Austin v. Shaw, 529

• Decision Date: 11 June 1952
• Docket Number: No. 529,529
• Citation: 71 S.E.2d 25,235 N.C. 722
• Court: North Carolina Supreme Court
• Parties: AUSTIN, v. SHAW, Mayor, et al.

Page 25

71 S.E.2d 25

235 N.C. 722

AUSTIN, v. SHAW, Mayor, et al.

No. 529

Supreme Court of North Carolina.

June 11, 1952

Taliaferro, Clarkson & Grier, Charlotte, for plaintiff, appellant.

John D. Shaw, Charlotte, for defendants, appellees.

DEVIN, Chief Justice.

The City of Charlotte according to the census of 1950 has a population of 133,212. The Southern Railway Company operates trains over three lines of railroad tracks through the City, the main line in the west side of the City, a freight line in the eastern portion of the City, and a cross-line connecting the main line with the line from Charlotte to Columbia and Augusta. Within the city limits there are 32 railroad crossings at grade. For the purpose of eliminating these hazards to public safety, the City, pursuant to resolution and notice, submitted to the qualified voters of the City an ordinance authorizing issue of $1,500,000 bonds to provide funds for the elimination of grade crossings and improvements incident thereto. The ordinance and bond issue were duly approved.

Thereafter, and following negotiations between the engineer for the City and the Chief Engineer of the Southern Railway Company, a comprehensive plan was tentatively agreed to providing ways and means for the accomplishment of the purpose sought, and a contract embodying the terms of this plan has been prepared and will be executed on behalf of the City unless restrained in this action.

Without undertaking to set out in detail the proposed plan, which is a part of the record in the case, its salient features are these: The plan calls for elevating the main line double tracks of the Southern Railway Company near the passenger station, constructing underpasses and overpasses at other crossings, elimination of the use of the cross-line through the City and removing a portion of that track and substituting a new line outside the city limits to serve the same purpose of connecting the main line with line to Columbia and Augusta. The plan also contemplates changes in the structure of the passenger station and other buildings to conform to the grade separation plan at that place. It also appeared that it would cost less to build the cross-line outside the city limits than to build it within or to construct all grade separations. It was estimated that the completion of this entire plan would cost $5,000,000, and it was tentatively agreed that of this amount the City should contribute $1,250,000, the Southern Railway Company $1,250,000, with the expectation of the parties that Federal funds for highway improvement will be available in an amount equal to these combined contributions, provided the contributions of City and Railway are pooled in the manner set out in the proposed contract.

It is admitted that the results to be secured by the performance of the contract would be conducive to the welfare of the City and its inhabitants, and that the means and methods of accomplishing this desirable end are feasible and reasonable, but the plaintiff's complaint voices the objection that the City is without power to enter into the contract, and that the contribution of the City's share toward the completion of the proposed plan would constitute an illegal expenditure of public funds of the City.

Three questions are raised: (1) Whether the City has power to contribute City funds for the construction of the cross-line railroad track beyond the limits of the City; (2) whether it is necessary to expend public funds for the elimination of grade crossings if the City has power to require the railroad to do so at its own expense; and (3) whether the City may lawfully expend its funds in contribution to the cost of alterations of railroad structures not directly related to grade crossings.

1. The general rule is that a municipal corporation has no extra-territorial powers, and may not expend public funds for improvements and construction outside its corporate limits, unless for a public purpose it is so authorized by statute or by its charter. Berry v. City of Durham, 186 N.C. 421, 119 S.E. 748; Asheville v. Herbert, 190 N.C. 732, 130 S.E. 861; Holmes v. City of Fayetteville, 197 N.C. 740, 150 S.E. 624; Riddle v. Ledbetter, 216 N.C. 491, 5 S.E.2d 542; Murphy v. City of High Point, 218 N.C. 597, 12 S.E.2d 1; Wilson v. Town of Mooresville, 222 N.C. 283, 22 S.E.2d 907; Nash v. Town of Tarboro, 227 N.C. 283, 42 S.E.2d 209; Horner v. Chamber of Commerce, 231 N.C. 440, 57 S.E.2d 789; Laughinghouse v. City of New Bern, 232 N.C. 596, 61 S.E.2d 802; 5 McQuillin Municipal Corporations, sec. 1969.

The general statute enumerating the powers conferred upon municipal corporations, G.S. § 160-204, provides that property may be acquired by a city outside its corporate limits for certain specified purposes in connection with public services operated by the City, and the City of Charlotte by its charter, Ch. 366 Public Local Laws 1939, is given power to regulate and control the construction of railroad tracks so that they may not interfere with the public use of the streets. But neither of these statutes expressly authorizes the City to expend its funds for the construction outside its corporate limits of several miles of railroad track for the use of the Southern Railway Company.

However, after careful consideration of the pleadings and the evidence, and the findings of the court thereon, we think that in order to carry out the comprehensive plans tentatively agreed to between the City and the Southern Railway Company, as set forth in the proposed contract, for the purpose of eliminating grade crossings in the public interest, the expenditure of city funds for the purpose of this extra-territorial construction would be justified under the principle of compensation by way of substitution. Instead of building a line in the City and expending a much larger sum for many structures for underpassing and overpassing, the plan for acquiring rights of way and building a line outside of the City limits may properly be considered as a substitute the one for the other, and as a means to the completion of an overall plan for a necessary public service. This view is in accord with the decisions of this Court in Dudley v. City of Charlotte, 223 N.C. 638, 27 S.E.2d 732, where the City's agreement to build a bridge on another's property in part compensation for a conveyance of land for the establishment of a public park was upheld. Numerous authorities support the principle of compensation by substitution for the completion of definite projects for the public benefit. Brown v. U. S., 263 U.S. 78, 44 S.Ct. 92, 68 L.Ed. 171, Dohany v. Rogers, 281 U.S. 362, 50 S.Ct. 299, 74 L.Ed. 904, 68 A.L.R. 434; Darwin v. Town of Cookeville, 170 Tenn. 508, 97 S.W.2d 838; Pitznogle v. Western Maryland R. R. Co., 119 Md. 673, 87 A. 917, 46 L.R.A.,N.S., 319; Fitzsimons & Galvin v. Rogers, 243 Mich. 649, 220 N.W. 881; Smouse v. Kansas City Southern Ry. Co., 129 kan. 176, 282 P. 183.

In Brown v. U. S., supra [263 U.S. 78, 44 S.Ct. 94], where the creation by the Government of a reservoir for irrigating inundated lands of adjacent owners, the right of the Government to condemn other lands to compensate such owners was upheld as a natural and proper part of the construction. Chief Justice Taft, speaking for the Court in that case, said: 'A method of compensation by substitution would seem to be the best means of making the parties whole.'

In Dohany v....