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  "name": "LOUCHHEIM, ENG & PEOPLE, INC. v. JAMES H. CARSON, JR., and NORTH CAROLINIANS FOR CARSON, a Political Committee",
  "name_abbreviation": "Louchheim, Eng & People, Inc. v. Carson",
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    "judges": [
      "Judges Britt and Webb concur."
    ],
    "parties": [
      "LOUCHHEIM, ENG & PEOPLE, INC. v. JAMES H. CARSON, JR., and NORTH CAROLINIANS FOR CARSON, a Political Committee"
    ],
    "opinions": [
      {
        "text": "HEDRICK, Judge.\nIn his first two assignments of error the plaintiff contends that the trial court erred in concluding on the basis of the pleadings that the plaintiff made a campaign contribution or expenditure in violation of the General Statutes of North Carolina. The statutes codified under Article 22A which regulate contributions and expenditures in political campaigns are of recent origin and have never been interpreted by the courts of this State. See G.S. 163-278.6-163-278.35 (1976), G.S. 163-278.36 (Supp. 1977). General Statute 163-278.19 reads in pertinent part as follows:\nViolations by corporations, business entities, labor unions, professional associations and insurance companies. \u2014 (a) Except as provided in G.S. 163-278.19(b), it shall be unlawful for any corporation, business entity, labor union, professional association or insurance company directly or indirectly:\n(1) To make any contribution or expenditure ... in aid or in behalf of or in opposition to any candidate or political committee in any election or for any political purpose whatsoever; ....\nThe term \u201ccontribution\u201d as used in this statute is defined as \u201cany advance, conveyance, deposit, distribution, transfer of funds, loan, payment, gift, pledge or subscription of money or anything of value whatsoever.\u201d G.S. 163-278.6(6) (emphasis added). The term \u201cexpenditure\u201d is similarly defined as \u201cany purchase, advance, conveyance, deposit, distribution, transfer of funds, loan, payment, gift, pledge or subscription of money or anything of value whatsoever.\u201d G.S. 163-278.6(9) (emphasis added). Thus, the advance of money or anything of value to a political candidate by a corporation, labor union or business entity constitutes an illegal contribution or expenditure within the meaning of this statute. The question presented in this case is whether the payments of money made by the plaintiff for media advertising in conjunction with defendant\u2019s campaign constitute \u201cadvances\u201d as prohibited by the foregoing statutes.\nIn the pleadings as summarized and quoted above plaintiff described its own acts in the allegations that \u201cplaintiff, in the defendant\u2019s behalf, and in reliance upon the assurance of payment, advanced money for the purchase of media advertising for defendant\u2019s campaign\u201d; and \u201c[t]hat the plaintiff corporate . . . paid for the cost of some advertising pending the receipt by the committee of campaign funds.\u201d Plaintiff in its brief recognizes that the inartful wording of its pleadings would seem to bring its conduct within the statutory prohibition but argues that the \u201coverall sense\u201d of the pleadings is to the contrary.\nIn ascertaining the meaning of the words in a particular statute the courts should keep one eye to the common definition of the word and one eye to the purposes of the statute and the evil to be remedied. Montague Brothers v. Shepherd Co., 231 N.C. 551, 58 S.E. 2d 118 (1950). According to common usage, to \u201cadvance\u201d money means \u201cto furnish money for a specific purpose understood between the parties, the money or sum equivalent to be returned; furnishing money or goods for others in expectation of reimbursement.\u201d Blacks Law Dictionary 72 (rev. 4th ed. 1968).\nThe purpose of the federal statute regulating campaign contributions and expenditures by corporations and labor unions, 2 U.S.C. \u00a7 441(b) (1976) (formerly 18 U.S.C. \u00a7 610), which is similar in its language and scope to our own statute, is to protect the populace from undue influence by corporations and labor unions, and to insure the responsiveness of elected officials to the public at large. United States v. C.I.O., 335 U.S. 106, 92 L.Ed. 1849, 68 S.Ct. 1349 (1948); Annot., 24 A.L.R. Fed. 162 (1975). As we read G.S. 163-278.19, we perceive its purposes to be identical to those of its federal counterpart. Our Legislature, as well as Congress, has specified that the advance of money by a corporation in behalf of a political candidate is frustrative of these purposes.\nThus, with the definition of \u201cadvance\u201d and the presumed intent of our Legislature in the enactment of the campaign contribution regulations in mind, we conclude that the payments made by plaintiff constituted illegal expenditures within the meaning of G.S. 163-278.19(a). In its reply plaintiff alleged that it expended substantial sums of money for the purchase of media advertising for the defendant\u2019s campaign until the defendant\u2019s committee could raise sufficient funds to cover these expenses. It is precisely this type of activity which could encourage favored treatment by an official once he is elected. We think the Legislature intended to curb such acts in its enactment of G.S. 163-278.19 and its inclusion of \u201cadvance\u201d within the definitions of contribution and expenditure.