State Ex Rel. Edwards v. Query

I concur in the dissenting opinion of Acting Associate Justice Lide. It appears to me that he has clearly demonstrated by reason and authority the unconstitutionality of the statute involved in this case. While I doubt that I can add anything to the force of his opinion, I feel that it is incumbent upon me to make it clear that the statistical data, the reasoning and the authorities upon which the prevailing opinion relies have been carefully examined in the light of their accuracy and applicability to the facts of this case. For myself I am constrained to say that the statistical data are inaccurate; that the reasoning does not reach any of the fundamental principles stated by Acting Associate Justice Lide, and that the authorities cited afford no support for the conclusions reached.

Even if it could be determined in this case that the violation of the constitutional provision against the impairment of the obligation of contracts alleged by the petitioners involves an amount of tax funds that in itself need not be regarded as substantially affecting the credit of the State or the financial interests of the bondholding creditors and the taxpayers of the State, I do not think that the rejection of the petitioners' contentions, characterized by Mr. Justice Stukes in his opinion as "imaginary," or "shadow-boxing," or as creating a "bogey man," should pass unnoticed. The history of all important constitutional limitations has been that except in cases involving public disasters or other emergency conditions, or directly affecting the public safety, the public health or the general well-being of the nation in matters related to the exercise of the police power, the courts have found it necessary to disregard degrees of violation, and to insist upon strict adherence to the language of the limitations, wherever life, liberty, or property rights have been involved.

Courts are fully conscious of the fact that slight infringements on constitutional safeguards are as grave as the most flagrant ones. Indeed they are more serious. Flagrant violations would defeat themselves; no court would sanction them. But slight deviations are the entering wedge which in the process of legislative and judicial growth become larger and larger as the boldness of pressure groups increases with each successive judicial victory, and in the end dissipate constitutional limitations. It would be a work of supererogation to demonstrate by illustration these elementary facts. The judicial history of the nation — especially that of our highest judicial tribunal — consistently emphasizes the doctrine that in the field we are discussing the door of encroachment must not be opened, because such an opening is itself an invitation to further and more serious encroachments.

I find here litigants — taxpayers and bondholders — who are concerned over the tremendous burden of debt imposed on the people of South Carolina, with the sanction of this Court as well as of the General Assembly, under legislation which commits the State of South Carolina to a continuously expanding highway system to be constructed and maintained out of the five cents gasoline tax, and to the maintenance of a continuous debt program now fixed at approximately sixty-five million dollars. As shown by the authorities cited by Acting Associate Justice Lide, there is a statutory pledge (judicially sanctioned) that the gasoline revenues to the extent of five cents per gallon will be devoted to those purposes exclusively and a policy declared both by the Legislature and by this Court that the gasoline tax thus pledged shall be uniformly applied to all users of gasoline. These are legislative representations to the people of South Carolina, and to the people of other states who contemplate coming to South Carolina to live or to engage in business, that this highway program will be carried to a conclusion without resort to a property tax — "never costing the taxpayers of the State one cent of property taxes" (Acts 1929, No. 297, p. 670).

In reaching my conclusions in this case, I draw no line between the petitioners who are bondholders and those who are taxpayers. The rights of the latter are no less than those of the former, though different constitutional principles may be invoked to uphold such rights. Indeed, if Article X, Section 3, of the Constitution of South Carolina had been especially devised to place taxpayers in the same position as holders of public bonds in situations of the present character, it could not have been more effectually worded or construed by this Court for such purpose. It is a grave plight in which the taxpayer is placed if this Court announces to the General Assembly that legislative conjectures and prognostications and political expediencies shall be the determining factors in creating tax exemptions, and that either contractual stipulations with the bondholders, or constitutional protection to the taxpayers, may be ignored with the sanctionof this Court.

