195 S.E. 271 | N.C. | 1938
Lead Opinion
Two questions arise on tbis appeal: (1) Are tbe operation, maintenance, and improvement of a municipally owned airport necessary expenses within the meaning of Art. VII, sec. 7, of the Constitution of North Carolina? (2) Can the governing body of a municipality make an appropriation and levy a tax for a contingent fund, and when the tax money is collected transfer it to, and use it for, a purpose for which such body is without authority to levy a tax?
Both questions are answered in the negative. The action of the city council as the governing body of the city of Charlotte in making the appropriations and tax levies is violative of the provisions of both Art. VII, sec. 7, of the State Constitution and the County Fiscal Control Act applicable to cities and towns.
First: “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 necessary expenses thereof, unless by a vote of the majority of the qualified voters therein.” Art. VII, sec. 7, of the Constitution of North Carolina; C. S., 2691.
In the recent case of Palmer v. Haywood County, 212 N. C., 284, 193 S. E., 668, it is said: “What are necessary expenses is a question for judicial determination. The judicial decisions in this State uniformly so hold. The courts determine what class of expenditures made or to be made by a municipal corporation come under the definition of ‘necessary expense.’ The governing authorities of the municipal corporations are vested with the power to determine when they are needed. . . . That is to say, the courts determine whether a given project is a necessary expense of a municipality, but the governing authorities of the municipality determine in their discretion whether such given project is necessary or needed in the designated locality.” Starmount Co. v. Hamilton Lakes, 205 N. C., 514, 171 S. E., 909; Black v. Comrs., 129 N. C., 121, 39 S. E., 818; Fawcett v. Mount Airy, 134 N. C., 125, 45 S. E., 1029; Storm v. Wrightsville Beach, 189 N. C., 681, 128 S. E., 17; Henderson v. Wilmington, 191 N. C., 269, 132 S. E., 25.
“In defining ‘necessary expense’ it is said in Henderson v. Wilmington, supra, ‘We derive practically no aid from the cases decided in other states. ... we must rely upon our own decisions.’ Then, after reviewing numerous cases dealing with the subject of ‘necessary expense,’ page 278, Adams, J., said: ‘The cases declaring certain expenses to be “necessary” refer to some phase of municipal government. This Court, so far as we are advised, has given no decision to the contrary.’ Then, on page 279, continues : ‘The decisions heretofore rendered by the Court make the test of a “necessary expense” the purpose for which the expense is to be incurred. If the purpose is the maintenance of the public peace
When thus tested, an airport is not a necessary governmental expense.
Tbe subject of tbe authority to levy taxes bas been discussed in numerous cases. Tbe law is well settled and may be summed up :
(1) “For necessary expenses. Tbe municipal authorities may levy up to tbe constitutional limitation without a vote of tbe people and without legislative permission;
(2) “For necessary expenses, they may exceed tbe constitutional limitation by special legislative authority Avithout a vote of tbe people. Constitution, Art. Y, sec. 6.
(3) “For other than necessary expenses a tax cannot be levied either within or in excess of tbe constitutional limitations except by a vote of tbe people under special legislative authority.” Palmer v. Haywood County, supra; Walker v. Faison, 202 N. C., 694, 163 S. E., 875; Glenn v. Comrs., 201 N. C., 233, 159 S. E., 439; Burleson v. Board of Aidermen, 200 N. C., 30, 156 S. E., 241; Greene County v. R. R., 197 N. C., 419, 149 S. E., 397; Comrs. v. Assell, 194 N. C., 412, 140 S. E., 34; Henderson v. Wilmington, supra; Herring v. Dixon, 122 N. C., 420, 29 S. E., 368.
Not being a necessary expense, tbe levy of a tax directly or indirectly to be expended for tbe purpose of tbe operation, maintenance and improvement of a municipal airport without a vote of a majority of tbe qualified voters, is violative of Art. VII, sec. 7, of tbe Constitution of North Carolina. While tbe good faith of tbe governing body of tbe city of Charlotte is not here impugned, tbe effect is no different in an indirect appropriation and tax levy than in a direct appropriation and tax levy for an unauthorized purpose. Tbe money collected pursuant to a tax levy for an undesignated purpose under tbe name of “contingent fund” is, nevertheless, money derived from an ad valorem tax. Giving it tbe name of “contingent fund” does not strip it of its qualities of tax money, nor can it thereby be transformed magically into tbe character of money “in tbe treasury” or “money on band” unappropriated and subject to be used for a purpose for which a direct tax cannot be levied. This patently would authorize to be done indirectly that which tbe Constitution forbids to be done directly.
