State Ex Rel. Capitol Addition Bldg. Commission v. Connelly , 39 N.M. 312 ( 1935 )

Speaking of the term "debt" as used in article 9, § 12, of the State Constitution in Seward v. Bowers, 37 N.M. 385,24 P.2d 253, we said: "The idea of a ``debt' in the constitutional sense is that an obligation has arisen out of contract, express or implied, which entitles the creditor unconditionally to receive from the debtor a sum of money, which the debtor is under a legal, equitable, or moral duty to pay without regard to any future contingency."

It has been said by some courts that it was not essential to the existence of debt that the creditor shall have any remedy at law or in equity for its enforcement. Mayor, etc., v. Gill,31 Md. 375. In that case the court said: "A debt is money due upon a contract, without reference to the question of the remedy for its collection. It is not essential to the creation of a debt that the borrower should be liable to be sued therefor. No suit can be maintained against the State by one of its citizens, and yet debts are created by the State which it is bound in good faith to pay."

I understand that so far as the state is concerned, a pledge of its faith and credit has nothing more behind it than the "moral duty to pay."

In my opinion the framers of the Constitution intended to avoid the unseemly situation of the state ever at any time repudiating or failing to keep its obligations or promises. "To raise money on a pledge is to borrow it." Mayor v. Gill, supra. In the case at bar, it is proposed by the statute that the state shall induce some one to furnish it with $175,000 for the purpose of defraying the expenses of the construction of a public building. The money is to be first borrowed, and then expended for a building for the executive, legislative, and judicial departments. I am unwilling to say that it is the intention of the Legislature that as a special fund is provided to repay the sums borrowed, however it may be derived, whether by an excise tax or a property tax, that if the special fund should prove insufficient to pay the debentures authorized and issued, that the state would be willing to continue to possess and occupy such building by its various departments whose functioning is based upon moral and ethical principles, without paying for it, and I do not believe that it was the intention of the Constitution-makers that the Legislature, even if so inclined, should ever be able to place the state in such an unmoral situation. The Constitution (article 9, § 8) declares: "No debt * * * shall be contracted by or on behalf of this state, unless * * *" (in this manner).

No language could be broader or more comprehensive. The only exception is found in the "preceding section" which permits the state to borrow money, not to exceed the sum of $200,000 in the aggregate to meet casual deficits or failure in revenue or for necessary expenses, and also in an unlimited amount to suppress insurrection and provide for the public defense. These exceptional powers are necessary to maintain the faith of the state and to secure its peace and good government; they are expressly excepted by the Constitution, and may be exercised within the discretion of the proper authorities. But with these exceptions, and perhaps another, the Constitution expressly forbids any debt occasioned by borrowing money being created by or on behalf of the state unless in the manner provided by section 8. I understand the majority to concede that what has been proposed will create a "debt," but it is not a "debt," prohibited by the Constitution. They say that section 8 of article 9 contains limitations upon power to create debts and does not contain a grant of power to create them. Conceding this to be so, section 8 does not give authority to create debts in the manner stated therein, but commands that no debt shall be contracted in any other manner than therein provided. This reflects the sound policy and wisdom of the provisions for the payment of the debt being made at the time of its incurrence, such provisions appearing both in section 29 of article 4 and section 8 of article 9 of our Constitution. It is manifest that the Constitution-makers thought it a wise policy to restrain the public officers from putting the name of the state to "negotiable paper" evidencing a promise of the state to pay money unless at the time its promise to pay is authorized, a scheme or plan of taxation for the benefit of a fund to discharge the same is fixed, definite, and certain, and sufficient to pay the debt "at maturity." It has been suggested in conference that as there is no time limit upon the levy and collection of the excise taxes in question, there will be eventually collected enough taxes or fees upon lawsuits to pay the bonds. But the last of the bonds will mature in twenty-five years from the date of the issue. What if the "taxes and/or fees" collected over a period of twenty-five years are not sufficient to pay all of the debentures at maturity? It is not conceivable to me that it was not intended by the Legislature that these debentures would be paid at maturity. The Constitution manifests concern that state obligations shall be met "at maturity." It might well be that the tax would continue and the state treasury would be reimbursed for money the state used from other sources to pay its obligations. When we get outside of obligations issued and sold to raise money for local improvements in municipal corporations for the grading, paving, or general improvement of streets, the construction of sewers, the acquirement of public parks, waterworks, and other utilities of a similar nature, where the obligations or the ordinances authorizing them, in clear and unmistakable terms, limits recovery of the holder of the security to the revenues or funds set apart for the discharge and especially and distinctly waive any other recourse against the municipal corporation, I find the uniform rule to be that even though a special fund has been provided to pay the obligations, they are nevertheless general obligations of the public corporation. For reasons heretofore stated, this would be particularly true where the state is a contracting party. The law is well set forth in Abbott Public Securities, in sections 364, 365, and 366, citing decisions of the United States Supreme Court and other courts.

