*1 CENTER, MENORAH MEDICAL a Not- Corporation,
for-Profit Missouri
Washington University, a Not-for-Profit Corporation,
Missouri and St. Louis Uni
versity, Corpo a Not-for-Profit Missouri
ration, Plaintiffs-Respondents, Ashcroft, Attorney
John of the General Missouri,
State of
Intervenor-Plaintiff-Respondent,
HEALTH AND EDUCATIONAL FACILI-
TIES AUTHORITY of the State of Mis-
souri, Body Corporate, Politic and Dr. Bartow, Bellinger,
Gale T. Luther G. Dr. Bonney, [King,
Samuel C. R. J. R. J.]
Massman, III, Lewis H. Wallace and Ra-
phael Zapien, Constituting All of the
Members of the Missouri Health Authority] Facilities
[Educational Missouri, Defendants-Appel-
State of
lants.
No. 61031.
Supreme Missouri, Court of
En Banc.
June *2 Teasdale, Wack, Armstrong,
Thomas E. Louis, Vaughan, for defend- Kramer & St. ants-appellants. Berkowitz, Webb R. Gil-
Lawrence M. Walsh, more, Mi- City, C. Kansas Thomas *3 Biggers, Louis, plaintiffs-re- chael G. St. for spondents.
MORGAN, Chief Justice. Center, Washington
Menorah Medical as University, University Louis St. judgment declaratory plaintiffs, sought a and Educational Facilities that the Health constituting now (passed Act in 1975 and this statutory law of Chapter 360 of the state) any provisions contravene did not Constitu- the Missouri and United States the Health and Defendants were tions. created Authority, Educational Facilities Act, members there- and the individual of. in the Circuit
Judgment was entered County plaintiffs. in favor of Court of Cole twenty-six predicated obviously upon It was thirty-seven Conclu- Findings of Fact and record, Law, we sions of entered all issues. We find delineated and resolved affirm. Act is purpose
The uncontroverted whereby “educa- to establish a mechanism institu- tional institutions” and “health therein,1 tions,” may obtain as defined 1. Section 360.015 able for use as a dining ing, place place maintenance place well as other structures or of students in the ed thereto ture in the manner for including ing defined in sections 360.010 to or orderly (3) structures essential or convenient for the operation parking operation appurtenances academic “Educational in which to conduct for athletic hall, conduct of such health furnishings, equipment, machinery, place required student lots, equipment of an educational of a care, building, in which to locate garages, conducting activities, dormitory Definitions facilities”, union, necessary or particular place useful which its use is intend- an institution and administration build- research, appurtenances library, and other in which to house place or other of research supplies, storage a structure suit- service or struc- 360.140, the instruction convenient institution, in which to utilities, laboratory, classroom, buildings housing, includ- at, relat- also as as or fuel, ed, or home, are deemed to constitute expense, property nection with used or to be used study viding nomination. istrative equipment doctors, suitable for use as place which to locate search, hall, (5) department but shall not include such supplies, place “Health or as a health home for the [*] place or interns’ offices, place used and shall not include for food service and any part place for [*] care, or other items which facilities”, in which to house maintenance to house fire or to be used supplies, storage place, place divinity utilities, auditorium, laboratory, laundry, for [*] residence, a aged of a religious worship hospital, in which to sectarian instruction a structure or [*] or program a current fighting equipment, infirm, primarily any religious place items as [*] clinic, any property preparation, customarily conduct re- of a school place pro- operating [*] building nursing in con- nurses, admin- books, or dining de- or improvements funds for vate 360.- financing capital Authority bonds. § fiduciaries arrangement to refinance of this any existing un- The benefits indebtedness Authority terms, tax-exempt hopefully, der more status of favorable than marketability at provides greater bonds private that in the market. sold lower interest rates than bonds designated Authority “body a issue, through the inter- private and that politic,” “public instrumentality,” and an est charged rate entity “deemed per- and held to be [in] than correspondingly lower institutions is formance of an essential function.” charged which would be 360.020. Being assigned Depart- lender. Affairs, ment of Regulations, Consumer new Authority may (1) finance either Licensing, report must (2) facilities, refinance institution-owned annually department. to the director of that facilities, (3) existing institution-owned 360.025, 360.140. “The proceed- Under *4 pri- the Authority-owned lease to ings authority and actions of the com- shall as to the vate Broad discretion institution. ply with all statutory requirements respect- type provided of to be financial assistance ing the by conduct of business a loans, purchas- e. given Authority, g., the to public agency.” “Educational institution” sale, securities, pur- of es construction and and “health any “pri- institution” include lease-back, contracts, mortgages, chase and association, vate corporation, or institution possible and all alternatives indentures are operated corporate not profit for or under 360.105. Section 360.050-.075 and §§ . .” The educational or health facili- Authority must specifies 360.100 when the may ties which broadly are be financed in- convey to institution the facilities the defined in “property 360.015 but exclude volved. used or to be used for sectarian instruction study or as place religious worship action, or a for all plaintiffs three in this any property or primarily pro- used or to be used not-for-profit corporations, Missouri in connection a the any part program financing with of of of to posed differing forms department any a school or of divinity Authority. of religious denomination.” The and income Menorah, a short term acute care property Authority of the and the income hospital governed by a board Jewish on the bonds tax-exempt. it issues are directors, purchase and lease-back proposed 360.085 and Bonds an §§ 360.135. are not Au- proposal, this the financing. Under obligation liability or of the state. 360.- thority proceeds the of a bond would use proceeds 080. The the bonds are not hospital portion purchase issue a to revenues of the state. 360.115. Bonds it. existing debt on retire the facilities and payable solely out of the revenues and facili- lease the Authority would then receipts leasing by derived from or sale amount ties Menorah at a rental back to Authority facility involved or as interest principal and pay sufficient to designated may be in a trust indenture au- au- would be due bonds. Menorah on the Authority. thorized 360.060. In- the leased reacquire title to thorized vestments made after Authority with Au- property directly from the lease, 360.120, thority specified paid funds are in § the bonds are in full. Under alter the including permissible by pri- given investments Menorah is foregoing, place any physical not include in which but shall mental and fuel, care, school, supplies, nursing other items health care such as or and dental items school, teaching place customarily a constitute medical and which to are deemed to offices; lots, expense, parking garages, operating in- house shall not build- current and and ings support- any property used or structures in which to clude used or to be house services; useful, place ing, necessary, study or as a and all sectarian instruction religious worship any furnishings, equipment, machinery, property to be used or related any part appurtenances, a including primarily used without limitation the connection divinity program acquisition, preparation, development department a school or of all necessary any religious lands denomination. or convenient as site or sites facility desirable, facility. A trust indenture as it session of the deems to extend the up five-year periods lease for to six Menorah and Wash- beyond similar to those of rent, ington accompanied the term of the the sale University bonds at nominal purchase agreement. terminate the lease and/or
