Town of Benson v. Johnston County

• Decision Date: 08 April 1936
• Docket Number: 242.
• Parties: TOWN OF BENSON v. JOHNSTON COUNTY.
• Court: North Carolina Supreme Court

185 S.E. 6

209 N.C. 751

TOWN OF BENSON v. JOHNSTON COUNTY.

No. 242.

Supreme Court of North Carolina

April 8, 1936

Appeal from Superior Court, Johnston County; F. A. Daniels Emergency Judge.

Controversy without action between the Town of Benson and the County of Johnston. From a judgment for the County, the Town appeals.

Affirmed.

This is a controversy without action. N.C.Code 1935 (Michie) § 626. The agreed statement of facts is as follows:

"1. The Town of Benson, North Carolina, is a municipal corporation, created by an Act of the General Assembly of North Carolina, Chapter 63, Private Laws of 1915, and is vested with all the rights conferred by its Charter and by the Statutory Law of North Carolina pertaining to municipal corporations. The County of Johnston is a body politic under the Statutes of North Carolina.

2. That the town of Benson duly instituted an action in the Superior Court of Johnston County, entitled Town of Benson v. J. C Warren and wife, Mrs. J. C. Warren, for the purpose of foreclosing tax certificate on account of the nonpayment of taxes levied and assessed against the property hereinafter described, and said property was acquired by the town of Benson from the commissioner appointed in said action, on the 6th day of January, 1934, and is now the lawful owner in fee simple of said property, the deed conveying the same to the town being of record in Book No. 306, page No. 517, Registry of Johnston County, and said property is described as follows: Lot No. 1, in Block No. 21, according to map of the town of Benson, made by Riddick, Mann and Hales in 1914, said map being of record in the office of the Register of Deeds for Johnston County. The property herein described being situate on Parrish Drive (Formerly Mill Street), in the town of Benson, North Carolina.

3. The County of Johnston instituted foreclosure proceedings on account of the nonpayment of taxes due said County by the Benson Creamery Corporation and prosecuted said action to judgment, wherein C. C. Canaday was appointed commissioner to sell and convey, and thereafter on the 10th day of May, 1932 the town of Benson having become the purchaser at said foreclosure sale, the said C. C. Canaday, commissioner, executed and delivered to the town of Benson a deed of conveyance stipulating a consideration of $1,174.76, and described and conveyed the following property:

1 lot fronting Wall Street, same being Highway No. 22, and is Lot No. 1, in Block No. 45, according to the map of the town of Benson, prepared by W. J. Lambert, Surveyor, and is Lot No. 17, in Block No. 33, according to the map of the Alonzo Parrish Property, and is bounded on the North by the land of D. J. Hill; on the East by Wall Street, or State Highway No. 22; on the South by the land of C. T. Johnson; and on the West by a lot of land formerly owned by Alonzo Parrish, said lot fronting Highway No. 22-60 feet and running back 50 feet, being a lot 60 by 50 feet.

This conveyance is made as of February 8, 1932, and the property herein conveyed shall not be chargeable with 1932 and 1933 county ad valorem taxes.

That the deed bears date of May 10, 1932, and was filed for registration on the 7th day of February, 1934, and registered in Book No. 306, Page No. 494, office of the Register of Deeds for Johnston County. The said commissioner paid the receipts of the sale to the County of Johnston, and said receipts were sufficient to pay all taxes to the County of Johnston up to and including 1931. The town of Benson has been in possession of said property since such sale and is the owner of same in fee simple.

4. There is a dwelling upon the first parcel of land hereinbefore described, and a small building upon the other parcel now used as a hatchery. The town of Benson, has, since obtaining title to said two parcels of property, received a small monthly rental, which has gone into the treasury of the town for general municipal purposes.

5. The town of Benson is now endeavoring to refund its bonded indebtedness and has prepared and promulgated a Refunding Plan, bearing date of December 1st, 1934. That said Refunding Plan contains the following provision:

Moneys derived from the sale or from the redemption of the twenty-two parcels of property heretofore taken over for delinquent taxes, and assessments, as well as the net income, if any, derived from the operation of said properties, will be paid into the sinking fund for the funding bonds.'

