Opinion
(Filed 9 November, 1916.)
1. Taxation — Constitutional Law — Counties — Special Tax — Poll Tax.
Article V, section 1, of our Constitution, providing an equation between the property and poll tax, and requiring that "the State and county capitation tax shall never exceed $2 on the head," is related to and should be construed with sections 2 and 6 of the same article; and it is Held, that the limitation imposed is for a levy for the ordinary expenses of the State and county governments, which, under section 2, is to be applied, so far as it relates to the poll, to the purpose of education and the support of the poor; and that under section 6 taxes may be "levied by the commissioners of the several counties for county purposes in like manner with the State taxes, and shall never exceed the double of the State tax, except for a special purpose, and with the special approval of the General Assembly."
2. Same — Statutes — Equation — Bond Issues.
The limitation as to the levy on poll tax prescribed by Article V, sections 1 and 2, of our Constitution does not apply to the levy of a special tax by a county for road purposes, authorized by the Legislature under section 6 thereof, submitted to the vote of the electors of the county and duly approved by them; and where the statute authorizes an issue of bonds for such purpose upon the property and polls, providing that the equation between the property and poll tax be observed, and at the time the taxes of the county have reached the limitation imposed by Article V, sections 1 and 2, bonds issued in accordance with the provisions of the statute are not void on the ground that the statute authorizing them is unconstitutional for that the poll tax in the county would exceed $2, and the equation prescribed would make it impossible to separate the property special tax from the special tax on the poll.
3. Taxation — Counties — Special Tax — Statutes — Legislative Powers — Constitutional Law.
The constitutional power conferred on the Legislature to authorize counties to levy a special tax upon the property and poll for special county purposes is essential to the existence of the State, and in the exercise of this power the Legislature is supreme. The doctrine of stare decisis discussed.
4. Taxation — Counties — Special Tax — Polls — Elector — Disqualification.
Where the Legislature, in the exercise of its power (Art. V, sec. 6) confers on a county the authority to levy an additional tax in excess of the poll tax of $2 (sec. 1 and 2), a failure to pay this additional tax on poll does not disqualify the person failing to pay it to vote; for this only applies to the failure to pay the poll tax levied directly under the limitation of Article V, secs. 1 and 2.
5. Taxation — Counties — Roads — Necessaries.
A levy of taxes authorized by statute for road purposes of the county is for a necessary expense.
6. Taxation — Statutes — Bond Issues — Par — Resales.
Where a statute authorizes a county to issue special tax bonds at their face value, to bear 5 per cent interest, and time certificates of deposit for a short period of time bearing only 2 per cent are partly taken in exchange, the difference in the interest rate reduces the purchase price of the bonds to below par, and the transaction is void, requiring a resale in accordance with the terms of the statute.
(420) MOTION made before Harding, J., 14 January, 1916, to continue a restraining order to the hearing; from ALEXANDER.
A. C. Payne and Cansler Cansler for plaintiffs.
L. F. Klutz, W. D. Turner, and Tillett Guthrie for defendant.
(422) ALLEN, J.
BROWN, J., concurring; CLARK, C. J., dissenting; WALKER, J., dissenting.
This is an action brought by J. F. Moose and others, residents and taxpayers of Alexander County, against the board of commissioners of said county, to perpetually restrain said board.
1. From issuing and selling $150,000 of road bonds to Sidney Spitzer Co., pursuant to the terms of a certain contract.
2. To perpetually restrain said board from levying a special tax upon the taxable property and polls in said county, which, when added to the general tax levy for necessary State and county purposes, would exceed 66 2/3 cents on the hundred dollars valuation of property, and $2 on each taxable poll.
3. That said board be perpetually restrained from appropriating any funds raised by general taxation for necessary county purposes to the payment of the principal or interest of said bonds, if issued.
4. That said board be perpetually restrained from performing the contract with Sidney Spitzer Co., by which the board undertook to pledge the revenues of said county, derived from general taxation, to the payment of the principal and interest of said bonds.
5. That said board be perpetually restrained from contracting with Spitzer Co., to bind future boards of commissioners of said county to continue to levy special taxes upon the property and the polls in said county, in excess of that authorized by the bond act above referred to, construed in connection with Article V of the Constitution.
The General Assembly of 1915 passed a good roads act for Alexander County (ch. 27, Pub. Local Laws), by the terms of which the commissioners of the county, under the restrictions and limitations contained in said act, were authorized to issue and sell $150,000 of road bonds of the county. These restrictions are as follows:
Section 1 of the act provides: "That none of the bonds authorized by this act shall be disposed of, either by sale, exchange, hypothecation, or otherwise, for a less price than their face value."
Section 17 of the act provides, among other things: "The board of commissioners of the county shall offer for sale, at such time or (421) times, such number of said bonds as may be determined by the good roads commission . . . and the proceeds of the sale of said bonds shall be delivered to the treasurer of the county."
Section 11 of the act creates the good roads commission of the county, declares it shall be composed of the board of commissioners and the board of education of the county, which, when organized, shall take the oath of office, etc. Other sections of the act places the supervision and control of the construction and repair of roads entirely in the hands of this commission.
Section 1 of the act also provides that: "The said board of commissioners may divide the said issue (of bonds) into three series."
Section 4 of the act provides: "In order to pay the interest of said bonds, create a sinking fund for taking up said bonds at maturity . . . the board of commissioners of Alexander County . . . shall annually compute the levy, at the time of levying other county taxes, a sufficient special tax on all polls, all real estate and personal property . . . always observing the constitutional equation between the taxes on the property and the taxes on the poll: Provided, there shall not be at any time levied in the county of Alexander for the purposes of road improvement . . . a tax greater than 33 1/3 cents on the hundred dollars valuation of property and $1 on each poll."
