Wilson v. City of High Point, 676

• Decision Date: 12 June 1953
• Docket Number: No. 676,676
• Citation: 238 N.C. 14,76 S.E.2d 546
• Parties: WILSON, v. CITY OF HIGH POINT et al.
• Court: North Carolina Supreme Court

Page 546

76 S.E.2d 546

238 N.C. 14

WILSON, v. CITY OF HIGH POINT et al.

No. 676.

Supreme Court of North Carolina.

June 12, 1953.

Schoch & Schoch, Haworth, Haworth & Walker, Knox Walker and W. B. Byerly, Jr., High Point, for plaintiff, appellant.

Horace Haworth, G. H. Jones, High Point, and T. C. Hoyle, Sr., Greensboro, for defendant, appellees.

PARKER, Justice.

The plaintiff as a taxpayer of the City has the right to bring this action to test the authority of the City to issue the proposed bonds. Williamson v. City of High Point, 213 N.C. 96, 195 S.E. 90; Nash v. Town of Tarboro, 227 N.C. 283, 42 S.E.2d 209.

This question is presented for our decision. Is the issuance of bonds by the City to pay the total cost of the erection of a building in the City for the joint use of the City and the County--the City to use said building for its Municipal Court, its Police Department and other governmental functions, and the County to use said building for holding terms of the Superior Court, High Point Division, and other governmental functions necessary or proper to be performed in the City--a necessary expense of the City within the meaning of Art. VII, sec. 7 of our Constitution, when the County shall be required eventually to purchase the building from the City, according to a contract between them? The answer is No.

Art. VII, sec. 7 of our Constitution reads: 'No debt or loan except by a majority of voters.--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 City proposes to issue bonds to pay for the total initial cost of the building as a necessary expense of the City without a vote of the people thereon. The exercise by a municipal corporation of the power to pledge its credit is an incipient step in the exercise of the power of taxation, and authority given to a municipality to issue bonds necessarily involves the power to levy taxes for the payment of interest on said bonds and the payment of said bonds at maturity. Bennett v. Board of Com'rs, 173 N.C. 625, 92 S.E. 603; Com'rs of Johnston County v. Lacy, 174 N.C. 141, 93 S.E. 482, 2 A.L.R. 726; Brown v. Board of Com'rs, 223 N.C. 744, 28 S.E.2d 104.

Section 3 of H.B.497, Ch. 353, Session Laws of the 1953 General Assembly states that the erection of the building provided for in the Act is necessary for the proper operation of the governmental functions of the County and the City, and will be beneficial to both. The legislative construction of the Constitution is entitled to great weight, but it is not binding upon the Court. 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. Person v. Board of State Tax Com'rs (Watts), 184 N.C. 499, 115 S.E. 336; Palmer v. Haywood County, 212 N.C. 284, 193 S.E. 668, 113 A.L.R. 1195; Sing v. City of Charlotte, 213 N.C. 60, 195 S.E. 271; Purser v. Ledbetter, 227 N.C. 1, 40 S.E.2d 702; Green v. Kitchin, 229 N.C. 450, 50 S.E.2d 545.

What is such 'a necessary expense' has been tersely and lucidly stated for the Court by Ervin, J., in Green v. Kitchin, supra, 229 N.C. at page 457, 50 S.E.2d at page 550. 'This Court has uniformly held that where the purpose for which a proposed expense is to be incurred by a municipality is the maintenance of public peace or administration of justice, or partakes of a governmental nature, or purports to be an exercise by the municipality of a portion of the State's delegated sovereignty, the expense is a necessary expense within the Constitution, and may be incurred without a vote of the people. Sing v. City of Charlotte, 213 N.C. 60, 195 S.E. 271; Palmer v. Haywood County, 212 N.C. 284, 193 S.E. 668, 113 A.L.R. 1195; Martin v. City of Raleigh, 208 N.C. 369, 180 S.E. 786.'

