I cannot concur in the conclusion reached by my learned associates that section *Page 218 2 of Article XIII of the Constitution requires a submission of the Act before us to a vote of the people, nor in the method of treatment by which they have arrived at that conclusion.
To my mind the basic error manifest in the opinion is in brushing aside the principal question presented, i.e.: Does the "debt" which the Act admittedly authorizes to be created and which will exceed $100,000, fall within the purview of section 2 of Article XIII of the Constitution, and considering only the term "liability" as though independent of the term "debt," as employed in the prohibition?
As the broad term "liability" includes "debt," and the Act provides for the creation of a debt, clearly it also provides for the creation of a liability, but as I read the constitutional prohibition in the light of its context and coexisting provisions on the same subject, no further liability is authorized by the Act than the admittedly authorized debt.
Definitions of the term "liability" are almost as numerous as the cases in which the term is considered (see 36 C.J. 1050), but in construing a constitutional provision, the court must first ascertain its purpose and intent, "taking in its obvious sense the language used" (State ex rel. Gleason v. Stewart,57 Mont. 397, 188 P. 904), and then, unless words are obviously used in a technical sense, give to the words employed their usual construction in conformity with the purpose and intent of the provision in which they are found. (Northern Pacific Ry. Co. v.Sanders County, 66 Mont. 608, 214 P. 596; State ex rel.Gillett v. Cronin, 41 Mont. 293, 109 P. 144; Scheffer v.Chicago etc. Ry. Co., 53 Mont. 302, 163 P. 565; see, also, 17 C.J. 1371.)
Technically, of course, the term "liability" is broad enough to include the duty imposed upon the state officers to carry out the provisions of the trust imposed upon them by the Act, but was the term employed in the constitutional prohibition in that sense? "Narrow and technical reasoning is misplaced when it is brought to bear upon an instrument framed by the people themselves, for themselves, and designed as a chart upon *Page 219 which every man, learned or unlearned, may be able to trace the leading principles of government." (1 Cooley's Constitutional Limitations, 132.)
The "context" of the article in which the prohibition applied is found is "Public Indebtedness," and the purpose of such a prohibition in a Constitution is to prevent the overburdening of the people by taxation. (Shields v. City of Loveland,74 Colo. 27, 218 P. 913.) The meaning of the term "liability" as here used must be determined in the light of such context and intent. Used as a check upon the creation of a "public indebtedness" the applicable definition of "liability is the condition of being actually or potentially subject to an obligation, and is more frequently used to denote the latter than the former." (State v. Sheets, 26 Utah, 105, 72 P. 334,335; Cochran v. United States, 157 U.S. 286, 39 L. Ed. 704,15 Sup. Ct. Rep. 628.)
Speaking for this court, Mr. Justice Galen has correctly construed the two terms here under consideration, as follows: "In construing our constitutional provision applicable, we have under consideration the words `debt or liability' and, in our view, the prohibition intended by these words is the creation of a debt or obligation of the state * * *; the words `debt' and `liability' as used in this connection are not employed in a technical sense, but have specific reference to the basic warrant and legislative authority on which a state contract must rest and on which alone a public debt must find sanction in order to obligate the state to pay." (State ex rel. Rankin v. State Board of Examiners,59 Mont. 557, 197 P. 988, 992.) Clearly, then, the terms "debt" and "liability" were not used independently in the last sentence of section 2, Article XIII, quoted in the opinion, but were used to prohibit the creation of either an actual obligation of the state (a debt) or a potential obligation (a liability which may attach subsequently, though not presently imposed) affecting the public funds. The two forms of obligation are so clearly allied in the context of the constitutional provision that, if the debt mentioned does *Page 220 not come within the purview of the prohibition, neither does the "liability."
As I read the prohibition considered, and as I think the "man on the street" would read it, the legislature is prohibited from either providing for the creation of a debt, which the state must in any event pay out of the public funds of the state, or a liability on the part of the state to pay, on failure of other means provided, or other contingency, "in excess of $100,000," unless the Act is first submitted to a vote of the people. As the Act under consideration does not pledge the faith and credit of the state but provides for the payment of interest and principal of the debentures solely from the "Highway Fund," there is no contingent liability imposed upon the state, and the Act provides for, and authorizes only, the creation of a debt." Should the source of repayment provided for in the Act fail, the holders of the debentures sold "will be limited in their rights to the requirement of the proper officers to perform their duties as prescribed by the statutes." (Allen v. Grimes, 9 Wash. 424,37 P. 662, quoted with approval in State ex rel. Bickford v.Cook, 17 Mont. 529, 43 P. 928, 930.)
The Bickford Case, followed by State ex rel. Armington v.Wright, 17 Mont. 565, 44 P. 89, clearly points out that the constitutional prohibitions respecting public moneys, and the appropriation thereof have no application to a debt created (or a liability incurred) which is to be repaid from a special fund, not carved from the general fund of the state. "The provisions of the Constitution * * * restricting the powers of the legislature to create debts within certain limitations, do not obtain."
