Sheldon v. Grand River Dam Authority

HURST, J. This action involves the constitutionality of an act of the Legislature and an amendment thereto creating the Grand River Dam Authority. The act (chapter 70, art. 4, Sess. L. 1985') creates a conservation and reclamation district consisting of that area included within the boundaries of 17 counties located in the northeast part of the state; namely, Adair, Cherokee, Craig, Delaware, Mayes, Muskogee, Nowata, Ottawa, Rogers, Tulsa, Wagoner, Sequoyah, Osage, Washington, McIntosh, Creek, and Okmulgee. The district is declared to be a “governmental agency and body politic and corporate, with the powers of government.” The act provides that nothing therein contained “shall be construed as authorizing the district to levy or collect taxes or assessments, or to create any indebtedness payable out of taxes or assessments, or in any manner to pledge tlie credit of the state of Oklahoma, or any subdivision thereof.” The act contemplates the construction of a dam on Grand river with the erection of a hydroelectric power plant, which will also make available the water necessary for irrigation, soil conservation, and recreational purposes and will facilitate in flood control. The act provides that the district cannot engage in the retail marketing of electric power, but can sell it only at the turbines for wholesale purposes. It provides for the. creation of a board of nine- directors, requiring that they be “residents of and freehold property taxpayers in the district,” and sets out in detail the powers, rights, and privileges to be exercisrd. The district is given authority to issue bonds, not to exceed $15,-000,000, payable solely out of the revenues received by the district from the sale of electric power and other revenues received in respect to its properties. The act further provides that before any bonds shall be sold, a certified copy of the proceedings for the issuance thereof shall be submitted to the Attorney General, and if he shall find that 1hey have been issued in accordance with law, he shall approve them and issue his certificate to that effect, which shall be filed in the office of the State Auditor. The amendment (chapter 70, arts. 1 and 2, Sess. L. 1937) does not re-enact the *25 1935 act in its entirety, but merely eliminates three counties, Rogers, Osage, and Washington, from the district, and also eliminates any restriction on the retail marketing of electric power. Plaintiff is a property owner and taxpayer within the district and brought this action seeking an injunction to prevent the Grand River Dam Authority from proceeding to issue bonds as authorized by the act. The injunction was denied and plaintiff brings this appeal. He presents 20 reasons for asserting the unconstitutionality, of the act. The principal contentions are: (1) That the legislation is local or special and viola-tive of sections 32, 46, and 5'9 of art, 5 of the state Constitution; and (2) that.it violates the debt limitation provisions of sections 23, 25, and 26 of art. 10 of the state Constitution. Amic-i curiae briefs have been filed in which it is asserted that the act is violative of sections 32 and 59 of art. 5, and section 26 of art. 10, of the Constitution. The first contention of the plaintiff and of the amici curiae is that the act is special or local, rather than general, legislation, and violates sections 32, 46 and. 59 of art. 5 of the Constitution. Section 32 of this article provides that ‘‘no special or local law shall be considered by the Legislature until notice of the intended introduction” thereof shall have been published in some newspaper in the “city or county affected by such law.” Section 46 provides that no local or special law upon 28 specified subjects shall be passed. Section 59 requires that “laws of a general nature shall have a uniform operation throughout the state, and where a general law can be made applicable, no special law shall be enacted.” It is stipulated that no notice was published as required by section 32, but the contention of the defendants in answer to the application of all of these sections is that the act is general, and not special or local. The first question is regarding the test for determining whether an act is special and local or general. The defendants, or proponents of the act, contend that any law is a general law if it deals with a “subject-matter that is of general interest and state-wide concern, although it may have a restricted or local operation.” On ihe other hand, amici curiae contend that the fact that a law may be enacted for a public purpose does not make it a general law if, by its terms, it is confined in its operation to property and persons of a particular locality of the state. Without determining whether the position of the defendants has been misunderstood, as they claim, it is clear that by reason of section 59, an act to be general must have a uniform operation throughout the state. It is not necessary that it shall operate upon every person and every locality in the state. A law may be general and have a local application or apply to a designated class if it operates equally and uniformly upon all the subjects within the class for which it was adopted, and upon all persons and parts of the state that are brought within the relation and circumstances provided by it. It must affect alike all persons in like situations, 'and where it operates upon a class, the classification must not be arbitrary or capricious, but must be reasonable, and pertain to some peculiarity in the subject-matter calling for the legislation. This principle is discussed in the following cases: Burks v. Walker (1909) 25 Okla. 353, 109 P. 544; Leatherock