Steup v. Indiana Housing Finance Authority
Decision Date | 02 April 1980 |
Docket Number | No. 1179S309,1179S309 |
Citation | 402 N.E.2d 1215,273 Ind. 72 |
Parties | Roger A. STEUP; American Federal Savings and Loan Association of Fort Wayne, Appellants (Plaintiffs below), v. INDIANA HOUSING FINANCE AUTHORITY; Robert D. Orr, John C. Hart, Jack New, James E. Faris, Carl Raymond Carlson, Louis H. Boink, and Frank P. Flynn as members of the Indiana Housing Finance Authority; and Theodore L. Sendak, as Attorney General of Indiana, Appellees (Defendants below). |
Court | Indiana Supreme Court |
Lewis C. Bose and Kendall C. Crook, Bose & Evans, Indianapolis, for appellants.
Phillip E. Gutman and Richard H. Blaich, Rothberg, Gallmeyer, Fruechtenicht & Logan, Ft. Wayne, Harry T. Ice and James A. Shanahan, Ice, Miller, Donadio & Ryan, Indianapolis, for Indiana Housing et al.
Theodore L. Sendak, Atty. Gen., Jane M. Gootee, Deputy Atty. Gen., Indianapolis, amicus curiae.
Appellants Steup and the American Federal Savings and Loan Association of Fort Wayne brought suit against the Indiana Housing Finance Authority (hereinafter referred to as "the Authority"), its individual members and the Attorney General of Indiana for a declaratory judgment and injunction holding unconstitutional the Indiana Housing Finance Authority Act, Ind.Code § 5-20-1-1, et seq., (Burns Supp.1979), (hereinafter referred to as "the Act"). The Hancock Circuit Court held that the Act was a valid and constitutional enactment of the Indiana General Assembly. This Court granted a joint petition to transfer this cause from the Court of Appeals, pursuant to Ind.R.App.P. 4(A)(10).
Appellants' constitutional challenge raises the following issues for review:
(1) Whether the Act violates Ind.Const. Art. 10 § 5 by creating a state debt;
(2) Whether the Act (a) authorizes a pledge of the state's credit and (b) makes the state a stockholder in a corporation in violation of Ind.Const. Art. 11, § 12;
(3) Whether the Act authorizes the Authority to expend public funds for private benefit without a valid public purpose in violation of U.S.Const. amend. XIV and Ind.Const. Art. 1, §§ 1 and 21;
(4) Whether the Act grants some citizens privileges not granted others similarly situated in violation of U.S.Const. amend. XIV and Ind.Const. Art. 1, § 23;
(5) Whether the Act is arbitrary and in violation of equal protection guarantees, U.S.Const. amend. XIV and Ind.Const. Art. 1, § 23, by creating local employment and contracting privileges;
(6) Whether the Act creates tax exemptions contravening U.S.Const. amend. XIV and Ind.Const. Art. 1, § 23 and Art. 10, § 1;
(7) Whether the Act constitutes an improper delegation of legislative authority to a state agency in violation of U.S.Const. amend. XIV and Ind.Const. Art. 4, § 1 and Art. 1, § 23;
(8) Whether the Act denies due process to certain creditors of the Authority in violation of U.S.Const. amend. XIV and Ind.Const. Art. 1, §§ 1 and 21; and
(9) Whether the trial court's conclusions of law are contrary to law in that they are not supported by sufficient evidence and are contrary to the evidence.
A statute is clothed with a presumption of constitutionality. Every doubt raised must be resolved in favor of the statute's validity. Furthermore, a heavy burden is borne by the challenger. Sidle v. Majors, (1976) 264 Ind. 206, 341 N.E.2d 763.
Appellants first claim that the statute should fail because it authorizes the creation of state debt for purposes other than those permitted by Art. 10, § 5 of the Indiana Constitution which is as follows:
"No law shall authorize any debt to be contracted, on behalf of the State, except in the following cases: To meet casual deficits in the revenue; to pay the interest on the State Debt; to repel invasion, suppress insurrection, or, if hostilities be threatened, provide for the public defense."
The Authority is similar in nature to the commissions created for the construction of the Indiana Toll Road, Ennis v. State Highway Commission, (1952) 231 Ind. 311, 108 N.E.2d 687; the Indiana Toll Bridge, Indiana State Toll Bridge Commission v. Minor, (1957) 236 Ind. 193, 139 N.E.2d 445; the State Office Building, Book v. State Office Bldg. Commission et al., (1957) 238 Ind. 120, 149 N.E.2d 273; and an Indiana port, Orbison v. Welsh, Governor et al., (1961) 242 Ind. 385, 179 N.E.2d 727. The Authority is neither a state agency nor a private corporation.
"(I)t is a separate corporate entity which is an instrumentality or agency of the state although it is not the state in its sovereign corporate capacity." Orbison v. Welsh, Governor, supra, 242 Ind. at 399, 179 N.E.2d at 734.
Ind.Code § 5-20-1-16(a) (Burns Supp.1979) provides that the Authority may create and establish one or more capital reserve funds to secure notes or bonds referred to and defined by Ind.Code § 5-20-1-2(10) (Burns Supp.1979) as "obligations." Ind.Code § 5-20-1-16(a) (Burns Supp.1979) states:
Ind.Code § 5-20-1-16(b) (Burns Supp.1979) limits the usage of the funds, as follows:
Appellants argue that appropriations made by the legislature and paid into the capital reserve fund would create a state indebtedness because those moneys could be applied directly and unconditionally to the satisfaction of the Authority's obligations. They further argue that the result would be identical if the state agreed directly to assume all or a portion of the obligations under the bonds or notes as they become due, which would be a violation of Art. 10, § 5 of the Indiana Constitution. Although the result may be identical "It is never an illegal evasion of a constitutional provision or prohibition to accomplish a desired result, which is lawful in itself, by discovering or following a legal way to do it." Book v. State Office Bldg. Commission et al., supra, 238 Ind. at 149, 149 N.E.2d at 288.
We have previously held that appropriations advanced to commissions for public purposes and projects did not create an indebtedness of the state. In prior cases, bonds authorized to be issued by the statute were not issued in the name of the state and, we held, were not its obligation. Ennis v. State Highway Commission, supra; Indiana State Toll Bridge Commission v. Minor, supra; Orbison v. Welsh, Governor, supra; Book v. State Office Bldg. Commission, supra. The Acts in Ennis and Book provided specifically that the bonds were payable solely from the revenues derived from the commissions. Both Acts contained a section stating that the obligations of the commissions were not the obligations of the state.
Similarly, Ind.Code § 5-20-1-8(a) (Burns Supp.1979) states in relevant part:
Ind.Code § 5-20-1-7(a) (Burns Supp.1979) expressly states that the Authority's obligations do not constitute a debt, liability or obligation of the state:
The above provision leaves no recourse against the state and the general fund cannot be reached to pay the Authority's obligations.
Furthermore, the legislature may appropriate funds to the capital reserve fund. However, no funds can flow into the reserve fund unless and until there is an appropriation by the legislature. The Act...
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