Wilson v. City of High Point

76 S.E.2d 546 (1953)

238 N.C. 14

WILSON v. CITY OF HIGH POINT et al.

No. 676.

Supreme Court of North Carolina.

June 12, 1953.

*549 Schoch & Schoch, Haworth, Haworth & Walker, Knox Walker and W. B. Byerly, Jr., High Point, for plaintiff, appellant.

Horace Haworth, G. H. Jones, High Point, and T. C. Hoyle, Sr., Greensboro, for defendant, appellees.

PARKER, Justice.

The plaintiff as a taxpayer of the City has the right to bring this action to test the authority of the City to issue the proposed bonds. Williamson v. City of High Point, 213 N.C. 96, 195 S.E. 90; Nash v. Town of Tarboro, 227 N.C. 283, 42 S.E.2d 209.

This question is presented for our decision. Is the issuance of bonds by the City to pay the total cost of the erection of a building in the City for the joint use of the City and the Countythe City to use said building for its Municipal Court, its Police Department and other governmental functions, and the County to use said building for holding terms of the Superior Court, High Point Division, and other governmental functions necessary or proper to be performed in the Citya necessary expense of the City within the meaning of Art. VII, sec. 7 of our Constitution, when the County shall be required eventually to purchase the building from the City, according to a contract between them? The answer is No.

Art. VII, sec. 7 of our Constitution reads: "No debt or loan except by a majority of voters.No county, city, town, or other municipal corporation shall contract any debt, pledge its faith or loan its credit, nor shall any tax be levied or collected by *550 any officers of the same except for the necessary expenses thereof, unless approved by a majority of those who shall vote thereon in any election held for such purpose."

The City proposes to issue bonds to pay for the total initial cost of the building as a necessary expense of the City without a vote of the people thereon. The exercise by a municipal corporation of the power to pledge its credit is an incipient step in the exercise of the power of taxation, and authority given to a municipality to issue bonds necessarily involves the power to levy taxes for the payment of interest on said bonds and the payment of said bonds at maturity. Bennett v. Board of Com'rs, 173 N. C. 625, 92 S.E. 603; Com'rs of Johnston County v. Lacy, 174 N.C. 141, 93 S.E. 482, 2 A.L.R. 726; Brown v. Board of Com'rs, 223 N.C. 744, 28 S.E.2d 104.

Section 3 of H.B.497, Ch. 353, Session Laws of the 1953 General Assembly states that the erection of the building provided for in the Act is necessary for the proper operation of the governmental functions of the County and the City, and will be beneficial to both. The legislative construction of the Constitution is entitled to great weight, but it is not binding upon the Court. Our decisions uniformly hold that what are necessary expenses for a municipal corporation for which it may contract a debt, pledge its faith or loan its credit and levy a tax without an approving vote of a majority of those who shall vote thereon in an election held for such purpose, is a question for the Court. Person v. Board of State Tax Com'rs (Watts), 184 N.C. 499, 115 S.E. 336; Palmer v. Haywood County, 212 N.C. 284, 193 S.E. 668, 113 A.L.R. 1195; Sing v. City of Charlotte, 213 N.C. 60, 195 S.E. 271; Purser v. Ledbetter, 227 N.C. 1, 40 S.E.2d 702; Green v. Kitchin, 229 N.C. 450, 50 S.E.2d 545.

What is such "a necessary expense" has been tersely and lucidly stated for the Court by Ervin, J., in Green v. Kitchin, supra, 229 N.C. at page 457, 50 S.E.2d at page 550. "This Court has uniformly held that where the purpose for which a proposed expense is to be incurred by a municipality is the maintenance of public peace or administration of justice, or partakes of a governmental nature, or purports to be an exercise by the municipality of a portion of the State's delegated sovereignty, the expense is a necessary expense within the Constitution, and may be incurred without a vote of the people. Sing v. City of Charlotte, 213 N.C. 60, 195 S.E. 271; Palmer v. Haywood County, 212 N.C. 284, 193 S.E. 668, 113 A.L.R. 1195; Martin v. City of Raleigh, 208 N.C. 369, 180 S.E. 786."

In Henderson v. City of Wilmington, 191 N.C. 269, 132 S.E. 25, the question for decision was whether the purchase of wharf and terminal facilities was a necessary expense of the City of Wilmington. At page 278 of 191 N.C., at page 30 of 132 S.E. the Court said: "The cases declaring certain expenses to have been `necessary' refer to some phase of municipal government. This court, so far as we are advised, has given no decision to the contrary." At page 277 of 191 N.C., at page 29 of 132 S.E. the Court further said: "In defining `necessary expense,' we derive practically no aid from the cases decided in other states. We have examined a large number of such cases apparently related to the subject, and in each one we have found some fact or feature or constitutional or statutory provision antagonistic to, or at variance with, the section under consideration. We must rely upon our own decisions."

