Vermont Educational Buildings Financing Agency v. Mann, 140

• Decision Date: 01 October 1968
• Docket Number: No. 140,140
• Citation: 247 A.2d 68,127 Vt. 262
• Parties: VERMONT EDUCATIONAL BUILDINGS FINANCING AGENCY v. Daulton MANN.
• Court: Vermont Supreme Court

Page 68

247 A.2d 68

127 Vt. 262

VERMONT EDUCATIONAL BUILDINGS FINANCING AGENCY v. Daulton MANN.

No. 140.

Supreme Court of Vermont.

Oct. 1, 1968.

Underwood, Lynch & Ketcham, Middlebury, for plaintiff; Joseph E. Frank, Burlington, amicus curiae in behalf of the American Civil Liberties Union of Vermont.

Downs & Rachlin, St. Johnsbury, for defendant.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.

HOLDEN, Chief Justice.

This appeal by the defendant, from a declaratory decree in chancery, challenges the validity of the Educational Building Financing Act of 1966 (S) No. 56; 16 V.S.A. §§ 3851-3862. The Court is called upon to review three questions which engage provisions of both State and Federal Constitutions.

1. Does the enactment serve a public, as distinguished from a private purpose?

2. Does the act constitute an unlawful delegation of power to a subordinate agency of the State?

3. Does the assistance contemplated by the statute, when extended to a church related college, offend the First Amendment, as applied to the states by way of Amendment 14?

The controversy arose when the plaintiff, the Vermont Educational Buildings Financing Agency, undertook certain leasing agreements with Bennington College Corporation and the College of St. Joseph the Provider, Inc., in accordance with the provisions of the statute. The defendant, the chairman of the Agency, on advice of counsel, refused to execute the leases and issue the revenue bonds, contemplated by the statute, on the grounds that the debentures were unmarketable because of constitutional infirmities in the enactment. The Agency petitioned, under the Declaratory Judgment Act, for relief against the chairman to settle these questions. The attorney general has been joined and heard in the proceedings, as provided in 12 V.S.A. § 4721.

In 1966 the General Assembly established the Vermont Educational Buildings Financing Agency, as a corporate instrumentarily of the State, for the purpose of aiding the construction and financing of any educational facilities of eligible institutions. 1966, No. 56 (Sp.Sess.) § 1, see note 16 V.S.A. § 3851. According to the definition of the statute, institution means any private nonprofit university, college or secondary school in the state, the university of Vermont and the Vermont state colleges. 16 V.S.A. § 3851(c).

The enactment empowered the agency to issue negotiable revenue bonds, but expressly provides that such obligations of the agency shall not be a debt of the state of Vermont, nor shall the state be liable thereon, nor shall they be payable out of any funds, other than those of the agency. 16 V.S.A. §§ 3856-3857. The act further provides that the bonds of the agency and the income they produce shall, at all times, be exempt from taxation, except for transfer and estate tax assessments. 16 V.S.A. § 3859.

By the terms of the statute, the Agency is authorized to construct and finance educational facilities for lease to eligible institutions. It may fix and collect rentals and contract with its landholders to fix rentals and other charges for the use of facilities at rates sufficient to pay all costs and the interest on amortization of and reserve for the bonded indebtedness. 16 V.S.A. § 3853. Any lease of a facility becomes the general obligation of the lessee and the lease may provide, as a part of the contract with the holders of the bonds for the pleading of revenues, the rental charges, the establishment of reserves and the disposition of the facility at the end of the term. 16 V.S.A. § 3854.

The chancellor's findings establish that Bennington College was founded in 1925 for the higher education of women, with the power to confer academic degrees. It is a nonprofit institution, administered by a board of trustees. The administration, management and control of the College is in no way connected with any religious group or organization. It has no religious facility on its campus and the college does not encourage nor discourage religious activities on the part of its student body in any way whatsoever. The resolution of the Agency has authorized the execution of a lease and sublease with Bennington College to aid in the construction and financing of a science building project, to be located on the college campus.

For the same purpose, the Agency and the College of St. Joseph the Provider, Inc., entered into leasing and subleasing agreements to construct and finance a classroom and science building for the education of students at that institution. The college is located in Rutland. It was founded as a nonprofit corporation and authorized in 1964 to confer degrees. Its constitution states-'The College of St. Joseph the Provider exists for the purpose of educating young women so that they may become well-trained professional women of true and deep Christian culture.'

