Opinion
(Decided 8 March, 1898.)
Injunction — Pleading — Admissions — Practice — Municipal Corporations — Necessary Expenses — Electric Light Plants — Constitutional Law.
1. Where, in an action to enjoin the erection by a city of an electric light plant, the complaint does not charge that such plant is a necessary municipal expense, an allegation to that effect in the answer is not an admission of such fact, and, even if it should be so considered, it would be an admission of a conclusion of law merely, and not a fact, and would not be binding on the court.
2. On appeal from an order granting or refusing an injunction, this Court can review the facts.
3. Where a rehearing is granted on one ground but refused on another, the original decision as to the latter is binding as a precedent.
4. Where a town has, by its charter, no express power, it has only such powers as necessarily pertain to or arise from the fact that it is a municipal corporation, and can do those things only that are indispensable to its existence and government.
5. To enable a municipal corporation to borrow money or loan its credit for any purpose, except for its necessary expenses, there must be an act of Assembly passed and ratified, as required by the Constitution, authorizing it to submit the proposition to the people, followed by an actual submission to and ratification by a majority of the qualified voters.
6. The erection and operation of an electric light plant for lighting the streets of a town is not a "necessary expense" within the meaning of section 7, Article VII of the State Constitution. (CLARK, J., dissents.)
7. A municipal corporation, having general powers only, cannot issue bonds for the erection of an electric light plant for lighting its streets without legislative authority to submit the question to its qualified voters and a ratification by a majority of such voters. (CLARK, J., dissents.)
ACTION brought at Fall Term, 1897, of BEAUFORT to enjoin the issue of bonds of the town of Washington for the erection of an electric light plant, and heard before Brown, J., at Chambers in Washington, N.C. on 4 September, 1897. His Honor refused the injunction and (6) plaintiff appealed.
No counsel for plaintiff (appellant).
Chas. F. Warren for defendant.
The defendant is a municipal corporation containing a population of about 5,000 inhabitants. By its charter it was given the general powers incident to such corporations in the following words: That the commissioners of the town of Washington (naming them) and their successors in office "be and they are hereby created a corporation and a body politic under the name and title of the Commissioners of the Town of Washington, with full power to make by-laws not inconsistent with the Constitution of the State or of the United States; to contract and be contracted with, to sue and be sued, to plead and be impleaded, by that name and title; and they are hereby invested with all other powers and rights necessary or usually appertaining to municipal corporations." Pr. Laws 1846-47, ch. 199, sec. 1.
The defendant has undertaken under this corporate power to buy, erect and operate an electric light plant for the purpose of lighting the public streets of the town of Washington at a cost of twenty thousand dollars, and to issue coupon bonds therefor, not to run more than thirty years and not to bear interest at a greater rate than 6 per cent per annum.
The plaintiff, a citizen and taxpayer of the defendant town, for himself and in behalf of other citizens and taxpayers, denies the right of the defendant to create this bonded debt for the purposes proposed, and thus to burden the citizens and taxpayers of the town of Washington.
This action is brought for the purpose of restraining and perpetually enjoining the defendant from creating such debt and from issuing said bonds. Upon the hearing below the Court refused to (7) issue the injunction prayed for and the plaintiff appealed.
The appeal was not argued orally in this Court. But we find a signed agreement of counsel asking that it be heard on printed briefs, in which it is stated that the plaintiff's counsel does not wish to file any brief, and has not done so. This is to be regretted, as the appeal involves the consideration of a most important question of constitutional law. But the well-considered brief of defendant's counsel treats the case fairly, and contends that there is but one question of law involved, and that is, the constitutionality of the proposed indebtedness and issue of bonds. And that depends upon one question of fact — is it one of the necessary expenses of the town?
The defendant contends that the case, as it is constituted in this Court, does not involve the question as to whether the defendant could furnish incandescent lights to its individual citizens for pay, and, if this Court should sustain the order of the Court below, that this question would still remain undecided. This seems to us a little like hedging, as we know of no electric light plant in the State that does not sell incandescent lights to private parties; and we can hardly believe that the defendant would wish to go to this expense in erecting and operating an electric light plant in the town of Washington without this means of defraying a part of the expense of operating the same. But as the defendant contends that it does not involve that question, we will treat it in that way.
