Opinion ID: 2149916
Heading Depth: 1
Heading Rank: 5

Heading: Authorizing Statute

Text: The Court of Appeals opinion also holds that any Bonds issued pursuant to the County Building Authority Statute, supra, must be redeemed as soon as sufficient funds are accumulated in the sinking fund. Hutchinson, Shockey, 626 N.E.2d at 559. This interpretation, of course, goes further than that court's interpretation of the Indenture, which gave the Bondholder the ability to redeem prior to maturity upon exercise of § 13.01, the defeasance clause. We read the statute differently from the Court of Appeals. The provision in question sets forth a series of requirements for the issuance of bonds. That is, at the time bonds are issued, the maturities on the bonds must not exceed the term of the lease. We agree with the Authority that it is highly likely that this provision is meant to assure compliance with constitutional debt limitations and to protect bondholders. Once the bonds are issued and the bondholders are protected by the terms of the indenture, the statutory provision of necessity is overridden by the terms of the indenture. If we were to hold otherwise, it could work to the extreme prejudice on the bondholder or the issuer, depending on market conditions. For example, such a holding would allow units of government to override the maturity and redemption provisions of outstanding bonds and indentures in unfavorable interest rate environments, depriving bondholders of their high-rate securities. Government has no power to impair a contract in this way. See Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 4 L.Ed. 629 (1819).