If the Legislature intended the debentures in question to be paid solely out of the special fund provided for in the act, that intention ought to have been expressed in precise terms and I find no such expression in the act. There are several indications to the contrary. That the statute manifests an intention of the Legislature to create a state debt is rather plain. It levies a tax for the purpose of making repayment. It provides that such taxes pledged for the payment of the debentures shall not be reduced so long as any of said debentures remain outstanding and unpaid, and contracts that the state will cause said taxes to be promptly collected and applied to pay said debentures. This constitutes a pledge of said taxes and was an endeavor to comply with the provisions of section 29 of article 4 and section 8 of article 9 to make provision in the law authorizing the indebtedness for the levy of a tax sufficient to pay the interest and for the payment "at maturity" of the principal. Such debentures are to be signed by the chairman of a state agency, to wit, the Capitol Building Commission, and countersigned by the state treasurer and are payable at the office of the state treasurer. We have seen that there is high authority for the proposition that mere provision for payment out of a special fund is not enough to deprive securities of their character of general obligations.

We should assume that the Legislature was familiar with the principle that securities payable solely out of a special fund are not negotiable instruments. Discussing the essentials of negotiable paper, Abbott on Public Securities at § 214, says:

"Third, the fact of payment must be certain, that is, the instrument must be payable unconditionally and at all events. This essential eliminates under some of the authorities those securities payable only from a special fund and which never become under any conditions a charge upon the general revenues of the corporation or a general charge or obligation of the corporation issuing them, if the special fund or source of revenue which is the sole means of payment becomes insufficient and inadequate.

"A recent case in the United States Circuit Court of Appeals for the Eighth Circuit is illustrative of this line of authorities. Railroad aid bonds were issued by Washington County, Nebraska, which acknowledged an indebtedness in a certain sum and which contained the promise to pay the same to the payee or bearer from a special fund to be raised by the annual levy of a specified rate of tax on the taxable property of the county — such funds to be applied pro rata on such bonds: first, to the payment of the interest and then to the payment of the principal. The court held in its opinion by Judge Thayer: ``Yet we are of opinion that the obligations in suit are not negotiable bonds, within the rules of the law-merchant, and that a purchaser of the same for value in the open market cannot invoke for his protection the doctrine of estoppel by recitals, as it is generally applied upon actions upon negotiable municipal bonds. To render a written promise to pay money negotiable in the sense of the law-merchant, it is essential that it should be an unconditional promise to pay a certain sum of money at some future time, which must be "certainty as to the fact of the payment." If by the terms of the contract the sum promised to be paid, or a portion thereof, may never become payable, as where the sum promised is not to be paid unconditionally and at all events, but only out of a special fund derived from certain sources, which may not prove adequate to meet the demand in full, the instrument, according to the great weight of authority, cannot be deemed negotiable, and entitled, in the hands of a third party, to the immunities which belong to that class of instruments. * * *' We have no reason to suppose and it has never been decided, that section 2968 of the Consolidated Statutes of Nebraska, which defines negotiable instruments, was designed to modify the doctrine aforesaid in any respect, or to declare that an instrument might be negotiable even though it was uncertain as to the fact of payment. The statute, like many other statutes of a similar character, was designed to place bonds and promissory notes on the same plane of negotiability as foreign bills of exchange, provided they possess the requisite words of negotiability and contain an unconditional promise to pay a certain sum of money at some future time, which is sure to arrive. Now, while the obligations in suit acknowledge an indebtedness is on the part of the county of Washington to a certain amount, yet the promise made to pay this indebtedness is not a promise to pay it unconditionally and at all events, but is a promise to pay it only out of a fund to be raised by a levy of one mill per dollar on the taxable property of the county, which fund is to be apportioned pro rata among all of the obligations, and applied first to the interest, and next to the indebtedness."

