#### NATHAN O’BERRY, Treasurer of the State of North Carolina, v. MECKLENBURG COUNTY and MECKLENBURG COUNTY HIGHWAY COMMISSION.

(Filed 19 February, 1930.)

1. Counties A a — A county is a governmental agency of the State.

A county is a governmental agency of the State and an integral portion of the general administration of State policy.

2. Statutes B a — General statutes do not hind the sovereign unless by express provision.

General statutes do not hind the sovereign unless the sovereign is expressly mentioned therein.

S. Taxation B e — Statute levying excise tax on distributors of gasoline does not apply to counties using gasoline for governmental functions.

A county purchasing gasoline for use by it in trucks and automobiles in the discharge of its governmental function of maintenance of its highways is not a “distributor” within the purview of chapter 93, Public Laws of 1927, imposing an excise tax upon distributors of gasoline, since general statutes do not bind the sovereign unless the sovereign is expressly mentioned, and under the express language of the statute the Legislature could not have intended to include counties thereunder since counties could not be subject to the procedure foruits enforcement nor *358liable for tbe penalty for its evasion. As to whether Article V, section 5, of the State Constitution prohibits the General Assembly from levying such a tax on a county, *quaere,*but not decided, the question not being necessary to the determination of the case.

Civil actioN, before *Grady, J.,*at Chambers, "Wake County.

On 2 August, 1928, the Treasurer of North Carolina instituted an action in the Superior Court of Wake County against Mecklenburg County and the Mecklenburg Highway Commission. It was alleged in the complaint that the defendant, Mecklenburg County, was a body politic and corporate, and authorized to sue and be sued. It was further alleged that “the General Assembly of North Carolina enacted chapter 93, Public Laws of 1927, wherein there was levied and imposed a tax of four cents per gallon on all motor fuel, sold, distributed or used in this State; that all of the net proceeds of said tax is required to be paid into the State Treasury and there placed to the credit of the State Highway Fund, to be used for the purposes hereinbefore stated.” It was further alleged that the county of Mecklenburg had received :and used in the State of North Carolina from 13 April, 1927, to 27 June, 1928, 184,485 gallons of gasoline, and'that said gasoline was subject to a tax of four cents per gallon, amounting to $7,379.40.

The cause of action is confined exclusively to the liability of Mecklen-burg County for said tax.

The county filed an answer admitting that it had bought the amount of gasoline alleged in the complaint, outside of the State of North Carolina, and that said defendant “used said gasoline in the State of North Carolina solely and exclusively for the operation of automobiles, trucks, tractors, road building machinery and other machinery and appliances, in the performance of the duties vested in it, and required of it by law, in the construction and maintenance of the public highways of Meck-lenburg County, and the defendant avers that in carrying out such duties it was performing a governmental function and was an instrumentality of the State.”

Upon the hearing the following judgment was rendered:

“The defendant has received and used in the county of Slecklenburg since 3 April, 1927, up to 27 June, 1928, 184,485 gallons of gasoline, which was used by it in the building of roads in said county and in the management, operation and maintenance of the roads, camps or convict camps of said county. Said gasoline was purchased outside of the State and shipped into the State through interstate commerce, without the payment of the tax of 4 cents per gallon, as provided by the laws of 1927, in cases of ‘distributors’ as defined in said act.

The tax or excise on said gasoline, if due at all, amounts to $7,379.40; and that amount is due to the State through its Treasurer, by the de*359fendant, if tbe defendant is liable at all far said tax, under tbe provisions of chapter 93, Public Laws of 1927.

Tbe defendant contends that it is not liable for said tax or duty, by whatever name it may be called, for that:

(a) It is a political subdivision of tbe State, engaged in governmental duties :and cannot be taxed, or required to pay any duty on gasoline under tbe provisions of said act, because tbe imposition of such tax or duty would be in contravention of Article Y, section 5, of tbe Constitution of North Carolina.