v. Lawter (1915) 45 Okla. 715, 147 P. 324; Coyle v. Smith (1911) 28 Okla. 121, 113 P. 944; School Dist. No. 85 v. School Dist No. 71 (1928) 135 Okla. 270, 276 P. 186; City of Sapulpa v. Land (1924) 101 Okla, 22, 223 P. 640. In Leatherock v. Lawter, supra, it is said: “Whether an act of the Legislature be a local or general law must be determined by the generality with which it affects the people as a whole rather than the extent of territory over which it operates, and if . it affects equally all persons who come within its range, it is neither local nor special.” In 59 C. J. 730, it is said: ’ “While a statute which is applicable to all of the people of the state and which operates in all parts of the state is most general in its character, it is not necessary that a law. in order to be general, shall affect all -of the people of the state, or all of the state, nor need it include all classes of individuals: it may be intended to operate over a limited number of persons or things, or within a limited territory, and if every person or locality brought within the relations and circumstances provided for by the law is affected, the law may be general although presently operative on but a single individual, or thing, place, or political subdivision, such as a county or municipal corporation : and its general character is not affected by the number of persons, things, or localities which come within the scope of its operation.” Defendants rely, by way of analogy, upon cases sustaining the validity of acts establishing superior courts in all counties having a certain population, with cities therein of a certain population (Burks v. *26 Walker, supra; Herndon v. Anderson [1933] 165 Okla. 104, 25 P. (2d) 326), and also establishing a superior court on the basis of population, effective actually in only one county, and abolishing the same (Leatherock v. Lawter, supra), and an act providing for an additional district judge in one judicial district, and prescribing the manner of nomination and election (Munroe v. McNeill [1927] 122 Okla. 297, 255 P. 150). They further rely upon cases upholding an , act locating the state capital (Coyle v. Smith [1911] 28 Okla. 121, 113 P. 944), and an act authorizing the Highway Commission to enter into a contract for acquiring a toll bridge (Coley v. State [1932] 157 Okla. 202, 11 P. (2d) 928). It will be noticed that in 'all of these cases the court concluded 'that there was a reasonable, substantial basis for classification, bearing a rational relationship to the subject matter, 'and that the acts operated uniformly on all persons coming within their scope. Under the rules above stated regarding the test for determining whether a law is special or local, or general, these acts are properly designated general laws. On the other hand, the plaintiff and amici curiae rely upon a great number of cases holding invalid certain legislation dealing with the offices of the justice of the peace, township officers, county commissioners, excise boards, methods of foreclosure and liquidation of assessment liens and back taxes, and other acts relating to school districts and county officers. Levine v. Allen (1923) 96 Okla. 252, 221 P. 771; Key v. Donnell (1924) 107 Okla. 157, 231 P. 546; Hudgins v. Poster (1928) 131 Okla. 90, 267 P. 645; Roberts v. Ledgerwood (1928) 134 Okla. 152, 272 P. 448; City of Sapulpa v. Land, supra; Welch v. Holland (1936) 177 Okla. 585, 61 P. (2d) 559; School Dist. No. 85 v. School Dist. No. 71, supra; Board of Com’rs of Grady County v. Hammerly (1922) 85 Okla. 52, 204 P. 445; Robinson v. Board of Com’rs (1931) 151 Okla. 100, 1 P. (2d) 660; Madden v. Excise Board of Harmon County (1932) 160 Okla. 170, 16 P. (2d) 259; White v. Infield (1926) 122 Okla. 4, 250 P. 81, and others. They also rely upon a case holding-invalid portions of a legislative act regulating the practice and procedure in district courts different than as prescribed by general law (Diehl v. Crump [1919] 72 Okla. 108, 179 P. 4), and a case imposing different duties on a district judge than imposed by general law (C., R. I. & P. Ry. v. Carroll, Brough, Robinson & Humphrey [1925] 114 Okla. 193, 245 P. 649). But it is likewise important to notice that in -all of these cases the court concluded that the classification was not made upon a real, substantial distinction, but was arbitrary and capricious, and was specifically prohibited by section 46. Thus these eases reflect the operation of the rule, but are not decisive of the effect of the present act, and it must be decided upon its own merits, tested by the rules announced above. In Lewis’ Sutherland, Statutory Construction (2d Ed.) p. 365, it is said: “Whether or not an 'act is class legislation, or whether or not it is a general, or special law, depends fundamentally upon a question of classification. When an act is assailed as class or special legislation, the -attack is necessarily based upon the claim that there are persons or things similarly situated to those embraced in the act, and which by the terms of the act are excluded from its operation. The question then is whether the persons or things embraced by the act form by themselves a proper and legitimate class with reference to the purposes of the act. It is agreed on all hands that the Constitution docs not forbid a reasonable and proper classification of the objects of legislation. The question is, What is reasonable and proper in the premises? No definite or absolute rule can be laid down by which the question can be determined in all cases, but the question must be determined in each case as it arises, and for that case alone.” (a) Mention has been made, by both parties, of the provisions of the act securing free public use