186 Ind. 660 | Ind. | 1917
Appellee in 1909 became, and is now the owner of certain street improvement bonds issued in 1908, in anticipation of the collection of assessments on account of the improvement of a certain street in the city of Indianapolis, under an act approved March 6, 1905 (Acts 1905 p. 219, 286, §8710 et seq. Burns 1914), and as such bondholder brought this suit against the city of Indianapolis, the city controller and the city treasurer, on behalf of himself and all others similarly situated, to enjoin the defendants from purchasing bonds aggregating $2,495.04, under the alleged authority of the amendatory act of 1915. Acts 1915 p. 549.
The complaint was challenged by a demurrer for want of facts which was overruled. Trial was had by the court, with decision and judgment in favor of appellee, enjoining appellants from making the proposed purchase. Appellants’ motion for a new trial was overruled, and this ruling, as well as the ruling on the de
Appellee, as we understand, took the position in the court below, which was sustained, that his contract, as evidenced by his street improvement bonds issued by the city of Indianapolis, was impaired by the provisions of the act to which we have referred.
Appellants earnestly insist: (1) That by the amendatory act appellee’s contract is not impaired, but by it he is given additional security, in that the city is made liable in personam; (2) that by the complaint, as well as from the evidence it appears that the threatened injury, if any, to appellee is wholly contingent, and that an injunction will never be granted where the alleged injury depends upon contingencies that may never arise.
It is settled in this State, and so conceded by appellants that: “The law, under which the contract was executed, is to be and remain the only rule by which the contract shall be construed. The obligations, shall not be increased, nor the rights diminished, by any act of future legislation.” Lewis v. Brackenridge (1822), 1 Blackf. 220, 221, 12 Am. Dec. 228; Bryson v. McCreary (1885), 102 Ind. 1, 1 N. E. 55; Davis v. Rupe (1888), 114 Ind. 588, 591, 17 N. E. 163; Von Hoffman v. City of Quincy (1866), 4 Wall. 535, 18 L. Ed. 403; Seibert v. Lewis (1886), 122 U. S. 284, 7 Sup. Ct. 1190, 30 L. Ed. 1161; Harrison v. Remington Paper Co. (1905), 140 Fed. 385, 72 C. C. A. 405, 3 L. R. A. (N. S.) 954, 5 Ann. Cas. 314.
In our opinion the legal rights of all the parties were fixed by the law as it stood when the bonds now held by appellee were issued. The obligation of the persons whose lands were assessed, .and their privilege of making prepayments; the duty of the city treasurer to receive payments and to apply such payments on out
Under these statutory provisions the city issues the bonds, but in doing so it incurs no liability for their payment as it would if the cost of the improvement were to be paid out of the general funds. Town of Windfall City v. First Nat. Bank (1909), 172 Ind. 679, 87 N. E. 984, 89 N. E. 311.
Appellee and those for whom he brings this suit hold ten per cent, installment bonds, with interest coupons attached. The payment of these bonds and coupons is secured by a lien on real estate. This lien can be removed only by the payment of the bonds, principal and interest, either before or at maturity, to the treasurer as trustee, whose duty it is, under the law, to immediately pay over any such prepayments to the bondholders entitled to the same. In short, that was the bondholders’ contract. But by the amendatory act of 1915, supra, such prepayments, if any, properly to be applied on these bonds, must.be credited to what is known as a “special fund” to be held in trust by the treasurer until the city, through its comptroller, can “invest such trust funds in bonds similar in kind and character, at par, for the benefit of said city as trustee for the holders of the bonds and interest coupons upon which such prepayments were made.” It is also provided that “said bonds in which said trust funds are in
As we construe this amendment, the bondholder is not given any option in the matter. The prepayments constitute the “special fund” for investment by the city, and to be so handled by it as to expectedly meet the installments of interest and principal as the same become due on outstanding bonds. In'handling this “special fund” the city acts in a trust capacity, and is not an insurer. It incurs only liability of a trustee, which is, that it will exercise sound discretion, as well as good faith and honest judgment in the purchase of the designated bonds. 39 Cyc 390. In this connection, the case of Brooklyn Park Commissioners v. Armstrong (1871), 45 N. Y. 234, 6 Am. Rep. 70, is in point. The reasoning in that case is strongly supportive of appellee’s theory here. In that case the court had under consideration the validity of an act of the New York legislature directing that certain land theretofore condemned by the city of Brooklyn for park purposes under legislative authority be sold, and the money received therefor paid into a sinking fund of the city, to be held for the redemption of the bonds, which the city of Brooklyn had issued, pledging the land for their payment. In the course of the opinion it is said: “The holder of the bond did not agree to take a security upon a fund in the city treasury, and incur any risk of its preservation, but stipulated for a specific lien upon this land. * * * It was on the assurance that this should remain, that the creditor was induced to take the bonds, and give in exchange his property. This was a contract. The security cannot now be taken away without impairing the
So in the case at bar when appellees and others for whom he sues purchased the bonds they obtained a contract not secured by a fund in the city treasury, or to be invested by the city as a trustee, but a contract which gave them a lien upon lots or parcels of land, or "the return to them of their money when paid in, be that at or before maturity of their bonds. Upon a careful consideration of the issues and evidence before us, we are convinced that the act of 1915, supra, added substantial, additional terms,'risks and delay in settlement of the contracts not contemplated when they were originally executed. Clearly, then, this amendatory act, as applied to the contracts now in suit as well as all others of like kind and character executed prior to the time it became a law, was in violation of §10, Art. 1, of the Constitution of the United States, and of §24, Art. 1, of the Constitution of Indiana.
In view of our conclusion on the question considered, it will not be profitable to consider the effect of the amendatory act on §§114 and 115 of the act of 1905, supra.
Without taking space for a further statement of the record, we believe from this narration that the inference may be readily drawn that the threatened injury was not contingent, but real. Whether or not appellee or those for whom he brings this suit are affected by the present purchase, can make no real difference, for it appears that the settled policy of the city and its officers is to divert and invest this special fund in violation of the contract entered into at the time these bondholders gave up their money for the bonds now held by
In our opinion this is a case for injunctive relief, and the judgment is therefore affirmed.
Note. — Reported in 117 N. E. 861. See under (1, 2) 12 C. J. 1010, 1013; 8 Cyc 947; (4) 22 Cyc 884. Effect of recitals in municipal bonds, 51 Am. St. 835.