Parker v. Bates, Treasurer

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] November 18, 1949. This action was brought in the original jurisdiction, in accord with prior permission, and heard at a special term in September 1949. It embodies attack by a Greenville citizen and taxpayer upon the validity of Act No. 344 of the Acts of the General Assembly of 1949, 46 Stat. 768.

It was entitled, "An Act to allocate funds to the counties of the State for the construction of health centers, hospitals or for other public purposes; and further relating to the fiscal affairs of the State." Section 1 appropriated from the general funds of the State, admittedly surplus, $2,584,000.00 to the respective counties at the rate of $40,000.00 per county plus $6,000.00 for each member of the House of Representatives. It was provided that the appropriations were, quoting, "for use in: (a) the erection of hospitals and/or health centers and/or for matching grants by the Federal Government for the erection of hospital and/or health centers, (b) for the purpose of paying off existing bonds sold for the erection and/or equipping of hospital and/or health centers. (c) for operation of county hospitals and/or health centers, (d) for purchase of equipment and supplies for hospitals and/or health centers, (e) for hospitalization of indigent citizens, (f) for any other eleemosynary hospitals in said counties whether or not such hospital is a county or municipal owned institution, (g) or in the event any health center or hospital has been erected and/or equipped with county funds, the sums herein provided may be used as reimbursement to such county of costs of such erecting and equipping thereof, and (h) and/or for other public uses."

Upon passage the Governor vetoed original provisions which gave control of expenditures in the counties to the respective legislative delegations, and these vetoes were sustained. Item (h) above was also vetoed by the Executive but the veto was overridden and it is a part of the law before us. The mechanics of this procedure were followed as outlined in the State Constitution of 1895, Art. IV, sec. 23. The veto power is a part of the legislative process. Doran v. Robertson, 203 S.C. 434,27 S.E.2d 714.

In the brief of plaintiff the constitutionality of the act is challenged as follows:

I. The provision of the Act permitting the money to be used for privately owned eleemosynary hospitals is invalid because it is a grant of public funds for a sectarian purpose.

II. The provisions of the Act permitting the money to be used "for other public uses" is invalid because it fails to specify the uses.

III. The hospital and health center provisions of the Act are invalid because they constitute a use of State funds for a county purpose.

Our consideration might well be limited to the foregoing but other relatively minor points arose in oral argument, to which we shall also make brief reference. General observations which are applicable will be first stated and then plaintiff's specifications of alleged unconstitutionality, reproduced above, will be discussed and decided seriatim.

Of primary importance are the long established rules which were concisely set forth in Moseley v. Welch,209 S.C. 19, 39 S.E.2d 133, 137, as follows:

"We approach the consideration of the various constitutional grounds upon which this legislation is challenged with the following well settled principles in mind: The supreme legislative power of the State is vested in the General Assembly; the provisions of our State Constitution are not a grant but a limitation of legislative power, so that the General Assembly may enact any law not expressly, or by clear implication, prohibited by the State or Federal Constitution; a statute will, if possible, be construed so as to render it valid; every presumption will be made in favor of the constitutionality of a legislative enactment; and a statute will be declared unconstitutional only when its invalidity appears so clearly as to leave no room for reasonable doubt that it violates some provision of the Constitution. Santee Mills et al. v. Queryet al., 122 S.C. 158, 115 S.E. 202; Clarke v. S.C. PublicService Authority et al., 177 S.C. 427, 181 S.E. 481; Ellerbev. David, County Treasurer, et al., 193 S.C. 332,8 S.E.2d 518; Pickelsimer v. Pratt et al., 198 S.C. 225,17 S.E.2d 524." This quotation was also approvingly included in the opinion in the very recent decision of Gaud v.Walker, 214 S.C. 451, 53 S.E.2d 316.

