Martin v. Maine Savings Bank, 154 Me. 259 (Me. 1958)

Williamson, C. J.

On report. The parties to this bill in equity join in seeking a declaratory judgment involving the constitutionality of the Maine Industrial Building Authority Act (hereinafter called the Enabling Act), P. L.,

1957, c. 421, § 1; R. S., c. 38-B. Uniform Declaratory Judgments Act, R. S., c. 107, § 38 et seq. The bill is reported by agreement of the parties for decision on bill, answers by all defendants, and an agreed statement of facts. R. S., c. 107, § 24.

The plaintiff is a depositor and corporator of the defendant Maine Savings Bank. The defendants are: the Maine Savings Bank (hereinafter called the Bank) ; the trustees of the Bank; the Maine Industrial Building Authority created by the Enabling Act (hereinafter called M.I.B.A.); the Gorham Development Corporation (hereinafter called Gorham), a local development corporation and an eligible mortgagor within the meaning of the Enabling Act; the Maine Metal Finishing Company (hereinafter called Maine Metal), a Maine corporation with “one of its principal purposes the manufacturing, processing or assembling of raw materials or manufactured products” and which admittedly, to quote from the bill, “has immediate need to expand its manufacturing facilities and has agreed to lease or conditionally purchase from Gorham, an industrial project to be erected by Gorham to the specifications of Maine Metal,” and the Attorney General.

The agreed statement of facts reads in part:

tees, have mutually agreed that, upon the completion of the said industrial building, Maine Savings Bank will loan to Gorham Development Corporation the sum of $45,000, and Gorham Development Corporation will secure said loan by a first mortgage on the said land and industrial building; provided the Maine Industrial Building Authority will issue a contract or Certificate of Insurance to insure the payment of said mortgage loan to the Maine Savings Bank.

The decisive issue in the case appears in paragraph 13 of the bill, denied by the defendants, reading:

settlement and resettlement of industrial and manufacturing enterprises within the State, the Legislature by proper enactment may insure the payment of mortgage loans on the real estate within the State of such industrial and manufacturing enterprises not exceeding in the aggregate $20,-000,000 in amount at any one time and may also appropriate moneys and authorize the issuance of bonds on behalf of the State at such times and in such amounts as it may determine to make payments insured as aforesaid.’

Reference hereinafter to section 14 and section 14-A will mean to these sections in Article IX of the Constitution.

The plan adopted by the Legislature pursuant to section 14-A is simple and plain in outline. It is contained in two statutes passed at the special session of the 98th Legislature in October 1957; (1) the Enabling Act, enacted under the Emergency Clause and effective when approved on October 31,1957, and (2) “An Act Relating to the Maine Industrial Building Authority” (P. L., 1957, c. 430) enacted without the Emergency Clause and effective January 30, 1958.

We summarize the Acts and set forth the portions in which we are particularly interested.

provide enlarged opportunities for gainful employment by the people of Maine and to thus insure the preservation and betterment of the economy of the State and its inhabitants. It is further declared that there is a need to stimulate a larger flow of private investment funds from banks, investment houses, insurance companies and other financial institutions including pension and retirement funds, to help satisfy the need for housing industrial expansion. Therefore, the Maine Industrial Building Authority is created to encourage the making of mortgage loans for the purpose of furthering industrial expansion in the State.

There follow provisions for the membership and organization of the Authority with which we are not here concerned.

thereof, the land upon which they may be located, and all real properties deemed necessary to their use by any industry for the manufacturing, processing or assembling of raw materials or manufactured products.

lease or rental to be temporary in nature and subject to such conditions as the authority may prescribe.

The Legislature in section 2 appropriated $500,000 for the establishment of the mortgage insurance fund.

“An Act Relating to the Maine Industrial Building Authority,” P. L., 1957, c. 430, supplements the Enabling Act in matters of detail.

The general plan established by the Legislature in the Enabling Act is not altered by chapter 430. Of interest is section 1 spelling out the power of M.I.B.A. to “enter into agreements with prospective mortgagees and mortgagors.” In the case at bar the M.I.B.A. made a commitment to insure a mortgage to be given in the future on fulfillment of certain conditions. It is clear that chapter 430 has no life or purpose apart from the Enabling Act. For convenience we will hereafter, unless otherwise indicated, include chapter 430 within the meaning of the term “Enabling Act.”

There is no suggestion in the case that the parties have failed, or will fail, to comply with the Enabling Act and the

requirements of M.I.B.A. If the statute is valid the plaintiff has no complaint. In short, the validity of the statute, not compliance with the statute, is in issue.

