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SMITH CHAPEL BAPTIST CHURCH, et al. v. CITY OF DURHAM



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subject to formal revision. If you find a typographical error or
other formal error, please notify the North Carolina Supreme
Court.


SMITH CHAPEL BAPTIST CHURCH,
et al.

v.

CITY OF DURHAM


IN THE SUPREME COURT OF NORTH CAROLINA

No. 250PA97

Filed: 20 August 1999

SMITH CHAPEL BAPTIST CHURCH; FELLOWSHIP BAPTIST
CHURCH, INC.; LAYMAN’S CHAPEL BAPTIST CHURCH; and CALVARY
BAPTIST CHURCH OF DURHAM, NORTH CAROLINA

v.

CITY OF DURHAM, a North Carolina Municipal
Corporation

On discretionary review pursuant to N.C.G.S. §
7A-31, prior to a determination by the Court of Appeals, of a
judgment entered by Manning, J., on 11 October 1996 and an
amended judgment and order entered on 3 January 1997 in
Superior Court, Durham County. Heard in the Supreme Court
19 November 1997; opinion filed 30 July 1998, 348 N.C.
632, 502 S.E.2d 364; said opinion superseded by this opinion
filed 20 August 1999 upon the allowance of plaintiffs’
petition for rehearing pursuant to Rule 31(a) of the North
Carolina Rules of Appellate Procedure. Heard in the Supreme Court
8 February 1999.

Stam, Fordham & Danchi, P.A., by
Paul Stam, Jr., and Henry C. Fordham, Jr., for
plaintiff-appellants.

Office of the City Attorney, by
Karen A. Sindelar, Assistant City Attorney, for
defendant-appellee.

Hunton & Williams, by
Charles D. Case; and J. Michael Carpenter,
General Counsel, North Carolina Home Builders
Association, on behalf of North Carolina Citizens for
Business and Industry, North Carolina Pork Council, North
Carolina Aggregates Association, and North Carolina Home
Builders Association, amici curiae.

Ward and Smith, P.A., by
Frank H. Sheffield, Jr., on behalf of Chatham County
Agribusiness Council, amicus curiae.

North Carolina Farm Bureau
Federation, by H. Julian Philpott, Jr., General
Counsel, and Stephen A. Woodson, Associate General
Counsel, amicus curiae.

North Carolina League of
Municipalities, by Gregory F. Schwitzgebel III,
Assistant General Counsel, amicus curiae.

City of Charlotte, N.C., by
Robert E. Hagemann and Judith A. Starrett,
Assistant City Attorneys; and Mecklenburg County, N.C.,
by Marvin A. Bethune, County Attorney, amici curiae.

Cumberland County, N.C., by Garris
Neil Yarborough, County Attorney, Grainger R.
Barrett, Senior Staff Attorney, and Karen Musgrave, Staff
Attorney; and City of Fayetteville, N.C., by Robert
Cogswell, City Attorney, amici curiae.

Michael F. Easley, Attorney General,
by Daniel C. Oakley, Senior Deputy Attorney General,
and Jennie Wilhelm Mau, Assistant Attorney General, on
behalf of North Carolina Department of Environment and
Natural Resources, amicus curiae.

WAINWRIGHT, Justice.


Stormwater runoff is rain or snowmelt that does
not evaporate or penetrate the ground and is collected by storm
drains that transport it to receiving waters.

In 1987, the United States Congress enacted an
amendment to the Clean Water Act of 1972 (CWA) known as the Water
Quality Act (WQA). See Water Quality Act of 1987, Pub. L.
No. 100-4, 101 Stat. 7 (1987). The WQA represented the first
major revision of the CWA since 1977, "clarifying certain
areas of the law as well as granting new powers and
responsibilities to the U.S. Environmental Protection Agency
(EPA) and states." Lawrence R. Liebesman &
Elliott P. Laws, The Water Quality Act of 1987: A Major
Step in Assuring the Quality of the Nation’s Waters
, 17
Envtl. L. Rep. (Envtl. L. Inst.) 10311, 10312 (Aug. 1987).

