Chesterfield County v. State Highway Dept. of South Carolina

• Decision Date: 07 July 1939
• Docket Number: 14910.
• Citation: 3 S.E.2d 686,191 S.C. 19
• Parties: CHESTERFIELD COUNTY v. STATE HIGHWAY DEPARTMENT OF SOUTH CAROLINA et al.
• Court: South Carolina Supreme Court

3 S.E.2d 686

191 S.C. 19

CHESTERFIELD COUNTY v. STATE HIGHWAY DEPARTMENT OF SOUTH CAROLINA et al.

No. 14910.

Supreme Court of South Carolina

July 7, 1939

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

Report of Special Referee follows:

On June 15, 1928, Chesterfield County issued and sold for par and Accrued interest $400,000 of 4 3/4 per cent bonds, maturing in annual installments of $40,000, payable on January 15th in each year from 1930 to 1939, inclusive, in order to provide the sum of $400,000 to comply with a highway reimbursement agreement entered into by Chesterfield County and the State Highway Department of South Carolina, on April 19, 1928, pursuant to the provisions of the acts of the General Assembly of South Carolina authorizing counties and the State Highway Department, in order to accelerate the construction of highways, to enter into agreements by which the county undertakes to advance funds to the State Highway Department to be used for the construction of highways in the county, and the State Highway Department agrees to reimburse the county for the funds so advanced.

About July 1, 1928, the proceeds arising from the sale of these bonds were placed to the credit of the Treasurer of Chesterfield County in South Carolina National Bank in Columbia, but shortly thereafter the County Treasurer transferred all of the funds to the Bank of Cheraw and Chesterfield County at Cheraw. Under the reimbursement agreement the funds to be advanced by Chesterfield County were required to be turned over to the Highway Department within sixty days after demand therefor, and on July 8, 1928 formal demand was made in behalf of the Highway Department for the entire $400,000, followed by further demands on August 2, 1928, and August 9, 1928, but the County Treasurer only remitted $150,000 on August 10, 1928, retaining the balance of the proceeds of the bonds on deposit to his credit in the bank at Cheraw. On or about November 12, 1928, and while this balance remained on deposit to the credit of the Treasurer of Chesterfield County, the bank failed, and the Highway Department has only received the $150,000 remitted by the County Treasurer on August 10, 1928, and the additional sums of $36,250, subsequently realized from dividends on the bank deposit, and $4,959.12, the proceeds of a special tax levy of two mills in Chesterfield County for the year 1931 made under circumstances to be later referred to.

Under the authority of certain acts of the General Assembly, to be later discussed, the Highway Department has purchased all installments of the bonds maturing up to this time and is holding the bonds purchased as a claim against Chesterfield County, except the proportionate part thereof represented by the $150,000 remitted to the Highway Department by the County Treasurer.

On or about March 24, 1936, Chesterfield County, claiming that under the reimbursement agreement between the County and the Highway Department and the statutes applicable thereto the payment of the bonds was an obligation of the Highway Department and not of the County, instituted an action against the State Highway Department in the original jurisdiction of the Supreme Court, seeking a writ of mandamus to require the Highway Department to turn over and deliver to the County all bonds paid by the Department. The Supreme Court denied the application for a writ of mandamus (181 S.C. 323, 187 S.E. 548, 550) on the ground, as stated in the opinion of the Court, "that there are varied and complex questions involved, from which differing conclusions can be deduced, which ought properly to be tried in a court of law, and not determined by the summary process of mandamus".

After the denial of its application for a writ of mandamus Chesterfield County, making substantially the same contentions as made in its application for a writ of mandamus, instituted the present action in the Court of Common Pleas against the State Highway Department of South Carolina, M. S. Watson, Treasurer of Chesterfield County, and T. W. Eddins, Auditor of Chesterfield County, asking to have all of its issue of $400,000 of bonds, heretofore paid or hereafter paid by the State Highway Department, adjudged to be the property of Chesterfield County and required to be delivered into its possession. It also seeks in the present action to have the Auditor and the Treasurer of Chesterfield County enjoined from levying and collecting an annual tax of two mills placed upon all taxable property in Chesterfield County by a provision appearing in the State Appropriation Act in each year from 1931 to 1936, inclusive. After the commencement of the action J. F. McBride, as a property owner and taxpayer of Chesterfield County, applied to be made a party in his own behalf and in behalf of all other property owners and taxpayers of Chesterfield County. The application of J. F. McBride having been granted by an order of the Judge of the 4th Circuit, dated December 12, 1936, the pleadings have been amended accordingly, and J. F. McBride in his own behalf and in behalf of all other property owners and taxpayers of Chesterfield County has been made an additional party defendant.