Counties are subdivisions of the State, subordinate and subject to legislative control, created and existing with a view to the policy of the State and serving as its agencies. Generally speaking they function as such and as instrumentalities of the State for purposes of political organization and local administration. 14 Am. Jur. 185, 186, 188, Counties, §§ 3, 5. This conception of a county is supported by our decisions and many others which are cited in the footnotes to the text. Chesterfield County v. State Highway Department, 191 S.C. 19, 3 S.E.2d 686, 698, and earlier cases cited in the opinion. There it was said: "The County is but an agency or arm of the State for governmental purposes, and privileges conferred upon counties and grants to them by the State, such as those here said to exist, are merely for the more convenient performance of the State's governmental functions". Plaintiff is prone in argument to disregard the true status of a county and to treat it as a sovereignty separate and apart from the State with distinct revenues and purposes, which it is not. 20 C.J.S., Counties, § 1 p. 755. Except for the constitutional provisions relating to counties they are subject to the plenary control of the legislature of the State, even to the extent of abolishment.

"Generally, where a surplus remains after the accomplishment of the purpose for which an appropriation is made, it may be diverted to other causes," which means "causes" for which taxes may have originally been levied. 42 Am. Jur. 776, Public Funds, § 80. Annotation, Ann. Cas. 1917B, 867. Manifestly there can be no unconstitutional diversion of surplus funds, as there was in the legislation condemned in State ex rel. Edwards v. Osborne,193 S.C. 158, 7 S.E.2d 526, and in the second suit of the same title, State ex rel. Edwards v. Osborne, 195 S.C. 295,11 S.E.2d 260. See the tangent case of State ex rel.Brown v. Bates, 198 S.C. 430, 18 S.E.2d 346.

There is no established segregation of tax sources between State and counties. Both may levy ad valorem taxes on property but the State has found it unnecessary to do so in recent years, depending upon excises, income taxes and the like. Likewise the counties may, and do, derive income from licenses of various kinds, road taxes, etc. In impressive amounts the proceeds of numerous levies by the State are in part divided annually among the counties by varying formulae, which proves the inaccuracy of the argument that the counties are confined in the accomplishment of their constitutional purposes to "county taxes." The following is from the State appropriation act of 1948, sec. 69, 45 Stat. at Large, page 2178:

"Item 1. Aid to Counties:
Income Tax ............................ $ 1,875,000.00
Alcoholic Liquors Tax .................   2,546,000.00
Beer and Wine Tax .....................     378,000.00
Insurance Tax .........................
475,000.00 Bank Tax ..............................     120,000.00
Motor Vehicle Dealers' Licenses .......      40,000.00
Gasoline Tax ..........................   3,400,000.00
Game Protection Fund ..................     110,000.00
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Total (Item 1) Aid to Counties ........ $ 8,944,000.00"

Hospitalization and other aid to the sick have constituted approved governmental activities for many generations and this court had recent occasion to expressly declare that expenditures therefor by state and county may be validly made under our constitution. Smith v. Robertson,210 S.C. 99, 41 S.E.2d 631. To the same effect is the older case of Battle v. Willcox, 128 S.C. 500,122 S.E. 516.

Since hospitalization and other aid to indigent sick is a proper state purpose there is no constitutional or other legal reason why the State could not from its tax funds erect and maintain a hospital in every county, of uniform size and expense. This will hardly be done for the needs vary in the counties on account of their respective populations and available existing hospitals and other health conditions and facilities. However, the consideration demonstrates the validity of the lump sum appropriation of $40,000.00 per county. The legislature went further, in recognition of the larger needs of the heavier populated counties, and provided $6,000.00 additional to each county per member of the House of Representatives, and the number of members per county is measured by relative county population. Const., Art. III, sec. 3. This partial uniformity in the distribution among the counties is not embraced in plaintiff's "questions involved" but it was referred to in oral argument and has been considered without avail to plaintiff. It cannot fairly be said to be arbitrary or capricious.

There is a compelling, practical reason for a uniform starting sum for each county, here $40,000.00. A health center building is apt to cost as much to build in a small, poor county as in a comparatively large, rich one; and as much to equip and maintain. Administrative expense is also likely to vary little, compensation of skilled personnel, etc. Health centers have been here referred to rather than hospitals because the aggregate sum which will accrue to the largest county is pitifully inadequate in relation to the present-day cost of a hospital. It can be best be but a modest contribution to such an institution. The statement went unchallenged in argument that the current construction cost of hospitals is about $10,000.00 per patient-bed.

