Court Opinion

ID: 9811827
Source: CourtListenerOpinion
Date Created: 2023-08-31 22:30:18.219996+00
Date Added: 2024-06-11T15:21:49.039948
License: Public Domain

*527ClaRK, 0. J.,
dissenting: Tbe powers of municipal corporations, as stated in Dillon Mun. Corp. (5 ed.), sec. 237, and approved in Smith v. New Bern, 70 N. C., 14, are as follows: “It is a general and undisputed proposition of law tbat a municipal corporation possesses and can exercise tbe following powers, and no other: First, those granted in express words; second, those necessarily or fairly implied in, or incident to, the powers expressly granted; third, those essential to the accomplishment of the declared objects and purposes of the corporation — mot simply convenient, but indispensable.” Eev., 2978 (originally enacted, ch. 112, Laws 1872-3), under the heading, “Municipal Property Sold,” provides: “By mayor and commissioners at public sale. The mayor and commissioners of any town shall have power at all times to sell at public outcry, after thirty days notice, to the highest bidder, any property, real or personal, belonging to any such town, and apply the proceeds as they may think "best.”
The defendant, Southern Public Utilities Company, a corporation of the State of Maine, claims to have bought at private sale the valuable “lighting and power plant,” the property of the town of Eeidsville, for $30,000, being $20,000 less than was offered by the plaintiffs, who were shown to be responsible bidders and in direct, violation of the above statute, for there was no sale “at public outcry, after thirty days’ notice, to the highest bidder,” which was the only condition under which the above section gave power to the commissioners of the town to sell. Said statute has never been repealed or amended in any way, and the action of the commissioners was therefore in violation of the terms of the statute conferring the power.
Indeed, the decisions of this Court, which have been unquestioned till now, held that even this section “did not authorize the sale or release of real estate which by the terms of the act of incorporation is to be held in trust for the use of the town, or to such real estate as is devoted to governmental purposes, as city hall, market house, etc., but a special act of the Legislature is necessary in such cases.”. Southport v. Stanly, 125 N. C., 464; Turner v. Comrs., 127 N. C., 154. The Court went further and held that the Legislature could not authorize the sale of streets in reference to which bordering property owners had located improvements. Southport v. Stanly, supra; Moose v. Carson, 104 N. C., 431. The Legislature subsequently passed a general act as to the corporate powers of towns, which is now Eev., 2916 (6) : “To grant, upon reasonable terms, franchises for public utilities, such grants not to exceed the period of sixty years, unless renewed at the end of the period' granted; also to sell or lease any waterworks, lighting plants, gas or electric, or any other public utility which may be owned by any city or town: Provided, in the event of such sale or lease it shall be approved by a majority *528of the qualified voters of such city or town, and also to make contracts, for a period not exceeding thirty years, for the supply of light, water, or other public commodity: Provided, this subsection shall not apply to New Hanover and Cumberland counties.”
' It will be seen at once that this act does not modify the protection given to the people of the towns and cities of this State that the public property held by the town can only be sold “at public outcry after thirty days notice to the highest bidder,” but that it allows the sale of the kind of property therein named (provided, there is, as required by sec. 2978, the above requirements of a sale open and aboveboard, by public outcry, and after thirty days notice, and to the highest bidder), when there is the additional guarantee that in such case there is an approval by a majority of the qualified voters of such city or town.
This is not only according to the well established rules that the whole of the Code must be construed together, and that the law does not permit repeals by implication, but it is in accordance with the well known conditions of modern society, in which huge aggregations of capital, incorporated usually in other States, are seeking to engross and take over the property, whether of State, county, city, or town, when that purpose can be attained by any means.
This section 2916 (6), according to the well settled principles applying to the interpretation of statutes, must be read in connection with section 2978, and the decision in Southport v. Stanly.
Chapter 28, Private Laws 1917, in no wise affects this well settled principle, but merely provides that the requirement in sec. 2916 (6) of approval by a majority of the “qualified” voters is modified to permit that in Reidsville the approval may be made "by a majority of the votes cast.” Why Reidsville should be exempted from the safeguard of approval by the majority of the qualified voters, still required as to the sale of public utilities in every other municipal corporation in North Carolina, does not appear.