\nPlaintiff argues that the statute, so construed, would prohibit all credit transactions between corporations and candidates for public office. Such an expansive interpretation of the statute is not justified by our conclusion in this case. We do not think that the plaintiffs expenditures in the present case were typical of the ordinary extension of credit to a client for services rendered. In this regard, we find particularly illuminating the plaintiffs allegation \u201c[t]hat at all times, the defendant knew that media advertising had to be currently paid and was aware of the laws and regulations concerning media expenses.\u201d Implicit in this contention is the knowledge on the part of the plaintiff of the illegality of its payments; from such knowledge it is reasonable to infer that plaintiff was aware that in paying the defendant\u2019s expenses, it was going beyond the mere extension of credit.\nPlaintiff also challenges the trial court\u2019s conclusion that \u201c[t]he statute makes no distinction between the advertent and inadvertent advancement or expenditure of funds.\u201d This conclusion was apparently addressed to the plaintiff\u2019s claim in connection with the check which was submitted by the defendant and returned for lack of sufficient funds. The plaintiff\u2019s assessment of the trial court\u2019s ruling on this point appears in its brief as follows:\nWhat the trial court is really saying here is that if the candidate pays a firm for its services by check, and the check turns out bad, the obligation is then converted into an \u201cinadvertent contribution\u201d and thus falls within the prohibition of the statute.\nWe are in no position to determine the accuracy of the plaintiff\u2019s statement as to the trial judge\u2019s purpose in including the foregoing conclusion. However, we regard the worthless check as nothing more than an acknowledgment by the defendant that the plaintiff had advanced money in his behalf. Our analysis has focused on the acts of the plaintiff in advancing money for the purchase of media advertising for the defendant from July to October, 1974. The fact that the defendant recognized a \u201cmoral\u201d obligation to the plaintiff on 28 October 1974 and attempted to satisfy it in part with a worthless check does not alter the complexion of plaintiff\u2019s prior illegal acts. And if the obligation itself is unenforceable then a check representative of such obligation cannot be made the basis of a claim. Corbett v. Clute, 137 N.C. 546, 50 S.E. 216 (1905).\nPlaintiff next contends that the statute, G.S. 163-278.19, is unconstitutional as construed by the trial court. Plaintiff argues that the trial court\u2019s construction of the statute would permit an unconstitutional infringement upon its rights to contract and carry on a lawful business activity which are embodied in the due process clause of the United States Constitution, U.S. CONST, amend. XIV, amend. V; and the law of the land clause of the North Carolina Constitution, N.C. CONST, art. I, \u00a7 19.\nFreedom to contract and engage in a lawful business activity are rights guaranteed by the state and federal constitutions. Muncie v. Insurance Co., 253 N.C. 74, 116 S.E. 2d 474 (1960); Alford v. Insurance Co., 248 N.C. 224, 103 S.E. 2d 8 (1958). However, these rights are not absolute, and limitations thereon imposed by the Legislature are not violative of the constitutional provisions so long as they are reasonable in light of the purposes to be accomplished. Morris v. Holshouser, 220 N.C. 293, 17 S.E. 2d 115 (1941). Plaintiff argues that the statute in issue, as construed by the trial court, is arbitrary in its contravention of constitutional rights.\nAs previously stated, in order to prevent undue corporate and union influence on federal elections, Congress deemed it necessary to prohibit contributions and expenditures in behalf of political candidates from these sources. The federal courts have examined the encroachment on constitutional rights inherent in specific applications of the statute. The prohibition of direct contributions of money or advances of money by a corporation has been found reasonably related to a permissible State objective. United States v. Chestnut, 394 F. Supp. 581 (S.D. N.Y. 1975), aff\u2019d, 533 F. 2d 40 (2d Cir. 1976). On the other hand, where the statute was construed to prohibit a national bank from making a fully secured loan to a political candidate, it was found to violate the fifth amendment by intruding into the normal course of business of the bank without sufficient relationship to the objective of the statute. United States v. First National Bank of Cincinnati, 329 F. Supp. 1251 (S.D. Ohio 1971).