ARK.] LEONARD V. SMITH. 695 LEONARD V. 'SMITH. 4-3143
Opinion delivered June 26, 1933. s l. STATUTES INTENTION.—In construir4 a statute the intention c if the Legislature must be discovered. HIGHWAYS—REFUNDING OF HIGHWAY WARRANTs. HolderS of warrants on the State Highway Furid in sums less than ' $100; but exceeding such . sum in the aggregate , held entitled to receive State bonds for each $100 or multiple thereof and payment of remainder in cash. . . 3. CONSTITUTIONAL LAW—IMPAIRMENT OF-OBLIGATION '9F CONTRACTS.. —Acts 1933; No. 167, providing for issuanoe of Stitte bon& in denomination of $100 or multiples thereof in lieu of ClaiMilagiinst
696- LEONARD- 'SMITH. - [187 - the State Highway 'Commission, and for cash piyment of the excess of such amounts in cash, no sufficient appropriation being made for payment of the small warrants, held not void as impair7 ing the obligation of contracts, since by a prior act (1932, 2d Ex. Sess. No. 15, § 3) the payment of such warrants was .deferred until all the matured bonds and accrued interest therein should be paid. 4. EvIDENCE—JUMCIAL KNOWLEDGE.—Judicial knowledge is taken that the State Highway Fund was virtually exhausted at the beginning of 1933, and the revenue then expected , was adequate for cash payment of only a very small portion of the outstanding obligations payable therefrom. 5. HIGHWAYS—REFUNDING OF HIGHWAY OBLIGATIONS.—Evidences of obligations payable from the State Highway Fund issued before February 1, 1933, must be presented to the State Refunding Board for allowance where they amount to $100 or multiple thereof, under Acts 1933, No. 167, § 5. 6. HIGHWAYS—AUTHORITY OF REFUNDING BOARD.—The State Refund-• ing Board, being authorized by statute (Acts 1933, No. 167, §§ 1, 5) to allow or disallow claims or warrants against the State Highway Fund, has the implied power to investigate the validity thereof and may disallow invalid warrants, though for less than $100. 7. HIGHWAYS—PRESENTATION OF CLAIMS TO REFUNDING BOARD.—The fact that presentation of small claims or warrants to the State Refunding Board might occasion trouble and expense to the claimant or holder does not 'affect the validity of the statute requiring the presentation. Appeal from Pulaski Chancery Court; Frank H. Dodge, Chancellor ; affirmed. Hal L. Norwood, Attorney General, and Robert F. Smith and Pat Mehagy, Assistants, for appellant. Trieber Lasley, for. appellee. BUTLER, J. This suit was brought for the purpose of restraining the appellant, Roy V. Leonard, as State Treasurer,.from paying in cash warrants drawn on the State Highway Fund, each of which was for less than $100, to holders of the same whose aggregate holdings exceeded $100 without first requiring said holders to present the warrants to the State Refunding Board 'for action thereon. The complaint alleged that there were outstanding, on February 1, 1933, warrants and vouchers issued by the highway depaftment payable out of the State Jlighway Fund, each for a sum of less than $100
ARK.] LEONARD V. SMITEI. 697 but, in the aggregate amounting to a sum in excess of. $500,000 ; that the appellant, as State Treasurer, had. accepted such warrants and had redeemed the same by paying out of the Bond Refunding Fund $60,000 and that, unless restrained, he would continue to pay the same in, cash without requiring the holders to present said warrants to the Refunding Board for examination and allowance. . .• A demurrer Was interposed to the complaint which was overruled by the court, and, .appellant refusing to plead . further, the temporary injunction which had been granted was made permanent and in accordance with the prayer of the complaint. From the action of the. court in overruling the demurrer and from the judgment, an appeal to this court was prayed and granted.. The correctness of the Court's ruling on the demur-rer is to be determined by the construction of legislation passed by the Legislature of 1933. To arrive at. a proper construction of this legislation the intent of the Legislature, of course, must be discovered, and this we find to be not without doubt and difficulty. The intent is obscured by the general terms in which it has manifested its purpose, and it is necessary to notice the situation existing which induced its action. At the convening of the General Assembly of 1933, the State .had just completed an