Smith v. County of Mecklenburg

Annotate this Case

187 S.E.2d 67 (1972)

280 N.C. 497

Arthur SMITH and David P. Reule, On Behalf of Themselves and On Behalf of All Others Similarly Situated v. The COUNTY OF MECKLENBURG et al.

No. 90.

Supreme Court of North Carolina.

March 15, 1972.

*72 Bailey & Davis by Gary A. Davis, Charlotte, for plaintiff appellees.

Ruff, Perry, Bond, Cobb, Wade & McNair by James O. Cobb, Charlotte, for the County of Mecklenburg and Members of the Mecklenburg County Board of Elections, defendant appellants.

Ervin, Horack & McCartha by William E. Underwood, Jr., Charlotte, for Members of the Mecklenburg County Board of Alcoholic Control, defendant appellants.

BOBBITT, Chief Justice.

Plaintiffs' status is solely that of "citizens, taxpayers and qualified voters of the County of Mecklenburg." In support of their motion to dismiss, appellants contended there was no evidence that implementation of the Mecklenburg Act would cause plaintiffs to suffer personal, direct and irreparable injury; hence, they contended, plaintiffs had no standing to test the constitutionality thereof in an action to enjoin its implementation. They cite decisions of this Court, including Fox v. Board of Commissioners of Durham, 244 N.C. 497, 500-501, 94 S.E.2d 482, 485-486 (1956), and Nicholson v. State Education Assistance Authority, 275 N.C. 439, 447-448, 168 S.E.2d 401, 405-407 (1969), as authority for their position. However, although contending the denial of their motion to dismiss was erroneous, appellants do not now press that contention. On the contrary, they urge this Court to pass upon the constitutionality of the Mecklenburg Act notwithstanding *73 defects, if any, in respect of plaintiffs' standing to maintain the action.

The public interest impels us to decide without further delay whether the Mecklenburg Act is unconstitutional in whole or in part and to decide the legal significance, if any, of the election held on November 5, 1971. Hence, in accordance with appellants' present position, we have elected not to consider questions relating to plaintiffs' standing to maintain the action.

The Mecklenburg Act was ratified on June 21, 1971, when Article II, Section 29, of the Constitution of North Carolina, in pertinent part, provided: "The General Assembly shall not pass any local, private, or special act or resolution . . . regulating labor, trade, mining, or manufacturing;. . . . Any local, private or special act or resolution passed in violation of the provisions of this section shall be void. The General Assembly shall have power to pass general laws regulating matters set out in this section."

The revised Constitution of North Carolina was adopted by a vote of the people in the general election held November 3, 1970, and became effective July 1, 1971. Article II, Section 24, in pertinent part, provides: "(1) Prohibited subjects. The General Assembly shall not enact any local, private, or special act or resolution: . . . (j) Regulating labor, trade, mining, or manufacturing;. . . . (4) General laws. The General Assembly may enact general laws regulating the matters set out in this Section."

The quoted provisions of former Article II, Section 29, and of present Article II, Section 24, are identical in all material respects. Decisions cited below which refer directly to former Article II, Section 29, apply equally to present Article II, Section 24.

We hold, in accordance with plaintiff's contention, that the Mecklenburg Act is a local act regulating trade and therefore void as violative of former Article II, Section 29, and of present Article II, Section 24, of the Constitution of North Carolina.

We think it clear that the Mecklenburg Act is a local act when tested by criteria established by our decisions. Reference is made to a comprehensive and scholarly article, "Local Legislation in the North Carolina General Assembly," by Joseph S. Ferrell, 45 N.C.L.Rev. 340-423 (1967), in which the author discusses the decisions of this Court relating to Article II, Section 29, in the three periods characterized as follows: "1917-1938, the period of strict construction; 1939-1961, the period of reappraisal; and 1961 to the present, the period of McIntyre v. Clarkson." Ferrell, op. cit. at 361.

