Request for Advisory Opinion Enrolled Senate Bill 558 (Being 1976 Pa 240), In re

• Decision Date: 10 June 1977
• Docket Number: No. 14,14
• Citation: 400 Mich. 175,254 N.W.2d 544
• Parties: , 400 Mich. 311 In re REQUEST FOR ADVISORY OPINION ENROLLED SENATE BILL 558 (BEING 1976 PA 240).
• Court: Michigan Supreme Court

Page 544

254 N.W.2d 544

400 Mich. 175, 400 Mich. 311

In re REQUEST FOR ADVISORY OPINION ENROLLED SENATE BILL 558

(BEING 1976 PA 240).

No. 14.

Supreme Court of Michigan.

June 10, 1977.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Milton I. Firestone, Craig Atchinson, Asst. Attys. Gen., Lansing, in support of the constitutionality of 1976 PA 240.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Thomas L. Casey, Asst. Atty. Gen., Lansing, opposing constitutionality.

KAVANAGH, Chief Justice.

Pursuant to the Legislature's request contained in House Concurrent Resolution No. 691 and the letter of Governor Milliken dated August 24, 1976, we agreed to give an advisory opinion (Const.1963, art. 3, § 8) on whether Act 183 of the Public Acts of 1964 as amended by Act 240 of the Public Acts of 1976 (M.C.L.A. § 830.411 et seq.; M.S.A. § 3.447(101) et seq.; hereinafter "The Act") violates Const.1963, art. 9, §§ 12 and 15.

We have been aided in this undertaking by the office of the Attorney General which has, in response to our request, submitted one brief supporting the conclusion of constitutionality, and one brief supporting the conclusion of unconstitutionality. We are grateful for this assistance.

We are of the opinion that The Act does not violate either § 12 or § 15 of art. 9, Const.1963.

The specific questions asked are:

I

"May the state lease property from the State Building Authority under the provisions of Act No. 183 of the Public Acts of 1964, as amended by Act No. 240 of the Public Acts of 1976, and validly contract therein to pay the true rental value of the leased premises at fixed times over a period of years in light of Sections 12 and 15 of Article 9 of the State Constitution of 1963?"

We answer in the affirmative.

The Michigan Constitution is not a grant of power to the Legislature as is the United States Constitution, but rather, it is a limitation on general legislative power. In re Brewster Street Housing Site, 291 Mich. 313, 289 N.W. 493 (1939). Unless the Constitution contains limitations, the Legislature has general power to contract.

We are asked to address the limitations contained in Const.1963, art. 9, §§ 12 and 15 which read as follows:

"Sec. 12. No evidence of state indebtedness shall be issued except for debts authorized pursuant to this constitution."

"Sec. 15. The state may borrow money for specific purposes in amounts as may be provided by acts of the legislature adopted by a vote of two-thirds of the members elected to and serving in each house, and approved by a majority of the electors voting thereon at any general election. The question submitted to the electors shall state the amount to be borrowed, the specific purpose to which the funds shall be devoted, and the method of repayment."

We are satisfied that the only office of these limitations is to limit the power of the Legislature to borrow money and issue evidence of the debt thereby incurred.

We reach this conclusion by our reading of these sections and the history of the limitations found in preceding Michigan Constitutions.

The 1843 amendment to the Constitution of 1835 provided that "every law authorizing the borrowing of money or the issuing of state stocks, whereby a debt shall be created on the credit of the state" would require a majority vote of the electorate in a referendum.

Const.1850, art. 14, in § 3, specifically authorized the state to "contract debts to meet deficits in revenue" and limited the aggregate of such debts to $50,000 at any one time, and in § 7 forbade the issuance of scrip, certificate, or other evidence of state indebtedness for any debts other than "as * * * expressly authorized" in the Constitution.

Const.1908, art. 10, § 10 provided in part: "The state may contract debts to meet deficits in revenue, but such debts shall not in the aggregate at any time exceed two hundred fifty thousand dollars". The ban on the issuance of scrip, certificate or other evidence of state indebtedness except for debts expressly authorized was continued.

We read the phrase "contract debts to meet deficits in revenue" in the foregoing to mean simply "borrow money".

The obligation to pay rent under a lease does not involve borrowing. Consequently it does not result in the incurring of a debt as that word is used in limitations thereon. See Walinske v. Detroit-Wayne Joint Building Authority, 325 Mich. 562, 39 N.W.2d 73 (1949), and cases cited therein. See also 56 Am.Jur.2d, Municipal Corporations, §§ 660-665.

