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THE LIBRARY OF THE UNIVERSITY OF NORTH CAROLINA THE COLLECTION OF NORTH CAROLINIANA CJUO N87a v.U2 no. 1-2 1972 UNIVERSITY OF N.C. AT CHAPEL HILL 00033947203 FOR USE ONLY IN THE NORTH CAROLINA COLLECTION Digitized by the Internet Archive in 2011 with funding from Ensuring Democracy through Digital Access (NC-LSTA) http://www.archive.org/details/northcarolinaatt19721973 W\ &dj \~j^ NORTH CAROLINA VOLUME 42 NUMBER 1 OBERT MORGAN TTORNEY GENERAL 42 N.C.A.G.-No. 1 Pages 1 through 144 NORTH CAROLINA ATTORNEY GENERAL REPORTS Opinions of the Attorney General July 1, 1972, through December 31, 1972 MAILING ADDRESS: P. O. Box 629, Raleigh, N. C. 27602 Jean A. Benoy James F. Bullock ROBERT MORGAN Attorney General Harry W. McGalliard Chief Deputy Attorney General Ralph Moody Special Counsel Andrew A. Vanore, Jr. Robert Bruce White, Jr. Deputy Attorneys General Carroll Leggett Special Assistant Attorney General H. H. Weaver Administrative Deputy Attorney General Myron C. Banks James L. Blackburn William F. Briley Lester Chalmers H. Al Cole, Jr. Richard B. Conely T. Buie Costen Christine Y. Denson Raymond W. Dew, Jr. Sidney S. Eagles, Jr. Edward L. Eatman, Jr. Roy Andre Giles, Jr. Eugene Hafer Guy A. Hamlin Claude Harris Charles M. Hensey Parks H. Icenhour Dale P. Johnson Rafford E. Jones Assistant Thomas E. Kane I. Beverly Lake, Jr. Richard N. League Charles A. Lloyd James E. Magner, Jr. William W. Melvin William F. O'Connell William B. Ray Millard R. Rich, Jr. James B. Richmond Walter E. Ricks, III Henry Thomas Rosser Jacob L. Safron Alfred N. Salley Howard P. Satisky Eugene A. Smith Robert S. Weathers Robert G. Webb Thomas B. Wood Attorneys General Wade E. Brown, Consultant Herbert Lamson, Jr., Claims Attorney Russell G. Walker, Jr., Revisor of Statutes 1U> ,/ - -2- Ruth G. Bell Edwin Thomas Maddox, Jr. George W. Boylan Henry E. Poole ltf7'K/'72 Jones P. Byrd M. Ann Reed Don A. Davis Russell G. Sherrill, III Ralf Haskell John M. Silverstein Charles D. Heidgert Edwin M. Speas, Jr. Howard A. Kramer Associate Attorneys TABLE OF CONTENTS Administration of Estates; Commissions; Executor; Joint Tenancy with Right of Survivorship; Joint Bank Accounts 138 Clean Water Bond Act of 1971 (Chapter 909, 1971 Session Laws); Application for Grants; Construction Begun Before Adoption of Administrative Rules and Regulations 16 Counties; Commissioners; Compensation; Fixing Compensation of County Commissioners Pursuant to G.S. 153-13 132 Counties; Recreation Districts; Article 28, Chapter 153 (G.S. 153-368, et seq.) 74 Courts; Clerk of Superior Court; Partition of Real Property; Authority to Impose Restrictive Covenants in Deeds in Sale for Partition of Real Property; G.S. 46-30 1 Courts; District Courts; Juveniles; Criminal Offenses; Commitments to the Board of Youth Development When the Juvenile is Over 16 Years of Age 69 Courts; Juveniles; Probation; Education; Compulsory Attendance Law 133 Courts; Summons and Process; Nonresidents, Service of 110 Criminal Law and Procedure; Law Enforcement; Legality of Law Enforcement Officers From Out of Jurisdiction Serving as Undercover Agents in Another Jurisdiction 76 Criminal Law and Procedure; Sentences; Judgment and Commitment; Correction, Department of; Prisons and Prisoners 68 Criminal Law and Procedure; Sentencing; Presentence Report; Use of Prior Convictions; Probation and Probation Officers 92 Criminal Law and Procedure; Youthful Offender; Parole on Conditional Release 83 Education; Colleges and Universities; Annuity or Retirement Income Contracts for Faculty Members, Officers and Employees of State-Supported Institutions of Higher Learning; G.S. 116-46.2 6 Education; Teachers; Teacher Tenure Act; G.S. 115-142; Career Teachers 61 Elections; Registration Commissioners; Time of Appointment 79 Escheats; Hospitals; Applicability of Escheats Law to Hospital 14 Escheats; Marketing Cooperatives; Applicability of G.S. 116A-7 12 Escheats; Statutes of Limitations Inapplicable 49 Health; Certificate of Need; Inapplicability to Facility Already Constructed but Not Fully Licensed or Used 54 Health; Certificate of Need; Proper Licensing Agency for Facility Which Combines Hospitals, Nursing Homes and Rest Home Care 57 Insurance; Automobile Liability Insurance Policies; Termination by Rescission; Legality of 29 Insurance; Automobile Liability Insurance Policies; Terminations by Cancellation and Refusal to Renew; Applicability of 48-Month Exclusion 22 Intoxicating Liquors; Beer; Sunday Sales; County Regulation of; Straw Vote 26 Intoxicating Liquors; Beer and Wine; Sale of Sweet Wine in City of Monroe; Chapter 541, Session Laws of 1963; Enactment of Chapter 18A of the General Statutes 4 Intoxicating Liquors; Solicitation of Sales; Authority of State Board to Regulate Solicitation of Sales of Alcoholic Beverages, Beer and Wine 51 Intoxicating Liquors; Transportation; Alcoholic Beverages Being Transported to ABC Stores; Authority of Local Board to Transport Beverages 114 Jails; Sheriffs; Duty of Sheriff to Transfer Prisoners to Adjoining County 127 Licenses and Licensing; Day Care Facilities; Facility With Morning Kindergarten and a Lesser Number of Children for All Day Care 81 Licenses and Licensing; Day Care; Facilities on Federal Reservations 128 Licenses and Licensing; Day-Care Facilities; Number of Children for Whom Facility Licensed 55 Licenses and Licensing; General Contractors; Installation of Industrial Equipment 45 Licenses and Licensing; Plumbing and Heating Contractors; Necessity of Obtaining a License Under the Grandfather Clause Prior to Engaging in the Business of Plumbing and Heating Contracting 20 Mental Health; Detention of Inebriates and Mentally 111 Persons; Authority of Clerk of Superior Court to Issue Custody Order to Sheriff 43 Mental Health; Detention of Inebriates and Mentally 111 Persons; Authority of Clerk to Order Non-State Operated Hospitals to Involuntarily Accept Patients 66 Mental Health; Examination and Hospitalization of Inebriates; Public Drunkenness As a Criminal Offense 41 Motor Vehicles; Abandoned or Junked Vehicles; Removal of Abandoned Vehicles from Private Property 47 Motor Vehicles; Drivers' Licenses; Habitual Offenders 130 Motor Vehicles; Drivers' Licenses; Limited Driving Privilege; Driving After License Revoked; Sufficiency of Warrant 97 Motor Vehicles; Drivers' Licenses; Limited Driving Privilege; Revocation; Driving Under the Influence, Second Offense 125 Motor Vehicles; Drivers' Licenses; Reduction of Points for Successful Completion of Driver Improvement Clinic; G.S. 20-1 6(c) 84 Motor Vehicles; Drunken Driving; Plea Bargaining; Careless and Reckless Driving 71 Motor Vehicles; Drunken Driving; "Public Vehicular Area" 107 Municipalities; Day-Care Centers; No Authority to Expend Municipal Funds 135 Municipalities; Intoxicating Liquors; Authority to Regulate Consumption and Display on Public or City-Owned Property 59 Municipalities; Ordinances; Parking Meters; City of Raleigh 141 Municipalities; Streets and Highways; Powell Bill Funds; Expenditure for Sidewalks 91 Municipalities; Streets and Highways; Powell Bill Funds; Expenditure on State Highway System Streets 85 Oaths; Attorneys at Law; Who May Swear in Attorneys to Practice Law; G.S. 84-1, G.S. 11-7.1 82 Public Contracts; Bidding; Factory-Installed Electrical Heating and Plumbing Facilities; Separate Bids Required; G.S. 143-128 129 Public Officers and Employees; ABC Board Employees; Not Employees of the Municipality or County 28 Public Officers and Employees; Conflict of Interest; Officer Contracting for His Own Benefit; G.S. 159A-10; G.S. 14-234; County Commissioner Who is Officer of Corporation 9 Public Officers and Employees; Double Office Holding; Member of County Social Services Board and County School Board 1 1 6 Public Officers and Employees; Highway Patrol; Liability of Troopers for Medical Services Rendered to Patients 2 Public Officers and Employees; Private Use by Physicians of State Facilities 58 Public Officers and Employees; Workmen's Compensation; State Highway Patrol 136 Social Services; Foster Home Fund; Noneligibility of Persons Who are 18 or More Years of Age 8 Social Services; Juveniles; Medical Care; Sufficiency of Consent by County Department of Social Services 101 Social Services; Juveniles; Probation; Termination Under Interstate Compact on Juveniles 117 Social Services; Juveniles; Wards of the State; Effect of Placement of Custody by Judge of Juvenile Court 88 State Departments, Institutions and Agencies; Correction, Department of; Liability for Hospitalization of Inmates 38 State Departments, Institutions and Agencies; Eminent Domain; Relocation Assistance 104 State Departments, Institutions and Agencies; Orthopedic Hospital; Authority to Make Charges for Treatment, Care and Maintenance 1 1 1 State Departments, Institutions and Agencies; Publications; Free Distribution on Request to Statutory List of Institutions; G.S. 147-50 94 State Departments, Institutions and Agencies; Tort Liability; Mental Health; Area Mental Health Boards; Board Members; Authority to Sue and be Sued 120 State Departments, Institutions and Agencies; UNC at Chapel Hill; Public Utilities; Governor's Commission to Study Sale or Retention of University-Owned Utilities; Chapter 723, Session Laws of 1971 122 Taxation; Ad Valorem; Exemptions; Real Property; Homes for the Aged, Sick and Infirm; G.S. 105-278(5) 99 Taxation; Gift Tax; Decedent's Estate; Assets Includable; G.S. 105-108; G.S. 105-109 32 Taxation; Privilege License Tax; Selling Illuminating Oil or Greases or Benzine, Naphtha, Gasoline or Like Products; Automotive Service Stations; G.S. 105-72 and -89 18 Taxation; Sales Tax; Laundries and Dry Cleaners; Rug Cleaning Services; G.S. 105-164.4(4) 35 3 July 1972 Subject: Requested by: Question: Courts; Clerk of Superior Court; Partition of Real Property; Authority to Impose Restrictive Covenants in Deeds in Sale for Partition of Real Property; G. S. 46-30 Honorable M. L. Huggins Clerk of Superior Court Lincoln County In a special proceeding before the clerk of superior court to sell land for partition among tenants-in-common, may the clerk authorize commissioners to impose legally binding restrictive covenants upon the real estate where the real estate now has no restrictions on its use and some of the co-tenants do not consent to the imposition of restrictive covenants? In a special proceeding before the clerk of superior court to sell land for partition among tenants-in-common, the clerk may not authorize commissioners to impose legally binding restrictive covenants upon the real estate where the real estate now has no restrictions on its use and some of the co-tenants do not consent to the imposition of restrictive covenants. Your letter of June 21 , 1972 recites that you have entered an order of sale and have appointed commissioners to carry out the sale of land in a special proceeding to sell land for partition among tenants-in-common. The land now has no restrictions on it of any kind. It may be, you note, that the imposition of covenants limiting the land to residential purposes and further restricting the kind and size of residences "would be wise and in the best interests of the sale." The tenants are unable to agree on the question of voluntary imposition of restrictions. Conclusion: After careful review, we conclude that the clerk of superior court does not have the authority to impose or approve imposition of restrictive covenants relating to residential use and size and kind of residences where the land was previously unencumbered. No express statutory authority exists to restrict or modify the title taken by purchasers at such a sale. We construe G. S. 46-30 as requiring the person making the deed to convey only ". . .such title and estate in the property as the tenants in common. . .had therein." To impose or authorize imposition of restrictive covenants on land heretofore unrestricted, notwithstanding the wisdom of the restrictions, constitutes a modification of the tenants' title and estate in the property to be sold. For the clerk or commissioners to do so would contravene G. S. 46-30. Supporting this position is the language by Justice Brown in Jordan v. Faulkner, 168 N. C. 466, 467 (1915): "The deed of the commissioner, by virtue of the partition proceedings, is in law the conveyance of all the parties, and vests in the grantee the same title and rights as would other conveyance equally comprehensive in terms." (Emphasis added.) Robert Morgan, Attorney General Sidney S. Eagles, Jr., Assistant Attorney General 5 July 1972 Subject: Public Officers and Employees; Highway Patrol; Liability of Troopers for Medical Services Rendered to Patients Requested by: Question: Col. Edwin C. Guy State Highway Patrol Is a member of the State Highway Patrol personally liable for hospital and doctor charges for necessary medical services -2- rendered to a prisoner in his custody because he secured the medical services for the prisoner? Conclusion: A member of the State Highway Patrol is not personally liable for hospital and doctor charges for necessary medical services rendered to a prisoner in his custody notwithstanding the fact that he secured the medical services for the prisoner. The typical incident described in this inquiry involved two prisoners who had been injured while resisting a lawful arrest by members of the State Highway Patrol. After making the arrest, the troopers then took the prisoners to a local hospital where they received first aid. One of these troopers was requested to sign the admittance slips on the prisoners; later, upon refusal of the prisoners to pay the medical fees incurred, the hospital requested payment from the arresting troopers. Ordinarily an express or implied contract is necessary to render one person liable for hospitalization charges of another. Any such contract must be construed in view of the language used in the agreement as well as in light of all the facts and circumstances involved at the time it was executed. See Bartron Clinic v. Kallemeyn, 60 S. D. 598, 245 N. W. 393 (1932). In the situation as described, by virtue of the troopers' position as law enforcement officers and their custodial responsibility for the prisoners, other factors enter into the circumstantial background to be considered in assaying the presence of pecuniary liability. One factor is the existence, or nonexistence, of any statutory duty to furnish necessary care for prisoners. Another factor is the basic responsibility of any peace officer, absent a specific statutory obligation, to provide humane treatment calculated to protect the health and welfare of persons within his charge. Applying these precepts to the situation described, it is clear that the troopers' purely humanitarian act of seeking medical treatment for their prisoners was one taken in an official capacity rather than -3- one designed to achieve a personal end. As a result, no personal liability would appear to be incurred thereby. As to payment of the medical costs, in the event of failure of payment by the patients and subsequent demand by the hospital, G. S. 153-53.2 and G. S. 153-53.3 appear to become pertinent as of the time of arrest. These two sections pertain to all prisoners "confined or detained" (See G. S. 153-50(6)). Basically they require that local confinement facilities have suitable plans in existence for providing emergency medical services and for payment for those services. Robert Morgan, Attorney General William F. O'Connell, Assistant Attorney General 7 July 1972 Subject: Intoxicating Liquors; Beer and Wine; Sale of Sweet Wine in City of Monroe; Chapter 541, Session Laws of 1963; Enactment of Chapter 18A of the General Statutes Requested by: Mr. Koy E. Dawkins Attorney Monroe ABC Board Question: Conclusion : In an earlier Attorney General opinion (41 N.C.A.G. 100 (1970)), this Office concluded that sweet wine could not be sold in the City of Monroe. Does the recodification of the intoxicating liquor laws as Chapter 18A of the General Statutes and the repeal of Chapter 18 affect the outcome of that issue? No. -4- This Office held in an opinion to Mr. John R. Milliken, Monroe City Attorney, on October 8, 1970 (41 N.C.A.G. 100) that sweet wine could not be sold in the City of Monroe as provided in G. S. 18-99 since Chapter 541 of the 1963 Session Laws provides that the Monroe ABC Board and the operation of the ABC stores in Monroe will be subject to the provisions of Article 3 of Chapter 18. Although the sale of fortified wine is allowed by the provisions of former Article 3, Chapter 18, the sale of sweet wine was dealt with in G. S. 18-99, which was in Article 5 of Chapter 18. Effective October 1, 1971, the General Assembly recodified the intoxicating liquor laws into Chapter 18A of the General Statutes and repealed Chapter 18. The category of sweet wines was abolished and, under the new General Statutes, wine is classified as either unfortified or fortified with the dividing line being a 14% alcohol by volume measure. G. S. 18A-57 provides: " § 18A-57. Local acts and local option. - (a) Nothing in this Chapter shall operate to repeal any of the local acts of the General Assembly of North Carolina prohibiting the possession or consumption of intoxicating liquor within any county, municipality, or portion thereof, and all such local acts shall continue in full force and effect and in concurrence herewith, until repealed or modified. "(b) Nothing in this Chapter shall require a permit to be issued for any territory where the sale of malt beverages or wine (fortified or unfortified) is prohibited by special legislative act or for any area where the sale or possession for the purpose of sale of malt beverages or wine (fortified or unfortified) is unlawful as a result of a local option election; and this Chapter shall not repeal any special, public-local, or private act prohibiting or regulating the sale of these beverages in any county in this State, or any act authorizing the board of commissioners of any county of this State, or the governing body of any municipality, in its discretion, to prohibit the sale of -5- malt beverages or wine (fortified or unfortified)." Since the local act pursuant to which the ABC store election in the City of Monroe was held did not permit the sale of sweet wines but only permitted the sale of fortified wines, the enactment of Chapter 18A of the General Statutes does not affect our opinion that the category of sweet wines as they were defined in former G. S. 18-99 still may not be sold by the Monroe ABC Stores. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 10 July 1972 Subject: Requested by: Question: Education; Colleges and Universities; Annuity or Retirement Income Contracts for Faculty Members, Officers and Employees of State-Supported Institutions of Higher Learning; G. S. 116-46.2 Mr. H. L. Ferguson, Jr. Vice Chancellor for Business Affairs University of North Carolina at Greensboro G. S. 116-46.2 empowers the board of trustees of any State-supported institution of higher learning to authorize the financial officer to enter into annual contracts with employees of the institution for a reduction in salary below the total established salary schedule for the purchase of annuity or retirement income contracts for the benefit of the employee. Is an employee free to determine the identity of the seller of such an annuity or retirement contract entered into for the employee's benefit, or may the institution make this determination? Conclusion: G. S. 116-46.2 provides that pursuant to the contract with the employee, "the financial officer or agent shall use the funds derived from the reduction in the salary ... to purchase a non-forfeitable annuity or retirement income contract for the benefit of . . . (the employee)." Because the seller of the annuity or retirement income contract enters into an agreement with the institution, not with the employee, the institution is free to determine the identity of the seller of such contract. G. S. 116-46.2 sets forth the procedure whereby State-supported institutions of higher learning may purchase annuity or retirement income contracts for employees of the institution. This statute establishes two types of contractual relations: (1) A contract between the employee and the appropriate administrative body of the institution whereby the employee agrees to have his pay reduced by a certain amount and the institution agrees to use this money to purchase a non-forfeitable annuity or retirement income contract; and (2) a contract between the institution and the seller of the annuity or retirement income plan under which the employee is a third party beneficiary. Because the contract entered into between the institution and the seller is fully enforceable by the third party beneficiary, and because the contract may not be materially altered without the beneficiary's consent, the employee-beneficiary is not being deprived of the unrestrained use of a part of his salary without his consent should the institution determine who the seller of the contract will be. Trust Company v. Processing Company, 242 N. C. 370 (1955); 2 Strong, N. C. Index 2d, Contracts, §14. However, the institution should, before agreeing with the employee for reduction in pay for the purchase of an annuity or retirement income contract, advise the employee of those companies it normally does business with and, if feasible, allow the employee to choose which company he -7- prefers the institution to contract with for his benefit. This opinion overrules an unpublished, informal opinion issued by this Office to Mr. Jule McMichael on 20 September 1971 construing G. S. 115-153.1, which provides for the same type of annuity and retirement income contracts for public school employees. Robert Morgan, Attorney General Andrew A. Vanore, Jr., Deputy Attorney General 11 July 1972 Subject: Requested by: Question: Conclusion : Social Services; Foster Home Fund; Noneligibility of Persons Who Are 18 or More Years of Age Mr. Clifton Craig Commissioner Department of Social Services May assistance from the State Foster Home Fund described in G. S. 108-66 lawfully be granted to persons who are 18 or more years of age and who live in foster homes? Assistance from the State Foster Home Fund described in G. S. 108-66 may not lawfully be granted to persons who are 18 or more years of age and who live in foster homes. G. S. 108-66 makes it clear that the funds provided for therein are for "needy children". G. S. 48A-2 provides that "A minor is any person who has not reached the age of 18 years." Therefore, we do not perceive that persons who are 1 8 or more years of age can properly be denominated "children". Furthermore, although G. S. 108-66 speaks of "needy children" rather than "dependent children", it is deemed significant that G. S. 108-66 providing for the Foster Home Fund is a part of Article 2 of Chapter 108 wherein, in G. S. 108-24, the adult status of persons who are 18 or more years of age is recognized. G. S. 108-24 is, in pertinent part, as follows: "As used in Article 2: . . .(3) 'Dependent child' is a person under 18 years of age. ..." Robert Morgan, Attorney General Robert S. Weathers, Assistant Attorney General 12 July 1972 Subject: Requested by: Question: Conclusion: Public Officers and Employees; Conflict of Interest; Officer Contracting for His Own Benefit; G. S. 159A-10; G. S. 14-234; County Commissioner Who Is Officer of Corporation Mr. Walter J. Cashwell, Jr. Scotland County Attorney May a county pollution abatement and industrial facilities financing authority lease a facility, constructed under the provisions of Chapter 159A, North Carolina General Statutes, to a corporate lessee to be subleased to a corporation partly owned by the lessee when a member of the county board of commissioners is president of the corporate sublessee and is also president of a third corporation which is part owner of the corporate sublessee? A lease or sublease of property constructed by a county pollution abatement and industrial facilities financing authority pursuant to the provisions of Chapter 159A, North Carolina General Statutes, to a corporation in which a county commissioner has a direct or indirect interest would be in contravention of the express conflict of interest provisions of G. S. 159A- 10 and may be in violation of G. S. 14-234. Inquiry is made whether a conflict of interest would arise under G. S. 159A-10 if a county pollution abatement and industrial facilities financing authority leases a facility, constructed with funds realized from bonds issued by the authority, to a corporation which will then sublease to a second corporation when it appears: 1. That the corporate sublessee is wholly owned by the corporate lessee and a third corporation; 2. The lessee is a customer of the sublessee and both are customers of the third corporation; and 3. A member of the board of county commissioners is president of both the sublessee and the third corporation. G. S. 159A-10 provides, inter alia: "No officer, member, agent or employee of . . . any political subdivison or agency thereof shall be interested either directly or indirectly in any contract with an authority. ..." {Emphasis added). The statute prohibits any public official or public employee having an interest, either direct or indirect, in any contract with a county pollution abatement and industrial facilities financing authority. No case has been found which construes the provisions of G. S. 159A-10. The provisions of that statute appear sufficiently similar to those of G. S. 14-234, however, that it is possible to reason by analogy. -10- This Office has determined that a conflict of interest would exist under G. S. 14-234 in the following instances: 1. Contract between a school board and the wholly owned subsidiary of a parent company in which a board member had stock. 40 N.C.A.G. 565 (1970). 2. Lease of houses by a municipal housing authority from a corporation of which the mayor, who appointed the housing authority, was president and owner. 40 N.C.A.G. 561 (1969). 3. Purchase of supplies by a town from a corporation when a town commissioner was part owner, director, secretary and general manager of a store owned by the corporation. 41 N.C.A.G. 371 (1971). In an Opinion appearing in 40 N.C.A.G. 566 (1969), it is said: "The North Carolina statute is merely declaratory of the common law which has always been enforced strictly by the courts to prohibit public officials from being a party to a contract with the municipality or in any manner receiving or being in a position to receive benefits from the body of which he is a member. The courts will not permit the rule - that a man cannot serve two masters - to be evaded by any device or subterfuge. The good faith of the parties is immaterial. McQuillin, Municipal Corporations, Vol. 10, §§ 29-97, et seq." Although in the instant case the lessor is the financing authority, it is noted that the members of the authority are appointed by the county governing body. G. S. 159A-4. Considering the proprietary interests and trade relations that exist among the corporations, it must be presumed that the lease and sublease are for the benefit of all. The county commissioner is a member of a political subdivision which is empowered to create the financing authority. Since the -11- execution of the lease by the financing authority is for the benefit of the corporations of which the commissioner is president, a conflict of interest arises under G. S. 159A- 10. Robert Morgan, Attorney General Henry T. Rosser, Assistant Attorney General 17 July 1972 Subject: Requested by: Question: Conclusion: Escheats; Marketing Cooperatives; Applicability of G. S. 116A-7 Honorable Edwin Gill State Treasurer A cooperative marketing association engaged only in the marketing of a single agricultural product for the producers thereof was exempt from escheating certain distributions by virtue of G. S. 116-25. That statute was amended and transferred to G. S. 116A-7 by the 1971 General Assembly, effective July 1, 1971. The association called for a redemption prior to July 1 , 1 97 1 , of certain equity certificates issued to its members. Is such an association required to escheat the value of such equity certificates called for redemption but not actually redeemed upon expiration of three years from the date of call for redemption? Under the facts stated, the cooperative marketing association must escheat the value of such certificates three years from the date of call for redemption or other time when it is determined that those certificates are unclaimed. -12- The inquiry indicates that several years ago the cooperative marketing association organized for the purpose of marketing one agricultural product complied with the United States Department of Agriculture regulation requiring the association's equity capital | to be owned by current members. In doing so, in July of 1970, the marketing association called for the redemption of equity certificates issued in 1923 of which $21,686.44 was then outstanding. As of June 30, 1971, only $1,673.29 had been retired, leaving a balance in the 1923 certificates of $20,013.15. Also, in July of 1970, a call for redemption of the 1924 certificates in the amount of $41,143.90 was called for and as of June 30, 1971, there was a balance of $38,025.52. At the time of making the call for redemption, the association was arguably exempt from the escheat law provisions in that G. S. 116-25, containing substantially the same provisions as G. S. 116A-7, provided that that paragraph of the statute would not apply "to a cooperative marketing association engaged only in the marketing of a single agricultural product for the producers thereof." Subsequently, effective July 1, 1971, the escheats statutes were recodified and this provision was transferred to G. S. 116A-7 and that exemption was dropped. The escheats law as codified in Chapter 116A of the General Statutes is applicable to any unclaimed or derelict property of certain specified kinds. Also, there is a "catch-all" provision in G. S. 116A-4 which covers all other unclaimed personal property held by any person, firm or corporation. Those equity certificates in the marketing cooperative association which remain unclaimed thus fall within the purview of G. S. 11 6A-7 and should be escheated to the State through the State Treasurer's Office three years after they are determined to be unclaimed. The call for redemption is probably a convenient measuring date for a determination that the shares are unclaimed. The escheat statute is not being applied retrospectively here but is being applied to property which is unclaimed as of July 1, 1971, and subsequently. The inquiry indicates that there was no cut-off date when such certificates could be redeemed and, indeed, when they are escheated to the State Treasurer's Office, they will be held there subject to claim by the party entitled thereto. -13- Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 17 July 1972 Subject: Requested by: Question: Conclusion: Escheats; Hospitals; Applicability of Escheats Law to Hospital Mr. Edward E. Hollowell Attorney Wake County Hospital System, Inc. Are the provisions of Chapter 1 1 6A of the General Statutes regarding escheats applicable to the various types of hospitals in North Carolina? The provisions of Chapter 1 1 6A of the General Statutes regarding escheats are applicable to the various types of hospitals in North Carolina. The recent inquiry made on behalf of Wake County Hospital System, Inc., inquires as to the applicability of the escheat law to the various types of hospitals in the State. The inquiry indicates that there are four principal types of hospitals in North Carolina: 1 . County hospital authorities operating hospitals such as Wayne County Memorial Hospital; 2. Not-for-profit leasing county facilities such as the Wake County Hospital System, Inc.; 3. Private, not-for-profit hospitals such as Rex Hospital; 4. For profit hospitals such as Mary Elizabeth Hospital. Chapter 1 16A of the General Statutes, transferred by Chapter -14- 135 of the 1971 Session Laws to this codification from provisions in former Chapter 116 of the General Statutes and now administered by the State Treasurer's Office, provides for the escheat of property to the State and the claim by the State to certain types of abandoned property. The statutes have historically been based on constitutional provisions (presently Article IX, sec. 10). The 1971 recodification did not make any substantive changes in the law as far as the administration with regard to hospitals is concerned except for the reporting requirements added by G. S. 116A-7.1. While there are some sections applicable to specifics (see, e.g., G. S. 116A-7(a) dealing with unclaimed salaries, wages and other compensation), there is a "catch-all" provision in G. S. 116A-4 which provides in pertinent part: "Personal property of every kind, except as is otherwise provided by this Chapter, ... in the hands of any person . . . , firm or corporation which shall not be recovered or claimed by the parties entitled thereto for three years after the same shall become due and payable, shall be deemed derelict property, and shall be paid or delivered to the Escheat Fund and held without liability for profit or interest until a just claim therefor shall be preferred by the parties entitled thereto." The language of this statute is all-inclusive and makes no distinction between public and private profit or not-for-profit operations. Therefore, when any property remains unclaimed for a period of three years, it should be paid to the State Treasurer's Office along with the report required by the statute and would be held by the State Treasurer's Office subject to claim. