Winkler v. West Virginia School Building Authority
West Virginia Supreme Court of Appeals
434 S.E.2d 420 (1993)
Facts
Pursuant to a West Virginia statute (the statute), the West Virginia School Building Authority (SBA) (defendant) proposed to issue over $338 million in revenue bonds. Under the statute, the SBA would create a building capital-improvement fund (the fund) in the state treasury, which the SBA was authorized to pledge to liquidate the bonds. Annually, the state legislature could appropriate general tax revenues to the fund to pay debt service on the bonds, but a disclaimer on the face of the bonds would read that the state legislature was “not legally obligated” to make an annual appropriation. Similarly, the trust agreement between the SBA and the bondholders’ trustee, the United National Bank (the bank), indicated that the bonds were secured by a pledge of “revenues” in the fund, with revenues defined to include “any moneys appropriated” by the state legislature. The statute also mandated the creation of a sinking fund in the state treasurer’s office to liquidate the bonds. Two citizens and taxpayers (plaintiffs) sued the SBA and the bank, seeking a declaratory judgment that the revenue bonds violated the state constitution’s restriction on state debt. The trial court invalidated the bonds. The SBA appealed, arguing that no state indebtedness had been created because general appropriations to pay the revenue bonds were not required.
Rule of Law
Issue
Holding and Reasoning (Miller, J.)
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