The opinion
OlabK, O. J\,
dissenting: Up to the second Wednesday in January, 1917, the Constitution of North Carolina, Art. Till, sec. 4, read as follows:
“Sec. 4. It shall be the duty of the Legislature to provide for the organization of cities, towns, incorporated villages, and to restrict their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit, so as to prevent abuses in assessments and in contracting debts by such municipal corporations.”
*456 Tbe General Assembly of 1915, cb. 99, submitted sundry amendments to tbe Constitution to tbe people for approval, and among them, section 4 of said act provided tbat tbe Constitution should be amended “by striking out section 4 of Article YIII and substituting tberefor tbe following:
“It shall be tbe duty of tbe Legislature to provide by general laws for tbe organization of cities, towns, and incorporated villages, and to restrict their powers of taxation, assessment, borrowing money, and loaning their credit, so as to prevent abuses in assessment and in contracting debts by such municipal corporations.”
Said act provided for the manner of voting upon tbe amendments, and tbe return of tbe votes and tbe declaration of tbe results, and section 8 of tbe said act provided tbat “any amendment so adopted shall take, effect on tbe second Wednesday after tbe first Monday in January, 1911. Any provision of these amendments passed by tbe General Assembly, and so adopted by tbe qualified voters, inconsistent with, or in conflict with, any provisions of tbe present Constitution shall be held to prevail.”
Tbe amendment in question, striking out tbe former section 4, Article YIII, and substituting tbe new section 4 of tbat article, was declared duly adopted by tbe people at tbe ballot box, and has been a part of the Constitution since tbe prescribed date, 10 January, 1917.
It will be seen by comparison tbat tbe new section 4, Article YIII, differs from tbe old section of tbat article only by tbe insertion of tbe ■words "by general laws” in lines 1 and 2 thereof, so tbat, whereas, prior fo tbe enactment of tbe substituted section, tbe Legislature was left free to discharge tbe duties placed upon it by said section, either by special laws or general acts, as it saw fit, by tbe substituted section tbe Legislature was empowered to exercise those duties "by general laws” only. Those who are conversant with tbe history of tbe State at tbat time, and with tbe discussion of this amendment in tbe press, in tbe General Assembly, and to tbe public before tbe election, will recall tbe purpose of such substitution was for tbe sole purpose of forbidding tbe Legislature to discharge tbe duties of tbat section by special legislation, and to restrict it to general laws on those subjects.
If this was not tbe intention in substituting the new section 4, Article YIII, for what purpose was it solemnly enacted by tbe General Assembly, and for what purpose did tbe peojde ratify it at tbe polls?
That tbe next succeeding General Assembly, whose members were elected- on tbe same day this was ratified, so understood tbe object of this amendment is shown by tbe fact tbat tbe General Assembly of 1917 enacted chapter 136, which was a general act, very full and elaborate, “to provide for tbe organization and government of cities, towns, and incorporated villages,” and also enacted chapter 140 (ratified 7 March, 1917), a general act entitled, “An act relating to general municipal *457 finance.” The preamble to tbis act specifies that it is required by the constitutional amendment, and reads as follows:
“Whereas, the people of North Carolina, in November, 1916, adopted amendments to the State Constitution which prohibited the enactment of special legislation amending the charter of municipal and other corporations, and made it' the duty of the Legislature to provide by general laws for the organization of cities, towns, and incorporated villages, and to restrict their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit so as to prevent abuses in assessment and in contracting debts by such municipal corporation; and whereas, many of the municipalities of this State require the powers hereinafter mentioned; .now, therefore”—
After this recital there follows a most careful and comprehensive act of 28 pages, covering every phase of the powers and duties conferred upon and “restricting municipal corporations as to taxation, assessment, borrowing money, contracting debts, and loaning their credits.”
Section 5 of this act (ch. 140) provides: “All bonds of the municipality shall be sold by the governing body at not less than par.” This section then goes on to prescribe in gfeat detail the methods for advertising the bonds for sale, deposits by bidders, the award, right to reject bids, private sales, sales of bonds from sinking fund, which bonds only it is directed “may be sold at less than par.”
The amendment strikes out the former section 4, Article VIII, which did not state the manner in which the Legislature should regulate the organization, government, and financial control of municipalities, but left it to that body to do these things, either by special acts or general laws, and substituted therefor the requirement that “it shall be the duty of the Legislature, by general laws,” to do these things. In 8 Oyc., 762 (e), it is said: “All constitutional provisions that designate in express terms the time or manner of doing particular acts and are silent as to their performance in any other manner are mandatory, and must bo followed.”
