that if the act of the legislature were carried out the purpose of the Federal grant would be defeated, and the trust theory was selected as a feasible one for supporting the decision reached.

The Indiana decision is based solely upon policy. The court felt that any attempt to divert Federal funds from the purposes specified in the grant should be quashed. Otherwise State legislatures would be permitted to accept the grants with all their conditions and later to enact legislation designed to defeat every limitation involved. As a result there could be no assurance that Federal funds would be used for the purposes set forth in the grant. Therefore the court made certain that even though the alleged title of the State to the lands were conceded, it would not be permitted to defeat the purpose of the grant.

The land grants probably represent the nearest approach to an out-and-out grant to the States for educational purposes. It would be difficult to sustain the assertion that these lands have remained the property of the Federal Government, yet the Federal Government will not permit the terms of the grant to be violated. Even if the title to the land is in the State, sufficient control is reserved to the Federal Government to make sure that the purpose of the grant is carried out. It should be emphasized, however, that no attempt to control educational policy was involved in the Indiana case. The court merely decided that lands granted for the support of education in the township cannot be diverted to the support of education throughout the State. Revenue from such lands therefore cannot be used for purposes of equalization.

A few years later there was a sequel to this case. When the Indiana statute was declared unconstitutional the legislature passed a substitute act providing that the land funds should not be diverted from the township, but that those schools receiving township funds should get nothing from the State until other schools should be placed on a parity with them. This law was upheld by the United States Supreme Court.2

2 Springfield Township of Franklin Co. v. Quick, 63 U. S. 56 (1859).

The university cases.-There are numerous cases involving the use of funds derived from lands granted to the States for the support of universities. In practically all of them the State legislature or some other agency has attempted to control or divert these funds. The usual contention has been that the lands belong to the State and are therefore subject to State control; that since the university is an instrumentality of the State, subject to its control and regulation, any funds coming to the university through Federal grants constitute a grant to the State, and ownership thereof is vested in the State. This contention was made in a Wyoming case, but the court overruled it. The court said:

Upon the state's acceptance of the grant, it was placed in the position of a trustee; it holds the lands for the purposes expressed in the grant, and no other, and is under at least a moral obligation to conform to the terms and conditions contained in the granting act.

The ownership of a trustee is conditional in nature. Socalled legal title is lodged in a trustee merely to enable him to carry out the terms of the trust. His title is limited. He has the legal title but the beneficiary has the equitable or beneficial title. Therefore the location of title in one person, or agency, or another is immaterial so long as the person or agency holding title is bound by the conditions. under which it was acquired.

The implication of this concept as it relates to equalization is plain. Funds granted by the Federal Government. for equalization may be used for that purpose only, and even if title is in the State it is subject to the terms of the grant. If title remains in the Federal Government the funds cannot, of course, be controlled by constitutional or statutory provision of the State.

Another problem involving the status of Federal grants to the States concerns the mechanics of disbursement of funds. after the designated custodian receives them. Disbursement has been the subject of litigation in several States. It has

Ross v. Trustees of the University of Wyoming, 31 Wyo. 464, 228 Pac. 642, at 651 (1924).

arisen most frequently because the custodian, a State official, has refused to release the funds to the agency supposed to benefit from them.

One of the most exhaustive opinions on the subject was handed down by the Supreme Court of the State of Washington in a case involving the Morrill, Hatch, and SmithLever funds. This case is an excellent example of how a State statute or constitutional provision may obstruct the distribution of Federal grants to the agencies which are to spend them. The State auditor refused to pay funds due the State College of Washington under the Federal acts on the ground that there had been no legislative appropriation of these funds for the use of the college. A Washington statute provided as follows:

The state treasurer shall hereafter constitute and be the treasurer of all funds belonging to State College. . . . All moneys or funds received from the United States or from any other source whatsoever for the benefit of said State College .. shall be paid to and deposited with the state treasurer.*

...