Tn the absence of a statute there was no authority in any town to sell any of its real estate of any kind held for public purposes. Rev., 2978, authorized the mayor and commissioners to sell the municipal property, “provided it was done at public outcry, after thirty days notice, to the highest bidder.” The decisions of this Court, in the cases above cited, held that this did not authorize, even under those conditions, “the sale of real estate devoted to governmental purposes, as city, hall, market house, street, etc.” Subsequently, Rev., 2916 (6), authorized “the sale or lease of waterworks, lighting plants, gas or electric, or any other public utility which may be owned by any city or town,” but with the additional guarantee — the word "provided” is used — in case of such sale or lease “the sale or lease shall be approved by a majority of the qualified voters of *529sucb city or town,” and tbe so-called Grlidewell Act only modifies the latter provision by providing that as to the town of Eeidsville the approval shall be sufficient if made “by a majority of the votes cast.”
There has been no express repeal, and there is no implied repeal, of the guarantee of the safety of the property of any city or town, given by the requirement that a sale thereof can be made (if at all) only “at public outcry, after thirty days notice, to the highest bidder” — which was itself a modification of the common law which forbade a sale of real estate devoted to governmental purposes at all. Winslow v. Morton, 118 N. C., 486; S. v. Johnson, 171 N. C., 799; S. v. Perkins, 141 N. C., 797.
The effect of construing 2916 (6) to repeal by implication Eev., 2978, is that this corporation of the State of Maine has obtained, if this action is approved, the ownership of a public utility of the town of Eeidsville, in the State of North Carolina, at' a sum at least $20,000 less than that which was offered for it by responsible parties before the sale was made.
The plaintiffs allege that the property is worth $75,000, and that for many years it has produced a net income averaging more than $8,000 per annum. The chief relief asked, and justified by allegations and proof offered to support them (which was rejected by the Court), was not the temporary restraining order, which was merely ancillary, but to have the attempted sale set aside as fraudulent and void.
It is urged that the sale was approved by a popular vote, but it is apparent that there was no popular vote upon this question. No one will believe that the people of Eeidsville would by popular vote approve a sale at $30,000 when $50,000 was offered at the same time by parties fully able to make the payment. The only proposition submitted at the election was whether the town should take $30,000 from this corporation or not sell at all.
There are allegations in the complaint that this result and method of making the sale was procured by fraud or corruption. There was no opportunity given to prove this, because an investigation was cut off by judgment for the defendants on the ground that the election had been held and the contract signed, though the question as to their validity still remained open. In 1 Lewis Southerland on Statutory Construction, sec. 267, it is said: “Eepeals by implication are avoided if possible. If two statutes can be read together without contradiction or repugnancy, or absurdity, or unreasonableness, they should be read together, and both will have effect. It is not enough to justify the inference of repeal that the later law is different; it must be contrary to the prior law. It is not sufficient that the subsequent statute covers some or even all the cases provided for by the former, for it may be merely affirmative, accumulative, or auxiliary. There must be positive repugnancy, and even then *530the old law is repealed by implication only to the extent of the repug-nancy. If, by a fair and reasonable interpretation, acts which are seemingly incompatible or contradictory, may be enforced and made to operate in harmony and without absurdity, both will be upheld and the later one will not be regarded as repealing the others by construction or in-tendment. As laws are presumed to be passed with deliberation and with a full knowledge of all existing ones on the same subject, it is but reasonable to conclude that the Legislature, in passing a statute, did not intend to interfere with or abrogate any former law relating to. the same matter, unless the repugnancy between the two is irreconcilable.” To the same effect in sec. 247 of the same volume, and, indeed, all the authorities and precedents on the construction of statutes.
There is no repugnancy between Rev., 2916 (6) and Rev., 2978. The latter section remains in full force, therefore, in requiring the safeguard of a sale “at public outcry, to the highest bidder, after thirty days notice.” The provision in the latter statute authorizes the sale by public utilities (if made in accordance with the terms of Rev., 2978), provided, that is, “but only if,” there is the additional requirement of the “approval of a public vote.” 'Without this provision of 2916 (6), even public utilities could not have been sold under the construction placed by the Court upon Rev., 2978, in .the cases above cited. The authority to sell even in compliance with the terms of Rev., 2978, of a “public sale, to the highest bidder, after thirty days notice,” did not extend to the sale or lease of public utilities till Rev., 29.16 (6), and then only with the “approval of a popular vote.” Elizabeth City v. Banks, 150 N. C., 407.
