O'Berry v. Mecklenburg County

• Decision Date: 19 February 1930
• Docket Number: 249.
• Parties: 198 N.C. 357, 67 A.L.R. 1304 v. MECKLENBURG COUNTY et al. O'BERRY, State Treasurer,
• Court: North Carolina Supreme Court

151 S.E. 880

198 N.C. 357, 67 A.L.R. 1304

O'BERRY, State Treasurer, v. MECKLENBURG COUNTY et al.

No. 249.

Supreme Court of North Carolina

February 19, 1930

Appeal from Superior Court, Wake County; Grady, Judge.

Action by Nathan O'Berry, Treasurer of the State of North Carolina, against Mecklenburg County and the Mecklenburg County Highway Commission. Judgment for defendants, and plaintiff appeals.

Affirmed.

On August 2, 1928, the treasurer of North Carolina instituted an action in the superior court of Wake county against Mecklenburg county and the Mecklenburg highway commission. It was alleged in the complaint that the defendant, Mecklenburg County, was a body politic and corporate, and authorized to sue and be sued. It was further alleged that "the General Assembly of North Carolina enacted chapter 93, Public Laws of 1927, wherein there was levied and imposed a tax of four cents per gallon on all motor fuel, sold, distributed or used in this state; that all of the net proceeds of said tax is required to be paid into the State Treasury and there placed to the credit of the State Highway Fund, to be used for the purposes hereinbefore stated." It was further alleged that the county of Mecklenburg had received and used in the state of North Carolina from April 13, 1927, to June 27, 1928, 184,485 gallons of gasoline, and that said gasoline was subject to a tax of four cents per gallon, amounting to $7,379.40.

The cause of action is confined exclusively to the liability of Mecklenburg county for said tax.

The county filed an answer admitting that it had bought the amount of gasoline alleged in the complaint, outside of the state of North Carolina, and that said defendant "used said gasoline in the State of North Carolina solely and exclusively for the operation of automobiles, trucks tractors, road building machinery and other machinery and appliances, in the performance of the duties vested in it and required of it by law, in the construction and maintenance of the public highways of Mecklenburg County, and the defendant avers that in carrying out such duties it was performing a governmental function and was an instrumentality of the State."

Upon the hearing, the following judgment was rendered:

"The defendant has received and used in the County of Mecklenburg since April 3, 1927, up to June 27, 1928, 184,485 gallons of gasoline, which was used by it in the building of roads in said county and in the management, operation and maintenance of the roads, camps or convict camps of said county. Said gasoline was purchased outside of the State and shipped into the State through the interstate commerce, without the payment of the tax of 4 cents per gallon, as provided by the laws of 1927, in cases of 'distributors' as defined in said Act.

"The tax or excise on said gasoline, if due at all, amounts to $7,379.40; and that amount is due to the state through its treasurer, by the defendant, if the defendant is liable at all for said tax, under the provisions of chapter 93, Public Laws of 1927.

"The defendant contends that it is not liable for said tax or duty, by whatever name it may be called, for that:

"(a) It is a political subdivision of the State, engaged in governmental duties and cannot be taxed, or required to pay any duty on gasoline under the provisions of said Act, because the imposition of such tax or duty would be in contravention of article 5, § 5, of the Constitution of North Carolina.

"(b) The defendant does not fall within the meaning of the word 'distributor' as defined in said Act of 1927.

"These are the questions presented, and upon the decision of the Court, as to these two questions, it is admitted that the rights of the parties depend.

"The Court has already held that the defendant is a political sub-division of the State, engaged in governmental functions. Jenkins v. Griffith, 189 N.C. 633, 127 S.E. 625. This being true in fact, the Court is of the opinion that the imposition of the tax of four cents per gallon upon gasoline purchased and used by the defendant is in contravention of the Constitution art. 5, § 5.