The act also provides that said bonds shall not be issued until authorized by a majority vote of the qualified voters of the county at an election to be called and held for that purpose.
At an election called and held for the purpose aforesaid, a majority of the qualified voters of the county voted in favor of the bond issue. Thereafter, the board of commissioners, on 6 April, 1915, advertised for the sale of said bonds in three series of $50,000 per series.
No satisfactory bids having been offered for such bonds, the said board thereafter, without advertisement, on 1 November, 1915, entered into a contract with Sidney Spitzer Co., by the terms of which they undertook to sell said bonds in seven series, and to accept in payment thereof $5,000 in cash and seventeen certificates of deposit of the American National Bank of Wilmington, N.C. due from three to nineteen months thereafter, and bearing 2 per cent interest.
This contract provided that it "is based upon the legality of the issuing of said bonds and the right to levy a tax under the act upon which they are issued . . . and that the terms of this sale be in accordance with the provisions of said act."
His Honor dissolved the restraining order theretofore issued, and the plaintiffs appealed.
The tax on the poll and on property of the value of $300 is now $2 in the county of Alexander for ordinary State and county purposes, and the General Assembly has by statute authorized the county to issue bonds in the sum of $150,000 for the purpose of constructing and maintaining roads, with provision in the statute for the levy of a poll and property tax in excess of $2, to be used in paying the principal and interest of the bonds.
Is this statute constitutional?
The question is presented in the most favorable aspect for sustaining the constitutionality of the statute, as the bonds are to be issued for constructing roads, which is a necessary expense ( Hargrave v. Comrs., 168 N.C. 626); the statute has the approval of the General Assembly, and it has been ratified by popular vote; and if under these conditions this statute cannot be upheld, no tax levy by the county exceeding $2 on the poll and property can be valid for any purpose.
The question is all important and vital, involving as it does the setting aside of an act of the General Assembly, and saying to the people that they have not the power under the Constitution to impose a tax upon themselves even for a necessary expense.
It may also have an important effect upon the credit of the State, and may prevent future development in the counties, because according to the report of the Tax Commission for the year 1914, there were then fifty-eight counties in which the poll tax exceeded $2, and ninety-seven in which the property tax exceeded that amount, and the total indebtedness of these counties, not including the indebtedness of special districts in the counties, was $10,196,363.26.
Bonds cannot be issued and sold unless supported by valid tax levies, and if the statute now before us is unconstitutional, not only are the taxes invalid which are now being collected in these counties to pay the principal and interest of the indebtedness, but the people of the counties have no power to impose on themselves additional taxes if their roads and bridges are swept away by floods or their courthouses, jails, and county homes are destroyed by fire.
If, however, these conditions arise from a proper and legitimate construction of the Constitution, we must abide the result. As was well said by Associate Justice Walker in the concurring opinion in Collie v. Comrs., 145 N.C. 179, "When the people have clearly ordained what shall be done, we, as judges, have nothing to do but to obey and to execute their will. Whether the particular provisions in question are wise or unwise is not for us to determine."
The section of the Constitution directly involved is the first section of Article V, which reads as follows: "The General Assembly shall (423) levy a capitation tax on every male inhabitant of the State over 21 and under 50 years of age which shall be equal on each to the tax on property valued at $300 in cash. The commissioners of the several counties may exempt from capitation tax in special cases, on account of poverty and infirmity, and the State and county capitation tax combined shall never exceed $2 on the head."
Related to this section, and bearing on its construction, are sections 2 and 6 of the same article, which are in the following language:
Section 2. "The proceeds of the State and county capitation tax shall be applied to the purposes of education and the support of the poor, but in no one year shall more than 25 per cent thereof be appropriated to the latter purpose."
Section 6. "The taxes levied by the commissioners of the several counties for county purposes shall be levied in like manner with the State taxes, and shall never exceed the double of the State tax, except for a special purpose, and with the special approval of the General Assembly."
Three contentions are made as to the construction of the first section of Article V.
1. That the limitation of $2 on the poll and $2 on property of the value of $300 applies to all taxes for all purposes, and that this amount cannot be exceeded on the poll or on property, although the tax may be levied for a special purpose and with the special approval of the General Assembly.
2. That the limitation on the poll is absolute and can never be exceeded for any purpose, but that the limitation upon property may be exceeded for a special purpose with the special approval of the General Assembly.
3. That the limitation on the poll and on the property applies only to taxes levied for the ordinary expenses of the State and county governments, and that the limitation on the poll and on property may be exceeded for a special purpose with the approval of the General Assembly.
If either of these constructions, except the last, is adopted, the statute is invalid in its entirety, because, after directing a levy on the poll and property tax, it links the two together and makes it impossible to separate them, by providing, "always observing the constitutional equation between the taxes on the property and the taxes on the poll."
In arriving at a correct conclusion, the subject being dealt with in the Constitution (taxation) and the nature and purpose of the Constitution itself may be considered.
"The power to tax is an attribute of sovereignty so vital and so necessary to the existence of a State that it cannot be held to have been forbidden as to any particular subject except where the policy (424) obviously commends itself to our sense of justice or is most clearly expressed." Pullen v. Comrs., 66 N.C. 363.
"The power of taxing the people and their property is essential to the very existence of government, and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the Government may choose to carry it. The only security against the abuse of this power is found in the structure of the government itself. In imposing a tax the Legislature acts upon its constituents. This is in general a sufficient security against erroneous and oppressive taxation. The people of a State, therefore, give to their Government a right of taxing themselves and their property; and as the exigencies of government cannot be limited, they prescribe no limits to the exercise of this right, resting confidently on the interest of the legislator, and on the influence of the constituents over their representative, to guard them against its abuse." McCulloch v. Maryland, 4th Wheat., 316.
