Title: Gardner v. City of Reidsville
Citation: 153 S.E.2d 139, 269 N.C. 581
Docket Number: 767
State: north-carolina
Issuer: north-carolina Supreme Court
Date: March 8, 1967

153 S.E.2d 139 (1967) 269 N.C. 581 Thomas L. GARDNER, a Citizen and Resident Taxpayer of the City of Reidsville, on Behalf of Himself and of other Citizens, Residents and Taxpayers of Reidsville, Similarly Affected and Situated, v. CITY OF REIDSVILLE, a Municipal Corporation, Claude S. Burton, Clifford Moore, and James Everette, Members of the Purported City of Reidsville ABC Board. No. 767. Supreme Court of North Carolina. March 8, 1967. *140 *141 *143 Everett, Everett &amp; Everett, Durham, and Allen W. Brown, Raleigh, for plaintiff, appellant. McMichael &amp; Griffin, Albert J. Post, Reidsville, and Joyner &amp; Howison, Raleigh, for defendants, appellees. BRANCH, Justice. Appellees contend that appellant cannot challenge the procedures of the Reidsville election since appellant failed to comply with Rule 19(3) of the Rules of the Supreme Court, 221 N.C. at p. 554. The following is appellant's assignment of error: While not in strict compliance with Rule 19(3), plaintiff's assignments of error are specific and definite. Since the Rules of the Court are made for our convenience and in dispatch of our appellate jurisdiction, Conrad v. Conrad, 252 N.C. 412, 113 S.E.2d 912, we will consider appellant's assignment of error as to election procedure. The question is raised whether Section 6 of Chapter 650, 1965 Session Laws, prevents the holding of a valid election within three years after the county-wide election of 27 July 1965. The pertinent provision of that section is as follows: By Paragraph 18 of his amended complaint plaintiff alleges: Defendants by their answer deny these allegations. Every reasonable presumption will be indulged in favor of the validity of an election. 26 Am.Jur., Elections, § 343, p. 162. This applies as well to a local option election. See 48 C.J.S. Intoxicating Liquors § 87(d), Contesting Elections, p. 217, where in this regard it is said: "The burden is on one instituting a contest to prove his right to maintain the proceeding and to prove the grounds of his complaint * * *. The usual rules as to the admissibility and the weight and sufficiency of the evidence generally apply to local option election contests." An election will not be disturbed for irregularities where it is not shown such irregularities are sufficient to alter the result. Owens v. Chaplin, 228 N.C. 705, 47 S.E.2d 12; Watkins v. City of Wilson, 255 N.C. 510, 121 S.E.2d 861. In the instant case it is stipulated by the parties that, "(I)t is now impossible to ascertain how many of the voters cast in Reidsville Township precincts were cast by persons residing in the City of Reidsville and how many were cast by persons residing outside the City limits." Plaintiff contends the burden is on defendants to prove that a majority of the votes cast within the City of Reidsville in the county election was not against the establishment of a city Alcoholic Beverage Control system. In support of this contention, plaintiff cites the rule that the burden of proof lies on the person who wishes to support his case by a particular fact which lies more particularly within his knowledge, or of which he is supposed to be cognizant. Cf. Skyland Hosiery Co. v. American Ry. Express Co., 184 N.C. 478, 114 S.E. 823. However, this rule does not apply here, since there is nothing in the record to show that the city election officials or any of the defendants had any control or influence over or access to the officials who held the county-wide election of 27 July 1965. The contrary is inferred since the first election was a county election and the election under attack is a municipal election. The prevailing rule is that the burden of proof is on the party holding the affirmative. Wilson v. Inter-Ocean Casualty Co., 210 N.C. 585, 188 S.E. 102. Although not decisive, we note, in passing, that the only unquestioned vote by the voters in the City of Reidsville resulted in a majority vote "for Alcoholic Beverage Control Stores and Law Enforcement." Plaintiff depends entirely on the provision of Section 6 of Chapter 650, 1965 Session Laws, and the results of the total votes cast in the six precincts encompassing the City of Reidsville to sustain his allegations. This is not sufficient to meet the burden of proof which he must carry. Furthermore, a careful reading of the section evidences that only where, in the event of a prior election, it is shown the voters within the City of Reidsville voted against the establishment of ABC stores shall a city election be deferred for three years. The clear intent of this provision was to prevent a repetitious election where the probable outcome had already been determined. By stipulation it is admitted the probable outcome of a city election could not be determined from the prior county election. We therefore hold that the city election was authorized by the statute. The principal question presented for decision is whether the Reidsville Act, Chapter 650 of the 1965 Session Laws, is in violation of Article II, Section 29, of the North Carolina Constitution, which provides: Appellees do not seriously contend that the Act is not local. In the case