It will be noted that tbe ordinance appropriating tbe $5,000 in question is not predicated upon any finding or determination of tbe governing body that it is for a necessary governmental expense. Tbe resolution is based upon tbe following premises:
*66 “Whereas, the said commission has been unable to derive sufficient revenue from the operation, maintenance, and upkeep of the said airport in a proper and adequate manner; and
"Whereas, additional hangar facilities are needed at said airport.”
The case of Adams v. Durham, 189 N. C., 232, 126 S. E., 611, is distinguishable from the instant case. There the city had on hand a fund derived from the sale of a municipal building, and no question of taxation or credit was involved. It is there specifically pointed out that “in no event shall further liability be imposed on the city” in the construction of the new building. Here, we are dealing with a question of taxation and the use of a qontingent fund derived from a tax levy. The Constitution is not to be circumvented by the simple device of raising a contingent fund by taxation and then using it. in the promotion of objects for which a direct tax could not be levied.
Second: The County Fiscal Control Act (chapter 146, Public Laws 1927; C. S., 1334 [53], 1334 [76]), which provides the machinery, charts the course, and prescribes the limitations for the administration of the fiscal affairs of counties, including the budgeting for appropriations and levying of taxes to cover same, is made applicable to cities and towns by sections 65 and 67 to 71 of chapter 60 of the Public Laws of 1931.
Sec. 65 thereof, C. S., 2969 (n), reads: “All cities and towns shall be subject to and be governed by all of the provisions of the County Eiscal Control Act and acts amendatory thereof and supplemental thereto, including acts ratified at the present session of the General Assembly, except as herein otherwise provided or except as the context shows that it is not intended that such acts should be applicable to cities and towns.”
Section 74 reads: “The provisions of this act shall apply to all counties, cities, and towns in this State, regardless of any provision to the contrary in any special or local act heretofore enacted.”
The record fails to disclose any allegation, admission, or finding of fact that the city of Charlotte comes, or is operating within the provisions of the exceptions of the said section 65.
In section 68 there are defined the funds required for cities and towns for each of the functions of municipal government. It is there prescribed, when read in connection with the County Fiscal Control Act, that each fund for each function shall be stated separately in preparing the budget estimate for appropriation, and shall be so set up in the appropriation resolution and tax levy.
Analyzing pertinent sections of County Fiscal Control Act, as applied to cities and towns, we find that: (1) The municipal accountant shall prepare and submit to the governing body not later than the first Monday in July a “budget estimate” of: (a) The amounts necessary to be
(3) Then the governing body, not later than the fourth Monday in July, shall adopt and record on its minutes an appropriate resolution, which shall make appropriation for the several purposes of the municipality, upon the basis of the estimates and statements submitted by the municipal accountant such sums as the governing body may deem sufficient and proper, whether greater or less than the recommendation of the budget estimates; “Provided, however, that ‘(d) no appropriation shall be made in excess of the amount which may be raised under any constitutional or statutory limits of taxation.’” C. S., 1334 (59)/. This resolution becomes the chart for the municipal accountant and municipal treasurer in disbursing the city funds. C. S., 1334 (60).
(4) Before any levy of taxes is made the municipal accountant shall submit to the governing body a supplemental budget showing: “(a) The amount of any increase or decrease in each item of (1) deficits and (2) unencumbered balances and (3) surplus revenues as reported by him in the budget estimate, and (b) the amount of miscellaneous revenues collected in the preceding year from sources other than taxation, this amount to be separately classified as to funds and functions, and (c) an estimate of the amount of faxes for the current fiscal year which will not be collected in the same year. Upon the submission of the figures showing increase or decrease in deficits, the appropriation resolution shall be deemed automatically amended by adding such increase to or subtracting such decrease from the amount appropriated for the fund or function to which such deficit pertains. . . .”
(5) Thereafter, and not later than Wednesday after the third Monday in August, the governing body, by resolution to be recorded in its minutes, shall levy upon all the taxable property of the city such rate of tax as may be necessary to produce: “(a) The sum appropriated and (b) the amount of the supplemental budget estimate of taxes which will not be collected in the current fiscal year, after taking into consideration the figures contained in the budget estimates and supplemental
(6) No appropriation made by the appropriation resolution, except an appropriation for general municipal expenses, shall be transferred from one fund to another fund, and no appropriation for general municipal expenses shall be transferred to any fund of any subdivision of the municipality, or vice versa. C. S., 1334 (64).
(7) Then follows provisions prescribing restrictions and limitations for contracting with reference to and disbursing the funds — with penalties for violations of the act. C. S., 1334 (65) to 1334 (72), under the County Fiscal Control Act as applied to cities and towns.
Thus, it is seen that the governing body of the city of Charlotte is required to appropriate and make tax levy for each fund or function separately. It is without authority to make an appropriation and levy a tax for a common contingent fund. For emergency purposes as to each fund for which it has the authority to levy a tax, it may appropriate an additional five per cent of the fund requirement which becomes a part of that fund requirement to be covered by subsequent tax levy. Only from the general municipal expense fund may transfer be made to any other fund' — and there is no authority for an “airport fund” in the appropriation resolution.