I first notice what appears to me to be misconceptions as to the statistical data with which we are dealing. The Osbornecases from which the prevailing opinion quotes correctly reflect the provisions of the applicable 1929 legislation. Such provisions do not attempt to segregate the revenues from the five cents gasoline tax for particular purposes, in a stated order, leaving a surplus for separate legislative disposition. The allocation of the revenues, as distinctly stated in the 1929 legislation and in the Osborne cases, is an allocation of "the entire amount of the revenues." Thereare no surplus revenues. The allocation is to a purpose which has already (according to the figures of the Highway Department) resulted in an expenditure of one hundred and sixty-seven million dollars for road construction alone and which presumably will entail a further expenditure of considerably more than that to meet the legislative requirements of the paving of a far greater amount of road mileage than has already been paved.

Except to the extent that the Court may take judicial notice of certain facts, such as those that appear in the reports of the Highway Department, there is no evidence whatsoever before the Court. But from the same source from which come the figures used by Mr. Justice Stukes to indicate that there will be in the hands of the Highway Department for road construction and maintenance, at the end of the 1946 calendar year, a total of more than thirteen million dollars, I find that no provision is made in such figures for the millions of dollars of deferred maintenance which has been built up during the war or for the hundreds of thousands of dollars that will be entailed in repairing road and bridge damage resulting from 1945 storms, or for the several million dollars that will be involved in the cost of completing road and bridge projects upon which work had already been started, or for the four million, one hundred thousand dollars which will have to be paid for the Cooper River Bridge (unless the Highway Department exercises the power to further increase the debt of the State to pay for this bridge), or even for a conservative estimate of the cost of normal maintenance during the year 1946.

Misapprehensions also seem to me to enter into the discussion in the prevailing opinion of the legal effect of the recitals in the statute before us. Stripped of repetitious and irrelevant verbiage, these recitals amount merely to a statement on the part of the General Assembly that the elimination of the five cents gasoline tax from the sale of gasoline used in farm machinery will increase rather than diminish the revenues obtained from the gasoline tax, because such elimination will increase the use of gasoline in farm machinery to such an extent as to produce more revenue from five-sixths of one cent per gallon tax than is obtained from a five cents tax.

If the first part of the recital stood alone, it would be rejected as ridiculous on its face. When the reason for the recital is added we are entering upon a field of economic data. Is that a domain to be entered exclusively by the General Assembly or is it one in which the courts also have a place of responsibility? The question is an important one. The prevailing opinion admits that a statutory recital which is palpably erroneous could not save the constitutionality of the Act.

If we take the position in this case that the recital is not palpably erroneous, it still is true that it is asserted to be such in both the petition and the reply filed by the petitioners in this case. Does the issue of fact thus made by the pleadings create a stalemate which makes the action of the General Assembly conclusive, and excludes the litigants from invoking the aid of the court, or does this issue of fact made by the pleadings itself create the element of jurisdiction imposing upon the court the duty to determine where the truth of the matter lies? It is not a question of applying the elementary presumptions in favor of the validity of legislative action. When these presumptions have been given full effect they still are only considerations which will stay the hand of the court in declaring an act unconstitutional unless certain legal tests are met; but certainly these presumptions do not extend to the point of enabling the General Assembly to invade the judicial domain, and assume to itself the power of conclusively deciding an issue of fact upon which the constitutionality of the act depends.

The petitioners in this case recognized that the recitals in the statute presented a factual controversy which may be determinative of the constitutional issues raised by them. That they were and are right in this regard is clearly shown by the briefs of counsel and by the conflicting opinions of Acting Associate Justice Lide and Justice Stukes. Hence, while contending by way of demurrer to the answer and return of the respondents that the Act is unconstitutional on its face, they at the same time moved before the Court for an order of reference so that if the Court rejected their contentions that the Act on its face is unconstitutional, the factual matter contained in the recitals, and which it appears to me is admittedly the sole foundation upon which the statute can rest, may be properly inquired into by the Court.

We, of course, are controlled in this case, at least to the extent of the contention that the statute is an unconstitutional impairment of the obligation of a contract, by the decisions of the Supreme Court of the United States. And these decisions, entirely ignored on the present point in the prevailing opinion, clearly entitle the petitioners to an opportunity to present in court, by way of a reference as sought, or in some other manner which the Court may direct, the facts upon which their constitutional contentions rest.

