Advisory Opinion Re Constitutionality of PA 1966, No 346

Adams, J.

(dissenting in part). The governor’s request for an advisory opinion submits two basic questions:

1. Does PA 1966, No 346, violate the provisions of Const 1963, art 9, § 18, which prohibits the State from granting its credit to or in aid of any person, association, or corporation, public or private, except as authorized in the Constitution?

2. If appropriations are made by the legislature to the funds of the authority, as authorized by the act, and such appropriations are used to pay principal and interest on bonds of the authority, is such action a borrowing by the State within the meaning of Const 1963, art 9, § 15?

I agree with the conclusion of Justice BreNNAN that PA 1966, No 346, does not violate the provisions of Const 1963, art 9, § 18. This Court has repeatedly held that a public project supported by its own revenue is financially distinct from government itself — at least to the extent that the project does not involve the credit of the government, because the bonds issued to finance the project are payable from the special fund created for that purpose to which the revenues of the project are deposited. Any financing undertaken by the housing-development authority payable from its revenues would be within the concept of the special fund doctrine. Since Act No 346, § 31, recites that the *587State shall not be liable on the notes or bonds of the authority and that such notes and bonds shall not be a debt of the State, “There has been rib pledge of State credit as security for the bonds, and, therefore, there has been no granting of the credit of tbe State.” State Highway Commissioner v. Detroit City Controller (1951), 331 Mich 337, 356, 357.

I would answer the second question on the authority of Schureman v. State Highway Commission (1966), 377 Mich 609, where it is said (p 612):

“We bold article 9, § 15, does, not apply to tbe special obligation bonds here involved. We bold that tbe quoted article is limited in its application to general obligation bonds pledging tbe full faith and credit of the State.”

I agree that the public health and general welfare of the people of the State are served by the authority which has as its objective the encouragement of an adequate supply of safe and sanitary dwelling accommodations within the financial means of low-income or moderate-income families. That such a law has a public purpose is fully demonstrated by the cases collected and cited in my opinion in City of Gaylord v. Gaylord City Clerk (1966), 378 Mich 273.

Absent specifically indicated legislative intent .so to do, I do not read Act No 346 as creating a quasi corporation. The legislature did not create a body —the authority — having clearly defined characteristics. It placed the authority in the department of social services in State government, subject tp budgetary control for housekeeping purposes by the department bead. Somewhat inconsistently, the legislature named it a public body corporate and politic, but it said the powers of the authority' shall be vested in the members thereof in office from time *588to time. The authority is nothing more than a board or commission serving as an agency or instrumentality of the State.*

I agree with Justice BreNNAN that the authority is not authorized to engage in works of internal improvement. See City of Gaylord v. Gaylord City Clerk, supra, p 289.

As Justice BreNNAN states, the act contemplates appropriations to the housing development fund and to the capital reserve fund. The housing de*589velopment fund will be used to make loans and advances to private corporations and the capital reserve fund will be used to repay bonds issued for the same and other purposes. He concludes that appropriations to these funds do not constitute appropriations for public purposes but that under Const 1963, art 4, § 30, the assent of 2/3 of the members elected to and serving in each house of the legislature permits the appropriation of public money or property for local or private purposes.

*588(1) Community airport authority: PA 1957, ISfo 206, CLS 1961, § 259.621 et seq. (Stat Ann 1960 Rev § 10.311 et seq.), “a body corporate”.
(2) Michigan State apple commission: PA 1939, No 87, CL 1948, § 290.51 et seq. (Stat Ann 1967 Rev § 12.1220[1] et seq.), “a corporate body”, “it shall have and possess all the powers of a corporation”.
(3) Maekinae bridge authority: PA 1950 (Ex Sess), No 21, CLS 1961, § 254.301 et seq. (Stat Ann 1958 Rev § 9.1360[1] et seq.), “hereby created a nonsalaried entity as a public benefit corporation and an agency and instrumentality of the state of Michigan to be known as the Maekinae bridge authority, whieh is hereby made a body corporate”.
(4) Charter water authority: PA 1957, No 4, CLS 1961, § 121.1 et seq. (Stat Ann 1958 Rev § 5.2533[31] et seq.), “shall be a public municipal corporation”.
(5) Michigan cherry commission: PA 1947, No 228, CL 1948, § 290.501 et seq. (Stat Ann 1967 Rev § 12.95[1] et seq.), “a body corporate”.
(6) Huron-Clinton metropolitan authority: PA 1939, No 147, CL 1948, § 119.51 et seq. (Stat Ann 1958 Rev § 5.2148[1] et seq.), “to form a metropolitan district as a body corporate”.
(7) Community hospital authority: PA 1945, No 47, CL 1948, § 331.1 et seq. (Stat Ann 1958 Rev § 5.2456[1] et seq.), “shall be a body corporate”.
(8) Economic development act: PA 1947, No 302, CL 1948, §125.1 et seq. (Stat Ann 1961 Rev § 3.540[1] et seq.), “hereby created a department of the state government to be known as the department of economic development”.
(9) Michigan hospital survey and construction act: PA 1947, No 299, CL 1948, § 331.501 et seq. (Stat Ann 1956 Rev § 14.1201 et seq.), “There is hereby established in the executive braneh of the state government an offiee of hospital survey and construction”.
(10) Michigan turnpike authority: PA 1953, No 176, CLS 1961, § 252.101 et seq. (Stat Ann 1958 Rev § 9.1095[1] et seq.), “There is hereby created as a public benefit corporation an agency and instrumentality of the state of Michigan to be known as the Michigan turnpike authority”.