The WQA requires, among other things, that
cities of 100,000 or more in population obtain a National
Pollutant Discharge Elimination System (NPDES) permit in order to
discharge stormwater from their municipal storm sewer systems
(MS4s) into the nation’s waters. Id. at 10324; see
WQA § 405, Pub. L. No. 100-4, 101 Stat. 69 (1994) (codified
at 33 U.S.C. § 1342(p)(2)(D)). Any state desiring to administer
its own permit program under the WQA may apply for permission to
do so with the EPA. CWA § 402(b), Pub. L. No. 92-500, 86 Stat.
880, 880-81 (1972) (codified at 33 U.S.C. § 1342(b)). In 1975,
North Carolina received approval from the EPA to administer its
own permit program under the CWA and was granted permission to
continue this program under the WQA. As such, article 21 of
chapter 143 of the North Carolina General Statutes grants
the North Carolina Department of Environment and Natural
Resources (DENR) (formerly North Carolina Department of
Environment, Health and Natural Resources) and the North Carolina
Environmental Management Commission (EMC) the authority to
administer this program. N.C.G.S. ch. 143, art. 21, pt. 1 (1993)
(amended); see N.C.G.S. § 143-214.7(a) (authorizing the
EMC to "develop and adopt a statewide plan with regard to
establishing and enforcing stormwater rules for the purpose of
protecting the surface waters of the State").

When Congress enacted the NPDES permitting
program, it did not provide the states with funding to support
these comprehensive stormwater management programs. N.C.G.S.
§ 160A-312(a) allows cities and towns to "acquire,
construct, establish, enlarge, improve, maintain, own, operate,
and contract for the operation of any or all of the public
enterprises as defined in this Article to furnish services to the
city and its citizens." N.C.G.S. § 160A-312(a) (1994). In
an effort to partially support local MS4s, the General Assembly
ratified a bill in 1989 titled "An Act to Authorize Local
Governments to Construct and Operate Storm Drainage Systems as
Public Enterprises and to Provide Local Governments With Funding
and Taxing Authority to Finance the Construction and Operation of
Storm Drainage Systems." Act of July 15, 1989, ch. 643,
1989 N.C. Sess. Laws 1763. As part of this Act, the General
Assembly amended N.C.G.S. § 160A-311 to include in its
definition of public enterprises "[s]tructural and natural
stormwater and drainage systems of all types." Id. at
1770; see N.C.G.S. § 160A-311(10) (1994).

Defendant City of Durham (City), in response to
the impending NPDES permitting requirements, employed outside
consultants to assist in planning and preparing for the
requirements that would accompany the NPDES permit application
process. These consultants opined that in order to comply with
EPA regulations in the NPDES permitting process, the City must
develop a comprehensive Stormwater Quality Management Program
(SWQMP). Furthermore, the consultants recommended that the SWQMP
not be funded through the City’s general fund because it
"is not a viable source of long-term funding" for the
program because political factors constrain the City’s
willingness to increase property taxes.

On 6 June 1994, the City adopted ordinance
number 10183, which created the City’s stormwater management
program. The ordinance provided for the creation of a stormwater
utility (SWU) to finance the stormwater management plan and
imposed a utility fee based on the impervious surfaces contained
on an individual property. Durham, N.C., Code ch. 23, art. VIII,
§§ 23-202, -203 (1994).

On 20 December 1994, plaintiffs filed a
complaint in which they challenged the ordinance and the utility
fees on several grounds, including the following: (1) the
ordinance exceeds the City’s enabling authority pursuant to
N.C.G.S. §§ 160A-311 and -314, (2) the ordinance violates
the express limitation on stormwater fees pursuant to N.C.G.S. §
160A-314(a1), and (3) the ordinance provides for utility
fees that are not reasonably commensurate with services
furnished. Following a nonjury trial, the trial court entered a
judgment on 11 October 1996 in which it concluded that the
ordinance and the utility fees were:

invalid as a matter of law in that they
[were] operated and conducted in a manner that exceed[ed] the authority granted to the City . . . through
[N.C.G.S. §§ 160A-311 and -314(a1)]. As a creature of
the legislature, the City . . . may only act
within its legislative authority as provided by the
General Assembly of North Carolina. The City
. . . has stepped far beyond that grant of
authority here and the [SWU] Ordinance and fees charged
thereby are declared invalid and unenforceable
. . . .

