California Educational Facilities Authority v. Priest

• Decision Date: 25 September 1974
• Docket Number: S.F. 23148
• Citation: 526 P.2d 513,12 Cal.3d 593,116 Cal.Rptr. 361
• Court: California Supreme Court
• Parties: , 526 P.2d 513 CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY et al., Petitioners, v. Ivy Baker PRIEST, as Treasurer, etc., Respondent. In Bank

Page 361

116 Cal.Rptr. 361

12 Cal.3d 593, 526 P.2d 513

CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY et al., Petitioners, v. Ivy Baker PRIEST, as Treasurer, etc., Respondent.

S.F. 23148.

Supreme Court of California,

In Bank.

Sept. 25, 1974.

Gordon D. Schaber, Donald R. Prinz, John R. Lewis, Sacramento, and Orrick, Herrington, Rowley & Sutcliffe, San Francisco, for petitioners.

Mackay, McGregor & Bennion, Adam Y. Bennion, Los Angeles, McCutchen, Doyle, Brown & Enersen, Albert J. Moorman, Jr., San Francisco, Musick, Peeler & Garrett, James E. Ludlam, Robert D. Girard, and Gerald G. Kelly, Los Angeles, as amici curiae, for petitioners.

Evelle J. Younger, Atty. Gen., and Walter J. Wiesner, Deputy Atty. Gen., for respondent.

MOSK, Justice.

Petitioners California Educational Facilities Authority (hereinafter called 'the Authority') and University of the Pacific seek an original writ of mandate to compel respondent state Treasurer to prepare to sell certain bonds authorized by the California Educational Facilities Authority Act (Ed.Code, § 30301 et seq., added by Stats. 1972, ch. 1432, § 1, p. 3127, hereinafter called 'the Act'). Respondent declines to take the steps necessary to sell the bonds because serious questions have been raised as to the constitutionality of the Act. We conclude the Act is valid and that a peremptory writ should issue as prayed.

The Act here challenged established the Authority as 'a public instrumentality' performing 'an essential public function' (§ 30304, subd. (a)), ¹ to wit, the issuance of revenue bonds for the purpose of 'providing private institutions of higher education within the state with an additional means by which to expand, enlarge, and establish dormitory, academic, and related facilities, to finance such facilities, and to refinance existing facilities.' (§ 30301.) Under the terms of the Act, the Authority may use the proceeds generated by its bond sales to construct or rehabilitate dormitories and other educational facilities at participating private colleges and universities. (§ 30310.) Such projects may include a wide variety of facilities suitable for academic and extracurricular use, ² but 'shall not include any facility used or to be used for sectarian instruction or as a place for religious worship or any facility used or to be used primarily in connection with any part of the program of a school or department of divinity.' (§ 30303.) To participate with the Authority in the financing, construction, or acquisition of a project under the Act, a private college or university must be a nonprofit institution of higher education which 'neither restricts entry on racial or religious grounds nor requires all students gaining admission to receive instruction in the tenets of a particular faith . . ..' (Ibid.)

The Authority may acquire land and other property necessary for any project by purchase or otherwise, and may construct or rehabilitate a project on land conveyed to it by a participating college. ³ The Authority is accorded broad supervisory powers over a project that it builds or repairs at a participating college, including the right to determine the location and character of the project; to prepare plans and estimates, and hire architects, contractors, and superintendents; to establish regulations for the use of the project; and to fix and collect the fees or rents to be charged for the services furnished by the project. (§ 30310; see also § 30316.)

The Authority is also empowered to lease to the participating college any project which it builds or repairs. When the liabilities of the Authority for any leased project have been met and the bonds of the Authority issued therefore have been paid, the Authority must transfer title to all real and personal property of the project to the participating college. (§ 30328.) Finally, the Authority is empowered to make loans to the participating college for the construction of projects approved by the Authority (§ 30329.)

The Act does not give the Authority any power to tax or to appropriate or expend public funds. The bonds issued under the Act are the obligation of the Authority alone. The Act expressly provides that the bonds shall not be deemed to constitute a debt or liability of the state or a pledge of the state's faith and credit. (§ 30315; see also § 30335.) The bonds and the interest thereon will be paid by the participating colleges out of revenues flowing from the projects. (§ 30316, subd. (b).) Moreover, the Authority has the power to apportion its administrative expenses among the participating colleges. (§ 30310, subd. (p).) Thus no general revenues of the state will be required to sustain the Authority.

In essence, therefore, the Act creates the Authority as a self-supporting mechanism through which private colleges may obtain financing for educational facilities at a lower rate of interest than would otherwise be available through conventional private financing sources. The reduced interest rate results from the Authority's power, as a public instrumentality, to issue tax-exempt bonds. ⁴ The tax-exempt status of the bonds permits them to be marketed at a significantly lower interest rate than bonds issued by nonexempt concerns. In turn, this reduces the cost of financing any projects built or acquired with the proceeds of such bonds.