facility prior redemption of the bonds agreements ap- were The three sets of paying a sum sufficient to retire the content the Au- proved to form bonds, purchase part facility meeting May thority in a on bonds, time paying without off the Authority then identified Counsel for the grant easements and licenses. Menorah issues, nearly identical legal various proposed also submitted a trust indenture case, including possi- those raised in this to the Authority. Under indenture a liability of the bility personal private corporate trustee would handle the members, him to advise the Au- which led proceeds. bond The trustee would also re- thority agreements. to execute ceive and disburse the revenues from the refusing a resolution passed members then projects in pay principal order to agreements. to execute the This suit interest on the bonds. In the then filed. default, event of the trustee would be enti- outset, At the note that the burden we tled to take management over of the facili- appellants legis- on that the to demonstrate improve, ty, lease, repair, operate, or fore- question lative are unconsti- enactments in the facility close place receivership. rel. Farmers’ Electric tutional. In State ex *5 Washington University, a nonsectarian Cooperative, Environmental Inc. v. State institution for higher proposed education a Authority, 72 Improvement 518 S.W.2d agreement loan refinancing for the of exist- (Mo. long 1975), recognized banc the we graduate ing faculty student and housing. principle established constitutional con- agreement, Under the Authority the would struction that: proceeds loan the of a bond issue to the constitution, The state unlike the federal University, which in turn would use the constitution, grant power, not a but pay loan to the existing indebtedness on the a power, only it is legislative as to the housing. The repaid loan solely would limitation; and, therefore, except for the operating from of the University. funds by the state constitu- imposed restrictions agreement The loan accompanied by tion, legislature the state the trust indenture similar to that by submitted Kan- practically unlimited absolute. Menorah. Fishman, City sas 362 Mo. (1951). Louis University, not-for-profit
St. S.W.2d cor- poration organized pur- for educational See also ex rel. Jardon v. Industrial State poses, was originally founded as a Jesuit Development Authority, 570 S.W.2d Academy. Today, two-thirds of the board and, (Mo. 1977); Americans Unit- banc members are of the Catholic faith. St. (Mo. Rogers, ed v. banc University Louis proposed agree- a sale 1976). ment. Under the agreement Authority the I. would use the proceeds pur- bond issue an chase system. system Appellants audio-visual that contend would then be University lending public sold to the credit and School authorizes the payments grant money by Medicine. As public Installment would the General by III,2 38(a), be made University. the Article Authority sembly in violation of §§ 39(1) 39(2), would receive no mortgage security or other the state’s that name bonds, repayment. default, Authority’s In the event of credit are used on Authority right impair would pos- have no to take and thus the bonds could default on noted,
2. Articles referred to herein are those of Unless otherwise Constitution of Missouri. credit, Authori- public own and in that no clear the bonds issued state’s purpose is solely involved in the issuance of these from the revenues and ty payable are bonds to receipts generated by institutions. the sale or lease involved, taxa- and not from III, Article 39 of the Missouri Constitu- tion, and thus the bonds do not constitute provides, tion part, that: any political liability debt or of the state assembly shall not have the 360.060, 360.080. subdivision thereof. §§ (1) power: give To or lend or to authorize which the This.limitation revenues from on giving lending or the of the credit of on the payable must be stated bonds any person, state in aid or to associa- such 360.080. Under face of the bonds. § tion, municipal corporation; or other circumstances, by this court been held has (2) pledge To the credit of the state Authority, credit lent is that of the that the payment liabilities, of the present ex not that of the state of Missouri. State prospective, any individual, association, Inc., su- Cooperative, Farmers’ Electric rel. municipal corporation; or other . Justices, 236 of the pra. Opinion also See argued It is that the credit of the state is (Mass.1968). thus find We N.E.2d being First, lent in ways: two the title of III, The same of Article no violation the Authority, “the Health and Education VI, holding been reached under has Facilities of the of Missou- State 23-25, lending of respect §§ ri,” (§ 360.020) indicates that the state is counties, political credit cities or other involved Authority; and stands behind the state. corporations or subdivisions second, any Authority might default Sikeston, City ex Mitchell v. State rel. credit, adversely affect the state’s even if 1977); (Mo. 290-91 banc required the state is not behind to stand Jardon, supra. ex rel. State Authority directly, since the is a appellants’ constitutional At heart of public instrumentality by virtue of the fact III, 38(a) is challenge concerning Article that it uses the name of the state. face, public purpose doctrine. On arguments These are without merit. The 38(a) prohibits granting *6 Authority is not the state and the credit of lending public credit money or being the state is not Authority lent. The regard pur- to the private entity without “body politic corpo established as a and proviso has pose grant or loan. A of the “public rate” which is a instrumentality.” this and similar judicially grafted been onto 360.020. Similar bodies have § been ad sections, however, grants of permits judged “separate entities” from the grant if the public money private entities state. See State ex rel. Farmers’ Electric public purpose. is for a Inc., Cooperative, (State supra, at 73 Envi (Mo. banc at 719-20 In Americans United Improvement ronmental Authority); Chris was the 1976), presented the issues one of Commission, tenson v. State Highway statutory program question of whether (Mo.1931) (State Highway ap- various grants of tuition to students at Commission, separate entity pur as a public private colleges violated proved and poses jurisdiction appeals). over In State 38(a). court held that majority A of this § Jardon, ex supra, rel. at we declined 38(a) was not violated because again the opportunity to extend the defini aiding high- public purpose of existence of a “lending tion of of credit” to the mere use er education. city county. the name of a In present oppor case we likewise decline the Authority creating The statute tunity to extend said definition to the mere present provides case that: use of the name of the state. authority of . the exercise to 360.- powers by 360.010
Even if the conferred were considered a state held to be entity, the 140 shall be deemed and credit which it lends is not func- public essential respondents argue, performance that of the As of an state. establishing the Act makes it tion. 360.020.