On 24 October 1996, the City filed a
motion for a new trial or, in the alternative, to amend the trial
court’s judgment on the ground that the evidence presented
at trial was insufficient to support the trial court’s
conclusions with regard to which of the City’s activities
were related to stormwater infrastructure. On 26 November
1996, the trial court allowed the motion to reopen the case in
order to take additional evidence "in the interest of
justice." Thereafter, the trial court entered an amended
judgment and order on 3 January 1997 in which it made
additional findings of fact and conclusions of law but did not
alter or amend its original judgment concluding that the City had
operated its SWU in excess of its statutory authority.

The City filed a timely notice of appeal to the
Court of Appeals from both the original 11 October 1996
judgment and the amended 3 January 1997 judgment and order.
Subsequently, the City filed a petition for discretionary review
prior to a determination by the Court of Appeals pursuant to
N.C.G.S. § 7A-31, which was allowed by this Court on
23 July 1997. Oral arguments were initially heard in this
Court on 19 November 1997, and an opinion was filed on
30 July 1998 in which this Court upheld the City’s SWU
ordinance on constitutional grounds. See Smith Chapel
Baptist Church v. City of Durham
, 348 N.C. 632, 502 S.E.2d
364 (1998). This Court allowed plaintiffs’ petition for
rehearing pursuant to Rule 31(a) of the North Carolina Rules of
Appellate Procedure on 30 September 1998 and now renders
this opinion, which supersedes the previous opinion filed by this
Court on 30 July 1998.

On appeal, we are presented with three
principal issues: (1) whether the City exceeded its enabling
authority by enacting the ordinance and the fees thereunder,
(2) whether the impervious area method of calculating the
fees is constitutionally permissible, and (3) whether the
remedy applied by the trial court was proper.

In deciding the first issue, we note that the
City of Durham chose to establish a utility as the
mechanism by which it would comply with the unfunded mandates of
the Water Quality Act of 1987. Municipalities are authorized to
establish and operate public enterprises like utilities pursuant
to the statutory requirements of N.C.G.S. § 160A-311 and
N.C.G.S. § 160A-314, which govern such public enterprises.

N.C.G.S. § 160A-314, which gives authority to
fix and enforce rates, reads, in pertinent part:

(a) A city may establish and revise
from time to time schedules of rents, rates, fees,
charges, and penalties for the use of or the services
furnished
by any public enterprise. Schedules of
rents, rates, fees, charges, and penalties may vary
according to classes of service, and different schedules
may be adopted for services provided outside the
corporate limits of the city.

(a1) . . . .

The fees established under this
subsection must be made applicable throughout the area of
the city. Schedules of rates, fees, charges, and
penalties for providing structural and natural
stormwater
and drainage system service may
vary according to whether the property served is
residential, commercial, or industrial property, the
property’s use, the size of the property, the area
of impervious surfaces on the property, the quantity and
quality of the runoff from the property, the
characteristics of the watershed into which stormwater
from the property drains, and other factors that affect
the stormwater drainage system. Rates, fees, and charges
imposed under this subsection may not exceed the
city’s cost
of providing a stormwater and
drainage system.

N.C.G.S. § 160A-314(a), (a1), para. 2 (Supp.
1998) (emphasis added).

In determining whether the City’s public
enterprise complies with the statutes, we first must look to the
plain language of the statutes themselves. State v. Dellinger,
343 N.C. 93, 95, 468 S.E.2d 218, 220 (1996). "Ordinary rules
of grammar apply when ascertaining the meaning of a
statute." Dunn v. Pacific Employers Ins. Co., 332
N.C. 129, 134, 418 S.E.2d 645, 648 (1992). "When the
language of a statute is clear and unambiguous, there is no room
for judicial construction, and the courts must give it its plain
and definite meaning." Lemons v. Old Hickory Council, BSA,
322 N.C. 271, 276, 367 S.E.2d 655, 658 (1988).

N.C.G.S. § 160A-314 reinforces this statutory
construction by providing that the City may establish fees
"for the use of or the services furnished by
any public enterprise" and that fees may vary for
"structural and natural stormwater and drainage system
service" according to the type and size of "property
served." N.C.G.S. § 160A-314(a), (a1) (emphasis added).
This clear and unambiguous language contemplates only the
collection of fees for the "use of" or "furnishing
of" stormwater services by the utility.