In Henderson v. City of Wilmington, 191 N.C. 269, 132 S.E. 25, the question for decision was whether the purchase of wharf and terminal facilities was a necessary expense of the City of Wilmington. At page 278 of 191 N.C., at page 30 of 132 S.E. the Court said: 'The cases declaring certain expenses to have been 'necessary' refer to some phase of municipal government. This court, so far as we are advised, has given no decision to the contrary.' At page 277 of 191 N.C., at page 29 of 132 S.E. the Court further 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.'

While this Court has said in Henderson v. City of Wilmington, supra, in defining necessary expenses 'we must rely upon our own decisions', it may not be inappropriate to quote what is said in 51 Am.Jur., Taxation, Sec. 402: 'It is clear that one taxing district, whether State, County, Municipality, or District established for the particular purpose, cannot be taxed for the benefit of another district. * * *. A municipal corporation cannot be compelled to turn over a portion of its funds to the county in which it is situated in order to pay the expense of a county function.'

Nor what is said in 61 C.J., Taxation. Sec. 66: 'The purpose to be accomplished by a tax must pertain to the district taxed, as the constitutional requirement of uniformity in taxation forbids the imposition of a tax on one municipality or part of the State for the purpose of benefiting or raising money for another.' In support of this statement C. J. quotes the following North Carolina cases: Com'rs of Johnston County v. Lacy, 174 N.C. 141, 93 S.E. 482, 2 A.L.R. 726; Keith v. Lockhart, 171 N.C. 451, 88 S.E. 640; Faison v. Board of Com'rs, 171 N.C. 411, 88 S.E. 761.

In Campbell County v. City of Newport, 174 Ky. 712, 193 S.W. 1, L.R.A.1917D, 791, the decision is correctly summarized in the L.R.A. headnote: 'The attempt by the legislature to require a municipal corporation to turn over a portion of its taxes to the county in which it is situated to assist in the support of a juvenile court, for which the county has already levied a tax on all the property within its limits, including that within the municipality, is invalid as violating the principle that taxation and representation must go together, that one municipal subdivision cannot levy a tax upon property located in another municipal subdivision, and also the constitutional provision that taxes must be uniform.'

A municipality, a creature of the State, has the 'powers prescribed by statute, and those necessarily implied by law, and no other.' G.S. § 160-1. Therefore, a municipality cannot expend tax revenue without the explicit or implicit authority of a constitutional statute. Horner v. Chamber of Commerce, 231 N.C. 440, 57 S.E.2d 789.

The defendant appellees contend in their brief that the case of Greensboro-High Point Airport Authority v. Johnson, 226 N.C. 1, 36 S.E.2d 803 supports their position that the City can issue bonds to pay the total initial cost of this building, because the expenditure will be primarily for the benefit of the City. The facts are entirely different. In that case it was held that Guilford County and the Cities of Greensboro and High Point could lawfully join in the construction, maintenance and operation of an airport if each of them is benefited. But it was stipulated in the agreed facts that the appropriations made by the municipalities were out of funds in their hands not derived from ad valorem taxes, but mainly from the sale of property. In this case, 226 N.C. at page 8, 36 S.E.2d at page 808 this Court said: 'No question of credit or taxation in violation of Article VII, Section 7' (of our Constitution) 'is involved, and the inhibition constituting the ratio decidendi in Sing v. City of Charlotte, supra, does not apply.'

The defendant appellees argue in their brief that Callam v. City of Saginaw, 50 Mich. 7, 14 N.W. 677, 679, is in point in support of their position. The Michigan Legislature enacted a statute authorizing the City of Saginaw to take upon itself alone the entire expense of building a courthouse in the City for Saginaw County. A taxpayer filed his bill to restrain the issue of bonds to pay for said building. In that case the Michigan Court said: '* * * the constitution, which in some cases requires a vote from the electors of the counties on financial questions, contains no such requirement as to cities, which usually act by their local legislatures. * * * Under this statute, while the approval of the taxpayers is a...