44 Ind. 524 | Ind. | 1873
Lead Opinion
Under the act of the legislature of this State, entitled “ an act to authorize aid to the construction of railroads by counties and townships taking stock in, and making donations to railroad companies,” approved May 1.2th, 1869, Acts 1869, p. 92, and in alleged conformity to that act, a tax was voted and collected in Tippecanoe county in aid of the Lafayette, Muncie, and Bloomington Railroad Company; and during the years 1871, 1872, and 1873, the commissioners of the county subscribed and paid for stock in said company to the amount of six thousand six hundred and ten shares, of the par value of fifty dollars per share, and the company issued to the county certificates of stock therefor. After the passage and approval of the act of December 17th, 1872, entitled “an act to require railroad companies to issue stock paid for by taxes voted in aid of the construction of their railroads, to the tax-payers or their assigns, and to issue unclaimed stock for the benefit of the common school fund, and declaring an emergency,” and before the treasurer had issued to any person a certificate, such as is contemplated by the first section of said act, the commissioners requested the treasurer not to issue any such certificate
Upon a complaint by the commissioners against the treasurer, representing substantially the above facts, an'injunction was granted by the judge of the circuit court, enjoining the treasurer from issuing any certificate or certificates to any person or persons, such as he is required to issue to taxpayers by the act of December 17th, 1872, the injunction to remain in force until the next term of the Tippecanoe Circuit Court, and until the further order of the court.
From this order of the court the treasurer appealed to this court, and he has assigned as error the granting of the injunction. In the first section of the act of December 17th, 1872, it is enacted that in all cases where stock has been taken by counties or townships in railroad companies, and paid for from taxes levied and collected under the provisions of the act of May 12th, 1869, it shall be the duty of the treasurer of the proper county, upon request, if made prior to the 1st day of January, 1874, to issue to the several tax-payers, and to the personal representatives of such as may have died, a certificate, stating the amount of railroad tax paid by such tax-payer, the date of payment, and the name of the railroad company in aid of which the tax was levied and paid, as the facts shall appear from the proper tax duplicates and record in his office.
In the second section it is provided, that where taxes have been, or shall be levied, in accordance with the provisions of said act, which shall thereafter be paid, the treasurer of the-proper county shall give to the person paying any such railroad tax a special receipt therefor, in which the facts shall be stated as in case of a certificate being given as required in the preceding section.
The third section declares that the certificates and receipts,
By the fourth section it is made the duty of the auditors of the several counties in which railroad taxes may have been collected and paid over for stock, under the provision of the act of May 12th, 1869, immediately after the expiration of the time for the surrender of certificates and receipts by individuals to railroad companies, as' fixed in the preceding section, to ascertain from the books of the county treasurer and the books of the proper railroad company, which he shall have the right to examine for that purpose, what amount of stock has been paid for by taxes levied in the county, or any township, as the case may be, which has not been applied for by individuals upon the surrender of such certificates and receipts as aforesaid, within the times limited for that purpose, and for such amounts- of unclaimed stock, the proper railroad company shall, upon the request of such auditor, issue to the several civil townships in such county
By the sixth section, townships are authorized to vote the stock held by their respective townships in all meetings of stockholders of the companies, by which the stock was issued; and all stock held under the provisions of this act shall entitle the holders thereof to all the rights and privileges of stockholders, who may have personally subscribed and paid stock in such railroad companies. The last section declares that an emergency exists for the immediate taking effect of the act, and that the same shall be in force and take effect from and after its passage.
