State ex rel. Wisconsin Development Authority v. Dammann

The following opinion was filed January 11, 1938:

Fritz, J.

The ultimate issues involved on these appeals are: (1) Was ch. 334, Laws of 1937, validly enacted by the legislature; and (2) is that act constitutional.

*154 The appellant questions the validity of the enactment of ch. 334, Laws of 1937, by the legislature because on June 16, 1937, as appears from the senate journal, that house attempted to act on the passage of the bill (one purpose of which was to make an appropriation) with but seventeen members present although, on the passage of such a bill in the senate, the attendance of at least twenty members was required to constitute a quorum, under sec. 8, art. VIII, Wis. Const., which, so far as material here, reads:

“On the passage in either house of the legislature of any law which . . . makes ... an appropriation of public .. . money . . . three-fifths of all the members elected to such house shall in all such cases be required to constitute a quorum therein.”

Upon fifteen of the members then present voting for the passage of the bill, it was duly declared passed; a motion for reconsideration was made and defeated; and a motion was adopted ordering the bill messaged immediately to the assembly. Before that was done in fact, a motion was made in the senate on June 18, 1937, to reconsider the action by which the bill was ordered messaged to the assembly, and it was also proposed to expunge the record of the vote purporting to pass the bill from the journal. Then, on a point of order, it was asserted that because less than the number required by the constitution to constitute a quorum on the passage of an appropriation bill were recorded on the question of its passage, the attempted passage was invalid, and the action ordering the messaging of the bill to the assembly was also void. The president pro tempore held the point of order well taken; that the attempted passage of the bill was a nullity; and that it reverted to its former status of but an engrossed bill. Thereafter the senate and also the assembly duly passed it with the required quorum in attendance in each house, and it was duly approved by the governor and published.

*155 As there were not sufficient members in attendance in the senate on June 16, 1937, to- constitute the quorum required by sec. 8, art. VIII, Wis. Const., to act on an appropriation bill, there was not then in attendance a legislative body capable under the constitution of transacting legislative business in relation to the passage of the bill; and therefore those present were wholly without power to take any such legislative action in relation thereto-. Under Rule 16 of the senate, its parliamentary practice was governed by the rules in Jefferson’s Manual, one of which reads :•

“Effect of no quorum on questions. When from counting the house on a division it appears that there is not a quorum, the matter continues exactly in the state in which it was before the division and must be resumed at that point on any future day.”

In an explanation of that rule in Cushing’s Parliamentary Law, in sections 369 and 370, it is stated:

“When, upon a division, it appears, that a quorum is not present, the question, upon which such division occurs, ordinarily remains undecided'. . . .”

Consequently, the attempted passage of the bill in the senate on June 16, 1937, was a nullity. It was as a thing not done at all; and not an act that was but defectively performed by a body possessing the power and the right to perform it perfectly. Webb v. Carter, 129 Tenn. 182, 165 S. E. 426; Wilson v. Atwood, 270 Mich. 317, 258 N. W. 773; Heiskell v. Baltimore, 65 Md. 125, 4 Atl. 116. Therefore, the status of the bill in the senate continued as it was before the votes were taken on June 16, 1937, until that house subsequently acted effectively by voting the passage of the bill when the required quorum was in attendance. By that passage and the subsequent valid action by the assembly and the governor, ch. 334, Laws of 1937, was duly enacted.

For consideration of the questions raised as to the constitutionality of ch. 334, Laws of 1937, it suffices to note the *156 fallowing matters: These actions were brought to test the validity of that act by seeking to' compel the secretary of state to audit thereunder accounts for indebtedness incurred by the Wisconsin Development Authority (hereinafter called the “W. D. A.”) to V. M. Murray, Norris E. Maloney, and IToward I. Tuttle, Inc. The accounts are for services performed for the W. D. A. since the enactment of the act, (1) by V. M. Murray in conducting a survey of the resources and facilities of the state for the production, transmission, distribution, and furnishing of light, heat, water, and power in the state; (2) by Norris E. Maloney in promoting and encouraging the creation of a co-operative association in Crawford county to engage in furnishing light, heat, water, and power, and the dissemination of information in relation thereto; and (3) by IToward I. Tuttle, Inc., for mimeographing form letters addressed to the executive officer of each of five hundred eight incorporated cities and villages in the state for the purpose of promoting municipal ownership of public utilities, and the dissemination of information relative thereto.

