Pinckard v. State Bd. of Ed.
| Decision Date | 21 July 1966 |
| Docket Number | 4 Div. 250 |
| Parties | William D. PINCKARD v. STATE BOARD OF EDUCATION et al. |
| Court | Alabama Supreme Court |
Jas. G. Clower, Troy, for appellant.
Jos. B. Wiley, Troy, and M. Camper O'Neal, Dumas, O'Neal & Hayes, Birmingham, for appellee Adams.
Richmond M. Flowers, Atty. Gen., Leslie Hall and Gordon Madison, Asst. Attys. Gen., for other appellees.
This is an appeal from a final decree dated January 13, 1966, of the Circuit Court of Pike County in an action for declaratory judgment and injunctive relief incident thereto.
The appellant, complainant in the Circuit Court, is a citizen and taxpayer of the State of Alabama and is an enrolled student of Troy State College at Troy, Pike County, Alabama, an educational institution of college rank of the State of Alabama. The appellees, respondents in the Circuit Court, are Ralph W. Adams, President of Troy State College, the State Board of Education of the State of Alabama, and the individual members of that Board.
The appellant filed a bill of complaint in the Circuit Court of Pike County for a declaratory judgment that the issuance by the State Board of Education (the State Board) of certain of its proposed bonds would create a debt of the State of Alabama prohibited by Section 213 of the Constitution of Alabama of 1901, as amended. The respondents filed answers admitting the allegations of the bill of complaint but denying that the bonds would constitute a debt of the state in violation of the Constitution. In effect, the facts are admitted with the exception just noted.
The case was submitted to the circuit court on the bill of complaint and answers. The circuit court denied the injunction, upheld the validity of the proposed bonds and rendered a declaratory judgment that the bonds would not constitute debts of the state in contravention of Section 213 of the Alabama Constitution, as amended. This appeal followed.
Troy State College needs additional housing facilities for approximately 538 men and 210 women students. The State Board of Education of the State of Alabama proposes to provide these facilities by the construction of a new dormitory and the improvement of an existing dormitory, Shackelford Hall. The cost of these new facilities will be financed by the State Board by the issuance of revenue bonds. The revenues from the new dormitory and renovated Shackelford Hall, standing alone, will not be sufficient to provide adequate security to enable the State Board to sell revenue bonds in the principal amount of $1,460,000 required for that purpose. In order to enable the State Board to effect the sale of these improvements bonds, it will be necessary to pledge, in addition, the revenues from existing facilities at Troy State College.
The aforementioned facilities at Troy State College consist of Shackelford Hall and an existing dining hall, seven existing dormitory buildings: namely, Dill Hall, Pace Hall, Pace Annex, Gardner Hall, Hamil Hall, Clements Hall, and Cowart Hall.
With the exception of Pace Hall, Cowart Hall and Shackelford Hall, the revenues from the above-described facilities at Troy State College are already pledged to outstanding revenue bonds of the State Board. The revenues from Dill Hall are pledged to the payment of the principal of and interest on the 1957 Bonds, the revenues from Pace Annex to the 1959 Bonds, the revenues from Gardner Hall to the 1961 Dormitory Bonds, the revenues from Hamil Hall and Clements Hall to the 1962 Bonds, and the revenues from the dining hall to the 1961 Dining Hall Bonds. Each of the several resolutions of the State Board authorizing the issuance of these respective bond issues provides for several funds: a revenue fund into which all revenues are required to be deposited and from which current expenses of operation and maintenance of the project are paid, a bond and interest fund for the payment of principal of and interest on the bonds, including a debt service reserve therefor, and a maintenance or repair and replacement reserve fund. Each of these several resolutions requires that the revenues from the respective projects financed thereby be paid into these several funds.
Any pledge of revenues from existing facilities other than from Pace Hall, Cowart Hall and Shackelford Hall, to the payment of the proposed improvement bonds, the 1965 Bonds, Series F, would be secondary and subordinate to the prior pledge of these revenues to the outstanding bonds as described above and to the prior disposition of revenues into the several funds in the respective amounts as provided in the resolutions authorizing the issuance of the outstanding bonds. The existence of this outstanding prior pledge of revenues materially affects the security of the proposed improvement bonds and their marketability.
