Newspaper Page Text
PAGE EIGHT
FARM NOTES
Lime Needs
Much Georgia land needs lim
ing, in the opinion of E. D. Alex
ander, state extension service
agronomist. Lime is especially de
sirable for pastures and legumes,
he said this week, and heavy
types of soil need higher rates of
liming than lighter soils. This
does not mean, however, that
lighter soils do not need liming.
Alexander recommended that soil
tests be used as a guide in ap
plying lime whenever possible,
but if tests aren’t available, 3,-
000 to 4,000 pounds will be safe
for the mountain section.
Soil Management
Fertile soil is the result of a
long, gradual process of building
up fertility. Successful farmers
manage their soil by rotating
crops, planting cover and soil
building crops and carrying out
other practices to restore the soil
and keep it productive.
Clean Lots for Pigs
Providing clean farrowing lots
is one of the most important fac
tors in getting pigs off to a good
start comparatively free of
wworms. One-fourth to one-half
acre of uncontaminated ground
should be provided for each sow.
Pasture Prorani
Producing crops that livestock
can harvest saves both time and
labor. With permanent and tem
porary pastures, grazing can be
provided for livestock throughout
the year.
If winter grazing plots were
seeded early they can usually be
grazed by early November.
If Chattooga County dairy
cows are not getting plenty of
good grazing now it will be wise
to feed them hay daily and to in
crease the amount of grain fed.
The outlook for farm machin
ery, machinery attachments and
repair parts holds little promise
of improvement through the first
half of 1947.
Practically half of the commer
cial forest area in Georgia is I
owned by farmers.
The best soil for strawberries <
is a sandy loam that retains mois I
ture.
By using simple production rec- j
ords, Georgia dairy farmers can |
soon rid their herds of unprofit- I
able '‘boarders.”
Demand for farm products in i
1947 will continue strong, eco- 1
nomic experts of the department j
of agriculture predict.
MENLONEWS
Mr. and Mrs. N. B. Daniel at
tended the VFW meeting in
Trion Sunday.
Mr. and Mrs. John C. Cavin
spent Saturday in Chattanooga
on business.
H. E. Wyatt and Zen Taylor
made a business trip to Chatta
nooga.
Mr. and Mrs. John C. Cavin
attended the V. F. W. meeting
in Trion Sunday afternoon. Mr.
Cavin is serving as commander
of the eVterans of Foreign
Wars in Chattooga County.
Mr. and Mrs. H. E. Wyatt were
in Chattanooga Wednesday.
Mrs. H. D. Mallicoat, of Heron,
Ohio, is visiting her father, W.
E. Ratliff, who is ill at the home
of Mr. and Mrs. E. W. Majors.
Mr. and Mrs. C. A. Wyatt and
Miss June Wyatt, Mr. and Mrs.
Norman Garvin and Misses Julia
Ann and Edith Garvin are spend
ing several days at Iverness, Fla.
Mr. and Mrs. R. H. Tucker and
daughter, Sandra, of Cleveland,
Tenn., spent the week-end with
Mrs. J. W. Tucker.
Those visiting in the home of
Mr. and Mrs. Warner E. Wilson
Sunday were Mr. and Mrs. Olan
Craven and son, Paul, and Mrs.
C. N. Wilson, of Chattanooga, and
Mr. and Mrs. Sell McWhorter.
Mr. and Mrs. J. E. Kennedy at
tended the wedding of Miss Car
olyn Thomas to Mr. Ralph De
vault in Chattanooga Sunday aft
ernoon.
Mrs. May King, of Atlanta, is
visiting her mother, Mrs. J. A.
Kennedy, who is ill at her home
here.
C. H. Harris,, who has been
working here on this construc
tion job, has been transferred
to South Carolina.
W. B. Martin spent the week
end with his sister, Mrs. Lula
Cleckler.
Mr. and Mrs. O. L. Cleckler and
Mr. and Mrs. Lester Edwards were
luncheon guests of Mrs. Lula
Cleckler Sunday.
Mr. and Mrs. John Taylor
Leath and children, of Rome,
visited Mrs. Lula Cleckler Mon
day.
The Rev. S. K. Dodson filled his
regular appointment at the Pres
byterian Church Sunday.