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General •15- 17 July 1972 Subject: Requested by: Question: Conclusion: Clean Water Bond Act of 1971 (Chapter 909, 1971 Session Laws); Application for Grants; Construction Begun Before Adoption of Administrative Rules and Regulations Mr. Marshall Staton, Director Sanitary Engineering Division State Board of Health Department of Human Resources May a unit of local government after July 1, 1972, but before the adoption by State administrative agencies of rules, regulations and procedures for administering the Clean Water Bond Act of 1971, proceed with the construction of a project to add to its water supply system and remain eligible to apply for a grant for such project from Bond Act funds? A unit of government which begins construction of a project to add to its water supply system after July 1, 1972, will not be disqualified from making application for grant under the Clean Water Bond Act of 1971 (Chapter 909, 1971 | Session Laws) solely because construction was begun prior to adoption by State administrative agencies of rules, regulations and procedures for administering the Act. A city and a county have indicated that they find it necessary to begin construction of certain additions to an existing water supply system soon after July 1, 1972. Since it does not appear that the administrative agencies charged with responsibility for administering the Clean Water Bond Act of 1971 will have completed the preparation of necessary rules, regulations and administrative procedures, the local government units will be unable to apply for -16- a grant from Bond Act funds at the time they desire to begin construction. Inquiry is made whether the local units of government will forfeit their eligibility to apply for such grants if they begin construction prior to adoption of rules, regulations and procedures by the administrative agencies. Section 7(a) of the Clean Water Bond Act of 1971 provides, in pertinent part: "Sec. 7. Use of bond proceeds; allocation. - (a) Grants. (1) Purpose. All monies paid into the Clean Water Fund . . . shall be used for grants to units of government for the construction of new or the improvement or expansion of existing wastewater treatment works, wastewater collection systems and water supply systems." Sec. 7(e) provided, inter alia: "Allocation of grants under the provisions of this Act, . . . , shall not be made in an aggregate amount exceeding $30,000,000 in the first fiscal year, beginning July 1, 1972. . . ." {Emphasis added). Section 4 of the Act provides for the issuance of $150,000,000 in bonds of the State, subject to a favorable vote of the qualified voters. The bond election was held May 6, 1972, pursuant to Section 4, and the bond issue was approved. The Act provides that it shall be administered by the Department of Administration, the Board of Water and Air Resources and the State Board of Health. Section 14 empowers those agencies "... to adopt, modify and revoke rules of procedure establishing and amplifying the procedures to be followed in the administration of this act and regulations interpreting and applying the provisions of this act." As shown by Section 7(e), the General Assembly provided that allocation of grant funds might begin during the fiscal year 1972 - 1973, and thus clearly intended that projects constructed during this period should be eligible to apply for grants under the Act. There is no provision of the Act that makes eligibility for grants contingent upon project construction beginning after the effective -17- date of adoption of rules and regulations by the administrative agencies. Indeed, to have so provided would have been to empower the administrative agencies to delay construction under the Act for an indefinite period, since no time was specified in the Act for adoption of rules and regulations. This would have been obviously at odds with the purpose and intent of the Act, as expressed in| Section 7(a), and Section 7(e). It is concluded that projects upon which construction was begun prior to the adoption of rules and regulations by the administrative agencies will not be disqualified for that reason alone from applying for grants under the Clean Water Bond Act of 1971. It should be noted, however, that the administrative agencies, through adoption of rules and regulations under the Act, may establish the form, method and time for making application for grants. Local units of government desiring to apply for grant funds might find that they are precluded unless they procure and closely follow the rules and regulations when adopted. Robert Morgan, Attorney General Henry T. Rosser, Assistant Attorney General 17 July 1972 Subject: Taxation; Privilege License Tax; Selling Illuminating Oil or Greases or Benzine, Naphtha, Gasoline or Like Products; Automotive Service Stations; G. S. 6§ 105-72 and 89 Requested by: Question: Mr. Nelson W. Taylor Morehead City Attorney May a city levy a license tax upon a service station which sells gasoline, under the authority of G. S. 105-72? 18- Conclusion: Yes, but only if (1) all persons, firms or corporations engaged in the business of selling illuminating oil or greases or benzine, naphtha, gasoline or other products of like kind are similarly taxed and (2) each taxpayer maintains in the city an agency, station or warehouse for the distribution or sale of such products. The attorney for Morehead City has inquired what the proper privilege tax should be upon service stations. The answer will depend largely upon the provisions of the statute under which the taxing ordinance is drawn. For example, G. S. 105-89 permits counties, cities and towns to levy a license tax upon "automotive service stations" not in excess of one-fourth of that levied by the State. In the case of Morehead City, the tax could not exceed $5.00, since the State tax is dependent upon municipal population, and the population of Morehead City would indicate a State tax of $20.00. However, under the provisions of G. S. 105-72, which is broader in scope, a city "in which there is located an agency, station or warehouse for the distribution or sale of such commodities enumerated in this section" may levy a license tax of $25.00, in the case of a municipality of less than 10,000 population, upon "every person, firm or corporation engaged in the business of selling illuminating oil or greases or benzine, naphtha, gasoline or other products of like kind." Therefore, it appears that the city could impose a license tax under G. S. 105-72, but it would have to be levied upon the entire class of persons, firms and corporations engaged in the enumerated business, rather than individual members of the class. For example, if service stations, drug stores, grocery stores and hardware stores all sell "benzine, naphtha, gasoline or other products of like kind," it would be discriminatory to single out only service stations for taxation, under the authority of G. S. 105-72. Thus, it seems likely that the sale of cigarette lighter fluid, dry cleaning fluid or portable lantern or stove fuel would bring a business within the taxable class. By the same token, each taxable business would have to be found to maintain within the city an agency, station or warehouse for the distribution or sale of such products. -19- If a city chose to enact ordinances under both G. S. 105-89 and G. S. 105-72, it is doubtful that a service station could be taxed under each. It is more likely that the ordinance taxing service stations as a class, being more specific, would preempt the ordinance taxing businesses selling petroleum products. In addition, the two ordinances would clearly raise serious questions of public policy implicit in double taxation by a single taxing authority. The better view, we think, would be to apply one but not both ordinances to a single business. Robert Morgan, Attorney General Myron C. Banks, Assistant Attorney General 17 July 1972 Subject: Licenses and Licensing; Plumbing and Heating Contractors; Necessity of Obtaining a License under the Grandfather Clause Prior to Engaging in the Business of Plumbing and Heating Contracting Requested by: Mr. F. O. Bates Executive Secretary of the State Board of Examiners of Plumbing and Heating Contracting Question: Is an unlicensed person, who has engaged in, or offered to engage in, the business of plumbing and heating or air-conditioning contracting since July 6, 1971, in areas where Chapter 87 did not previously apply, in violation of Chapter 87 of the North Carolina General Statutes as amended by the 1971 General Assembly? Conclusion: No. The Amendment to Article 2 of Chapter 87 was effective on the date of -20- ratification, July 6, 1971; however, those not previously covered have until December 31, 1972, before they must secure a license prior to engaging in the business of plumbing and heating or air-conditioning contracting without violation of Article 2, Chapter 87 of the North Carolina General Statutes. Prior to amendment by the 1971 General Assembly, Article 2 of Chapter 87, requiring a license to engage in the business of plumbing and heating contracting, applied only in cities and towns having a population of more than 3,500 people. The 1971 General Assembly amended Article 2 of Chapter 87 to provide that G. S. 87-2 1(c) shall apply to all those persons, firms and corporations engaging in the business of plumbing and heating contracting. The effective date of the amendment was July 6, 1971; however, there was no saving or transitional clause provision for those not previously covered by Chapter 87 who were lawfully engaged in the business of plumbing and heating and air-conditioning contracting prior to July 6, 1971. The legislature provided, however, at the same time, a grandfather clause for those who had engaged in the business of plumbing and heating contracting in areas not previously covered. G. S. 87-2 1(d) as amended is as follows: "G. S. 87-21. Definitions; contractors licensed by Board; examination; posting license, etc.-. . . .(d) License Granted Without Examination. - Any resident of North Carolina who was engaged in business as defined in this Article in any city, town or other area in which General Statutes 87, Article 2 did not previously apply, shall receive license without examination upon submission of an application on forms provided by the Board, together with reasonable proof that he was engaged in business as defined and upon payment of the annual license fee; provided, the completed application is submitted to the Board on or before December 31, 1972." By the express provision of this section, those who engaged in the business of plumbing and heating contracting in areas where -21- Article 2 of Chapter 87 was not applicable have until! December 21, 1972, to obtain a license without an examination.1 If the Act were interpreted to require a license upon ratification of those in areas not previously covered by Article 2, Chapter 87 J approximately 4,300 would have been immediately required toM obtain a license (a physical impossibility), operate illegally, or temporarily go out of business until they could comply with the time-consuming provisions of the grandfather clause as set out in G. S. 87-21 (d). Certainly, by the enactment of the grandfather clause at the same time Article 2 of Chapter 87 was amended to cover all of the areas in North Carolina, the General Assembly has shown that it was not their intention to declare unlawful or put out of business those persons, firms or corporations lawfully engaged in the business of plumbing and heating contracting in areas not previously covered after July 6, 1971. It is presumed that the legislature acted in accordance with reason and common sense and that it did not intend an unjust or absurd result. King v. Baldwin, 276 N. C. 316. It is the opinion of this Office that those not previously covered have until December 31, 1972, before they must secure a license to engage in the business of plumbing and heating and air-conditioning contracting without violating the provisions of Article 2 of Chapter 87 of the North Carolina General Statutes. Robert Morgan, Attorney General James E. Magner, Assistant Attorney General 17 July 1972 Subject: Insurance; Automobile Liability Insurance- Policies; Terminations by Cancellation and Refusal to Renew; Applicability of 48-Month Exclusion Requested by: The Honorable Edwin S. Lanier Commissioner of Insurance -22- Question: Under the provisions of G. S. 20-310, would continuous automobile liability insurance coverage written voluntarily or under the North Carolina Automobile Assigned Risk Plan (old assigned risk plan) followed by voluntary coverage prior to January 1, 1972, and continuous coverage under the North Carolina Automobile Insurance Plan (new assigned risk plan) followed by voluntary coverage, count toward completion of the consecutive period of coverage of 48 months or longer set forth in subdivision (g) (3) of the statute? Conclusion: No period of continuous automobile liability insurance coverage prior to January 1, 1972, written either voluntarily or under the North Carolina Automobile Assigned Risk Plan would count toward the completion of a period of 48 consecutive months of coverage necessary to exclude a policy from the provisions of G. S. 20-310. Nor would coverage under the North Carolina Automobile Insurance Plan count toward completion of the 48-month period. The Commissioner of Insurance has requested that the Attorney General render an opinion concerning the financial responsibility laws pertaining to the termination of insurance policies. Specifically, the Commissioner desires to know: (1) Whether continuous automobile liability insurance coverage under a policy written on a voluntary basis for a period prior to January 1, 1972, whereby the total coverage was for 48 months or more would exclude such a policy from the provisions of G. S. 20-310; (2) Whether continuous automobile liability insurance coverage under a policy written on a voluntary basis combined with prior 23- coverage by the same company under the North Carolina Automobile Insurance Plan (new assigned risk plan) resulting in total continuous coverage of 48 months or longer would exclude such a policy from the provisions of G. S. 20-310; (3) Whether continuous automobile liability insurance coverage under a policy written on a voluntary basis combined with prior coverage by the same company under the North Carolina Automobile Assigned Risk Plan (old assigned risk plan) resulting in total continuous coverage of 48 months or longer would exclude such a policy from the provisions of G. S. 20-310? G. S. 20-310 (g) in pertinent part reads as follows: "(g) Nothing in this section shall apply: * * * * (3) . . .to any policy which has been written or written and renewed for a consecutive period of 48 months or longer." It is understood that the Commissioner has concluded that continuous automobile liability coverage written on a voluntary basis for a period prior to January 1, 1972, will not count toward completion of the period of continuous coverage for 48 months or longer referred to in subdivision (g) (3) of the statute. We concur fully with that opinion. Session Laws 1971, c. 1205, s. 6, provides: "Section 4 (codified as G. S. 20-310) of this act shall become effective on January 1, 1972, but shall apply only to insurance policies written or renewed after said date." {Emphasis added.) This language demonstrates that the undeniable intent of the General Assembly was that nothing contained in G. S. 20-310 would affect policies written or renewed before January 1, 1972. "The fundamental rule of statutory construction, to -24- which all other rules are subordinate, is that the court shall, by all aids available, ascertain and give effect ... to the intention or purpose of the legislature as expressed in the statute." 82 C.J.S., Statutes, s. 321 (See also Ballard v. Charlotte, 235 N. C. 484, 70 S. E. 2d 575 (1952)). In support of this position is the purpose of the financial responsibility act that every motorist maintain continuously proof of financial responsibility. The statute at hand must be considered in context with the other provisions of these laws and the purpose thereof {Perkins v. Insurance Co., 21A N. C. 134, 161 S. E. 2d 536 (1968)) and the obvious purpose of G. S. 20-310 was to provide to the insured some degree of continuous liability insurance coverage. It is well settled that "... in the interpretation of a statute of doubtful meaning, it is proper to take into consideration its purpose . . . intended to be efficiently embodied in the enactment." 50 Am. Jur., Statutes, s. 303. Interpreting G. S. 20-310 in light of its purpose, it becomes clear that this purpose would be frustrated if coverage prior to January 1, 1972, were allowed to count toward completion of the 48-month period of continuous coverage necessary to exclude a policy from the provisions of the statute. Since many persons have been covered under policies, written, or written and renewed, for a consecutive period of 48 months or longer, the act would afford these persons no protection whatsoever. Therefore, the statute would be ineffective in many cases in abating the particular problem that it was designed to prevent-unchecked cancellations and refusals to renew by insurance companies. Question (2) can be answered by merely referring to the definitional section of the statute. Under Subsection (a) (1) of G. S. 20-310, it is stated that "'policy' shall not apply to any policy issued under the North Carolina Automobile Insurance Plan." Therefore, since Subdivision (g) (3) applies "to any policy" {emphasis added), coverage under the North Carolina Automobile Insurance Plan does not come within the exclusion by definition. Therefore, coverage under the North Carolina Automobile Insurance Plan will not count toward completion of the 48-month period set forth in Subdivision (g) (3) of the statute. -25- The result reached in question (1) above is determinative of question (3). The North Carolina Automobile Insurance Plan replaces the North Carolina Automobile Assigned Risk Plan with the former applying to all policies written or renewed after January 1, 1972. Session Laws 1971, c. 1205, s. 6, provides: "Section 3 (G. S. 20-279.34) of this act shall become effective on January 1, 1972, but shall apply only to insurance policies written or renewed after this date. The present provisions of G. S. 20-279.34 and the plan adopted pursuant thereto shall apply to all insurance policies written or renewed under the North Carolina Automobile Assigned Risk Plan prior to January 1, 1972." Therefore, coverage under the North Carolina Automobile Assigned Risk Plan would not count toward completion of the period of 48 months of continuous coverage set forth in Subdivision (g) (3) of the statute. Robert Morgan, Attorney General Benjamin H. Baxter, Jr., Associate Attorney 17 July 1972 Subject: Requested by: Question: Intoxicating Liquors; Beer; Sunday Sales; County Regulation of; Straw Vote Mr. John R. Jenkins, Jr. Bertie County Attorney May the Board of Commissioners of Bertie County call a special election or otherwise submit to the voters of the county at the general election to be held on November 5, 1972, the question of whether beer shall be sold in Bertie County on Sundays? -26- Conclusion: The Board of County Commissioners may not submit to the voters of the county the question of whether beer should be sold on Sundays in the County absent some special or general authorizing legislation. The inquiry indicates that the County Commissioners of Bertie County wish to submit to the voters of Bertie County the question of whether they will allow or disallow the Sunday sale of beer in the County. G. S. 18A-33(b) allows counties and municipalities in the State to regulate and prohibit the Sunday sale of beer and/or wine from 1:00 on Sunday until 7:00 a.m. on the following Monday although excluded from that authority are those establishments having a permit under Article 3 of Chapter 18A (the so-called "brown-bagging" establishments). The section provides that the powers vested in municipalities are exclusive within the corporate limits and the powers vested in the county commissioners are exclusive in all parts of the counties not included within municipal corporate boundaries. It is axiomatic that the counties have only that authority which is delegated them by the General Statutes or necessarily implied by law. 2 Strong, N. C. Index 2d, Counties, §2. "There is no inherent power in any governmental body to hold an election for any purpose, and an election held without affirmative constitutional or statutory authority is a nullity. ..." 3 Strong, N. C. Index 2d, Elections, §1. The counties have not been given authority to hold an election in the nature of a straw vote as to whether they should undertake to prohibit Sunday sales of beer and/or wine and, therefore, there is no authority for the Board of County Commissioners of Bertie County to hold such an election. This conclusion assumes that there are no local acts on the books as to Bertie County allowing the County Commissioners to hold -27- such straw vote elections since if there are such local acts, that would be sufficient authority. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 20 July 1972 Subject: Requested by: Question : Conclusion: Public Officers & Employees; ABC Board Employees; Not Employees of the Municipality or County Mr. W. Charles Cohoon Chairman State Board of Alcoholic Control Are employees of county and city ABC boards considered as employees of the city or county? No. A county or municipal ABC board is a separate political subdivision and employees of such boards are not employees of the county, municipal or State governments. G. S. 18A-16 creates a county board of alcoholic control in each county that is permitted to engage in the sale of alcoholic beverages. Local acts authorizing ABC systems in a municipality create a municipal ABC board and generally the only authority which the municipality has over such board is the power to appoint the members of the ABC board. Under G. S. 18A-16, the board of county commissioners, the county board of health and the county board of education appoint the members of the county ABC board. Other than this appointive power, the county and municipality have no control over the municipal or county ABC board. G. S. 18A-17 confers certain powers, authority and duties upon county ABC boards and these powers, duties and authorities are conferred in local acts upon -28- municipal ABC boards. All the powers and duties conferred upon county boards are subject to the powers conferred upon the State ABC Board. The State ABC Board, under G. S. 18A-15, is given control over county and municipal ABC boards in certain areas. The case of Hunter v. Retirement System, 224 N. C. 359, involved the question as to whether employees of the New Hanover County ABC Board were entitled to benefits under the City and County Retirement System. The Court discussed various sections of Chapter 18 of the General Statutes, now Chapter 18A of the General Statutes, and stated that there is no authority whatsoever vested in the City of Wilmington or County of New Hanover to control the Alcoholic Beverage Control Board of New Hanover ; County, to determine the number of its employees, to fix their salaries or to assign their duties or in any way to interfere with the discretionary powers vested in the State and county boards of alcoholic beverage control. The Court concluded that the employees of the Alcoholic Beverage Control Board of New Hanover County were not employees of the County of New Hanover nor of the City of Wilmington and were not eligible to the benefits of the retirement system. This office has previously concluded that a county or municipal ABC board was a separate political subdivision of State government and therefore employees of a county or municipal ABC board were not employees of the municipality, the county or State government. Robert Morgan, Attorney General James F. Bullock, Deputy Attorney General 20 July 1972 Subject: Insurance; Automobile Liability Insurance Policies; Termination by Rescission; Legality of Requested by: Honorable Edwin S. Lanier Commissioner of Insurance -29- Question: Whether under the financial responsibility laws, an insurer can rescind a policy of automobile liability insurance because of material misrepresentations made by the insured in an application for a policy thereby making it void ab initio*! Conclusion: Where an insured makes material misrepresentations in an application for a policy of automobile liability insurance, the insurer may not rescind the policy thereby making it void ab initio. The Commissioner of Insurance has requested that the Attorney General render an opinion regarding the financial responsibility laws pertaining to the termination of policies of automobile liability insurance. Specifically, the Commissioner wishes to know whether an insurer can terminate such a policy by rescission because of false and material representations made by the insured in the application for the policy thus making the policy void ab initio. The Insurance Department has received information of a termination by a carrier in the following factual situation: On February 24, 1972, the insured completed and executed an application for automobile liability insurance which contained false statements. Based upon this application, the carrier issued an automobile liability policy covering the insured. A routine driver's license check with the North Carolina Department of Motor Vehicles revealed the misrepresentations. Based upon the misrepresentations, the carrier voided the policy ab initio and by letter dated April 20, 1972, gave notice thereof to the insured. The Financial Responsibility Act was passed by the General Assembly to provide protection to persons injured or damaged by the negligent operation of automobiles. Hawley v. Indemnity Ins. Co. of North America, 257 N. C. 381, 126 S. E. 2d 161 (1962), and Perkins v. America Mut. Fire Ins. Co., 274 N. C. 134, 161 S. E. 2d 536 (1968). To effect this purpose, the Act was designed to ensure that operators of motor vehicles maintain continuous financial responsibility. Crisp v. State Farm Mutual Auto. Ins. Co., 256 N. C. 408, 124 S. E. 2d 149 (1962). Hence, the -30- Act contemplates that termination of automobile insurance policies shall only be made pursuant to its provisions and only in the specific cases set out therein. G. S. 20-310. Also, the Act provides that the operation of a motor vehicle without financial responsibility is a misdemeanor. G. S. 20-3 13(a). To allow an insurer to rescind a policy for fraud thus making it void from its inception is inconsistent with the Financial Responsibility Act. We recognize that the common law or statutory right to rescind ab initio for fraud would normally apply to an insurance contract. However, this common law or statutory right cannot be reconciled with the financial responsibility laws whose purpose as stated above is to assure continuous liability coverage. Teeter v. Allstate Insurance Company, 192 N.Y.S. 2d 610, 9 A.D. 2d 176 (1959). The fact that the Act prescribes penal sanctions to assure compliance and places the burden upon the insured to comply therewith is determinative. To allow rescission to be effective retroactively as of the date of issuance of the policy would make it impossible for the insured to either procure new insurance or surrender his license plates prior to the date upon which the termination of the coverage became effective. The insured would be retroactively rendered guilty of a misdemeanor for having operated a vehicle from the date of issuance to the date of rescission of the policy even though his conduct was lawful at the time. Teeter v. Allstate Insurance Company, supra. Therefore, we conclude that such a result could not have been intended by the legislature. The next question that must be resolved is whether under the Act, an insurer can terminate a policy due to fraud prospectively. The word "cancel" "is not used in the statute in its technical insurance sense but in its colloquial sense, as meaning a termination of coverage under a policy in any manner prior to the expiration date therein specified." Teeter v. Allstate Insurance Company, supra. Therefore, since a termination for fraud is not specified as a reason for cancellation in G. S. 20-3 10(d), we conclude that a policy of insurance cannot be terminated in the fact situation described by the Commissioner. We are not unmindful of the seemingly hopeless plight of the insurer in a case such as this. The General Assembly did, however, provide for a 60-day underwriting period during which time the insurer may -31- cancel a policy for any reason. This would seem ample time for the insurer to discover such fraud and cancel the policy. An insurer acting diligently can easily secure the driving record of its insured from the Department of Motor Vehicles and cancel a policy well within the 60-day underwriting period. Robert Morgan, Attorney General Benjamin H. Baxter, Jr., Associate Attorney 31 July 1972 Subject: Taxation; Gift Tax; Decedent's Estate; Assets Includable; G. S. 105-108; G. S. 105-109 Requested by: Question: Conclusion : Mr. B. E. Rogers, Director Inheritance & Gift Tax Division N. C. Department of Revenue If a gift tax has not been paid by a decedent upon the transfer of an asset later found to be includable in his estate, will the payment of the gift tax by the decedent's executor or administrator constitute an allowable deduction against his estate for inheritance tax purposes? Gift taxes paid by an executor and imposed upon the transfer of assets found to be includable in a decedent's estate are not deductions for North Carolina inheritance tax purposes. G. S. 105-8 provides, in relevant part: "In case a tax has been imposed under Schedule G of the Revenue Act of 1937, or under subsequent acts, -32- upon any gift, and thereafter, upon the death of the donor, the amount thereof is required by any provision of this Article to be included in the gross estate of the decedent, then the tax paid with respect to such gift shall constitute an advance payment of the tax which would otherwise be chargeable against the beneficiaries of the estate under the provisions of this Article, and shall be applied in reduction of said tax. ..." G. S. 105-9 provides, in relevant part: "Deductions -In determining the clear market value of property taxed under this Article, or schedule, the following deductions, and no others, shall be allowed: (1) Taxes accrued and unpaid at the death of the decedent and unpaid ad valorem taxes accruing during the calendar year of death." In McGill v. Oklahoma Tax Commission, 258 P. 2d 1180 (Okla. 1953), it was held that gifts made in contemplation of death, and therefore subject under the Federal Estate Tax Act to the payment of federal estate taxes, were subject to a contingent gift tax liability that disappeared upon the death of the donor. Upon his death, the tax on gifts in contemplation of death reappeared as an estate tax and was not a debt deductible under Oklahoma's inheritance tax law. In Smith v. Shaughnessy, 318 U. S. 176, 63 S. Ct. 545, 87 L. Ed. 690, (1943), it was pointed out that where a federal gift tax is paid on transfers in contemplation of death, it merely constitutes a "down payment" on the estate tax that is subsequently imposed on the transfer. As the court expressed it: "Under the statute the gift tax amounts in some instances to a security, a form of 'down payment' on the estate tax which secures the eventual payment on the latter. It is in no sense double taxation." 