted by the constitutional amendment, until the further order of the circuit court of Harrison county. Such is the situation appearing from the allegations of the bill on which this proceeding is based."

It will be observed that the situation there presented did not disclose any necessity for the proposed levy in excess of the constitutional maximums. The very existence of fundamental governmental functions was not there involved, as here.

I therefore reach the conclusion that the unavoidable expense of government shall first be paid out of such levies and, where necessary, additional levies must be laid to make provision for the requirements of existing indebtedness. This view is entertained not in exclusion of, but in harmony with, the primary intention of the people in adopting the amendment of section 1, Article X of the State Constitution, that both the current expense of essential constitutional government and funds for existing indebtedness should be obtained as far as possible under the maximum levies prescribed by the amendment.

This is the legislative construction of the amendment. Acts of the Legislature, Regular Session 1933, chapter 38. Legislative interpretation of constitutional requirements, though not controlling, is entitled to great weight. "Legislative exposition of a constitutional provision, particularly when made almost contemporaneously with the provision, is entitled to great deference." Road Commission v. County Court, 112 W. Va. 98,163 S.E. 815. And as we recently said in Bates v. BridgeCommission, 109 W. Va. 186, 153 S.E. 305, 306: "Every law enacted by the Legislature is presumed to be constitutional until the contrary is clearly shown. It is the duty of the court to uphold every act if by any reasonable construction and interpretation it can be seen that the act is not in contravention of the fundamental law. If there be any doubt in the mind of the court as to the constitutionality, the doubt must be resolved in favor of the act. Slack v. Jacob, 8 W. Va. 612. Only in a case of very plain infraction of the constitution, from which there is no escape, should the courts declare an act invalid. If there be doubt, the act must be affirmed." By section 13 of said act, the legislature has placed large discretion in the county courts, the boards of education and the municipal councils in ascertaining their essential requirements for current expense. This involves the exercise of wide power; high authority says not subject to judicial control. City of East St. Louis v. U.S. ex rel.Zebley, 110 U.S. 321; 28 L.Ed. 162. Whether this broad rule would operate in cases of fraud or other gross improprieties remains to be determined. I think the courts could properly exert a restraining power in such cases. If the legislature has placed too extensive a power in the governmental agencies mentioned, such power can be curtailed by legislation or by the people themselves.

A narrow and circumscribed interpretation may be as unfittingly and inappropriately applied to a constitutional provision as to a statute. "In the main, the general principles governing the construction of statutes apply also to the construction of constitutions." 12 Corpus Juris, 699. In construing a statute courts will employ "such construction as will uphold the law and further justice. It is as well our duty to disregard a construction, though apparently warranted by the literal sense of the words used, which would lead to injustice and absurdity." Click v. Click, 98 W. Va. 419, 127 S.E. 194,198. If units of government are to be abolished and our whole system is to be changed it would seem that the intent of the people to produce such results should not be imputed to them merely through interpretation of a tax limitation amendment of the Constitution. I therefore cannot favor a construction of the amendment which may bring about such serious consequences when more liberal construction would avoid chaotic conditions. As between a construction that seems strongly to tend to such consequences and the practical legislative construction (Acts 1933, ch. 38, supra), in my judgment the latter should be employed without hesitation. This would avoid precipitating serious financial crisis in many of the public affairs of the state. Constitutional provisions are not intended to hamper but to promote the public weal. They should be so construed.

The Supreme Court of the United States in dealing with a kindred matter proceeded on the assumption that of course the expenses of necessary government would be first discharged. It said: "The expenses will, of course, be first defrayed out of the fund." Von Hoffman v. Quincy, 71 U.S. 535, 549;18 L.Ed. 403. There is much authority for this basic principle that the reasonable expenses of essential constitutional government shall be first paid. The courts seem to take it for granted that such course must be pursued, ex necessitate rei. City ofCleveland (Tenn.) v. U.S., 166 F. 677; State v. Erickson,93 Mont. 466, 19 P.2d 227 and Barnard Co. v. KnoxCounty, 37 F. 563.

"This right to thus apply the current revenues to the defraying of ordinary expenses is grounded upon the fact that such a course is absolutely necessary to the life of the municipality and to the successful accomplishment of the purposes of its creation." Grant v. City of Davenport, 36 Iowa 396; Rauch v. Chapman, 48 Pac. (Wash.) 253.

"In this day of enlightened thought there is much controversy among students of government as to the proper and necessary limitations upon the powers of government; but it is now beyond the stage of controversy, agreed to and admitted by all learned men, that certain necessary and fundamental functions of government must always be expressed and actively exercised. The duty of protecting life, liberty, and property, and preserving peace and order cannot be delayed, nor can the power so to do be abdicated without the destruction of the state. These functions are elementary and indestructible." In re Application of State of Oklahoma to Issue Bonds, 33 Okla. 797, 127 P. 1065-7.

To the proposition that there must be a vote of the people under the very terms of the amendment itself before there can be any increase of levies for any purpose, I answer that it would make no difference with reference to prior indebtedness whether such vote was taken or not, or if taken, whether the result was favorable or unfavorable. I say this because no vote or other action of the people could possibly alter their existing obligations, or obviate the necessity for maintaining orderly government and of underwriting the expense thereof. If, within the power of the Legislature, under section 5, Article X of the state Constitution, indirect taxation can be provided and properly allocated so as to furnish necessary revenue over and above that which can be raised by the maximum levies, all well and good; but until revenue from indirect taxation becomes a reality, we must deal with the situation as it exists. In this connection the question arises whether funds raised by indirect taxation in a populous community can be allocated by the Legislature for local expenditure elsewhere. The constitutional provision referred to reads: "The power of taxation of the Legislature shall extend to provisions for the payment of the State debt, and interest thereon, the support of free schools, and the payment of the annual estimated expenses of the state; * * *."

Two of these cases come from Cabell County and one from Braxton. The able circuit judges of those counties have each held the legislative act constitutional. In forceful written opinion, Judge Fisher said in the Braxton case: "It would seem that the measures provided for in Chapter 38 of the Acts of 1933 were not only proper; but that they are in full accord with legislative power and duty. And, assuming the correctness of this proposition, it follows that as to levies made for all governmental and contractual obligations created after the adoption of the Amended section 1 of Article 10, the limitation therein fixed could not be exceeded in any event; but, when, and if, it was found necessary in order to prevent the impairment of contracts existing before the amendment was adopted, then such additional levies may be laid as do not with other essential levies, exceed the limits of levying bodies, existing when the contracts were entered into, or the obligations arose." I think this analysis of the situation is sound. While the obligation of existing debts is paramount, it cannot in the very nature of things be placed ahead of maintenance of government.

I would affirm the decrees of the trial chancellors and refuse the injunctions. Therefore, I respectfully dissent from the opinion and decision of my brethren in the Bee and Eakle cases. I concur in the Snider case.