State, ex rel. Lake Cty. Bd. of Commrs., v. Zupancic

• Decision Date: 24 December 1991
• Docket Number: No. 90-1615,90-1615
• Citation: 581 N.E.2d 1086,62 Ohio St.3d 297
• Parties: The STATE, ex rel. BOARD OF COUNTY COMMISSIONERS OF LAKE COUNTY et al., Appellants, v. ZUPANCIC, Appellee.
• Court: Ohio Supreme Court

Page 297

62 Ohio St.3d 297

581 N.E.2d 1086

The STATE, ex rel. BOARD OF COUNTY COMMISSIONERS OF LAKE COUNTY et al., Appellants, v. ZUPANCIC, Appellee.

No. 90-1615.

Supreme Court of Ohio.

Submitted Sept. 18, 1991.

Decided Dec. 24, 1991.

SYLLABUS BY THE COURT

The construction of for-profit, multiunit, low- and moderate-income rental housing constitutes the construction of facilities for industry and commerce under Section 13, Article VIII, Ohio Constitution. (State, ex rel. Brown, v. Beard [ 1976], 48 Ohio St.2d 290, 2 O.O.3d 438, 358 N.E.2d 569, overruled.)

In 1988, relator-appellant Board of Commissioners of Lake County ("the board"), acting under what it believed to be its authority pursuant to R.C. 165.02 and Section 13, Article VIII, Ohio Constitution, passed a resolution authorizing the county to issue $3,135,000 in "economic development" bonds. The revenue generated by the sale of the bonds was to fund a loan to relator-appellant Willow Terrace Limited Partnership ("Willow Terrace") for use in the construction of a for-profit, ninety-six-unit apartment complex for low- and middle-income individuals and families.

In order to complete the bond issuance process, the board and Willow Terrace (collectively "the relators") subsequently attempted to comply with the statutes and regulations governing the issuance of bonds, and to take those actions that were necessary to permit the bond purchaser, Chase Manhattan Bank, to sell and deliver the bonds. ¹ Although the relators completed all other steps necessary to consummate the transaction envisioned by the board's authorizing legislation, they were unable to comply with the requirements of (former) R.C. 133.19(B) ² because the respondent-appellee Lake County Auditor Edward H. Zupancic ("the auditor"), refused to sign the bonds and affix the seal of his office to them. The auditor's refusal was based upon his belief that the issuance of the bonds for the purpose of constructing housing was unconstitutional under the general prohibition against issuing bonds in aid of private enterprise found in Section 6, Article VIII of the Ohio Constitution ³ and that the project did not fall under the exceptions to Section 6 found in Section 13, Article VIII, relating to industry, commerce, distribution and research. ⁴

Upon the auditor's refusal to sign and seal the bonds, relators initiated this action on August 25, 1988, filing a petition for a writ of mandamus in the Lake County Court of Common Pleas. On March 9, 1989, the trial court granted relators' motion for summary judgment, denied the auditor's cross-motion, and issued a peremptory writ of mandamus directing the auditor to sign the bonds and affix his seal thereto. The parties agreed to a stay of the trial court's ruling pending appeal.

Upon appeal, the Lake County Court of Appeals reversed the trial court and entered judgment for the auditor, vacating the issuance of the writ. The court held that the use of the bonds for the construction of multiunit, low- and moderate-income rental housing was prohibited by Section 6, Article VIII of the Ohio Constitution. Relying upon State, ex rel. Brown, v. Beard (1976), 48 Ohio St.2d 290, 2 O.O.3d 438, 358 N.E.2d 569, the court agreed with the auditor and rejected appellants' argument that the use of bonds was permissible under the Section 13 exceptions to Section 6, Article VIII. The court noted that although Section 13 would permit the county to issue bonds for the construction of facilities "for industry, commerce, distribution, and research," the Beard decision required the court to hold that the construction of low- and moderate-income rental housing did not constitute "commerce" or "industry," and thus the purpose for the issuance of the bonds did not fall under the Section 13 exceptions.

This cause is now before the court pursuant to the allowance of a motion to certify the record.

Mastrangelo & Freda, E.W. Mastrangelo, Peck, Shaffer & Williams and John Weld Peck, for appellants.

Steven V. LaTourette, Pros. Atty., and Michael P. Brown, for appellee.

WRIGHT, Justice.

The sole issue before the court is whether the construction of for-profit, multiunit rental housing constitutes the construction of facilities for commerce or industry under Section 13, Article VIII, Ohio Constitution. The parties agree that if the proposed housing project meets the requirements of Section 13, the issuance of the bonds will meet constitutional muster, and the respondent auditor will be obligated to sign the bonds and affix his seal to them. For the reasons set forth below, we overrule State, ex rel. Brown, v. Beard (1976), 48 Ohio St.2d 290, 2 O.O.3d 438, 358 N.E.2d 569, and hold that construction of for-profit, multiunit, low- and moderate-income rental housing constitutes the construction of facilities for commerce and industry under Section 13. Accordingly, we hold that the proposed construction is a permissible project for which the relator board may issue bonds.

