Court Opinion

ID: 9625783
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:51:09.364348+00
Date Added: 2024-06-11T18:06:15.321455
License: Public Domain

WOLFE, Justice
(concurring in the result).
I concur in the conclusions that the bonds authorized by a resolution of the Board of Trustees of the Utah State Agricultural College for the purpose of raising $750,000 for the construction of a Union Building under question in this action will be obligations, the principal of and interest on which are payable only from the revenues to be derived from the building. Revenues derived from the building include student building fees and rentals from the use of the building; they are not an obligation of the State either directly or indirectly; they are not even an obligation of the College nor of the Board of Trustees thereof, but only a charge against revenues derived from the building.
*129I accept generally the reasons for this conclusion given in the opinion of Mr. Justice LATIMER. I would, however, prefer to place my concurrence in this regard on the simple fact that the contracts contemplated between the College and the holders of the negotiable bonds and evidenced by the proposed bonds and/or the resolution providing for their issuance and sale adopted and approved by the Board of Trustees of the College on the 14th day of April, 1950, in pursuance of which the bonds are to be issued, themselves provide that they are not to be obligations of the State nor of the College nor of the Board of Trustees of the College, but that they are special obligations payable only from the revenues derived from the operation of the building and student fees pledged thereto by the resolution of which the contemplated bond in substantial form and substance is a part.
No other source for the payment of the principal of and interest on the bonds is provided and the obligation to pay is expressly limited to such funds, and such funds are irrevocably pledged to the purpose of paying the principal of and interest on said bonds (and the establishment of reserves for such purposes) and for the cost of maintaining and operating said building.
Ch. 126, Laws of Utah 1947, p. 420, now contained in the 1949 Supplement to U. C. A. 1943 as § 75 — 31—1 to 12, pp. 60-65, furnishes legislative authority for the issuance and sale of negotiable revenue bonds for the purpose of financing the building of certain self-liquidating projects on the campuses of the Agricultural College and the University of Utah under certain conditions, limitations and restrictions. One of these restrictions is that the bonds issued should not constitute an indebtedness of the State of Utah or of the institution for which they are issued or of the Board of Regents or Board of Trustees, but shall be special obligations payable solely from the revenues to be derived *130from the operation of the building and student building fees. The Board (either of Regents or Trustees, as the case may be — in this case the Trustees of the College) is authorized and directed to pledge all or any part of the revenues to the payment of the principal of and interest on the bonds. The Board is further authorized, by appropriate provisions to be contained in a resolution or resolutions authorizing the bonds, to also authorize to be included in the bonds certain covenants with the holders thereof. One of these covenants is provided for by clause 3 of Sec. 3 of Ch. 126, Laws of Utah, 1947, reading, “[To covenant] to collect student building fees from all students and to pledge said fees to the payment of building bonds.” There is no doubt, therefore, that the resolution of the Board of Trustees of the College authorizing the issuance of these revenue-building bonds has provided for that covenant in the bonds, as well as other covenants providing for, “the use and disposition of the proceeds of the sale of such bonds,” clause 1 of Sec. 3, Ch. 126, Laws, 1947; for the operation of the building and the collection and disposition of the revenues derived from its operation and all other necessary covenants. This would support what I have said, that not only by statute have the building revenues been made the sole source of payment of the principal of and interest on the negotiable building bonds but the bonds themselves have so provided by express language and/or by reference* to the resolution of the Board of Trustees of the College adopted and approved on April 14, 1950, providing for the bonds, thus including it in the contract with the holders.
I may hereafter, in my treatment of the contention of amicus curiae that the University of Utah and the Agricultural College have autonomy not subject to interference by the Legislature under Sec. 4 of Article X of our Constitution, again refer to the provisions of Ch. 126, Laws of Utah, 1947. *131It is alleged in paragraph six of the petition which is the part of the petition which deals with the alleged unconstitutionality that “the issuance of said bonds, as so proposed, will create and constitute a debt within the meaning of the provision of Sec. 2, Art. XIII and Sec. 1 of Art. XIV of the Constitution of the State of Utah * *
Up to this point, I can see some sense in the allegation of paragraph six of the petition. I suppose what petitioner intends to assert is that the bonds as proposed are a State indebtedness despite the fact that they are by their terms expressly made not so and despite the fact that Ch. 126 expressly provides that the bonds issued under its provisions shall not be so and despite the fact that the resolution authorizing the bonds and the bonds themselves and Ch. 126 all expressly provide that they are not to be a State indebtedness but are to be paid solely out of revenues derived from the Union Building. The complete answer to the proposition lies in what was said above. The old case of State ex rel. University of Utah v. Candland, 36 Utah 406, 104 P. 285, 24 L. R. A., N. S., 1260, has been shown by the main opinion to cover a very different situation than we have in this case.