Accordingly we are of the opinion that neither § 12 nor § 15 of Const.1963, art. 9, precludes the state from leasing property under the provisions of The Act.

II

If under The Act the state may lease property from the State Building Authority, are future Legislatures contractually obligated to appropriate amounts each year sufficient to pay periodic rentals to the building authority for true rent falling due in future years?

We answer in the affirmative.

Implicit in our holding that the Legislature may contract to lease for a period of years on behalf of the state without violating the borrowing limitations of art. 9 is our recognition that future Legislatures will be contractually bound to appropriate the necessary public funds to meet the state's rental obligation. However, in that its power to invoke sovereign immunity can partially or even totally obstruct enforcement, the state differs essentially from non-governmental contractors. (See generally 72 Am.Jur.2d, States, §§ 87-88). Although in granting limited jurisdiction over all contract claims against the state to the Court of Claims (M.C.L.A. § 600.6401 et seq.; M.S.A. § 27A.6401 et seq.) the State of Michigan has waived its sovereign immunity, even that waiver is subject to legislative revocation.

The Court of Claims has jurisdiction to award damages but it is without equitable powers. Parties who pursue their contract claims in that court are therefore restricted in the nature of the remedy they may seek.

Nevertheless we are of the opinion that the enabling Legislature in the instant case does contractually oblige future Legislatures to provide adequate appropriations in order to satisfy the rental payments as due. See Nichols v. State Administrative Board, 338 Mich. 617, 62 N.W.2d 103 (1954).

III

Would the bonds to be issued pursuant to The Act by the building authority and repaid from proceeds derived from true rental payments by the state pursuant to lease constitute a state indebtedness within the meaning of §§ 12 and 15 of Const.1963, art. 9?

We answer in the negative.

Only general obligation bonds are limited by §§ 12 and 15. Revenue bonds and special obligation bonds are not within the ban of these sections. Schureman v. State Highway Commission, 377 Mich. 609, 141 N.W.2d 62 (1966).

We do not regard the bonds contemplated by The Act as pledging the general obligation of the state to their repayment. They purport to be revenue bonds, payable only from the revenue generated by the payment of "true rental" under the terms of the lease. No undertaking on the part of the state to pay the bonds is authorized and a disclaimer of a pledge of the state's general obligation is required under § 8 of The Act.

We do not regard the contractual obligation of the state to make lease payments as a promise to pay the bonds. The nature of these bonds as true revenue bonds is not vitiated by the circumstance that the state's rental obligation will be paid from the general tax fund. We have regarded revenue bonds as exempt from the constitutional borrowing limitations not because state tax funds would never provide their repayment but rather because revenue bonds are secured and repaid by the users of the project financed.

It is the state's pledge of its general taxing power to repay bonds issued for borrowed money which is limited in article 9 and not the state's commitment of its general taxing power to meet the state's ordinary annual expenses and contract obligations.

MOODY, COLEMAN, FITZGERALD and WILLIAMS, JJ., concur.

LEVIN, J., not participating.

COLEMAN, Justice (concurring).

I write separately to emphasize the effect of an advisory opinion. It is one requested by "either house of the Legislature or the Governor" and offers the Court's advice, its counsel, its guidance. Because there necessarily are no facts against which such legislation can be tested, we are obliged to look only to the face of the enactment under scrutiny.

Individual or collective judicial perceptions of the merits of the act are irrelevant to our task. For instance, this act can be either a boon or a burden to the people of Michigan, dependent largely upon the fiscal restraint and wisdom of the people's representatives, their legislators. However, that is no basis upon which to overcome the presumption of constitutionality which clothes all legislation.

No one should think that an advisory opinion forever binds this Court (or even the signing justices) to a particular position. In footnote 1 to the Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich. 441, 208 N.W.2d 469 (1973), we said it "is important to emphasize the fact that an advisory opinion does not constitute a decision of the Court and is not precedentially binding in the same sense as a decision of the Court after a hearing on the merits". An advisory opinion "constitutes the opinion of the several justices signatory based upon the bare words of the act and unadorned by any facts or combination of facts". Also see Advisory Opinion re Constitutionality of 1975 PA 227, 396 Mich. 465, 242 N.W.2d 3 (1976). Without a case or controversy, we can only offer counsel.

In Advisory Opinion re Constitutionality of 1974 PA 242, 394 Mich. 41, 228 N.W.2d 772 (1975), we said the lack of a case or controversy forces us "to make assumptions concerning how the questioned statute would operate once effective". In addition to presuming that legislation is...