Commissioners of Buncombe County v. Payne

The bonds whose validity is impeached by the present action contain no recital of the authority for their issue, but the order of the Board of County Commissioners upon which the question of their issue was submitted to popular vote in 1875, recites as authority Chapter 166, Pr. Laws 1858-’59 to “Amend the Charter of the Greenville & French Broad Railroad Co.” That Act could confer no such authority after the adoption of the Constitution of 1868, which by Section 14, Article II, requires such acts to be passed in the manner therein prescribed. This is held in Commissioners v. Call, at this term and the reason there given is that *487the adoption of the new Constitution with the restrictions as to issue of municipal bonds ‘ ‘annulled all special powers remaining unexecuted and not granted in-strict conformity with its requirements.” ,This has been repeatedly held by the United States Supreme Court. Norton v. Brownsville, 129 U. S., 479, 490; R. R. v. Falconer, 103 U. S., 821; Wadsworth v. Supervisors, 102 U. S., 534, 537; Concord v. Savings Bank, 92 U. S., 625.

Such was evidently the legislative view- also for by Chapter 48, Acts 1871-2, the General Assembly created a new body politic under the name and style of the Greenville & French Broad R. R. Co.” and gave it all the rights and immunities conferred by the incorporation Act of 1854-5 and the amendatory Act of T858- 59. Whether this be treated as an entirely new act or as an attempt to revive and renew powers conferred by the prior Acts above recited it could grant no valid power to issue these bonds, or order an election upon the subject, because of non-compliance with the requirements of the Constitution, Article II, Section 14, in that the bill was not “read three several times in each House of the General Assembly and passed three several readings, which readings were not on three different days, and agreed to by each House respectively and the yeas and nays on the second and third reading of the bill were not entered on the Journal.” Commissioners v. Call, supra; Charlotte v. Shepard, 122 N. C., 602; Rodman v Washington, Id., 39; Commissioners v. Snuggs, 121 N. C., 394, and Bank v. Oxford, 119 N. C., 214, and McGuire v. Williams, at this term, in all of which this constitutional provision has been carefully considered.

The defendants further contend that conceding the invalidity of the Act of 1858 — ’59 and confirmatory Act *488of 1871-72 as- authority to issue the bonds, still the Commissioners had authority to order the election by virtue of Chapter 171, Laws 1868- 69 (which is now the Code, Sec. 1996) hut the County had theretofore no interest in the Railroad and no work was done thereon in this State till after the said election in 1875. The bonds were therefore not authorized because not ‘ ‘necessary to aid in the completion of any railroad.” Commissioners v. Snuggs, supra; Commissioners v. Call, supra.

Besides the reasons given in those cases, there is this further consideration, that "even if it be conceded that a general Act might authorize elections to issue bonds as to all railroads partly completed (in which counties were interested) at the adoption of the Constitution, to aid in their completion, this corporation was never organized till after the charter of re-incorporation of 1871 and hence could acquire no rights except those conferred in conformity with the provisions of the Constitution of 1S68. Not only must the bonds be authorized by a popular vote (Const., Sec. 7, Art. VII) and the authority to hold the election granted by a statute passed in the mode required by Constitution, Section 14, Article II, but to exceed double the State tax (which is necessary) the special purpose must be authorized by a special Act of General Assembly. Const., Sec. 6, Art. V. A general Act authorizing any and all counties to issue bonds for railroad purposes would be invalid, especially when (as is the case here) it is necessary to exceed the constitutional limitation to pay interest or principal. Tate v. Commissioners, 122 N. C., 812 (at p. 815); Herring v. Dixon, Id. 420 (at p. 424).

