Goldston, et al. v. State of N.C., et al.

W. D. GOLDSTON, JR., JAMES E. HARRINGTON, and citizens, taxpayers and bondholders similarly situated, Plaintiffs, v. STATE OF NORTH CAROLINA and MICHAEL F. EASLEY, Governor, individually and in his official capacity, Defendants.

Case Status

Current Status: Closed
Date Filed: Nov 14th, 2002
Last Action: Nov 17th, 2010
Court Filed In: Wake County Superior Court

Case Summary

The North Carolina Institute for Constitutional Law’s Executive Director Bob Orr and Senior Staff Attorney Jeanette Doran, in collaboration with Gene Boyce and Dan Boyce of the Boyce & Isley law firm, filed a Notice of Appeal and Petition for Discretionary Review on behalf of Plaintiffs W.D. Goldston, Jr. and James E. Harrington in a case challenging diversion of taxes specifically collected for the building of specific roads and highways and placed in North Carolina’s Highway Trust Fund.  The funds were transferred by Governor Mike Easley and the North Carolina General Assembly to the State’s general fund in order to balance the State’s budget.  Governor Beverly Perdue has given notice that she also intends to appeal the case. 


Last month, the Court of Appeals ruled in favor of Goldston, a former Democrat Senator, and Harrington, a former Secretary of Transportation in a Republican administration, that the State Constitution prohibits the Governor from transferring money from the Highway Trust Fund to the State’s General Fund in an effort to balance the budget.  But the court also ruled that the General Assembly could make such transfers and that “trust fund” principles were not applicable even though the money had been placed in the “Highway Trust Fund.” The plaintiffs are now appealing the decision to the Supreme Court on the grounds that the case involves a substantial constitutional question relating to the transfers by the Legislative Branch and the Executive Branch. The State is expected to appeal the portion of the Court of Appeals decision which held the Governor did not have authority to transfer $80 million from the Highway Trust Fund. 


The State Constitution requires that a tax statute state the “special object” or purpose for which the tax is being imposed and mandates that tax money be spent only on those purposes. Money in the Highway Trust Fund comes from a variety of taxes, including the gas tax and taxes on the purchase and leasing of cars. State law requires that money in the Highway Trust Fund be used exclusively for transportation expenses such as road maintenance and highway construction. But, in 2002, then Governor Easley used $80 million from the Highway Trust Fund to balance the state budget and the General Assembly transferred $125 million from the Highway Trust Fund to the General Fund for general spending purposes.


NCICL was contacted by Boyce & Isley following last month’s Court of Appeals decision and asked to join in the Supreme Court appeal. Orr and Doran, on behalf of NCICL, will represent the Plaintiffs along with Boyce & Isley in the appeal of all the issues before the Supreme Court.  


This case has already been to the Supreme Court on the question of whether Goldston and Harrington had the right to file the lawsuit. In 2006, the Supreme Court ruled in favor of the Goldston and Harrington and sent the case back to the trial court saying taxpayers have the right to sue to challenge the unconstitutional misuse of public funds. NCICL filed a friend of the court brief in the previous appeal and has closely followed the case since its inception.


Documents Filed

Document Title Date Filed Court Download
Certification of Judgment 11/17/2010 N.C. Court of Appeals PDF 40KB
Opinion 10/08/2010 N.C. Supreme Court PDF 27KB
Plaintiffs-Appellees' New Brief 04/14/2010 N.C. Supreme Court PDF 2.5MB
Notice of Appeal & Petition for Discretionary Review 10/20/2009 N.C. Supreme Court PDF 7.6MB
Record on Appeal 06/27/2008 N.C. Court of Appeals PDF 4.8MB
Opinion 12/15/2006 N.C. Supreme Court PDF 80KB
Order to Allow Oral Argument as Amicus Curiae 09/27/2006 N.C. Supreme Court PDF 18KB
Defendants-Appellees' New Brief 06/13/2006 N.C. Supreme Court PDF 234KB
NCICL Amicus Curiae 05/03/2006 N.C. Supreme Court PDF 1.4MB
Motion for Leave to File Brief Amicus Curiae 11/09/2005 N.C. Supreme Court PDF 274KB
Opinion 09/20/2005 N.C. Court of Appeals PDF 63KB
Plaintiff-Appellants' New Brief 05/11/2005 N.C. Supreme Court PDF 775KB
Appellants' Reply Brief 03/24/2005 N.C. Court of Appeals PDF 650KB
Defendant-Appellees' Brief 03/07/2005 N.C. Court of Appeals PDF 1.5MB
Appellants' Brief 02/02/2005 N.C. Court of Appeals PDF 1.0MB
Record on Appeal 04/29/2004 N.C. Court of Appeals PDF 2.3MB
Complaint 11/14/2002 Wake County Superior Court PDF 515KB