The General Assembly amended N.C.G.S. §
160A-314 in 1991 to add the following provision: "Rates,
fees, and charges imposed under this section may not exceed
the city’s cost of providing a stormwater and drainage
system
." N.C.G.S. § 160A-314(a1), para. 2
(emphasis added); see Act of July 8, 1991, ch. 591,
sec. 1, 1991 N.C. Sess. Laws 1283, 1283-84. This statutory
provision clearly and unambiguously mandates that the City may
not exceed the cost of providing a stormwater and drainage
system. Thus, under a plain reading of the statute, SWU fees are
limited to the amount which is necessary for the City to maintain
the stormwater and drainage system rather than the amount
required to maintain a comprehensive SWQMP to meet the
requirements of the WQA.

As previously noted, N.C.G.S. § 160A-311 was
amended in 1989 by the General Assembly to include in its
definition of public enterprises "structural and natural
stormwater and drainage systems of all types."
N.C.G.S. § 160A-311(10) (emphasis added). This definition has a
plain and clear meaning. The plain meaning is public enterprises,
authorized by the applicable statutes, are expressly limited to
those systems of physical infrastructure, structural or natural,
for servicing stormwater.

While plain language of the statutes is
sufficient to determine its meaning, this Court has stated that
the title of an act should be considered in ascertaining the
intent of the legislature. State ex rel. Cobey v. Simpson,
333 N.C. 81, 90, 423 S.E.2d 759, 764 (1992). As previously noted,
the act that added the statutory provisions regarding stormwater
was titled:

AN ACT TO AUTHORIZE LOCAL GOVERNMENTS
TO CONSTRUCT AND OPERATE STORM DRAINAGE SYSTEMS AS PUBLIC
ENTERPRISES AND TO PROVIDE LOCAL GOVERNMENTS WITH FUNDING
AND TAXING AUTHORITY TO FINANCE THE CONSTRUCTION
AND OPERATION OF STORM DRAINAGE SYSTEMS.

Act of July 15, 1989, ch. 643, 1989 N.C. Sess.
Laws 1763 (emphasis added). The title’s focus on
"construction and operation" of storm drainage systems
demonstrates that the legislature intended such public
enterprises to be used solely for the establishment and
maintenance of physical systems directly related to stormwater
removal and drainage of property.

In determining whether the City’s
ordinance meets the restrictions cited above, an examination of
the ordinance is instructive. The ordinance creates a stormwater
utility "to develop and operate the stormwater management
program." The ordinance defines the stormwater management
program as one that not only includes a stormwater system, but
also one that "includes, but is not limited to
. . . the development of ordinances, policies,
technical materials, inspections, monitoring, outreach, and other
activities
related to the control of stormwater quantity and
quality." Durham, N.C., Code ch. 23, art. VIII, § 23-201
(1994). Thus, the ordinance on its face exceeds the express
limitation of the plain and unambiguous reading of the statute,
and the operation of the utility exceeds the statutory authority.

As further evidence of the utility exceeding
statutory authority, the City created a document containing
frequently asked questions with answers, including the following:

Q: What does Durham plan to
do in their [stormwater] management plan?

A: Durham’s [stormwater] management plan addresses preventative
maintenance, repair, and replacement of the storm
drainage system to control urban flooding. Our
[stormwater] management plan also addresses water
pollution control. The City will develop educational
programs
that encourage and help citizens and
businesses prevent [stormwater] pollution. We
will develop guidance manuals for
construction activities, industrial sites, and
related facilities. We will promote and encourage
used oil recycling, household hazardous
waste collection programs
, and reporting
of illegal dumping activities. The City will also
test and monitor local runoff and water bodies to
see how well our [stormwater] program is doing
and to locate areas that need improvement. The
City’s [stormwater] management plan will
strive to meet our current needs, as well as the
needs of future generations.

Furthermore, a memorandum from one of the
consultants is informative in that it breaks down the line items
for operating the SWQMP into "cost centers," including
a cost center for stormwater quality management:

A separate cost center has been
identified in the cost of service analysis for
[stormwater] quality management. Pursuant to the
requirements of the NPDES [stormwater] discharge permit,
the City’s [stormwater] quality management program
is expected to begin in fiscal year 1993/1994. It is
expected to include a mix of operational, structural,
regulatory, and public education components, all intended
to reduce pollution of receiving waters due to
[stormwater] runoff.