ambitious program , for the construction and maintenance of highWays, the cost of which was to be paid from revenues derived from the. license fees, on . automotive vehicles and the oil and fuel used in their propulsion. From a survey of the revenues . derived from these , sources, it was expected that those derived from the same sources in the future would , be ample to pay the current expenses of maintenance of the administration of the Highway Department and for the interest on bonds and for their retirement as the same matured. Owing largely to extraordinary cii.cumstances which were not foreseen, such as the failure of many banks in Arkansas in the fall . of 1929 and the spring of 1.930, unusual climatic conditions and the general- and - wide-spread financial depression, a great falling off in the use of motor-driven vehicles on the highways resulted
698 LEONXRD v;SwIrrn.-- [187 and a. consequent decline in the fuel and oil consumed, which occasioned a corresponding-decrease in the amount of revenues; far • below the -sum -expected, and at the beginning of the year 1933 the State found itself unable to pay- the interest on bonds not matured and for the bonds that had matured; and alse . unable to pay for the ordinary maintenance of :the highways constructed on which work had been done and warrants issued to those who had Performed the Work• and • furnished the material. To meet this situation, the Legislature of 1933 addressed itself.• • Under the legislation existing Prior to the Meeting of the General Assembly of 1933, the highWay revenues were deposited . in the State Treasury,...designated as "The State Highway Fund," . and all Warrants .draii,rn for payment of construction; maintenance werk and other highway expenses wore Made payable out of this fund, warrants for the payment' of highWay notes andinterest, toll bridge bonds and interest, revenne bonds and interest being giVen preference' over the payment of the sal;- aries of the State Highway Audit CommisSion and the maintenance of the Highway Departnienf and highwaYs. By §§. 7 and' 8 of act No:'82 of the General Assembly of .1933, it was provided: "Seetion 7: There is hereby created in the State .Treasury a fnnd to be knownns the Highway Maintenanee Fund; and n11 appropriationS for the . expenSes of the Highway Department and ft:4- the maintenance Of 'the State Highway System shalt be pay.-: able from this hind, to -which the'.State Treasurer, shall transfer each month from the highway revennes . in tbe Unapportioned Fiind the sum of $166,666. The iemainder of the State Highway revenues shall- be transferred to a fund to be known aS the Bond Refunding Fund." " • Section 8. The State Treasurer shall transfer from the State Highway Fund to the Highway Maintenance Fund immediately upon the . effective date of this act the sum of $166,666, and he.shall also transfer to the TJnapportioned Fnnd the remainder of the Highway Fund. After these transfers have been made all further transfers required by ]aw -to be made to or from the
ARK.] LEONARD V. SMITH. 699 State Highway Fund shall be made to and from the Bond Refunding Fund. ?' • The effect of these sections was to abrogate the State Highway Fund and • substitute for it the , funds named in the sections supra, evincing the purpoSe of the Legislature: to change the method for the payment of warrants drawn against the State Highway Fund. Following the passage of act No. 82, sUpra, the General Assembly passed act No. 167, the parts of which, pertinent to the question involved, are as follows : `.` Section 1. The issuance of Arkansas. State Bonds, herein-after called State bonds,. is hereby authorized ip, a total sum equal to the aggregate of the entire outstanding indebtedness of thp State on . account of the . construction and maintenance of the State Highway System, includ7 ing all State highway .notes or bonds, toll bridge bonds, revenue bonds, valid outStanding . road district bonds on which the State has been. paying interest , under act No. 11 of the Acts of 1927 and act No..65 of the Acts of 1929, hereinafter called road district bonds, certificates of indebtedneSs 'issued or authorized under aet . No. 8, approved . October 3, 1928, and act No.' 85 of 1931, short term notes issued under act No. 15, approved April 14, 1932, all valid claims against the State Highway Commission, and all