Webb v. Port Commission of Morehead City

OoNNon, J.

It is contended on behalf of the plaintiffs, on their appeal to this Court, that chapter 75, Private Laws of North Carolina, Session 1933, is unconstitutional and void, because by its enactment the General Assembly has undertaken to create a corporation by a special act in violation of the prohibition of section 1 of Article VIII of the Constitution of North Carolina. If this contention is sustained, the judgment of the Superior Court is erroneous in all respects, and must be reversed. If, however, the act is constitutional and valid, the Port Commission of Morehead City is a corporation duly created and organized under the laws of this State, with such powers as are conferred upon said corporation by the General Assembly in the exercise of its valid legislative power. In that case, the validity of these powers as set out in the act, is presented by the plaintiffs’ exception to the judgment, and must be determined by this Court in disposing of this appeal. If some of these powers are valid, and others invalid, because of constitutional prohibitions, tbe judgment must be modified and affirmed. If all tbe essential powers conferred by tbe act on tbe Port Commission of Morebead City, as a corporation, are valid, tbe judgment must be affirmed. Tbus tbe primary question involved in tbis appeal is wbetber tbe act of tbe General Assembly creating tbe corporation is unconstitutional and void, as contended on behalf of tbe plaintiffs.

Section 1 of Article VIII of the Constitution of North Carolina, is as follows:

“Section 1. Corporations under General Laws. No corporation shall be created, nor shall its charter be extended, altered, or amended by special act, except corporations for charitable, educational, penal or reformatory purposes that are to be and remain under tbe patronage and control of the State; but the General Assembly shall provide by general laws for the chartering and organization of all corporations and for amending, extending and forfeiture of all charters, except those above permitted by special act. All such general laws and special acts may be altered from time to time or repealed; and tbe General Assembly may at any time by special act repeal tbe charter of any corporation.”

Whether or not chapter 75, Private Laws of North Carolina, Session 1933, is a special act within tbe meaning of section 1 of Article VIII of the Constitution, is to be determined not by its form or by its publication as a private act, but by its purpose as disclosed by its language, and by what in the ordinary course of things must necessarily be its ojieration and effect. R. R. v. Cherokee County, 177 N. C., 86, 97 S. E., 758; Hancock v. R. R., 124 N. C., 222, 32 S. E., 679. Whether a statute is public or private, general or special, within tbe meaning of a constitutional provision affecting its validity for that reason, depends upon its purpose as shown by its contents, and not upon tbe judgment of a public official, who has directed its publication in the performance of an administrative duty imposed upon him by statute. C. S., 7659.

And so, whether or not the corporation created by chapter 75, Private Laws of North Carolina, Session 1933, and known as the Port Commission of Morebead City, is such a corporation as tbe General Assembly is prohibited from creating by section 1 of Article VIII of tbe Constitution, is to be determined by tbe purposes for which said corporation was created, and the powers which are conferred upon said corporation by the act, and not by a strict and literal construction of tbe word as used in said section. It has been uniformly held by this Court since section 1 of Article VIII was ratified as an amendment to tbe Constitution, that tbe prohibition contained in the section refers to private or business corporations, and not to public or gwosi-public corporations created by tbe General Assembly, as governmental agencies with power to perform governmental functions. Holmes v. Fayetteville, 197 N. C., 740, 150 S. E., 624. In that case it is said: “It has been lield that this section applies only to private or business corporations and not to those of a public or giwi-public nature, such as cities, towns, and counties. Kornegay v. Goldsboro, 180 N. C., 441, 105 S. E., 187. A municipality furnishing water or light renders service for a public purpose, and the fact that the water or service is furnished for individual consumption or the use of the inhabitants does not detract from the public service. Private purposes may be served incidentally, but this does not destroy the public character of the corporation or municipality. 3 Dillon (5 ed.), see. 1300.” The suggestion to this effect was first made in Board of Education v. Comrs., 174 N. C., 47, 93 S. E., 383, and was subsequently approved in Mills v. Comrs., 175 N. C., 215, 93 S. E., 481. It may be that in neither of these cases was the question directly presented. The question was, however, directly presented and decided by this Court in Kornegay v. Goldsboro, 180 N. C., 441, 105 S. E., 187, and in Dickson v. Brewer, 180 N. C., 403, 104 S. E., 887. In Kornegay v. Goldsboro, supra, it was held that section 1 of Article YIII of the Constitution must be construed in connection with sections 2 and 3 of said article. Applying this principle, it was held that the word “corporation,” used in section 1 of Article YIII, must be construed as meanin'g^a corporation created for private or business purposes.

