Smith v. State, 23584

• Decision Date: 08 September 1966
• Docket Number: No. 23584,23584
• Citation: 150 S.E.2d 868,222 Ga. 552
• Parties: M. M. SMITH et al. v. STATE of Georgia et al.
• Court: Georgia Supreme Court

Page 868

150 S.E.2d 868

222 Ga. 552

M. M. SMITH et al. v. STATE of Georgia et al.

No. 23584.

Supreme Court of Georgia.

Sept. 8, 1966.

Rehearing Denied Oct. 6, 1966.

Syllabus by the Court.

1 (a) The amendment to Article VII, Section VII, Paragraph V (Code Ann. § 2-6005) authorizing Telfair County to issue revenue anticipation bonds to provide funds for the purchase, construction, or enlargement of facilities including land, buildings, machinery and equipment suitable for use by (a) any industry for manufacturing, processing or assembling any agricultural or manufactured products or (b) any commercial enterprise in storing, warehousing, distributing and selling products of agriculture, mining and industry, which facilities may be sold or leased to such industry or commercial enterprise, permits the county to issue bonds for a purely private purpose without regard to public use, the public good or the general welfare of the county, and is not for a public purpose or use.

(b) Since the amendment authorizes issuance of the bonds for a private purpose, the exemption provision of the amendment exempting the private industry from taxation on buildings leased or purchased while requiring plaintiffs and other private industry in the county to pay said taxes, constitutes a taking of the property of plaintiffs and other Telfair County taxpayers without due process of law and would deny them equal protection of the law in violation of the 14th amendment to the Constitution of the United States.

(c) The amendment is unconstitutional in that it violates the due process and equal protection clauses of the 14th amendment to the Constitution of the United States.

Smith & Harrington, Will Ed Smith, Eastman, for appellants.

Albert D. Mullis, Sol. Gen., Eastman, Billy W. Walker, E. Herman Warnock, Warnock & Rawlins, McRae, King & Spalding, Pope B. McIntire, Atlanta, for appellee.

Arthur K. Bolton, Atty. Gen., Alfred L. Evans, G. Ernest Tidwell, Asst. Attys. Gen., Alston, Miller & Gaines, Gambrell & Mobley, Atlanta, for parties at interest not parties to record.

MOBLEY, Justice.

The appeal is from a judgment of the Telfair Superior Court confirming and validating an issue of Industrial Revenue Bonds to be issued by Telfair County, over objections filed to the petition to validate by appellants, citizens and taxpayers of Telfair County. The county proposes to issue the bonds pursuant to a local constitutional amendment (Ga.L.1960, p. 1400) to Article VII, Section VII, Paragraph V (Code Ann. § 2-6005) of the Constitution of 1945 proposed by the General Assembly of Georgia and ratified by the voters of Telfair County. The amendment provides as follows: '* * * that revenue anticipation obligations herein called revenue bonds may be issued by Telfair County herein called the issuer, to provide funds for the purchase, construction, enlargement, or either of facilities, including land, buildings, appurtenances, machinery and equipment suitable for use by (a) any industry for manufacturing, processing, or assembling any agricultural or manufactured products or (b) any commercial enterprise in storing, warehousing, distributing or selling products of agriculture, mining and industry, or any combination thereof. Such facilities may be leased or sold by the issuer to such industry or commercial enterprise upon such terms as may be agreed upon, subject to the lien of the revenue bonds upon the revenue of the facilities involved. No sale shall be completed and title to the facility shall remain in the issuer until all revenue bonds outstanding secured by the revenue of such undertaking shall have been paid in full.

'The revenue bonds shall be payable, as to principal and interest, only from revenue received from such undertaking, and shall not be deemed debts of, or create debts against the issuer within the meaning of this Constitution; and the issuer shall not exercise the power of taxation for the purpose of paying the principal or interest of the revenue bonds or any part thereof. Such revenue bonds, their transfer the income therefrom, the security therefor, and until the payment in full of the obligation such facilities shall at all times be exempt from taxation from within the State. Bonds may be issued bearing rate or rates of interest and maturing at the years and amounts determined by the governing body of the issuer and when so authorized the procedure of validation, issuance and delivery shall be in all respects in accordance with the Revenue Bond Law (Ga.L.1937, p. 761) as amended, Code, Ann.Supp. Chapter 87-8, as if said obligations had been originally authorized to be issued thereunder. Upon the adoption of this amendment the issuer may proceed to comply with the provisions hereof immediately without any further action on the part of the General Assembly.' It further provides that the amendment be submitted to the voters of Telfair County for ratification or rejection.

1. Appellant contends that this amendment violates the due process and the equal protection clauses of the 14th Amendment to the Constitution of the United States on the ground that 'it fails to limit the issuance of bonds to situations in which increased employment, or other public purpose would result from the issuance of such bonds,' and contends that this case, as distinguished from others decided by this court approving revenue anticipation certificates or bonds, 'involves primarily the power of a county to finance private business enterprise, as described, for private purposes only, with no stated public purpose.' The parties agree that the bonds must be issued for a public purpose. This Court so held in Beazley v. Dekalb Co., 210 Ga. 41(4), 77 S.E.2d 740. It is not necessary for the amendment to state that the bonds may or must be issued for a 'public purpose,' if, in fact, the purpose for which the amendment authorizes the bonds to be issued is a public purpose. What constitutes a public use or purpose under the Constitution of Georgia is a question which must be decided by the courts of this state. Housing Authority of the City of Atlanta v. Johnson, 209 Ga. 560, 563, 74 S.E.2d 891. In deciding whether it is a public use under the federal Constitution the Supreme Court of the United States, while recognizing its authority to determine whether state legislation violates the federal Constitution, has generally left to the state courts wide latitude in determining what is a 'public use.' Housing Authority of the City of Atlanta v. Johnson, supra; Hairston v. Danville & Western Ry. Co., 208 U.S. 598, 28 S.Ct. 331, 52 L.Ed. 637. Thus, the issue for decision by this court is whether or not the activities such as are proposed in this case are for a legitimate public purpose; or specifically, is the issuance of revenue bonds by Telfair County to finance the construction of a plant for lease to private industry a public use?

Appellants concede that the relief of unemployment is a public purpose; in fact, the Supreme Court of the United States so held in Carmichael v. Southern Coal Co., 301 U.S. 495(11), 57 S.Ct. 868, 81 L.Ed. 1245. But appellants emphasize that this amendment does not limit the activities of the county in furnishing facilities to private enterprise solely on those occasions to relieve unemployment, or for any other public purpose, with which conclusion we agree. This amendment would permit the county to issue bonds for a purely private purpose; for example, to secure funds to construct a building or plant to be leased to and occupied by an already existing and operating business with a perfectly adequate building which would perform the same functions, employ the same number of people, and add nothing in the way of industry, or alleviate unemployment, or otherwise contribute to the public good. The amendment does not, as do the amendments upon which Smith v. State by Hayes, 217 Ga. 94, 121 S.E.2d 113 was decided, and upon which appellees rely,...