The Legislature must have known that this essential of negotiable paper was declared in our Negotiable Instruments Act (chapter 27, Comp. St. 1929 [section 27-101 et seq.]) wherein is stated the qualities of negotiable instruments. One of the essentials is that it "must contain an unconditional promise or order to pay a sum certain in money." (Italics mine.) Section 27-107.

In the face of this knowledge they said in section 9 of the statute in question (Laws 1934 Sp. Sess., c. 14): "Such debentures and the coupons thereto attached shall have all the qualities of negotiable paper under the law merchant." This is as much as to say: "Such debentures and the coupons thereto attached are payable unconditionally and at all events."

The fact that the statute creates a debt within the purview of section 8 of article 9 is the justification for attempting to make the law imposing the excise tax irrepealable. If it does not create a debt, the attempt to make this provision of the statute irrepealable is wholly ineffective and void because not within the power of the enacting Legislature. See State ex rel. Fletcher v. Executive Council, 207 Iowa, 923, 223 N.W. 737.

All of the foregoing proves to my mind that the Legislature intended to contract both a moral and a legal obligation, in other words, a general obligation.

I thus conclude that there has been no violation of the Constitution and that the taking effect of the law merely awaits an approving vote of the electors.

This difference of opinion involves principles and consequences of far greater importance than the decision of the particular case before us and I deem it proper to further set forth my views.

A fair construction of the word "debt," as used in section 8 of article 9 of the Constitution, includes all liabilities arising out of contract that are or may become a legal obligation due from and to be met by the state from the proceeds of public taxes.

It is laid down in the prevailing opinion that the word "debt" as so used is limited to legal obligations of the state to be met by the state from the proceeds of property taxes. I am not satisfied of the soundness of this conclusion.

Whether it would be sound as to debts contracted by a city, town, or village, I express no opinion. The argument of the prevailing opinion would be stronger as applied to such debts because that section contemplates the payment of the debt out of a fund provided by "the levy of a tax, not exceeding twelve mills on the dollar upon all taxable property within such city, town or village." Const. art. 9, § 12.

That this language is broad enough to cover a levy of a tax upon personal property, I do not doubt. 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. We should not import into the provisions providing for a state debt the restrictions and provisions surrounding the contracting of a debt by a city, town, or village, nor of a county or school district. The difference in policy manifested by the Constitution-makers, when dealing with state debts and debts of its corporate subdivisions, is apparent and it would be of little value at present to discuss the reasons therefor.

We are not dealing with the powers of cities, towns, or villages, which we must discover in grants of power or delegated power, among which is the power to levy property taxes and restricted power to levy excise taxes. We are dealing with the power of the state, much of which is inherent and unlimited.

It is conceded that the exactions of "taxes and/or fees" to pay the debentures in question are excise taxes.

It is assumed by all that the state has power to levy both property and excise taxes. Also, that its power to borrow money carries with it the power to repay it out of the proceeds of excise taxes as well as property taxes unless the power is limited by the Constitution.

We all agree that limitations upon these powers of the state must be discovered in plainly expressed terms.

The power to borrow the money in question and repay it out of the proceeds of excise taxes with the approval of the electors of the state is not challenged.

So far as material to a consideration of the present case, the limitations are three in number. First, section 29 of article 4 says: "No law authorizing indebtedness shall be enacted which does not provide for levying a tax sufficient to pay the interest, and for the payment at maturity of the principal."