(b) Tbe defendant does not fall within tbe meaning of tbe word “distributor” as defined in said act of 1927.

These are tbe questions presented, and upon tbe decision of tbe Court, as to these two questions, it is admitted that tbe rights of tbe parties depend.

Tbe Court has already held that tbe defendant is a political subdivision of tbe State, engaged in governmental functions. *Jenlcvns v. Griffith,*189 N. C., 633, 127 S. E., 625. This being true in fact, tbe Court is of tbe opinion that tbe imposition of tbe tax of four cents per gallon upon gasoline purchased and used by tbe defendant is in contravention of tbe Constitution, Art. Y, sec. 5.

Tbe act of 1927, chapter 93, Public Laws, states that tbe word distributor shall include any person, firm, association or corporation that has on band or in its possession, in this State, motor fuels being held for tbe purpose of sale, distribution or use, within tbe State. Section 3 of said act further limits and defines tbe meaning of tbe word distributor, and, as tbe entire statute should be considered in construing section 1 *(Jones v. Board of Education,*185 N. C., 303), tbe Court is of tbe opinion that tbe word distributor as used in section 1, means only those who are engaged in tbe business of buying and selling motor fuels, and that it does not apply to tbe defendant in this ease.

"Wherefore, it is now considered by tbe Court, ordered, adjudged and decreed, that tbe plaintiff is not entitled to recover anything in this action; that tbe defendant go hence without day and recover its costs, to be taxed by tbe clerk.”

.From tbe foregoing judgment tbe plaintiff appealed.

*Attorney-General Brummitt and Assistant Attorney-General Nash for the State.*

*J. L. DeLaney and John S. Gansler for defendant.*

BeogdbN, J.

Tbe record presents two questions of law, to wit:

(1) Is a county liable for a tax upon gasoline, used by it in tbe discharge of its governmental functions?

*360(2) Is a county using gasoline in tbe discharge of its governmental functions within the purview of chapter 93, Public Laws of 1927?

The defendant contends that it is not liable for said tax by reason of the application of Article Y, section 5, of the Constitution of North Carolina, the pertinent portion of which is that “property belonging to the State, or to municipal corporations, shall be exempt from taxation,” etc. A county under our system of government is not strictly a municipal corporation. This concept runs through the law, beginning with *Mills*v. *Williams,*33 N. C., 558. The distinction between public and private corporations was thus expressed in that case: “The substantial distinction is this: some corporations are created by the *mere will*of the Legislature, there being *no other party interested or concerned.*To this body a portion of the power of the Legislature is delegated to be exercised for the public good, and subject at all times to be modified, changed, or annulled. Other corporations are the result of contract. The Legislature-is not the only party interested; for, although it has a public purpose to be accomplished, it chooses to do it by the instrumentality of a *second party.*These two parties made a contract.”

Again in *Bell v. Commissioners,*127 N. C., 85, 37 S. E., 136, this Court declared: “Counties are not, in a strictly legal sense, municipal corporations, like cities and towns. They are rather instrumentalities of government, and are given corporate powers to execute their purposes, and they are not liable for damages, in the absence of statutory provisions giving a right of action.” To the same effect is the utterance in *Jones v. Commissioners,*137 N. C., 579, 50 S. E., 291, in these words: “These counties are not, strictly speaking, municipal corporations at all in the ordinary acceptation of the term. They have many of the features of such corporations, but they are usually termed g-Masi-public corporations. In the exercise of ordinary governmental functions, they .are simply agencies of the State, constituted for the convenience of local administration in certain portions of the State’s territory, and in the exercise of such functions they are subject to almost unlimited legislative control, except where this power is restricted by constitutional provision.” The weight of authority is to the effect that all the powers and functions of a county bear reference to the general policy of the State, and are in fact an integral portion of the general administration of State policy. *White v. Commissioners,*90 N. C., 437; *Hughes v. Commissioners,*107 N. C., 598, 12 S. E., 465; *Pritchard v. Commissioners,*126 N. C., 908, 36 S. E., 353; *Burgin v. Smith,*151 N. C., 561, 66 S. E., 607; *Marsh v. Early,*169 N. C., 465, 86 S. E., 303.