Prior to the enactment of ch. 334, Laws of 1937, the W. D. A. was incorporated under the general incorporation laws of Wisconsin as a nonstock, nonprofit-sharing corporation .for the purpose of promoting and encouraging municipal and co-operative acquisition and operation of all forms of public utilities, and of engaging in the utility business as a holding or as an operating company. Under its articles of organization, membership in the corporation is not open to the public. Neither its members nor its officers are to be chosen by the electors, or appointed by any officer of the state. They are not required to take the oath of office prescribed by sec. 28, art. IV, Wis. Const.; and there is no limitation upon the salaries which may be paid to them or the corporation’s employees. By sec. 199.01 of ch. 334, Laws *157 of 1937 (creating secs. 199.01 to 199.07 and 20.514, Stats.), the W. D. A. was “designated and selected as an instrumentality for the execution of certain duties and functions provided in section 199.03and by sec. 20.514, Stats., there was appropriated to the W. D. A. $10,000, and “annually thereafter, beginning July 1, 1937, sixty thousand dollars for the execution of its duties and functions under section 199.03.” In sec. 199.03, Stats., it was provided that “subject to the provision of section 199.02” the W. D. A. “shall use and expend the funds appropriated to it by section 20.514 solely for the execution of the following duties and functions.” Those duties and functions are stated in subs. (1) to (7) of sec. 199.03, Stats., and may be summarized as follows:

A. — To promote or encourage the organization or creation of, (1) municipal power districts under ch. 198, or (2) of co-operative associations or nonprofit corporations, to engage in the production, transmission, distribution or furnishing of light, heat, water, or power or the rendering of street or interurban railway or bus services;

B. — To promote or encourage the acquisition, ownership, construction, operation, or management of any plant, equipment, or facilities, or part thereof for the production, transmission, distribution, or furnishing of light, heat, water, or power, or the rendering of such railway or bus services, (1) by any co-operative association or nonprofit corporation or any group or combination thereof; (2) or by any municipality, municipal power district, or other political or governmental units of the state, or any group or combination thereof;

C. — To (1) survey the resources and facilities, existing and potentially available, for the production, transmission, distribution, and furnishing of light, heat, water, and power in the state; and (2) make studies and surveys, (a) for the economical development, use, and conservation thereof as will best provide an abundant and cheap supply of these essential services for industrial, agricultural, commercial, *158 governmental, transportation, and domestic purposes, and (b) for the co-ordination of water-power and fuel-power developments with the regulation of rivers by storage or otherwise for water supply, navigation, flood control, soil conservation, public health, recreational, and other uses;

D. — To collect and disseminate information and engage in research, planning, and educational activities necessary and useful for the execution of the W. D. A.’s duties and functions under sec. 199.03, Stats.; and to' co-operate with the federal government and its agencies in the execution of those duties and functions.