The same doctrine is well set out, 6 R. C. L., sec. 50, 51 (pp. 55, 56) : “It is the ‘general rule to regard constitutional provisions as mandatory, and not to leave it to the will of the Legislature to obey or to disregard them. This presumption as to mandatory quality is usually followed unless it is unmistakably manifest that the provisions were intended to be directory only. ... So strong is the inclination in favor of giving obligatory force to the terms of organic law that it has been said that neither by the courts nor by any other department of the Government can any provision of the Constitution be regarded as merely directory, but that each and every one of its provisions should be treated *458 as imperative and mandatory, without reference to the rules distinguishing between directory and mandatory statutes.”
The Constitution is the “higher law,” enacted by the people themselves as a mandate to the Legislature, and is a restriction upon their powers, which otherwise would be absolute. In view of the contention that this amendment is merely a suggestion to the Legislature, which it may observe or not, as financial interests may find it convenient, let us read against the provisions of this amendment so recently adopted at the ballot box:
“It shall be the duty of the Legislature to provide by general laws for the organization of cities, towns, and incorporated villages, and to restrict their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit so as to prevent abuses in assessment, and in contracting debts by such municipal corporations.”
There is nothing directory in this amendment. The purpose is clearly expressed to prevent abuses in contracting debt by the municipalities, and the means by which such abuses are to be prevented are “by general laws.” It provides that “it shall be the duty of the Legislature” to do those things by “general laws,” which is a restriction to that method. The opportunity for abuse in such matters by special legislation procured by a single member of the Legislature, at the instance of local interests, was well known to all men, and the object was to prevent such legislation by the requirement in the Constitution that all legislation affecting such matters should be uniform and enacted by general laws as to which every member of the General Assembly would be fixed with responsibility, whereas, as is well known, special acts of local application receive no attention. To prevent this very evil, as well as to save the waste of time of the General Assembly in such legislation, the former section of the Constitution which permitted local legislation, as well as general laws, in providing for the regulation of municipalities, was stricken out and this amendment was adopted which made it the duty of the Legislature to enact such regulations of municipalities by general laws.
Referring to this very subject of special acts, Bynum, J., one of the ablest and clearest-headed judges that has ever sat upon this bench, says in Simonton v. Lanier, 71 N. C., 505 : “Public laws are founded on the gravest considerations of public benefit. They are deliberately enacted, are permanent in character, are for the benefit of all, and of universal application. Not so with private statutes, these are not of common concern, and do not receive the watchful and cautious scrutiny of the Legislature, which is devoted to those of a public character. They are often procured by agents and for a purpose, who are watchful to take advantage of any relaxation in legislative vigilance.”
*459 Tbe mandatory character of tbe provisions of our Constitution, as to municipal indebtedness and to taxation is tersely stated by tbe Court in McGuire v. Williams, 123 N. C., at top of page 356, as follows: “Since tbe opinion in Charlotte v. Shepard, 122 N. C., 602 , concurred in by every member of tbis Court, it must be considered a settled rule tbat tbe provisions of tbe Constitution in relation to municipal indebtedness and taxation are mandatory, and will be strictly enforced by tbis Court.”
Tbe provisions of tbis amendment, providing tbat legislation regulating municipal indebtedness and taxation shall be by general laws is too clear upon its face, and tbe purpose of its enactment is too well known, to leave any doubt tbat it was intended to prevent tbe abuses-incident to special legislation, which could be controlled and influenced by local influences in favor of special interests.
One of tbe most familiar rules of construction of both statutes and constitutions is to give effect to tbe intent of' tbe framers and of tbe people who adopted them, and it is especially applicable to all constitutions tbat they are to be construed so as to promote tbe objects for which they are framed and adopted. 8 Cyc., 730 (3a). Tbe same proposition is stated in 6 R. C. L., sec. 45, p. 50, tbat a constitutional provision should not be construed so as to defeat its evident purpose, but rather so as to give it effective operation and suppress tbe mischief at which it was aimed.
If section 4, Article YIII, as it formerly stood, which permitted regulation of municipalities as to taxation and contracting debts by special act, as well as by general laws, was satisfactory and did not admit of abuses, for what purpose did tbe Legislature submit, and tbe people at tbe polls ratify, a constitutional provision, striking out tbe section as it stood, and reenacting it in exactly tbe same words in every respect except tbe insertion of tbe words, making it tbe duty of tbe Legislature to enact such legislation “by general laws”?
It is also said in 6 R. C. L., sec. 45, p. 51, tbat it is settled by tbe highest authority tbat in construing a Constitution or any clause thereof, “tbe Court should look to tbe history of tbe times and examine tbe state of things existing when tbe Constitution, or amendment thereto, was framed or adopted, to ascertain tbe old law, tbe mischief, and tbe remedy,” and tbe text is supported by citations of authorities from U. S. Supreme Court, notably R. I. v. Mass., 12 Pet., 657 , and tbe famouse Slaughter Mouse cases, 16 Wall., 36 . It.is common knowledge tbat prior to tbe adoption of tbis amendment to tbe Constitution tbe Legislature was overwhelmed with a mass of special and private legislation affecting particular communities, and not tbe State as a whole, such legislation being often procured for tbe benefit of tbe special local interests of individuals.
