Court Opinion

ID: 3644484
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:01:06.363252+00
Date Added: 2024-06-11T14:08:04.532015
License: Public Domain

By RODMAN and DICK, JJ., Conceding that an inchoate corporation is created by the acts in question, the "Directors" required for its consummation have not as yet been duly appointed, inasmuch as to such appointment the State Constitution renders a confirmation by the Senate, indispensable.
ARGUENDO:
By the Court, 1. Galloway v. Jenkins, ante 147, cited and approved.
2. The proportions and limitations (ubi supra) do not apply to taxes laid for the purpose of paying either the interest or the principal of *Page 411 
the public debt, as it existed at the adoption of the Constitution, or for special county purposes, (as in Art. 5, sec. 7, of the Constitution.)
By READE, DICK and SETTLE, JJ. The proportions and limitations (ubi supra)
apply only to taxes laid for the ordinary and current expenses of the State, and include none of the objects of expenditure referred to in Secs. 4 and 5, of the same Article.
By PEARSON, C. J. They apply in all cases of State or County taxation, except provisions, (1) for the public debt as it existed when the Constitution was adopted, (2) for casual deficits, insurrection and invasion, and (3) county taxation for special purposes.
By RODMAN, J. They apply (except in regard to the public debt as it existed at the adoption of the Constitution) equally in regard to all State taxes whatever, but not with equal force to all; being, in some matters,imperative; in others, only directory to the Legislature, — whose decision in such case is conclusive, and cannot be reviewed by the judiciary. In this latter class are included, taxes, (1.) to supply casual deficits, to suppress invasions and insurrections; (2.) for the ordinary and legitimate purposes of the State, and (3.) to construct unfinished Rail Roads.
By PEARSON, C. J., and RODMAN and DICK, JJ., (Dissentiente, READE, J.) As the Legislature cannot give or lend the credit of the State to others, for the purpose of constructing new Rail Roads, without the sanction of a vote of the people, so a fortiori, it cannot without such sanction, engage in such construction directly
The petition, filed at the same Term, in the name of "The University Rail Road Company," set forth that the petitioner was a corporation created by An Act ratified January 30, 1869, as amended by another Act ratified April 1st, 1869, for the purpose of constructing a rail road between Chapel Hill and a certain point on the line of the North Carolina Rail Road. And, amongst other things, it alleged that the acts above, provided that it should be the duty of the Governor and the Treasurer of the State to prepare and issue to such company for the purpose of constructing its road, bonds of the State to the amount of three hundred thousand dollars. That a special tax to provide for the interest was laid, and under the *Page 412 
provisions of these acts the plaintiff was entitled to have the bonds issued; but that the Governor and Treasurer, upon being applied to, refused to have them prepared and issued.
The prayer was for a Mandamus, to be directed to W. W. Holden, as Governor, and D. A. Jenkins, as Treasurer, c.
The writ for an alternative mandamus having been issued returnable upon the 15th day of April, during the same term, and service thereof having been accepted by the defendants, upon its return, His Honor ordered a peremptory writ to be issued; and the defendants appealed.
I. I incline to the opinion that the act entitled "An act to incorporate the University Rail Road Company," does not have in law the effect to create a corporation. To give legal effect to a grant, there must be a grantor, a grantee, and a thing granted. Here we have a grantor, the General Assembly; a thing granted, corporate powers and franchises "to the same extent as are possessed by the North Carolina Rail Road Company;" but there is no grantee — no person, persons, or body politic to whom the grant is made. If this be so, it would seem to follow, that the Directors who are to manage the affairs of said "University Rail Road Company" (there being in contemplation of law no company) cannot have such rights as are enforced by the writ of mandamus.
II. In my opinion, by the proper construction of Art. V, Sec. 5 of the Constitution, the General Assembly has no power to contract a debt to build a new railroad, unless the subject be submitted to a vote of the people. It is decided (Galloway v. Jenkins, ante 147) that the General Assembly has no power to contract a debt, without a vote of the people, to aid in the construction of a new railroad. If the General Assembly has no power to contract a debt for the purpose of building a new railroad, with the assistance of contributions by *Page 413 
individuals, county subscriptions, and subscriptions by other railroads, it would seem it cannot have power to contract a debt for the purpose of making a new railroad out and out. A prohibition not to contract a lesser, surely amounts to a prohibition not to contract a greater debt, for the same object. The evil which the Constitution seeks to prevent is not that of giving aid to individuals or corporations in the construction of railroads; but, that of contracting new debts on the part of the State, the existing debt being almost too heavy to bear, and the credit of the State tottering under the load. A construction by which new debts may be contracted on a larger scale than one expressly prohibited, is not admissible upon any principle of law. As this is a deduction from Gallowayv. Jenkins, in which the Court was divided, I will put my conclusions also on the construction of all the provisions of Art. V.
III. The act under consideration is in violation of the Constitution in this: the tax levied by it disturbs the proportion which, by the Constitution, capitation tax must bear to the tax on the value of property, to wit: "The tax on a poll shall be equal to the tax on three hundreddollars worth of property. " Here we have the proportion. Then follows a provision: "The State and County tax combined, shall never exceed twodollars on the head," and the necessary effect is, that the State and county tax on the value of property shall never exceed two dollars on three hundred dollars worth of property; and the effect also is, that if the tax on a poll is less than two dollars, then the tax on three hundred dollars worth of property must be less in the same ratio. In other words, the tax on the poll is "the standard" by which the tax on property is to be levied.
