No. 8 5 - 4 4 7
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
JOHN L. HOLLOW,
Plaintiff
STATE OF MONTANA, MONTANA ECONOMIC DEVELOPMENT
BOARD, D. PATRICK McKITTRICK, YVONNE SNIDER,
JEREMIAH R. SULLIVAN, G. STEVEN BROWN, KAREN
R. LOCKE, JOHN C. ORTH, JACKSON L. SCHUTTE,
as members of said Montana Economic Development
Board, MONTANA STATE DEPARTMENT OF COMMERCE,
and KEITH COLBO, Director of said Department
of Commerce,
Defendants
ORIGINAL PROCEEDING:
COUNSEL OF RECORD:
For Plaintiff:
Hull & Sherlock; Jeffrey M. Sherlock,
Helena, Montana, Argued
For Defendants:
Dorsey & Whitney; Mae Nan Ellingson,
Great Falls, Montana, Argued
Submitted: March 12, 1 9 8 6
Decided: August 8, 1 9 8 6
Filed: 3 'YB6
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
In this case we determine and hold that the provisions
of § 17-6-308, MCA, which permit the use of in-state
investment fund monies ($ 17-6-306, MCA) derived from
taxation to guarantee loans or bonds of private individuals
or private entities either directly or through the capital
reserve account ( S 17-5-1515, MCA) or through the economic
development guaranty fund ( 17-5-1520, MCA) are
unconstitutional from the viewpoint of our state
constitution.
I.
This is an original proceeding in this Court, brought by
John L. Hollow, a citizen, resident of Helena, Montana, and
taxpayer, voter and property owner in this state. His action
is brought under the Uniform Declaratory Judgments Act (5
27-8-101, MCA, et seq.) for the purpose of obtaining from
this Court a declaration that certain provisions of S.B. 349,
Ch. 640, Laws of Montana (1985), enacted by the 49th
Legislative Assembly are invalid as offending the State
Constitution. We ordered responses from counsel representing
the defendants, which responses were served and filed.
Thereafter, oral argument was had before the Court on March
12, 1986 concerning the contentions raised by the complaint
and the responses.
There is no dispute between the parties as to whether
this Court has jurisdiction to proceed, but in an original
proceeding, we must, of course, find jurisdiction under our
granted powers. To be sure about it, the same facts and
factors that excited our acceptance of original jurisdiction
and caused us to find standing for the taxpayer in Grossman
v. State Department of Natural Resources (Mont. 1984), 682
P.2d 1319, 41 St.Rep. 804, are present in this case. Here
Hollow challenges the constitutionality of various aspects of
the in-state investment program; the issuance of bonds by the
state under the program is delayed because underwriters or
investors who would purchase bonds require a final court
resolution of the constitutional issues involved; the program
involves major segments of the state's population, and has
great impact upon its economy; requiring the case to proceed
first to the District Court and then here on appeal for a
final resolution will require a lapse of time almost
intolerable; and the proceedings here are designed to obtain
a final judgment on the validity of the bonds which might be
issued thereunder, so if valid, the bonds would be
marketable. As we stated in Grossman, the issues here are
fairly stated, fully explored and vigorously contended so
that we have a justiciable controversy suitable for final
resolution. Therefore we assume jurisdiction.
The Montana Economic Development Board was created by §
2-15-1805, MCA; its individual members at the time of the
complaint here are the defendants McKittrick, Snider,
Sullivan, Brown, Locke, Orth, and Schutte. The Board is
administratively attached to the Montana Department of
Commerce, an administrative agency of the state which is
directed by the defendant Colbo. The Board is purporting to
and intends to issue bonds within the limits prescribed by
S.B. 349 (the title of the legislation in the legislature; we
will refer as we proceed in this discussion to pertinent
parts of S.B. 349 as the said parts are now enumerated in the
code sections of the Montana Codes Annotated). The Board
adopted a resolution on August 8, 1985 declaring its
intention to issue the total principal amount of bonds
permitted under the legislation. However, the Board has been
advised by its bond counsel that there are several
constitutional issues raised by the legislation which have
not been specifically addressed by this Court in prior
decisions and that a final resolution of those issues would
be required by the investors to effectuate the sale of bonds
issued by the Board.
111.
A short statement of what S.B. 349 accomplished is that
the legislation authorized the Board to utilize the in-state
investment fund to guarantee loans or bonds otherwise
authorized to be made or issued by the Board under the
provisions of the Montana Economic Development Bond Act, the
Municipal Finance Consolidation Act, or the Montana Health
Facility Authority Act; and to make and agree to make loans
from the in-state investment fund to the capital reserve
account and guarantee funds which secure certain bonds issued
by the Board.
