Kornegay v. City of Goldsboro

• Decision Date: 01 December 1920
• Docket Number: 126.
• Citation: 105 S.E. 187,180 N.C. 441
• Parties: KORNEGAY v. CITY OF GOLDSBORO ET AL.
• Court: North Carolina Supreme Court

105 S.E. 187

180 N.C. 441

KORNEGAY v. CITY OF GOLDSBORO ET AL.

No. 126.

Supreme Court of North Carolina

December 1, 1920

Appeal from Superior Court, Wayne County; Daniels, Judge.

Action by George C. Kornegay against the City of Goldsboro and others. Judgment for defendant, and plaintiff appeals. Affirmed.

Clark C.J., and Brown, J., dissenting.

Bonds issued by a municipal corporation partake of the nature of "chattels"; so that a special statute authorizing the sale of such bonds at a discount, which would result in interest exceeding the usury statutes, is not a violation of the usury laws, which do not apply to sales of chattels.

This is an action to restrain the sale of certain municipal bonds the plaintiff alleging that the act of the General Assembly authorizing the sale of the bonds is unconstitutional and void. The important and material facts involved in this controversy are:

(1) That the city of Goldsboro, being indebted for public improvements, prepared to issue bonds under the Municipal Finance Act for sale, in order that the proceeds might be used to pay said indebtedness, which consists of $150,000 in favor of the Equitable Trust Company of New York, by notes dated June 2, 1920, and due December 2, 1920; $75,000 in favor of the Equitable Trust Company of New York, by notes dated September 1, 1920, and due February 1, 1921 $75,000 in favor of J. S. Bache & Co., of New York, by notes dated September 14, 1920, and due September 14, 1921; $41,661 in favor of People's Bank & Trust Company of Goldsboro, now due; $42,500 in favor of Wayne National Bank of Goldsboro, now due; $25,000 in favor of the West Construction Company, due within two months--all of which debts were contracted for the purpose of securing money with which to pay outstanding contracts entered into by the city prior to August, 1920.

(2) That the provisions of the Finance Act were complied with, and the bonds were ready for sale and delivery to the purchaser.

(3) That the sale of the bonds was advertised twice, but no sale was made, because no bidder offered to pay par for the bonds.

(4) That these conditions existed when the General Assembly met in special session in 1920, when an act was passed authorizing the cities, towns, townships, and school districts in Wayne county to sell bonds at less than par--

"within four months after the ratification of this act, for the purpose of paying indebtedness heretofore incurred and now due or to become due within six months, or for the purpose of paying the cost of public works, improvements, or properties for the making or acquisition of which an outstanding contract has heretofore been entered into by the city, town, township or school district, as the case may be."

(5) That the indebtedness of the city for which bonds are offered for sale comes within the description in said act.

(6) That pursuant to said act said bonds have again been offered for sale, and they will be sold at less than par, if no better bid is offered; the right to reject all bids being, however, reserved.

That on October 14, 1920, and since the institution of this suit, after advertising in the Goldsboro Daily Argus, The Raleigh News and Observer, and the Bond Buyer of New York, the city opened bids for said bonds; the best bid received for said bonds pursuant to said advertisement being less than 96. That the board of aldermen rejected all of said bids, and on the following day sold said bonds to the Wayne National Bank of Goldsboro at 96 and accrued interest; the Wayne National Bank acting as agent in said purchase for New York and Toledo bond buyers.

That said bonds were duly executed and were in New York City at the time of the sale; that delivery of the bonds was to be made in New York City; that payment of both principal and interest of the bonds are to be made in New York City.

That there is no intent to evade the usury laws of this state, but in good faith to meet the urgent, necessary, and immediate needs of the city in the sale of said bonds.

That unless the city can legally deliver and receive payment of said bonds there is an immediate and imminent danger that the city will have to default in the payment of its obligations.

His honor refused to restrain the sale of the bonds, and the plaintiff excepted and appealed.

Dickinson & Freeman, of Goldsboro, for appellant.

D. C. Humphrey, of Goldsboro, for appellee.

ALLEN J.

The plaintiff raises several constitutional questions, which we will consider in their order, first laying down the rules, formulated by the experience of the past as safe guides when an act of the legislative branch of the government is attacked upon the ground that it violates some provision of the Constitution.