I do not favor the granting of the petitioners' order of reference because I am thoroughly satisfied that upon the principles stated by Acting Associate Justice Lide the statute is unconstitutional on its face, and no application for an order of reference or other proffer of testimony having been made on behalf of the respondents, there is in my opinion nothing to refer. But if a majority of the members of this Court should reach the conclusion that the statute is not invalid on its face, and that factual matters implied in the enactment of the statute and embraced within the recitals thereof are determinative of the constitutional issue, then it is my opinion that evidence on such matters should be presented and I know of no other way in which such presentation may be made than through the granting of an order of reference.

This is no subsidiary issue in the case. It goes to the very roots of our constitutional system. In specific terms contained in appropriate pleadings, the petitioners assert as a fact that the recitals in the present Act are erroneous; respondents deny this assertion and in their pleading reiterate the facts stated in the recitals with no supporting data. There is thus a clear issue of fact which is the essence of the controversy in this case.

Whatever our own view of the situation might be, the controlling decisions of the Supreme Court of the United States make it very clear that the issue presented cannot be rejected or ignored by the Court, or the petitioners denied the opportunity to establish the correctness of the allegations of their pleadings.

In Chastleton Corp. v. Sinclair, 264 U.S. 543,68 L.Ed., 841, the Court held that the validity of a rent control statute, upheld as an emergency measure at the time of enactment, may become invalid by reason of a change of conditions and that when the Act was challenged, the lower Court should have taken testimony respecting the continued existence of facts necessary to sustain the validity of the Act. As the Court there said:

"We repeat what was stated in Block v. Hirsch, 256 U.S. 135,154, 65 L.Ed., 865, 870, 16 A.L.R., 165,41 Sup. Ct. Rep., 458, as to the respect due to a declaration of this kind by the legislature so far as it relates to present facts. But, even as to them, a court is not at liberty to shut its eyes to an obvious mistake, when the validity of the law depends upon the truth of what is declared. * * *

"These cases show that the court may ascertain as it sees fit any fact that is merely a ground for laying down a rule of law, and if the question were only whether the statute is in force today, upon the facts that we judicially know, we should be compelled to say that the law has ceased to operate. Here, however, it is material to know the condition of Washington at different dates in the past. Obviously, the facts should be accurately ascertained and carefully weighed, and this can be done more conveniently in the supreme court of the District than here. The evidence should be preserved, so that, if necessary, it can be considered by this court."

In Weaver v. Palmer Bros. Co., 270 U.S. 402,70 L.Ed., 654, the Court said:

"Legislative determinations express or implied are entitled to great weight; but it is always open to interested parties to show that the Legislature has transgressed the limits of its power. (Citing case.) Invalidity may be shown by things which will be judicially noticed (citing case), or by facts established by evidence. The burden is on the attacking party to establish the invalidating facts."

"The said legislative declaration has no greater effect and is no more binding upon the court than if the legislature had declared that a certain measure is or is not constitutional. In such contingency that question would still remain for the courts to determine." As quoted in 7 A.L.R., 521, fromMcClure v. Nye, 22 Cal.App., 248, 133 Pac., 1145.

As said by the Court in Borden's Farm Products Co. v.Baldwin, 293 U.S. 194, 79 L.Ed., 281:

"But where the legislative action is suitably challenged, and a rational basis for it is predicated upon the particular economic facts of a given trade or industry, which are outside the sphere of judicial notice, these facts are properly the subject of evidence and of findings. With the notable expansion of the scope of governmental regulation, and the consequent assertion of violation of constitutional rights, it is increasingly important that when it becomes necessary for the Court to deal with the facts relating to particular commercial or industrial conditions, they should be presented concretely with appropriate determinations upon evidence, so that conclusions shall not be reached without adequate factual support. * * *

"While the complaint is lacking in the specific and definite allegations as to trade conditions which would be appropriate to the plaintiff's assertions in supporting its attack on the statute, we think that the plaintiff should not be refused standing in court upon the allegations made. As we do not approve the procedure adopted below, we do not pass upon the ultimate question of the constitutionality of the statute. The plaintiff should be permitted to proceed with the cause; the motion for preliminary injunction should be heard and decided and the cause should proceed to final hearing upon pleadings and proofs; the facts should be found and conclusions of law stated as required by Equity Rule 70 1/2."

