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Constitution of North Carolina

ARTICLE II Legislative

Sec. 23. Revenue bills.

No law shall be enacted 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 shall have been agreed to by each house respectively, and unless the yeas and nays on the second and third readings of the bill shall have been entered on the journal.

History Note. - The provisions of this section are similar to those of Art. II, § 14, Const. 1868.

CASE NOTES





I. General Consideration.

II. Journals and Certificates.

III. Substitutions and Amendments.



I. GENERAL CONSIDERATION.



Editor's Note. - The cases cited below were decided under former Art. II, § 14, Const. 1868.

This section is mandatory. Union Bank v. Commissioners of Oxford, 119 N.C. 214, 25 S.E. 966 (1896); Commissioners of Stanly County v. Snuggs, 121 N.C. 394, 28 S.E. 539 (1897).

And must be strictly complied with. Smathers v. Commissioners of Madison County, 125 N.C. 480, 34 S.E. 554 (1899).

This section is not retroactive. Board of Comm'rs v. Travelers' Ins. Co., 128 F. 817 (4th Cir. 1904).

Effect of Section. - The adoption of this section annulled all special powers remaining unexecuted, and not granted in strict conformity with its requirements. Commissioners of Buncombe County v. Payne, 123 N.C. 432, 31 S.E. 711 (1898).

Article II, § 14 of the 1868 Constitution is substantially the same as this section. North Carolina E. Mun. Power v. Wake County, 100 N.C. App. 693, 398 S.E.2d 486 (1990), cert. denied, 329 N.C. 270, 407 S.E.2d 838 (1991).

Act Is Void Unless Section Is Followed. - An act not passed with the formalities required by this section is void, and confers no authority upon a city to create a debt and issue the bonds therein provided for. City of Charlotte v. E.D. Shepard & Co., 122 N.C. 602, 29 S.E. 842 (1898); Glenn v. Wray, 126 N.C. 730, 36 S.E. 167 (1900); Cottrell v. Town of Lenoir, 173 N.C. 138, 91 S.E. 827 (1917).

Valid and Invalid Acts Not Construed Together. - An act passed according to the requirements of this section cannot be construed with an act not so passed. Pritchard v. Board of Comm'rs, 160 N.C. 476, 76 S.E. 488 (1912).

Burden of Proof. - Objecting parties have the burden of showing that acts had not been passed according to the requirements of this section. Slocomb v. City of Fayetteville, 125 N.C. 362, 34 S.E. 436 (1899).

A motion to reconsider violates the efficacy of the original passage according to this section; for the act to be valid, the final result must comply with this section. Allen v. City of Raleigh, 181 N.C. 453, 107 S.E. 463 (1921).

Applicability of This Section to Statutes Imposing a Tax. - It is well established law in this State that when determining the constitutional validity of a statute, if the meaning is clear from reading the words of the Constitution, courts should not search for a meaning elsewhere. The language of this section is clear in that it applies to statutes enacted to impose a tax. North Carolina E. Mun. Power v. Wake County, 100 N.C. App. 693, 398 S.E.2d 486 (1990), cert. denied, 329 N.C. 270, 407 S.E.2d 838 (1991).

Trial court erred in denying state agencies' motion to dismiss a corporation's complaint, seeking a declaratory judgment that an E-Procurement fee was a tax not enacted by the legislature in violation of N.C. Const., Art. II, § 23 and a refund of the taxes under G.S. § 105-267 because the corporation's claims were barred by the defense of sovereign immunity; the North Carolina Supreme Court's holding that sovereign immunity could not prevent a plaintiff from asserting a claim alleging a violation of his rights under the Declaration of Rights of the North Carolina Constitution was limited to alleged violations of personal rights and did not extend to the corporation's complaint because N.C. Const., Art. II, § 23 did not articulate any rights, only procedures to be followed. Petroleum Traders Corp. v. State, 190 N.C. App. 542, 660 S.E.2d 662 (2008).