We agree with the defendant's counsel that there is but one question of law involved, and that is the power of the defendant to make (8) the debt and issue the bonds; and this depends upon the fact whether an electric light plant, costing twenty thousand dollars, is one of the necessary expenses of the town government? The defendant contends that it is, and cites several cases as sustaining this contention.
Tucker v. Raleigh, 75 N.C. 267, is cited for two purposes: to prove that electric lights are a necessary expense, and that the admission of this fact by the defendant is binding on the Court. In our opinion it sustains neither contention. In that case, the facts admitted were that the debt sued on was money due for work, performed on the streets, cleaning out wells, and the like. The Court said these facts being admitted, we, as a matter of law, hold that the debt was for necessary expenses. In the case under consideration there is no dispute about facts. They are alleged by the plaintiff and admitted by the defendant, as they were in Tucker v. Raleigh. And the defendant says in its answer that these facts show, that to buy, establish and operate this electric light plant is one of the necessary expenses of its government. The defendant's contention cannot be sustained for two reasons, first, It is not an admission of the defendant that it is a necessary expense, but an allegation that it is. It is not alleged by the plaintiff, that it is a necessary expense, and not being alleged it cannot be an admission.
But if the plaintiff had admitted that this debt, if created, would be for a necessary expense, it would be an agreement as to a result, a conclusion, and not a fact, and the Court would not be bound by the admission. But, as this is an application for an injunction, this Court has the right to review the Court below on the facts. Jones v. (9) Boyd, 80 N.C. 258.
Brodnax v. Groom, 64 N.C. 244, is cited by the defendant as sustaining his contention. But in our opinion it does not. The subject of litigation in that case was to enjoin the collection of taxes levied under a special act of the Legislature to build and repair bridges. There was no dispute but what the act authorized the levy, and the only question involved was as to whether it was constitutional or not, as the question was not submitted to a vote of the people. This fact, that it was not submitted to a vote of the people, made the constitutional question hinge upon the question as to whether building and repairing bridges was one of the necessary expenses of the county government, and the Court held that it was. This is the only analogy that Brodnax v. Groom bears to the case under consideration. And it is so obvious that the building and repairing bridges on the public highways of a county is a part of the necessary public expense of a county, that we do not propose to discuss this question further.
Evans v. Commissioners, 89 N.C. 154, is also cited by the defendant. But it is placed entirely on Brodnax v. Groom and decides no more than that case does.
Mauldin v. City Council, 33 S.C. 1, is cited by defendant as sustaining its authority to create the debt and issue the bonds. We do not think it does, but that it sustains the contention of the plaintiff. There is no constitutional restriction in South Carolina as there is in North Carolina, and the right of the defendant in that case depended upon its powers under its charter, and the Court held that it had the power. The opinion is made largely of quotations from Judge Dillon, defining general corporate powers. Quoting from Judge Dillon, these powers are defined as follows: "Those granted in express words; (10) those necessarily or fairly implied, or incident to the powers expressly granted; those essential to the declared objects and purposes — not simply convenient, but indispensable. Any fairly reasonable doubt concerning the existence of power is resolved by the Courts against the corporation. . . . It is quite certain that such power is not essential to the declared objects and purposes of the corporation, for the city has heretofore been lighted by contract, without owning the gas fixtures." The first part of this quotation down to........ was quoted by the South Carolina Court from Judge Dillon, and from there down is a part of the comment of the South Carolina Court. As there was no constitutional restriction of the corporate power in South Carolina, it depended on their general corporate power to contract. They were not restricted as the defendant is. In South Carolina the power of the defendant to lend the credit of the town and to issue bonds was not restricted to the necessary expenses of the corporation.
In the charter of the defendant, there are no express powers. It therefore has only such powers as necessarily pertain or arise from the fact that it is a municipal corporation, and, therefore falls under the third division of Judge Dillon's definition, which he says does not mean simply "convenient, but indispensable." And "any fair reasonable doubt concerning the existence of power is resolved by the courts against the corporation." This case was called to our attention by the defendant as sustaining its position.
