The plaintiffs, who are taxpayers of the city, complain that on 18 January, 1875, the corporate authorities levied a tax of two per cent on all the real and personal property in the city, which they are proceeding to collect. They allege that the power of the corporation to tax is limited by ch. 144, Laws 1872-'73, Schedule B, sec. 1, p. 229, to one and a halfper cent, and pray for an injunction against the excess. We are of opinion that as the power to tax is not limited by the city charter, the act cited applies, subject, however, to the qualification that it does not operate to limit the power to tax for the payment of any valid debt contracted before its passage on 3 March, 1873.
The Constitution, while it requires taxation to be uniform on all property within the city, and requires the observance of a (482) certain proportion between the tax on polls and on property, contains no limitation on the amount of tax which cities and towns may impose.
The omission was of purpose. It was unwise to establish in a law, which was expected to be comparatively permanent, the same maximum rate of taxation for all the cities and towns in the State, with population and other conditions so different. These two are subject to constant change, and a maximum proper in 1868, might be otherwise a few years later. The Constitution, therefore, almost necessarily left this duty to the Legislature, which could both perform it better originally, and could change the maximum from time to time as the conditions might change. By Art. III, sec. 4, it imposed on the Legislature a moral obligation to restrict the power of municipal corporations to tax and to contract debts. This obligation it has as yet imperfectly discharged. The act cited was in obedience to this command of the Constitution, and it did enact a limitation on the power of cities and towns to tax, which is impliedly subject to the qualifications above stated.
The Constitution imposed a limitation on the power of counties to tax by Art. IV, sec. 1. And it has been settled by numerous cases that the limitation did not apply as to debts contracted before the adoption of the Constitution. Trull v. Comrs., 72 N.C. 388; French v. Comrs., 74 N.C. 692.
The ground of these decisions is that such limitation, if applied to prior valid debts, would tend to impair the obligation of the contract, *Page 340 which the Constitution could not rightfully do. And it will be presumed it did not intend what in any instance might have that effect, The same principle applies to the limitation created by the act cited. To apply it to prior debts would evidently weaken the security (483) of the creditor, and might in some cases impair the obligation of the contract, which will not be presumed to have been intended.
It was, therefore, prospective in its application. The corporate authority may levy and tax it may think proper, with the qualifications of uniformity and proportion above stated for the bona fide purpose of discharging the interest and principal of any valid debt contracted before the passage of the act. For any and all other purposes they cannot exceed the limit of one and a half per cent.
We are also of opinion that under Laws 1871-'72, chap. 27, p. 32, the corporate authorities may levy a tax over and above the limit of one and a half per cent for the purpose of raising a sinking fund to be applied to the payment of any valid indebtedness incurred before 3 March, 1873. To raise a sinking fund to pay a debt is only to raise and lay by every year in anticipation of the maturity of the debt a sum to be applied to its payment at maturity. It is only distributing over several years a burden which would otherwise fall on one. French v. Comrs., 74 N.C. 692. The sums so raised may be applied to buying in the city bonds before their maturity; and this would be the way of applying them, least liable to loss by neglect or fraud. We are not called on to say that this is the only way in which the authorities are permitted to dispose of any sums raised for that purpose, and we express no opinion on that point.
If the money collected for the purpose of paying the interest and principal of the valid debt of the city shall be embezzled or fraudulently misapplied, the citizens who are injured have a remedy in the criminal as well as in the civil law. No such case is presented here. Nor are we called on to decide whether any part of the city debt which the defendants propose to pay is valid or not. That question must be distinctly presented upon a definite statement of facts in respect to one or (484) more particular debts before it can be passed on in a court, and that is not done in this case.
Whether a tax of one and a half per cent will raise more money than is needed for the current necessary expenses of the city, and whether an additional tax of one-half of one per cent is needed to pay the interest of the valid city debt, and to raise a reasonable sinking fund in anticipation of the maturity of the principal, are questions which were not decided in the Superior Court, and which, therefore, are not now before us on this appeal. Certainly if a tax of one and a half per cent will *Page 341 overpay the necessary current expenses, the excess should be applied towards the interest of the bonded debt. And if by that means or otherwise the tax of half of one per cent be in excess of the purposes to which it can be lawfully applied, the collection of such excess should be restrained. These questions may come under the consideration of the judge of the Superior Court at the hearing. We are not required to pass on them or in a condition to do so properly. We cannot say that even probably an injury will result from dissolving the injunction.
PER CURIAM. Affirmed.
Cited: Young v. Henderson, 76 N.C. 423; Barksdale v. Comrs., 93 N.C. 482;Redmond v. Comrs., 106 N.C. 137; Collie v. Comrs., 145 N.C. 181;Swinson v. Mount Olive, 147 N.C. 612.
(485)