DEVIN, J., concurring.
BARNHILL, J., concurring.
SCHENCK, J., concurs in the concurring opinion of Barnhill, J.
CLARKSON, J., dissenting in part and concurring in part. Action for injunction against appropriating funds and levying taxes for operation, maintenance, and improvement of municipal airport without a vote of the majority of the qualified voters.
The plaintiff is a resident and taxpayer of the defendant city of Charlotte, a municipal corporation, of which the codefendants are and constitute the governing body.
By consent of parties, a jury trial being waived, the court below finds pertinent facts substantially as follows: At an election held in the city of Charlotte on 3 November, 1936, the issuance of $50,000 in bonds of said city for the purpose of purchasing a tract of land for a municipal airport, and the levying of a sufficient tax on taxable property therein to pay the principal of and interest on said bonds were approved by a vote of the majority of the qualified voters in said city. Thereafter the governing body of the city purchased approximately 450 acres of land outside of, but near, the limits of the city. The airport constructed thereon with Federal Government funds was completed and turned over to the city about 1 June, 1937, for maintenance and operation.
An airport commission of three was appointed under authority of an act of the General Assembly of 1937, with power to appoint a manager for said airport and to fix his compensation to be paid from the proceeds derived from the operation of the airport, and to establish and collect fees, tolls, and charges from those using said airport and its facilities, and to deposit all proceeds from the said airport from any source in separate account, to be known as the "Airport Fund," of which the treasurer of the city is the treasurer. Disbursements from said fund are authorized to be made on warrant signed by the treasurer, mayor, city manager, and chairman of the airport commission. The airport commission *Page 63 is given authority to employ an assistant manager and such other employees as they may deem necessary for the proper maintenance and operation of the airport.
In the budget for the fiscal year beginning 1 July, 1937, the governing body of and for the city set up and appropriated, and levied taxes to raise, respectively, both (1) the sum of $25.00 to be expended toward the maintenance of the municipal airport, and (2) a sum, the amount of which is not shown in the record on appeal, but in excess of $5,000, and stated by counsel to be $20,000, as a contingent fund.
Thereafter, on 3 November, 1937, the governing body of the city passed an ordinance in which there appears in part the following:
"Whereas, the said commission has been unable to derive sufficient revenue for the operation, maintenance, and upkeep of the said airport in a proper and adequate manner; and whereas, additional hangar facilities are needed at said airport. Now, therefore, be it ordained by the city council in regular session that $5,000 be and the same hereby is appropriated from the contingent fund of the city and transferred to the airport fund to be used in the operating cost, maintenance, and further improvement of the facilities of said airport, said fund to be disbursed in accordance with the provisions of the legislative act authorizing said airport commission, and known as chapter 559 of the Private Laws of 1937."
The court below further finds as a fact: "That the $5,000 referred to in the pleadings transferred from the contingent fund to the airport fund was money derived from taxation and was not an unappropriated surplus fund derived from other sources."
Upon these findings of fact the court below concluded as a matter of law that the city of Charlotte is without authority to appropriate and expend (1) The sum of $25.00 set out in the budget for the purpose of operating and maintaining a municipal airport, and (2) the sum of $5,000 for that purpose under the provisions of an ordinance by the governing body, "without the question being submitted to and approved by a majority of the qualified voters. Art. VII, sec. 7, of the North Carolina Constitution."
Thereupon judgment was entered enjoining and restraining the defendants, and each of them, from expending any sum for the construction, operation, and maintenance of the municipal airport until the question of levying of such taxes has been submitted to and approved by a majority of the qualified voters of said city of Charlotte. The defendant appealed therefrom to the Supreme Court, and assigned error. Two questions arise on this appeal: (1) Are the operation, maintenance, and improvement of a municipality owned airport necessary expenses within the meaning of Art. VII, sec. 7, of the Constitution of North Carolina? (2) Can the governing body of a municipality make an appropriation and levy a tax for a contingent fund, and when the tax money is collected transfer it to, and use it for, a purpose for which such body is without authority to levy a tax?
Both questions are answered in the negative. The action of the city council as the governing body of the city of Charlotte in making the appropriations and tax levies is violative of the provisions of both Art. VII, sec. 7, of the State Constitution and the County Fiscal Control Act applicable to cities and towns.
First: "No county, city, town, or other municipal corporation shall contract any debt, pledge its faith, or loan its credit, nor shall any tax be levied or collected by any officers of the same except for necessary expenses thereof, unless by a vote of the majority of the qualified voters therein." Art. VII, sec. 7, of the Constitution of North Carolina; C. S., 2691.
