Maine State Housing Authority v. Depositors Trust Co.

• Decision Date: 23 June 1971
• Citation: 278 A.2d 699
• Parties: The MAINE STATE HOUSING AUTHORITY v. DEPOSITORS TRUST COMPANY.
• Court: Maine Supreme Court

Page 699

278 A.2d 699

The MAINE STATE HOUSING AUTHORITY v. DEPOSITORS TRUST COMPANY.

Supreme Judicial Court of Maine.

June 23, 1971.

McLean, Southard, Hunt & Lipman, by Sumner H. Lipman, Augusta, Hawkins, Delafield & Wood, by Gerard Fernandez, Jr., Janice C. Griffith, New York City, for plaintiff.

Locke, Campbell & Chapman, by Frank G. Chapman, Augusta, for defendant.

Before DUFRESNE, C. J., WEBBER, WEATHERBEE, POMEROY, WERNICK, and ARCHIBALD, JJ.

All concurring.

None dissenting.

WEATHERBEE, Justice.

On Report.

In 1949 the Maine Legislature enacted the Maine Housing Authorities Act the purposes of which may generally be stated to be to assist in making available safe and sanitary dwelling accommodations for persons of low income and to benefit the general social and economic condition of the entire community by removing unsafe, unsanitary and overcrowded dwelling units and by eliminating lighted municipal areas. P.L.1949, Chap. 441. The Act eventually became 30 M.R.S.A. §§ 4551 to 4766 inclusive and has undergone considerable amendment in later legislative sessions.

On December 21, 1970 the Authority, in an effort to effectuate its corporate purposes, entered into a Note Purchase Agreement with the Defendant Bank under which the Bank contracted to purchase Bond Anticipation Notes of the Plaintiff in an aggregate amount of $50,000. The Agreement contains a warranty by the Plaintiff of the validity of its existence as a public body corporate and politic, its authority to enter into the Agreement and to purchase mortgage loans for a valid public purpose and that its notes shall be valid, binding and enforceable obligations of the Authority and not obligations of the State.

Upon being advised by its counsel that serious doubts exist as to the constitutionality of the Act which created the Plaintiff Authority, the Defendant declined to fulfill its commitment. The Plaintiff then brought this action for a Declaratory Judgment as to its rights under the Agreement, as provided by 14 M.R.S.A. §§ 5951 to 5963, and the Defendant answered raising affirmative defenses based on constitutional questions and joined in the prayer for a Declaratory Judgment.

The parties submitted the matter to the Superior Court on an agreed statement of facts and it has been reported to us for answer to four questions of law which present the issues raised by Defendant's affirmative defenses. The evidence purpose of this action is to test for the first time the constitutionality of the Act.

The four questions presented to us ask us whether in those four specific respects the Act offends certain constitutional mandates. We find that it does not.

Question 1.

Does the action taken by the Maine State Housing Authority ('Authority') created and acting pursuant to the 'Maine Housing Authorities Act' being Title 30, Chapter 239, Subchapter II, Sections 4551 to 4766, inclusive of the Maine Revised Statutes Annotated, as amended, ('Act') for the purpose of exercising its corporate purposes including the purchase of first mortgage loans or evidences thereof for persons or families deemed by the Authority to require such assistance on account of low personal or family income taking into consideration the criteria set forth in the Act constitute a valid and constitutional public purpose (Article IV, Part Third, Section I and Article I, Section 21 of the Constitution of the State of Maine; and Amendment XIV, Constitution of the United States) for which money raised by the issuance and sale of tax-exempt notes and bonds of the Authority may be expended?

The constitutional provisions against which the question requires us to measure the purposes of the Act follow:

'The Legislature * * * with the exceptions hereinafter stated, shall have full power to make and establish all reasonable laws and regulaltions for the defense and benefit of the people of this State, not repugnant to this Constitution, nor to that of the United States.' Article IV, Part Third, Section 1, Constitution of Maine.

'Private property shall not be taken for public uses without just compensation; nor unless the public exigencies require it.' Article I, Section 21, Constitution of Maine.

'No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.' Amendment XIV, Constitution of the United States.