However, paragraph six goes on to state that these bonds as proposed will be a violation of Sec. 2 of Art. XIII and Sec. 1 of Art. XIV “in that no provision is made in the authorization of said bonds for the levying and collection of taxes to pay the principal of, and interest on, the said bonds, and that the said Act of the Legislature under which said bonds are proposed to be issued [which is Ch. 126 above considered at length] is therefore unconstitutional and void.”
This appears to involve a complete non sequitur. How does it follow that an act permitting the construction of self-liquidating projects by bonds which provide for the payment of principal and interest only out of revenue *132derived from the building is unconstitutional because it does not provide for the payment of principal and interest by the levying of taxes. The very purpose of Ch. 126 was to permit building construction by paying for it ultimately through revenue derived from the building and thus avoid the levy of taxes for the payment and the incurring of an obligation against the State. In doing so, we are told that, because the Legislature passed an act which did just that, viz. avoided the incurring of a State indebtedness by providing for the liquidation of the bonds issued to borrow money to construct the building only by the application of revenue derived from the building, such act is unconstitutional because liquidation of the bonds was not provided for in the authorization for them by a levy and collection of taxes to pay their principal and interest, which procedure would of course have resulted in incurring a State obligation, which was the very event Ch. 126 sought to avoid. If it had been included in the bonds, it would bring about two utterly contrary methods of liquidating the bonds. Under Sec. 2 of Art. XIV of the Constitution, the State may not contract debts in excess of one and one-half per-centum of the value of the taxable property of the State. The ordinary manner in which a state contracts debts is by issuing bond obligations or certificates of indebtedness. The Legislature by the passage of Ch. 126 sought to avoid the effect of Sec. 1 of Art. XIV by permitting the issuance of building revenue bonds, the principal and interest of which were to make payable entirely and only out of revenues derived from the building itself and thus by making such bonds a charge against a special fund, to by-pass Sec. 2, Art. XIV.
These last allegations of paragraph six of the petition seem in effect to say, “Unless you include a provision for payment of the bonds by taxation the bonds are unconstitutional, but if you do include such a provision enough bonds may be finally issued so as to result in an unconsti*133tutional excess of indebtedness under Sec. 1 of Art. XIV.” In short, “you must, to make the bonds a constitutional issue, put in a provision which may result in there being an excess of constitutionally allowed State indebtedness and therefore result in an unconstitutional bond issue.” The proposition answers itself.
The necessity to obtain an opinion of the court of last resort as to the validity of bond issues in order to make them marketable unfortunately requires for a short-cut the device of setting up untenable objections in order to ask for prohibition. Perhaps in cases like this we should permit the application to this court for a declaratory judgment as to the constitutionality of such bond issues since the question of constitutionality is still open in spite of the incontestability of the bonds after certification by the Attorney General under Section 6, Chapter 126. Such procedure would save the raising of fictitious allegations in order to obtain the opinion of this court and yet when only law questions were involved obtain a declaratory judgment without going through two courts. It could be limited to bond issues for public purposes on questions of constitutionality only where all facts were stipulated. If such procedure does not come under our rulemaking authority, resort could be had to the legislature.
If the petitioner intended to attack the constitutionality of Ch. 126, that is, if he intended to question the power of the Legislature to permit institutions to issue bonds for the construction of self-liquidating projects, then he has done it in a most roundabout way. The simple, direct and complete answer to such a contention is that there is nothing in the Constitution which by express language or implication forbids the Legislature from enacting a law permitting the University and the College to issue self-liquidating revenue-building bonds.