What is said in the majority opinion with respect to the fund considered in the Bickford Case, does not apply to the fund under consideration in the Armington Case, where the same conclusion was reached. These cases are in line with the holding generally that where money is borrowed, with the provision of repayment from special funds, such as special assessments for street improvements, construction and maintenance of piers, *Page 221 canals and the like, in special districts (Hamilton v. PierDistrict, 120 Me. 15, 112 A. 836; Kasch v. Miller,104 Ohio St. 281, 135 N.E. 813; Fox v. City of Bicknell,193 Ind. 537, 141 N.E. 222; Gross v. City of Bowdle, 44 S.D. 132,182 N.W. 629; City of Valdosta v. Harris, 156 Ga. 490,119 S.E. 625); from the income of waterworks and electric light plants (19 R.C.L. 985; Shelton v. City of Los Angeles, 206 Cal. 544,275 P. 421; Winston v. Spokane, 12 Wash. 524, 41 P. 888;Shields v. City of Loveland, 74 Colo. 27, 218 P. 913); from rentals of state-owned railway (Wright v. Hardwick,152 Ga. 302, 109 S.E. 903); from the sale of state-owned lands (Seattle L.W. Waterway Co. v. Seattle Dock Co., 35 Wash. 503,77 P. 845), constitutional provisions such as those under consideration have no application.
It is, however, asserted that the gasoline tax receipts are in fact a part of the general fund of the state, or could be made such by subsequent action of the legislature, and are a source of revenue to the state which must be taken into consideration in making appropriations and, therefore, the rule does not apply. It is true that when the legislature first determined to impose a gasoline tax and throughout subsequent legislation, until the present highway policy was adopted, not all of the receipts from the tax were assigned to the Highway Fund; and it is also true that in State ex rel. Toomey v. State Board, 74 Mont. 1,238 P. 316, 321, we said that in determining the available amount for "appropriation" the legislature may take into consideration "the total income of the government, derived from all sources," as stated by counsel, but the statement is followed by the significant qualification "subject to be applied to public purposes." A special fund devoted to a special purpose is not "subject to be applied to public purposes," in the sense of general appropriation, for it does not swell the general fund of the state and, without change in the law, cannot be appropriated for any other purpose.
Answering the suggestion that the fund here considered is not such a special fund as considered in the cases cited, because *Page 222 it was once, in part, diverted to the general fund and might again be so used, in whole or in part, I quote from People v.Murray, 149 N.Y. 367, 32 L.R.A. 344, 44 N.E. 146: "We assent to the claim of counsel for the appellant that the cities and towns * * * never acquired any irrevocable right to receive the license fees collected. We do not doubt that it would have been competent for the legislature, from the first, to have required all license fees to be paid into the state treasury for general state purposes, or at any time to have changed the practice which was adopted, * * *, but the legislative declaration in the Act of 1896 * * * is in accordance with the uninterrupted understanding that the legislature may devote excise moneys to the uses of cities and towns in which they are collected * * *, and it is now too late to question this construction of the Constitution."
Here is the key to the situation: The moneys diverted, now wholly, to the Highway Fund are the receipts from excise taxes imposed for a specific purpose. On this point it is said inPeople v. Murray, above, that the constitutional prohibition against "appropriation" of "public moneys" without a two-thirds vote of the legislature — in principle the same as the prohibition considered here — has to do only with "public moneys of the state as contradistinguished from public revenues levied for local purposes by cities * * * under state authority, or moneys which by a long course of legislation, as in the case of excise moneys, have been treated as standing in the same situation." The purpose of the constitutional prohibitions is the protection of those funds in which the general public has a beneficial interest. (B.F. Sturtevant Co., v. IndustrialCommission, 186 Wis. 10, 202 N.W. 324.) The gasoline tax is "an excise or occupational tax" although imposed for revenue purposes. (State v. Sunburst Refining Co., 73 Mont. 68,235 P. 428.)
As clearly pointed out early in the history of the state, our Constitution contemplates two systems of raising funds for the conduct of the state affairs, "(1) the taxing system, and (2) *Page 223 the license system." (State v. Camp Sing, 18 Mont. 128, 56 Am. St. Rep. 551, 32 L.R.A. 635, 44 P. 516, 517.) This case was decided seven years after the adoption of the Constitution, by a court two members of which had taken part in the constitutional convention of 1884, and the prevailing argument was presented by members of the convention which framed the Constitution under consideration, so that the decision should accurately reflect the intention of the framers of the Constitution. The court there said, "If the legislature sees fit, all revenues may be raised by taxation. Taxation is the security for the debts and expenses. The license system is a further provision. As exigencies arise, or do not arise, or cease to exist the license system may be, or need not be, resorted to. That system is elastic and pliable, and can be suited to circumstances." It is there held, after mature deliberation and on logical reasoning, that the limitations on the legislature imposed by Article XII of the Constitution, apply to the taxing system, not to the license system, which is "mentioned by name in only one place in the Constitution. That is the last sentence of section 1, which says: `The legislative assembly may also impose a license tax.'"