An examination of all the provisions of chapter 75, Private Laws of North Carolina, Session 1933, discloses that the corporation created by said act, to be known as the Port Commission of Morehead City, is not a private or business corporation, but is a public corporation, created by the General Assembly as an agency of the State to perform a well recognized governmental function, to wit: to provide facilities for the transportation of goods, wares and merchandise both into and out of the State by means of carriers over land and water. These facilities will not be constructed, maintained or operated, under the terms of the act, for private gain, but solely in the public interest. Eevenues derived from the operation of the facilities will be devoted exclusively to the payment of the expense of their operation and maintenance, and of the interest on the bonds, and of the bonds, at their maturity, which the corporation is authorized to issue to procure funds to defray the expense of constructing, maintaining and operating the said facilities. For these reasons, the statute is not a special act within the meaning of section 1 of Article YIII of the Constitution of this State, nor is the Port Commission of Morehead City such a corporation as the General Assembly of this State is prohibited from creating by said section.

The contention that chapter 75, Private Laws of North Carolina, Session 1933, is unconstitutional and void, because its enactment was in violation of section 1 of Article VIII of tbe Constitution of North Carolina, is not sustained. There was no error in the judgment of the Superior Court that said act is constitutional and valid. Its enactment was not in violation of any prohibition of the Constitution of this State.

The Port Commission of Morehead City is a corporation duly created by the General Assembly of this State, in the valid exercise of its legislative power. As such corporation, the said commission has the power to construct, maintain and operate the facilities described in the act, and to charge, and collect fees and tolls from those who avail themselves of the service provided by the said facilities. The revenues derived from the operation of said facilities must be applied solely and exclusively to the payment of the expenses incurred by the commission in operating, maintaining and constructing the said facilities. No part of said revenues can be lawfully applied or appropriated to any other purpose. Under the terms of the act, none of said revenues will be paid to the State of North Carolina, to the town of Morehead City, or to any municipality of the State of North Carolina, unless, of course, the State or some of its municipalities shall become holders of the bonds, which may be issued by the said Port Commission.

The Port Commission of Morehead City, as a corporation duly created and organized under the laws of this State, has the power, expressly conferred upon the corporation, to issue and sell its bonds for the purpose of procuring funds with which to 'pay for the construction, maintenance and operation of the facilities which the said commission is authorized to construct, maintain and operate at Morehead City. These bonds will not be obligations of the State of North Carolina, of the town of Morehead City, or of any other municipality of this State.

The credit of neither the State, nor of the town of Morehead City, nor of any other municipality of this State, is pledged for the payment of said bonds, or of the interest on the said bonds. The bonds may be issued only on the credit of the Port Commission of Morehead City, as a corporation. The interest on the bonds, and the bonds, as they shall mature, will be paid only out of revenues derived from the operation of the facilities which the Port Commission is authorized to construct, maintain and operate at Morehead City. The provision in the act by which the Port Commission was created that its property and the bonds that may be issued and sold as authorized by the act shall be exempt from taxation by the State, or any of its political subdivisions, is valid. The General Assembly has the power to so provide, for the reason that the property of the Port Commission will be held, and the bonds will be issued solely for public purposes. Whatever doubt there may be as to the validity of this provision, by reason of section 3 of Article V of the Constitution of this State, must he, under well settled principles of constitutional construction, resolved in favor of its validity. Certainly, if the bonds are sold to an agency of the United States Government, as contemplated by the act, the provision is valid so long as the bonds are held by such agency, or by any person, firm or corporation holding the same by purchase from such agency. The provisions of the act, with reference to the hoard of commissioners of the town of Morehead City, the Municipal Finance Act of North Carolina, or the Local Government Commission of this State, do not affect the validity of bonds which may he issued and sold by the Port Commission to an agency of the United States Government. These provisions, applicable only in certain contingencies, are merely a part of the mechanics provided for the issuance of the bonds.