This court stated at ex rel. Farmers' it would be difficult this time to State Inc., Cooperative, Electric supra, invoke literal construction a more strict or that: find that provisions. these We thus under constitutional upheld 360 is determination of what consti- III, 38(a), challenges relating Article §§ public
tutes a purpose is primarily for the 39(1), 39(2). legislative department and it will not be overturned unless found to be arbitrary II. and unreasonable. the Act vio Appellants argue that III, Debates on Article at the 1945 VI, prohib lates §§ Convention, Constitutional indicate the be- political or subdivision corporation lief that Missouri’s constitution should be granting lending the state from its credit or flexible progressive enough to allow public money private of value to things public state funds to be committed to new persons exemptions because tax on the purposes. needs and See Eleven Debates of participating bonds allow institutions Constitution, 1945, Missouri pp. 3208-3212. charged borrow those at rates less than philosophy This was reiterated in State ex the commercial and because tax market Jardon, rel. supra, at when we noted exemptions revenues are lost tax special that, on the bond income. legislative consensus of modern public again applies. purpose doctrine
judicial thinking is to broaden the scope This situations court has held in similar activities which be classified as exception qualification such an involving public purpose. prohibition Jardon, exist, ex does State rel. Mitchell, supra; supra; ex State rel. State purposes at issue here pub- meet the Inc., ex Cooperative, rel. Farmers Electric purpose lic test. The encouragement of Jardon, supra. supra, In ex State rel. higher education explicitly recognized legislature political authorized subdivisions public aas purpose United, in Americans to approve separate corporations for the supra, at City Ellis of Grand purpose developing industrial facilities to Rapids, 564-573, 257 F.Supp. (W.D. be leased or sold to entities. Such Mich.1966), the court said that: corporations empowered to finance were All recognized have hospital care issuing exempt tax bonds. provided by public, private, pri- solely The bonds of reve- payable were out vate non-profit sectarian institutions is a generated developed. nue by the facilities public use clothed with the overriding The legislation not to was held violate §§23 public interest, and courts have sustained and 25 because it was enacted for a *7 the Executive Legislative and branches Mitchell, purpose. supra, In ex rel. State of government our giving aid to such output the power generating plant of a new institutions. was to by municipalities be shared several hardly argued, It can be within the context private cooperative. City a electric The of the Missouri Department of Mental of proposed Sikeston to build and own the Health and Health Division of within the plant, financing it with revenues obtained Department Services, of that is Social tax-exempt payable from the sale bonds of arbitrary designate and unreasonable to the solely generated out of from the revenues provision public purpose. of health care as a plant. municipalities private Other and the cooperative This public proposed court has attached the same to enter into provision purpose provisions of sales contracts with This financ- to similar Sikeston. VI, ing upheld (against arrangement Article 23 and 25. See State ex rel. was §§ Jardon, 676; supra, claim that the bond issue and sales con- at ex rel. Mitch State ell, 291; lending of supra, tracts constituted a credit at ex rel. Farmers’ State cooperative of 23 and Inc., private in violation Cooperative, supra, §§ Electric at 74-75. 25) pub- was for a arrangement because the interpretation given In view of past the purpose. lic rel. Farmers’ Elec- III, VI, State ex 38(a) Article Article § §§ Crowe, Cooperative, Inc., (Mo.1962), trie in that supra, legislature “body corporate politic” may created a arise in es- some future circumstance sentially on the similar the which state will held liable be present case. to those purpose acquire Its was to bonds. In circumstances similar Buildings pollution case, and construct present abatement Board Public contractual “liability” which were to be sold held “a leased or that means future, industry. indebtedness, absolute or by present facilities were financed liquidated issuance of exempt payable tax will or be contingent, bonds which solely generated by from of Public by general revenues the facil- Board taxation.” However, ities and the state was Board way which in no 605. Buildings, supra at Authority’s liable. The up- activities were that au- Buildings went to hold Public on held, against a challenge based on 23 and to issue revenue §§ thorization of Board because public for a purpose. buildings were did bonds for construction of state cases, In view of these it is meaning evident that liability within the create expenditures loans or of bond reve- issue III, were to Article where the bonds § by public public nues purposes bodies for do generated by paid solely be out of revenues VI, not violate Article 23 and §§ constructed, id. The buildings to be rel. Farm- holding court in ex State this III. Inc., supra at Cooperative, ers’ Electric Appellants argue per that the Act issued is to effect that bonds the same expenditure mits the funds for solely out separate entity, paid private purposes X, in violation of Article fi- the facilities generated by revenues 1 and §§ because the state’s own funds nanced, the state. do not create liabilities subject could be to claims bondholders in in the specifies the bonds 360.080 the event of creating certain acts legal lia present consti- case “shall not be deemed bility part on the of the Authority and its any liability tute of the state a debt members. . . . political subdivision thereof The same argument presented State ex rel. Farmers’ Electric Cooperative, V. supra rejected. challenged Act vio argue Appellants revenue,” sections relate to “tax taxing Equal III, 40(28), lates Article powers. As was the case in State ex rel. United requirement Protection Farmers’ Cooperative, Inc., Electric the Au- by grant Missouri Constitutions States and thority does not exercise taxing power. privileges, and immuni ing special rights, because only ties to certain institutions