In 2 Dillon Mun. Corp., sec. 801, it is said: “Where the charter or incorporating act requires the officers of a city to award ‘contracts to the lowest bidder/ a contract made in violation of its requirement is illegal.” And in sec. 809 he says: “The purpose of a statute requiring the letting of bids to the lowest bidder, is to invite competition, and to that end publicity of the intention to let the contract is of the essence of the proceeding. Hence, any statutory provisions requiring advertisement or specifying its nature, are usually to be regarded as mandatory, and failure substantially to comply with their requirements is sufficient to avoid the contract.”
Under our statutes, read as they are required to be read, upon reason and authority, in pari materia, the proper and only valid course that this corporation of another State, seeking to acquire the municipal franchise of operating the Light & Power Plant of Reidsville, could pursue was as follows:
1. There should have been the approval of a popular vote, whether the town should sell its lighting system, on the terms stated in the advertisement.
*5312. If it was so approved by a popular vote, then the town officials, in compliance with Bev., 2978, should have advertised such sale by thirty days notice, and sold at public outcry to the last and highest bidder. Nothing less than this would be valid under the laws of this-State, nor in compliance with the rules of prudence and fidelity to their trust, which the law exacts of all public officials in dealing with public property.
3. Even after such bid there would still have remained in the administrative officers the legal discretion to reject the highest bid and offer at resale if there was reasonable ground to believe that upon such resale a substantially better bid could be had. This is done in the sale of private property under decree of court, and certainly public officials should show the same solicitude and care in the disposal of public property.
The commissioners of Eeidsville were certainly not warranted by law in submitting to the voters the question of sale or no sale of the lighting plant, to so phrase the submission as to require the electors as a condition of voting upon the sole question of sale or no sale to vote also in favor of a private sale to the Southern Public Utilities Company, and giving a thirty years franchise to it, and in further refusing to submit at the same time the proposition of the plaintiffs, shown to be responsible parties, to buy the same plant at the price of $50,000.
This Court, in Winston v. Bank, 158 N. C., 513, has condemned the course pursued in this case in the following unmistakable language, by Mr. Justice Hoke: “When a popular vote is required to authorize or validate a municipal indebtedness, the proposition should be single, and when the question presented embodies two or more distinct and unrelated propositions, and the voter is only afforded an opportunity to express his preference or decision on a single ballot, and on a question as an entity, the election, as a rule, is invalid, and on objection made in apt time, and in a proper way, may be disregarded.”
This is the clear and convincing language used by Mr. Justice Hoke, quoting from many other learned judges, and especially approving the following language by Mr. Justice Brewer (later of the U. S. Supreme Court), in Lewis v. Comrs., 12 Kan., 186, as follows: “It may be conceded that two or more questions may be submitted at a single election., provided each question may be voted on separately, so that each may stand or fall upon its own merits. But that is a very different matter from tacking two questions together, to stand or fall upon a single vote. It needs no argument to show the rank injustice of such a mode of submission. By it several interests may be combined and the real will of the people overslaughed. By this combination an unpopular measure may be tacked on to one that is popular, and carried through on the strength of the latter. A necessary matter may be made to carry with it *532some private speculation for the benefit of tbe few. Things odious and wrong in themselves may receive the popular approval because linked with propositions whose immediate consummation is deemed essential. It is against the very spirit of popular elections, that aims to secure freedom of choice, not merely between parties, but also in respect to every office to be filled and every measure to be determined. A voter at a State election would bo shocked to be told that because he voted for a person named for Governor on one ticket he must vote for all other persons named thereon; or that, voting for .one person, he was to be understood as voting for all. He would feel that his freedom of choice was infringed upon. None the less is it so by such a submission as this.”
