Huber v. Groff
Citation | 171 Mont. 442,558 P.2d 1124 |
Decision Date | 29 December 1976 |
Docket Number | No. 13552,13552 |
Parties | Charles W. HUBER, Plaintiff and Appellant, v. William A. GROFF et al., Defendants and Respondents. |
Court | Montana Supreme Court |
Patrick f. Hooks argued, Townsend, for plaintiff and appellant.
Moulton, Bellingham, Longo & Mather, Fredric D. Moulton argued, Billings, Walter S. Murfitt, Special Asst. Atty. Gen. appeared, Helena, for defendants-respondents.
This is an original proceeding brought by Charles W. Huber, plaintiff, against the members of the Board of Housing of the state of Montana seeking a declaratory judgment pursuant to Chapter 89, Title 93, Revised Codes of Montana 1947. The Court accepted original jurisdiction pursuant to Rule 17(a), M.R.App.Civ.P. because the shortness of time before the next meeting of the legislature made 'due consideration in the trial court and due appeal to this Court an inadequate remedy.'
The plaintiff seeks to have the 'Housing Act of 1975' which was passed as Chapter 461, Laws of 1975, by the Forty-fourth Legislature declared unconstitutional on several grounds:
First, plaintiff alleges the Act does not serve a public purpose as required by Art. VIII, Section 1, 1972 Montana Constitution.
Second, plaintiff alleges the bonds the Housing Board intends to sell are state debt and violate the requirements of Art. VIII, Section 8, 1972 Montana Constitution.
Third, plaintiff alleges that even if the bonds are not state debt, section 35-517, R.C.M., violates the separation of powers section of the 1972 Montana Constitution and impinges on the powers of the executive violating Art. III, Section 1 and Art. VI, Section 9.
Fourth, plaintiff alleges the entire Act, and especially section 35-517, violates Art. V, Section 11(5).
Fifth, plaintiff alleges the Act entails an unconstitutional delegation of the legislative power.
Sixth, plaintiff alleges the statutory flow of funds violates Art. VIII, Section 12, Section 13 and Section 14.
Seventh, plaintiff requests the Court resolve the statutory conflict between section 5-1037, R.C.M.1947, and the Housing Act of 1975.
A brief look at the function of the proposed programs of the Housing Board is necessary as background. The Housing Board intends to issue what are basically revenue bonds. The legislature granted these bonds tax exempt status and this status, along with the fact that the bonds are issued by a carefully supervised governmental body, should reduce the risk factor resulting in a significantly lower interest rate. The Housing Board's plan is to take this low interest money and inject it into the state's mortgage money market to make mortgage money available to 'persons and families of lower income.' The Housing Board currently plans to use only two of the statute's programs, the loan to lender program and the mortgage repurchase program. Both programs operate in a similar manner. The first program loans money to lending institutions on the condition they loan that money within a specified time period to 'persons or families of lower income'. The second program provides for the purchase of mortgages on the condition that the money be lent to 'persons or families of lower income.' Both programs have financial incentives which encourage lending institutions to participate.
Before beginning discussion of plaintiff's specific allegations we note the adoption of the 1972 Montana Constitution resulted in a significant change in the constitutional framework in the revenue and finance provisions. That change was the result of the deletion of the 1889 Constitution's Art. XIII, Section 1 which prohibited the lending of credit of the state to individuals and corporations. This prohibition serves as the background for many of the older cases in Montana and most cases in other states even today.
First. Plaintiff contends the Housing Act of 1975, sections 35-501 through 35-526, R.C.M.1947, does not serve a public purpose. Art. VIII, Section 1, 1972 Montana Constitution requires:
This Court in Mills v. Stewart, 76 Mont. 429, 438, 247 P. 332, 334, held:
The question is twofold: (1) Is the purpose of the legislation a public purpose? (2) Are the means selected reasonably likely to accomplish that public purpose?
The purpose of the Housing Act of 1975 is set out in section 35-502:
The basic means to be used to accomplish this purpose are set out in section 35-505:
'(1) The board may: (a) make loans to lending institutions under terms and conditions adopted by the board requiring the proceeds to be used by the lending institution for the making of mortgage loans for housing developments in the state for persons and families of lower income;
'(b) invest in, purchase or make commitments to purchase, and take assignments from lending institutions, of notes, mortgages and other securities evidencing loans for the construction, rehabilitation, purchase, leasing or refinancing of housing developments for persons and families of lower income in this state, under terms and conditions adopted by the board;
'(c) make, undertake commitments to make, and participate in the making of mortgage loans, including federally insured mortgage loans, and to make temporary loans and advances in anticipation of permanent mortgage loans to housing sponsors to finance the construction or rehabilitation of housing developments designed and planned for occupancy by persons and families of lower income in this state, under terms and conditions adopted by the board;
'(d) make, undertake commitments to make, and participate in the making of loans to persons and families of lower income for housing development, including without limitation persons and families of lower income who are eligible or potentially eligible for federally insured loans, federal mortgages or other federal housing assistance, when the board determines that mortgage loans are not otherwise available, wholly or in part, from private lenders upon reasonably equivalent terms and conditions, and under terms and conditions adopted by the board. * * *'
The Housing Board has taken necessary administrative steps to activate subsections (a) and (b), section 35-505 and those programs are ready to begin.
As this Court pointed out in Cottingham v. State Board of Examiners, 134 Mont. 1, 10, 11, 328 P.2d 907, 912:
In Willett v. State Board of Examiners, 112 Mont. 317, 322, 115 P.2d 287, 289, the Court said:
'* * * What is a 'public purpose' is a question primarily for legislative determination, with which we will not interfere unless there had been a clear abuse of power. * * *'
A great majority of other states which have considered nearly identical legislation found housing to be for a public purpose. State ex rel. Warren v. Nusbaum, 59 Wisc.2d 391, 208 N.W.2d 780; Minnesota Housing Finance Agency v. Hatfield, 297 Minn. 155, 210 N.W.2d 298; Vermont Home Mortgage Credit Agency v. Montpelier National Bank, 128 Vt. 272, 262 A.2d 445; New Jersey Mortgage Finance Agency v. McCrane, 56 N.J. 414, 267 A.2d 24; Maine State Housing Authority v. Depositors Trust Co. (Me.1971), 278 A.2d 699; Opinion to the Governor, 112 R.I. 139, 308 A.2d 802; Johnson v. Penn. Housing Finance Agency, 453 Pa. 329, 309 A.2d 528; Massachusetts Housing Finance Agency v. New England Merchant's National Bank, 356 Mass. 202, 249 N.E.2d 599 ( ); Walker v. Alaska State Mortgage Association (Alaska 1966), 416 P.2d 245; Gibson v. Smith, Or.App., 531 P.2d 724; In the Matter of the Constitutionality of O. R. S. 456.720, Or., 537 P.2d 542; California Housing Finance Agency v. Elliot, 17 Cal.3d 575, 131 Cal.Rptr. 361, 551 P.2d 1193; State ex rel. West Virginia Housing Development Fund v. Copenhaver, 153 W.Va. 636, 171 S.E.2d 545; Rich v. Georgia, 237 Ga. 291, 227 S.E.2d 761; West v. Tennessee Housing Development Agency (Tenn.1974), 512 S.W.2d 275. The lone state that found this legislation is not for a public purpose is Michigan where in In re Advisory Opinion, 380 Mich. 554, 158 N.W.2d 416, the Supreme Court of that state found the act was for a public purpose except as it related to a unique state constitution provision which relates to construction of internal improvements and which prohibited the state from being a party to such improvements. The ...
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