warrants 'and vouchers issued by the State Highway CommisSion prier to'February 1 . , 1933, together with the interest on the- respective obligatiOnS and claims. Such bonds shall be the . direct • obligatiori of the State, for the . payment of which,- principal and"interest, the- full faith 'and • credit of-the State and , all . its Te, sources are hereby pledged: They shall be dated'Mair 1933;- shall be ' payable :in twenty-fiveyears, and shall 'bear 'interest . at the ..rate. o thr f ee p • er ' cent: per' annuni, the interest to be payable semi-annnally, and to be evidenced by attached interest coutoons.." - "Section 5. The holder of any State Highway Note. or Bond,. Toll Bridge .Bond, Revenue Bond,' valid Road District Bond or Sbort . Terrn• Note issned under .act 'No. 15 may deposit the same with the State Treasurer for exchange for a State Bond of equal face value. All other obligations and claims Mentioned-in § 1 shall be presented
LEONARD :l.SMITH. . 187 to and examined by tbe State. Refunding Board, and, if allowed, may be presented to the State Treasure.r, with the certificate of allowance, and exchanged -for a State Bond of the face value of the amount allowed by th,3 Board." "Section 7. Whenever the amount for which tbe State Treasurer is to issue a State Bond is not one hundred dollars or a multiple thereof, the treasurer shall issize b bonds in denominations of one hundred dollars or multiples thereof and -pay the excess in cash." The General Assembly of 1933 also passed . act No. 206, approved On the same day as act No. 167, §§ 2 and 3 of which provided as foflows : "Tbere i hereby appropriated payable from the Bond Refunding Fund, the-Sum -of one hundred thousand dollars ($1,00,000) for the purpose of paying to the holders of obligations to be exchanged for Arkansas State Bonds the difference between bonds 'delivered to such holders , and 'the obligations . exchanged. 'The Auditor of State is' hereby directed fo. issue his warrants against the above appropriations on vouchers drawn by the. designated agent of the Refunding Board." It is apparent that the State-was unable to meet its matured obligations in cash, and it is also apparent from the language of tbe legislation just quoted, viewed in the light of the circumstances then existing, that .it was the dominant purpose of the Legislature to provide-. for a just and equitable method for the satisfaction of tbose holding the obligations of the State. Not being able to provide for the payment of these obligations in cash, the Legislature provided by § . 1 of act No. 1.67 that, in lieu of the outstanding obligations evidenced by -State Highway Notes or Bonds, Toll Bridge Bonds, Revenue Bonds. Road District Bonds, Certificates of Indebtedness issued under existing authority of law,.Short Term Nbtes issued under act No. 15 of the Acts of 1.932, all valid Olaiin's against the State Highway Commission and nll warrants • and vouchers issued by the State Highway Commission prior to February 1, 1933, together witb the in-
ARK.] LEONARD V. SMITH. 701 terest on: the respective. obligations . and . claims, interest-bearing bonds of :the State should be dssued, for the payment of which the full faith and credit of the State would be pledged. There was no distinction made between any of these obligations or the amounts thereof, but it was the obvious purpose to issue bonds in lieu of all of them, regardless of the amount of the obligation . or the manner in which it was evidenced, The Legislature deemed it proper that no bond should be issued in any sum less than $100 and .provided that the method for the exchange of . the outstanding obligations for State Highway Bonds .was . that . these- .obligations should be presented to and' examined by the . State Refunding Board; and, if allowed, a certificate. of allowance should be -issued by the State Board, .which, when pre; sented to the State Treasurer, might be exchanged for a State bond of the face:value of the amount allowed by tbe board.. It was proVided that : the bonds should be issued in denominations of $100 or multiples . thei.eof. The Legislature recognized :that .. of. the Valid obligations would . nOt coMe unCier "this d'sificartion, that is, that some one might have claims which .in the aggregate exceeded $100,, but did . not equal a multiple thereof for instance, fel- $125 ; also that . others'might present claims which did not amount to $100, and by § 7 provided that in such , cases the Warrants when. allowed might be redeemed in cash. If this Section ds considered , apart from the remaining . sections of the act and the sectiOns of acts 82 and 206 noted, it might appear that . the LegislatUre seemed to have had in mind those having claims dn excess of.