The question presented is as to the constitutionality of the act which we have set out, the act of December 17th, 1872. It is urged by counsel for the appellees that the legislature has not the power to pass a law to take the railroad stock
Were this k question relating to the power of the legislature to dispose of the property of a private corporation, as it has disposed or attempted to' dispose of the property of the counties and townships by this law, there would, probably, be no ground for hesitation in declaring the law to be a violation of the constitution. Counties and townships, however, are not private corporations, and the rules of law applicable to them are not, in all respects, the same as those which are applicable to private corporations. They are not created by special charter, as is generally or frequently the case with private corporations. They exist under general laws enacted by the legislature, by which the territory of the State is divided into political divisions, as the convenience of the government may suggest and require; and the people falling within such divisions have such rights, are required to perform such duties, and conform to such regulations as may be prescribed. This makes it convenient, if not necessary, that corporate powers, greater or less in extent, shall be conferred upon them. Whether they shall have those rights, assume those duties, or conform to those regulations, they are not allowed to determine. The legislature creates the divisions, either directly or by conferring power for that purpose upon some
But the question here is, can the legislature, while such a corporation remains in existence, take from it property which has been thus vested in it by authority of law, and transfer the ownership to another ? It may be stated as a general proposition, that the property owned by counties and townships is derived or results from the taxation of the property and polls of the county or township. There are exceptions to this rule; for instances could be named where property is acquired by such corporations by means other than taxation. In this instance, however, the money with which the railroad stock was purchased was obtained from the people of the county by taxation exclusively, and the object of the law in question is to return to them, so far as is practicable, the property in its new form, in the same proportions in which it was obtained from them. Assuming that the stock, if the county shall continue to own and hold it, will yield a revenue to the county treasury, it may be presumed that, to this extent, the taxes which it may be necessary, in the future, to levy for county purposes, will be diminished, and that, therefore, to most of those who have paid the money, it will make no material difference whether
When the municipal divisions of the territory of the State are changed in their boundaries, two or more consolidated into one, or one is subdivided, the legislature possesses the power to make such disposition of the corporate property as equity and justice may require, in view of the changes made. Cooley Const. Lim. 236; The State v. Votaw, 8 Blackf. 2; Love v. Schenck, 12 Iredell, 304; The Town of Milwaukee v. The City of Milwaukee, 12 Wis. 93.
Judge Cooley, in the summing up of his views on the question as to the power of the legislature over the property of municipal corporations, says, that the rule upon the subject seems to be this: when corporate powers are conferred, there is an implied compact between the State and the corporators that the property which they have the capacity to acquire under their charter shall not be taken from them and appropriated to other uses. If the State grants property to the corporation, the grant is an executed contract, which cannot be revoked. The rights acquired, either by such grants or by any other legitimate mode in which such a corporation can acquire property, are vested rights, and cannot be taken away. Nevertheless, when the corporate powers are repealed, the corporate ownership ceases; and by modification of corporate powers, the legislature may in other cases affect and divest the rights of individual corporators, so far as they can be said to have any rights in public property. And in other ways and by direct intervention, the legislature may exercise control over the disposition and use of property, subject to the restriction, that it must not be diverted to a use substantially different from that for which it was acquired. Page 238.
“ City corporations are emanations of the supreme law making power of the State, and they are established for the more convenient government of the people within their .limits. In this respect, corporations chartered by the crown of England and confirmed at the revolution, stand on the same footing with similar corporations created by the legislature. Their boards of aldermen and councilmen and other officers are as truly public officers as the boards of supervisors, or sheriffs and clerks of counties ; and the property intrusted to their care and management is as essentially public property as that confided to the administration of similar official agencies in counties and towns. In cities, for reasons partly technical, and in fact founded upon motives of convenience, the title is vested in the corporate body. It is not thereby shielded from the control of the legislature, as the supreme law making power of the State. Let us suppose the city to be the owner of a parcel of land not adapted to any municipal use, but valuable only for sale to private persons for building purposes, or the like. No one, I think, can doubt but what it would be competent for the legislature to direct it to be soM, and the proceeds to be devoted to some municipal or other public purpose, within the city, as a court-house, a
In The State of Maryland v. The Baltimore and Ohio Railroad Company, 3 How. 534, the validity of an act of the legislature of Maryland was in question. The state, in 1836, passed a law; directing a subscription of three millions to be made to the capital stock of the Baltimore and Ohio Railroad Company, with a proviso that if the company should not locate the road in the manner provided for in the act, they should forfeit one million dollars to the State of Maryland for the use of Washington county. In March, 1841, the state passed another act repealing so much of the prior act as made it the duty of the company to construct the road by the route then prescribed, remitting and releasing the penalty, and directing the discontinuance of any suit brought-to recover the same. It was Adjudged that the proviso was a measure of state policy, which it had a light to change, if the policy was afterward discovered to be erroneous, and neither the commissioners, nor the county, nor any one of its citizens acquired any separate or private interest under it, which could be maintained in a court of justice. It was held to be a penalty inflicted upon the company as a punishment for disobeying the law; and the assent of the company to it, or a supplemental charter, was not sufficient to deprive it of the character of a penalty; that being a penalty imposed by law, the legislature had a right to remit it.