Plaintiff's first point of attack anticipates use of the appropriated funds for the aid of sectarian hospitals but no instance of attempt or intention to so apply any part of the funds is specified. The pertinent constitutional provision is quite broad. Art. XI, sec. 9, as follows: "The property or credit of the State of South Carolina, or of any county,. city, town, township, school district, or other subdivision of the said State, or any public money, from whatever source derived, shall not, by gift, donation, loan, contract, appropriation, or otherwise, be used, directly or indirectly, in aid or maintenance of any college, school, hospital, orphan house, or other institution, society or organization, of whatever kind, which is wholly or in part under the direction or control of any church or of any religious or sectarian denomination, society or organization."

The following is quoted from 42 Am. Jur. 767, Public Funds, § 66: "Under a constitutional prohibition that no appropriations shall be made for charitable purposes to any denominational or sectarian institution, it has been held that the department of welfare cannot contract, or expend funds appropriated for its use, for the treatment of indigent sick in sectarian hospitals. The fact that a sectarian hospital makes no profit from treatment of indigent sick does not prevent the operation of the constitutional provision that no appropriations shall be made for charitable purposes to any denominational or sectarian institution." See also, annotation, 142 A.L.R. 1083.

In the recent (1949) case of Kentucky Building Commissionv. Effron, 310 Ky. 355, 220 S.W.2d 836, the Court of Appeals of Kentucky had before it an act of the legislature of that state which was passed, like ours before us now, to take advantage of the federal act, 42 U.S.C.A. § 291 et seq., providing aid to States and their subdivisions in the construction and operation of hospitals and medical centers, whereby allocation of State tax funds to non-profit, non-publicly owned hospitals was authorized. It was held that church-founded and controlled hospitals might be included in the allocation if they were operated on a non-profit basis, open to the public of all creeds and not teaching religion or preferring any one sect over another. We are not prepared to go so far and we think the plain meaning of our constitution is that no public funds may be allocated in any manner to any hospital or health center which is, quoting, "wholly or in part under the direction or control of any church or of any religious or sectarian denomination, society or organization." Distinction is found in the varying provisions of the Kentucky and South Carolina constitutions, which will appear from a reading of the cited decision.

However, as indicated, no attempted or intended violation is alleged as in view and it may not be assumed that the governing board of any county will violate the constitution in the application of funds. If such situation should arise in the future in any county, the courts are open for appropriate preventive action.

The second point made by plaintiff has given more concern. It avers the unconstitutionality of item (h) which, quoted above, is an alternative appropriation for other public uses. We have seen that the seven preceding items all relate to public health, hospitals and health centers and payment or refund of the cost of construction, equipment and maintenance of them. It is argued by the defendants that item (h) constitutes a valid grant of state funds in aid of the counties for county purposes, to wit, any purposes within the constitutional sphere of the county. However, we are constrained to hold that the argument is untenable in view of the expressed public health purpose of the act which is evidenced by the numerous preceding provisions all closely knit to that end. The legislative purpose is not evident to make a blanket grant in aid of the counties as is regularly done in the general appropriation acts, to which we have adverted, and the appropriation here cannot fairly be taken to be such, but is one, as seen, for aid of the counties in solution of the problem of public health. Item (h) is foreign to the manifest purpose of the act, and for that reason invalid. If allowed to stand, it might cause defeat of the purpose in one or more counties.

Plaintiff particularly invokes an excerpt from sec. 23 of Art. IV of the constitution, constituting one sentence of a lengthy paragraph, as follows: "Bills appropriating money out of the Treasury shall specify the objects and purposes for which the same are made, and appropriate to them respectively their several amounts in distinct items and Sections." More will be later said concerning the section from which the quoted sentence is taken and the context will clarify the intent of it. This final item (h) is, as has been said, a departure from the scheme of the act and, in that setting, does not comport with the cited provision, which was undertaken in this instance to be followed by the legislature, and should, we think, be stricken as unconstitutional. This holding should not be construed to question the ordinary grants in unspecified aid to the counties contained in the State general appropriation acts. Plaintiff conceded the propriety of the latter which his counsel denominated in argument "kickbacks" to the counties.

