Eastern Kentucky Lunatic Asylum v. W. O. Bradley

JUDGE DuRELLE delivered ti-ie opinion oe the court. By an act of the general assembly, which became a law upon the 10th day of May, 1897, entitled “An act authorizing the Commonwealth of Kentucky †0' issue bonds to the aggregate amount of $500,000, for the purpose of funding certain indebtedness of the State,” coupon bonds were directed to be issued by the commissioners of the sinking fund of Kentucky, and to be sold for account of the Commonwealth to the highest and best bidder or bidders, the proceeds of the sale to be used only in the payment of that part of the existing indebtedness of the Commonwealth which had been created on account of the several charitable institutions and asylums, among others the appellant corporation. Appellant filed its petition in the Franklin Circuit ■Court, alleging the authority given by the act to issue such bonds; that it was the holder of warrants issued by the auditor for quarterly allowances, and for the building fund provided by law, aggregating $142,365, and that the total of all warrants outstanding on account of the charitable institutions at the time of the passage of the act was' over $563,000. The petition admits that, at the time of the adoption of the present Constitution and at the time of the passage of the act under consideration, the outstanding bonded indebtedness of the Commonwealth amounted m more than $500,000, and still existed at the filing of the petition, but alleges that no bonded indebtedness has been created since the adoption of the present Constitution, and that the present Constitution authorized the issuance of bonds to the amount of $500,000, in addition to the bonded [553] indebtedness existent at the time of its adoption. A refusal by the appellees to issue and sell the bonds provided for is pleaded, and a mandamus prayed for requiring their issue and sale. A demurrer to the petition was sustained by the trial court, and from that judgment this appeal has been prosecuted. Sections 49 and 50 of the present Constitution contain the constitutional limitations upon the power of the general assembly to contract debts and authorize them to be contracted on behalf of the Commonwealth. They are as follows : “Section 49. The general assembly may contract debts to meet casual deficits or failures in the revenue; but such debts, direct or contingent, singly or in the aggregate, shall not at any time exceed $500,000, and the moneys arising from loans creating such debts shall be applied only to the purpose or purposes for which they were obtained, or to repay such debts: Provided, The general assembly may contract debts to repel invasion, suppress insurrection, or if hostilities are threatened, provide for the public defense. “Section 50. No act of the general assembly shall authorize any debt to he contracted on behalf of the Commonwealth except for the purposes8 mentioned in section 49, unless provision be made therein to levy and collect an annual tax sufficient to pay the interest stipulated and to discharge the debt within thirty years; nor shall such act take effect until it shall have been submitted to the people at a general election, and shall have received a majority of all the votes cast for and against it: Provided, The general assembly may contract debts by borrowing money [554] to pay any part of the debt of the State, without submission, to the people, and without making provision in the act authorizing the same for a tax to discharge the debt so contracted, or the interest thereon.” These two sections of the Constitution appear to- make provision for the creation of three classes of indebtedness: 1st. To meet casual deficits or failures in the revenuey provided for by section 49. 2d. New indebtedness', which mus-t be submited to a vote of the people, and for the payment of which, with interest, within thirty years an annual tax must be provided in the act authorizing the creation of the debt, as required in the body of section 50. 3d. For the purpose of funding a debt existing at the adoption of the Constitution, or thereafter created in accordance with its provisions, which is authorized by the provisa of section 50. The two classes last mentioned are not necessary to ber and are not, passed upon in this case. The act under consideration appears to have been drawn and adopted under section 49, and the question for decision here is whether it is authorized by that section of the organic law. The limitation contained in the section, providing that such debts “shall not at any time exceed $500,-000,” seems to us dearly to be a limitation upon the power of the general assembly to provide for future casual deficits or failures of revenue, and to have no reference to debts theretofore created for that or other purposes. We must assume that the framers of the Constitution were [555] aware of the outstanding indebtedness of the Commonwealth, and adopted the provision in question with reference to the condition then existing; and we can not believe that by this permissive provision, which expressly authorizes the creation of indebtedness to meet casual deficits or failures in the revenue, it was intended to include in the deficits provided for deficits- already existent and greater in amount than the authorized indebtedness would (provide for. Such a construction would render- the authority useless. The language used appears to indicate that the entire section was intended to apply to future deficits. It provides that the general assembly may contract debts; that such debts shall not exceed $500,000, and that the money arising from such .loans shall be applied only to the purpose or purposes for which they were obtained, or to repay such debts. There is no indication in the language of the section that any acts theretofore performed, or any debts theretofore created, were referred to or provided for. It will, moreover, be observed that the class of indebtedness provided for by section t9 is expressly excepted from the provisions of section 50 by the terms of that section. Under the averments of the petition it appears that no; debt has, since the adoption of the present Constitution, been created by the general assembly for the purpose of meeting casual deficits or failures in revenue. This is the first exercise of authority under section 49; and as the existence of a deficit sufficient in amount to warrant the exhaustion by the general assembly of the power conferred by the Constitution has been averred, we see no good [556] Reason for denying to the general assembly the right in thin ■act to proceed to the limit of its constitutional power. For the reasons stated the judgment is reversed and the case remanded, with directions- to set aside the judgment sustaining the demurrer, and for further proceedings consistent with this opinion.