The above would seem to fully dispose of the original *134issue raised by the petition for prohibition and the motion to dismiss said petition were it not for the fact that the University of Utah appearing- as amicus curiae is interested in the question of whether the issuance of bonds in pursuance of the provisions of Ch. 126, Laws of Utah, 1947, is not such a recognition of the power of the Legislature over the Agricultural College as will affect the question of a claimed autonomy of the University of Utah in matters relating to the governance of the University.
It is my opinion that a decision of this Court on the question above resolved (that these bonds are not an obligation of the State) is entirely severable from the question posed by amicus curiae and our reasoning on the question of whether the union building revenue bonds are an obligation of the State need not draw into the case any phase of the question as to the local autonomy or lack of it in either the Agricultural College or the University of Utah.
I think the main opinion so holds but the ratio decidendi by which it arrives at the separability of these two questions appears to me to draw in to some extent the very question which amicus curiae is apprehensive that we may decide and because of which apprehension it filed its brief as amicus curiae.
I think the question posed by amicus curiae is of great moment. It is certainly of very great significance if the college institutions have local autonomy to the extent that their governance is to be entirely free from any interference by the body that votes the appropriations to run the institutions, to wit, the Legislature. Yet it is clearly apparent that if the Legislature, because it controls the purse strings or because for other and broader reasons, has power to control the affairs of the two institutions directly or indirectly, it may exercise administrative rather than legislative functions over those institutions. Doubtless in states like Michigan, Minnesota, *135Idaho, Oklahoma and some other states it was realized by the courts that any attempt by the legislatures to govern their state institutions of higher learning would be detrimental to those institutions and the purposes for which they were constituted, in that it would be an intrusion by a body whose personnel would in the main be unfitted to prescribe in the field of higher education. And thus there was read into constitutional expressions the intent to give to the governing boards of such institutions local autonomy, that is, power to govern the institution without interference by the Legislature. But whether this ' means that the autonomy must be total or only partial, whether the legislature is free to confer new powers not granted before statehood, with or without limitations, or impose new or additional duties on the governing boards of the institutions, or on the other hand, whether in their sphere of government of the institutions these boards have full and unlimited power by virtue of § 4, Art. 10 of the Constitution, present, in the light of cases cited by amicus curiae, questions which at this time I do not think need be decided. And I think my approach will avoid them by reasoning which will demonstrate the complete severa-bility of the question posed by amicus curiae in all its ramifications, implications and phases from the question of the liability of the State for the bond indebtedness to be contracted to build the Union Building.
An examination of Ch. 126, Laws of Utah, 1947, reveals that said Ch. 126 is not a requirement that the University or College erect any new buildings. It is a'tender by the Legislature of provisions to be pursued if the governing boards of either institution decides to erect any of the self-liquidating projects covered by the act, but it leaves to those governing boards the decision as to whether they shall build such structures.
If, therefore, the College has autonomous powers, that *136is, if by Sec. 4 of Art. 10 of our Constitution it can be held that the College has been given autonomy or powers independent of the Legislature and it is further held that such powers cover not only the governance of the institution but that it is protected against intrusion by the Legislature in all matters of policy including enlargement of the College by the acquisition of new ground or erection of buildings, either because that itself is a function included in the field of government and control of the institution or because the autonomous powers are broader than those that pertain to governance, Ch. 126 does not appear to be an intrusion of the Legislature on any autonomous powers the Board of Trustees of the College may have. The act leaves the board free to build or not to build. It is permissive only. If the Board decides to build, Ch. 126 provides the manner and method of issuing revenue-building bonds which , are made payable as to principal and interest only out of the revenues derived from the building which it constructed.
If for the purposes of this discussion we grant that the College is not required in order to issue revenue-building bonds to pursue the provisions of Ch. 126, but could, in the pursuance of its supposed autonomical powers, have resolved to build a Union Building, and to issue revenue bonds to finance that building, and make the payment of principal of and interest on those bonds payable only out of the revenue derived from fees and the use of the building, it could put into the bonds every covenant mentioned in § 3 of Ch. 126 and some others not therein set out, sell the bonds to the public, deposit the proceeds in a depository of its own choosing, make the contracts itself instead of through the Utah State Building Board, and issue its own warrants against the funds through its own fiscal agent.
Most of the provisions of Ch. 126, Laws of Utah, 1947, embody procedures and bond covenants which any public *137body having power to issue revenue bonds would follow in the exercise of sound business principles designed to make the bonds marketable and to protect the funds derived therefrom and to insure the application of the money to the building contracts.