Lott v. Mayor, 84 Ga. 681, is cited by the defendant. This case expressly states that it does not decide any constitutional question. The case bears a very slight analogy to ours, if it has any at all. That case is where the town of Waycross contracted with a company (11) to furnish it with a certain number of electric lights at an agreed price per annum. The action was brought to enjoin the enforcement of this contract, for the reason that it was not submitted to a vote of the people. The Court held that this did not involve any constitutional question; that, if the contract was a reasonable one and the annual rental was kept paid, the constitutional question might never arise. There is very little discussion of the case by the Court, and we do not know what the constitutional provisions of Georgia are. But the case nowhere shows that the question of necessary expense was presented or considered by the Court.
Crawfordsville v. Braden, 130 Ind. 149, is also cited by defendant as sustaining its contention. But we do not think it does. There are no constitutional restrictions in the State of Indiana, as there are in North Carolina. The power of the defendant in that case depended entirely upon the powers contained in its charter and the case is not put upon the ground of necessity, but upon the ground of convenience and benefit. But it may be observed that the reasoning of the Supreme Court of Indiana places the power as to waterworks and electric plants on the same footing, and we do not see how they can well be distinguished.
This is a new question in North Carolina so far as the right of a municipality to establish and operate an electric light plant is concerned, without submitting the question to the people for their approval. But it is not new in principle. We have many opinions construing sec. 7, Art. VII, of the Constitution. We also have many opinions defining the powers of municipal corporations. From these it seems that we ought to be able to arrive at a proper conclusion as (12) to the law governing this case.
There is no special act of the Legislature authorizing the levy of a tax, as there was in Brodnax v. Groom. Nor is there any express power contained in the charter to do so. So, the defendant's right to erect and operate an electric plant and to create a debt and issue bonds, depends upon the general powers vested in the defendant as a municipal corporation.
Every municipality in this State is subject to the provisions of sec. 7, Art. VII, of the Constitution, and it does not matter what powers it has under its charter, if they are in conflict with the provision of the Constitution, they are void. To enable a municipal corporation to borrow money or to loan its credit for any purpose, except for the necessary expenses of the corporation, there must be an act of Assembly passed and ratified as required by the Constitution authorizing it to submit the proposition to the people. Bank v. Commissioners, 119 N.C. 214; Commissioners v. Snuggs, 121 N.C. 394, and the question must then be submitted to and ratified by a majority of qualified voters thereof. It requires both the authority to submit the proposition, and the ratification by a majority of the qualified voters to warrant the creation of the debt and the issue of the bonds. R. R. v. Commissioners, 116 N.C. 563. If the people want it, why not get it in this constitutional way?
This brings us to the final consideration of the question as to whether the purchase of an electric light plant for the town of Washington at the price of $20,000, simply to light its streets, is one of the necessary expenses pertaining to its government, and it seems to us that the authorities cited by defendant's counsel show that it is not.
We have seen that the power to establish electric light plants (13) and waterworks plants stand on substantially the same footing. If we consider this to be so (and we are not able to see why they do not) we have at least one direct decision which holds that it is not one of the necessary expenses of a city government. Charlotte v. Shepard, 120 N.C. 411. In the defendant's brief this case is treated as obiter. But that is not so. It was claimed on the argument in Charlotte v. Shepard, that this was one of the necessary expenses of the corporation, and that the plaintiff had the power, without any act of the Legislature or submission of the question to the people, to make this debt and to issue bonds. And this is the second ground of error assigned in the plaintiff's petition for a rehearing. While a rehearing was granted as to the other assignments of error, it was denied as to this ground. This decision was made by a full bench and a unanimous Court, and is entitled to the same weight, as a precedent, that any other opinion of this Court is entitled to.
