Debnam v. . Chitty

FURCHES, C. J., dissenting; CLARK, J., dissenting in part. This is an action to declare invalid certain bonds issued by Murfreesboro Township, in Hertford County, and to enjoin the payment thereof. From a judgment for the plaintiff the defendant appealed. As this case stands upon demurrer, all (676) the allegations of fact contained in the complaint must be taken as true for the purposes of this appeal. However, we have not been satisfied with this legal presumption, but have personally examined the original Journal of the House of Representatives, and find that neither act was passed in accordance with the mandatory provisions of the Constitution. We will give the entry on one reading as an example. We find on one page of the Journal the following written entry:

"H. B. 948, a bill to incorporate the Murfreesboro Railroad Company, passes its third reading by the following vote, and is ordered to be sent to the Senate without engrossment." On the following page is a printed blank which, with the entries in ink, reads as follows:

"H. B. 948; S. B. _____ Messrs. Speaker (here follows the printed names of all the members of the House, with a simple dash( — ) opposite ninety-four names). Ayes, 94; nays, ____; total, ____."

The only written entries are the figures "948" after the capital letters "H. B.," the dashes opposite the names, and the figures "94" after the word "ayes." The dotted lines after the letters "H. B." and "S. B." and after the words "ayes" and "nays" and "total," are all printed. There is not the scratch of a pen after the words "nays" and "total." From this it appears that ninety-four members, whose names are marked, voted in the affirmative; while there is no statement as to those voting in the negative. If there were any members voting in the negative their names should have been entered upon the Journal, while if there were none so voting that fact should be affirmatively stated. To say that the mere failure to fill out a printed blank is an affirmative declaration that there were no nays is a proposition that does not commend itself either to our views of language or of law. If it were affirmatively stated that (677) there were no nays, or that only 94 members voted, the case would be different. Again, if the Journal gave the names of 120 members voting in the affirmative, we would take judicial cognizance of the fact that there were only 120 members of the House, and that therefore there could be no nays; but there are 26 members on the third reading and 50 members on the second reading who are not accounted for. We may know as a matter of fact that members are frequently absent, but there is no such presumption. If there were any presumption at all it would seem to be that the members of the Legislature were present during its sessions in the performance of the responsible duties for which they were elected. Aside from this we can only repeat what this Court has so often said, that where the names of the members voting in the negative are not given it must affirmatively appear on the Journal that there were none so voting. Smathers v. Commissioners, 125 N.C. 480-486;Commissioners v. DeRossett, 129 N.C. 279. Section 14 of Article II of the Constitution of this State is as follows: "No law shall be passed to raise money on the credit of the State or to pledge the faith of the State, directly or indirectly, for the payment of any debt, or to impose any tax upon the people of the State, or to allow the counties, cities or towns to do so, unless the bill for the purpose shall have been read three several times in each house of the General Assembly, and passed three several readings, which readings shall have been on three different days, and agreed to by each house respectively, andunless the yeas and nays on the second and third reading of thebill shall have been entered on the Journal." The italics are ours. This Court has uniformly held that these provisions of the Constitution are mandatory, and that any act of the Legislature passed in violation thereof is, at least to the extent of such repugnance, absolutely void. Bank v. Commissioners,119 N.C. 214; 34 L.R.A., 487; Commissioners v. Snuggs,121 N.C. 394; 39 L.R.A., 439; Charlotte v. Shepard, (678)120 N.C. 411, and 122 N.C. 602; Rodman v. Washington,122 N.C. 39; Commissioners v. Call, 123 N.C. 308; 44 L.R.A., 252; Commissioners v. Payne, 123 N.C. 432;McGuire v. Williams, 123 N.C. 349; Smathers v. Commissioners, 125 N.C. 480;Glenn v. Wray, 126 N.C. 730; Commissioners v. DeRossett, 129 N.C. 275;Black v. Commissioners, 129 N.C. 121; Hooker v. Greenville, 130 N.C. 472. In McGuire v. Williams, supra, this Court says: "It must be considered a settled rule that the provisions of the Constitution in relation to municipal indebtedness and taxation are mandatory, and will be strictly enforced by this Court. So great is their effect that any act repugnant thereto, at least to the extent of that repugnance, will be declared null and void ab initio, not only without legal effect, but without legal existence. It makes no difference when or how such unconstitutionality appears to us."

In Commissioners v. Call, 123 N.C. 308, this Court says: "An act of the Legislature passed in violation of the Constitution of the State, or in disregard of its mandatory provisions, is, to the extent of such repugnance, absolutely void; and all bonds issued thereunder bear the brand of illegality stamped upon their face by the hand of the law."