IV. from for-profit institutions exclusion of Appellants argue that vio the Act arbitrary and without the Act benefits of III, lates state limits rational basis. issues, liabilities and term bond because the “liability” monetary is broader than a mere Unit- Equal Protection Clause debt and state’s own funds could be Constitution, too ed Amend. States subject claims bondholders in the Appel- require well recitation. known creating legal liability event of certain acts of the clause specify lants do not part on the and its mem by the they intend Missouri Constitution bers. Presumably, “Equal term Protection.” *8 I, 2, in provides, Article which § intend III, 37, provides,
Article § part: relevant general assembly pow- shall have no and equal are are created persons that all er to contract or authorize the contract- opportunities rights and equal entitled ing any state, liability of the or to law; . under the therefor, issue bonds . III, 40(28) provides, Article exceptions pertinent. not here assembly shall Section 40. The Appellants term argue “liability” that the or law: special local pass not meaning merely public has broader than debt, citing Buildings of Public v. Board
(28) only if the may struck granting any corporation, fication be down associa- unreasonable, e. tion show that it is any special challengers or individual or exclusive Liberman, 547 g., of St. Louis v. right, City privilege immunity, or 1977). (Mo. ap- banc S.W.2d Appellants argue generally that it is irra- in distinction pellant has not shown the grant tional to special privilege and tax and not-for- for-profit Chapter 360 between exemption only not-for-profit and health profit institutions to be unreasonable. education for-profit institutions when insti- tutions the same func- services and VI.
tions and equally would be able to increase that the tax ex Appellants contend their services and lower if the their costs emptions Authority property for under privilege and exemption were available pre and 360.135 fall outside §§ 360.085 Appellants them. support cite no cases in X, 6 and sumptions set forth in Article §§ proposition. of their Authority “political not a because is meaning within the of those subdivision” State ex rel. Atkinson v. Ind. Planned provisions, exceptions constitutional and Expansion Auth., (Mo. provided apply Authority therein do not 1975), banc illustrates the by criteria property. is determined whether a law is local special. The provide, part, classification must be reasona- 360.085 360.135 §§ ble, owned, not arbitrary, privilege acquired and the that all or used property created by by Authority exempt the law must be available is to be from to all entities classification, legislature ability within the taxation. The of the id. at 43. This test grant exemptions Article is met in tax limited present case. X, 6 and 15 of the Missouri Constitution. §§ Although profit not-for-profit both Authority agree We is not a purpose institutions providing have the “political the definition subdivision” within education, health care or the differences in X, Authority does since the structure and organization profit between validity have to tax. not-for-profit possi- institutions and the exemption granted tax 360.085 §§ bility of differences re- institution-client depends therefore on whether 360.135 lationships leg- form a reasonable basis for property falls within islative distinction. X, permissible exemptions of Article The reasonableness of the be- distinction e., property i. whether is both profit tween not-for-profit institutions corporate “. . not held for Chapter supported by noting ” profit . . . . and “. . used exclu- law, similar distinctions common in our sively religious for schools and worship, for g., Community e. Hospital City Memorial charitable, colleges, purposes purely for Moberly, (Mo.1967); Ch. agricultural and societies horticultural (establishing separate RSMo 1969 Not- Corporation Law); for-Profit Mo.Const. statutory of educa- Under definitions X, 6, 6(b) Art. (permitting exemp- §§ tax eligible tional receive financ- institutions not-for-profit tions for certain institutions ing from the and educational fa- property). assistance financing cilities for As to the criteria, second there is no received, (4), 360.015(3), the Authori- dispute that the benefits 360 are ty’s property used institu- educational available for all not-for-profit institutions exclusively . property tions is “used which otherwise meet the criteria in the . . colleges for schools and statute. However, exemption there is no blanket There is no contention that exclusively the classifica- for health in- property used tion created is invidious or property that the exclud- stitutions similar to the one *9 for-profit ed property institutions are any colleges. denied used for schools and Therefore, rights. not-for-profit fundamental may the classi- of health be institutions 82
exempt only exclusively VII. if “used . purposes
for
.
purely charitable
.
.
Act vio
argue
the
Appellants
IV,
15,
Hoehn,
107,
III,
36,
Army
§
In Salvation
v.
