State Ports Authority v. Arnall

• Decision Date: 07 January 1947
• Docket Number: 15653.
• Citation: 41 S.E.2d 246,201 Ga. 713
• Parties: STATE PORTS AUTHORITY v. ARNALL, Governor, et al.
• Court: Georgia Supreme Court

41 S.E.2d 246

201 Ga. 713

STATE PORTS AUTHORITY v. ARNALL, Governor, et al.

No. 15653.

Supreme Court of Georgia

January 7, 1947

Syllabus by the Court.

1. By art. 1, sec. 4, par. 2, of the constitution of 1945, it is provided: 'Legislative acts in violation of this constitution, or the constitution of the United States, are void, and the judiciary shall so declare them.' Code (Ann.Supp.) § 2-402.

(a) The acts of 1946 (Ga.L.1946, p. 60; and Ga.L.1946, p. 163), the former authorising the State to pay from its general funds under certain conditions, all or a part of the annual cost of 'maintaining, repairing, and operating' the facilities of State Ports Authority, a distinct corporate entity having perpetual existence, and the latter appropriating and allocating all the rentals to be received from the lease of the Western & Atlantic Railroad from 1950 to the end of the lease to a special fund, and placing these rentals at the disposal of the Authority to be applied by it toward the payment of its refunding bonds, with the interest thereon, creates a debt within the meaning of the constitutional inhibition against the State incurring debts. Const. Art. 7, § 3, par. 1; Code (Ann.Supp.), § 2-5601.

(b) The act of 1946 (Ga.L.1946, p. 163), appropriating and allocating all the rentals to be received from the lease of the Western & Atlantic Railroad from 1950 to the end of the lease, a sum of approximately $10,800,000, to a special fund, and placing these rentals at the disposal of the State Ports Authority to be applied by it toward the payment of refunding bonds issued to acquire, construct, equip, maintain, develop and improve the harbors or seaports of the State and their port facilities, increases the bonded debt of the State and therefore ciolates art. 7, sec. 3, par. 2, of the constitution of 1945, which provides: 'The bonded debt of the State shall never be increased, except to repel invasion suppress insurrection, and defend the State in time of war.' Code (Ann.Supp.) § 2-5602.

2. By art. 7, sec. 9, par. 4, of the constitution of 1945, it is provided: 'The appropriation for each department, officer, bureau, board, commission, agency, or institution for which an appropriation is made, shall be for a specific sum of money, and no appropriation shall allocate to any object, the proceeds of any tax or fund or a part or percentage thereof.' Code (Ann.Supp.) § 2-6204.

(a) Assuming but not holding that the State Ports Authority is an instrumentality of the State to which an appropriation of State funds may legally be made, the act of 1946 (Ga.L.1946, p. 60) does not purport appropriate any specific sum of money for the 'maintenance, repair, and operation' of the Authority's facilities, and therefore violates that provision of art. 7, sec. 9, par. 4, of the constitution which provides: 'The appropriation for each department, officer, bureau, board, commission, agency, or institution for which an appropriation is made, shall be for a specific sum of money.' Code (Ann.Supp.) § 2-6204.

(b) The act of 1946 (Ga.L.1946, p. 163) appropriates and allocates to a special treasury fund the rentals to be received from the Western & Atlantic Railroad for the use and benefit of the State Ports Authority, in violation of the provision contained in art. 7, sec. 9, par. 4 of the constitution, which provides that 'no appropriation shall allocate to any object, the proceeds of any tax or fund or part or percentage thereof.'

(c) An appropriation made to any object which is not contained in the general appropriations act then of force, or by amendment thereto, and which is neither a supplementary appropriation from unappropriated funds in the treasury, nor from taxes laid for that purpose and collected into the treasury, is prohibited by art. 7, sec. 9, par. 3, of the constitution of 1945, Code (Ann.Supp.) § 2-6203.