Reason for the distinction exists in the fact that the now customary grants in aid to the counties are taken into account in the general State appropriation acts (see quotation from that of 1948, supra), and are also regularly anticipated in the several county supply acts which provide for the expenditure of the grants and other county funds in conformity with the constitutional plan of State appropriations upon which plaintiff relies. In the act before us the legislature set out to itemize. which was done to include seven kindred, specified public uses or purposes, but all of that careful handiwork would be undone by sustention of the alternative, incongruous appropriation for "other public use."

The Governor accurately appraised the legislation and said in his veto message, in part, as follows: "I am in entire agreement with the fundamental purpose of this legislation, which is to encourage the development of South Carolina's health program by furnishing State funds to assist the counties of the State in providing hospital and health center facilities, as a means of giving the people of every section of South Carolina an opportunity to obtain better medical and surgical care and treatment.

"Because of the importance of this health program to our people, I approve this Act with the exception of the following items, which I hereby veto: * * *"

Part of plaintiff's attack upon this item, which is based upon the foregoing quotation from Art. IV, sec. 23, of the constitution, is attempted to be also related by him to sec. 3 of Art. X which is: "No tax shall be levied except in pursuance of a law which shall distinctly state the object of the same; to which object the tax shall be applied." This provision was successfully invoked in the gasoline tax diversion cases of State v. Osborne, supra, but is irrelevant here because the funds appropriated are surplus funds. The point is elaborated in the outset observations, supra. To the authorities there cited to that point may be added the opinion of Justice McIver in State ex rel. Branch v. Leaphart, 11 S.C. 458, which involved State treasury surplus and the applicable constitution (of 1868) was the same in this respect as the present (1895). The taxes which resulted in the surplus now appropriated were levied for the support of the government and it was expressly held in Alderman v. Wells,85 S.C. 507, 67 S.E. 781, 785, 27 L.R.A., N.S., 864, 21 Ann. Cas. 193, that an act entitled "to raise revenue for the support of the state government * * *" is, quoting, "a distinct statement of the object to which the tax shall be applied." Thus plaintiff's contention of unconstitutionality of item (h) is not precisely in point but the substance of it is upheld for the reason and upon the ground which we have stated.

In view of the foregoing sustention of plaintiff's point II his point III may properly be disposed of almost as briefly as he states it. The contention is that the entire appropriation is invalid because it would constitute a use of State funds for county purposes. But hospitals and health centers, to which the appropriation will be limited under this decision, are a State purpose as well as a county purpose and there is no constitutional or other legal barrier of which we know that prevents the State from dealing with the problem through the agency of its governmental subdivisions, to wit, the counties. There is no comfort to plaintiff in this contention to be found in Smith v. Robertson,supra, 210 S.C. 99, 41 S.E.2d 631. It merely involved the power of the county to issue bonds and use the proceeds in aid of the establishment of a State hospital within the county, which has no material bearing upon the question which plaintiff would make. The argument is that the decision was in contemplation of a supposed principle that State funds must be used for State purposes and county funds for county purposes. However, that case expressly held that a hospital is a proper State purpose and likewise a proper county purpose as, we add, a health center is. A citizen and taxpayer is no less a citizen of the State because he happens to live in one county rather than another. Plaintiff fallaciously says in his brief: "The State builds and operates hospitals for the benefit of the people of the State, whereas a county builds and operates a hospital for the benefit of the people of that county." There is no such distinctive citizenship. The people of every county are the people of the State, and it is quite common knowledge that frequently people are patients in hospitals of other than their respective counties.