Inapplicability to Session Laws 1987 (Reg. Sess., 1988), Chapter 1052. - There is no doubt that the effect of Chapter 1052 of Session Laws 1987 (Reg. Sess., 1988) imposed a greater tax burden on plaintiff for 1988. However, this section focuses on the purpose of the statute (to impose a tax) and not the result of the statute (an increased tax burden). Chapter 1052 of Session Laws 1987 (Reg. Sess., 1988) neither imposes a tax nor authorizes its imposition, and therefore, this section does not apply. North Carolina E. Mun. Power v. Wake County, 100 N.C. App. 693, 398 S.E.2d 486 (1990), cert. denied, 329 N.C. 270, 407 S.E.2d 838 (1991).

If an act is not a revenue or tax act from the outset, it does not matter if the act is retroactive or prospective in its application. North Carolina E. Mun. Power v. Wake County, 100 N.C. App. 693, 398 S.E.2d 486 (1990), cert. denied, 329 N.C. 270, 407 S.E.2d 838 (1991).

Applicability to Townships. - The restrictions are by necessary implication applicable to townships, as they are but constituent parts of the county organization. Wittkowsky v. Board of Comm'rs, 150 N.C. 90, 63 S.E. 275 (1908); Township Rd. Comm'n v. Board of Comm'rs, 178 N.C. 61, 100 S.E. 122 (1919).

Where a town charter is not passed in accordance with this section, such town cannot levy any tax under said charter, but it may levy taxes for necessary expense. Rodman-Heath Cotton Mills v. Town of Waxhaw, 130 N.C. 293, 41 S.E. 488 (1902).

Section Not Applicable to Necessary County Expense. - It is not necessary to enter the yeas and nays on an act to raise revenue for a necessary county expense. Black v. Commissioners of Buncombe County, 129 N.C. 121, 39 S.E. 818 (1901).

Issuing bonds for road purposes is a necessary expense to which the section does not apply. Leonard v. Board of Comm'rs, 185 N.C. 527, 117 S.E. 580 (1923). See Woodall v. Western Wake Hwy. Comm'n, 176 N.C. 377, 97 S.E. 226 (1918).

An act authorizing treasurer to deliver State bonds is not within this section. Battle v. Lacy, 150 N.C. 573, 64 S.E. 505 (1909).

Effect on Bonds of Failure to Comply with Section. - This section is mandatory, and, not having been complied with in the passage of certain laws authorizing certain counties to subscribe for stock in a railroad company and issue bonds in payment therefor, bonds issued by a city pursuant thereto were void. Burlingham v. City of New Bern, 213 F. 1014 (E.D.N.C. 1914).

A town may not pledge its faith or credit for the issuance of bonds for municipal purposes, unless under statutory authority is given in conformity with the requirements of this section, or unless for necessary expenses. Storm v. Town of Wrightsville Beach, 189 N.C. 679, 128 S.E. 17 (1925).

An act of the legislature authorizing a bond issue for public roads is valid if conforming to this section of the State Constitution, without submitting the proposition to a vote of the people. Hargrave v. Board of Comm'rs, 168 N.C. 626, 84 S.E. 1044 (1915).

Payment of interest does not preclude inquiry as to the validity of the bonds. Glenn v. Wray, 126 N.C. 730, 36 S.E. 167 (1900).

Township Not Estopped to Deny Invalidity of Bonds. - Where township bonds are invalid because issued without authority, the township is not estopped from asserting such fact by recitals in the bonds that they are issued in compliance with the Constitution and laws of the State. Debnam v. Chitty, 131 N.C. 657, 43 S.E. 3 (1902), overruled on other grounds, Board of Comm'rs v. Wachovia Loan & Trust Co., 143 N.C. 110, 55 S.E. 442 (1906).

Who May Enjoin Bond Issue. - It is competent for a taxpayer to file a complaint on behalf of himself and all other taxpayers in the State to enjoin the issue of State bonds under an unconstitutional act of Assembly. Galloway v. Jenkins, 63 N.C. 147 (1869).