Under two dollars, the power to levy a poll tax for State purposes is unlimited; this interest needed no protection, for it has a full representation in the General Assembly.
Counties are protected by Sec. 7, which provides "taxes levied for county purposes shall be levied in like manner with the State taxes, and shall never exceed double of the State tax except for a special purpose and with the special approval of the General Assembly. *Page 414
Cities, towns and townships are protected, (Art. VII, Sec. 7,) which provides "no debt shall be contracted, nor shall any tax be levied except for necessary expenses, unless by a vote of a majority of the qualified voters therein.
The only remaining interest is that of property holders, in respect to State and County taxes. This interest is protected by the equation fixed between capitation tax and the tax on property. A statute which disturbs this equation breaks down the safeguard thrown around property by the Constitution. If it can be done to the extent of one hundredth of one per cent, it may be done to the extent of one tenth, and there is no limit.
It was said in the argument, that this equation applies only to taxes levied for current expenses of the State and counties, and has no reference to taxation necessary to pay the interest on the public debt, or the tax to be levied to pay the interest on any new debt.
1. I agree that if, under this equation, carried to its limits, the amount is not enough to meet current expenses, and also to pay the interest on the public debt, then for the excess needed it is not only within the power, but it is the duty of the General Assembly to disregard the equation; for this protection to property must be taken to be subject to the injunction, "to maintain the honor and good faith of the State untarnished in regard to the public debt, [Art. I, Sec. 6,] and by Sec. 4 of the Article under consideration, it is ordained: "The General Assembly shall, by appropriate legislation and adequate taxation, provide for the payment of the interest on the public debt, and after 1880 it shall lay a special annual tax, as a sinking fund, to discharge the principal." I do not adopt the entire position taken by Mr. Haywood, that by a specific tax is meant a tax on land by the acre, or on horses and cattle by the head. It is enough to admit that this tax is to be independent of the equation; as in Sec. 7, a tax for special county purposes, with the special approval of the General Assembly, may be levied without reference to the equation.
2. I do not agree to the position, that the tax required by *Page 415 
Sec. 5, to be levied to pay the interest on any new debt, is not subject to the equation; and that the power to tax property in reference to new debtsis unlimited, save by the discretion of the General Assembly. There is nothing, as we have seen there is in the case in regard to taxation to meet the interest and principal of the existing debt, to take this taxation out of the equation. Its being called a special tax cannot have that effect; for Sec. 8 requires that every act shall state the special object to which the tax is to be applied. On the contrary, it is included in the equation by every rule of construction.
This fixed equation between poll tax and property tax, gives significance to the provision the first clause of Section 5: "No new debt shall be contracted in behalf of the State, unless in the same bill a special tax is levied to pay the interest annually.
If the purpose was simply to keep up the price of State bonds, this would amount to but little, as snch [such] a tax is very easily inserted in a bill; — but suppose the purpose to be to restrain the power of taxation in regard to property by reference to the equation before fixed, so that the special tax on property cannot be levied, without making a corresponding increase in the capitation tax, and this proviso amounts to a very important practical limitation on the power to tax property, and must have a very decided effect in checking a disposition to contract new debts.
And the exceptions in regard to "supplying a casual deficit," and for "suppressing insurrection or invasion," in which cases the equation may be disregarded, speak volumes, and show that more was intended, in requiring a tax to be levied in the same bill, than simply to put the draftsman to the task of adding a clause to the bill. It is only in exigencies that this safeguard to property is not to be observed.
Except out of the operation of Sec. 1, the taxation that may be "appropriate and adequate" to meet the interest and principal of the existing debt; except also out of its operation the taxation necessary to meet the interest and principal of such new debts as shall be contracted in behalf of the State, and the effect will be to emasculate the section and fritter it away to nothing. Only current expenses are left for it to operate on; *Page 416 
and these expenses may be met by the tax on trades, professions, franchises and incomes (Sec. 3,) which are not embraced by the equation. So, by the construction contended for, this supposed protection to property holders is made void and illusory, and, after all, amounts to nothing.
On the argument, it was urged that the bill levying this tax on property to pay the interest on the debt to be contracted for the University Rail Road, was passed several days before the bill called "The Revenue Act," which fixes the capitation tax at 105 cents on the head and the property tax at 35 cents on the $100 worth, observing the equation of taxation; and if this equation must be adhered to, the effect will be either to nullify all of the taxation of the session, or to displace pro tanto a part of the tax on property in the Revenue Bill, in order to make room for the tax in the University bill — inasmuch as "qui prior est in tempore," c.
I do not concur in either of the conclusions. All of the bills at the same session are to be taken together. The Revenue Bill being in exact accordance with the Constitution, must take effect, and it specially appropriates the amount to be raised under it, to the annual expenses of the State government, and to the payment of the interest of the public debt. So the scope of the legislation is: If the General Assembly has power to lay a tax to pay the interest on the debt for the University Rail Road without being limited by the equation, then the tax is to be levied, Otherwise, it will fail, as being levied ultra vires, and because the General Assembly assumes an unlimited power of taxation.
Several cases were supposed in the argument, but they all involved the fallacy, that the General Assembly and County Commissioners have an independent power to tax property to the extent of 66 2/3 cents on the $100 value, whereas there is no such power, and the right to tax property depends on the capitation tax. Both must be exercised jointly, in order to preserve the equation of taxation.
PER CURIAM.
Order below reversed, and petition dismissed. *Page 417