Mrs. W. J. Hogg and Ben Da
vis Crane made a business trip
to LaFayette Tuesday.
Good Reason
“Waiter, there is no wishbone
in this chicken.”
“It didn’t need one, sir. That
chicken lived such a contented
life that it had nothing to wish
nooga.
State tyewpia
StatetncKt &ciAe*t (faccUtfon
SEPTEMBER 30, 1946
rfwetd
Cash in State Treasury $27,869,341.63
Cash and Cash Items in hands of State Departments 35,409,537.89
Cash due from U. S. Government on Reimbursements 1,741,824.42
Total Cash Assets $65,020,703.94
.dia&itctiee
CURRENT
Accounts Payable • $ 4,847,665.30
RESERVES
For Commitments Outstandings 3,937,406.06
For Sinking Fund to retire State Bonds and County Certificates (See opposite
page) 7,201,500.00
For Board of Regents Bond Funds for Construction . 3,569,736.51
•For Highway Contracts to Mature 18,064,297.38
For Matching Federal Road Funds accrued to Sept. 30, 1946 8,485,335.10
For Land Title Guarantee Fund 5,428.55
For Federal Funds on hand. * • 1,645,197.77
For Agency Funds on hand• 4,992,521.54
For Teacher Retirement Trust Fund . • • 4,027,523.58
For Unearned Income 581,395.66
For Revolving Fund of Agencies 3,750,000.00
For Maintaining Aid to Common Schools .•••••• 3,350,321.29
For Memorandum Operating Allotments .«•••••••••••••• 00
For Income Equalization Reserveoo
Total Reserves 4<
Total Accounts Payable and Reserves $64,458,328/4
Swtfltad
UJRPLUSs (Cash over Account! Payable and Reserve! Applied on fixed debt, page 3)I 29
☆ ☆ ☆
(•) Highway Department Contracts to Mature Active Suspended Total
Total Contractss29,4lß,l7B.2o $ 568,085.59 $29,986,263.79
less:
Regular Federal Fund Participation . ...1 »••••••••• 11,898,447.39 23,519.02 11,921,966.41
Net State Obligation for Contracts to Mature• • • $17,519,730.81 $ 544,566.57 $18,064,297.38
See Page 3 for Summary of Current and Future Maturing Debt Position.
See Page 4 for Auditor's Notes on Financial Condition.
Auditor’s Notes
Bu: B. E. THRASHER. JR.. State Auditor
introduction
This report ol the financial condition of the State of Geor
gia as of September 30. 1946, has been delayed until this date
in order to obtain an opinion from the Attorney General of
Georgia as to the legal status of the $3,750,000.00 In Revenue
Bonds Issued by the authority of the Board of Regents through
a corporation known as the Regents ot the University Sys
tem of Georgia. In later paragraphs ot these notes the legal
status of these bonds is discussed.
Because of this condition which has developed since my
June 30, 1946 report and in view of the opinion of the Attor
ney General 1 find it necessary to humbly apologize to the
people of Georgia and to the members of the General Assembly
lor my erroneous public statement made under date of Feb
ruary 38, 1945 in which reference was made to the •mo
mentous Items affecting the finances of the State” as pro
vided in the new Constitution, Including the statement that
the proposed Constitution carried forward “such outstanding
features that provided for the prevention of any current in
debtedness in the future.” It is now quite evident that I was
over-zealous as to the invincibility ol the provisions of the
State Constitution.
FINANCIAL CONDITION
On September 30, 1946. the State of Georgia, at least that
part under control of the General Assembly, the Governor and
the Budget Bureau, has a cash surplus of $562,375.20 after
providing reserves to meet every approved outstanding obliga
tion at September 30 whether due today or in the future. See
later paragraph on State Condition which takes into considera
tion the Revenue Bonds issued by the Regents.
In the reserves therp is $8,485,335.10 held In the State
Treasury to match Federal road funds accrued to the benefit
ol the State to September 30. 1946. This does not take Into
consideration the full annual Federal funds which are avail
able for the year July 1, 1946, to June 30, 1947, but does take
into consideration one-fourth of the funds, which is considered
to have been accrued tor the three months July I. 1946, to
September 30, 1946.
