Crayton v. City of Charlotte, 175 N.C. 17 (1917)

Dec. 22, 1917 · Supreme Court of North Carolina

175 N.C. 17

J. E. CRAYTON v. CITY OF CHARLOTTE.

(Filed 22 December, 1917.)

1. Statutes — In Pari Materia — Municipal Corporations — Bonds.

Chapter 131 Laws of 1915, limiting a municipal bond issue to 10 per cent of the assessed value of its real and personal property, should be construed with the provisions of ch. 138, Laws of 1917, and the two acts being upon the same subject-matter and in pari materia.

2. Same — Property Values — Limitation—Issuance.

Chapter 131, Laws of 1915, limits the issuance of municipal bonds to 10 per cent of its assessed real and personal property valuation, and ch. 138, Laws of 1917 to 10 per cent of the net valuation of the property, etc., the later act expressly not requiring the passage of an ordinance, under the circumstances, for the submission of the question to the voters; and where a municipality has passed the ordinance required by the act of 1915, for an election to be held on the proposition, which is held and the bonds approved after the enactment of the later act, and it appears that the property valuation was sufficient thereunder, the further proceedings being under the act of 1917, are valid, and the bonds are a valid municipal indebtedness.

Appeal by plaintiff from Webb, J., at November Term, 1917, of MeckleNbubg.

This is a controversy without action, under section 803 of tbe Revisal to restrain tbe issue of $250,000 in bonds by tbe city of Charlotte for purchasing sites and building tbe necessary buildings for tbe public schools of tbe city.

Tbe ordinance of tbe city of Charlotte calling tbe election on tbe bonds in question was passed on 23 February, 1917. Tbe election was called and held on 26 April, 1917. This election was called by tbe ordinance of 23 February, under chapter 131, Public Laws of 1915. Section 6 of this chapter limits tbe right, to issue bonds thereunder to 10 per cent of tbe assessed value of tbe real and personal property in tbe city. At tbe time 'the ordinance was adopted tbe entire bonded indebtedness of tbe city of Charlotte, including assessment and waterworks bonds, was $2,523,100, and tbe assessed value of tbe property for taxation at said time was $24,500,000.

On 5 March, 1917, tbe General Assembly passed tbe Municipal Finance Act, which became effective and tbe law of tbe State on 8 March, 1917. This law was effective at tbe date of tbe election above mentioned on 26 April, 1917. Tbe said Municipal Finance Act provides for tbe issue of bonds, upon tbe favorable vote of tbe people, up to 10 per cent of tbe net indebtedness of the city upon tbe assessed value of tbe property therein for tbe three previous years. Tbe net indebtedness of tbe city of Charlotte at tbe time of tbe subsequent resolutions of tbe governing body of tbe city of Charlotte directing and providing for tbe issue of tbe bonds was $1,903,000, and the average assessed value therein for three years was $24,475,519. Tbe difference between tbe limitation as prescribed in chapter 131, Laws of 1915, and chapter 138, Laws of 1917 (being’ tbe Municipal Finance Act), is that tbe Municipal Finance Act, in computing tbe indebtedness of tbe city, provides for a deduction of outstanding bonds secured by collateral as street improvement bonds, and revenue producing bonds — as waterworks bonds, and striking tbe balance of what is called tbe net indebtedness of tbe city. Tbe net indebtedness of tbe city, tbe resolutions of tbe governing body of tbe city at tbe time of tbe proposed issue of bonds was, and is, less than ten per cent of its assessed taxable property for tbe period mentioned in the act for 1917, under tbe rule of computation prescribed in said act.

Upon these facts bis Honor held that tbe defendant bad tbe right to issue said bonds, ■ and that tbe plaintiff was not entitled to tbe relief prayed for and tbe plaintiff appealed.

Thaddeus A. Adams for plaintiff.

Pharr & Bell for defendant.

AlleN, J.

There are many subdivisions of the argument of the plaintiff attacking the proposed bond issue, but they all depend on the proposition that the election purporting to authorize the issue of bonds was called and held under chapter 131, Laws 1915, which provides that “No bonds shall be issued which together with all other bonded debt of the municipality shall exceed 10 per centum of the assessed valuation of the real and personal property situated in said municipality,” and as the resolution was adopted calling the election, and the election held when the bonded indebtedness exceeded 10 per cent of the assessed valuation, there is no authority to issue the bonds.

The question has been presented earnestly and forcibly in the briefs filed in behalf of the plaintiff and defendant, but the diligence of counsel and the researches of the Court have not discovered any authority directly in point, and we must turn to the language of the statutes and the evil intended to be remedied to find the Legislative intent and the 'effect of the limitation on the power to issue bonds.

The act of 1915 confers the authority to issue bonds on the governing-body of the city or town, but requires the approval of the qualified voters before issuing. The language is the “board of commissioners, council, or other governing body is hereby authorized to issue bonds of such municipality in all respects as provided in the foregoing section, but before issuing said bonds the question of their issuance shall be submitted to .the qualified voters of such municipality.” .