It is worthy in passing to pause and appraise that part of the preamble to the ordinance transferring the $5,000 fund which reads: “Whereas, additional hangar facilities are needed at said airport,” followed by the appropriation “to he used in further improvement of the facilities of said airport.” “Hangar,” in connection with an airport, is defined to be “a shed for housing aeroplanes.” “Facility” is “that which facilitates any action; aid;” used in plural as “facilities for trade, study, travel, etc.” “Improvement” is “a valuable addition or betterment, as a building, clearing, drain, fence, etc., on land.”
If the approval by the qualified voters of the purchase of an airport site be implied authority to the governing body of the city to spend tax money to. build hangars, why not for concrete runways and other additions and improvements without limit, without further approval of such voters ?
The judgment of the court below is
Affirmed.
Concurrence Opinion
concurring: I concur in the result reached in the well considered opinion delivered by Winborne, J., for the majority of the Court.
I do not understand that on this record the decision goes to the extent of holding that the city is without power, by appropriate resolution, to
The County Fiscal Control Act is by later statute made applicable to cities and towns, except where the context shows that it was not so intended. The act contains this provision: “No appropriation made by the appropriation resolution, except an appropriation for general county expenses, shall be transferred from one fund to another, and no appropriation for general county expenses shall be transferred to any fund of any subdivision, or vice versa. C. S., 1334 (64). The last clause obviously is inapplicable to cities and towns.
Thus it appears that the transfer by the city of funds appropriated for general municipal expenses to another fund for an authorized municipal purpose, such as the necessary maintenance and repairs to city property, would not seem to be prohibited by the Municipal Fiscal Control Act. Otherwise, the city might be seriously hampered in the performance of its corporate functions, in case of a sudden casualty or emergency, or be caused to incur substantial liability.
This would not involve a violation of Art. VII, sec. 7, of the State Constitution.
Nor is there anything in the holding in Adams v. Durham, 189 N. C., 232, 126 S. E., 611, as interpreted by later decisions, that would invalidate an appropriation from funds already in the treasury for this essential purpose. In Holmes v. Fayetteville, 197 N. C., 740, 150 S. E., 624, upholding the right of the city “to use only such available funds as it has” for the purpose of extending its electric light facilities beyond the city limits, it was said {Adams, J., speaking for the Court) : “This course was pursued in the erection of a building in the city of Durham and was approved by this Court, but the auditorium was in the city and was intended for a public purpose. Adams v. Durham, 189 N. C., 232.”
In Nash v. Monroe, 198 N. C., 306, 151 S. E., 634, it was said {Brogden, J., speaking for the Court) : “Undoubtedly, if the city of Monroe had the money in its treasury, it could purchase equipment for its hospital. Adams v. Durham, 189 N. C., 232.” It was there held that a municipal hospital is not a necessary governmental expense.
In Mewborn v. Kinston, 199 N. C., 72, 154 S. E., 76, we find this language: “The right of the city to use funds on hand for a public purpose is fully sustained by the decisions of this Court. Adams v. Durham, 189 N. C., 232.”
In Burleson v. Board of Aldermen, 200 N. C., 30, 156 S. E., 241, where the application of funds of a town for the maintenance of a hospital, a public purpose but not a necessary expense, was consid
In Goswick v. Durham, 211 N. C., 687, it was said: “Tbe acquisition of tbe land (for public purpose) from surplus funds was not beyond tbe power of tbe city, and it in no way offended tbe provisions of Art. VII, sec. 7, of tbe Constitution,” citing Adams v. Durham, supra, and Nash v. Monroe, supra.
I concur in tbe view tbat tbe maintenance of an airport may not now be classed as a necessary municipal expense, and tbat, upon tbe facts presented by tbe record in tbis ease and under tbe resolution of tbe city, tbe appropriation of $5,000 from tbe contingent fund of tbe city to tbe airport fund for additional bangar facilities cannot be upheld. To do so would be to open tbe door to appropriations for new and additional construction, and would permit expenditures which would necessarily require tbe levy of taxes indirectly in violation of Art. VII, sec. 7, of tbe Constitution.
Tbe inclusion in tbe budget of a sum to be raised by tbe levy of taxes for tbe maintenance of tbe municipal airport was properly enjoined as in conflict with tbe prohibition contained in tbe above quoted section of tbe State Constitution.