In a concurring opinion Justices Stone and Cardozo say the following:

"We are in accord with the view that it is inexpedient to determine grave constitutional questions upon a demurrer to a complaint, or upon an equivalent motion, if there is a reasonable likelihood that the production of evidence will make the answer to the questions clearer."

No authority contrary to the specific holdings made in these cases has been cited. Obviously, cases which deal exclusively with matters coming within the scope of the so-called police power are irrelevant. It is quite true that in determining whether an emergency exists so as to justify the exercise of emergency governmental powers that admittedly cannot be exercised under normal conditions, such as the need of rent control, the restriction of creditors' rights, the need of the imposition of extraordinary measures for the public health or public safety, and the like, the Courts will be slow to question the judgment of the legislative branch of the government, but an examination of the cases dealing even with such exceptions indicates that legislative findings or conclusions to which great weight is thus given by the judicial branch are findings and conclusions based upon adequate and intelligent inquiry as the result of which the true facts or conditions underlying the particular statute were ascertained. The cases above cited include illustrations of this phase of the matter and of course, where the legislative declaration merely sets forth a "publicly injurious and almost world-wide fact," such as depression of extraordinary proportions, the legislative declaration may be said to be practically conclusive. Block v. Hirsch, 256 U.S. 135,65 L.Ed., 865.

What is meant by a legislative injury on a debatable factual issue, which will influence the courts in according to the legislative declaration a presumptive element of accuracy that may not be challenged by the courts, is indicated in the case of U.S. v. Carolene Products Co., 304 U.S. 144,82 L.Ed., 1235.

That case involved the validity of the Filled Milk Act. The questions were presented on a demurrer to an indictment. The statute in question prohibited the shipment of filled milk in interstate commerce except under stated circumstances, on the ground that the product is an adulterated article of food injurious to the public health. The court said:

"In twenty years evidence has steadily accumulated of the danger to the public health from the general consumption of foods which have been stripped of elements essential to the maintenance of health. The Filled Milk Act was adopted by Congress after committee hearings, in the course of which eminent scientists and health experts testified. An extensive investigation was made of the commerce in milk compounds in which vegetable oils have been substituted for natural milk fat, and of the effect upon the public health of the use of such compounds as a food substitute for milk. The conclusions drawn from evidence presented at the hearings were embodied in reports of the House Committee on Agriculture, H.R. No. 365, 67th Cong. 1st Sess., and the Senate Committee on Agriculture and Forestry, Sen. Rep. No. 987, 67th Cong., 4th Sess. Both committees concluded, as the statute itself declares, that the use of filled milk as a substitute for pure milk is generally injurious to health and facilitates fraud on the public. * * *

"We may assume for present purposes that no pronouncement of a legislature can forestall attack upon the constitutionality of the prohibition which it enacts by applying opprobrious epithets to the prohibited act, and that a statute would deny due process which precluded the disproof in judicial proceedings of all facts which would show or tend to show that a statute depriving the suitor of life, liberty or property had a rational basis. * * *

"The present statutory findings affect appellee no more than the reports of the Congressional committees; and since in the absence of the statutory findings they would be presumed, their incorporation in the statute is no more prejudicial than surplusage. * * *

"Where the existence of a rational basis for legislation whose constitutionality is attacked depends upon facts beyond the sphere of judicial notice, such facts may properly be made the subject of judicial inquiry (citing case), and the constitutionality of a statute predicated upon the existence of a particular state of facts may be challenged by showing to the court that those facts have ceased to exist (citing case)."

See, also the case of City of Hammond v. Schappi BusLine, 275 U.S. 164, 72 L.Ed., 218, which involved the validity of an ordinance regulating the operation of buses on certain streets. Interstate commerce, police powers and alleged discrimination were some of the factors involved. The Supreme Court refused to pass upon the issues because no facts were found, and the case was remanded to the lower court to take testimony.

