Court Opinion

ID: 9727569
Source: CourtListenerOpinion
Date Created: 2023-08-26 13:43:38.0148+00
Date Added: 2024-06-11T18:25:39.699399
License: Public Domain

PRENTICE, Justice,
dissenting.
“It has been said that it is the spirit which vivifies and the letter which killeth.” Downes v. Bidwell, (1901) 182 U.S. 244, 21 S.Ct. 770, 45 L.Ed. 1088.
In State v. Nixon, (1979) Ind., 384 N.E.2d 152, 157, we stated that the fundamental principle of constitutional construction is to give effect to the intent of those who framed and adopted the organic law and that those of us charged with responsibility for the task should “ ‘look to the history of the times, and examine the state of things existing when the constitution or any part thereof was framed and adopted, to ascertain the old law, the mischief and the remedy.’ (emphasis added).” Citing State v. Gibson, (1871) 36 Ind. 389, 391.
The mischief that Article 10, Section 5 of our State Constitution seeks to proscribe is the obligating of the future revenues of the state by those in power for the moment. Any scheme or combination of schemes that can accomplish the financing of public projects without creating an obligation upon the state is, therefore, lawful, and any scheme or combination of schemes which obligates the future revenues of the state or its property, other than such revenues or property which are created by the scheme, is unlawful.
One such scheme that has been successfully utilized is the creation of a separate legal entity to develop the asset and be responsible for the debt. Such scheme is lawful, not because it embodies a separate legal entity but because the public, although having the benefit of the property, is insulated from liability upon the debt created.
*1136Another such scheme to avoid being in violation of a very similar proscription has been employed by cities and towns with respect to Article 13, Section 1 of our Constitution. In cases cited in the majority opinion, we have held that obligations issued by such municipalities were not viola-tive of the constitution, since they were payable from revenues of the project only and not from the general revenues. The revenues and property sought to be protected by the debt proscription, although not insulated from the obligation by the veil of a separate legal entity, were insulated, nevertheless, by the exculpatory language of the debt instruments.
The majority opinion has concentrated, to a degree, upon the funds from which the bonds are payable; but the question of constitutionality must be answered not by a determination of the funds from which they are payable but by a determination of the funds from which they are not payable. Whether or not they are ever paid is of no moment, under the constitution, so long as payment cannot be compelled from the general revenues.
It is immaterial that, as pointed out by the majority, the state has heretofore utilized both a separate legal entity and exculpatory language and has thusly doubly insulated itself. I believe, however, that, as between the two, the mandate for clear exculpatory language contained in the statute and consequent, clear exculpatory language in the debt instrument are of more importance than the employment of a specially created separate legal entity which might be regarded as a mere ruse designed by the state to mislead the investors.
Lastly, I note that the appellant discounts the authority of those cases where municipalities have employed exculpatory language alone by pointing out that the proscription against the state is the authorization of debt, except under certain, enumerated circumstances, whereas the proscription against the municipalities is the authorization of debt in excess of two percentum, etc. Such distinction will not bear scrutiny. Both constitutional provisions are designed to limit public debt, except under enumerated exceptions. That the exception provided in one is an authorized amount of debt and the exceptions provided in the other are emergency events is immaterial to the issue, which is whether or not the financing scheme can operate without obligating the general revenues.
I would hold the statute to be constitutional and affirm the trial court.
HUNTER, J., concurs with separate opinion.