"The power of the General Assembly to pass all needful laws, except when barred by constitutional restrictions, is plenary." Shelby v. Power Co., 155 N.C. 200, 71 S.E. 219, 35 L. R A. (N. S.) 488, Ann. Cas. 1912C, 179.

"Every presumption is in favor of the validity of an act of the Legislature and all doubts are resolved in support of the act. In determining the constitutionality of an act of the Legislature, courts always presume in the first place that the act is constitutional. They also presume that the Legislature acted with integrity and with an honest purpose to keep within the restrictions and limitations laid down by the Constitution." Lowery v. School Trustees, 140 N.C. 40, 52 S.E. 269.

The right to declare an act unconstitutional "should be exercised sparingly, and the conflict between the fundamental law and the legislation should be manifest, and clear beyond any reasonable doubt. We should endeavor, by the use of all reasonable logic, to harmonize the two, and only resort to the power as a last expedient, where our plain duty requires us to exercise it in order to preserve the supremacy of the Constitution." Johnson v. Board of Education, 166 N.C. 472, 82 S.E. 833, L. R. A. 1915A, 828.

"It is a well-recognized principle of statutory construction that 'a court will not adjudge an act of the Legislature invalid, unless its violation of the Constitution is, in their judgment, clear, complete, and unmistakable.' Black, Const. Law, p. 61. And, as between two permissible interpretations, that should always be adopted which will uphold the law." Bonitz v. School Trustees, 154 N.C. 379, 70 S.E. 736.

The courts have no power to declare an act unconstitutional because "it is opposed to the spirit supposed to pervade the Constitution," or "is against the nature and spirit of the government," or "is contrary to the general principles of liberty," or "because they may be harsh and may create hardships or inconvenience," or "upon the grounds of inexpediency, injustice, or impropriety," or "because not wise or against public policy."

"The courts are not the guardians of the rights of the people against oppressive legislation, which does not violate the provisions of the Constitution. * * * The propriety, wisdom, and expediency of legislation is exclusively a legislative question, and the courts will not declare a statute invalid because in their judgment it may be unwise or detrimental to the best interests of the state. * * * The only question for the courts to decide is one of power, not of expediency, and statutes will not be declared void simply because, in the opinion of the court, they are unwise." 6 R. C. L. 104 et seq.

"The Legislature, being familiar with local conditions, is primarily the judge of the necessity of such enactments. The mere fact that a court may differ with the Legislature in its views of public policy, or that judges may hold views inconsistent with the propriety of the legislation in question affords no ground for judicial interference, unless the act * * * is unmistakably in excess of legislative power." McLean v. Arkansas, 211 U.S. 539, 29 S.Ct. 206, 53 L.Ed. 315.

The legislative construction of a statute while not binding on the courts, "is entitled to great weight." Sash Co. v. Parker, 153 N.C. 134, 69 S.E. 3. Let us then see, not whether the statute passed at the special session of 1920 authorizing the sale of these bonds at less than par is wise, or in accordance with the best public policy, but is its unconstitutionality "clear, complete, and unmistakable," the rule approved by Hoke, J., in the Bonitz Case, or is it "manifest and clear beyond any reasonable doubt," which is stated as the correct guide by Walker, J., in the Johnson Case; because this is the test, and unless we can so say, resolving doubts in favor of the statute, we are required to uphold and sustain it.

The plaintiff contends:

I. That the act passed at the special session, 1920, authorizing a sale of the bonds at less than par, is in conflict with article 8, section 1, of the Constitution, which provides:

"No corporation shall be created, nor shall its charter be extended, altered, or amended by special act, except corporations for charitable, educational, penal, or reformatory purposes that are to be and remain under the patronage and control of the State; but the General Assembly shall provide by general laws for the chartering and organization of all corporations and for amending, extending, and forfeiture of all charters, except those above permitted by special act."

The answer is that the defendant is a public corporation, and section 1 of article 8 "would seem clearly to have reference to private or business corporations, and does not refer to public or quasi public corporations acting as governmental agencies." Mills v. Com'rs, 175 N.C. 219, 95 S.E. 482, approved on this point at this term in Dickson v. Brewer, 104 S.E. 887.

If argument was needed in support of this authority, it is found in the fact that the section is in an...