Horton v. Redevelopment Commission of High Point , 259 N.C. 605 ( 1963 )

131 S.E.2d 464 (1963) 259 N.C. 605

W. W. HORTON, A. G. Whitener, Whitener Realty Co., Inc., Woodworkers Supply Co., Inc., et al., on Behalf of themselves and all other Taxpayers of the City of High Point,
v.
REDEVELOPMENT COMMISSION OF HIGH POINT et al.

No. 599.

Supreme Court of North Carolina.

June 14, 1963.

Harriss H. Jarrell, High Point, for plaintiff appellants.

Knox Walker and Haworth, Riggs, Kuhn & Haworth, by John Haworth, High Point, for defendant appellees.

PARKER, Justice.

This is a summary of the crucial allegations of the amended complaint, necessary for a decision of this appeal:

The City Council of the city of High Point enacted an ordinance approving the creation of the Redevelopment Commission of High Point. Thereafter, a certificate of incorporation was issued by the Secretary of State of North Carolina for the Redevelopment Commission of High Point, in which its members were named.

This Redevelopment Commission has prepared and caused to be prepared a redevelopment plan for East Central Urban Renewal Area, Project No. N. C. R-23, which has been approved and adopted by the City Council of the city of High Point.

The City Council of the city of High Point did not have in existence a legal plan or method of financing the acquisition of the renewal area in the urban renewal plan, Project No. N. C. R-23, at the time of approving said plan as required by G.S. § 160-463, and has no legal plan now for financing the project.

The plan, as approved, is too broad in scope to qualify as slum clearance, in that the plan includes the construction of a million dollar pedestrian plaza, and some of the city of High Point's best commercial and business districts, namely, East High Street, South Wrenn Street, and East Commerce Street.

The City Council of the city of High Point has agreed that the city of High Point will provide an amount in cash, streets, utilities, etc., which will not be less than one-third of the net cost of this redevelopment plan, and the city of High Point has paid the salary of the Urban Renewal Director out of ad valorem tax money.

In pursuance of this plan, the Redevelopment Commission of High Point is proceeding with the plan, and that ad valorem tax monies have been spent, and will be spent in carrying out this plan, and that this plan cannot be finished without the expenditure of substantial sums of money. That the expenditure of this money derived from taxation, spent and to be spent, for carrying out the purpose of this plan is not a necessary expense of the city of High Point within the purview of Article VII, section 7, of the North Carolina Constitution. That no vote by the citizens of High Point has been had on the question of expending money derived by taxation for putting this plan into effect. To carry out this plan will require the city of High Point, and its agencies, to levy taxes and issue bonds, and that to do this to carry out this plan without the approval of the majority of those who shall vote in an election held for such purpose contravenes Article VII, section 7, and Article V, sections 3 and 4, of the North Carolina Constitution.

G.S. §§ 160-466(d) and 160-470 contravene Article VII, section 7, of the North Carolina Constitution. There is an unlawful delegation of authority by the General Assembly to the Redevelopment Commission of High Point in violation of Article II, section 1, of the North Carolina Constitution.

The city of High Point, and its agencies, are contracting debts, pledging its faith, lending its credit, levying ad valorem taxes, and spending ad valorem tax money for the consummation of this redevelopment plan, even though the expense of carrying into effect this plan is not a necessary expense of the city of High Point. The city of High Point has appropriated $5,000 in ad valorem tax monies for urban renewal purposes.

G.S. § 1-151 requires us to construe liberally a pleading challenged by a demurrer with a view to substantial justice between the parties. The demurrer to the amended complaint admits, for the purpose of testing the sufficiency of the pleading, the truth of factual averments well stated and relevant inferences of fact reasonably deducible therefrom. But it does not admit inferences or conclusions of law asserted by the pleader. Little v. Wilson Oil Corp., 249 N.C. 773, 107 S.E.2d 729; Hedrick v. Graham, 245 N.C. 249, 96 S.E.2d 129; Strong's N. C. Index, Vol. 3, Pleadings, pp. 625-627.

The demurrer admits, for the purpose of challenging the sufficiency of the amended complaint, allegations of fact therein alleged to this effect: The city of High Point, and its agency the Redevelopment Commission of High Point, have prepared or caused to be prepared a far-reaching urban renewal project requiring the expenditure of large sums of money in that the project or plan includes the construction of a million dollar pedestrian plaza, and also includes in the project some of the city's best commercial and business districts on East High Street, South Wrenn Street, and East Commerce Street. The City Council of the city of High Point has agreed that the city of High Point will provide an amount in cash, streets, utilities, etc., which will not be less than one-third of the net cost of this redevelopment plan. These allegations of fact permit the reasonable inference that the total cost of completing East Central Urban Renewal Area, Project No. N. C. R-23, will amount to several millions of dollars. The city of High Point has paid the salary of the Urban Renewal Director out of ad valorem tax money, and has appropriated $5,000 in ad valorem tax monies for urban renewal purposes. The city of High Point, and its agencies, are contracting debts, pledging its faith, lending its credit, levying ad valorem taxes, and spending ad valorem tax money for the consummation of this redevelopment plan. No vote has been had on the question of expending money derived by taxation for putting this plan into effect, or for the city's contracting debts, pledging its faith and lending its credit, and levying taxes for putting this plan into effect.