There is also reserved $18,064,297.38 in cash to liquidate
the State s part of highway contracts which have been let or
are in the process of letting at September 30, 1946. The full
amount of the contracts is $29,986,263.79 of which the Federal
Government finances $11,921,966.41, thus leaving the $18,064,-
297.38 State fund requirement, which has been reserved.
There is also in the State Treasury $7,201,500.00 in the
Sinking Fund to retire the balance outstanding of the General
state Bonds, the Highway Refunding Bonds, and the Western
and Atlantic Railroad Rental Discounts.
There Is another obligation which has been created by the
Board of Regents through a corporation known as “Regents of
the University System ot Georgia,” without a specific Act of
the General Assembly authorizing or limiting the obligation,
and the creation of this obligation was not subject to the ap
proval of the Governor, the Attorney General, or Budget Bu
reau of Georgia. The item is $3,750,000.00 Revenue Bonds issued
by the authority of the Regents for the purpose of building
dormitories at Georgia School ol Technology. The legal status
of this item is discussed in following paragraph.
Taking into consideration this item of indebtedness cre
ated by the Regents, the financial condition of the State and
Agencies at September 30, 1946 was net obligations of State and
Agencies in excess ot cash available of $3,187,624.80, as com
pared to a net general surplus of $591,230.09 at December 31,
1945 when the State finally cleared its books ot all obligations
in excess oi cash on hand.
REVENUE BONDS OF THE REGENTS OF THE
UNIVERSITY SYSTEM OF GEORGIA
In receiving Information from the State Agencies as to
their financial condition as of September 30, 1946. it was re
ported that on May 1, 1946 $3,750,000.00 in Revenue Bonds had
been issued by the authority of the Board of Regents through
the corporation known as the Regents of the University System
of Georgia for the purpose ot building dormitories and are
payable from dormitory rents In the years 1949 through 1978.
State Auditor’s Request for Legal Opinion
Under date ot October 10, 1946 your State Auditor wrote the
following letter to the Honorable Ellis Arnall. Governor:
“I am in the process of preparing the Financial Statement
ot Georgia tor the period ended September 30, 1946, and since
the last quarterly statement I find that the Board of Regents
has authorized and issued $3,750,000.00 in Revenue Bonds
to be paid in the years 1949 through 1978.
Inasmuch as there is no specific Act ot the General As
sembly authorizing the Issuance ot these Bonds, nor was the
action approved by you, the Attorney General, or the Budget
Bureau of Georgia, I do not have any legal basis to guide me
in the treatment of this obligation, particularly since new
financing laws have been passed and the Constitution of the
State of Georgia rewritten.
1 am told that the Board of Regents serves In two capaci
ties; one being as a State Agency subject to all rules, regu
lations, and limitations imposed by the Constitution and laws
of the State; the other is as a corporation which can make
its own rules and regulations and can by-pass any of the legal
restrictions.
I am unwilling to concede that anybody representing the
State of Georgia collecting funds under the authority of the
laws of the State of Georgia can be given powers which will
nullify the provisions ot the State Constitution and the gen
eral laws enacted by the General Assembly of Georgia.
If this condition exists we should find out now so that the
Legislature can take the necessary action to correct the sit
uation. as I do not believe that It Is good and sound govern
ment for any Agency of the State to be given powers which
cannot be controlled by the General Assembly of Georgia.
Inasmuch as you, as Governor, are the only official who
can ask the Attorney General for official opinion, and inas
much as it is necessary for me to have an interpretation of
the laws pertaining to this subject in order to perform the
duties required of me by the General Assembly, 1 most re
spectfully ask that you request an opinion from the Attorney
General to clarify this situation, so that I will know how to
report this transaction."
Governor’s Request for Opinion of Attorney General
Under dates of October 10 and October 21 Governor Arnall
In letiers to the Attorney General, asked for an opinion on the
following questions, and also made the following comments:
The above is a reprint of the Sept. 30, 1946 report of State Auditor B. E. Thrasher, Jr., and is published as a matter of public information at the direction of Governor Ar
nall and paid for by the Executive Department of the State of Georgia.
/ THE SUMMERVILLE NEWS: SUMMERVILLE, GEORGIA
"Are these revenue bonds Issued by the State Board of Re
gents legal obligations of the State and should they be listed
as State obligations?