Changing of County Tax Agencies. - The legislature has the power and authority to change the county tax agencies without further observing the requirements of this section. State ex rel. O'Neal v. Jennette, 190 N.C. 96, 129 S.E. 184 (1925).

Tolls and Taxes Distinguished. - Taxes are levied for the support of government, and their amount is regulated by its necessities. Tolls are compensation for the use of another's property or for improvements which have been made, and their amount is determined by the cost of the property or improvements. North Carolina Tpk. Auth. v. Pine Island, Inc., 265 N.C. 109, 143 S.E.2d 319 (1965).

Tolls are not taxes. A person uses a toll road at his option; if he does not use it, he pays no toll. North Carolina Tpk. Auth. v. Pine Island, Inc., 265 N.C. 109, 143 S.E.2d 319 (1965).

Because tolls do not constitute a tax within the meaning of the Constitution, the limitations of N.C. Const. art. I, § 8 and N.C. Const. art. II, § 23 do not apply. Wideni77 v. N.C. DOT, - N.C. App. - , - S.E.2d - (May 2, 2017).

Turnpike Authority Bonds Not Debt within Meaning of Constitution. - The General Assembly has taken great care to make it crystal clear that the credit of neither the State nor any of its political subdivisions can be pledged to pay the Turnpike Authority's revenue bonds. This method of financing creates no debt within the meaning of the Constitution. North Carolina Tpk. Auth. v. Pine Island, Inc., 265 N.C. 109, 143 S.E.2d 319 (1965).

A statute for the revaluation of property is not in its strict sense a revenue act within the meaning of this section. Hart v. Board of Comm'rs, 192 N.C. 161, 134 S.E. 403 (1926).

The filing fee required by the primary law is in no sense a tax within the meaning of this section. McLean v. Durham County Bd. of Elections, 222 N.C. 6, 21 S.E.2d 842 (1942).

A bailment surcharge imposed on each case of distilled spirits shipped from ABC warehouse to ABC stores is not a tax; the cost of liquor enforcement is a burden incident to the privilege of buying spirituous liquors in the state and such a surcharge is not unconstitutional as a tax imposed in violation of this section or of N.C. Const., Art. V, § 2. North Carolina Ass'n of ABC Bds. v. Hunt, 76 N.C. App. 290, 332 S.E.2d 693, cert. denied, 314 N.C. 667, 336 S.E.2d 400 (1985).

North Carolina State Lottery Act, G.S. § 18C-101 et seq., was not a revenue bill and, thus, it did not have to be enacted according to the requirements set forth in N.C. Const., Art. II, § 23. The law was not a revenue bill because it was not enacted to (1) raise money on the credit of the State, (2) pledge the faith of the State directly or indirectly for the payment of any debt, or (3) impose any tax upon the people of the State, but, rather, involved a voluntary activity that incidentally raised revenue. Heatherly v. State, 189 N.C. App. 213, 658 S.E.2d 11 (2008), aff'd, 363 N.C. 115, 678 S.E.2d 656 (2009).

Acts Upheld. - For case holding that the last paragraph of former G.S. § 153-152 was enacted in accordance with the requirements of this section, see Martin v. Board of Comm'rs, 208 N.C. 354, 180 S.E. 777 (1935).

Passage of Session Laws 1961, c. 783, amending G.S. § 105-228.5, was held to meet the requirements of this section. Great Am. Ins. Co. v. High, 264 N.C. 752, 142 S.E.2d 681 (1965).

Session Laws 1967, c. 967, was duly passed and is valid and binding. State ex rel. Dyer v. City of Leaksville, 275 N.C. 41, 165 S.E.2d 201 (1969).

Cited in Goldston v. State, 199 N.C. App. 618, 683 S.E.2d 237 (2009), review denied 363 N.C. 802, 690 S.E.2d 536 (2010); Richmond County Bd. of Educ. v. Cowell, 225 N.C. App. 583, 739 S.E.2d 566 (2013), review denied, 747 S.E.2d 553, 2013 N.C. LEXIS 843 (2013).

