Appeal of Martin

• Decision Date: 01 January 1971
• Citation: 286 N.C. 66,209 S.E.2d 766
• Court: North Carolina Supreme Court
• Parties: Appeal of Mr. James G. MARTIN, Chairman of the Mecklenburg County Board of Commissioners, from a

Page 766

209 S.E.2d 766

286 N.C. 66

Appeal of Mr. James G. MARTIN, Chairman of the Mecklenburg

County Board of Commissioners, from a decision of the

Mecklenburg County Board of Equalization and Review

exempting from Tax certain Property belonging to Ross

Laboratories and stored in the public warehouse in Charlotte

as of January 1, 1971.

No. 83.

Supreme Court of North Carolina.

Nov. 26, 1974.

Boyle, Alexander & Hord by B. Irvin Boyle, Charlotte, for Ross Laboratories, appellant.

Ruff, Bond, Cobb, Wade & McNair by Hamlin L. Wade, Charlotte, for Mecklenburg County, appellee.

HUSKINS, Justice:

Mecklenburg County contends that Chapter 1185 of the 1967 Session Laws, amending G.S. § 105--281 (1965), which classifies certain personal property stored in public warehouses as nontaxable, is unconstitutional in that it violates Article v, Section 2 of the North Carolina Constitution. The taxpayer contends that Mecklenburg County has no standing to question the constitutionality of the statute. We first determine whether the County has standing to raise the constitutional question.

The text of the law in question, later codified as the third paragraph of G.S. § 105--281 (1969 Cum.Supp.), in effect at the time this action arose, reads as follows:

' § 105--281. Property subject to taxation,--All property, real and personal, within the jurisdiction of the State, not especially exempted, shall be subject to taxation.

Cotton, tobacco, other farm products, goods, wares, and merchandise which are held or stored for shipment to any foreign country, or held or stored at a seaport terminal awaiting further shipment after being imported from a foreign country through any seaport terminal in North Carolina, except any such products, goods, wares, and merchandise which have been so stored for more than twelve months on the date as of which property is assessed for taxation, are hereby designated a special class of personal property and shall not be assessed for taxation. It is hereby declared to be the policy of the State to use its system of property taxation in such manner, through the classification of the aforementioned property, as to encourage the development of the ports of North Carolina. For purposes of this section and of this subchapter, the term 'property, real and personal,' as used in the first paragraph of this section, shall not include the property hereinabove in this paragraph so specially classified.

Personal property of nonresidents of the State in their original package or fungible goods in bulk, belonging to a nonresident of the State, shipped into this State and placed in a public warehouse for the purpose of transshipment to an out-of-state or within the state destination and so designated on the original bill of lading, or personal property of residents of the State in their original package and fungible goods in bulk, belonging to a resident of the State, placed in a public warehouse for the purpose of transshipment to an out-of-state destination and so designated on the original bill of lading, shall be, while so in the original package, or as fungible goods in bulk, in such warehouse, and they are hereby designated a special class of personal property and shall not be assessed for taxation. No portion of a premises owned or leased by a consignor or consignee, or a subsidiary of a consignor or consignee, shall be deemed to be a public warehouse within the meaning of this Section despite any licensing as such. It is hereby declared to be the policy of this State to use its system of property taxation in such manner, through the classification of the aforementioned property, to encourage the development of the State of North Carolina as a distribution center. For purposes of this Section and this subchapter, the term 'property, real and personal,' as used in the first paragraph of this Section, shall not include the property hereinabove in this paragraph so specially classified.'

The general rule with respect to those eligible to question the validity of a statute was stated by Justice Sharp, writing for the Court, in Stanley, Edwards, Henderson v. Dept. of Conservation & Development, 284 N.C. 15, 199 S.E.2d 641 (1973), as follows:

'Under our decisions '(o)nly those persons may call into question the validity of a statute who have been injuriously affected thereby in their persons, property or constitutional rights.' Canteen Service v. Johnson, 256 N.C. 155, 166, 123 S.E.2d 582, 589 (1962). See also Nicholson v. Education Assistance Authority, 275 N.C. 439, 168 S.E.2d 401 (1969); In Re Assessment of Sales Tax, 259 N.C. 589, 31 S.E.2d 441 (1963); Carringer v. Alverson, 254 N.C. 204, 118 S.E.2d 408 (1961); James v. Denny, 214 N.C. 470, 199 S.E. 617 (1938). The rationale of this rule is that only one with a genuine grievance, one personally injured by a statute, can be trusted to battle the issue. 'The 'gist of the question of standing' is whether the party seeking relief has 'alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentations of issues upon which the court so largely depends for illumination of difficult constitutional questions. '' Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947, 961 (1968).'

