Amicus Curiae Brief — Gordon v. Lance

IN THE

"SUPREME COURT OF THE UNITED STATES

i

OCTOBER TERM, 1970

No. 96

A. T. GORDON, et al.,

Petitioners and intervening

Defendants Below,

VS.

GRANVILLE H. LANCE, et. al.,

Respondents and Plaintiffs Below,

and

THE BOARD OF EDUCATION OF THE COUNTY OF ROANE,

a Corporation, et al.,

Respondents and Defendants Below.

BRIEF

Of Chas. Claflin Allen as Amicus Curiae

STATEMENT

This amicus curiae is a practicing lawyer in St. Louis

and St. Louis County for a number of years and has been

concerned with the issuance and collection of bonds of

counties, cities, schoo) districts and other districts. There

is now pending in the District Court in the City of St.

ad

Louis a case entitled, Preisler v. Mayor of the City of

St. Louis and two companion cases consolidated with

it, attacking the requirement of the Constitution ang

Statutes of Missouri of a two-thirds majority vote to ap-

prove bond issues and to approve school taxes in excess of

the constitutional rate. This amicus has been appointed

by the District Court as amicus curiae in those cases,

That court has stayed its decision pending a decision jp

this case.

The briefs of the petitioners for the writ of certiorarj

in the case at bar and of amici curiae from California,

have fully discussed the principles involved in this case,

which it is not necessary for this amicus to repeat. This

brief will make only one point dealing with the inappli-

cability of the Equal Protection Clause in cases where the

public policy of the state is involved and will briefly give

the history of the difficulties in Missouri which gave rise

to the two-thirds vote requirement, and which show that

policy.

POINTS AND AUTHORITIES

Point I

The Fourteenth Amendment Does Not Apply to an Im-

t Public Policy of the State Which Has a Rational

Relationship to a Legitimate State End.

McDonald v. Board of Election Commissioners, 394

U. S. 802.

Point IT

The Constitution of Missouri Requires the Consent of

at Least % of the Voters Voting at an Election Prior to

the Issue of Bonds of Counties, Cities, School Districts

and Other Political Corporations.

Sec, 26 of Article VI of Annex hereto.

This court in the case of McDonald v. Board of Election

Commissioners, 394 U. S. 802, a case involving an inmate of

a jail who was denied by the statute the right to an ab.

sentee ballot to vote in an election, in the opinion by Chief

Justice Warren, said,

‘‘Though the wide leeway allowed the States by the

Fourteenth Amendment to enact legislation that ap-

pears to affect similarly situated pecple differently,

and the presumption of statutory validity that adheres

thereto, admits of no settled formula, some basic

guidelines have been firmly fixed. The distinctions

drawn by a challenged statute must bear some ra-

tional relationship to a legitimate state end and will

be set aside as violative of the Equal Protection Clause

only if based on reasons total'y unrelated to the

pursuit of that goal. Legislatures are presumed to

have acted constitutionally even if source materials

normally resorted to for ascertaining their grounds

for action are otherwise silent, and their statutory

classifications will be set aside only if no grounds can

be conceived te justify them.’’ (394 U. S., 1. ¢. 808-9.)

The historical background of this Missouri constitu-

tional requirement of a two-thirds majority vote for bond

issues is enlightening. Until 1865 there was no consti-

tional provision requiring an election to be held either by

the state or by the counties, cities or other political sub-

divisions prior to the issuance of bonds.

In the 1830’s the country entered into an era of railroad

building and bond issues for millions of dollars were is-

sued in aid of constructing railroads for which the rail-

road companies issued their bonds.

By the end of the Civil War many bonds issued to or

for the railroads were in default. As a result of these

eg ecaamameamna a

experiences, the constitution of 1865 by Article XI, Section

13 provided for the first time that the state should not

become a stockholder in any private corporation except

to secure loans theretofore extended to certain railroad

corporations. Section 14 of the same Article also provided

that no county, city or town should become a stockholder

in or loan its credit to any corporation unless two-thirds

of the qualified voters of the county, city or town assented

thereto. In 1868 the ‘‘Township Aid Act’’ was passed

requiring & two-thirds majority of the voters who voted

at the election.

