The Univ. Rail Rd. Co. v. Holden

• Decision Date: 30 June 1869
• Citation: 63 N.C. 410
• Court: North Carolina Supreme Court
• Parties: The UNIVERSITY RAIL ROAD COMPANY v. W. W. HOLDEN, Governor, and D. A. JENKINS, Treasurer of North Carolina.

63 N.C. 410

The UNIVERSITY RAIL ROAD COMPANY

v.W. W. HOLDEN, Governor, and D. A. JENKINS, Treasurer of North Carolina.

Supreme Court of North Carolina.

June Term, 1869.

The Acts of January 30th, 1869, and April 1st, 1869, in regard to “the University Rail Road Company” are invalid; because--

1. By PEARSON, C. J., and READE, DICK and SETTLE, JJ.

No corporation is created thereby, and therefore there is no grantee to take the franchises specified.

2. By PEARSON, C. J., and RODMAN and DICK, JJ.

The question involved therein of an expenditure by the State, hasnot been decided by a vote of the People.

3. By PEARSON, C. J.,

The proportions and limitations upon taxation, required by Art. 5, sec. 1 of the State Constitution, have not been observed.

By RODMAN and DICK, JJ.,

Conceding that an inchoate corporation is created by the acts in question, the “Directors” required for its consummation have not as yet been duly appointed, inasmuch as to such appointment the State Constitution renders a confirmation by the Senate, indispensable.

ARGUENDO:

By the Court, 1. Galloway v. Jenkins, 63 N.C. 147, cited and approved.

2. The proportions and limitations ( ubi supra) do not apply to taxes laid for the purpose of paying either the interest or the principal of the public debt, as it existed at the adoption of the Constitution, or for special county purposes, (as in Art. 5, Sec. 7, of the Constitution.)

By READE, DICK and SETTLE, JJ.

The proportions and limitations ( ubi supra) apply only to taxes laid for the ordinary and current expenses of the State, and include none of the objects of expenditure referred to in Secs. 4 and 5, of the same Article.

By PEARSON, C. J.

They apply in all cases of State or County taxation, except provisions, (1) for the public debt as it existed when the Constitution was adopted, (2) for casual deficits, insurrection and invasion, and (3) county taxation for special purposes.

By RODMAN, J.

They apply (except in regard to the public debt as it existed at the adoption of the Constitution) equally in regard to all State taxes whatever, but not with equal force to all; being, in some matters, imperative; in others, only directory to the Legislature,--whose decision in such case is conclusive, and cannot be reviewed by the judiciary. In this latter class are included, taxes, (1.) to supply casual deficits, to suppress invasions and insurrections; (2.) for the ordinary and legitimate purposes of the State, and (3.) to construct unfinished Rail Roads.

By PEARSON, C. J., and RODMAN and DICK, JJ. ( Dissentiente, READE, J.)

As the Legislature cannot give or lend the credit of the State to others, for the purpose of constructing new Rail Roads, without the sanction of a vote of the people, so a fortiori, it cannot without such sanction, engage in such construction directly.

MANDAMUS, tried before Watts, J., at Spring Term 1869, of the Superior Court of WAKE.

The petition, filed at the same Term, in the name of “The University Rail Road Company,” set forth that the petitioner was a corporation created by An Act ratified January 30, 1869, as amended by another Act ratified April 1st, 1869, for the purpose of constructing a rail road between Chapel Hill and a certain point on the line of the North Carolina Rail Road. And, amongst other things, it alleged that the acts above, provided that it should be the duty of the Governor and the Treasurer of the State to prepare and issue to such company for the purpose of constructing its road, bonds of the State to the amount of three hundred thousand dollars. That a special tax to provide for the interest was laid, and under the provisions of these acts the plaintiff was entitled to have the bonds issued; but that the Governor and Treasurer, upon being applied to, refused to have them prepared and issued.

The prayer was for a Mandamus, to be directed to W. W. Holden, as Governor, and D. A. Jenkins, as Treasurer, &c.

The writ for an alternative mandamus having been issued returnable upon the 15th day of April, during the same term, and service thereof having been accepted by the defendants, upon its return, His Honor ordered a peremptory writ to be issued; and the defendants appealed.

Attorney General and Pou, for the appellants .

Haywood, Fowle & Badger, and Person, contra .

PEARSON, C. J.