In addition, during the course of the trial,
the City introduced an updated stormwater management fund budget
report in which it divided expenditures from the stormwater
management fund into three separate components: stormwater
quality, stormwater quantity, and clean city. A review of these
components is instructive.

According to the budget report, the stormwater quality
component is described as follows:

This program provides for the
implementation of the City’s [SWQMP] approved in the
[NPDES] Municipal [Stormwater] Discharge Permit. Program
components include industrial and seasonal storm event
sampling, identification and correction of illicit
connections and illegal dumping, household hazardous
waste collection, and development of management programs
for commercial, industrial, and residential areas and
construction sites.

All funds collected by the utility are placed
in one fund, and this fund pays for the City’s entire
stormwater quality program. The City concedes the utility’s
activities substantially exceed the providing of stormwater
infrastructure. The projected cost for this funding of the
stormwater quality component in 1995-96 was $3,686,257 out of a
total budget of $5,820,162, and in 1996-97 was $3,751,753 out of
a total budget of $6,873,659.

In addition, the stormwater quantity
component is described in the budget report as follows:

The [Stormwater] Quantity program
includes the routine maintenance and repair of the
[stormwater] drainage system located in the public
rights-of-way and maintenance and improvements to the
public drainage system located on private property. This
program also includes response to drainage and flooding
inquiries from citizens.

As noted, the quantity component even includes
drainage and flooding inquiries from citizens. The projected cost
for funding the stormwater quantity component in 1995-96 was
$2,133,905 out of a total budget of $5,820,162, and in 1996-97
was $2,171,819 out of a total budget of $6,873,659.

Finally, the clean city component is described
in the budget report as follows: "This program includes the
City’s efforts to maintain clean streets and educate the
public regarding litter control." The clean city component
was not funded in 1995-96, but the projected cost for funding the
clean city component in 1996-97 was $950,087 out of a total
budget of $6,873,659.

From its description, it appears that little of
the program’s emphasis is on the maintenance and
construction of a structural and natural stormwater and drainage
system. The program instead focuses on educational programs,
guidance manuals, used oil recycling, household hazardous waste
collection, and enforcement efforts against illegal dumping of
hazardous materials.

After a careful and thorough review of the
record and the evidence presented in this case, it is undisputed
that the City’s stormwater management program funded by the
SWU is a fully comprehensive SWQMP with separate component parts,
the majority of which are not used to fund and maintain the
stormwater and storm sewer drainage systems in place. The SWU is
funding an EPA-regulated pollution prevention and control
program. The program includes elements not directed at or used
for providing a structural and natural stormwater and drainage
system or directed at planning, maintaining, or implementing such
facilities. In fact, according to the City’s own admission,
the program is designed to satisfy the EPA’s NPDES permit
requirements required by the WQA’s demands for pollution
control of stormwater discharges into public waters.

Based on the foregoing, it appears clear that,
for reasons of expediency, the City chose to establish the
SWU as a mechanism by which it would comply with the unfunded
mandates of the WQA related to stormwater runoff. In addition,
the City also chose not to fund the expenditures through
the general fund. However, in doing so, the City’s SWU
ordinance went well beyond the scope of authority granted to the
City under N.C.G.S. § 160A-311 to construct and operate a
structural and natural stormwater and drainage system in that it
authorized the operation of a comprehensive SWQMP as envisioned
by the EPA and the WQA. Furthermore, the rates, fees, and charges
imposed by the City’s SWU far exceed the cost of providing a
structural and natural stormwater and drainage system to the
City’s citizens as contemplated by the General Assembly. See
N.C.G.S. § 160A-314(a1). Therefore, the City’s SWU
ordinance and the fees charged thereunder are invalid as a matter
of law because they are operated and conducted in a manner that
exceeds the authority granted to the City through N.C.G.S. §§
160A-311 and -314(a1).

As to the second issue, this Court has
previously held that the establishment of rates for services
furnished by a municipality to its citizens "is a
proprietary [function] rather than a governmental one, limited
only by statute or contractual agreement." Town of Spring
Hope v. Bissette
, 305 N.C. 248, 250-51, 287 S.E.2d 851, 853
(1982). To that end, N.C.G.S. § 160A-314(a) provides as follows:

(a) A city may establish and revise
from time to time schedules of rents, rates, fees,
charges, and penalties for the use of or the services
furnished by any public enterprise. Schedules of rents,
rates, fees, charges, and penalties may vary according to
classes of service, and different schedules may be
adopted for services provided outside the corporate
limits of the city.