While this Court has said in Henderson v. City of Wilmington, supra, in defining necessary expenses "we must rely upon our own decisions", it may not be inappropriate to quote what is said in 51 Am.Jur., Taxation, Sec. 402: "It is clear that one taxing district, whether State, County, Municipality, or District established for the particular purpose, cannot be taxed for the benefit of another district. * * *. A municipal corporation cannot be compelled to turn over a portion of its funds to the county in which it is situated in order to pay the expense of a county function."

Nor what is said in 61 C.J., Taxation, Sec. 66: "The purpose to be accomplished by a tax must pertain to the district taxed, as the constitutional requirement of uniformity in taxation forbids the imposition of a tax on one municipality or part of the *551 State for the purpose of benefiting or raising money for another." In support of this statement C. J. quotes the following North Carolina cases: Com'rs of Johnston County v. Lacy, 174 N.C. 141, 93 S.E. 482, 2 A.L.R. 726; Keith v. Lockhart, 171 N.C. 451, 88 S.E. 640; Faison v. Board of Com'rs, 171 N.C. 411, 88 S.E. 761.

In Campbell County v. City of Newport, 174 Ky. 712, 193 S.W. 1, L.R.A.1917D, 791, the decision is correctly summarized in the L.R.A. headnote: "The attempt by the legislature to require a municipal corporation to turn over a portion of its taxes to the county in which it is situated to assist in the support of a juvenile court, for which the county has already levied a tax on all the property within its limits, including that within the municipality, is invalid as violating the principle that taxation and representation must go together, that one municipal subdivision cannot levy a tax upon property located in another municipal subdivision, and also the constitutional provision that taxes must be uniform."

A municipality, a creature of the State, has the "powers prescribed by statute, and those necessarily implied by law, and no other." G.S. § 160-1. Therefore, a municipality cannot expend tax revenue without the explicit or implicit authority of a constitutional statute. Horner v. Chamber of Commerce, 231 N.C. 440, 57 S.E.2d 789.

The defendant appellees contend in their brief that the case of Greensboro-High Point Airport Authority v. Johnson, 226 N.C. 1, 36 S.E.2d 803 supports their position that the City can issue bonds to pay the total initial cost of this building, because the expenditure will be primarily for the benefit of the City. The facts are entirely different. In that case it was held that Guilford County and the Cities of Greensboro and High Point could lawfully join in the construction, maintenance and operation of an airport if each of them is benefited. But it was stipulated in the agreed facts that the appropriations made by the municipalities were out of funds in their hands not derived from ad valorem taxes, but mainly from the sale of property. In this case, 226 N.C. at page 8, 36 S.E.2d at page 808 this Court said: "No question of credit or taxation in violation of Article VII, Section 7" (of our Constitution) "is involved, and the inhibition constituting the ratio decidendi in Sing v. City of Charlotte, supra, does not apply."

The defendant appellees argue in their brief that Callam v. City of Saginaw, 50 Mich. 7, 14 N.W. 677, 679, is in point in support of their position. The Michigan Legislature enacted a statute authorizing the City of Saginaw to take upon itself alone the entire expense of building a courthouse in the City for Saginaw County. A taxpayer filed his bill to restrain the issue of bonds to pay for said building. In that case the Michigan Court said: "* * the constitution, which in some cases requires a vote from the electors of the counties on financial questions, contains no such requirement as to cities, which usually act by their local legislatures. * * * Under this statute, while the approval of the taxpayers is a condition precedent it is nothing more. The council can do as they please about making an arrangement with the county. The legislature might have given the council power to act without the approval of any other persons." According to the language of the Court the Michigan Constitution had no provision similar to art. VII, sec. 7 of our Constitution.

The issuance of bonds by the City to pay for the erection of a building for the operation of its Municipal Court for the housing of its Police Department, providing space for its City Jail and for the performance of other governmental functions is undoubtedly "a necessary expense" of the City within the meaning of art. VII, sec. 7 of our Constitution. But the City proposes to go further and issue its bonds, the interest and principal of which must be paid by ad valorem taxation of property within the City, to erect a building for the City and the County to use for their governmental functions respectively.