What kind of an inquiry was made by the General Assembly in the present case? It did hear partisan arguments, but it took no testimony. If it had before it any authentic statistical data upon which to bottom the factual recitals in the Act, none of the counsel in the case have so contended before this Court. In a brief filed by the State Farm Bureau with our permission as amicus curiae statements made on behalf of the Bureau before the General Assembly in connection with the consideration of the Act by that body are quoted. But like the recitals of the Act themselves the figures given in this statement are estimates of a most conjectural and speculative character. Although it is alleged that thirty-six states have gasoline tax exemption statutes, there is not a suggestion in the record — not even in the reproduction in the brief filed on behalf of the State Farm Bureau of the statement made before the General Assembly — that in any of such states the experience has been that the enactment of the exemption statute increased the use of gasoline in the exempted classes of vehicles. Nor is it suggested in the arguments of counsel for the respondents and for the State Farm Bureau that the arguments can be founded on any such experience.

I earnestly challenge the suggestion that the Legislature can create facts by fiat, and the contention that although the Legislature is palpably acting without information it can instill into the judicial mind the credulity necessary to swallow a statement which is on its face incredible unless supported by evidence of facts unknown to the Court, and where such evidence has not been produced before it. To say that the State will derive more revenue from a tax of five-sixths of one cent a gallon on gasoline than from a tax of five cents per gallon is on its face a mathematical monstrosity. To say that such an increase will nevertheless be found to arise under the terms of the present statute because of economical and statistical facts asserted by advocates who appeared before the General Assembly and by counsel who appeared in this Court, without the production of any evidence in support of their claims, adds little strength to the assertion.

If we are to resort to briefs of counsel to obtain our facts, the brief filed on behalf of the State Farm Bureau makes a strong case against the statute. There it is said that the use of gasoline is very much more efficient than lower grade and cheaper fuels; that the use of gasoline considerably reduces the quantity of lubricating oil that must be used; that there is a saving in the original cost of tractors sold in South Carolina when the proper equipment for the use of gasoline alone is installed; that the use of lower grade fuels "doubles and trebles" the amount and cost of repairs; that all tractors use gasoline for starting and warming, so that there is involved the time element of changing over to fuel oil, etc. Since according to the brief of special counsel for the respondents a tractor does the work of eight men, and according to the brief of counsel for the Farm Bureau, "to the farmer the cost of repairs is a heavy burden, but probably not as heavy a burden, as to have all his equipment standing idle in time of greatest need, because his tractor is tied up for overhaul, possibly indefinitely for lack of repair parts," there seems to be in the argument of respondents' counsel a strong showing that the greater economy and efficiency of gasoline over the cheaper fuels vastly outweighs in dollars and cents the differential represented by the five cents gasoline tax. Taking the figure of usage of eighteen gallons of gasoline per day as given by the Farm Bureau, the ninety cents of the gasoline tax paid on such gasoline surely represents less than the sum of all of the advantages and economies represented in the elements of saving above pointed out.

There is no answer to the considerations above set forth relating to the recitals of the present Act in the fact that this Court in the Moorer case accepted the legislative recitals in the 1929 legislation governing the State highway system.

Those recitals were based on facts of which the Court of necessity was compelled to take judicial notice. Unless the Court had stultified itself it could not have questioned the recitals in the Act of the direct relation between good roads and the agricultural, industrial and social development of the State.

In the second Osborne case (195 S.C. 295,11 S.E.2d 260), this Court recognized the law as declared in the opinion of Acting Associate Justice Lide. In that case, as here, there was involved a statute which on its face appeared to be clearly unconstitutional under the decision of this Court in the first Osborne case. In an attempt to avoid the constitutional objections there pointed out, the Act involved in the second Osborne case was preceded by an elaborate recital expressly setting forth the determination of the State that the obligations of the Highway Department represented by its certificate of indebtedness and reimbursement agreements shall not be impaired and that the diversion of highway revenues therein provided for would come out of a surplus above the requirements for the discharge of the highway obligations, including the maintenance of the highway system in a safe and serviceable condition.