Chesterfield County predicates its alleged right to have the bonds adjudged to be its property and required to be delivered into its possession upon the theory, for the present somewhat generally stated, that funds pledged under authority of law for the payment of the bonds, as well as funds actually belonging to the County, have come into the hands of the Highway Department, and that the Highway Department has been required by various Acts of the General Assembly to assume the payment of the bonds. As to the annual tax of two mills placed upon all taxable property in Chesterfield County by the State Appropriation Acts from 1931 to 1936, inclusive, it is contended that the tax has been unconstitutionally imposed, for reasons to be later discussed. The State Highway Department admits that it is liable for the payment of the bonds to the extent of the $150,000 remitted to the Department by the County Treasurer on August 10, 1928, but denies that it is liable to any greater extent, and it also denies that the two mills annual tax levy is unconstitutional. The defendant, J. F. McBride, admits the allegations of the complaint and makes common cause with the plaintiff. The defendants, M. S. Watson, Treasurer of Chesterfield County, and T. W. Eddins, Auditor of Chesterfield County, have failed to answer and are in default.

The facts are not in dispute, and the disposition of the case depends wholly upon questions of law, which to a very large extent involve the proper construction of applicable statutes. The parties, therefore, have entered into a written stipulation as to the facts, and they have further agreed orally that anything appearing in the exhibits attached to the pleadings, or in the record for the Supreme Court in the former application for a writ of mandamus, may be taken as a part of the stipulation as to the facts. In relation to the facts, however, it may be of some moment to state that although the reimbursement agreement between Chesterfield County and the State Highway Department, entered into on April 19, 1928, provided for the construction, at an estimated cost of $400,000, of a section of Highway Route No. 1 and a section of Highway Route No. 9, both to be graded and surface treated, yet in 1931 the State Highway Department built these sections of road, using a much higher and more expensive type of construction, at a total cost of $1,401,002.52, financed with the $150,000, previously advanced by Chesterfield County, and $1,251,002.52 taken from the construction funds of the State Highway Department.

The reimbursement agreement between the County and the State Highway Department having been made wholly under statutory authority, it seems obvious that the rights conferred and the obligations imposed must be measured by the several statutes authorizing and regulating these agreements; and since the County points to many provisions of these statutes, by which it is contended that the County is relieved of the obligation of paying any part of the bonds and the State Highway Department is required to pay them in full, a somewhat detailed and perhaps tedious statement of the pertinent parts of the statutes claimed to have that effect is necessary. It is also necessary to state the provisions of certain other statutes giving special treatment to these reimbursement bonds of Chesterfield County, because the State Highway Department has acted under them in acquiring and handling the bonds, and the constitutional validity of some of this legislation is attacked by the County.

By an act commonly referred to as the "Pay-As-You-Go" Highway Act, approved March 21, 1924 (33 Stat. 1193, Secs 5926-5933, Code of 1932), a comprehensive plan was adopted for constructing and financing a connected system of State highways, the highways to be constructed in each county of the State being set forth in detail. Motor vehicle license taxes and a tax of three cents a gallon on sales of gasoline were imposed, and it was provided that the highways should be constructed and maintained from any amount available from automobile license taxes, federal aid, and gasoline taxes. It was further provided, for the year 1924, that from the three cents a gallon gasoline tax one cent should be paid into the State treasury to the credit of the general fund, one cent to the counties, and one cent to the State Highway Department, and that after December 31, 1924, all gasoline taxes, automobile license taxes and federal aid should go to the State Highway Department for the purpose of constructing and maintaining the highways. The State...