A number of counties, townships and other public cor-

porations issued bonds and delivered them to railroad

promoters and they were sold throughout the east to

holders in due course. Ina number of cases, after selling

the bonds, the promoters did not complete the railroad.

In 1873 a severe depression hit the country and litiga-

tion arose over the validity of the bonds.

A number of holders of these bonds obtained judgments

in the Federal courts against several counties on the

ground that the plaintiffs were holders in due course and

the bonds contained recitals that all the requirements of

law had been complied with although the counties had

not gotten the railroad. The only remedy of these judg-

ment creditors was mandamus to compel the county courts

to levy taxes to pay the judgments. When such orders

were issued the county judges frequently resigned, ieav-

ing the county without a county court; some county of-

ficials spent time in jail for contempt.

For years these judgments went unpaid; but all were

ultimately refunded at a compromise figure by new bonds

which were voted by the required two-thirds majority and

matured serially over a 20-year period. The last county

ae

to refund its railroad aid judgment was St. Clair County,

which issued refunding bonds in 1918 and which were qj

paid by 1938.

In the meanwhile, the state constitution of 1875 carried

forward the requirements of the two-thirds vote. Section

12 of Article X provided that ‘‘no county, city, town,

township, school district or other political corporation or

subdivision of the state shall be allowed to become ip.

debted in any manner or for any purpose to an amout

exceeding in any year the income and revenue provided

for such year without the consent of two-thirds of the

voters thereof voting on such proposition at an election

to be held for that purpose; * * * and provided further,

that any county, city, town, township, school district or

other political corporation or subdivision of the state in.

curring an indebtedness requiring the consent of the

voters as aforesaid shall, before or at the time of doing

so, provide for the collection of an annual tax sufficient to

pay the interest on such indebtedness as it falls due and

also to constitute a sinking fund for the payment of the

principal thereof, within 20 years from the time of con-

structing the same: .. .’’

This constitution also provided limitations on the

amount of indebtedness which might be so incurred, based

on a percentage of the assessed valuation.

Article VI, Section 26 of the Constitution of 1945 car.

ries forward these provisions requiring a two-thirds vote

of the qualified electors voting on the proposition before

the political corporation may become indebted in ex-

cess of the income and revenue for the year. Section

26(f) requires that before incurring any such indebted-

ness, provision must be made for the collection of an

annual tax in whatever amount is needed, in order to be

sufficient to pay the interest and principal within 20 years.

ll ae

In an opinion by Mr. Justice Field in the case of Vital

Jarrolt Vv. City of Moberly, 108 U. 8. 580, 1. ¢. 585, this

court, speaking of the requirement of the Missouri Con-

stitution of a two-thirds vote for the issuance of bonds,

said,

“The object of the inhibitiom in the state constitu-

tion was to prevent the creation of debts by counties,

cities and towns on behalf of any company, associa-

tion or corporation without the assent of two thirds

of their qualified voters. The loan of their credit,

that is, the placing of their obligation for the pay-

ment of money for the use of companies was the

usual mode in which they incurred indebtedness. Aid

in this way to companies, particularly such as were

organized for the construction of railroads, was given

so frequently by municipal bodies in Missouri, before

the Constitution of 1865 went into effect, as in many

instances to greatly embarrass and subject them to

burdensome and oppressive taxation to provide for

the interest on their obligations and the ultimate pay-

ment of the principal.’’

‘‘Numerous Acts of the Legislature had author-

ized officers of counties and cities to subscribe for stock

in railway companies, and to issue bonds for their

aid without limit as to amount and without the previ-

ous assent of those who were to be taxed for their pay-

ment. In many instances the road, in aid of which

the bonds were issued, was never constructed, and

as no benefit resulted to the counties and cities, their

inhabitants naturally felt impatient under the burdens

which their officers had improvidently imposed.”’

It will thus be seen that the requirement of a two-thirds

vote before the issuance of bonds and of tax levies for

their payment, without limitation as to rate, has been

part of the established fiscal policy of the State of

ee

Missouri for 100 years. This policy has resulted in the

fact that bonds of cities, counties and school districts jn

Missouri have enjoyed a high standing in the financig}

markets of the country with the resulting relatively low

interest cost.