In the briefs of counsel in that case the question now under discussion was fully argued to the Court; yet when the Court came to make its decision, the recitals in the Act were deemed to have so little relevancy to the constitutionality of the purpose and effect of the Act that the Court made no mention of the matter in its opinion.

As the Court said in that case:

"In these troublous times, with public finance and economic forces taking on aspects that challenge alike the pessimist and the optimist in looking to the uncertain days ahead, our solemn duty can be no less than that of being diligent to maintain the balance of governmental powers that give rise to the power of a Court to declare an act of the General Assembly unconstitutional."

The strongest argument for the rejection of the view that the recitals in the present Act should be accorded the benefit of the presumptions that would exclude an inquiry by the court is found in a contrast of the opinions of Acting Associate Justice Lide and Justice Stukes. When the Justices of this Court are unable, on the record, to agree that the recitals in a statute are probably correct — when the difference of opinion is as to whether such recitals are wholly conjectural, made for the specific purpose of affecting constitutional limitations, or are probably founded on fact — it appears to me that we have a most convincing illustration of the need of inquiry as to where the truth lies. It is begging the issue to say, as does Mr. Justice Stukes, that material facts have been "found" by the Legislature. The point of the matter is that the Legislature made an obviously arbitrary declaration, rather than a finding based upon inquiry and testimony.

The attempt to distinguish the present case from the Osbornecases on the ground that in such cases the diversion was to purposes "foreign" to the purposes of the levy, whereas (it is argued) the present diversion is in line with the scope of the original highway legislation, answers itself. What diversion could be more foreign to the purposes of an act intended to raise revenue for a specific purpose than a subsequent act depleting such revenue by refunding a part of it to a special group of persons after it has been collected?

There is no escape from the fact that in the Osbornecases, as here, the principal point urged upon the Court was the fact that there was a "surplus" of revenues out of which the diverted funds could be paid, and that therefore, there could be no unconstitutional diversion. It is true that in neither case did the Court deal with the contention that the statute impaired the obligation of contracts, but it did hold that regardless of any mathematical manipulations that might on some theory show the existence of funds available for the purposes of diversion, it was not within the power of the General Assembly to divert gasoline revenues from the purposes for which they were appropriated in the 1929 legislation.

And in the Osborne cases the amounts involved, when viewed in their proper aspects, were probably much smaller than those involved in the present case.

There is no way of determining just what would be the cost to the State of the refund of gasoline taxes under the present Act. But if we take even the small figures which were presented speculatively by counsel on both sides and recognize that this refund would be an annual disbursement as against the single disbursement in each of the Osbornecases, it is readily perceived that the amount involved in the present Act cannot in any sense be regarded as trifling.

As a matter of fact, the prevailing opinion practically adopts the argument of the respondents in the Osbornecases, and expressly rejects the dictum of the Court therein that the question involved is not the amount of the diversion in the particular case, but the principle of "occasional or systematic attrition" which might start with a small sum and end with a disastrously large one.

If, as the prevailing opinion appears to recognize, future legislation creating cumulative exemptions and providing for additional refunds may well result in the necessity of condemning the statutes as impairing contracts, how and when is the determination to be reached? If in each successive statute there are legislative recitals such as are found in the present case, the principles advanced in the prevailing opinion would render such later legislation constitutional, because of its similarity to the present statute.

If it is answered that cumulative legislation of the present character might be unconstitutional, whereas the present statute is not, because of the amounts of money involved, how are we to deal with the matter except by an inquiry into the material facts as each case arises? If, as it appears to be recognized, such an inquiry will be ultimately necessary, it is difficult to understand how the inquiry can be avoided at this time any more than it can be avoided later.

The attempted distinction of the case of Martin v. Saye (147 S.C. 433, 145 S.E., 186) from this case appears to me to encompass one of the misconceptions upon which the prevailing opinion rests. It is stated that the diversion of the funds involved in that case from the statutory object to which they had been allocated, to wit, the payment of interest on certain bonds, was a "dedication * * * exclusive of all other purposes and objects" whereas it is argued that the funds involved in the present case were not allocated solely to the payment of bonds and the interest thereon, leaving a margin of funds that can be used for other purposes. That argument is a direct rejection of theOsborne cases, and totally disregards the expressed legislative policy that all of the revenues derived from the five cents gasoline tax shall be applied to the purposes set forth in the Act, none of which contemplates the diversion of any of such revenues by way of refunds or exemptions.

