Opinion ID: 1709084
Heading Depth: 1
Heading Rank: 9

Heading: As to Violation of Amended Section 93, Constitution 1901.

Text: It is contended that the project is not a work of internal improvement in the promotion and development of harbors and seaports, within the meaning of the provisions of the Mobile Port Amendment. The general language of that Amendment includes within its scope the facilities specified in more detail in § 13, Tit. 38, supra. It follows that the project, which we have held to be included in the language of § 13, quoted above, is a work of internal improvement in promoting and developing harbors and seaports, within the meaning of the Mobile Port Amendment. The broad scope of the Mobile Port Amendment has been recognized by this court. See: Radcliff and Lang, supra. In the latter case, we approved the following from the decree of the trial court: The Constitution and Enabling Acts authorize the State through a duly created agency, to engage in the work of `promoting, developing, constructing, maintaining and operating all harbors and seaports within the State.' No broader powers could have been concisely conferred.    [Emphasis supplied.] We do not think the employment agreement, by which the Department employs the operating company to perform services at a portion of the project, violates those provisions of § 93, Constitution 1901, as amended, having the effect of requiring that works of internal improvement acquired by the State at harbors and seaports shall remain under the management and control of the Department. By the express terms of the employment agreement, the Department has reserved full management and control of the plant facilities referred to in that agreement. The actions of the Department in entering into those of the proposed agreements to which it is a party will not violate the provisions of § 93, Constitution, 1901, as amended, prohibiting the State from being interested in any private or corporate enterprise or lending money or its credit to any individual, association or corporation. It seems clear that the Department is not lending its credit to the City under the project lease; but, even if so, such action would not violate § 93, as amended. That section does not apply to transactions between the Department and the City. State ex rel. Austin v. City of Mobile, 248 Ala. 467, 28 So.2d 177; Alabama State Bridge Corporation v. Smith, 217 Ala. 311, 116 So. 695. Since no contention is made that the services to be performed by the Operating Company will not be worth the compensation to be paid to it, we are not impressed with the argument that the employment agreement will constitute a lending of the State's credit. The service requirements agreement is a business contract with benefits accruing to both parties. Under its provisions, Henderson, as a customer of the Department, has access to facilities to which it may submit its requirements of sugar for processing. The Department, in turn, receives from Henderson amounts sufficient to pay the cash rental required to be paid by the Department under the provisions of the project lease, and the costs of operation, maintenance and capital improvements to the plant facilities (other than those of such costs that are allocable to the processing of sugar for others than Henderson) and also to yield a profit to the Department. The payments made by Henderson under the service requirements agreement do not cover any services rendered to Henderson at the wharf facilities. It will, therefore, be necessary that Henderson make additional payments of wharfage and dockage fees with respect to sugar presented by Henderson for processing. The Department will receive benefits under the service requirements agreement, regardless of whether Henderson has any requirements for the processing of sugar. When a contract of a public body is an ordinary commercial contract, with benefits flowing to both parties and a consideration on both sides, it is not a lending of credit by the public body. Otherwise, §§ 93 and 94, Constitution 1901, as amended, would prohibit any public body from entering into any contract whereunder the other party gained any benefits whatever. Presumably, benefits must accrue to the other party to every contract entered into by the Department for services from the port facilities at Mobile. Otherwise, it is not likely that anyone would enter into a contract with the Department. In considering whether the actions of the Department in entering into the employment agreement and the service requirements agreement would constitute a lending of the State's credit to Henderson and its subsidiary, the Operating Company, we have not considered it important that two corporations, rather than one, are involved. Our conclusions would be the same if Henderson were the other party to both the employment agreement and the service requirements agreement. What was said in State ex rel. Wilkinson v. Murphy, 237 Ala. 332, 186 So. 487, 121 A.L.R. 283, and In re Opinion of the Justices, 237 Ala. 429, 187 So. 244, is not inconsistent with our conclusions in this case. The business activities involved in those cases were not within the exception clauses that were added to § 93 of the Constitution by the Mobile Port Amendment. The Wilkinson case involved the engaging by the State in the business of selling liquor, and In re Opinion of the Justices involved the operation by the State of agricultural produce markets. Neither of those cases involved the promotion or development of a seaport. Activities of the State in promoting and developing seaports are given exceptional and special treatment by § 93, as amended by the Mobile Port Amendment. The customary functions of the Department constitute the carrying on of proprietary enterprises. In State Docks Commission v. Barnes, 225 Ala. 403, 143 So. 581, we spoke of the State in its port activities as being engaged in business enterprises, and as performing a business or corporate power, and not a governmental function. While the State is prohibited by § 93, as amended, from engaging in proprietary functions and business enterprises generally, we hold that it is not prohibited thereby from carrying on business enterprises of the nature here involved in promoting and developing its seaports.