State ex rel. Medlock v. South Carolina State Family Farm Development Authority, 21975

• Decision Date: 11 August 1983
• Docket Number: No. 21975,21975
• Citation: 279 S.C. 316,306 S.E.2d 605
• Court: South Carolina Supreme Court
• Parties: STATE of South Carolina, Ex Relatione T. Travis MEDLOCK, Attorney General, Appellant, v. SOUTH CAROLINA STATE FAMILY FARM DEVELOPMENT AUTHORITY, Respondent.

Page 605

306 S.E.2d 605

279 S.C. 316

STATE of South Carolina, Ex Relatione T. Travis MEDLOCK Attorney General, Appellant, v. SOUTH CAROLINA STATE FAMILY FARM DEVELOPMENT AUTHORITY, Respondent.

No. 21975.

Supreme Court of South Carolina.

Aug. 11, 1983.

Atty. Gen. T. Travis Medlock, Retired Atty. Gen. Daniel R. McLeod and Deputy Atty. Gen. Frank K. Sloan, Columbia, for appellant.

Randall T. Bell & William E. Craver III, of McNair, Glenn, Konduros, Corley, Singletary, Porter & Dibble, Columbia, for respondent.

NESS, Justice:

This action tests the validity of Act No. 179, § 15, the Family Farm Development Act, now codified at S.C.Code Ann. § 46-47-10 et seq. (Cum.Supp.1982). The trial judge held the Act constitutional, and we affirm.

The Act empowers the Authority to issue revenue bonds to provide loans to low and moderate income farmers through three methods of financing: (1) direct loans, (2) loans to lending institutions, and (3) loan purchases. Under the first method, the Authority may issue bonds and loan the proceeds to qualified farmers. The second method allows the Authority to lend bond proceeds to qualified lending institutions; the institution must then lend to low and moderate income farmers within a specified time. Under the third method, the Authority may use bond proceeds to purchase loans made to low and moderate income farmers from qualified lending institutions.

Appellant first contends the Act violates Article III, § 17 of the South Carolina Constitution requiring that legislative enactments relate to only one subject.

The purpose of Article III, § 17 is to (1) prevent the General Assembly from being misled into passing bills containing provisions not indicated in their titles, and (2) apprise the public of the subject of the proposed legislation, giving it an opportunity to be heard. Maner v. Maner, S.C., 296 S.E.2d 533 (1982). We have liberally construed this provision to uphold legislation where practicable, and have consistently held the provision's requirements are satisfied when the title of an act states the general subject of the legislation and the provisions of the act are germane to that subject. Hercules, Inc. v. The S.C. Tax Commission, et al., 274 S.C. 137, 262 S.E.2d 45 (1980); McCollum v. Snipes, et al., 213 S.C. 254, 49 S.E.2d 12 (1948). A statute will not be declared unconstitutional unless it clearly violates the constitution beyond reasonable doubt. Hercules, Inc. v. The S.C. Tax Commission, supra.

The subject of Act No. 179 is the authorization of bonded indebtedness to fund various government programs. Section 15 empowers the Authority to issue bonds to provide loans for low to moderate income farm families, and is thus germane to subject of the act. Moreover, the content of § 15 is specifically referred to in the title. ¹ We hold the Act falls within constitutional limits.

Appellant next contends the Act violates Article X, § 11 of the South Carolina Constitution because it permits the pledging of the State's credit for the benefit of private individuals.

We have held that there is no lending of the State's credit unless its general credit and taxing powers are pledged. Johnson v. Piedmont Municipal Power Agency, 277 S.C. 345, 287 S.E.2d 476 (1982); State, ex rel. McLeod v. Riley, 276 S.C. 323, 278 S.E.2d 612 (1981). In this case, the act itself specifically prohibits resort to the State's general taxing powers at § 46-47-180:

"The bonds or other obligations of the authority shall not be a debt nor create an obligation of the State or its political subdivisions--. Any bonds or obligations issued by the authority shall be special obligations of it. Neither the State nor any political subdivision shall be liable on the bonds nor shall they be payable out of any funds other than those of the authority pledged and all bonds and other obligations issued pursuant to this chapter shall contain on the face a statement to such effect."

