Carll v. South Carolina Jobs-Economic Development Authority, JOBS-ECONOMIC

• Decision Date: 10 December 1984
• Docket Number: JOBS-ECONOMIC,No. 22248,22248
• Citation: 327 S.E.2d 331,284 S.C. 438
• Parties: Alex T. CARLL, Appellant, v. SOUTH CAROLINADEVELOPMENT AUTHORITY, Respondent. . Heard
• Court: South Carolina Supreme Court

Page 331

327 S.E.2d 331

284 S.C. 438

Alex T. CARLL, Appellant, v. SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY, Respondent.

No. 22248.

Supreme Court of South Carolina.

Heard Dec. 10, 1984.

Decided Feb. 26, 1985.

Rhett P. Dove, III, of Nelson, Mullins, Grier & Scarborough, Columbia, for appellant.

Atty. Gen. T. Travis Medlock, Chief Deputy Atty. Gen. Joseph A. Wilson, II, Asst. Atty. Gen. Charles W. Gambrell, Jr.; and O. Wayne Corley, April C. Lucas and Peter L. Murphy, all of McNair, Glenn, Konduros, Corley, Singletary, Porter & Dibble, Columbia, for respondent.

CHANDLER, Justice:

Appellant challenges the constitutionality of Act No. 145 of 1983 (Act), codified as S.C.Code Ann. §§ 41-43-10, et seq. (1976 & Supp.1983).

The Act created the Jobs-Economic Development Authority (Authority) and authorizes programs which provide affordable capital and management assistance to eligible South Carolina businesses.

Appellant bases his challenge upon six grounds, contending that the Act: (I) relates to several subjects in violation of Article III, § 17, S.C. Const. (1895); (II) is not for a public purpose; (III) pledges the credit of the State in violation of Article X, § 11, S.C. Const. (1895); (IV) denies equal protection; (V) delegates governmental power in violation of Article III, § 1, S.C. Const. (1895); and (VI) interferes with interstate and foreign commerce.

We affirm.

The Order of Circuit Judge Walter T. Cox, Jr. properly disposes of all the issues and, as modified, is adopted.

ORDER OF CIRCUIT JUDGE WALTER T. COX, JR. DATED APRIL 27,

1984, AS MODIFIED

I. THE ACT RELATES TO SEVERAL SUBJECTS

Article III, § 17 of the South Carolina Constitution provides that "every act or resolution, having the force of law, shall relate to but one subject, and that shall be expressed in the title." Appellant contends several provisions of the Act are not mentioned in the title, which reads as follows "An Act to Create the South Carolina Jobs-Economic Development Authority and To Provide for Its Duties."

The three objectives of the constitutional provision requiring that each act relate to one subject are to (1) apprise the members of the General Assembly of the contents of an act by reading the title, (2) prevent legislative log-rolling and (3) inform the people of the State of the matters with which the General Assembly concerns itself. DeLoach v. Scheper, 188 S.C. 21, 198 S.E. 409 (1938); Arthur v. Johnston, 185 S.C. 324, 194 S.E. 151 (1937); Southern Power Company v. Walker, 89 S.C. 84, 71 S.E. 356 (1911). The title of the Act fulfills those objectives. A title meets the requirements of Article III, § 17 when it states the general subject of the legislation and the provisions of the Act are germane to that subject; the title need not be an index to every provision of the act. Hercules, Inc. v. South Carolina Tax Commission, 274 S.C. 137, 262 S.E.2d 45, 47 (1980). The basic thrust of the Act is to promote economic development in the State through programs administered by a central state agency. The title refers to both economic development and creation of a state agency, thus fulfilling the requirement as to statement of general subject matter. As to whether the Act's provisions are germane to those subjects, Appellant has failed to identify a single provision which is not pertinent to the objectives in the title.

II. THE ACT IS NOT FOR A PUBLIC PURPOSE

In Bauer v. South Carolina State Housing Authority, 271 S.C. 219, 246 S.E.2d 869 (1978), we defined the public purpose doctrine as follows:

'All legislative action must serve a public rather than a private purpose,' [Elliott v. McNair ], 250 S.C. at 86, 156 S.E.2d at 427 [1967]. 'In general, a public purpose has for its objective the promotion of the public health, morals, general welfare, security, prosperity, and contentment of all the inhabitants or residents within a given political division....' Caldwell v. McMillan, 224 S.C. 150, 77 S.E.2d 798, 801 (1953).... It is a fluid concept which changes with time, place, population, economy and countless other circumstances. Id. It is a reflection of the changing needs of society.