318 U. S. 179. -33- The California Court of Appeal held in In Re Estate of Gioletti, 24 C.A. 3d 921 (1972) that the amount of federal gift tax that is paid upon the transfer of property in contemplation of death, when the property subsequently becomes subject to federal and State inheritance taxes, and that is credited against the amount of the federal estate tax, is not deductible from the appraised value of the property in determining California inheritance tax. The State of New Jersey has held that a federal gift tax paid on a gift made in contemplation of ,death is nondeductible from the appraised value of an estate in computing the state inheritance tax liability. In Re Estate of Snivels, 105 N. J. Super. 242, 251 A. 2d 771 (1969). In that case, the court said: "There is no obligation to pay the gift tax as a separate liability, in the case of gifts made in contemplation of death, when the same items are included in the federal estate tax return. Gifts in contemplation of death are includable as assets of the donor's estate and subject to federal estate tax and a gift tax paid on such gifts is a mere credit on account of the calculated federal estate tax. If the gift tax has not been paid, the estate simply receives no credit. In the final analysis, the tax paid, by whatever label is put on it by the executor, is the federal estate tax." The federal government denies as a deduction in computing federal estate taxes any state gift tax paid on a gift in contemplation of death and subsequently credited to the state inheritance tax. Internal Revenue Bulletin 1971-31, provides that: "Since the provisions of section 2053(c)(1)(b) of the Code preclude the deduction of death taxes, it is further held that where, under state law, state gift taxes paid after the donor-decedent's death are regarded as prepayments of state inheritance taxes, such payments cannot be deducted from the value of his gross estate." Under G. S. 105-8, North Carolina treats any gift tax paid when -34- the asset is subsequently included in the decedent's estate as an "advance payment" of the estate tax. As such, as in other jurisdictions, it is not in reality or substance a payment of a gift tax, but a "down payment" of the estate tax and therefore not a deduction under G. S, 105-9 for "taxes accrued and unpaid at the death of the decedent." That which is in reality an estate tax cannot be converted into a deductible gift by the mere mechanics of filing a gift tax return when the amount of the gift tax is allowed as a credit against the estate tax. Smith v. Shaughnessy, supra. We cannot presume that the collective conscience of the legislature intended to create and sanction a situation whereby those who choose to transfer their property by will or the laws of intestacy would incur a greater tax obligation than those who would transfer in contemplation of death. Robert Morgan, Attorney General George W. Boylan, Associate Attorney 31 July 1972 Subject: Taxation; Sales Tax; Laundries and Dry Cleaners; Rug Cleaning Services; G. S. 105-164.4(4) Requested by: Mr. Eric L. Gooch, Director Sales & Use Tax Division N. C. Department of Revenue Questions: (1) Are the gross receipts from rug cleaning services conducted on the business premises of a rug cleaner subject to sales tax? (2) Are the gross receipts from rug cleaning services conducted on the premises of the rug cleaner's customer subject to sales tax? Conclusions: (1) Yes. -35- (2) No. The Director of the Sales & Use Tax Division, North Carolina Department of Revenue, has asked that certain provisions of Sales & Use Tax Regulation 24 be reviewed in the light of G. S. 105-164.4(4) and the following circumstances: Taxpayer A, a "rug and floor cleaner", maintains at its place of business seventeen rug hangers, each of which can accommodate a rug up to 12' x 12' in size. It picks up rugs, cleans them at its premises with a portable shampoo machine, and delivers the cleaned rugs to its customers. Jn addition to this activity, it engages in cleanup work resulting from fires and smoke damage, including the cleaning of walls, ceilings and floors. It also cleans rugs and carpets on the customer's premises. Taxpayer B may also be characterized as a rug cleaner. In its building, it has five rug poles, each thirteen feet long and capable of accommodating rugs up to twelve feet wide. It engages in the cleaning of rugs at its place of business, using portable rug cleaning equipment, and also engages in the cleaning of carpets, rugs, walls, floors and furniture in homes and offices, particularly where there has been fire and smoke damage. G. S. 105-164.4(4) imposes a sales tax upon the gross receipts of "every person, firm or corporation engaged in the business of operating a pressing club, cleaning plant, hat blocking establishment, dry cleaning plant, laundry (including wet or damp wash laundries and businesses known as launderettes or launderalls) or any similar type business. ..." As it applies to rug cleaning services, Sales & Use Tax Regulation 24 interprets G. S. 105-164.4(4) in this way: "(a) The gross receipts derived from the following are subject to the 3% sales or use tax: (1) Services rendered by pressing clubs, cleaning plants, hat blocking establishments, dry cleaning plants, -36- laundries, including wet or damp wash laundries and businesses known as launderettes and launderalls, and all similar type businesses. (2) The rental of clean linen, towels, wearing apparel and similar items. (3) Soliciting cleaning, pressing, hat blocking and laundry. (4) Rug cleaning services performed by persons operating rug cleaning plants or performed by any of the businesses named in this Regulation irrespective of whether the rug cleaning service is performed on the customer's location or at the plant. Persons who do not operate any of the businesses included in this Regulation and only perform house cleaning or building maintenance services and clean rugs at the customer's location do not come within the provisions of this Regulation." Clearly, under Regulation 24, the gross receipts of Taxpayers A and B, derived from the performance of rug cleaning services, wherever done, are subject to tax. The question is whether the Regulation is supported by the law. Common to each of the businesses taxed under G. S. 105-164.4(4) is a strong sense of physical location (a "club", a "plant", a "laundry", an "establishment") indicative of an intent to tax receipts from business carried on at a business premises. While we feel that a rug cleaning business bears sufficient similarity to the businesses more specifically named in the statute to bring it within its terms, we are of the opinion that the rule of construction which requires a statute imposing a tax to be strictly construed, against the State and in favor of the taxpayer, in cases of doubt, militates against that part of the Regulation which seeks to tax those receipts derived from services rendered at the customer's home or office. -37- In other words, gross receipts derived from rug cleaning services rendered at the plant or business premises of the rug cleaner are subject to tax. However, those derived from services rendered at the customer's premises, in our opinion, would not be. That portion of Regulation 24 which permits the imposition of the tax in the latter example is, we believe, in error. To the extent that it is in conflict with this opinion, the opinion on the same subject, dated 17 July 1961, is hereby modified. Robert Morgan, Attorney General Myron C. Banks, Assistant Attorney General 1 August 1972 Subject: Requested by: Questions: State Departments, Institutions and Agencies; Correction, Department of; Liability for Hospitalization of Inmates Mr. Martin R. Peterson Chief of Custody and Security N. C. Department of Correction Is the North Carolina Department of Correction required to pay medical and hospital expenses for an inmate requiring hospitalization outside the confines of the Department of Correction in the following instances: (1) An inmate is permitted to leave the confines of his unit on an authorized Community Volunteer leave. He escapes from his sponsor and is injured. The inmate is picked up immediately by police and delivered to the hospital for treatment. He is then turned over to the custody of the -38- Department of Correction after being released from the hospital. (2) An inmate escapes from the Department of Correction. He is injured in a car wreck while being chased by Highway Patrol or police who take him into custody and deliver him to a hospital. The Department of Correction is notified of his hospitalization and he is returned to the Department's custody after release from the hospital. (3) An inmate, who has escaped from the Department of Correction, is imprisoned in another jurisdiction. He is released to the local sheriff to await arrival of officers from the North Carolina Department of Correction to take him into custody. In the meantime, while being held for North Carolina on our detainer, it becomes necessary to hospitalize him. The inmate is released to the Department's officers as soon as the hospitalization is terminated. (4) An inmate escapes from the Department of Correction and while on escape has occasion to enter a hospital. He leaves the hospital prior to being apprehended by law enforcement officers. The hospital attempts to bill the North Carolina Department of Correction because he is an inmate. (5) An inmate is granted an extension of confinement limits pursuant to G. S. 148-4 in the form of either a home leave or a Community Volunteer leave and it becomes necessary that he be hospitalized. Is the Department of Correction required to pay his medical and -39- hospital expenses if he notifies the unit granting the extension or if he fails to notify the unit. Conclusions: (1) Yes. (2) Yes. (3) Yes. (4) No. (5) Yes. "A prisoner may be taken, when necessary, to a medical facility outside the State prison system." G. S. 148-1 9(a). In each of the first three fact situations presented, the inmate has been taken into custody by law enforcement officials on behalf of the Department of Correction. In the first two cases, the inmate has escaped, has been apprehended by the police, and then delivered to a hospital for treatment. The officers would be acting as agents, at least constructively, for the Department of Correction when apprehending the inmate. In fact, in North Carolina any citizen has authority to apprehend an escaped convict and retain him in custody to be delivered over to the State Department of Correction. G. S. 148-40. In the third case, the sheriff would also be acting as an agent for the Department of Correction while maintaining custody of the inmate, pursuant to a North Carolina detainer, awaiting officers from this State to take the inmate into custody. In these cases, the inmate is in the constructive custody of the North Carolina Department of Correction, and therefore the Department should pay the medical and hospital expenses incurred. In the fourth case, the inmate, while on escape, enters and departs the hospital prior to being apprehended by law enforcement officials. During this time, the inmate has neither been in the actual nor in the constructive custody of the North Carolina Department of Correction. The hospital was not treating the inmate under the expectation that they were performing services as agents for, or on behalf of, the Department of Correction. Therefore, the Department -40- would not be liable for medical expenses incurred by the inmate during this period of time. In the fifth case, when an inmate is granted an extension of his confinement limits under G. S. 148-4, he is still under the custody and control of the Department of Correction and therefore the Department should pay for any hospitalization required. Robert Morgan, Attorney General Edward L. Eatman, Jr., Assistant Attorney General 1 August 1972 Subject: Mental Health; Examination and Hospitalization of Inebriates; Public Drunkenness As a Criminal Offense Requested by: Question: Colonel Edwin C. Guy Commanding State Highway Patrol Under current North Carolina General Statutes are peace officers authorized to arrest persons for the offense of public drunkenness? Conclusion: Under current North Carolina General Statutes peace officers are authorized to arrest persons for the offense of public drunkenness. This question has arisen due to an apparent misunderstanding as to the effect of Article 7, Chapter 122 of the North Carolina General Statutes. This Article is entitled "Judicial Hospitalization" and provides procedures for examination of inebriates and mentally ill persons and admission of these persons to the proper State hospital (or other institution) for observation and treatment, when appropriate. -41- Due to the nature of the present question, this opinion will be limited to consideration of individuals falling within the category of "inebriates." G. S. 122-36(c) defines this term as follows: "The word 'inebriate' shall mean a person habitually so addicted to alcoholic drinks or narcotic drugs or other habit forming drugs as to have lost the power of self-control and that for his own welfare or the welfare of others is a proper subject for restraint, care, and treatment." In cases involving inebriates, Article 7 requires the clerk of superior court to take action to secure custody of the individual concerned in an appropriate fashion, to conduct a hearing on the issue, and to dismiss the proceedings or to issue an order for hospitalization, as warranted by the circumstances. However, these proceedings are precipitated only after receipt by the clerk of an affidavit stating that the alleged inebriate is in need of observation and admission, together with a request for examination of the person from "some reliable person having knowledge of the facts." See G. S. 122-60 through G. S. 122-62. Although an exception may be made to this rule requiring an affidavit in a situation "when the clerk of the superior court has other valid knowledge of the facts of the case to cause" such examination (see G. S. 122-62), a specific order of the clerk is required in any case before any of the actions authorized by Article 7 leading to examination and hospitalization can be taken. On the other hand, public drunkenness is proscribed by G. S. 14-335. While subsection (c) provides that chronic alcoholism can be an affirmative defense available to an individual charged with public drunkenness, the remainder of this section provides that public drunkenness is a crime punishable by a fine or imprisonment. In fact, any doubt that the legislators intended the statutes in question to be complementary to rather than conflicting with each other is laid to rest by specific statutory provisions permitting the trial judge to order the clerk of superior court to institute judicial hospitalization proceedings under Article 7, where appropriate, in cases wherein a person has been acquitted of public drunkenness by reason of chronic alcoholism. See G. S. 14-335(c), G. S. 122-65.7, and G. S. 122-65.8. -42- Since public drunkenness is a criminal offense within this State, ipso facto, peace officers within North Carolina are authorized to arrest persons committing this offense. Robert Morgan, Attorney General William F. O'Connell, Assistant Attorney General 1 August 1972 Subject : Mental Health; Detention of Inebriates and Mentally 111 Persons; Authority of Clerk of Superior Court to Issue Custody Order to Sheriff Requested by: Question : Conclusion: Honorable Ralph L. McSwain Sheriff Stanly County Does the clerk of superior court have the authority to direct the sheriff to take into custody a person alleged to be an inebriate or a mentally ill person? The clerk of superior court has the authority to direct the sheriff to take into custody a person alleged to be an inebriate or a mentally ill person. This is one of the multiple questions which have arisen because of the following provisions of G. S. 122-61, effective July 1, 1972: "§ 122-61. Detention of persons alleged to be mentally ill or inebriate and dangerous to themselves or others.- If the affidavit filed in accordance with the provisions of G. S. 122-60 states that the alleged mentally ill person or alleged inebriate is likely to endanger himself or others, he may be taken into -43- custody and detained in his own home, in a private or general hospital, or in any other suitable facility as approved by the local health director for such detention, upon an order of the clerk of the court. He shall not be detained in a nonmedical facility used for the detention of individuals charged with or convicted of penal offenses. The Department of Mental Health shall make available to the clerk of court such medical services and transportation necessary to effect the detention deemed necessary. The clerk shall expedite the hearing, and, if the alleged mentally ill person or alleged inebriate is found to be in need of hospitalization, the clerk shall expedite the transmission of this information to the proper State hospital so that the alleged mentally ill person or alleged inebriate can be admitted without any undue delay." In interpreting this new section, it must be recognized that it only purports to deal with emergency type detention of an inebriate or mentally ill person, where necessary, prior to a hearing by the clerk of superior court and prior to expeditious admission to the proper State hospital if that action is directed. Thus, it must be considered as a part of the "judicial hospitalization" proceedings and must be interpreted in conjunction with the other sections included in Article 7, Chapter 122 of the General Statutes-/. e., G. S. 122-60 through G. S. 122-65.5. G. S. 122-60 provides that some reliable person having knowledge of sufficient facts may start proceedings calculated to result in judicial hospitalization by filing with the clerk of superior court an affidavit to the effect that the potential patient is in need of observation or admission in a proper hospital, together with a request for examination of such individual. G. S. 122-62 then provides that, upon the clerk's receipt of the affidavit and request (or when the clerk has other adequate valid knowledge of the facts), he shall direct two qualified, uninvolved physicians to examine the potential patient. As a tool available to the clerk for insuring the performance of the examination, this latter section of the General Statutes contains the following language: "The clerk is authorized to order 44- the alleged mentally ill person or inebriate to submit to such examination, and it shall be the duty of the sheriff or other law enforcement officer to see that this order is enforced." The temporary detention authorized by G. S. 1 22-6 1 in cases where that type of action is necessary in order to avoid danger to the potential patient or to others is clearly a preliminary part of the proceedings leading up to the examination required by G. S. 122-62 for the purpose of determining whether an individual should be judicially hospitalized. This new section does not serve to relieve the sheriff or any other peace officer from cooperation with and assistance to the Department of Mental Health in adequately detaining the individual, nor does it serve to relieve these officials from their obligations to see that the clerk's orders are enforced. Therefore, when it is necessary to utilize the services of the sheriff or other law enforcement officer in order to take the individual into custody and detain him, as permitted by G. S. 122-61, the clerk is authorized to issue an order to that effect directly to such peace officer. 1 August 1972 Subject: Requested by: Question: Robert Morgan, Attorney General William F. O'Connell, Assistant Attorney General Licenses and Licensing; General Contractors; Installation of Industrial Equipment Mr. Jimmy M. Wells, Jr. Seere tary-Treasurer N. C. Licensing Board for Contractors Is a company required to be licensed by the General Contracting Licensing Board under the provisions of Chapter 87, in order to bid on a "turn-key" Peak Shaving -45- Facility, consisting of a prefabricated building, air compressing equipment, gas blending equipment, and controls inside a prefabricated building as well as two large tanks and a self-contained propane vaporizer outside the building of which the total general contracting work involved is estimated to be $10,900 out of the low bid of $132,700? Conclusion: The erection of industrial equipment is specifically exempted from the licensing requirement of G. S. 87-1 and inasmuch as the estimated cost of the general contracting work is less than $30,000, no general contractor's license is required of the low bidder. The facts as indicated in a letter of July 17, 1972, from the Licensing Board for Contractors are that bids were advertised by the City of Lexington for a turn-key Peak Shaving Facility consisting of a prefabricated building and the installation of air compressing equipment, gas blending equipment, and controls in the building as well as the installation adjacent to the building of a self-contained propane vaporizer and two 30,000 gallon water capacity tanks which will be shop fabricated and placed on concrete foundations at the site. A piping and pumping station will also be installed. The engineering consultant retained by the city estimates that out of the low bid of $132,700, the general contracting work amounts to a total cost of $10,900 which consists of the erection of a prefabricated metal building, construction of concrete supports for the building, concrete supports for water bath vaporizer and base for propane liquid pump, concrete supports for the two 30,000 gallon tanks, and grading for the tanks and yard piping. The remainder of the amount bid is attributable to the cost of the equipment and the cost of installing it. The provisions of G. S. 87-1, the general contractor's licensing statute, is applicable to ihe construction of improvements in excess of $30,000, but it specifically exempts the erection of the industrial -46- equipment. The amount included in the bid in excess of $10,900 is attributable to the cost of installing industrial equipment. It is the opinion of this office that a general contractor's license is not required to bid on the installation of the facility, as the estimated cost of the improvements included in the bid for which a general contractor's license is required is less than $30,000. Robert Morgan, Attorney General Eugene A. Smith, Assistant Attorney General 3 August 1972 Subject: Requested by: Question: Conclusion: Motor Vehicles; Abandoned or Junked Vehicles; Removal of Abandoned Vehicles from Private Property Chief Thomas M. Dowdy Kill Devil Hills Police Department Should city police have unauthorized vehicles parked in privately owned motel parking lots towed at request of motel management? City police should have unauthorized vehicles parked in private motel parking lots towed only if the city has enacted proper ordinance pursuant to the provisions of G. S. 160A-303 and the owner or lessee of the motel has made request for removal thereof in writing, or the proper city official has declared such vehicle to be a health or safety hazard. G. S. 160A-303 in pertinent part reads: "§ 160A-303. Removal and disposal of junked and -47- abandoned motor vehicles.-(a.) A city may by ordinance prohibit the abandonment of motor vehicles on the public streets or on public or private property within the city, and may enforce any such ordinance by removing and disposing of junked or abandoned motor vehicles according to the procedures prescribed in this section. (b) A motor vehicle is defined to include all machines designed or intended to travel over land or water by self-propulsion or while attached to any self-propelled vehicle. An abandoned motor vehicle is one that: . . . (3) Is left on private property without the consent of the owner, occupant, or lessee thereof for longer than two hours; . . . (c) Any junked or abandoned motor vehicle found to be in violation of an ordinance adopted under this section may be removed to a storage garage or area, but no such vehicle shall be removed from private property without the written request of the owner, lessee, or occupant of the premises unless the council or a duly authorized city official or employee has declared it to be a health or safety hazard. The city may require any person requesting the removal of a junked or abandoned motor vehicle from private property to indemnify the city against any loss, expense, or liability incurred because of the removal, storage, or sale thereof. ..." {Emphasis added.) Robert Morgan, Attorney General William W. Melvin, Assistant Attorney General -48- 15 August 1972 Subject: Escheats; Statutes of Limitations Inapplicable Requested by: Honorable Edwin Gill State Treasurer Question: Does the expiration of any period of a statute of limitations bar the State from escheating property? Conclusion: Statutes of limitations are not applicable against the State in escheats. The inquiry indicates that a certain petroleum company (hereinafter "the Company") has reported unclaimed dividends escheatable under G. S. 116A-4 and unclaimed salaries and wages escheatable under G. S. 116A-7(a) but denies that it is liable in escheat because of the expiration of three years. The statutes of limitations cited are G. S. 1-52(1) not allowing an action after three years "upon a contract, obligation or liability arising out of a contract ..." and G. S. 1-52(2) not allowing an action after three years "upon a liability created by statute, other than a penalty or forfeiture. . . ."We think it clear that no contract between the State and the Company is involved so subdivision (1) is inapplicable. Further, it can be argued that escheat is in the nature of a forfeiture and, therefore, subdivision (2) is inapplicable; but since we conclude that statutes of limitations are not applicable against the State in escheats, this argument is unnecessary. G. S. 1-30 provides: "The limitations prescribed by law apply to civil actions brought in the name of the State, or for its benefit, in the same manner as to actions by or for the benefit of private parties." -49- While this statute was earlier adhered to by the Supreme Court regardless of the nature of the action (Furman v. Timberlake, 93 N. C. 66 (1885); Tillery v. Lumber Company, 172 N. C. 296, (1916)), the Court has in more recent cases distinguished between those functions of government which exercise sovereign power and] those exercising proprietary functions. In Guilford County v. Hampton, 224 N. C. 817 (1945), a suit to recover welfare payments was held to be proprietary, growing out of a contract, with the statute applicable. City of Charlotte v. Kavanaugh, 221 N. C. 259 (1942), was a holding to the same effect regarding special assessments although the Court said the statute would have been inapplicable if taxes had been involved. The case of City of Raleigh v. Mechanics and Farmers Bank, 223 N. C. 286 (1943), also dealt with special assessments but the Court discussed the distinction between sovereign and other exercises of governmental power. The Court stated: "While this ancient maxim has lost much of its vigor by the erosions of time, and by legislative enactment, it is still regarded as the expression of a sound principle of government applicable to actions to enforce the sovereign rights of the State. Notwithstanding the inclusive provisions of sec. 420 of the Consolidated Statutes that 'the limitations prescribed by law apply to civil actions brought in the name of the State, or for its benefit, in the same manner as to actions by or for the benefit of private parties' (Threadgill v. Wadesboro, 170 N. C, 641, 87 S. E., 521), it has been uniformly held that no statute of limitations runs against the State, unless it is expressly named therein. Wilmington v. Cronly, 122 N. C, 388, 30 S. E., 9; Asheboro v. Morris, supra. However, where in the statutes affording a remedy by a municipal corporation for enforcing the statutory lien of an assessment for public improvement a limitation of time is imposed upon the exercise of that power, manifestly the principle expressed in the quoted maxim is not controlling." (at p. 293) -50- This distinction was again made in City of Reidsville v. Burton, 269 N. C. 206 (1967). The Court stated: "It is also generally held in this State and in the other States, except as provided otherwise by constitutional or statutory provisions, that the statute of limitations may be interposed as a defense to an action by a municipal corporation to enforce private, corporate or proprietary rights. Charlotte v. Kavanaugh, 221 N. C. 259, 20 S. E. 2d 97; 53 C.J.S., Limitation of Actions, § 17(a); 17 McQuillin, Municipal Corporations, § 49.06. See also 34 Am. Jur., Limitation of Actions, § 397." (at p. 210) The exercise of the escheat power is unquestionably a sovereign function. From ancient times, all forfeited and unclaimed property went to the Crown and that part of common law has been maintained in North Carolina through Constitutional (now Article IX, Sec. 10) as well as statutory provisions. Escheat statutes would have no meaning if the State was barred after three years since many items, including the dividends reported by the Company in this case, are not reportable until they remain unclaimed for three years. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 15 August 1972 Subject: Requested by: Intoxicating Liquors; Solicitation of Sales; Authority of State Board to Regulate Solicitation of Sales of Alcoholic Beverages, Beer and Wine Mr. James W. Pierce, Administrator State Board of Alcoholic Control -51- Question: Does the State Board of Alcoholic Control have authority to restrict the activities of! salesmen of alcoholic beverages, beer and wine, to the end that no solicitations may be made to clubs and individuals? Conclusion: The State Board of Alcoholic Control does not have the authority to restrict the activities of salesmen of beer and wine in their contact with licensed retail outlets of beer and wine in this State. The State Board does have the authority to restrict the activities of salesmen of alcoholic beverages, beer and wine and prohibit solicitations of persons who are not licensed retail outlets in this State. This opinion deals with the activities of salesmen employed or acting as agents for distilleries, breweries, and wineries and those persons who exercise functions as licensed wholesalers of beer, wine, and alcoholic beverages (those beverages with an alcoholic content of over 14%) in this State. It does not deal with the activities of persons who hold retail licenses in the State. Under the State scheme of sale of intoxicating liquors in North Carolina salesmen may make sales of alcoholic beverages only for supply to the local board of alcoholic control store systems. Sales to any other person, firm or individual are absolutely prohibited. The activities of salesmen for breweries and wineries and of salesmen of licensed wholesalers of beer and wine, however, are much more broad in that there are many retail outlets for beer and wine in the State and solicitations of sales from those outlets are not prohibited. Solicitations of sales of persons not licensed as retail outlets when the salesmen know that the product is being secured for the purchase of resale are unlawful since only licensed retailers may sell beer and wine in this State. G. S. 18A-10 gives the State Board of Alcoholic Control regulatory authority over the advertising of intoxicating liquor, which includes -52- alcoholic beverages, beer and wine. G. S. 18A-15(3) empowers and mandates the State Board to fix retail prices of alcoholic beverages in local stores "at such levels as shall promote the temperate use of these beverages." Chapter 18A clearly indicates that alcoholic beverages (that is, beverages with an alcoholic content of more than 14% by volume) shall be tightly controlled in their sales, transportation and consumption. G. S. 18A-1 provides in part that the policy of the State is "that the sale, purchase, transportation, manufacture, and possession of intoxicating liquors shall be prohibited except as authorized in" Chapter 18A of the General Statutes. With the tight restrictions in mind of alcoholic beverages and the fact that those may only be sold in stores and may be consumed on very limited premises, it is clear that if as a control measure the State Board of Alcoholic Control feels that it is necessary to restrict activities of salesmen of distilleries to contact with the proper officials with regard to supply of local stores, that is within the Board's power. Because the restrictions on beer and wine sales are not as tight with breweries, wineries and wholesalers as well as many retail outlets for both beer and wine licensed by the State Board, the State Board's authority with regard to restrictions placed on salesmen at the brewery-winery level or the wholesale level is not as broad as it is in the alcoholic beverage area. The State Board of Alcoholic Control has the authority to prohibit salesmen employed by distilleries, breweries, wineries or salesmen employed by wholesalers from promoting the sale of alcoholic beverages, beer or wine by personal contact and soliciting of sales in connection with such solicitation of anyone except an authorized retail outlet in the State. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General -53- 15 August 1972 Subject: Requested by: Question: Conclusion: Health; Certificate of Need; Inapplicability to Facility Already Constructed but Not Fully Licensed or Used Dr. Jacob Koomen State Health Director A skilled nursing home was constructed with approximately 170 beds. These beds were available for several years as nursing home beds but subsequently a license was obtained for approximately 40 to be used as psychiatric beds under a license issued by the Department of Mental Health. That license was dropped but for several years the facility has been licensed for only approximately 90 beds and part of the facility has remained vacant. May the facility now begin to utilize more than the licensed number of beds without first obtaining a certificate of need from the : State Board of Health? After obtaining a license, the facility may begin to utilize more than the licensed number of beds without first obtaining a certificate of need from the State Board of Health. The inquiry indicates that an existing facility with space for approximately 170 beds is currently licensed for only 90 and does not use part of the present facility. G. S. 90-29 1(b) provides in pertinent part: "Any existing medical care facility need not apply for a certificate of need except when the facility proposes new construction, construction of additional bed capacity, or the conversion of existing bed -54- capacity to a different license category, except outpatient and emergency services. No certificate of need shall be required as a pre-condition to issuing or continuing a license to an existing medical facility in the absence of new construction, construction of additional bed capacity or conversion of existing bed capacity to a different license category for the existing medical care facility." Clearly, if the facility were building a new building or a new wing, a certificate would be required. If the psychiatric beds were presently licensed or if the other space for beds was operated as a rest home, a certificate would be required. But the use of additional facilities already constructed and licensed at one time as nursing home beds does not require a certificate of need. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 15 August 1972 Subject: Requested by: Question: Conclusion: Licenses and Licensing; Day-Care Facilities; Number of Children for Whom Facility Licensed Mr. John Sokol, Director Child Day-Care Licensing Board Assuming a day-care facility has three shifts of 10 children each during a twenty-four-hour period, should the facility be licensed for 10 or 30 children? The facility should be licensed for 10 children. The Child Day-Care Licensing Board and mandatory licensing of -55- "day-care facilities" are provided for by Article 7 of Chapter 110 of the General Statutes, enacted by Chapter 803 of the 1971 Session Laws. G. S. 110-86(2) provides that "day-care" is "any child-care arrangement under which a Child less than 1 3 years of age receives care away from his own home by persons other than his parents, grandparents, guardians or full-time custodians on a regular basis for more than four hours per day where a payment, fee or grant is made for care." Subdivision (3) defines "day-care facility" as "day-care center or child-care arrangement that provides day care for more than five children and which receives a payment, fee, or grant for any of the children receiving care, wherever operated, and whether or not operated for profit, except that the following are not included: public schools; nonpublic schools, whether or not accredited by the State Department of Public Instruction, which regularly and exclusively provide a course of grade school instruction to children who are of public school age; summer camps having children in full-time residence; summer day camps; and Bible schools normally conducted during vacation periods." A license must be obtained by a day-care facility and certain standards are mandatory. Standards pertinent to the issue here are those in G. S. 110-91(6) which requires "no less than 25 square feet of floor space for each child for which a day-care facility is licensed. " (Emphasis added.) G. S. 110-91(7) contains specific provisions with regard to staff-children ratios which must be maintained. Neither of these standards would have much meaning if in the example given the figure of 30 children rather than 10 children were used. Therefore, it is the opinion of this Office that a day-care facility should be licensed for the maximum number of children on the premises at any one time. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General -56- 29 August 1972 Subject: Requested by: Question : Conclusion : Health; Certificate of Need; Proper Licensing Agency for Facility Which Combines Hospitals, Nursing Homes and Rest Home Care Mr. William S. Henderson Deputy Secretary Department of Human Resources Who is the proper agency to license and issue a certificate of need for a facility which proposes to combine a hospital, nursing home and rest home? The North Carolina Medical Care Commission which licenses hospitals is the proper agency to license and issue a certificate of need for a facility which combines hospital, nursing home and rest home care. A unique situation has arisen in one locality of the State where a new facility is being constructed adjacent to and physically connected to a hospital already licensed by the Medical Care Commission. It is proposed that a certain number of beds in the new facility will be allocated to nursing home care and a certain number of beds will be licensed as rest home beds. All of this will be operated by the hospital in conjunction with the hospital operation. Article 13A of Chapter 31 of the General Statutes provides for licensing of hospitals by the Medical Care Commission. G. S. 130-9(e) provides for the licensing of nursing homes by the State Board of Health. Section 4 1/2 of Chapter 51 of the 1961 Session Laws provides that such regulation by the State Board of Health will not be applicable "to any facility operated by, under the auspices of, or in conjunction with any hospital required to be licensed by the North Carolina Medical Care Commission." -57- G. S. 108-4(10) and G. S. 108-77 authorize the State Department of Social Services to license rest homes, boarding homes and homes for the aged in this State. However, G. S. 108-77(d) provides that such licensing requirement will not apply to any institution which is "licensed by the State Board of Health under the provisions of ; G. S. 130-9(e)." Since the Medical Care Commission has authority not only to license hospitals but to license nursing homes in connection with hospitals, and since the standards for rest homes are less strict with regard to skilled care than those of nursing homes, it seems logical that, in connection with the operation of a hospital, the Medical Care Commission would have authority to license a rest home. The operation of the hospital, nursing home and rest home will be intimately inter-connected with the assumed transfer of j persons from one category to the other as they progress or regress in their health status. It is recommended that the Medical Care Commission adopt regulations for licensing of nursing homes and rest homes when that licensing is by the Commission in conjunction with the operation of a hospital and while these regulations must be independent of those of the Board of Health and the Department of Social Services, , we recommend that the regulations of those two Departments for those kinds of facilities be used as guidance. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 31 August 1972 Subject: Requested by: Question: Public Officers and Employees; Private Use by Physicians of State Facilities Mr. Martin R. Peterson State Department of Correction Whether space in the facilities of the State Department of Correction may be used by -58- staff physicians for private purposes? Conclusion: The governing board of the State Department of Correction may establish and develop its own policy as to use of its facilities for private purposes. The conclusion stated above is based upon an absence of any known prohibition against such use or specific authority granting such use. Therefore, in the absence of any statutory or case authority, it would appear to be a matter of policy of the governing board of the Department of Correction as to whether it wishes to grant such use and as to guidelines the board may establish for such use. Because of the absence of specific authority in this area, it is suggested that enabling legislation be presented to the 1973 General Assembly by the Departments engaging in this practice. Robert Morgan, Attorney General Raymond W. Dew, Jr., Assistant Attorney General 31 August 1972 Subject: Requested by: Question: Conclusion: Municipalities; Intoxicating Liquors; Authority to Regulate Consumption and Display on Public or City-Owned Property Mr. Carl V. Venters Jacksonville City Attorney Do municipalities have the authority to regulate or prohibit the consumption or display of intoxicating liquor on any public alley, road or street or on any city-owned property within the city limits? Municipalities have authority to regulate or -59- prohibit the consumption or display of intoxicating liquor on any public alley, road or street or on any city-owned property within the city limits. The inquiry indicates that the City of Jacksonville wishes to adopt an ordinance prohibiting the consumption or display of intoxicating liquor as defined in G. S. 18A-2 "on any public alley, road, street or highway within the City of Jacksonville or on any other property owned or controlled by the City of Jacksonville." It has long been held in North Carolina that it is inherently within the police power of municipalities to regulate intoxicating liquor. See, for example, Paul v. Washington, 134 N. C. 363, 47 S. E. 793 (1904). Since the enactment of Chapter 18 of the General Statutes, recodified as Chapter 18A by the 1971 General Assembly, the authority of municipalities has been somewhat restricted. In effect,; a doctrine of preemption by the State has been adopted but it has been restrictively applied to preempt municipal action only where the State regulation or prohibition occupies the field. Thus, in Davis v. Charlotte, 242 N. C. 670, (1955), the Supreme Court in an opinion by Justice (now Chief Justice) Bobbitt held that a Charlotte ordinance prohibiting a "car hop" sale of beer on a licensed premises was invalid. The Court's holding was that "The enforcement of the ordinance provision is restrained only as to sales made on the private property, that is, 'the premises' of the plaintiffs." (242 N. C. at p. 675) Thus, the trial court's order that the ordinance was valid as to sales on city streets was upheld. Unless some specific provision of the General Statutes allows the consumption and/or display of intoxicating liquors on public and city-owned areas, the city may regulate those areas. G. S. 18A-2(4) defines intoxicating liquor as including "alcohol, brandy, whiskey, rum, gin, beer, ale, porter, and wine, and in addition thereto any spirituous, vinous, malt or fermented beverages, liquids, and compounds, whether medicated, proprietary, patented, or not, and by whatever name called, containing one half of one -60- percent (1/2 of 1%) or more of alcohol by volume, which are fit for use for beverage purposes." As to fortified wine or any other alcoholic beverage with an alcoholic content of more than 14%, consumption is outlawed on any public road, street or highway by G. S. 18A-30(5)a. The public display of such beverages at athletic contests and the consumption on unauthorized premises are made unlawful by G. S. 18A-30(5)b. and e. respectively. G. S. 18A-35(a) provides: "Except as otherwise provided in this Chapter, the purchase, transportation, and possession of malt beverages and unfortified wine by individuals 18 years of age or older for their own use are permitted without restriction or regulation." This does not speak to the question of either consumption or display of malt beverages and unfortified wine. We conclude, therefore, that the State has not preempted the area of consumption or display of intoxicating liquor on public streets or city-controlled property and this is, therefore, a proper subject for a municipal ordinance. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 5 September 1972 Subject: Education; Teachers; Teacher Tenure Act; G. S. 115-142; Career Teachers Requested by: Mr. W. F. Womble Attorney for the Winston-Salem/Forsyth County Board of Education -61- Question: To what extent, if any, is an otherwise qualified teacher entitled to credit for employment prior to July 1, 1972, in determining that teacher's eligibility for career teacher status? Conclusion: Unless, at the end of the last school year preceding July 1, 1972, the teacher has had at least four consecutive years' employment with the school system considering him for tenure, or unless that teacher has had at least five consecutive years' employment with any of the public school systems of this State; that teacher is entitled to no credit for his previous employment in determining his eligibility for career teacher status. The 1971 General Assembly completely rewrote G. S. 115-142 in enacting the Fair Employment Practices and Dismissals Act, informally referred to as the Teacher Tenure Act. The new Act was made effective on July 1, 1972. Chapter 883 of the Session Laws of 1971. It gives teachers certain rights and imposes upon school boards certain duties, none of which had heretofore existed. Because new rights are created and new duties imposed, the Act amounts to a substantial change in this State's substantive law, rather than in its procedural law. Smith v. Mercer, 276 N.C. 329, 172 S.E. 2d 489 (1970). The present question arises because of a seeming conflict between two provisions contained in G. S. 115-142(c). The first provision of that subsection reads as follows: "After a teacher has been employed by the same public school system in this State for a period of three consecutive years, the board of that system is required to vote upon that teacher's employment for the next succeeding year. If a majority of the board votes to reemploy the teacher, he or she becomes a career teacher. " -62- The last two sentences of subsection (c) provide: "All teachers employed by a public school system of this State at the time this section takes effect who, at the end of the last school year, will either have been employed by that school system (or a successor system if the system has been consolidated) for a total of four consecutive years or will have been employed by a public school system of this State for a total of five consecutive years shall automatically be career teachers if employed for a second year following July 1, 1972. All other teachers employed by a public school system of this State on July 1, 1972, shall be probationary teachers. " The first provision is the general rule and requires three consecutive years' employment before tenure can be acquired. Four or five years of experience prior to July 1, 1972, are necessary to meet the special requirements of the second provision. If the general rule is applied retroactively, the two provisions conflict. To illustrate the inconsistency, the inquiry poses an example: "It would appear from the first sentence that any teacher who has been employed by the Winston-Salem/Forsyth County school system for a period of three consecutive years at the end of the 1 972-73 school year would become a career teacher if reemployed for the '73-'74 school year. On the other hand, it appears from the fifth sentence of the subsection that only those teachers who have been employed for a total of four consecutive years in the Winston-Salem/Forsyth County school system or five consecutive years in any public school system in the state as of July 1, 1972, will automatically become career teachers if employed for the 1973-74 school year." The short answer to the problem is that the inconsistency is only apparent and technically does not exist at all. What the statute presents is a general provision, namely that career teacher status attaches after three consecutive years of employment and reemployment for the fourth year, and a special provision for acquiring tenure when the Act initially becomes effective; that is that those with four years of previous employment in the same -63- school system prior to July 1, 1972, or five years' experience statewide will achieve tenure upon reemployment for the '73-'74 school year. In such situations of apparent conflict, the rule is plain: "Where there are two provisions in the statute, one of which is special or particular and the other general, which, if standing alone, would conflict with the particular provision, the special will be taken as intended to constitute an exception to the general provision, as the General Assembly is not to be presumed to have intended a conflict." Davis v. Granite Corporation, 259 N.C. 672, 676; 131 S.E. 2d 335 (1963). Under that principle, then, the general rule does not apply when the Act first takes effect. Initially, the special requirement of four or five years' employment is an exception to the general rule and must be complied with. But in the present case, the special provision serves as more than merely an exception to the general rule that tenure follows three consecutive years' employment. Here, it also helps to make plain that the General Assembly intended no credit be given for employment prior to July 1, 1972, unless the previous employment amounts to at least four consecutive years with the same school system or five years statewide. If the statute were read to mean that employment prior to the effective date was to be counted in other cases, clear injustice would result. For example, suppose that at the close of the 1971-72 school year a teacher has been employed by a particular school system for three consecutive years. He is reemployed for the year beginning in the fall of 1972, but does not sign his contract until after July 1, 1972, the effective date of the Act. If it were assumed that the teacher's three previous years should count toward tenure, that teacher would have tenure after signing his contract for the 1972-73 school year. However, a teacher with four or more years of experience could not possibly attain career teacher status until one year later under the specific provision of subsection (c). A construction such as that, resulting in injustice, will be avoided when the statute is susceptible to another construction. Little v. Stevens, 267 N.C. 328, 148 S.E. 2d 201 (1966). To avoid such a result, the Act must be construed to provide that no credit be given for previous experience unless that experience amounts to at least four or five years as set out. Whether experience prior to July 1, 1972, is to be looked at in -64- awarding tenure is really a question of retroactivity: Is the general provision that tenure attaches following three consecutive years of employment to be given retroactive effect for purposes of accumulating the experience required? The North Carolina Supreme Court has held that a statute, such as the present one, amounting to a change in substantive law is to be applied prospectively only. Smith v. Mercer, supra. In that case, our court quoted with approval the standard rule on retroactivity as stated in Monroe v. Chase, 76 F. Supp. 278 (D.C. 111., 1947), that a substantive change is not to be "given a retrospective application in the absence of clear language that the lawmakers so intended." 276 N.C. at 335. Under the present statute, there is "clear language" that the legislature intended that the statute be applied retroactively in only two specifically named situations. They arise only when the teacher has had four previous, consecutive years of employment in the same school system or five years statewide. There is nothing to indicate that the General Assembly intended a retroactive application in any other situation. The indication, as shown by the palpable injustice that would result, is in fact to the contrary. The proper construction of the statute is, therefore, that it has no retrospective application except as specifically stated. Thus, previous employment not amounting to four years with the same school system or five years within the state will not be counted toward tenure. There are not yet any North Carolina judicial constructions of the Act. However, a case from another jurisdiction, Anderson v. Board of Education, 390 111. 412, 61 N.E. 2d 562 (1945), is instructive. In that case the Supreme Court of Illinois was confronted with a tenure statute similar to our own. The court held that a year's employment contracted for prior to the effective date of the tenure statute could not count toward fulfilling the required probationary period preceding an award of tenure. The teacher there argued that the period of probation should be given retrospective application. The court denied his claim and said, "We have examined the Teacher Tenure Law and cannot say that this statute contains 'clear language that will admit of no other construction' than that the legislature intended it to be retroactive." 61 N.E. 2d at 571 (citation omitted). The same construction is applicable to the North Carolina statute. See also, Falligin v. School Dist., 54 Mont. 177, 169 P. 803 (1917). -65- The result is that teachers who have had at least four or five years' experience, as discussed, will achieve tenure upon reemployment for the 1973-74 school year. Other teachers, regardless of their previous experience will receive no credit toward tenure for employment prior to July 1, 1972, and will not be eligible for tenure before they are reemployed for the 1975-76 school year. Robert Morgan, Attorney General Charles A. Lloyd, Associate Attorney 7 September 1972 Subject: Requested by: Question: Mental Health; Detention of Inebriates and Mentally 111 Persons; Authority of Clerk to Order Non-State Operated Hospitals to Involuntarily Accept Patients Dr. Granville G. Tolley Assistant Commissioner of Mental Health Is a hospital other than a State hospital required to accept over its objection an alleged inebriate or mentally ill person ordered to be detained under the provisions of G. S. 122-61? Conclusion: A hospital other than a State hospital is not required to accept over its objection an alleged inebriate or mentally ill person ordered to be detained under the provisions of G. S. 122-61. In haec verba, the section under consideration is as follows: "§ 122-61. Detention of persons alleged to be mentally ill or inebriate and dangerous to themselves or others.-H the affidavit filed in accordance with the -66- provisions of G. S. 122-60 states that the alleged mentally ill person or alleged inebriate is likely to endanger himself or others, he may be taken into custody and detained in his own home, in a private or general hospital, or in any other suitable facility as approved by the local health director for such detention, upon an order of the clerk of the court. He shall not be detained in a nonmedical facility used for the detention of individuals charged with or convicted of penal offenses. The Department of Mental Health shall make available to the clerk of court such medical services and transportation necessary to effect the detention deemed necessary. The clerk shall expedite the hearing, and, if the alleged mentally ill person or alleged inebriate is found to be in need of hospitalization, the clerk shall expedite the transmission of this information to the proper State hospital so that the alleged mentally ill person or alleged inebriate can be admitted without any undue delay." Literal reading of this statute makes it clear that the clerk of the superior court is charged with the responsibility for effecting a detention where necessary and in the manner most suitable for the alleged inebriate or mentally ill person concerned. This section delineates the types of places in which these individuals "may" be detained. It prescribes certain limitations upon the exercise of discretion by the clerk but contains no language indicating that the legislature intended to authorize the clerk to force a hospital (other than one operated by the State of North Carolina) to accept a patient of this type over its protest. Deliberate consideration of the ramifications of the types of situations involved buttresses this conclusion. Obviously, the type of patient covered by this section presents unusual materiel and personnel problems for a hospital assuming custody. Adequate control over and treatment of these patients would require quantities and kinds of facilities, equipment, and skilled personnel not necessarily found in every hospital. Further, the very act of assuming the custody of inebriates and mentally ill persons raises a specter -67- of claims of malpractice (spurious or otherwise) and legal actions against the responsible institution which would cause concern to the average hospital. In view of the fertile field for litigation, which this type of treatment provides in the present day and time, it would be unconscionable, if n
Object Description
Description
Title | North Carolina Attorney General reports |
Contributor | North Carolina. Department of Justice. |
Date | 1972; 1973 |
Subjects |
Attorneys general's opinions--North Carolina Automobiles--Transportation--Law and legislation Children Criminal law Education Genealogy Liquor laws Local government Mental health laws Public health Public officers--North Carolina Public welfare Taxation--Law and legislation |
Place | North Carolina, United States |
Time Period | (1945-1989) Post War/Cold War period |
Description | Opinions of the Attorney General. |
Publisher | Raleigh, N.C. :Dept. of Justice,1970- |
Agency-Current | North Carolina Department of Justice |
Standard Number | 0364-362X |
Rights | State Document see http://digital.ncdcr.gov/u?/p249901coll22,63754 |