East Hartford v. The Hartford Bridge Co., 10 How. 511, is also cited. The town of Hartford owned a ferry over the Connecticut river from 1681 to 1783, at which time the legislature incorporated the town of East Hartford and
In The County of Richland v. The County of Lawrence, 12 Ill. 1, the question was this: Under a statute relating to internal improvements, a certain sum of. money had been paid to Lawrence county, as one of the counties that had by the law no railroad of canal passing through it. Rich-land county was created by detaching territory from Lawrence and Clay counties. After the county of Richland was created, the legislature passed a law directing that Law-rence county should pay out of the fund so received, to Richland county, such proportion of the fund as the population of Richland county, or that part of the territory taken from Lawrence county, as compared with the whole population, should show Richland county entitled to. It was urged that the statute making such division was in violation of the clause in the constitution of the United States forbidding the passage of any law by a state impairing the obligation of contracts. But it was held that the statute was not liable to the objection. Trumbull, J., in delivering the opinion of the court, used this language:
“ The money in this instance was appropriated out of the funds received by the State for purposes of internal improve
“Public or municipal corporations, however, which exist only for public purposes, and possess no powers except such as are bestowed upon them for public, political purposes, are subject at all times to the control of the legislature, which may alter, modify, or abolish them at pleasure." 2 Kent Com. 305 ; Bailey v. The City of New York, 3 Hill N. Y. 531.”
In Dennis v. Maynard, 15 Ill. 477, the question was as to the validity of a law by which a tax was imposed, to pay a debt incurred in the erection of a bridge, and to keep the bridge in repair, in a certain precinct. It was objected that the act was judicial and not legislative. The act was held valid. The court said, Scates, J., delivering the opinion: “ The State does not allow itself to be sued, but it may hear, investigate, and determine its own indebtedness, and
In The State, ex rel., etc., v. The County Court, etc., 34 Mo. 546, an act of the legislature was in question, which directed the appropriation- of a large sum of money, which had been raised by taxation by the county, to pay a portion of the police expenses of a city within its limits. The act was held valid. Bates, J., said:
“The money belongs to the county by virtue of acts of the General Assemby, and is expended under the direction of the same authority. Counties are subdivisions of the State, in which some of the powers of the state government are exercised by local functionaries for local purposes, in this instance and generally the functionary being the county court. The funds of the county are not strictly private property. They certainly do not belong to the citizens who may have contributed them. They are rather public property, the property of the State acquired from the people and the property in the county, and to be used and expended for the benefit of the same people and property. The General Assembly, having the legislative power of the State, deter
• The case of Grim v. Weissenberg School District, 57 Pa. St. 433, involved the validity of a law for the collection of assessments on persons and property to pay bounties. Grim paid his taxes under protest, and afterward sued to recover the amount back. While the suit was pending, an act was passed curing certain defects in the assessment, This law was also
In The Town of Milwaukee v. The City of Milwaukee, 12 Wis. 93, it was decided that the legislature had not the power, either directly or indirectly, to divest a municipal corporation of its private property, without the consent of its inhabitants.
