Castevens v. . Stanley County

191 S.E. 739, 211 N.C. 642, 1937 N.C. LEXIS 170

• Court: Supreme Court of North Carolina
• Decided: June 9, 1937
• Status: Published

Opinion

CoNNOR, J.

Chapter 186, Public Laws of North Carolina, 1931, is entitled “An act to provide tbe manner in which tbe issuance of bonds or notes of a unit, and tbe indebtedness of a unit, may be validated.”

In section 1 of said act, tbe word “unit,” as used therein, is defined as “a county, city, town, township, school district, school taxing district, or other district or political subdivision of government of tbe State.”

Sections 4 to 8, inclusive, of said act, as amended by chapter 290, Public Laws of North Carolina, 1935 (see N. C. Code of 1935, section 2492, subsections 55 to 59, inclusive), now read as follows:

“Sec. 4. At any time after tbe adoption of an ordinance, resolution, or order for tbe issuance of refunding or funding bonds of a unit by tbe board authorized by law to issue tbe same, and following tbe approval of tbe issuance of such bonds by tbe Local Government Commission, and prior to tbe issuance of any such bonds, such board may cause to be instituted in tbe name of tbe unit an action in tbe Superior Court of any county in which all or any part of tbe unit lies, to determine tbe validity of such bonds and tbe validity of tbe means of payment provided therefor.

“Such action shall be in tbe nature of a proceeding in rem, and shall be against each and all tbe owners of taxable property within tbe unit, and each and all tbe citizens residing in tbe unit, but without any requirement that tbe name of any such owner or citizen be stated in tbe complaint or in tbe summons.

“Jurisdiction of all parties defendant may be bad by publication of a summons once a week for three successive weeks in some newspaper of general circulation published in each county in which any part of tbe unit lies, and jurisdiction shall be complete within twenty days after the full publication of such summons in the manner herein provided. Any interested person may become a party to such action, and the defendants and all others interested may at any time before the expiration of such twenty days appear and by proper proceedings contest the validity of the indebtedness to be refunded or funded or the validity of such refunding or funding bonds, or the validity of the means of payment provided therefor.

“The complaint shall set forth briefly by allegations, references, or exhibits the proceedings taken by such board in relation to such bonds and the means of payment provided therefor, and, if an election was held to authorize such issuance, a statement of that fact, together with a copy of the election notice and of the official canvass of votes and declaration of the result. There shall similarly be set forth in the complaint a statement of the amount, purpose, and character of the indebtedness to be refunded or funded, and such other allegations as may be relevant. The prayer of the complaint shall be that the court find and determine as against the defendants the validity of such bonds and the validity of the means of payment so provided.

“Sec. 5. The trial of such action shall be in accordance with the Constitution and laws of the State; and the rules of pleading and practice provided by the Consolidated Statutes and court rules for civil actions, including the procedure for appeals, which are not inconsistent with the provisions of this act, are hereby declared applicable to all actions herein provided for: Provided, however, that an appeal from a decree in such action must be taken within thirty days from the date of the rendition of such decree.

“The court shall render a decree either validating such bonds and the means of payment provided therefor, or adjudging that such bonds and the means of payment provided therefor are, in whole or in part, invalid and illegal.

“Sec. 6. If (a) the Superior Court shall render a decree validating such bonds and the means of payment provided therefor, and no appeal shall be taken within the time prescribed herein, or (b) if taken, the decree validating such bonds and the means of payment provided therefor shall be affirmed by the Supreme Court, or (c) if the Superior Court shall render a decree adjudging that such bonds and the means of payment provided therefor are, in whole or in part, invalid and illegal, and on appeal the Supreme Court shall reverse such decree and sustain the validity of such bonds and the means of payment provided therefor (in which case the Supreme Court shall issue its mandate to the Superior Court requiring it to render a decree validating such bonds and the means of payment provided therefor), the decree of the Superior Court validating such bonds and tbe means of payment provided therefor shall be forever conclusive as to the validity of such bonds and the validity of the means of payment provided therefor as against the unit' and as against all taxpayers and citizens thereof, to the extent of the matters and things pleaded, or which might have been pleaded, and to such extent the validity of said bonds and means of payment thereof shall never be called in question in any court in this State.