The bonds were issued in 1876 — *7 and ’8 by virtue of an unauthorized election and are" unconstitutional and void — counties being expressly prohibited from issuing *489bonds unless authorized in the manner prescribed by the Constitution. Lewis v. Shieveport, 108 U. S., 282 (at p. 286); Ottowa v. Cary, Id. 110, 123. The payment of interest on the bonds by the county authorities is not an estoppel nor does it validate- them. Such payments were as much without constitutional warrant as the original issue and one illegal act can not validate another. Doon v. Cummins, 142 U. S , 366, citing (at p. 376) Marsh v. Fulton, 10 Wall., 676; Loan Asso. v. Topeka, 20 Wall., 655; Daviess v. Dickinson, 117 U. S., 657; Norton v. Shelby, 118 U. S., 425, 451.

There is an Act of the Legislature (and only one) that purports- to validate these bonds. Pr. Laws, 1876-7, Ch. 40. But that can have no effect because it was not passed in the mode required by Const., Art, II, Sec. 14. Whether if it had been enacted in the constitutional mode it could have supplied the original lack of power to submit the question to popular vote is a question not before us.

The later Act of. 1893, Ch. 172, does not purport to validate these bonds. It simply recites that the bonds had been issued by proper authority (which is a judicial and not a legislative question) and under that erroneous impression, the legislature proceeded to authorize the issue of new bonds payable “in gold coin” — which is a deviation from the terms of the original bonds — to be exchanged for the said bonds, or sold and with the proceeds purchase or pay them. The act did not submit the issue of the new bonds to popular vote as was the case in Comity of Jasper v. Ballou, 103 U. S., 745, but specially-provides that the new bonds “shall be regarded and held as a continuation of the bonded iildebtedness created as aforesaid,” so that if the bonds issued in 1876-’7 and ’8 were invalid, the new bonds are equally so. *490Whether or not a subsequent legislature can validate bonds issued upon the strength of an election which was held without authority it is very certain they can not be validated by inference from an Act authorizing a sale of new bonds (issued without a -popular vote) to take up the first bonds. The validating Act must be a directed enactment.

The wisdom of the sovereign people has inserted in the organic law as a protection to tax-payers, the provision to be found in Section 14, Article II, and legislation coming within its scope is void unless the constitutional requirement is observed. It is put there for that purpose. Holders of county bonds, who. have taken them without ascertaining if there was constitutional authority for their issue, can not expect the Courts to disregard the Constitution to save them from the consequences of their negligence. The judgment below is

Affirmed.

dissenting : The purpose of this action is to have declared void certain coupon bonds issued by plaintiffs in 1895, 1896 and 1897 to the amount of $98,000.

In 1855 the legislature passed an Act chartering a railroad company by the name and title of the “Green-ville & French Broad Railroad Company. ” Acts 1854-5, Ch. 299. This Act was amended by the legislature of 1858- 9, in which amended act it is provided “That it shall be competent • for any county through which said road is intended to pass, to subscribe to the capital stock of said company any sum or sums that may be determined on by the' Court of Pleas and Quarter Sessions of such county.” Acts 1858-’9, Ch. 166.

The next Act of the legislature affecting the question *491under consideration is the Act of 1868-9, Ch. 171. This Act expressly authorizes the commissioners of any County to submit the question of subscription to a vote, and if a majority of the qualified voters of the County vote for the proposition, to make the subscription. This Act seems to have been literally complied with by the Commissioners of Buncombe in making this submission to the voters of the county.

The legislature of 1871-2 passed another Act, as amendatory of the Act of 1855, chartering the Greenville & French Broad Railroad Company, in which new directors are appointed, and this Act closes by saying that the original Act and all other act^ amendatory thereof are re enacted. Acts 1871-’2, Ch. 48. '

The Legislature of 1873-4, passed another amendment to the original act of 1855 chartering this road, appointing other incorporators, and giving further time to complete its organization. Acts 1873-’4, Oh.'38.