Concurrence Opinion
concurring: Tbe resolution adopted by tbe city council of tbe city of Charlotte, transferring $5,000 from tbe contingency fund to tbe maintenance fund for tbe municipal airport, contemplates tbat tbis fund shall be used for tbe enlargement and improvement, as well as for tbe maintenance, of tbe airport. Tbe operation of an airport is not a necessary expense of a municipality' any more so than would be tbe operation of a railway terminal or a railway or bus line depot. Consequently, tbe city council is without authority to make tbe proposed expenditure for tbe purposes contemplated by tbe resolution. Tbe inclusion of $25.00 in tbe budget for tbe operation and maintenance of tbe airport was likewise without authority in law. A-municipality is not authorized to operate, as a necessary expense of tbe municipality, airports, railway terminals, railroad or bus line depots, or similar undertakings. It follows tbat tbe city council was without authority to levy a tax without a vote of tbe people to operate tbe airport.
I am of tbe opinion, however, tbat tbe city council has tbe authority to use tax money to keep tbe airport property in a reasonably safe condition. In so far as tbe majority opinion intimates, if it does so intimate, tbat tbe city council is without tbis authority, I disagree.
Tbe city acquired tbe airport property under mandate of tbe people as expressed in an election. When tbe city acquired tbe property it did
Dissenting Opinion
dissenting in part and concurring in part: In one aspect I cannot agree with the main opinion:
(1) I think the levy of $25.00 included in the budget for the fiscal year ending 30 June, 1938, for the Charlotte “airport” was a necessary expense and it was not such an expense that should be submitted to a vote of the people, under Const, of N. O., Art. VII, sec. 7.
(2) I think the governing body of the city of Charlotte has a right to pass an ordinance transferring $5,000, on hand unappropriated and collected as a “contingent fund,” for the “airport.” In the concurring opinion of Devin, J., is the following: “I do not understand that on this record the decision goes- to the extent of holding that the city is without power, by appropriate resolution, to provide for the expenditure of money in its treasury applicable to general municipal expenses when this is done for the purpose of protecting and making essential repairs to property owned by the city and used for a public purpose.” If this is the correct interpretation, on this aspect I concur.
The judgment of the court below is as follows: “This cause coming on to be heard before the undersigned judge at the November, 1937, Term of the Superior Court, and a stipulation having been entered into waiving a jury trial and agreeing that the court finds the facts in said cause, and the court having found the following facts: ‘(1) That the plaintiff is a citizen, resident, and property owner and taxpayer of the city of Charlotte, North Carolina. (2) That the defendants constitute the governing body of the city of Charlotte, a municipal corporation. (3) That the city of Charlotte is a city of substantial and fastly expanding government; with a population of approximately 95,000, and total taxable values of approximately $110,000,000, and is strategically located for further immediate growth and development, and has been recognized by the Federal Government as a strategic airport center between New
It is to be noted that (1) “the appropriation of $25.00 was made to be expended towards the maintenance, operation, and upkeep of the said airport,” and that (2) “the $5,000 . . . transferred from the contingent fund to the airport fund was money derived from taxation and was not an unappropriated surplus fund derived from other sources.” It is apparent that the revenues from the airport are insufficient to maintain it in such a way that it would retain its status as an airmail distributing center and a regular passenger and express depot. Unless its revenues are supplemented by tax funds, the large investment of the city will rapidly depreciate, its usefulness will be increasingly lessened until it is ultimately destroyed, and that which was rightly conceived as a far-sighted, advantageous, and progressive enterprise will die for want of sufficient public support during the early years of the project.
The citizens of Charlotte voted a $50,000 bond issue to construct this municipal airport. Only 119 votes were cast against the bond issue. The Federal Government spent $325,000, and the State Highway and Public Works Commission another $35,000, to complete this airport. When the citizens of Charlotte voted the bonds, when the Federal Government made the grant, and when the State project was approved, it was generally and necessarily assumed by the citizens and the Federal, State, and local officials alike that the maintenance of the airport would be upon the municipality, certainly until the project should become self-supporting. It is significant that the judgment states that upon the completion of the airport by the Federal Government about 1 June, 1937, it was “turned . . . over to the city of Charlotte for maintenance and operation.” When the citizens of Charlotte voted upon the establishment of a municipal airport, the very nature of the proposition submitted involved two elements: (1) The initial outlay of $50,000 by the city, and (2) the assumption of the general support and maintenance of the airport until such time as the airport should become self-supporting. The movement to establish the airport was initiated by the city and for the city. No other agency assumed the support of the airport. The citizens of Charlotte, by their vote, approved the airport and assumed its maintenance. By the mandate of the people, the city of Charlotte has the implied obligation to maintain this airport and to make expenditures essential to its general maintenance.