of High Point Surplus Co. v. Pleasants, Sheriff, 264 N.C. 650, 142 S.E.2d 697, the Court stated: Here the statute is applicable in only one city. Neither the statute nor the appellees show any reasonable distinction between the City of Reidsville and any other city or town for the purpose of classification under the terms of the statute. See also State v. Dixon, 215 N.C. 161, 1 S.E.2d 521; Sams v. Board of Com'rs., 217 N.C. 284, 7 S.E.2d 540; Carolina-Virginia Coastal Highway v. Coastal Turnpike Authority, 237 N.C. 52, 74 S.E.2d 310. Therefore, we conclude that the Act under consideration is a local act. For the purposes of this decision we need not consider whether the Act is special or private. The more serious question posed for decision is whether the dispending of intoxicating liquors by the State is a "trade" *146 within the meaning of the constitutional provision. Article II, Section 29 removed some sixteen or more subjects from the field of local, private and special legislation. Prior to its framing in 1915, more than eighty percent of the laws enacted by the General Assembly were local, special or private laws. Thus it is apparent that the purpose of this amendment, when framed by the legislature in 1915, was to relieve the General Assembly from the necessity of passing on laws relating to certain specified matters in which only a small territory or a few persons were concerned, and to thereby enable members of the General Assembly to devote their time and attention to the enactment of legislation important to the entire State. The problem of intoxicating liquors was a major problem for the General Assembly of 1915, just as it has been for hundreds of years and is today. In this state it has long been considered a proper subject of legislative control. State v. Joyner, 81 N.C. 534. In connection with the problem, the Court stated in Guy v. Board of Commissioners, 122 N.C. 471, 29 S.E. 771: "Nor is it essential that the regulation (of intoxicating liquors) shall be uniform throughout the state." Although we note this statement was made some nineteen years prior to the enactment of the amendment, it evidences early recognition of the fact that due to varying social and cultural differences within the state, the control of intoxicating liquors was not a subject easily susceptible of uniform regulation. The truth of this fact has been subsequently borne out and was recognized by the 1937 legislature when they, after the end of prohibition, adopted a "local option" plan of liquor control. G.S. § 18-61. This plan and many local acts have generally been acquiesced in and abided by for thirty years. Although sixteen specific matters are prohibited by Section 29, Article II, it is noteworthy that the framers of this proposal did not specifically refer to regulation of the sale of intoxicating liquors. It would seem that had it been the intention of the General Assembly to include this ever-present *147 and important question among the prohibited subjects, the term "intoxicating liquor" would have been included in the enumerated list. There are eleven different definitions of the word "trade" in Webster's Third New International Dictionary, varying from "a path traversed or for traverse," to "the business one practices or the work in which one engages regularly." Certainly those who so painstakingly and carefully drafted the proposal for submission to the people would not have chosen a word capable of such varied definitions and meanings as "trade" to include this monstrous and demanding problem. Because of the singular nature of Section 29, Article II, of the North Carolina Constitution, we find no cases in other jurisdictions actually interpreting the word "trade" in the connection presented by this appeal. However, in the case of Cohen v. State, 53 Tex.Cr.R. 422, 110 S.W. 66, defendant was indicted under a statute providing for the punishment of anyone engaged in the "business or occupation" of keeping or storing intoxicants for others in any county, etc., where the sale of intoxicants had been prohibited, who permitted another to drink intoxicants within such place of business. Defendant claimed that the intoxicants drunk on the premises were not kept for hire or profit, nor as a business or calling, but that such keeping was casual and incidental. The court held that an instruction defining "business or occupation" to be "that which engages one's time and attention or labor, or that about which one is engaged or employed," was misleading and that the correct definition of the words "business and occupation" is meant "a calling, trade, or vocation which one engages in for the purpose of making a living or of obtaining wealth." The case of State v. University Club, 35 Nev. 475, 130 P. 468, 44 L.R.A., N.S., 1026, is one which considered whether a statute imposing a license tax on persons engaged in the "business of selling liquor" applied to a bona fide social club where liquor was sold for a fixed charge, and profit went to the general expenses of the organization. The court held that the term "business" as used in the law imposing the license tax on business, professions and callings ordinarily means "a business in the trade or commercial sense; one carried on with a view to profit or livelihood." In the