The decisive issue remains as stated in paragraph 18 of the bill. Does the provision in the Enabling Act (Sec. 5, VIII) that the mortgagor “shall be limited to local development corporations,” conflict with the provision of section 14-A, that “the Legislature by proper enactment may insure the payment of mortgage loans on the real estate within the State of such industrial and manufacturing enterprises,” thus rendering the Enabling Act void and of no effect? We think not.

There are certain principles to be kept in mind in considering the exact point in issue.

First: The long standing policy of the State in section 14, that “The credit of the state shall not be directly or indirectly loaned in any case” was altered by the addition of the words “except as provided in section 14-A” and by the adoption of the new section 14-A, supra. For the history of section 14, see Opinion of the Justices, 146 Me. 183, 186, 79 A. (2nd) 753. We have no concern with the wisdom of the change in policy. Our obligation and duty is to declare what the law is, and to apply the law in the case before us.

Second: On October 29, 1957, the six Justices of the Supreme Judicial Court (one of whom has since retired) gave their opinions pursuant to their obligation under Sec. 3 of Art. VI of the state constitution to the Senate to the effect that the present chapter 421, then Legislative Document 1614, if enacted, would be constitutional. In an advisory opinion which, although all joined therein, is, under our practice, the advisory opinion of each justice acting individually, the justices said, in part:

Section 14-A of the Constitution and are otherwise constitutional.”

It is familiar law that an advisory opinion binds neither the justice who gave the opinion nor the court when the same questions are raised in litigation. Justice Eufus Tapley, in Opinion of the Justices, 58 Me. at 615, stated the principle in apt language:

Our duty is to consider the problem anew in light of the issues presented and with the aid and assistance of the research, briefs, and arguments of counsel. The defendants urge that the rule of Cummings v. Eastman, 126 Me. 147, 151, 136 A. 810, involving the validity of the removal of a sheriff is applicable. The court said:

In the instant case there has been no final action taken under the Enabling Act. At most, the Legislature passed the Act in reliance upon the Opinion of the Justices as to its constitutionality. We need not consider what, if any, application the Cummings case would have had action final in nature been taken. See also Laughlin v. City of Portland,

111 Me. 486, 90 A. 318; Commonwealth v. Welosky, 276 Mass. 398, 177 N. E. 656; Bowe v. Secretary of the Commonwealth, 320 Mass. 230, 69 N. E. (2nd) 115; Lincoln v. Secretary of Commonwealth, 326 Mass. 313, 93 N. E. (2nd) 744.

Third: We approach the issue of constitutionality of the Enabling Act, having in mind the principles well stated for the court by Chief Justice Fellows in these words:

In First National Bank of Boston v. Maine Turnpike Authority, et al., 153 Me. 131, 171, 136 A. (2nd) 699, we recently said:

The basic objective of section 14-A and the Enabling Act is to foster, encourage and assist the industrial expansion

of the state through the use of the state’s credit to a limited extent in financing the cost of needed new industrial buildings for the use of the industrial and manufacturing enterprises (which we may for convenience call “industries”) mentioned in the Constitution. Only a bare outline of the purposes is found in section 14-A. They are set forth in more detail in the Enabling Act.

There is no controversy between the parties arising from any supposed conflict between the purposes and provisions of the Enabling Act or the terms and conditions prescribed by the M.I.B.A. in administering the program on the one hand, and section 14-A of the Constitution on the other, except from the “ownership issue” to be later discussed.

Passing for a moment the “ownership issue” it satisfactorily appears that the “industrial project” of the Enabling Act (Sec. 5-III) comes within the meaning of real estate eligible for an insured mortgage under section 14-A. In short, there is no conflict between Act and Constitution about the kind or type of property to be covered by such a mortgage. For convenience therefore we shall refer to the “real estate” in section 14-A as an “industrial project” or “project.”

It is not enough in our view of section 14-A simply that an industrial building be constructed that is suitable for or adapted to industrial purposes. Under both the Constitution and the Enabling Act it seems plain that the industrial building must be used by an industry, that is to say, an industrial or manufacturing enterprise. Only with such use does the building become an industrial project eligible for an insured mortgage.

Thus an industry of necessity gains an intimate connection with the project. Such interest therein is not of course necessarily measured by complete ownership. Further, it is implicit in section 14-A and in the Enabling Act that the

income to pay the mortgage must come from the industry using the project. There is no other source of revenue.

In brief, under any plan devised to carry out the purpose of section 14-A we will find an industry with an interest in the project equal at least to that of a tenant. There is no industrial expansion without industry, and industry must ultimately pay the cost of the new industrial buildings.

We see the plan in operation in the case at bar. “Maine Metal, has immediate need to expand its manufacturing facilities and has agreed to lease or conditionally purchase from Gorham, an industrial project to be erected by Gorham to the specifications of Maine Metal.”