The essence of Art. YII, sec. 7, of the Constitution is the provision that no “tax be levied . . . except for necessary expenses, . . . unless by a vote of the majority of the qualified voters therein.” Only under two conditions may taxes be levied by a municipal corporation: (1) For necessary expenses of government, or (2) where voted by the
In Goswick v. Durham, 211 N. C., at pp. 689-690, Justice Devin wrote, “While there is no contention that the construction, equipment, and maintenance of an airport and landing field is a necessary municipal expense within the meaning of Article VII, section 7, of the Constitution (Henderson v. Wilmington, 191 N. C., 269), yet it may not be improper to say that man’s constantly advancing progress in the conquest of the air as a medium for the transportation of commerce and for public and private use indicates the practical advantage and possible future necessity of adequate landing facilities for the use of the 'argosies of-magic sails . . . dropping down with costly bales’ to the same
extent that paved streets and roads are now regarded for the purposes of communication and transportation on land. Hargrave v. Comrs., 168 N. C., 626; Dysart v. City of St. Louis, 321 Mo., 514. As was said by Brogden, J., speaking for the Court in Walker v. Faison, 202 N. C., 694: “The law is an expanding science, designed to march with the advancing battalions of life and progress and to safeguard and interpret the changing needs of a commonwealth or community.”
In Starmount Co. v. Hamilton Lakes, 205 N. C., at p. 520, Justice Brogden quoted the general rule: “The courts determine what class of expenditures made or to be made by a municipal corporation come under the definition of 'necessary expense.’ ” Then he added, “That is to say, the courts determine whether a given project is a necessary expense of a municipality.” By judicial approval of particular expenditures, the list of “necessary expenses” is constantly growing, as befits the law of a progressive commonwealth. Until a particular type of expenditure is brought within the magic circle of “necessary expenses,” such expenditures cannot be made by a municipality without a vote of the citizens.
The citizens of Charlotte approved the bond issue for the purpose of building the airport — I think that the “vote of the majority of the qualified voters” thereby complied with the requirement of Art. VII, sec. 7, of the Constitution. When the citizenship of a community expressly approves the establishment of a public project at public expense, there is necessarily the approval by the citizens of the continued operation of that project. It is inconceivable that the citizens would approve the establishment of a project which they did not wish operated thereafter. If this were not true, the entire expenditure assumed by the citizens would be wasted. In my opinion, when the citizens of Charlotte voted to establish an airport at municipal expense, their vote became a
Under this latter view it becomes pertinent to examine to what extent this mandate was applicable. Certainly it extended to include the usual and ordinary maintenance, repair, and current operating expenses. If this mandate extended at all to the “maintenance” of the airport (and that it did seems abundantly demonstrated), it extended, as a minimum, to the ordinary, commonplace, and routine operation and maintenance expenditures. It seems to me that this mandate might also be extended to include expenditures for capital outlay items, such as additional hangars, under the theory that the vote of the people gave to the governing body of the city authority to expand, as well as maintain, the airport in keeping with the rapidly changing needs of a beginning enterprise.
The reasoning of Justice H. G. Connor, in Brockenbrough v. Comrs., 134 N. C., 1, is applicable here; there, at p. 16, he wrote: “The people of Charlotte have by their votes declared that a system of waterworks is essential to their corporate welfare and safety. They have empowered their municipal servants and agents to expend a large sum for securing such a system. It is not clear that this involves the duty of protecting this property and making it efficient for the very important, may we not say necessary, purpose for which it was acquired? If so, the power to contract such obligations as are necessary to discharge the duty must be found. Narrow and technical reasoning is misplaced when it is brought to bear upon an instrument framed by the people themselves, and designated as a chart upon which every man, learned or unlearned, may be able to trace the leading principle of government.’ Cooley, Constitutional Limitations, 59.”
Whether the judgment of the citizens of Charlotte in establishing this airport was sound is not before this Court. The citizens have made the investment and now ask this Court the privilege of protecting it without the additional expense of a special election each year to approve the allotment of funds for an enterprise which has the almost unanimous approval of the entire taxpaying citizenship. Art. VII, sec. 7, was intended to protect the people in their rights, not to prevent them from exercising their rights after they had given their solemn judgment by ballot. When the people have spoken, the courts should be slow to thwart the popular will. The abiding and protective spirit which broods over the entire Constitution is that the will of the people, as far as it may be or has been determined, shall prevail; that which tends to defeat the expressed wishes of the sovereign citizenship is inimical to this spirit of the Constitution.
This view of the law of this case has received legislative sanction in the following clear and unequivocal terms: “The governing body or
Under a liberal application of the view that the approval of the people carried a mandate to the governing body to maintain and improve the airport, both the $25.00 appropriation and the $5,000 appropriation would be fully approved, even to the extent of use of the funds for the building of an additional hangar. Even under a restricted interpretation of this mandate, the $25,000 appropriation would be valid; and the $5,000 appropriation, if limited strictly to the purpose of current maintenance and general operating expenses (a limitation which is not required by the general statute), would likewise be valid. Further, under the theory that a municipal airport for Charlotte, under present conditions, is a “necessary expense,” both the $25.00 and the $5,000 appropriations for the airport would be valid. I think the facts in the present case similar to those in the case of Adams v. Durham, 189 N. C., 232.