Equality of the burden of taxation is, we agree, a fundamental requirement of the constitution. Art. X. And further we recognize the existence of the principle that the rule of equality and uniformity may be violated by a discriminatory method of distribution of the proceeds of taxation. 51 Am. Jur. 219, 220, Taxation, sec. 165.Commonwealth v. Alden Coal Co., 251 Pa. 134, 96 A. 246, L.R.A. 1916 F., 154. However, this case does not present any such unfair distribution of the benefits of taxation as is condemned by the cited authorities. On the contrary, it comports with the rule stated with reference to the distribution of funds in aid of public education in Murph v.Landrum, 76 S.C. 21, 33, 56 S.E. 850, 854, as follows: "The idea of apportionment of the public school fund involves a division or distribution among counties or school districts according to some reasonable and uniform rule. It is true the General Assembly has discretion to determine the particular rule of apportionment, as, for example, whether it shall be according to population of school age in the respective counties. or according to the enrollment of pupils, or according to the average attendance, or according to some other rule having reasonable relation to the purpose to be subserved by a public school fund and operating throughout the state upon all counties or school districts falling within the reasonable rule or classification. (If) it is to be conceded that while a classification may be adopted so as to deny to one county and give to another the rule of apportionment must be based upon reasonable difference of condition or situation, as, for example, greater illiteracy or less ability to meet the education demands in one county than in another; but the rule of apportionment shall have uniform application to all within the designated class."

There arises the question whether the conclusion that item (h) is invalid vitiates the whole law or it subsists with that elimination. There are two independent and equally sound reasons for the decision we reach that the law survives the striking out of item (h). First, it falls within the general rule which was last applied in Gaud v. Walker, supra,214 S.C. 451, 53 S.E.2d 316, 329. A substantial and important part of the act involved in that case was stricken as unconstitutional and the remainder sustained with the comment, without citation of authority, as follows: "When this portion of the Act is eliminated, that which remains is capable of being executed in accordance with the legislative intent, wholly independent of that which has been rejected." Shortly prior to that decision we said in Moseley v. Welch,supra, 209 S.C. 19, 39 S.E.2d 133, 144, where a county school act was upheld after numerous provisions were condemned as unconstitutional, again deeming citation of authority unnecessary, that the remaining valid portions constituted, quoting, "a complete act in itself, capable of being executed independently of the unconstitutional parts without doing undue violence to the legislative intent." Neither of these decisions referred to the saving clause, much less relied upon it.

Many other similar decisions from this court may be found by reference to 30 S.E. Dig. 717 et seq. and pocket part supplement, Statutes, Par. 64. The subject is there captioned as follows: "Although a statute may be invalid or unconstitutional in part, the part that is valid will be sustained where it can be separated from that part which is void." Here the legislature itself has separated the item which we hold void and without it the Act is entirely complete and capable of being executed in accordance with the legislative intent. It will be noted from a reading of the decisions which have been cited and referred to that the rule is not dependent upon the modern legislative device of a saving clause, mentioned above. The rule originated long before such clause came into occasional use. 11 Am.Jur. 834 et seq., 846 et seq.

Indeed, the doctrine of partial invalidity very soon followed the recognition of the power of a court to void legislation for unconstitutionality at all. The establishment of this very delicate judicial power was gradual because of regard for the constitutional plan of equality and independence of the three separate departments of government, namely, the legislative, the executive and the judicial. The doctrine under discussion, to wit, partial invalidity, naturally and quickly followed because of the ideal of separation and independence of each of the several branches of government and the reluctance of the courts to encroach upon it. It is universally held that a court should proceed most carefully in the exercise of this, its highest, prerogative, and go no further than it deems absolutely necessary in declaring unconstitutional and void the considered action of the legislature which is composed of the people's popularly elected representatives; but it is justified in going that far, and no further, in order to uphold the constitution because it is the charter of government adopted by the people directly or through their representatives. Properly hesitant to proceed at all in such cases, a court will go no further than it feels impelled in order to uphold the constitution. Invalidation of a separable part of a legislative act without impairment of the remainder logically results. Illustrative cases from our courts which are much older than the invention of the saving clause are the following: State v. Carew, 13 Rich. 498, 91 Am. Dec. 245; and Wardlaw v. Buzzard, 15 Rich. 158, 94 Am. Dec. 148, where it was said: "It was not contended seriously that if one part of an Act was unconstitutional, it vitiated the whole * * *."

Plaintiff argues that the stated rule is not applicable to this Act because the fact that the legislature overrode the veto of item (h) shows that the body would not have passed the Act without inclusion of it and therefore sustention of the remainder would violate the legislative intent. We think this is an assumption without supporting fact or reason and no precedent is cited. On the contrary, in the case of appropriation acts the legislature is quite used to executive vetoes and support or defeat of a veto has never been considered of importance in determining the legislative intent concerning passage of such an act, regardless of the fate of the vetoes. Impotence of the argument is seen in the light of the consideration that the legislative intent is thwarted in part in every case of invalidation of a portion of an act for unconstitutionality, yet validity of the remainder is the rule rather than the exception as is seen by the results of the cases collected in 30 S.E. Dig. and supplement, cited supra.

