Court Opinion

ID: 9562048
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:20:47.49045+00
Date Added: 2024-06-11T09:17:11.273095
License: Public Domain

Lake, J.,
dissenting:
It is my view that the judgment of the superior court should be affirmed because the act under which the Housing Corporation purposes to operate is unconstitutional in that: (1) It appropriates tax revenues for a purpose other than a “public purpose,” as that term is used in Article V, § 3, of the Constitution of North Carolina; and (2) it purports to exempt from taxation the bonds which the Housing Corporation proposes to issue, this being a violation of Article Y, §§ 3 and 5 of the Constitution of the State.
Article V, § 3, of the Constitution provides: “The power of taxation shall be exercised * * * for public purposes only, and shall never be surrendered, suspended, or contracted away.
Article V, § 5, provides: “Property belonging to the State, counties and municipal corporations shall be exempt from taxation” and the General Assembly may exempt properties held for specified purposes not here applicable.
This Court has consistently held that Article V, § 3, forbids not only the levying and collecting of a tax for a non-public purpose, but also the appropriation to such purpose of revenues derived from taxes lawfully levied and collected. Mitchell v. Financing Authority, 273 N.C. 137, 159 S.E. 2d 745; Horner v. Chamber of Commerce, 231 N. C. 440, 57 S.E. 2d 789.
The act in question appropriates $500,000.00 of revenues derived from taxation for use by the Housing Corporation in paying its expenses of organization and in creating a reserve fund for payment of its bonds and notes. The question is whether the purposes of the General Assembly in creating the Housing Corporation, including those for which it may, under this act, borrow money, are a “public purpose” within the meaning of this constitutional limitation upon the authority of the General Assembly to impose taxes and to spend the revenues derived *60■therefrom. This Court has said the term “public purpose” as used in Article V, § 3, has a meaning which is not necessarily the same as is given the term in other contexts. In Briggs v. Raleigh, 195 N.C. 223, 141 S.E. 597, speaking through Stacy, C. J., a unanimous Court said, “Many objects may be public in the general sense that their attainment will confer a public benefit or promote a public convenience, but not be public in the sense that the taxing power of the State may be used to accomplish them.”
In applying the term “public purpose” to fix the limits of the taxing and spending powers, the approach of this Court has been to say what is not, rather than what is within the limits. Thus, in Briggs v. Raleigh, supra, this Court said, “The use and benefit must be in common, and not for particular persons, interests or estates.” Again, as recently as in Mitchell v. Financing Authority, supra, Sharp, J., speaking for the Court, said, “It is clear * * * that for a use to be public its benefits must be in common, and not for particular persons, interests or estates; the ultimate net gain or advantage must be the public’s as contradistinguished from that of an individual or private entity.” To the same effect is Horner v. Chamber of Commerce, supra.
The purpose of the act in question is to assist individuals to acquire houses to be owned privately by them and occupied and used privately by them. The public will have no more right to use, occupy, control or dispose of the houses so acquired than it has to use, occupy, control or dispose of any other private home. To tax Jones, Smith, Black and Green to raise funds with which to assist Brown to buy and own a home is not to tax for a public purpose. It would not be contended otherwise if the purpose were to assist a single individual or family. The public or private nature of the assistance is not affected by the fact that it is to be repeated many times. Each home to be acquired will be a separate, private benefit to a single individual or family. A multiplicity of private benefits does not, per se, become a public benefit to be enjoyed by all in common like a public park, school or playground. If the person to be so assisted in acquiring a more desirable or more adequate home were in the upper or even the middle income bracket, the non-public nature of this use of tax revenues would be apparent. The fact that the person to be assisted is in the lower income bracket may *61make this use of tax revenues more meritorious, but does not convert it into a “public use.”