In Nash v. Monroe, 198 N. C., 306 (307), it is said: “Undoubtedly, if the city of Monroe has the money in its treasury, it could purchase equipment for its hospital. Adams v. Durham, supra; Henderson v. Wilmington, supra.”
Streets and highways are “necessary expenses,” under Art. VII, sec. 7, of our Constitution. Airports, to facilitate the landing, flight, and accommodation of aeroplanes, traveling over air routes and carrying-passengers, freight, mail, and the varied commerce of the air, may, in the widening realm of human progress, be a necessary expense in certain localities, as the present. The expenditure of money by the city of Charlotte, a city of its size, for the maintenance of a municipal airport, is, I think, a necessary expense within the meaning of Art. VII, sec. 7, of the Constitution.
Hence, it follows that the inclusion in the budget for the fiscal year ending 20 June, 1938, of the sum of $25.00 to be expended for this purpose and for which taxes are to be levied and collected, without a vote
In my opinion, tbe use of this fund, $5,000, on band, unappropriated, for tbe current maintenance and operation of tbe airport is permissible.
Lead Opinion
DEVIN, J., concurring.
BARNHILL, J., concurring.
SCHENCK, J., concurs in the concurring opinion of Barnhill, J.
CLARKSON, J., dissenting in part and concurring in part. Action for injunction against appropriating funds and levying taxes for operation, maintenance, and improvement of municipal airport without a vote of the majority of the qualified voters.
The plaintiff is a resident and taxpayer of the defendant city of Charlotte, a municipal corporation, of which the codefendants are and constitute the governing body.
By consent of parties, a jury trial being waived, the court below finds pertinent facts substantially as follows: At an election held in the city of Charlotte on 3 November, 1936, the issuance of $50,000 in bonds of said city for the purpose of purchasing a tract of land for a municipal airport, and the levying of a sufficient tax on taxable property therein to pay the principal of and interest on said bonds were approved by a vote of the majority of the qualified voters in said city. Thereafter the governing body of the city purchased approximately 450 acres of land outside of, but near, the limits of the city. The airport constructed thereon with Federal Government funds was completed and turned over to the city about 1 June, 1937, for maintenance and operation.
An airport commission of three was appointed under authority of an act of the General Assembly of 1937, with power to appoint a manager for said airport and to fix his compensation to be paid from the proceeds derived from the operation of the airport, and to establish and collect fees, tolls, and charges from those using said airport and its facilities, and to deposit all proceeds from the said airport from any source in separate account, to be known as the "Airport Fund," of which the treasurer of the city is the treasurer. Disbursements from said fund are authorized to be made on warrant signed by the treasurer, mayor, city manager, and chairman of the airport commission. The airport commission *63 is given authority to employ an assistant manager and such other employees as they may deem necessary for the proper maintenance and operation of the airport.
In the budget for the fiscal year beginning 1 July, 1937, the governing body of and for the city set up and appropriated, and levied taxes to raise, respectively, both (1) the sum of $25.00 to be expended toward the maintenance of the municipal airport, and (2) a sum, the amount of which is not shown in the record on appeal, but in excess of $5,000, and stated by counsel to be $20,000, as a contingent fund.
Thereafter, on 3 November, 1937, the governing body of the city passed an ordinance in which there appears in part the following:
"Whereas, the said commission has been unable to derive sufficient revenue for the operation, maintenance, and upkeep of the said airport in a proper and adequate manner; and whereas, additional hangar facilities are needed at said airport. Now, therefore, be it ordained by the city council in regular session that $5,000 be and the same hereby is appropriated from the contingent fund of the city and transferred to the airport fund to be used in the operating cost, maintenance, and further improvement of the facilities of said airport, said fund to be disbursed in accordance with the provisions of the legislative act authorizing said airport commission, and known as chapter 559 of the Private Laws of 1937."
The court below further finds as a fact: "That the $5,000 referred to in the pleadings transferred from the contingent fund to the airport fund was money derived from taxation and was not an unappropriated surplus fund derived from other sources."
Upon these findings of fact the court below concluded as a matter of law that the city of Charlotte is without authority to appropriate and expend (1) The sum of $25.00 set out in the budget for the purpose of operating and maintaining a municipal airport, and (2) the sum of $5,000 for that purpose under the provisions of an ordinance by the governing body, "without the question being submitted to and approved by a majority of the qualified voters. Art. VII, sec. 7, of the North Carolina Constitution."