Are they legal obligations ot the Board of Regents?
Are they authorized by the Constitution and laws ot Geor
gia?
Is the power of the Regents to Issue lelf-llquidattng bonds
unlimited?
Are these revenue bonds Issued by the Regents new obli
gations of the State?
Must they be considered as State debts?
Are they legal?
Are the members of the State Board of Regents public offi
cials subject to all limitations and restrictions of constitu
tional and statutory law as public officers?
Can the Board of Regents transfer to a corporation Income
received by the Board of Regents as provided by law?
As you know, I have worked very assiduously to pay the
State out of debt and to wipe out State obligations.
I am tremendously anxious that the dormitory bond Issue
ot Georgia Tech not be charged up against the State govern
ment as a State debt. Moreover, for bookkeeping purposes, the
legal aspects of the transaction should be definitely deter
mined.”
Attorney General’s Opinion
Under dates of October 18th and 24th, 1946 Attorney General
Eugene Cook rendered the following opinions on the questions
above recited. For the convenience of the reader, your State
auditor has caused to be printed in BOLD TYPE the para
graphs which give the opinions of the Attorney General on
the questions asked.
“The Supreme Court of Georgia on July 28, 1934, in the
case of State of Georgia v. Regents of the University System
of Georgia (179 Ga. p. 210) passed on questions very similar
to those now under consideration relating to the laws govern
ing the Board of
follows:
“ID The Regents of the University System of Georgia is a
distinct corporate entity and is governed by a Board of Re
gents. Through the board It can exercise any power usually
granted to such Incorporations, necessary to Its usefulness,
and not in conflict with the constitution and laws. An obli
gation incurred by the corporation, or the Board of Regents
Is not a debt of the State, and therefore is not affected by
constitutional limitations upon State indebtedness.’’
“(6) The loan agreement as made by the corporation and
its Board of Regents with the Federal Government under
which bonds will be Issued by the Regents and purchased by
the government for the purpose of providing funds for stated
university uses, the bonds to be paid exclusively out of de
scribed special funds, does not involve any illegal undertaking
on the part of the Board of Regents, and is within the pow
ers granted to the corporation and Its Board of Regents by
the laws of this State. The court properly refused to enjoin
the execution of such agreement.’’
The above decision seems to be a complete answer to your
questions as of the date of July 28, 1934. Our inquiry is there
fore limited to the sole question of whether the laws have been
changed or altered subsequent to the date of that decision in
such away as to render the judgment of the Court inoperative
at this time. In order to determine this question, it becomes
necessary to examine all laws subsequent to July 28, 1934
In 1935 the General Assembly passed an Act (Ga. L. 1935
pp 171-173 J which provides in part as follows:
“That the corporation created under section 45 of the Act
approved August 25. 1931, as embodied in title 32. section 32-
101. of the Code of Georgia of 1933. and known as ‘Regents
of the University System of Georgia,’ is hereby declared to
be a governmental agency of the State of Georgia, and all
property held bv said corporation under said Act of August
25, 1931, as embodied in title 32 of the Code of Georgia of
1933 is hereby declared to be the property of the State of
Georgia, and subject to all the limitations and restrictions
Imposed upon other property of the State of Georgia by the
Constitution and laws of this State. The members of the
Board of Regents of the University System of Georgia, as
provided for by said Act, are hereby declared to be public
officers of the State of Georgia and subject, in all their
actions as such, to all the limitations and restrictions im
posed by the Constitution and laws of this State upon other
public officers.’’
“(3) Tuition, matriculation fees and proceeds of the sale
of personalty shall be reported and remitted to the Secre
tary-Treasurer of the Board of Regents, who shall transmit
the same to the State Treasurer, and the same are hereby
appropriated as a continuing appropriation to the branch or
division of the University System from which they originate,
to be drawn out of the Treasury upon a requisition just as
other funds are drawn. The proceeds from dormitory rentals,
mess hall charges, proceeds of athletic contests, and other
similar revenue shall remain with the institution originating
the same, and shall not be paid into the Treasury under this
Act. All such receipts, however, shall be reported to the Sec
retary-Treasurer of the Board of Regents and shall be avail
able to the Governor, to the General Assembly and to the
Board of Regents; and all such revenue is declared to be un
der the control of the Board of Regents, which control may
be exercised directly or through such athletic associations or
organizations as it may authorize, provided, such associations
and organizations remain always subject to the control of the
Board of Regents.”