The chancellor determined that both colleges are eligible institutions within the definition of the term prescribed in 16 V.S.A. § 3851(c). Bennington and St. Joseph share, in common, the concern of this appeal, with the first two questions relating to the nature of the power delegated to the Agency and whether the act permits the expenditure of public funds for private purposes contrary to the Vermont Constitution.

The purpose of the enabling act of 1966 is declared in its preamble:

The purpose of this act is to promote the welfare of the people of the State of Vermont; create the Vermont Educational Buildings Financing Agency as a body corporate and politic with power to acquire, construct, reconstruct, improve, equip, furnish and operate facilities, to lease them and to fix fees, rentals and charges for the use thereof; authorized and regulate the issuance of bonds of the agency, and provide for their payment and the rights of the holders thereof; authorize the Agency to enter into agreements with the government of the United States or any federal agency; empower the agency to sell, convey and mortgage property; and provide that no debt of the state of Vermont may be incurred in the exercise of any of the powers granted by this act. 1966 (S.) No. 56 § 1.

That this is a public purpose is settled in the language of our Constitution itself. The Plan or Frame of Government of the Vermont Constitution establishes the policy and defines its objectives.

Laws for the encouragement of virture and prevention of vice and immorality ought to be constantly kept in force, and duly executed; and a competent number of schools ought to be maintained in each town unless the General Assembly permits other provisions for the convenient instruction of youth. All religious societies, or bodies of men that may be united or incorporated for the advancement of religion and learning, or for other pious and charitable purposes, shall be encouraged and protected in the enjoyment of the privileges, immunities, and estates, which they in justice ought to enjoy, under such regulations as the General Assembly of this State shall direct. Constitution of the State of Vermont, 1777, Chapter II, XLI; Vermont Constitution 1786, Ch. II § 38; Constitution 1793, Ch. II § 64; as amended 1964.

This provision of our Constitution imposes on the General Assembly a duty in regard to education that is universally accepted as a proper public purpose. Everson v. Board of Education, 330 U.S. 1, 7, 9, 67 S.Ct. 504, 91 L.Ed. 711 at 719; Cochran v. Louisiana State Board of Education, 281 U.S. 370, 374, 50 S.Ct. 335, 74 L.Ed. 913.

If the general public benefit is the dominant interest served, constitutional demands are not offended, even though the aid enures to the benefit of a private institution. As Chief Justice Hughes has explained-the interest of the state '* * * is education, broadly; its method, comprehensive. Individual interests are aided only as the common interest is safeguarded.' Cochran v. Louisana State Board of Education, supra, 281 U.S. at 375, 50 S.Ct. at 336. To the extent that Bennington and St. Joseph Colleges are aided in financing a public state educational program, there is no offense to Articles 7th and 9th of Chapter I of the Vermont Constitution. City of Burlington v. Central Vermont Railway Co., 82 Vt. 5, 9, 71 A. 826; Town of Bennington v. Park, 50 Vt. 178, 192; See also Dresden School District v. Norwich Town School District, 124 Vt. 227, 231, 203 A.2d 598.

Was the authority granted to the Agency sufficiently restrained to constitute a permissible delegation of power within the related requirements of the Vermont Constitution?

Chapter II, Section 2. The Supreme Legislative power shall be exercised by a Senate and a House of Representatives.

Chapter II, Section 5. The Legislative, Executive, and Judiciary departments, shall be separate and distinct, so that neither exercise the powers properly belonging to the others.

Our review of this question must proceed according to '(t)he testablished rule * * * that every presumption is to be made in favor of the constitutionality of an act of the Legislature and it will not be declared unconstitutional without clear and irrefragable proof that it infringes the paramount law.' State v. Auclair, 110 Vt. 147, 156, 4 A.2d 107 (Moulton, C. J.).

Functions of the General Assembly which are strictly and entirely legislative cannot be delegated, but are reserved unto the Legislature alone. Village of Waterbury v. Melendy, 109 Vt. 441, 448, 199 A. 236. But the traditional doctrine of separation of powers recognizes that the lawmakers cannot deal directly with all functions of the sovereign. Neither can those functions be precisely divided. Sabre v. Rutland Railroad Co., 86 Vt. 347, 362, 85 A. 693; Vermont Electric Power Co. v. Anderson, 121 Vt. 72, 84, 147 A.2d 875.

The General Assembly cannot transfer its supreme legislative power to enact laws. Village of Waterbury v. Melendy, supra, 109 Vt. at 451, 199 A. 236. But it can confer upon the executive and judicial branches of government or grant to a...