Thereupon judgment was entered enjoining and restraining the defendants, and each of them, from expending any sum for the construction, operation, and maintenance of the municipal airport until the question of levying of such taxes has been submitted to and approved by a majority of the qualified voters of said city of Charlotte. The defendant appealed therefrom to the Supreme Court, and assigned error. Two questions arise on this appeal: (1) Are the operation, maintenance, and improvement of a municipality owned airport necessary expenses within the meaning of Art. VII, sec. 7, of the Constitution of North Carolina? (2) Can the governing body of a municipality make an appropriation and levy a tax for a contingent fund, and when the tax money is collected transfer it to, and use it for, a purpose for which such body is without authority to levy a tax?
Both questions are answered in the negative. The action of the city council as the governing body of the city of Charlotte in making the appropriations and tax levies is violative of the provisions of both Art. VII, sec. 7, of the State Constitution and the County Fiscal Control Act applicable to cities and towns.
First: "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 necessary expenses thereof, unless by a vote of the majority of the qualified voters therein." Art. VII, sec. 7, of the Constitution of North Carolina; C. S., 2691.
In the recent case of Palmer v. Haywood County,
"In defining `necessary expense' it is said in Henderson v. Wilmington,supra, `We derive practically no aid from the cases decided in other states. . . . we must rely upon our own decisions.' Then, after reviewing numerous cases dealing with the subject of `necessary expense,' page 278,Adams, J., said: `The cases declaring certain expenses to be "necessary" refer to some phase of municipal government. This Court, so far as we are advised, has given no decision to the contrary.' Then, on page 279, continues: `The decisions heretofore rendered by the Court make the test of a "necessary expense" the purpose for which the expense is to be incurred. If the purpose is the maintenance of the public peace *65 or the administration of justice; if it partakes of a governmental nature or purports to be an exercise by the city of a portion of the State's delegated sovereignity; if, in brief, it involves a necessary governmental expense.'"
When thus tested, an airport is not a necessary governmental expense.
The subject of the authority to levy taxes has been discussed in numerous cases. The law is well settled and may be summed up:
(1) "For necessary expenses. The municipal authorities may levy up to the constitutional limitation without a vote of the people and without legislative permission;
(2) "For necessary expenses, they may exceed the constitutional limitation by special legislative authority without a vote of the people. Constitution, Art. V, sec. 6.
(3) "For other than necessary expenses a tax cannot be levied either within or in excess of the constitutional limitations except by a vote of the people under special legislative authority." Palmer v. Haywood County,supra; Walker v. Faison,
Not being a necessary expense, the levy of a tax directly or indirectly to be expended for the purpose of the operation, maintenance and improvement of a municipal airport without a vote of a majority of the qualified voters, is violative of Art. VII, sec. 7, of the Constitution of North Carolina. While the good faith of the governing body of the city of Charlotte is not here impugned, the effect is no different in an indirect appropriation and tax levy than in a direct appropriation and tax levy for an unauthorized purpose. The money collected pursuant to a tax levy for an undesignated purpose under the name of "contingent fund" is, nevertheless, money derived from an ad valorem tax. Giving it the name of "contingent fund" does not strip it of its qualities of tax money, nor can it thereby be transformed magically into the character of money "in the treasury" or "money on hand" unappropriated and subject to be used for a purpose for which a direct tax cannot be levied. This patently would authorize to be done indirectly that which the Constitution forbids to be done directly.
It will be noted that the ordinance appropriating the $5,000 in question is not predicated upon any finding or determination of the governing body that it is for a necessary governmental expense. The resolution is based upon the following premises: *66
"Whereas, the said commission has been unable to derive sufficient revenue from the operation, maintenance, and upkeep of the said airport in a proper and adequate manner; and
"Whereas, additional hangar facilities are needed at said airport."
The case of Adams v. Durham,
Second: The County Fiscal Control Act (chapter 146, Public Laws 1927; C. S., 1334 [53], 1334 [76]), which provides the machinery, charts the course, and prescribes the limitations for the administration of the fiscal affairs of counties, including the budgeting for appropriations and levying of taxes to cover same, is made applicable to cities and towns by sections 65 and 67 to 71 of chapter 60 of the Public Laws of 1931.
Sec. 65 thereof, C. S., 2969 (n), reads: "All cities and towns shall be subject to and be governed by all of the provisions of the County Fiscal Control Act and acts amendatory thereof and supplemental thereto, including acts ratified at the present session of the General Assembly, except as herein otherwise provided or except as the context shows that it is not intended that such acts should be applicable to cities and towns."
Section 74 reads: "The provisions of this act shall apply to all counties, cities, and towns in this State, regardless of any provision to the contrary in any special or local act heretofore enacted."
The record fails to disclose any allegation, admission, or finding of fact that the city of Charlotte comes, or is operating within the provisions of the exceptions of the said section 65.