\nPlaintiff\u2019s constitutional claims were premised on the assumption that the trial court\u2019s construction of G.S. 163-278.19 would bar all credit transactions between businesses and political candidates. Such a construction would raise constitutional questions of a different magnitude than those presented by our more limited construction and might well involve an unreasonable intrusion on constitutional rights. In any event, the plaintiff\u2019s payment of the defendant\u2019s advertising expenses were clearly advances as prohibited by the statute; and the prohibition thereof constitutes only a minimal intrusion on plaintiff\u2019s constitutional rights, and is clearly reasonable in light of the purposes to be accomplished by the statute. We hold that the statute on its face, and as applied by the trial court, is constitutional.\nThe plaintiff in this case has sought to enforce an obligation arising out of a transaction which we have found to be in violation of G.S. 163-278.19. If this Court were to lend its aid and compel the defendant to repay money advanced contrary to the statute, the policy declared by the Legislature in the enactment of that statute would be frustrated. Thus we will follow the advice offered by our Supreme Court at an earlier time: \u201c[W]hen the court discovers that it is invoked to aid in enforcing an illegal transaction, the court ex mero motu will withdraw its hand.\u201d Cansler v. Penland, 125 N.C. 578, 581, 34 S.E. 683, 684 (1899). See also McArver v. Gerukos, 265 N.C. 413, 144 S.E. 2d 277 (1965). The plaintiff\u2019s acts, as reflected in the pleadings, preclude its recovery in the courts of this State for money advanced in the amount of $19,349.26.\nHowever, what we have heretofore said relates only to the plaintiff\u2019s claim for $19,349.26. We are unable to determine on the basis of these pleadings whether plaintiff\u2019s claim for $2,902.39 based on \u201ccommissions\u201d is barred as an illegal contribution or expenditure to a political candidate pursuant to G.S. 163-278.19. The pleadings do not establish whether the \u201ccommissions\u201d were earned by the plaintiff in connection with the illegal advancement of $19,349.26. Since the pleadings do not reflect an insurmountable bar to plaintiff\u2019s claim of $2,902.39, this portion of the judgment for defendant must be reversed. Furthermore, the judgment for defendant from which the appeal was taken makes no disposition of defendant\u2019s counterclaim.\nThe result is: that portion of the judgment dismissing plaintiff\u2019s claim against the defendant for $19,349.26 is affirmed; that portion of the judgment dismissing plaintiff\u2019s claim for commissions of $2,902.39 is reversed and remanded to Superior Court for further proceedings with respect to plaintiff\u2019s claim for $2,902.39 and defendant\u2019s counterclaim.\nAffirmed in part.\nReversed and remanded in part.\nJudges Britt and Webb concur.",
        "type": "majority",
        "author": "HEDRICK, Judge."
      }
    ],
    "attorneys": [
      "Akins, Harrell, Mann & Pike, by Bernard A. Harrell, for plaintiff appellant.",
      "Tharrington, Smith & Hargrove, by Wade M. Smith, for defendant appellee."
    ],
    "corrections": "",
    "head_matter": "LOUCHHEIM, ENG & PEOPLE, INC. v. JAMES H. CARSON, JR., and NORTH CAROLINIANS FOR CARSON, a Political Committee\nNo. 7710SC205\n(Filed 21 February 1978)\n1. Elections \u00a7 15\u2014 illegal campaign contributions \u2014 advances\nThe advance of money or anything of value to a political candidate by a corporation, labor union or business entity constitutes an illegal contribution under G.S. 163-278.19. G.S. 163-278.6(6),(9).\n2. Elections \u00a7 15\u2014 illegal campaign contributions \u2014 purpose of statutes\nThe purpose of statutes regulating campaign contributions and expenditures by corporations and labor unions is to protect the populace from undue influence by corporations and labor unions, and to insure the responsiveness of elected officials to the public at large.\n3. Elections \u00a7 15\u2014 political candidate \u2014 advancement of money by public relations firm for advertising \u2014 illegal contribution or expenditure\nThe payment of money by a corporation engaged in the business of public relations for media advertising for the campaign of a political candidate with the expectation of reimbursement by the candidate\u2019s campaign committee when sufficient funds were raised to cover these expenses constituted an advancement and thus was an illegal contribution or expenditure within the purview of G.S. 163-278.19(a).\n4. Elections \u00a7 15\u2014 illegal campaign contributions \u2014 constitutionality of statute\nThe trial court\u2019s construction of G.S. 163-278.19 as prohibiting a public relations firm from paying the advertising expenses of a political candidate with the expectation of reimbursement when funds were raised by the candidate does not bar all credit transactions between businesses and political candidates, and the statute, on its face and as applied by the court, does not constitute an unconstitutional intrusion upon the public relations firm\u2019s rights to contract and carry on a lawful business activity.\n5. Contracts \u00a7 6; Elections \u00a7 15\u2014 obligation to repay illegal campaign advancement \u2014 no enforcement by courts\nThe courts will not enforce an obligation to repay advancements made by a corporation to a political candidate in violation of G.S. 163-278.19.