But there are provisions in Ch. 126 which impose duties on the Attorney General. Sec. 7 requires him to examine and certify the bonds “in accordance with such requirements as he may make.” This imposes a duty on the Attorney General which perhaps the College might not be legally able to require him to do if it were acting not in pursuance of Ch. 126, but rather out of its own powers, although it is not clear that the Attorney General might not be required to assist the College in his capacity as advisor to state institutions.
Likewise, in order to make the bonds a trust investment for banks, savings funds, etc., under § 8 of Ch. 126, it may desire to follow and come under and be bound by the requirements of Ch. 126.
In such case, it may receive the benefits of Sec. 5 of the act and require the State Depository Board to name the depository for proceeds of bond sales, require the Utah State Building Board to make the building contracts and provide for the construction, furnishings and equipment of the building, and require the State Finance Commission to issue warrants upon the State Treasurer “against such funds for such amounts as he may from time to time find to be due upon audited itemized estimates and claims which bear the approval of the officials designated by the Board [of Trustees] for such purpose,” all according to Sec.'5 of Ch. 126.
But I would see no reason for making a choice between issuing revenue bonds out of its autonomous powers if it has such powers and coming in under Ch. 126 since to do *138the latter would not in any case result in a surrender of any of those autonomous powers but would give it certain privileges mentioned above which it might not be able to obtain if it did not accept the legislative provisions laid down in Ch. 126. I know of no principle which holds that a body with autonomous powers cannot bring itself under the aegis of the powers exercised by the Legislature for its benefit. It. may choose not only to adopt certain procedures and provisions set out in Ch. 126, but rather choose to subject itself to the permissive legislative act. Thus it may obtain the certificate of the Attorney General and give the bonds the quality of incontestability — according to the provisions of Sec. 7 of Ch. 126.
If the College has autonomous powers to do all the above acts and others, does it surrender its power by choosing to follow methods laid down by the Legislature ? If it alreadj’ has those powers, it may adopt the provisions laid down in Ch. 126 by reference thereto or by adoption and make them its own. At least by pursuing them, it does not surrender its autonomous powers. Its autonomous powers cannot be surrendered. The College Board cannot shed them if it desired to. They remain extant and intact.
If the Board of Trustees of the College does not have autonomous powers, then it has no choice and must come under the requirements of Ch. 126 in order to issue the bonds at all or it could not build without an appropriation. And in that case it operates under the permissive provisions of Ch. 126 laid down by legislative enactment.
To sum up this segment of the case: I do not believe that an acceptance of the theory of autonomous powers in the Board of Trustees of the College means that there may not be fields into which such autonomous powers do not extend. If the College has autonomous powers to govern itself, that does not necessarily mean that such powers include the authority to acquire land and/or construct and add build*139ings to the College. But whether the College has autonomous powers and, if so, the extent of them, I refrain from expressing an opinion in accordance with my belief .that it is not necessary in this case to do so. The power to increase the College plant or extend its area may still reside in the Legislature or at least only the Legislature may have the power to lay down provisions under which that may be done without making the cost a charge against the state. It would be somewhat startling to find that the College or University had the power to build and enlarge the physical plant and make the State pay the cost of it without authority from the Legislature. There is nothing in Ch. 126 which compels the College or University to accept the provisions of that chapter to enlarge the institutions. The College may not choose to build self-liquidating projects. Only if it choose to do so may it be required to use the plan and methods prescribed by the Legislature. Even if we consider a decision of either institution to erect buildings as part of its powers to govern, there is nothing inconsistent with those powers in the Legislature laying down the method to be followed if the institutions choose to build self-liquidating projects as to how that is to be accomplished under provisions which designate the manner and steps to be followed in order to do it without asking for an appropriation and without in any way burdening the state with the costs of the project. And certainly it would require a legislative provision to make the bonds tax free and thereby greatly increase their value and salability; also it would require legislative permission to enable the institutions to use the Utah State Building Board to make and execute contracts for the construction, furnishings and equipment of the building and probably to authorize the State Finance Commission to issue warrants upon the State Treasurer, all of which services are now tendered to the College and University under Sec. 5 of Ch. 126, Laws of Utah, 1947, *140and which seemingly would not be available to them unless they took advantage of Ch. 126, which is a product of the Legislature and a grant of power from it.
