Could North Carolina’s Department of Cultural Resources pledge securities transferred by the Battleship Commission as collateral for the loan described in this 1995 opinion?

Plain-English summary

This 1995 opinion addresses a particular proposed pledge of securities by the Department of Cultural Resources. The USS North Carolina Battleship Commission had transferred the securities to the Department. The AG said the transfer was valid and that the Department had authority to pledge them as collateral for the loan described in the opinion.

The opinion relies on N.C.G.S. § 121-11, which authorizes the Department to assist a corporation in acquiring, maintaining, preserving, restoring or developing historic property in North Carolina. It concludes that this pledge was assistance within that statute. The AG also said the Secretary was authorized to execute and deliver the Pledge Agreement. Once executed and delivered, the agreement would create a first and prior pledge, security interest and lien in favor of the Bank and would be a binding Department obligation.

The opinion qualifies enforceability: the Bank's rights may be subject to judicial discretion under general principles of equity and valid exercises of governmental constitutional, police and taxing powers. Its statements about authority and enforceability concern the identified securities, loan and agreement. It does not decide whether another form of financial support would be authorized.

Currency note

This is a 1995 opinion about a specified transaction. Check current statutes, the proposed agreement and any later authority before applying it to a new pledge.

Background and statutory framework

The opinion identifies the Department as a principal executive department under N.C.G.S. § 143B-49 et seq. and the Battleship Commission as a commission of that Department under N.C.G.S. § 143B-73 et seq. It says the Commission's securities were validly transferred and that the Department could pledge them as collateral for the Loan. The excerpt held in this record begins with the AG's numbered conclusions; its opening request and recitals are absent from the stored text.

Common questions

Does this opinion approve grants or direct contributions under § 121-11?

It addresses the pledge of transferred securities as collateral for this Loan. The opinion does not analyze grants or direct contributions.

When would the Bank's security interest arise?

The AG said the Pledge Agreement would create a first and prior pledge, security interest and lien when the Secretary executed it and delivered it to the Bank. The opinion also states the qualifications on enforceability described above.

Did the AG report litigation that could materially affect the agreement?

The opinion states that the authors knew of no pending or threatened proceeding of the kind described in its litigation paragraph. That statement concerns the transaction at the time of the opinion.

Citations

• N.C.G.S. § 121-11 (assistance for historic property)
• N.C.G.S. § 143B-49 et seq. (Department authority)
• N.C.G.S. § 143B-73 et seq. (Battleship Commission)

Source

• Landing page: https://ncdoj.gov/opinions/department-of-cultural-resources-u-s-s-north-carolina-battleship-commission/

Original opinion text

Best-effort transcription from the NCDOJ landing page; the opening paragraphs (header, request, and recitals) were not in the scraped capture, so the text below begins with the numbered conclusions. The linked landing page is authoritative.

• The Department is a duly-constituted principal executive department of the State of North Carolina, having all of the powers granted to it pursuant to N.C.G.S. § 143B-49, et seq. and other applicable law.
• The Commission is a duly-constituted commission of the Department, having all of the powers granted to it pursuant to N.C.G.S. § 143B-73, et seq. and other applicable law.
• In accordance with N.C.G.S. § 121-11, the Department is authorized to provide assistance to any corporation in connection with the acquisition, maintenance, preservation, restoration, or development of historic property in the State of North Carolina.
• The Securities have been validly transferred from the Commission to the Department, and the Department has the power and authority to pledge the same and to create a security interest in the Securities as collateral for the Loan.
• The pledge by the Department of the Securities as collateral for the Loan constitutes the provision of assistance by the Department, within the meaning and scope of N.C.G.S. § 121-11.
• The Secretary of the Department has been duly authorized by all necessary actions and proceedings to execute and deliver the Pledge Agreement to the Bank, and to take all such other actions as may be necessary to perform the terms thereof.
• The Pledge Agreement, when executed by the Secretary of the Department and delivered to the Bank, will create in the Securities a first and prior pledge of, security interest in and lien upon the Securities and any account in which the same are held, in favor of the Bank, which Pledge Agreement shall constitute the valid, legal and binding obligation of the Department enforceable in accordance with its terms.
• There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body known to be pending or threatened against or affecting the Department or the Commission, nor to the best of the undersigned's knowledge, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated by the Pledge Agreement or which in any way would adversely affect the validity or enforceability of the Pledge Agreement or any agreement or instrument to which the Department or the Commission is a party. There are no actions, suits or proceedings pending or, to the knowledge of the undersigned, threatened against or affecting the Department or the Commission in any court or before any governmental commission, board or authority which, if adversely determined, will have a material adverse effect on the ability of the Department to perform its obligations under the Pledge Agreement.

It is understood that the rights of the Bank and the enforceability of the Pledge Agreement may be subject to (a) the exercise of judicial discretion in accordance with general principles of equity, and (b) the valid exercise of the constitutional powers of the United States of America and of the sovereign police and taxing powers of any governmental unit having jurisdiction.

Charles J. Murray, Special Deputy Attorney General

Ann Reed, Senior Deputy Attorney General