"The Act of 1927, Chap. 93, Pub. Laws, states that the word distributor shall include any person, firm, association or corporation that has on hand or in its possession, in this State, motor fuels being held for the purpose

of sale, distribution or use, within the State. Section 3 of said Act further limits and defines the meaning of the word distributor, and, as the entire Statute should be considered in construing Sec. 1, (School Commissioners of City of Charlotte v. Board, 158 N.C. 191, 73 S.E. 905), the Court is of the opinion that the word distributor as used in Sec. 1, means only those who are engaged in the business of buying and selling motor fuels, and that it does not apply to the defendant in this case.

"Wherefore, it is now, considered by the Court, ordered, adjudged and decreed, that the plaintiff is not entitled to recover anything in this action, that the defendant go hence without day and recover its costs, to be taxed by the Clerk."

From the foregoing judgment, the plaintiff appealed.

Dennis G. Brummitt, Atty. Gen., and Frank Nash, Asst. Atty. Gen., for appellant.

J. L. De Laney and John S. Cansler, both of Charlotte, for appellees.

BROGDEN J.

The record presents two questions of law, to wit

(1) Is a county liable for a tax upon gasoline, used by it in the discharge of its governmental functions?

(2) Is a county using gasoline in the discharge of its governmental functions within the purview of chapter 93, Public Laws of 1927?

The defendant contends that it is not liable for said tax by reason of the application of article 5, § 5, of the Constitution of North Carolina, the pertinent portion of which is that "property belonging to the State or to municipal corporations, shall be exempt from taxation," etc. A county under our system of government is not strictly a municipal corporation. This concept runs through the law, beginning with Mills v. Williams, 33 N.C. 558. The distinction between public and private corporations was thus expressed in that case: "The substantial distinction is this: some corporations are created by the mere will of the Legislature, there being no other party interested or concerned. To this body a portion of the power of the Legislature is delegated to be exercised for the public good, and subject at all times to be modified, changed, or annulled. Other corporations are the result of contract. The Legislature is not the only party interested; for, although it has a public purpose to be accomplished, it chooses to do it by the instrumentality of asecond party. These two parties make a contract."

Again in Bell v. Commissioners, 127 N.C. 85, 37 S.E. 136, this court declared: "Counties are not, in a strictly legal sense, municipal corporations, like cities and towns. They are rather instrumentalities of government, and are given corporate powers to execute their purposes, and they are not liable for damages, in the absence of statutory provisions giving a right of action." To the same effect is the utterance in Jones v. Commissioners, 137 N.C. 579, 50 S.E. 291, 297, in these words: "These counties are not, strictly speaking, municipal corporations at all, in the ordinary acceptation of the term. They have many of the features of such corporations, but they are usually termed "quasi public corporations.' In the exercise of ordinary governmental functions, they are simply agencies of the state, constituted for the convenience of local administration in certain portions of the state's territory; and, in the exercise of such functions, they are subject to almost unlimited legislative control, except where this power is restricted by constitutional provision." The weight of authority is to the effect that all the powers and functions of a county bear reference to the general policy of the state, and are in fact an integral portion of the general administration of state policy. White v. Commissioners 90 N.C. 437, 47 Am. Rep. 534; Hughes v. Commissioners, 107 N.C. 598, 12 S.E. 465; Prichard v. Commissioners, 126 N.C. 908, 36 S.E. 353, 78 Am. St. Rep. 679; Burgin v. Smith, 151 N.C. 561, 66 S.E. 607; Marsh v. Early, 169 N.C. 465, 86 S.E. 303.

Therefore, property held by a county is held for the express purpose of aiding or facilitating the discharge of governmental functions. For this reason the property of the state and the property of counties is exempt from taxation by express provisions of the Constitution in article 5, § 5, thereof.

Another reason for exempting the property of the state and counties from taxation is thus stated by Cooley on Taxation, vol. 2 (4th Ed.) par. 621: "Some things are always presumptively exempted from the operation of general tax laws because it is reasonable to suppose they were not within the intent of the Legislature in adopting them. Such is the case with property belonging to the state and its municipalities and which is held by them for public purposes. All such property is taxable, if the state shall see fit to tax it; but to levy a tax upon it would render necessary new taxes to meet the...