Blanton v. Board of Commissioners

Smith, C. J. (after stating the case.) It is perfectly manifest that in the issue of the new bonds in place of those that had matured, it was not intended to surrender any security which the creditor had for the debt by a novation of the one for the other, but to maintain the indebtedness as essentially one and the same in the different forms assumed. The security possessed in the capacity of the taxing power, when necessary to provide means to pay the obligations, to go beyond the limits fixed in the Constitution, and repeatedly asserted as incident to obligations entered into before the adoption of the Constitution (Clifton v. Wynne, 80 N. C., 145, and numerous cases therein referred to), was clearly intended to be preserved and to attach to those given in renewal. It is held in Hyman v. Devereux, 63 N. C., 624, that the taking up a bond secured by a mortgage upon real and personal estate, and giving a new one for the residue due on *535 the first, was not an extinguishment of the debt unless so intended, and that it still retained the mortgage security. The principle was again asserted in Kidder v. McIlhenny, 81 N. C., 123. The ruling in Clifton v. Wynne and the several previous adjudications therein referred to, proceeds upon an interpretation of the Federal Constitution, winch forbids a State, by any act impairing the obligations of contracts, to withdraw from the Legislature, by restraints upon the taxing powers, the ability and means possessed when the contract was entered into and essential to a fulfillment of its requirements. The mere renewed recognition of a subsisting liability in the issue of a new bond, declared in the very act which authorizes the issue “ to be a continuation of the liability ” resting upon the county, cannot, upon any second reasoning, be deemed the creation of a new debt in the sense of its falling under the restrictions applicable to new contracts of indebtedness, with the deprivation of the pre-existent means of enforcing performance by the levy of the necessary taxes. The only case called to our attention in the argument for defendants, Wilson v. Patton, 87 N. C., 318, supposed to militate against the view taken, simply decides that a creditor taking a new in place of' an old note and reducing the former to a judgment, upon which he sues out execution, loses his right to proceed against the debtor’s exemption under the latter, since he. must enforce the contract sued on, with the incidents attaching to it when it was made under the then existing laws. It is not, therefore, pertinent to the present inquiry. Another specification in the'demurrer, is the omission to allege in the complaint that’ the question of issuing of the new bonds was submitted to the voters of the county in pursuance of section 7, article 7, of the Constitution, and was sanctioned by them. *536 But, as we have already said, this and other sections limiting the exercise of the taxing power have reference to i he contracting of debts, the pledging of municipal faith, ihe loan of municipal credit and the levying and collecting of taxes after they become operative, and not to antecedent obligations, or the use of the means necessary for their, discharge. Street v. Commissioners of Craven, 70 N. C., 644; Brothers v. Commissioners of Currituck, Ib., 726, and other cases to the same effect. Our attention has been called to Katzenberger v. Aberdeen, 121 U. S., 172, where the validity of an act of Mississippi, whose Constitution contains a clause in terms very similar to that (art. 7, sec. 7) in our own, was considered. In this case the city of Aberdeen had issued bonds in payment for shares subscribed to the New Orleans, Jackson and Great Northern Railroad Company, under an act of the Legislature which authorized the subscription but not the issue of bonds in payment therefor. Since the adoption of the new Constitution containing the restraining clause which required any county, city or town, before becoming a stockholder in, or lending its credit to, any company, association or corporation, to obtain the assent to the proposal of two-thirds of the qualified voters therein. (Art. 12, sec. 14.) The Legislature passed what was intended to be a validating or curative act, which attempted to legalize, ratify and confirm all bonds not made in violation of the State Constitution and issued to the said railroad, to which a different name had been given, without requiring the sanction of a popular vote of two-thirds. The objection to the bonds lay in the want of power in said city to issue them. The language of the Chief Justice delivering the opinion is as follows : “ The bonds in the present case, when issued, were unauthorized and void, so that the only question is whether the curative statute has made them good. The *537 objection to them is not that they were issued irregularly, but that there was no power to issue them at all. They are to be made good, if at all, not by waiving irregularities in the execution of an old power, but by the creation of a new one. Clearly, therefore, if the Legislature had no constitutional authority to grant the new power, a statute passed for that purpose could not have the effect of validating the old bonds.” The facts in this case are wholly unlike those in '.he case before us; the differences being too marked to need being pointed out. In our opinion none of the grounds of the demurrer are tenable, and it was properly overruled. But the demurrer fails to point out other serious defects in the complaint, among which is the failure to insert any definite debt to be provided for by a specific mandate, and for this and other defects which may perhaps be remedied by amendment in the Court below, the case must be remanded, in doing which, however, we have deemed it proper to give our opinion upon the matters involved. Remanded.