127 Ind. 204 | Ind. | 1891
The Legislature of the State in 1846 and 1847 passed laws providing for the funding and payment of the public debt. Those acts authorized the auditor and treasurer of the state to execute certificates pledging the irrevocable faith of the State to the payment of the sum named in each of the certificates. Among the certificates issued were those upon which this action is founded. They are dated the 3d day of May, 1852, and are payable at the pleasure' of the State at any time after twenty years from the 19th day of January, 1846. They provide for the payment of interest semi-annually at the rate of five per centum per annum; the days of such semi-annual payments are designated as the first days of January and July in each year. The payee of the certificates is described as Jean Baptiste Maurice du Coetlosquet, of Paris, and provision is made for the registry of the certificates. The place of payment of principal and interest is declared to be the city of New York.
No question is made as to the validity of the certificates, nor could’any be successfully made. The certificates were issued under valid legislative authority and in accordance with duly enacted laws. There is, therefore, a complete and binding contract; no element is wanting nor is any incident absent.
As there is a perfect contract, the State is bound to perform it according to its legal tenor and effect, and to redeem the pledge it has declared to be irrevocable. In entering into the contract it laid aside its attributes as a sovereign and bound itself substantially as one of its citizens does
The principle that a State, in entering into a contract,; binds itself substantially as an individual does, under simi-i lar circumstances, necessarily carries with it the inseparable | y and subsidiary rule that it abrogates the power to annul j or impair its own contract. It can not be true that a State is bound by a contract and yet be true that it has power to cast off its obligation and break its faith, since that would involve the manifest contradiction that a State is bound and yet not bound by its obligation. It may have the mighty and means of defeating the enforcement of a contract, yet, in a just sense, have no power to do so. Might and opportunity do not constitute power in the true sense; to constitute power another element must be present, and that element is right. If right is absent there is no power. Legislatures^ may, by a failure to make an appropriation, defeat a just ¡ claim, or, indeed, block the wheels of government, but under the Constitution they have no power to do any such thing, j It seems very clear, therefore, that there is no constitutional power to annul or impair a valid contract entered into by a State, and so it has long been settled. Fletcher v. Peck, 6 Cranch, 87; Terrett v. Taylor, 9 Cranch, 43; Trustees, etc., Co. v. Beers, 2 Black, 448; Davis v. Gray, 16 Wall. 203; Hall v. Wisconsin, 103 U. S. 5; People v. Platt, 17 Johns. 195; Montgomery v. Kasson, 16 Cal. 189; State, ex rel., v. Barker, 4 Kansas, 379.
The right of the relator to compel the auditing and payment of his claim must, it is evident, depend upon whether there is an appropriation upon which a warrant can be rightfully drawn, and out of which it can be lawfully paid; for ¡ if there is no such appropriation the courts are powerless to j assist him to enforce his contract, although they may not j doubt its validity.
It is clear upon authority that the promise to pay, contained in the certificate, is not an appropriation. Ristine v. State, ex rel., 20 Ind. 328; State, ex rel., v. Ristine, 20 Ind. 345; Newell v. People, 3 Seld. 9; Sunbury, etc., R. R. Co. v. Cooper, 33 Pa St. 278.
It does not, however, follow that because no claim can be be enforced where there is no appropriation, the appropriation must be made in a particular form or in express terms. It is sufficient if the intention to make the appropriation is clearly evinced by the language employed in the statutes upon the subject, or if it is evident that no effect can possibly be given to a statute unless it be construed as making the necessary appropriation. In Ristine v. State, ex rel., supra, it was said: “An appropriation of the money to a specified object would be an authority to the proper officers to pay the money, because the auditor is authorized to draw his warrant upon an appropriation, and the treasurer is authorized to pay such warrant if he has appropriated money in the treasury. And such an appropriation may be prospective, that is, it may be made in one year, of the revenues to • accrue in another or future years, the law being so framed as to address itself to such future revenues. So a direction to
While it is true that the acts of 1846 and 1847 can not, under the decisions referred to, be considered as making an appropriation, still they do exert some influence upon the question, and can not pass unheeded. They do pledge the faith of the State to the payment of the debt, and do provide that the certificates, together with the interest thereon, shall be paid out of the State revenues. Acts of 1847, p. 1. Independently of any provision of this character the presumption is, and ought to be, that the State meant to pay its debt, for the law, as well as equity, imputes an intention to fulfil an obligation. In justice a State has no right to repudiate its contract, either directly or by indirection, and no such purpose should be imputed to it. In McCauley v. Brooks, supra, it was said: “We deny both the right to repudiate and the fact of repudiation. The State possesses no such right, but upon her rests the same obligations to do justice and keep faith as rest upon individuals.” In view of the provisions of the act of 1847, and of the general principles of equity and justice, the courts must assume, unless a contrary intention is clearly manifested, that the State did not intend to defeat its creditors by direct or indirect measures; hence we must assume in the construction of subsequent statutes (unless to make this assumption violates the language employed) that the State meant to make good its declaration in the act of 1847, and perform the promise contained in the contract of 1852. A series of acts, extending over a period of many years, shows an intention to provide means for the payment of the State debt, for various statutes provide measures for raising money to pay the certificates issued to the creditors of the State under the acts of 1846 and 1847. 1 R. S. 1852, p. 408; Acts 1861, p. 107; Acts 1871, p. 6.