Of course, this principle is subject to the qualification that the power to tax cannot be exercised when prohibited in the Constitution; but it serves the purpose of showing that the power, which belongs to the legislative branch, is essential to the existence of the State, and that in its exercise the Legislature is supreme, except as the Constitution limits its power.
We find this scheme of taxation in a constitution, and while we would not subscribe to the doctrine of Napoleon that "constitutions ought to be short and obscure," a constitution is permanent in its nature, deals with the future, and as its framers cannot foresee and anticipate conditions that may arise in the growth and development of the State, it deals largely in general principles and not in details.
"A constitution, unlike a statute, is intended not merely to meet existing conditions, but to govern the future. It has been said that the term 'constitution' implies an instrument of a permanent nature. Since it is recognized that its framers could not anticipate conditions which might arise thereafter in the progress of the Nation, and could not establish all the law which from time to time might be necessary to conform to the changing conditions of a community, as a rule a constitution does not deal in details, but enunciates the general principles and general directions which are intended to apply to all new facts that may come into being, and which may be brought within these general principles or directions. It has been said that it would have been an unwise attempt to provide, by immutable rules, for exigencies which, if foreseen at all, must have been seen dimly, and which can be best provided for as they occur, and that it would have deprived the Legislature of the (425) capacity of avail itself of experience, to exercise its reason, and to accommodate its legislation to circumstances." 6 R. C. L., 16.
"A constitution is framed for ages to come, and is designed to approach immortality as nearly as human institutions can approach it." Cohens v. Virginia, 6 Wheat., 264. Story, J., speaking of the Constitution of the United States in Martin v. Hunter, 1 Wheat., 304, uses language which is applicable to all constitutions. He says: "The constitution unavoidably deals in general language. It did not suit the purpose of the people, in framing this great charter of our liberties, to provide for minute specifications of its powers, or to declare the means by which those powers should be carried into execution. It was foreseen that this would be a perilous and difficult, if not an impracticable, task. The instrument was not intended to provide merely for the exigencies of a few years, but was to endure through a long lapse of ages, the events of which were locked up in the inscrutable purposes of Providence. It could not be foreseen what new changes and modifications of power might be indispensable to effectuate the general objects of the charter; and restrictions and specifications which, at the present, might seem salutary, might, in the end, prove the overthrow of the system itself. Hence its powers are expressed in general terms, leaving to the Legislature, from time to time, to adopt its own means to effectuate legitimate objects, and to mold and model the exercise of its powers as its own wisdom and the public interests should require."
If, therefore, the scheme of taxation, necessary to the existence of the State, is provided for in the Constitution, if the Constitution is permanent in its nature and deals with the future, if its purpose is to deal in general principles and not in details, is it not the natural and reasonable conclusion that the framers of the Constitution were only intending to place limitations on the exercise of the power of taxation as to those expenses of government which they could reasonably foreseen and anticipate — the ordinary expenses — and not as to extraordinary expenses for special purposes arising from time to time and far beyond human vision and foresight?
They might form a reasonable estimate of the ordinary expenses of the Government for the future and be willing to fix a maximum of taxation for that purpose, but they would have been rash indeed to have limited the power of their posterity to deal with exigencies and emergencies, which arise in the life of a State, which they could not conceive or imagine.
This, as it seems to us, has been the construction placed on this section of the Constitution — that it applies only to the ordinary expenses of government and not to those for a special purpose — by the (426) Legislative, Executive, and Judicial Departments, and by the people.
By the Legislative in enacting hundreds of statutes authorizing the levy of taxes for general purposes on polls and property in excess of the limitation; by the Executive in collecting and expending these taxes; by the Judicial in declaring this to be the true meaning of the section; and by the people in voting for the taxes in many instances and paying them.
Let us now turn to the language of the Constitution and to the decided cases and see how far the statement is sustained that the construction of the Constitution has been definitely settled by judicial decision.
In sections 1 and 2 the poll tax is referred to as "the State and county capitation tax," and this language must receive the same construction in both sections. In section 1 it is declared that the poll tax "shall be equal on each to the tax on property valued at $300" and that "the State and county capitation tax shall never exceed $2 on the head," and in section 2, that "The proceeds of the State and county capitation tax shall be applied to the purposes of education and the support of the poor." The words "shall be applied" in section 2, "shall be equal" and "shall never exceed," in section 1, are equally imperative, and if the poll tax cannot exceed $2 for a special purpose, under section 1, neither can any part of it be applied to a special purpose, under section 2, nor can it be greater or less than the property tax.
The first section establishes the equation of taxation to be maintained between property and poll, and if the section applies to all taxes it must be maintained in all cases and cannot be disregarded when taxes are levied for a special purpose; and it also declares for the principles of a limitation of taxation on property and the poll in the first part of the section and fixes the amount of the limitation on both in the concluding sentence; and if this limitation applies to all taxes it cannot be exceeded for a special purpose.
The authorities show that the limitation applies to property and poll.
"It is too plain to admit of argument that the intent of this section was to establish an invariable proportion between the poll tax and the property tax, and that as the former is limited to $2 on the poll, so is the latter to $2 on the $300 valuation of property." This was said by Rodman, J., a member of the Convention which framed the Constitution, in R. R. v. Holden 63 N.C. 427.
This section commands two things:
"1. That the poll tax shall always be equal to that on $300 valuation of property. This has been called the equation of taxation.
(427) "2. That the State and county poll tax shall not exceed $2. This fixes the limit of taxation on polls, and consequently on property.
"These two directions are equally definite and positive; they are in no wise inconsistent with each other; it is impossible that one has any more favor or sanctity than the other merely because it comes earlier or later in the sentence; they must be equally binding on the Legislature." Rodman, J., in Winslow v. Weith, 66 N.C. 432.