Mo.
lates
Article
354
Article
§
1945),
(banc
moneys
188
S.W.2d
830
the court
the
because it fails
reiterated
approval the definition of a
with
the
go into
by
Authority shall
received
Estate,
charity as set
re
forth in In
Rahn’s
expenditure
state
it
for
treasury and
allows
492, 511,
120, 128,
316 Mo.
51
291 S.W.
by
moneys
appropriation
of
without
such
(1927), stating
A.L.R. 877
that:
legislature.
it
gift,
applied
.
to be
is a
consist-
part
III,
provides
Article
in relevant
§
laws,
ently with existing
for
benefit
that:
persons,
of an
indefinite number
either
money received
All revenue collected and
by bringing their hearts under
influ-
go
treasury
by the state shall
into the
religion, by relieving
ence of education or
no
assembly
shall have
disease, suffering,
their bodies from
or
or
the with-
permit
to divert the same
constraint,
assisting
them to establish
ex-
treasury,
money
from the
drawal
life,
by erecting
themselves
for
made
cept
appropriations
pursuance
maintaining public buildings or works or
.
law.
lessening
otherwise
the burdens
* * *
government.
may
A
re-
charity
face,
III,
only
applies
On its
Article
strict its
to a class
admissions
of humani-
money received
“revenue collected
ty,
public; may
and still
it
be
be for
added)
indi-
(Emphasis
As
by the state.”
blind,
mute,
suffering
those
under
it is a
earlier,
though
Authority,
cated
infants,
special diseases,
aged,
for
enti-
instrumentality,
is an
public body and
women, men,
callings
for different
Thus,
if its
ty apart
state.
even
from the
humanity
or trades
its
earns
funds,
may not be
funds are
bread,
long
as the
classification
See
subject
provision.
state
to this
funds
determined
in-
by some distinction which
(Mo.
Barrera,
v.
Mallory
voluntarily
may
affects or
affect
Electric
1976);
banc
ex rel. Farmers’
State
people, although
the whole
only
small
76;
Inc., supra
Board of
Cooperative,
at
benefited,
directly
number
* * *
rel.
Buildings, supra;
ex
Public
State
public.
for North-
Regents
v. Board
Thompson
As noted in
Tertiary
Franciscan
Prov.
College, 305
Teachers’
east Missouri State
Mo.,
Comm’n,
Inc. v. State Tax
1924).
(Mo.
banc
Mo.
264 S.W.
(Mo.
1978),
banc
rationale
III,
because
36 is not violated
Army
granting
Salvation
has been used
Article
hospitals
exemptions
entity from the
separate
charitable
from ad va-
is a
lorem
Hospital
taxation. Alexian Brothers
its funds
state
not raise
receive
and does
Powers,
476, aff’g
v.
Mo.App.
Mo.
powers of
any sovereign
in connection
(1881); Community
Hospital
Memorial
Thus,
money or revenue
no state
state.
City
(Mo.1967);
Moberly, 422 S.W.2d
is involved.
Commission,
Jackson County v.
Tax
State
VIII.
(Mo.
1975).
the same is available to both rich and expressed in poor. ject clearly which shall be . title Chapter 360, and the ques- institutions in relevant. exceptions here with certain present case, tion in the fall within the appel- exemptions X, The sections of set forth in Article 6.§
83 III, regarding financing lants claim violate forth in the are: are not set 360.125, statute, which authorizes investment in the can subdele- in that banks, Authority’s the bonds by executors gate participating institutions decisions fiduciaries; 360.130, other directing delegation indenture and in that that Authority-financed facilities not be trustees and is unlawful. apparent public considered the purpose facilities for outset, Chapter 360 At we note that regulating facilities; laws public of and the unit, integrated should be construed as an Act, generally, provides in that it benefits pari in with each section thereof viewed to both health and educational institutions. chapter. materia with other sections of No authority cited support in of these chapter out To take sections of the certain propositions. legislative justice of not do context does Jardon, State ex supra, rel. where sim- restrictions. legitimate delegation intent or ilar rejected, contentions were raised and authority) incorpo- (Powers of 360.045.6 the court that: stated Chapter of rates reference whole Clearly, controlling test is whether or repeated par- section 360. To have in each not all provisions of the of statute chap- in of the ticulars found other sections fairly subject, relate to the same have a unnecessary ter been to would have add natural connection therewith are the redundancy. incidents or accomplish the means to its the current successfully Act meets purpose, id. Security forth ABC Missouri test as set in subject matter interrelationship is Service, Miller, (Mo. Inc. v. S.W.2d apparent in provisions 360. All Therein, 1974). stated at we that: relate to the establishment of Health which vests An ordinance or a statute Educational Facilities in officials discretion administrative implementation projects. of its In Fort must, stated, generally include standards Presbyterian Sanders Hospital v. Health guidance to be constitu- their in order Board, and Educational Facilities 224 Tenn. Moberly, 243 City tional. Behnke v. (1970), it was held Clay City (Mo.App.1951); S.W.2d 549 that: Louis, (Mo.App. St. 495 S.W.2d It is our view that the Act does not 1973). subjects embrace merely two because case, continued But the ABC both health and educational facilities are emphasizing that: Rather, dealt subject with. liberali tendency greater is toward [T]he Act is public corporations, the creation of discretion, Mil ty permitting grants in implementation improvement Ketchum, Stores, gram Inc. v. Food health and being descriptive education (Mo.1964), validity S.W.2d 510 objectives corporations, id. depend large grant discretion will We conclude that all of the sections of activity with ly upon nature of the Chapter 360, pointed appellants, do parte Ex respect to which it is exercised. fairly relate subject same as it is Williams, Mo. expressed in the Act’s title: (1940). An relating Act to the creation of a exceptions require- Three health and educational authority delegating ment of standards statutes Missouri, prescribe state of agencies were decisions to administrative powers and duties. S.C.S.H.B. set ABC case at 524-25: forth in the 78th Gen.Ass. 1st Session.
