Montana Attorney General Opinion 15-96

Opinion No. 96 County Commissioners - Powers - In- (lebtedness - Constitutional Law- Blidge Fund-Contmcts Payable from Cash on Hand. HELD: County Commissioners have the power to let a contract for the con- struction of a bridge to be paid out of cash on hand in the bridge fund, the construction of which will exceed $1.0,- 000, without submitting the question to a vote of the people and without vio- lating Section 5, Article XIII of the Constitution. March 2, 1.933. You ha,e submitted for my opinion the question whether the county com- missioners of Cascade County have the power to let a contract for the con- struction of a bridge in Cascade Coun- ty, to be paid out of cash on hand in the bridge fund, the cost of whiCh will exceed $1.0,000, without first suhmit- ting the question to a vote of the peo- ple and, if they do so, whether it would be in violation of Section 5, Article XIII of the Constitution ,which reads: "No county shall incur any indebt- edness or liability for any single pur- pose to an amount exceeding $1.0,000 without the approval of a majority of the electors thereof, Yoting at an elec- tion ,to be provided by law." I am advised that on .Tanuary 31., 1933, the cash in the bridge fund amounted to $1.8,786.42; that the war· rants outstanding amounted to $187.37, leaving a net amount in the bridge fund on that date of $18,500.05; that the lowest bid for such contract was $13,659.80, while the highest bid was $17,1.94.80. I am further ad,ised that the expenditures are not planned to re- duce the cash balance in the said bridge fund, by ,Tune 1., 1.933, and thereafter additional moneys will be credited to the fund from the second half of taxes collected. Granting that the expenditure will be for a single purpose, the question arises whether it will be incurring an "in- debtedness or liability" within the meaning of the Constitution when the money to be expended for this purpose is from cash on hand and from a fund already provided and known as a bridge fund. In a recent case, State v. Board of 'l'rustees et al., 91 Mont. 300, 7 Pac. (2nd) 543, our Supreme Court had before it a ,~imilar question, to-wit: '''hether the county commissioners of :1I11ssoula County were empowered to expend for the erection of county high school buildings, the sum of $248,743 in the hands of the county treasurer, without a vote of the people. 'l'his money was fire insurance money paid to the county treasurer as a result of the destruction of the county high hy fire. The court held that no vote of the people was necessary and that the constitutional provision above re- fen'ed to did not apply to expenditure of cash on hand raised for a definite purpose in excess of $10,000. I quote from page 307, as follows: "It seems plain that the constitu- tional limitation does not apply to the expenditure of cash on hand proyided for a specific purpose; but rather to the creation of an obligation to be met and paid in the future by the taxpay- ers. (1!'alls City Const. Co. v. 1!'iscal Court, 1.60 Ky. 623, 170 8'. W. 26; Boettcher v. McDowall, 43 N. D. 178, 174 N. W. 759.) "In our opinion, a liability such as is here contemplated, payable solely from money in the treasury to the credit of a special fund which can- not be used for any other purpose than the construction of a high school huildillg and equipment therefor, is not incul'I'ing an indebtedness or a OPI~IO~S OF THE ATTORNEY GENERAL liability of the county within the meaning of this constitutional restric· tion. Limitations of the amount of a <lebt or Iiahility of a county were ne\·· er inteuded to prohibit the expendi. ture of cash on hand usable only for a <lesignated purpose already ap- proYed by the people. Had the fram- ers of the Constitution so intenue<l, the word 'expenditure' would ha \·e been use<l as in Section 12 of Article XII. The county does not create a debt or liability within the meaning of this constitutional limit where the payment is to be made from fuuds al- ready provided. (15 C. J., p. 578). It was the manifest intention of the framers of our Constitution that the people shall not be burdened by taxa- tion with the payment of an indebted- ness or obligation to be created over and above funds already pro\·ide<l without first being by them ap- proved." It will be ohsen·ed from a reading of the above and the rest of the opinion that the court based its decision largely on the fact that the money to be ex- pended was from cash on hand. A similar question was before the Supreme Court in the case of State ex. reI. Hankin v. State Board of Exam- iners, 59 Mont. 557, 197 Pac. 988, whcre the construction of the words "debts a nd liabilities" as used in Section 2, Article XlII, was under consideration and where it was held that the prohibi- tion intended by these words is the creation of a debt or obligation of the state in excess of cash on hand and re\·enue provided for. The court said Oll page 566: "In construing our constitutional proyision applicable, we have under (;onsideration the meaning of the words 'debt or liability', and in our dew, the prohibition intended by these words is the creation of a debt or obUgation of the state in excess of cash on hand and revenue provided for." And again on page 568: "The constitutional limitation has reference to such a liahility as singly or in aggregate will obligate the state to an amount in excess of $100,000 over and above cash on hand and rev- enues ha dng a potential existen(.'C by virtue of existing revenue laws. In the case before us, the funds must be considered in esse for the pa~'ment of the treasury notes, provision having been made for their levy and collec- tion. The state, in conducting its business by such methods, is in no different position than the merchant doing business on an assured credit basis in anticipation of accounts due being paW to him at stated intervals. He\-enue for which provision is al- ready made may constructively be considered as cash on hand. (25 R. C. L .. Sec. 30.) Clearly. the character of debts prohibited by the Constitu- tion in excess of $100.000 without ma- jority approval of the people at a general election are such as pass the limit of a\·ailable cash on hanel and revenue for which adequate provision has been made by law." The latter case was cited and the language of the court above quoted was quoted with appro\·al in the case of State y. Board of Trustees, supra, the court adding the following on page 306: "And there is no good reason why a different meaning. should be placed upon the words 'indebte<lness' or "lia- bility' as employed in Section 5 of Article XIII, placing limitations upon the creation of debts or obligations by the several counties of the state. Xo provision of law has been made for submitting to the electors the question of the expenditure of cash on hand, raised for a definite purpose, in excess of $10,000; and by the Jaw· makers this constitutional restriction has been interpret€d as a restriction upon the borrowing of money, as by statute a method is provide<l for the manner of submitting to the people' the question of borrowing money in excess of $10,000. (Sees. 4717 to 4722; also, Sec. '1712, Rev. Codes 1921.) " ] n Section 4712, R C. l\:[. 1921, the legislatUre as state<l in the above quo- tation from our court, provided for the submission to the people the question of borrowing money excee<ling $10,000. There is no pro\·ision for submitting to the vote of the people the question of expending money from cash on hand in excess of $10,000. A. Similar ques- tion was cOllsiuered hy this office in an 78 OPINIOXS OF THE A'l'TonXEY GE:-\ERAL opinion rendered to H. R. Eickemeyer. found in Volume 11, Opinions of the Attorney General, page 290. I am in- dined to agree with this opinion where a number of authorities are cited and quoted. Since that opinion was given our Supreme Court has rendered its decision in the case of State v. Board of Trustees, supra. On the strength of the decisions of our Supreme Court abm'e referred to, as well as other au- thorities, I am of the opinion that it is not necessary to submit this question to a vote of the people. This being .my opinion, it is not nec- essary to consider the further ques- tion as to whether it would make any (lifference if the bids on the bridge are let in several different units pro- "hIed no unit exceeded the sum of $10,- 000. In my opinion, however, that would not make any difference. Hoff- man Y. Board of County Commission- ers of Gallatin County, 18 ~lont. 224, 44 Pac. 973; Hefferlin v. Chambers, 16 :\lont. 34fl, 40 Pac. 787; Turner Y. Patch, 64 :\Iont. 565; Jenkins v. Xew- man, et aI., 3!) Mont. 77, 101 Pac. 625; 15 C. J. 578, Section 280.