N.C.G.S. § 160A-314(a). According to the Court
of Appeals’ interpretation of this statute in Town of
Spring Hope
, "[u]nder this broad, unfettered grant of
authority, the setting of such rates and charges is a matter for
the judgment and discretion of municipal authorities, not to be
invalidated by the courts absent some showing of arbitrary or
discriminatory action." Town of Spring Hope v. Bissette,
53 N.C. App. 210, 212-13, 280 S.E.2d 490, 492 (1981), aff’d,
305 N.C. 248, 287 S.E.2d 851 (1982).

As previously noted, N.C.G.S. § 160A-314(a1)
provides in pertinent part:

The fees established under this
subsection must be made applicable throughout the area of
the city. Schedules of rates, fees, charges, and
penalties for providing structural and natural stormwater
and drainage system service may vary according to whether
the property served is residential, commercial, or
industrial property, the property’s use, the size of
the property, the area of impervious surfaces on the
property, the quantity and quality of the runoff from the
property, the characteristics of the watershed into which
stormwater from the property drains, and other factors
that affect the stormwater drainage system. Rates, fees,
and charges imposed under this subsection may not exceed
the city’s cost of providing a stormwater and
drainage system.

N.C.G.S. § 160A-314(a1), para. 2.

Upon review of this statute, the City enacted
ordinance number 10183, which provided for a rate schedule based
upon the impervious area, size, and use of the property.
According to the ordinance, an "impervious area" is:

a surface composed of any material that
impedes or prevents natural infiltration of water into
the soil, including but not limited to roofs, solid
decks, driveways, patios, sidewalks, parking areas,
tennis courts, concrete or asphalt streets, or compacted
gravel surfaces. Wooden slatted decks and the water area
of swimming pools are considered pervious.

Durham, N.C., Code ch. 23, art. VIII, §
23-201. The billing method under the ordinance is as follows:

(a) All developed land in the City,
whether public or private, shall be subject to a
[stormwater] service charge. Exemptions shall not be
allowed based on age, tax exemption, or other status of
an individual or organization. Service charges may be
subject to a credit system as further provided in this
ordinance.

(b) Service charges on all developed
land shall begin on July 1, 1994 and shall be
computed as follows:

(1) Residential units shall be charged
at two rates: $2.17 for residential units with less than
2,000 square feet of impervious surface and $3.25 for
residential units with 2,000 square feet or more of
impervious surface.

(2) Other residential and
nonresidential land shall be charged $3.25 for each
equivalent residential unit (ERU). ERUs of less than
five-tenths shall be rounded down and those of
five-tenths or greater shall be rounded up to the nearest
whole number. There will be no service charge for other
residential and nonresidential property that contains
less than .5 ERU of impervious surface.

Durham, N.C., Code ch. 23, art. VIII, §
23-203. Further, an ERU is defined as "2,400 square feet of
impervious surface, which is the average amount of impervious
surface on a single family property in the [C]ity." Durham,
N.C., Code ch. 23, art. VIII, § 23-201.

Plaintiffs contend the SWU fees are illegal in
that the impervious area method does not reasonably relate to the
stormwater runoff of individual properties and forces customers
to involuntarily pay fees that are not reasonably commensurate
with services furnished. However, as the trial court properly
noted, the City was completely within its statutory authority
when it based the utility fee rates on the impervious area of the
property. As our Court of Appeals has noted, "[t]he test is
not whether any particular customer has directly benefited from
the use of a discrete or particular component of the utility
plant, but whether the municipal authority has acted arbitrarily
in establishing its rates." Town of Spring Hope v.
Bissette
, 53 N.C. App. at 213, 280 S.E.2d at 493.