The above Act of 1935 clearly changed the law as dealt with
py the Court in State of Georgia vs. Regents of the University
System of Georgia, et al., supra. To this effect see Ramsen
vs. Hamilton .181 Ga. p. 365. decided October 19 ’335 in whirl
the Court held:
“(4) By the act of 1935 <Ga. L. 1935. p. 171» the status c
the Regents of the University System of Georgia is declare
to be a governmental agency of the State of Georgia, and
the title to all property held by the same to be in the State
Therefore a suit against the said regents Is in effect a sur
against the State of Georgia, and cannot be maintained with
out its consent.”
On page 378 of this opinion, the Court, In dealing with
the change of legislative intent on this question, stated:
“It is a matter of current history that the Act of 1935 from
which we have quoted was adopted by the General Assembly
and approved by the Governor for the purpose of changing
the status and relation which the Regents of the University
System of Georgia sustained to the State under the previous
law, as pointed out in the decision of this Court in State vs.
Regents, supra; and since the passage of that Act it is ap
parent that the Regents of the University System of Georgia
is now. and was at the time of the filing of the present suit
‘'Tftafaniwp es State and rfgeetetee
OBLIGATIONS—State Authorized
Dec. 31, 1940 Dec. 31, 1942 Dec, 31, 1945 Sept, 30, 1946
Highway Obligations to Mature $ 8,336,214.61 $10,733,955.34 $ 8,103,378.28 $18,064,297.38 (1)
General State Bonds of 1833 3,320,022.17 3,203,202.17 937,202.17 103,500.00 (2)
Highway Refunding Bonds of 1939 5,300,000.00 7,950,000.00 7,950,000.00 5,325,000.00 (3)
County Refunding Certif. of 1931 13,333,954,73 8,000,472.87 0 0
W& A Rental Discount of 1931 and 1938 4,860,000.00 3,780,000.00 2J82.000.C3 1,773,000.00 (4*
Hospital Authority Bonds of 1939 2,390,000.00 2,294,000.00 2,132,000.00 0
Tattnall Prison Debt • 1,051,088.2700 0
Tota l $38,641,279.78 $35,961,630.38 $21,304,530.45 $25,265,797.38
Less Cash:
Accumulated Operating Deficit (-)16,723,906.31
Accumulated Operating Surplus 0 7,619,494.57 591,230.09 562,375.20
Highway Contract Reserve 0 0 8,103,378.28 18,064,297.38
Sinking Fund Reserves 2,195,040.00 2,546,720.00 13,201,202.17 7,201,500.00
Total (*)514,528,866.31 $10,166,214.57 $21,895,810.54 $25,828,172.58
Net Obligations—State of Georgia . $53,170,146.09 $25,795,415.81
Net General State Surplus $ 591,230.09 $ 562,375.20
*Net cash deficit.
OBLIGATIONS—Regents Authorized
Georgia School of Technology Dormitory /ci
Revenue Bonds issued May 1, 1946 * 3,750,000.00 (5)
Total Regents authorized Obligation! I 3,750,000.00
less Cash: .
Sinking Fund Reserves -90
Net Obligations—Regents Authorized• $ 3,750,000.00
Net Obligations—State and Agencies $53,170,146.09 $25,795,415.81 $ 3,187,624.80
Net General Surplus—State and Agencies $ 591,230.09
«
(1) —"Highway Obligations"—The amount of State Funds required to complete all contract! outstanding and there is a cash reserve
to liquidate this item which is payable as work progresses.
(2) All "General State Bonds" outstanding are past due, but have not been presented for redemption. Cash reserve of $103,500.00
is held in State Treasury to liquidate this obligation.
(3) Os the "Highway Refunding Bonds" outstanding $25,000.00 in bonds are past due but have not been presented for redemption,
$2,650,000.00 in bonds mature March 15, 1947 and $2,650,000.00 mature March 15, 1948. Cash Sinking Fund Is held in
the State Treasury to liquidate this obligation in full.