It is further provided in the act that the W. D. A. shall not use or expend any of the funds appropriated to it by the state for any activities or functions which would be repugnant to the state constitution if carried on by the state, and that the state shall never be liable or responsible for any debt or obligation of that corporation (sec. 199.02, Stats.) ; that the accounts and records of the W. D. A. shall be so- kept as to clearly distinguish the uses made of funds appropriated by the state, and all disbursements of funds appropriated by the state shall be audited by the secretary of state in the manner provided by law (sec. 199.05, Stats.); and that the W. D. A.’s authority to expend funds appropriated by the state shall terminate in the event its articles of organization shall be amended so as to provide profits for its members, directors, or officers, or so as to change the mode or manner of distribution of its property upon dissolution, or if its articles of organization shall at any time authorize it to engage in, and pursuant thereto it does engage in, any activities except those provided by sec. 199.03, Stats., and those which are part of the acquisition, ownership, construction, operation, or management of any plant, equipment, or facilities for the production, transmission, distribution, or furnishing of light, heat, water, or power, the transmission of telephone messages, or the rendering of street or interurban railway or *159 bus services, and the furnishing of technical, supervisory, or management services therefor (sec. 199.01, Stats.).

The defendant contends that ch. 334, Laws of 1937, is unconstitutional because it purports to delegate the execution or administration of a statute to the W. D. A., a privately controlled private corporation, organized under our general incorporation laws, which do not authorize incorporation for the purpose of holding public office or empower a corporation to do so. It is fundamental that under our constitutional system the governmental power to execute the laws is vested in the executive department of the state, and can be exercised only by duly constituted officers thereof. By the act in question it was, however, clearly intended to vest the execution thereof in the W. D. A. Thus, it is provided therein that the W. D. A. “is hereby designated and selected as an instrumentality for the execution of certain duties and functions provided in section 199.03” (sec. 199.01, Stats.) ; and that it “shall use and expend the funds appropriated to it by sec. 20.514 solely for the execution of the following duties and functions” (sec. 199.03, Stats.). And that those duties and functions were considered governmental in character clearly appears by implication from the provision that the W. D. A. “shall not use or expend any of the funds appropriated to it by the state for any activities or functions which would be repugnant to the constitution of the state if carried on by the state” (sec. 199.02, Stats.). The proper performance of the duties and functions thus delegated to the W. D. A. necessitates the exercise of discretion and responsibility incidental to' the governmental power under consideration that cannot legally be delegated otherwise than to public officers, acting for and as a part of the government under such conditions and control that “they can approach and determine questions impartially, unbiased, and without adverse personal interest.” (Wagner v. Milwaukee, 177 *160 Wis. 410, 418, 188 N. W. 487.) On the one hand the act appropriates state funds for the use of the W. D. A. in executing its duties and functions thereunder, without any allocation by the legislature or any authorized public officer as to what portions of the funds are to be used by the W. D. A. for one or the other of the activities in which it is to engage in the administration of the act. Likewise, there is no legislative direction as to what circumstances or conditions are tó govern that corporation’s determination as to the order in which or the extent to which the W. D. A. may engage in those activities, or the methods, means, or agencies by which it will perform them; or what localities or portions of the state, or which of the specified forms of public utility ownership or operation, etc.,— otherwise than by private corporations,— it will favor by its performance of those activities with the use of the appropriated funds. On the other hand, there is no provision in the act directing or authorizing the execution or administration thereof by any public officer or authorizing or requiring him even to supervise the execution or administration by the W. D. A. (which is only required, if and after it acts, to report annually to the governor its activities with the use of appropriated funds; and to have the expenditure thereof audited by the secretary of state). Consequently, there is under the act virtually a complete abdication to the W. D. A. of the state’s sovereign power which is exercised in the execution of a statute, including the discretion and responsibilities incidental thereto'. It is obvious that, if the act had directed the execution thereof by the governor or any other state officer, his performance of the duties and functions delegated thereby to the W. D. A. would clearly be in the exercise of that sovereign power. Likewise, performance thereof by that corporation under the act as enacted would be in the exercise of that power. Thus, it alone was intended to be the instrumentality authorized *161 under the act to accomplish the purposes thereof, — which the relators contend are public purposes. If they were but private purposes, the appropriation and use of state funds therefor would be invalid.

