Bd. Of Drainage Com&rs Of Muddy Creek Drainage Dist v. C. A. Webb & Co

• Decision Date: 04 December 1912
• Court: North Carolina Supreme Court
• Parties: BOARD OF DRAINAGE COM'RS OF MUDDY CREEK DRAINAGE DIST. v. C. A. WEBB & CO.

76 S.E. 552

160 N.C. 594

BOARD OF DRAINAGE COM'RS OF MUDDY CREEK DRAINAGE DIST.

v.C. A. WEBB & CO.

Supreme Court of North Carolina.

Dec. 4, 1912.

Taxation (§ 218^*)—Exemptions — "Municipal Corporation"—What Is.

A drainage district, although a quasi public corporation, is not a "municipal corporation" within the purview of Const. art. 5, § 5, providing that property belonging to the state or municipal corporations shall be exempt from taxation, and hence under Const. art. 5, § 3, art. 7, § 9, respectively, providing that all moneys, stocks, and personal property shall be taxed by uniform law, and that all taxes levied by any county, city, or town shall be uniform, the Legislature was without power to exempt from taxation bonds issued by a drainage district, as was attempted by Pub. Laws 1911, c. 177.

[Ed. Note.—For other cases, see Taxation, Cent. Dig. § 357; Dec. Dig. § 218.*

For other definitions, see Words and Phrases, vol. 5, pp. 4620-4627; vol. 8, p. 7726.]

Appeal from Superior Court, Duplin County; Ferguson, Judge.

Action by the Board of Drainage Commissioners of the Muddy Creek Drainage District against C. A. Webb & Co. From a judgment for defendant, plaintiff appeals. Affirmed.

Kerr & Gavin, of Warrenton, for appellant.

C. A. Webb, of Asheville, and T. H. Calvert, of Raleigh, for appellee.

CLARK, C. J. The only question presented is whether the Legislature had the power by chapter 177, Pub. Laws 1911, to exempt from taxation bonds issued by the commissioners of the Muddy Creek drainage district, in Duplin county. Const. art. 5, § 3, declares: "Laws shall be passed, taxing by a uniform rule all moneys, credits, investments in bonds, stocks, joint stock companies or otherwise; and also, all real and personal property." And article 7, § 9, provides: "All taxes levied by any county, city or town or township shall be uniform and ad valorem upon all property in the same, except property exempted by this Constitution." The language of the Constitution is explicit, and the court below properly held that the bonds of this drainage district could not be exempted from taxa tion. The plaintiffs contend that the Legislature has such power to exempt bonds from taxation under article 5, § 5, which provides that: "Property belonging the state or to municipal corporations shall be exempt from taxation." But its own bonds are not the property of the drainage district. Nor is such district a municipal corporation. Certainly not within the meaning of that paragraph of the Constitution, which merely contemplates exempting property belonging to the state and to counties, cities, and towns. The reason for this is that as the state has the taxing power, if its bonds are not exempted, the amount of the taxes will merely be added to the rate of interest, and it would be useless to collect additional taxes to pay the interest when it will save commissions thereon to deduct the taxes in advance, thus reducing the rate of interest. We do not know of any county or municipal bonds being exempted, but, if it can be done the exemption would only extend to taxes of the county or municipality issuing such bonds, else to the extent of the exemption such county or municipality would be taxing the people of the rest of the state. As stated by Hoke, J., in Sanderlin v. Luken, 152 N. C. 743, 68 S. E. 226, these drainage districts are regarded as "quasi public corporations, but partaking to some extent of the character of a governmental agency." Their assessments upon the land it is said, quoting Shuford v. Commissioners, 86 N. C. 552, are "regarded as a local assessment and...