II. JOURNALS AND CERTIFICATES.



What Journals Must Show. - The journal must show who voted for the bill, and that the requisite number of Senators and members did so, and no other source of evidence can be invoked; the certificate of the presiding officers that a bill has been read three times does not obviate the necessity of examining the journal. Burlingham v. City of New Bern, 213 F. 1014 (E.D.N.C. 1914).

Showing of Nays. - As this section requires that on the voting of a bill before the legislature the yeas and nays shall be entered on the journals, either the nays must be on the journal, or it must affirmatively appear that there were none. Commissioners of New Hanover County v. DeRosset, 129 N.C. 275, 40 S.E. 43 (1901).

Where the House journal showed that a certain law, authorizing the issuance of county bonds, was passed by the following vote: "Ayes 94, nays . . .; total . . .", such record sufficiently showed that there was no negative vote cast, under the presumption that the Clerk of the House charged with the recording of the vote performed his duty, and hence such record constituted a sufficient compliance with this section. Board of Comm'rs v. Tollman, 145 F. 753 (4th Cir. 1906).

A bill to authorize a county to pledge its faith and credit by issuing bonds for road purposes, duly ratified, was not invalid for failure to meet the requirements of this section, by reason of the failure to record on the journal on the second reading in one of the branches of the legislature the "no" vote, when it was made to appear from the entries of the names of those voting in the affirmative that a majority of the voters had so voted, the absence of the entries of the names of those voting in the negative showing that there were none. Leonard v. Board of Comm'rs, 185 N.C. 527, 117 S.E. 580 (1923), citing Board of Comm'rs v. Trust Co., 143 N.C. 110, 55 S.E. 442 (1906).

Journals Conclusive. - The journals are conclusive as against not only a printed statute published by authority of law, but also against a duly enrolled act. Union Bank v. Commissioners of Oxford, 119 N.C. 214, 25 S.E. 966 (1896); Commissioners of Stanly County v. Snuggs, 121 N.C. 394, 28 S.E. 539 (1897).

The journals are the sole evidence as to whether the ayes and noes on a vote on a bill were entered on such journals. Commissioners of New Hanover County v. De Rosset, 129 N.C. 275, 40 S.E. 43 (1901); Allen v. City of Raleigh, 181 N.C. 453, 107 S.E. 463 (1921).

The journals of the General Assembly, when competent as evidence, import absolute verity, and cannot be explained or altered by parol evidence. Wilson v. Markley, 133 N.C. 616, 45 S.E. 1023 (1903).

The Constitution requires that it should appear, not from the entries on the original bill, but from the journal, that the bill was properly read and the necessary entry of yeas and nays was made. If the journal should show that the bill was properly passed, no evidence will be received to contradict what is therein recorded. State ex rel. Dyer v. City of Leaksville, 275 N.C. 41, 165 S.E.2d 201 (1969).

And Not the Certificates. - With respect to the requirements in this section, the House and Senate journals, and not the certificates of ratification signed by the presiding officers, are the sources of proof as to whether the bill was read on three several days in each house of the General Assembly and passed three several readings on three different days and that the yeas and nays on the second and third readings were entered on the journals. State ex rel. Dyer v. City of Leaksville, 275 N.C. 41, 165 S.E.2d 201 (1969).

The additional steps necessary to show the passage of revenue acts are not within the conclusive presumption arising from the certificates of the presiding officers. The journals are made the exclusive sources of such proof. State ex rel. Dyer v. City of Leaksville, 275 N.C. 41, 165 S.E.2d 201 (1969).

Effect of Certificates of Ratification. - The usual certificate of ratification is conclusive only of the fact of ratification, but not of a compliance with this section of the Constitution. Smathers v. Commissioners of Madison County, 125 N.C. 480, 34 S.E. 554 (1899).