Wells v. Housing Authority, 213 N.C. 744, 197 S.E. 698, and other decisions relying thereon, are not controlling in this case. Those cases involved the Housing Authorities Act of 1935, the purpose of which, as was observed in the Wells Case, was “To accomplish ‘slum clearance’ — to rehabilitate crowded and congested areas in cities and towns where insanitary and other conditions exist conducive to disease and public disorder, menacing the safety and welfare of society.” In Mallard v. Housing Authority, 221 N.C. 334, 20 S.E. 2d 281, the proposed housing was to be built in rural areas, but the owner of each farm on which a low-rent house was to be built had to contract that he would destroy one insanitary dwelling on his farm or convert it to non-residential use.
The constitutional authority of the State to take by eminent domain for destruction property, the existence and use of which is a substantial menace to the public health and safety, is unquestioned. Thus, slum properties may be acquired by eminent domain, or by negotiation, and the offensive property destroyed. This is a spending of tax revenues for a public purpose. Having removed the offensive condition, the State may, as an incident to this purpose, use the property so acquired or dispose of it subject to reasonable conditions calculated to prevent a recurrence of the menace to the public.
That is not the present case. No slum property is to be taken for destruction by the Housing Corporation. No house or area, now unsanitary or congested or blighted, is to be changed by it. Its purpose begins and ends with providing an individual financial assistance in purchasing or building a house to be owned and used by him as private property. He may or may not now live in a slum area or in an unsanitary house, but, if he does live in such area or house, neither he nor anyone else is required to destroy it. The availability to him of “adequate” housing perhaps tends to lighten the demand for “inadequate” housing, but the possibility that thereby “inadequate” housing will become unprofitable, so that it will eventually stand empty and possibly be destroyed, is too indirect and remote to convert this spending of tax revenues into a spending for a “public purpose.”
*62In Redevelopment Commission v. Bank, 252 N.C. 595, 114 S.E. 2d 688, also relied upon by the majority in this case, the proceeding was one to condemn a slum area. It arose under the Urban Redevelopment Law. This Court, speaking through Parker, J., later C. J., observed: “The primary purpose of the taking is the eradication of ‘blighted areas/ the reconstruction and rehabilitation of such areas and the adaptation of them for uses which will prevent a recurrence of the blighted condition. * * * The sale or transfer to the redeveloper is merely incidental or collateral to the primary purpose of the Urban Redevelopment Law.” (Emphasis added.)
In re Housing Authority, 233 N.C. 649, 65 S.E. 2d 761, and Housing Authority v. Wooten, 257 N.C. 358, 126 S.E. 2d 101, also relied upon by the majority in this case, did not decide any question of constitutional law or authority. In the first of these cases, Denny, J., later C. J., speaking for the Court, said: “The respondents do not contend that the proposed project is not needed in the City of Charlotte or that the proposed construction * * * is not in the public interest and necessary for public use. * * * (I)n the hearing below, the respondents challenged the validity of the proceeding on the ground that the petitioner had failed to observe the statutory requirements governing such project or projects.” (Emphasis added.) The holding of this Court was simply that the statute did not require the application to the Utilities Commission for a certificate of public convenience and necessity, for construction of low-rent dwellings, to describe the property on which the project was to be built.
The Wooten Case, supra, was one for condemnation of a site for a low-rent housing project and involved only a motion to strike portions of a further answer filed by the owner of land sought to be condemned. Speaking through Parker, J., later C. J., this Court said: “Respondents state in their brief: ‘Respondents contend that by their further answer and defense they have alleged facts which show the Housing Authority of the City of Wilson has acted in bad faith in the selection of a site or sites for its housing projects.” (Emphasis added.)
Thus the constitutional question which faces us was not raised in these two decisions and it is well established that this Court will not pass upon constitutional questions not raised by the litigants. Carbide Corp. v. Davis, 253 N.C. 324, 116 S.E. 2d *63792; State v. Blackwell, 246 N.C. 642, 99 S.E. 2d 867; Fox v. Commissioners of Durham, 244 N.C. 497, 94 S.E. 2d 482. Consequently, these two decisions, sustaining the actions of the Housing Authorities involved therein against attacks on non-constitutional grounds, are not authorities which control or guide us in the decision of the constitutional questions properly before us in the present matter.
