Opinion
[Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] Rehearing 25 Cal. 635 at 652.
Application to the Supreme Court for writ of mandate.
COUNSEL
The law of 1863, (Stats. p. 380,) authorizing the Board of Supervisors to make subscriptions to the capital stock of the Pacific Railroad was constitutional. (French v. Teschemaker , 24 Cal. 518.)
The vote of approval by the electors of San Francisco was not necessary to the validity of the law, but only a condition precedent to the exercise of the new franchise granted to the Board of Supervisors. (Bank of Rome v. Village of Rome , 18 N. Y., 4 Smith, 38; Clarke v. City of Rochester, 24 Barb. 446; Corning v. Green, 23 Barb. 33.)
The Legislature had the power to direct the Supervisors of San Francisco to levy six hundred thousand dollars by taxation, and pay it to the Central Pacific Railroad without any vote of the people of that city and county. They might have done so after the people had been authorized to vote upon the question, and on such vote had refused to levy the tax. They might have imposed the tax without any subscription being made, or any stock or other considerationreceived, except the incidental benefit from the construction of the road, and of the nature and extent of that benefit the Legislature is the exclusive judge.
" The Legislature is not confined in its appropriation of the public moneys, or of the sums to be raised by taxation in favor of individuals, to cases in which a legal demand exists against the State. It can thus recognize claims founded in equity and justice in the largest sense of these terms, or in gratitude or charity. Independently of express constitutional restrictions, it can make appropriations of money whenever the public well being requires or will be promoted by it; and it is the judge of what is for the public good. It can, moreover, under the power to levy taxes, apportion the public burdens among all the tax paying citizens of the State, or among those of a particular section or political division. It is well settled that the authority to raise money by the exercise of the taxing power is not in conflict with the constitutional provisions protecting private property from seizure. The two principles co-exist in the Constitution, and it is not difficult to distinguish between them." (Town of Guilford v. Supervisors of Chenango, 3 Kernan, 13 Smith, 143; Brewster v. City of Syracuse , 19 N. Y., 5 Smith, 116; The People v. Mayor of Brooklyn , 4 N. Y., 4 Const. 419; Providence Bank v. Billings, 4 Peters, 514, 561-563; McCullock v. Maryland, 4 Wheat. 428; Blanding v. Burr , 13 Cal. 356.)
An eminent instance of a large debt founded upon a merely valuable or meritorious consideration and forced upon a municipal corporation by Act of the Legislature, will be found in Laws 1858, page 183, section 2.
All the corporate franchises of the City and County of San Francisco are repealable by the Legislature, and it can therefore have no vested right under the grant of a franchise which the Legislature cannot divest. (Const. of California, Art. IV, Sec. 31; McLaren v. Pennington, 1 Paige, 102.)
And this power to alter and repeal is not restricted by any legislative limitations existing in the Constitution at the time when the original law is passed, but may be exercised under the fullest power of legislation contained in the Constitution as subsequently amended and existing at the time when the alteration or repeal is made. When the charter of a railroad corporation containeda clause authorizing the Legislature to repeal or alter it, the alteration of the charter, by the Legislature, made on the application of the directors, without consulting the stock subscribers, does not absolve the latter from their subscription. (10 Barb. 261.)
The franchise granted to the Board of Supervisors, authorizing them to hold railroad stock, was an extraordinary franchise; so extraordinary, that it was at first held under our Constitution to be unconstitutional. (Low v. Marysville , 5 Cal. 214.) But, like all corporate franchises, the power of repeal is expressly reserved in the Constitution. (Const. Cal. Art. IV, § 31.)
This franchise could, therefore, be repealed at any time by the Legislature; that is to say--The Legislature might withdraw the power to hold railroad stock, and prescribe the mode in which the city should dispose of it. (Angel & Ames on Corporations, Ch. XXII, § 2, p. 733; McLaren v. Pennington, 1 Paige Ch. R. 102.)
The Legislature could not grant an irrepealable franchise to a municipal corporation. This would be allowing one Legislature to trammel the constitutional powers of all its successors. If a Legislature authorizes amunicipal corporation to issue bonds under a limitation that they shall be paid by a tax which is unconstitutional, the result is, not that the bonds are invalid, but that they shall be provided for by a tax which is not subject to any constitutional objection. (Gilman v. City of Sheboygan, 2 Black U.S.R. 510.)
The power to subscribe for stock, or to compromise, includes the power to pay money, or to issue bonds or other securities, and in the form prescribed in the ordinance. (2 Kent Comm. 278, etc. text and notes; Berry v. Merchants' Exchange Company, 1 Sandf. Ch. R. 280, 288; Reinboth v. Mayor of Pittsburg, 41 Penn. 278, 280, 283; Seibert v. Mayor of Pittsburg, S.Ct. U.S. Dec. Term, 1863.)
The Act of April, 1864, confers upon a municipal corporation a special power, and, like all municipal charters and special powers, must be strictly construed and closely pursued. (Sedgwick on Stat. Cons. 465-7, 321-3, 338-40; 3 Comstock, 433; 21 Penn. 22; 5 Cal. 214; 13 Cal. 540; 20 Cal. 96; French v. Teschemaker et al. , 24 Cal. 518.)