"It is well settled that, for the ordinary expenses of government, both State and county, the first section of Article V of the Constitution places the limit of taxation and preserves the equation between the capitation and the property tax — the capitation tax never to exceed $2, and the tax upon property valued at $300 to be confined within the same limit." Board of Education v. Comrs., 111 N.C. 580.
It has not only been held that the limitation is on property and poll, but also that property is the standard for ascertaining the amount of the poll tax. Kitchin v. Wood, 154 N.C. 565.
If, therefore, these sections refer to taxes levied for all purposes, it follows that the equation of taxation and the limitation upon property and the poll must always be maintained, and that the poll tax can never be applied to purposes other than education and the support of the poor; and that if the sections only deal with taxation for the ordinary expenses of the State and county, and not to those for special purposes, there is no limitation upon this power of the General Assembly in authorizing the levy of taxes on property and the poll for special purposes, except that of submitting the question to a vote of the people if not for necessary expenses.
The authorities sustain the latter view by stating clearly and definitely that section 1 applies only to taxation for ordinary expenses, by sustaining levies for special purposes which did not maintain the equation and exceeded the limitation, and by declaring legal the application of the poll tax to special purposes.
In Jones v. Comrs., 107 N.C. 248, Merrimon, C. J., after discussing several sections of the Constitution says: "We are therefore of opinion that the equation and limitation of taxation established by the Constitution (Art. V, sec. 1) applies only to taxes levied for the ordinary purposes of the State and counties"; and this language is quoted and approved by Hoke, J., in Perry v. Comrs., 148 N.C. 524.
In Wingate v. Parker, 136 N.C. 370, Clark, C. J., says, after citing section 1 of Article V: "It is clear that this section applies solely to State and county taxation," and he then quotes with approval from Jones v. Comrs., supra, as follows: "But it is settled by many decisions of this Court that it (Art. V, sec. 1) does not establish an exclusive system or scheme of taxation applicable and to be observed in all (428) cases and for all purposes; that, on the contrary, it applies only to the revenue and taxation necessary for the ordinary purposes of the State and the Several counties thereof."
In Collie v. Comrs., 145 N.C. 182, Walker, J., in his concurring opinion: "The general limit of taxation is fixed, of course, at 66 2/3 cents on the $100 in value of property, as I have already indicated, by the provision in regard to the equation, and the maximum of the poll tax, which is $2 on the $300 of property at its true value in cash. Const., Art. V, sec. 1. All the above provisions were evidently intended to apply to taxes laid for general State and county purposes."
The decisions are equally clear and definite in establishing the principle that the equation and limitation of taxation apply only to taxes levied for ordinary expenses, and have no application to taxes levied for a special purpose, and that poll taxes levied for special purposes may be applied to that purpose and not to education and support of the poor.
The case of R. R. v. Comrs., 148 N.C. 220, and R. R. v. Comrs., 148 N.C. 248, decide unequivocally that the equation need not be observed when the tax is for a special purpose; and Board of Education v. Comrs., 137 N.C. 310, and Crocker v. Moore, 140 N.C. 432, are equally positive in holding that a part of the poll tax may be applied to special purposes and not to education and the support of the poor.
In the last case Clark, C. J., answering a constitutional objection to the statute then being considered, says: "In that the act applies a part of the county capitation tax to the use of the public roads in violation of the Constitution, Art. v. sec. 2, which appropriates the State and county poll tax 'to the purposes of education and the support of the poor.' But that provision applies to the levy of taxation for general, not special purposes. Board of Education v. Comrs., 137 N.C. 310."
The leading case on the power to exceed the limitation on property and the poll for special purposes is Herring v. Dixon, 122 N.C. 422, in which the present Chief Justice not only gives a valuable analysis of section 1 of Article V of the Constitution, but he also answers specifically the objection that the tax on the property and the poll cannot exceed $2, as follows:
"2. The plaintiff, however, further contends that the levy is unconstitutional because when this special levy is added to the levy by the State and the ordinary county levy, the total exceeds $2 on the poll and 66 2/3 cents on the $100 value of property. This tax, however, is authorized by the Constitution, Art. V, sec. 6, since it has the special approval of the General Assembly and is for a special purpose, that of raising (429) funds by which the county can put the roads and bridges in better condition than could be done within the constitutional limitation upon taxation. Brodnax v. Groom, 64 N.C. 244; Williams v. Comrs., 119 N.C. 520; Evans v. Comrs., 89 N.C. 154; Halcombe v. Comrs., 89 N.C. 346. Article V, section 6, confers upon the Legislature power to authorize a county by special act and for a special purpose 'to exceed double the State tax.' As the State tax is 43 cents, this would have empowered the Legislature to authorize the county to go far beyond the point to which this tax reaches, and, as the greater includes the less, authorizes this levy, which is well within that limit, though exceeding the limitation of 66 2/3 cents to the $100 and $2 on the poll."
If this is the law, it answers every objection of the plaintiffs to the statute before us, because it sustains a tax levy on the poll and on property for roads, "though exceeding the limitation of 66 2/3 [cents] on the $100 and $2 on the poll"; and that this was a point decided and not a dictum appears from the opinion of Connor, J., in R. R. v. Comrs., 148 N.C. 237, where he says: "In Herring v. Dixon, 122 N.C. 420, the only question presented and decided was whether a tax for working the public roads was for a special purpose for which the Legislature could authorize the levy of a property and poll tax beyond the limitation."
The case has never been questioned and, on the contrary, it has been approved in twelve decisions of this Court, notably, in Hargrave v. Comrs., 168 N.C. 627, where after citing Herring v. Dixon, and other decisions, Clark, C. J., says: "We know of no reason to question the correctness of these decisions."