*460 Tbe words of tbis amendment: “It shall be tbe duty of tbe Legislature to provide by general laws” absolutely commands tbe manner in wbicb tbe laws affecting these municipalities and tbe subjects embraced in that section shall be passed, and tbe addition of tbe words of prohibition, directing tbe opposite not to be done, would be redundant and superogatory.
Tbe defendant contends that a- special act enacted by tbe General Assembly at tbe Special Session of 1920, entitled “An act relating to tbe finances of cities, towns, townships, and school districts of Wayne County,” and- authorizing them to sell their bonds “at such place and at such interest basis, whether above or below 6 per cent per annum, as tbe official board or body may determine to be tbe best obtainable,” is valid as to tbe town of Goldsboro notwithstanding tbe above amendment wbicb requires that all such legislation as to municipalities shall be enacted by general laws, and notwithstanding tbe two general statutes of 1917, enacted, as they recite, in consequence of such amendment and covering tbe entire scope of municipal regulation as to tbe matters cited in that amendment. If tbe Constitution is to govern, and tbe legislation of 1917 in accordance therewith, tbe special act of 1920 in regard to Goldsboro is invalid, because it is in conflict with tbe constitutional provision, and with tbe general laws enacted in accordance- therewith.
It is asked, Could not tbe Legislature of 1920 amend or change tbe acts of tbe Legislature of 1917? Certainly. But in tbis matter of regulating municipalities such amendment or change must be made by general laws applying throughout tbe State, and not by special legislation applying only to tbe municipalities in a certain county.
There being two conflicting acts, one a “general law,” as required by tbe Constitution, and tbe other “a special act,” tbe court must bold tbe former and not tbe latter to be valid.
In Atchison v. Barlow, 4 Kan., 144 , it appears in that State, as in tbis, formerly municipal corporations were organized and regulated by special statutes. Tbe able opinion in .that case sets out tbe abuses therefrom, and bow local interests and influences profited financially and otherwise by legislation which could not have been enacted if proposed by general laws applying throughout tbe State. We need not repeat tbe details there given, for they are familiar here, and caused tbe adoption of tbe amendment to their Constitution almost identical with our amendment above. Tbe Kansas amendment provided: “Art. 12, sec. 5. Provision shall be made by general law for tbe organization of cities, towns, and villages, and their power of taxation, assessment, borrowing money, contracting debts, loaning their credit shall be restricted so as to prevent tbe abuse of such power.”
In that ease tbe Supreme Court of that State held invalid all special legislation regulating municipalities in said respects, except by general *461 laws, and has adhered to such ruling ever- since, greatly to the protection 'and satisfaction of the taxpayers in the municipalities of that State. Subsequently, an ingenious attempt was made to evade this constitutional amendment by amending the general statute, in such way that it could not apply but to three cities therein, and the Court, in Topeka v. Gillett, 32 Kan., 431 , promptly held that invalid because in violation of the constitutional provision.
It has been strenuously urged that Goldsboro has made contracts for municipal improvements, and that just at present it cannot sell these bonds at par, and that if not allowed to sell them below par, the work must be stopped, and the banks in that city, which have advanced money on these bonds, will be seriously incommoded. But such considerations surely cannot prevail to set aside the will of the people of the State, as enacted in their Constitution. The provision had a wise, purpose over and above the saving of time of the General Assembly wasted in special legislation. It is common knowledge that there-are a few large bond-buying houses in the Union who purchase municipal bonds at the lowest available figure, and resell them at a large profit. Their local agents in this State can readily combine by agreeing upon a price among them'selves below par (if sales below par are not prohibited by a general act, which cannot be evaded by special legislation), and bonds bought at a low figure in consequence of suppression in competition of the bond buyers, can later be parceled out among the buyers. The effective protection of the general act of 1917, which forbids the sale of municipal bonds below par, has been that such bonds, which have the advantage of being also tax-free, have hitherto sold readily at par. If that protection is nullified as to any one city, it may be removed as to any other whenever, with or without the cooperation of local influences, special legislation can be procured exempting such municipality from the control of the constitutional provision which prohibits local legislation in such matters by requiring general laws.
It is not suggested that in this instance there has been any combination of bond buyers or any ulterior motive on the part of any one! We have under consideration the possibilities of abuse that will be opened up. It will be readily seen that such occasions will occur if the constitutional provision requiring uniform legislation in regulation of the finances of .municipalities and their power of contracting debts is not strictly adhered to. It is true that just at present there is a financial stringency, but it cannot be that the 6 per cent, tax-free bonds of a growing, prosperous, wealthy municipality like the city of Goldsboro can long be without sale at par, and should such condition occur, the Legislature could'respond by a general act giving to all corporations the same power to sell their bonds below par.
