To The Honorаble the House of Representatives of the Commonwealth of Massachusetts:
The Justices оf the Supreme Judicial Court respectfully submit these answers to the questions in an order adopted on April 29, 1935, copy whereof is hereto annexed.
The questions relate to a proposed bill for the establishment of a corporation to be operated by a board of directors consisting of certain existing public officials and additional citizens appointed by thе Governor with the advice and consent of the council. The funds for carrying on its business are to be obtained from the Commonwealth by subscription to all its capital stock and from the sale of its bonds which are to be fully and unconditionally guaranteed by the Commonwealth. The business of the cоrporation is (1) to insure privately owned and privately managed banks and other corporations and associations,
1. The money to be used by the corpоration must be obtained directly or indirectly through the exercise of the power of taxation by the Commonwealth. The subscriptions to the capital stock of the corporation must сome from that source. The guaranty of the bonds of the corporation by the Commonwealth rests ultimately upon the same source.
The corporation appears to be dеsigned to be in a sense a governmental agency although it has some of the charactеristics of a private corporation. Sloan Shipyards Corp. v. United States Shipping Board Emergency Fleet Corp.
' The proposed bill puts the Commonwealth deeply into the business of lending money upon mortgages on real estate. That is not a public purpose. After the great fire of 1872 a statute wаs enacted purporting to authorize the city of Boston to borrow money in order to lend it to landowners for rebuilding on the burned area. It was held in Lowell v. Boston,
The power conferred upon the" General Court by art. 43 of the Amendments to thе Constitution to take land for the purpose of relieving congestion of population and pro
The first question is answered “Yes.”
2. If the corporation established by the propоsed bill were a public agency for a proper purpose, doubtless the credit of thе Commonwealth might be given or lent to it. But the business of the corporation as set forth in the bill contemplates the giving or lending of credit to the participant corporations, § 10, and the insuranсe of the mortgages held by the participant corporations. §§ 24 to 32. The participаnt corporations are clearly corporations privately owned and managed. § 6. The credit of this public agency created, financed and managed by the Commonwealth is thus givеn or lent in aid of such private corporations. The Commonwealth cannot do through such a public agency as the proposed corporation that which it is forbidden to do directly. This would be plainly in violation of art. 62 of the Amendments to the Constitution, which prohibits the use of the credit of the Commonwealth “to or in aid of any individual, or of any private association, or of аny corporation which is privately owned and managed.” Opinion of the Justices,
The answer to the second question is “Yes.”
3. The executive and administrative work of the Commonwealth was organized into twenty departments as required by art. 66 of the Amendments to thе Constitution. A new agency of government like the proposed corporation ought to be under such supervision and regulation as the General Court may prescribe by law. Art. 66. That is a legislativе function. We are of opinion that omission'of a provision of that nature would be in violation of art. 66. Opinion of the Justices,
The third question is answered “Yes.”
4. The fourth question requires no answer. Opinion of the Justices,
Arthur P. Rugg.
John C. Crosby.
Edward P. Pierce.
Fred T. Field.
Charles H. Donahue.
Henry T. Lummus.
Stanley E. Qua.