Following the case of Herring v. Dixon is Tate v. Comrs., 122 N.C. 812. The facts in this case are that the taxes on property and the poll had reached the constitutional limit in Haywood County, and under this condition the General Assembly passed an act requiring the commissioners of the county to levy an additional tax on the poll and on property to be used in building and maintaining roads and providing in the act, "the constitutional equation to be observed at all times." The commissioners refused to levy the taxes, upon the ground that the statute was unconstitutional, and the action was instituted to compel them to do so by the writ of mandamus.
This Court held, Clark, C. J., writing the opinion, that the statute was constitutional; that the constitutional limitation did not apply, and directed the mandamus to issue compelling the levy of the taxes.
Note that the statute required the equation of taxation to be observed, and that, therefore, the tax on property could not be valid if the tax on the poll was invalid, and that the Court ordered mandamus to issue to compel the levy of a tax on the poll and on property, in excess of the constitutional limitation, for the purpose of constructing (430) and maintaining roads.
If this case was correctly decided (and it has been approved more than twenty times, and in Hargrave v. Comrs., 168 N.C. 627, the Court, after citing it and other cases, says: "We know of no reason to question the correctness of those decisions"), it settles the constitutionality of the statute before us, because in both the taxes are on the poll and on property, the taxes on both are in excess of the limitation, the purpose for levying the taxes is the same, and the same safeguards are around both, except in this: we have a vote of approval by the taxpayers themselves, which was absent in the Tate case.
In Crocker v. Moore, 140 N.C. 432, approving Tate v. Comrs., Clark, C. J., says: "The language of the act authorizing the levy of a special tax for these roads is almost identical with that sustained in Herring v. Dixon, 122 N.C. 420, and Tate v. Comrs., ibid, 812. The Legislature can authorize a county to exceed the constitutional limitation for necessary purposes, and working the roads is a necessary purpose."
This not only approves the principle declared, but also the decision on the facts, because he says the language of the two statutes "is almost identical."
There are expressions in R. R. v. Comrs., 148 N.C. 220, contrary to this view, and some in its favor, but it was not decided in that case that the poll tax could not exceed $2 for special purposes, and the point could not have been decided, because neither in that case nor in the subsequent case by the same name in the same volume did the statute before the Court authorize the levy of a poll tax.
On the contrary, in the Mecklenburg case the statute forbade the levy of a poll tax in excess of $2, and in the Buncombe case authority was only conferred to levy the taxes on "taxable property," and the only questions raised and decided were whether the equation of taxation must be observed in levying taxes in excess of the limitation for special purposes, and whether the levy on property could exceed the limitation.
As no poll tax was levied in these cases, and there was no attempt to do so, and as the statute did not authorize the levy of a poll tax, how can it be said that the Court then decided that the limitation on the poll could not be exceeded for a special purpose and with the special approval of the General Assembly?
If, however, it had been so decided, the decision is greatly weakened if not destroyed by the subsequent case of Perry v. Comrs., 148 N.C. 521, in which it was held to be valid to levy a poll tax in excess of the constitutional limitation in a school district. It did not appear in the case that the school district did not have a four months school, and (431) the section of the Constitution relied on in Collie v. Comrs., 145 N.C. 170, was not invoked in support of the decision, which was not limited to schools. This appears clearly from the concurring opinion of Connor, J., who says on page 530: "Fortunately, in this case the tax goes to the support of the public school; but there is nothing in the Constitution, as we interpret it, by which such taxation may be confined to this purpose."
Justice Hoke, writing the opinion for the Court, quotes from Jones v. Comrs., supra, that "The equation and limitation of taxation established by the Constitution (Art. V, sec. 1) applies only to taxes levied for the ordinary purposes of the State and county," and finally rests the decision upon the ground that by cutting off a part of the county into a special district it is made a quasi municipal corporation, and as such falls under Art. VII, sec. 7, of the Constitution, and is not bound by the constitutional limitation on the poll.
It is therefore decided in that case that a poll tax in excess of the limitation may be levied and collected in a school district, and the principle, as shown by the opinion of Connor, J., is not confined to school districts, but extends to districts such as roads.
If so, and a county cannot do so under R. R. v. Comrs., we have the situation under the Constitution of a part of a county having authority to levy and collect taxes when the whole county is forbidden to do so for the same purpose; and a further result is that the General Assembly may divide a county into the two districts and incorporate them, and authorize a valid tax on the poll in excess of the constitutional limitation in each when it cannot permit and direct it in the county as a whole for the same purpose.
These three cases of R. R. v. Comrs. of Mecklenburg, 148 N.C. 220; R. R. v. Comrs. of Buncombe, 148 N.C. 248; and Perry v. Comrs., 148 N.C. 521, were correctly decided, and are in harmony with the principle which underlies this opinion, to wit, that the equation and limitation of taxation prescribed by Article V, section 1, of the Constitution apply only to taxes for the ordinary expenses of the State and county government, and that the levy of taxes for special purposes is committed by the Constitution to the discretion of the General Assembly, which may, as to such taxes, exceed the limitation on the poll and on property, and may levy the tax on the poll and property, or on property alone, without observing the equation, subject to the qualification that if the tax is not for a necessary expense it must be submitted to a vote of the people.
The opinions in the first two of these cases were written by the same judge, and as the questions were the same, the leading opinion was written in the Mecklenburg case.
The action was brought to restrain the collection of certain (432) taxes on property in excess of the limitation, upon the ground that a corresponding poll tax had not been levied, or, in other words, because the equation of taxation had not been observed.
