Northeast Shoe Co. v. Industrial and Recreational Finance Approval Bd.

• Decision Date: 19 October 1966
• Citation: 223 A.2d 423
• Parties: NORTHEAST SHOE CO., Inc. v. The INDUSTRIAL AND RECREATIONAL FINANCE APPROVAL BOARD and Frank G. Chapman.
• Court: Maine Supreme Court

Page 423

223 A.2d 423

NORTHEAST SHOE CO., Inc. v. The INDUSTRIAL AND RECREATIONAL FINANCE APPROVAL BOARD and Frank G. Chapman.

Supreme Judicial Court of Maine.

Oct. 19, 1966.

Rudman, Rudman & Carter, by Paul L. Rudman, Bangor, for plaintiff.

Leon V. Walker, Jr., Asst. Atty. Gen., Augusta, for defendants.

Before WILLIAMSON, C. J., and WEBBER, TAPLEY, MARDEN and DUFRESNE, JJ.

WILLIAMSON, Chief Justice.

On report. This is a complaint for a declaratory judgment and relief in the nature of mandamus by the Northeast Shoe Co., Inc., the plaintiff, against the Industrial and Recreational Finance Approval Board (the Board), a public instrumentality established under Section 5327 of the 'Municipal Industrial and Recreational Obligations Act' (the Act), and Frank G. Chapman, its acting manager. Rule 57 M.R.C.P. (declaratory judgment); Rule 80B, M.R.C.P. (review of administrative action); First Manf'rs Nat'l Bk. et al. v. Johnson, 161 Me. 369, 212 A.2d 840; 30 M.R.S.A. §§ 5325-5344 (the Act).

Since November 1965 the plaintiff and the defendants have been nogotiating for the construction of a proposed industrial facility or project in Pittsfield. In May 1966 pending arrangements for financing under the Act and after further extensive negotiations between the Board and the municipal officers of Pittsfield, the plaintiff commenced construction of the proposed facility.

In July 1966 the plaintiff requested a hearing on its pending application filed under the rules of the Board for the certificate of approval by the Board required before submission of the proposal to the voters under Sections 5328, subd. 3 and 5331, subd. 1. The plaintiff in its request said, 'Construction contracts have been let by Northeast Shoe Company, Inc. for the full construction of the building. Construction was commenced May 11, 1966 and will be completed on or about December 30, 1966.' The Board, in acting upon this request, voted not to grant a hearing for the following reasons:

'1. Article IX, Section 8-A, of the Maine Constitution permits the issuance of municipal bonds or notes 'for the purpose of constructing buildings for industrial use,' and, while we believe that this may apply only to General Obligation bonds or notes of municipalities, sufficient doubt exists in our minds to warrant refusal to grant a hearing that would lead to the issuance of a Certificate of Approval where the building is already under construction by the applicant with the use of temporary financing.

'2. The Maine Court in Opinion of the Justices, 161 Maine 182, at 208 (210 A.2d 683), in answering question No. 4 concerning the Act, did not render an answer sufficiently broad to cover industrial facilities financed by revenue obligation securities. We are of the opinion that if this same case arose in the recreational field the answer to question No. 4 is sufficiently clear to sustain the issuance of the Certificate of Approval.'

The plaintiff prays: first, that we declare that Section 8-A of Article IX of the Maine Constitution, below, applies only to general obligation notes or bonds issued by a municipality and that revenue obligation securities may be issued under the Act to acquire a fully or partially constructed industrial facility or project; or second, that if Section 8-A is applicable to such revenue obligations nevertheless they may be issued under the Act in the circumstances of the instant case; and third, that the Board and its manager be ordered to hear the plaintiff upon its request for a certificate of approval.

Article IX, Section 8-A of the Maine Constitution reads:

'For the purposes of fostering, encouraging and assisting the physical location, settlement and resettlement of industrial and manufacturing enterprises within the physical boundaries of any municipality, the registered voters of that municipality may, by majority vote, authorize the issuance of notes or bonds in the name of the municipality for the purpose of constructing buildings for industrial use, to be leased or sold by the municipality to any responsible industrial firm or corporation.'

Following are pertinent provisions of the Act:

' § 5325. General grant of powers

A municipality is authorized and empowered:

1. Revenue-producing industrial or recreational facilities. To acquire, construct reconstruct, renew and replace industrial and recreational projects within or partly within the corporate limits of the municipality;

'2. Securities. To issue revenue obligations securities of the municipality as provided to pay the cost of such acquisition, construction, reconstruction, renewal or replacement; * * *'

Section 5331, subd. 1 provides for the issuance after approval by the voters 'of revenue obligation securities of the municipality for the purpose of paying the cost of acquiring, constructing, reconstructing, renewing or replacing any revenue-producing industrial or recreational facility, * * *'

'3. Credit of State or municipalities not pledged. Securities issued under this chapter shall not constitute any debt or liability of the State or of any municipality therein or any political subdivision thereof or a pledge of the faith and credit of the State or of any such municipality or political subdivision, but shall be payable solely from revenues of the project for which they are issued and all such securities shall contain on their face a statement to the effect. The issuance of securities under this chapter shall not directly or indirectly or contingently obligate the State or any municipality or political subdivision to levy or to pledge any form of taxation whatever...