Assuming (without, however, here deciding) that the purposes in question are public because the execution thereof is to further the material and permanent interests and welfare of the entire state, and is not of merely private, local, or temporary concern, then the instrumentality so empowered and authorized to be compensated out of public funds is a public officer, under the definition of that term in Hall v. State, 39 Wis. 79, 86, to wit:

“When public functions are conferred by law upon certain persons elected by the people or appointed by the legislature, if those functions concern the general interests of the state, and are not of a nature merely local or temporary, such persons are public officers, especially if they are paid a salary for their services out of the public treasury.”

In quoting that definition with approval in In re Appointment of Revisor, 141 Wis. 592, 608, 124 N. W. 670, the court said:

“There have been many attempts to accurately define an office and differentiate it from a mere employment, but it is manifest that the line is not easy to draw.”

That difficulty was encountered in the following cases, cited by the relators in contending that the duties and functions delegated and to be performed under the act are not such as would constitute the instrumentality which is to perform them a public officer, to wit: United States ex rel. Noyes v. Hatch, 1 Pin. 182; United States ex rel. Boyd v. Lockwood, 1 Pin. 359; Butler v. Regents of the University, 32 Wis. 124; Weise v. Board of Supervisors of Milwaukee County, 51 Wis. 564, 8 N. W. 295; State ex rel. Brown County v. Myers, 52 Wis. 628, 9 N. W. 777; Sieb v. Racine, *162 176 Wis. 617, 187 N. W. 989. Those cases are, however, not in point because there was not involved therein any such delegation of the governmental power to' execute or administer a statute as is involved in the case at bar.

For the same reason, such cases as Wisconsin Industrial School for Girls v. Clark County, 103 Wis. 651, 79 N. W. 422, and Loomis v. Callahan, 196 Wis. 518, 220 N. W. 816, are not in point. They did relate to' services performed in the discharge of a public, governmental purpose, but the performance thereof by a private corporation was not the execution or administratibn of a statute in the exercise of governmental power. As was said in Fox v. Mohawk & H. R. Humane Soc. 165 N. Y. 517, 525, 59 N. E. 353, 355: “Of course, the state or any of its subdivisions may employ individuals or corporations to do work or render service for it; but the distinction between a public officer and a public employee or contractor is plain and well recognized.” But the execution of the duties and functions of the W. D. A. under the act would not be merely in the nature of work or service performed by an employee or a contractor in the execution of a public project in relation to which the state’s administrative functions to determine the character, scope, and what shall constitute performance, etc., thereof have been duly exercised, or reserved for control by its officers. The state can have a private instrumentality construct a highway at public expense when the location, dimensions, and similar essential matters in relation thereto have been determined by or are under the control or supervision of an official vested with its governmental powers in that regard. But the state cannot delegate the determination of such essential matters to an unofficial, private instrumentality with but the direction that it shall use appropriated state funds for the purpose of locating and constructing public highways of some kind, somewhere within the state.

*163 In. addition to the reasons stated above for confining the delegation of such duties and functions as the W. D. A. was to execute to public officers, there is in point the statement in People v. Salem, 20 Mich. 452, 495, that,—

“For the expenditure of public money the constitution and laws provide public officers and put them under adequate control and security. The money of the people belongs in the custody of the agents of the people. Governments cannot delegate public responsibilities to private and irresponsible hands.”

