# Johnson v. McDonald > Supreme Court of Colorado · September 9, 1935 · 97 Colo. 324 URL: https://www.frixlaw.com/law-library/cases/9865152 ## Case - **Full name:** Johnson, Governor Et Al. v. McDonald - **Court:** Supreme Court of Colorado - **Decided:** September 9, 1935 - **Citations:** 97 Colo. 324; 49 P.2d 1017 - **Precedential status:** Published - **Opinion:** Dissent by Hilliard - **Judges:** Young, Butler, Hilliard - **Cited by:** 49 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/9865152 ## How later opinions describe it (automated extraction) - holding that Article X, section 2 is a mandate to the legislature to provide for an annual tax ## Opinion text Mr. Justice Hilliard, dissenting. This case should be regarded as controlled by In Re Senate Resolution No. 2, 94 Colo. 101 , 31 P. (2d) 325 and Walker v. Bedford, 93 Colo. 400 , 26 P. (2d) 1051 , and the judgment affirmed. In the first mentioned matter (opinion per Burke, J.) proposed legislation without actual difference to that here challenged was held to be in contravention of section 3, article XI, of the Constitution. The distinctions the court finds between that legislation and the statutes now before us will be found upon- examination to be something else, something that may fairly be termed evasions. That they are evasions, palpable evasions, is determined by quoting but a sentence of Mr. Justice Burke’s opinion: The “purpose” (of the constitutional provision) was “to prevent the pledging of revenues of future years.” That the Walker case is likewise of application is not explained away by the court’s insistence that the legislative recitation of emergency has not influenced its judgment. I venture to say that in the absence of emergency the court would recoil unanimously from the suggestion that this legisla *357 tioa is permitted by the fundamental law. So also would the legislature and the executive. A hard case has made bad law indeed. I admire, while I deplore, the cunning logic that convinces the court that black is white and that there is no difference between heaven and hell. It will be news to our people that the promise of the state to pay twenty-five millions of dollars out of the proceeds — and all of the proceeds — of the various excises having to do with motor vehicles is not a debt. The opinion will disabuse their minds of that fallacy, although it may be that the more obtuse will be unable to perceive why the state should pay out one million dollars of interest annually on obligations which it does not owe. And there may be some who will not follow the reasoning that the repayment of the twenty-five millions out of the motor vehicle excises “can never place any burden on the revenue available for general state purposes.” They may feel, as all men know, that highways do not endure for thirty years, and that from some other source of revenue must come the money to rebuild and repair the roads presently to be built and paid for with the ordinary highway revenues of the next thirty years. And there may be those who obstinately believe that if the state promises to pay twenty-five millions of dollars it should keep its promise and that if the motor vehicle excises fail — as well they may in the light of invention — the lender should nevertheless be paid. Should it come to pass that the excises fail there will not be found a lack of plausible gentlemen, mayhap those who have argued here, to call upon the state to perform its plain moral duty and raise and pay that twenty-five millions to protect the good name of the commonwealth. Our history dictates that such will be our policy. Men who dealt with the state and extended it credit in the past well knowing the warrants they received were void and worthless yet were not bowed down with their prospective losses for they knew the good people would not repudiate their claims and *358 thus besmirch their honor. We issued, by constitutional amendment, general obligation bonds to pay those trusting creditors. The buyer of the twenty-five millions of no-debt paper now proposed will feel safe in his belief that it is a debt whether the court thinks so or not. I confess, when I consider the many phases of this problem, that I am embittered, and deeply embittered. The court has worshipped at the shrine of construction, often and here the falsest of gilded gods, and for that sin the sweat of the people shall not fail for more than a generation. “The Constitution was written to be understood by the voters; its words and phrases were used in their normal and ordinary as distinguished from technical meaning; where the intention is clear there is no room for construction and no excuse for interpolation or addition.” United States v. Sprague, 282 U. S. 716 , 51 Sup. Ct. 220. This court has often announced the same wholesome doctrine. Cf. People ex rel. v. May, 9 Colo. 80 , 10 Pac. 641 ; In re Lowrie, 8 Colo. 499 , 19 Pac. 489 . The Constitution of Colorado ordains that “The State shall not contract any debt by loan in any form.” It will be perceived instantly that this permits the state to enter into an irrevocable contract to borrow and pay twenty-five millions of dollars out of our only practicable source of road-building revenue, the proceeds of the motor vehicle excises. The very heavens protest against so monstrous a construction of the document conceived by the people for their protection against rapacity. If this be law, and the court has said it is, there is no limit whatever and the constitutional limitation and prohibition of debt might as well be stricken from the instrument altogether. The language of the Constitution could not have been more imperatively or understandingly phrased. And yet, it is overthrown by niceties so refined as to be nonexistent and logic that destroys both the letter and the spirit. The court has been at pains to demonstrate that In Be *359 Senate Resolution No. 2, supra, is authority for the conclusion reached that a promise to repay twenty-five millions of dollars is not a debt. It is said the doctrine of that case is that only where revenue available for general purposes is required for