McLucas v. State Bridge Bldg. Authority

• Citation: 77 S.E.2d 531,210 Ga. 1
• Decision Date: 14 September 1953
• Docket Number: No. 18284,18284
• Parties: McLUCAS v. STATE BRIDGE BUILDING AUTHORITY et al.
• Court: Supreme Court of Georgia

Page 531

77 S.E.2d 531

210 Ga. 1

McLUCAS v. STATE BRIDGE BUILDING AUTHORITY et al.

No. 18284.

Supreme Court of Georgia.

Sept. 14, 1953.

Syllabus by the Court.

The State Bridge Building Authority Act of 1953, Ga.L.1953, p. 626, is not invalid for any reason assigned; and, in all complained-of respects, the revenue bonds, the lease contract, and the trust indenture completely conform to the act, as the record indisputably shows. Hence the trial judge did not err, as contended, in rendering the judgment complained of.

A. C. Latimer, Atlanta, for plaintiff in error.

Paul Webb, Sol. Gen., Atlanta, C. Winton Adams, Asst. Atty. Gen., B. D. Murphy, Eugene Cook, Atty. Gen., Carlton Mobley, Macon, for defendant in error.

CANDLER, Justice.

The State Bridge Building Authority, a body corporate and politic, was created by an act of the legislature which the Governor approved on March 25, 1953, Ga.L. 1953, p. 626. By the creating act, it was given perpetual corporate existence and was deemed thereby to be an instrumentality of the State and a public corporation. An acute need for additional bridges and a desire to replace many substandard bridges, the construction and replacement of which as a part of the State's highway system and which the State was unable to finance without creating a state debt, was the motivating influence prompting passage and approval of the act. Among many others, and in addition to usual corporate powers, the Authority was expressly authorized and empowered by the act, at one time, or from time to time, to provide by resolution for the issuance of negotiable revenue bonds in a sum not to exceed $30,000,000 outstanding at any one time; to sell its bonds and use the proceeds for the purpose of paying all or any part of the cost of any project or combination of projects, the financing and construction of which the State Highway Board for the benefit of the State Highway Department had proposed and requested; to lease or rent its facilities to the State Highway Department for a period not exceeding 50 years from the date of the lease contract; and to pledge the revenue derived therefrom to the payment of its revenue bonds; and the State Highway Board for and on behalf of the State Highway Department, by the bridge-building act and by the terms of an amendment, which the legislature passed in 1953, Ga.L.1953, p. 81, to the State Highway Board Act of 1950, as amended by the act of 1951, was fully authorized to contract with the Authority for the use of its facilities. It authorizes and empowers the State Highway Board for the benefit of the State Highway Department to request the Authority to consider the financing and construction of any project or projects which may be desirable in the opinion of the Board; and for the purpose of making consideration of a project possible, it authorizes the Board to expend available highway funds. The act also declares that all revenue bonds issued under the provisions thereof shall have all the qualities and incidents of negotiable instruments under the Negotiable Instrument Law of Georgia, and that such bonds and the income therefrom shall be exempt from all taxation within the State. And section 30 of the act provides: 'It is hereby found, determined and declared that the creation of the Authority and the carrying out of its corporate purposes is in all respects for the benefit of the people of this State, and that the Authority is an institution of purely public charity and will be performing an essential governmental function in the exercise of the power conferred upon it by this Chapter and this State covenants with the holders of the bonds that the Authority shall be required to pay no taxes or assessments upon any of the property acquired or leased by it, under its jurisdiction, control, possession or supervision or upon its activities in the operation or maintenance of the projects erected by it or any fees, rentals or other charges for the use of such projects or other income received by the Authority and that the bonds of the Authority, their transfer, and the income therefrom shall at all times be exempt from taxation from within the State.' The act also declares that the bonds of the Authority shall not be deemed to constitute a debt of the State or a pledge of the credit of the State; that they shall not directly, indirectly, or contingently obligate the State to levy or pledge any form of taxation whatsoever therefor or to make any appropriation for their payment; and that they must contrain recitals on their face covering substantially the foregoing provisions. And section 26 of the act expressly provides that the bonds of the Authority, both as to principal and interest, shall be paid solely from revenue received by it as rentals for the use of its facilities. The act also provides that the bonds of the Authority shall be confirmed and validated in accordance with the procedure of the Code of Georgia, § 87-8, by an action brought therefor in the Superior Court of Fulton County, Georgia; and that in and as an integral, but independent, part of the bond-validation proceedings, or separately, the Authority has and is expressly given the right to and privilege of a simultaneous or separate action, suit, countersuit, or equitable bill against the State and the State Highway Board and the State Highway Department for a declaratory adjudication of the validity and binding effect of any lease contract or contracts whose rental income may be pledged or partially pledged to the benefit of any bonds being validated.