Nor is it probable that either institution desiring to raise funds for building a self-liquidating project would be able to take advantage of the incontestability feature of Sec. 7 of Ch. 126, which depends on a certificate by the Attorney General that he has examined the bonds and finds legal obligations according to their terms.
I have cited the above features as evidencing a tender by legislative enactment of privileges to the college and university which may not be included in the concept of governance or, if included in that field because the government of an institution may be conceived of as taking in the construction of necessary buildings, nevertheless may require or make desirable legislative aid and to that extent make the institutions partially dependent on the Legislature.
And if I am correct in this conclusion, then it follows that whether we hold on the one hand that the College is dependent on legislatively-granted powers for its right to construct self-liquidating buildings, or on the other hand, that it may do so by fashioning the mechanics and machinery for issuing and selling revenue-liquidating bonds out of its supposedly constitutionally created autonomous powers, the result is the same.
The resolution of April 14, 1950, was passed in pursuance of Ch. 126, Laws of Utah, 1947. But the acceptance of the provisions of Ch. 126 is not a surrender of any autonomous powers which may have been given to the Board by the Constitution even if it is considered that its power to govern the institution takes in the power to acquire land and/or erect buildings because the legislative provisions of Ch. 126 are in aid of and not an interference with such autonomous powers as the Board may have, if *141the Board has no autonomous power to erect buildings either as part of its powers to govern the institution or as a part of wider powers, then in that case it is a plain instance of using powers which the Legislature permitted it to exercise under Ch. 126. So it results in either case that it is not necessary to determine now whether the College is acting under legislatively-granted powers or under powers independent of the Legislature, and if we avoid determining that question we do not draw into this case the legal problems posed by amicus curiae. And if they need not be decided, it follows that the question of whether the bonds under consideration are obligations of the State may be determined entirely independently of any determination of the question of autonomy.
I am thus absolved from determining this question of autonomous powers. Being so absolved, I need not concur with or dissent from the statement that the College was not by the territorial Organic Act or by the territorial legislation “created as a separate public corporation.” I do not need to determine whether it makes any difference if it is or is not a public corporation. At least it is a public body or institution and as such, regardless of whether it is a public corporation, its governing body may or may not have autonomy. In my view, the question of whether it was a public corporation is beside the point in this case and need not be decided.
Nor do I think I need for the purpose of this case determine whether the Constitution froze the number of trustees at seven, although I am inclined to share the view of the main opinion that Sec. 4 of Art. X of the Constitution did no such thing. Assuming for the moment that the number was frozen at seven, since all fourteen of the present trustees voted for the resolution authorizing the bond issue, seven of those votes were superfluous, but seven of these trustees must have been trustees de jure since they were appointed according to the method provided by the *142Constitution and the de jure trustees all, as well as the superfluous ones, must have voted for the resolution unless the Constitution froze not only the number of trustees but gave the Board of Trustees the right themselves to select their successors. But I cannot see any basis for such a holding, whether the college is or is not a public corporation. I agree with Mr. Justice LATIMER that it would be deliberately going out of our way to hold that view which is against wisdom and common sense and the best interests of an institution which is to be ageless in its existence. Moreover, even though the College is held to be a public corporation and that the franchise granted to be such a corporation is made perpetual by the Constitution, it is unnecessary and unwise to hold that a part of the content of such franchise embraced a right in the Board of Trustees of self-perpetuation or to a selection of their successors. That is as far as I care to go in my opinion. I do not think it necessary to determine whether the Board of Trustees was constituted a public corporation, but only that no right was accorded to the Board to select its successors by § 4 of Art. X or any other provision of the Constitution. While I do not think it necessary to this case or perhaps even to the position of amicus curiae to determine whether the number of trustees was, by the Constitution, frozen, I am prepared in order to set the question at rest to join the majority in their holding that it did not do so and that consequently the Legislature is. free to increase or decrease-the number of members of the Board.
But I do not join with the majority in holding that the Agricultural College was before 1929 (by the Laws of Utah, 1929, it was made such) not a public corporation because I think it unnecessary to decide that question in order to reach the above result.
For the reasons stated above and with the reservations noted, I concur in the result.