Even though the County's tax revenues are diminished by the tax exempt classification in the third paragraph of G.S. § 105--281 (1969 Cum.Supp.), the taxpayer urges that the County, as a creature of the Legislature, has no standing to question, on constitutional grounds, the validity of tax legislation enacted by the General Assembly. Cf. Brown v. Com'rs of Richmond County, 223 N.C. 744, 28 S.E.2d 104 (1943).

We held in State v. Mems, 281 N.C. 658, 190 S.E.2d 164 (1972), that the State had standing to challenge the constitutionality of former G.S. § 7A--457(a) which prevented an indigent defendant from waiving counsel at any critical stage of a capital case. Mecklenburg County contends that Mems is authority for the County's standing in this case. Not so. Mems was a criminal proceeding in which the State's right to introduce otherwise competent and vitally important evidence and its right to carry out the judgment it had obtained against the defendant in the trial court were defeated by a statutory classification of persons singled out by the Legislature for special treatment when there was no reasonable relation between the classification and the objective the statute sought to accomplish. Moreover, in the factual context of Mems, the State, and only the State, acting through the Attorney General, a constitutional officer under the executive branch of government, was in a position to raise the constitutional question. This distinguishes Mems. In the case before us other taxpayers adversely affected have standing to raise the constitutional issue Mecklenburg Seeks to raise. Thus Mems is not authority for the County's position.

The question whether a state subdivision has standing to contest the constitutionality of a State Statute has produced conflicting decisions in other jurisdictions. C. Hewitt and Sons Co. v. Keller, 223 Iowa 1372, 275 N.W. 94 (1937); King County v. Port of Seattle, 37 Wash.2d 338, 223 P.2d 834 (1950); 16 C.J.S. Constitutional Law, § 76 (1956). But the prevailing view is that a subdivision of the State does not have standing to raise such a constitutional question. Baltimore County v. Churchill, Ltd., 271 Md. 1, 313 A.2d 829 (1974). Likewise, a majority of jurisdictions which have considered whether a city or county may challenge a tax statute on constitutional grounds answer in the negative. Board of Review v. Southern Bell Tel. & Tel. Co., 200 Ala. 532, 76 So. 858 (1917); City of Sebring v. Wolf, 105 Fla. 516, 141 So. 736 (1932); C. Hewitt and Sons Co. v. Keller, supra; Baltimore County v. Churchill, Ltd., supra; City of Buffalo v. State Board of Equalization and Assessment, 26 A.D.2d 213, 272 N.Y.S.2d 168 (1966); Chesterfield County v. State Hwy. Dept., 191 S.C. 19, 3 S.E.2d 686 (1939); State ex rel. Hansen v. Salter, 190 Wash. 703, 70 P.2d 1056 (1937); Marshfield v. Cameron, 24 Wis.2d 56, 127 N.W.2d 809 (1964). Contra, State ex rel. Tulane Homestead Ass'n v. Montgomery, 185 La. 777, 171 So. 28 (1936); Clearfield Bituminous Coal Corp v. Thomas, 336 Pa. 572, 9 A.2d 727 (1939). Although these decisions do not articulate a well defined rule of law, much of their reasoning is persuasive.

The counties of North Carolina were created by the General Assembly as governmental agencies of the State. N.C.Const. Art. VII, § 1; Saluda v. Polk County, 207 N.C. 180, 176 S.E. 298 (1934); State ex rel. O'Neal v. Jennette, 190 N.C. 96, 129 S.E. 184 (1925). The counties have no inherent taxing power. Hajoca Corp. v. Clayton, Comr. of Revenue, 277 N.C. 560, 178 S.E.2d 481 (1971); Murphy v. Webb, 156 N.C. 402, 72 S.E. 460 (1911). The power of taxation must be exercised by the legislative branch. Hajoca Corp. v. Clayton, Comr. of Revenue, supra; Saluda v. Polk County,supra. Thus Mecklenburg County dervies its power to tax from the Legislature and cannot complain that the enabling legislation is lacking in breadth.

As a general rule, 'one who voluntarily proceeds under a statute and claims benefits thereby conferred will not be heard to question its constitutionality in order to avoid its burdens.' 16 Am.Jur.2d, Constitutional Law, § 135 (1964); See Utilities Comm. v. Electric Membership Corp., 276 N.C. 108, 171 S.E.2d 406 (1970); City of Durham v. Bates, 273 N.C. 336, 160 S.E.2d 60 (1968); Ramsey v. Veterans Commission, 261 N.C. 645, 135 S.E.2d 659 (1964); Convent v. Winston-Salem, 243 N.C. 316, 90 S.E.2d 879 (1956). When Mecklenburg County sought to assess the property of the taxpayer in this case, G.S. § 105--281 (1969 Cum.Supp.) included both the general taxing power which the County was exercising and the nontaxable classification it now seeks to attack on constitutional grounds. Such an...