(40 Sup.Ct.) people of the United States. McCulloch v. | electors of Congressmen as those "requisite Maryland, 4 Wheat. 316, 402, 4 L. Ed. 579. for electors of the most numerous branch of The states surrendered to the general govern- the state Legislature." Article 1, section 3, ment the powers specifically conferred upon provided that Senators shall be chosen in the nation, and the Constitution and the each state by the Legislature thereof, and laws of the United States are the supreme this was the method of choosing senators unlaw of the land. til the adoption of the Seventeenth Amend The framers of the Constitution realized that it might in the progress of time and the development of new conditions require changes, and they intended to provide an orderly manner in which these could be accomplished; to that end they adopted the fifth article. This article makes provision for the proposal of amendments either by two-thirds of both houses of Congress, or on application of the Legislatures of two-thirds of the states; thus securing deliberation and consideration before any change can be proposed. The proposed change can only become effective by the ratification of the Legislatures of threefourths of the states, or by conventions in a like number of states. The method of ratification is left to the choice of Congress. Both methods of ratification, by Legislatures #227 or conventions, call for *action by deliberative assemblages representative of the people, which it was assumed would voice the will of the people. [2, 3] The fifth article is a grant of author-vened. ity by the people to Congress. The determination of the method of ratification is the exercise of a national power specifically granted by the Constitution; that power is conferred upon Congress, and is limited to two methods, by action of the Legislatures of three-fourths of the states, or conventions in a like number of states. Dodge v. Woolsey, 18 How. 331, 348, 15 L. Ed. 401. The framers of the Constitution might have adopted a different method. Ratification might have been left to a vote of the people, or to some authority of government other than that selected. The language of the article is plain, and admits of no doubt in its interpretation. It is not the function of courts or legislative bodies, national or state, to alter the method which the Constitution has fixed. All of the amendments to the Constitution have been submitted with a requirement for legislative ratification; by this method all of them have been adopted. *228 ment, which made *provision for the election of Senators by vote of the people, the electors to have the qualifications requisite for electors of the most numerous branch of the state Legislature. That Congress and the states understood that this election by the people was entirely distinct from legislative action is shown by the provision of the amendment giving the Legislature of any state the power to authorize the executive to make temporary appointments until the people shall fill the vacancies by election. It was never suggested, so far as we are aware, that the purpose of making the office of Senator elective by the people could be The accomplished by a referendum vote. necessity of the amendment to accomplish the purpose of popular election is shown in the adoption of the amendment. In article 4 the United States is required to protect every state against domestic violence upon application of the Legislature, or of the executive when the Legislature cannot be conArticle 6 requires the members of the several Legislatures to be bound by oath, or affirmation, to support the Constitution of the United States. By article 1, section 8, Congress is given exclusive jurisdiction over all places purchased by the consent of the Legislature of the state in which the same shall be. Article 4, section 3, provides that no new states shall be carved out of old states without the consent of the Legislatures of the states concerned. There can be no question that the framers of the Constitution clearly understood and carefully used the terms in which that instrument referred to the action of the Legislatures of the states. When they intended that direct action by the people should be had they were no less accurate in the use of apt phraseology to carry out such purpose. The members of the House of Representatives were required to be chosen by the people of the several states. Article 1, section 2. The Constitution of Ohio in its present #229 form, although *making provision for a referendum, vests the legislative power primarily in a General Assembly, consisting of a Senate and House of Representatives. Article 2, [4] The only question really for determination is: What did the framers of the Constitution mean in requiring ratification by "legislatures"? That was not a term of un-section 1, provides: certain meaning when incorporated into the Constitution. What it meant when adopted it still means for the purpose of interpretation. A Legislature was then the represent ative body which made the laws of the people. The term is often used in the Constitu-ments to the Constitution, and to adopt or retion with this evident meaning. Article 1,ject the same at the polls on a referendum vote section 2, prescribes the qualifications of as hereinafter provided." "The legislative power of the state shall be Senate and House of Representatives, but the vested in a General Assembly consisting of a people reserve to themselves the power to propose to the General Assembly laws and amend 40 SUP.CT.