In the recent case of Palmer v. Haywood County, 212 N.C. 284,193 S.E. 668, it is said: "What are necessary expenses is a question for judicial determination. The judicial decisions in this State uniformly so hold. The courts determine what class of expenditures made or to be made by a municipal corporation come under the definition of `necessary expense.' The governing authorities of the municipal corporations are vested with the power to determine when they are needed. . . . That is to say, the courts determine whether a given project is a necessary expense of a municipality, but the governing authorities of the municipality determine in their discretion whether such given project is necessary or needed in the designated locality." Starmount Co. v. Hamilton Lakes, 205 N.C. 514,171 S.E. 909; Black v. Comrs., 129 N.C. 121, 39 S.E. 818; Fawcett v.Mount Airy, 134 N.C. 125, 45 S.E. 1029; Storm v. Wrightsville Beach,189 N.C. 681, 128 S.E. 17; Henderson v. Wilmington, 191 N.C. 269,132 S.E. 25.
"In defining `necessary expense' it is said in Henderson v. Wilmington,supra, `We derive practically no aid from the cases decided in other states. . . . we must rely upon our own decisions.' Then, after reviewing numerous cases dealing with the subject of `necessary expense,' page 278,Adams, J., said: `The cases declaring certain expenses to be "necessary" refer to some phase of municipal government. This Court, so far as we are advised, has given no decision to the contrary.' Then, on page 279, continues: `The decisions heretofore rendered by the Court make the test of a "necessary expense" the purpose for which the expense is to be incurred. If the purpose is the maintenance of the public peace *Page 65 or the administration of justice; if it partakes of a governmental nature or purports to be an exercise by the city of a portion of the State's delegated sovereignity; if, in brief, it involves a necessary governmental expense.'"
When thus tested, an airport is not a necessary governmental expense.
The subject of the authority to levy taxes has been discussed in numerous cases. The law is well settled and may be summed up:
(1) "For necessary expenses. The municipal authorities may levy up to the constitutional limitation without a vote of the people and without legislative permission;
(2) "For necessary expenses, they may exceed the constitutional limitation by special legislative authority without a vote of the people. Constitution, Art. V, sec. 6.
(3) "For other than necessary expenses a tax cannot be levied either within or in excess of the constitutional limitations except by a vote of the people under special legislative authority." Palmer v. Haywood County,supra; Walker v. Faison, 202 N.C. 694, 163 S.E. 875; Glenn v. Comrs.,201 N.C. 233, 159 S.E. 439; Burleson v. Board of Aldermen, 200 N.C. 30,156 S.E. 241; Greene County v. R. R., 197 N.C. 419, 149 S.E. 397;Comrs. v. Assell, 194 N.C. 412, 140 S.E. 34; Henderson v. Wilmington,supra; Herring v. Dixon, 122 N.C. 420, 29 S.E. 368.
Not being a necessary expense, the levy of a tax directly or indirectly to be expended for the purpose of the operation, maintenance and improvement of a municipal airport without a vote of a majority of the qualified voters, is violative of Art. VII, sec. 7, of the Constitution of North Carolina. While the good faith of the governing body of the city of Charlotte is not here impugned, the effect is no different in an indirect appropriation and tax levy than in a direct appropriation and tax levy for an unauthorized purpose. The money collected pursuant to a tax levy for an undesignated purpose under the name of "contingent fund" is, nevertheless, money derived from an ad valorem tax. Giving it the name of "contingent fund" does not strip it of its qualities of tax money, nor can it thereby be transformed magically into the character of money "in the treasury" or "money on hand" unappropriated and subject to be used for a purpose for which a direct tax cannot be levied. This patently would authorize to be done indirectly that which the Constitution forbids to be done directly.
It will be noted that the ordinance appropriating the $5,000 in question is not predicated upon any finding or determination of the governing body that it is for a necessary governmental expense. The resolution is based upon the following premises: *Page 66
"Whereas, the said commission has been unable to derive sufficient revenue from the operation, maintenance, and upkeep of the said airport in a proper and adequate manner; and
"Whereas, additional hangar facilities are needed at said airport."
The case of Adams v. Durham, 189 N.C. 232, 126 S.E. 611, is distinguishable from the instant case. There the city had on hand a fund derived from the sale of a municipal building, and no question of taxation or credit was involved. It is there specifically pointed out that "in no event shall further liability be imposed on the city" in the construction of the new building. Here, we are dealing with a question of taxation and the use of a contingent fund derived from a tax levy. The Constitution is not to be circumvented by the simple device of raising a contingent fund by taxation and then using it in the promotion of objects for which a direct tax could not be levied.
Second: The County Fiscal Control Act (chapter 146, Public Laws 1927; C. S., 1334 [53], 1334 [76]), which provides the machinery, charts the course, and prescribes the limitations for the administration of the fiscal affairs of counties, including the budgeting for appropriations and levying of taxes to cover same, is made applicable to cities and towns by sections 65 and 67 to 71 of chapter 60 of the Public Laws of 1931.
Sec. 65 thereof, C. S., 2969 (n), reads: "All cities and towns shall be subject to and be governed by all of the provisions of the County Fiscal Control Act and acts amendatory thereof and supplemental thereto, including acts ratified at the present session of the General Assembly, except as herein otherwise provided or except as the context shows that it is not intended that such acts should be applicable to cities and towns."
Section 74 reads: "The provisions of this act shall apply to all counties, cities, and towns in this State, regardless of any provision to the contrary in any special or local act heretofore enacted."
