Twining v. City of Wilmington, 214 N.C. 655 (1939)

Jan. 4, 1939 · Supreme Court of North Carolina

214 N.C. 655

W. G. TWINING, a Resident and Taxpayer of the City of WILMINGTON, NORTH CAROLINA, Suing for Himself and in Behalf of All Other Taxpayers Similarly Situated Who Desire to Come in, Make Themselves Parties to This Cause and Contribute to the Costs Thereof, v. CITY OF WILMINGTON, NORTH CAROLINA.

(Filed 4 January, 1939.)

1. Taxation § 4—

Bonds for tlie purpose of building and equipping a municipal auditorium are not for a necessary municipal expense.

2. Same—

Tbe finding of the court below that in this case bonds for the purpose of acquiring lands and establishing public parks and playgrounds, and equipping same, are not for a necessary municipal expense, is approved.

3. Same—

Bonds for the purpose of erecting and equipping a municipal building to be used in part as a public library, are not for a necessary municipal expense.

4. Same—

The finding of the trial court that in this case bonds for the purpose of acquiring lands and erecting suitable buildings thereon for recreation and athletic purposes, are not for a necessary municipal expense, is approved.

5. Same—

Bonds for other than necessary purposes must be approved by a majority of the qualified voters of the taxing unit. Art. VII, sec. 7.

6. Taxation § 3b—

Bonds in excess of two-thirds of the amount by which the taxing unit decreased its outstanding debt during the prior fiscal year may be issuedupon the approval of a majority of those voting, Art. V, sec. 4., unless for other than a necessary purpose.

7. Taxation §§ 3b, 4—

The people of the State, in their Constitution, may place what restrictions they please upon the creation of public debt, and in doing so, to distinguish between debts different in kind and necessity.

8. Same — Art. VII, sec. 7, .and Ai’t. V, sec. 4, are not in conflict, and in apposite instances both are applicable.

Art. VII, sec. 7, and Art. V, see. 4, of the State Constitution are not in conflict, and bonds for other than necessary expenses which are also in excess of two-thirds of the amount by which the taxing unit decreased its outstanding indebtedness during the prior fiscal year, must be approved not only by a majority of those voting in the election under the provisions of Art. V, sec. 4, but also by a majority of the qualified voters of the taxing unit under the requirement of Art. VII, sec. 7, although but one referendum is required.

9. Taxation § 4—

When municipal bonds for purposes other than the payment of necessary municipal expenses are proposed to be issued under the Municipal Finance Act, it is required by C. S., 2948, that they be approved by a majority of the qualified voters.

Appeal of defendant from Cranmer, J., at November Term, 1938, of New Hakovee.

Affirmed.

Tbe city of Wilmington, planning to issue bonds for certain projects, adopted four several ordinances, under tbe Municipal Finance Act of 1917, relating respectively to tbe building and equipping of a Municipal Auditorium; tbe acquisition of lands and establishing of public parks and playgrounds, and equipping tbe same; tbe erection and equipping of a Municipal Building to be used in part as a public library; tbe acquisition of lands and erection tbereon of suitable buildings for recreational and athletic purposes. Tbe aggregate amount of bonds was not to exceed $135,000, allocated in detail to tbe projects respectively; and as to each resolution tbe bond issue provided tbe levying of a tax to pay tbe principal and interest.

Pursuant to tbe requirements of tbe act, a special bond election was held on Tuesday, 30 August, 1938, at which time each of tbe projects above named were approved by a majority of those voting but not by a majority of tbe qualified voters, as provided in Article Nil, section 7, of tbe Constitution of North Carolina, and by section 2948 of tbe Consolidated Statutes (Micbie’s Code of 1935).

Tbe plaintiff, a taxpayer of the city of Wilmington, brought this action in bis own behalf and in behalf of other taxpayers similarly situated, to enjoin further proceedings, and especially tbe issuing of tbe contemplated bonds, upon tbe ground tbat sucb issue was not approved by tbe majority of tbe qualified voters of tbe city.

Tbe city of Wilmington bad not retired a sufficient amount of its indebtedness during tbe preceding fiscal year to permit tbe bond issue, under tbe provisions of Article V, section 4, of tbe Constitution, limiting sucb bond issue to two-tbirds of tbe amount of debt so retired.

Upon tbe bearing tbe judge below found, under tbe facts stated in tbe record, tbat none of tbe projects proposed constituted a necessary purpose, and none bad been approved at tbe election by a majority of tbe qualified voters and, therefore, enjoined tbe issue of tbe bonds. From this judgment tbe defendant appealed.

W. F. J ones for plaintiff, appellee.

W. B. Campbell and Alan A. Marshall for defendant, appellant.

Seawell, J.

1. We approve of tbe findings of Judge Cranmer tbat none of tbe projects mentioned was a necessary purpose.

2. If tbe provisions of Article VII, section 7, of tbe Constitution still apply, tbe issue of tbe bonds. is without authority, since none of tbe proposals were approved by a majority of tbe qualified voters at tbe election. Tbat may be true, also, by application of tbe statute, under which tbe proceeding leading to tbe bond issue was bad.

Article VII, section 7, of tbe Constitution is as follows: “7. 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 tbe same except for tbe necessary expenses thereof, unless by a vote of the majority of the qualified voters therein."

Tbe pertinent part of Article V, section 4, of tbe Constitution is as follows: “. . . and for any purpose other than these enumerated tbe General Assembly shall have no power to authorize counties or municipalities to contract debts, and counties and municipalities shall not contract debts, during any fiscal year, to an amount exceeding two-tbirds of tbe amount by which tbe outstanding indebtedness of tbe particular county or municipality shall have been reduced during tbe next preceding fiscal year, unless tbe subject be submitted to a vote of tbe people of tbe particular county or municipality. In any election held in tbe State or in any county or municipality under tbe provisions of this section, tbe proposed indebtedness must be approved by a majority of those who shall vote thereon."

To summarize, for tbe creation of debt for unnecessary purposes, Article VII, section 7, of tbe Constitution requires tbe approval of a majority of tbe qualified voters; to overcome tbe restriction placed upon tbe creation of debt by Article Y, section 4 (wbicb was necessary in tbis case), it is only necessary to bave tbe approval of a majority of those voting.

These sections of tbe Constitution are not in conflict. It was competent for tbe people of tbe State, in their Constitution, to place what emphasis they pleased upon restrictions in tbe creation of debt, and in doing so to distinguish between debts differing in kind and necessity, and we see no indication in tbe adoption of tbe amendment to Article Y, section 4, that there was any intention on their part to modify tbe measure of restraint expressed in tbe more rigid requirements of Article YII, section 7, as a condition precedent to tbe contraction of debt for an unnecessary purpose. One referendum only is required, but when tbe proposal is to issue bonds for a purpose wbicb cannot be classed as necessary, it must be approved by a majority of tbe qualified voters, as required in Article YII, section 7, although a majority of those voting is sufficient to satisfy tbe requirements of Article Y, section 4, as to tbe particular restriction imposed therein.

We may say further that tbe city has undertaken tbe issue of tbe bonds under the Municipal Finance Act of 1917' — C. S., 2936, et seq.— and is bound by its provisions. Section 2948 requires that where the bond ordinance provides for tbe issuance of bonds for a purpose other than tbe payment of necessary expenses of tbe municipality, tbe approval of a majority of tbe qualified voters is necessary to make tbe ordinance operative. Hemric v. Comrs. of Yadkin County, 206 N. C., 845, 175 S. E., 168.

Upon tbis reasoning, tbe judgment of tbe court below, restraining tbe issuance of tbe bonds, is

Affirmed.