Eastern Western Lbr. Co. v. Patterson , 124 Or. 112 ( 1927 )

Section 7, Article XI, of the Oregon Constitution, prohibits the creation, in any manner, of a voluntary indebtedness by the state in excess of $50,000. Chapter 322, General Laws of Oregon, 1927, provides for the construction of an "office building for the State of Oregon," to cost not more than $600,000. By this suit, the validity of that act is challenged. For a copy of the act, together with a full statement of the cause, see the former opinions of this court handed down on July 12, 1927 (124 Or. 105,258 P. 193, 204).

It is our theory of government that sovereignty resides in the people; that all governmental power flows from them; and that all officials are but the agents of the people, from whom all authority issues. For their own protection, the people of the State of Oregon framed and adopted their fundamental law, couched in plain, clear, concise language that is easily understood. The particular provision of that law involved in this litigation reads as follows:

"The legislative assembly shall not lend the credit of the state, nor in any manner create any debt or liabilities which shall singly or in the aggregate with previous debts or liabilities, exceed the sum of $50,000." Section 7, Art. XI, Or. Const.

These words are used in their ordinary and popular sense; and we are satisfied that this provision means just what it says, and that it does not mean what it neither declares nor implies. The word "debt," as used in the Oregon Constitution, means "debt" as you, and I, and all of us understand that term.

It is a familiar canon of construction that, in the interpretation of constitutional provisions, the instrument must be so construed as to give effect to the intention of the people who adopted it, as indicated by the language therein used. In this connection, Black, in his work on Interpretation of Laws, says the intention is to be sought in the Constitution itself, and the meaning thereof to be derived from the words employed therein. As to the practice of departing from the language of the Constitution in the construction of a statute, this eminent writer says:

"Deviating from the literal sense of the words employed in a constitution is a very dangerous proceeding, and one upon which the courts may embark only under the pressure of necessity, to avoid a plain absurdity or contradiction, and their power in this respect must be exercised with very great caution." Black on Interpretation of Laws, pp. 21, 22.

In the light of the condition of the public funds of our state, we cannot concede that the carrying into effect of the provisions of Chapter 322, General Laws of Oregon, 1927, providing for the construction of "an office building for the State of Oregon," and the investment of $600,000 of the industrial accident fund therein, and the appropriation from the general fund of the sum of $60,000 annually for the repayment of that fund, with interest, does not create a "debt" or "liability" within the meaning of the constitutional provision hereinbefore noted.

The case of Wilson, Attorney General, v. State Water Sup.Com., 84 N.J. Eq. 150 (93 A. 732), is squarely in point. In that case, a contract made by the State Water Supply Commission, an agency of the state, to incur an obligation in violation of paragraph 4, Section 6, Article IV, of the New Jersey Constitution, limiting the right of the state to create an indebtedness, was challenged by the attorney general. The language of the New Jersey Constitution, in so far as it relates to the inhibition involved here, is substantially the language of the Oregon Constitution. The constitutional provision of New Jersey reads:

"The legislature shall not, in any manner, create any debt or debts, liability or liabilities, of the state, which shall singly or in the aggregate with any previous debts or liabilities at any time exceed $100,000; except. * *."

In the New Jersey case, it was contended by the Water Supply Commission, as in the case at bar it was argued, that the word "debt," as used in the Constitution, should be pared to fit the occasion, and that it did not prohibit the creation of a mortgage debt. On that point the New Jersey court, in an able and exhaustive opinion, said:

"A mortgage debt is clearly within the language of the Constitution, for the simple reason that the language there used is broad enough to cover every manner of debt; a debt created `in any manner' is the unqualified constitutional description. The only question is whether we shall pare this language down and say that it means only this sort of debt or only that sort. The principal attempt in this direction is to limit the word `debt' to actionable debts, i.e., to those the payment of which is enforceable. For such a limitation there is not the slightest justification either in common usage or in the context. Common usage reflects common experience, which teaches us that the vast majority of debts are paid without any reference to their enforceable character. Why, therefore, should the exceptional case be singled out as illustrative of common usage in order to give to a word the sense in which it is most infrequently used? * *

"Another attempt to pare down the constitutional language is based upon the argument that a debt that is to be collected from a particular fund, or that is to be made out of a particular piece of land, is for that reason not a debt, an illogical argument that carries with it its own refutation. As a matter of common usage, no term is more familiar than `mortgage debt.'

"If the context be regarded, we find that it not only gives no support to these limitations, but, on the contrary, distinctly refutes them, for in the context `debt' is connected with `state' and `legislature,' neither of which is amenable to that enforcement of debt to which it is sought to limit the meaning of that word. But the context goes further than this, in a most significant direction, when we consider that the only manner in which the legislature pays a debt is by the making of an appropriation. Regard for the context, therefore, must at least constrain us not to deny to the word `debt' its ordinary meaning merely because it is payable by a legislative appropriation. It is at least a reasonable construction that what the framers were guarding against were not suits and actions against the legislature, which they knew could not be brought, but debts incurred by the legislature, which they knew might be paid by appropriations if they were permitted to be contracted."