Pursuant to the Act, the Authority approved a resolution indicating its intent to issue bonds to finance educational facilities for petitioner University of the Pacific, a 'participating college.' The Authority then requested that respondent state Treasurer fulfill her statutory duty to prepare to issue the subject bonds. Respondent refused to act, questioning the validity of the Act in light of various provisions of the United States and California Constitutions.

At the outset we note that the writ of mandate will lie to compel a governmental official to perform a ministerial act such as the issuance of bonds; and in a proceeding brought for that purpose, the validity of the law authorizing such issuance may be determined. (Metropolitan Water District v. Marquardt (1963) 59 Cal.2d 159, 170--171, 28 Cal.Rptr. 724, 379 P.2d 28, and cases cited.) This court will exercise its original juridiction to grant such a writ (Cal.Const., art. VI, § 10) when 'the issues presented are of great public importance and must be resolved promptly.' (County of Sacramento v. Hickman (1967) 66 Cal.2d 841, 845, 59 Cal.Rptr. 609, 611, 428 P.2d 593, 595; accord, San Francisco Unified School Dist. v. Johnson (1971) 3 Cal.3d 937, 944--945, 92 Cal.Rptr. 309, 479 P.2d 669.) The questions presented in the case at bar are manifestly of considerable statewide significance. The maintenance and improvement of facilities for higher education is of clear public concern. (See University of So. California v. Robbins (1934) 1 Cal.App.2d 523, 528, 530, 37 P.2d 163.) Moreover, a challenge to the validity of an elaborate new statutory program designed to assist institutions of higher education in preserving and expanding their facilities is a matter which deserves prompt judicial attention.

Turning to the merits, we first address respondent's contention that the implementation of the Act will result in furnishing state aid to sectarian institutions of higher education in violation of the establishment clause of the First Amendment to the United States Constitution, and related provisions of the California Constitution (art. I, § 4; art. IX, § 8; art. XIII, § 24). ⁵

The First Amendment to the United States Constitution provides in pertinent part: 'Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; . . .' ⁶ Although the establishment clause was originally 'intended to erect 'a wall of separation between church and State. " (Everson v. Board of Education (1947) 330 U.S. 1, 16, 67 S.Ct. 504, 512, 91 L.Ed. 711, 719), ⁷ the United States Supreme Court acknowledges that an absolute 'sanitized separation' cannot be achieved. (Committee for Public Education v. Nyquist (1973) supra, 413 U.S. 756, 760, 93 S.Ct. 2955, 37 L.Ed.2d 948; Lemon v. Kurtzman (1971) 403 U.S. 602, 614, 91 S.Ct. 2105, 29 L.Ed.2d 745.) The Supreme Court recognizes its inability to perceive with invariable clarity 'the lines of demarcation in this extraordinarily sensitive area of constitutional law' (Lemon v. Kurtzman (1971) supra, 403 U.S. 602, 612, 91 S.Ct. 2105, 2111), and concedes that today the 'line of separation, far from being a 'wall,' is a blurred, indistinct, and variable barrier depending on all the circumstances of a particular relationship.' (Id. at p. 614, 91 S.Ct. at p. 2112; accord, Committee for Public Education v. Nyquist (1973) supra, 413 U.S. 756, 761, fn. 5, 93 S.Ct. 2955, 37 L.Ed.2d 948.)

In reviewing a law attacked on establishment grounds the Supreme Court seeks to ascertain whether the enactment furthers any of the primary evils which the clause was intended to forestall, i.e., the "sponsorship, financial support, and active involvement of the sovereign in religious activity." (Committee for Public Education v. Nyquist (1973) supra, 413 U.S. 756, 772, 93 S.Ct. 2955, 2965, quoting from Walz v. Tax Commission (1970)397 U.S. 664, 668, 90 S.Ct. 1409, 25 L.Ed.2d 697.) In this regard, the court has determined that an enactment may be a 'law respecting an establishment of religion' even though in effect it does not promote a 'state religion.' (Lemon v. Kurtzman (1971) supra, 403 U.S. 602, 612, 91 S.Ct. 2105, 2111.) Moreover, a law may violate the clause by aiding all religions, not only by preferring one sect or religion over another. (Everson v. Board of Education (1947) supra, 330 U.S. 1, 15, 67 S.Ct. 504, 91 L.Ed. 711.) However, recognizing that in complex modern society some interaction between government and religious organizations is inevitable, the court has determined that a law which confers indirect, remote, or incidental benefits upon...