Court Opinion

ID: 9636152
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:18:03.087994+00
Date Added: 2024-06-11T18:09:42.642259
License: Public Domain

PALMORE, Judge
(dissenting).
In Faulconer v. City of Danville, 313 Ky. 468, 232 S.W.2d 80, and Dyche v. City of London, Ky., 288 S.W.2d 648, funds .raised by the sale of municipal bonds were converted into the form of industrial property owned by the city and to be leased for manufacturing purposes. In the Danville case the use of money raised by taxation was not involved. In the London case the bonds were secured by the taxing power of the city. In each situation, presumably, the ultimate disposition of the property will be a conveyance to the lessee when the full *280cost .has been liquidated through the rental payments. In each case, therefore, the public investment remains intact in that the ownership of the property is retained in the public authority unless and until the money is replaced. But the present case goes a step farther. Money raised by taxation is loaned by the Industrial Development Authority to a private, nonprofit corporation, which in turn carries out the function performed by the city in the Danville and London cases. The property into which the funds ultimately are converted will be owned not by any public agency, but by a corporation which, though nonprofit, is nonetheless a private corporation. In lieu of the property itself, the public authority will own only the notes of this private, nonprofit developmental corporation. It is not required that they be first mortgage notes. In fact, the act specifically provides that the funds to be furnished by or available to the local development corporation as a prerequisite to the loan from the public authority may be obtained “from other independent and responsible sources, such as banks and insurance companies or otherwise.” Thus the final result is that money raised by taxation will be converted into the form of promissory notes secured by inferior liens. If this can be upheld on the basis of public purpose, so could outright grants of money to the local development corporations. By the same logic, there is no reason why outright loans or grants of tax money directly to private manufacturing corporations cannot be sustained, since the resulting employment of personnel would relieve unemployment and thereby serve a public purpose. I am not willing to go that far just yet, for it seems to me that the taxpayers of this state, sorely pressed as their are, have the right to look to their constitution for protection against speculation with their money.
The majority opinion in this case is excellently written, and it follows a modern trend. But its real effect is to justify everything and anything in the name of “public purpose,” no matter how remote or incidental the ultimate fulfillment of that purpose may be, and to wash its hands of the responsibility for that determination, leaving it almost arbitrarily to the Legislature. Conceding that the Constitution ought to be liberally construed as the world changes, that it should not be so straitly interpreted as to become a suicide pact, yet neither should it be blown to and fro with every passing wind or storm. Our haste in molding it to the hue and cry of the day must be tempered by deliberation. A spirit of moderation is demanded by the solemnity of the document itself. Private enterprise is not dead yet, nor is it ready for the rite of extreme unction for which the philosophy of this decision seems to be preparing it.
It may be argued, of course, that whether public money or property is loaned, given or leased, the public purpose is the same, the loss or risk of loss being immaterial, but I do not think so. The state should have no more right to speculate its money on a privately owned business venture than it does to bet it at the race track. There is a difference between an investment and a gamble. Tested by Section 171 of the Constitution one is legitimate and the other is not Whether the expenditure is for a legitimate public purpose resolves itself into the question of “whether it bears directly and immediately or only remotely and circumstantially upon the public welfare” (cf., Opinion of the Justices, 99 N.H. 528, 114 A.2d 514, 516), and that is a question into which, under the checks and balances secured by our constitutional form of government, the taxpayers are entitled to expect a substantial judicial inquiry. With the greatest of respect to my brothers of this Court, I can honestly answer that question in only one way: The public purpose in this case is too remote and speculative to satisfy Section 171 of our Constitution. See opinion of Chief Justice Carroll in Carman v. Hickman County, 185 Ky. 630, 215 S.W. 408, 411.
BIRD, J., joins me in this dissent.