The second consideration which we apply to the question whether the act is a valid law sans item (h) is likewise conclusive in itself of validity. It is the effect of the provisions of section 23 of Art. IV of the constitution. They are in much detail with reference to the participation of the Executive in legislation, his power of veto and how such shall be handled by the legislature. It is plain with respect to the authorization of the veto of any item or section of an appropriation bill, which that before us is. The pertinent portion of the constitution is here quoted from the cited section: "Bills appropriating money out of the Treasury shall specify the objects and purposes for which the same are made, and appropriate to them respectively their several amounts in distinct items and Sections. If the Governor shall not approve any one or more of the items or Sections contained in any Bill, but shall approve of the residue thereof, it shall become a law as to the residue in like manner as if he had signed it. The Governor shall then return the Bill with his objections to the items or Sections of the same not approved by him to the House in which the Bill originated, which House shall enter the objections at large upon its Journal and proceed to reconsider so much of said Bill as is not approved by the Governor. The same proceedings shall be had in both Houses in reconsidering the same as is provided in case of an entire Bill returned by the Governor with his objections; and if any item or Section of Said Bill not approved by the Governor shall be passed by two thirds of each House of the General Assembly, it shall become a part of said law notwithstanding the objections of the Governor."

If the residue of an appropriation bill is a valid act after veto of items or sections, and the veto or vetoes upheld, it should follow that the court is ordinarily bound to similarly uphold an appropriation act after voiding an item or section for unconstitutionality. This course seems to be dictated by the provisions of the constitution, to which of course the courts are subject. This difference between a bill or act appropriating money from the State treasury and other bills or acts was noted in the opinion in Doran v. Robertson, supra,203 S.C. 434, 443, 27 S.E.2d 714, 717. The Executive power of veto is ordinarily exercised only with respect to the whole of a bill or joint resolution but with reference to bills appropriating money from the State treasury the constitution expressly makes an exception to the rule and as to them the veto may go to any items or sections without impairing the residue. Surely the courts should generally follow suit and not invalidate an entire appropriation act because of the necessity to declare unconstitutional one or more items or sections of the act.

It was alleged in the complaint and suggested in oral argument that the questioned appropriation is invalid for lack of designated administrators in the counties to discreetly expend the funds, but no authority was cited and we know of none which would sustain the objection. Certainly an appropriation by the State to a county implies the right of expenditure in accord with the terms of the appropriation act, and they are rather detailed here. Every county has a governing board or commission, by whatever name called. Chapter 116, Civil Code of 1942, Vol. 2, p. 1042 et seq. It happens that the broad powers of the governing board of plaintiff's county were discussed in Ex parteGreenville County, 190 S.C. 188, 2 S.E.2d 47. Undoubtedly it is empowered to administer the funds which will be distributed to that county. We have just held that the legislature may vest a county governing board with power to levy taxes, make appropriations, incur indebtedness and issue bonds for county purposes. Gaud v. Walker, supra,214 S.C. 451, 53 S.E.2d 316. In comparison, the implied power to expend this appropriation under the terms of the act appears picayune. There will accrue to Greenville, the largest county, $94,000; to the smallest, $46,000. See apportionment in the House of Representatives, Act 602, 1942, 42 Stat. 1510. The sum appropriated when divided in almost any fashion among the forty-six counties will not yield a very large quotient.

It may be noted that the problems presented by this litigation are not apt to often recur. A sizable State surplus is something new under the sun in South Carolina and at the rate illustrated by this Act will not long survive.

Our judgment is that the act under attack, No. 344 of 1949, is valid except the appropriation item (h) which is stricken as unconstitutional; injunction is denied with respect to the other, valid provisions of the act, and the temporary restraining order heretofore issued is dissolved.

BAKER, C.J., and FISHBURNE, J., concur.

TAYLOR and OXNER, JJ., dissent.