This is a part of the article describing the powers of the Legislature. Section 8 of article 9 dealing with the debt contracting power of the state says the same thing except the command is that the law authorizing the debt shall provide "for an annual tax levy sufficient to pay the interest and to provide a sinking fund to pay the principal of such debt within fifty years from the time of the contracting thereof."

I do not understand that the majority think that the word "annual" would be a barrier to the levying of an excise tax.

If the law authorizing the indebtedness levies a tax sufficient to pay the interest, and for the payment at maturity of the principal, and further provides that the issue and sale of the evidences of indebtedness shall constitute an irrevocable and irrepealable contract between the state of New Mexico and the owner of any of said evidences of indebtedness that the tax pledged for the payment thereof at the rate levied in the act shall not be reduced for twenty-five years, I consider that the greater includes the less and that a levy of a tax for twenty-five years is a levy of a tax in each of the twenty-five years deemed annually sufficient to pay annual and other requirements of the debentures issued in accordance with the statute and is a substantial compliance with the requirement of section 8 of article 9.

It is not said in either of the two sections last quoted that the tax levied must be a "property tax" or a "direct tax" or an "ad valorem tax." I take it for granted those terms were well known to the framers of the Constitution, and if it had been their intention to limit the payment or securing of state debts to the proceeds of property taxes, they would have used some of these terms which are usually employed synonomously. The following definitions found in Ballentine's Law Dictionary will be helpful:

"Direct property tax. A tax levied at a uniform rate upon all the property real and personal within each city, town, or other taxing district, and which is usually intended to reach all property within the power of the state to tax. 26 R.C.L. 134."

"Direct tax. A capitation tax or a tax on real or personal property by reason of its ownership whether based on its value or not. 26 R.C.L. 37."

"Direct taxes. In 1894 it had come to be accepted that direct taxes in the constitutional sense were confined to taxes levied on real estate because of its ownership, but it was then held that the word ``direct' had a broader significance, since it embraced also taxes levied directly on personal property because of its ownership, and subsequently the 16th Amendment impliedly made this wider significance a part of the Constitution. 23 R.C.L. 948."

"Indirect tax. ``All taxes, other than polls, are either direct or indirect. A direct tax is one that is imposed directly on property according to its value. It is generally spoken of as a property tax, or an ad valorem tax. An indirect tax is a tax upon some right or privilege, and it is also called an excise or occupation tax.' See Foster Creighton Co. v. Graham, 154 Tenn. 412, 285 S.W. 570, 47 A.L.R. 971, 975."

The rules of construction applicable to constitutional limitations do not permit us to limit the powers of the state beyond what such limitations plainly import. Section 5 of article 7 of the Constitution of Iowa is similar in several respects to section 8 of article 9 of our Constitution. I quote from the Iowa Constitution and italicize language which distinguishes it as follows: "And such law shall impose and provide for the collection of a direct annual tax, sufficient to pay the interest on such debt, as it falls due, and also to pay and discharge the principal of such debt, within twenty years from the time of the contracting thereof."

In 1929, the Supreme Court of Iowa had before it a case involving the procedure adopted for the incurring of a state debt which was to be repaid by a direct annual tax and also from a fund arising from gasoline and motor vehicle licenses. See State ex rel. Fletcher v. Executive Council, 207 Iowa, 923,223 N.W. 737. The court held: "The general assembly has no power topledge or to substitute indirect taxes for the direct tax required by the Constitution for the payment and discharge of a state bonded indebtedness approved by the people under Sec. 5, art. VII." (Italics mine.)

The court also held: "That part of the State Road Bond Act of 1928 which irrevocably pledged the primary road funds to the payment of the bonds was necessarily such a persuasive inducement to the approval of the act by the people as to invalidate the entire act, when it was adjudged that said pledge was invalid."