"A statute is either `general' or `local'; there is no middle ground." High Point Surplus Co. v. Pleasants, Sheriff, 264 N.C. 650, 656, 142 S.E.2d 697, 702 (1965). Prior to McIntyre v. Clarkson, 254 N.C. 510, 119 S.E.2d 888 (1961), "local" was defined arbitrarily in terms of geography: if an act applied to fewer than fifty counties, it was local. In re Harris, 183 N.C. 633, 112 S.E. 425 (1922). Under that rule, the Mecklenburg Act would have been local because it applies solely to Mecklenburg County. In McIntyre, however, this Court amplified the definition of a "local act" to mean: an act applying to fewer than all counties, in which the affected counties do not rationally differ from the excepted counties in relation to the purpose of the act.

Under the McIntyre rule, which was approved and applied in Treasure City of Fayetteville, Inc. v. Clark, 261 N.C. 130, 134 S.E.2d 97 (1964), and in High Point Surplus Co. v. Pleasants, Sheriff, supra, the Mecklenburg Act is unquestionably a local act.

Restaurants, hotels, motels, and "social establishments" are to be found in most *74 counties of the State; municipally-operated auditoriums and convention or meeting centers are to be found in other counties than Mecklenburg. People who favor mixed beverages by the drink are to be found throughout the State. A majority of the people in many counties have voted in favor of opening ABC stores in their counties, just as have the citizens of Mecklenburg County. These people stand on the same plane with those in Mecklenburg County. The same General Assembly that enacted the Mecklenburg Act also enacted a statute (Chapter 279, Session Laws of 1971) giving the people of Moore County the same right, upon petition signed by 15% of the registered voters of that county; but no other citizens of the State other than those of Mecklenburg and Moore Counties have been given this right.

The Mecklenburg Act recites, in its statement of purpose in section 2, that "control of alcoholic beverages is not susceptible to a uniform system of control throughout all counties of the State" and that "[i]n particular, Mecklenburg County. . . has the State's largest population" and "[t]he City of Charlotte serves as a major trading area for the 2 million people in a 75-mile radius." We are unable to perceive in what way these features differentiate Mecklenburg County from other North Carolina counties with reference to the right of the citizens thereof to decide whether their county should have mixed beverages by the drink. We note that section 2 of the similar Moore Act, while also stating that "control of alcoholic beverages is not susceptible to a uniform system of control throughout all counties of the State," makes no mention of Moore County's unique features or of features it shares with Mecklenburg County. We further note that subsequent to the enactment of the Mecklenburg Act and the Moore Act, the same General Assembly enacted a comprehensive statute (Chapter 872, Session Laws of 1971, comprising G.S. Chapter 18A-1 to 18A-58, which superseded former G.S. Chapter 18) which, in G.S. § 18A-1, declares its purpose as follows: "to establish a uniform system of control over the sale, purchase, transportation, manufacture, and possession of intoxicating liquors in North Carolina, and to provide administrative procedures to insure, as far as possible, the proper administration of this Chapter under a uniform system throughout the State." (Our italics.)

Our summary of its provisions discloses that the Mecklenburg Act regulates with particularity the manner in which a licensed restaurateur may purchase and sell alcoholic beverages. Moreover, such purchase and sale constitute trade within the meaning of former Article II, Section 29, and present Article II, Section 24.

"Trade within the meaning of Article II, Section 29 of our Constitution is a business venture for profit and includes any employment or business embarked in for gain or profit." High Point Surplus Co. v. Pleasants, Sheriff, supra, 264 N.C. at 655-656, 142 S.E.2d at 702. Accord: State v. Dixon, 215 N.C. 161, 164, 1 S.E.2d 521, 522 (1939); State ex rel. Taylor v. Carolina Racing Asso., 241 N.C. 80, 84 S.E.2d 390 (1954); Orange Speedway, Inc. v. Clayton, 247 N.C. 528, 533, 101 S.E.2d 406, 410 (1958); Treasure City of Fayetteville, Inc. v. Clark, supra, 261 N.C. at 133, 134 S.E.2d at 99; State v. Smith, 265 N.C. 173, 177, 143 S.E.2d 293, 296-297 (1965). In each of these cases, a local act was held to be an act regulating trade and therefore void as violative of former Article II, Section 29.

