Salmon River-Grande Ronde Highway Improvement Dist. v. Scott

IN BANC. Mandamus proceeding by the Salmon River-Grande Ronde Highway Improvement District, a municipal corporation of the state of Oregon, and others against Leslie M. Scott and others, commissioners of the Oregon State Highway Commission. From an order that a peremptory writ issue, defendants appeal.

AFFIRMED. This is a mandamus proceeding to compel the defendant commissioners of the Oregon State Highway Commission to pay to the plaintiff highway improvement district, in compliance with chapter 298, G.L.O. 1933, the sum of $3,150.29, as specified in said act. A demurrer to the alternative writ was overruled and, upon refusal of the defendants to plead further, *Page 122 the circuit court ordered and adjudged that a peremptory writ issue. Defendants appeal.

It is conceded that the decision of this case hinges upon the constitutionality of the act purporting to authorize the payment of this money. Chapter 298, G.L.O. 1933, is entitled "An Act Authorizing, empowering and directing the state highway commission to pay to the Salmon River-Grand Ronde highway improvement district certain sums of money in cooperation and as a contribution toward the building and construction of the Salmon River Cutoff highway between Valley Junction, in Polk county, and Otis, in Lincoln county, within said highway improvement district, and to pay to the Umpqua highway improvement district certain sums of money in cooperation and as a contribution toward the building and construction of the Drain-Reedsport highway between Drain and Reedsport in Douglas county, within said highway improvement district, and declaring an emergency." After reciting the organization of the plaintiff highway improvement district and that the Salmon River Cutoff highway is a public and permanent road constructed "for the use and benefit of all of the people of the State of Oregon" and has been taken over and added to the highway system of the state, section 1 of the act provides that:

"The state highway commission hereby is authorized, empowered and directed to pay to the Salmon River-Grand Ronde Highway Improvement district, in cooperation and as a contribution toward the building and construction of said Salmon River Cutoff highway, out of the state highway funds, the following amounts at the times stated, to wit:

March 15, 1933, $3,150.29

* * *" *Page 123

Additional payments are authorized to be made during the years 1933 to 1947, inclusive.

The state highway commissioners, being in charge of trust funds, have submitted the question as to whether this act contravenes Article XI, section 8 of the Oregon Constitution, which provides as follows:

"The state shall never assume the debts of any county, town, or other corporation whatever, unless such debts shall have been created to repel invasion, suppress insurrection, or defend the state in war."

It appears from the alternative writ that the Salmon River-Grande Ronde Highway Improvement district was duly organized in June, 1926, under and by virtue of chapter 399, G.L.O. 1921. It further appears from the writ that it was the original plan of the highway improvement district to build a road about 10 miles in length, in accordance with market road standards and specifications, and at an approximate cost of $35,000. However, the original plans and specifications were altered by the state highway commission and a road was constructed according to the standards and specifications of a state highway and at a much greater cost than was originally contemplated by the district. It is admitted that, as a result of such action on the part of the state highway commission, it was necessary for the highway improvement district to issue and sell general obligation bonds amounting to $125,000 for the purpose of raising funds to construct a portion of said highway. Thereafter, the highway improvement district raised by direct taxation the approximate sum of $90,000, in addition to the amount derived from sale of bonds, in order to complete the highway in accordance with the plans and specifications as approved by the highway commission. *Page 124 It is further averred that the Salmon River Cutoff highway has been almost entirely constructed by said highway improvement district under the supervision and direction of the Oregon state highway commission and through the cooperation of the United States Bureau of Public Roads and that the same has been taken over by the state highway commission as a part of the state highway system. It is further averred that there remains unpaid on this bond issue the sum of $120,000 with interest thereon at 5 1/4 per cent payable semiannually, and that the funds appropriated by virtue of chapter 298, G.L.O. 1933, will be used by the improvement district to pay these bonds as they mature.