While that short statement may suffice to advise the
reader of the effect of the legislation, it does not begin to
lead the reader through the maze of statutory provisions
attending the activities of the Board. These we must explore
in some detail for background to our decision here.
The legislature adopted the "Montana Economic
Development Bond Act of 1983" (5 17-5-1501, MCA, et seq.) for
the purposes of promoting the general welfare of the people
of the state, to increase job opportunities, and to retain
existing jobs by making available funds for industrial,
commercial, agricultural and other uses for economic
development. The Board was given power to issue bonds and
notes for "projects" and "major projects" ( S 17-5-1506, MCA)
and to maintain necessary accounts ( S 17-5-1514, MCA) . One
of such accounts is the capital reserve account, of which
more later.
The Board was also given power to engage in a project
guarantee program (S 17-5-1519, MCA) and to guarantee
payments required by a loan, lease, or other credit
arrangement for any project funded as authorized.
Particularly with respect to its guarantee program, the Board
was also empowered to create an economic development
guarantee fund ( S 17-5-1520, MCA).
IV.
The capital reserve account established by the Board is
provided in 5 17-5-1515, MCA. It consists of funds
appropriated and made available by the state for the purposes
of the account, proceeds from the sale of notes or bonds to
the extent provided in the resolutions or indentures of the
Board authorizing their issuance and such other funds as may
be available from other sources.
Funds held in the capital reserve account must be used
solely for the payment of principal of or interest on bonds
secured by the account and must be maintained in a minimum
amount sufficient to meet obligations of principal, interest
and redemption premiums and debt service for such bonds and
notes.
No bonds issued by the Board, and funded through the
capital reserve account are a debt, liability or obligation
of the faith and credit of the sta.te, but are payable solely
from the revenue or assets of the Board ( S 17-5-1523, MCA).
Nonetheless, the governor must include in the executive
budget submitted to the legislature any sums required to
restore the capital reserve account to the sum of minimum
capital reserve requirements ( S 17-5-1516, MCA) . This latter
provision is denoted the "moral obligation" clause.
v.
The Board is further empowered to establish a project
guarantee program (S 17-5-1519, MCA). The Board may make
commitments to guarantee payments required by a loan, lease
or other credit arrangement for any project funded under the
Montana Economic Development Bond Act, or under industrial
development projects as outlined in § 90-5-101, MCA, et seq.
To fund this program, the Board is authorized to create an
economic guarantee fund ( S 17-5-1520, MCA) . It consists of
insurance fees, premiums and other revenue and assets as the
Board considers necessary to comply with any contract or
agreement entered into by the Board and of borrowings up to
$7.5 million from any available state funds.
Funds in the Economic Development Guarantee Fund must be
used to satisfy any claim resulting from a defaulted loan
lease or any other credit agreement. Once again the credit
of the state is not pledged with respect to this fund but the
governor is required to include in the executive budget
submitted to the legislature sums required to restore the
economic guarantee fund to the minimum reserve requirements,
which is an amount not in excess of the aggregate annual
payments due under the loans, leases, or other credit
agreements guaranteed by the Board ((SS 17-5-1520 (3 , (4 ,
MCA) .
The projects for which the funds produced by Economic
Development Bonds may be used are broadly defined. A "major
project" is one whose cost or appraised value exceeds
$800,000 (5 17-5-1503 (6), MCA) . Otherwise a "project" means,
under S 17-5-1503(7), MCA, those projects outlined in S
90-5-101 (6), MCA, which follow:
"Project" means any land; any building or other
improvement; and any other real or personal
properties deemed necessary in connection
therewith, whether or not now in existence, which
shall be suitable for use for commercial,
manufacturing, agricultural, or industrial
enterprises; recreation or tourist facilities;
local, state, and federal governmental facilities;
multifamily housing, hospitals, long-term care
facilities, or medical facilities; small-scale
hydroelectric production facilities with a capacity
of 50 megawatts or less; and any combination of
these projects.
VI.
The provisions of S.B. 349 that create constitutional
problems, as we view it, arise out of the use of the in-state
investment fund.
The 1972 Montana Constitution, in Art. VIII, 5 13,
directs that the state engage in a unified investment
program. Accordingly, 5 17-6-201, MCA, directs that public
funds be administered by the Board of Investments and the
Montana Economic Development Board. The power of the Board
of Economic Development, however, is limited to investment of
the in-state investment fund (5 17-6-201 (4), MCA) .
