Humble Oil & Refining Co. v. Board of Aldermen
202 S.E.2d 129
N.C.
1974
Check Treatment
SHARP, Justice.

The first question which Humble, the petitioner-appellant, discusses in its brief is whether it has standing to challenge the Board’s denial of its application for the special use permit. This question was not raised at the joint hearing before the Aldermen and the Planning Board. However, in its answer to Humble’s petition to the Superior Court for a writ of certiorari, after responding to the merits of each averment, the Aldermen alleged “that the petitioner is not the proper party to apply for a special use permit, it being the holder of options only. . ... ” Notwithstanding, at the hearing before Judge McKinnon the Board did not make this contention; nor did it raise this point in the Court of Appeals. That court, however, ex mero motu, considered the question. Relying upon Lee v. Board of Adjustment, 226 N.C. 107, 37 S.E. 2d 128, 168 A.L.R. 1 (1946), it held that Humble lacked standing. Even so it passed upon the assignments of error and affirmed the action of the Board in refusing to issue the special permit.

At the time Humble petitioned this Court for certiorari to review the decision of the Court of Appeals it also filed a motion suggesting a diminution of the record. Accompanying this motion were documents showing, as set forth in our statement of the facts, that Humble had conditionally exercised each of its three options. The motion to make these documents a part of the record on appeal in this Court was allowed. The question which we consider, therefore, is whether an optionee who has exercised his option upon condition that he obtain a special use permit which will enable him to use the property for the purpose he seeks to acquire it has standing to apply for the permit.

The case of Lee v. Board of Adjustment, supra, is factually distinguishable and does not dictate the answer to the question now posed. See MacPherson v. City of Asheville, 283 N.C. 299, 308, 196 S.E. 2d 200, 206-207 (1973). The applicant in Lee was a mere optionee. Humble, having exercised its option condition *465 ally, is a prospective vendee, bound to purchase if the special use permit it seeks be granted. Humble, therefore, is the real party in interest, the only one in position to furnish the plans, specifications, and other data which under ordinance requirements, must accompany any application for a special use permit. See Burr v. City of Keene, 105 N.H. 228, 196 A. 2d 63 (1963).

In Arant v. Board of Adjustment, 271 Ala. 600, 126 So. 2d 100, 89 A.L.R. 2d 652 (1961), the Supreme Court of Alabama held that the right of a conditional vendee (such as Humble) to apply for a variance permit is equivalent to that of the vendor were he the one who desired the variance; that such a prospective purchaser is the equitable owner of the property. To hold otherwise, the Alabama Court said, would make the right to apply for a variance or special permit “depend on the identity of the owner instead of the situation of the property and the facts and circumstances of the case.” Id. at 604, 126 So. 2d at 104. Reason and the weight of authority support the rule that a prospective vendee under contract to purchase the property to be affected by the granting of a zoning variance or a special use permit is a proper party to apply therefor or to appeal a denial thereof, and the fact that he is bound to take the property only if a zoning variance or special use permit is granted does not deprive him of such standing. See Annot., 89 A.L.R. 2d 663, 669, 671.

We hold that Humble had standing to apply for the special use permit and to challenge the denial of its application for the permit. This holding is in accord with the rationale of our decision in MacPherson v. City of Asheville, supra, decided after the decision of the Court of Appeals in this case was filed.

Humble contends that the Aldermen’s denial of its application for a special use permit was arbitrary and a denial of due process in that (1) the Aldermen denied the application without first referring it to the Planning Board for study and recommendation as required by the ordinance; and (2) the Aider-men’s finding that the issuance of the permit would materially increase traffic hazards and danger to the public at this intersection was unsupported by competent evidence. Humble also contends that the ordinance provisions authorizing the issuance of special use permits are invalid for lack of adequate standards governing their issuance.

Ordinance Section 4-D-6A makes the issuance of special use permits for drive-in business the duty of the Aldermen.