Physical Characteristics | v. ;23 cm. |
Collection | Health Sciences Library. University of North Carolina at Chapel Hill |
Type | text |
Language | English |
Format | Reports |
Digital Characteristics-A | 21013 KB; 526 p. |
Digital Collection |
Ensuring Democracy through Digital Access, a North Carolina LSTA-funded grant project North Carolina Digital State Documents Collection |
Digital Format | application/pdf |
Title Replaces | North Carolina. Department of Justice..Biennial report of the Attorney General of the State of North Carolina |
Audience | All |
Pres File Name-M | pubs_edp_biennialreportattorneygeneral19721973.pdf |
Pres Local File Path-M | \Preservation_content\StatePubs\pubs_edp\images_master\ |
Full Text | THE LIBRARY OF THE UNIVERSITY OF NORTH CAROLINA THE COLLECTION OF NORTH CAROLINIANA CJUO N87a v.U2 no. 1-2 1972 UNIVERSITY OF N.C. AT CHAPEL HILL 00033947203 FOR USE ONLY IN THE NORTH CAROLINA COLLECTION Digitized by the Internet Archive in 2011 with funding from Ensuring Democracy through Digital Access (NC-LSTA) http://www.archive.org/details/northcarolinaatt19721973 W\ &dj \~j^ NORTH CAROLINA VOLUME 42 NUMBER 1 OBERT MORGAN TTORNEY GENERAL 42 N.C.A.G.-No. 1 Pages 1 through 144 NORTH CAROLINA ATTORNEY GENERAL REPORTS Opinions of the Attorney General July 1, 1972, through December 31, 1972 MAILING ADDRESS: P. O. Box 629, Raleigh, N. C. 27602 Jean A. Benoy James F. Bullock ROBERT MORGAN Attorney General Harry W. McGalliard Chief Deputy Attorney General Ralph Moody Special Counsel Andrew A. Vanore, Jr. Robert Bruce White, Jr. Deputy Attorneys General Carroll Leggett Special Assistant Attorney General H. H. Weaver Administrative Deputy Attorney General Myron C. Banks James L. Blackburn William F. Briley Lester Chalmers H. Al Cole, Jr. Richard B. Conely T. Buie Costen Christine Y. Denson Raymond W. Dew, Jr. Sidney S. Eagles, Jr. Edward L. Eatman, Jr. Roy Andre Giles, Jr. Eugene Hafer Guy A. Hamlin Claude Harris Charles M. Hensey Parks H. Icenhour Dale P. Johnson Rafford E. Jones Assistant Thomas E. Kane I. Beverly Lake, Jr. Richard N. League Charles A. Lloyd James E. Magner, Jr. William W. Melvin William F. O'Connell William B. Ray Millard R. Rich, Jr. James B. Richmond Walter E. Ricks, III Henry Thomas Rosser Jacob L. Safron Alfred N. Salley Howard P. Satisky Eugene A. Smith Robert S. Weathers Robert G. Webb Thomas B. Wood Attorneys General Wade E. Brown, Consultant Herbert Lamson, Jr., Claims Attorney Russell G. Walker, Jr., Revisor of Statutes 1U> ,/ - -2- Ruth G. Bell Edwin Thomas Maddox, Jr. George W. Boylan Henry E. Poole ltf7'K/'72 Jones P. Byrd M. Ann Reed Don A. Davis Russell G. Sherrill, III Ralf Haskell John M. Silverstein Charles D. Heidgert Edwin M. Speas, Jr. Howard A. Kramer Associate Attorneys TABLE OF CONTENTS Administration of Estates; Commissions; Executor; Joint Tenancy with Right of Survivorship; Joint Bank Accounts 138 Clean Water Bond Act of 1971 (Chapter 909, 1971 Session Laws); Application for Grants; Construction Begun Before Adoption of Administrative Rules and Regulations 16 Counties; Commissioners; Compensation; Fixing Compensation of County Commissioners Pursuant to G.S. 153-13 132 Counties; Recreation Districts; Article 28, Chapter 153 (G.S. 153-368, et seq.) 74 Courts; Clerk of Superior Court; Partition of Real Property; Authority to Impose Restrictive Covenants in Deeds in Sale for Partition of Real Property; G.S. 46-30 1 Courts; District Courts; Juveniles; Criminal Offenses; Commitments to the Board of Youth Development When the Juvenile is Over 16 Years of Age 69 Courts; Juveniles; Probation; Education; Compulsory Attendance Law 133 Courts; Summons and Process; Nonresidents, Service of 110 Criminal Law and Procedure; Law Enforcement; Legality of Law Enforcement Officers From Out of Jurisdiction Serving as Undercover Agents in Another Jurisdiction 76 Criminal Law and Procedure; Sentences; Judgment and Commitment; Correction, Department of; Prisons and Prisoners 68 Criminal Law and Procedure; Sentencing; Presentence Report; Use of Prior Convictions; Probation and Probation Officers 92 Criminal Law and Procedure; Youthful Offender; Parole on Conditional Release 83 Education; Colleges and Universities; Annuity or Retirement Income Contracts for Faculty Members, Officers and Employees of State-Supported Institutions of Higher Learning; G.S. 116-46.2 6 Education; Teachers; Teacher Tenure Act; G.S. 115-142; Career Teachers 61 Elections; Registration Commissioners; Time of Appointment 79 Escheats; Hospitals; Applicability of Escheats Law to Hospital 14 Escheats; Marketing Cooperatives; Applicability of G.S. 116A-7 12 Escheats; Statutes of Limitations Inapplicable 49 Health; Certificate of Need; Inapplicability to Facility Already Constructed but Not Fully Licensed or Used 54 Health; Certificate of Need; Proper Licensing Agency for Facility Which Combines Hospitals, Nursing Homes and Rest Home Care 57 Insurance; Automobile Liability Insurance Policies; Termination by Rescission; Legality of 29 Insurance; Automobile Liability Insurance Policies; Terminations by Cancellation and Refusal to Renew; Applicability of 48-Month Exclusion 22 Intoxicating Liquors; Beer; Sunday Sales; County Regulation of; Straw Vote 26 Intoxicating Liquors; Beer and Wine; Sale of Sweet Wine in City of Monroe; Chapter 541, Session Laws of 1963; Enactment of Chapter 18A of the General Statutes 4 Intoxicating Liquors; Solicitation of Sales; Authority of State Board to Regulate Solicitation of Sales of Alcoholic Beverages, Beer and Wine 51 Intoxicating Liquors; Transportation; Alcoholic Beverages Being Transported to ABC Stores; Authority of Local Board to Transport Beverages 114 Jails; Sheriffs; Duty of Sheriff to Transfer Prisoners to Adjoining County 127 Licenses and Licensing; Day Care Facilities; Facility With Morning Kindergarten and a Lesser Number of Children for All Day Care 81 Licenses and Licensing; Day Care; Facilities on Federal Reservations 128 Licenses and Licensing; Day-Care Facilities; Number of Children for Whom Facility Licensed 55 Licenses and Licensing; General Contractors; Installation of Industrial Equipment 45 Licenses and Licensing; Plumbing and Heating Contractors; Necessity of Obtaining a License Under the Grandfather Clause Prior to Engaging in the Business of Plumbing and Heating Contracting 20 Mental Health; Detention of Inebriates and Mentally 111 Persons; Authority of Clerk of Superior Court to Issue Custody Order to Sheriff 43 Mental Health; Detention of Inebriates and Mentally 111 Persons; Authority of Clerk to Order Non-State Operated Hospitals to Involuntarily Accept Patients 66 Mental Health; Examination and Hospitalization of Inebriates; Public Drunkenness As a Criminal Offense 41 Motor Vehicles; Abandoned or Junked Vehicles; Removal of Abandoned Vehicles from Private Property 47 Motor Vehicles; Drivers' Licenses; Habitual Offenders 130 Motor Vehicles; Drivers' Licenses; Limited Driving Privilege; Driving After License Revoked; Sufficiency of Warrant 97 Motor Vehicles; Drivers' Licenses; Limited Driving Privilege; Revocation; Driving Under the Influence, Second Offense 125 Motor Vehicles; Drivers' Licenses; Reduction of Points for Successful Completion of Driver Improvement Clinic; G.S. 20-1 6(c) 84 Motor Vehicles; Drunken Driving; Plea Bargaining; Careless and Reckless Driving 71 Motor Vehicles; Drunken Driving; "Public Vehicular Area" 107 Municipalities; Day-Care Centers; No Authority to Expend Municipal Funds 135 Municipalities; Intoxicating Liquors; Authority to Regulate Consumption and Display on Public or City-Owned Property 59 Municipalities; Ordinances; Parking Meters; City of Raleigh 141 Municipalities; Streets and Highways; Powell Bill Funds; Expenditure for Sidewalks 91 Municipalities; Streets and Highways; Powell Bill Funds; Expenditure on State Highway System Streets 85 Oaths; Attorneys at Law; Who May Swear in Attorneys to Practice Law; G.S. 84-1, G.S. 11-7.1 82 Public Contracts; Bidding; Factory-Installed Electrical Heating and Plumbing Facilities; Separate Bids Required; G.S. 143-128 129 Public Officers and Employees; ABC Board Employees; Not Employees of the Municipality or County 28 Public Officers and Employees; Conflict of Interest; Officer Contracting for His Own Benefit; G.S. 159A-10; G.S. 14-234; County Commissioner Who is Officer of Corporation 9 Public Officers and Employees; Double Office Holding; Member of County Social Services Board and County School Board 1 1 6 Public Officers and Employees; Highway Patrol; Liability of Troopers for Medical Services Rendered to Patients 2 Public Officers and Employees; Private Use by Physicians of State Facilities 58 Public Officers and Employees; Workmen's Compensation; State Highway Patrol 136 Social Services; Foster Home Fund; Noneligibility of Persons Who are 18 or More Years of Age 8 Social Services; Juveniles; Medical Care; Sufficiency of Consent by County Department of Social Services 101 Social Services; Juveniles; Probation; Termination Under Interstate Compact on Juveniles 117 Social Services; Juveniles; Wards of the State; Effect of Placement of Custody by Judge of Juvenile Court 88 State Departments, Institutions and Agencies; Correction, Department of; Liability for Hospitalization of Inmates 38 State Departments, Institutions and Agencies; Eminent Domain; Relocation Assistance 104 State Departments, Institutions and Agencies; Orthopedic Hospital; Authority to Make Charges for Treatment, Care and Maintenance 1 1 1 State Departments, Institutions and Agencies; Publications; Free Distribution on Request to Statutory List of Institutions; G.S. 147-50 94 State Departments, Institutions and Agencies; Tort Liability; Mental Health; Area Mental Health Boards; Board Members; Authority to Sue and be Sued 120 State Departments, Institutions and Agencies; UNC at Chapel Hill; Public Utilities; Governor's Commission to Study Sale or Retention of University-Owned Utilities; Chapter 723, Session Laws of 1971 122 Taxation; Ad Valorem; Exemptions; Real Property; Homes for the Aged, Sick and Infirm; G.S. 105-278(5) 99 Taxation; Gift Tax; Decedent's Estate; Assets Includable; G.S. 105-108; G.S. 105-109 32 Taxation; Privilege License Tax; Selling Illuminating Oil or Greases or Benzine, Naphtha, Gasoline or Like Products; Automotive Service Stations; G.S. 105-72 and -89 18 Taxation; Sales Tax; Laundries and Dry Cleaners; Rug Cleaning Services; G.S. 105-164.4(4) 35 3 July 1972 Subject: Requested by: Question: Courts; Clerk of Superior Court; Partition of Real Property; Authority to Impose Restrictive Covenants in Deeds in Sale for Partition of Real Property; G. S. 46-30 Honorable M. L. Huggins Clerk of Superior Court Lincoln County In a special proceeding before the clerk of superior court to sell land for partition among tenants-in-common, may the clerk authorize commissioners to impose legally binding restrictive covenants upon the real estate where the real estate now has no restrictions on its use and some of the co-tenants do not consent to the imposition of restrictive covenants? In a special proceeding before the clerk of superior court to sell land for partition among tenants-in-common, the clerk may not authorize commissioners to impose legally binding restrictive covenants upon the real estate where the real estate now has no restrictions on its use and some of the co-tenants do not consent to the imposition of restrictive covenants. Your letter of June 21 , 1972 recites that you have entered an order of sale and have appointed commissioners to carry out the sale of land in a special proceeding to sell land for partition among tenants-in-common. The land now has no restrictions on it of any kind. It may be, you note, that the imposition of covenants limiting the land to residential purposes and further restricting the kind and size of residences "would be wise and in the best interests of the sale." The tenants are unable to agree on the question of voluntary imposition of restrictions. Conclusion: After careful review, we conclude that the clerk of superior court does not have the authority to impose or approve imposition of restrictive covenants relating to residential use and size and kind of residences where the land was previously unencumbered. No express statutory authority exists to restrict or modify the title taken by purchasers at such a sale. We construe G. S. 46-30 as requiring the person making the deed to convey only ". . .such title and estate in the property as the tenants in common. . .had therein." To impose or authorize imposition of restrictive covenants on land heretofore unrestricted, notwithstanding the wisdom of the restrictions, constitutes a modification of the tenants' title and estate in the property to be sold. For the clerk or commissioners to do so would contravene G. S. 46-30. Supporting this position is the language by Justice Brown in Jordan v. Faulkner, 168 N. C. 466, 467 (1915): "The deed of the commissioner, by virtue of the partition proceedings, is in law the conveyance of all the parties, and vests in the grantee the same title and rights as would other conveyance equally comprehensive in terms." (Emphasis added.) Robert Morgan, Attorney General Sidney S. Eagles, Jr., Assistant Attorney General 5 July 1972 Subject: Public Officers and Employees; Highway Patrol; Liability of Troopers for Medical Services Rendered to Patients Requested by: Question: Col. Edwin C. Guy State Highway Patrol Is a member of the State Highway Patrol personally liable for hospital and doctor charges for necessary medical services -2- rendered to a prisoner in his custody because he secured the medical services for the prisoner? Conclusion: A member of the State Highway Patrol is not personally liable for hospital and doctor charges for necessary medical services rendered to a prisoner in his custody notwithstanding the fact that he secured the medical services for the prisoner. The typical incident described in this inquiry involved two prisoners who had been injured while resisting a lawful arrest by members of the State Highway Patrol. After making the arrest, the troopers then took the prisoners to a local hospital where they received first aid. One of these troopers was requested to sign the admittance slips on the prisoners; later, upon refusal of the prisoners to pay the medical fees incurred, the hospital requested payment from the arresting troopers. Ordinarily an express or implied contract is necessary to render one person liable for hospitalization charges of another. Any such contract must be construed in view of the language used in the agreement as well as in light of all the facts and circumstances involved at the time it was executed. See Bartron Clinic v. Kallemeyn, 60 S. D. 598, 245 N. W. 393 (1932). In the situation as described, by virtue of the troopers' position as law enforcement officers and their custodial responsibility for the prisoners, other factors enter into the circumstantial background to be considered in assaying the presence of pecuniary liability. One factor is the existence, or nonexistence, of any statutory duty to furnish necessary care for prisoners. Another factor is the basic responsibility of any peace officer, absent a specific statutory obligation, to provide humane treatment calculated to protect the health and welfare of persons within his charge. Applying these precepts to the situation described, it is clear that the troopers' purely humanitarian act of seeking medical treatment for their prisoners was one taken in an official capacity rather than -3- one designed to achieve a personal end. As a result, no personal liability would appear to be incurred thereby. As to payment of the medical costs, in the event of failure of payment by the patients and subsequent demand by the hospital, G. S. 153-53.2 and G. S. 153-53.3 appear to become pertinent as of the time of arrest. These two sections pertain to all prisoners "confined or detained" (See G. S. 153-50(6)). Basically they require that local confinement facilities have suitable plans in existence for providing emergency medical services and for payment for those services. Robert Morgan, Attorney General William F. O'Connell, Assistant Attorney General 7 July 1972 Subject: Intoxicating Liquors; Beer and Wine; Sale of Sweet Wine in City of Monroe; Chapter 541, Session Laws of 1963; Enactment of Chapter 18A of the General Statutes Requested by: Mr. Koy E. Dawkins Attorney Monroe ABC Board Question: Conclusion : In an earlier Attorney General opinion (41 N.C.A.G. 100 (1970)), this Office concluded that sweet wine could not be sold in the City of Monroe. Does the recodification of the intoxicating liquor laws as Chapter 18A of the General Statutes and the repeal of Chapter 18 affect the outcome of that issue? No. -4- This Office held in an opinion to Mr. John R. Milliken, Monroe City Attorney, on October 8, 1970 (41 N.C.A.G. 100) that sweet wine could not be sold in the City of Monroe as provided in G. S. 18-99 since Chapter 541 of the 1963 Session Laws provides that the Monroe ABC Board and the operation of the ABC stores in Monroe will be subject to the provisions of Article 3 of Chapter 18. Although the sale of fortified wine is allowed by the provisions of former Article 3, Chapter 18, the sale of sweet wine was dealt with in G. S. 18-99, which was in Article 5 of Chapter 18. Effective October 1, 1971, the General Assembly recodified the intoxicating liquor laws into Chapter 18A of the General Statutes and repealed Chapter 18. The category of sweet wines was abolished and, under the new General Statutes, wine is classified as either unfortified or fortified with the dividing line being a 14% alcohol by volume measure. G. S. 18A-57 provides: " § 18A-57. Local acts and local option. - (a) Nothing in this Chapter shall operate to repeal any of the local acts of the General Assembly of North Carolina prohibiting the possession or consumption of intoxicating liquor within any county, municipality, or portion thereof, and all such local acts shall continue in full force and effect and in concurrence herewith, until repealed or modified. "(b) Nothing in this Chapter shall require a permit to be issued for any territory where the sale of malt beverages or wine (fortified or unfortified) is prohibited by special legislative act or for any area where the sale or possession for the purpose of sale of malt beverages or wine (fortified or unfortified) is unlawful as a result of a local option election; and this Chapter shall not repeal any special, public-local, or private act prohibiting or regulating the sale of these beverages in any county in this State, or any act authorizing the board of commissioners of any county of this State, or the governing body of any municipality, in its discretion, to prohibit the sale of -5- malt beverages or wine (fortified or unfortified)." Since the local act pursuant to which the ABC store election in the City of Monroe was held did not permit the sale of sweet wines but only permitted the sale of fortified wines, the enactment of Chapter 18A of the General Statutes does not affect our opinion that the category of sweet wines as they were defined in former G. S. 18-99 still may not be sold by the Monroe ABC Stores. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 10 July 1972 Subject: Requested by: Question: Education; Colleges and Universities; Annuity or Retirement Income Contracts for Faculty Members, Officers and Employees of State-Supported Institutions of Higher Learning; G. S. 116-46.2 Mr. H. L. Ferguson, Jr. Vice Chancellor for Business Affairs University of North Carolina at Greensboro G. S. 116-46.2 empowers the board of trustees of any State-supported institution of higher learning to authorize the financial officer to enter into annual contracts with employees of the institution for a reduction in salary below the total established salary schedule for the purchase of annuity or retirement income contracts for the benefit of the employee. Is an employee free to determine the identity of the seller of such an annuity or retirement contract entered into for the employee's benefit, or may the institution make this determination? Conclusion: G. S. 116-46.2 provides that pursuant to the contract with the employee, "the financial officer or agent shall use the funds derived from the reduction in the salary ... to purchase a non-forfeitable annuity or retirement income contract for the benefit of . . . (the employee)." Because the seller of the annuity or retirement income contract enters into an agreement with the institution, not with the employee, the institution is free to determine the identity of the seller of such contract. G. S. 116-46.2 sets forth the procedure whereby State-supported institutions of higher learning may purchase annuity or retirement income contracts for employees of the institution. This statute establishes two types of contractual relations: (1) A contract between the employee and the appropriate administrative body of the institution whereby the employee agrees to have his pay reduced by a certain amount and the institution agrees to use this money to purchase a non-forfeitable annuity or retirement income contract; and (2) a contract between the institution and the seller of the annuity or retirement income plan under which the employee is a third party beneficiary. Because the contract entered into between the institution and the seller is fully enforceable by the third party beneficiary, and because the contract may not be materially altered without the beneficiary's consent, the employee-beneficiary is not being deprived of the unrestrained use of a part of his salary without his consent should the institution determine who the seller of the contract will be. Trust Company v. Processing Company, 242 N. C. 370 (1955); 2 Strong, N. C. Index 2d, Contracts, §14. However, the institution should, before agreeing with the employee for reduction in pay for the purchase of an annuity or retirement income contract, advise the employee of those companies it normally does business with and, if feasible, allow the employee to choose which company he -7- prefers the institution to contract with for his benefit. This opinion overrules an unpublished, informal opinion issued by this Office to Mr. Jule McMichael on 20 September 1971 construing G. S. 115-153.1, which provides for the same type of annuity and retirement income contracts for public school employees. Robert Morgan, Attorney General Andrew A. Vanore, Jr., Deputy Attorney General 11 July 1972 Subject: Requested by: Question: Conclusion : Social Services; Foster Home Fund; Noneligibility of Persons Who Are 18 or More Years of Age Mr. Clifton Craig Commissioner Department of Social Services May assistance from the State Foster Home Fund described in G. S. 108-66 lawfully be granted to persons who are 18 or more years of age and who live in foster homes? Assistance from the State Foster Home Fund described in G. S. 108-66 may not lawfully be granted to persons who are 18 or more years of age and who live in foster homes. G. S. 108-66 makes it clear that the funds provided for therein are for "needy children". G. S. 48A-2 provides that "A minor is any person who has not reached the age of 18 years." Therefore, we do not perceive that persons who are 1 8 or more years of age can properly be denominated "children". Furthermore, although G. S. 108-66 speaks of "needy children" rather than "dependent children", it is deemed significant that G. S. 108-66 providing for the Foster Home Fund is a part of Article 2 of Chapter 108 wherein, in G. S. 108-24, the adult status of persons who are 18 or more years of age is recognized. G. S. 108-24 is, in pertinent part, as follows: "As used in Article 2: . . .(3) 'Dependent child' is a person under 18 years of age. ..." Robert Morgan, Attorney General Robert S. Weathers, Assistant Attorney General 12 July 1972 Subject: Requested by: Question: Conclusion: Public Officers and Employees; Conflict of Interest; Officer Contracting for His Own Benefit; G. S. 159A-10; G. S. 14-234; County Commissioner Who Is Officer of Corporation Mr. Walter J. Cashwell, Jr. Scotland County Attorney May a county pollution abatement and industrial facilities financing authority lease a facility, constructed under the provisions of Chapter 159A, North Carolina General Statutes, to a corporate lessee to be subleased to a corporation partly owned by the lessee when a member of the county board of commissioners is president of the corporate sublessee and is also president of a third corporation which is part owner of the corporate sublessee? A lease or sublease of property constructed by a county pollution abatement and industrial facilities financing authority pursuant to the provisions of Chapter 159A, North Carolina General Statutes, to a corporation in which a county commissioner has a direct or indirect interest would be in contravention of the express conflict of interest provisions of G. S. 159A- 10 and may be in violation of G. S. 14-234. Inquiry is made whether a conflict of interest would arise under G. S. 159A-10 if a county pollution abatement and industrial facilities financing authority leases a facility, constructed with funds realized from bonds issued by the authority, to a corporation which will then sublease to a second corporation when it appears: 1. That the corporate sublessee is wholly owned by the corporate lessee and a third corporation; 2. The lessee is a customer of the sublessee and both are customers of the third corporation; and 3. A member of the board of county commissioners is president of both the sublessee and the third corporation. G. S. 159A-10 provides, inter alia: "No officer, member, agent or employee of . . . any political subdivison or agency thereof shall be interested either directly or indirectly in any contract with an authority. ..." {Emphasis added). The statute prohibits any public official or public employee having an interest, either direct or indirect, in any contract with a county pollution abatement and industrial facilities financing authority. No case has been found which construes the provisions of G. S. 159A-10. The provisions of that statute appear sufficiently similar to those of G. S. 14-234, however, that it is possible to reason by analogy. -10- This Office has determined that a conflict of interest would exist under G. S. 14-234 in the following instances: 1. Contract between a school board and the wholly owned subsidiary of a parent company in which a board member had stock. 40 N.C.A.G. 565 (1970). 2. Lease of houses by a municipal housing authority from a corporation of which the mayor, who appointed the housing authority, was president and owner. 40 N.C.A.G. 561 (1969). 3. Purchase of supplies by a town from a corporation when a town commissioner was part owner, director, secretary and general manager of a store owned by the corporation. 41 N.C.A.G. 371 (1971). In an Opinion appearing in 40 N.C.A.G. 566 (1969), it is said: "The North Carolina statute is merely declaratory of the common law which has always been enforced strictly by the courts to prohibit public officials from being a party to a contract with the municipality or in any manner receiving or being in a position to receive benefits from the body of which he is a member. The courts will not permit the rule - that a man cannot serve two masters - to be evaded by any device or subterfuge. The good faith of the parties is immaterial. McQuillin, Municipal Corporations, Vol. 10, §§ 29-97, et seq." Although in the instant case the lessor is the financing authority, it is noted that the members of the authority are appointed by the county governing body. G. S. 159A-4. Considering the proprietary interests and trade relations that exist among the corporations, it must be presumed that the lease and sublease are for the benefit of all. The county commissioner is a member of a political subdivision which is empowered to create the financing authority. Since the -11- execution of the lease by the financing authority is for the benefit of the corporations of which the commissioner is president, a conflict of interest arises under G. S. 159A- 10. Robert Morgan, Attorney General Henry T. Rosser, Assistant Attorney General 17 July 1972 Subject: Requested by: Question: Conclusion: Escheats; Marketing Cooperatives; Applicability of G. S. 116A-7 Honorable Edwin Gill State Treasurer A cooperative marketing association engaged only in the marketing of a single agricultural product for the producers thereof was exempt from escheating certain distributions by virtue of G. S. 116-25. That statute was amended and transferred to G. S. 116A-7 by the 1971 General Assembly, effective July 1, 1971. The association called for a redemption prior to July 1 , 1 97 1 , of certain equity certificates issued to its members. Is such an association required to escheat the value of such equity certificates called for redemption but not actually redeemed upon expiration of three years from the date of call for redemption? Under the facts stated, the cooperative marketing association must escheat the value of such certificates three years from the date of call for redemption or other time when it is determined that those certificates are unclaimed. -12- The inquiry indicates that several years ago the cooperative marketing association organized for the purpose of marketing one agricultural product complied with the United States Department of Agriculture regulation requiring the association's equity capital | to be owned by current members. In doing so, in July of 1970, the marketing association called for the redemption of equity certificates issued in 1923 of which $21,686.44 was then outstanding. As of June 30, 1971, only $1,673.29 had been retired, leaving a balance in the 1923 certificates of $20,013.15. Also, in July of 1970, a call for redemption of the 1924 certificates in the amount of $41,143.90 was called for and as of June 30, 1971, there was a balance of $38,025.52. At the time of making the call for redemption, the association was arguably exempt from the escheat law provisions in that G. S. 116-25, containing substantially the same provisions as G. S. 116A-7, provided that that paragraph of the statute would not apply "to a cooperative marketing association engaged only in the marketing of a single agricultural product for the producers thereof." Subsequently, effective July 1, 1971, the escheats statutes were recodified and this provision was transferred to G. S. 116A-7 and that exemption was dropped. The escheats law as codified in Chapter 116A of the General Statutes is applicable to any unclaimed or derelict property of certain specified kinds. Also, there is a "catch-all" provision in G. S. 116A-4 which covers all other unclaimed personal property held by any person, firm or corporation. Those equity certificates in the marketing cooperative association which remain unclaimed thus fall within the purview of G. S. 11 6A-7 and should be escheated to the State through the State Treasurer's Office three years after they are determined to be unclaimed. The call for redemption is probably a convenient measuring date for a determination that the shares are unclaimed. The escheat statute is not being applied retrospectively here but is being applied to property which is unclaimed as of July 1, 1971, and subsequently. The inquiry indicates that there was no cut-off date when such certificates could be redeemed and, indeed, when they are escheated to the State Treasurer's Office, they will be held there subject to claim by the party entitled thereto. -13- Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 17 July 1972 Subject: Requested by: Question: Conclusion: Escheats; Hospitals; Applicability of Escheats Law to Hospital Mr. Edward E. Hollowell Attorney Wake County Hospital System, Inc. Are the provisions of Chapter 1 1 6A of the General Statutes regarding escheats applicable to the various types of hospitals in North Carolina? The provisions of Chapter 1 1 6A of the General Statutes regarding escheats are applicable to the various types of hospitals in North Carolina. The recent inquiry made on behalf of Wake County Hospital System, Inc., inquires as to the applicability of the escheat law to the various types of hospitals in the State. The inquiry indicates that there are four principal types of hospitals in North Carolina: 1 . County hospital authorities operating hospitals such as Wayne County Memorial Hospital; 2. Not-for-profit leasing county facilities such as the Wake County Hospital System, Inc.; 3. Private, not-for-profit hospitals such as Rex Hospital; 4. For profit hospitals such as Mary Elizabeth Hospital. Chapter 1 16A of the General Statutes, transferred by Chapter -14- 135 of the 1971 Session Laws to this codification from provisions in former Chapter 116 of the General Statutes and now administered by the State Treasurer's Office, provides for the escheat of property to the State and the claim by the State to certain types of abandoned property. The statutes have historically been based on constitutional provisions (presently Article IX, sec. 10). The 1971 recodification did not make any substantive changes in the law as far as the administration with regard to hospitals is concerned except for the reporting requirements added by G. S. 116A-7.1. While there are some sections applicable to specifics (see, e.g., G. S. 116A-7(a) dealing with unclaimed salaries, wages and other compensation), there is a "catch-all" provision in G. S. 116A-4 which provides in pertinent part: "Personal property of every kind, except as is otherwise provided by this Chapter, ... in the hands of any person . . . , firm or corporation which shall not be recovered or claimed by the parties entitled thereto for three years after the same shall become due and payable, shall be deemed derelict property, and shall be paid or delivered to the Escheat Fund and held without liability for profit or interest until a just claim therefor shall be preferred by the parties entitled thereto." The language of this statute is all-inclusive and makes no distinction between public and private profit or not-for-profit operations. Therefore, when any property remains unclaimed for a period of three years, it should be paid to the State Treasurer's Office along with the report required by the statute and would be held by the State Treasurer's Office subject to claim. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General •15- 17 July 1972 Subject: Requested by: Question: Conclusion: Clean Water Bond Act of 1971 (Chapter 909, 1971 Session Laws); Application for Grants; Construction Begun Before Adoption of Administrative Rules and Regulations Mr. Marshall Staton, Director Sanitary Engineering Division State Board of Health Department of Human Resources May a unit of local government after July 1, 1972, but before the adoption by State administrative agencies of rules, regulations and procedures for administering the Clean Water Bond Act of 1971, proceed with the construction of a project to add to its water supply system and remain eligible to apply for a grant for such project from Bond Act funds? A unit of government which begins construction of a project to add to its water supply system after July 1, 1972, will not be disqualified from making application for grant under the Clean Water Bond Act of 1971 (Chapter 909, 1971 | Session Laws) solely because construction was begun prior to adoption by State administrative agencies of rules, regulations and procedures for administering the Act. A city and a county have indicated that they find it necessary to begin construction of certain additions to an existing water supply system soon after July 1, 1972. Since it does not appear that the administrative agencies charged with responsibility for administering the Clean Water Bond Act of 1971 will have completed the preparation of necessary rules, regulations and administrative procedures, the local government units will be unable to apply for -16- a grant from Bond Act funds at the time they desire to begin construction. Inquiry is made whether the local units of government will forfeit their eligibility to apply for such grants if they begin construction prior to adoption of rules, regulations and procedures by the administrative agencies. Section 7(a) of the Clean Water Bond Act of 1971 provides, in pertinent part: "Sec. 7. Use of bond proceeds; allocation. - (a) Grants. (1) Purpose. All monies paid into the Clean Water Fund . . . shall be used for grants to units of government for the construction of new or the improvement or expansion of existing wastewater treatment works, wastewater collection systems and water supply systems." Sec. 7(e) provided, inter alia: "Allocation of grants under the provisions of this Act, . . . , shall not be made in an aggregate amount exceeding $30,000,000 in the first fiscal year, beginning July 1, 1972. . . ." {Emphasis added). Section 4 of the Act provides for the issuance of $150,000,000 in bonds of the State, subject to a favorable vote of the qualified voters. The bond election was held May 6, 1972, pursuant to Section 4, and the bond issue was approved. The Act provides that it shall be administered by the Department of Administration, the Board of Water and Air Resources and the State Board of Health. Section 14 empowers those agencies "... to adopt, modify and revoke rules of procedure establishing and amplifying the procedures to be followed in the administration of this act and regulations interpreting and applying the provisions of this act." As shown by Section 7(e), the General Assembly provided that allocation of grant funds might begin during the fiscal year 1972 - 1973, and thus clearly intended that projects constructed during this period should be eligible to apply for grants under the Act. There is no provision of the Act that makes eligibility for grants contingent upon project construction beginning after the effective -17- date of adoption of rules and regulations by the administrative agencies. Indeed, to have so provided would have been to empower the administrative agencies to delay construction under the Act for an indefinite period, since no time was specified in the Act for adoption of rules and regulations. This would have been obviously at odds with the purpose and intent of the Act, as expressed in| Section 7(a), and Section 7(e). It is concluded that projects upon which construction was begun prior to the adoption of rules and regulations by the administrative agencies will not be disqualified for that reason alone from applying for grants under the Clean Water Bond Act of 1971. It should be noted, however, that the administrative agencies, through adoption of rules and regulations under the Act, may establish the form, method and time for making application for grants. Local units of government desiring to apply for grant funds might find that they are precluded unless they procure and closely follow the rules and regulations when adopted. Robert Morgan, Attorney General Henry T. Rosser, Assistant Attorney General 17 July 1972 Subject: Taxation; Privilege License Tax; Selling Illuminating Oil or Greases or Benzine, Naphtha, Gasoline or Like Products; Automotive Service Stations; G. S. 6§ 105-72 and 89 Requested by: Question: Mr. Nelson W. Taylor Morehead City Attorney May a city levy a license tax upon a service station which sells gasoline, under the authority of G. S. 105-72? 18- Conclusion: Yes, but only if (1) all persons, firms or corporations engaged in the business of selling illuminating oil or greases or benzine, naphtha, gasoline or other products of like kind are similarly taxed and (2) each taxpayer maintains in the city an agency, station or warehouse for the distribution or sale of such products. The attorney for Morehead City has inquired what the proper privilege tax should be upon service stations. The answer will depend largely upon the provisions of the statute under which the taxing ordinance is drawn. For example, G. S. 105-89 permits counties, cities and towns to levy a license tax upon "automotive service stations" not in excess of one-fourth of that levied by the State. In the case of Morehead City, the tax could not exceed $5.00, since the State tax is dependent upon municipal population, and the population of Morehead City would indicate a State tax of $20.00. However, under the provisions of G. S. 105-72, which is broader in scope, a city "in which there is located an agency, station or warehouse for the distribution or sale of such commodities enumerated in this section" may levy a license tax of $25.00, in the case of a municipality of less than 10,000 population, upon "every person, firm or corporation engaged in the business of selling illuminating oil or greases or benzine, naphtha, gasoline or other products of like kind." Therefore, it appears that the city could impose a license tax under G. S. 105-72, but it would have to be levied upon the entire class of persons, firms and corporations engaged in the enumerated business, rather than individual members of the class. For example, if service stations, drug stores, grocery stores and hardware stores all sell "benzine, naphtha, gasoline or other products of like kind," it would be discriminatory to single out only service stations for taxation, under the authority of G. S. 105-72. Thus, it seems likely that the sale of cigarette lighter fluid, dry cleaning fluid or portable lantern or stove fuel would bring a business within the taxable class. By the same token, each taxable business would have to be found to maintain within the city an agency, station or warehouse for the distribution or sale of such products. -19- If a city chose to enact ordinances under both G. S. 105-89 and G. S. 105-72, it is doubtful that a service station could be taxed under each. It is more likely that the ordinance taxing service stations as a class, being more specific, would preempt the ordinance taxing businesses selling petroleum products. In addition, the two ordinances would clearly raise serious questions of public policy implicit in double taxation by a single taxing authority. The better view, we think, would be to apply one but not both ordinances to a single business. Robert Morgan, Attorney General Myron C. Banks, Assistant Attorney General 17 July 1972 Subject: Licenses and Licensing; Plumbing and Heating Contractors; Necessity of Obtaining a License under the Grandfather Clause Prior to Engaging in the Business of Plumbing and Heating Contracting Requested by: Mr. F. O. Bates Executive Secretary of the State Board of Examiners of Plumbing and Heating Contracting Question: Is an unlicensed person, who has engaged in, or offered to engage in, the business of plumbing and heating or air-conditioning contracting since July 6, 1971, in areas where Chapter 87 did not previously apply, in violation of Chapter 87 of the North Carolina General Statutes as amended by the 1971 General Assembly? Conclusion: No. The Amendment to Article 2 of Chapter 87 was effective on the date of -20- ratification, July 6, 1971; however, those not previously covered have until December 31, 1972, before they must secure a license prior to engaging in the business of plumbing and heating or air-conditioning contracting without violation of Article 2, Chapter 87 of the North Carolina General Statutes. Prior to amendment by the 1971 General Assembly, Article 2 of Chapter 87, requiring a license to engage in the business of plumbing and heating contracting, applied only in cities and towns having a population of more than 3,500 people. The 1971 General Assembly amended Article 2 of Chapter 87 to provide that G. S. 87-2 1(c) shall apply to all those persons, firms and corporations engaging in the business of plumbing and heating contracting. The effective date of the amendment was July 6, 1971; however, there was no saving or transitional clause provision for those not previously covered by Chapter 87 who were lawfully engaged in the business of plumbing and heating and air-conditioning contracting prior to July 6, 1971. The legislature provided, however, at the same time, a grandfather clause for those who had engaged in the business of plumbing and heating contracting in areas not previously covered. G. S. 87-2 1(d) as amended is as follows: "G. S. 87-21. Definitions; contractors licensed by Board; examination; posting license, etc.-. . . .(d) License Granted Without Examination. - Any resident of North Carolina who was engaged in business as defined in this Article in any city, town or other area in which General Statutes 87, Article 2 did not previously apply, shall receive license without examination upon submission of an application on forms provided by the Board, together with reasonable proof that he was engaged in business as defined and upon payment of the annual license fee; provided, the completed application is submitted to the Board on or before December 31, 1972." By the express provision of this section, those who engaged in the business of plumbing and heating contracting in areas where -21- Article 2 of Chapter 87 was not applicable have until! December 21, 1972, to obtain a license without an examination.1 If the Act were interpreted to require a license upon ratification of those in areas not previously covered by Article 2, Chapter 87 J approximately 4,300 would have been immediately required toM obtain a license (a physical impossibility), operate illegally, or temporarily go out of business until they could comply with the time-consuming provisions of the grandfather clause as set out in G. S. 87-21 (d). Certainly, by the enactment of the grandfather clause at the same time Article 2 of Chapter 87 was amended to cover all of the areas in North Carolina, the General Assembly has shown that it was not their intention to declare unlawful or put out of business those persons, firms or corporations lawfully engaged in the business of plumbing and heating contracting in areas not previously covered after July 6, 1971. It is presumed that the legislature acted in accordance with reason and common sense and that it did not intend an unjust or absurd result. King v. Baldwin, 276 N. C. 316. It is the opinion of this Office that those not previously covered have until December 31, 1972, before they must secure a license to engage in the business of plumbing and heating and air-conditioning contracting without violating the provisions of Article 2 of Chapter 87 of the North Carolina General Statutes. Robert Morgan, Attorney General James E. Magner, Assistant Attorney General 17 July 1972 Subject: Insurance; Automobile Liability Insurance- Policies; Terminations by Cancellation and Refusal to Renew; Applicability of 48-Month Exclusion Requested by: The Honorable Edwin S. Lanier Commissioner of Insurance -22- Question: Under the provisions of G. S. 20-310, would continuous automobile liability insurance coverage written voluntarily or under the North Carolina Automobile Assigned Risk Plan (old assigned risk plan) followed by voluntary coverage prior to January 1, 1972, and continuous coverage under the North Carolina Automobile Insurance Plan (new assigned risk plan) followed by voluntary coverage, count toward completion of the consecutive period of coverage of 48 months or longer set forth in subdivision (g) (3) of the statute? Conclusion: No period of continuous automobile liability insurance coverage prior to January 1, 1972, written either voluntarily or under the North Carolina Automobile Assigned Risk Plan would count toward the completion of a period of 48 consecutive months of coverage necessary to exclude a policy from the provisions of G. S. 20-310. Nor would coverage under the North Carolina Automobile Insurance Plan count toward completion of the 48-month period. The Commissioner of Insurance has requested that the Attorney General render an opinion concerning the financial responsibility laws pertaining to the termination of insurance policies. Specifically, the Commissioner desires to know: (1) Whether continuous automobile liability insurance coverage under a policy written on a voluntary basis for a period prior to January 1, 1972, whereby the total coverage was for 48 months or more would exclude such a policy from the provisions of G. S. 20-310; (2) Whether continuous automobile liability insurance coverage under a policy written on a voluntary basis combined with prior 23- coverage by the same company under the North Carolina Automobile Insurance Plan (new assigned risk plan) resulting in total continuous coverage of 48 months or longer would exclude such a policy from the provisions of G. S. 20-310; (3) Whether continuous automobile liability insurance coverage under a policy written on a voluntary basis combined with prior coverage by the same company under the North Carolina Automobile Assigned Risk Plan (old assigned risk plan) resulting in total continuous coverage of 48 months or longer would exclude such a policy from the provisions of G. S. 20-310? G. S. 20-310 (g) in pertinent part reads as follows: "(g) Nothing in this section shall apply: * * * * (3) . . .to any policy which has been written or written and renewed for a consecutive period of 48 months or longer." It is understood that the Commissioner has concluded that continuous automobile liability coverage written on a voluntary basis for a period prior to January 1, 1972, will not count toward completion of the period of continuous coverage for 48 months or longer referred to in subdivision (g) (3) of the statute. We concur fully with that opinion. Session Laws 1971, c. 1205, s. 6, provides: "Section 4 (codified as G. S. 20-310) of this act shall become effective on January 1, 1972, but shall apply only to insurance policies written or renewed after said date." {Emphasis added.) This language demonstrates that the undeniable intent of the General Assembly was that nothing contained in G. S. 20-310 would affect policies written or renewed before January 1, 1972. "The fundamental rule of statutory construction, to -24- which all other rules are subordinate, is that the court shall, by all aids available, ascertain and give effect ... to the intention or purpose of the legislature as expressed in the statute." 82 C.J.S., Statutes, s. 321 (See also Ballard v. Charlotte, 235 N. C. 484, 70 S. E. 2d 575 (1952)). In support of this position is the purpose of the financial responsibility act that every motorist maintain continuously proof of financial responsibility. The statute at hand must be considered in context with the other provisions of these laws and the purpose thereof {Perkins v. Insurance Co., 21A N. C. 134, 161 S. E. 2d 536 (1968)) and the obvious purpose of G. S. 20-310 was to provide to the insured some degree of continuous liability insurance coverage. It is well settled that "... in the interpretation of a statute of doubtful meaning, it is proper to take into consideration its purpose . . . intended to be efficiently embodied in the enactment." 50 Am. Jur., Statutes, s. 303. Interpreting G. S. 20-310 in light of its purpose, it becomes clear that this purpose would be frustrated if coverage prior to January 1, 1972, were allowed to count toward completion of the 48-month period of continuous coverage necessary to exclude a policy from the provisions of the statute. Since many persons have been covered under policies, written, or written and renewed, for a consecutive period of 48 months or longer, the act would afford these persons no protection whatsoever. Therefore, the statute would be ineffective in many cases in abating the particular problem that it was designed to prevent-unchecked cancellations and refusals to renew by insurance companies. Question (2) can be answered by merely referring to the definitional section of the statute. Under Subsection (a) (1) of G. S. 20-310, it is stated that "'policy' shall not apply to any policy issued under the North Carolina Automobile Insurance Plan." Therefore, since Subdivision (g) (3) applies "to any policy" {emphasis added), coverage under the North Carolina Automobile Insurance Plan does not come within the exclusion by definition. Therefore, coverage under the North Carolina Automobile Insurance Plan will not count toward completion of the 48-month period set forth in Subdivision (g) (3) of the statute. -25- The result reached in question (1) above is determinative of question (3). The North Carolina Automobile Insurance Plan replaces the North Carolina Automobile Assigned Risk Plan with the former applying to all policies written or renewed after January 1, 1972. Session Laws 1971, c. 1205, s. 6, provides: "Section 3 (G. S. 20-279.34) of this act shall become effective on January 1, 1972, but shall apply only to insurance policies written or renewed after this date. The present provisions of G. S. 20-279.34 and the plan adopted pursuant thereto shall apply to all insurance policies written or renewed under the North Carolina Automobile Assigned Risk Plan prior to January 1, 1972." Therefore, coverage under the North Carolina Automobile Assigned Risk Plan would not count toward completion of the period of 48 months of continuous coverage set forth in Subdivision (g) (3) of the statute. Robert Morgan, Attorney General Benjamin H. Baxter, Jr., Associate Attorney 17 July 1972 Subject: Requested by: Question: Intoxicating Liquors; Beer; Sunday Sales; County Regulation of; Straw Vote Mr. John R. Jenkins, Jr. Bertie County Attorney May the Board of Commissioners of Bertie County call a special election or otherwise submit to the voters of the county at the general election to be held on November 5, 1972, the question of whether beer shall be sold in Bertie County on Sundays? -26- Conclusion: The Board of County Commissioners may not submit to the voters of the county the question of whether beer should be sold on Sundays in the County absent some special or general authorizing legislation. The inquiry indicates that the County Commissioners of Bertie County wish to submit to the voters of Bertie County the question of whether they will allow or disallow the Sunday sale of beer in the County. G. S. 18A-33(b) allows counties and municipalities in the State to regulate and prohibit the Sunday sale of beer and/or wine from 1:00 on Sunday until 7:00 a.m. on the following Monday although excluded from that authority are those establishments having a permit under Article 3 of Chapter 18A (the so-called "brown-bagging" establishments). The section provides that the powers vested in municipalities are exclusive within the corporate limits and the powers vested in the county commissioners are exclusive in all parts of the counties not included within municipal corporate boundaries. It is axiomatic that the counties have only that authority which is delegated them by the General Statutes or necessarily implied by law. 2 Strong, N. C. Index 2d, Counties, §2. "There is no inherent power in any governmental body to hold an election for any purpose, and an election held without affirmative constitutional or statutory authority is a nullity. ..." 3 Strong, N. C. Index 2d, Elections, §1. The counties have not been given authority to hold an election in the nature of a straw vote as to whether they should undertake to prohibit Sunday sales of beer and/or wine and, therefore, there is no authority for the Board of County Commissioners of Bertie County to hold such an election. This conclusion assumes that there are no local acts on the books as to Bertie County allowing the County Commissioners to hold -27- such straw vote elections since if there are such local acts, that would be sufficient authority. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 20 July 1972 Subject: Requested by: Question : Conclusion: Public Officers & Employees; ABC Board Employees; Not Employees of the Municipality or County Mr. W. Charles Cohoon Chairman State Board of Alcoholic Control Are employees of county and city ABC boards considered as employees of the city or county? No. A county or municipal ABC board is a separate political subdivision and employees of such boards are not employees of the county, municipal or State governments. G. S. 18A-16 creates a county board of alcoholic control in each county that is permitted to engage in the sale of alcoholic beverages. Local acts authorizing ABC systems in a municipality create a municipal ABC board and generally the only authority which the municipality has over such board is the power to appoint the members of the ABC board. Under G. S. 18A-16, the board of county commissioners, the county board of health and the county board of education appoint the members of the county ABC board. Other than this appointive power, the county and municipality have no control over the municipal or county ABC board. G. S. 18A-17 confers certain powers, authority and duties upon county ABC boards and these powers, duties and authorities are conferred in local acts upon -28- municipal ABC boards. All the powers and duties conferred upon county boards are subject to the powers conferred upon the State ABC Board. The State ABC Board, under G. S. 18A-15, is given control over county and municipal ABC boards in certain areas. The case of Hunter v. Retirement System, 224 N. C. 359, involved the question as to whether employees of the New Hanover County ABC Board were entitled to benefits under the City and County Retirement System. The Court discussed various sections of Chapter 18 of the General Statutes, now Chapter 18A of the General Statutes, and stated that there is no authority whatsoever vested in the City of Wilmington or County of New Hanover to control the Alcoholic Beverage Control Board of New Hanover ; County, to determine the number of its employees, to fix their salaries or to assign their duties or in any way to interfere with the discretionary powers vested in the State and county boards of alcoholic beverage control. The Court concluded that the employees of the Alcoholic Beverage Control Board of New Hanover County were not employees of the County of New Hanover nor of the City of Wilmington and were not eligible to the benefits of the retirement system. This office has previously concluded that a county or municipal ABC board was a separate political subdivision of State government and therefore employees of a county or municipal ABC board were not employees of the municipality, the county or State government. Robert Morgan, Attorney General James F. Bullock, Deputy Attorney General 20 July 1972 Subject: Insurance; Automobile Liability Insurance Policies; Termination by Rescission; Legality of Requested by: Honorable Edwin S. Lanier Commissioner of Insurance -29- Question: Whether under the financial responsibility laws, an insurer can rescind a policy of automobile liability insurance because of material misrepresentations made by the insured in an application for a policy thereby making it void ab initio*! Conclusion: Where an insured makes material misrepresentations in an application for a policy of automobile liability insurance, the insurer may not rescind the policy thereby making it void ab initio. The Commissioner of Insurance has requested that the Attorney General render an opinion regarding the financial responsibility laws pertaining to the termination of policies of automobile liability insurance. Specifically, the Commissioner wishes to know whether an insurer can terminate such a policy by rescission because of false and material representations made by the insured in the application for the policy thus making the policy void ab initio. The Insurance Department has received information of a termination by a carrier in the following factual situation: On February 24, 1972, the insured completed and executed an application for automobile liability insurance which contained false statements. Based upon this application, the carrier issued an automobile liability policy covering the insured. A routine driver's license check with the North Carolina Department of Motor Vehicles revealed the misrepresentations. Based upon the misrepresentations, the carrier voided the policy ab initio and by letter dated April 20, 1972, gave notice thereof to the insured. The Financial Responsibility Act was passed by the General Assembly to provide protection to persons injured or damaged by the negligent operation of automobiles. Hawley v. Indemnity Ins. Co. of North America, 257 N. C. 381, 126 S. E. 2d 161 (1962), and Perkins v. America Mut. Fire Ins. Co., 274 N. C. 134, 161 S. E. 2d 536 (1968). To effect this purpose, the Act was designed to ensure that operators of motor vehicles maintain continuous financial responsibility. Crisp v. State Farm Mutual Auto. Ins. Co., 256 N. C. 408, 124 S. E. 2d 149 (1962). Hence, the -30- Act contemplates that termination of automobile insurance policies shall only be made pursuant to its provisions and only in the specific cases set out therein. G. S. 20-310. Also, the Act provides that the operation of a motor vehicle without financial responsibility is a misdemeanor. G. S. 20-3 13(a). To allow an insurer to rescind a policy for fraud thus making it void from its inception is inconsistent with the Financial Responsibility Act. We recognize that the common law or statutory right to rescind ab initio for fraud would normally apply to an insurance contract. However, this common law or statutory right cannot be reconciled with the financial responsibility laws whose purpose as stated above is to assure continuous liability coverage. Teeter v. Allstate Insurance Company, 192 N.Y.S. 2d 610, 9 A.D. 2d 176 (1959). The fact that the Act prescribes penal sanctions to assure compliance and places the burden upon the insured to comply therewith is determinative. To allow rescission to be effective retroactively as of the date of issuance of the policy would make it impossible for the insured to either procure new insurance or surrender his license plates prior to the date upon which the termination of the coverage became effective. The insured would be retroactively rendered guilty of a misdemeanor for having operated a vehicle from the date of issuance to the date of rescission of the policy even though his conduct was lawful at the time. Teeter v. Allstate Insurance Company, supra. Therefore, we conclude that such a result could not have been intended by the legislature. The next question that must be resolved is whether under the Act, an insurer can terminate a policy due to fraud prospectively. The word "cancel" "is not used in the statute in its technical insurance sense but in its colloquial sense, as meaning a termination of coverage under a policy in any manner prior to the expiration date therein specified." Teeter v. Allstate Insurance Company, supra. Therefore, since a termination for fraud is not specified as a reason for cancellation in G. S. 20-3 10(d), we conclude that a policy of insurance cannot be terminated in the fact situation described by the Commissioner. We are not unmindful of the seemingly hopeless plight of the insurer in a case such as this. The General Assembly did, however, provide for a 60-day underwriting period during which time the insurer may -31- cancel a policy for any reason. This would seem ample time for the insurer to discover such fraud and cancel the policy. An insurer acting diligently can easily secure the driving record of its insured from the Department of Motor Vehicles and cancel a policy well within the 60-day underwriting period. Robert Morgan, Attorney General Benjamin H. Baxter, Jr., Associate Attorney 31 July 1972 Subject: Taxation; Gift Tax; Decedent's Estate; Assets Includable; G. S. 105-108; G. S. 105-109 Requested by: Question: Conclusion : Mr. B. E. Rogers, Director Inheritance & Gift Tax Division N. C. Department of Revenue If a gift tax has not been paid by a decedent upon the transfer of an asset later found to be includable in his estate, will the payment of the gift tax by the decedent's executor or administrator constitute an allowable deduction against his estate for inheritance tax purposes? Gift taxes paid by an executor and imposed upon the transfer of assets found to be includable in a decedent's estate are not deductions for North Carolina inheritance tax purposes. G. S. 105-8 provides, in relevant part: "In case a tax has been imposed under Schedule G of the Revenue Act of 1937, or under subsequent acts, -32- upon any gift, and thereafter, upon the death of the donor, the amount thereof is required by any provision of this Article to be included in the gross estate of the decedent, then the tax paid with respect to such gift shall constitute an advance payment of the tax which would otherwise be chargeable against the beneficiaries of the estate under the provisions of this Article, and shall be applied in reduction of said tax. ..." G. S. 105-9 provides, in relevant part: "Deductions -In determining the clear market value of property taxed under this Article, or schedule, the following deductions, and no others, shall be allowed: (1) Taxes accrued and unpaid at the death of the decedent and unpaid ad valorem taxes accruing during the calendar year of death." In McGill v. Oklahoma Tax Commission, 258 P. 2d 1180 (Okla. 1953), it was held that gifts made in contemplation of death, and therefore subject under the Federal Estate Tax Act to the payment of federal estate taxes, were subject to a contingent gift tax liability that disappeared upon the death of the donor. Upon his death, the tax on gifts in contemplation of death reappeared as an estate tax and was not a debt deductible under Oklahoma's inheritance tax law. In Smith v. Shaughnessy, 318 U. S. 176, 63 S. Ct. 545, 87 L. Ed. 690, (1943), it was pointed out that where a federal gift tax is paid on transfers in contemplation of death, it merely constitutes a "down payment" on the estate tax that is subsequently imposed on the transfer. As the court expressed it: "Under the statute the gift tax amounts in some instances to a security, a form of 'down payment' on the estate tax which secures the eventual payment on the latter. It is in no sense double taxation." 