May 23, 1995
Capt. D. R. Scheu (USN, Ret) Director, NC Battleship Commission
P.O. Box 480 Wilmington, NC 28402
RE: Advisory Opinion; Department of Cultural Resources/U.S.S. North Carolina Battleship Commission; N.C.G.S. §§ 143B-49, 143B-73, 121-11
Dear Capt. Scheu:
The undersigned has acted as counsel to the North Carolina Department of Cultural Resources (the "Department") and the U.S.S. North Carolina Battleship Commission (the "Commission") in connection with a loan from NationsBank, N.A. (Carolinas) (the "Bank") to Friends of the Battleship North Carolina, Inc., a non-profit corporation organized and existing under the laws of the State of North Carolina (the "Loan"), for the purpose of paying a portion of the cost of refurbishing and making repairs to the deck of the U.S.S. North Carolina Battleship Memorial. The Loan, which is in the principal amount of $200,000, is to be secured by certain marketable securities (the "Securities") that have been owned by the Commission and held in its reserve fund, known as the "Battleship Fund." In my capacity as counsel to the Department and the Commission, I have reviewed a draft of a "Pledge and Assignment Agreement" (the "Pledge Agreement"), and such other documents, records and papers as I deem to be relevant and necessary as the basis for the opinions set forth below. Based upon the foregoing, it is my opinion that:
- 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