159 S.E. 430 | N.C. | 1931
ADAMS, J., concurring. Controversy without action submitted on an agreed statement of facts.
The plaintiff, a resident taxpayer of Durham County, sues on behalf of himself and all others similarly situated who may wish to make themselves parties, to test the right or to enjoin the defendants from issuing, on 1 July, 1931, certain funding bonds of Durham County in the amount of $65,000 "for the purpose of funding, redeeming and paying a like amount of indebtedness created by said county for its current necessary expenses, without enumeration of any particular purpose for which such indebtedness was created, the same being evidenced by tax anticipation notes of said county now outstanding, and to cause such bonds to recite on their face that they and the interest thereon are payable from an unlimited ad valorem tax upon all taxable property of said county. . . . That all of the notes hereinabove mentioned were issued in anticipation of the collection of the taxes and other revenue for the fiscal year ending 30 June, 1931, $50,000 of the proceeds thereof having been paid into the county operating expense fund and expended for such necessary current operating expenses, and $15,000 of such proceeds having been used for the payment of $15,000 revenue anticipation notes issued for necessary current operating expenses in the preceding fiscal year."
The defendants are proceeding under "The County Finance Act," ch. 81, Public Laws 1927, as amended by the "Local Government Act," ch. 60, Public Laws 1931, and they contend that the issuance of the bonds in question for funding the county "indebtedness now outstanding or incurred before 1 July, 1931," and the recital in said bonds to the effect "that the tax for their payment is unlimited" are authorized by said statutes, particularly section 41 of the former as amended by section 60 of the latter.
It is agreed that if, under these statutes, an unlimited tax may be levied to pay the interest on said bonds and the principal when due, everything necessary to bring this about has been done, i, e., all the requirements of the law have been observed on the part of the defendants. *236
It further appears that "Durham County levied in the fiscal year ending 30 June, 1931, and also in the fiscal year ending 30 June, 1930, a tax of fifteen cents on the one hundred dollars of taxable property for said fund known as County Operating Expense Fund, which fund is for its necessary current operating expenses, but has been unable to collect sufficient taxes and other revenue for the payment of all of its necessary current operating expenses or for the payment of any of said notes."
On the facts agreed the trial court enjoined and restrained the defendants from inserting in the advertisements of sale any statement that said bonds and the interest thereon will be payable "from an unlimited tax upon all the taxable property in said county, or that the face of said bonds will so recite."
From this ruling and order the defendants appeal, assigning error.
After stating the case: The essence of what the defendants propose to do, and the ultimate effect of their proposal is, to issue bonds of Durham County to meet a deficiency of $65,000 in the county operating expense fund, which deficiency, without enumerating the several items composing it, was occasioned by the inability of the county authorities to collect or to realize sufficient taxes out of the maximum constitutional levy for said fund. The remedy suggested in French v. Commissioners,
The defendants contend that this latter course has been pursued in the instant case, while a contrary view is taken by the plaintiff.
Special approval of the General Assembly is given in section 8 of "The County Finance Act" to the issuance of county bonds and notes for certain purposes designated therein as special. And in section 41 of the same act it is provided that the full faith and credit of the county shall be deemed to be pledged for the punctual payment of the *237 bonds and notes issued thereunder, including bonds for which special funds are provided, etc. This section was amended by section 60 of the Local Government Act by adding at the end thereof the following:
"`Nothing in this section shall be construed as authorizing an unlimited tax for the payment of bonds not issued for a special purpose within the meaning of section six of article five of the Constitution of north Carolina. It is the intention of this act, however, to authorize the issuance of funding and refunding bonds and notes as herein provided in cases where taxes for their payment is limited by the constitution, as well as in other cases. The General Assembly hereby declares that an emergency exists by reason of the present extraordinary financial condition of the counties of this State, and hereby gives its special approval to the levying of taxes to the fullest extent permitted by the constitution for the purpose of paying bonds and notes issued hereunder to fund or refund a renew indebtedness now outstanding or incurred before July first, nineteen hundred and thirty-one, and hereby declares that the payment of such bonds and notes constitutes a special purpose.'"
The pertinent constitutional provisions on the subject are as follows:
Article V, section 6: "The total of the State and county tax on property shall not exceed fifteen cents on the one hundred dollars value of property, except when the county property tax is levied for a special purpose and with the special approval of the General Assembly, which may be done by special approval of the General Assembly, which may be done by special or general act: Provided, this limitation shall not apply to taxes levied for the maintenance of public schools of the State for the term required by article nine, section three, of the constitution: Providedfurther, the State tax shall not exceed five cents on the one hundred dollars value of property."
Article VII, section 7: `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 any officers of the same except for the necessary expenses thereof, unless by a vote of the majority of the qualified voters therein.'
