Horton v. Redevelopment Commission of High Point, 599

• Decision Date: 14 June 1963
• Docket Number: No. 599,599
• Parties: W. W. HORTON, A. G. Whitener, Whitener Realty Co., Inc., Woodworkers Supply Co., Inc., et al., on Behalf of themselves and all other Taxpayers of the City of High Point, v. REDEVELOPMENT COMMISSION OF HIGH POINT et al.
• Court: North Carolina Supreme Court

Page 464

131 S.E.2d 464

259 N.C. 605

W. W. HORTON, A. G. Whitener, Whitener Realty Co., Inc.,

Woodworkers Supply Co., Inc., et al., on Behalf of

themselves and all other Taxpayers of

the City of High Point, v. REDEVELOPMENT COMMISSION OF HIGH POINT et al.

No. 599

Supreme Court of North Carolina.

June 14, 1963

Harriss H. Jarrell, High Point, for plaintiff appellants.

Knox Walker and Haworth, Riggs, Kuhn & Haworth, by John Haworth, High Point, for defendant appellees.

PARKER, Justice.

This is a summary of the crucial allegations of the amended complaint, necessary for a decision of this appeal:

The City Council of the city of High Point enacted an ordinance approving the creation of the Redevelopment Commission of High Point. Thereafter, a certificate of incorporation was issued by the Secretary of State of North Carolina for the Redevelopment Commission of High Point, in which its members were named.

This Redevelopment Commission has prepared and caused to be prepared a redevelopment plan for East Central Urban Renewal Area, Project No. N. C. R-23, which has been approved and adopted by the City Council of the city of High Point.

The City Council of the city of High Point did not have in existence a legal plan or method of financing the acquisition of the renewal area in the urban renewal plan, Project No. N. C. R-23, at the time of approving said plan as required by G.S. § 160-463, and has no legal plan now for financing the project.

The plan, as approved, is too broad in scope to qualify as slum clearance, in that the plan includes the construction of a million dollar pedestrian plaza, and some of the city of High Point's best commercial and business districts, namely, East High Street, South Wrenn Street, and East Commerce Street.

The City Council of the city of High Point has agreed that the city of High Point will provide an amount in cash, streets, utilities, etc., which will not be less than one-third of the net cost of this redevelopment plan, and the city of High Point has paid the salary of the Urban Renewal Director out of ad valorem tax money.

In pursuance of this plan, the Redevelopment Commission of High Point is proceeding with the plan, and that ad valorem tax monies have been spent, and will be spent in carrying out this plan, and that this plan cannot be finished without the expenditure of substantial sums of money. That the expenditure of this money derived from taxation, spent and to be spent, for carrying out the purpose of this plan is not a necessary expense of the city of High Point within the purview of Article VII, section 7, of the North Carolina Constitution. That no vote by the citizens of High Point has been had on the question of expending money derived by taxation for putting this plan into effect. To carry out this plan will require the city of High Point, and its agencies, to levy taxes and issue bonds, and that to do this to carry out this plan without the approval of the majority of those who shall vote in an election held for such purpose contravenes Article VII, section 7, and Article V, sections 3 and 4, of the North Carolina Constitution.

G.S. §§ 160-466(d) and 160-470 contravene Article VII, section 7, of the North Carolina Constitution. There is an unlawful delegation of authority by the General Assembly to the Redevelopment Commission of High Point in violation of Article II, section 1, of the North Carolina Constitution.

The city of High Point, and its agencies, are contracting debts, pleding its faith, lending its credit, levying ad valorem taxes, and spending ad valorem tax money for the consummation of this redevelopment plan, even though the expense of carrying into effect this plan is not a necessary expense of the city of High Point. The city of High Point has appropriated $5,000 in ad valorem tax monies for urban renewal purposes.

G.S. § 1-151 requires us to construe liberally a pleading challenged by a demurrer with a view to substantial justice between the parties. The demurrer to the amended complaint admits, for the purpose of testing the sufficiency of the pleading, the truth of factual averments well stated and relevant inferences of fact reasonably deducible therefrom. But it does not admit inferences or conclusions of law asserted by the pleader. Little v. Wilson Oil Corp., 249 N.C. 773, 107 S.E.2d 729; Hedrick v. Graham, 245 N.C. 249, 96 S.E.2d 129; Strong's N. C. Index, Vol. 3, Pleadings, pp. 625-627.