That the two parcels of land hereinbefore described constitute a part of the twenty-two parcels referred to in the above quoted provision.

6. The town of Benson offered the two parcels of property referred to for sale, and has received bona fide bids to purchase said property at an agreed price from the firm of Blackman and Massengill and Wade F. Johnson, who require the title to be in fee simple, free and clear of all liens, encumbrances and taxes. There are no liens or encumbrances upon said property, excepting that the County of Johnston claims taxes against the first parcel of land herein described (J. C. Warren property), for the years 1929 to 1935, both years inclusive, and upon the second parcel of property referred to (Creamery property), for the years 1932 to 1935, both years inclusive, the town of Benson admits that the Warren property is subject to county taxes for the years 1929 to 1933, inclusive, being prior to the time the town took title to said property, but denies that the county is entitled to any taxes upon said property since the town of Benson took title thereto; the town further denies that the county is entitled to assess taxes as a lien against the Creamery property since the town acquired title thereto, and during the period title to said property, as well as the other parcel referred to, is vested in said town of Benson.

7. Under the duly constituted authority, the Board of County Commissioners of Johnston County have assessed said property for taxation during the period the title to same has been vested in the town of Benson, and have levied a tax against same, which plaintiff refuses to pay; and the tax collector has advertised said property to be sold for taxes for the aforesaid years. The proposed purchasers have refused to accept title while this claim of tax lien remains unsettled against said property. The plaintiff denies that the County of Johnston is permitted to tax said property during the period it remains vested in the plaintiff municipal corporation, and, therefore, refuses to pay the same.

Wherefore, the parties hereto have agreed upon the foregoing facts, and respectfully urge a speedy determination of the matter of law involved in this controversy. The matter in controversy being whether or not such tax may be assessed as a lien against said property for and during the period title to same is vested in said town of Benson.

This the 14 day of February, 1936.

L. L. Levinson, Atty. for Plaintiff.

W. J. Hooks, Atty. for defendants.

The judgment of the court below is as follows: This cause coming on to be heard, and being heard by His Honor, F. A. Daniels, Judge Presiding, at the February Term, 1936, of the Superior Court of Johnston County, by consent, upon an agreed statement of facts submitted in a controversy without action: It is therefore considered, ordered and adjudged that the tax levied and assessed by the defendant against the property of the plaintiff, during the period that the title to said property was vested in the plaintiff, is valid and collectible. Let the plaintiff pay the cost of this action. F. A. Daniels, Judge Superior Court Holding the February Term, 1936."

The only exception and assignment of error is to the judgment as signed.

DEVIN, J., dissenting.

L. L. Levinson, of Benson, for appellant.

W. J. Hooks, of Smithfield, for appellee.

CLARKSON Justice.

The question involved in this controversy is whether or not a county may levy and collect ad valorem taxes against real estate owned by a municipality within that county, after title to such real property has been acquired by tax foreclosure and is being used by the municipality for rental purposes. We think so, when the property is not devoted to governmental uses or purposes.

The plaintiff claims the parcels of property: (1) Acquired by the town of Benson at a foreclosure sale of the tax certificate held by the town of Benson for the nonpayment of tax on the J. C. Warren property. (2) Acquired by the town of Benson at a foreclosure sale of the tax certificate held by the county of Johnston for the nonpayment of tax on the Benson Creamery Corporation property.

The plaintiff contends that it is exempted under the Constitution of North Carolina, art. 5, § 5. We cannot so hold under the facts of this controversy. The provisions of the Constitution are as follows: "Property belonging to the State, or to municipal corporations, shall be exempt from taxation. The General Assembly may exempt cemeteries and property held for educational, scientific, literary, charitable, or religious purposes; also wearing apparel, arms for muster, household and kitchen furniture, the mechanical and agricultural implements of mechanics and farmers; libraries and scientific instruments, or any other personal property, to a value not exceeding three hundred dollars."

In Atlantic & N.C. R. Co. v. Board of Commissioners of Carteret County, 75 N.C. 474, 476, it is said: "But where the State steps down from her sovereignty and embarks with individuals in business enterprises, the same considerations do not prevail. * * * At any rate we do not think the exemption in the constitution embraces the interest of the State in business enterprises, but applies to the property of the State held for State purposes."

The General...