It is established by the authoritative decisions interpreting these sections of the Constitution.
1. That within the limitations fixed in article V, section 6, the county commissioners of the several counties may levy taxes for the necessary expenses of the county without a vote of the people or special legislative approval. Henderson v. Wilmington,
"Taxation for State and county purposes combined cannot exceed the constitutional limitation for their necessary expenses and new debts. . . . If what are often miscalled the `necessary expenses' of a county exceed the limitation prescribed by law, the necessity cannot justify the violation of the Constitution." French v. Commissioners,
2. That for special purposes and with the special approval of the General Assembly, the county commissioners of the several counties may exceed the limitations in Article V, section 6, without a vote of the people; provided the special purposes so approved by the General Assembly are for the necessary expenses of the county. R. R. v. Lenoir County,
Speaking to the subject in McCless v. Meekins,
"Such `special purposes' must be of the ordinary purposes of the county, such as that to build a courthouse, a public jail, or an important bridge, as to which in may be deemed necessary to create a special fund" —Merrimon, C. J., in Jones v. Commissioners,
3. That for purposes other than necessary expenses, whether special or other, taxes may not be levied by the commissioners of any county, *239
either within or in excess of the limitations fixed by Article V, section 6, except by a vote of the people under special legislative authority.Briggs v. Raleigh,
4. That a tax "to supplement the general county fund" (R. R. v. Reid,
When a debt is originally created for a purpose properly denominated special, which is also a necessary expense of the county, its funding or refunding may be declared a special purpose because of its initial character (Barbour v. Wake County,
Nor does it appear that the Legislature had any different object in view. It says: "Nothing in this section shall be construed as authorizing an unlimited tax for the payment of bonds not issued for a special purpose." The statute provides that funding and refunding bonds may be issue where taxes for their payment are limited by the Constitution, as well as in other cases. But this is only declaratory of the law as heretofore announced in a number of cases, notably Bennett v.Commissioners, supra, where Hoke, J., speaking for a unanimous Court, says: "True, we have held in this jurisdiction that when county commissioners have power to contract a debt or to provide for valid debts already contracted, they may, in the exercise of good business prudence, issue county bonds in evidence of the obligation, the right of taxation, *240
therefore, being restricted to the constitutional limitations as to debts incurred since the same was adopted. Commissioners v. Webb,
The General Assembly further declares that an emergency exists by reason of the present extraordinary financial condition prevailing in the counties of the State and gives its special approval for the levying of taxes "to the fullest extent permitted by the Constitution" for the purpose of paying bonds and notes issued to fund or refund or renew indebtedness of the counties and outstanding or incurred before 1 July, 1931, and declares that the payment of such bonds and notes shall constitute a special purpose. But this does not purport to convert notes issued for a deficiency in the general county fund into notes for special purposes. If it does, then to this extent the act runs counter to the organic law, for the Legislature is without power to suspend the Constitution even in times of stress. Dixon v.Commissioners,
It is true, the act provides for finding "indebtedness now outstanding or incurred before 1 July, 1931," and declares that the payment of such finding bonds and notes shall constitute a special purpose. Interpreted in the light of the Constitution, this means that debts created in prosecution purposes properly denominated special, which are also necessary expenses of the county, may be funded and taxes levied to pay said finding bonds as "for a special purpose," while those levied to pay the bonds issued to meet a deficiency in the general county fund, would fall within the limitations of Article V, section 6. Bennett v. Commissioners, supra; McCless v.Meekins, supra.
The cases of Wolfe v. Mt. Airy,
As a "special purpose" for which an unlimited tax may be levied with the special approval of the General Assembly and without a vote of the people must also be a "necessary expense" of the county, which latter includes both law and fact, and, as used in the Constitution and municipal resolutions, is a matter for judicial, rather than legislative, determination (Henderson v. Wilmington, supra), it follows that what constitutes a special purpose within the meaning of the Constitution, must ultimately be decided by the courts. Storm v. Wrightsville Beach,
The expressions "current necessary expenses" and "necessary current operating expenses," used in the agreed statement of facts, were doubtless induced by similar expressions in some of our opinions, notably Black v.Commissioners, supra, where "current necessary expenses of the county" and "floating indebtedness of the county" were used by the writer of the opinion; but these expressions are neither determinative of the legal question now presented, nor do they furnish a cue to its solution.
We think the instant case falls within the principles stated in the fourth paragraph above, to the effect that, in substance, the effort is to supplement the general county fund, or to provide for a deficiency therein, or to take up a note in bank and other current expenses, or to borrow money for the necessary expenses of the county and provide for its repayment, which we have said was not "for a special purpose" within the meaning of Article V, section 6, of the Constitution. The judgment is accordingly
Affirmed.