The court further held:

"The purport of the foregoing is to pledge irrevocably the fund arising from gasoline taxes and motor vehicle licenses to the payment of the bonds. The plaintiff challenges the validity of these sections. The act as a whole is one for the creation of an indebtedness in excess of $250,000. The power of the Legislature to create it is circumscribed by the limitations of the Constitution. Within the limitations of the Constitution, and pursuant to its procedure, the 42d General Assembly had power to create the debt and to render its enactment thereof irrevocable by any future General Assembly. It had the constitutional power to impose a ``direct tax' for the payment of the debt it had created. No future General Assembly could repeal the levy of such tax while the debt remained. But this is so because the Constitution makes it so. In the absence of any constitutional provision to such effect, no General Assembly has power to render its enactment irrevocable and unrepealable by a future General Assembly. No General Assembly can guarantee the span of life of its legislation beyond the period of its biennium. The power and responsibility of legislation is always upon the existing General Assembly. One General Assembly may not lay its mandate upon a future one. Only the Constitution can do that. It speaks as an oracle and stands as a monitor over every General Assembly. The funds resulting from license fees and gasoline taxes are within the legislative power, and are necessarily subject to the control of the existing General Assembly. Its enactment in relation thereto will continue in force until repealed. The power of a subsequent General Assembly either to acquiesce or to repeal is always existent. It must be held, therefore, that sections 13 and 15 above quoted, were and are wholly ineffective and void. * * *

"The net result of section 12, like that of sections 13 and 15, is that it pledges the license and gasoline taxes to a primary liability for the payment of the debt. This is a purported substitution of these indirect taxes for the direct tax. Thereby the section becomes doubly invalid, because the Legislature had power neither to pledge nor to substitute an indirect tax for a direct one."

Under section 8 of article 9 and section 29 of article 4 of our Constitution, the Legislature not only may irrevocably pledge the proceeds of "taxes" for the payment of state debts, but is required to do so.

In State v. State Highway Commission, 89 Mont. 205,296 P. 1033, 1037, the court had under consideration section 2 of article 13 of the Montana Constitution which provides that the Legislature shall not create any debt or liability except by law which shall provide for the levy of a tax sufficient to pay the interest and principal, within the time limited by law for the payment thereof.

The court held an act authorizing sale of debentures to be paid from excise tax on motor fuel to create a "liability" exceeding $100,000 and therefore required to be submitted to electorate. They also held that excise taxes on motor fuels are state funds, and the state may devote proceeds of such tax to any public purpose. Mr. Justice Angstman, concurring specially, said that he agreed with what was said in the opinion, but he thought the determination of the case would not require the drawing of distinctions between debts and liabilities, and that reasons stated in the court's opinion supporting the conclusion that the creation of the special fund for the payment of the debentures did not prevent the act from creating a liability were his reasons why the provisions for a special fund would not save the act from creating a debt. And further that:

"The scheme provided by chapter 1 diverts public revenues to the payment of a loan by the state as effectually as if the full faith and credit of the state were actually pledged in payment of the debentures. The fact that it creates a debt within the purview of section 2, article 13, is the justification for attempting to make the law imposing the excise tax irrepealable. Much was said by learned counsel for respondents in the brief and oral arguments to the effect that section 2, article 13, in the use of the words ``levy a tax,' means only an ad valorem tax. If this were so, then this act is in conflict with section 2, and a vote of the people would be useless. If that is the correct interpretation to be placed upon section 2, then that section, by construction, would contain this command to the Legislature: ``You shall not create a debt in any manner unless you provide for the levy of an ad valorem tax sufficient to pay the principal and interest within the time provided.' Confessedly no ad valorem tax has been levied. That construction of section 2 would make it read substantially as the Iowa Constitution (article 7, § 5), which requires ``the collection of a direct annual tax.' Under such a provision the Iowa Supreme Court has held that the Legislature was without authority to exercise a mortgaging power over future gasoline and motor vehicle license taxes. State ex rel. Fletcher v. Executive Council, 207 Iowa, 923, 223 N.W. 737.

