Shotts v. Hugh, 49686

Decision Date04 June 1976
Docket NumberNo. 49686,49686
Citation551 P.2d 252
PartiesRon SHOTTS, Petitioner, v. HUGH et al., Respondents.
CourtOklahoma Supreme Court

Fagin, Brown, Bush, Selvidge & Tinney, Inc., Oklahoma City, for respondents.

Ron Shotts, Oklahoma City, for petitioner.

DOOLIN, Justice.

This case presents important questions as to the proper functions of this state through public trusts formed by the authority of 60 O.S.1971 § 176 et seq, Trusts for Furtherance of Public Functions. § 176 Provides in pertinent part:

'(a) Express trusts may be created in real or personal property, or either or both, or in any estate or interest in either or both, with the state, or any county, municipality, political or governmental subdivision, or governmental agency of the state as the beneficiary thereof by the: (1) express approval of the Governor if the State of Oklahoma or any governmental agency thereof is the beneficiary; (2) express approval of two-thirds (2/3) of the membership of the governing body of the beneficiary if the county or a political or governmental subdivision thereof is the beneficiary; (3) express approval of two-thirds (2/3) of membership of the governing body of the beneficiary if a municipality or a governmental subdivision thereof is the beneficiary and The purpose thereof may be the furtherance, or the providing of funds for the furtherance, of any authorized or proper function of the said beneficiary. * * *' (Emphasis supplied).

This action involves the Oklahoma Housing Finance Agency (Agency) a public trust created May 1, 1975 and accepted by Governor David Boren on behalf of the State of Oklahoma as its beneficiary.

The broad purpose of the trust as enumerated in the Trust Indenture is to aid the state in providing adequate housing in accord with the needs of the people of Oklahoma and to eliminate the existence of a large number of sub-standard dwellings. More specifically the trust creates a Loans to Lenders Program (Program) which furnishes financing to selected lending institutions enabling such institutions to make available to the public lower cost new mortgage loans for the construction, acquisition, rehabilitation or improvement of residential housing. Program would be funded through the proceeds from the sale of revenue bonds in the amount of $28,825,000. 1

Agency, on March 1, 1976, gave notice it was accepting applications from lending institutions throughout the state to join in Program. Two savings and loans associations elected to accept and were approved.

The terms and conditions governing the use participating institutions may make of the proceeds of the revenue bonds as set forth in Agency's official statement are as follows:

                                                             Minimum          Maximum Interest
                                                               Term
                           Purpose of Mortgage Loan            (Years)             Rate
                           ------------------------            -------             ----
                1.  Acquisition of 1-to-4 family dwelling        15      2% above rate on the
                                                                           Loan
                2.  Acquisition of multi-family dwelling         15      2.5% above rate on the
                                                                           Loan
                3.  Rehabilitation or improvement of 1-to-4       5      no restriction
                      family dwelling or multi-family
                      dwelling
                4.  Construction of 1-to-4 family dwelling   no restri-  4% above rate on the
                                                               ction       Loan
                      or multi-family dwelling
                

Further, the loans must be on owner occupied dwellings within the state including condominiums and multi-family dwellings up to 35 units. The mortgage loans may be for new construction or rehabilitation and improvement of existing structures.

Petitioner brings this original action as a resident and taxpayer of this state on behalf of himself and all other citizens of the State of Oklahoma to enjoin the issuance of the revenue bonds alleging the issuance of said bonds to be a violation of 60 O.S.1971 § 176.

In order for Program to be valid, it must meet the guidelines of § 176 restricting the purpose of a public trust to one which may further, or provide funds to further, an authorized or proper function of the State of Oklahoma. The singular question presented therefore becomes whether lending money to a private lending institution with only minimal restrictions or controls in order that it may finance housing, is a proper function of the state. If it is not, as petitioner claims, the trust in its present form must fail.

Petitioner feels since there are no economic restrictions on any loan, or any provision as to location of dwellings affected, the proceeds could conceivably be used to finance $100,000 homes, condominiums or 35 unit apartment houses. He submits providing mortgage money for unrestricted purchase or construction of high income dwellings is not a proper public function of government as it does not benefit the general citizenry of the state.

Petitioner hastens to recognize the validity of trusts similar to this which results in a true benefit to the public by providing housing for the elderly, those displaced by urban renewal or other low income citizens. He further acknowledges the validity of public trusts resulting from specific legislative authority, enacted because a definite need has been perceived. But the present Program he points out could be used as a benefit only to persons with middle to high income and the two participating savings and loan institutions.

Any authorized function of the state is recognized by this court as a proper subject for a public trust such as providing airport facilities, 2 water transportation 3 and facilities for parking. 4 In addition this state possesses authority to provide services in reduction of pollution and for disposal of waste. Hence a public trust with State of Oklahoma as beneficiary for the purpose of providing funds for performance of these functions that promote and encourage development...

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3 cases
  • John R. Grubb, Inc. v. Iowa Housing Finance Authority
    • United States
    • Iowa Supreme Court
    • May 25, 1977
    ...the Act promotes a private purpose, plaintiffs cite In re Advisory Opinion, 380 Mich. 554, 158 N.W.2d 416 (1968) and Shotts v. Hugh, 551 P.2d 252 (Okla.1976). The latter case involved the device of a statutory public trust "for furtherance of public functions." The trust there involved was ......
  • Goodwin, Application of
    • United States
    • Oklahoma Supreme Court
    • July 12, 1979
    ...Atchison, T. & S. F. R. Co. v. Johnson, 85 Okl. 161, 204 P. 910 (1922); Baker v. Braden, 165 Okl. 12, 24 P.2d 293, 294 (1933).11 Okl., 551 P.2d 252 (1976).12 60 O.S.Supp.1976 § 178.6.13 Authority approved maximum income of $17,500 for low-to-moderate income persons participating under the p......
  • Fun Country Development Authority, Application of
    • United States
    • Oklahoma Supreme Court
    • July 12, 1977
    ...holding shall not be interpreted as a challenge to such previous opinions or orders of this court. We are not unmindful of Shotts v. Hugh, 551 P.2d 252 (Okl.1976) and Morrison v. Ardmore Industrial Development Corporation, 444 P.2d 816 (Okl.1968); but point out that in these cases a justici......

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