In Bauer v. S.C. State Housing Authority, 271 S.C. 219, 246 S.E.2d 869 (1978), we held a similar provision sufficient to protect the State from pecuniary liability. This statute affords the same protection, thus we find appellant's exception without merit.

Next, appellant argues the Act denies equal protection because it provides loan benefits for a limited group.

The requirements of equal protection are satisfied if (1) the classification bears a reasonable relation to the legislative purpose sought to be effected; (2) the members of the class are treated alike under similar circumstances and conditions; and (3) the classification rests on some reasonable basis. Bauer, supra.

The determination of whether a classification is reasonable is initially one for the legislature and will not be set aside unless plainly arbitrary. State v. Solomon, 245 S.C. 550, 141 S.E.2d 818 (1965); Glens Falls Insurance Co. v. City of Columbia, 242 S.C. 237, 130 S.E.2d 573 (1963). In support of the classification, the legislature found that low and middle income farmers cannot acquire the resources necessary to maintain the State's vital farming industry. The classifications are designed to provide low and middle income farmers a means of acquiring the needed resources. Since appellant presented no evidence refuting this finding, we conclude the classification is reasonable. Bauer, supra.

Appellant asserts that because the loan limit to any one farmer or farm family is $625,000.00, the Act does not serve the stated purpose of benefitting low to moderate income farm families. Given the high capital expenditures for land and machinery required of the average farmer, we cannot say the Act is not rationally related to its intended purpose.

Next, appellant contends the Act violates Article I, § 3 of the South Carolina Constitution because it does not serve a public purpose.

We have recognized that legislation which aids and promotes agriculture serves a valid public purpose. S.C. Farm Bureau Marketing Association v. S.C. State Ports Authority, S.C., 293 S.E.2d 854 (1982). The public purpose is not destroyed merely because benefits will accrue to private individuals, nor is it necessary for the legislation to serve all the people. Bauer, supra; Anderson v. Baehr, 265 S.C. 153, 217 S.E.2d 43 (1975). The program will directly benefit a substantial segment of the State's farmers and the State as a whole by improving the farm economy. We hold the Act serves a valid public purpose.

Finally, appellant maintains the Act is unconstitutional because it delegates the performance of governmental functions to private persons and institutions.

Under the Act, the Authority may delegate the implementation of the loan programs to governmental agencies and financial institutions, but the Authority retains ultimate responsibility for the programs through regulation and contractual agreement with the lenders. A lending institution cannot loan Authority funds to someone not in the prescribed class, nor to an unworthy credit risk. All loans must be made at an interest rate sufficient to pay principal and interest on the bonds and the Authority's administrative costs. The Authority, not the lending institution, must determine that each loan is not otherwise available to the borrower on reasonably equivalent terms. The Authority determines whether and on what terms a loan may be assumed, whether to include a due-on-sale clause, and the method of securing the loan. Each loan must comply with all the Authority's regulations. In short, the Authority maintains final control over the management of its loan programs, while delegating the ministerial duties for which lending institutions possess the necessary organization and experience.

We have held that delegation of administrative and ministerial duties is not unconstitutional. Clarke v. S.C. Public Service Authority, et al., 177 S.C. 427, 181 S.E. 481 (1935); Green, et al. v. City of Rock Hill, et al., 149 S.C. 234, 147 S.E. 346 (1929). Since the legislature in this instance delegated only ministerial duties, the Act is not violative of Article III, § 1 of the South Carolina Constitution.

AFFIRMED.

HARWELL, J., and PAUL M. MOORE, A.A.J., concur.

LEWIS, C.J., and GREGORY, J., dissent.

LEWIS, Chief Justice (dissenting):

The majority opinion reaches the conclusion that Act No. 179 of the 1981 Acts of the General Assembly does not offend Article III, Section 17, of the South Carolina Constitution. I disagree and, therefore, dissent.

Article III, Section 17, of the Constitution states:

Section 17. One...