Article VII, section 7, of the North Carolina Constitution reads:

"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 the necessary expenses thereof, unless approved by a majority of those who shall vote thereon in any election held for such purpose."

The necessity of a rigid observance of this constitutional provision has been pointed out and reiterated in our decisions, and emphasized by G.S. § 160-62, which reads:

"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 officer of the same, except for the necessary expenses thereof, unless by a vote of the majority of the qualified voters therein."

This Court in Redevelopment Commission of Greensboro v. Security National Bank, 252 N.C. 595, 114 S.E.2d 688, has determined that lands acquired for the purposes and in the manner set forth in G.S. Chapter 160, Subchapter VII, Article 37, Urban Redevelopment Law, meet the public purpose test. To the same effect, Redevelopment Commission of Greensboro v. Hagins, 258 N.C. 220, 128 S.E.2d 391. The question of whether such an acquisition is for a necessary purpose relating to some phase of municipal government so as to enable a municipality to carry on the work for which it was organized and given a portion of the State's sovereignty, and necessitating the ordinary and usual expenditures reasonably required to enable a municipality to perform its duties as a part of the State Government was expressly reserved for determination in the Hagins case. See also the concurring opinion by Bobbitt, J., in the Bank case.

"Our decisions uniformly hold that what are necessary expenses for a municipal corporation for which it may contract a debt, pledge its faith, or loan its credit and levy a tax without an approving vote of a majority of those who shall vote thereon in an election held for such purpose, is a question for the Court." Wilson v. High Point, 238 N.C. 14, 20, 76 S.E.2d 546, 550.

In Henderson v. Wilmington, 191 N.C. 269, 277, 132 S.E. 25, 29, the Court held that the acquisition of free wharves and terminals that may be of advantage to the city's local business interests was not a necessary governmental expense, and without the approval of its voters the city is inhibited by Article VII, section 7, of the State Constitution from issuing bonds for such acquisition. In its opinion, the Court said:

"In defining ``necessary expense,' we derive practically no aid from the cases decided in other states. We have examined a large number of such cases apparently related to the subject, and in each one we have found some fact or feature or constitutional or statutory provision antagonistic to, or at variance with, the section under consideration. We must rely upon our own decisions."

At page 278, 132 S.E. at page 30 the Court further said: "The cases declaring certain expenses to have been ``necessary' refer to some phase of municipal government. This court, so far as we are advised, has given no decision to the contrary."

In Jones v. Madison County Commissioners, 137 N.C. 579, 599, 50 S.E. 291, 298, Hoke, J., gives the following definition of necessary expenses: "They involve and include the support of the aged and infirm, the laying out and repair of public highways, the construction of bridges, the maintenance of the public peace and administration of public justice—expenses to enable the county to carry on the work for which it was organized and given a portion of the state's sovereignty." In a subsequent decision the same learned judge observes that the term "necessary expense" more especially refers "to the ordinary and usual expenditures reasonably required to enable a county to properly perform its duties as part of the state government." Keith v. Lockhart, 171 N.C. 451, 456, 88 S.E. 640, 642. This feature is again stressed in Ketchie v. Hedrick, 186 N.C. 392, 119 S.E. 767, 31 A.L.R. 491, in which Clark, C.J., delivering the opinion of the unanimous Court said: "But all these cases extending the meaning of the words ``necessary expenses' were due to the enlarged scope of governmental expenses causing a broader vision and a very proper growth in the recognized needs and requirements of municipal government. They were not based upon any idea that ``necessary expenses' would take in matters which were not required as necessary governmental expenses." In Green v. Kitchin, 229 N.C. 450, 457, 50 S.E.2d 545, 550, Ervin, J., speaking for a majority of the Court said: "This Court has uniformly held that where the purpose for which a proposed expense is to be incurred by a municipality is the maintenance of public peace or administration of justice, or partakes of a governmental nature, or purports to be an exercise by the municipality of a portion of the State's delegated sovereignty, the expense is a necessary expense within the Constitution, and may be incurred without a vote of the people."

