Municipality of Metropolitan Seattle v. O'Brien

Rosellini, J.

(dissenting in part) — I cannot agree with the majority that the taxes levied and collected by the municipalities and paid into the state treasury, pursuant to statute, constitute a special “proprietary” fund not subject to the power of appropriation. The municipalities are creatures of the legislature, and their power to levy this tax was derived therefrom. The power of the legislature over political subdivisions is plenary unless restrained by provisions of the constitution. State ex rel. Barlow v. Kinnear, 70 Wn.2d 482, 423 P.2d 937 (1967). Thus the legislature, which conferred the power to levy, collect and use this tax, may take away that power so long as constitutional provisions are not violated.

The taxes collected are not private funds, as were the retirement payments held in trust by the State in the case of State ex rel. State Employees’ Retirement Bd. v. Yelle, 31 Wn.2d 87, 195 P.2d 646 (1948), relied upon by the majority. These taxes are public property, and they are moneys in the state treasury, and therefore subject to the provisions of Const, art. 8, § 4 (amendment 11). That provision is not limited in its terms to moneys belonging to the state, as the majority assumes, but rather embraces all money in the treasury. The “special fund” doctrine has carved an exception when private parties claim ownership of funds in the treasury, but I can conceive no sound reason to expand the doctrine to include moneys belonging to or claimed by subdivisions of the State. Such an extension may soon lead to *355judicial control of the public funds. It was the manifest intent of the framers of the constitution that the legislature should control the treasury.

In the case of State ex rel. Toll Bridge Authority v. Yelle, 61 Wn.2d 28, 377 P.2d 466 (1962), the legislature had created a special fund, into which the proceeds of an excise tax on motor vehicle fuels were to be paid. These funds were to be used for the payment and servicing of bonds issued to finance the building of a toll bridge. The legislative act in that case served a purpose very similar to that which was served in this case by the legislation which was designed to facilitate the acquisition and operation of public transportation systems. It was there contended that the act in question violated article 8, section 4 (amendment 11) because it obligated the State beyond the biennium and thus constituted an appropriation extending beyond the time provided in the constitution.

This court held that the statute in question did not appropriate moneys beyond the biennium but rather dedicated the fund to a specific use, the payment of its contractual obligation to those who should purchase bonds. It was agreed by counsel that each succeeding legislature would be required to enact the necessary appropriation measure, if the bonds were to be serviced.

If the legislation in that case was subject to the provisions of article 8, section 4 (amendment 11), the statutes under consideration in this case are also subject to those provisions. There is no material difference between them. While the municipalities levy and collect the taxes, this is done pursuant to and subject to legislative authority and the funds are dedicated to the municipal purpose by the legislature, which expressly provided that they should be paid into the state treasury. Once there, they were subject to the requirements of article 8, section 4 (amendment 11).

We are not here called upon to decide whether, in failing to appropriate the funds which it had previously dedicated, the legislature breached a contractual commitment to the bondholders, and I will voice no opinion upon that subject. *356The contentions in this case are that no appropriation was necessary (a contention which the authorities fall short of supporting) and that the legislature could not, or did not, appropriate the funds in question for another purpose.

Upon the question whether the legislature validly appropriated the funds in question for other uses, I am in agreement with the contention of the petitioners that the appropriations act, to the extent that it altered the use to which the fund was dedicated in RCW 35.58.279, was in violation of Const, art. 2, § 37, which provides:

No act shall ever be revised or amended by mere reference to its title, but the act revised or the section amended shall be set forth at full length.

State ex rel. Toll Bridge Authority v. Yelle, 54 Wn.2d 545, 342 P.2d 588 (1959); State ex rel. Trenholm v. Yelle, 174 Wash. 547, 25 P.2d 569 (1933). To that extent the act was of no effect.

If the attempted appropriation was invalid under article 2, section 37, it is unnecessary to consider whether it also violated the contracts clauses of the state and federal constitutions, insofar as rights of existing bondholders are involved. However, since the majority opinion deals with this question and since I am not in agreement with all that is said with respect to it, I believe it will not be inappropriate to set forth briefly my views upon that subject.

I agree with the majority that, insofar as Laws of 1975, 2d Ex. Sess., chs. 2 and 7, appropriated to another use funds of a municipality which had sold bonds to purchasers who relied upon the statutory dedication of the tax proceeds, it impaired the security and therefore the obligation of the contracts entered into between the municipality and the bondholders. The statutory provisions whereby these taxes were to be levied, collected, held and used for the payment of the bond obligations as well as the operation of the transportation systems, was a vital part of the contract and one which the legislature could not constitutionally abrogate by diverting the funds to another purpose. While it is true that the legislature appropriated an amount sufficient *357to service the bonds, to be used for that purpose, it had no right to appropriate any of these funds for other purposes, so long as bonds were outstanding and unpaid. Von Hoffman v. Quincy, 71 U.S. (4 Wall.) 535, 18 L. Ed. 403 (1866).

I am not willing to join the majority in its implication that every act of the legislature which indirectly, as well as directly, affects the value of a contract, violates the contract’s clause. There may be many kinds of legislation which incidentally affect the value of private contracts but which are enacted for a legitimate public purpose within the police power and are not invalid, because of their effect upon contracts. Examples which immediately come to mind are zoning laws and laws enacted for the protection of the environment.

Also, I do not subscribe to the notion, conceivably implied in Ruano v. Spellman, 81 Wn.2d 820, 505 P.2d 447 (1973), and the majority opinion in this case, that a governmental body may not call in its bonds and pay them off according to their terms and thereafter abandon the project for the financing of which they were issued. As the United States Supreme Court indicated in the Quincy case, the State’s obligation continues only so long as there are bonds outstanding. That question is not before the court in this case, of course, since none of the municipalities seeks to abandon its public transportation system; but I think the court should make it clear that it does not intend to foreclose the question.

A conclusion that the legislature’s attempt to appropriate the funds in question to another purpose was unconstitutional does not answer the question: Can the legislature be compelled to appropriate them to the purpose to which they were dedicated? If there is authority for the proposition that the court can order the legislature to appropriate money, the petitioners have not cited it, and I should be very much surprised if such authority can be found. The petitioners, I must conclude, however reluctantly, have failed to sustain their burden of showing that the court should order the funds to be paid over to the municipalities.

*358In my opinion, the petitioners are entitled to an order restraining the State Treasurer from paying any of the funds deposited in the treasury by the municipalities, pursuant to the statutes authorizing them to levy and collect motor vehicle excise taxes, to any party other than these municipalities. They are not entitled to a writ requiring the payment to them of these funds, no appropriation having been made.

Hunter, J., concurs with Rosellini, J.