Among the constitutional provisions and laws designed to further such control and security, is sec. 28, art. IV, Wis. Const., which requires all officers “except such inferior officers as may be by law exempted” to take an oath to support the federal and state constitutions “and faithfully to discharge the duties of their respective offices to the best of their ability.” Likewise, to that end, it is “a fundamental principle of our government that a person not an elector of the state is ineligible to hold a public office therein, although our constitution and statutes do not expressly so ordain.” State ex rel. Off v. Smith, 14 Wis. *497; State ex rel. Schuet v. Murray, 28 Wis. 96; State v. Trumpf, 50 Wis. 103, 108, 5 N. W. 876, 6 N. W. 512. As the W. D. A. is incapable of qualifying in either of those respects, it cannot assume the duties and functions of a public office in this state. Moreover, there is no provision in the general incorporation laws under which the W. D. A. is organized as a private corporation, that authorizes such a corporation to receive or hold public office, or to exercise the duties or functions thereof. Therefore, and in view of the rule that “corporations are the creature o.f the state and exist with such powers, and such powers only, as the laws of the state of their creation confer upon them” (Fleischer v. Pelt on Steel Co. 183 Wis. 451, 455, 198 N. W. 444), the W. D. A. is- *164 likewise incapable to receive or assume the official authority to execute the duties and functions delegated to it by the act. Under those circumstances, the decision in Dade County v. State, 95 Fla. 465, 116 So. 72, is applicable. The statute then under consideration purported to confer upon a nonofficial commission authority to make plans and estimates for an ocean-front protection and improvement as a public purpose and burden; and to receive and disburse county funds therefor. In holding the attempted delegation of governmental power invalid, the court said (pp. 476, 479) :

“The project contemplated by the act is an administrative function requiring the exercise of sovereign governmental powers. Such powers may legally be exerted only by officials duly commissioned for that purpose. The constitution does not contemplate that essential governmental power or authority may be exercised by a corporate agency whose members are not duly commissioned officers. . . .

“The constitution contemplates that administrative functions that are governmental in their nature involving discretion and responsibility, and not merely clerical or expert assistance, shall be performed by duly commissioned officers.”

See also Schieffelin v. Hylan, 236 N. Y. 254, 140 N. E. 689, 691.

It follows that the attempted delegation to the W. D. A. of the authority and duty to- execute the act on behalf of the state renders it invalid; and that therefore the orders under review must be reversed, and the peremptory writs of mandamus vacated.

In the excellent briefs filed herein, other grounds, upon which the validity of the act is questioned, are also given extended and thorough consideration. The questions raised in relation to some of those grounds are of great importance and highly controversial. But as the incapability of the W. D. A. to receive the authority and to execute the act renders the provisions thereof invalid to such an extent that *165 there remain none by which the legislative intent and purpose thereunder can be accomplished, and as the same legal questions may not arise under an enactment with due regard to the fundamentals of our constitutional system, it is considered unnecessary and inadvisable to decide them until they are presented in a case in which they can be determined under the facts and circumstances then involved.

Harold E. Stafford of Chippewa Falls, special counsel, for the appellant. For the respondents there was a brief by the Attorney General, John Ernest Roe of Madison, special counsel and attorney for the Wisconsin Development Authority, Norris E. Maloney of Madison, attorney for intervening relators, attorneys, and Charles B. Perry of Milwaukee of counsel, and oral argument by the Attorney General, Mr. Roe, Mr. N. S. Boardman, assistant attorney general, and Ralph M. Ployt of Milwaukee, special counsel. Briefs amici curice were filed by William Ryan of Madison; by R. M. Rieser, J. W. Rector, and Roy G. Tulane, and Olin & Butler of counsel, all of Madison; by James F. Malone of Beaver Dam, Herb J. Smith of De Pere, and Frank W. Lucas of Madison; and by Lloyd K. Garrison, Jacob H. Beuscher, and Ray A. Brown, all of Madison. Briefs amici curice were also filed by the Attorney General and William H. Dietrich, Jr., special counsel, for various veterans’ associations receiving state aid; by the Attorney General and Ralph M. Hoyt, special counsel, for various corporations receiving state aid; and by the Attorney General and N. S. Boardman, assistant attorney general, for the Wisconsin Agricultural Authority.

*165 By the Court. — Orders reversed and peremptory writs vacated ; and causes remanded with directions tO' enter an order granting the defendant’s motion to quash the alternative writ of mandamus in each action.

A motion by the respondents for a rehearing was granted, and the cause was reargued.