STATE OF ARIZONA ex Rel. ANA FROHMILLER, State Auditor, Petitioner,
HARRY M. MOORE, State Treasurer, Respondent; STATE BOARD OF SOCIAL SECURITY AND WELFARE, Intervener
Original proceeding in Mandamus. Alternative writ quashed.
Mrs. Ana Frohmiller, Petitioner, in pro. per., and Mr. P. H. Brooks, Deputy State Auditor, for Petitioner.
Mr. Joe Conway, Attorney General, Mr. J. M. Johnson and Mr. W. E. Polley, his Assistants, for Respondent and Intervener.
[50 Ariz. 188] ROSS, J.
The State Auditor and the State Treasurer not being able to agree on the law for the disposition of the sum of $53,083.46 now in the state treasury, the former has petitioned this court asking that the treasurer be required to place said sum in the state's general fund and the latter has answered [50 Ariz. 189] that such sum belongs to the State Board of Social Security and Welfare. The latter agency has petitioned the court for leave to intervene and the petition being granted has filed a pleading in which it adopts the theory of the State Treasurer.
The history of the fund in question is as follows: In 1933 the first broad and somewhat inclusive social service legislation
was enacted by our legislature. See chapter 35, Laws of 1933. This law created a State Board of Public Welfare and clothed it with the power and duty to look after and supply the needs of those of our citizens unable to take care of themselves and, among other things, to initiate or approve work projects for relief and
"To act as the official agency for the state in any social welfare activity initiated by the deferral government and to administer and state funds that may at any time be appropriated or made available for the relief of destitute or necessitous persons." Subdivision 13, § 3.
During 1935 the said state board had a large number of employees -- in supervisory, executive, and clerical positions, in the building and other trades, mechanics, and many other skilled and unskilled workers -- all employed in aid of the needy and unemployed persons or on public works projects carried on under the authority of said chapter 35. All of these employees were insured in the State Compensation Fund, the premiums being paid by the State Board of Public Welfare. For the purpose of fixing insurance rates and collecting premiums, the Industrial Commission placed the State Board of Public Welfare with its employees in what it designated as "Class 0022, Civics," which class contained other state departments and private concerns which pay insurance on their employees. Such classification is in accordance with [50 Ariz. 190] the provisions of section 1413, Revised Code of 1928, which makes it the duty of the Industrial Commission to give credit to or declare cash dividends to each member in a classification when the assets therein exceed the liabilities. The premiums for the year 1935 were $135,300.51 which it turned out was far in excess of the liabilities in "Class 0022, Civics," and the Industrial Commission accordingly declared cash dividends to the insurers in such class, the State Board of Public Welfare's dividend being $53,083.46. This sum the Industrial Commission, on March 30, 1937, paid to the State Board of Public Welfare by check, which was deposited with the State Treasurer, who, in turn, placed it to the credit of the State Public Welfare Fund.
Chapter 35, Laws of 1933, was repealed by chapter 69, Laws of 1937, the latter setting up an entirely new plan of social security and public welfare and placing its administration in the hands of the State Board of Social Security and Welfare, successor to the former board and intervener herein. See Mahoney et al. v. Maricopa County, 49 Ariz. 479, 68 P.2d 694.
In 1935 the State Board of Public Welfare had no funds with which to insure its employees. The legislature, by section 2, article 4, chapter 78, Laws of that year, appropriated to such board for "unemployment and welfare relief" 96 per cent. of the taxes collected under said chapter (known as the luxury tax law) and directed the State Tax Commission, the collector of such tax, to place the same in a fund to be known as the "State Public Welfare Fund," and that was the only state source from which the State Board of Public Welfare obtained its funds. These funds could not legally be used for anything except objects falling within the terms "unemployment and welfare relief," as used in chapter 78, Supra. Certainly not to pay premiums on insurance of employees of the [50 Ariz. 191] state board. Whatever money the state board used for insurance was therefore diverted from the use intended by the legislature to another and different use, and the fund for "unemployment and relief" was depleted to the extent of the $135,300.51. The law then and now was and is that insurable state employees should be insured in the State Compensation Fund. Sections 1418, 1419, and 1425, Revised Code of 1928. Section 1425, supra, makes it the duty of the State Auditor to furnish the Industrial Commission quarterly pay-rolls of the state's insurable employees and to deaw his warrant for premiums due in favor of the State Treasurer on the appropriation made therefor in the general appropriation bill for the State Compensation Fund. The appropriation for 1935 for that purpose was only $20,000. Subdivision 35, chapter 107 (general appropriation bill).
The Industrial Commission thus was put on notice as to who should draw warrants for premiums on insurance for employees of the state and the fund against which such warrants should be drawn. The Industrial Commission knew when it accepted premiums from the State Board of Public Welfare that warrants for such premiums should be drawn by the State Auditor and paid by ...