“Sec. 7. The costs in any action brought under this act may be allowed and apportioned between the parties or taxed to the losing party, in the discretion of the court.

“Sec. 8. If the complaint in any action brought under this act, or an exhibit attached to' such complaint, shows that an ordinance or resolution has been adopted by the unit providing that a tax sufficient to pay the principal and interest of the bonds or notes involved in such action is to be levied and collected, such ordinance or resolution shall be construed as meaning that such tax is to be levied without regard to any constitutional or statutory limitation of the rate or amount of taxes, unless such ordinance or resolution declares that such limitation is to be observed in levying such tax.”

By the provisions of section 4 to 8, inclusive, of chapter 186, Public Laws of North Carolina, 1931, as amended by chapter 290, Public Laws of North Carolina, 1935, the General Assembly of North Carolina, in which are vested all the legislative powers which reside primarily in the people of this State, subject only to limitations contained in the Constitution of the United States and in the Constitution of North Carolina, has authorized any local governmental unit in this State, as defined in section 1 of the act, whose governing body, in the exercise of its statutory powers, has ordered and directed that bonds of said unit for the purpose of funding or refunding its existing valid indebtedness shall be issued and sold, before the said bonds are issued or offered for sale, to institute in the Superior Court of this State an action in which the said court shall have power to render a decree or judgment that said bonds are or are not valid. The action authorized by the statute is in the nature of a proceeding in rem, and is adversary both in form and in substance. The statute contemplates that issues both of law and of fact may be raised by pleadings duly filed, and that such issues shall be determined by the court. The court has no power by virtue of the statute to validate bonds which are for any reason invalid. It has power only to determine whether or not on the facts as found by the court and under the law applicable to these facts, the bonds are valid. This is a judicial power, and in its exercise the court is performing a judicial function. The contention of the plaintiff in this action to the contrary cannot be sustained. This contention is not supported by either Tregea v. Modesto Irrigation District, 164 U. S., 178, 41 L. Ed., 395, or by Wright v. McGee, 206 N. C., 52, 173 S. E., 31. See People v. Linda Vista Irrigation District (Cal.), 61 Pac., 81; Fidelity National Bank & Trust Company of Kansas City v. Swope, 274 U. S., 123, 71 L. Ed., 959; and O’Neal v. Mann, 193 N. C., 153, 136 S. E., 379.

The statute provides that “each and all the owners of taxable property within the unit, and each and all the citizens residing in the unit, shall be made parties defendant to the action.” It is expressly provided in the statute that it shall not be required that “the name of any such owner or citizen be stated in the complaint or in the summons,” and that “jurisdiction of all parties defendant may be had by publication of a summons once a week for three successive weeks in some newspaper of general circulation published in each county in which any part of the unit lies.” “Jurisdiction of all parties to the action shall be complete within twenty days after the full publication of such summons in the manner herein provided.”

The contention that an owner of taxable property within the unit, or a citizen residing therein, may be deprived of his property, without due process of law, or contrary to the law of the land, by a 'decree or judgment in the action declaring or adjudging that the bonds and tax to be levied for their payment, are valid, because it is not required by the statute that his name shall appear in the summons or in the complaint, or that the summons shall be served on him personally, cannot be sustained. The action is declared by the statute to be in the nature of a proceeding in rem. In such case, all persons included within a well defined class may be made parties defendant, and service of summons by publication is sufficient, although such persons are not named in the summons. See Bernhardt v. Brown, 118 N. C., 700, 24 S. E., 527. In the opinion in that case it is said summons may be served by publication, in cases authorized by law, in proceedings in rem.