Like the Constitution of New Jersey, our Constitution contains a mandatory provision reading:

"The legislative assembly shall not * * in any manner create any debt * * which shall * * exceed the sum of $50,000." Section 7, Art. I, Or. Const.

Could language be plainer? In obedience to the provisions of the act assailed, it is the purpose of the authorities of the state to construct, upon state land, "an office building for the State of Oregon," to cost not more than $600,000, with moneys belonging to the industrial accident fund, and to repay the funds thus used, with interest, at the rate of $60,000 per annum. That fund is a trust fund; and the building constructed therewith will be "an office building for the State of Oregon." Now, as to the question of a debt, note the following:

"Section 6. There is hereby appropriated from the general fund semi-annually, beginning with July, 1927, the sum of $30,000,for repayment to the industrial accident fund. The secretary of state shall, on the first day of July, 1927, and on the first day of January and July annually thereafter, by warrant, transfer from the general fund to the industrial accident fund the amount of the said appropriation, and same shall be applied first to the payment of the amount of the verified vouchers submitted to the secretary of state on said dates by the state treasurer pursuant to section 5 hereof, and the remainder, so far as may be required, shall be applied in refunding the principal of theindustrial accident fund, until the entire amount of same,including interest, shall have been repaid." Gen. Laws Or. 1927, Chap. 322.

If the enactment in question does not authorize the creation of an indebtedness by the State of Oregon, why does the foregoing section thereof provide for an appropriation for the repayment of principal and interest at the rate of $60,000 per annum?

Under the provisions of the act, the state board of control is authorized to borrow from the industrial accident fund "for the construction of an office building for the State of Oregon," and to invest not more than $600,000 thereof for that purpose. "Invest" means:

"To lay out (money or capital) in business with the view of obtaining an income or profit." Webster's New International Dictionary.

The title of the act is enlightening. It provides "for the construction of an office building for the State of Oregon." It further provides for "the investment of part of the industrial accident fund for that purpose," and then provides "for the security of said fund."

So we learn that the state promises to repay the funds used and pledges the office building as security therefor. Who repays but a borrower? In this connection, it is interesting to note that the state has paid into that fund the total sum of $1,007,786.57, while the employers and employees have contributed thereto about $26,000,000. That contribution was made, not as a tax for public revenue, but for the express purpose of affording a means for compensating the unfortunate workman who, while engaged in a hazardous occupation as defined by the act, sustains accidental personal injuries arising out of and in the course of his employment, or, in case of his death, for providing some recompense to the widow or orphan children or other dependents for the loss of their bread earner. No employer or workman ever contributed a dollar to that fund with any understanding that the fund would be diverted to build office buildings for the state, or would be used as public revenue.

Let us now go back to the "investment" of that fund, as defined by Webster. There was no thought in the legislative mind to misappropriate these funds that were held in trust by the state. The purpose of the legislature was to borrow the funds for its proprietary uses, and it undertook to provide for the repayment of the obligation by appropriating $60,000 annually therefor. Thus the act recognizes the existence of creditor and debtor, and expressly promises to repay the debt thereby created.

Now, with the certain knowledge that a promise to repay the money used creates an obligation of the state not permitted by the Constitution, it is asserted, in effect, by some who have undertaken to construe this act, that it consists of a tissue of words, and that it does not mean what it says it means. This statute is clothed in plain, ordinary language, and it ought not to be construed away. We freely concede that the activities of the state have outgrown its buildings. That, however, is no argument for the creation of a debt that is not lawful. The opinions written by my learned associates, Mr. Justice COSHOW and Mr. Justice ROSSMAN, alike argue that the office building is highly desirable, and assert that it will be paid for largely by revenue arising from the rentals thereof. Where do the bureaus derive the money to be expended in rental? It is the property of the state, arising from taxation, direct or indirect.

This court is barred from entering upon the domain of legislation. It is our province only to construe the law as it now exists. We are mindful of the fact that all reasonable doubts must be construed in favor of the validity of the statute questioned. We are also mindful that it is the high and solemn duty of the court to protect the fundamental law from violation. Before entering upon our judicial duties, we took the oath provided by that law, to support the Constitution of the United States and the Constitution of the State of Oregon. When we wrote our former opinion we believed, and we still believe, it proper to assume that the constitutional provision limiting, with certain exceptions, the voluntary indebtedness of our state to the sum of $50,000 demands respect and obedience, and that it should be consistently enforced. Without qualification, we hold that the positive restraints embodied in our Constitution, the safeguard of the people, for their protection and common welfare, should not be defeated by evasion or construction.

We regret to differ from our brothers, but we cannot follow their reasoning. We are firmly of the opinion that our former determination of this cause is sustained by the fundamental law of this commonwealth, and that determination should not be disturbed.

RAND, C.J., and BEAN, J., concur.