The Montana in-state investment fund is derived partly
from the taxation of the severance of coal in Montana. The
Montana in-state investment fund consists of (1) 25% of the
revenue deposited after June 30, 1983 into the permanent coal
tax trust fund established in S 17-6-203 (5), MCA; (2) the
principal payments on all investments made from the Montana
in-state investment fund; and, (3) 15% of the annual income
and earnings on the Montana in-state investment fund
appropriated to the coal severance permanent fund by §
17-5-704 (2), MCA. (Section 17-6-306, MCA. )
At this point, it is necessary to set out in full the
perimeters of 5 17-6-308, MCA, respecting authorized
investments of the in-state investment fund. The statute
follows:
(1) The Montana in-state investment fund must be
invested as authorized by rules adopted by the
board. For purposes of this section, "investment"
includes the guaranty of loans or bonds in
consideration for a fee, in lieu of the actual
acquisition of such loans or bonds.
(2) The board may use the in-state investment fund
to guarantee loans or bonds issued under the
provisions of 17-5-1501 through 17-5-1529, Title
17, chapter 5, part 16, or Title 90, chapter 7.
Each guaranty must be given in consideration of a
fee. The fees must be paid to the board. The
guaranty must provide directly or by separate
agreement that the board is fully subrogated to the
rights of the obligee under the loan or bond. The
board shall by rule establish the maximum ratio
between guaranty funds available and loans or bonds
to be guaranteed. The board may covenant in bond
issues to maintain such ratio. Unless bonds issued
to finance a project are secured by a common
capital reserve account and a common guaranty fund,
the maximum amount of the guaranty authorized by
this section may not exceed $3,000,000 with respect
to the bonds or loans to finance the project.
(3) The board may make loans from the in-state
investment fund to the capital reserve account
created pursuant to 17-5-1515 and the guaranty fund
created pursuant to 17-5-1520 to establish balances
or restore deficiencies therein. The board may
agree in connection with the issuance of bonds or
notes secured by such account or fund to make such
loans. Loans must be on such terms and conditions
as the board determines and must be repaid from
revenues of the board realized from the exercise of
its powers under 17-5-1501 through 17-5-1529,
subject to the prior pledge of the revenues to the
bonds and notes.
Under S.B. 349, the legislature in 1985 amended
subdivision (1) of 17-6-308, MCA, to provide that an
"investment" includes the guaranty of loans or bonds in
consideration of a fee, in lieu of the actual acquisition of
such loans or bonds. Such a provision did not exist prior to
the amendment to define an investment.
The concept that undertaking to guaranty the private
debt or obligation of another is an "investment," is
peculiar, to put it mildly. It is akin to co-signing a note
at the bank for a friend, which as Shakespeare noted, "oft
loses both itself and friend." The defendants contend that
guaranties on loans authorized under the statutes here are
nothing more than additional types of investments and that
the act of investing by guaranty does not create a debt on
the part of the state. They rely on an informal opinion of
the Montana Attorney General to that effect, and on
provisions of $ 17-6-308, MCA that the guaranty must be given
in consideration of a fee; that it must provide that the
Board is subrogated to the rights of the obligee; that there
must be a maximum ratio between guaranty funds available and
loans to be guarantied; that the maximum amount of the
guaranty may not exceed $3 million in any project unless the
bond is secured by a common guaranty fund and that the loans
must be repaid from the revenues of the Board.
An "investment" is defined in Webster's New Collegiate
Dictionary (1981 ed.) as "the outlay of money usually for
income or profit; a capital outlay." When an investment is
by guaranty, the outlay will come when the project has failed
or the income is lost. A guarantor agrees to answer for the
debt, default or miscarriage of another. Section 28-11-101,
MCA .
The provisions of $ 17-6-308, MCA, which permits the
Board to establish a maximum ratio between guaranty funds
available and loans to be guarantied have prompted the Board
to adopt by resolution an administrative rule, A.R.M. S
8.97.413, which reads in pertinent part:
(2) The total principal amount of loans guarantied
under A.R.M. 8.97.410 and bonds guarantied under
17-6-308(1), MCA, and of outstanding loans and
obligations to make loans to the Capital Reserve
Account and Guaranty Reserve Account shall not
exceed, as of the date of the guaranty, loan or
obligation, eight times the Guaranty and Loan Base.