It is further provided in the statute that where a decree or judgment has been rendered in an action instituted and prosecuted in accordance with its provisions, declaring or adjudging that the bonds and the tax to be levied for their payment, are valid, such decree or judgment shall be binding and conclusive as against all taxpayers and citizens of the unit, to the extent of all matters and things which were or which might have been pleaded in the action, and that with respect to such matters and things the validity of the bonds and the tax shall not be called in question in any court of this State.

The contention that by this provision an owner of taxable property within the unit, or a citizen residing therein, is estopped from challenging the validity of the bonds and of the tax, without having had an opportunity to be heard, cannot be sustained. No decree or judgment adverse to Ms rights can be rendered in an action instituted and prosecuted in accordance with the provisions of the statute, until every taxpayer and citizen of the unit bas been lawfully served with summons, and until be bas bad ample opportunity to appear and file sucb pleadings as be may wisb. If be bas failed to avail bimself of bis constitutional rights, which are fully protected by the statute, be bas no just ground of complaint that the court will not bear him when be invokes its aid after the decree or judgment bas been finally rendered, and others have relied upon its protection.

After full and careful consideration, we are of the opinion that there was no error in the holding of the judge of the Superior Court, at the trial of this action, that sections 4 to 8, inclusive, of chapter 186, Public Laws of North Carolina, 1931, as amended by chapter 290, Public Laws of North Carolina, 1935 (see section 2492, subsections 55 to 59, inclusive, Code of N. C., 1935), are not unconstitutional either on the ground that the statute confers nonjudicial functions on the Superior Courts of this State or on the ground that the statute denies due process of law to taxpayers or citizens of a local governmental unit in this State, in violation of the provisions of the Fourteenth Amendment to the Constitution of the United States, or of the 17th section of Article I of the Constitution of North Carolina.

The plaintiff in this action further contends that conceding that the statute under which the action entitled “Stanly County, plaintiff, v. Each and all of the owners of taxable property within the county of Stanly, and each and all of the citizens residing in said county, and J. N. Auten, on his own behalf and on behalf of all other taxpayers and citizens of the county of Stanly, defendants,” was instituted, is valid, there was error in the holding of the judge of the Superior Court that the summons and the service of summons by publication in said action were in full compliance with the provisions of the statute, and were sufficient to give the court jurisdiction of said action and of the parties thereto.

This contention cannot be sustained. The summons in said action was in strict compliance as to its form and substance with the provisions of the statute. It was published once a week for three successive weeks as required by the statute. This was sufficient.

The only issues of fact arising on the pleadings in this action involve the validity of the indebtedness of Stanly County which the defendants propose to fund by the issuance and sale of the bonds of said county, designated as “School Funding Bonds” and “General Funding Bonds,” and the purposes for which said indebtedness was incurred. These identical issues were submitted to the jury at the trial of the action entitled “Stanly County, plaintiff, v. Each and all the owners of taxable property within the county of Stanly, and each and all the citizens residing in said county, and J. N. Auten on his own behalf and on behalf of all other taxpayers and citizens of the county of Stanly, defendants.”

These issues were answered in the affirmative, that is, the jury found that the said indebtedness is valid and was incurred for lawful purposes. The decree or judgment in that action is binding and conclusive on the plaintiff in this action. It is expressly so provided in the statute, which recognizes and applies to the action authorized by the statute the principle stated in Eaton v. Graded School, 184 N. C., 471, 114 S. E., 689, as follows :

“Except where some special private interest is shown, it seems to he established by the clear weight of authority that, in the absence of fraud or collusion, a final judgment on the merits rendered in a suit by a taxpayer (usually brought on behalf of himself and others similarly situated) involving a matter of general interest to the public, and instituted against a governmental body or local hoard, which in its official capacity represents the citizens and taxpayers of the territory affected, is binding on all residents of the district, if adverse to the plaintiff, and all may take advantage of it if the judgment is otherwise.” See cases cited.

"We find no error in the judgment in this action. It is

Affirmed,