-32 [5] The argument to support the power of { article 1 section 4, of the Constitution, which the state to require the approval by the peo- provides that the times, places, and manners ple of the state of the ratification of amend- of holding elections for Senators and Reprements to the federal Constitution through sentatives in each state shall be determined the medium of a referendum rests upon the by the respective Legislatures thereof, but proposition that the federal Constitution re- that Congress may at any time make or alter quires ratification by the legislative action of such regulations, except as to the place for the states through the medium provided at choosing Senators. As shown in the opinion the time of the proposed approval of an in that case, Congress had itself recognized amendment. This argument is fallacious in the referendum as part of the legislative authis ratification by a state of a constitution- thority of the state for the purpose stated. al amendment is not an act of legislation It was held, affirming the judgment of the within the proper sense of the word. It is Supreme Court of Ohio, that the referendum but the expression of the assent of the state provision of the state Constitution, when apto a proposed amendment. plied to a law redistricting the state with a *view to representation in Congress, was not unconstitutional. Article 1, section 4, plainly gives authority to the state to legislate within the limitations therein named. Such legislative action is entirely different from the requirement of the Constitution as to the expression of assent or dissent to a proposed amendment to the Constitution. In such expression no legislative action is authorized or required. #231 At an early day this court settled that the submission of a constitutional amendment did not require the action of the President. The question arose over the adoption of the Eleventh Amendment. Hollingsworth et al. v. Virginia, 3 Dall. 378, 1 L. Ed. 644. In that case it was contended that the amend ment had not been proposed in the manner provided in the Constitution as an inspection of the original roll showed that it had never been submitted to the President for his approval in accordance with article 1, section 7, of the Constitution. The Attorney General answered that the case of amendments is a substantive act, unconnected with the ordinary business of legislation, and not within the policy or terms of the Constitution invest *230 ing the President with a qualified negative on the acts and resolutions of Congress. In a footnote to this argument of the Attorney General, Justice Chase said: The court by a unanimous judgment held that the amendment was constitutionally adopted. [6] It is true that the power to legislate in the enactment of the laws of a state is derived from the people of the state. But the power to ratify a proposed amendment to the federal Constitution has its source in the federal Constitution. The act of ratification by the state derives its authority from the federal Constitution to which the state and its people have alike assented. This view of the amendment is confirmed in the history of its adoption found in 2 Watson on the Constitution, 1301 et seq. Any other view might lead to endless confusion in the manner of ratification of federal amendments. The choice of means of ratification was wisely withheld from conflicting action in the several states. [7] It follows that the court erred in holding that the state had authority to require the submission of the ratification to a referendum under the state Constitution, and its judgment is reversed and the cause remanded for further proceedings not inconsistent with this opinion. Reversed. Ohio. "There can, surely, be no necessity to answer that argument. The negative of the President applies only to the ordinary cases of legisla- (Argued April 23, 1920. Decided June 1, 1920.) tion. He has nothing to do with the proposition, or adoption, of amendments to the Constitution." No. 601. But it is said this view runs counter to the decision of this court in Davis v. Hildebrant, 241 U. S. 565, 36 S. Ct. 708, 60 L. Ed. 1172. But that case is inapposite. It dealt with (253 U. S. 231) HAWKE v. SMITH, Secretary of State of In Error to the Supreme Court of the State of Ohio. Suit by George S. Hawke against Harvey C. Smith, as Secretary of State of Ohio. To review an adverse judgment of the Supreme Court of Ohio (127 N. E. 924), plaintiff brings error. Reversed. Messrs. J. Frank Hanly, of Indianapolis, Ind., Arthur Hellen, of Washington, D. C. (Messrs. George S. Hawke, of Cincinnati, Ohio, and Charles