Opinion
(Filed 26 September, 1917.)
1. Constitutional Law — Statutes — Roads and Highways — Bonds — Counties — Townships — State Aid.
Chapter 6, Laws of 1917, is designed to enable the State to lend its aid to road building and maintenance in counties, townships, and road districts, applying therefore in accordance with the terms of the act, the State to issue its 4 per cent bonds upon receiving a bond from the county at 5 per cent interest, intending to take care of the State's bond with interest in a designated period of years; and provides that the county bond may be put in suit to recover any deficiency, with penalty attached, section 19 establishing a limit on the amount the county may borrow; section 11 requiring the bond to obligate the county for its payment; section 20 extending its terms so as to include townships and road districts, requiring bond to be executed by the county commissioners, wherein the township and road district is situate, making it their duty to levy and the sheriff to collect the special tax: Held, the bond contemplated to be given to the State is that of the county and not that of the township or road district.
2. Same — Taxation Without Benefit — Equal Protection — Faith and Credit.
Section 20 of chapter 6 of the Laws of 1917, extending the provisions of the act to townships and road districts, requiring that the bond of the county be given the State upon which the latter is to issue its forty-one year 4 per cent bonds and turn over the proceeds under the scheme set forth to the township, etc., to the establishment and maintenance of the public roads of the particular township, etc., is one entirely within the township government as to the control and expenditure of the fund, without reference either to State or county benefit, and is unconstitutional as the taxing of other districts, etc., within the county, without their consent, for the exclusive benefit of one of them, and is in derogation of Article I, section 17, forbidding that any person be disseized of his freehold liberties and privileges, or in any manner deprived of his property, etc., "but by the law of the land," and of Article VII, section 7, prohibiting a municipality to contract a debt or pledge its credits, except for a necessary expense thereof unless with the approval of its qualified voters.
3. Same — "Necessaries" — Benefit.
While the building of public roads has been held a necessary expense within the meaning of Article VII, section 7 of our Constitution, the application of the principle may not be extended to instances where a statute requires the county to issue its bonds for road purposes to obtain aid for a township or local taxing district therein, upon the approval of the voters of the particular district alone, and without benefit to the others.
4. Roads and Highways — Statutes — Counties — Townships — Bonds — State Aid — Adequate Security.
Section 20, chapter 6, Laws of 1917, cannot be construed so as to require the county commissioners, as agents for the township, to give the township bond to the State upon which the latter shall issue its 4 per cent bond to aid the township in the construction, etc., of its public roads, for apart from the express language, the statute contemplates more adequate security than a township bond would afford, the size and boundaries of the townships being under the statutory control of the commissioners and subject to be changed by them. Rev., sec. 1318, subsec. 7.
5. Constitutional Law — Statutes — Interpretation.
The principle that when two constructions of a statute are permissible, the courts, in favor of upholding legislation, should adopt that which is in accordance with the organic law, does not apply when such would force a departure from the plain and natural significance of the words employed in the statute, and which the meaning and purpose of the law clearly tend to confirm and support.
6. Same — Test.
The test of the constitutionality of a statute is whether the statute authorizes an unconstitutional act, and not whether the act in a particular instance would be done with a beneficial effect.
7. Constitutional Law — Unconstitutional in Part — Courts — Appeal and Error.
Where a portion of a legislative act is alone presented on appeal and found to be unconstitutional, the Court may not properly consider the effect thereof upon other portions of the act, as to the constitutionality of such other portions, when not necessary to the decision.
CIVIL action heard on case agreed before his Honor, W. A. Devin, J., at June Term, 1917, of WAKE.
From the facts as presented, it appears that O'Neal Township (143) in Johnston County, having decided by popular vote to apply to the State for a loan of $40,000 to establish and maintain a system of public roads in said township, pursuant to the provisions of chapter 6, Laws 1917, entitled "An act to encourage road building in North Carolina by State aid,"and the result having been duly certified to the Board of Commissioners of said county, that body passed a resolution to levy a special tax in said township at the approaching August meeting in 1917 to meet the obligations imposed by the statute, duly applied for said loan and prepared and tendered to defendant, the State Treasurer, the bond of the county in the sum of $40,000, promising to repay said loan and interest thereon at 5 per cent for forty-one years, payable semiannually, and to be computed at said rate on each installment of said loan from the date same should be advanced. Said bond contained provision, also, "that in default of prompt payment of said interest as it accrues, the said county of Johnston promises to pay the penalties prescribed by section 12, said chapter 6, and to observe and be bound by other provisions of the act."Accompanying the offer of the bond was a request from the Board of Commissioners that the Treasurer presently advance on said loan an installment of $15,000, etc. The same facts are applicable in case of Selma Township in said county, except the amount voted and total loan applied for was $50,000.