So elementary and necessary a truth could not be more clearly expressed. It needs no repetition, but can be found stated in the legal decisions of all the courts that have treated upon the necessity of the utmost fidelity in the handling and disposition of public property by municipal officials. Many of these authorities are cited by Judge Hoke in the above case of Winston v. Bank.
The defendants, while averring the acceptance of a lower bid by a vote of the people, did not allege or contend that the $50,000 bid had been also submitted, nor that there had been any compliance with the unre-pealed and unamended section 2918 of the Revisal, which is an express inhibition upon all power in municipalities to sell real or personal property except “at public outcry, after thirty days notice, and to the highest bidder.”
The motion by the plaintiff for judgment upon the pleadings should have been granted because it appears thereon that there was no compliance with the requirements of that section, which was the common law and has been the statutory law in this. State since chapter 112, Laws 1872-3. As to the defendants’ defense that the sale has been ratified by the administrative officers of the town, it can need no citation of authority that if there was no authority to sell without compliance with the requirements of section 2978 there can be no ratification of action which was void because ultra vires. 2 Dillon Mun. Corp., sec. 797.
In Edwards v. Comrs., 170 N. C., at p. 451, the Court said: “We were referred, on the argument to Stratford v. Greensboro, 124 N. C., 127, in support of the position that on the present record the action of the commissioners could well be made the subject of judicial scrutiny and control, but in that case there was specific allegation, with evidence tending to show that the action of the city authorities was in pursuance of a contract admittedly entered into with the individual defendant, and making it according to plaintiff’s evidence, not at all improbable that the measure complained of was in promotion of a personal and private scheme, in favor of the individual defendant, and not in furtherance of the public interests.” *533Ill this case, as in that, “the allegations are specific and definite of issuable facts tending to establish official default.” The authorities are numerous that the plaintiff as taxpayer has a right to challenge the action of the board of commissioners in rejecting a bid of $50,000 and submitting one in favor of the defendant corporation of $20,000 less. Coughlin v. Gleason, 121 N. Y., 631, and numerous other cases; Mazet v. Pittsburg, 137 Pa., 548; Stratford v. Greensboro, 124 N. C., 127, and
others, which it is unnecessary to cite, for it should need no argument that when there are allegations, such as those made in the complaint in this case, of misfeasance on the part of the town officials and collusion by them with .the purchasers by which the city lost $20,000, it is due to all parties concerned, and in the interest of public justice, that the facts should be determined by a jury of 12 honest men. Public officials should wish to be like Caesar's wife, “above suspicion,” and not shut off the investigation of such charges, when made in the courts by reputable citizens.
There was no sale to the highest bidder (but to one $20,000 lower), no advertisement, and no public outcry, as required by the statute. A bid was accepted for. $30,000, and no submission of the higher bid then outstanding for $50,000, and the $30,000 was submitted as a part of the proposition to sell the municipal lighting plant so that the two propositions being intermingled a vote against accepting $30,000 was a vote against selling at all. The sale of public property upon a grossly inadequate price has been held ground for indictment. S. v. Hatch, 116 N. C., 1003.
The determination of such charges, when made in a court of justice in this State, should be made after the fullest investigation, and inquiry should not be cut off. The matter should not have been determined upon the technicality of the refusal of an injunction, which refusal was itself erroneous. This is not like the case of a tree cut down, which cannot be restored, nor like the recent case where, after the refusal of an injunction against a primary, the general election had been held. For here this action calls in question the validity of the election whenever it was held, and if in law it was invalid, the so-called election was a nullity. In any event, the plaintiffs were entitled to have it impeached, and the sale thereunder set aside, if the allegations of fact were sustained by the verdict of a jury, and they had a right to offer evidence in support of their charges, and to a verdict by a jury. The sale and the so-called election are not validated because they have occurred. The consummation of a fraud is no estoppel upon the courts to set it aside, if proven.
The very gist of this action was to call in question the legal right of the defendants to hold the election and to allege as a matter of fact that by reason of collusion and fraud it would be invalid if held. It is no *534answer to these allegations of law and fact that, notwithstanding, such election has been held. If the contentions of the plaintiffs, either as to law or facts, are valid, then the so-called election was a nullity and should be set aside. To hold otherwise is to sustain the proposition that when an illegal act has been committed it cannot be investigated in the courts. These defendants proceeded with the alleged election and the alleged sale with notice of the plaintiffs’ proceeding. They are put in no better position thereby if the plaintiffs can show the illegality of the proceedings or the alleged fraud and collusion in pursuance of which the alleged election and the sale were made.