B. Smith, of Cincinnati, Ohio, and James Bingham and Reinster A. Bingham, both of Indianapolis, Ind., of counsel), for plaintiff in error. #232 *Messrs. John G. Price, Atty. Gen., and B. W. Gearheart, of Columbus, Ohio (Judson Harmon and Lawrence Maxwell, both of Cincinnati, Ohio, of counsel), for defendant in error. Messrs. Shippen Lewis, William Draper Lewis, and George Wharton Pepper, all of Philadelphia, Pa., amici curiæ. Mr. Justice DAY delivered the opinion of the Court. This case presents the same question as that already decided in No. 582, 253 U. S. 221, 40 Sup. Ct. 495, 64 L. Ed.; the only difference (40 Sup.Ct.) 283-TAXATION being that the amendment involved is the pro- | 6. CONSTITUTIONAL LAW 38-LEGISLATION HELD NOT TO DENY DUE PROCESS BY IMPOSING TAXES FOR PRIVATE PURPOSES. For the reasons stated in our opinion in OF LEGISLATION. Act N. D. Feb. 25, 1919 (Laws 1919, c. 151), creating the Industrial Commission, with extensive powers; the Bank of North Dakota Act (Laws 1919, c. 147), establishing a bank operated by the state under the control of such commission; the act (Laws 1919, c. 148) providing for a bond issue to create the capital of such bank; the act (Laws 1919, c. 154) providing for a bond issue to replace funds employed by the bank in making loans on real estate; the act (Laws 1919, c. 152) providing for the engagement by the state in the business of manufacturing and marketing farm products vator, and flour mill system operated by the and for the establishment of a warehouse, elestate; the act (Laws 1919, c. 153) providing for a bond issue for the purpose of carrying on the business of the mill and elevator association; and the Home Building Act (Laws 1919, c. 150), declaring the purpose of the state to engage in the enterprise of providing homes for its residents and to operate a home building association-do not take property without due process of law, by imposing taxes for private purposes, in view of the conditions existing in North Dakota as found by the Supreme Court of that state. In Error to the Supreme Court of the State of North Dakota. Action by E. A. Green and others against Lynn J. Frazier, Governor, and others. An order sustaining a demurrer to the complaint was affirmed by the Supreme Court of North Dakota (176 N. W. 11), and plaintiffs bring error. Affirmed. Mr. Thomas C. Daggett, of St. Paul, Minn., for plaintiffs in error. Mr. Frederick A. Pike, of St. Paul, Minn., for certain defendants in error. Mr. Justice DAY delivered the opinion of the Court. This is an action by taxpayers of the state of North Dakota against Lynn J. Frazier, #234 Governor, John N. *Hagan, Commissioner of Agriculture and Labor, William Langer, Attorney General, and Obert Olson, State Treasurer, and the Industrial Commission of that state, to enjoin the enforcement of certain state legislation. The defendants Lynn J. Frazier, as Governor, William Langer, as Attorney General, and John Hagan, as Commissioner of Agriculture and Labor, constitute the Industrial Commission, created by the Act of February 25, 1919, of the Sixteenth Legislative Assembly of the state of North Dakota (Laws 1919, c. 151). [1] The laws involved were attacked on vaWith the wisdom of state legislation, at-rious grounds, state and federal. The Sutacked as taking property without due process of law, by imposing taxes for private purposes, preme Court of North Dakota sustained the and with the soundness of the economic policy constitutionality of the legislation. involved, the federal Supreme Court has no concern. So far as the decision rests on state grounds it is conclusive, and we need not stop to inquire For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes concerning it. Davis v. Hildebrant, 241 U. S. 565, 36 Sup. Ct. 708, 60 L. Ed. 1172. The only ground of attack involving the validity of the legislation which requires our consideration concerns the alleged deprivation of rights secured to the plaintiffs by the Fourteenth Amendment to the federal Constitution. It is contended that taxation under the laws in question has the effect of depriving plaintiffs of property without due process of law. The legislation involved consists of a series of acts passed under the authority of the state Constitution, which are: (1) An act creating an Industrial Commission of North Dakota, which is authorized to conduct and manage on behalf of that state certain utilities, industries, enterprises, and business projects, to be established by law. The act gives authority to the commission to manage, operate, control, and govern all utilities, enterprises, and business projects owned, undertaken, administered, or operated by the state of North Dakota, except those carried on in penal, charitable, or educational institutions. To that end certain powers and authority are given to the commission, among others: The right of eminent domain; to fix the buy state in the sum of $2,000,000, the proceeds of which are to constitute the capital of the Bank of North Dakota. The earnings of the bank are to be paid to the state treasurer. Tax levies are authorized