(4) Os the "W & A Rental Discount" warrants outstanding $18,000.00 in warrants are past due but have not been presented for
redemption, the remaining $1,755,000.00 mature $45,000.00 on the first day of month beginning October 1, 1946, and for
each month thereafter through December 1, 1949. Cash Sinking Fund is held in the State Treasury to liquidate this obligation
in full.
(5) "Obligations- -Regents Authorized." Payable from dormitory rentals, maturing in part on each May 1, 1949 through 1978.
The Regents by exercising the powers of a corporate entity issued the Dormitory Revenue bonds for the benefit of the Georgia
School of Technology. There Is no specific act of the General Assembly authorizing the issuance of these bonds, nor was the action sub
|eet to the approval of the Governor, Attorney General or the Budget Bureau of Georgia. See Auditor's notes for opinion of Attorney
General as to the legal status of this obligation.
a governmental agency of the State In charge of property
of which the title is in the State.”
See also, State of Georgia vs. Davidson, 198 Ga.
p. 27.
However, on February 1, 1946, an Act was approved winch
repealed in its entirety the Act of 1935 above referred to, and
in addition thereto provided as follows:
“The status of the title to the property and the status and
of powers of the Regents of the University System of Geor
gia and of the Board of Regents are hereby restored to the
full extent as if said Act had never been enacted.”
It seems clear that the Legislature has manifested a posi
tive intent to restore the status of the Regents of the I Diver
sity System and of the Board of Regents to the same position
they held when the case of State of Georgia vs. Regents of
the University System of Georgia, supra, was deeded by the
Supreme Court of this State. In other words, after the passage
ot the Act of February I. 1946 the Regents of the University
System of Georgia again became a distinct corporate entity
governed by a Board of Regents. This would mean that rn
obligation incurred by the corporation or the Board ot n-’cns.
is not a debt of the State, and therefore is not affected by
constitutional limitations upon State indebtedness
There was another change in the law since the decition in
State of Georgia vs. Regents of the University System of Geor
gia. supra, which must be considered in order to determine
whether or not that decision should be operative under existing
law Oa August 7, 1945. when the Constitution of this State
was revised. 0 the following pertinent provisions were inserted
therein in relation to the Board of Regents. In Paragraph 1,
Section 4 of Article 8, the following provisions are stated:
“There shall be a Board of Regents of the University Sys
tem of Georgia, and the government, control and manage
ment of the University System of Georgia and all of its in
stitutions in said system shall be vested in said Board of Re
gents of the University System of Georgia. . . . The said
Board of Regents of the University System of Georgia shall
have the powers and duties as provided by law existing at
the time of the adoption of this Constitution, together with
such further powers and duties as may be hereafter pro
vided by law.”
Two questions are immediately posed by the above provisions
of the Constitution. First, does the fact that the government,
control and management of the University System and its In
stitutions are vested in a Board of Regents necessarily prevent
the said Board of Regents from operating this system through
the Regents of the University System of Georgia as a distinct
corporate entity as was done at the time of the decision in
State of Georgia vs. Regents of the University System of Geor
gia, et al?
My answer to this question Is that the constitutional pro
vision above referred to does not prevent the Regents from op
erating as a corporate entity as provided for by statutory en
actment. The mere fact that the control and management of
the University System are vested in the Board of Regents by
the Constitution does not in my opinion prevent or prohibit the
Regents from operating as a distinct corporate entity. This
point of law was passed on in
State of Georgia vs. Regents of the Univ. System of Geor
gia, supra,
where on p. 179 of the opinion the Court dealt specifically with
a statute which is similar to the constitutional provision now
under consideration. The Court quoted Section 48 of the Act
of 1931, and held as follows:
“By Section 48, as in case of the former trustees, it was
provided that ‘the government of the University of Georgia
and all of its branches ... is vested in a Board of Regents.
. . .’ It is thus seen that the Regents of the University Sys
tem of Georgia is a distinct corporate entity, though con
trolled by a Board of Regents which is designated as a de
partment of the State Government.”