The State Highway Board for the benefit of the State Highway Department requested the Authority to consider the financing and construction of a project consisting of approach spans to a named bridge and a number of bridges in several different counties of the State, and acceding thereto and pursuant to the provisions of the act, the Authority did on April 10, 1953, by resolution, provide for the issuance and sale of $9,750,000, in principal amount, of its bridge-building bonds for the purpose of financing the project so designated. Pursuant to resolutions regularly adopted and pursuant also to the provisions of the act, the Authority entered into an agreement with the State Highway Department whereby the former agreed to and did lease to the latter for a term of 50 years, beginning as of July 1, 1953, and ending June 30, 2003, the facilities of the designated project, or the approach spans and those bridges which the Authority had on April 10, 1953, agreed to construct and finance, for the sum of $831,000 per annum, and in addition thereto such other rental charges as are provided for by section 11 of the act, but all payable only out of the current revenues of the lessee, and such lease or rental contract was made and entered into between the parties after the Authority, as it was required to do by section 8 of the bridge-building act, had first secured a certificate from the State Auditor that the annual rental obligations under the aforesaid lease or rental contract fall within the existing fiscal power of the State Highway Department to make such obligations pursuant to section 12 of the State Highway Board Act of 1950, as amended by the acts of 1951 and 1953. By resolution duly adopted, the Authority provided for the execution of a trust indenture with The Citizens and Southern National Bank of Atlanta as trustee, securing the issue of the aforesaid bonds, as it was by section 24 of the bridge-building act authorized to do, and such an instrument was thereafter duly executed.

To a petition by Paul Webb, Solicitor-General of the Atlanta Judicial Circuit, in behalf of the State of Georgia against the State Bridge Building Authority, the State Highway Department, and the State Highway Board, seeking to validate $9,750,000 in principal amount of negotiable revenue bonds which the State Bridge Building Authority provided for on April 10, 1953, for the purpose of constructing and financing a project designated by the State Highway Board as a part of the State's highway system, all of the defendants filed answers admitting as true the material allegations of the petition and prayed for a judgment validating the bonds so issued. Further answering, and by way of countersuit for declaratory relief against the State of Georgia, the State Highway Department, and the State Highway Board, the State Bridge Building Authority alleged that it entered into a lease contract on April 10, 1953, with the State Highway Department under the terms of which it rented to the lessee for a term of 50 years, beginning as of July 1, 1953, the rights of way and bridges to be constructed thereon as are specified in the validation petition and the exhibits thereto attached. The countersuit contained a prayer that the lease contract be declared good and sufficient and a valid and binding obligation of the State Highway Department. The State of Georgia responded and by its response thereto admitted the facts alleged, conceded validity of the lease contract, and stated that it should, as an obligation of the parties thereto, be declared valid and binding, and in every respect legal.

John D. McLucas, as a citizen and taxpayer of Fulton County, Georgia, presented and had allowed by order of the court his intervention objecting to the validation of the bonds and to a judgment declaring the lease contract valid and binding. His intervention alleges that the bridge-building act of 1953 violates several stated provisions of the Constitution of 1945 and is for that reason null and void; and that the lease contract between the State Highway Department and the State Bridge Building Authority is illegal and unenforceable for reasons which will be pointed out and dealt with in the opinion. After a hearing, the act was declared constitutional and the lease was adjudged to be valid and enforceable over all attacks made by the intervenor upon the respective...