In section 68 there are defined the funds required for cities and towns for each of the functions of municipal government. It is there prescribed, when read in connection with the County Fiscal Control Act, that each fund for each function shall be stated separately in preparing the budget estimate for appropriation, and shall be so set up in the appropriation resolution and tax levy.
Analyzing pertinent sections of County Fiscal Control Act, as applied to cities and towns, we find that: (1) The municipal accountant shall prepare and submit to the governing body not later than the first Monday in July a "budget estimate" of: (a) The amounts necessary to be *67 appropriated for the next ensuing fiscal year for the different objects of the municipality, listing each object of disbursement under the appropriate class of function as defined in section 68 of chapter 60, Laws of 1931, "which estimate shall include the amount of any deficit in any fund, andmay include an emergency estimate for each fund not greater than FIVE percent in excess of other estimates for such fund"; (b) an itemized estimate of the revenue to be available during the ensuing fiscal year, separating revenue from taxation from revenue from other sources, classifying the same under proper funds as defined in said section 68 of chapter 60, Public Laws 1931; and (c) an estimate of the amount of unencumbered and surplus revenues of the current fiscal year in each fund. C. S., 1334 (57); C. S., 2969 (o); C. S., 2969 (p).
(3) Then the governing body, not later than the fourth Monday in July, shall adopt and record on its minutes an appropriate resolution, which shall make appropriation for the several purposes of the municipality, upon the basis of the estimates and statements submitted by the municipal accountant such sums as the governing body may deem sufficient and proper, whether greater or less than the recommendation of the budget estimates; "Provided, however, that `(d) no appropriation shall be made in excess of the amount which may be raised under any constitutional or statutory limits of taxation.'" C. S., 1334 (59). This resolution becomes the chart for the municipal accountant and municipal treasurer in disbursing the city funds. C. S., 1334 (60).
(4) Before any levy of taxes is made the municipal accountant shall submit to the governing body a supplemental budget showing: "(a) The amount of any increase or decrease in each item of (1) deficits and (2) unencumbered balances and (3) surplus revenues as reported by him in the budget estimate, and (b) the amount of miscellaneous revenues collected in the preceding year from sources other than taxation, this amount to be separately classified as to funds and functions, and (c) an estimate of the amount of taxes for the current fiscal year which will not be collected in the same year. Upon the submission of the figures showing increase or decrease in deficits, the appropriation resolution shall be deemed automatically amended by adding such increase to or subtracting such decrease from the amount appropriated for the fund or function to which such deficit pertains. . . ."
(5) Thereafter, and not later than Wednesday after the third Monday in August, the governing body, by resolution to be recorded in its minutes, shall levy upon all the taxable property of the city such rate of tax as may be necessary to produce: "(a) The sum appropriated and (b) the amount of the supplemental budget estimate of taxes which will not be collected in the current fiscal year, after taking into consideration the figures contained in the budget estimates and supplemental *68 budget showing surplus revenues and unencumbered balances carried over from the preceding fiscal year and the estimated miscellaneous revenues from other sources than taxation." C. S., 1334 (63).
(6) No appropriation made by the appropriation resolution, except an appropriation for general municipal expenses, shall be transferred from one fund to another fund, and no appropriation for general municipal expenses shall be transferred to any fund of any subdivision of the municipality, orvice versa. C. S., 1334 (64).
(7) Then follows provisions prescribing restrictions and limitations for contracting with reference to and disbursing the funds — with penalties for violations of the act. C. S., 1334 (65) to 1334 (72), under the County Fiscal Control Act as applied to cities and towns.
Thus, it is seen that the governing body of the city of Charlotte is required to appropriate and make tax levy for each fund or function separately. It is without authority to make an appropriation and levy a tax for a common contingent fund. For emergency purposes as to each fund for which it has the authority to levy a tax, it may appropriate an additional five per cent of the fund requirement which becomes a part of that fund requirement to be covered by subsequent tax levy. Only from the general municipal expense fund may transfer be made to any other fund — and there is no authority for an "airport fund" in the appropriation resolution.
It is worthy in passing to pause and appraise that part of the preamble to the ordinance transferring the $5,000 fund which reads: "Whereas, additional hangar facilities are needed at said airport," followed by the appropriation "to be used in further improvement of the facilities of said airport." "Hanger," in connection with an airport, is defined to be "a shed for housing aeroplanes." "Facility" is "that which facilities any action; aid;" used in plural as "facilities for trade, study, travel, etc." "Improvement" is "a valuable addition or betterment, as a building, clearing, drain, fence, etc., on land."
If the approval by the qualified voters of the purchase of an airport site be implied authority to the governing body of the city to spend tax money to build hangers, why not for concrete runways and other additions and improvements without limit, without further approval of such voters?
The judgment of the court below is
Affirmed.