In Beard, we last addressed the issue of whether the construction of low- and moderate-income housing constituted commerce or industry as those terms are used in Section 13, Article VIII. ⁵ In a brief per curiam opinion, we summarily rejected the argument that "moderate and low cost housing is related to industry and commerce to such an extent as to fall within either of those constitutionally designated categories." Id., 48 Ohio St.2d at 292, 2 O.O.3d at 439, 358 N.E.2d at 570. Although the action in Beard concerned the authority of the state to issue bonds for the construction and rehabilitation of multiunit housing under Section 4, Article VIII, and not the authority of a county to issue bonds for a similar project under Section 6, the issue decided in Beard --how Section 13 should be interpreted--is essentially the same as the issue presented in the case sub judice.

As the court of appeals correctly noted, Beard would dispose of the issue before us were we to allow it to stand. Much has transpired since our decision in Beard, and we now review that opinion with the benefit of fifteen years of experience and hindsight. Although we are reluctant to overturn well-established precedent, we are less so in the face of precedent wanting in reason and justification. As Justice Holmes succinctly stated in his concurring opinion in Scott v. News-Herald (1986), 25 Ohio St.3d 243, 254, 25 OBR 302, 311, 496 N.E.2d 699, 709:

" * * * It does no violence to the legal doctrine of stare decisis to right that which is clearly wrong. It serves no valid public purpose to allow incorrect opinions to remain in the body of our law. * * *"

We now see that Beard, with its conclusory language and its focus on construction activities rather than the postconstruction use of the housing units, was inartfully, if not wrongly, decided.

We begin our analysis with a consideration of what the legislature intended to include in the constitutional categories of commerce and industry when Section 13 was submitted to the voters for their subsequent approval. A long-standing rule of construction mandates that we consider the common and ordinary meaning of the terms contained within our Constitution in order to interpret them properly. Cleveland Tel. Co. v. Cleveland (1918), 98 Ohio St. 358, 368-369, 121 N.E. 701, 704. ⁶

In State, ex rel. Bd. of Commrs. of Preble Cty., v. Mong (1984), 12 Ohio St.3d 66, 12 OBR 56, 465 N.E.2d 428, we turned to the lexicographers for assistance in defining the common and ordinary meanings of the terms "commerce" and "industry." In holding that farming constituted commerce and industry under Section 13, we relied upon the generally accepted definitions of "commerce" as "the buying and selling of goods" and "industry" as "the commercial production of goods." Id. at 67, 12 OBR at 57, 465 N.E.2d at 429, citing The American Heritage Dictionary (1979) 266, 672, and Webster's New World Dictionary (2 Ed.1982) 285, 719. Today, we look to the broader definitions of those terms to include the service industries that for some time have formed a substantial part of our state's and nation's economies. Turning again to dictionaries, we find "commerce" defined as "[t]he exchange of goods, productions, or property of any kind " (emphasis added), Black's Law Dictionary (6 Ed.1990) 269, ⁷ and "industry" defined as "the commercial production and sale of goods and services" (emphasis added), American Heritage Dictionary (1981) 672.

In adopting those definitions, we conclude that relators' proposed project would constitute the construction of facilities for industry and commerce under Section 13. The exchange of money for possessory interests in the rental units certainly constitutes "commerce" as that term is commonly used and has been defined. Furthermore, the commercial service of providing and maintaining rental housing constitutes a service industry that would be promoted by the issuance of the bonds in question. ⁸ The proposed issuance of the bonds is proper under the Ohio Constitution.

Our view that the rental industry is commerce is certainly consistent with our prior decision in Roosevelt Properties Co. v. Kinney (1984), 12 Ohio St.3d 7, 12 OBR 6, 465 N.E.2d 421. In Roosevelt, we considered the question of whether a multiunit commercial apartment complex constituted residential property for the purposes of a tax reduction factor that was available only to owners of residential property. In holding that the multiunit complexes at issue were not residential, we relied upon our view that the owner's use of the apartments was "singularly commercial in nature," id. at 12, 12 OBR at 10, 465 N.E.2d at 426, and that such properties are "utilized in a business or commercial capacity." Id. at 13, 12 OBR at 11, 465 N.E.2d at 426. For similar reasons we view relators' proposed construction project as unequivocally commercial and industrial in nature. We are mindful that since Beard, and in response thereto, the electorate has...