318 U. S. 179. -33- The California Court of Appeal held in In Re Estate of Gioletti, 24 C.A. 3d 921 (1972) that the amount of federal gift tax that is paid upon the transfer of property in contemplation of death, when the property subsequently becomes subject to federal and State inheritance taxes, and that is credited against the amount of the federal estate tax, is not deductible from the appraised value of the property in determining California inheritance tax. The State of New Jersey has held that a federal gift tax paid on a gift made in contemplation of ,death is nondeductible from the appraised value of an estate in computing the state inheritance tax liability. In Re Estate of Snivels, 105 N. J. Super. 242, 251 A. 2d 771 (1969). In that case, the court said: "There is no obligation to pay the gift tax as a separate liability, in the case of gifts made in contemplation of death, when the same items are included in the federal estate tax return. Gifts in contemplation of death are includable as assets of the donor's estate and subject to federal estate tax and a gift tax paid on such gifts is a mere credit on account of the calculated federal estate tax. If the gift tax has not been paid, the estate simply receives no credit. In the final analysis, the tax paid, by whatever label is put on it by the executor, is the federal estate tax." The federal government denies as a deduction in computing federal estate taxes any state gift tax paid on a gift in contemplation of death and subsequently credited to the state inheritance tax. Internal Revenue Bulletin 1971-31, provides that: "Since the provisions of section 2053(c)(1)(b) of the Code preclude the deduction of death taxes, it is further held that where, under state law, state gift taxes paid after the donor-decedent's death are regarded as prepayments of state inheritance taxes, such payments cannot be deducted from the value of his gross estate." Under G. S. 105-8, North Carolina treats any gift tax paid when -34- the asset is subsequently included in the decedent's estate as an "advance payment" of the estate tax. As such, as in other jurisdictions, it is not in reality or substance a payment of a gift tax, but a "down payment" of the estate tax and therefore not a deduction under G. S, 105-9 for "taxes accrued and unpaid at the death of the decedent." That which is in reality an estate tax cannot be converted into a deductible gift by the mere mechanics of filing a gift tax return when the amount of the gift tax is allowed as a credit against the estate tax. Smith v. Shaughnessy, supra. We cannot presume that the collective conscience of the legislature intended to create and sanction a situation whereby those who choose to transfer their property by will or the laws of intestacy would incur a greater tax obligation than those who would transfer in contemplation of death. Robert Morgan, Attorney General George W. Boylan, Associate Attorney 31 July 1972 Subject: Taxation; Sales Tax; Laundries and Dry Cleaners; Rug Cleaning Services; G. S. 105-164.4(4) Requested by: Mr. Eric L. Gooch, Director Sales & Use Tax Division N. C. Department of Revenue Questions: (1) Are the gross receipts from rug cleaning services conducted on the business premises of a rug cleaner subject to sales tax? (2) Are the gross receipts from rug cleaning services conducted on the premises of the rug cleaner's customer subject to sales tax? Conclusions: (1) Yes. -35- (2) No. The Director of the Sales & Use Tax Division, North Carolina Department of Revenue, has asked that certain provisions of Sales & Use Tax Regulation 24 be reviewed in the light of G. S. 105-164.4(4) and the following circumstances: Taxpayer A, a "rug and floor cleaner", maintains at its place of business seventeen rug hangers, each of which can accommodate a rug up to 12' x 12' in size. It picks up rugs, cleans them at its premises with a portable shampoo machine, and delivers the cleaned rugs to its customers. Jn addition to this activity, it engages in cleanup work resulting from fires and smoke damage, including the cleaning of walls, ceilings and floors. It also cleans rugs and carpets on the customer's premises. Taxpayer B may also be characterized as a rug cleaner. In its building, it has five rug poles, each thirteen feet long and capable of accommodating rugs up to twelve feet wide. It engages in the cleaning of rugs at its place of business, using portable rug cleaning equipment, and also engages in the cleaning of carpets, rugs, walls, floors and furniture in homes and offices, particularly where there has been fire and smoke damage. G. S. 105-164.4(4) imposes a sales tax upon the gross receipts of "every person, firm or corporation engaged in the business of operating a pressing club, cleaning plant, hat blocking establishment, dry cleaning plant, laundry (including wet or damp wash laundries and businesses known as launderettes or launderalls) or any similar type business. ..." As it applies to rug cleaning services, Sales & Use Tax Regulation 24 interprets G. S. 105-164.4(4) in this way: "(a) The gross receipts derived from the following are subject to the 3% sales or use tax: (1) Services rendered by pressing clubs, cleaning plants, hat blocking establishments, dry cleaning plants, -36- laundries, including wet or damp wash laundries and businesses known as launderettes and launderalls, and all similar type businesses. (2) The rental of clean linen, towels, wearing apparel and similar items. (3) Soliciting cleaning, pressing, hat blocking and laundry. (4) Rug cleaning services performed by persons operating rug cleaning plants or performed by any of the businesses named in this Regulation irrespective of whether the rug cleaning service is performed on the customer's location or at the plant. Persons who do not operate any of the businesses included in this Regulation and only perform house cleaning or building maintenance services and clean rugs at the customer's location do not come within the provisions of this Regulation." Clearly, under Regulation 24, the gross receipts of Taxpayers A and B, derived from the performance of rug cleaning services, wherever done, are subject to tax. The question is whether the Regulation is supported by the law. Common to each of the businesses taxed under G. S. 105-164.4(4) is a strong sense of physical location (a "club", a "plant", a "laundry", an "establishment") indicative of an intent to tax receipts from business carried on at a business premises. While we feel that a rug cleaning business bears sufficient similarity to the businesses more specifically named in the statute to bring it within its terms, we are of the opinion that the rule of construction which requires a statute imposing a tax to be strictly construed, against the State and in favor of the taxpayer, in cases of doubt, militates against that part of the Regulation which seeks to tax those receipts derived from services rendered at the customer's home or office. -37- In other words, gross receipts derived from rug cleaning services rendered at the plant or business premises of the rug cleaner are subject to tax. However, those derived from services rendered at the customer's premises, in our opinion, would not be. That portion of Regulation 24 which permits the imposition of the tax in the latter example is, we believe, in error. To the extent that it is in conflict with this opinion, the opinion on the same subject, dated 17 July 1961, is hereby modified. Robert Morgan, Attorney General Myron C. Banks, Assistant Attorney General 1 August 1972 Subject: Requested by: Questions: State Departments, Institutions and Agencies; Correction, Department of; Liability for Hospitalization of Inmates Mr. Martin R. Peterson Chief of Custody and Security N. C. Department of Correction Is the North Carolina Department of Correction required to pay medical and hospital expenses for an inmate requiring hospitalization outside the confines of the Department of Correction in the following instances: (1) An inmate is permitted to leave the confines of his unit on an authorized Community Volunteer leave. He escapes from his sponsor and is injured. The inmate is picked up immediately by police and delivered to the hospital for treatment. He is then turned over to the custody of the -38- Department of Correction after being released from the hospital. (2) An inmate escapes from the Department of Correction. He is injured in a car wreck while being chased by Highway Patrol or police who take him into custody and deliver him to a hospital. The Department of Correction is notified of his hospitalization and he is returned to the Department's custody after release from the hospital. (3) An inmate, who has escaped from the Department of Correction, is imprisoned in another jurisdiction. He is released to the local sheriff to await arrival of officers from the North Carolina Department of Correction to take him into custody. In the meantime, while being held for North Carolina on our detainer, it becomes necessary to hospitalize him. The inmate is released to the Department's officers as soon as the hospitalization is terminated. (4) An inmate escapes from the Department of Correction and while on escape has occasion to enter a hospital. He leaves the hospital prior to being apprehended by law enforcement officers. The hospital attempts to bill the North Carolina Department of Correction because he is an inmate. (5) An inmate is granted an extension of confinement limits pursuant to G. S. 148-4 in the form of either a home leave or a Community Volunteer leave and it becomes necessary that he be hospitalized. Is the Department of Correction required to pay his medical and -39- hospital expenses if he notifies the unit granting the extension or if he fails to notify the unit. Conclusions: (1) Yes. (2) Yes. (3) Yes. (4) No. (5) Yes. "A prisoner may be taken, when necessary, to a medical facility outside the State prison system." G. S. 148-1 9(a). In each of the first three fact situations presented, the inmate has been taken into custody by law enforcement officials on behalf of the Department of Correction. In the first two cases, the inmate has escaped, has been apprehended by the police, and then delivered to a hospital for treatment. The officers would be acting as agents, at least constructively, for the Department of Correction when apprehending the inmate. In fact, in North Carolina any citizen has authority to apprehend an escaped convict and retain him in custody to be delivered over to the State Department of Correction. G. S. 148-40. In the third case, the sheriff would also be acting as an agent for the Department of Correction while maintaining custody of the inmate, pursuant to a North Carolina detainer, awaiting officers from this State to take the inmate into custody. In these cases, the inmate is in the constructive custody of the North Carolina Department of Correction, and therefore the Department should pay the medical and hospital expenses incurred. In the fourth case, the inmate, while on escape, enters and departs the hospital prior to being apprehended by law enforcement officials. During this time, the inmate has neither been in the actual nor in the constructive custody of the North Carolina Department of Correction. The hospital was not treating the inmate under the expectation that they were performing services as agents for, or on behalf of, the Department of Correction. Therefore, the Department -40- would not be liable for medical expenses incurred by the inmate during this period of time. In the fifth case, when an inmate is granted an extension of his confinement limits under G. S. 148-4, he is still under the custody and control of the Department of Correction and therefore the Department should pay for any hospitalization required. Robert Morgan, Attorney General Edward L. Eatman, Jr., Assistant Attorney General 1 August 1972 Subject: Mental Health; Examination and Hospitalization of Inebriates; Public Drunkenness As a Criminal Offense Requested by: Question: Colonel Edwin C. Guy Commanding State Highway Patrol Under current North Carolina General Statutes are peace officers authorized to arrest persons for the offense of public drunkenness? Conclusion: Under current North Carolina General Statutes peace officers are authorized to arrest persons for the offense of public drunkenness. This question has arisen due to an apparent misunderstanding as to the effect of Article 7, Chapter 122 of the North Carolina General Statutes. This Article is entitled "Judicial Hospitalization" and provides procedures for examination of inebriates and mentally ill persons and admission of these persons to the proper State hospital (or other institution) for observation and treatment, when appropriate. -41- Due to the nature of the present question, this opinion will be limited to consideration of individuals falling within the category of "inebriates." G. S. 122-36(c) defines this term as follows: "The word 'inebriate' shall mean a person habitually so addicted to alcoholic drinks or narcotic drugs or other habit forming drugs as to have lost the power of self-control and that for his own welfare or the welfare of others is a proper subject for restraint, care, and treatment." In cases involving inebriates, Article 7 requires the clerk of superior court to take action to secure custody of the individual concerned in an appropriate fashion, to conduct a hearing on the issue, and to dismiss the proceedings or to issue an order for hospitalization, as warranted by the circumstances. However, these proceedings are precipitated only after receipt by the clerk of an affidavit stating that the alleged inebriate is in need of observation and admission, together with a request for examination of the person from "some reliable person having knowledge of the facts." See G. S. 122-60 through G. S. 122-62. Although an exception may be made to this rule requiring an affidavit in a situation "when the clerk of the superior court has other valid knowledge of the facts of the case to cause" such examination (see G. S. 122-62), a specific order of the clerk is required in any case before any of the actions authorized by Article 7 leading to examination and hospitalization can be taken. On the other hand, public drunkenness is proscribed by G. S. 14-335. While subsection (c) provides that chronic alcoholism can be an affirmative defense available to an individual charged with public drunkenness, the remainder of this section provides that public drunkenness is a crime punishable by a fine or imprisonment. In fact, any doubt that the legislators intended the statutes in question to be complementary to rather than conflicting with each other is laid to rest by specific statutory provisions permitting the trial judge to order the clerk of superior court to institute judicial hospitalization proceedings under Article 7, where appropriate, in cases wherein a person has been acquitted of public drunkenness by reason of chronic alcoholism. See G. S. 14-335(c), G. S. 122-65.7, and G. S. 122-65.8. -42- Since public drunkenness is a criminal offense within this State, ipso facto, peace officers within North Carolina are authorized to arrest persons committing this offense. Robert Morgan, Attorney General William F. O'Connell, Assistant Attorney General 1 August 1972 Subject : Mental Health; Detention of Inebriates and Mentally 111 Persons; Authority of Clerk of Superior Court to Issue Custody Order to Sheriff Requested by: Question : Conclusion: Honorable Ralph L. McSwain Sheriff Stanly County Does the clerk of superior court have the authority to direct the sheriff to take into custody a person alleged to be an inebriate or a mentally ill person? The clerk of superior court has the authority to direct the sheriff to take into custody a person alleged to be an inebriate or a mentally ill person. This is one of the multiple questions which have arisen because of the following provisions of G. S. 122-61, effective July 1, 1972: "§ 122-61. Detention of persons alleged to be mentally ill or inebriate and dangerous to themselves or others.- If the affidavit filed in accordance with the provisions of G. S. 122-60 states that the alleged mentally ill person or alleged inebriate is likely to endanger himself or others, he may be taken into -43- custody and detained in his own home, in a private or general hospital, or in any other suitable facility as approved by the local health director for such detention, upon an order of the clerk of the court. He shall not be detained in a nonmedical facility used for the detention of individuals charged with or convicted of penal offenses. The Department of Mental Health shall make available to the clerk of court such medical services and transportation necessary to effect the detention deemed necessary. The clerk shall expedite the hearing, and, if the alleged mentally ill person or alleged inebriate is found to be in need of hospitalization, the clerk shall expedite the transmission of this information to the proper State hospital so that the alleged mentally ill person or alleged inebriate can be admitted without any undue delay." In interpreting this new section, it must be recognized that it only purports to deal with emergency type detention of an inebriate or mentally ill person, where necessary, prior to a hearing by the clerk of superior court and prior to expeditious admission to the proper State hospital if that action is directed. Thus, it must be considered as a part of the "judicial hospitalization" proceedings and must be interpreted in conjunction with the other sections included in Article 7, Chapter 122 of the General Statutes-/. e., G. S. 122-60 through G. S. 122-65.5. G. S. 122-60 provides that some reliable person having knowledge of sufficient facts may start proceedings calculated to result in judicial hospitalization by filing with the clerk of superior court an affidavit to the effect that the potential patient is in need of observation or admission in a proper hospital, together with a request for examination of such individual. G. S. 122-62 then provides that, upon the clerk's receipt of the affidavit and request (or when the clerk has other adequate valid knowledge of the facts), he shall direct two qualified, uninvolved physicians to examine the potential patient. As a tool available to the clerk for insuring the performance of the examination, this latter section of the General Statutes contains the following language: "The clerk is authorized to order 44- the alleged mentally ill person or inebriate to submit to such examination, and it shall be the duty of the sheriff or other law enforcement officer to see that this order is enforced." The temporary detention authorized by G. S. 1 22-6 1 in cases where that type of action is necessary in order to avoid danger to the potential patient or to others is clearly a preliminary part of the proceedings leading up to the examination required by G. S. 122-62 for the purpose of determining whether an individual should be judicially hospitalized. This new section does not serve to relieve the sheriff or any other peace officer from cooperation with and assistance to the Department of Mental Health in adequately detaining the individual, nor does it serve to relieve these officials from their obligations to see that the clerk's orders are enforced. Therefore, when it is necessary to utilize the services of the sheriff or other law enforcement officer in order to take the individual into custody and detain him, as permitted by G. S. 122-61, the clerk is authorized to issue an order to that effect directly to such peace officer. 1 August 1972 Subject: Requested by: Question: Robert Morgan, Attorney General William F. O'Connell, Assistant Attorney General Licenses and Licensing; General Contractors; Installation of Industrial Equipment Mr. Jimmy M. Wells, Jr. Seere tary-Treasurer N. C. Licensing Board for Contractors Is a company required to be licensed by the General Contracting Licensing Board under the provisions of Chapter 87, in order to bid on a "turn-key" Peak Shaving -45- Facility, consisting of a prefabricated building, air compressing equipment, gas blending equipment, and controls inside a prefabricated building as well as two large tanks and a self-contained propane vaporizer outside the building of which the total general contracting work involved is estimated to be $10,900 out of the low bid of $132,700? Conclusion: The erection of industrial equipment is specifically exempted from the licensing requirement of G. S. 87-1 and inasmuch as the estimated cost of the general contracting work is less than $30,000, no general contractor's license is required of the low bidder. The facts as indicated in a letter of July 17, 1972, from the Licensing Board for Contractors are that bids were advertised by the City of Lexington for a turn-key Peak Shaving Facility consisting of a prefabricated building and the installation of air compressing equipment, gas blending equipment, and controls in the building as well as the installation adjacent to the building of a self-contained propane vaporizer and two 30,000 gallon water capacity tanks which will be shop fabricated and placed on concrete foundations at the site. A piping and pumping station will also be installed. The engineering consultant retained by the city estimates that out of the low bid of $132,700, the general contracting work amounts to a total cost of $10,900 which consists of the erection of a prefabricated metal building, construction of concrete supports for the building, concrete supports for water bath vaporizer and base for propane liquid pump, concrete supports for the two 30,000 gallon tanks, and grading for the tanks and yard piping. The remainder of the amount bid is attributable to the cost of the equipment and the cost of installing it. The provisions of G. S. 87-1, the general contractor's licensing statute, is applicable to ihe construction of improvements in excess of $30,000, but it specifically exempts the erection of the industrial -46- equipment. The amount included in the bid in excess of $10,900 is attributable to the cost of installing industrial equipment. It is the opinion of this office that a general contractor's license is not required to bid on the installation of the facility, as the estimated cost of the improvements included in the bid for which a general contractor's license is required is less than $30,000. Robert Morgan, Attorney General Eugene A. Smith, Assistant Attorney General 3 August 1972 Subject: Requested by: Question: Conclusion: Motor Vehicles; Abandoned or Junked Vehicles; Removal of Abandoned Vehicles from Private Property Chief Thomas M. Dowdy Kill Devil Hills Police Department Should city police have unauthorized vehicles parked in privately owned motel parking lots towed at request of motel management? City police should have unauthorized vehicles parked in private motel parking lots towed only if the city has enacted proper ordinance pursuant to the provisions of G. S. 160A-303 and the owner or lessee of the motel has made request for removal thereof in writing, or the proper city official has declared such vehicle to be a health or safety hazard. G. S. 160A-303 in pertinent part reads: "§ 160A-303. Removal and disposal of junked and -47- abandoned motor vehicles.-(a.) A city may by ordinance prohibit the abandonment of motor vehicles on the public streets or on public or private property within the city, and may enforce any such ordinance by removing and disposing of junked or abandoned motor vehicles according to the procedures prescribed in this section. (b) A motor vehicle is defined to include all machines designed or intended to travel over land or water by self-propulsion or while attached to any self-propelled vehicle. An abandoned motor vehicle is one that: . . . (3) Is left on private property without the consent of the owner, occupant, or lessee thereof for longer than two hours; . . . (c) Any junked or abandoned motor vehicle found to be in violation of an ordinance adopted under this section may be removed to a storage garage or area, but no such vehicle shall be removed from private property without the written request of the owner, lessee, or occupant of the premises unless the council or a duly authorized city official or employee has declared it to be a health or safety hazard. The city may require any person requesting the removal of a junked or abandoned motor vehicle from private property to indemnify the city against any loss, expense, or liability incurred because of the removal, storage, or sale thereof. ..." {Emphasis added.) Robert Morgan, Attorney General William W. Melvin, Assistant Attorney General -48- 15 August 1972 Subject: Escheats; Statutes of Limitations Inapplicable Requested by: Honorable Edwin Gill State Treasurer Question: Does the expiration of any period of a statute of limitations bar the State from escheating property? Conclusion: Statutes of limitations are not applicable against the State in escheats. The inquiry indicates that a certain petroleum company (hereinafter "the Company") has reported unclaimed dividends escheatable under G. S. 116A-4 and unclaimed salaries and wages escheatable under G. S. 116A-7(a) but denies that it is liable in escheat because of the expiration of three years. The statutes of limitations cited are G. S. 1-52(1) not allowing an action after three years "upon a contract, obligation or liability arising out of a contract ..." and G. S. 1-52(2) not allowing an action after three years "upon a liability created by statute, other than a penalty or forfeiture. . . ."We think it clear that no contract between the State and the Company is involved so subdivision (1) is inapplicable. Further, it can be argued that escheat is in the nature of a forfeiture and, therefore, subdivision (2) is inapplicable; but since we conclude that statutes of limitations are not applicable against the State in escheats, this argument is unnecessary. G. S. 1-30 provides: "The limitations prescribed by law apply to civil actions brought in the name of the State, or for its benefit, in the same manner as to actions by or for the benefit of private parties." -49- While this statute was earlier adhered to by the Supreme Court regardless of the nature of the action (Furman v. Timberlake, 93 N. C. 66 (1885); Tillery v. Lumber Company, 172 N. C. 296, (1916)), the Court has in more recent cases distinguished between those functions of government which exercise sovereign power and] those exercising proprietary functions. In Guilford County v. Hampton, 224 N. C. 817 (1945), a suit to recover welfare payments was held to be proprietary, growing out of a contract, with the statute applicable. City of Charlotte v. Kavanaugh, 221 N. C. 259 (1942), was a holding to the same effect regarding special assessments although the Court said the statute would have been inapplicable if taxes had been involved. The case of City of Raleigh v. Mechanics and Farmers Bank, 223 N. C. 286 (1943), also dealt with special assessments but the Court discussed the distinction between sovereign and other exercises of governmental power. The Court stated: "While this ancient maxim has lost much of its vigor by the erosions of time, and by legislative enactment, it is still regarded as the expression of a sound principle of government applicable to actions to enforce the sovereign rights of the State. Notwithstanding the inclusive provisions of sec. 420 of the Consolidated Statutes that 'the limitations prescribed by law apply to civil actions brought in the name of the State, or for its benefit, in the same manner as to actions by or for the benefit of private parties' (Threadgill v. Wadesboro, 170 N. C, 641, 87 S. E., 521), it has been uniformly held that no statute of limitations runs against the State, unless it is expressly named therein. Wilmington v. Cronly, 122 N. C, 388, 30 S. E., 9; Asheboro v. Morris, supra. However, where in the statutes affording a remedy by a municipal corporation for enforcing the statutory lien of an assessment for public improvement a limitation of time is imposed upon the exercise of that power, manifestly the principle expressed in the quoted maxim is not controlling." (at p. 293) -50- This distinction was again made in City of Reidsville v. Burton, 269 N. C. 206 (1967). The Court stated: "It is also generally held in this State and in the other States, except as provided otherwise by constitutional or statutory provisions, that the statute of limitations may be interposed as a defense to an action by a municipal corporation to enforce private, corporate or proprietary rights. Charlotte v. Kavanaugh, 221 N. C. 259, 20 S. E. 2d 97; 53 C.J.S., Limitation of Actions, § 17(a); 17 McQuillin, Municipal Corporations, § 49.06. See also 34 Am. Jur., Limitation of Actions, § 397." (at p. 210) The exercise of the escheat power is unquestionably a sovereign function. From ancient times, all forfeited and unclaimed property went to the Crown and that part of common law has been maintained in North Carolina through Constitutional (now Article IX, Sec. 10) as well as statutory provisions. Escheat statutes would have no meaning if the State was barred after three years since many items, including the dividends reported by the Company in this case, are not reportable until they remain unclaimed for three years. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 15 August 1972 Subject: Requested by: Intoxicating Liquors; Solicitation of Sales; Authority of State Board to Regulate Solicitation of Sales of Alcoholic Beverages, Beer and Wine Mr. James W. Pierce, Administrator State Board of Alcoholic Control -51- Question: Does the State Board of Alcoholic Control have authority to restrict the activities of! salesmen of alcoholic beverages, beer and wine, to the end that no solicitations may be made to clubs and individuals? Conclusion: The State Board of Alcoholic Control does not have the authority to restrict the activities of salesmen of beer and wine in their contact with licensed retail outlets of beer and wine in this State. The State Board does have the authority to restrict the activities of salesmen of alcoholic beverages, beer and wine and prohibit solicitations of persons who are not licensed retail outlets in this State. This opinion deals with the activities of salesmen employed or acting as agents for distilleries, breweries, and wineries and those persons who exercise functions as licensed wholesalers of beer, wine, and alcoholic beverages (those beverages with an alcoholic content of over 14%) in this State. It does not deal with the activities of persons who hold retail licenses in the State. Under the State scheme of sale of intoxicating liquors in North Carolina salesmen may make sales of alcoholic beverages only for supply to the local board of alcoholic control store systems. Sales to any other person, firm or individual are absolutely prohibited. The activities of salesmen for breweries and wineries and of salesmen of licensed wholesalers of beer and wine, however, are much more broad in that there are many retail outlets for beer and wine in the State and solicitations of sales from those outlets are not prohibited. Solicitations of sales of persons not licensed as retail outlets when the salesmen know that the product is being secured for the purchase of resale are unlawful since only licensed retailers may sell beer and wine in this State. G. S. 18A-10 gives the State Board of Alcoholic Control regulatory authority over the advertising of intoxicating liquor, which includes -52- alcoholic beverages, beer and wine. G. S. 18A-15(3) empowers and mandates the State Board to fix retail prices of alcoholic beverages in local stores "at such levels as shall promote the temperate use of these beverages." Chapter 18A clearly indicates that alcoholic beverages (that is, beverages with an alcoholic content of more than 14% by volume) shall be tightly controlled in their sales, transportation and consumption. G. S. 18A-1 provides in part that the policy of the State is "that the sale, purchase, transportation, manufacture, and possession of intoxicating liquors shall be prohibited except as authorized in" Chapter 18A of the General Statutes. With the tight restrictions in mind of alcoholic beverages and the fact that those may only be sold in stores and may be consumed on very limited premises, it is clear that if as a control measure the State Board of Alcoholic Control feels that it is necessary to restrict activities of salesmen of distilleries to contact with the proper officials with regard to supply of local stores, that is within the Board's power. Because the restrictions on beer and wine sales are not as tight with breweries, wineries and wholesalers as well as many retail outlets for both beer and wine licensed by the State Board, the State Board's authority with regard to restrictions placed on salesmen at the brewery-winery level or the wholesale level is not as broad as it is in the alcoholic beverage area. The State Board of Alcoholic Control has the authority to prohibit salesmen employed by distilleries, breweries, wineries or salesmen employed by wholesalers from promoting the sale of alcoholic beverages, beer or wine by personal contact and soliciting of sales in connection with such solicitation of anyone except an authorized retail outlet in the State. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General -53- 15 August 1972 Subject: Requested by: Question: Conclusion: Health; Certificate of Need; Inapplicability to Facility Already Constructed but Not Fully Licensed or Used Dr. Jacob Koomen State Health Director A skilled nursing home was constructed with approximately 170 beds. These beds were available for several years as nursing home beds but subsequently a license was obtained for approximately 40 to be used as psychiatric beds under a license issued by the Department of Mental Health. That license was dropped but for several years the facility has been licensed for only approximately 90 beds and part of the facility has remained vacant. May the facility now begin to utilize more than the licensed number of beds without first obtaining a certificate of need from the : State Board of Health? After obtaining a license, the facility may begin to utilize more than the licensed number of beds without first obtaining a certificate of need from the State Board of Health. The inquiry indicates that an existing facility with space for approximately 170 beds is currently licensed for only 90 and does not use part of the present facility. G. S. 90-29 1(b) provides in pertinent part: "Any existing medical care facility need not apply for a certificate of need except when the facility proposes new construction, construction of additional bed capacity, or the conversion of existing bed -54- capacity to a different license category, except outpatient and emergency services. No certificate of need shall be required as a pre-condition to issuing or continuing a license to an existing medical facility in the absence of new construction, construction of additional bed capacity or conversion of existing bed capacity to a different license category for the existing medical care facility." Clearly, if the facility were building a new building or a new wing, a certificate would be required. If the psychiatric beds were presently licensed or if the other space for beds was operated as a rest home, a certificate would be required. But the use of additional facilities already constructed and licensed at one time as nursing home beds does not require a certificate of need. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 15 August 1972 Subject: Requested by: Question: Conclusion: Licenses and Licensing; Day-Care Facilities; Number of Children for Whom Facility Licensed Mr. John Sokol, Director Child Day-Care Licensing Board Assuming a day-care facility has three shifts of 10 children each during a twenty-four-hour period, should the facility be licensed for 10 or 30 children? The facility should be licensed for 10 children. The Child Day-Care Licensing Board and mandatory licensing of -55- "day-care facilities" are provided for by Article 7 of Chapter 110 of the General Statutes, enacted by Chapter 803 of the 1971 Session Laws. G. S. 110-86(2) provides that "day-care" is "any child-care arrangement under which a Child less than 1 3 years of age receives care away from his own home by persons other than his parents, grandparents, guardians or full-time custodians on a regular basis for more than four hours per day where a payment, fee or grant is made for care." Subdivision (3) defines "day-care facility" as "day-care center or child-care arrangement that provides day care for more than five children and which receives a payment, fee, or grant for any of the children receiving care, wherever operated, and whether or not operated for profit, except that the following are not included: public schools; nonpublic schools, whether or not accredited by the State Department of Public Instruction, which regularly and exclusively provide a course of grade school instruction to children who are of public school age; summer camps having children in full-time residence; summer day camps; and Bible schools normally conducted during vacation periods." A license must be obtained by a day-care facility and certain standards are mandatory. Standards pertinent to the issue here are those in G. S. 110-91(6) which requires "no less than 25 square feet of floor space for each child for which a day-care facility is licensed. " (Emphasis added.) G. S. 110-91(7) contains specific provisions with regard to staff-children ratios which must be maintained. Neither of these standards would have much meaning if in the example given the figure of 30 children rather than 10 children were used. Therefore, it is the opinion of this Office that a day-care facility should be licensed for the maximum number of children on the premises at any one time. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General -56- 29 August 1972 Subject: Requested by: Question : Conclusion : Health; Certificate of Need; Proper Licensing Agency for Facility Which Combines Hospitals, Nursing Homes and Rest Home Care Mr. William S. Henderson Deputy Secretary Department of Human Resources Who is the proper agency to license and issue a certificate of need for a facility which proposes to combine a hospital, nursing home and rest home? The North Carolina Medical Care Commission which licenses hospitals is the proper agency to license and issue a certificate of need for a facility which combines hospital, nursing home and rest home care. A unique situation has arisen in one locality of the State where a new facility is being constructed adjacent to and physically connected to a hospital already licensed by the Medical Care Commission. It is proposed that a certain number of beds in the new facility will be allocated to nursing home care and a certain number of beds will be licensed as rest home beds. All of this will be operated by the hospital in conjunction with the hospital operation. Article 13A of Chapter 31 of the General Statutes provides for licensing of hospitals by the Medical Care Commission. G. S. 130-9(e) provides for the licensing of nursing homes by the State Board of Health. Section 4 1/2 of Chapter 51 of the 1961 Session Laws provides that such regulation by the State Board of Health will not be applicable "to any facility operated by, under the auspices of, or in conjunction with any hospital required to be licensed by the North Carolina Medical Care Commission." -57- G. S. 108-4(10) and G. S. 108-77 authorize the State Department of Social Services to license rest homes, boarding homes and homes for the aged in this State. However, G. S. 108-77(d) provides that such licensing requirement will not apply to any institution which is "licensed by the State Board of Health under the provisions of ; G. S. 130-9(e)." Since the Medical Care Commission has authority not only to license hospitals but to license nursing homes in connection with hospitals, and since the standards for rest homes are less strict with regard to skilled care than those of nursing homes, it seems logical that, in connection with the operation of a hospital, the Medical Care Commission would have authority to license a rest home. The operation of the hospital, nursing home and rest home will be intimately inter-connected with the assumed transfer of j persons from one category to the other as they progress or regress in their health status. It is recommended that the Medical Care Commission adopt regulations for licensing of nursing homes and rest homes when that licensing is by the Commission in conjunction with the operation of a hospital and while these regulations must be independent of those of the Board of Health and the Department of Social Services, , we recommend that the regulations of those two Departments for those kinds of facilities be used as guidance. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 31 August 1972 Subject: Requested by: Question: Public Officers and Employees; Private Use by Physicians of State Facilities Mr. Martin R. Peterson State Department of Correction Whether space in the facilities of the State Department of Correction may be used by -58- staff physicians for private purposes? Conclusion: The governing board of the State Department of Correction may establish and develop its own policy as to use of its facilities for private purposes. The conclusion stated above is based upon an absence of any known prohibition against such use or specific authority granting such use. Therefore, in the absence of any statutory or case authority, it would appear to be a matter of policy of the governing board of the Department of Correction as to whether it wishes to grant such use and as to guidelines the board may establish for such use. Because of the absence of specific authority in this area, it is suggested that enabling legislation be presented to the 1973 General Assembly by the Departments engaging in this practice. Robert Morgan, Attorney General Raymond W. Dew, Jr., Assistant Attorney General 31 August 1972 Subject: Requested by: Question: Conclusion: Municipalities; Intoxicating Liquors; Authority to Regulate Consumption and Display on Public or City-Owned Property Mr. Carl V. Venters Jacksonville City Attorney Do municipalities have the authority to regulate or prohibit the consumption or display of intoxicating liquor on any public alley, road or street or on any city-owned property within the city limits? Municipalities have authority to regulate or -59- prohibit the consumption or display of intoxicating liquor on any public alley, road or street or on any city-owned property within the city limits. The inquiry indicates that the City of Jacksonville wishes to adopt an ordinance prohibiting the consumption or display of intoxicating liquor as defined in G. S. 18A-2 "on any public alley, road, street or highway within the City of Jacksonville or on any other property owned or controlled by the City of Jacksonville." It has long been held in North Carolina that it is inherently within the police power of municipalities to regulate intoxicating liquor. See, for example, Paul v. Washington, 134 N. C. 363, 47 S. E. 793 (1904). Since the enactment of Chapter 18 of the General Statutes, recodified as Chapter 18A by the 1971 General Assembly, the authority of municipalities has been somewhat restricted. In effect,; a doctrine of preemption by the State has been adopted but it has been restrictively applied to preempt municipal action only where the State regulation or prohibition occupies the field. Thus, in Davis v. Charlotte, 242 N. C. 670, (1955), the Supreme Court in an opinion by Justice (now Chief Justice) Bobbitt held that a Charlotte ordinance prohibiting a "car hop" sale of beer on a licensed premises was invalid. The Court's holding was that "The enforcement of the ordinance provision is restrained only as to sales made on the private property, that is, 'the premises' of the plaintiffs." (242 N. C. at p. 675) Thus, the trial court's order that the ordinance was valid as to sales on city streets was upheld. Unless some specific provision of the General Statutes allows the consumption and/or display of intoxicating liquors on public and city-owned areas, the city may regulate those areas. G. S. 18A-2(4) defines intoxicating liquor as including "alcohol, brandy, whiskey, rum, gin, beer, ale, porter, and wine, and in addition thereto any spirituous, vinous, malt or fermented beverages, liquids, and compounds, whether medicated, proprietary, patented, or not, and by whatever name called, containing one half of one -60- percent (1/2 of 1%) or more of alcohol by volume, which are fit for use for beverage purposes." As to fortified wine or any other alcoholic beverage with an alcoholic content of more than 14%, consumption is outlawed on any public road, street or highway by G. S. 18A-30(5)a. The public display of such beverages at athletic contests and the consumption on unauthorized premises are made unlawful by G. S. 18A-30(5)b. and e. respectively. G. S. 18A-35(a) provides: "Except as otherwise provided in this Chapter, the purchase, transportation, and possession of malt beverages and unfortified wine by individuals 18 years of age or older for their own use are permitted without restriction or regulation." This does not speak to the question of either consumption or display of malt beverages and unfortified wine. We conclude, therefore, that the State has not preempted the area of consumption or display of intoxicating liquor on public streets or city-controlled property and this is, therefore, a proper subject for a municipal ordinance. Robert Morgan, Attorney General (Mrs.) Christine Y. Denson, Assistant Attorney General 5 September 1972 Subject: Education; Teachers; Teacher Tenure Act; G. S. 115-142; Career Teachers Requested by: Mr. W. F. Womble Attorney for the Winston-Salem/Forsyth County Board of Education -61- Question: To what extent, if any, is an otherwise qualified teacher entitled to credit for employment prior to July 1, 1972, in determining that teacher's eligibility for career teacher status? Conclusion: Unless, at the end of the last school year preceding July 1, 1972, the teacher has had at least four consecutive years' employment with the school system considering him for tenure, or unless that teacher has had at least five consecutive years' employment with any of the public school systems of this State; that teacher is entitled to no credit for his previous employment in determining his eligibility for career teacher status. The 1971 General Assembly completely rewrote G. S. 115-142 in enacting the Fair Employment Practices and Dismissals Act, informally referred to as the Teacher Tenure Act. The new Act was made effective on July 1, 1972. Chapter 883 of the Session Laws of 1971. It gives teachers certain rights and imposes upon school boards certain duties, none of which had heretofore existed. Because new rights are created and new duties imposed, the Act amounts to a substantial change in this State's substantive law, rather than in its procedural law. Smith v. Mercer, 276 N.C. 329, 172 S.E. 2d 489 (1970). The present question arises because of a seeming conflict between two provisions contained in G. S. 115-142(c). The first provision of that subsection reads as follows: "After a teacher has been employed by the same public school system in this State for a period of three consecutive years, the board of that system is required to vote upon that teacher's employment for the next succeeding year. If a majority of the board votes to reemploy the teacher, he or she becomes a career teacher. " -62- The last two sentences of subsection (c) provide: "All teachers employed by a public school system of this State at the time this section takes effect who, at the end of the last school year, will either have been employed by that school system (or a successor system if the system has been consolidated) for a total of four consecutive years or will have been employed by a public school system of this State for a total of five consecutive years shall automatically be career teachers if employed for a second year following July 1, 1972. All other teachers employed by a public school system of this State on July 1, 1972, shall be probationary teachers. " The first provision is the general rule and requires three consecutive years' employment before tenure can be acquired. Four or five years of experience prior to July 1, 1972, are necessary to meet the special requirements of the second provision. If the general rule is applied retroactively, the two provisions conflict. To illustrate the inconsistency, the inquiry poses an example: "It would appear from the first sentence that any teacher who has been employed by the Winston-Salem/Forsyth County school system for a period of three consecutive years at the end of the 1 972-73 school year would become a career teacher if reemployed for the '73-'74 school year. On the other hand, it appears from the fifth sentence of the subsection that only those teachers who have been employed for a total of four consecutive years in the Winston-Salem/Forsyth County school system or five consecutive years in any public school system in the state as of July 1, 1972, will automatically become career teachers if employed for the 1973-74 school year." The short answer to the problem is that the inconsistency is only apparent and technically does not exist at all. What the statute presents is a general provision, namely that career teacher status attaches after three consecutive years of employment and reemployment for the fourth year, and a special provision for acquiring tenure when the Act initially becomes effective; that is that those with four years of previous employment in the same -63- school system prior to July 1, 1972, or five years' experience statewide will achieve tenure upon reemployment for the '73-'74 school year. In such situations of apparent conflict, the rule is plain: "Where there are two provisions in the statute, one of which is special or particular and the other general, which, if standing alone, would conflict with the particular provision, the special will be taken as intended to constitute an exception to the general provision, as the General Assembly is not to be presumed to have intended a conflict." Davis v. Granite Corporation, 259 N.C. 672, 676; 131 S.E. 2d 335 (1963). Under that principle, then, the general rule does not apply when the Act first takes effect. Initially, the special requirement of four or five years' employment is an exception to the general rule and must be complied with. But in the present case, the special provision serves as more than merely an exception to the general rule that tenure follows three consecutive years' employment. Here, it also helps to make plain that the General Assembly intended no credit be given for employment prior to July 1, 1972, unless the previous employment amounts to at least four consecutive years with the same school system or five years statewide. If the statute were read to mean that employment prior to the effective date was to be counted in other cases, clear injustice would result. For example, suppose that at the close of the 1971-72 school year a teacher has been employed by a particular school system for three consecutive years. He is reemployed for the year beginning in the fall of 1972, but does not sign his contract until after July 1, 1972, the effective date of the Act. If it were assumed that the teacher's three previous years should count toward tenure, that teacher would have tenure after signing his contract for the 1972-73 school year. However, a teacher with four or more years of experience could not possibly attain career teacher status until one year later under the specific provision of subsection (c). A construction such as that, resulting in injustice, will be avoided when the statute is susceptible to another construction. Little v. Stevens, 267 N.C. 328, 148 S.E. 2d 201 (1966). To avoid such a result, the Act must be construed to provide that no credit be given for previous experience unless that experience amounts to at least four or five years as set out. Whether experience prior to July 1, 1972, is to be looked at in -64- awarding tenure is really a question of retroactivity: Is the general provision that tenure attaches following three consecutive years of employment to be given retroactive effect for purposes of accumulating the experience required? The North Carolina Supreme Court has held that a statute, such as the present one, amounting to a change in substantive law is to be applied prospectively only. Smith v. Mercer, supra. In that case, our court quoted with approval the standard rule on retroactivity as stated in Monroe v. Chase, 76 F. Supp. 278 (D.C. 111., 1947), that a substantive change is not to be "given a retrospective application in the absence of clear language that the lawmakers so intended." 276 N.C. at 335. Under the present statute, there is "clear language" that the legislature intended that the statute be applied retroactively in only two specifically named situations. They arise only when the teacher has had four previous, consecutive years of employment in the same school system or five years statewide. There is nothing to indicate that the General Assembly intended a retroactive application in any other situation. The indication, as shown by the palpable injustice that would result, is in fact to the contrary. The proper construction of the statute is, therefore, that it has no retrospective application except as specifically stated. Thus, previous employment not amounting to four years with the same school system or five years within the state will not be counted toward tenure. There are not yet any North Carolina judicial constructions of the Act. However, a case from another jurisdiction, Anderson v. Board of Education, 390 111. 412, 61 N.E. 2d 562 (1945), is instructive. In that case the Supreme Court of Illinois was confronted with a tenure statute similar to our own. The court held that a year's employment contracted for prior to the effective date of the tenure statute could not count toward fulfilling the required probationary period preceding an award of tenure. The teacher there argued that the period of probation should be given retrospective application. The court denied his claim and said, "We have examined the Teacher Tenure Law and cannot say that this statute contains 'clear language that will admit of no other construction' than that the legislature intended it to be retroactive." 61 N.E. 2d at 571 (citation omitted). The same construction is applicable to the North Carolina statute. See also, Falligin v. School Dist., 54 Mont. 177, 169 P. 803 (1917). -65- The result is that teachers who have had at least four or five years' experience, as discussed, will achieve tenure upon reemployment for the 1973-74 school year. Other teachers, regardless of their previous experience will receive no credit toward tenure for employment prior to July 1, 1972, and will not be eligible for tenure before they are reemployed for the 1975-76 school year. Robert Morgan, Attorney General Charles A. Lloyd, Associate Attorney 7 September 1972 Subject: Requested by: Question: Mental Health; Detention of Inebriates and Mentally 111 Persons; Authority of Clerk to Order Non-State Operated Hospitals to Involuntarily Accept Patients Dr. Granville G. Tolley Assistant Commissioner of Mental Health Is a hospital other than a State hospital required to accept over its objection an alleged inebriate or mentally ill person ordered to be detained under the provisions of G. S. 122-61? Conclusion: A hospital other than a State hospital is not required to accept over its objection an alleged inebriate or mentally ill person ordered to be detained under the provisions of G. S. 122-61. In haec verba, the section under consideration is as follows: "§ 122-61. Detention of persons alleged to be mentally ill or inebriate and dangerous to themselves or others.-H the affidavit filed in accordance with the -66- provisions of G. S. 122-60 states that the alleged mentally ill person or alleged inebriate is likely to endanger himself or others, he may be taken into custody and detained in his own home, in a private or general hospital, or in any other suitable facility as approved by the local health director for such detention, upon an order of the clerk of the court. He shall not be detained in a nonmedical facility used for the detention of individuals charged with or convicted of penal offenses. The Department of Mental Health shall make available to the clerk of court such medical services and transportation necessary to effect the detention deemed necessary. The clerk shall expedite the hearing, and, if the alleged mentally ill person or alleged inebriate is found to be in need of hospitalization, the clerk shall expedite the transmission of this information to the proper State hospital so that the alleged mentally ill person or alleged inebriate can be admitted without any undue delay." Literal reading of this statute makes it clear that the clerk of the superior court is charged with the responsibility for effecting a detention where necessary and in the manner most suitable for the alleged inebriate or mentally ill person concerned. This section delineates the types of places in which these individuals "may" be detained. It prescribes certain limitations upon the exercise of discretion by the clerk but contains no language indicating that the legislature intended to authorize the clerk to force a hospital (other than one operated by the State of North Carolina) to accept a patient of this type over its protest. Deliberate consideration of the ramifications of the types of situations involved buttresses this conclusion. Obviously, the type of patient covered by this section presents unusual materiel and personnel problems for a hospital assuming custody. Adequate control over and treatment of these patients would require quantities and kinds of facilities, equipment, and skilled personnel not necessarily found in every hospital. Further, the very act of assuming the custody of inebriates and mentally ill persons raises a specter -67- of claims of malpractice (spurious or otherwise) and legal actions against the responsible institution which would cause concern to the average hospital. In view of the fertile field for litigation, which this type of treatment provides in the present day and time, it would be unconscionable, if n |
OCLC Number-Original | 2640733 |