*462 It would be invidious to allow a few municipalities to sell tbeir bonds below par while forbidding this privilege to all others. If the situation is such that Goldsboro cannot sell its bonds at par, while other towns are forbidden to sell at less than par, doubtless there is local patriotism and financial ability in Goldsboro that will tide over the situation until the city can obtain par for its bonds as is required of other municipalities. We know that Mecklenburg County has recently sold $300,000 of its bonds at 108; that Nash also has recently sold its bonds at 102; Randolph County and the thriving town of Hickory at par and interest, and “there are others.”
Should there be a permanent depression in the market for 6 per cent, tax-free bonds of solvent municipalities, the remedy is for the Legislature to amend the general statute by extending the power to sell at less than par to all municipalities. But to permit this to be done as to few towns by special legislation tends to depress the market for all municipal bonds, and gives unlimited opportunity for a “rake-off” whenever influential combinations can manipulate the bonds of any particular towns. It was to prevent this that the control of the finances of the municipalities was placed with the Legislature, and that the Constitution requires that such legislation shall be by general laws and uniform.
Besides the reasons above given, special acts allowing certain municipalities to sell their 6 per cent, tax-free bonds below par are unconstitutional for another reason. We have a usury law, C. S., 2306, which imposes a penalty for exacting a greater interest than 6 per cent. The Bank of Statesville procured a private act amending its charter, ch. 64, Laws 1869-70, which authorized it “to discount notes and other evidences of debt, and to lend money upon such terms and rate of interest as may be agreed upon,” and it was held in a strong opinion by Bynum, J., in Simonton v. Lanier, 71 N. C., 503 , that such act was unconstitutional and invalid, so far as it could be construed to authorize a rate of interest in excess of the general rate of 6 per cent, because it was in violation of the time-honored constitutional provisions: Art. I, sec. 7, of the Constitution, which declares that “No man or set of men are entitled to exclusive or. separate emoluments, privileges, or immunities,” and Art. I, sec. 31, “Perpetuities and monojiolies are contrary to the genius of a free State, and ought not to be allowed.” Judge Bynum, after quoting the above provisions of the Constitution, pertinently asked: “What public service has this bank rendered that it should be granted the exceptional privilege” that it should be exempted from the usury law? and said: “The wisdom and foresight of our ancestors are nowhere more clearly shown than in providing these fundamental safeguards against partial and class legislation — the insidious and overworking foes of free and equal government.” This decision has never been overruled or *463 questioned, and its wisdom and justice bas commended it to tbe approval of tbe public and tbe Court as is shown by tbe numerous citations thereto to be found in Anno. Ed., which we need not therefore take tbe space to recapitulate.
Not only is this special legislation authorizing tbe city of, Goldsboro to sell its bonds below par in violation of tbe above quoted sections of tbe Constitution, which require “Equal right to all and special privilege to none,” and in violation of tbe amendment passed for tbe express purpose of requiring uniform legislation as to all municipalities, and in violation of tbe general acts passed, in pursuance thereof by tbe Legislature of 1917, but it is a serious discrimination against other towns and cities which are required to sell their bonds “at not less than par,” and tends to depress the price of all municipal bonds in the State with great loss to the taxpayers, and giving unlimited opportunity for “rake-offs” to powerful combinations of capital which will be formed to depress the price of such bonds, and it is in violation of our usury law, and will inevitably force the repeal of that statute, which for so long a time has been a protection to our people; for who will lend money to a farmer, merchant, or any other legitimate business at 6 per cent if such towns as Goldsboro are allowed to sell 6 per cent, tax-free bonds at 4 to 6 per cent below par, which privilege will be extended to other cities by special act, and we may see the sale price of municipal bonds brought down to a far lower figure still. If the bonds are sold at 94, the present and future citizens of Goldsboro will pay for years to come $6 annually as interest for every $94 received (which is considerably more than 6 per cent on $100), besides the $6 initial “rake-off” to the buyers. Other towns will get similar acts in derogation to the Constitution. Local financial “rings” will be formed to elect boards to sell “bonds at less than par” — which phrase has “depths lower still,” as is held in lively remembrance by those who can recall the time when even State bonds were hawked at 30 and less.
For these reasons I earnestly insist that this special act, giving this special privilege to Goldsboro to sell its bonds at less than par, is in violation of the constitutional provision enacted to prevent, among other things, this very legislation, and opens the doors wide to the very “abuses” which the amendment to require uniform legislation, “by general law,” of municipalities was framed and adopted to prevent.