The legislature 1874-5 passed another act ratifying a consolidation of the Greenville & French Broad Railroad Company with the French Broad Railroad Company, under the name of the “Spartanburg & Asheville Railroad Company.” Acts 1874-’5, Ch. 27. And under this legislation and organization the Commissioners of Buncombe County, in 1875, submitted a proposition to the voters of said county to subscribe $100,000 to the capital stock of the “Spartanburg and Asheville Railroad Company,” and to issue coupon bonds therefor. A majority of the qualified voters of said county having voted in favor of the proposition, the subscription was made, and the bonds issued and put upon the market.

These bonds ran for 20 years, and not having been paid, the Legislature of 1893 passed an Act authorizing the issue of new bonds in the place, of the old bonds is*492sued in 1875, known as the Funding Act. Acts 1893, Chapter 172. It is admitted that this Act was passed according to the constitutional requirements. But there was no submission to the people, after the passage of this Act.

After the passage of the Act of 1893, the commissioners of Buncombe County issued the bonds they are how seeking to have declared unconstitional and void; sold them to Blair & Co. of New York at par value for cash, with which money they paid off and discharged the original bonds issued in 1875. It is these last bonds that the plaintiffs are now trying to avoid the payment of. . 0

This case .is very much like the case of The Commissioners of Wilkes v. Call, decided at this term, but different in some respects that the Court considered material in that case. In Commissioners v. Call, it appeared in the face of the bonds that they were issued under the Act of 1879, which was admitted not to have been passed according to the constitutional provisions so as to authorize their issue; and this was held by the Court to be an estoppel. But there is no such question as that in this case. The submission to the voters of Buncombe County was made: “In pursuance of the provisions of, and in accordance with the powers granted by an Act of the General Assembly of the State of North Carolina, passed at its session of 1858-’9 and ratified on the 16th day of February, 1859, entitled an Act to amend the charter of the Greenville and French Broad Railroad Company.” The submission was in September, 1873. But before the bonds were issued in 1875, the Act of 1874 had been passed, consolidating this company with another railroad company and called the “Spartanburg and Asheville Railroad Company.”

*493The bonds are payable to bearer, and it is stated in their face that they are issued to pay the subscription to the “Spartanburg and Asheville Railroad Company” —this being the new name of the consolidated company, made under the Act of 1874-’5.

It is admitted that, if the original bonds issued in 1875 were valid these bonds are valid. This is true, and the admission does the plaintiff no harm. And it may be that the present bonds are valid, even if the original bonds were not. But I do not propose to discuss that question now; I may do so further on.

I have discussed many of the questions presented in this case so fully in my dissenting opinion in Commissioners v. Call, at this term, that I shall not enter into so full a discussion in this case, as I otherwise might have done. But I refer to that opinion for arguments that might have been made here.

It seems to me that if the Acts I have cited are law, there can be no doubt but what these bonds are valid. And while I recognize the doctrine contained in Bank v. Oxford, 119 N. C., 214; Charlotte v. Sheppard, 122 N. C., 602, and Commissioners v. Snuggs, 121 N. C., 394, I propose to show that all these Acts are valid law for the purposes of issuing the bonds, of 1875, except the Act of 1871-2, and that that Act is not necessary to. the validity of these bonds; and that there is no conflict between their validity and the doctrine in Bank v. Oxford, Commissioners v. Snuggs and Charlotte v. Sheppard, supra.

It is stated and admitted, as true, that the ayes and nays were not taken and recorded in the Journals upon the passage of the Act of 1858- 9 and the Act of 1871-2. But it is not alleged, admitted or shown that they were not taken and entered, according to. the require*494ments of the Constitution, upon the passage of the other Acts cited by me in this opinion.

When an Act is passed and ratified by the Legislature it is presumed that it was passed according to law. Gatlin v. Tarboro, 78 N. C., 119; McGuire v. Williams, at this term; and, if it is not, the burden is on the plaintiff (in this case) to show that they were not so passed. And it not being shown but what these Acts were passed according to the constitutional requirements, they must be taken to have been so passed. It must therefore be held that the ayes and nays were called on the passage of each one of these Acts, except the Act of 1858 — ’9 and the Act of 1871-2. It makes no difference that the ayes and nays were not taken and recorded on the passage of the Act of 1858- 9, as there was no provision in the Constitution at that time requiring that it should be done.