The defendant, the State Treasurer, declined to accept the bond and advance the money, contending:
"1. That the act was invalid.
"2. That the bond tendered was not in proper form.
"3. That the proposed tax levy was invalid," etc.
The court being of opinion with the plaintiff, so entered its judgment and directed that the State Treasurer pay the commissioners the amounts asked for in accordance with the provisions of the law.
Defendant thereupon excepted and appealed.
F. H. Brooks for plaintiff.
Attorney-General and Assistant Attorney-General R. H. Sykes for defendant.
WALKER, J., concurring in the result; CLARK, C.J., dissenting.
Chapter 6, Laws 1917, is a statute designed to enable the State to lend its aid to road building and maintenance in the counties, townships and road districts properly applying therefor under its provisions. In general terms, the scheme and purpose is that the State shall procure the money by issuing its coupon bonds, payable forty-one years from date, bearing interest at 4 per cent, and advance the money so obtained to localities applying for the same on receiving the bond of the respective counties promising to pay interest on the amount loaned at 5 per cent for said period of forty-one years, this 1 per cent difference in the (144) amount of interest to constitute a road fund to be invested by the State Treasurer, the purpose and estimate being that, if continuously and favorably invested for that period, there should be realized an amount sufficient to relieve both the State, counties and townships from ultimate liability. The loans are to be advanced by the State Treasurer in amounts as required, not to exceed the sum of $400,000 semiannually; and this is to continue for the period of forty-one years, involving, if carried out to its full intent and meaning, the incurring of a State indebtedness approximating $32,000,000. Provision is also made that if at any time there is any default in payment of the 5 per cent interest, as stipulated, the bond shall be put in suit for the amounts due and penalties attached; and if at the end of forty-one years the Treasurer has not been enabled to realize the full amount then due according to the scheme of loans and investment, the respective counties shall make good the deficit in proportion to the amount of the proceeds which such counties may have received.
After thus providing for obtaining the money in case of counties, the statute (in section 19) establishes a limit on the amount a county may borrow, the same not to exceed, in connection with other county indebtedness, 6 per cent of the assessed valuation of the property in the county; and in section 20 it is enacted as follows:
"Townships and road districts created by special act of the General Assembly may avail themselves of the benefits of this act upon compliance with the requirements herein set out: Provided, that the bond or undertaking filed with the State Treasurer shall be executed by the board or boards of county commissioners of the county or counties in which such township or road district is situated. It shall be the duty of such commissioners to levy and the duty of the sheriff to collect such special taxes and make payment thereof in the manner and under the penalty set out in section eighteen of this act."
The application for a loan in this case, being in behalf of two of the townships of Johnston County, comes more directly within the meaning of this section 20; and considering the same in reference to the terms employed and the other provisions of the statute and the general meaning and purpose of the law, it is clear, we think, that, whether the loan be applied for by county, township, or road district, the bond that is tendered shall be that of the county. No other than a county bond is anywhere mentioned in the statute, and in section 11 the statute itself says "said bond shall obligate said county to pay to the State Treasurer the 5 per cent interest per annum on the amount thus loaned," and when the provisions of the statute were extended to townships and road districts and the provision formally required that the "bond tendered should be (145) executed by the Board of County Commissioners," it plainly meant the bond that had been previously referred to and which the Board of County Commissioners would naturally give — the bond of their county. This is evidently the interpretation put upon it by the advocates of the measure as well as the actors in the present suit, for in this transaction (said to be brought as a test case), though the election and application are by two of its townships, the bonds are obligations of Johnston County. To hold otherwise would not only be a departure from the plain meaning of the language used, but would leave the proviso without substantial significance. And there is too controlling reason for such a requirement. A perusal of the statute will disclose that, while the bonds of the State are to be positive obligations so far as the creditor or holder is concerned, it was clearly contemplated that the State should be ultimately reimbursed for its outlay, and to this end proper security should be furnished. A county bond in all probability would do this, whereas the bond of a township or road district, without regard to its size or ability to pay and on which no limit in its indebtedness had been placed by the statute, except that it could only have its proportionate part in case the aggregate amount applied for should exceed semiannual loan of $400,000, might and often would fall far short of affording adequate security. It was for this reason no doubt that the proviso was inserted, and both its language and the facts and circumstances show that the framers of the statute intended that in all cases a county bond should be required. This being the correct and, to our minds, the only permissible construction of this section 20, we are of opinion that the Legislature is without power to require a county to give its binding obligation to pay the interest on a loan at 5 per cent for forty-one years on the application and vote of a township or road district for the construction and maintenance of the roads of the township or district.