(1) [Wjhere the ordinance or statute IX. require the deals with situations which Appellants offi- vesting of some discretion chapter maintain that cials, impracti- constitutes delegation legis unlawful and where is difficult definite, lative authority adequate comprehen- down a- lay standards cable to *11 84 rule; 820, 823 (2) City,
sive
the
relates
Inc. v. Kansas
537 S.W.2d
where
discretion
police regula
to the administration of a
the court held that:
(Mo.App.1976),
necessary
protect
public
tion and is
to
the
tendency
the courts
The modern
morals, health,
safety and
wel
greater
permitting
liberality
toward
fare;
(3)
personal
where
fitness is a fac
of
grants
to
of discretion
administrative
tor to be taken into consideration. Mil
adminis
ficials in order to facilitate the
Stores,
Ketchum,
gram Food
Inc. v.
su
complexity of
of the laws as
tration
the
514;
pra, 384
rel.
p.
S.W.2d at
State ex
governmental
in
and
conditions
economic
Gunn,
(Mo.banc
Priest v.
314
326 S.W.2d
Stores, Inc. v.
Milgram
creases.
Food
1959);
Williams,
1121,
parte
Ex
345 Mo.
cert.
Ketchum,
(Mo.1964),
384
510
S.W.2d
(1940)
139
supra;
S.W.2d 485
State ex rel.
801,
10, 15 L.Ed.2d
den. 382
86
U.S.
S.Ct.
681,
Mackey v. Hyde, 315 Mo.
286 S.W.
(1965),
Pressman v.
quoting
55
from
(banc
Louis,
1926);
City
363
Clay v.
St.
544,
(1956).
Barnes,
Md.
A.2d 816
209
121
675-676;
supra,
p.
«5 intended to so limit Barry Barry, Depart- the framers had Inc. v. State bodies, Vehicles, ment legislative of Motor 81 Wash.2d 540, 543, (banc 1972), 500 P.2d than expressly, rather would have done so Washington Supreme that del- Court stated by implication.
egated power nied soned that strict interpretation of the stan- dard rule frustrated the efficient of government require [A] less. The needs and demands of modern tive standards. islative should be altered to turn it into an effec- should no delegation quire purpose should protecting against unnecessary and un- gated initially shift from controlled istrative mean provisions legislative bodies. We believe that one of [TJhese State and United States constitutions amount of discretion an administrative government The non-delegation logically *12 by specific [*] strictly construed legislative powers granted by focus of and useful meaningful statutory only power provisions safeguards. [*] is the discretionary statutory of unsound and longer did not have to be . judicial when it held that: standards. The court legislative be the much judicial without legislative [*] power be either fundamentally of inquiries standards to admin- standards doctrine n tool. delegation to determine the power. legally specific guiding power or to re- power standards; deeper Washington thus should [*] Its operation meaning- accompa- can doctrine purpose . prevent is dele- of one of to the these # rea- leg- its ments in Missouri by the state sumed, legislature Barry at The in the face of an charge, if two constructions Ketchum, sist location validity that possible, the one which would Farmers’ Electric There is S.Ct. L.Ed.2d cert. denied 382 U.S. can be said for § about this under this leases, challenge was met when the court State United, The The designate participating institutions in that determination. case it is 653, ex rel. constitutionality and § Authority and supra, cert. denied should 55, and construction of of given 384 S.W.2d nothing unclear or is 50 L.Ed.2d chapter grant of went on to except Jardon, constitution, 360.045(13) practically absolute Milgram without equally indenture trustee Cooperative, adopted. 360.045(7), can understand and to make has supra power authority. The same improper Food 801, of 510, limitations recognize that even 632; pertaining always stated that: legislative 429 86 of a statute “To determine 514 Stores, State 678, this issue power of the pertaining U.S. S.Ct. Inc., supra. merit. Americans ambiguous uphold its delegation delegation 360.045(6). been (Mo.1964), repairs or to loans. imposed facility” 97 1029, ex Inc. clearly enact 10, to as- pre rel. are 15 v. rights granted to the We believe that the
agency carrying should exercise in out case do not private trustee in the instant granted legislature. duties to it They any governmental powers. To involve provisions confining construe these merely upon bestowed the trustee legislative the exercise of are power to the bodies, a bondholder’s legislative purpose protecting of would be to read them in- receiving principal and power expectation as limitations of rather than as grants such, power. do may payments. We assume that if terest As Earle, 337, authority; Kelley v. 325 Pa. ministerial acts did not an uncon- constitute delegation (1937), legislative power a state stitutional where the A. authority arrange purchase the construction commission. The act dealt with the improvements buildings, among designated types public of bonds was and construction of Armory things; Keehn, upheld; other Bd. Loomis v. 400 Ill. Texas National Guard McCraw, Gen., (1948), Atty. Armory N.E.2d where the 132 Tex. (1939), university provisions permitting board Board Act’s corporation wherein armories, permissibly empowered regents to make to build them to the lease state, violating pay necessary without loans contracts and to issue bonds for construction anti-delegation delegation was held to rule. ministerial and a lawful delegation legislation sufficiently Our declares pow-
constitute an unlawful er. under which defines the conditions act, legis- powers, Board The Missouri Health and Fa- Educational will; determinations lative detailed cilities Act creates an essential the Board’s discre- may properly rest in acquisition mechanism for construction and tion. of health facilities. being Provisions chal- lenged Chapter substantially sim- also, Corp. v. See Brown-Forman Distillers ilar to the model health institution act4 Stewart, (Mo.1975). 5-6 adopted by the Council of State Govern- Fa- deny To and Educational Health ments, Suggested Legislation, State it must cilities the discretion XXXII, pp. (August 1975). Vol. 47-49 have make vital factual determinations purpose: model act has. stated as its insti- of our on an of the needs institutions To a measure of assistance *13 lease, to con- tution-by-institution basis and alternative methods to enable health in- struct, upon based or refinance facilities stitutions to refund or refinance out- would specific given of a institution needs standing indebtedness incurred health away giant step backwards be to take a facilities and to additional health from modern realities of administrative by creating structures a law. state authority money lend health X. by authorizing institutions and the state construct, authority acquire, repair Appellants two church-state offer
properties
use
as health facilities.