The certificate of the speakers of each house of the legislature is conclusive evidence that a bill was read and passed three several readings in each house. Commissioners of New Hanover County v. DeRossett, 129 N.C. 275, 40 S.E. 43 (1901).

Correction of Journals. - A subsequent special session of the same legislature may correct its journals of the regular session so as to show in point of fact that a bill of this character was properly passed in accordance with these provisions. Commissioners of Richmond County v. Farmers Bank, 152 N.C. 387, 67 S.E. 969 (1910).

Where journal of the Senate affirmatively showed that first and second readings took place on the same day, the act was unconstitutional. Storm v. Town of Wrightsville Beach, 189 N.C. 679, 128 S.E. 17 (1925).

III. SUBSTITUTIONS AND AMENDMENTS.

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When Amendment Will Affect Constitutionality. - An act passed in accordance with this section is not rendered invalid by an amendment not passed in accordance with the constitutional provision when the amendment does not affect the taxing or other financial features of the act, increase either the taxes, or impose any additional burden on the taxpayer. Wagstaff v. Central Hwy. Comm'n, 174 N.C. 377, 93 S.E. 908 (1917).

Passage of Material Amendments. - A material amendment made by one branch of the legislature to a bill passed by the other, allowing a county to pledge its credit in issuing bonds for the improvement of the highways therein, must be concurred in according to the requirements of this section. Glenn v. Wray, 126 N.C. 730, 36 S.E. 167 (1900); Claywell v. Board of Comm'rs, 173 N.C. 657, 92 S.E. 481 (1917). See also, Guire v. Board of Comm'rs, 177 N.C. 516, 99 S.E. 430 (1919), as to amendment by separate act.

Passage of Immaterial Amendments. - When an act has been passed in accordance with this section, an amendment which does not increase the amount of the bonds or the taxes to be levied or otherwise materially change the original bill may be adopted by the concurrence of both houses of the General Assembly. Board of Comm'rs v. F.M. Stafford & Co., 138 N.C. 453, 50 S.E. 862 (1905).

An amendment which does not increase the amount of the bonds or tax to be levied, or otherwise materially change the bill is immaterial. Gregg v. Board of Comm'rs, 162 N.C. 479, 78 S.E. 301 (1913).

It is only when a material amendment is affected that rereading is necessary. Frazier v. Board of Comm'rs, 194 N.C. 49, 138 S.E. 433 (1927).

No Presumption of Materiality of Amendment. - Where the journal does not show the effect of the amendment, there is no presumption that it was material. Frazier v. Board of Comm'rs, 194 N.C. 49, 138 S.E. 433 (1927).

Evidence of Materiality. - Slips of paper attached by a rubber band to the cover of the original bill when it was engrossed were not admissible in determining whether an amendment was material. Frazier v. Board of Comm'rs, 194 N.C. 49, 138 S.E. 433 (1927).

Materiality a Judicial Question. - Whether an amendment is material and required to be passed in accordance with this section is a question of law for the court, under the facts, and is not controlled by an agreement between the parties. Wagstaff v. Central Hwy. Comm'n, 174 N.C. 377, 93 S.E. 908 (1917).

Validation by Later Act. - Where a statute, pledging the faith and credit of the State in issuing State bonds, has not been passed in accordance with the provisions of this section and is therefore invalid, its invalidity may be cured by a later statute passed as the Constitution requires, referring to the former statute, and supplying the omissions, and the bonds thereunder issued after the question has been submitted to and approved by the voters of the State, as the statute required, are valid. Hinton v. Lacy, 193 N.C. 496, 137 S.E. 669 (1927).

Change in Caption. - A slightly different caption retaining the number of the original bill was an immaterial amendment. Brown v. Road Comm'rs, 173 N.C. 598, 92 S.E. 502 (1917).