In Crommett et al. v. Portland, 150 Me. 217, 107 A.2d 841 (1954) we examined the basic principles which distinguish public use from private use in the field of governmental activity. There we concluded that

'* * * Whether the public exigency requires the taking of private property for public uses is a legislative question, the determination of which by the legislature is final and conclusive. * * * Whether the use for which such taking is authorized is a public use is a judicial question for the determination of the court.'

While section 4751 of the Act recites that 'Bonds of an authority are declared to be issued for an essential public and governmental purpose * * *' we must remember that, as we said in Crommett 'Whether a given use of public moneys is public in nature is a matter for determination by the courts.' However, while a legislature's opinion that its proposed use would be public is not conclusive upon the Court, its findings are entitled to great respect since they relate to public conditions which, by necessity and duty, the legislature must know. Block v. Hirsh, 256 U.S. 135, 154, 41 S.Ct. 458, 65 L.Ed. 865, 16 A.L.R. 165 (1920).

We approach the duty before us mindful of the existence of a strong presumption of the constitutionality of a statute.

'Unless it has clearly exceeded its constitutional powers in so doing, its action must be sustained. All rational doubts as to the constitutionality of statutes must be resolved in favor of the constitutionality thereof. Although it is the duty of the court to declare acts which transcend the powers of the legislature void, this judicial duty is one of gravity and delicacy and it is only when there are no rational doubts which may be resolved in favor of the constitutionality of the statute that the inherent power of the court to declare statutes unconstitutional should be exercised.' State of Maine v. F. H. Vahlsing, Inc., 147 Me. 417, 88 A.2d 144 (1952).

In enacting the statute, the Legislature determined (sec. 4553) ¹ that there exists a scarcity of safe and sanitary dwelling accommodations priced for sale or rental within the range which persons of low income can afford. The Legislature found that many blighted areas exist where unsafe, unsanitary and overcrowded dwelling accommodations constitute a menace to the health, safety, morals and welfare of all the residents of the State, impairing both human and economic values. The Legislature further found that these deplorable conditions cannot be relieved 'through the operation of private enterprise' and that the clearance of such blighted areas, the construction of housing projects for persons of low income and aid in the repair of deteriorating dwellings would 'not be competitive with private enterprise' and will benefit the public as a whole. The Legislature has found a public exigency requires the action which it has empowered the authority to take and this determination is final. Paine v. Savage, 126 Me. 121, 136 A. 664 (1927).

The Act empowers the Authority to study the State's housing needs and to make its studies available to other public agencies, to acquire real property by eminent domain or otherwise, to construct and operate housing projects, renting, leasing and selling their units. In order to carry out the purposes of providing housing for people of low income ² it is authorized to accept federal funds and other assistance, to issue revenue bonds or notes and to purchase and sell first mortgages and notes.

It is agreed that Defendant had contracted to purchase certain Bond Anticipation Notes from Plaintiff and that the Plaintiff proposed to use the proceeds of the sale of the notes to enable it to meet an agreement to purchase from the Livermore Trust Company first mortgages on dwelling units of persons of low income in order to carry out the purposes of the Act.

The Act purports to empower Plaintiff to issue its bonds in order to carry out the purposes of the Act and to sell its notes in anticipation of the bond issue. Defendant's agreement to purchase the Plaintiff's notes is valid and enforceable only if Plaintiff was, in carrying out its functions under the Act, serving a public, rather than a private purpose. This determination must be made by the Court. Allen v. Jay, 60 Me. 124, 139 (1872).

In determining whether a given use is public in nature we must consider existing conditions, as we did in Crommett.

'* * * (W)hat could not be deemed a public use a century ago, may, because of changed economic and industrial conditions, be such today. Laws which were entirely adequate to secure public welfare then may be inadequate to accomplish the same results now.' Laughlin v. City of Portland, 111 Me. 486, 90 A. 318 (1914).

'Admittedly the line of demarcation between a public and a private use is not always easy to draw. Whether a use is public or private is a question of law for the court. This question must be determined by the application of established legal principles to the then existing facts.' State of Maine v. F. H. Vahlsing, Inc., supra.

The purpose of the Act is to eliminate areas of crowded, unsafe and unsanitary housing and to make available, either through public construction or through financing of privage construction and improvement, adequate housing for people of low income, victims of disaster and defense workers.

This Court and its Justices have distinguished public from private uses on...