*466 Subsection a. of Section 4-C-l authorizes the Aldermen to issue special use permits for the uses listed in Section 4-D “after joint hearing with the Town Planning Board and after Planning Board review and recommendations.” Subsections b, c, and d set out the requirements for the application, provide for notice and a public hearing as in case of an amendment to the ordinance, specify certain dates during each year for such hearings, and declare that “all interested persons shall be permitted to testify” at the joint hearing before the Board and the Planning Board. Subsection e requires the Planning Board to submit its recommendation to the Board within 30 days after the joint meeting at which the application is heard. Subsection f directs the Board, on receiving the Planning Board’s recommendations, “to consider the application and said recommendation and either grant or deny the Special Use Permit requested.” (Emphasis added.)

If the Board grants the permit Section 4-C provides that it must find :

“(1) that the use will not materially endanger the public health or safety if located where proposed and developed according to the plan as submitted and approved.

“(2) that the use meets all required conditions and specifications.

“(3) that the use will not substantially injure the value of adjoining or abutting property, or that the use is a public necessity, and

“ (4) that the location and character of the use if developed according to the plan as submitted and approved will be in harmony with the area in which it is to be located and in general conformity with the plan of development of Chapel Hill and its Environs.”

Subsection h requires the Board, if it denies the permit, to enter the reasons for the denial in the minutes of the meeting at which the action was taken.

We consider first whether the Court of Appeals erred in holding that the Aldermen’s denial of Humble’s application obviated the ordinance requirement that the Aldermen refer the application to the Planning Board for review and recommendation before acting upon it. That Court ruled “that before the Board of Aldermen could issue a special use permit, the appli *467 cation would have to go to the planning board for review and recommendations, but not where, as here, the Board of Aldermen denies the permit.” With this interpretation of the ordinance we cannot agree.

A special permit (like a special exception) is one issued for a use which the ordinance expressly permits in a designated zone upon proof that certain facts and conditions detailed in the ordinance exist. In re Application of Ellis, 277 N.C. 419, 178 S.E. 2d 77 (1970); 8 McQuillan, Municipal Corporations § 25.160 (3d ed., 1965); 101 C.J.S. Zoning § 271 (1958). It is granted or denied after compliance with the procedures prescribed in the ordinance. These include a duly advertised public hearing on the application before a joint meeting of the Aldermen and the Planning Board and the subsequent referral of the application to the Planning Board for its consideration and recommendations. The Aldermen may grant the application only by making the required findings, which must be supported by substantial evidence. If the application is denied, the reasons for the denial must be entered in the minutes of the meeting at which the action is taken.

That the Aldermen are to defer any action on the application for the permit until they have had the benefit of the Planning Board’s investigation, consideration, and recommendation is clearly spelled out by the provision of subsection f (heretofore quoted) that on receiving the Planning Board’s recommendation the Aldermen shall consider the application and recommendation and either grant or deny the special use permit. The obvious purpose of this provision is to insure that every application for a special use permit receives the same careful, impartial consideration. Thus, whether the application is to be allowed or denied, the Aldermen must “proceed under standards, rules, and regulations uniformly applicable to all who apply for permit.” See In re Application of Ellis, supra at 425, 178 S.E. 2d at 81. This means that, in passing upon an application for a special permit, a board of aldermen may not violate at will the regulations it has established for its own procedure; it must comply with the provision of the applicable ordinance.

The procedural rules of an administrative agency “are binding upon the agency which enacts them as well as upon the public. ... To be valid the action of the agency must conform to its rules which are in effect at the time the action is taken, particularly those designed to provide procedural safeguards *468 for fundamental rights.” 2 Am. Jur. 2d Administrative Law § 350 (1962). In no other way can an applicant be accordéd due process and equal protection, or the Aldermen refute a charge that their denial of a permit constituted an arbitrary and unwarranted discrimination against a property owner. See Keiger v. Board of Adjustment, 281 N.C. 715, 720, 190 S.E. 2d 175, 179 (1972).