The State Board proposes to issue, pursuant to the provisions of Sec. 37, Title 52 of the Alabama Code of 1940, as amended, $3,336,000 principal amount of Troy State College Housing and Dining System Revenue Bonds of 1965, Series A, B, C, D, E (refunding bonds), and F (improvement bonds), dated November 1, 1965 (the 1965 Bonds) for the following purposes:
(1) Series A Bonds, in the principal amount of $323,000, bearing interest at the rate of 2 7/8% Per annum, payable semiannually, and maturing serially on November 1 in each of the years 1966 through 1996, to refund a like principal amount of outstanding revenue bonds of the Board dated October 1, 1957 (the '1957 Bonds'), bearing the same rate of interest, heretofore issued to pay the cost of acquiring and constructing a dormitory building at Troy State College (Dill Hall), and payable solely from the rents and revenues from said dormitory building.
(2) Series B Bonds, in the principal amount of $217,000, bearing interest at the rate of 3% Per annum, payable semiannually, and maturing serially on November 1 in each of the years 1966 through 1998, to refund a like principal amount of outstanding revenue bonds of the Board dated April 1, 1959 (the '1959 Bonds'), bearing the same rate of interest, heretofore issued to pay the cost of constructing a dormitory at Troy State College (Pace Annex), and payable solely from the rents and revenues of said dormitory building.
(3) Series C Bonds, in the principal amount of $318,000, bearing interest at the rate of 3 1/2% Per annum, payable semiannually and maturing serially on November 1 in each of the years 1966 through 2001, to refund a like principal amount of outstanding revenue bonds of the Board dated November 1, 1961 (the '1961 Dormitory Bonds'), bearing the same rate of interest, heretofore issued to pay the cost of construction of a dormitory at Troy State College (Gardner Hall), and payable solely from the rents and revenues of said dormitory building.
(4) Series D Bonds, in the principal amount of $163,000, bearing interest at the rate of 3 1/2% Per annum, payable semiannually and maturing serially on November 1 in each of the years 1966 through 2001, to refund a like principal amount of outstanding revenue bonds of the Board dated November 1, 1961 (the '1961 Dining Hall Bonds'), bearing the same rate of interest, heretofore issued to pay the cost of constructing a dining hall at Troy State College, and payable solely from the revenues of said dining hall.
(5) Series E Bonds, in the principal amount of $855,000, bearing interest at the rate of 3 3/8% Per annum, payable semiannually and maturing serially on November 1 in each of the years 1966 through 2002, to refund a like principal amount of outstanding revenue bonds of the Board dated November 1, 1962 (the '1962 Bonds'), bearing the same rate of interest, heretofore issued to pay the cost of construction of two dormitory buildings at Troy State College (Hamil Hall and Clements Hall), and payable solely from the rents and revenues of said two dormitory buildings.
(6) Series F Bonds, in the principal amount of $1,460,000, bearing interest at the rate of 3% Per annum, payable semiannually, and maturing serially on November 1 in each of the years 1968 through 2005, to pay the cost of acquiring and constructing a new dormitory at Troy State College with appurtenant facilities, to house approximately 536 men students, and of renovating and converting an existing dormitory (Shackelford Hall) to provide housing facilities for approximately 210 women students (the 'New Facilities').
The State Board proposes a combined refunding and improvement revenue bond issue consisting of $1,876,000 principal amount of refunding bonds (Series A through E, inclusive) to refund a like principal amount of the outstanding bonds described above, and $1,460,000 principal amount of improvement bonds, designated Series F, for the new construction and improvement.
The 1965 Bonds will be payable from and will be secured equally and ratably, without preference or priority of one series of bonds over another, by a pledge of the revenues from all the facilities described above, including the existing facilities.
Under this proposed plan of financing, all of the bonds, refunding and improvement bonds, will be secured by a first lien on pledged revenues, and the State Board will be...
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