From the above decision of the Supreme Court, 1 am es
the opinion that the eonstitutional provision does no more than
make the Board of Regents constitutional officers of this State,
and as such, the Board of Regents becomes a department of
the State government. However, in keeping with the decision
of the court, this does not mean that the corporate entity
is a department of State. It therefore follows in my opinion
that the decision of the Court clearly applies to the constitu
tional provision now under consideration, since this provision
is very similar to the statute (Section 32-113 of the Code of
Georgia) which the Court had under consideration. Since this
is true, it must necessarily follow that the corporation is fully
authorized to enter into any contract or issue revenue bonds
which, in its reasonable discretion, may be necessary for the
usefulness of the University System or any one of its institu
tions. This liability incurred in the corporate name is not a
liability of the State, but rather a separate legal obligation
of the corporation.
The second inquiry concerning the constitutional provision
which provides that the “Board of Regents . . . shall have the
powers and duties as provided by law existing at the time of
the adoption of this Constitution, together with such other
powers and duties as may hereafter be provided by law” does
not in my opinion mean that the provisions contained in the
Act of 1935 are permanently retained as powers and duties of
the Board of Regents. The framers of the Constitution were
careful to provide that the Board of Regents should not only
have the powers and duties existing at the time of the adop
tion of the Constitution, but that the said Board was to have
such further powers and duties which may be subsequently
provided by law. The Act of 1935 primarily deals with the
status of the Regents and the members of the Board of Re
gents over State property. As shown by the caption of the Act,
another purpose of this legislation was “to limit and restrict
the powers of the Regents of the University System and the
members of the Board of Regents.” On the other hand, it seems
that the Constitution desires to protect all powers and duties
of the Board of Regents and to be sure that this authority Is
not later taken away from the Board by subsequent legislation.
The Act of 1946 in repealing the Act of 1935, does not sub
stantially take away any previous authority which the Board
of Regents may have had, but on the contrary, this latter Act
by repealing the Act of 1935 with its limit and restriction on
the powers of the Board, seems, if anything, to enlarge the
scope of the powers and duties of the Board of Regents. This
is certainly in keeping with the latter part of the constitutional
provision which authorizes the Legislature to grant further
powers and duties to the Board of Regents.
The above construction of the Constitution seems to be in
line with the weight of authority on the subject. In Am. Jur.
at page 660, there are numerous cases cited on the follow
ing proposition:
“It is proper to assume that a Constitution Is Intended to
meet and be applied to new conditions and circumstances as
they may arise in the course of progress of the community.
The courta in this country have shown a determination to
give our written constitutions, by Interpretation, such flex
ibility as will bring them into accord with what the courts
believe to be public Interest ”
Applying the rule of flexibility to the stated provisions of
the Constitution above, it seems that we should give great
weight to the opinion of the Legislature in reference to defining
Just what matters are believed to be in the public interest. It
would be a rather harsh rule to rigidly apply the Constitution
to such an extent that the Legislature would be powerless to
promote public interest by future legislation, unless ol course
such legislation was in conflict with the Constitution.
From the above provisions ot law, 1 am of the opinion that
the Slate Boaru of Regents are constitutional officers ui this
State, and as such as subject to all Slate laws and regulations.
However, the Regents of the University System of Georgia is
a distinct corporate entity and is subject to the control of the
Board of Regents. The decision of the Supreme Court in Slate
of Georgia vs. liegents of the University System, supra, is now
in full force and effect under the laws existing al this lime.
It therefore follows that the revenue bonds issued by the Slate
Board us Regents in its corporate capacity are not obligations
of the State. Inese bonds do not create a debt against the
State. On the contrary, the corporate entity bad the authority
to enter into these contracts by virtue of Section 32-121 of the
Code of Georgia which granted to the Board of Regents tue
power “to exercise any authority usually granted to such cor
poration, necessary to its usefulness, which is not in conflict
with the Constitution aud laws of this State.”
You ask the further question us whether the power of the
Regents to issue seli-iiquidating bonds is unlimited. The Court
in State of Georgia vs. Regents of tue University System, supra,
seems to give a satisfactory answer to this inquiry. On page
218 us the opinion the Court holds:
“So long as the board does not exercise its power caprici
ously or aroitrarily, or so as to tuwart the purpose oi the
legislature in estaolisning a system ot university education,
the board itself must determine what is necessary tor the
usefulness of the system, and thus will govern the univeisity
of Georgia and its several branches. The powers granted are
broad and comprehensive, and, subject to the exercise of a
wise and proper discretion, the regents are untrammelled ex
cept by such restraints ol law as are directly expressed, or
necessarily implied. The legislature does not pretend to gov
ern the system, but has enuusted this responsibility to the
Board of Regents.”