Chapter
challenges
application
to the
First,
Id.,
federal
360.
that
at
contend
Amend
of the First
establishment clause
In Board of County Commissioners v.
pro
use of
ment is violated in that
bond
Idaho
Authority,
Health Facilities
96 Idaho
Center and St.
ceeds Menorah Medical
498,
588,
(1975),
531 P.2d
the Idaho
University
en
Louis
constitutes excessive
Supreme
approved delegation
Court
found
Second,
ap
tanglement with
religion.
39-1447,
in 7A Idaho Code
an act
similar
agree
pellants contend
Menorah lease
Chapter 360, because the
authority
agree
University sale
ment and St. Louis
merely given
power
“the
to determine facts
Authority violate church-
ment with the
functions,
necessary
carry
reg-
out its
Constitution
provisions of Missouri
state
ulate
carrying
given
itself in
out
duties
as)
(what appellants classify
“pub
because
law,
to it by
agreements
and to
into
enter
being
lic
are
used to aid sectarian
funds”
authorized
law.”
purposes.
authorities,
Establishment of
or
boards
power
endowed with the
to construct or
McNair,
734, 93 S.Ct.
In Hunt v.
U.S.
buildings,
particular-
lease
is not
new nor
(1973), the
statute fosters an entanglement regard excessive With financing to the bonds and religion. This test also has been arrangements, flexibility rec- is set further ognized by Missouri courts. Americans forth in 360.075. United, supra. appellants have not demonstrated
However, “purpose” arrangements and “effect” of financing the Health and Educational provisions Facilities Act any specific conflict with are not challenged by appellants. They contrary Authority’s the Act or are only quarrel with the entangle- goals excessive promoting higher health and edu- ment prong of the test. cation. outset,
At the we note entanglement XII. prohibited. itself is not Only excessive en- We find no violation of 15.10 tanglement is forbidden. Four overall ob- Reorganization Omnibus State Act of servations lead us to conclude that no exces- proposed Menorah’s lease and St. sive entanglement present exists in the University’s proposed agreement Louis (1) case: the state is directly involved in sale, separate entity. as the ais expending or in supervising expenditure of funds, (2) funds are being promote used to XIII. public purpose, one, not a (3) sectarian funds involved are being used in a neutral prohibit pay 360 does not fashion, for the physical construction of fa- ment proceeds of bonds out of derived from *14 cilities, (4) and higher facilities for the edu- a agreement. loan Sections 360.060 level, cation opposed elementary 360.080 should be construed in such a man secondary level, are in issue. ner as possible. to avoid conflict if Section provides 360.060 payment for of bonds from
We reiterate our earlier conclusion that leasing agreements, or sale while 360.080 § the state is not the financing mechanism. provides that: Financing is through arrange- contractual ments between the independent authority bond authority pur- issued [E]ach given educational or health provisions institu- suant to the 360.010 to §§ tion and bondholders. The Authority 360.140 payable solely does shall be from the not become a subdivision of the state simply pledged funds payment its in accord- because it deals with exempt tax bonds and ance with authorizing the resolution its there is impairment no of state any credit in- issuance or trust indenture or mort- Thus, volved. the state is not gage security involved in or deed of trust executed as establishing religion. therefor.
XI. legislature intended We do not believe the agreement procedure with- create loan reject appellants’ conten We (consistent permitting logical out means proposed tion that financing agree mechanisms of the repayment other question ments in expressed exceed the Act) through repayment possi- implied 360.045, rights of the Authority. § adequate ble. there is autho- 360.080 § Authority’s powers, enumerates the from loan repaying rization for bonds begins by stating that: agreement proceeds. authority following shall have the powers together powers with all inciden-
tal thereto or XIV. necessary perform- for the ance thereof . Contrary appellants’ to the conten including, 360.045(16), as stated in tions, § agreement we between find sales right: Authority and University Louis and the St. there payment provisions associated things necessary do all and conve-
[t]o
guidelines
adequate
with to be
under the
carry
nient to
purposes
out the
of [the
a whole.
360.100
360 as
§
Act].
Ill,
We,
therefore,
II,
and Art.
agree
with the lower Const.Art.
I,
10. These
process,
rulings
court’s
on all
affirm the
due
Mo.Const.Art.
counts and
unrelated McGautha
judgment predicated
provisions are not
thereon.
California,
272, 91 S.Ct.
U.S.
SEILER, JJ.,
BARDGETT and
concur.
J.,
(Brennan,
dissent
(1971)
L.Ed.2d 711
preven
with the
ing). Both
concerned
WELBORN,
Judge,
Special
in re-
concurs
power. As
arbitrary
tion of
exercise
sult.
cause to
Berger has had
Professor Raoul
DONNELLY, J.,
separate
dissents in
dis-
note,
Mcllwain:
quoting Charles
senting opinion filed.
“
ele-
two fundamental correlative
‘[T]he
WELLIVER, JJ.,
RENDLEN and
dissent
which all
ments of
constitutionalism
separate dissenting opinion
and concur in
yet fight
are the
liberty
lovers
must
DONNELLY, J.
a com-
legal
arbitrary power and
limits to
govern-
plete political responsibility of
J.,
SIMEONE,
sitting.
” Berger, The
governed.’
ment
DONNELLY, Judge, dissenting.
Law, 1
the Rule of
Constitution and
question
in this
is whether
case
(1978).
Eng.L.R.