On the facts here presented, an obligation of this kind imports a liability to taxation, and in case of a subordinate municipal corporation, it means that payment can be coerced, and that all the taxable values therein may be made available on the claim. As said in People v. Township Salem, 20 Mich. 452: "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 unless the object to be promoted be such as may be provided for by taxation, the power to make the pledge does not exist, and the Legislature cannot confer it." And a decision in this Court at the last term in Bennett v. Commissioners of Rockingham is in full recognition of the principle. True, both the levy and apportionment of taxation is very largely in the legislative discretion, and, when the power exists, it is very rarely if ever that courts are allowed to interfere. It is true, also, that a State or county may, as a rule, lend its (146) aid or expend its money in the building and maintenance of public roads anywhere within its borders when it is being done for the public benefit or as a part of a State or county system, but in this instance the improvement is entirely localized. The roads of the differing townships or districts are set apart and a scheme is entered upon by which they can be planned, constructed, and improved entirely under township governance and without reference either to State or county benefit; and when this occurs, the principle is presented that it is not within the legislative power to tax one community or local taxing district for the exclusive benefit of another — a principle which has been directly approved in several recent decisions of this Court and is one very generally accepted. Keith v. Lockhart, 171 N.C. 451; Faison v. Comrs., 171 N.C. 411; Harper v. Comrs., 133 N.C. 106; Commissioners Prince George v. Commissioners Laurel, 70 Md. 443; Lumber Co. v. Township of Springfield, 92 Mich. 277; People of Salem, supra, citing Lexington v. McQuillan's Heirs, 39 Ky. 513; Cooley on Taxation (3d Ed.) 420; Judson on Taxation, sec. 254; 37 Cyc. 749.
In the citation to Cooley on Taxation, speaking to the question, the author says: "The taxing district through which the tax is to be apportioned must be the district which is to be benefited by its collection and expenditure. The district for the apportionment of the State tax is the State, for a county tax the county, and so on. Subordinate districts may be created for convenience, but the principle is general, and in all subordinate districts the rule must be the same."
In 37 Cyc., supra, the principle is stated as follows: "The constitutional requirement of uniformity of 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."
It is a fundamental principle in the law of taxation that taxes may only be levied for public purposes and for the benefit of the public on whom they are imposed, and to lay these burdens upon one district for benefits appertaining solely to another is in clear violation of established principles of right and contrary to the express provisions of our Constitution, Art. I, sec. 17, which forbids that any person shall be disseized of his freehold liberties and privileges or in any manner deprived of his life, liberty or property but by the law of the land."
On the facts presented by this record, the position is further emphasized and conclusively determined in this jurisdiction by reason of another constitutional provision, Article VII, section 7, which provides that no county, city, town or other municipal corporation shall contract a 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 by a vote of the majority (147) of the qualified voters therein." True, we have held in several well-considered decisions, that debts incurred and moneys expended for the building and maintenance of public roads are a necessary expenses within the meaning of this section, but neither the decisions nor the principle on which they rest will sanction or approve the position that the road system of a township or road district under its local control and constituted for its special benefit is a necessary county expense, or that a vote of such township or district made for such purpose can establish a county obligation importing liability to taxation on the entire county and to which the voters of the county have not given their consent and are nowhere permitted and required to give it. On the contrary, it appears from a bare perusal of the relevant facts that such a localized road system can in no sense be considered a necessary county expense, and a statute, or that portion of it certainly which undertakes to establish a county liability for its construction and upkeep is in clear violation of this wholesome constitutional provision and must be declared invalid.
Recognizing the conclusive force of this position, it is contended for the applicants that the objectionable proviso in section 20 shall be so construed as to require only the execution of the township bond, and that the county commissioners, for the purpose, shall be held to act only as the representatives or agents of the townships and road districts for which the loan is made, and we are referred to various decisions of the Court where the commissioners have so acted, among others, Edwards v. Comrs., 170 N.C. 448; McCracken v. R. R., 168 N.C. 62; Jones v. Comrs., 107 N.C. 248.