"In my opinion, however, the words ``levy of a tax,' as used in section 2, contemplate only that the Legislature when creating a debt shall provide for raising sufficient revenues to pay the principal and interest by either of the constitutional methods of raising revenues for public purposes, and that it includes the levy or imposition of a license or excise tax, as here."

In my judgment the majority by construction make section 8 of article 9 read as does the Iowa Constitution and to contain this command to the Legislature: "You shall not create a state debt unless you provide for the levy of a property or ad valoremtax sufficient to pay the principal and interest within the time provided."

In addition to the fact heretofore noted, that the framers of the Constitution did not say that in terms, there are good reasons to account for the absence of a command that would limit the resources for the payment of a state debt to the proceeds of a property tax. As the levy of excise taxes is one of the constitutional methods of raising revenues for public purposes, it seems unlikely that the framers of the Constitution would deprive the Legislature of the power to pledge the proceeds of such taxes for the payment of its debts. Mention has been made in the prevailing opinion that counsel for respondent argues that the 1921 amendment of article 9 by incorporating section 16 therein, involved in State v. Graham, 32 N.M. 485, 259 P. 623, constitutes a legislative interpretation, entitled to weight, that a constitutional amendment was necessary to authorize the debentures there assailed. I think such amendment is valuable as a legislative interpretation to the effect that excise taxes, as well as property taxes, were available to provide payment in the law authorizing indebtedness. Not being in doubt of that, the Legislature doubtless thought that a two-million dollar bond issue did exceed "one per centum of the assessed valuation of all the property subject to taxation in the state," and therefore an amendment was necessary. And also, for expedition it was considered desirable to avoid the necessity of an approving vote by the electorate. Since the decision of this court in State v. Graham, supra, that amendment is to be considered as a permanent change of policy so that debentures anticipating an excise gasoline tax for the purpose of raising money to be covered into the state road fund may be accomplished without an approving vote of the electorate and even though the total indebtedness of the state may thereby temporarily exceed 1 per centum of the excise valuation of all property subject to taxation in the state. Mr. Justice Watson in that case said, arguendo: "This conclusion is strengthened by consideration of the fact that the method employed to effectuate the purpose was that of amending the Constitution. Unless permanency and future application were desired, the Constitution required no amendment. A mere popularratification of the particular act was all that was needed."

The last sentence in the foregoing quotation is in accord with my thought that the Constitution would not require amendment in order to devote excise taxes to the payment of a state debt, otherwise valid.

The second limitation contained in section 8 of article 9 is that: "No such law shall take effect until it shall have been submitted to the qualified electors of the state and have received a majority of all the votes cast thereon at a general election."

It is significant that in section 8 neither property owning nor tax paying requisites are added to what is elsewhere in the Constitution required in order to make an inhabitant a "qualified elector."

Having included among the qualifications of an elector under section 12 "as have paid a property tax therein during the preceding year," I see no reason for its omission from section 8 if proceeds of a property tax alone are to be resorted to to pay or secure a state debt. The fact that a limited class would bear the burden in the procedure involved in the case at bar is accidental so far as the principle involved is concerned. Constitutions speak in broad terms and it was doubtless understood that some excise taxes will touch the pocketbook of a vast majority of the "qualified electors of the state." The sales tax might be mentioned as an example.

The third limitation is: "No debt shall be so created if the total indebtedness of the state, exclusive of the debts of the territory, and the several counties thereof, assumed by the state, would thereby be made to exceed one per centum of the assessed valuation of all of the property subject to taxation in the state as shown by the preceding general assessment." Const. art. 9, § 8.

The prevailing opinion referring to the provision last quoted says that no suggestion arises so naturally as that the assessment roll and the property therein listed could be solely resorted to from year to year by the general taxing power as the source of funds for repayment of the debt so created. In my judgment, the opinion here leans upon a very slender reed. It seems just as natural to me that since the Constitution-makers did not make the limitation upon aggregate indebtedness to depend upon amount of taxes paid, that they selected, arbitrarily perhaps, the only fixed and stable measure of the wealth of the state, namely, its property values, as shown by the assessment roll, and selected a percentage thereof as the limitation.