of the water to be impounded by the dam for recreational purposes and providing means of enforcement at the instance of “any citizen of Oklahoma.” There can be no doubt but that this feature of the act is uniform in its operation. The amici curiae do not contend otherwise, but merely insist that these provisions do not prevent the act from being local or special in other respects. With this we agree. (b) It is argued that the act does not have a uniform operation throughout the state and is therefore special or local legislation, because it restricts the selection of a board of directors from residents of the district. The act requires that the directors be residents and freehold property taxpayers of the district, but there is nothing in that provision contrary to the requirements of the Constitution. To require the' powers, rights, privileges, and functions of the act to be carried out by those who are property owners and residents of the area within which the project will be constructed, is not an arbitrary or capricious classification. It is reasonable to presume that taxpaying residents of that area are better equipped *27 to administer the act than those of- other parts of the state. To all those similarly situated, the act operates equally, and there is nothing to prohibit the appointment of anyone who shall move into the district and bring himself within the requirements provided. (c) It is next contended that the act is special or local because it limits the sale of water for irrigation and other purposes to that land within .the boundaries of the district. The act provides that it shall have the authority “to control, store and preserve, within the boundaries of the district, the water of the Grand river and its tributaries for any useful purpose, and to use, distribute and sell the same within the boundaries of the district”; and further, “that nothing herein shall prevent the district from selling for irrigation purposes within the boundaries of the district any. water impounded by it under authority of law.” It is argued that this provision is local and special for the reason that not even those people of the state within the watershed area of the Grand river and its tributaries, but outside the district, are entitled to participate in the irrigation project. But the classification as to area is reasonable as applied to irrigation, and there is nothing in the record to indicate that the boundary designated by the district is not the'proper extent of the area which could reasonably be irrigated by this project. There is no evidence that anyone outside the district will be arbitrarily deprived of water for irrigation or other purposes, and this court will take judicial notice of the fact that practically the entire watershed area of the Grand river is within the district, and that it is not feasible to sell and transport water outside the district. 59 G. J. 59, 60. The fact that the district covers a greater area than the watershed is immaterial. (d) It is next contended that the act is special or local because the sale of electric power is limited to the district. Even considering the 1935 act as separate from the 19S7 amendment, we find no such limitation. By the 1935 act, the sale of electric power was limited to wholesale marketing at the turbines, but it would be available to anyone throughout the state who cared to so purchase it. By the 1937 amendment, the limitation against retail marketing was eliminated and the electric power can be sold to anyone in the state. The engineer on behalf of defendants testified that “it is possible to serve every part of the state from a physical standpoint.” (e) It is next contended that the provision regarding the prevention of soil erosion and flood', control does not operate uniformly upon all the people of the state or any properly constituted class, thus rendering the act special or local. The act authorizes the district “to forest and reforest and to aid in the foresting and reforesting of the watershed area of the Grand river and its tributaries and to prevent and to aid in the prevention of soil erosion 'and floods within said watershed area.” The class designated in this provision includes all those within the watershed area, and considering the subject matter of the legislation in this regard, it seems clear that the classification is reasonable and the' act operates uniformly upon all those included therein. (f) It is contended that the act is special and local in that it designates the counties by name and the classification is therefore arbitrary and capricious. But in Tucker v. Mullendore (1937) 180 Okla. 180, 69 P. (2d) 35, in dealing with an act providing for grazing district, excluding 40 counties from the operation thereof by name, this court held that such classification was not unreasonable, arbitrary, or capricious,- and sustained the act as a general law. Thus the fact that the area contemplated by the act is designated by counties does not alone render the act invalid, if the area included within the counties named reflects a reasonable classification, having regard to the subject matter of the legislation. (g) Amici curiae further contend that the act is special and violative of section 59, art. 5, of the Constitution, in that a general law can be made applicable, and they attempt to demonstrate this by showing that a general law is now in force relating to conservation and reclamation districts (article 5, ch. 70, O. S. 1931, as amended by article 5, chapter 70, S. L. 1935). Our attention is called to six particulars wherein the act excepts this district from the operation of general laws now in force or which could be enacted. Although the existing general