The pertinent provision (art. VIII, sec. 4) of the Constitution of Washington states:

No moneys shall ever be paid out of the treasury of this state, or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law . . . .

The legislature had failed or refused to appropriate the Federal funds in the hands of the treasurer. When warrants were drawn against the funds the auditor refused payment, citing the constitutional provision quoted as authority for his refusal. In an exhaustive opinion the court upheld the auditor. The court pointed out that if the Federal act specified the custodian of the moneys, the legislature cannot change this designation. On the other hand, if the granting act does not designate the custodian, the funds go to the officer designated by State law to receive State moneys. Furthermore, even if moneys are not required to be paid to the State officer, but are, nevertheless, in his possession, legislative appropriation is necessary to enable him to disburse them. The court said:

Sec. 5527. Remington's Comp. Stat. (1909).

...

moneys, even if not funds of the state in the sense that the same are available for general state purposes, and even though they are derived from some particular source and are impressed with a trust which requires their use for a special purpose only, are, nevertheless... not subject to withdrawal without legislative appropriation. . . .5

The court did not find it necessary to locate title to the funds. It passed solely on the narrow issue of control of disbursement. This case is typical of decisions limited to the narrow issue involved, in which no attempt is made to generalize as to title.

The Clausen case is important because of its practical, as distinguished from its purely legal, implications. The statutory and constitutional provisions of the State deprived the State College of Washington of the use of Federal funds until the next regular session of the legislature, unless a special session were called sooner to pass the necessary act of appropriation. The Hatch Act did not require payment to the State auditor; these funds would therefore have been available without legislative appropriation except for the fact that they had been paid to him. Thus, according to this court, if money comes into the State auditor's hands, even though he is not the designated custodian, he may not disburse it without legislative authority. It is submitted that the case is hardly supportable on principle. A strong dissenting opinion is in accord with this view.

An opposite conclusion was reached in a similar situation in an Idaho case. The court expressly held that the proceeds of Federal land grants, direct Federal appropriations, and private donations to the State University are trust funds, which are not subject to the constitutional requirement that money be appropriated before it may be paid out by the State custodial authority. The court further held that claims against such funds need not be passed upon by the State board of examiners, and that the funds received from the Federal Government may be expended by the board of regents subject only to the conditions imposed by Congress.

'State v. Clausen, 160 Wash. 618, 295 Pac. 751, at 756 (1931).

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7

The Idaho court indicates a theory of constitutional construction which it considers fundamental. In reaching its decision, one clearly in accord with the spirit of the Federal grant, the court used the following trenchant language:

When a constitutional provision or legislative act is fairly open to two constructions, one of which will carry out and the other defeat some great public purpose for which it was designed, the former construction should be applied.

The Washington and Idaho cases represent the strict and liberal views respectively with reference to the disbursement of Federal funds. The liberal view was adopted by the Supreme Court of Nebraska in a similar case."

A Federal act granting funds to the States for equalization or other educational purposes should be carefully worded in order to avoid the Washington situation. This may be done by a provision in the Federal act to the effect that the acceptance of the terms of the Federal grant shall constitute an appropriation of the funds thereof for the purposes therein indicated. If this is inadvisable, the State departments of education should be warned by the United States Commissioner of Education of the possible difficulty so that they may make an effort to have the necessary appropriation acts passed in their respective States.

State aid.-A California case involving funds appropriated by the State for the benefit of the several districts is analogous to the Federal grant problem. The law provided that the State superintendent should apportion moneys appropriated for school purposes to the several counties and that he should draw his order for these moneys in favor of the several county treasurers. A city treasurer, who was also the school treasurer, brought suit against a county treasurer to force the county treasurer to pay him the amount due his district. The city treasurer contended that the moneys thus appropriated were, pro tanto, those of the local district, which was entitled to their possession. In overruling this contention the court said:

• State v. State Board of Education, 33 Idaho 415, 196 Pac. 201, at 205 (1921).

State v. Searle, 77 Neb. 155, 109 N. W. 770 (1906).