We hold that the rate scheme enacted by the
City pursuant to the SWU ordinance is rationally related to the
amount of runoff from each lot and was not an arbitrary exercise
of the City’s statutory authority. Furthermore, N.C.G.S. §
160A-314(a1) expressly authorized the City to base the SWU fees
on the impervious area of the property. As such, the trial court
correctly concluded that the City’s rate scheme was
"rational and reasonable." However, as the trial court
further noted in its 11 October 1996 judgment, "[t]his
finding . . . does not apply to the amount of the
stormwater charges that were adopted by the City . . .
or the use of the funds collected by the [SWU]."

As to the final issue, we must determine
whether the remedy afforded by the trial court was correct. In
its decree, the trial court ordered that "plaintiffs in this
action, having paid the [SWU] fees under protest, are entitled to
a full refund, plus interest, on those fees paid by plaintiffs to
the date of this Judgment." As of the date of trial,
plaintiff Smith Chapel Baptist Church had paid $22.75 per month
to the SWU; plaintiff Fellowship Baptist Church, Inc., had paid
$299.00 per month to the SWU; Layman’s Chapel Baptist Church
had paid $22.75 per month to the SWU; and Calvary Baptist Church
of Durham had paid $120.75 per month to the SWU.

A refund of the invalid SWU fees paid by
plaintiffs in this action is similar to the common law doctrine
of an action for money had and received. It has been held that
the common law action could "be maintained whenever the
defendant has money in his hands which belongs to the plaintiff,
and which in equity and good conscience he ought to pay to the
plaintiff." Wilson v. Lee, 211 N.C. 434, 436, 190
S.E. 742, 743 (1937). This Court has stated the common law
doctrine as follows:

"Recovery is allowed upon the
equitable principle that a person should not be permitted
to enrich himself unjustly at the expense of another.
Therefore, the crucial question in an action of this kind
is, to which party does the money, in equity and good
conscience, belong? The right of recovery does not
presuppose a wrong by the person who received the money,
and the presence of actual fraud is not essential to the
right of recovery. The test is not whether the defendant
acquired the money honestly and in good faith, but
rather, has he the right to retain it. In short,
‘the gist of this kind of action is, that the
defendant, upon the circumstances of the case, is obliged
by the test of natural justice and equity to refund the
money.’ Moses v. MacFerlan, 2 Burrow 1005, 97
Eng. Reprints 676."

Ridley v. Jim Walter Corp., 272 N.C.
673, 677, 158 S.E.2d 869, 872 (1968) (quoting Allgood v.
Wilmington Sav. & Trust Co.
, 242 N.C. 506, 512, 88 S.E.2d
825, 829 (1955)); see also Wyatt v. Hertz Claim Mgmt.
Corp.
, 236 Ga. App. 292, 292-93, 511 S.E.2d 630, 632 (1999); Conrad
v. Evans
, 269 Wis. 387, 392, 69 N.W.2d 478, 481 (1955).

In the instant case, because we have already
held that the City’s SWU ordinance and the fees charged
thereunder are invalid as a matter of law, we further hold that
plaintiffs are entitled to a full refund of the illegally
collected fees from the City, plus interest on those fees to the
date of judgment.

For the reasons stated in this opinion, the
trial court’s original 11 October 1996 judgment and the
amended 3 January 1997 judgment and order are affirmed, and
plaintiffs are entitled to a full refund, plus interest, on those
fees paid by plaintiffs to the date of judgment.

AFFIRMED.


Justice FRYE dissenting.

I agree with that part of the majority opinion
which holds that "the rate scheme enacted by the City
pursuant to the SWU [stormwater utility] ordinance is rationally
related to the amount of runoff from each lot and was not an
arbitrary exercise of the City’s statutory authority."
I disagree, however, with the majority’s conclusion that
"the City’s SWU ordinance and the fees charged
thereunder are invalid as a matter of law because they are
operated and conducted in a manner that exceeds the authority
granted to the City." I believe that the majority takes an
unduly narrow view of the City’s authority. Application of
the appropriate rule of statutory construction requires us to
hold that the applicable public enterprise statutes, N.C.G.S.
§§ 160A-311, -312, and -314, are broad enough to authorize the
City’s SWU ordinance and the expenditure of monies collected
thereunder on a "system" for stormwater and drainage
collection and transport, including activities that are ancillary
to and supportive of the City’s physical infrastructure.