The power to compromise and settle is, under the Act of 1864, a special power, and mustbe confined within the terms employed.
Restrictions upon the powers of municipal corporations are the settled policy of our laws.
The rules of construction applicable to municipal charters are those always applied to grants of special powers where the State confers or delegates a part of its sovereignty. Much more strict will be the construction when it is sought, under the power, to donate to a private corporation nearly half a million of dollars of public revenue, without reckoning interest on the bonds to be issued.
Applying these rules to the Act of 1864, we claim that the Act authorizes no more than a reduction of the amount of subscription, and a change of the mode of payment to " cash or other security in place of bonds." It does not authorize a donation of four hundred thousand dollars, or any other amount; in other words, it authorizes a subscription for any amount less than six hundred thousand dollars, payable " in cash, etc., in place of the bonds ," etc.
What was the claim to be settled? It was not a claim for damages, for money or bonds without equivalent. It was a claim to exchange certificates of stock for bonds. To settle such aclaim is to fix the amount of subscription by reducing it, if possible, not by making a donation.
Shafter, Goold & Dwinelle, for Relator.
H. H. Haight, for Defendants.
H. & C. McAllister, also for Defendants.
The decision in French v. Teschemaker adjudicated the constitutionality of the seventeenth section of the statute of April 22, 1863, and went no further.
The previous mandamus, sued out on the relation of " The Central Pacific Railroad of California" against the Board of Supervisors of the City and County of San Francisco, commanded said Supervisors to make the six hundred thousand dollars subscription called for by the Act of April 22d, 1863, and which had been voted at the special election held under the provisions of that statute; but did not dispose of the objections raised to the issuance of the bonds, which was a matter by no means identical with the question of subscription.
The right of the railroad company to demand of the Supervisors the act of subscription, was one thing; but their right to exact the issuance of the bonds was quite another thing.
Besides, the Act of April 4, 1864, excludes from the compromise any such bonds as were contemplated by the statute of April 22, 1863. The language is, " to compromise and settle all claims, etc., for cash or other security, in place of bonds claimed by said companies of said city and county, under an Act, etc ."
However large and unlimited the powers given by the Act of April 4, 1864, there is one kind of security clearly interdicted, to wit: Such bonds as the statute of 1863 called for; the compromise is to substitute something in their place and stead. How, then, can this statutory power be construed to authorize the issuance of the original bonds? (Starin v. The Town of Genoa , 23 N.Y. 9 Smith, 454, 455.
The Act of April 4, 1864, has been misconstrued; it does not relieve San Francisco from her subscription, but simply authorizes its liquidation " in cash or other security," in lieu of the bonds originally proposed.
The statute of April 22, 1863, is neither expressly nor impliedly repealed by the Act of April 4, 1864. Its existence, validity, and operative force, have been recently recognized by this Court in the decision as to the previous mandamus .
" Whenever two Acts can be made to stand together, it is the duty of a Judge to give both of them full effect. Even where they are seemingly repugnant, they must, if possible, have such a construction that one may not be a repeal of the other, unless the latter one contain negative words, or the intention to repeal is made manifest by some intelligible form of expression ." (Brown v. County Commissioners, 21 Penn. 43; Bowen v. Lease, 5 Hill, 226.)
The law recognizes interests and rights in the individual corporators of a municipality as beneficiaries, or cestui que trusts, separate and distinct from those of the legal entity, called the corporation, which stands merely as the trustee of these corporators, holding the legal title of the corporate property. (Wetmore v. Story, 3 Abbott Pr. R. 274-276; Wood v. Draper, 4 Abbott Pr. R. 323, 324; Redfield on Railways, 415, note.)
The proposition that the State has no power to divest vested rights, or to impair the obligation of contracts, applies as well to cases of municipal corporations as to individuals. (Grogan v. San Francisco , 18 Cal. 612, 613.)
JUDGES: Currey, J.
OPINION
CURREY, Judge
By the Court, Currey, J., on petition for rehearing.
The decision and judgment in this case was rendered early in September, eighteen hundred and sixty-four. About the tenth of that month, a written notice of such decision, as appears by proof before us, was personally served on the attorney for the respondents. On the thirteenth of the same month a petition was filed by new attorneys and counsel on behalf of respondents for a rehearing. Since then, and during the present term of the Court, the relators' attorneys have appeared and objected to the hearing and entertaining of this petition, on the ground that, as the case was originally commenced, tried and determined in this Court, the judgment rendered cannot be reviewed on petition for a rehearing.
By the amended Constitution, power was granted to the Supreme Court to issue writs of mandamus, certiorari and prohibition, and it was by authority of the constitutional provision referred to that this Court, upon proper proceedings instituted, assumed to act in the premises. Our judgment in the case was that of a Court of original jurisdiction, and for the correction of any error which we may commit in such cases the party aggrieved must pursue the course prescribed by the Practice Act in like cases arising in the District Courts, so far as may be. It is unnecessary to refer to the particular provisions of the Act specifying the course to be pursued in order to obtain a re-examination of a case by the same Court of original jurisdiction, after one decision made therein. The course prescribed by the statute has not been followed by the respondents in this case, and therefore the petition filed cannot be entertained.
It is therefore ordered that the petition for a rehearing be denied.