Bourland v. Pollock

Hart, J., (dissenting). The Chief Justice and myself are of the opinion that the ordinance appropriating money to the Fort Smith Federated Welfare Association violates art. 12, § 5, of the Constitution of 1874, which reads as follows: “No county, city, town or other municipality corporation shall become a stockholder in ¡any company, association or corporation, or obtain or appropriate money for, or loan its credit to, any corporation, association, institution or individual.”

It will be noted that this provision of the Constitution prohibits municipal corporations from appropriating money for or loaning its credit to any corporation, association, institution or individual. Hence the first question to be considered is whether the Fort Smith Federated Welfare Association is an association within the meaning of the Constitution.

It is true the association is devoted to charitable purposes, but it is nevertheless a voluntary association, and is not under the legal control of the city. While the mayor was elected a member of the board of directors, this was done by the voluntary action of the members of the association, and he was not elected pursuant to any law requiring it, nor did he become a director by virtue of his office as mayor. Neither the city nor the State has any control whatever over the association or management of its affairs. The institution owes no duty to the city or to the State. The question is whether the association comes within the prohibition of the Constitution. The same principle would apply as in cases of public and private corporations. Under this provision of the Constitution a municipal tax must be for a public and not a private purpose. Under it, the Legislature has no power to authorize a municipal corporation to make a gift of money raised by taxation to a voluntary association of individuals or an institution organized to carry on private charity, although it may result in incidentally benefiting the public. See Dartmouth College v. Woodward, 4 Wheat. (U. S.) 518.

The ordinance under consideration by its terms made a donation for the support and maintenance of the Fort Smith Federated Association, and, by the terms of the section of the Constitution above quoted, such donation was prohibited. This provision of the Constitution is self-executing, and required no legislation to place it in full force and effect.

In considering a similar question under a similar clause of the Constitution of the State of Illinois, in the case of Washington Home of Chicago v. City of Chicago, 29 L. R. A. 798, the Supreme Court of that State held that a corporation composed of private individuals, not restrained by law from conducting its business for private benefit, which does not report to and is not inspected by any 'State official, elects its own managers "without the State’s approval, and by law owes the State no duty, is a private corporation within the pror visions of the Illinois Constitution prohibiting municipalities from making donations to private corporations.'

In the article on Municipal Corporations in Ruling Case Law, it is said that the power of a municipal corporation under legislative authority to expend funds raised by taxation upon public institutions, such as hospitals, schools and similar undertakings which are owned* operated and controlled by the municipality, is unquestioned. Continuing his discussion of the subject the author said: “It is not, however, within the power of a municipal corporation, even with express legislative authority, to donate funds in aid of ia private institution, although it is devoted to a charitable educational work for which public funds might lawfully be expended by the municipality directly if the corporation controls the institution, selects its own officers, manages its own affairs 'and owes no duty to the State except that which arises from the nature of the work undertaken by it. The incidental benefit to a city of town from the location of such .an institution within its limits is not the kind of benefit and interest which will authorize a resort to the power of taxation.” 19 R. C. L., sec. 25, pp. 716-717. Several cases in addition to the one above mentioned are cited in support of the text. Among others is the case of Egan v. City and County of San Francisco, 165 Cal. 576 , 133 Pac. 294 , Ann. Cas. 1915-A, 754. In that ease the Supreme court of California held that, even if it should be granted that the municipality had the right, under its charter, to own and conduct an opera house, it did not have the power, after acquiring the ownership of such structure located on the land belonging to the municipality, to turn over to a body of prh vate citizens the absolute control and management of the property. The court said that the public use of public property could not coexist with the private management and control of such property.

The same reasoning applies here. If the management of a hospital or other like building owned by the city could not be turned over to the control and management of some private agency, the city could not donate the public funds to aid a private association, although its activities are devoted to charity and are beneficial to the public.

We think this principle was distinctly recognized in the case of Shepherd’s Fold v. Mayor, etc. of N. Y., 96 N. Y. 137 , relied upon to sustain the majority opinion. In that case the court was construing secs. 10 and 11 of an amendment to the Constitution adopted by vote of the people in November, 1874. So much of the sections as are applicable are as follows:

'“Sec. 10. Neither the credit nor the money of the State shall be given or loaned to or in aid of any association, corporation or private undertaking. This section shall not, however, prevent the Legislature from making such provision for the education and support of the'blind, the deaf and dumb, and juvenile delinquents, as to it may seem proper. Nor shall it apply to any fund or property now held, or which may hereafter be held, by the 'State for educational purposes.

“Sec. 11. No county, city, town or' village shall hereafter give any money or property, or loan its money or credit to or in aid of any individual, association or corporation, or become directly or indirectly the owner of stock in, or bonds of, any association or corporation; nor shall any such county, city, town or village be allowed to incur any indebtedness except for county, city, town or village purposes. This section shall not prevent such county, city, town or village from making such provision for the aid and support of its poor as may be authorized by law.”

The court in construing them said: “The general scheme of the constitutional provisions referred to seems to he that the general funds of the State shall not be given to local charitable institutions., except in aid of the blind, the deaf and dumb, and juvenile delinquents, and that the poor are to be provided for in their localities, counties, cities, towns and villages, being allowed to make any provision for the support of their poor which may be authorized by law. Carrying out the designated charities through the instrumentality of private corporations is not prohibited by the Constitution, but the giving away of the money either of the State or of its counties or other local divisions to individuals or priváte corporations, except for .the designated purposes for which each is authorized to provide, is forbidden.”