*589I disagree with Justice Brennan as to the significance of public purpose as it relates to legislative appropriations. Public purpose, so applied, is to be tested by the police power standards of public health, morals, safety, or the general welfare to determine if the authorized appropriation and expenditure of the public revenues raised by taxation are for a proper governmental purpose within the legitimate exercise of legislative power. If not, the appropriation may amount to an unconstitutional taking of private property without due process of law. One man’s money or property can never be taken by taxation to be banded over to another for bis private use or profit. Any such scheme would be unconstitutional as a taking of private property without due process. People, ex rel. Detroit & H. R. Co., v. Salem Township Board (1870), 20 Mich 452. The explanation of the Salem Case is given by Justice Cooley himself in the later case of People, ex rel. Trombley, v. Auditor General (1871), 23 Mich 471, 483, where be said:

“This Court held, in People, ex rel. Detroit & H. R. Co., v. Salem Township Board (1870), 20 Mich 452, 454, that a legislative act originating proceedings by, or in pursuance of, which individual property was to be taken under tbe forms of taxation for tbe benefit of a private corporation, could not *590be justified as an exercise of legislative power. It was not, therefore, dne process of law.”

Article 4, § 30, traces its origin in Michigan to Const 1850. It apparently was borrowed by the drafters of that Constitution from a State of New York Constitution. The section deals with appropriation bills and relates to the legislative vote requisite to passage of such a bill appropriating public money or property for local or private purposes. - I do not construe Const 1963, art 4, § 30, as furnishing a cure-all for constitutional infirmities, provided legislative assent to the appropriation can be obtained by a 2/3 vote. It was never intended to eliminate an essential ingredient in the exercise of the power of taxation — that the taking of an individual’s money or property by taxation may only be done lawfully in the exercise of a public purpose.

Article 4, § 30, of the present Constitution, like its predecessors, must be construed as requiring that the appropriation of public money or property be in furtherance of the public interest or public good although the beneficiary of the appropriation may be private enterprise or individuals in their pri- . vate capacities, or the appropriation may be one which is for a local purpose. To sustain such an appropriation, even though passed with the necessary 2/3 vote in the legislature, it is essential to find as an overriding condition of the appropriation that it is in furtherance of the general welfare of the people of the State or in furtherance of the public health or safety, or some other similar beneficial public interest. I agree with Justice BkbNNAN as to the relationship between housing and the health, welfare, and the safety of the people of the State of Michigan, as stated by him in section 6 of his opinion: “The construction of housing has *591become in onr times an enterprise affected with, a public interest.”

I also agree with Justice Bbennan that the primary purpose of the act is to meet the housing-needs of low-income persons or moderate.-income persons who are displaced by slum clearance. I do not agree with Justice Bbennan that the failure of Act No 346 to restrict its operation to such persons enlarges the proposed operation of the act to such an extent as to bring it under Const 1963, art 4, § 30, and require a 2/3 vote of the legislature in connection with an appropriation to the housing-development fund or the capital reserve fund. In my opinion, any appropriation by the legislature of funds which could be used by the housing authority to finance private persons, corporations, or other private legal entities to construct and operate low-cost housing, even though the beneficiaries of such low-cost housing were restricted to those persons to whom the act now gives a preference, would still require a 2/3 vote because such an appropriation of State funds would be to carry out a private purpose or enterprise even though an overriding public purpose would be served. Since the act’s overriding-purpose is a public one, I find no infirmity in the act because, as a very minor incident, some persons of means might benefit from the act’s ultimate objective of providing low-cost housing to displaced low- or moderate-income groups.