271 S.C. at 227, 246 S.E.2d at 873.

In deciding whether governmental action satisfies a public purpose, we look to the object sought to be accomplished. If a legislative act is designed to achieve a public goal, satisfy a public need, or solve a public problem, the method chosen by the legislative body will not invalidate the act. Bauer, 271 S.C. at 230-231, 246 S.E.2d 869. The legislative determination as to what constitutes a public purpose or public need is entitled to great weight.

In Elliott v. McNair, we recognized that economic development and creation of jobs were, as a general proposition, matters of public concern. Thus, the question before the Court is whether the provisions of the Act are reasonably related to its legitimate public goals. The findings of the legislature are critical to resolution of the public purpose issue. Here, the legislature's findings are detailed and comprehensive. They indicate the General Assembly undertook a thorough investigation of the employment-development problems faced by this State, determined the problems were severe enough to warrant legislative intervention and made a reasoned judgment as to the appropriate remedies.

The factual record clearly supports the findings of the General Assembly. In light of the record, the legislative findings and the holdings in Bauer and Elliott v. McNair, we find the Act is for a public purpose.

III. THE ACT PLEDGES THE CREDIT OF THE STATE

Appellant argues that because the Act authorizes the Authority to pledge its assets, including all real and personal property, the credit of the State is thereby pledged in violation of the Constitution. Similar legislation was upheld in Bauer, supra.

The limitation imposed upon the power of the General Assembly by Article X, § 11 of the South Carolina Constitution "relates solely to general obligation bonds payable from the proceeds of ad valorem tax levies." Elliott v. McNair, 250 S.C. 75, 85, 156 S.E.2d 421 (1967). Not only is there no pledging of the proceeds of ad valorem tax levies here, there is also this disclaimer in Section 12 of the Act:

In making such agreements the authority does not have the power to obligate itself except with respect to program funds and cannot incur a pecuniary liability or a charge upon the general credit of the authority or of the State or against the taxing powers of the State.

This disclaimer is sufficient to protect the State from pecuniary obligations. Bauer, supra.

In Elliott v. McNair, we discussed the purpose behind the constitutional limitation: "... the word 'credit' ... was intended to protect the state from pecuniary liability...." Elliott v. McNair, 250 S.C. 75, 86, 156 S.E.2d 421 (1967). The Act in no way imposes any pecuniary liability on the State. Appellant speculates that if the Authority defaults on its bonds, the State may choose to pay off the bonds.

The purpose of the constitutional limitation is to prevent the State from being obligated to use State tax revenues to pay off the bonds. Elliott v. McNair, supra; Bauer v. South Carolina State Housing Authority, supra; and State ex rel. Medlock v. South Carolina Family Farm Development Authority, 279 S.C. 316, 306 S.E.2d 605, 609 (1983).

Appellant argues there is a comingling of funds which allows state monies to be reached through tracing. However, Sections 12, 22 and 23 of the Act prohibit comingling and the type of tracing about which the Appellant is concerned. There is no mechanism in the Act that would result in assets of Authority being transferred to private parties. If the Authority uses program funds to pay administrative expenses, the program funds cannot be replenished by administrative funds. Once program funds are used to pay administrative expenses those funds become de facto administrative funds. There is, therefore, no comingling. Additionally, the last sentence of Section 22 specifically prohibits comingling administrative funds with program funds. Section 23 mandates that all obligations other than administrative obligations be paid solely out of program funds and that such limitation be "clearly stated on the face of any bonds and in the text of any other obligation or contract."

For these reasons, we find the Act does not permit an unconstitutional lending or pledging of the State's credit.

IV. THE ACT DENIES EQUAL PROTECTION

The provisions in the Act which place restrictions on the businesses which participate in the Authority's programs are constitutional under state and federal guarantees of equal protection because the classifications drawn are reasonable, are rationally related to the purpose of the Act, and are not drawn upon any inherently suspect distinctions. Although Appellant's arguments address the current regulations adopted by the Authority, those regulations are not before the Court. Only the Act is challenged in the complaint.

A statute may be limited to a particular class, provided the limitation established is for a proper public purpose. Ex Parte Hollman, 79 S.C. 9, 60 S.E. 19 (1908); Simmons v. Western Union Telegraph Co., 63 S.C. 425, 41 S.E. 521 (1902). Although the classification may not be arbitrary, and there must be a reasonable relationship between the classification and a proper legislative purpose, United States Fidelity and Guaranty Co. v. City of Newberry, 257 S.C. 433, 186 S.E.2d 239 (1972), a classification will be sustained against constitutional attack if there is "any reasonable hypothesis" to support it. Elliott v. Sligh, 233 S.C. 161, 165, 103 S.E.2d 923 (1958). We summarized the controlling principles as follows:

The requirements of equal protection are satisfied if (1) the classification bears a reasonable relation to the legislative purpose sought to be effected; (2) the members of the class are treated alike under similar...