The contrary ruling would lead into a morass. For ex.

ample, Sec. 3 of Article VI of the Missouri Constitution

provides that two or more counties may be consolidated

by « vote of a majority of the qualified electors voting

thereon in each county affected. If the respondents’ po-

sition in this case should prevail, no two counties could

be consolidated unless they happened to have the same

population because each vote in the smaller county would

have more ‘‘weight’’ than a vote in the larger.

It cannot be said that the requirement of a % majority

has no rational relationship to a legitimate state end.

Respectfully submitted

CHAS. CLAFLIN ALLEN

Amicus Curiae

611 Olive Street

St. Louis, Missouri 63101

i cee.

ANNEX

THE SUBSTANCE OF THE MISSOURI CONSTITU-

TIONAL PROVISIONS RELATING TO

ELECTIONS AND BOND ISSUES

ARTICLE VI

Section 3. Two or more counties may be consolidated

by a vote of a majority of the qualified electors voting

thereon in each county affected.

Section 4. No county shall be divided or have any por-

tion stricken therefrom except by vote of a majority of

the qualified electors voting thereon in each county af-

fected.

Section 5. A county may be dissolved by vote of two-

thirds of the qualified electors of the county voting

thereon, and when so dissolved all or portions thereof may

be annexed to the adjoining county or counties as pro-

vided by law.

Section 6. No county seat shall be removed except by

vote of two-thirds of the qualified electors of the county

voting thereon at a general election, but no such vote

shall be taken more than once in five years.

Section 26(a). No county, city, incorporated town or

village, school district or other political corporation or

subdivision of the state shall become indebted in an

amount exceeding the income and revenue provided for

such year, except as otherwise provided in this consti-

totion.

Section 26(b). Any county, city, incorporated town or

village or other political corporation or subdivision of

this state, by a vote of two-thirds of the qualified voters, vot in

may become indebted in an amount not to exceed 5% of

the value of taxable tangible property therein as shown

‘ag Ms

by the last completed assessment for state or county por.

poses except that a schoo] district by a two-thirds vote of

the qualified seat eat been indebted in an amount

not to exceed 10% of such value.

Section 26(c). Any county or city by vote of two-thirds

of the qualified electors voting thereon may incur an ad.

ditional indebtedness for county or city purposes not to

exceed 5% of the taxable tangible property shown as pro.

vided in Section 26(b).

Section 26(d). Any city by a two-thirds vote of the

qualified electors voting thereon, may become indebted

not exceeding in the aggregate an additional 10% of the

value of the taxable tangible property shown as provided

in Section 26(b) for the purpose of acquiring rights of

way, constructing, extending and improving the streets

and avenues and acquiring rights of way, constructing,

extending and improving sanitary or storm sewer systems.

This section further authorizes the governing body of the

city to provide that all or any part of the cost of such

improvement may be levied or assessed on the property

benefited by the improvement and the proceeds shall be

used to reimburse the city for the amount paid or to be

paid by it on the bonds issued for the improvement.

Section 26(e). Any city by a vote of two-thirds of the

qualified electors voting thereon may incur an indebted-

ness in an amount not to exceed an additional 10% of the

value of the taxable property shown as provided in Sec-

tion 26(b) for the purpose of paying the cost of purchas-

ing or constructing waterworks, electric or other light

plants to be owned exclusively by the city, provided the

total general obligation indebtedness of the city shall not

exceed 20%.

Section 26(f). Before incurring any indebtedness every

city, town, village, school district or other political cor-

— A-3—

tion or subdivision of the state shall provide for the

collection of an annual tax on all taxable tangible property

therein sufficient to pay the interest and principal of the

indebtedness as they fall due and to retire the same

within 20 years.

Section 27. Any city, town or village by a vote of 4/7ths

of the qualified electors voting thereon may issue negotia-

ple interest bearing revenue bonds for the purchase of pay-

ing all or part of the cost of purchasing, constructing, ex-

tending or improving any revenue producing water, gas

or electric light works, heating or power plants, or air-

ports, to be owned exclusively by the city, the cost of oper-

ation and maintenance and the principal and interest of

the bonds to be payable solely from the revenues derived

from the operation of such utility.