sufficient to pay the interest on the bonds annually. The bonds shall mature in periods of five years, and the board of equalization is authorized $236 to levy a tax in an amount *equal to one-fifth of the amount of their principal. The state treasurer is required to establish a bank bond payment fund into which shall be paid moneys received from taxation, from appropriations and from bank earnings. $10,000 is appropriated for the purpose of carrying the act into effect. (4) An act (Laws 1919, c. 154) providing for the issuing of bonds in the sum of not exceeding $10,000,000, to be known ries." These bonds are to be issued for the as "Bonds of North Dakota, Real Estate Sepurpose of raising money to procure funds funds as may have been employed by it from for the Bank of North Dakota to replace such time to time in making loans upon first mortgages upon real estate. The faith and credit of the state of North Dakota are pledged for from the sale of the bonds are to be placed the payment of the bonds. Moneys derived by the Industrial Commission in the funds of the bank, and nothing in the act is to be construed to prevent the purchase of the bonds with any funds in the Bank of North Dako ta. #235 ing price of things bought, and the selling price of things sold, incidental to the utilities, industries, enterprises, and business projects, and to fix rates and charges for services rendered, having in mind the accumulation of a fund with which to replace in the general funds of the state the amount received by the commission under appropriations made by the act; to procure the necessary funds for such utilities, industries, enterprises, and business projects by negotiating the bonds of the state in such amounts and in such manner as may be provided by law. $200,000 of the funds of the state are appropriated to carry out the provisions of the act. (2) The Bank of North Dakota Act (Laws 1919, c. 147), which establishes a bank under the name of "The Bank of North Dakota," operated by the state. The Industrial Commission is placed in control of the operation and management of the bank, and is given the right of eminent domain to acquire necessary property. Public funds are to be deposited in the bank, and the deposits are guaranteed by the state of North Dakota. Authority is given to transfer funds to other departments, institutions, utilities, industries, enterprises, or business projects, plants, machinery and equipment, owned, and to make loans to counties, cities, or polit-controlled, and operated by it under the name ical subdivisions of the state, or to state or of the "North Dakota Mill & Elevator Associnational banks, on such terms as the com- ation." The Industrial Commission is placed mission may provide. Loans to individuals, in control of the association, with full power, associations, and private corporations are au- and it is authorized to acquire by purchase, thorized, when secured by duly recorded first lease, or right of eminent domain, all necesmortgages on lands in the state of North Da- sary property or properties, etc.; to buy, mankota. An appropriation of $100,000 is made ufacture, store, mortgage, pledge, sell, and immediately available to carry out the pro- exchange all kinds of raw and manufactured visions of the act. (3) An act (Laws 1919, c. farm products, and by-products, and to oper148) providing for the issuing of bonds of the 'ate exchanges, bureaus, markets and agencies *237 It is further provided that the state board of equalization shall, if it appears that the funds in the hands of the state treasurer are insufficient to pay either principal or interest, accruing within a period of one year thereafter, make a necessary tax levy to meet the indicated deficiency. Provision is made for the repeated exercise of the powers granted by the act, for the purposes stated. An appropriation of $10,000 is made for carrying into effect the provisions of this act. (5) An act the state of North Dakota to engage in the (Laws 1919, c. 152) declaring the purpose of business of manufacturing and marketing farm products, and to establish a warehouse, of "North Dakota Mill & Elevator Associaelevator, and flour mill system under the name tion," to be operated by the state. The purpose is declared that the state shall engage in and for that purpose shall establish a system the business of manufacturing farm products of warehouses, elevators, flour mills, factories, (40 Sup.Ct.) within and without the state, and in foreign ferring to leave its scope to judicial decicountries. Provision is made for the bring- sions when cases from time to time arise. ing of a civil action against the state of Twining v. New Jersey, 211 U. S. 78, 100, 29 North Dakota on account of causes of action Sup. Ct. 14, 53 L. Ed. 97. arising out of the business. An appropriation is made out of state funds, together with the funds procured from the sale of state bonds, to be designated as the capital of the association. (6) An act (Laws 1919, c. 153) providing for the issuing of bonds of the state of North Dakota in a sum not exceeding $5,000,000, to be known as "Bonds of North Dakota, Mill & Elevator Series," providing for a tax and making other provisions for the payment of the bonds, and appropriations for the payment of interest and principal thereof. The bonds are to be issued and sold for the purpose of carrying on the business of the Mill & Elevator Association. The faith and credit of the state of North Dako ta are pledged for the payment of the bonds, both principal and interest. These bonds may be purchased with funds in the Bank of North Dakota. Taxes are provided for sufficient to pay the bonds, principal and interest, taking into account the earnings of the association. The sum of $10,000 is appropriated from the general funds of the state to carry the provisions of the act into effect. (7) The Home Building Act (Laws 1919, c. 150) declares the purpose of the state to engage in the enterprise of providing homes for its residents and to that end to establish a business system operated by it under the name *238 of the "Home Building Association of North Dakota," and defines its duties and the extent of its powers. The Industrial Commission is placed in control of the "Home Build ing Association," and is given the power of eminent domain, and the right to purchase and lease the requisite property. Provision is made for the formation of home building unions. The price of town homes is placed at $5,000, and of farm homes at $10,000. A bond issue of $2,000,000, known as "Bonds of North Dakota, Home Building Series," is pro The due process of law clause contains no specific limitation upon the right of taxation in the states, but it has come to be settled that the authority of the states to tax does not include the right to impose taxes for merely private purposes. Fallbrook Irrigation District v. Bradley, 164 U. S. 155, 17 Sup. Ct. 56, 41 L. Ed. 369. In that case the province of this court in reviewing the power of state taxation was thoroughly discussed *239 by the late Mr. Justice Peckham speak*ing for the court. Concluding the discussion of that subject (164 U. S. 158, 17 Sup. Ct. 63, 41 L. Ed. 369), the Justice said: "In the Fourteenth Amendment the provi sion regarding the taking of private property is is confined to its depriving any person of life, omitted, and the prohibition against the state liberty or property, without due process of law. It is claimed, however, that the citizen is deprived of his property without due process of law, if it be taken by or under state authority for any other than a public use, either under the guise of taxation or by the assumption of the right of eminent domain. In that way the question whether private property has been taken for any other than a public use becomes material in this court, even where the taking is under the authority of the state instead of the federal government." Accepting this as settled by the former adjudications of this court, the enforcement of the principle is attended with the application of certain rules equally well settled. When a [3] The taxing power of the states is primarily vested in their Legislatures, deriving their authority from the people. state Legislature acts within the scope of its their right to change the agents to whom authority it is responsible to the people, and they have intrusted the power is ordinarily deemed a sufficient check upon its abuse. undertakes to exert the taxing power, and When the constituted authority of the state brought before this court, every presumption the question of the validity of its action is in its favor is indulged, and only clear and demonstrated usurpation of power will authorize judicial interference with legislative action. vided for. [2] There are certain principles which must be borne in mind in this connection, and which must control the decision of this court upon the federal question herein involved. -This legislation was adopted under the broad power of the state to enact laws raising by taxation such sums as are deemed necessary to promote purposes essential to the general welfare of its people. Before the adoption of the Fourteenth Amendment this power of the state was unrestrained by any federal authority. That amendment introduced a new limitation upon state power into the federal Constitution. The states were forbidden With this united action of people, *Legislato deprive persons of life, liberty or proper-ture and court, we are not at liberty to interty without due process of law. What is fere unless it is clear beyond reasonable conmeant by due process of law this court has troversy that rights secured by the federal had frequent occasion to consider, and has al- Constitution have been violated. What is a ways declined to give a precise meaning, pre-public purpose has given rise to no little judi *240 thority of the Constitution and laws prevail[4] In the present instance under the auing in North Dakota the people, the Legislature, and the highest court of the state have acts were passed to be of a public nature, declared the purpose for which these several and within the taxing authority of the state. |