I. I incline to the opinion that the act entitled “An act to incorporate the University Rail Road Company,” does not have in law the effect to create a corporation. To give legal effect to a grant, there must be a grantor, a grantee, and a thing granted. Here we have a grantor, the General Assembly; a thing granted, corporate powers and franchises “to the same extent as are possessed by the North Carolina Rail Road Company;” but there is no grantee--no person, persons, or body politic to whom the grant is made. If this be so, it would seem to follow, that the Directors who are to manage the affairs of said ““University Rail Road Company” (there being in contemplation of law no company) cannot have such rights as are enforced by the writ of mandamus.

II. In my opinion, by the proper construction of Art. V, Sec. 5 of the Constitution, the General Assembly has no power to contract a debt to build a new railroad, unless the subject be submitted to a vote of the people. It is decided ( Galloway v. Jenkins, 63 N.C. 147) that the General Assembly has no power to contract a debt, without a vote of the people, to aid in the construction of a new railroad. If the General Assembly has no power to contract a debt for the purpose of building a new railroad, with the assistance of contributions by individuals, county subscriptions, and subscriptions by other railroads, it would seem it cannot have power to contract a debt for the purpose of making a new railroad out and out. A prohibition not to contract a lesser, surely amounts to a prohibition not to contract a greater debt, for the same object. The evil which the Constitution seeks to prevent is not that of giving aid to individuals or corporations in the construction of railroads; but, that of contracting new debts on the part of the State, the existing debt being almost too heavy to bear, and the credit of the State tottering under the load. A construction by which new debts may be contracted on a larger scale than one expressly prohibited, is not admissible upon any principle of law. As this is a deduction from Galloway v. Jenkins, in which the Court was divided, I will put my conclusions also on the construction of all the provisions of Art. V.

III. The act under consideration is in violation of the Constitution in this: the tax levied by it disturbs the proportion which, by the Constitution, capitation tax must bear to the tax on the value of property, to wit: “ The tax on a poll shall be equal to the tax on three hundred dollars worth of property. ” Here we have the proportion. Then follows a provision: “The State and County tax combined, shall never exceed two dollars on the head,” and the necessary effect is, that the State and county tax on the value of property shall never exceed two dollars on three hundred dollars worth of property; and the effect also is, that if the tax on a poll is less than two dollars, then the tax on three hundred dollars worth of property must be less in the same ratio. In other words, the tax on the poll is “ the standard” by which the tax on property is to be levied.

Under two dollars, the power to levy a poll tax for State purposes is unlimited; this interest needed no protection, for it has a full representation in the General Assembly.

Counties are protected by Sec. 7, which provides “taxes levied for county purposes shall be levied in like manner with the State taxes, and shall never exceed double of the State tax except for a special purpose and with the special approval of the General Assembly.

Cities, towns and townships are protected, (Art. VII, Sec. 7,) which provides “no debt shall be contracted, nor shall any tax be levied except for necessary expenses, unless by a vote of a majority of the qualified voters therein.

The only remaining interest is that of property holders, in respect to State and County taxes. This interest is protected by the equation fixed between capitation tax and the tax on property. A statute which disturbs this equation breaks down the safeguard thrown around property by the Constitution. If it can be done to the extent of one hundredth of one per cent, it may be done to the extent of one tenth, and there is no limit.

It was said in the argument, that this equation applies only to taxes levied for current expenses of the State and counties, and has no reference to taxation necessary to pay the interest on the public debt, or the tax to be levied to pay the interest on any new debt.

1. I agree that if, under this equation, carried to its limits, the amount is not enough to meet current expenses, and also to pay the interest on the public debt, then for the excess needed it is not only within the power, but it is the duty of the General Assembly to disregard the equation; for this protection to property must be taken to be subject to the injunction, “to maintain the honor and good faith of the State untarnished in regard to the public debt, [Art. I, Sec. 6,] and by Sec. 4 of the Article under consideration, it is ordained: “The General Assembly shall, by appropriate legislation and adequate taxation, provide for the payment of the interest on the public debt, and after 1880 it shall lay a special annual tax, as a sinking fund, to discharge the principal.” I do not adopt the entire position taken by Mr. Haywood, that by a specific tax is meant a tax on land by the acre, or on horses and cattle by the head. It is enough to admit that this tax is to be independent of the equation; as in Sec. 7, a tax for special county purposes, with the special approval of the General Assembly, may be levied without reference to the equation.

2. I do not agree to the...