Substitution of Name of Commissioner. - An amendment in the second branch of the legislature substituting the name of a commissioner does not broaden the scope of the act or affect its financial feature, and the failure in the first branch to comply with this section will not alone affect its validity. Brown v. Road Comm'rs, 173 N.C. 598, 92 S.E. 502 (1917).

Curtailing Territory to Which Indebtedness Applied. - An act empowering special school districts of the State to issue bonds, which followed the requirements of this section except that upon its last reading, by amendment, it was made to apply only to one district in the State, the effect of the amendment being to exclude the other districts, and the act being regularly enacted as to the one district retained, was valid as to that district. Gregg v. Board of Comm'rs, 162 N.C. 479, 78 S.E. 301 (1913).

Where a bill was introduced in one branch of the legislature for the issuance of bonds, and amendments were made by the other branch, withdrawing certain of the more wealthy and popular townships from the liability for the indebtedness to be created, except under condition requiring the approval of the voters, the amendment was a material one, requiring for the validity of the act that it be passed in accordance with the requirements of this section. Claywell v. Board of Comm'rs, 173 N.C. 657, 92 S.E. 481 (1917).

Substitution of Tax Bill. - Where a bill authorizing a levy of taxes for road purposes was read and referred to a committee, and the committee recommended a substitute, resulting in the tabling of the original bill and the passing of the substitute on two separate days in that branch of the legislature, and otherwise conforming to the requirements of this section, in both branches, the substitute would be regarded, in the contemplation of the Constitution, as an amendment to the original bill introduced, and the act could not successfully be questioned as not having passed on the several separate days required of a bill of this character. Edwards v. Nash County Bd. of Comm'rs, 183 N.C. 58, 110 S.E. 600 (1922).

Increase in Tax Rate. - When an act was passed by the legislature authorizing a graded school district to vote on the question of issuing school bonds in a certain amount, and amended at a subsequent session so as to authorize bonds to a larger amount and to run a longer time, both acts having been passed upon their several readings, with aye and no vote according to this section, an issue of bonds under a still later and similar act for a larger amount and upon a greater rate of taxation was invalid in toto when the later act was not likewise passed in accordance with this section. Russell v. Town of Troy, 159 N.C. 366, 74 S.E. 1021 (1912).

Increase in Interest Rate on Bonds. - An amendment to an act authorizing a county to issue bonds for road construction, which increases the rate of interest from 5% to 6%, involved material change in the former law. Guire v. Board of Comm'rs, 177 N.C. 516, 99 S.E. 430 (1919).

Where a municipal charter authorizing issuance of bonds was subsequently amended with regard thereto, but upon condition that the proposition be submitted to the voters, which was never done, and the legislature attempted to pass a still later law amending the former act but not in accordance with the requirements of this section, the later acts were of no effect, leaving the charter of the town as to these provisions open, under the terms of which the bonds could yet be issued. Cottrell v. Town of Lenoir, 173 N.C. 138, 91 S.E. 827 (1917).

Subsequent Act Requiring Referendum on Bond Issue. - Where the legislature passed an act authorizing a county to pledge its faith and credit in the issuance of bonds upon its several readings, upon its aye and no vote in accordance with this section, and by later ratification of an act requires the question to be submitted to the qualified voters, it was not necessary that the later ratified act also be passed in accordance with the constitutional requirement, and thus, in the absence of a proper election, the bond issue would be declared invalid. Graham County v. W.K. Terry & Co., 194 N.C. 22, 138 S.E. 443 (1927).

Where the legislature passed an act authorizing a county to issue bonds according to the provisions of this section, it was within its power to add a provision that the question be first submitted to the electorate of the county. Graham County v. W.K. Terry & Co., 194 N.C. 22, 138 S.E. 443 (1927).

An amendment which made a material change in the valid act it proposed to amend was unconstitutional, and the commissioners were without authority to levy the tax specified in the later act. Township Rd. Comm'n v. Board of Comm'rs, 178 N.C. 61, 100 S.E. 122 (1919), cert. denied, 329 N.C. 270, 407 S.E.2d 838 (1991).

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