Hunt v. McNair

PETITIONER: Hunt
RESPONDENT: McNair
LOCATION: Allegheny County District Court

DOCKET NO.: 71-1523
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: South Carolina Supreme Court

CITATION: 413 US 734 (1973)
ARGUED: Feb 21, 1973
DECIDED: Jun 25, 1973

ADVOCATES:
Huger Sinkler - for appellees
Robert McCormick Figg, Jr. - for appellant
Robert McCormick Figg, Jr. -

Facts of the case

Question

Media for Hunt v. McNair

Audio Transcription for Oral Argument - February 21, 1973 in Hunt v. McNair

Warren E. Burger:

71-1523, Hunt against McNair.

Robert McCormick Figg, Jr.:

Mr. Chief Justice and may it please the Court.

Warren E. Burger:

Would you just suspend for a moment until we get clear, counsel.

Robert McCormick Figg, Jr.:

Excuse me, sir.

Warren E. Burger:

That’s fine, alright.

It takes a moment or two to clear the decks.

You may proceed now Mr. Figg.

Robert McCormick Figg, Jr.:

This is an appeal from the judgment of the Supreme Court of South Carolina which upheld against the challenge under the First Amendment of the Constitution of the United States.

A transaction between the State of South Carolina and the Baptist College of Charleston wherein made under a 1969 statute entitled the Educational Facilities Act.

The transaction on behalf of the State was to be conducted by its Educational Facilities Authority which this Act provided should be State’s Budget and Control Board.

That Board is composed of the Governor, the State Treasurer, the Comptroller General, the legislative and two legislative chairmen ex-official, it’s the core of the State Government.

It’s the governing board of the State’s Departments of Finance, Property and Personnel and the Act gives it these duties which I shall refer to “as an incident of its functions in connection with the public finances of the State.”

The Baptist College of Charleston is an activity of the South Carolina Baptist Convention and it’s chartered to “operate a Baptist Liberal Arts College for educational purposes.”

It manages the affairs of the college and trust for the South Carolina Baptist Convention and the courts below have found that it is a religious activity and that the question is properly raised in its case under the First Amendment even though they didn’t agree with that view of the decision.

Under this transaction, the -- what is happening here is that the State under its own Constitution cannot give a grant to a religious institution to construct a building or a facility even though it’s of a neutral purpose because its own Constitution prohibits direct or indirect aide to a sectarian institution and our code has said that that means that no state funds can be given to a religious institution.

It undertakes therefore to authorize the Budget and Control Board which as I say is the core of the State Government to issue South Carolina State Revenue Bonds which would give the purchases immunity from federal income taxation on the interest and thereby benefit the institution.

To that extent, it enables, in other words the borrowing on behalf of the college to be at a lower rate of interest and would otherwise supply and it uses in order to accomplish this, the format of legislation under which was commonly known as self-liquidating project will authorize back in 1933 and 1934 and by other Act under which electrical systems and water works and what not were financed by out of the earnings of an operation and out of the profits, the fees that were derived from the consumers.

Warren E. Burger:

Has the State ever defaulted on a revenue bond to the extent that you could call it a default?

Robert McCormick Figg, Jr.:

In this case?

Warren E. Burger:

No, no.

In the experience of the State, do you -- if you happen to know?

Robert McCormick Figg, Jr.:

If our State has ever defaulted?

Warren E. Burger:

Yes.

Robert McCormick Figg, Jr.:

On the contrary, our Supreme Court has made a statement in one case that in this enlightened age the State will not allow one of its revenue bond issues to go into default even though it’s not technically liable on them and we’ve never had a default on our revenue bond issue of the electric or the water works or the others.

Now, the State did have one revenue bond issued and what they call the South Carolina Public Service Authority, the Santee-Cooper Hydroelectric Project but those bonds have been paid over the operation of an electrical system and the charges to consumers.

Now, this is a little different though from the usual self-liquidating projects because here, they do not let the project issued the bonds and then pay off out of its operations because the project is the college and the college issuing revenue bonds would not be able to give the purchases of the tax immunity which the State can give.

So, what the State does is to take a conveyance from the Baptist College of a part of its campus, then it leases its back at an agreed rent, leases that campus back at an agreed rental and that rental is of course calculated to pay off the principal and interest of the bonds which the State has issued.

Now, the Act provides that this Authority, the Budget and Control Board, that is the State Government’s core, issue and sell to the public State of South Carolina general revenue bonds, payable principal and interest only from the rent to be received by the Board under the lease.

And those proceeds, as I said, are to be spent in a general program because it’s not just for religious colleges, it’s for all non-public colleges in the State and for religiously neutral facilities, these building and facilities.

But in order to make the bond saleable, the State Board as empowered by this Act to fix and revise from time to time and charge and collect fees and charges for the use of and for the services furnished by the project.