On June 28, 2023, the Indiana Supreme Court clarified the meaning of the word “invest” in the context of a contract between a public school corporation and a private company regarding the development and operation of a wind turbine project. The contract obligated the school to make payments over a 20-year period totaling nearly $1.6 million. In exchange, the school would have access to the project for educational purposes and receive a share of the net operating revenue. The project was completed, but it never realized any such revenue. The school’s refusal to make any contract payments led to a lawsuit.
Indiana law prohibits public entities, such as school corporations, from making investments other than those expressly authorized in the statute. A wind turbine project is not a listed exception. Because unauthorized investments are unenforceable, the central issue in the case was whether this venture constituted an investment or a valid private contract.
The trial court held the contract was illegal. But in the developer’s appeal of that ruling, a divided panel of the Court of Appeals reversed, finding it was a valid contract.
The Supreme Court accepted the school’s petition for discretionary review. In a unanimous decision, the court noted that the school had committed money in the hope of obtaining a financial return. Applying the plain, ordinary and usual meaning of the word “invest”, the justices ruled that this venture was an investment. And since it is not one that a public body is authorized to make, the contract was held to be unenforceable.
Parr Richey Senior Counsel Kent Frandsen, who chairs the Indiana School Boards Association amicus committee, submitted a brief in support of the school’s appeal to the Supreme Court. In its decision, the court stated ISBA’s brief was helpful in deciding the case.