For many years, municipalities had the
authority to exercise only those powers expressly granted, or
those necessarily or fairly implied in or incident to expressly
granted powers, or those essential to the accomplishment of the
declared objects and purposes of the municipal corporation. See
Homebuilders Ass’n of Charlotte, Inc. v. City of
Charlotte
, 336 N.C. 37, 442 S.E.2d 45 (1994) (describing the
powers of municipalities as stated by the now-defunct
"Dillon’s rule"); see also N.C.G.S. §
160-1 (repealed effective 1 January 1972).

However, in 1971, the General Assembly enacted
a comprehensive revision of the laws governing municipalities,
codified in chapter 160A of the North Carolina General Statutes.
Act of June 30, 1971, ch. 698, 1971 N.C. Sess. Laws 724; see
also
Homebuilders Ass’n of Charlotte, 336 N.C. at
42, 442 S.E.2d at 49. As part of chapter 160A, the General
Assembly enacted the following rule of construction for
legislative grants of power to municipalities:

§ 160A-4. Broad construction.

It is the policy of the General
Assembly that the cities of this State should have
adequate authority to execute the powers, duties,
privileges, and immunities conferred upon them by law. To
this end, the provisions of this Chapter and of city
charters shall be broadly construed and grants of power
shall be construed to include any additional and
supplementary powers that are reasonably necessary or
expedient to carry them into execution and effect:
Provided, that the exercise of such additional or
supplementary powers shall not be contrary to State or
federal law or to the public policy of this State.

N.C.G.S. § 160A-4 (1994). In Homebuilders
Ass’n of Charlotte, Inc. v. City of Charlotte
, this
Court interpreted N.C.G.S. § 160A-4 as a legislative mandate
"that the provisions of chapter 160A and of city charters shall
be broadly construed and that grants of power shall be
construed to include any additional and supplementary powers that
are reasonably necessary or expedient to carry them into
execution and effect." 336 N.C. at 43-44, 442 S.E.2d at 50.

When the General Assembly, in 1989, amended
N.C.G.S. § 160A-311 to include "structural and natural
stormwater and drainage systems of all types," it allowed
cities to establish and operate stormwater systems as public
enterprises. N.C.G.S. § 160A-311(10) (1994); Act of
July 15, 1989, ch. 643, sec. 5, 1989 N.C. Sess. Laws 1763,
1769-70. Municipalities are allowed to "acquire, construct,
establish, enlarge, improve, maintain, own, operate, and contract
for the operation of any or all of the public enterprises as
defined in this Article to furnish services to the city and its
citizens." N.C.G.S. § 160A-312(a) (1994). Further,
municipalities are expressly authorized to fix and enforce rates
and fees "for the use of or the services furnished by any
public enterprise." N.C.G.S. § 160A-314(a) (Supp. 1998).
Specifically, cities may set "rates, fees, charges, and
penalties for providing structural and natural stormwater and
drainage system service," so long as the fees imposed do not
"exceed the city’s cost of providing a stormwater and
drainage system." N.C.G.S. § 160A-314(a1). These public
enterprise statutes, upon which the City relies as enabling
authority for its SWU, are a part of chapter 160A, and as such,
they are subject to the rule of broad construction mandated by
the General Assembly in N.C.G.S. § 160A-4.

The City adopted its SWU ordinance under the
authority granted by the General Assembly in the public
enterprise statutes. The City operates a structural and natural
stormwater and drainage system that must comply with the mandates
of the federal NPDES (National Pollutant Discharge Elimination
System) permitting requirements. Compliance with federal NPDES
regulations is a duty of the City and of other affected
municipalities. Any ambiguity in the meaning of the term
"stormwater and drainage system" must be
resolved in favor of enabling municipalities to execute the
duties imposed upon them by federal law concerning the discharge
of stormwater. The City cannot operate a stormwater and drainage
system without complying with federal regulations. Certainly,
N.C.G.S. § 160A-4 and Homebuilders Ass’n of Charlotte
require us to interpret the applicable public enterprise statutes
broadly enough to encompass the City’s operation of its SWU
and collection of fees under the SWU ordinance as
"reasonably necessary or expedient" to its expressly
granted powers. I would uphold the City’s SWU ordinance and
the fees charged thereunder as a valid exercise of the
City’s authority granted by N.C.G.S. §§ 160A-311, -312,
and -314.

Chief Justice MITCHELL and Justice PARKER join
in this dissenting opinion.

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