West.New
Chapter 360,
Supp.1975, the Missouri
RSMo
II,
Constitu-
1 of the Missouri
Health and
Educational Facilities
tion, reads as follows:
Act, is
I
hold that
constitutional.
would
shall be
powers
government
“The
is not
because of
failure to delimit the
departments—
divided
three distinct
into
discretionary powers given
wide
the Au-
judicial—
legislative, executive and
thority.
sepa-
to a
be confided
each which shall
empowered,
engage
collec-
person,
no
magistry,
rate
types
leasing
three
of financial assistance —
exercise
persons, charged with the
tion of
facilities, making
Authority-owned
loans
belonging to one of
powers properly
facilities,
to finance new institution-owned
shall-- exercise
departments,
those
making
refinancing existing
loans
*15
either
the
power
belonging to
properly
facilities,
360.045(6),(7),
institution-owned
others,
in this
the
except
instances
(13), (14).
only
the
The
limitation on
exer-
permit-
expressly
constitution
directed
powers,
cise of
and guidance
these
as to
ted.”
which of
eligible
the
Missouri institutions
III,
the Missouri Constitu-
1 of
assisted,
360.045(14),
should be
is found in §
tion,
follows:
reads as
pertaining solely
refinancing
to the
of exist-
be vested
power shall
legislative
“The
ing institution-owned
facilities.
Section
representatives
in a
and house of
senate
360.045(14)sets standards of financial hard-
Assembly of the
styled
to be
‘The General
education,
ship, reduced cost of care or
”
of Missouri.’
State
savings
parties.
by
to third
Adherence
objec-
to these standards
been
historically have
provisions
These
tively
par-
by any
determined and enforced
doctrine.”
“delegation
implemented by the
so,
ty
body
to
having cause
do whether it
step along
another
today
This Court
takes
Assembly, applicant
be the General
institu-
meaning out of this
reading all
path
tions,
courts,
reviewing
public.
The
opinion in
acknowledge that the
doctrine.
I
broad,
granted
uncontrolled
Miller,
Service,
v.
Inc.
Security
ABC
power
discretion as to the exercise of its
that “a
(Mo.1974) declares
Authority-owned
lease
and to
adminis-
vests discretion
statute which
make
finance
institution-
loans to
new
stated,
must, generally
in-
trative officials
owned facilities.
in order
guidance
their
clude standards for
However, I would
grants
to be
Such
of discretion to administra-
constitutional.”
purports
it
general rule
tive
overrule ABC. The
authorities raise two constitutional con-
exceptions it
cerns,
declare is a fiction.
separation
powers,
Mo.
larger
creates are
agree
than the
rule itself.
I
sentatives are uncertain or cannot
only hope
can
that some future Court will
argüment
against
an
paternalism
question
reexamine and
pro-
wisdom of
supra,
Wright,
81 Yale L.J. at
democracy.”
ceeding along
path.
this
583, 584-585.
I
delegation
believe that
doctrine
Harlan-Brennan-Wright
view would
properly requires that
granting
statutes
dis-
imple-
delegation
use the
doctrine so as to
cretionary
to administrators be de-
accountability.
primary
ment
concern
clared
if they
unconstitutional
not
do
“set
satisfy
by
It
primary
would
this
concern
standards sufficiently precise to ensure that
in stat-
requiring
fixing
of standards
the relevant agency
signals
receives clear
agree.
utes.
I
regarding
policy
expected
it is
carry
system government
Our
becomes basi-
Wright,
out.”
Beyond Discretionary Jus-
cally
governors
per-
flawed when our
tice,
81 Yale L.J.
(1972).
lives of
mitted to assume direction of the
justifications
Various
have been articu-
governed
accountability
without
lated for the doctrine:
Experience may
them.
teach us that our
(1) Mr. Justice Harlan said in 1963: “The
problems have become
economic and social
principle
granted
that authority
by
leg-
so complex
require
is unrealistic
islature must be
by adequate
limited
stan-
Assembly
“set
suf-
General
standards
**
*
dards
insures that the fundamen-
ficiently precise to ensure that the relevant
tal policy decisions in our society will be
agency
signals regarding
clear
receives
made not
an appointed
but
official
expected
How-
policy
carry
it is
out.”
the body immediately responsible to the
ever, we must make the effort until such
people.”
California,
Arizona v.
373 U.S.
people
change
time
fit to
as the
see
546, 626,
1468, 1511,
83 S.Ct.
L.Ed.2d
system government.
(1963) (Harlan, J., dissenting
part).
Supreme
has
United States
Court
(2) Mr. Justice Brennan said in 1967: “For-
Congress
declared that an act of
does
policy
legislature’s
mulation of
is a
primary
delegation
constitute an unconstitutional
responsibility,
entrusted to it
the elector-
legislative
Congress clearly delin
power “if
ate, and to the
Congress delegates
extent
public agency
eates
general policy,
authority
standards,
under indefinite
this
it,
apply
which is to
and the boundaries
policy-making
passed
function is
on to other
this
Power
delegated authority.” American
agencies, often not
responsi-
answerable or
Light
Exchange
&
&
Com
Co. v. Securities
ble in
degree
the same
people.”
133, 142,
mission,
329 U.S.
S.Ct.
Robel,
258, 276,
United
States
389 U.S.
(1946).
Power
L.Ed. 103
American
419, 430,
S.Ct.
(1967) (Bren-
regulations guide hearing officers in to del- principal opinion Because the fails their regarding requests decisions pro- delegated discretionary power imit the wide bationary licenses.” thus dilut- I, Fund, ing II, Ill, In Environmental Art. Art. Art. Defense U.S. *18 App.D.C. Constitution, respect- I at 10 of supra F.2d the Missouri court reasoned: fully dissent.