“It is my definite opinion that the members oi the State
Board of Regents are public officials and are subject to all
limitations and restrictions of law to the same extent as other
public officials of this State. The members of the Board of Re
gents are constitutional officers. (See Far. 1 of Section 4 of
article 8 of the Constitution.)”
The Legislature has likewise declared the Board ol Regents
to constitute a department of the State government ot Georgia.
(See Code Section 32-101.) To the same effect, see
Slate ot Georgia vs. Regents ot the University System of
Georgia, 179 Ga. p. 210, at p. 218, where the Court held;
“It is thus seen that the Regents of the University System
of Georgia is a distinct corporate entity, though controlled by
a Board ot Regents which is designated as a department of
the State Government.”
Your second Inquiry Is whether the Board of Regents may
transfer to a corporation income received by the Board of Re
gents as provided by law. You state that this question is sup
plemental to tnose propounded in your letter ot October 10, 1946,
and I therefore assume that your question is directly related
to the issrance ot revenue certificates by the Board of Regents
payable out of certain specified income derived from particular
property.
In State of Georgia vs. Regents of University, supra, the
Court held that “the bonus no not constitute general obliga
tions, but are payuoie only out ox special funds.” The Court
in that case concluded by holding tnat me Regents as a cor
poration were authorized to pay sucn bonds out of the stipu
lated income, but mat * if the payment oi any of these bonds
from tne income as pledge« should by any chance cause such
a drain upon the resources of the anected institution mat ft
mignt oe in need of increased appropriations in order to func
tion properly as an educational unit, the State would still be
under no obligation to supply the dexicit, even though it might
desire to do so and actually do so.”
From the reasoning oi the Court advanced in the above
case, it seems that the Regents as a corporate entity has con
trol over the fees and income which have been specifically des
ignated for the payment of these certificates. It should be
pointed out in this connection that the Supreme Court dealing
with this question placed certain limitations and restrictions
on the authority of the Board. On page 218 of me above opin
ion the Court held;
“It is further true that the corporation, by and through
the Board of Regents, exercises any power usually granted
to like corporations, which is necessary to the usefulness of
the particular corporation and is not in conflict with the
laws of this State. So long as the board does not exercise its
powers capriciously or arbitrarily, or so as to thwart the
purpose ot the legislature in establishing a system of uni
versity education, the board itself must determine what is
necessary for the usefulness of the system, and thus will
govern the University of Georgia and its several branches.
The powers granted are broad and comprehensive, and, sub
ject to the exercise of a wise and proper discretion, the re
gents are untrammeled except by such restraints of law as
are directly expressed, or necessarily implied. The legisla
ture does not pretend to govern the system, but has entrusted
this responsibility to the Board of Regents.”
The Board of Regents would not be authorized to pledge
money appropriated by the Legislature or from some other
source, otner than the income from the property specifically
designated by the corporation for such purpose, to pay any in
debtedness created by the issuance of these revenue certificates.
All funds not directly collected by the Regents as a corporate
entity would be subject to the same provisions of law as gov
ern all other appropriations made by the General Assembly. All
appropriations made by the General Assembly should be made
to the Board of Regents who are constitutional and public of
ficials of this State. The Board of Regents as such public offi
cials would not be authorized to transfer such appropriated
funds to the Regents of the University System of Georgia to
liquidate any indebtedness resulting from the issuance of these
revenue certificates. These certificates or bonds are payable
only from the pledged income, and as stated by the Supreme
Court on page 222 of its opinion in State of Georgia vs. Re
gents f the University System, supra,
“Regardless of the stipulations made, the State of Georgia
could never be called upon to pay these bonds.”
1 am therefore of the opinion in keeping with the above
decision that the Board of Regents would not be authorized to
transfer income received by the Board of Regents to the cor
poration in question for the purpose of liquidating the rev
enue bonds previously issued by that corporation.”
Thursday, November 14,1946