Wayne County Citizens Ass'n for Better Tax Control v. Wayne County Bd. of Com'rs

• Decision Date: 10 January 1991
• Docket Number: No. 252PA90,252PA90
• Citation: 399 S.E.2d 311,328 N.C. 24
• Court: North Carolina Supreme Court
• Parties: WAYNE COUNTY CITIZENS ASSOCIATION FOR BETTER TAX CONTROL: Robert Outlaw, individually, and as Chairman of the Wayne County Citizens Association for Better Tax Control; Joe Daughtery, individually, and as Secretary-Treasurer of the Wayne County Citizens Association for Better Tax Control; Ed Allen, Jim Barnwell, Garland Joyner, and Thomas Wooten, all individually, and as Members of the Board of Directors of the Wayne County Citizens Association for Better Tax Control v. WAYNE COUNTY BOARD OF COMMISSIONERS, Atlas Price, John Wooten, Betsy Johnson, Tommy Jarrett, J. Nelson Kornegay, Howard Buddy Shaw, and Jerry Braswell, all as Members of the Wayne County Board of Commissioners.

Page 311

399 S.E.2d 311

328 N.C. 24

WAYNE COUNTY CITIZENS ASSOCIATION FOR BETTER TAX CONTROL:

Robert Outlaw, individually, and as Chairman of the Wayne

County Citizens Association for Better Tax Control; Joe

Daughtery, individually, and as Secretary-Treasurer of the

Wayne County Citizens Association for Better Tax Control;

Ed Allen, Jim Barnwell, Garland Joyner, and Thomas Wooten,

all individually, and as Members of the Board of Directors

of the Wayne County Citizens Association for Better Tax Control v. WAYNE COUNTY BOARD OF COMMISSIONERS, Atlas Price, John

Wooten, Betsy Johnson, Tommy Jarrett, J. Nelson Kornegay,

Howard Buddy Shaw, and Jerry Braswell, all as Members of the

Wayne County Board of Commissioners.

No. 252PA90.

Supreme Court of North Carolina.

Jan. 10, 1991.

Braswell & Taylor by Roland C. Braswell, Goldsboro, for plaintiffs-appellants.

Baddour, Parker & Hine, P.A. by E.B. Borden Parker, Goldsboro, and Parker, Poe, Adams & Bernstein by Charles C. Meeker, Blair Levin, and Heman R. Clark, Raleigh, for defendants-appellees.

Lacy H. Thornburg, Atty. Gen. by Douglas A. Johnston, Asst. Atty. Gen., Raleigh, amicus curiae.

Hunton & Williams by William H. McBride, N.C. Ass'n of County Com'rs by James B. Blackburn III, Gen. Counsel, and N.C. League of Municipalities by S. Ellis Hankins, Gen. Counsel, for North Carolina Ass'n of County Com'rs and North Carolina League of Municipalities, Raleigh, amici curiae.

MEYER, Justice.

Plaintiffs in this action are an unincorporated group known as Wayne County Citizens Association for Better Tax Control (hereinafter "Tax Association") and individuals who are citizens, residents, and taxpayers of Wayne County acting individually and as officers and members of the Board of Directors of the Tax Association. By a complaint filed 26 January 1990, plaintiffs challenged the constitutionality of N.C.G.S. § 160A-20, which authorizes a local government unit to enter into a contract granting a security interest in real property subject to improvement. The relief sought by the plaintiffs was that N.C.G.S. § 160A-20 be declared unconstitutional as being in violation of article V, section 4 and section 7(2) of the North Carolina Constitution and, further, a declaration that defendants did not comply with the provisions of that statute in carrying out the transaction complained of. The defendant Board of Commissioners and its members filed an answer denying the material allegations of the complaint and subsequently filed motions for summary judgment and to dismiss the action.

The matter was heard before Butterfield, J., at the 26 March 1990 term of Superior Court on defendants' motion for summary judgment. By order entered 29 March 1990 and signed 4 April 1990, the trial judge, after ruling that there was no genuine issue as to any material fact and that the court would rule as a matter of law on all issues pending therein, (1) ordered, with the consent of all parties, that the Attorney General of North Carolina, who had filed a brief, be allowed to appear as a friend of the court; (2) held that the individual plaintiffs and the Tax Association have standing to bring the action and are proper parties; (3) held that the County of Wayne and the other defendants had complied with the provisions of N.C.G.S. § 160A-20 and that defendants' actions in the matter as they relate to that statute were lawful; (4) reserved ruling on the constitutionality of N.C.G.S. § 160A-20 and ruled that he would henceforth treat the action as an action for declaratory judgment; and (5) allowed the parties until 4 April 1990 to submit additional briefs.

On 6 April 1990, the trial judge, based upon the record in the case (including a stipulation of the parties), briefs submitted to the court, and oral argument, found as a fact and concluded as a matter of law that N.C.G.S. § 160A-20 was constitutional in every respect, taxed the costs of the action to the plaintiffs, and dismissed the action. Plaintiffs appealed from both orders, and we allowed the parties' joint petition and the Attorney General's supplemental petition to bypass the Court of Appeals on 26 July 1990.

Plaintiffs assign as error that the trial judge erred (1) in his ruling that N.C.G.S. § 160A-20 is constitutional in all respects; (2) in his ruling that defendants had complied with the provisions of N.C.G.S. § 160A-20; and (3) therefore, erred in dismissing the plaintiffs' action. We conclude that the trial judge did not err, and we therefore affirm his orders.