It thus appears from a recital of the facts in the alternative writ that the money which the act directs the state highway commission to pay to the improvement district will be used for payment of principal and interest on the bonds, whereas it is shown from the face of the act that the state highway commission is directed to pay this money to the improvement district "in cooperation and as a contribution toward the building and construction of said Salmon River Cutoff highway". Can this court, in determining the constitutionality of the act, consider matters not appearing in the act and of which it can not take judicial notice? This question was answered in Kinney v. Astoriaet al., 108 Or. 514 (217 P. 840), wherein the court said:

"The judicial department must, when passing upon the nature of the purpose of a statute, base its decision upon the matters appearing upon the face of the statute, and possibly facts of which judicial notice may be taken may also be considered; but ordinarily a court can not make an independent inquiry as to facts which *Page 125 do not appear in the statute and are discoverable only outside of the provisions of the statute, and then, based upon such extraneous facts, say that the statute is unconstitutional: * * *."

To the same effect see Waterloo Woolen Mfg. Co. v. Shanahan,128 N.Y. 345 (28 N.E. 358, 14 L.R.A. 481). Also see Stevenson v.Colgan, 91 Cal. 649 (27 P. 1089, 25 Am. St. Rep. 230, 14 L.R.A. 459 and cases cited in L.R.A. note). If this well-established rule be followed and consideration be given only to those matters appearing upon the face of the act, it is clear that the statute does not offend the above constitutional provision as it contains no reference to any bonded indebtedness. It is certainly within the province of the legislature to direct that such funds be used for the construction of state highways. If the act is constitutional, it remains only for the state highway commission to comply therewith and to pay the money to the highway improvement district.

Let us assume, however, that we may take into consideration, in determining the constitutionality of the act, the admitted fact that the money paid will be used to retire these highway improvement bonds. Does it follow that there is an assumption of indebtedness by the state and that such constitutes a violation of the fundamental law? We fail to see wherein the act obligates the state to pay these bonds. The legal obligation to pay this bonded indebtedness still rests upon the highway improvement district. The state has not undertaken to adopt the liability of the district nor to put itself in place of the district. It is within the power of any future legislature to discontinue the payments provided in the act in question. Assumption of indebtedness, in the ordinary acceptation of the words, means *Page 126 for one person to bind himself to pay the debt incurred by another: Vol. 1, Words and Phrases, First Series, p. 589.

In Kinney v. Astoria, supra, this court had under consideration an act appropriating money to the city of Astoria to constitute a trust fund for the purpose of aiding the city to pay bonds. These bonds had been issued to provide funds for the construction of public property destroyed by fire in 1922. It was urged that this act violated Article XI, section 8, of the state Constitution prohibiting the state from assuming the debt of any county, town, or other corporation, but such contention was held untenable. In holding that there was no violation of the constitutional provision in question, the court said:

"We do not now decide whether Chapter 280 does in truth operate as a pro tanto assumption of a future debt, but if it be assumed for the purposes of the present discussion that the statute operates as a pro tanto assumption of a debt of the city it is not such a debt as is forbidden by Article XI, Section 8, of the state Constitution. In the final analysis the state is appropriating money to pay for a state interest."

So it may be said in the instant case that the state appropriated this money for a public purpose, namely, the construction of a state highway. The legislature no doubt felt that it was just and equitable to grant some relief to a highway improvement district unduly burdened by taxes on account of having constructed a highway which it was the primary duty and obligation of the state to construct.

In Stoppenback v. Multnomah County, 71 Or. 493 (142 P. 832), suit was instituted to enjoin Multnomah county from the issuance and sale of certain bonds, *Page 127 the proceeds of which were to be used in constructing an approach to and a bridge across the Columbia river, connecting the highway leading from Portland, Oregon, to Vancouver, Washington. Chapter 349, G.L.O. 1913, provided among other things for a refund by the state to Multnomah county of an amount equal to the annual interest on the bonds. It was urged that this act violated Article XI, section 8, of the Constitution of Oregon, in that it imposed upon the state an obligation which originally had been assumed by the county. The court held against such contention.