Approved as "necessary expenses" for a municipal corporation within the purview of Article VII, section 7, of the State Constitution have been the following: Repairing, maintaining and paving public streets, Jones v. New Bern, 152 N.C. 64, 67 S.E. 173; providing a city with a waterworks plant, a sewerage system, and for grading and paving its streets, Greensboro v. Scott, 138 N.C. 181, 50 S.E. 589; Bradshaw v. High Point, 151 N.C. 517, 66 S.E. 601; a market house, Swinson v. Mount Olive, 147 N.C. 611, 61 S.E. 569; a municipal building, Hightower v. Raleigh, 150 N.C. 569, 65 S.E. 279; a municipal power plant, Williamson v. High Point, 213 N.C. 96, 195 S.E. 90; special training of a policeman, Green v. Kitchin, supra. For a list of many more cases to the same effect see G.S. Vol. 4A, pp. 105-106 of an annotation to Article VII, section 7, of the State Constitution; and also 18 N.C.L.R. p. 93 et seq.

The following have been held not as "necessary expenses" within the purview of Article VII, section 7, of the State Constitution: a swimming pool, Greensboro v. Smith, 239 N.C. 138, 79 S.E.2d 486; municipal parks and recreational facilities, Purser v. Ledbetter, 227 N.C. 1, 40 S.E.2d 702; support and maintenance of James Walker Memorial Hospital, Board of Managers v. Wilmington, 237 N.C. 179, 74 S.E.2d 749; a hospital, Sessions v. Columbus County, 214 N.C. 634, 200 S.E. 418; Palmer v. Haywood County, 212 N.C. 284, 193 S.E. 668, 113 A.L.R. 1195; Burleson v. Board of Aldermen, 200 N.C. 30, 156 S.E. 241; Nash v. Monroe, 198 N.C. 306, 151 S.E. 634; a public library, Westbrook v. Southern Pines, 215 N.C. 20, 1 S.E.2d 95; Jamison v. Charlotte, 239 N.C. 682, 80 S.E.2d 904; an airport, Greensboro-High Point Airport Authority v. Johnson, 226 N.C. 1, 36 S.E.2d 803; a chamber of commerce, Ketchie v. Hedrick, supra; a drill tower for firemen, Wilson v. Charlotte, 206 N.C. 856, 175 S.E. 306. See also, Wilson v. High Point, supra.

The ultimate result, which our Urban Redevelopment Law, G.S. § 160-454 et seq., seeks to achieve, is to eliminate the injurious consequences caused by a blighted area in a municipality and to substitute for them a use of the area which it is hoped will render impossible future blight and its injurious consequences. This is in its broad purpose a preventive measure. As the Court said in Redevelopment Commission v. Bank, supra: "It may be that the measure [urban redevelopment project] may prove eventually to be a disappointment, and is ill advised, but the wisdom of the enactment is a legislative and not a judicial question." In our opinion, and we so hold, the expenses incurred, or to be incurred, by a municipality in putting into effect an urban redevelopment plan, pursuant to the authority vested in it by our Urban Redevelopment Law, are not expenses incurred, or to be incurred, by a municipality in the maintenance of public peace or administration of justice, do not partake of a governmental nature, and do not purport to be an exercise by a municipality of a portion of the State's delegated sovereignty, and consequently are not "necessary expenses" within the purview of Article VII, section 7, of the North Carolina Constitution. Any provisions of G.S. § 160-466(d) and 160-470 to the effect that bonds may be sold and issued by a redevelopment commission for the purpose of carrying out the provisions of an urban redevelopment plan or project under the provisions of our Urban Redevelopment Law, or that any municipality located within the area of such a commission may appropriate funds to a redevelopment commission for the purpose of aiding such a commission in carrying out any of its powers and functions under our Urban Redevelopment Law, and to obtain funds for this purpose, the municipality may levy taxes, and may in the manner prescribed by law issue and sell its bonds, without the approval of a vote of the qualified voters in the municipality, are repugnant to the provisions of Article VII, section 7, of the North Carolina Constitution. "Statutory requirements, in all events, must be made to square with the provisions of the organic law, or else disregarded." Sessions v. Columbus County, supra. The trial court erred in sustaining the demurrer to the amended complaint.

The amended complaint alleges there is an unlawful delegation of authority by the General Assembly to the Redevelopment Commission of High Point in violation of Article II, section 1, of the North Carolina Constitution. In Redevelopment Commission v. Bank, supra, the Court affirmed the constitutionality of our Urban Redevelopment Law. In this case the Court said: "In our opinion, and we so hold, the Urban Redevelopment Law does not confer any illegal delegation of legislative power upon petitioners in violation of Article II, Section 1, of the North Carolina Constitution, as contended by respondent."

In our opinion the allegations in the amended complaint to the effect that the City Council of the city of High Point did not have in existence a legal plan or method of financing the acquisition of the renewal area in the urban renewal plan, Project No. N. C. R-23, at the time of approving said plan as required by G.S. § 160-463, and has no legal plan now for financing the project, are conclusions of law. For the necessity of having such a plan in order to proceed with the project, see Redevelopment Commission v. Hagins, supra.

The order of the lower court sustaining the demurrer to the amended complaint is

Reversed.