case of City of St. Louis v. Smith, 325 Mo. 471, 30 S.W.2d 729, the court held that a municipality was not an "incorporated company" within the constitutional provision providing for the right of trial by jury in a condemnation proceeding. The distinguishing difference between a municipal corporation and a business corporation was made in that the latter is one organized for the purpose of carrying on a business for profit, while the former is organized with political and legislative powers for the purpose of local civic government and police regulation of the people of a particular district included within its boundaries, and is a subordinate branch of the government of a state. Our own Court has considered the prohibitions contained in Section 29, Article II, of the North Carolina Constitution in other connections, but has never directly passed on the question of whether the operation of an alcoholic beverage control store by the State or a municipality is a trade. However, in the case of State v. Chestnutt, 241 N.C. 401, 85 S.E.2d 297, defendant appealed from conviction under an act which banned all motor vehicle races on Sunday in Wake County. Defendant contended the act violated Article II, Section 29 of the North Carolina Constitution. The Court held the statute constitutional, stating through Bobbitt, J.: On the other hand, the Court, in the case of Orange Speedway, Inc. v. Clayton, 247 N.C. 528, 101 S.E.2d 406, interpreting a statute which regulated professional racing in Orange County, held the statute invalid as being a local act regulating trade, prohibited by Article II, Section 29, North Carolina Constitution. The Court so held on the basis that this was an act aimed at persons, firms or corporations promoting and conducting motorcycle or motor vehicle races for profit in Orange County. The results reached in Clayton and Chestnutt are distinguishable in that they recognized the difference in an absolute prohibition under the State's police power and a regulation of a business venture entered into for profit by persons, firms or corporations. Both Chestnutt and Clayton differ from the instant case in that here there is a State agency as opposed to persons, firms or corporations, and here the defendants are engaged in a governmental operation as opposed to pleasure or a business venture for profit. The framers of the Constitution have enumerated a great many specific subjects, then grouped the words "regulating labor, trade, mining, or manufacturing". Applying the rule of noscitur a sociis to the word "trade," in reference to the words with which it is associated, we are led to the conclusion that "trade" refers to a business venture embarked in for gain or profit by a person or a business corporation. It refers to commerce engaged in by citizens of the State, and not a restricted activity conducted by the State itself. As one of his principal authorities, appellant cites and relies on State ex rel. Taylor v. Carolina Racing Association, 241 N.C. 80, 84 S.E.2d 390, where an act providing for the operation of a dog-racing track in Morehead City was held unconstitutional by the Court as being a local and special act regulating trade. Under provisions of the act the track was to be operated by a corporate licensee of a city racing commission. It is noted there were other reasons for declaring the act invalid in the Taylor case, in that Article II, Section 7, was violated because there was a grant of privilege and grant of privilege and immunity, and further, there was an unlawful delegation of legislative power. This was also a case where a private corporation was unquestionably embarked on a business venture for the purpose of profit. In deciding the case, pertinent principles as to the sovereign *149 police power were clearly and concisely stated by the Court, speaking through Bobbitt, J., as follows: Again considering the exercise of the sovereign police power, the Court, speaking through Parker, J. (now C. J.) in the case of Boyd v. Allen, 246 N.C. 150, 97 S.E.2d 864, said: "Under its inherent police power the State of North Carolina has the right to prohibit, regulate or restrain the use, manufacture and sale of beer within its bounds. * * * The liquor business `stands, by universal consent, in a class peculiarly within the police power.'" This police power allows the State of North Carolina to prohibit, restrain or regulate the sale of intoxicating liquor within particular localities upon approval by a majority of the qualified voters of the affected locality. If there exists in the sovereign, under the exercise of its police power, the right to regulate intoxicating beverages, it logically follows that the sale or dispensing of intoxicating beverages must either be permitted by the sovereign state or be sold or dispensed by the sovereign state. As stated by Stacy, C. J., in Amick v. Lancaster, 228 N.C. 157, 44 S.E.2d 733: "It would be strange indeed, if the same government which authorizes the establishment of a `liquor control store,' should also provide for its padlocking at the instance of a private citizen * * *." It is noted that profits were contemplated under the statute. However, these profits, if any, would be distributed primarily to governmental agencies and for law enforcement. The Act