To give the statute such an interpretation, as we have endeavored to show, would be contrary to the natural import of the language and to add to the proviso in question words that it does not now contain, and, on the reason of the thing, we deem it well to note again that it is clear from a perusal of the entire statute that the State is to be ultimately reimbursed for this outlay, and to that end adequate security is to be furnished for the loans. A county whose boundaries are known and tax-paying ability recognized and established would very likely do this, whereas a township bond where size and boundaries are now entirely under control of the commissioners (Revisal, chap. 23, sec. 1318, sub sec. 7) might, and no doubt frequently would, prove totally insufficient.
In view of these conditions, the only protection the State could prudently rely on was to require, as it has done, that, for township and district loans, a county bond shall be given, and the authorities cited tend rather to confirm than to antagonize this construction of the law, for in every one we have examined the statute construed, as plaintiffs contend, contained the provision in express terms that, in giving the bond, it should be the "obligation of the township," or that "the commissioners should act only as agents (148) of the township," terms that do not appear in the statute before us.
The principle is further urged upon our attention that, when two constructions of a statute are permissible, the Courts in favor of upholding legislation should adopt that which is in accord with the organic law; but such principle does not justify a departure from the plain and natural significance of the words employed and which the meaning and purpose of the law clearly tend to confirm and support. As said in 6 Ruling Case Law, sec. 77: "There are, however, limitations to the application of these principles, and Courts are not at liberty, in order to sustain a statute, to give it a forced construction which does not appear in the language enacted by the Legislature."
We are not inadvertent to the fact that thus far a tax only on the township applying for the loan is contemplated by the county commissioners, but, as we have seen, the bond to be given fixes an obligation on the county for the entire sum, and the statute provides that if there be default in paying the 5 per cent interest for thirty days the entire amount due and all penalties shall "at once become due and payable" and enforced by action. And, as we have said in former decisions: "It is no answer to this position that, in the particular case before us, no harm is likely to occur or that the power is being exercised in a benevolent manner, for when a statute is being squared to the requirement of constitutional provision, it is what the law authorizes, and not what is being presently done under it, that furnishes the proper test of validity."
Applying these principles, and for the reasons stated, we are of opinion that section 20 of this statute is unconstitutional and void, and that the application for these present loans, which are entirely dependent upon it, were properly refused by the State Treasurer.
What effect the invalidity of this section may have upon the remaining provisions of the statute, and whether the general principles which forbid that, on the facts of this record, the cost for building and upkeep of a local road system for a township or road district be fixed upon a county will operate to prevent a State from incurring a large bonded indebtedness in aid of road building in the different counties are questions of gravest import which we do not now determine. They are not presented in the record and we do not consider it proper to decide them by anticipation. Speaking to this course, the Supreme Court of the United States in Baker v. Grice, 169 U.S. 284, says: "It is a matter of common occurrence — indeed, it is almost the undeviating rule of the Courts, both State and Federal — not to decide constitutional questions until the necessity for such decision arises in the record before the Court. This Court has followed this practice from the foundation of the Government." And in Wellman v. R. R., 143 U.S. 339: "Such an (149) exercise of the power is the ultimate and supreme function of Courts. It is legitimate only in the last resort and as a necessity in the determination of real earnest and vital controversy between individuals." And in Liverpool, etc., Steamship Co. v. Commissioners Em., 113 U.S. 33: "It (the Court) has no jurisdiction to pronounce any statute, either of State or of the United States, void because irreconcilable with the Constitution, except as it is called on to adjudge the legal rights of litigants in actual controversies." In accord with these precedents and in full recognition of their fitness, we purposely refrain from determining the questions suggested, and confine our decision to the controversy actually presented in the record and dependent, as stated, on the validity of section 20 of the statute.
The suggestion that the State extends its aid in offering educational advantages to the people throughout its territory, and that it is at times made effective in certain designated localities, to our minds, is not apposite to the question decided in this appeal and not helpful to its proper solution. That is recognized and dealt with as a State-wide system under the control of general State officers, made imperative by special constitutional provision; and while aid is at times extended to certain localities where need is pressing, and through the agency of local officials, they are acting, as stated, in promotion of the general system and are in fact and truth performing official duties to that end.
There is error, and this will be certified to the court below that the action be dismissed.
Reversed.