While we have no case before this Court as to the power to erect and operate an electric light plant by a municipality, we find that it has been presented in other States, and considered and decided upon the very point involved in this case, that is whether it is one of the necessary expenses of the corporate government. In Spaulding v. Peabody, 153 Mass. 129, decided in 1892, we find a very full and satisfactory discussion of the subject. There, the town of Peabody proposed to erect an electric plant at a cost of $30,000, to light the streets, and for other purposes. The Court discussed both aspects of the question, and held that the defendant had no power to incur the expense of erecting such plant for the purpose of lighting streets or for other purposes. The opinion is delivered by Chief Justice Field and concurred in by all the judges. In the discussion of the case the Court say that "it has been uniformly (14) held that cities and towns are under no obligation to light their streets for the purpose of making them safe and convenient for travel," citing Sparhawk v. Salem, 1 Allen, 30; Tyson v. Booth, 100 Mass. 258; Randall v. R. R., 106 Mass. 276. This opinion further says "that all the power a municipal corporation has to tax is derived from the Legislature by express grant or necessary implication" and where the Legislature has the right to grant the necessary powers, the implied powers are strictly construed." "That the exceptions to this rule are few, and being such as a town clock, hay scales, pumps, reservoirs, etc. These obtain by reason of ancient custom, and are not to be extended." The opinion further states that it was contended "that, if the town of Peabody could erect street lamps, it could maintain them by any appropriate means, and that to furnish them by means of such electric plant was one of the proper means of doing so." The rule as laid down by the Massachusetts Court is "that where there is any considerable amount of money to be expended, it must be under legislative authority." This is, as we interpret it, any unusually large amount for that municipality. And the Court say that "it cannot be said that the erection of such works as are contemplated . . . in this case, is in any strict sense necessary in order to enable the town of Peabody to light its streets." This case decides the very point upon which our case turns — that it is not a necessary expense of a corporation to light its streets with electric lights, and therefore not necessary to incur the debt of $20,000, and to issue the bonds.
To draw the line of demarcation between what are and what are not necessary expenses to be borne by a municipal corporation, (15) would be attended with difficulty. It is not necessary that we should attempt to do so in this case, and we do not attempt to draw the line. There are some things clearly within the line of power and it is the duty of the corporate authorities to provide for them — such as courthouses and jails, as in Vaughn v. Commissioners, 117 N.C. 429, or public highways and public bridges, as in Brodnax v. Groom, supra.
There are others that are clearly outside the line of necessary expenses, such as appropriations to build railroads, cotton factories, to build and operate electric street car lines, etc. These the municipality would have no right to pledge the faith and credit of a town or city to build, without first obtaining authority from the Legislature, and from the popular vote.
The erection of electric light plants and waterworks plants may not be so far outside the line of power as some of the things mentioned. But we are of the decided opinion that they are outside.
The claim of power upon the plea of necessity must stop somewhere. The restrictions contained in the Constitution were not intended to be meaningless. If they had not been for a purpose, they would not have been put into the Constitution. In our opinion this provision of the Constitution was wisely put into that instrument for a most beneficent purpose, and it must be judicially sustained and enforced by the Courts.
Suppose we hold it to be within the corporate power to buy and operate electric light plants on a pledging of the faith and credit of the town; how long will it be until it will be claimed that electric street cars are necessary for the business, progress and convenience of the town? And, if we grant this claim of necessity, how will we resist that? What grounds have we to distinguish one from the other? If (16) we sustain the plea of necessity for street cars, what is there to prevent the same claim of necessity to the growth, prosperity and convenience of the people of a town, to which there is no railroad, from pledging the faith and credit of the town to build a railroad? Especially so, if we allow the claim or admission of the corporate authorities to settle the question of necessity, as is claimed that they should do in this case. It is heard every day, in towns of much size, that a street railway is necessary to the growth and prosperity of the town; and, in towns that have no railroad, to hear it said `that a railroad to this place is a necessity.' And it is contended for the defendant in this case that, if such town should make a subscription and issue bonds, or should propose to do so, and when suits should be brought to enjoin it from so doing, if the town alleged it was a necessary expense, it is to be taken as conclusive evidence that such street car or railroad is one of the necessary expenses of the municipality, and that the Court is bound by this claim or admission. If this be so, every town in the State would soon have railroads running to it, and a line of electric street cars, based upon the pledged faith and credit of the town. This cannot be the law.
Smith v. Goldsboro, 121 N.C. 350, was cited for defendant, but it is not in point. The question of establishing electric lights was not involved in that case. The only question involved was the right of the city to use the streets, in a territory lately added to the city by extending its corporate boundary. It was to give the same benefits and the same protection to the citizens of the new territory that the citizens of the old territory had.
The Constitution must be observed and enforced. There is error. The judgment for the Court below is reversed and the injunction as prayed for must be granted. (17)
Reversed.