(3) The Guaranty and Loan Base shall, at the time
of determination, be an amount equal to 25% of the
current market value of all assets of the board in
the Investment Fund.
Thus, the potential liability of the state is for the
full amount of all guaranties made by the Board which can be
as great as two times the amount of the in-state investment
fund. In a worst case scenario, guaranty holders may look to
the state for full satisfaction for when "the legislature
validly acts to establish a debt under Art. VIII, S 8, that
indebtedness becomes a state obligation extending over the
life of the indebtedness, and every succeeding legislative
assembly has an unavoidable duty to provide for it, in the
manner required by the authorizing law." Grossman, 682 P.2d
at 1332, 41 St.Rep. at 819-20.
The strictures which protect the credit of the state
with respect to bonds issued by the Board are not present
with respect to the use of the in-state investment funds
under S 17-6-308, MCA. With respect to bonds, S 17-5-1523,
MCA, provides that such obligations do not constitute a debt,
liability, obligation or pledge of the faith or credit of the
state. To the contrary, under S 17-6-308, MCA, the Board may
use the in-state investment fund to pay obligations of
guaranty of loans or bonds. In so doing, the Board would
apply that portion of the in-state investment fund that
derives from 25% of the coal severance tax revenues provided
in S 17-6-306, MCA. When such funds are used to satisfy
guaranties of private debts or obligations its use offends
Art. VIII, § 1 of the Montana Constitution which provides
taxes shall be levied by general laws for public purposes;
Art. V, S ll(5) that no appropriation shall be made for
industrial or benevolent purposes to any private individual
or private corporation not under the control of the state;
and Art. VIII, S 13 (1), providing for a unified investment
program, insofar as S 17-6-308, MCA allows guaranties of
private obligations as permissible investments. See
Veteran's Welfare Commission v. V.F.W. and D.A.V. (1963), 141
Mont. 501, 379 P.2d 107.
In like manner, the provisions of subdivision (3) of §
17-6-308, MCA, are constitutionally impermissible. Under
that subdivision, the Board may make loans from the in-state
investment funds to the capital reserve account we have
described above and the economic guaranty fund also described
above to establish balances or restore deficiencies therein.
The loans are repayable from revenues of the Board realized
from the exercise of its power and the issuance of bonds but
subject to the prior pledge of the revenues to the bonds and
the notes.
As we noted, under § 17-5-1523, MCA, the credit of the
state is not pledged to secure the bonds issued by the Board.
Section 17-6-308(3), MCA, sidesteps that provision by
providing that the Board may agree in connection with the
issuance of bonds to make loans out of the in-state
investment fund to the capital reserve account and the
economic guaranty fund. The effect is, without the further
action of the legislature, that tax monies derived from the
coal severance tax will be loaned from the in-state
investment fund and used to secure the obligations of the
bonds. Such a procedure impermissibly offends the same
provisions of the constitution we have referred to above.
This Court is aware that in Huber v. Groff (1976), 171
Mont. 442, 558 P.2d 1124, we held that the credit of the
state was not pledged under the provisions of the Montana
Housing Act of 1975. That act provides that the Board of
Housing may issue bonds for the purchase of loans used for
housing from banks and other financial institutions. We were
careful to point out in Huber, however, that the act
specifically said that the credit of the state was not
pledged as security of the bonds so issued, even though there
was a "moral commitment" much as we have at the case at bar,
that the governor would request the legislature to
appropriate necessary funds to supplement the reserve
accounts. That avenue of redress for deficiencies, if any
exist, in the capital reserve account and the economic
development bond fund is still open under this decision.
What we do not and cannot condone is the direct use of tax
monies by legislative provision which in effect directly
pledges the credit of the state to secure the bonds involved
in this case.
VI .
There are a number of other issues raised by Hollow in
his complaint, but what we have said foregoing is sufficient
to demonstrate that the use of the in-state investment fund
as provided in S 17-6-308, MCA, is constitutionally
impermissible. We will not undertake to discuss the other
issues raised by Hollow.
This opinion shall be and constitute a declaratory
judgment in favor of Hollow to the effect that the use of
in-state investment funds to guaranty loans or to make loans
to the capital reserve account and the economic guaranty fund
as provided in B 17-6-308, MCA, is invalid under the Montana
Constitution. This opinion, without the filing of further
instruments or orders shall be and constitute such a
declaratory judgment.