The failure of the Aldermen to comply with the terms of the ordinance requires that its denial of Humble’s application for a special use permit be set aside and that the application be considered de novo. We deem it expedient, therefore, to consider Humble’s contention that the finding upon which the permit was denied (that to issue it would materially increase the traffic hazard, and danger to the public at this intersection) is arbitrary in that it is unsupported by competent, material, and substantial evidence.

When an applicant has produced competent, material, and substantial evidence tending to establish the existence of the facts and conditions which the ordinance requires for the issuance of a special use permit, prima fade he is entitled to it. A denial of the permit should be based upon findings contra which are supported by competent, material, and substantial evidence appearing in the record. See Jackson v. Board of Adjustment, 275 N.C. 155, 166 S.E. 2d 78 (1969); Utilities Commission v. Tank Line, 259 N.C. 363, 130 S.E. 2d 663 (1963). In no other way can the reviewing court determine whether the application has been decided upon the evidence and the law or upon arbitrary or extra legal considerations.

If there be facts within the special knowledge of the members of a Board of Aldermen or acquired by their personal inspection of the premises, they are properly considered. However, they must be revealed at the public hearing and made a part of the record so that the applicant will have an opportunity to meet them by evidence or argument and the reviewing court may judge their competency and materiality. Hyman v. Coe, 102 F. Supp. 254 (D.D.C. 1952); Goldstein v. Zoning Board of Review of City of Warwick, 101 R.I. 728, 227 A. 2d 195 (1967); 2 Rathkopf, The Law of Zoning and Planning, Ch. 64 (3d ed., 1972); 2 Yokley, Zoning Law and Practice § 15-17 (3d ed., 1965); Application of Imperial Asphalt Corporation, 359 Pa. 402, 59 A. 2d 121 (1948).

*469 On the present record it appears probable that the Aider-men based their finding that Humble’s proposed use of the lots in question would materially increase the traffic hazard and endanger the public safety at this intersection upon the following testimony:

Mr. Creech “felt some trees would be destroyed.” Two persons thought there were too many service stations in this area already. One alderman wanted to wait until the completion of “a service station survey in progress.” Mrs. Perry objected “because of the church across the intersection and the traffic problems.” Mrs. Weaver opposed it. Alderman Smith said the intersection had been dangerous for twenty-eight years and the State Highway Commission had approved the placement of a signal not yet installed. The Eeverend Manly said, “Some citizens opposed it and it would be a traffic problem until a traffic light is installed at this intersection.” (Eespondent appellee’s brief advises us that since the denial of Humble’s application eleven traffic control signals have been installed in the area.)

The foregoing statements, which are conclusions unsupported by factual data or background, are incompetent and insufficient to support the Aldermen’s findings. Evidence that another filling station in this area would increase the hazárds at intersections affected appears to be totally lacking. That another filling station in the area might disperse the business and thus the traffic is a reasonable assumption, but it is not at all certain that it will increase traffic or make a dangerous intersection more dangerous. An increase in traffic does not necessarily mean an intensification of traffic congestion or a traffic hazard. Thomson Methodist Church v. Zoning Board of Review, 99 R.I. 675, 210 A. 2d 138 (1965).

When a board of aldermen, a city council, or zoning board hears evidence to determine the existence of facts and conditions upon which the ordinance expressly authorizes it to issue a special use permit, it acts in a quasi-j udicial capacity. Its findings of fact and decisions based thereon are final, subject to the right of the courts to review the record for errors in law and to give relief against its orders which are arbitrary, oppressive or attended with manifest abuse of authority. Lee v. Board of Adjustment, 226 N.C. 107, 37 S.E. 2d 128, 168 A.L.R. 1 (1946); In re Pine Hill Cemeteries, Inc., 219 N.C. 735, 15 S.E. 2d 1 (1941).