The local act involved in State v. Dixon, supra, provided for the licensing and regulation of real estate brokers and salesmen; that involved in State ex rel. Taylor v. Carolina Racing Asso., supra, provided for the operation of a pari-mutuel dog racing track for private profit by the licensee of a racing commission; that involved in Orange Speedway, Inc. v. Clayton, supra, required a promoter of motorcycle or motor *75 vehicle races for profit to obtain insurance coverage for drivers and spectators and also banned races on Sundays and evenings; that involved in Treasure City of Fayetteville, Inc. v. Clark, supra, provided that "[a]ny person, firm or corporation who engages on Sunday in the business of selling, or sells or offers for sale on such day [certain articles of merchandise], shall be guilty of a misdemeanor"; that involved in High Point Surplus Co. v. Pleasants, Sheriff, supra, authorized county commissioners to regulate and prohibit the sale of goods, wares and merchandise on Sunday; and that involved in State v. Smith, supra, authorized the Board of Commissioners of Forsyth County to regulate or prohibit the operation of public poolrooms, billiard parlors, dance halls and nightclubs located within three hundred yards of a church or school.

Unquestionably, any restaurateur who elected to purchase, sell and serve alcoholic beverages in the manner prescribed by the Mecklenburg Act would be embarking upon a business venture for gain or profit. No limitation is placed upon what he may charge for the alcoholic beverages he sells and serves. The only limitation is that the gross receipts from the sales of alcoholic beverages must be less than the gross receipts from the sale of full meals and non-alcoholic beverages. We think it clear that the purchase, sale and serving of alcoholic beverages by such licensed restaurateur would constitute "trade" within the meaning of present Article II, Section 24(1) (j).

Appellants cite Gardner v. Reidsville, 269 N.C. 581, 153 S.E.2d 139 (1967), and State v. Chestnutt, 241 N.C. 401, 85 S.E.2d 297 (1955), as authority for their contention that the Mecklenburg Act does not regulate trade. However, the activity regulated or proscribed by the local act involved in these cases was quite different from that regulated by the Mecklenburg Act.

In Gardner v. Reidsville, supra, the contested local act authorized an election by the qualified voters of the City of Reidsville to determine whether alcoholic beverage control stores should be established in that city. If favored by the majority, provision was made for the establishment of a City Board of Alcoholic Control. The act provided further "that the City Board shall have all the powers and duties imposed by G.S. § 18-45 on County Boards; shall be subject to the same powers and authority of the State Board as are County Boards under G.S. § 18-39; and the operation of any City Alcoholic Beverage Control Stores shall be subject to and in pursuance of the provisions of Article 3 of Chapter 18 of the General Statutes, except where in conflict with this Act." With reference to whether their operation constituted "trade" within the meaning of Article II, Section 29, the ABC stores in Reidsville had the same status as the ABC stores established and maintained pursuant to county-wide elections under G.S. § 18-61. The Court, two Justices dissenting, rejected the contention that the operations of the Reidsville ABC stores constituted trade within the meaning of Article II, Section 29. The opinion of Justice Branch, for the Court, marked the distinction in these words: "`[T]rade' refers to a business venture embarked in for gain or profit by a person or a business corporation. It refers to commerce engaged in by citizens of the State, and not a restricted activity conducted by the State itself." (Our italics.) Gardner v. Reidsville, supra at 591-592, 153 S.E.2d at 148. Private profit was held an inherent element of the concept of trade as used in Article II, Section 29.

In State v. Chestnutt, supra, the defendants were tried on a warrant which charged that they engaged in, promoted and participated in a motor vehicle race in Wake County on a designated Sunday in violation of a statute which provided: "It shall be unlawful for any person, firm, or *76 corporation to engage in, promote, or in anywise participate in any motorcycle or other motor vehicle race or races on Sunday in Wake County, North Carolina." The defendants appealed solely on the ground that this local act regulated labor and trade and therefore was void as violative of Article II, Section 29. The Court held that the act prohibited all motor vehicle races on Sunday wholly without regard to whether profit or other compensation was involved and thus did not regulate labor or trade. The opinion states: "Were the statute directed solely against labor, e. g., compensated employment, or trade, e. g., business ventures, for profit, in relation to the conduct of motor vehicle races on Sunday in Wake County, the question posed would be serious indeed. But where the statute in sweeping terms bans an activity, to wit, all motor vehicle races on Sunday in Wake County, making it a misdemeanor to promote or engage in the proscribed activity, without regard to the commercial or non-commercial character of the activity, the fact that these defendants promote and engage in such activity for profit and for compensation puts them in no better position than those who promote and engage in such activity without reference to profit or compensation." In contrast to the local act considered in Chestnutt, the local act considered in Orange Speedway, Inc. v. Clayton, supra, applied only to motorcycle or motor vehicle races for profit and was held to be an act which regulated trade.

