Dickinson v. Talbott
In Dickinson v. Talbott, 114 W.Va. 1, 170 S.E. 425 (1933), the Court discussed how invocation of the "previous liability" exception to the debt clause is directly tied to the discharge of an indebtedness. Through that decision, the Court approved the issuance of state bonds for the purpose of discharging a specific indebtedness that resulted when the state, due to insufficient tax receipts and tax levying during the Depression, borrowed funds from various banks to meet the state's obligations and transferred funds from special funds not intended for general revenue purposes.
Under the facts of Dickinson, two exceptions to the debt clause were determined to permit the bond issuance: the exceptions granted for casual deficits and redemption of a previous liability. See id. at 5-6, 170 S.E. at 427-28; W.Va. Const. art. X, 4.
In discussing the debt clause, we observed in Dickinson that:
The phraseology employed in the section under consideration art. X, 4 indicates that the framers of the Constitution anticipated that emergencies might arise in the state's finances when it would be necessary for indebtedness to be incurred by the state, and therefore provisions were made that such conditions might properly be met if and when they should arise.... ...
We are of the opinion also that legislative justification of the five-million-dollar bond issue is based not only on the existence of casual deficits within the meaning of section 4, Article X of the Constitution, but as well on the existence of "a previous liability of the State" within the meaning of said section. The unanticipated decline in receipts of public revenue produced first the deficits in such revenue and then, to meet the same, indebtedness was incurred by the state as hereinabove stated.
(114 W.Va. at 6, 170 S.E. at 428.)
In upholding the bond issue in Dickinson, the Court made clear that application of the "previous liability" exception to the debt clause requires an existing indebtedness and an accompanying liability that results when that specific indebtedness is discharged or satisfied:
"When, by reason of casual deficits in its revenues, the state incurs liability in the discharge of indebtedness incident to such deficits, the same may be funded by state bonds for the issuance of which provision is made by legislative enactment, on the basis of the redemption of "a previous liability of the State" within the meaning of section 4, Article X, West Virginia Constitution."
(114 W.Va. at 2, 170 S.E. at 426, syl. pt. 4.)