The General Assembly, by an act approved March 9, 1945, Ga.L.1945, pp. 464-480, created the State Ports Authority as a body corporate and politic, with all the rights and powers incident to corporate existence, and authorized and empowered it to develop and improve the harbors and seaports of the Stat of Georgia, for the handling of water-borne commerce from and to any part of the State of Georgia, other States, and foreign countries, and to acquire, construct, equip, maintain, develop, and improve its harbors or seaports and port facilities. It was also authorized to borrow money for any of its corporate purposes in a sum not to exceed fifteen million dollars and to issue therefor negotiable revenue bonds. Section six of the act provided: That the bonds so authorized should not be deemed to constitute a debt of the State of Georgia, or a pledge of the faith and credit of the State, but such bonds so authorized should be payable solely from income derived by the Authority from fees and rentals resulting from a use of its facilities; that such bonds when issued should not directly, indirectly, or contingently obligate the State to levy or pledge any form of taxation or to make any appropriation for their payment; that neither the State nor the authority should be obligated to pay the principal of or the interest on such bonds, except from earnings of the Authority; and that all bonds so issued should contain on their face recitals covering such provision for their payment.

Article VII, Section II, Paragraph I, sub-paragraph 6 of the constitution of 1945 (Code Ann.Supp., § 2-5501), provides: 'The powers of taxation over the whole State shall be exercised by the General Assembly for the following purposes only: * * * 6. To construct and maintain State buildings and a system of State highways, airports, and docks * * *.'

By an act approved January 30, 1946, Act No. 516, Ga.L.1946, p. 60, the act of 1945 creating the State Ports Authority was amended by adding a new paragraph at the end of section 10 thereof, which reads as follows: 'Notwithstanding any of the foregoing provisions of this section or any of the other provisions of this act, and inasmuch as such project or projects will constitute a part of the system of State docks, and the power of taxation may be exercised by the General Assembly for the purpose of maintaining a system of State docks, the Authority may, by resolution passed prior to the issuance of any bonds under the provisions of this act, or by the trust indenture securing such bonds, covenant for and on behalf of the State of Georgia for the payment by said State of the cost of maintaining, repairing, and operating any project or projects acquired or constructed under the provisions of this act, in their entirety or to the extent provided by such resolution, and such resolution shall have the force of contract between the State and the holders of such bonds issued for such project or projects.'

By an act approved February 1, 1946, Act No. 628, Ga.L.1946, p. 163, the Governor of the State was authorized and empowered to set aside the rentals arising from the lease of the Western & Atlantic Railroad from January 1, 1950, to the date of the expiration of the existing lease, to the credit of a special treasury fund for the use and benefit of the State Ports Authority, to be used by it solely and exclusively for the purpose of paying the principal of and the interest upon the bonds of the Authority issued pursuant to the act creating it. Section 2 of the act authorized, empowered, and directed the Governor to draw his warrant or warrants against the special treasury fund, payable to the order of the Authority, cause them to be countersigned by the comptroller-general, and deliver them to the Authority. Such warrant or warrants and the rents paid or to be paid to the credit of the special treasury fund were made assignable by resolution of the Authority to any trustee or fiscal agent designated by resolution of the Authority. The act further provided that when a resolution was passed by the authority assigning the warrants and the special treasury funds to the trustee, and a certified copy of the resolution of assignment was filed with the treasurer of the State of Georgia, such assignment would be irrevocable until all the bonds of the Authority, together with interest thereon, were paid in full. Section 3 of the act provided that, if any surplus of these funds remained in the special treasury fund account after all of the bonds and interest of the Authority were paid, the same should be paid to the treasurer for the credit of the general funds of the State.

Pursuant to the act approved March 9, 1945, creating the Authority the amendment thereto approved January 30, 1946, obligating the State to pay the cost of maintaining, repairing, and operating the facilities acquired or constructed by the Authority, and the act approved February 1, 1946, placing the rentals of the Western & Atlantic Railroad at the disposal of the Authority for the purpose of paying its bonds and the interest thereon, the Authority passed a resolution for the issuance of bonds in the sum of fifteen million dollars. The resolution further provided that the bonds were to be in the denomination of $100 each and were to be numbered from one to fifteen thousand, dated as of August 1, 1946, and to bear interest at the rate of 2 1/4 per cent per annum. Bonds numbered from one to five thousand were to mature and be payable during the years 1951 through 1970, and the remaining numbered bonds would mature February 1, 1981. In addition to pledging all of the earnings from its facilities as security for the payment of its bonds and the interest thereon, the resolution recited that by trust indenture it had named a trustee to whom the warrants, drawn on the special treasury fund, would be assigned as additional security for the payment of its bonds...