LeBlanc v. Police Jury of Rapides Parish

• Decision Date: 15 June 1966
• Docket Number: No. 1794,1794
• Parties: J. Hall LeBLANC et al., Plaintiffs-Appellants, v. POLICE JURY OF the PARISH OF RAPIDES and the Industrial Development Board of the Parish of Rapides, Inc., Defendants-Appellees.
• Court: Court of Appeal of Louisiana — District of US

Page 131

188 So.2d 131

J. Hall LeBLANC et al., Plaintiffs-Appellants, v. POLICE JURY OF the PARISH OF RAPIDES and the Industrial

Development Board of the Parish of Rapides, Inc.,

Defendants-Appellees.

No. 1794.

Court of Appeal of Louisiana, Third Circuit.

June 15, 1966.

Writ Refused June 23, 1966.

Mansour & Lauve, by Alfred A. Mansour, Alexandria, for plaintiffs-appellants.

Stafford & Pitts, by Grove Stafford, Sr., Alexandria, Benton & Moseley, by Fred G. Benton, Sr., Baton Rouge, F. Jean Pharis, Alexandria, for defendants-appellees.

EN BANC.

PER CURIAM.

This is a suit by the plaintiff taxpayers to enjoin the consummation of a proposed industrial development plan to be entered into by the defendant Industrial Development Board of Parish of Rapides, Inc. (hereinafter 'Development Board'), a public corporation created as authorized by the Police Jury of Rapides Parish under the provisions of LSA-R.S. 51:1151--1165 (Act 436 of 1962, as amended by Act 433 of 19--64). The Development Board and the Police Jury are made defendants. The plaintiff taxpayers primarily contend that the statute is unconstitutional as violating a provision of the state constitution which prohibits the lending or use of the credit or property of the State or any of its political corporations to any person, association, or corporation, public or private. The plaintiffs contend that therefore any acts done by virtue thereof are invalid, such as the proposed development plan. The plaintiffs also contended in the trial court that other constitutional provisions are offended by the activities sought to be enjoined.

After trial on stipulations, the trial court held that the statute and the proposed development plan was constitutional. Accordingly, the plaintiff taxpayers suit was dismissed. They appeal to this court.

The Constitutional provision which the plaintiffs allege is offended by the questioned statute and industrial development plan is Article IV ('Limitations'), Section 12, Louisiana Constitution of 1921, which pertinently provides:

'The funds, credit, property or things of value of the State, or of any political corporation thereof, shall not be loaned, pledged or granted to or for any person or persons, associations or corporations, Public or private; nor shall the State, nor any political corporation, purchase or subscribe to the capital stock or stock of any corporation or association Whatever, or for any private enterprise. Nor shall the State, nor any political corporation thereof, assume the liabilities of any political, municipal, parochial, private or other corporation or association whatsoever, except as otherwise provided in this Constitution; nor shall the State undertake to carry on the business of any such corporation or association, or become a part owner therein; * * *.' (Italics ours)

In summary: LSA-R.S. 51:1151--1165 authorizes the incorporation in municipalities and parishes of public corporations to acquire, lease, and dispose of properties for purposes of industrial development. 1152. These public corporations may be formed only if authorized after application by resolution of the municipality or parish governing body. 1153. Bonds to be issued by the corporation to carry out its purposes are payable solely out of revenues and receipts from the leasing or sale by the public corporation of its projects. 1158. The principal and interest of any bonds shall be secured by a pledge of the revenues and receipts out of which payable, or may be secured by a mortgage of the projects from the revenues may be derived. 1159. In no event shall the parish or municipality be liable for any of the obligations of the public development corporation so authorized. 1161. The corporation shall be nonprofit, with any net earnings or proceeds upon dissolution to go to the municipality or parish. 1162, 1163. The public development corporation, its income and bonds and the income therefrom, shall be exempt from taxation in the state except for ad valorem taxes. 1160.

The present taxpayers' suit seeks to enjoin consummation of a proposed industrial development plan by the Development Board through the leasing by it to a private corporation of certain property and facilities to be constructed by the Development Board through the issuance of revenue bonds.