There is no doubt in my mind that the foundation of the prevailing opinion, as of the arguments of respondents' counsel, is the implied contention that the decisions above adverted to are contrary to judicial trend; that they do not represent the latest judicial thinking on the subject; and that to the extent that their application would invalidate the present statute, they should be regarded as overruled.

On what cases is reliance placed for this extraordinary position?

The case of Martin v. Saye has been repeatedly cited with approval by this Court. In the case of Federal Land Bankv. Garrison, 185 S.C. 255, 193 S.E., 308, as pointed out by Acting Associate Justice Lide (and where certiorari was denied by the Supreme Court of the United States), this Court quoted from Martin v. Saye the proposition that the unconstitutionality of an act alleged to impair the obligation of a contract "can never depend upon the extent of the change which the law effects in it. Any deviation from its terms * * * however minute and apparently immaterial in their effect upon the contract of the parties, impairs its obligation."

The case of Martin v. Saye was cited for the same legal proposition in Henry v. Alexander, 186 S.C. 17,194 S.E., 649.

On the general subject of the diversion of public funds and on related questions of constitutional law the case has been frequently cited and followed. See, for example, Statev. Moorer, 152 S.C. 455, 150 S.E., 269 (dissenting opinion of Judge Watts); Fant v. Highway Department, 164 S.C. 187,162 S.E., 262; Kirk v. Douglass, Sheriff, 190 S.C. 495,3 S.E.2d 536; Kirk v. Clark, 191 S.C. 205,4 S.E.2d 13; Bland v. City Council of Sumter, 203 S.C. 392,27 S.E.2d 498.

Nor have the decisions of the Supreme Court of the United States upon which this Court relied in the case ofMartin v. Saye been overruled on any of the questions involved in the present case. It is true that in a number of cases cited in the prevailing opinion and in the arguments of counsel for the respondents the statutes were upheld notwithstanding that to some extent their effect was to impair the obligation of contracts, but in every one of these cases the court was dealing with the exercise of emergency sovereign powers, or with considerations of public health or general public welfare involving the exercise of the police power. I will not extend this opinion by undertaking to quote from them. It suffices to say that there isn't a suggestion in any of them that in the field of law with which we are concerned in the present case there is to be deduced the slightest variation from the principle that the question of contract impairment is not a question of degree or extent; if judicial inquiry discloses any impairment at all, the statute under attack will be stricken down lest it be made a precedent for successive impairments that would constitute the "process of attrition" of constitutional limitations that would finally render nugatory the protection which the public can find only in the precise language of the constitutional limitation.

It is still the law that "to know the obligation of a contract we look to the laws in force at its making," as held by the Supreme Court of the United States in the recent decision of Worthen v. Kavanaugh, 295 U.S. 56,79 L.Ed., 1298, 1301 (decided in 1935), just as it was in the cases cited therein and in many other cases decided before and since then, starting as far back as Sturgis v. Crowninshield, 4 Wheat., 122, 4 L.Ed., 529 (decided in 1819), which is cited in the Worthen case. And the rigid application of the constitutional inhibition against the impairment of a public contract which was declared in Dartmouth Collegev. Woodward, 4 Wheat., 518, 4 L.Ed., 631 (decided in 1819), continues to be approved by our highest tribunal in the long line of cases which have been decided by it from the earliest days to the present time, as, for example, U.S.ex rel. TVA v. Powelson, 319 U.S. 266, 87 L.Ed., 1390,1401 (decided May 17, 1943).