The demurrer admits, for the purpose of challenging the sufficiency of the amended complaint, allegations of fact therein alleged to this effect: The city of High Point, and its agency the Redevelopment Commission of High Point, have prepared or caused to be prepared a far-reaching urban renewal project requiring the expenditure of large sums of money in that the project or plan includes the construction of a million dollar pedestrian plaza, and also includes in the project some of the city's best commercial and business districts on East High Street, South Wrenn Street, and East Commerce Street. The City Council of the city of High Point has agreed that the city of High Point will provide an amount in cash, streets, utilities, etc., which will not be less than one-third of the net cost of this redevelopment plan. These allegations of fact permit the reasonable inference that the total cost of completing East Central Urban Renewal Area, Project No. N. C. R-23, will amount to several millions of dollars. The city of High Point has paid the salary of the Urban Renewal Director out of ad valorem tax money, and has appropriated $5,000 in ad valorem tax monies for urban renewal purposes. The city of High Point, and its agencies, are contracting debts, pledging its faith, lending its credit, levying ad valorem taxes, and spending ad valorem tax money for the consummation of this redevelopment plan. No vote has been had on the question of expending money derived by taxation for putting this plan into effect, or for the city's contracting debts, pledging its faith and lending its credit, and levying taxes for putting this plan into effect.

Article VII, section 7, of the North Carolina Constitution reads:

'No county, city, town, or other municipal corporation shall contract any debt, pledge its faith or loan its credit, nor shall any tax be levied or collected by any officers of the same except for the necessary expenses thereof, unless approved by a majority of those who shall vote thereon in any election held for such purpose.'

The necessity of a rigid observance of this constitutional provision has been pointed out and reiterated in our decisions, and emphasized by G.S. § 160-62, which reads:

'No county, city, town, or other municipal corporation shall contract any debt, pledge its faith, or loan its credit, nor shall any tax be levied, or collected by any officer of the same, except for the necessary expenses thereof, unless by a vote of the majority of the qualified voters therein.'

This Court in Redevelopment Commission of Greensboro v. Security National Bank, 252 N.C. 595, 114 S.E.2d 688, has determined that lands acquired for the purposes and in the manner set forth in G.S. Chapter 160, Subchapter VII, Article 37, Urban Redevelopment Law, meet the public purpose test. To the same effect, Redevelopment Commission of Greensboro v. Hagins, 258 N.C. 220, 128 S.E.2d 391. The question of whether such an acquisition is for a necessary purpose relating to some phase of municipal government so as to enable a municipality to carry on the work for which it was organized and given a portion of the State's sovereignty, and necessitating the ordinary and usual expenditures reasonably required to enable a municipality to perform its duties as a part of the State Government was expressly reserved for determination in the Hagins case. See also the concurring opinion by Bobbitt, J., in the Bank case.

'Our decisions uniformly hold that what are necessary expenses for a municipal corporation for which it may contract a debt, pledge its faith, or loan its credit and levy a tax without an approving vote of a majority of those who shall vote thereon in an election held for such purpose, is a question for the Court.' Wilson v. High Point, 238 N.C. 14, 20, 76 S.E.2d 546, 550.

In Henderson v. Wilmington, 191 N.C. 269, 277, 132 S.E. 25, 29, the Court held that the acquisition of free wharves and terminals that may be of advantage to the city's local business interests was not a necessary governmental expense, and without the approval of its voters the city is inhibited by Article VII, section 7, of the State Constitution from issuing bonds for such acquisition. In its opinion, the Court said:

'In defining 'necessary expense,' we derive practically no aid from the cases decided in other states. We have examined a large number of such cases apparently related to the subject, and in each one we have found some fact or feature or constitutional or statutory provision antagonistic to, or at variance with, the section under consideration. We must rely upon our own decisions.'

At page 278, 132 S.E. at page 30 the Court further said: 'The cases declaring certain expenses to have been 'necessary' refer to some phase of municipal government. ...