\nAppeal by plaintiff from Bailey, Judge. Judgment entered 17 December 1976 in Superior Court, WAKE County. Heard in the Court of Appeals 17 January 1978.\nCivil action wherein plaintiff seeks to recover $22,251.65 for debts allegedly owed by the defendant, James H. Carson, Jr., for services rendered during the defendant\u2019s unsuccessful campaign for election to the office of Attorney General of North Carolina. The allegations in plaintiff\u2019s complaint are summarized and quoted as follows:\nPlaintiff is a corporation engaged in the business of public relations. In July 1974 it transacted business in Raleigh, North Carolina, as Capital Communications of North Carolina, Inc. During the same period of time the defendant held the office of Attorney General of North Carolina and was preparing to campaign in the impending election as the Republican candidate for the same office. On 1 July 1974 the defendant and his campaign staff conferred with officers of the plaintiff and agreed that plaintiff would manage the media campaign for defendant. The defendant and his staff authorized the plaintiff to do whatever was necessary to handle this portion of the campaign. The plaintiff further alleged:\n7. That the defendant, acting for himself and through his campaign managers, workers, employees, and agents, assured the plaintiff at all times that it would be paid fully for its services rendered and for monies advanced to purchase media advertising, posters, buttons, and other campaign devices for defendant\u2019s campaign.\n8. That relying upon the promises and assurances of the defendant, the plaintiff commencing in July, 1974, and continuing through October, 1974, rendered full services to the defendant in procuring, arranging, directing and generally managing all aspects of media advertising of defendant\u2019s campaign for Attorney General; that the plaintiff, in the defendant\u2019s behalf, and in reliance upon the assurance of payment, advanced money for the purchase of media advertising for defendant\u2019s campaign; that from time to time, the defendant paid or caused to be paid through his campaign committee portions of the amounts outstanding for such services and for money advanced to purchase media advertising.\nThe defendant was at all times aware of the expenditure being made in his behalf and as of 30 October 1974 \u201cthe defendant owed to the plaintiff for actual money advanced the sum of Nineteen Thousand Three Hundred Forty-nine and 26/100ths Dollars ($19,349.26),\u201d plus $2,902.39 in commissions. On 28 October 1974 the defendant\u2019s campaign committee sent a check payable to plaintiff in the amount of'$10,000, but the check was returned for lack of sufficient funds.\nIn his answer the defendant denied the material allegations of the complaint and set up several defenses, among which appears the following:\n2. That the Complaint alleges that said corporation advanced funds in the approximate amount of $20,000.00 for the political campaign, in an effort to elect the defendant to the office of Attorney General of North Carolina.\n3. That North Carolina General Statute \u00a7 163-728.6(9) [sic] defines the word \u201cexpenditure\u201d to include any advance, loan or transfer of funds.\n4. That North Carolina General Statute \u00a7 163-278.19 prohibits a corporation from making any expenditure in aid of or on behalf of or in opposition to any candidate or political committee.\n6. That public policy of the State of North Carolina prohibits condoning unlawful activities by Capital Communications, Inc., and its president, Jerome Louchheim and requires that the action be dismissed.\nDefendant also filed a counterclaim in which he alleged that plaintiff, through its president Jerome Louchheim, knowingly and wilfully violated the law in \u201carranging] an unlawful extension of credit to the campaign efforts of the defendant,\u201d and in doing so, damaged defendant\u2019s reputation in the amount of $50,000. Subsequent to filing his answer and counterclaim, the defendant moved pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure for judgment on the pleadings.\nIn a reply to the defendant\u2019s counterclaim the plaintiff alleged that it \u201cdid not make a contribution or expenditure as the term is used in G.S. 163-278.19, but paid for the cost of some advertising pending the receipt by the committee of campaign funds.\u201d\nThe trial court in consideration of defendant\u2019s motion for judgment on the pleadings concluded that the advance of money by plaintiff for media advertising for defendant\u2019s campaign was an expenditure by a corporation for a candidate for political office as prohibited by G.S. 163-278.19(a); and that the statute, so construed, is not violative of the North Carolina and United States Constitutions. Accordingly, judgment was entered for defendant on the plaintiff\u2019s claims, from which plaintiff appealed. The judgment was not dispositive of defendant\u2019s counterclaim.\nAkins, Harrell, Mann & Pike, by Bernard A. Harrell, for plaintiff appellant.\nTharrington, Smith & Hargrove, by Wade M. Smith, for defendant appellee."
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