Section 24 of the act provides for a possible forgiveness of an advance made by the authority to aid private operators to ascertain if a project will qualify for a governmental loan. Such an advance of public money by the authority would, upon the happening of certain conditions subsequent, become a gift. It would be an advance of public money to permit an individual corporation or association to submit a request for government financing on a *592housing development still in the planning stages and amounts to saying, “Go ahead, see if you can get a government loan.” If the answer is “No”, the advance from the public funds need not he repaid. "While the general welfare of the people of the State would be served by advancing State money to help the developer to make his inquiry, the forgiveness of such indebtedness would violate due process. Consequently, in my opinion, section 24 of the act is unconstitutional.

I do not agree with Justice Bkennan that the last section of the act, namely, section 57, appropriating $5,000 from the general fund for the administration of the act, is to be used purely for administration of the authority and is, therefore, an appropriation for a public purpose which does not require 2/3 vote of the legislature.

The appropriation is for the administration of the act. It is not earmarked to carry out the housing authority’s administrative responsibilities but, conceivably, could be used to finance a private housing project. Such an appropriation, unlike one line-itemed to carry out the housing authority’s responsibilities as a public agency to aid, assist, advise, and counsel the housing industry in the development of low-cost housing, would require 2/3 vote of the legislature.

It is my opinion that, except for sections 24 and 57, the State housing development authority act of 1966 (PA 1966, No 346) is constitutional legislation.

T. M. KaváNagh, J., concurred with Adams, J. Sotjbis, J.

I cannot subscribe my Brethren’s opinions. They go far beyond the two specific constitutional questions asked in the governor’s request *593for our advisory opinion1 and answered in the briefs filed by the attorney general, at this Court’s request, and by the urban law program of the University of Detroit school of law, as amicus curiae. the governor asked, specifically, whether PA 1966, No 3462 violates Const 1963, art 9, §§ 15, 18. In my opinion it violates neither of those provisions, but I refrain from expressing any opinion on other constitutional issues considered by my Brethren or still lying dormant in the act.

I.

Schureman v. State Highway Commission (1966), 377 Mich 609, compels my agreement that Act No 346 does not violate art 9, § 15. There we held that only general obligation bonds pledging the full faith and credit of the State, as distinguished from special obligation bonds and revenue bonds, are subject to the limitations upon the State’s borrowing power imposed by art 9, § 15.3 Act No 346 does not require the State to borrow on its full faith and credit although section 41 does provide that the State housing development authority may recommend such borrowing to the legislature for a vote of the people as required by art 9, § 15.

II.

Article 9, § 18 is a limitation upon the State’s power to grant its credit for any purpose, public *594or private, except as authorized by other provisions of the Constitution.4 I do not read this language as restrictively as do my Brethren. The State’s credit is granted, it seems to me, whether by guaranty of another’s debt, by direct State borrowing, by pledge of periodic contributions or, as in Act No 346,5 by expression of legislative purpose *595to appropriate public funds to a project as may be needed to accomplish the project’s purpose.

The fact that the State’s credit has been granted, as I believe Act No 346 grants it, is not in itself a violation of art 9, § 18 of our Constitution, provided authority therefor can be found elsewhere in the Constitution. I find constitutional authority for the State to provide housing for its people too poor to acquire safe and sanitary housing, including authority for the appropriation of public funds and the grant of the State’s credit, in the express mandate of Const 1963, art 4, § 516 that the legislature pass laws for the protection and promotion of the public health. I agree with Justice Adams that the legislature’s purpose in enacting Act No 346 was to promote and to protect the public health and general welfare of the people of this State by stimulating the construction7 of safe and sanitary dwell*596ing accommodations for low-income or moderate-income families. The fact that the legislature granted the State’s credit, as I read Act No 346, does not constitute a violation of art 9, § 18, because it did so in accomplishment of a constitutionally authorized objective.

Thus, in answer to the governor’s specific questions, it is my opinion that PA 1966, No 346 violates neither article 9, § 15, nor article 9, § 18. I repeat, however, that I express no opinion on constitutional infirmities that otherwise may exist in the legislation.

Por the creation by the legislature of other boards or commissions see:

CL 1948, § 125.1401 et seq. (Stat Ann 1968 Cum Supp § 16.114[1] et seq.).

Article 9, § 15 provides:

“The state may borrow money for specific purposes in amounts as may he provided by acts of the legislature adopted by a vote of two-thirds of the members elected to and serving in each house, and approved by a majority of the electors voting thereon at any general election. The question submitted to the electors shall state the amount *594to be borrowed, the specific purpose to which the funds shall be devoted, and the method of repayment.”