This act of .1858- 9 provided that counties through which the road was intended to pass might subscribe to the capital stock'of the company “if a majority of the lawfully qualified voters of such county voted for the subscription. ” But the second section of this Act provides that if a majority of the votes cast are for subscription, it shall'be declared to have been carried. It is true that this election was to be ordered and held under the direction and supervision of the county court; and the submission to the voters in this case, as in Commissioners v. Call, was by the commissioners of the county. The commissioners are the successors of the county court in all such matters. It is so held in Belo v. Commissioners, 76 N. C., 489. and is expressly so provided in Section 1997 of The Code.

It is contended in the opinion of the Court that the Act of 1858- 9 was repealed by the Constitution of *4951868. There is no provision of the Constitution of 1868 repealing this or any other law of the State. So if it is repealed, it must be by implication on.account of the repugnance of the Act (the charter) to the Constitution. I admit that any part of this Act repugnant to the Constitution of 1868 could not be enforced on account of the repugnance. But I deny that the Act was. repealed by the Constitution. If this were true no corporation could have been organized under its-provisions, and the “Spartanburg & Asheville Railroad Company” would be without any legal authority' — -would be a nullity. If this were true, no railroad company could be chartered, unless the Act chartering it passed according to Article II, Section 14 of the Constitution. This cannot be law. The passage of the Act according to Article II, Section 14 of the Constitution, is only necessary where it is used as a basis for raising money by means of a corporation subscription and tax. Suppose a railroad company is chartered by legislative enactment without complying with Article II, Section 14, and a company is organized thereunder (as I have no hesitation in saying it maybe) can it be contended that if the Legislature passes another Act, as required by Article II, Section 14, of the Constitution, authorizing a subscription to said road, a submission made to the voters, and an. issue of bonds under this Act, it would be unconstitutional and .the bonds void? That is the case. The railroad company was organized under the Act of 1858- 9, but the provision of this Act authorizing counties to subscribe, was repugnant to the Constitution of 1868 in that it provided that a subscription might be made and bonds issued, upon a majority of those voting, and not upon a majority of the whole qualified vote of the county. But the Act of 1868-9 (now Section 1991 of The Code) *496which was passed or presumed to have been passed according to Article II, Section 14 of the Constitution, supplied that defect in the Act of 1868-’59. This Act was not called to the attention of the learned Judge who tried the case. Had it been, he would, in my opinion, have decided it differently.

The Act of 1858-’9 and the amendments thereto (outside of the Act of 1871-’2) authorized the organization of the “Spartanburg & Asheville Railroad Company” and authorized Buncombe County' to subscribe to the capital stock of said company; and the Act of 1868-9 authorized a submission to the voters of said county as required by Article II, Section 14 of the Constitution, and in my opinion the bonds are valid.

There is another ground upon which it is claimed that their legality may be maintained; that of ratification.

There is no dispute but what the question of subscription was fairly submitted to the qualified voters of Buncombe County, and that a majority voted for the subscription. The Act of 1893, which is admitted to have been passed according to the requirements of Article II, Section 14 of the Constitution, expressly recognizes the old bonds as a valid indebtedness of Buncombe County, in the following terms: “That said indebtedness having been created in the year 1875, under proper authority, to pay for the subscription of the said county to the stock of the Spartanburg & Asheville Railroad Company.” This Act further provides in Section 3 as follows: “And when issued they shall be regarded and held as a continuation of the bonded indebtedness of said county, created for the purposes aforesaid, and they shall not be exchanged or sold for less than their par value.” ' It is contended that this isa *497ratification of the Acts under which the original bonds were issued. This is an interesting question, but, as I am of the opinion that the bonds are valid for the reasons given by me, outside of the doctrine of ratification, • I do not pursue the discussion further.