payment is a debt created. No such construction is warranted. The court has failed understandingly to consider the “special fund” theory, although Brother Burke did not fail clearly to state the rule in that respect. The true, and the only, special fund rule in connection with debt prohibitions is that an inhibited debt is not created where the bondholders must look for repayment to the enhancement of values, as in the case of local improvement districts, or to earnings and profits, as in the case of so-called revenue bonds, arising out of the operation of publicly owned utilities. Whether that is a sound doctrine I do not now inquire, but it is the extent of the doctrine, and its basis is simply that the capital of the holders of local improvement district bonds, or of utility bonds, has produced and made possible the enhanced value or earnings with which alone the bonds are to be repaid. The tax load of the people, whether of excise or ad valorem, has not been increased or affected. But where, as here, the imposition of a tax is necessary to discharge the debt the rule fails at once. There is no enhancement of values, there are no earnings or profits, there is simply the creation of an additional and staggering debt to be discharged out of taxes wrung from the people. Our own decisions, rightly read, sustain this proposition. “If a tax was required, there was of course a debt.” Searle v. Town of Haxtun, 84 Colo. 494, 496 , 271 Pac. 629 . cf. Shields v. Loveland, 74 Colo. 27, 32 , 218 Pac. 913 ; Reimer v. Holyoke, 93 Colo. 571 , 27 P. (2d) 1032 . No debt? The act by its terms is irrepealable. It pledges every penny of future motor vehicle excises to the payment of the euphemistically styled “Revenue Anticipation Warrants.” The power of the Federal Constitution is cited by the court to show that come what *360 may these instruments cannot be repudiated. But it is no debt, says the court, because the source of the revenue may fail. By the same token no promise of the state to pay is a debt, for it is not inconceivable, and I think it is probable, that every source of revenue will dry up. We cannot live by taxing each other any more than the Fiji islanders could subsist by taking in one another’s washing. The truth is, despite the court’s protested adherence to the rule that a debt is created where funds otherwise available for general purposes must be applied in payment, that the debt-prohibiting sections of the Constitution have been discarded by the opinion in this case. As was suggested in the admirable presentation of counsel for the defendant in error, the legislature is now at liberty to set up a “State Excise Corporation,” make all (other) excises payable to it, give it power to issue anticipation warrants, and pledge all excises to the end of time to repay them. Our present excises, excluding the sales tax, produce more than double the revenue of ad valorem impositions. With those pledged away, as I doubt not they will be, the persistency and ingenuity of tax spending men considered, the portent is clouded with gloom. Those of my generation are fortunate; we shall not see the full harvest of our sowing. To sum up, and to emphasize, let it be remembered that the present use of future revenue, as prescribed by the act, involves potential interest charges in the sum of one million dollars annually, besides the “charges of banks and trust companies” and “necessary fiscal agency charges,” and besides any discount and commission the highway corporation may care to give on the sale of the warrants, for there is no prohibition of such practices. This great yearly burden, not a cent of which will go for their benefit, must be paid by an already overburdened people, still bound to bear from year to year the expense of current road building and repair. This is manifestly unjust. It is waste. It is stupidity. *361 Every study shows that with a political state, as with an individual, each year’s requirements absorb each year’s income. The individual may be prodigal at his pleasure, pledging his future income to the extent of his credit. But the state of Colorado, it was believed until now, however much its careless or wasteful servants might dissipate its income of the year for the same year, enjoyed constitutional protection against present spoliation of next year’s income. It is to be regretted that the General Assembly and the Executive, in turn, and now the court, disregarding the Constitution, and overriding precedent, should authorize and approve the immediate use of revenue to be collected in years to come. All history proves that revenue, whenever and however collected, is concurrently needed. The legislative branch of the government could have frowned on this monstrous folly in the first place, and the executive branch had constitutional power to still it in the second place, and now this court, as did the trial court, has but to announce adherence to the Constitution and its own pronouncements, to save the people from this orgy of exploiting the future. I assume it is a coincidence that private counsel, arguing here in favor of the constitutionality of this legislation, are of the private counsel who advised the Executive that an act of the same General Assembly in the matter of an income tax, designed to visit the burdens of taxation in accordance with ability to pay, was unconstitutional. Lawyers in private practice, their retainers not renounced, may convince a Governor that an act passed in the interest of the common man is unconstitutional, and cause its veto, but they have not persuaded me to subscribe to the legality of the act involved here, which, in addition to its unconstitutionality, as I am convinced, is subversive of the commonweal, and useful only to those who prosper and find seeming contentment in overreaching the general public. I am unable to frustrate this scheme, but I can pay modest tribute to the framers *362 of our organic law, who, well advised of the danger, believed they had protected the inarticulate against machinators. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9865152. Public record. Not legal advice.