It is unnecessary to refer to all of those acts, but of two of them it is necessary to speak with some particularity. In 1865 an act was passed wherein it was declared that it was
“ Section 3. That the State debt sinking fund as a separate fund of the state treasury be discontinued from and after the 1st day of February, A. D. 1873, and be merged in, and constitute a' part of, the general fund of said treasury, and all sums of money or claims now lawfully payable out of the said State debt sinking fund, shall, after the date last' aforesaid, be payable out of the general fund of the State treasury. ”
This provision, even if it stood alohe, must be regarded as making an appropriation within the meaning of the Constitution, but if it were true that there might be doubt if the provision were isolated from all others and considered in itself, there can possibly be none when it is considei’ed, as it must be, in connection with the prior statute, and, under the rules of the law we have stated, so that if there is no valid provision in other sections of the act of 1872 contravening that contained in section 3, it must be held that there was a valid appropriation. If there is a provision destroying the appropriation it must be that contained in the
As the action of the board of sinking fund commissioners was ineffective, the question necessarily turns upon the provisions of the act of 1872, which assume to infuse vitality into the action of the board by confirming it. We do not deem it necessary to inquire whether a void act can be ratified or validated in such a case as this, for if the appropriation was annulled the question is not important, and if it was not annulled the question is of still less importance. The pivotal question is whether the appropriation was annulled, for, as we have seen, if there was no appropriation this action can not be maintained.
The right of the auditor to refuse to audit a claim where an appropriation has been annulled by an effective statute must be conceded, for the principle which requires that conclusion is declared in the case of Louisiana v. Jumel, 107 U. S. 711. But the question here is not whether the effective withdrawal of the appropriation will defeat the creditor, but the question is, was there a valid enactment annulling the prior statutes which made the appropriation ? It can make no difference for what cause the statute assuming to abrogate the appropriation is unconstitutional; if in reality it is unconstitutional, the cause of its infirmity is immaterial. Here the infirmity is that the General Assembly,instead of directly annulling or repealing the appropriation, attempted to accomplish that end by annulling the contract of the State, and, as that body can not annul the contract, its action is fruitless. Either this conclusion must be affirmed or else
There is no question in this case as to the power of the State to withdraw a remedy and thus defeat its creditor. As we have seen, the question here is whether the appropriation made by prior statutes was destroyed by the act of 1872; if it was not the remedy is unaffected, for there is no suggestion in any statute looking in the direction of a change of the rule that has so long prevailed in this State, namely, that where there is a valid claim and an effective appropriation the auditor will be compelled by mandate to draw the proper warrant. In holding, as we do, that this action will lie, we do not adjudge that a State is bound to continue a remedy or an appropriation once provided ; we decide simply that where an appropriation is once effectively made it will stand until annulled by some constitutional statute, and that an enactment assuming to impair a contract of the State is not such a statute.
Courts are bound to ascertain and give effect to the legislative intention when expressed as the Constitution sanctions; but neither the courts nor the Legislature can disregard the commands of the Constitution. No enactment can carry into effect a legislative intention if it be expressed in an unconstitutional mode. The infirmity in the first section of the act of 1872 consists in assuming to do what the Legislature has no power to do. It assumes to do what can not be done without a violation of the constitutional provision forbidding the impairment of the obligation of a contract. It is, as every one knows, the duty of the judiciary to declare all enactments void which clearly infringe the provisions of the paramount law, and, in the discharge of that duty, we must adjudge that the attempt to annul the contract evidenced by the obligations of the State is utterly futile. As there is no constitutional expression of a legislative intention to abrogate the appropriation made for the payment of the State debt, there is no intention which the courts can
Freely granting, as we do, that it is the duty of the judiciary to ascertain and give effect to the properly expressed legislative intention, we, nevertheless, affirm that we have no right to give life and vigor to an act which the Constitution makes lifeless and powerless. If it could be granted that the courts can give life to an unconstitutional statute, then the conclusion stated in the very able argument of the counsel for the appellant would necessarily follow, but this no court can do, so that the conclusion falls to the ground. Without the premise the conclusion is absolutely foundationless.
It is, in truth, unnecessary to inquire or decide whether the act of 1872 does, or does not, make an appropriation, for, conceding that it does 'not, and conceding, also, that it is proper to consider the invalid provisions of that act, still, the result must be the same, for if there was no repeal of the appropriation made by former acts, that appropriation remains in full force and vigor.
The contract of the State, as we construe it, contains a promise to pay interest, and that promise, under the settled rule to which we have referred, binds the State to pay interest upon the principal sum. This disposes of the general question as to the right of the relator to interest under the contract; but the entire question is not disposed of by the principle stated, since the general rule that a State is not liable for interest unless it contracts to pay it exerts an important influence upon another phase of the question. To justly apply this general rule that a State is not liable for interest in the absence of a contract agreeing to pay it, and to ascertain whether our construction of the contract is correct, we must look to the provisions of the statute, to the language of the contract, and to the facts bearing upon the question of interest. Section 5 of the act of 1846 reads as
The next question which naturally arises is, what rate of interest did the State contract to pay ? The law, as we have said, is that a sovereign is bound to pay only such interest as it binds itself by contract to pay. United States v. North Carolina, 136 U. S. 211; United States, ex rel., v. Bayard, 127 U. S. 251; United States v. Sherman, 98 U. S. 565; In re Gosman, 17 Ch. D. 771. The contract of a sovereign with respect to the payment of interest is governed by a different rule from that which prevails in cases of contracts of citizens, for where there is no promise to pay interest a sovereign is exempt. We are, therefore, required to determine what rate the sov
The remaining question is this: Is the relator entitled to interest upon interest? The contention of his counsel is that he is not asking compound interest, but that he is asking interest upon each semi-annual instalment of interest which
We do not inquire whether an individual would, or would not, be liable for interest upon interest, as it is enough to adjudge that a sovereign State is not liable where, as here, there is no contract to pay interest upon interest.
Judgment affirmed.