In Norton v. Shelby County, 118 U.S. 425, the Supreme Court of the United States says: "An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed." Under these authorities we are compelled to hold that the bonds in question, having been issued in clear violation of constitutional prohibitions, are null and void, and have been so ab initio. The defendant contends that the people of the township issuing the bonds are bound by the recitals therein to the effect that they were issued "in compliance with all the requirements of (679) the Constitution and laws of the State of North Carolina." This is not a recital of fact but the mere statement of a legal conclusion. This point has been directly decided both by this Court and the Supreme Court of the United States. We have repeatedly held that all the constitutional requirements are mandatory, and not directory, and that where there is no lawful power to issue bonds such want of power can neither be cured by recitals nor eliminated by estoppels.Commissioners v. DeRossett, supra; Commissioners v. Call,supra. In Dixon County v. Field, 111 U.S. 83, 92, it was held that the estoppel arising from recitals in the face of the bonds never extended to nor covered matters of law, and could arise only "upon matters of fact which the corporate officers had authority to determine and certify." In County of Davies v.Huidekoper, 98 U.S. 98, 100, the Court says: "There must be indeed power which, if formally and duly exercised, will bind the county or town. No bona fides can dispense with this, and no recital can excuse it." In U.S. v. Macon County Court,99 U.S. 582, the Court says: "The difficulty lies in the want of original power. While there has undoubtedly been great recklessness on the part of the municipal authorities in the creation of bonded indebtedness, there has not been unfrequently grosscarelessness on the part of purchasers when investing in such securities. Every purchaser of a municipal bond is chargeable with notice of the statute under which the bond was issued. If the statute gives no power to make the bond the municipality is not bound." The rule has been clearly laid down in the leading case of Anthony v. Jasper, 101 U.S. 693, where Chief JusticeWaite says: "Dealers in municipal bonds are charged with notice of the laws of the State granting power to make the bonds they find on the market. This we have always held. If the power exists in the municipality, the bona fide holder is (680) protected against mere irregularities in the manner of its execution, but if there is a want of power, no legal liability can be created."

The defendant contends that "the plaintiff is estopped from denying the validity of said bonds and coupons by the judgment in the controversy of W. T. Brown against the Board of County Commissioners of Hertford County." That case was submitted upon an agreed state of facts in a controversy without action, and the validity of the act under section 14 of Article II of the Constitution was in no way involved. Not only was it not decided, but it was not even alluded to in any stage of the proceedings. Therefore it cannot operate as an estoppel under the uniform decisions of this Court. In Glenn v. Wray, 126 N.C. 730, this Court says: "The plaintiffs are not estopped by the decision in Claybrook v. Commissioners, 117 N.C. 456. That was an action to impeach the validity of the bonds now in question, but upon the ground of irregularity in the election, and that alone. The decision therein is conclusive that the bonds are not invalid on that ground. The present action is to attack their validity upon the entirely different ground that the act authorizing an election was not passed in the mode required by the Constitution. This was not within the scope of the litigation in Claybrook v. Commissioners, and has not been passed upon. Hence it is not res judicata. . . . Of course the payment of interest by the commissioners would be no estoppel. Commissionersv. Payne, 123 N.C. 432, and cases cited at page 489." In Slocumb v. Fayetteville, 125 N.C. 362, JusticeFurches, speaking for the Court, says: "The other important question is this: It is not alleged or denied in either the complaint or answer whether the acts, chapter 18 and chapter 118, were passed and ratified as required by Article II, section 14, of the Constitution of this State, or not. This must have been done to make the bonds valid. And the determination of thiscase will not prevent the question from hereafter being presented; and while the judgment in this case might (681) work an estoppel, we do not say it will as to the plaintiff Slocumb; it certainly would not as to the other persons, not parties to this action. . . . We therefore affirm the judgment appealed from. But if these acts were not passed according to the constitutional provisions cited above, parties taking the bonds may find no protection in this judgment."

The same caution is reiterated in Black v. Commissioners, 129 N.C. 121, on page 128.

It is contended that the plaintiff is estopped by the judgments in the United States Circuit Court. In no event could these judgments operate as an estoppel in any degree beyond the coupons then actually due and embraced in the judgments. Nesbitt v. Riverside District, 144 U.S. 60. As to such coupons, a majority of this Court think they are res judicata.

The courts of this State will never sanction the repudiation of a lawful debt; but we are here to declare the law and not to make it. If any hardship results we can only deplore what we are unable to remedy. The Constitution of this State is plenary notice to the world of its organic law. There can be no bona fide holders of unconstitutional obligations, nor can ignorance of public statutes and legislative journals be deemed otherwise than willful or negligent. The Journals are published for the information of the public, and are widely distributed and easily accessible, fully as much so as the public records of a county. Surely no one would be heard to say that he was the bona fide owner of a piece of land simply because he held a deed thereto, when an inspection of the records would show that his grantor had no power to convey.