under consideration made any board authorized thereunder subject to the provisions of Article III, Ch. 18, of the General Statutes, commonly known as the ABC Act of 1937. The first section of Article, i. e., G.S. § 18-36, provides in part: "The purpose and intent of this article is to establish a system of control of the sale of certain alcoholic beverages in North Carolina". (Emphasis ours). G.S. § 18-39 provides: "Powers and authority of Board.Said state board of alcoholic control shall have power and authority as follows, to wit: (1) To see that all the laws relating to the sale and control of alcoholic beverages are observed and performed." (Emphasis ours). G.S. § 18-46 provides in part: G.S. § 18-53 prohibits advertising by any county ABC store and on billboards, signs or other device. G.S. § 18-54 prohibits advertising of alcoholic beverages by any radio broadcast. G.S. § 18-58 regulates the transportation of alcoholic beverages. These statutory acts and pronouncements of intention by the legislature lead us to the conclusion that the purpose of the alcoholic beverage control act of 1937 and the many local acts of regulation and prohibition were to control every possible facet of intoxicating liquor. Considering our Court's definition of the word "trade", i. e., a "business venture for profit," Orange Speedway, Inc. v. Clayton, supra, in connection with the recognition that it has never been the philosophy of the people of North Carolina or their elected representatives to put the State in competition with private enterprise, we conclude that it would necessitate cynical, strained and illogical reasoning to hold that it was the intent of the legislature in passing the 1937 Act or of the 1965 legislature in passing the "Reidsville Act" to place the sovereign state in a "business venture for profit" for the purpose of dispensing a product to its people which is recognized as a cause of crime, cruelty, indolence, neglect and poverty. We cannot conceive that the people of North Carolina, speaking through their representatives, contemplated under Section 29 of Article II that the sovereign state would enter any trade or business venture for profit. Nor did they intend to limit or fetter the police power of the State in any manner in its control of intoxicating liquor. Rather, we conclude that it is evident the people of North Carolina recognize that decreeing total abstinence from intoxicating liquor is futile, and that in localities where a majority of the qualified voters approve, the State may undertake the controlled dispensation of alcoholic beverages in the exercise of its police power. "Undoubtedly, the State possesses the police power in its capacity as a sovereign, and in the exercise thereof, the legislature may enact laws, within constitutional limits, to protect or promote the health, morals, order, safety, and general welfare of society." State v. Ballance, 229 N.C. 764, 51 S.E.2d 731, 7 A.L.R. 2d 407. This Court recognizes a presumption in favor of the constitutionality of a statute. In the case of McIntyre v. Clarkson, 254 N.C. 510, 119 S.E.2d 888, the Court said: "`It is well settled in this state that the courts have the power, and it is their duty, in proper cases to declare an act of the General Assembly unconstitutional; but it must be plainly and clearly the case. If there is any reasonable doubt, it will be resolved in favor of the lawful exercise of their powers by the representatives of the people.'" "Every presumption is in favor of the constitutionality of a statute, and the courts will not pronounce an act of the General Assembly unconstitutional unless it is plainly so." Strong, N.C. Index, Vol. 1 (Supp.) Constitutional Law, § 10. And again considering the constitutional question in the case of American Equitable Assurance Co. of New York v. Gold, 249 N.C. 461, 106 S.E.2d 875, the Court stated: "Every presumption favors the validity of a statute. It will not be declared invalid unless its unconstitutionality be determined beyond reasonable doubt." See also 16 C.J.S. Constitutional Law § 99(b). Thus applying these recognized rules of construction, we hold that Chapter 650 of the 1965 Session Laws does not violate *151 Article II, Section 29 of the North Carolina Constitution, as the act of dispensing intoxicating liquors by the State is not a trade, but is a valid exercise of its police powers. Nor does this exercise of the police power violate the terms of Article II, Section 29 of the North Carolina Constitution as being a partial repeal of a general law. Affirmed. LAKE, Justice (dissenting). The systematic purchase and resale of a commodity for profit is trade. This is true even though the one engaged in such course of action be a municipal corporation or an agency thereof. It is true even though the commodity purchased and resold be an alcoholic beverage. A law which provides that one person can engage in a trade within a certain locality and no one else can do so is a regulation of that trade. It is nonetheless a regulation because its primary purpose is to protect the public morals. Article II, § 29, of the Constitution of North Carolina provides, "The General Assembly shall not pass any local, private, or special act or resolution * * * regulating * * * trade * * *." The Act