Winkler v. State School Bldg. Authority
Decision Date | 01 January 1990 |
Citation | 434 S.E.2d 420,189 W.Va. 748 |
Parties | , 85 Ed. Law Rep. 554 William S.E. WINKLER and Diane Hickle, Plaintiffs Below, Appellees, v. STATE of West Virginia SCHOOL BUILDING AUTHORITY, and United National Bank, a National Banking Association, as Trustee Under the Certain Trust Indenture by and Between the School Building Authority of West Virginia, A Public Body Corporate and United National Bank, as Trustee, Dated |
Court | West Virginia Supreme Court |
Syllabus by the Court
1. Questions of constitutional construction are in the main governed by the same general rules applied in statutory construction.
2. "The general rule of statutory construction requires that a specific statute be given precedence over a general statute relating to the same subject matter where the two cannot be reconciled." Syllabus Point 1, UMWA by Trumka v. Kingdon, 174 W.Va. 330, 325 S.E.2d 120 (1984).
3. A category of bonds that override the specific limitations contained in Sections 4 and 6 of Article X of the West Virginia Constitution are bonds that the Legislature issues after following the procedures contained in Section 2 of Article XIV of the Constitution relating to constitutional amendments. Under the amendment procedure, a majority of qualified voters voting on the issue must approve the issuance of the bonds.
4. The restrictions contained in Section 4 of Article X of the West Virginia Constitution deal with the creation of long-term debt by the State or its agencies by way of legislative enactments through revenue bonds or other similar obligations.
5. The plain language of Section 6 of Article X of the West Virginia Constitution is designed to restrict the State from granting credit to subordinate political subdivisions such as municipalities and counties, as well to forbid the State from granting credit or assuming liabilities for debts of private persons or other entities.
6. Section 4 of Article X of the West Virginia Constitution is not designed to prohibit the State or the state's agencies from issuing revenue bonds that are to be liquidated from contracts requiring rental payments from another state agency or from contracts for necessary services such as utilities; nor does this constitutional provision preclude the issuance of revenue bonds which are to be redeemed from a special fund.
7. Revenue bonds authorized under the School Building Authority Act, W.Va.Code, 18-9D-1, et seq., constitute an indebtedness of the State in violation of Section 4 of Article X of the West Virginia Constitution. To the extent that Syllabus Point 3 of State ex rel. Resource Recovery-Solid Waste Disposal Authority v. Gill, 174 W.Va. 109, 323 S.E.2d 590 (1984), holds to the contrary, it is overruled.
8. " Syllabus Point 4, Kincaid v. Mangum, 189 W.Va. 404, 432 S.E.2d 74 (1993).
9. Based upon our general principles of retroactivity of judicial decisions, revenue bonds issued by the State of West Virginia School Building Authority pursuant to W.Va.Code, 18-9D-1, et seq., prior to the date of this opinion are not invalid.
10. Because the previous issue of State of West Virginia School Building Authority bonds is not invalid under principles of retroactivity and because we also have determined that the refunding of bonds does not create new debt, the State of West Virginia School Building Authority is authorized to issue refunding bonds from the Capital Improvement and Revenue and Refunding Bonds, Series 1993, to replace existing bonds at a lower interest rate.
James B. Lees, Jr., Hunt, Lees, Farrell & Kessler, Charleston, for plaintiffs.
Harry M. Rubenstein, Kay, Casto, Chaney, Love & Wise, Morgantown, John O. Kizer, Kay, Casto, Chaney, Love & Wise, Charleston, for amicus curiae Board of Educ. of the Counties of Barbour, Doddridge, Gilmer, Harrison, Lewis, Marion, Monongalia, Preston, Randolph, Taylor, Tucker and Upshur.
Michael R. Crane, Alison E. Patient, M.E. Mowery, Charleston, for amicus curiae West Virginia Legislature.
Howard E. Seufer, Jr., Roger D. Hunter, Claudia W. Bentley, Bowles, Rice, McDavid, Graff & Love, Martinsburg, for amicus curiae Boards of Educ. of the Counties of Berkeley, Boone, Braxton, Calhoun, Fayette, Grant, Greenbrier, Hampshire, Hancock, Hardy, Logan, McDowell, Mineral, Ohio, Pleasants, Raleigh, Ritchie, Roane, Wetzel, Wirt, Wood and Wyoming.
Darrell V. McGraw, Jr., Atty. Gen., L. Eugene Dickinson, Asst. Atty. Gen., Charleston, for State of West Virginia School Bldg. Authority.
James K. Brown, Anthony J. Majestro, Jackson & Kelly, Charleston, Cynthia A. Majestro, Charleston, for United National Bank.
David L. Campbell, Charleston, for amicus curiae Honorable Gaston Caperton, Governor of the State of W.Va.
Stuart Calwell, Jacqueline A. Hallinan, Calwell & McCormick, Charleston, for amicus curiae State Bldg. & Constr. Trades Council.
Michael D. Thompson, Pros. Atty., of Jefferson County, Charles Town, amicus curiae.
The question that we are asked to decide on this appeal is whether the Circuit Court of Kanawha County was in error when it held in its July 9, 1993 order that the Capital Improvement and Revenue and Refunding Bonds, Series 1993, issued by the appellant, State of West Virginia School Building Authority (SBA) in the amount of $338,145,000, were invalid as violating Sections 4 and 6 of Article X of the Constitution of West Virginia. 1 These constitutional provisions restrict the ability of the State to issue bonds that draw upon the State's general revenue funds.
The appellants are the SBA and the United National Bank (Bank). The Bank is the Trustee under a certain Trust Indenture between it and the SBA dated January 1, 1990, which is part of the bond financing arrangements. The appellees are two citizens and taxpayers who sought a declaratory judgment with attendant injunctive relief against the SBA on June 16, 1993, in the Circuit Court of Kanawha County. 2 Their claim was that the 1993 Series revenue bonds about to be issued pursuant to W.Va.Code, 18-9D-1, et seq., were unconstitutional because issuance of the bonds violated the provisions of Sections 4 and 6 of Article X of the West Virginia Constitution prohibiting state debt.
On June 21, 1993, the circuit court granted the Bank the right to intervene in this case. After several hearings were held, the circuit court, by order entered July 9, 1993, held that issuance of the bonds was unconstitutional, and therefore enjoined the SBA from issuing the bonds. The basis for the circuit court's holding was that the bonds commit the State Legislature to fund the bonds' retirement and that this commitment constitutes an impermissible debt against the State. We granted this appeal on July 13, 1993, on an expedited basis because of the urgent need for a decision on the issues involved in this case. 3 A full hearing was held on July 20, 1993.
There is no question that the challenged bonds were authorized by the SBA under the provisions of W.Va.Code, 18-9D-1, et seq. The general outline of that article, with regard to the bond arrangement, is as follows. Under Section 4, the SBA may issue revenue bonds under the guidelines set out in that section. Pursuant to Section 6, a building capital improvement fund is "created in the state treasury." This same section authorizes the SBA to pledge this fund to liquidate the revenue bonds. Section 8 provides further directions as to the issuance of the bonds, the trust indenture agreement, and the pledge of funds to liquidate the bonds. Section 12 spells out in more detail the trust agreement for the benefit of the bondholders. Section 13 mandates that a sinking fund be created in the State Treasurer's office in order to liquidate the bonds. Finally, under Section 14, this statement is made:
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