We are frequently reminded of the hardships arising from declaring bonds invalid after they have been sold and paid for. We see no way of deciding upon their validity before the (682) question is presented to us, and this question can be, and frequently has been, presented and decided before the issuing of the bonds. Charlotte v. Shepard, 120 N.C. 411, andCommissioners v. DeRossett, 129 N.C. 275. If parties prefer to take the risk of buying the bonds before the determination as to their legality, they cannot complain of the consequences.

The decisions of this Court upon these matters have been uniform, and were foreshadowed by those upon kindred subjects.

In S. v. Patterson, 98 N.C. 660, it was held, quoting the syllabus: "The provisions of the Constitution, in respect to the forms and methods to be observed by the General Assembly in the enactment of laws, are mandatory."

In the opinion the Court says, on pages 262 and 264: "The answer to these and like questions must be, that requirements of the Constitution shall prevail and be observed; and when it prescribes that a particular act or thing shall be done in a way and manner specified, such direction must be treated as a command, and an observance of it essential to the effectiveness of the act or thing to be done. Such act cannot be complete — such thing is not effectual — until done in the way and manner so prescribed.

"The purpose of thus prescribing an enacting clause — `the style of the acts' — is to establish the act — to give it permanence, uniformity and certainty — to identify the act of legislation as of the General Assembly, to afford evidence of its legislative, statutory nature, and to secure uniformity of identification, and thus prevent inadvertence, possible mistake and fraud. Such purpose is important of itself, and as it is of the Constitution, a due observance of it is essential. The manner of the enactment of a statute is of its substance. This is so in the nature of the matter as well as because the Constitution makes (683) it so." In Commissioners v. Coler, 180 U.S. 506, 517, the Court, after quoting from Patterson's case, refers to the subsequent decisions of this Court as follows: "After the decision inS. v. Patterson, rendered as above stated before the bonds in suit were issued, it might have been anticipated that the same Court would hold as they did in the subsequent cases above cited, that the entering of the yea and nay vote on the second and third readings of an act of the class mentioned in section 14 of Article II of the State Constitution was a condition precedent that could not be dispensed with under any circumstances."

The bonds now in question are dated 19 September, 1887; but it appears from the record that they were not actually issued until after the determination of the Brown suit in 1888. Therefore they were issued after the decision in Patterson's case, which was determined in 1887. The same principle was decided in practical effect in Galloway v. R. R., 63 N.C. 147, determined by this Court at its January Term, 1869, less than one year after the adoption of the Constitution. There an act directing the State Treasurer to issue certain bonds of the State to the Chatham Railroad Company was declared void on the ground that the General Assembly had no power to pass it without submitting the subject to a vote of the people. In the opinion of the Court, delivered by Pearson, C. J., among the constitutional provisions held to be mandatory are expressly mentioned those of section 14, Article II, as far as they applied to the State, then the party in interest. If the provisions applying to the State are mandatory, those in the same section applying to counties and cities must be equally so. The following is an extract, beginning on page 152 of the opinion: "In the second clause the two exceptions have the effect to make it read, `Shall have no power to give or lend the credit of the State in any casewhatever, except,' etc., `unless the subject be submitted to a vote of the people'; so the intention to restrict the (684) power of the General Assembly in regard to increasing the public debt in any mode or manner is as strongly expressed as the English language can do it. In matters of construction the Court is not to confine itself to the particular section, but is to consider the entire instrument in order to find the general purpose and the object arrived at.

"'To maintain the honor and good faith of the State untarnished the public debt regularly contracted before and since the rebellion shall be regarded as inviolable, and never to be questioned.' Article I, section 6. `No law shall be passed to raise money on the credit of the State, directly or indirectly, for the payment of any debt, etc., unless the bill is read three times on three different days, and unless the yeas and nays on the second and third readings of the bill shall have been entered on theJournal.' Article II, section 14. (The italics are ours.) `The General Assembly shall,' etc., Article V, section 4. Here we have a declaration of a purpose to maintain the honor of the State and pay off the public debt — a rebuke of hasty legislation in reference to raising money and pledging the faith of the State — and an announcement that although the debt is so large that it cannot be paid off for years, yet the interest must be paid promptly and a sinking fund provided for the discharge of the principal. This purpose could not be effected without putting a stop to the increase of the public debt by restricting the power of the Legislature." In that case it was not alleged that the yeas and nays were not entered upon the Journal, and hence that question was not directly at issue; but the inclusion of section 14, Article II, among the mandatory provisions of the Constitution is a clear intimation of what the Court would have decided had the question been involved.

In Scarborough v. Robinson, 81 N.C. 409, the Court, at the close of its opinion, expressly disclaims any intention of (685) passing upon the effect of Article II, section 14, of the Constitution, as it was not before them. The uniformity, in letter and spirit, of the decisions of this Court through so long a series of years has created a settled rule of law which we deem it our duty to follow.

The judgment of the court below is

Modified and affirmed.