under which the defendants propose to establish and operate liquor stores within the city of Reidsville is a special or local act. Consequently, it is unconstitutional and the establishment and operation of such stores within the city is not authorized thereby. It is no answer to say that this Act is an exercise of the police power. Of course it is. So is every valid regulation of trade. It is nonetheless a regulation of trade. This exercise of the police power in regulation of trade is unconstitutional because it is done by a local act, which Article II, § 29, of the Constitution forbids the General Assembly to do. The majority of the Court say they "cannot conceive that the people of North Carolina, speaking through their representatives, contemplated under Section 29 of Article II that the sovereign state would enter any trade or business venture for profit." I am sure this correctly represents the political philosophy of the people and their legislators when this provision was put into the Constitution. The implication, however, that the statutes authorizing the sale of alcoholic beverages in county and municipally operated stores do not put these governmental units into a "trade or business venture for profit" attributes to the members of the General Assembly a degree of naivety which I believe is unwarranted in view of their demonstrated awareness of conditions in North Carolina and their astute judgment with reference to fiscal matters. The State Alcoholic Beverage Control Board publishes an annual report of "Public Revenues From Alcoholic BeveragesNorth Carolina ABC Boards," unit by unit. The report for the fiscal year July 1, 1965 to June 30, 1966 shows Gross Sales $118,304, 628.51; Net Revenue (to the counties and municipalities operating stores) $14,979,597.67; State Tax (in addition to the Net Revenue to counties and municipalities) $12,404,408.60. In other words, the State and local governments combined derived from the sales of these beverages in those 12 months a total profit of $27,384,006.27, which is over 23% of the gross sales. The share designated for "Education" was $316,683.76; that for "Law Enforcement" was $1,187,085.26; and that for "Rehabilitation Contribution" $1,990,671.28. These figures leave one with some reasonable basis for concluding that the profit motive is not wholly divorced from the sale of alcoholic beverages by these governmental agencies. I am authorized to say that Sharp, J., joins in this dissenting opinion. PARKER, Chief Justice (concurring in the majority opinion). In Boyd v. Allen, 246 N.C. 150, 97 S.E.2d 864, the Court said, "The liquor business, `stands by universal consent, in a class peculiarly within the police power.'" In my opinion, there is nothing in the law or statutes of this State permitting the sale of intoxicating liquor in State ABC stores to support the theory that the State of North Carolina or any of its counties or municipalities operating ABC stores is engaged in a trade or business within the purview of the word "trade" as used in Article II, section 29 of the North Carolina Constitution. The rationale behind the statutes of this State permitting, controlling, and regulating the sale of intoxicating liquors by publicly owned ABC stores is that such ABC stores are governmental agencies, established in the exercise of the police power of the sovereign State of North Carolina to accomplish governmental purposes and to perform a governmental function under the inherent police power of the State. The systematic purchase and resale of a commodity for profit by private individuals, or an association of private individuals, or a private corporation, is primarily to make a private gain or profit. In my opinion, that is trade in the connotation of the word "trade" as used in Article II, section 29 of the State Constitution. Any gain or profit made by any ABC store of this State operating under our State statutes is not a private gain or profit, but is a gain or profit for the public and not any individual. The North Carolina Department of Motor Vehicles through its Commissioner is charged with the responsibility of administering the laws regulating the operation of motor vehicles in the State of North Carolina. G.S. § 20-39. Receipts from the sale of registration plates for motor vehicles by the Department of Motor Vehicles during the fiscal year ended 30 June 1966 exceeded the cost of these registration plates by more than forty-two and one-half million dollars, according to figures furnished from the accounting records of the Department of Motor Vehicles by the Director of the Division of Accounts. Can it be successfully maintained that by reason of this, the Department of Motor Vehicles is engaged in trade or business? In my opinion, the answer is, No. In my opinion, the provision of Article II, section 29 of the North Carolina Constitution inhibiting the General Assembly to enact any private or special legislation or any local, private, or special act or resolution relating to trade connotes a trade engaged in by a person, or group of persons, or a private corporation for private gain or profit, and the local act challenged by plaintiff in the instant case is not in conflict with this provision of our State Constitution. I concur in the majority opinion.