The limitation in the act is on the power to issue bonds, and not on the right of the voters to approve, and as the power to issue is conferred upon the governing body, it is a limitation on the power of that body and not on the right to hold an election.

The distinction between the limitation on the right to issue bonds and the holding of an election to ascertain the will of the voters does not rest on mere conjecture or on a technical and strained construction of the act, but, on the contrary, is clearly recognized by the General Assembly in the act of 1915 and in the act of 1917, ch. 138, superseding it, which, being related and dealing with the same subject-matter, should be construed together, because in the act of 1915 the limitation is on the right to issue bonds — “No bonds shall be issued” — -while in the act of 1917, after requiring that all bonds shall be authorized by an ordinance, it is provided in section 19, subsec. 2, that “The ordinance shall not be passed unless it appears from said statement either that the net debt does not exceed 10 per centum of said average assessed valuation or that the net increase does not exceed three per centum of the assessed valuation.”

Why this change in language, placing a prohibition on the first step to be taken in tbe issuance of bonds, unless it was in tbe mind of tbe General Assembly tbat tbe limitation in tbe act of 1915 related to tbe time of issuing tbe bonds?

Tbis is also in accord witb tbe principle generally prevailing tbat “Tbe time of tbe actual issue of municipal bonds is tbe time for determining wbetber tbe debt limit is exceeded” (28 Cyc., 1584); and it bas been beld in tbe application of tbe principle tbat “An ordinance is not void wbicb provides for a contract wben financial condition will permit” (28 Cyc., 1540, and note), wbicb is tbe legal effect of tbe.resolution of 23 February.

If it be objected tbat tbis construction attributes to tbe General Assembly tbe purpose of permitting an election to be beld wben no bonds can be issued, tbe answer is tbat authority must precede tbe issuing of tbe bonds, and time is required after authorization before issue, and frequently tbe retirement of a part of the municipal indebtedness or an increase in valuations may be foreseen, sometimes much in advance of tbe event. ■ And no injury can befall tbe taxpayer, as be becomes interested only wben tbe bond is issued or tbe'taxes collected for tbe payment of principal and interest.

We are, therefore, of opinion tbat under tbe act of 1915 the relation between tbe indebtedness and tbe valuation of tbe property is to be ascertained as of tbe time of issuing tbe bonds. Tbis does not, however, establish tbe right of tbe defendant to issue tbe bonds in controversy, because under tbe act of 1915 tbe indebtedness, computed as required by tbat act, without allowing certain deductions in tbe act of 1917, exceeds 10 per cent of tbe valuation.

How is tbe question affected by tbe act of 1917 ?

Tbe act of 1917, ratified 7 March, known as tbe Municipal Finance Act, provides in section 38 tbat “All acts and parts of acts, general or special (including acts passed at tbis session of tbe General Assembly prior to tbe passage of tbis act), to tbe extent tbat they relate to tbe subject-matter of tbis act, are superseded by this act: Provided, however, (a) Tbat acts and proceedings heretofore done, or taken by any municipality or tbe voters thereof, or any board or officers thereof, pursuant to acts or parts of acts superseded by tbis act shall not be affected by tbis act, but all such acts or proceedings similar to any acts or proceedings provided for in tbis act shall have tbe same force and effect as if done and taken pursuant to tbis act, and only subsequent proceedings shall be taken as provided in tbis act: Provided, further, (fe) Tbat in all cases where, pursuant to acts or parts of acts so superseded, an ordinance or resolution bas been heretofore passed authorizing tbe issuance of bonds or notes or calling an election for such purpose, nothing in tbis act shall prevent tbe issuance of tbe bonds or notes in accordance witb tbe terms of -sucb ordinance or resolution, and it shall not be necessary to pass tbe ordinance provided for in section 17 of this' act, and no vote o£ tbe people shall be necessary for tbe issuance of sucb bonds or notes unless they are for purposes other than tbe payment of necessary expenses, or unless sucb vote shall be required by tbe terms of tbe acts or parts of acts so superseded or by tbe terms of tbe ordinance or resolution so passed.”

It supersedes the act of 1915 but validates proceedings already taken under tbe act and provides that bonds may be issued pursuant to ordinances and resolutions calling for elections passed prior to tbe ratification of tbe act; and that subsequent proceedings shall be as prescribed in tbe act of 1917. If so, tbe resolution of 23 February calling for tbe election on tbe question of issuing bonds is valid under tbe act of 1917, and as tbe ordinance required by tbe latter act is dispensed with by section 38, subsection (b), tbe election of 26 April was regularly called under tbe act of 1917; and if regularly called, it was a valid election, as no other irregularity has been pointed out.

If this conclusion is sound, tbe governing body of tbe defendant has called an election at which tbe voters have given their approval to tbe proposition to issue bonds, and as tbe subsequent proceedings are to be taken under tbe act of 1917, tbe ascertainment of tbe proportion between tbe indebtedness and tbe assessed valuation of property must be under that act, and as it is conceded if this be done tbe indebtedness does not exceed 10 per cent of tbe assessed valuation, tbe defendant has tbe right to issue tbe bonds in question, and tbe same, when' issued, will be binding-obligations of tbe defendant. .

Affirmed.