The provisions of the act by which the Port Commission of More-head City was created, relative to the calling and holding of an election in the town of Morehead City, to determine whether a majority of the qualified voters of said town approve the levying of a tax by the hoard of commissioners of said town for the purpose of raising money to aid- the said Port Commission in the performance of its duties, do not affect the validity of the bonds which the Port Commission may issue under the power conferred upon the said commission by the act. Such an election is not a condition precedent to the issuance of the bonds. The election may he called and held only in the contingency provided for by the act. If such contingency shall happen, and the election shall be called and held, and a majority of the qualified voters of the town shall approve the levying of the tax, as authorized by the act, the tax will he valid, and may be lawfully levied and collected, without regard to whether the tax is for a necessary purpose within the meaning of section 7 of Article YII of the Constitution of North Carolina. Such tax will be for a public purpose. Briggs v. Raleigh, 195 N. C., 223, 141 S. E., 597.

Some of the specific questions in difference between the parties to the controversy and submitted to the court for determination are not necessarily involved in the larger questions presented. There is no error in the judgment to the effect:

(1) That chapter 75, Private Laws of North Carolina, Session 1933, is in all respects a valid and constitutional enactment;

(2) That the Port Commission of Morehead City is a corporation, duly created and duly organized under the provisions of the act;

(3) That the Port Commission of Morehead City, as a corporation created by the General Assembly, for a public purpose, may lawfully exercise all tbe powers conferred upon tbe said commission by tbe General Assembly in order that said commission may perform its duties as prescribed by tbe act;

(4) That tbe bonds which the Port Commission of Morehead City proposes to issue and sell, under the authority conferred upon said commission by the act, will be valid obligations of said commission, and if sold to an agency of the. United States Government, will be exempt from taxation, so long as held by such agency, or by any person, firm or corporation holding the same as a purchaser or purchaser from such agency.

(5) That if an election shall be called and held by tbe board of commissioners of tbe town of Morehead City, and the levying of a tax as authorized by the act shall be approved by a majority of the qualified voters of said town at said election, such tax will be valid, and may be lawfully levied and collected.

In arriving at the conclusion that the judgment of the Superior Court should be affirmed, we have not been unmindful of contentions made by the counsel for the appellants in their arguments in this Court to the contrary, nor have we been indifferent to Avell settled principles of constitutional construction. The arguments were forceful and persuasive, but we think not conclusive. Tbe construction of tbe act has not been, we think, in violation of these principles. It is true that we have not been aided by decided cases or precedents. The questions presented are novel, and in many respects of first impression. We have been influenced largely in our conclusion by the language used by the General Assembly in section 11 of the act. It is there declared that “the Port Commission shall be regarded as performing an essential governmental function in undertaking the construction, maintenance and operation of the said terminal or terminals, and in carrying out the provisions of this act in relation thereto, and shall be required to pay no taxes or assessment upon any of tbe properties acquired or used by it for such purposes.” It is further declared in said section that it is “the policy of the State of North Carolina to promote, encourage and develop water transportation, service and facilities in connection with tbe commerce of the United States and to foster and preserve in full vigor both rail and water transportation, and that Morehead City, North Carolina, is hereby • declared to be a port to be developed in connection with the interior of the State of North Carolina.”

Chapter 75, Private Laws of North Carolina, Session 1933, was enacted in furtherance of the declared policy of the State, and in all its provisions is reasonably adequate to that end. The judgment is

Affirmed.