In Re Menefee, State Treasurer , 22 Okla. 365 ( 1908 )

The question to be determined on this record is whether or not the bonds issued pursuant to an act of the Legislature of March 6, 1908 (Laws 1907-08, p. 155, c. 7), are valid, said bonds having been issued to refund an indebtedness of the territory of Oklahoma, which was assumed by the state by section 4 of article 1 (Bunn's Ed. § 6) of the Constitution, and to meet expenses not provided for in a sum less than $400,000.

1. It appears to be conceded that, as to debts for expenses not provided for in a sum not exceeding $400,000 by virtue of section 23 of article 10 (Bunn's Ed. § 289) of the Constitution, power was lodged with the Legislature to provide for the issuance of bonds to cover the same without such act being submitted to the people for their sanction, and receiving a majority of all votes cast for and against it at such election (section 25, art. 10, Bunn's Ed. § 291) the decisive question being as to whether or not the Legislature had the authority to provide for refunding bonds to liquidate the assumed territorial indebtedness. The enabling act required that the debts and liabilities of the territory of Oklahoma should be assumed and paid by the state. Act June 16, 1906, c. 3335, § 3, 34 Stat. 267; Bunn's Okla. Const. § 509. Pursuant to said requirement, it is provided in section 4, art. 1 (Bunn's Ed. § 6), of the Constitution, that the debts and liabilities of the territory of Oklahoma are hereby assumed and shall be paid by the state. The state, or rather the people of the state of Oklahoma, when they ratified the Constitution, entered into a solemn contract to pay said indebtedness, which is expressed in said section. Section 23, art. 10 (Bunn's Ed. § 289), of the Constitution, expressly provides that the state may, to meet casual deficits or failures in revenues or for expenses not provided for, contract debts, but such debts, direct or contingent, singly or in the aggregate, shall not at any time exceed $400,000, and the moneys arising from the loans creating such debts shall be applied to the purpose for which they were obtained or to repay the debts so contracted, and to no other purpose whatever. The state having already contracted to pay the debts or liabilities of the territory of Oklahoma, said section 23 could mean nothing other than that the state, in addition to the debts and liabilities of the territory of Oklahoma, to meet casual deficits or failures in revenue or for expenses not provided for, may contract debts, but that such debts, direct and contingent, singly and in the aggregate, in addition to said territorial indebtedness, and such other indebtedness as was assumed by the Constitution, when not to repel invasion, suppress insurrection, or to defend the state in war (section 24, art. 10, Bunn's Ed. § 290), shall not at any time exceed $400,000, and it is mandatory that the moneys arising from such loans creating such debts shall be applied to the purpose for which they were obtained, or to repay the debts so contracted, and to no other purpose whatever. Section 25, art. 10 (Bunn's Ed. § 291.)

The question further arises as to whether or not the issuing of refunding bonds creates a debt. If so, the act of the Legislature of March 6, 1908 (Laws 1907-08, p. 155, c. 7), providing for the issuance of the refunding bonds, has not taken effect; it having not been submitted to the people at a general election for their sanction, and not having received a majority of all the votes cast for and against it at such election. It has frequently been held that, where bonds have been issued for the express purpose of liquidating an outstanding indebtedness; that such bonds neither created nor increased the public debt, but simply changed its form.City of Huron v. Second Ward Sav. Bank, 86 Fed. 272, 30 Cow. C. A. 38, 57 U.S. App. 593, 49 L. R. A. 534; Rollins Sons v.Board of Commissioners of Gunnison County, 80 Fed. 692, 26 Cow. C. A. 91, 49 U.S. App. 399. The power to contract a debt for the state under section 23, art. 10 (Bunn's Ed. § 289), of the Constitution, without the sanction of the people having been secured as provided in section 25, art. 10 (Bunn's Ed. § 291), includes the power for the Legislature to provide for the paying or refunding such indebtedness of the state, without reference to the people at a general election for sanction.Portland Savings Bank v. City of Evansville (C. C.) 25 Fed. 389; Simonton Mun. Bonds, § 126; City of Quincy v. Warfield,25 Ill. 317, 79 Am. Dec. 330; Morris v. Taylor, 31 Or. 62, 49 P. 660; Village of Hyde Park v. Ingalls, 87 Ill. 13; Rogan v.City of Watertown, 30 Wis. 259; City of Huron v. Second WardSav. Bank, supra.