Article 9, § 18 provides:

“The credit of the state shall not be granted to, nor in aid of any person, association or corporation, public or private, exeept as authorized in this constitution.”

“See. 23. (1) There is created and established under the jurisdiction and control of the authority a revolving fund to be known as the ‘housing development fund'.

“(2) There shall be paid into the housing development fund (a) any moneys appropriated and made available by the state for the purposes of the fund; (b) any moneys which the authority receives in repayment of advances made from the fund, and (c) any other moneys which may be made available to the authority for the purpose of the fund from any other souree or sources.” CL 1948, § 125.1423 (Stat Ann 1968 Cum Supp § 16.114[23]).

“See. 32. (1) The authority shall ereate and establish a special fund to secure the notes and bonds, herein referred to as capital reserve fund, and shall pay into the capital reserve fund (a) any moneys appropriated and made available by the state for the purposes of such fund, (b) any proceeds of sale of notes or bonds, to the extent provided in the resolution of the authority authorizing the issuanco thereof, and (c) any other moneys which may be made available to the authority for the purpose of sueh fund from any other souree or sources. All moneys held in the capital reserve fund, exeept as hereinafter provided, shall be used solely for the payment of the principal of bonds of the authority as the same mature, the purchase of bonds of the authority, the payment of interest on such bonds of the authority or the payment of any redemption premium required to bo paid when such bonds are redeemed prior to maturity. Moneys in the capital reserve fund shall not be withdrawn therefrom at any time in sueh amount as would reduce the amount of the fund to less than the maximum amount of principal and interest maturing and becoming due in any succeeding calendar year on all bonds of the authority then outstanding, except for the purpose of paying principal of and interest on bonds of the authority maturing and becoming due and for the payment of which other moneys of the authority are not available. Any income or interest earned by, or increment to, the capital reserve fund due to the investment thereof may be transferred by the authority to the general reserve fund or other fund of the authority to the extent it does not reduce the amount of the capital reserve fund below the maximum amount of principal and interest maturing and becoming due in any succeeding calendar year on all bonds of the authority then outstanding.

*595“(2) * * *

“(3) * * *

“(4) To assure tlie continued operation and solveney of the authority for the carrying out of the public purposes of this act, provision is made for the accumulation in the capital reserve fund of an amount equal to the maximum amount of principal and interest maturing and becoming due in .any succeeding calendar year on all bonds of the authority then outstanding. In order further to assure such maintenance of the capital reserve fund, there may be annually apportioned and paid to the authority for deposit in the capital reserve fund such sum, if any, as shall be certified by the chairman of the authority to the governor and budget director as necessary to restore the capital reserve fund to an amount equal to the maximum amount of principal and interest maturing and becoming due in any succeeding calendar year on the bonds of the authority then outstanding. The chairman of the authority if necessary, on or before December 1, shall make and deliver to the governor and budget director his certificate stating the amount required to restore the capital reserve fund and the amount so stated may be apportioned and paid to the authority during the next state fiscal year.

“(5) * * *

“(6) * * * ” CL 1948, § 125.1432 (Stat Ann 1968 Cum Supp § 16.114[32]).

“The public health and general welfare of the people of the state are hereby declared to be matters of primary public concern. The legislature shall pass suitable laws for the protection and promotion of the public health.”

Whether the State builds the dwellings itself or whether it en*596courages private builders to do so is quite beside the point so long as the objective is a constitutionally authorized one and so long as the means used are not constitutionally proscribed. I have stated my view that the objective of Act No 346 finds constitutional sanction in art 4, § 51. I do not believe that art 4, § 30, which requires a % vote of the legislature to appropriate publie money or property for local or private purposes, has any relevance to the means adopted by the legislature to accomplish its objective. The phrase “local or private purposes” refers to local or private laws which benefit a few or selected individuals or a specified locality as contrasted with publie laws that are of general application, as is Act No 346. See Garner v. Teamsters (1953), 346 US 485, 494 (74 S Ct 161, 168, 98 L ed 228, 241), and Allen v. Board of State Auditors (1899), 122 Mich 324. See, also, State v. Southern Pine Company (1949), 205 Miss 80, 93 (38 So 2d 442, 446) ; In re Cramer Estate (1958), 183 Kan 816, 822 (332 P2d 560, 566), certiorari denied sub non. Division of National Missions v. Koerner, 360 US 912 (79 S Ct 1296, 3 L ed 2d 1261); 33 Words and Phrases, “Private Law”; and 172 ALR 1407.