The commissioners replied that they were acting under a statute which provided that: "The equation of taxation prescribed in the Constitution applies only to taxation levied for the ordinary purposes of the State and county, and no poll tax shall be levied, except as hereinafter provided, in excess of $2 for State and county purposes combined; and all acts levying or authorizing the levy of taxes for special purposes which contain authority to levy a poll tax in excess of $2 in the aggregate for all purposes are hereby repealed or modified so as to restrict and provide that the poll tax for State and county and special taxes combined shall never exceed $2."
The question for decision, therefore, in the Mecklenburg case was as to the equation of taxation, while the question before us is as to the limitation of taxation.
It was not whether the commissioners could levy more than $2 on the poll, or the Legislature authorize them to do so, but could they levy a tax on property and refuse to levy a tax on the poll, when the Legislature had said no poll tax should be levied?
The single inquiry, then, before the Court was, Has the General Assembly the power to authorize the levy of a tax on property for a special purpose in excess of the limitation, and at the same time command that no corresponding poll tax should be levied? and it was answered, as we hold, in the affirmative, while the inquiry now is, Has the General Assembly the power to authorize the levy of a tax for a special purpose on the poll and on property in excess of the limitation?
The doubt expressed by the learned judge then writing for the court was whether the first of these questions had been answered by the peovious [previous] decisions of the Court, and not as to the second, and he makes this clear as he proceeds with the discussion. He reviews many of the cases, and among other things says: "In Herring v. Dixon, 122 N.C. 420, the only question presented and decided with whether a tax for working the public roads was for a special purpose for which the Legislature could authorize the levy of a property and poll tax beyond the limitation. No question of equation was presented, because the poll tax was levied. The same is held in Tate v. Comrs., 122 N.C. 812."
Language could not be clearer or more unequivocal, and it commits the Court, all of the members having concurred, to the positive statement that the question presented and decided in Herring v. Dixon and in Tate v. Comrs. was whether a tax for working the public roads was (433) for a special purpose for which the Legislature could authorize the levy of a property and poll tax beyond the limitation; and that is the only question now before us.
He concluded that the two cases cited were not authority for the position the Court was then considering as to the equation of taxation, saying: "No question of equation was presented because the poll tax was levied."
He was evidently fearful that in the midst of an elaborate discussion of a vexed question he might say something outside of the case, and to avoid binding the Court, if he did so, he took the precaution before the conclusion of his opinion to state the precise point of discussion. He said: "We decide that the commissioners of Mecklenburg acted in accordance with the statute in failing to levy more than $2 on the poll, and that the statute is a valid exercise of power by the Legislature. This conclusion renders it unnecessary to discuss the much vexed question as to what is or is not a special purpose within the meaning of section 6, Article V."
In other words, he says it was decided that the commissioners performed their duty in failing to levy more than $2 on the poll, because the Legislature had said in the act before the Court that no poll tax in excess of $2 should be levied for ordinary expenses of the State and county and for special purposes, and that this was a valid exercise of legislative power, because as to these taxes it was not necessary to observe the equation of taxation, and he adds: "This conclusion renders it unnecessary to discuss the much vexed question as to what is or is not a special purpose within the meaning of section 6, Article V," which we now have to decide.
If, therefore, there are expressions in the opinion relating to the limitation of taxation, they do not come within the rule of stare decisis, which has for its purpose uniformity, certainty, and stability in the law.
"The doctrine of stare decisis contemplates only such points as are actually involved and determined in a case, and not what is said by the Court or judge outside of the record or on points not necessarily involved therein. Such expressions, being obiter dicta, do not become precedents. It is a maxim not to be disregarded, that general expressions in every opinion are to be taken in connection with the case in which those expressions are used. If they go beyond the case, they may be respected, but ought not to control the judgment in a subsequent suit where the very point is presented for decision. The reason of this maxim is obvious. The question actually before the Court is investigated with care and considered in its full extent. Other principles which may serve to illustrate it are considered in their relation to the case (434) decided, but their possible bearing on all other cases is seldom completely investigated. It cannot be reasonably expected that every word, phrase, or sentence contained in a judicial opinion will be so perfect and complete in comprehension and limitation that it may not be improperly employed by wresting it from its surroundings, disregarding its context and the change of facts to which it is sought to be applied, as nothing short of an infinite mind could possibly accomplish such a result. Therefore, in applying cases which have been decided, what may have been said in an opinion should be confined to and limited by the facts of the case under consideration when the expressions relied upon were made, and should not be extended to case where the facts are essentially different. When this rule is followed, much of the misapprehension and uncertainty that often arise as to the effect to a decision will be practically avoided." 7 R. C. L., 1000, 3, 4.
The case of Perry v. Comrs., decided five months after R. R. v. Comrs., presented the question of the limitation on taxation on the poll and property in a special school-tax district.
A tax of 20 cents on property of the value of $100 and 60 cents on the poll in excess of the constitutional limitation was levied, and the action was brought by the plaintiff, who was subject to the poll tax, to restrain its collection upon the ground that it was unconstitutional; but the Court declared the tax to be legal, which is in direct conflict with the decision in R. R. v. Comrs., if it means, as now contended, that Article V, section 1, of the Constitution applies to all taxes, and that the poll tax can never exceed $2 for any purpose.
If the prohibition in the Constitution applies to all taxes, it is of little avail to deny it to the counties and to permit subdivisions of counties, cities, and towns to disregard it at pleasure; and this is the condition that will exist if we adopt the construction placed on R. R. v. Comrs. by the plaintiffs and Perry v. Comrs. stands.