Here the legislative assembly was not dealing with revenue derived from the taxation system, nor even with the ordinary revenue derived from the application of the "license system," but with a properly designated "special fund" brought into being for a special purpose, the relation of purpose and fund being marked.
The subject of adequate highways in the state has long been a problem which has increased by reason of new modes of transportation, out of all proportion to the increase in the population and wealth of the state; with changed conditions imperatively calling for better roads and more of them, the taxation system of financing their construction and maintenance becomes wholly inadequate, and, therefore, the legislature fell back upon the licensing power and seized upon a source of revenue for this purpose which lays the burden upon those who directly *Page 224 benefit by the work done, and relieves the public at large of a heavy duty theretofore imposed in a great measure upon it. The fund thus created — not by a division of, or a diversion from, the general fund of the state, but by an impost upon those who derive benefit, business and pleasure from the use of the fund — is as clearly and directly connected with the highway program, to the exclusion of other state activities, as are special improvement assessments to the improvements made, or the revenues from municipally owned water and electric light systems to the construction of such works, and becomes a special fund in the same sense as the funds discussed in the Bickford andArmington Cases, above.
It is stated in the majority opinion that the people have an interest in determining how their money shall be spent. With this I agree, but that interest is confined, in so far as an expression thereof by their vote is concerned, to those laws passed by their representatives, the legislature, as have to do with the disbursement of the general fund of the state. The submission of the Act before us to a vote of the people calls only for an expression of their opinion on an administrative policy, for which submission there is no provision in the Constitution. Attention is called to the fact that the people have already expressed their approval of the diversion of the whole of the gasoline tax to the Highway Fund. (Initiative Measure 31, Laws of 1927, p. 604.)
In the Iowa and Kentucky cases, mentioned in the majority opinion, the fatal defect in similar Acts considered was that the legislature attempted to pledge the faith and credit of the state to the repayment of the loans, in the event the special fund failed. The majority opinion of the supreme court of South Carolina upheld a like Act, in spite of such a pledge, and the dissenting opinion of the Chief Justice of that court clearly indicates that, had it not been for this fact and had he been convinced that the gasoline tax paid into the Highway Fund was a special fund, he would have joined in the majority opinion. His declaration is: "Where there is created no obligation *Page 225 on the part of the state and the proposed improvements are to be paid out of a designated special source of income, the state is but the trustee of an express trust to apply such income to the stated purpose, incurring no liability itself other than what might spring from the discharge of that trust." (State v.Moorer, 152 S.C. 455, 150 S.E. 269, 295.) Here we have but a provision of the legislature for the creation of an express trust to be administered by certain state officers, in order to do presently that which must be ultimately done in order that the state may receive the full benefit of the trust fund allocated to this state by the federal government.
No one, knowing the past and present condition of our state highways and being familiar with the piecemeal work heretofore done with limited funds, can doubt but that the full receipts from the gasoline tax would be exhausted each year for the period of the debentures provided for, by a continuation of the piecemeal system necessitated, unless some means are devised for more efficient use of the funds derived from this source, and it must be remembered that by a continuance of the piecemeal work a large part of the federal aid money will be lost to the state. During the constructive period, which has now extended over several years, with but a small portion of our highways constructed, experience has demonstrated that the full amount of the income from this source has been insufficient for the needs of this state "of magnificent distances," and we need not speculate as to whether future legislatures would deem it wise to divert a part, or the whole, of the income from the gasoline tax to the general fund, if such speculation has any bearing on the question before us.
While, therefore, the Act under consideration does tie up the gasoline tax receipts for several years to come, such impounding cannot conceivably injure the public generally by increasing advalorem taxes, nor affect the general fund of the state; it is but a provision for doing now what must ultimately be done, and doing it in an effective and economical manner. What the courts would do in case the legislature *Page 226 should attempt to divert other taxes to special funds, to the disaster of the general fund and for purposes not directly in accord with the purpose of their imposition or levy, should be met when, or if, such an attempt, is made.
The funds allocated to the state are trust funds, and the legislature but adds thereto further trust funds for the same purpose and in order to secure the federal trust funds.
I agree that the Act may be submitted at a special election under the amendment cited.
I have carefully gone into the remaining questions presented on the hearing of this application, but, as they are not discussed in the majority opinion, I will not here discuss them; suffice it to say that, in my opinion, on no question raised is the unconstitutionality of the Act before us demonstrated beyond a reasonable doubt and, therefore, the demurrer should be sustained and the proceeding dismissed.