The case closest in point is our very recent decision in Mitchell v. Financing Authority, supra. There, we held the General Assembly could not, consistently with Article V, § 3, of the Constitution of this State, appropriate tax revenues for the operating expenses of a corporation created by the statute and authorized thereby to build industrial properties for lease to corporations coming into the State to establish industrial plants here. Obviously, the attraction of desirable, new industry to North Carolina would provide benefits to many people, including the creation of new employment opportunities and better wages, as a result of which many persons in the low income bracket could more easily buy or build “adequate” homes of their own and have access to other benefits which accompany improved earnings. Nevertheless, in a carefully prepared, well documented opinion by Justice Sharp, we held the proposed expenditure was for a private, not a public purpose within the meaning of Article V, § 3, of the Constitution of this State. In this respect, I am unable to distinguish an appropriation of tax revenues to aid an individual to acquire a building to house a business which he will own and operate for his exclusive, private benefit from a use of such revenues to enable the same individual, or another less wealthy, to acquire a building which he will use as his own, private residence. The majority opinion seriously undermines, if it does not destroy, the Mitchell Case, which in my opinion was, and still is, a correct application of this provision in the Constitution.
It has been well said that, in considering the constitutionality of a statute, the wisdom of the legislative plan is not before us. It is equally true that the wisdom of a provision in the Constitution is not before us. If the people have written into their Constitution a prohibition upon certain actions by their Legislature, it is not for us or for the Legislature to disregard it because we believe it unwise or out of date, even if we do so regard it.
*64Spending policies of the Federal Government are not germane to the issue before us. In the first place, the United States Constitution does not contain a provision such as Article Y, § 3, of the State Constitution, though such a limitation maybe thought implicit in the Due Process Clause of the Fifth Amendment, or in Article I, § 8, Clause 1. In the second place, even if such a provision were expressed in the United States Constitution in the precise words used in Article V, § 3, of the North Carolina Constitution, neither Congressional appropriation nor approval thereof by the Supreme Court of the United States would compel us to give a like construction to the limitation placed by the North Carolina Constitution upon the Legislature of this State. For the same reason, decisions by the courts of other states, interpreting the provisions of their constitutions, do not have that effect, notwithstanding our great respect for those courts.
Even if the purpose for which the statute before us authorizes the Housing Corporation to act were a “public purpose,” the provision purporting to exempt its bonds from taxation is, in my opinion, invalid by reason of Article V, §§ 3 and 5, of the Constitution of North Carolina.
When the proposed bonds are issued and sold to private investors they will not be property of the State, a county or a municipal corporation. They are not property of any type which Article V, § 5, authorizes the Legislature to exempt from taxation.
It is quite clear that when Article V, § 5, provides expressly that certain types of property shall be exempt from taxation and certain other types of property may be exempted, the necessary conclusion is that the Constitution means that no other type of property may be exempted. This is made even more certain by the express provision in Article V, § 3, that “the power of taxation shall never be surrendered, suspended, or contracted away.” It is worthy of remembrance that these are not antiquated provisions in our State Constitution, relics of the horse and buggy age. Both § 3 and § 5 of Article V were before the Legislature for rewriting by amendment as recently as 1961 and the people ratified the rewritings in the election of 1962. The revision of the Constitution proposed by the General Assembly of 1969, which is to be voted upon by the people at *65the next general election, leaves the pertinent parts of these provisions unchanged. Session Laws of 1969, c. 1258.
The exemption of State, county and municipal bonds from taxation has been held authorized by this Court. Mecklenburg County v. Insurance Co., 210 N.C. 171, 185 S.E. 654; Pullen v. Corporation Commission, 152 N.C. 548, 68 S.E. 155. The rationalization of this result is far from convincing but in any event it does not support this statute. The reason for the holding in those cases was that such exemption reduces the interest the State, or its political subdivision, has to pay on its own obligations and so the effect is approximately the same as if the obligation were taxed and the higher interest rate paid. See, the dissenting opinion of Clark, C. J., in the Pullen Case. The statute before us expressly provides that neither the State nor any of its political subdivisions shall be liable for the payment of any bond issued by the Housing Corporation or for the payment of interest thereon.
Higgins, J., joins in the dissenting opinion.