The Supreme Court of Illinois, in Mitchell v. Lowden,288 Ill. 327 (123 N.E. 566), had under consideration an act entitled "An act in relation to the construction by the state of Illinois of a statewide system of durable hard-surfaced roads upon public highways of the state and the provision of means for the payment of the cost thereof by an issue of bonds of the state of Illinois." Section 10 of the act provided that the department of public works and buildings could make use, in the construction of the roads, of any paved road of a proper, durable, hard-surfaced type which might have been constructed by the county and accepted by the state. In such case the state allotted to the county an amount of money equal to the share of the actual cost to the county of such paved road, and provided that the county, at its option, might use the money so allotted toward the payment of outstanding bonds. It was contended that this section violated the provision of the state constitution relative to the assumption of indebtedness. In disposing of this contention adversely to appellant, the court said:

"Section 10 merely provides for the payment by the state of the cost of a road of which it takes control as a part of the state-wide system. The state *Page 128 assumes no debt but pays in cash for what it purchases, and the county may use the money to construct or improve its other roads, or, at its option, in the payment of its bonds issued to improve its state-aid roads. The taxes of the inhabitants of the county for the construction of a state-wide system of roads will not be affected in any way. The county will merely be paid for the cost it has paid for the road taken."

Also see Baker v. Hickman County, 164 Tenn. 294 (47 S.W.2d 1090).

It is urged, but not by counsel in the case, that the act under consideration violates Article IV, section 23 (subdivision 7) of the Oregon Constitution, providing that the legislative assembly shall not pass any special or local laws "for laying, opening, and working on highways". We are not concerned with an appropriation for the building of a county road, as was involved in Sears v. Steel, 55 Or. 544 (107 P. 3), and Maxwell v.Tillamook County, 20 Or. 495 (26 P. 803). The appropriation in the instant case concerns a highway taken over by the state highway commission and over which it has complete jurisdiction. Relative to Sears v. Steel, supra, and Maxwell v. TillamookCounty, supra, this court, in Stoppenback v. Multnomah County, supra, said:

"It was formerly held that any act of the legislative assembly, appropriating money to be used in any county of this state, to build a public road was a special and local law for laying, working and opening highways, and therefore violative of Article IV, Section 23, subdivision 7, of the state Constitution: Maxwell v. Tillamook County, 20 Or. 295 (26 P. 803); Sears v. Steel, State Treasurer, 55 Or. 544 (107 P. 3). Since these cases were decided, and evidently to overturn the effect thereof, Article XI, Section 7 of the Constitution of this state has been amended so as to read: *Page 129

"`The legislative assembly shall not lend the credit of the state nor in any manner create any debt or liabilities which shall singly or in the aggregate with previous debts or liabilities exceed the sum of fifty thousand dollars, except in case of war or to repel invasion or suppress insurrection or to build and maintain permanent roads; and the legislative assembly shall not lend the credit of the state nor in any manner create any debt or liabilities to build and maintain permanent roads which shall singly or in the aggregate with previous debts or liabilities incurred for that purpose exceed 2 per cent of the assessed valuation of all the property in the state; and every contract of indebtedness entered into or assumed by or on behalf of the state in violation of the provisions of this section shall be void and of no effect': Gen. Laws Or. 1913, p. 8.

"The reason for invoking the provisions of Article IV, Section 23, subdivision 7, of the organic law to defeat legislative appropriations to build public roads need not now be mentioned, for they have been set forth in former opinions: Allen v. Hirsch,8 Or. 412, 425; Sears v. Steel, State Treasurer, 55 Or. 544, 552 (107 P. 3). Whatever ground may have been assigned for the conclusion thus reached is unimportant for the subdivision of the section of the Constitution referred to as a basis therefor was impliedly repealed by the amendment of Article XI, Section 7 of the Constitution."

The order of the lower court directing the issuance of the peremptory writ of mandamus is affirmed.

BEAN and KELLY, JJ., concur.