If the law is as claimed by the plaintiffs, then the sale should be set aside. If the facts are as alleged by them, it should be equally set aside for that reason, and the plaintiffs are not cut off from an investigation by a jury of the allegations of fraud, because the defendants have accomplished their purpose to the extent of making the sale, if those allegations are found to be true.
The plaintiff moved for judgment because it affirmatively appeared from the answer of the defendants, and especially from the answer of the defendants, commissioners of Reidsville, that the town had attempted to make a private and not a public sale of its lighting plant to the defendant, “Southern Public Utilities Company,” at the price of $30,000, privately and not publicly bid, which said price was by $20,000 less than could and would have been received from another responsible bidder, “who had validly and legally bound himself to pay said increased price upon any sale had in accordance with law, and that said sale was made-in violation, notably, of sec. 2978, which prohibits all North Carolina corporations from conveying either their personal or real estate, except at public outcry, to the highest bidder, after thirty days advertisement.”
2. Because Rev., 2916 (6), and ch. 28, Private Laws 1917, should be construed strictly in favor of the public, and as additional to, and not as an implied repeal of, Rev., 2978.
3. That compliance with said sec. 2916 (6), as amended by ch. 28, Private Laws 1917, was only one of the several requisite essential acts necessary to a valid alienation of municipal property.
7. Because it affirmatively appears from the answer that as an integral part of the ordinance ordering the so-called election, and hence prior to-any election, there was granted to the defendant “The Southern Public Utilities Company,” a thirty years franchise to enter upon and occupy the streets of the town of Reidsville with a lighting plant, thereby cutting off the possibility of competition in the sale of its own lighting plant, even had it been exposed to sale by public auction, after due advertisement according to law.
*535On these grounds it was error to refuse the above motions for judgment in favor of plaintiff, and also for the further reason, heretofore given, that the submission of the double proposition of the sale, and at the same time, as a part thereof, the acceptance of the $30,000 bid by the Southern Public Utilities Company, and also the refusal to submit the proposition of a responsible bidder at $50,000 were illegal in fact and in law. Winston v. Banks, supra.
The defendants moved to dismiss the action because it appeared that the sale had been made and the election had been held. This was error, as has already been pointed out, for the election and the contract were both with notice of this proceeding, impeaching their validity in law, and the good faith in the sale of public property as a matter of fact, and the subsequent consummation of such illegal acts is not validated thereby, but was subject to investigation of the allegations of fact and the propositions of law set out by the plaintiffs.
It may well be doubted if a more important case! than this has ever come before this Court. It is alleged in the complaint that the defendant, Southern Public Utilities Company, is essentially an alias for the Southern Power Company and the American Tobacco Company, or at least it is a mere subsidiary corporation.' The defendant company denies the allegation as stated, but admits that all three have many stockholders in common. Whether there is not a more intimate connection in the ownership of the bonds, or a lease of the other corporations by one (which is not unusual), is not stated.
It appears from the official reports of the investigations in Congress . of the water power in this country that 94 per cent of the total water power in North Carolina has, in one way or another, been acquired by corporations. If it is not identically one corporation, substantially one great corporation controls the situation, which is reaching out, as appears by the docket of this Court, to acquire a monopoly of the entire water power of this State. See R. R. v. Southern Power Co., and other cases at this term. Not for nothing did our ancestors condemn monopolies in our Constitution, because they “are contrary to the genius of a free State and ought not to be allowed.” Cons. N. C., Art. I, sec. 31.