The learned judge who wrote the opinion in Perry v. Comrs., first discusses the cases from Mecklenburg and Buncombe and other cases, and then follows this comment, in which all the judges concurred: "True, these decisions are directly on the question of the equation of taxation established by Article V, but every reason for the ruling on the question of the equation bears in full force on the subject of this restriction on the amount of the poll tax, with the additional and conclusive reason that such restriction in express terms is confined to the 'State and county capitation tax.'"What can this mean except that the question for decision in the Mecklenburg and Buncombe cases was whether the equation of taxation must be observed in levying taxes for special purposes, and that "every reason" for holding that the equation did not apply, (435) as was done in those cases, "bears with full force" on the subject of the restriction on the amount of the poll tax, with the "additional and conclusive reason that such restriction in express terms is confined to the 'State and county capitation tax.'"
Again, Justice Hoke gives the reason which induced the framers of the Constitution to restrict the limitation to taxes for ordinary expenses of government. He says: "Anticipating, as the result has proved, that the general State and county taxation would very generally reach the limit of $2, the framers of the Constitution did not deem it well to place an arbitrary restriction on all local efforts in communities whose enterprise might suggest and financial condition justify a greater amount of taxation than that followed by the general law. And it was no doubt further considered that the restriction contained in section 7, forbidding the levy of any unusual tax, except when sanctioned by a majority of the qualified voters of a given district, would operate as a wholesome check against excessive taxation or extravagant expenditure. Certain it is that, with the exception of the restraints indicated, the matter is not further affected by the Constitution, but is referred entirely to the legislative will. As to taxation within these special districts, it is theirs to observe or disregard the equation established by Article V in reference to State and county taxes and to exceed or abide by the limit established in said article in reference to general taxation."
These cases, therefore, instead of being in conflict with the position of the defendant, support it, in that:
1. It is decided in R. R. v. Comrs. that it is not necessary to observe the equation of taxation in levying taxes for special purposes, and it is said in Perry v. Comrs. that there is stronger reason for holding that the limitation does not apply to such taxes.
2. The cases of Herring v. Dixon and Tate v. Comrs. are recognized as authority, and that they decide that the limitation on the poll and on property may be exceeded for roads, a special purpose.
3. It is held in Perry v. Comrs. the poll tax may exceed $2 in a subdivision of a county, notwithstanding the constitutional provision that the State and county capitation tax shall never exceed $2.
We are therefore of opinion that the statute is constitutional and that it is within the power of the General Assembly to authorize a levy of taxes for special purposes on property and on the poll in excess of the limitation prescribed in Article V, section 1, of the Constitution, and that as to such taxes it is not compelled to maintain the equation between property and the poll.
The construction gives force and vitality to the language in section 6 of Article V, "except for a special purpose and with the special approval of the General Assembly," which otherwise would have (436) no practical operation, because if this section means that the counties can never exceed double the State tax for ordinary purposes, but may do so for special purposes, within the limitation, however, of section 1, there has been no time since the Constitution of 1868 was adopted, except possibly one year, when the State tax and double that amount, if levied by the counties, for ordinary expenses, would not exceed the limitation, leaving nothing for special purposes.
It must be assumed that the men who wrote the Constitution at least knew of conditions then existing; and still, at the first session of the General Assembly after its adoption a State tax of $1.05 on the poll and 35 cents on property of the value of $100 was levied (Laws 1868-9, ch. 108), and it is significant that the statute says: "This tax shall be levied in addition to such special taxes as are authorized by the General Assembly.
Under this article, and giving effect to section 6 of Article V, the counties could not levy double the State tax for ordinary expenses, and within the limitation of section 1 no taxes could be levied for special purposes, although it would seem the General Assembly thought it had authority to authorize this to be done.
If none of these positions can be maintained, the tax provided in the statute is valid, as counties as well as cities and towns are embraced in Article VII, section 7, of the Constitution, and it was so held in Pritchard v. Comrs., 159 N.C. 636, in which there was a levy on polls and property for roads; and corporations within that article of the Constitution may exceed the limitation on the poll and property when authorized so to do by the General Assembly, as was held in Perry v. Comrs., supra, and in other cases.
The language of this section is, "No county, city, town, or other municipal corporation shall," etc., and the only authority for the levy of special taxes for schools in special school districts is that they come under the designation "municipal corporations."
If, therefore, a municipal corporation may exceed the limitation on the poll and property under this section of the Constitution, as was held in Perry v. Comrs., supra., why may not a county do so?
Hoke, J., said in the Perry case, after reviewing the authorities: "From these authorities it is clear that the tax in question (the 60 cents in excess of the $2 already levied for State and county purposes) is not within the restriction of Article V, section 1, of the Constitution, but that the same is a tax imposed for a definite purpose by a special taxing district, coming as a public quasi corporation under the provisions of Article VII of the Constitution, and subject only to the limitations and restrictions contained in that article, notably, in (437) section 7, that 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 officers of the same, except for the necessary expenses thereof, unless by a vote of the majority of the qualified voters therein; and of section 9, to the effect that all taxes levied shall be uniform and ad valorem. In aid of the construction we place upon the provision of the Constitution bearing upon this question, good reasons could be suggested for the distinction in the two classes of taxation. Anticipating, as the result has proved, that the general State and county taxation would every generally reach the limit of $2, the framers of the Constitution did not deem it well to place an arbitrary restriction on all local effort in communities whose enterprises might suggest and financial condition justify a greater amount of taxation than that allowed by the general law. And it was no doubt further considered that the restriction contained in section 7, forbidding the levy of any unusual tax, except when sanctioned by a majority of the qualified voters of a given district, would operate as a wholesome check against excessive taxation or extravagant expenditure. Certain it is that, with the exception of the restraints indicated, the matter is not further affected by the Constitution, but is referred entirely to the legislative will. As to taxation within these special districts, it is theirs to observe or disregard the equation established by Article V in reference to State and county taxes, and to exceed or abide by the limit established in said article in reference to general taxation."
