Acquisitions & Dispositions of Real Property; Governor and Council of State

Subject:

Requested By: Mr. Joseph W. Grimsley, Secretary Department of Administration

Question: Do future land acquisitions or dispositions planned by the North Carolina Railroad Company and the Atlantic and North Carolina Railroad Company require the prior approval of the Governor and Council of State?

Conclusion: Future dispositions of real property by these companies must be approved by the Governor and Council of State. Acquisitions of real property by these companies are not subject to the approval of the Governor and Council of State unless the acquisition constitutes an encumbrance on the property of the Railroad.

The North Carolina Railroad Company was incorporated by the General Assembly of North Carolina as a private corporation in 1849. Session Laws of North Carolina, 1849, Chapter 83. The Atlantic and North Carolina Railroad Company was incorporated by the General Assembly of North Carolina as a private corporation in 1852. Session Laws of North Carolina, 1852, Chapter 136. The State of North Carolina is the majority stockholder in each of the corporations. The State owns 73.5 percent of the stock in the Atlantic and North Carolina Railroad Company.

G.S. 124-5 reads as follows:

"no corporation or company in which the State has or owns any stock or any interest shall sell, lease mortgage, or otherwise encumber its franchise, right-of-way, or other property, except by and with the approval and consent of the Governor and Council of State."

This statute, if given its full literal affect, would apply to a disposition of real property by any corporation in which the State owns a single share of stock. Such a construction might give rise to a question of constitutionality. However, it is unnecessary to address that question at this time.

The State of North Carolina is the majority stockholder in each of the Railroad companies. There is a presumption in favor of the constitutionality of a statute. Strong’s N.C. Index 3d, Statutes, §

4.1. We are of the opinion that this statute would be constitutional as applied to the North Carolina Railroad Company and the Atlantic and North Carolina Railroad Company. Therefore, we conclude that future dispositions of real property by these companies require the approval of the Governor and Council of State.

G.S. 124-5 applies only to dispositions of property. It does not apply to acquisitions of property except when the acquisition would constitute an encumbrance on the property of the Railroad. We are unable to find any other statutory provision which requires approval by the Governor and Council of State for acquisition of property by these companies. Since these companies are private corporations, the provisions of Chapter 146 of the General Statutes relating to acquisitions of real property by State agencies would not apply.

Rufus L. Edmisten Attorney General

Roy A. Giles, Jr. Assistant Attorney General