This corporation has thus attempted to consummate its acquirement of the lighting and electric plant built by the town of Eeidsville, at the expense of its taxpayers, and, admittedly, at a sum $20,000 less than that bid by a responsible party. It appears that it was a corporation of the State of Maine, and .a subsidiary corporation of the Southern Power Company, which is seeking to run a municipal plant for a town in North Carolina. “There is a reason,” though it has not been stated, nor has compliance by it with our statute been shown. It further appears not only that it has already acquired, by means not disclosed, other public *536utilities in this State, but it appears from another ease, now pending in this Court, that the Southern Power Company, with which it has close relations, admittedly is seeking to discriminate in its charges against a municipal plant in the town of Salisbury. If that discrimination were allowable, the Southern Power Company could speedily acquire the ownership not only of every municipal lighting and power plant in the State, but, by the exercise of such discrimination, it would sooner or later have it in its power to acquire every cotton mill or other industrial plant in this State dependent upon electric power, for the time is near at hand when, with the exhaustion of the coal beds, or interruption in their operation, no industrial plant in this State can exist with the discrimination of this great monopoly in charging it higher rates for electric power than it charges other plants of like kind. This would mean financial and political control of the State, and is a menace that is apjiarent and cannot be disregarded.
It is not desirable that powerful monopolies should thus engross the water power, the lighting and electric plants, of a whole State. The declaration in our Constitution against monopolies should be sacredly remembered and observed. This is more necessary now than when written by the great jiatriots who made it. Monopolies are dangerous, and should not be permitted to engross the power and lighting plants now in existence, either by purchasing those owned by the public, at an under price and without publicity, or to obtain the control of other industrial plants, whether public utilities or under private ownership, by being permitted to charge discriminatory prices, which is simply a form of confiscation.
It is true that in this case the judge found as a fact, upon the preliminary injunction, that there was no fraud or collusion. lie could do so as to the injunction proceeding, though even as to that his findings would not be binding on this Court on appeal, and such finding has no effect upon the issues raised on the pleadings, in which fraud and corruption is clearly charged, and being denied, there are issues of fact which only a jury can determine. There are many allegations in the complaint of specific acts tending to show fraud, collusion, and improper influence, ■ which, if found true by a jury, would entitle the plaintiffs to have the sale set aside, irrespective of the defendants’ failure to observe the requirements of Rev., 2978, and of the illegal manner in submitting a double issue as above stated. These allegations of fraud and collusion the plaintiffs are entitled to have submitted to a jury.
The prayer for relief in the complaint is to declare the attempted sale fraudulent and void, and to set it aside, and for a restraining order until the issues are determined by a jury. The plaintiffs asked to introduce evidence in support of their allegations of fraud and collusion, but this was refused by the court, and the action was dismissed.
*537It is due to the defendants, as well as to the plaintiffs, and in the interest of public justice, that these charges should be investigated and determined by a jury, and it was error to dismiss this action.
There are in the complaint the fullest and most specific charges of fraud and collusion against the defendant Southern Public Utilities Company, and the authorities of the town of Reidsville, and that said company was a branch of the American Tobacco Company and the Southern Power Company, with their widely extended properties, and that the American Tobacco Company was active in procuring the election of the defendant mayor and commissioners. There are other specific acts of collusion and misconduct charged, and that the defendants used improper means to influence the vote at the election on the sale of the property to themselves at an under price. These allegations were denied, but the plaintiffs were entitled to have the issues arising thereon, with the inferences, submitted to a jury. There was no opportunity to prove these allegations, for the judgment recites: “The plaintiffs thereupon offered to introduce evidence of all allegations in the complaint not admitted by the answers of the defendants, which motion (or offer to introduce evidence) is hereby denied, and the plaintiffs in apt time except.”
The appeal brings up this judgment for review, and this exception was earnestly presented on the argument here, and is also presented by the plaintiffs in the brief, on page 10, alleging “the allowing defendants’ motion to dismiss the action” as one of its chief grounds of appeal, and again on page 41. Indeed, this denial to the plaintiffs of the right to trial by jury of the serious issues of fact raised by the allegations in the complaint runs through the entire appeal as the substratum and foundation of the appeal. It is not shown that the official body of Reidsville committed fraud and collusion in the sale of this property, but it is clearly and distinctly averred, and denied, and the plaintiffs had a right to have opportunity to prove it to a jury. The brief also avers, and stresses with full citation of authorities, the exception that two unrelated matters were illegally submitted to a vote, to the great prejudice of the plaintiffs.