# Eastern & Western Lumber Co. v. Patterson

> Oregon Supreme Court · June 21, 1927 · 124 Or. 112

URL: https://www.frixlaw.com/law-library/cases/3841056

## Case

- **Full name:** EASTERN & WESTERN LUMBER CO. Et Al. v. ISAAC L. PATTERSON, Governor, Et Al.
- **Court:** Oregon Supreme Court
- **Decided:** June 21, 1927
- **Citations:** 124 Or. 112; 264 P. 441; 258 P. 193; 1927 Ore. LEXIS 276
- **Precedential status:** Published
- **Opinion:** Addendum by Rossman
- **Judges:** Rossman, Brown, Burnett, Band, Bean, Belt, McBride, Coshow, Rand
- **Cited by:** 19 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/3841056

## Opinion text

Reversed on rehearing February 14, 1928.
On Rehearing.
[ 264 Pac. 441 .]
Reversed on Rehearing.
ROSSMAN, J.
Much has already been written by the court in setting forth its construction of the building act and the debt clause of our state Constitution. No useful object would be served in adding an extensive third opinion to the two already published. We shall, therefore, confine ourselves to a brief statement of our views.
The building act proposes to use $600,000 of the industrial accident fund in the construction of an office building. The plaintiffs declare that the employment of this money in this manner will create a debt. To have that effect we must find present three necessary elements: a debtor, a creditor, a promise to pay. If the industrial accident fund is the absolute property of the state, an expenditure from it in behalf
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of the state cannot create a debt. For the orderly transaction of its affairs, the state recognizes particular sums of money appropriated to its different bureaus and departments as funds; whenever it diverts money from a use intended when the fund was created to some other purpose, it may charge itself with a duty to replenish the fund; but no debt is created thereby. Indeed, 1927 Session Laws, Chapter 308, which is the general act governing overdrafts of-the different departments and bureaus, imposes a duty upon any department having a deficit, to pay the overdraft and interest at the rate of 2 per cent per annum to the fund which supplied the necessary balance. No debt in the sense contemplated by the constitutional inhibition is created thereby, because the debtor-creditor element is wanting. The various departments, bureaus and commissions are not personages to the extent that they are creditors or debtors. The use of the words “repayment” and “refund” occurring in Section 6 which plaintiffs rely upon can be well reconciled with the foregoing; that is, that funds must be kept intact, and accordingly the legislature made provision for replenishing the industrial accident fund. Hence, if the state is the absolute owner of the industrial accident fund, no debt arises when it uses $600,000 for the construction of a building, however unwise it might be to use the fund for such a purpose.
But, let us now assume that the fund is a trust fund, and not the absolute property of the state. This is a serious step to take, for when we have once taken it, a concession has been made that the $2,000,000 comprising the fund is not the absolute property of the state. When we have made this concession the beneficial interest is in the employer-employee class,
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although the state has put into the fund $1,000,000 of state money, and has supplied the commission with office space and many conveniences. Furthermore, to make this concession carries with it another: the state can never recover the $1,000,000 it appropriated to the use of the commission to enable it to carry on its work before income and expenses met, although the recoupment of such donations is generally a pre■rogative of sovereignty. We find nothing in the legislative act warranting such concessions. !
But for the sake of proceeding into our next investigation let us grant all of this. Nevertheless it remains true, that the legislature has the right to determine how the fund shall be invested. Prior to 1927 the fund has been invested in certain types of securities. The 1927 legislative assembly evidently felt that the state needed an office building; this need is recognized in the dissenting opinion. We see the need expressed in 1927 Session Laws, Chapter 77, which directs the hoard of control to “lease one or more office buildings, or parts thereof, in the city of Salem, on such terms and under such conditions as it may deem advisable.” 1927 Session Laws, Chapter 78, confers authority upon the same board to lease an office building, or space in one, in Portland. The brief of counsel in this case has vouched for the fact that the state annually expends $36,481.50 for rental of office space, and the same source of information is authority for the statement that the space thus procured is scattered about in many buildings. Confronted with these circumstances, the legislature evidently felt it would be justifiable to use $600,000 now invested in bonds, and with it construct an office building. If the bonds were the property of the commission, the legislature evidently proposed that the
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building should likewise become the property of the commission, and so it wrote that the building shall “stand for and be an investment” of the funds of the commission. It is not an uncommon thing for insurance companies to build office buildings as investments for their funds. A companion act of the foregoing piece of legislation (1927 Session Laws, Chap. 383), directs the Secretary of State to assign space in the new building, upon completion, to state officers, boards and commissions, and provides that the board of control shall fix the amount of rent to be paid for the use of the quarters assigned. It would seem strange that the state would pay rent for the use of a building it owned. The payment of rent, however, can be very nicely reconciled with the theory we have been pursuing; that is, that the state recognizes that it is not the absolute owner of the fund, and accordingly recognizes it will not be the owner of the building; hence it proposes to pay rent. In this connection it is deserving of notice that the act does not direct that the building shall be erected on land owned by the state.
The foregoing analysis of the act appeals to us as reasonable and just. The law is well settled that when an act is susceptible to more than one construction, one of which renders it invalid as violative of constitutional inhibitions while the other is in accord with the Constitution, the latter shall be preferred, provided it does no violence to reason or justice. Likewise all courts are agreed that proof of an acts’s invalidity by reason of its conflict with the Constitution, must be highly persuasive. None of our number agrees with the construction placed upon the act by counsel for plaintiffs. Of all the interpreta
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tions which may be placed upon it, only that placed upon the act by the plaintiffs renders it invalid.
We reject this interpretation as not being in accordance with our views. It therefore becomes a matter of no consequence to write anything further. We find the act valid.
It follows that the case is reversed on rehearing.
Reversed on Rehearing.
McBride, Belt and Coshow, JJ., concur.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/3841056. Public record. Not legal advice.