The agreement or commitment relating to insuring the Gorham mortgage on completion of the project and upon meeting conditions imposed by statute or prescribed by the M.I.B.A. call among other things for a lease from Gorham to Maine Metal at a rental sufficient to pay the mortgage in full over the term of the lease. The lease is to be assigned to the Bank as additional security for the mortgage. The lease will also provide in substance that on payment of the mortgage and fulfillment of the terms of the lease either that Gorham shall convey the project to Maine Metal or that Maine Metal shall have an option to purchase for $1. For purposes of the case it is immaterial which provision may be included in the proposed lease.

The Legislature in the Enabling Act has chosen to place the local development corporation between the industry on the one hand and the Bank or mortgagee on the other. The mortgage to be eligible for insurance may not exceed 90% of the cost of the project, with a ceiling of $1,000,000. In this manner the Legislature brings the locality directly benefited or developed by industrial expansion into the picture through the control'to be exercised by the local development corporation “to whose members no profit shall

enure” and through the self-interest created by the necessity of raising 10% of the cost. The local development corporation, with its control of the project, seems also designed to lessen opportunity for speculation in industrial buildings or projects financed by insured mortgages. The wisdom of the policy is for the Legislature to determine and is not our concern. We may take note, however, that the means chosen are reasonably adapted to secure the desired end.

The decision hinges upon the meaning of the phrase in section 14-A, “real estate ... of such industrial and manufacturing enterprises . . .,” and even more narrowly turns upon the meaning of the word “of.”

The position of the plaintiff is that the project to be eligible for an insured mortgage must be owned by the industry. “Of” to the plaintiff means complete ownership, and since to give a first mortgage the local development corporation must have a good title, there is, says the plaintiff, a conflict between the Act and section 14-A.

We are convinced, however, that the People intended to give the Legislature broad powers to implement the policy permitted under section 14-A, and had no intention of limiting the means of carrying out the policy in the manner urged by the plaintiff. In reaching our decision we take the words creating the controversy in the context of the Constitution and we have in mind the purpose of section 14-A.

We are satisfied that something less than complete ownership by the industry meets the standard of section 14-A. In particular we are of the opinion that the proposed lease in the instant case to Maine Metal carries with it a sufficient part of the total rights comprising ownership to bring the Gorham mortgage within the bounds of eligibility for insurance.

The phrase “real estate ... of such industrial and manufacturing enterprises” carries an element of use and possession, but it does not necessarily mean complete ownership, or, for example, title in fee simple. Such a construction it seems to us fairly and reasonably gives effect to the intention of the People and prevents suffocation of the objective of section 14-A under the cloak of a narrow construction.

See in Webster’s New International Dictionary (2nd ed.) within the definition of “of” the following: “Indicating the possessive relationship, otherwise expressed by the possessive case; belonging or pertaining to, or connected with (a place, time, person, or thing) ; . . .”

There is not the slightest doubt that the Legislature intended section 14-A to cover the plan adopted in the Enabling Act. In submitting section 14-A to the People by “Resolve Proposing an Amendment to the Constitution Pledging Credit of State for Guaranteed Loans for Industrial Purposes” (Resolves 1957, c. 159, effective August 28, 1957), the Legislature had before it for consideration a bill “An Act to Create the Maine Industrial Building Authority,” Legislative Document 640, which all agree was substantially like the Enabling Act, and in particular contained the provision limiting mortgagors to local development corporations.

In light of the necessity of a constitutional amendment to permit the desired policy, Legislative Document 640 was withdrawn. It reappeared in new form but with changes of no consequence for our purposes, as chapter 421 in the special session of the 98th Legislature held after the adoption of section 14-A. It may be said indeed that section 14-A was designed by the Legislature to meet the very plan subsequently enacted.

No complaint of unconstitutionality other than the “ownership issue” has been made by the plaintiff. Surely

we need not seek for issues not reached by the research and argument of counsel. Our decision is based on the issue presented and none other.

We point out that we do not pass upon the sufficiency of the various drafts of agreements and leases prepared for use by the M.I.B.A. and offered in evidence. They are instruments drawn to accomplish what we hold are proper and lawful objectives under a constitutional Act. We cannot be expected, nor indeed have we in argument been requested, to examine the drafts in detail.

The plaintiff fails in his attempt to enjoin the Bank and its Trustees from making the loan. The Enabling Act (P. L., 1957, c. 421) is constitutional, and so also is the supplementary act (P. L., 1957, c. 430). Acts and agreements of the M.I.B.A. pursuant to authority of the Enabling Act (as supplemented) are of full force and effect. The proposed loan by the Bank to Gorham if made pursuant to the authority of the Enabling Act (as supplemented) does not violate any provision of the banking laws.

The entry will be