Counties, cities, towns, and municipal corporations are mentioned in the section; the same authority to levy taxes is conferred on each; and if the municipal corporation may exceed the limitation on the poll and property, the same power cannot be denied to the counties.
It would seem that all of the authorities may be reconciled upon the ground that Article V of the Constitution provides for the ordinary expenses of the State and county, excepting therefrom, as to counties, special purposes, and that Article VII provides for all the expenses of municipal governments, including counties with the limitation that special taxes must have the approval of the General Assembly.
The learned judge who wrote the opinion in R. R. v. Comrs., 148 N.C. 220, seems to have reached this conclusion, and also that the equation and limitation in section 1 do not apply to taxes levied for special purposes, as he says in the valuable work on the Constitution by Connor and Cheshire, page 258, commenting on Article V, section 1:
"This equation and this limitation on taxation have no application to taxes levied for a special purpose under Article V, section 6, nor to taxes necessary to meet an obligation assumed under Article (438) VII, section 7. Board of Education v. Comrs., 137 N.C. 310; Jones v. Comrs., 107 N.C. 248; R. R. v. Comrs., 148 N.C. 220."
In coming to this conclusion, if it was proper in any case for us to be influenced by the earnest and eloquent plea of counsel for the plaintiffs in behalf of the man who owns no property and is only liable for a poll tax, we could not consider it when, as in this case, there is no allegation in the complaint that either of the plaintiffs is in this class, and when the grievance complained of is that the levy and collection of the tax "would cast a cloud upon the title of the real and personal property now owned by these plaintiffs and the other taxpayers in said county."
It is probable that the man who is only liable for a poll tax is content, as he will be relieved from six days work on the public roads by the payment of $1 under the new system of working the roads in Alexander County.
Under the old system of working the roads in Alexander County all able-bodied males between the ages of 18 and 45 were liable to work on the roads six days in each year (Rev., sec. 2725), but this has been superseded by the new system, and a poll tax not greater than $1 has been substituted for six days labor.
Nor need there be any fear that any additional restrictions or burdens will be placed on the right of suffrage.
This right is carefully guarded, and it is specifically provided in Article VI, section 4, that the poll tax which the voter is required to pay is the one "prescribed in Article V, section 1," which is the one for ordinary expenses of the State and county, and which cannot exceed $2.
This was held in Perry v. Comrs., supra, where Hoke, J., says: "It is suggested that the construction we give to the Constitution will in certain instances make it possible, by the levy of an exorbitant poll tax, to deprive many citizens within a special district of the right to vote, and this by reason of the provision of the Constitution, 'That no person shall be allowed to vote unless he shall have paid his poll tax for the previous year.' But not so. The language of Article VI, section 4, of the Constitution, being the article relating to and regulating the right of suffrage, provides that no one shall be entitled to vote unless he has paid his poll tax for the previous year, 'as prescribed by Article V, section 1, of the Constitution,' thus providing that on payment of the poll tax allowed and established in Article V the right of suffrage in this respect is established; and this poll tax, as we have seen, can never exceed $2." (439) This disposes of the principal question involved in the appeal.
The plaintiffs, however, insist that if the bond issue and the taxes are valid, that the contract for the sale of the bonds is illegal because not, as required by the statute, for their face value; and as we construe the contract of sale, this position is well taken.
The statute requires the bonds to be sold at their face value, and under the contract the purchaser gets the bonds drawing interest at 5 per cent and pays therefor $5,000 in cash and time certificates of deposit running from three to eighteen months, with interest thereon at 2 per cent, and when the difference in interest is considered, this would reduce the purchase price to $97 or $98 for a bond of $100.
"In disposing of bonds, municipalities are frequently prohibited from selling them 'at less than the par value thereof.' The words 'par value,' when so used, mean a value equal to the face of the bonds and accrued interest to date of sale. When the bonds draw interest from their date and are disposed of after their date, with accrued interest attached, their face or 'par value,' within the meaning of the statute, is the sum of the principal and the accrued interest. Persons purchasing the bonds from the municipality are bound to take notice of the power of the municipality in this respect, and a sale of the bonds at less than par is absolutely void inter partes, as expressly prohibited by law. Neither party to the contract is bound thereby, and it cannot be the subject of a valid claim by either against the other." 2 Dillon Mun. Corp. (5 Ed.), sec. 895 (p. 1400).
In the leading case of Delafield v. State of Illinois, 26 Wend., 132, the facts were strikingly similar to the facts in the case at bar, the act under which the bonds were issued stating that they 'should not be sold for less than their par value.' As a matter of fact, the purchaser agreed to pay par for the bonds, but was to do so by honoring and paying time drafts drawn by the State upon him, which time drafts bore no interest. In holding that this was a violation of the provision of the act above quoted, the New York Court said: "But the actual sale is made on terms which on the $300,000 sale gave the appellant an advantage of 130 days interest, and on the $283,000 sale of about ten months. I cannot, upon any understanding of the words, consider this as a sale at par value, any more than if there had been an undisguised discount at the same rate. . . . In giving these double advantages of credit and of gain of interest to Delafield, I can see that the agents exceeded their specific and limited authority, and in the latter case assumed a risk far beyond the bounds of ordinary prudence, since it was done on the personal credit of the purchaser alone, unaccompanied by any security." (Page 225.)
This will not prevent another sale of the bonds upon the terms (440) of the statute.
We are therefore of opinion that the bonds are valid and that the taxes named in the statute can be legally levied and collected, and that the contract of sale is invalid.
The order and judgment of the Superior Court will be modified in accordance with this opinion.
Let the costs of the appeal be divided between the plaintiffs and the defendant.
Modified and affirmed.