Furthermore, it seems to me that it would be about the only standard which could be selected. The limitation not being upon the amount of taxes paid, it would be impractical to use the elements which give rise to the imposition of the excise taxes as a measure or standard upon which to base a limitation. In other words, excise taxes usually are exactions for certain privileges which would be rather intangible as a basis for a limitation.

The opinion of the Supreme Court of Iowa in State ex rel. Fletcher v. Executive Council, supra, affords another suggestion of value. They decided: "The general assembly has no power to render its enactment irrevocable and unrepealable by a future general assembly, even in an enactment which has been approved, under the Constitution, by a direct vote of the people. So held where the act sought to irrevocably pledge certain indirect taxes to the payment of state bonds."

This thought is elaborated in a quotation from the opinion heretofore employed herein.

Section 8 of article 9 of our Constitution authorizes the pledge of taxes to pay the interest and to provide a sinking fund to pay the principal of a state debt within fifty years from the time of the contracting thereof, and this authorized pledge may be irrevocable. If this is construed to mean "property taxes" alone, then I find no power vested in our Legislature to irrevocably pledge its excise taxes to the payment of a state debt.

I do not mean that available excise taxes may not be used for any public purpose, but I assert that if the majority is correct such excise taxes may not be pledged for a future period to the exclusion of later legislative control.

The general evil which the people intended to guard against was undoubtedly legislative improvidence. That evil, unchecked, would result disastrously to the state's credit, to its ability to carry on the ordinary and necessary functions of government from year to year, and in an increasing and finally intolerable burden of taxation on the people.

That evil and its resultants the people evidently thought there was reason to apprehend. Else the limitations in question would not have been included in the Constitution.

The result of the majority view is that in addition to the $200,000 to meet casual deficits, etc., and an unnamed amount to suppress insurrection and to provide for the public defense mentioned in section 7, the Legislature, pursuant to section 8, may pledge its property taxes to incur state debts with the approval of the electorate up to 1 per centum of the assessed value of all of the property subject to taxation in the state. And then the Legislature may, without restraint of a referendum and without limit, draw upon the state's other constitutional method of raising revenues for public purposes, viz., excise taxes, and pledge them for a hundred years or more in advance in order to borrow money in unlimited amounts to carry out some scheme, however plausible and worthy of one Legislature, and tie the hands of future Legislatures as to the particular excises so pledged. If this may be done, it is easy to see that future Legislatures must devise new sources of revenues to carry on the ordinary and necessary functions of government from year to year. Frittering away the sources of public revenues and impoverishing the people by taxation are the same evils fundamentally, whether it be property or excise taxation that follows. If these evils may occur, then it seems that the framers of the Constitution guarded but poorly against the evils they intended to guard against.

Under the contention of the relator the Legislature having already pledged the "Road Fund," having proposed to set up the "Capitol Addition Building Fund," could also further divide the public revenue into another called the "School Fund," another the "Agricultural Fund," another the "Public Health Fund," another the "State Park Fund," and another the "State Fair 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 and without the approval of the electorate, provided each debt was made payable out of some one of the specially designated funds, into which all the revenue collected by excise taxation (and why not property taxation?) had been divided. The mere statement of the proposition carries with it, it seems to me, its own refutation. If the process designed by the statute in question does not contract a debt, then the Legislature undoubtedly could do the same thing with other license or excise taxes, and thus accomplish by indirection what the Constitution prohibits to be done directly.

The people are gravely concerned as to how and the purposes for which their money is spent. They may eagerly desire to sell the proposed debentures to the end that suitable and adequate quarters and offices may be provided for the various executive, legislative, and judicial departments of the state. But another measure pledging excise taxes in large amounts for some special purpose might encounter their definite disapproval.

My conclusion is that the act of the Legislature here involved is all right, but it will not take effect until approved by the electorate.

I have reached my conclusion with a due sense of the great importance of the principles involved, and also after a faithful effort to sustain the law as the rules governing decisions in such cases require.

For the reasons stated, I dissent.