Green v. Frazier

Background

A group of North Dakota taxpayers sued state officials to stop several 1919 laws that created a state-run Industrial Commission, a state bank, a mill-and-elevator system, and a home-building program. The laws authorized bond issues, state appropriations, and tax levies to fund these enterprises and to back loans and operations. The State Supreme Court upheld the laws, and the taxpayers argued the taxes required by these laws violated the Fourteenth Amendment by taking property without due process.

Reasoning

The Court framed the core question as whether using taxes to establish and support state-owned businesses and to pay related bonds amounted to an unconstitutional taking of property. Relying on long-standing rules, the Court gave strong deference to the state legislature and the state’s highest court, noting local authorities are best positioned to judge public needs. The Court accepted North Dakota’s factual findings about the importance of agriculture and the alleged economic harms, and it emphasized these enterprises were state-owned, not private ventures aided by taxes. Citing prior decisions, the Court held the federal due-process clause did not bar the State from taxing to carry out these public purposes and affirmed the state court’s decision.

Real world impact

The decision means North Dakota may continue to use taxes and bond proceeds to run the bank, mill-and-elevator, and housing programs without running afoul of the Fourteenth Amendment as interpreted here. Taxpayers face a high barrier to federal interference when state constitutions, legislatures, and courts declare such projects to serve a public purpose. The Court declined to evaluate the wisdom of the economic policy, leaving such judgments to the people and their state institutions.