$100 or some multiple thereof., But the language of. the section shOuld . be Construed, if it may . be , done so reasonably, to include any claim allowed in a less sum than $100, fOr it is not to be presumed that tbe Legislature intended to avoid the payment to those holding •a single small obligation and . to . provide,. for the payment of only those obligations as ; would in the aggregate amount to $100 or more. , Therefore, we- are of the opinion that where one is. a bolder of a number of war-. rants, each of Which is in a Sum . of less . than $100, but
702 LEONAV V. SMITH'. [187 the aggre.gate- of which 'exceeds $100, the-holders- -are entitled only-to receive bonds for - each $100 or multiple thereof; the reinainder if any to be paid in cash. It is the contention of the appellant that, unless it wa§ the intention to pay obligations for less than $100 hi Cash out Of previous appropriations made, then no pro-visibn. has been made, 'that act • No.. 167 impaired the obligatioit of contracts; and for that reason, in so far as it has done so; is Void. It is further contended that the Legislature 'either intended . lhat -all of the- small* warrants (those for• legs than $100) should be paid in cash or . riet At' all.' • Tbe Afton:fey- General 'has -presSed- these contentions and supPorted them by aPt argument and reasons Which:Merit, and havehad, our closest attention. We are 'unable; hoWeVer; to aecede to the' Position 'taken 'by MO; .. *We d O 'mit gee' . hOW any.. sUbstantial right of the holder Of:.s.mall wa"rianth *is impaired lby the legislation referred to.. , There ;was no . Money With Which to pay these warrants,. and, 'under . §:3. .of act No. 15 of the . Acts of . 1931, the payment of . sniall .wartant§ was deferred until all the:matured 136116 And-aecined interest thereon should be-Paid: .There is little donbt that,. Mader the law existing.prior te. the passage_. of acts NOs. 82, 167. and .206 of the - Acts of . 1933, sup* all the highWay . warrants unpaid at that time would remain so for an indefinite period: This included not only the small Warrants, but thOse in'excess of $100, and_ the legislatibn, therefOre, cOuld not 'reaSonably be g aid to impair the rights -Of holderS in any substantial manner. As noted, when the purpose of- the legislatiOn, supia, is considered and the circumstances which impelled it, it seems to us that the controlling thought was not bow anY particular claim should be paid, but tow all Might be taken care of on a just and equitable basis without discrimination. It is current history, of which we take knowledge, that the fund in the State Treasury pledged to the payment of the outstanding obligations was Virtually exhausted, and.that the revenue then to be expected was totally inadequate to provide
ARK.] LEONARD V. SMITH: 703 for tbe payment in cash of but a very small:portion of these outstanding obligations. Therefore; as this condition eXisted, the State was attempting to do the.best it could to meet it, which was. to issne its interest-bearing bonds payable in the future in sums of . $100, or multiples thereof, and it was only in the event that bonds of this character. could . not represent the obligation that • payment in' cash was- provided. So, it would 4)6 immaterial whether one had only' a Single warrant of less than $100 or a number of such which, in . the • aggregate, exceeded $100, or some multiple thereof ; for, in the first instance, no bond could be issued . and ' the claimant was therefore entitled, under § 7 to have his warrant paid in:cash; and, in the second instance,,no bond could•be issued for the excess where the aggregate amount exceeded . $100, or. a multiple thereof,..anci in that event the exceSs was to be paid in. a like manner.; . kis alleged and admitted by the dethurrer that the. aggregate of small. warrants outstanding is in excess . of $500,000. It is to be ,presumed that . the Legislature- in, dealing , with . the subjegt knew of the amount of the small