Opinion of the Justices to the House of Representatives

291 Mass. 567 | Mass. | 1935

The order was transmitted to the Justices on May 1, 1935, and on May 14, 1935, they sent the following answers:

To The Honorable the House of Representatives of the Commonwealth of Massachusetts:

The Justices of 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 the 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 corporation is (1) to insure privately owned and privately managed banks and other corporations and associations, which enter into and perform agreements or contracts with the corporation, against loss through loans upon home mortgages or home construction mortgages, (2) to discount obligations evidencing such home mortgages, and (3) to lend its funds directly upon such mortgages or upon home construction mortgages.

1. The money to be used by the corporation 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 come 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 designed to be in a sense a governmental agency although it has some of the characteristics of a private corporation. Sloan Shipyards Corp. v. United States Shipping Board Emergency Fleet Corp. 258 U. S. 549. United States v. McCarl, 275 U. S. 1. The questions in the order are based on the theory that the corporation is an agency of government. It is not privately owned or managed.

' 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 was 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, 111 Mass. 454, that this was not a public purpose for which public money under the Constitution could be used. That decision is decisive against the proposed bill. See also Mead v. Acton, 139 Mass. 341; Opinion of the Justices, 186 Mass. 603; 204 Mass. 607; 211 Mass. 624; Salisbury Land & Improvement Co. v. Commonwealth, 215 Mass. 371; Duffy v. Treasurer & Receiver General, 234 Mass. 42, 50.

The power conferred upon the" General Court by art. 43 of the Amendments to the Constitution to take land for the purpose of relieving congestion of population and providing homes for citizens does not authorize the Commonwealth to go into the business of lending money upon homes either directly or indirectly. The extension of public functions by art. 47 of the Amendments to the Constitution so as to include the “providing of shelter” “during time of war, public exigency, emergency or distress” falls far short of embracing the insurance of real estate values and the money lending business as set forth in the proposed bill.

The first question is answered “Yes.”

2. If the corporation established by the proposed bill were a public agency for a proper purpose, doubtless the credit of the 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 insurance of the mortgages held by the participant corporations. §§ 24 to 32. The participant corporations are clearly corporations privately owned and managed. § 6. The credit of this public agency created, financed and managed by the Commonwealth is thus given 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 any corporation which is privately owned and managed.” Opinion of the Justices, 261 Mass. 523, 542, 543.

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 the 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 legislative function. We are of opinion that omission'of a provision of that nature would be in violation of art. 66. Opinion of the Justices, 271 Mass. 582, 594. G. L. (Ter. Ed.) c.' 30, § 2, first a part of St. 1919, c. 350, § 1, was enacted with a different design.

The third question is answered “Yes.”

4. The fourth question requires no answer. Opinion of the Justices, 261 Mass. 556, 613. The answers already given are conclusive against the proposed bill.

Arthur P. Rugg.

John C. Crosby.

Edward P. Pierce.

Fred T. Field.

Charles H. Donahue.

Henry T. Lummus.

Stanley E. Qua.