Therefore, property held by a county is held for the express purpose of aiding or facilitating the discharge of governmental functions. For *361tbis reason tbe property of tbe State and tbe property of tbe counties is exempt from taxation by express provisions of tbe Constitution in Article Y, section 5 thereof.

Another reason for exempting tbe property of tbe State and counties from taxation is thus stated by Cooley on Taxation, Yol. II, 4 ed., paragraph 621: “Some things are always presumptively exempted from tbe operation of general tax laws because it is reasonable to suppose they were not within tbe intent of tbe Legislature in adopting them. Such is tbe case with property belonging to tbe State and its municipalities, and which is held by them for public purposes. All such property is taxable, if tbe State shall see fit to tax it; but to levy a tax upon it would render necessary new taxes to meet tbe demand of tbis tax, and thus tbe public would be taxing itself in order to raise money to pay over to itself, and no one would be benefited but tbe officers employed, whose compensation would go to increase tbe useless levy. It cannot be supposed that tbe Legislature would ever purposely lay such a burden upon public property, and it is therefore a reasonable conclusion that, however general may be tbe enumeration of property for taxation, tbe property held by tbe State and by all its municipalities for public purposes was intended to be excluded, and tbe law will be administered as excluding it in fact, unless it is unmistakably included in tbe taxable property by tbe Constitution or a statute.”

It is clear, from all tbe authorities upon tbe subject, that tbe State cannot levy a tax upon gasoline owned by a county, but tbe plaintiff insists that tbe said tax on tbe use of gasoline by a county is not a tax on property but an excise tax. Tbis position is sound and is supported by uniform judicial declaration upon tbe subject. *Askren v. Continental Oil Co.,*252 U. S., 444; *Bowman v. Continental Oil Co.,*256 U. S., 642; *Texas Co.*v. *Brown,*258 U. S., 466; *Chicago Motor Club v. Kinney,*160 N. E., 163; *City of Portland v. Kozer,*217 Pac., 833; *Crockett v. Salt Lake County,*270 Pac., 142, 60 A. L. R., 867.

“Taxes are charges imposed by tbe General Assembly, or under its authority for public purposes, and upon grounds of public policy.” *Commissioners v. Hall,*177 N. C., 490, 99 S. E., 372. Excise taxes are defined by Cooley, Vol. I, 4 ed., sec. 42, as “taxes laid upon tbe manufacture, sale or consumption of commodities, within tbe county, upon licenses to pursue certain occupations and upon corporate privileges.” An excise tax is therefore a charge imposed by law, and in tbe case at bar, it is a charge upon tbe use of property devoted wholly to tbe discharge of governmental functions. Gasoline is essential to tbe governmental function of road building. Therefore, to levy a tax upon tbe use of one of tbe means by which governmental function is discharged is to lay a burden upon governmental function itself. Tbis idea was ex*362pressed by the Supreme Court of the United States in *Helson v. Kentucky,*decided 18 April, 1929, and reported in 73 L. Ed., 683. In that case the State of Kentucky levied a tax upon the use of gasoline which was essential to the operation of a ferry boat engaged in interstate commerce. The Court said: “A tax which falls directly upon the use of one of the means by which commerce is carried on directly burdens that commerce.” *Panhandle Oil Co. v. Mississippi,*277 U. S., 218, 56 A. L. R., 585. The defendant county cannot dispose of gasoline except to use it for governmental purposes. Hence in the hands of the county the use of gasoline constitutes its sole property value. Moreover, is it to be presumed, in the absence of express statutory declaration to that effect, that the General Assembly intended to levy a charge or excise tax upon the performance of governmental function ? The State Capitol in Raleigh is owned by the State. The physical property is therefore exempt from taxation by virtue of the constitutional exemption. Could the Legislature levy a privilege tax or excise tax of $10,000, or other sum, a year upon the use of the capitol by the Legislature and the Governor and other State officers in discharging their constitutional and governmental duties? As to whether the Legislature has such power, we do not decide, but certainly such t power would not be presumed, or such a result anticipated, in the absence of express statutory declaration. This conclusion is justified by the utterance of the Court in *Guilford County v. Georgia Co.,*112 N. C., 34, 17 S. E., 10, as follows: “General statutes do not bind the sovereign, unless specially mentioned in them. . . . The county is a part of the delegated authority of the State, and is *pro hoc vice*the State.”