In 'addition there was a statute empowering the commissioners of charities to transfer orphans and friendless children to the charge of the Shepherd’s Fold. There was also a statute authorizing the board of supervisors of the county of New York to levy 'and collect a tax and pay the same over to the Shepherd’s Fold, to be applied to the purposes and objects of the said corporation. The court said that, having the authority, under the Constitution, to commit to the charge of the Shepherd’s Fold the specified class of the poor, it was a matter of legislative discretion to determine how the expenses of these children should be provided for. So, too, we think McLean County v. Humphreys, 104 Ill. 378 , relied upon by the majority opinion, supports our view. In that case there was a statute making it the duty of the county court to commit infant females of a designated class to the industrial school, and charging the county with the expense of their maintenance. Hence the question of the power of a county or municipality to. donate to a private charity was not involved. The case of Wisconsin Industrial School for Girls v. Clark County, 103 Wis. 651 , sustained the constitutionality of a statute providing- for the commitment of infants of a certain class to industrial schools, and charges the counties from which the commitments are made with the expense thereof.

In all these cases the courts recognized that a simple gift of the money to the institutions would have come within the constitutional prohibition, whether the money was regarded as State, city, or county money.

In construing the provision of the Constitution under consideration, this court has held that a municipal corporation cannot assist in the building of a courthouse for the county to be located within its limits. Russell v. Tate, 52 Ark. 541 . Neither do we think that the case of Cumnock v. Little Rock, 154 Ark. 471 , lends any support to the majority opinion. In that case it was said that municipal corporations have only the powers expressly conferred by statute, and such as are necessarily incident to those expressly granted, or essential to the declared objects and purposes of the corporation. Hence we held that, under the section of the statute relating to municipal corporations commonly known as the general welfare clause, the common council of the city had the power to provide by ordinance for the erection 'and maintenance of a public hospital by said city. This statutory provision, in our opinion, has no reference to or connection with private charitable hospitals which have been erected or established in a city by any private corporation, society, or voluntary association.

It is conceded that there is no express power in the statute conferred upon a city to make donations or gifts gratuities to private hospitals, and it is equally clear to our minds that no such power is essential to the existence and wellbeing of a city. If once the principle is adopted that a city may raise money by taxation for private purposes, or bestow money raised by taxation gratuitously, it will inevitably follow that municipal corporations might by insensible degrees increase their donations to various charitable objects until all the people of the city must bend their backs to the burden of taxation, to such an extent that poor people, or those of moderate means, may become themselves in danger of being paupers. While the charity under consideration in this case is a wise and beneficent one, we do not think that the ordinance under consideration can be regarded as the proper exercise or application of the implied police powers of the city.

Our view on this branch of the case is well expressed in St. Mary’s Industrial School v. Brown, 45 Md. 310 . In that case the court said: “We have carefully examined all the statutes to which we have been referred, and all others in any manner relating to the subjects under consideration, and we have utterly failed to discover any express power, or any by fair implication, by which the appropriations to the appellants, in the manner in which they have been made, can be sustained. They are made without terms or conditions. The institutions could receive the money thus appropriated, and the day after, in the exercise of the powers completely in their control, discharge every inmate received from the city. We speak not of what would likely be done, but of the power to do. The city council, in making these appropriations, entirely abdicate all discretion over the subject of their application. They become therefore mere donations. Who shall or who shall not be the objects of the charity, the .city retains no power to determine. Whether the inmates really belong to the pauper class,- — whether they be really objects of municipal care and protection — are questions that the city authorities do not determine, and have no means -of determining. It is all left to the discretion of -those who manage the institutions, and they, as we -have -shown, are not municipal agents, nor subject to any -control or accountability as to the use and -application of the money. It is certain, we suppose, -that the city council could have no power to make appropriations to these institutions -simply as such, nor because merely of the very humane and laudable -objects and purposes for which, they were created by their founders and promoters; it is only because of the actual services and benefits rendered the city that any claim, could be urged for their support from the city treasury. And, if this is so, what guarantee has the city that services or benefits will accrue, commensurate with -the appropriations that are made? The same principle that would sustain these appropriations would equally sustain appropriations to every private school and private charity in the city. And once concede the power to make them, and it will be in viain to invoke the courts to exercise a discretion as to any limit in the amount or extent of them.

“That the city has ample power delegated to it, and that it is a duty, to provide for the foundlings, the insane, the indigent, infirm and helpless, and for the correction of -the vicious and vagrant portions of its population, is beyond all question; but whatever provisions may be made must be under the control and subject to the supervision of municipal authority.” See also Hitchcock v. St. Louis, 49 Mo. 484 .

Municipal corporations hold their money for their inhabitants to be expended for legitimate corporate purposes. The right of taxation by such corporations extends only to raising money for public purposes and uses. There is no definition of a public purpose or use which -can include the maintenance and support of a private charitable -institution by -the donation of money levied and collected by taxation. It is one thing for a city to provide itself with a hospital or the like institution to care -for the poor and the sick, and quite another to make gifts to'a-private institution for that purpose. The former is a public purpose, and is not prohibited by the Constitution; the latter is a private purpose, and falls within the ban of the clause of the Constitution of 1874 quoted -above.

The Fort Smith Federated Welfare Association is a private institution not under the control of the city and having no legalvconnection with it. It will exist only during the pleasure and for the purpose of its members. If the money collected by taxes may be given to it, it may also be donated to any other private corporation or person.

Therefore we respectfully dissent.