Except for activities related to the in-state
investment fund, nothing in this opinion affects the validity
of state actions through the capital investment fund or the
economic development guaranty fund. Under Huber, supra, the
"moral commitment" statutes of the latter two funds do not
constitute a pledge of the state's credit to underpin the
funds.
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Justice &i"
We concur:
Chief Justice
Justices
Mr. Justice Frank B. Morrison, Jr. dissents as follows:
I respectfully dissent.
I find no real problem with the procedural and factual
discussion found in the majority opinion. My first
disagreement begins with whether a guarantee is an investment
or a debt.
In holding a guarantee to be a debt, the majority relies
on Webster s definition of "investment" as being "the outlay
of money usually for income or profit; capital outlay." Some
reliance is also placed upon 5 28-11-101, MCA, which provides
a guarantor agrees to answer for the debt of another.
The majority fails to discuss the October 18, 1984,
informal opinion of the Attorney General determining that a
guarantee of a bond is a security and the purchase of a
security is an investment; therefore, the guarantee of a bond
is an investment. The opinion states:
Neither "guarantee" nor "investment" is defined in
the Montana Code. However, Black's Law Dictionary
741 (5th Ed. 1979), defines "investment" as "to
purchase securities of a more or less permanent
nature ... Security is defined by the Montana
Code as the guarantee of a bond. Section
30-10-103 (11), MCA.
The majority opinion also ignores the obvious - there is
less risk associated with a guarantee of a bond than with the
issuance of a bond. The State may collect from a solvent
principal any money expended by the State as guarantor.
Furthermore, according to S 17-6-308 (2), MCA, the guarantee
must provide that the board is fully subrogated to the rights
of the obligee under the bond. A bond is not a debt under
5 17-5-1523, MCA. This was affirmed in Huber v. Groff
(1976), 171 Mont. 442, 558 P.2d 1124. If a bond is not a
debt surely a guarantee of a bond is not a debt.
Finally, a guarantee is a contingent liability. Doorly
v. Butte and Western Silver Mines (1924), 71 Mont. 529, 533,
230 P. 779, 780. The guarantee depends on a future uncertain
event, the failure of the principal to pay the debt.
Contingent liabilities are not debts. In Hanson v. City of
Havre, et al., (1941), 112 Mont. 207, 212, 114 ~ . 2 d1053,
1056, this Court said:
The possibility that part of the bonds may have to
be paid with monies obtained from the revolving
fund which in turn is created by a tax levy on the
property of the city does not create a city debt
but is merely an arrangement whereby the city,
through the revolving funds, loans money to the
district, and for which it holds security in the
form of a lien.
The majority opinion finds the statutory scheme here at
issue to be unconstitutional because:
1) It uses coal tax monies for private purposes,
as opposed to public purposes;
2) It gives private individuals appropriations for
industrial and benevolent purposes; and
3) It violates the Unified Investment program by
allowing guaranties of private obligations.
This sweeping holding by the majority opinion is not
supported by authority and runs contrary to well established
law in this state. In Grossman v. State of Montana (1984),
682 P.2d 1319, we said:
The constitutional provision is not violated
because the legislature may in making
appropriations or other provisions in some way
benefit incidentally various private individuals,
associations or corporations not under the control
of the state. As long as the provisions relating
to the expenditures of the funds derived from the
proceeds of the bonds are under the control of the
state, the constitutional mandate [No
appropriations shall be made for religious,
charitable, industrial, educational, or benevolent
purposes to any private individual, private
association, or private corporation not under
control of the State] is satisfied.
Likewise, in Huber, supra, the appropriations were found
to go to a public purpose despite benefit to private
homeowners, because the Housing Board, which controlled the
money, was a public corporation, not a private corporation.
We said: "It received all its powers directly from the
legislature and its duties and responsibilities are set out
clearly by the statute which created it. " 171 Mont. at 457.
The same can be sa.id about the Montana Economic Development
Board in this instance. Therefore, under relevant precedent,
the purpose of the legislation is public, not private.
Likewise, the coal tax money is going to a public
purpose. Our language in Grossman is instructive. We said:
The question of whether a particular purpose for
which taxes may be levied and collected is a public
purpose is for the legislature in the first
instance, and the courts will indulge every
reasonable presumption in favor of the legislative
decision in this respect. Lewis and Clark County
v. Industrial Accident Board (1916), 52 Mont. 6,
155 P. 268.
Grossman, 41 St.Rep. at 822.
Unfortunately, the effect of the majority opinion casts
serious doubt on whether any different program could pass
constitutional muster.