The Attorney General has cited the case of Cheney et ux. v.Jones, 14 Fla. 587, which is an opinion handed down by the reconstruction Supreme Court of that state in passing upon alleged fraudulent bonds issued by its reconstruction government The doctrine in that case declared in sustaining such bonds goes to a further extent than we care to commit this court. The rule herein announced, and also in the case of Bryan v. Menefee,21 Okla. 1, 95 P. 471, is in accordance with the adjudications of the Supreme Courts of North and South Dakota, which states have similar provisions in their Constitutions, as well as the federal adjudications cited.

2. The next question is in regard to the emergency. In the case of Oklahoma City v. Shields, ante, p. 265, 100 P. 559, the rule was announced that the declaring of an emergency by the Legislature, when it is expressed in the act that such measure is immediately necessary for the preservation of the public peace, health, or safety, when such act is not for the purpose of carrying into effect provisions relating to the initiative or referendum, or a general appropriation bill, or does not include the granting of a franchise or license to a corporation or individual to extend longer than one year, and does not provide for the purchase or sale of real estate, nor the renting or incumbering of real property for a longer period than one year, is conclusive upon the courts. In the case of an enactment for the purpose of carrying into effect provisions relating to the initiative and referendum, or a general appropriation, such bills go into effect upon their passage and approval; but enactments granting a franchise or license to a corporation or individual to extend longer than one year, or containing a provision for the purchase or sale of real estate or the renting or incumbering of real property for a longer period than one year, are not subject to an emergency, and in no event can go into effect until 90 days after the adjournment of the session of the Legislature at which they were passed. This act appears to be of the character of bills that neither take effect immediately after their passage and approval, nor within the class not subject to the emergency. The Legislature having declared the emergency and expressed its judgment therein, the same is conclusive upon the courts.

3. As to the objection that the title of the act, being "An act providing for funding the outstanding warrants and other indebtedness of the state of Oklahoma, and the issuing of bonds therefor; providing for the payment of the same and making an appropriation therefor, and declaring an emergency," is in conflict with section 57, art. 5 (Bunn's Ed. § 130), of the Constitution, requiring every act to have but one subject which shall be clearly expressed in the title, there is no merit in this contention. City of Pond Creek v. Haskell et al.,21 Okla. 711, 97 P. 338; Noble State Bank v. Haskell et al., ante, p. 48, 97 P. 590; Woodson v. Murdock, 22 Wall. 351, 22 L. Ed. 716; Ballentyne v. Wickersham, 75 Ala. 539; Lindsay v. UnitedState Savings Loan Association, 120 Ala. 156, 24 So. 171, 42 L. R. A. 783.

4. The certificates as amended comply with the provisions of section 29, art. 10 (Bunn's Ed. § 295), of the Constitution, which provides that no bond or evidence of indebtedness of this state shall be valid unless the same shall have indorsed thereon a certificate, signed by the Auditor and Attorney General of the State, showing that the bond or evidence of debt is issued pursuant to law, and within the debt limit. The certificates of the Auditor and the Attorney General appear to comply with this provision. It is not necessary that the certificate should be jointly executed, but may be made by each separately.

5. As to the objection that it is impossible to determine when the bonds shall become due, as was said by the lower court, there is no merit in this contention. Section 2 of the act provides that they shall be issued in series, running from 10 to 20 years, and the amount of the entire issue shall be divided into 10 equal annual payments, the first payment to become due on the eleventh year, after date, etc. It is claimed that one tenth of the bonds are due on the eleventh year, another one-tenth the twelfth year, and so on until the twentieth year. It further appears that in issuing the bonds the series have been lettered and a place left to number each bond, so that the bonds must show for themselves how they have been divided in compliance with the act, and when each becomes due.

No error appearing in the record, the judgment of the lower court is affirmed.

All the Justices concur.