*470 At the time this proceeding was brought in the Superior Court judicial review of orders of zoning boards of adjustment by proceedings in the nature of certiorari was authorized by G.S. 160-178 (now G.S. 160 A-388 (1972)). In Jarrell v. Board of Adjustment, 258 N.C. 476, 480, 128 S.E. 2d 879, 883 (1963), this Court held that such review is adequate only “if the scope of review is equal to that under G.S. Chapter 143, Article 33, 143-306 et seq.” Thus the general administrative agencies review statutes were made applicable to municipal agencies. See Hanft, Some Aspects of Evidence in Adjudications by Administrative Agencies in North Carolina, 49 N.C.L. Rev. 635 (1971).

Since boards of aldermen and city councils are generally composed of laymen who do not always have the benefit of legal advice, they cannot reasonably be held to the standards required of judicial bodies. For that reason N. C. Gen. Stats., Ch. 143, Art. 33A (G.S. 143-317, 318 (Supp. 1971)), which requires that the rules of evidence as applied in the General Court of Justice shall be followed in proceedings before State agencies (with noted exceptions), was not made applicable to county and municipal agencies. We construe a State administrative agency, as that term is used in Art. 33A, to mean an authority, board, bureau, commission, committee, department, or officer whose jurisdiction is statewide.

Notwithstanding the latitude allowed municipal boards, as Justice Bobbitt (now Chief Justice) pointed out in Jarrell, a zoning board of adjustment, or a board of aldermen conducting a quasi-judicial hearing, can dispense with no essential element of a fair trial: (1) The party whose rights are being determined must be given the opportunity to offer evidence, cross-examine adverse witnesses, inspect documents, and offer evidence in explanation and rebuttal; (2) absent stipulations or waiver such a board may not base findings as to the existence or nonexistence of crucial facts upon unsworn statements (see Craver v. Board of Adjustment, 267 N.C. 40, 147 S.E. 2d 599 (1966)); and (3) crucial findings of fact which are “unsupported by competent, material and substantial evidence in view of the entire record as submitted” cannot stand.

As noted by Professor Hanft in his very valuable article in 49 N.C.L. Rev. 635, 667, this Court has not indicated any test for substantial evidence; nor are we yet ready to attempt one. Instead we repeat the “realistic statement by the Supreme Court,” quoted in the article: “ ‘Substantial evidence is more *471 than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ It ‘must do more than create the suspicion of the existence of the fact to be established. ... [I]t must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact, for the jury.’ ” Id. at p. 667. The quoted words are those of Mr. Chief Justice Hughes in Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938), and of Mr. Justice Stone in NLRB v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300 (1939).

Humble’s third contention, that the provisions of Ordinance Section 4-C 1 f(l)-(4) (the special use provisions, heretofore quoted in full) are void for lack of adequate guiding standards, was not raised in its petition for certiorari directed to .the Superior Court. Notwithstanding, that court decreed that the special use provisions of the ordinance “are not invalid,” and the Court of Appeals affirmed the Superior Court. We agree with these rulings.

Some of the ordinance requirements for a special use permit are specific; others, not susceptible of exact definition, are necessarily stated in general terms. In our view the ordinance achieves reasonable specificity. Safeguards against arbitrary action by zoning boards in granting or denying special use permits are not only to be found in specific guidelines for their action. Equally important is the requirement that, in each instance the board (1) follow the procedures specified in the ordinance; (2) conduct its hearings in accordance with fair-trial standards; (3) base its findings of fact only upon competent, material, and substantial evidence; and (4) in allowing or denying the application, it state the basic facts on which it relied with sufficient specificity to inform the parties, as well as the court, what induced its decision.

The decision of the Court of Appeals is reversed, and this cause is returned with direction that it be remanded to the Superior Court of Orange County for entry of a judgment (1) vacating the findings of fact and order of the Board of Aider-men of Chapel Hill from which Humble appeals; and (2) directing the Board of Aldermen to consider Humble’s application de novo in accordance with the procedures specified in the ordinance and the principles set forth in this opinion.

Reversed.