The citation in the prevailing opinion of the case of Michaelsv. Barrett, 355 Ill., 175, 188 N.E., 921, is illustrative of the misapprehension which underlies the prevailing opinion in this case. In that case the bonds which it was claimed were impaired were county bonds. The fuel tax law which was invoked as creating a contract with the bondholders was of course a state law. The Legislature of Illinois undertook to appropriate part of the proceeds of the gasoline tax to the payment of bonds issued for an emergency relief purpose. This appropriation was attacked as an unconstitutional diversion and an impairment of the obligation of the contract between the holders of the county bonds and the state.

But under the Illinois law the motor fuel tax is not pledged in whole or in part to the payment of county road bonds. Such bonds can be issued only when they are accompanied by specific provision for the levy and collection of a direct annual tax to pay the same. A portion of the gasoline tax revenues was allocated to the counties, but this constituted merely an additional source of revenue available to the counties for road purposes or for the payment of road bonds.

The Court pointed out that the state had assumed no responsibility for the payment of the county road bonds; that there had been no statutory or other pledge of any part of the gasoline tax to pay such bonds; and that the portions of the gasoline tax not specifically allocated by the statute imposing the tax could be utilized by the state for any lawful purpose.

The contrasting case of Streit v. Lujan, ___, N.M., ___, 6 P.2d 205, is a singularly pertinent authority showing the fundamental difference between a statutory situation in which the gasoline revenues may be taken to be wholly pledged, as is the case in South Carolina, or as only partially pledged to the extent of bonds issued on the strength thereof. In New Mexico there is a specific pledge of the revenues for the payment of highway obligations. In 1931 the New Mexico Legislature enacted a statute exempting from the tax on gasoline such gasoline as was purchased for use otherwise than in motor vehicles operated on the public highways. The question in the case was whether this exemption violated the statutory pledge.

The court calls attention to another New Mexico statute expressly providing that each year the state treasurer shall set aside out of the gasoline revenues a sum sufficient to pay the principal of and interest on the state's highway obligations maturing that year, and that the gasoline tax shall not be reduced so long as the bonds remain outstanding.

As the court clearly points out, the statute is thus a specific negation of the general pledge alleged by the bondholders; the pledge consists of such amount of the gasoline revenues each year as is necessary to pay the bonds maturing that year, and this amount is required to be specially set aside and applied accordingly; that as to the remainder of the revenues there is no specific allocation.

The point of the decision therefore clearly is that when the Legislature itself has limited the pledge to the amount required each year to pay the bonds maturing and the interest accruing that year, the Legislature has not bound itself as to the application of the gasoline revenues beyond the specific amount so arrived at.

The citation in the prevailing opinion of authorities dealing with the amendment or repeal of statutes levying taxes for the purpose of discharging public bonds appears to me to be irrelevant. See, for example, the case of Gilman v.Sheboygan, 2 Black, 510, 17 L.Ed., 305. A general obligation bond, such as is involved in the cases in question, is payable out of any public funds available for that purpose. A statute levying a tax to pay such bonds is not a pledge of that particular tax, or a restraint upon the legislature to make other provision for the payment of the bonds. The pledge in such cases is of the total resources of the state and of the whole taxing power of the state. In contrast, the bonds issued by the Highway Department are issued under legislation which constitutes a specific pledge of the gasoline revenues for the express purpose of avoiding the imposition of taxes under the general taxing power, though resort to this power is preserved in case of need to insure payment of the bonds.

Having regard to the legislative policy that the mileage of the road system shall be continually expanded, and that to meet the cost of construction the Highway Department shall continue to issue bonds within statutory limits that are increased from time to time, and to the resulting burden of debt resting upon the people of South Carolina, I would rather have it go out to the world of industry and to the people of this State that the solemn pledge of the General Assembly contained in the 1929 highway legislation that the "entire proceeds" of the five cents gasoline tax will be devoted to all of the obligations connected with the construction and maintenance of the highway system will be strictly adhered to, at least until the time has arrived when the system can be said to be substantially completed, and the burdens resting upon the gasoline revenues have achieved a diminishing instead of an increasing flavor. The alternative is to announce to the world a willingness on the part of this Court to see the State embark upon a program of financial inflation that utterly ignores both constitutional limitations intended to guard against that very course, and the history of economic disasters that flow from legislative and judicial rejection of the lessons of experience.