outstanding warrants, and, .indulging this presumption, we are of : the opinion, that the view just expresse d is strengt e h d e n 1)37 the language of § 2 of act No. 206, suPra ,. fpr, if `the Legislature intended that all of the small . Warrants . ' shoUld be paid in - cash, it would have aPprOpriated . a sum .approicimateiy sufficient to effectuate thiS .inzipose: If, then, the holder of; a : number .of. warrants, . each in a sum of less than . $100 but in the. aggregate. amonnt-ing to a greater sum, can receiVe in cask only the aniount the aggregate sum was in excess of $100, or some multiple thereof, it follows that the evidences of the, outstanding obligations, whether 'bonds,. notes,..certificates of indebtedness, warrants or . vouchers . issued;:by :the State . Highway CoMmission before February 1,.,1933; must be presented . : to the ; State Refunding . Board for allowance. From . the .provision of . §..5. of act .No,167, supra, the only way. in . which one holding these • instru-me.nts• can exchange same for State bonds and re0Oive the excess in cash, where they , amount to over $100 or
7-04 LEONARD V. SMITH. [187 some multiple thereof; is l ySf presenting them_ to -such board for allowance and for. its certificate of such to be presented to the State-Treasurer.. Hence, if one having a number of small warrants which, in the aggregate) exceed the sum of $1,000 and less than $1,100, we will say, the only method provided by the statute is that these be presented to the Refunding Board, and if allowed, such board-will issue its certificate for the issuance of State bonds 'up to the sum of $1,000 and for the payment in cash of the • excess. SectiOn 5 of act. No. 167, when considered in connection with § 1 thereof, can have no other meaning than that all obligations except notes And bands mentioned therein must be presented to the State RefUnding Board before any bonds can be issued or cash paid. The languagois : "All obligation§ and claims mentioned hi § 1 shall be presented to and eianained by the State. Refunding Board and, if allowed, may be presented to the State- TreaSurer with the certificate of allowance and exchanged, for a , State Bond of the face valne of the 'amount allowed bY the BOard." It is' argued that the Refunding Board has no authority, under the we have reviewed, to ,inquire into the validity a small' warrants and that to require them to be presented to a Refunding Board which has no authority to PaSs upon them Would' be Absurd, and that where a warrant is for less than $100 and is presented, the board has no discretion in the matter and must allow the same. This contention is untenable tor the reason that; when the act gave the board authority to allow or disallow a elaim or warrant, there was necessarily implied the power to investigate the validity of a warrant and, -if found to be -valid, to allow the same ; --otherwise, to disallow it. As -suggested by counsel -for the appellee, the investigation of the - Audit Commission disclosed the fact that there had been irregularities in the allowance of claims by the Highway Commission and the issuance of warrants, And that many illegal claims and warrants had been discovered. The Legislature deemed it wise to vest in the Refunding Board the authority to investigate
the claims and warrants presented in order to ascertain whether or not they represented -crlid obligations of the highWay department. It is argned that to require.,,the holder of a small warrant to present his claim to the Refunding Ioard before it Could be paid would occasion much trouble to the holder and probably result in great delay and expense to him. This may be true, but reliance must be placed upon the board to provide for a procedure Which will be as little burdensome ag possible to the warrant holder and yet. protect the interest of the State. . . . We-have .considered 'acts Nos. 82, 167 and 206, since they deal with the -same subject-matter and are in pari_ materia, drawing from all of --them, , together with the circuinstances of . the occasion, the reasons , for the enactment . of, act :No..167 and the consequences flowing therefrom. When this is done, we, are constrained .to find that the conclusion reached by. the court. below . is .correct. The decree will therefore be . affirmed.' J,,•dissents.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.