In 1989, the Board of Commissioners of Wayne County determined that the County needed to build additional county court, administrative, and jail facilities. These facilities consist of a new four-story court and administrative building with 96,590 square feet (including five new courtrooms and offices for the clerk of court, the district attorney, and the register of deeds) and a new five-story jail with 44,000 square feet. After public notice and hearing, the Board of Commissioners approved negotiation of a $7,500,000 installment purchase contract (hereinafter "the contract") with First Union Securities, Inc. Upon application by Wayne County, the Local Government Commission of North Carolina approved the contract. The contract was not submitted to a vote of the people of Wayne County for their approval.

As part of the contract, First Union Securities was granted a security interest on the real property on which the court, administrative, and jail buildings were located. Wayne County's installment payments are to be made from appropriations in the sole discretion of Wayne County for any fiscal year in which the contract is in effect. The contract and other documents associated with this transaction expressly provide that (1) the taxing power of Wayne County is not pledged directly or indirectly to secure any monies due; (2) to the extent that Wayne County does not make any payment beyond that appropriated by the County for any fiscal year in which the contract is in effect, First Union Securities' sole remedy is to repossess the real property, and (3) no deficiency judgment may be rendered against the County.

Specifically, article XV of the Contract, in pertinent part, provides the following as to the "LIMITED OBLIGATION OF THE COUNTY":

NO PROVISION OF THIS CONTRACT SHALL BE CONSTRUED OR INTERPRETED AS CREATING A PLEDGE OF THE FAITH AND CREDIT OF THE COUNTY WITHIN THE MEANING OF ANY CONSTITUTIONAL DEBT LIMITATION. NO PROVISION OF THIS CONTRACT SHALL BE CONSTRUED OR INTERPRETED AS CREATING A DELEGATION OF GOVERNMENTAL POWERS NOR AS A DONATION BY OR A LENDING OF THE CREDIT OF THE COUNTY WITHIN THE MEANING OF THE CONSTITUTION OF THE STATE. THIS CONTRACT SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE COUNTY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED IN THE SOLE DISCRETION OF THE COUNTY FOR ANY FISCAL YEAR IN WHICH THE CONTRACT IS IN EFFECT; PROVIDED, HOWEVER, ANY FAILURE OR REFUSAL BY THE COUNTY TO APPROPRIATE FUNDS, WHICH RESULTS IN THE FAILURE BY THE COUNTY TO MAKE ANY PAYMENT COMING DUE HEREUNDER WILL IN NO WAY OBVIATE THE OCCURRENCE OF THE EVENT OF DEFAULT RESULTING FROM SUCH NONPAYMENT. NO DEFICIENCY JUDGMENT MAY BE RENDERED AGAINST THE COUNTY IN ANY ACTION FOR BREACH OF A CONTRACTUAL OBLIGATION UNDER THIS CONTRACT AND THE TAXING POWER OF THE COUNTY IS NOT AND MAY NOT BE PLEDGED DIRECTLY OR INDIRECTLY OR CONTINGENTLY TO SECURE ANY MONEYS DUE UNDER THIS CONTRACT.

Plaintiff-appellants argue that under the installment purchase contract between First Union Securities and Wayne County, the Board could be forced to appropriate money in future years to make payments under the contract. We do not agree. The plain language of the document does not provide such power, and our decision is based upon our conclusion that such power does not exist.

Article XV of the contract provides in part:

THIS CONTRACT SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE COUNTY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED IN THE SOLE DISCRETION OF THE COUNTY FOR ANY FISCAL YEAR IN WHICH THE CONTRACT IS IN EFFECT; PROVIDED, HOWEVER, ANY FAILURE OR REFUSAL BY THE COUNTY TO APPROPRIATE FUNDS, WHICH RESULTS IN THE FAILURE BY THE COUNTY TO MAKE ANY PAYMENT COMING DUE HEREUNDER WILL IN NO WAY OBVIATE THE OCCURRENCE OF THE EVENT OF DEFAULT RESULTING FROM SUCH NONPAYMENT.

This language makes clear that the annual events of appropriation are subject to the sole discretion of the Board. Under the plain language of the contract, the Board cannot be forced to appropriate amounts for payment of the contract in any year. Article XV also provides that, to the extent that there may be any conflict between this article and any other provision in the contract, article XV takes priority.

We first address plaintiffs' contention that N.C.G.S. § 160A-20 is unconstitutional. In determining the constitutionality of N.C.G.S. § 160A-20, we begin with several well-settled principles. The first is that a statute enacted by the General Assembly is presumed to be constitutional.

The presumption is in favor of the constitutionality of an act. All doubts must be resolved in favor of the Act. The Constitution is a restriction of powers and those powers not surrendered are reserved to the people to be exercised through their representatives in the General Assembly; therefore, so long as an act is not forbidden, the wisdom and expediency of the enactment is a legislative, not a judicial, decision.

In re Housing Bonds, 307 N.C. 52, 57, 296 S.E.2d 281, 284 (1982) (citations omitted) (issuance of bonds to finance housing for persons of moderate income held constitutional). A statute will not be declared unconstitutional unless this conclusion is so clear that no reasonable doubt can arise, or the statute cannot be upheld on any reasonable ground. Poor Richard's, Inc. v. Stone, 322 N.C. 61, 63, 366 S.E.2d 697, 698 (1988) (it is well settled that an act passed by the legislature is presumed to...