The record fails to disclose any allegation, admission, or finding of fact that the city of Charlotte comes, or is operating within the provisions of the exceptions of the said section 65.
In section 68 there are defined the funds required for cities and towns for each of the functions of municipal government. It is there prescribed, when read in connection with the County Fiscal Control Act, that each fund for each function shall be stated separately in preparing the budget estimate for appropriation, and shall be so set up in the appropriation resolution and tax levy.
Analyzing pertinent sections of County Fiscal Control Act, as applied to cities and towns, we find that: (1) The municipal accountant shall prepare and submit to the governing body not later than the first Monday in July a "budget estimate" of: (a) The amounts necessary to be *Page 67 appropriated for the next ensuing fiscal year for the different objects of the municipality, listing each object of disbursement under the appropriate class of function as defined in section 68 of chapter 60, Laws of 1931, "which estimate shall include the amount of any deficit in any fund, andmay include an emergency estimate for each fund not greater than FIVE percent in excess of other estimates for such fund"; (b) an itemized estimate of the revenue to be available during the ensuing fiscal year, separating revenue from taxation from revenue from other sources, classifying the same under proper funds as defined in said section 68 of chapter 60, Public Laws 1931; and (c) an estimate of the amount of unencumbered and surplus revenues of the current fiscal year in each fund. C. S., 1334 (57); C. S., 2969 (o); C. S., 2969 (p).
(3) Then the governing body, not later than the fourth Monday in July, shall adopt and record on its minutes an appropriate resolution, which shall make appropriation for the several purposes of the municipality, upon the basis of the estimates and statements submitted by the municipal accountant such sums as the governing body may deem sufficient and proper, whether greater or less than the recommendation of the budget estimates; "Provided, however, that `(d) no appropriation shall be made in excess of the amount which may be raised under any constitutional or statutory limits of taxation.'" C. S., 1334 (59). This resolution becomes the chart for the municipal accountant and municipal treasurer in disbursing the city funds. C. S., 1334 (60).
(4) Before any levy of taxes is made the municipal accountant shall submit to the governing body a supplemental budget showing: "(a) The amount of any increase or decrease in each item of (1) deficits and (2) unencumbered balances and (3) surplus revenues as reported by him in the budget estimate, and (b) the amount of miscellaneous revenues collected in the preceding year from sources other than taxation, this amount to be separately classified as to funds and functions, and (c) an estimate of the amount of taxes for the current fiscal year which will not be collected in the same year. Upon the submission of the figures showing increase or decrease in deficits, the appropriation resolution shall be deemed automatically amended by adding such increase to or subtracting such decrease from the amount appropriated for the fund or function to which such deficit pertains. . . ."
(5) Thereafter, and not later than Wednesday after the third Monday in August, the governing body, by resolution to be recorded in its minutes, shall levy upon all the taxable property of the city such rate of tax as may be necessary to produce: "(a) The sum appropriated and (b) the amount of the supplemental budget estimate of taxes which will not be collected in the current fiscal year, after taking into consideration the figures contained in the budget estimates and supplemental *Page 68 budget showing surplus revenues and unencumbered balances carried over from the preceding fiscal year and the estimated miscellaneous revenues from other sources than taxation." C. S., 1334 (63).
(6) No appropriation made by the appropriation resolution, except an appropriation for general municipal expenses, shall be transferred from one fund to another fund, and no appropriation for general municipal expenses shall be transferred to any fund of any subdivision of the municipality, orvice versa. C. S., 1334 (64).
(7) Then follows provisions prescribing restrictions and limitations for contracting with reference to and disbursing the funds — with penalties for violations of the act. C. S., 1334 (65) to 1334 (72), under the County Fiscal Control Act as applied to cities and towns.
Thus, it is seen that the governing body of the city of Charlotte is required to appropriate and make tax levy for each fund or function separately. It is without authority to make an appropriation and levy a tax for a common contingent fund. For emergency purposes as to each fund for which it has the authority to levy a tax, it may appropriate an additional five per cent of the fund requirement which becomes a part of that fund requirement to be covered by subsequent tax levy. Only from the general municipal expense fund may transfer be made to any other fund — and there is no authority for an "airport fund" in the appropriation resolution.
It is worthy in passing to pause and appraise that part of the preamble to the ordinance transferring the $5,000 fund which reads: "Whereas, additional hangar facilities are needed at said airport," followed by the appropriation "to be used in further improvement of the facilities of said airport." "Hanger," in connection with an airport, is defined to be "a shed for housing aeroplanes." "Facility" is "that which facilities any action; aid;" used in plural as "facilities for trade, study, travel, etc." "Improvement" is "a valuable addition or betterment, as a building, clearing, drain, fence, etc., on land."
If the approval by the qualified voters of the purchase of an airport site be implied authority to the governing body of the city to spend tax money to build hangers, why not for concrete runways and other additions and improvements without limit, without further approval of such voters?
The judgment of the court below is
Affirmed.