Without deciding the constitutional question involved, we are of the opinion that the defendant does not come within the purview of chapter 93, Public Laws of 1927. In that statute a tax of four cents per gallon was laid upon a “distributor.” Section 1 of the act defines a distributor as “any person, firm, farm, association, or corporation that has on hand or in his or its possession in this State, motor fuel being held for the purpose of sale, distribution or use within the State,” etc.

The contention of the plaintiff is that the county of Mecklenburg is such ;a, corporation as to bring it within the definition of “distributor,” and that it is admitted that such corporation had the gasoline specified in the complaint in its possession for “úse within the State.” The question then, is whether a county is a “distributor” when it uses gasoline in the discharge of its governmental function. That is to say, when the General Assembly used the word “corporation” in said act, did it have in mind the ordinary business corporation, ot did it also have in mind governmental agencies ? The chief method of probing legislative intent is to examine the language which is supposed to express that intent. In *363section 3 of tbe act it is declared that “any distributor engaged in business . . . and another distributor, prior to the commencement of doing business” shall “file an application for a license setting forth the name under which such distributor transacts or intends to transact business within the State, the address of each place of business and a designation of the principal place of business.” Such distributor shall also file a bond in an amount not exceeding $10,000 with such surety as may be required. Such distributor shall also keep a record of all fuels purchased, received, sold, delivered or used by him. If any distributor makes a false or fraudulent report, he shall be guilty of a misdemeanor and fined not less than $100 nor more than $1,000. Furthermore, if the tax is not paid, the State Treasurer can secure a judgment for the amount and the Treasurer shall have “all remedies now, or which may hereafter be given by the laws of the State of North Carolina for the collection of taxes, . . . for the collection of judgment recovered by the State Treasurer under this section.” In other words, if a county shall be deemed to be a distributor, it must make an application, give a bond and procure a surety. If any false statement should be made the county could thereupon be ¡arrested and fined not less than $100 nor more than $1,000. Thereafter, the State Treasurer would take judgment, and if the county did not pay, he could levy an execution upon the county’s property and sell it at the courthouse door. The property of a county cannot thus be subjected to debt. *Hughes v. Commissioners,*107 N. C., 598, 12 S. E., 465; *Gooch P. Gregory,*65 N. C., 142; *Hardware Co. v. Schools,*151 N. C., 507, 66 S. E., 583.

Furthermore, general statutes do not bind the sovereign unless the sovereign is expressly mentioned. Thus in *S. v. Garland,*29 N. C., 48, *Ruffin, C. J.,*wrote: “It is a known and firmly established maxim that general statutes do not bind the sovereign, unless expressly mentioned in them. Laws are made prima facie for the government of the citizens, and not of the State itself.”

These considerations lead unerringly to the conclusion that the General Assembly did not intend to include governmental agencies within the term “distributor.”

Our attention has been called to only one casé in the country deciding the identical question involved in this litigation. That case is *Crockett*v. *Salt Lake County,*270 Pac., 142, 60 A. L. R., 867. The Supreme Court of Utah decided that a county was liable for the tax under a statute somewhat similar to our statute. The Court was sharply divided and the dissenting opinions are strong and persuasive. The *Portland case, supra,*is also in point, but that case involved the rights of a city.

Affirmed.