The court below adjudged that section 7(a) in its entirety is unconstitutional and void, and that section 7(b) is unconstitutional and void "except as it applies to the operation of auditoriums or convention centers by municipal corporations or other governmental units."

We take note of the following provisions of G.S. § 160A-489: "Any city is authorized to establish and support public auditoriums, coliseums, and convention centers. As used in this section, `support' includes but is not limited to: acquisition, construction, and renovation of buildings and acquisition of the necessary land and other property therefor; purchase of equipment; compensation of personnel; and all operating and maintenance expenses of the facility.. . ." We find no statute which purports to confer on a county or on a municipal corporation power to engage in the restaurant business. Whether such a statute would be subject to successful challenge on constitutional grounds need not be considered.

We hold that neither G.S. § 160A-489 nor the Mecklenburg Act confers implied authority to engage in the restaurant business on any municipal corporation or other governmental unit of Mecklenburg County. "Neither counties nor municipalities have any inherent legislative powers. Counties are instrumentalities and agencies of the State government and are subject to its legislative control; they possess only such powers and delegated authority as the General Assembly may deem fit to confer upon them. [Citations.] A municipal corporation is a creature of the General Assembly, has no inherent powers, and can exercise only such powers as are expressly conferred by the General Assembly and such as are necessarily implied by those expressly given." High Point Surplus Co. v. Pleasants, Sheriff, supra, 264 N.C. at 654, 142 S.E.2d at 701.

Furthermore, we construe the provisions of section 7(b) as purporting to authorize the sale of alcoholic beverages by the drink at an auditorium or convention center only by private licensed restaurateurs. Hence, the court below erred by the implied holding that a municipality or other governmental unit of Mecklenburg County might become a licensed restaurateur under the Mecklenburg Act. Obviously, such a result was not intended or contemplated by the General Assembly. Moreover, the provisions relating to the *77 sale of liquor by the drink at licensed restaurants located in civic centers and auditoriums are so interrelated with those relating to such sales in restaurants located elsewhere as to preclude separation.

In view of our holding that the entire Mecklenburg Act is unconstitutional and void as violative of Article II, Section 24(1) (j), of the Constitution of North Carolina, it is unnecessary to consider whether particular provisions thereof would be invalid as violative of other constitutional provisions. Nor do we consider whether the Mecklenburg Act would be vulnerable to attack on other constitutional grounds by a restaurateur whose dining room had fewer seats than fifty or whose operations failed to comply in some other respect with the requirements for the mixed-beverage license.

"The wisdom and expediency of a statute is for the legislative department, when acting entirely within constitutional limits." McIntyre v. Clarkson, supra, 254 N.C. at 515, 119 S.E.2d at 891. In the exercise of the sovereign police power of the State of North Carolina, the General Assembly may prohibit, regulate or permit the sale of alcoholic beverages. Gardner v. Reidsville, supra, 269 N.C. at 592, 153 S.E.2d at 149. However, in its exercise of this power it cannot violate constitutional limitations. State v. Smith, supra, 265 N.C. at 179-180, 143 S.E.2d at 298-299.

The Mecklenburg Act being void in its entirety, the election held November 5, 1971, is a nullity.

The foregoing leads to this conclusion: The judgment of the court below, to the extent it adjudges the Mecklenburg Act to be invalid, is affirmed; but, to the extent it adjudges any portion thereof to be valid, it is reversed. The cause is remanded to the Superior Court of Mecklenburg County for the entry of a judgment in conformity with this opinion.

Affirmed in part; reversed in part.