laws might cover certain features of the act, yet this act embraces a subject not purported to be covered by the general conservation and reclamation law, or any other general law referred to above, that is, the production and sale of electric power in the manner contemplated herein. The act does not purport to amend the general conservation law or any other law. but. is an independent act dealing with a particular subject matter, and, if general, will supersede all general laws which relate to the same subject matter. Norton-Johnson Buick Co. v. Lindley (1923) 173 Okla. 93, 46 P. *28 (2d) 525; State ex rel., etc. v. Weber County Irrigation Dist. (Utah, 1923) 218 P. 732. We conduele that the act in question has a uniform operation throughout the state and that the classification and distinctions made therein are reasonable and have a sound and rational relation to the subject matter of the legislation, and affect equally all coming within its scope. Therefore, we hold that the act is general " legislation, and is not special or local, and does not conflict with sections 32, 46, and 59 of art. 5 of the Constitution. This holding .makes it unnecessary for us to pass upon the contention of the defendants that the act is a general act bjr reason of the fact that it was enacted pursuant to a specific grant of power in section 31 of art. 2 of the Constitution. 2. The second principal contention of plaintiff is that the act creates an indebtedness in violation of sections 23, 25, and 26 of art. 10 of the state Constitution. The amici curiae contend that the act falls within section 26, and by reason of that section alone, the act' is unconstitutional. Sections 23 and 25 refer to the creation of indebtedness by the state, and section 26 provides that “no county, city, town, township, school district, or other political corporation, or subdivision of the state, shall be allowed to become indebted, in any manner, or for any purpose, to an amount exceeding, in any year, the income and revenue provided for such year, without the assent of three-fifths of the voters thereof, voting at an election, to be held for that purpose,” and making certain other requirements not material here. The amici curiae argue that the act creates a “political corporation, or subdivision of the state” within the meaning of section 20, and that the special fund doctrine has been rejected in its entirety in this state with regard to section 26, although admitting that it may be applied in its restricted sense to state debts within the meaning of sections 23 and 25. They rely upon the cases of Zachary v. City of Wagoner (1930) 146 Okla. 268, 292 P. 345, and City of Tecumseh v. Butler (1931) 148 Okla. 151, 298 P. 256. On the other hand, the defendants rely upon the rule of ejusdem generis, that is, where general words follow the enumeration of particular classes of things, the general words will be construed as applicable only to things of the same general nature or class as those enumerated. Thus they argue that the words “or other political corporations, or subdivisions of the state,” refer to corporations or subdivisions of the same class as those enumerated, which are counties, cities, towns, townships, and school districts, and it is contended that the Grand River Dam Authority is not of such class. The amici curiae take no exception to the application of this rule, but contend that the Authority is of the same general nature and character as those subdivisions enumerated, in that it is declared to be a “governmental agency and body politic and corporate, with the powers of government.” They point out that the Authority has practically all the powers, rights, and privileges which are vested in counties, cities, towns, and townships, and assert that there is no material difference between them. But by the terms of the act in question, the people have no voice in the management or government of the Authority, and no power of taxation has been conferred as in the case of counties, cities, towns, townships, and school districts. The Authority was not organized for political or governmental purposes, and does not possess political or governmental powers other than necessary to carry out the specific purposes for which it was created. The board of directors is appointed by state officers, and the people of the district have no voice in their selection. In these respects the corporation is analogous to the Oklahoma Agricultural and Mechanical College. The waters and potential electric energy of- the Grand river are the natural resources of the state, and stripped of all its detail, the act creates an agency through which the state seeks to exploit, preserve, and utilize in a certain and specific manner that portion of its natural resources. The purpose of the act is analogous to that of an irrigation district, and in Wood v. Imperial Irr. Dist. (1932, Cal.) 17 P. (2d) 128, it is held that an “irrigation district is not, strictly speaking, ‘municipal corporation’, nor is it ‘political subdivision of state or county’ or ‘political subsidiary.’ ” We therefore conclude that, under the rule of ejusdem generis, the act does not create a “political corporation, or subdivision of the state” within the meaning of section 26 of art. 10. Rather, it creates a governmental agency or public corporation, with limited powers, for the purpose of conducting a state function, which could have been accomplished by an existing state board or office, and which is governed in its debt features by sections 23 and 25 of art. 10 of the Constitution. As to state agencies and instrumentalities, the special fund doctrine has been adopted in this state by the case of Baker v. Carter (1933) 165 Okla. 116, 25 P. (2d) 747, and *29 lias been thoroughly discussed and limited and defined in its application in the recent case of Boswell v. State, 181 Okla. 435, 74 P.2d 940. Erom those two cases it has become an established rule that' the special fund doctrine may be invoked in a restricted sense in this state as an exception to the debt limitation provisions of sections- 23 and 25 of art. 10 of the Constitution. The act in question falls squarely within the special fund doctrine as established in Baker v. Carter, supra. The project is purely self-liquidating-. The act does not' pledge any existing- revenues of the state or of the Authority, and does not pledge any revenues derived from taxation, either on an ad valorem basis or by special taxes. It is provided that “nothing in this act or in any other act or law contained, however, shall be construed as authorizing the district to levy or collect taxfs or assessments, or to create any indebtedness payable out of taxes or assessments, or in any manner to pledge the credit of the state of Oklahoma or any subdivision thereof.” In the event of the failure of revenues from the properties to be 'acquired by the district, the state is under no obligation to make up the loss. The amici curiae contend, however, that the special fund doctrine as heretofore announced can have no application to the. instant ease for the reason that the act pledges the revenues of the state indirectly or contingently, on the theory that the state will be coerced into stepping in if and when the project fails, and resort to taxation to save a valuable investment. The authority cited in support of this proposition is Boykin v. Town of River Junction (1935, Fla.) 164 So. 558, and Kathleen Citrus Land Co. v. City of Lakeland (1936, Fla.) 169 So. 356. Those cases involved the extension and enlargement of an existing plant, and a pledging of the revenues of the entire system, and held, contrary to the previous case of State ex rel. Diver v. City of Miami (Fla.) 152 So. 6, that a contingent or indirect liability was incurred in violation of their constitutional debt limitation provisions. It was apparently to distinguish the former case that the theory of coercion, relied on here, was invoked, and with the exception of State v. City of Miami (discussed in Boswell v. State, supra) the special fund doctrine is, in effect, rejected in its entirety. "We cannot adhere to such theory in the instant case, for to do so would in reality negative the application of the special fund doctrine in its entirety. If. in fact, there is an indirect or contingent pledge of the revenues of the state, the doctrine is not appropriate, but the coercion anticipated in the brief of the amici curiae is based upon mere speculation, and the resort to taxation is not indirectly or contingently contemplated by the act. On the other hand, such theory is negatived by the provisions clearly establishing- legal liability only against the special fund. Under the rules announced in Baker v. Carter, supra, and Boswell v. State, supra, f e "ct does not violate the debt limitation provisions of sections 23 and 25 of art. 10 of the state Constitution. As section 26 of art. 10 is not applicable, it is unnecessary to pass upon the contention of amici curiae that a different rule as to the special fund doctrine applies under section 26. 3. The remaining constitutional objections are not seriously urged. Plaintiff admits “that his objection No. 7 is not well taken.” In this objection he attacks the constitutionality of the act as violating sections 34 and 35 of art. 5, dealing with thé reading and passage of bills. We have examined the act and records in the office of the Secretary of State and amendment thereto in the light of this objection, and conclude that it is without merit. See Coyle v. Smith, supra. 4. Plaintiff also waives his objection No. 9, attacking the act as violating section 50 of art. S for the reason that it purports to exempt property from taxation, and says: “It is the iJelief of the plaintiff that the property exempt from taxation by reason of this act, to wit, the bonds, is such property as can be exempt from taxation without violating this constitutional provision for the reason that such bonds are instru-mentalities of government.” With this conclusion we agree. In re Assessment of First Nat. Bank of Chickasha, 58 Okla. 508, 160 P. 469. 5. The remaining objections are based upon the following constitutional provisions: (1) Section 31 of art. 2, referring to the right of the state to engage in business; (2) section 32 of art. 2, prohibiting monopolies; (3) section 5 of art. 5, reserving the powers of initiative and referendum to the legal voters of “every county and district therein,” 'as to local legislation; (4) section 3 of 'art. 16. granting power to the Legislature to provide for a system of levees, drains and ditches; (5) section 1 of art. 18, dealing with the creation of municipal corporations; and (6) section 4 (a) of art. 18, reserving the powers of initiative and referendum to the people of every “municipal corporation.” The views herein expressed dis *30 pose of the objections regarding section SI, art. 2; section 5, art. 5; and section 3, art. 16. The Grand River Dam Authority is not a “municipal corporation” within the meaning of sections 1 and 4 (a) of art. IS, and does not violate the provisions thereof. We hold that the act does not create a monopoly in violation of section 32 of art. 2, in that nothing in the act excludes the operation of like businesses. The judgment is affirmed. OSBORN, C. J., BAXLESS, V. O. J., and RILEY, GIBSON, and DAYISON, JJ., concur. WELOI-I, J., concurs in the conclusion. PHELPS tod CORN, JJ., dissent.