The state of Ohio created a building authority to which it transferred for a period of twenty-five years certain hospitals and public land. In return the authority promised to repair the hospitals and to construct a number of new buildings. Bonds to the amount of $7,500,000 were issued by the authority on a resolution pledging the income to be derived from the property pursuant to a twenty-three year rent and bond retirement agreement with the department of welfare. The department promised to charge its patients enough to meet these obligations, and to make payment possible a statute was passed allowing the department to retain the money collected from pay patients instead of turning it in as state revenues. The bonds expressly provided that payment was to be fulfilled by the faith and credit of the authority and was not to be a charge against the general credit of the state, which had a constitutional provision limiting state indebtedness to $750,000. In case of default, a receiver could be appointed to collect the rent. An action in mandamus was brought against the secretary of state to compel him to attest the bonds. On demurrer, it was held that bonds issued on the basis of such a resolution and contract with the department of welfare constitute an indebtedness of the state. Writ denied. State ex rel. Public Institutional Building Authority v. Griffith, 135 Ohio St. 604, 22 N. E. (2d) 200 (1939).
James W. Deer,
MUNICIPAL CORPORATIONS - DEBT LIMITATIONS - VALIDITY OF REVENUE FINANCING BONDS,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol38/iss8/21