The plaintiff contends that S.B. 349 is not a valid
appropriation in that it does not specify a fixed amount of
loans or guarantees that may be made by the Board and
therefore does not comply with Article VIII, Section 14, of
the 1972 Montana Consitution which provides:
Except for interest on the public debt, no money
shall be paid out of the treasury unless upon an
appropriation made by law and a warrant drawn by
the proper official in pursuance thereof.
Defendant argues that an appropriation by the
legislature is not required to validly authorize the In-State
Investment Fund to be invested in a guarantee or loan as
contemplated by S.B. 349 in that an investment is neither a
debt nor an expenditure.
Twenty-five percent of the coal severance tax trust fund
constituting the in-state investment fund has been
appropriated by act of the legislature. The defendant argues
that the investment thereof, as opposed to the expenditure of
the principal, does not require an appropriation. I agree.
Just as a legislative appropriation is not required each time
the Board of Investments invests each of the funds subject to
its control under the Unified Investment Progam, neither
should one be required each time the Montana Economic
Development Board purchases a loan or issues its guarantee.
The majority opinion fails to discuss the important
constitutional issue of whether the legislature
unconstitutionally delegated its authority to the Board in
allowing it to set the limits of liability. The test is
found in Douglas v. Judge (1977), 174 Mont. 32, 39, 568 P.2d
530, where this Court said:
... a statute is complete and validly delegates
administrative authority when nothing with respect
to a determination of what is the law is left to
the administrative agency, and its provisions are
sufficiently clear, definite, and certain to enable
the agency to know its rights and obligation.
Here the Board has been given specific guidelines for
the investment of the in-state investment fund. Investments
from the fund should:
a) diversify, strengthen and stabilize the Montana
economy,
b1 increase Montana employment and business
opportunities,
c) maintain a clean and healthful environment, and
d) give preference to business investments that
i) are for locally owned enterprised that are
either expanding or establishing new operations;
ii) provide jobs that will be substantially filled
by Montana residents;
iii) encourage or benefit the processing,
refining, marketing and innovative use and
promotion of Montana's agricultural products; or
iv) benefit small and medium-sized businesses.
Section 17-6-309, MCA.
With respect to amounts, the Legislature has prohibited
the use of the fund for:
a) direct loans;
b) investments that would result in one business
enterprise receiving a benefit from or incurring a
debt to the fund in excess of 10% of the prior
fiscal year's coal severance tax revenue deposited
in the fund; and
c) participation in loans to an extent greater
that 80% of the loan.
Sections 17-6-310 through 312, MCA.
I believe the guidelines are sufficiently definite and
the delegation is lawful. In Grossman v. State of Montana,
supra, we said:
Here the enactments of the legislature are complete
and delegate to the Board of Natural Resources and
Conservation and the Department of Natural
Resources and Conservation administrative authority
which is sufficiently clear, definite and certain
to enable the agencies to know their respective
rights and obligations. Huber v. Groff (19761, 171
Mont. 442, 558 P.2d 1124; Montana Milk Control
Board v. Rehberg (1962), 141 Mont. 149, 376 P.2d
508. Determinations of economic and environmental
feasibility are far more appropriate in the
administrative sector than in the legislative
branch. There is nothing improper,
constitutionally or otherwise, in the legislature
making its authorizations contingent upon
administrative decisions properly made in the
executive side of the state government.
I find Grossman to be controlling here. We should
determine that the delegation of authority is constitutional.
The plaintiff had the burden of persuasion in this case.
He must show beyond a reasonable doubt that S.B. 349 violates
some specific requirement of the Montana Constitution. If
the constitutionality of an act is doubtful the court should
resolve all doubts in favor of the validity of the act.
Tipton v. Erickson (1933), 93 Mont. 446, 19 P.2d 227. The
only troublesome feature I find is administrative rule,
A.R.M. 5 8.97.413. After quoting the administrative rule the
majority opinion states that:
The potential liability of the state is for the
full amount of all guaranties made by the Board
which can be as great as two times the amount of
the in-state investment fund.
The administrative rule can not invalidate the statutory
scheme. The heavy presumption in favor of constitutionality
has not been overcome by plaintiffs. If the majority wished
to find. the administrative rule to be an improper
construction of the statutes it should have done so but
should have preserved the integrity of the statutes
themselves.
Under previous decisions of this Court herein cited the
basic statutory framework passes constitutional muster. I
would issue a declaratory judgment upholding the statutory
scheme.