G.S. § 153-77, subsec. (b) provides that counties may issue bonds and levy taxes for the "Erection and purchase of courthouse and jails". That is "a necessary expense" for the County. Jackson v. Board of Com'rs, 171 N.C. 379, 88 S.E. 521; Castevens v. Stanly County, 209 N.C. 75, *552 183 S.E. 3. For the City to issue bonds, thereby contracting a debt, pledging its faith and lending its credit, and as a necessary consequence being required to levy taxes, to pay the entire cost for the erection of a building, part of which shall be used by the County as a courthouse for the Superior Court of the County, High Point Division, for providing space for the Office of the Clerk of the Superior Court of the County, for the housing of the Sheriff's Department, the Tax Supervisor's Department of the County, for the safekeeping of county prisoners and for other governmental functions of the County proper to be performed in the City touches no phase of municipal government. All those matters are governmental functions of the County, not of the City, and the taxpayers of the City with all the other taxpayers of the County are taxed for the performance by the County of such governmental functions of its own. To tax the citizens of High Point again to pay for the performance of governmental functions of the County would mean that taxation in the County would not be uniform. Taxation that is not uniform is necessarily unequal. It would mean taxing property in the City twice for the same purpose. Lack of uniformity in taxation is unjust, and opposed to the principles of equality and fairness upon which a righteous scheme of taxation depends. It is not "a necessary expense" for the City to provide such a building for the County.

It is with us well settled law that for other than necessary expenses a municipality cannot levy a tax either within or in excess of the constitutional limitations except by a vote of the people under appropriate legislative authority. Sing v. City of Charlotte, supra, and cases cited; Greensboro-High Point Airport Authority v. Johnson, supra.

The defendant appellees state in their brief the "Constitution art. V, sec. 4 authorizes a city to issue bonds for necessary expenses without a vote of the people, if the amount issued does not exceed two-thirds of the amount of bonds retired during the preceding fiscal year." As we have stated above, the proposed issue of bonds is not a necessary expense of the City.

It is an elementary principle of law that an Act of the General Assembly will not be held unconstitutional, unless it is clearly proven so. Nash v. Town of Tarboro, supra, and the numerous cases therein cited. We are mindful of the fact that every presumption is in favor of the constitutionality of a statute, and all doubts must be resolved in support of it. However, when it is clear a statute transgresses the authority vested in the legislature by the Constitution, it is a duty of the Court to declare the act unconstitutional. Glenn v. Board of Education, 210 N.C. 525, 187 S.E. 781; Board of Managers of James Walker Memorial Hospital v. City of Wilmington, 237 N.C. 179, 74 S.E.2d 749.

The plaintiff contends that H.B. 497, Ch. 353 enacted at the 1953 Session of the General Assembly is unconstitutional. We have carefully studied the question before us in the light of the decisions and other authorities herein cited, and we are of the opinion that this part of Section 3 of the Act which reads "and the City of High Point when authorized by its city council may issue bonds to provide for the erection of said building in accordance with the Municipal Finance Act of the State of North Carolina" is in clear violation of art. VII, sec. 7 of our Constitution, as it would permit the City not for the necessary expenses thereof to contract a debt, pledge its faith, loan its credit and levy a tax, without the approval of a majority of the voters of the City in an election held for such purpose. And this is true, even though the County has entered into a contract with the City to pay the City eventually in full for said building.

The agreed facts do not present for our consideration a case where a city has funds already on hand, and the proposed expenditure for a public purpose will impose no further liability on the municipality, nor involve the imposition of further taxation upon it. Adams v. City of Durham, 189 N.C. 232, 126 S.E. 611; Nash v. City of Monroe, 198 N.C. 306, 151 S.E. 634; Goswick v. City of Durham, 211 N.C. 687, 191 S.E. 728; Greensboro-High Point Airport Authority v. Johnson, supra.

*553 Nor do the agreed facts present for decision a case where the Legislature has enacted a statute that the City may issue bonds for the construction of a building to be jointly used by the City and the County, provided it was approved by a majority of those who voted thereon, in an election held for such purpose, and the action of the Legislature has been sanctioned by a majority vote of the people of the City, who would be primarily liable for the bonds, and necessarily affected by the tax. See Briggs v. City of Raleigh, 195 N.C. 223, 141 S.E. 597; and Turner v. City of Reidsville, 224 N.C. 42, 29 S.E.2d 211, where the people of Reidsville voted to issue bonds and levy a tax for a municipal airport.

We have decided this case upon the agreed facts presented to us. To discuss other questions argued in the defendant appellees' brief would be to render an advisory opinion, which we do not do.

However beneficial it may be to have a joint building for the use of the City and the County in High Point in the performance of their respective governmental functions there, the cost of the building, if constructed, must be paid in accordance with the provisions of our Constitution and laws.

The judgment of the Court below is reversed, and it is ordered that a permanent injunction issue to restrain the City from issuing the proposed bonds.

Reversed.