In their principal contention that LSA-R.S. 51:1151 et seq. and any action taken thereunder violates Article 4, Section 12, Louisiana Constitution, the plaintiffs suggest that in effect the Development Board is the alter ego of the Police Jury, so that what is prohibited to the Police Jury should be prohibited to the latter public corporation. The plaintiffs also contend in effect that the Police Jury is unconstitutionally lending its credit for a private enterprise, and that nowhere in the State Constitution is activity such as that sought to be enjoined authorized as an exception to Article 4, Section 12.

In this latter connection, the plaintiffs point out that Article 14, Section 14(m) is only applicable to public utilities and does not appertain to an industrial plant such as the Development Board intends to acquire, and that Article 14, Section 14(b.2), authorizes debt and the issuance of bonds for the encouragement of industrial enterprises only through the creation of an 'industrial district' with bonds not to exceed 20% Of the assessed valuation of the taxable property of the parish (the present Development Board intending to issue bonds in excess of such percentage in relationship to the assessed property). With regard to the latter constitutional provision, the plaintiffs thus contend that the procedures permitted by LSA-R.S. 51:1151 et seq. are not in accordance with those authorized by Article 14, Section 14(b.2), so that the present industrial development plan cannot be said to be authorized by this provision which allegedly provides the exclusive constitutional method whereby public bodies can encourage industrial activity of the sort intended here.

While the principal contention is that the statute attacked and the Development Board's industrial development plan violates Article 4, Section 12, there are also contentions that the due process provisions of the federal and state constitutions are violated (Article 1, Section 2, Louisiana Constitution; Fifth and Fourteenth Amendments, United States Constitution), and that the Development Board's issuance of bonds and incurment of debt is in violation of taxing and debt restrictions applicable to parochial and municipal corporations (Art. 10, Section 5, and Art. 14, Sections 14(f) and 14(b.2).)

All of these contentions are in our opinion most ably summarized and disposed of by the opinion of the District Court. We therefore adopt it as our own as follows, omitting quotation marks, with inserts shown in brackets:

The said Police Jury acting under the authority of Act No. 436 of 1962 (R.S. 51:1151 et seq.) on November 9, 1965, adopted a resolution finding and determining it to be wise, expedient, necessary and advisable that a corporation to be known as 'The Industrial Development Board of the Parish of Rapides, Inc.' be formed for certain purposes stated in the resolution authorizing the persons who had applied for permission to create such corporation to so proceed.

Pursuant to this resolution proceedings for the creation of said corporation were duly taken, and on November 9, 1965, Articles of Incorporation for said corporation were duly executed and filed, as required by law, in the office of the Secretary of State of Louisiana, and were duly recorded in the office of the Clerk of Court and ex-officio Recorder of mortgages and documents.

On November 9, 1965, the Board of Directors of said corporation theretofore elected by said Police Jury met and organized, and following a general discussion of certain immediate plans of the Board adopted by-laws in pursuance to the authorizing resolution.

Admittedly, plans have been projected and steps have been taken to negotiate and consummate a certain lease with said Southern Paper, acquiring and leasing to said company certain lands in the Parish of Rapides, and on which said Development Board proposes to construct buildings comprising a manufacturing plant and appurtenant facilities for the manufacturing, processing, storing, warehousing, distributing and selling of (1) pulp paper, paper board or paper products, or (2) such other products as the said Southern Paper may deem appropriate, and for the acquisition and construction and installation of other facilities necessary for the operation of the project, to provide the money for which the Development Board proposes to issue and to sell, as is provided under R.S. 51:1151 et seq., bonds for an amount in principal in excess of $20,000,000.00, for all purposes required.

Further, that under the provisions of the proposed lease the land, with the manufacturing plant and pertinent facilities to be acquired and constructed with the proceeds of the bonds of the Development Board, are to be leased to said Southern Paper under provisions which will require Southern Paper to pay all expenses of operating and maintaining such facilities, including all taxes of whatever nature which are imposed on the property, to pay rentals to the Development Board which will be sufficient in amount for the Board to meet, when due, all installments of principal and interest with respect to the bonds of the Development Board that Board will issue to provide funds for the purposes shown; and to pay all overhead and administrative expenses of the Development Board in connection with the project pursuant to which, when the bonds of the Development Board have been fully retired and the obligations of the Development Board have been paid in full, title to the property comprising the project will vest in the Parish of Rapides should Southern Paper fail in the meantime to exercise an option to purchase such property at a price and on terms to be...