Rider v. Lenoir County

78 S.E.2d 745 (1953) 238 N.C. 632

RIDER et al.
v.
LENOIR COUNTY et al.

No. 377.

Supreme Court of North Carolina.

November 25, 1953.

R. S. Langley, Matt H. Allen, and John G. Dawson, Kinston, for plaintiff appellees.

Chas. B. Aycock, R. A. Whitaker, and Thos. J. White, Kinston, for defendant appellants.

BARNHILL, Justice.

Plaintiffs first filed an injunction bond in the sum of $200. Thereafter, in compliance with an order of the court, they filed bond in the sum of $15,000, with the National Surety Corporation as surety. This constituted a novation and served to discharge the original bond. So then, the first question posed for decision is this: Are the plaintiffs and their surety, the National Surety Corporation, liable in any amount to defendants by reason of the wrongful issuance of the temporary restraining order herein? We must answer in the negative.

It is true the plaintiffs, in seeking to prevent the execution of the proposed plan for providing additional hospital facilities, attacked the bond election and we held that the election was in all respects valid. Even so, the real objective of the action was to prevent the expenditure of $138,713.80 of county funds in furtherance of the hospital facilities project, in addition to the $465,000 the voters had been advised would be expended. We reversed the order vacating the restraining order. Thus the restraining order is still in full force and effect.

In this connection, the defendants have either overlooked or misconstrued the language used in the closing paragraph of our former opinion. We gave defendants an opportunity to elect to "(1) consider the feasibility of conforming the proposed project to the limits authorized by the voters, or (2) submit another or other proposals to the voters." We directed, however, that "Meanwhile, the temporary restraining order will be deemed and treated as in force and effect to the extent of staying disbursement of funds in furtherance of the proposed hospital enlargement project and preventing further action on the part of the defendants in furtherance of the construction project, except in conformity with this opinion." Thus we, in effect, made permanent the order restraining the defendants from any further action in furtherance of the original construction project. Rider v. Lenoir County, 236 N.C. 620, 73 S.E.2d 913. In no sense was the original restraining order wrongful or unlawful. A correct interpretation of our opinion discloses that we so held. Therefore, defendants are not now in position to insist that they are entitled to recover any amount of plaintiffs and their surety upon their injunction bond.

Plaintiffs make the somewhat novel contention that they should receive credit for the saving in the cost of construction arising out of the delay occasioned by this lawsuit. They say that during this delay economic conditions changed to the extent the defendant county was able to effect a saving of $133,286.20 when it relet the contract in accord with the opinion of this Court. They also assert—and the court below found as a fact—that the plaintiffs, by this action, have "restored" to the general fund $138,713.80, thus effecting a total saving to the taxpayers of the county of a total of $272,000. They do not seek to participate in this saving. They only request that they be allowed therefrom a sufficient amount to pay the attorneys employed by them.

The court below made an allowance of expense money, as requested by plaintiffs, to which the defendants excepted. Their assignment of error based on this exception raises this second question for decision: Are the plaintiffs entitled to an allowance out of the $138,713.80, the defendants proposed to expend on the original project, as expense money to be used to pay counsel employed to prosecute this action? This question must likewise be answered in the negative.

Counsel fees in favor of the successful litigant to be taxed as a part of the costs were abolished in this State in 1879. Midgett v. Vann, 158 N.C. 128, 73 S.E. 801; Wachovia Bank & Trust Co. v. Schneider, 235 N.C. 446, 70 S.E.2d 578. Our present statute, G.S. § 6-21, by implication, authorizes attorney fees in certain enumerated actions to be taxed as a part of the costs, to be paid out of the fund which is the subject matter of the action. Cases such as this are not included.

Where the proceeding is essentially in rem and the services inure to the benefit of those who have an interest in the property and the property is recovered or preserved by the action or proceeding, expense money is oftentimes allowed. Likewise, such allowance is made in certain equity cases prosecuted in behalf of a class, when the successful prosecution of the cause inures to the benefit of the members of the class. Mordecai v. Devereux, 74 N.C. 673; Lightner v. Boone, 222 N.C. 421, 23 S.E.2d 313; Annotation 49 A.L.R. 1149, 107 A.L.R. 751.

But we are interested here only in the rule which applies when a taxpayer successfully prosecutes an action on behalf of all the taxpayers of a subordinate governmental unit to protect, preserve, or recover a fund belonging to the governmental unit. This subject is fully discussed by Johnson, J., speaking for the Court, in Horner v. Chamber of Commerce, 236 N.C. 96, 72 S.E.2d 21. For us now to review and reiterate what is there said would be a work of supererogation. We need only call attention to the rule there stated which prevails in this State in respect to the allowance of expense money to cover the fees of counsel in an action instituted by a taxpayer or group of taxpayers for the benefit of all the taxpayers within the bonds of the municipality.

The rule as there stated comes to this: When, in an action instituted by a taxpayer to recover a fund which has been unlawfully or wrongfully expended by a municipality, it is made to appear that (1) the fund was in fact wrongfully expended, (2) the governing board of the municipality refused, on demand, to institute an action to recover the same, (3) as a result of which the taxpayer instituted his action to recover for the benefit of the citizens of the municipality, and (4) obtained judgment (5) which has been paid, in whole or in part, and the fund is thus restored to the public treasury, the court may allow plaintiff expense money to the extent of reasonable attorney fees, to be paid out of the fund so recovered.

In that case, Horner v. Chamber of Commerce, supra, this Court expressly limited the application of the rule to cases in which all these facts—especially the fact the money had been actually restored—are made to appear. Fox v. Lantrip, 169 Ky. 759, 185 S.W. 136; Wachovia Bank & Trust Co. v. Schneider, supra.

The facts stated in the petition for an allowance of expense money in this case fail to meet the test prescribed by that rule. The defendant had the fund here involved in its general fund account when the bond order was adopted; the fund has never been expended; the proposed expenditure was for a public purpose; and, finally, no sum has been restored to the general fund of the county; nor has the public treasury been enriched by this action. Instead, the particular fund here involved has remained in the general fund throughout this litigation.

That the county, due to the delay caused by this action, has been able to let a contract which effects a saving of more than $100,000 is incidental. That was not the subject matter of the action, and the saving thus effected cannot form the basis for the allowance of expense money.

In this connection it is well to note that we did not sustain the order restraining the defendants from expending $138,713.80 on the proposed project on the ground the county was without authority to expend surplus nontax county funds in furtherance of the plan to provide additional hospital facilities. It was sustained for the reasons such expenditure (1) would be contrary to the representations contained in the bond order limiting the amount of county funds to be expended for that purpose; (2) would materially vary the project after the issuance of bonds in accord with the bond resolution had been authorized by the voters; and (3) would constitute a breach of faith with the electorate of the county. Rider v. Lenoir County, supra.

In our opinion the costs of the action should be taxed against the defendant county. To this extent the exception to the taxation of the costs is without merit and is overruled.

The other exceptive assignments of error are without sufficient merit to require discussion.

The court below erred in allowing plaintiffs expense money to the extent of reasonable attorney fees. Likewise, the costs should have been taxed against the defendant county. The judgment entered must be so modified. In all other respects said judgment is affirmed.

Modified and affirmed.