City of Louisville v. The President, etc., of the University of Louisville, 15 B. Mon. 642, involved the question to what extent the legislature could control the property rights of the city: It was said: “ The city of Louisville, though itself, a civil institution created to be employed to some extent as an instrument of the government, was not and is not the government itself, but a distinct though subordinate being; and although, as a public corporation, it holds its existence and its peculiar forms and faculties at the will of the government of which it is an instrument, or in some sense a part, it is not so identified with it that all its acts and acquisitions must necessarily be ascribed to the government, or enure to its benefit, either in point of interest or of power. Louisville might hold property for herself and her corporators. She might contract with individuals or other corporations with respect to her peculiar interests, and might certainly contract with the State; and even if abolished as a corporation, the State would not thereby become the beneficial proprietor of her rights of property or contract, but these would remain subject to the uses for which she had lawfully acquired or appropriated them.”
In The State, ex rel. Board of Education of Oshkosh, v. Haben, 22 Wis. 660, it was decided that money raised in a city by.
After land had been taken for a road and paid for by the public, it was held that it could not, by act of the legislature, be taken from the public and donated to the former owner, without any consideration paid therefor; when the town authorities had taken the land for the purpose of a highway and paid the proprietor therefor, the right to the easement became a vested right in the public, and the public having received the land, and the proprietor the compensation, it became a fixed contract between them, and the provision of the constitution of the United States declaring that “ no state shall pass any law impairing the obligation of contracts” applied. The People v. The Commissioners of Highways, etc., 53 Barb. 70.
Whether counties stand on an equality with cities and towns, as corporations, may be doubtful. If they do not, then the cases cited, in which cities and towns were the corporations whose rights and powers were in question, would not be strictly applicable to the case which we are considering.
Judge Story says: “There is no doubt, as to public corporations, which exist only for public purposes, that the legislature may change, modify, enlarge, and restrain them; with this limitation, however, that property, held by such corporation, shall still be secured for the use of those for whom, and at whose expense, it has been acquired.” 2 Story Const., sec. 1393. The same language, in substance, was used by the same learned judge in Terrett v. Taylor, 9 Cranch, 43; and this language was referred to in Edwards v. Jagers, 19 Ind. 407. But neither of these cases involved the question concerning the powers of the legislature "over the property of a county or any other municipal corporation; as the case in Cranch related to the property of an ecclesiastical corporation, and that in 19 Ind. related to a private corpora
Of all the cases cited on both sides of this case, and we have examined them all, there is not one exactly like this
Can anything be urged against the justice of this law ? The money with which the stock was purchased was paid by all the tax-payers-of the county. The law proposes to return it to them, in the same proportions, in its new form, or if they do not apply for it, to vest it in the township for school purposes, a purpose clearly of a public nature. He who paid most is to own most. No provision could be pi ore
It is expressly decided in this case, that where there was a provision in the act by which the tax was authorized and the stock subscribed, directing the issuing of stock to those who paid the tax, in the proportions in which they contributed the money with which it was purchased, such provision was valid, and not liable to any constitutional objection. The part of the act in question in that case, relating to the distribution of the stock among those-paying the taxes, is very much like the act in question in this case, except that it is contained in the act authorizing the tax and the subscription, while this act was passed after the tax had been voted and collected, and the stock subscribed.
It should be stated as a fact which may have a material bearing on the question in this case, that the act of May 12th, 1869, does not provide how the stock to be subscribed for by a county shall be held, how it shall be managed, or to what purpose it or its dividends shall be applied. The legislature, apparently by design, omitted to make any specific appropriation of the stock or its dividends to any purpose. The way is, therefore, left open to a further act declaring what shall be done with the stock, etc., and to what
The judgment is reversed, with costs, and the cause remanded, with instructions to dismiss the complaint.
Concurrence Opinion
being unable to concur in the opinion and judgment pronounced by a majority- of the court, dissent therefrom and state the following reasons for their dissent:
The facts of the case and the questions of -law arising in the record sufficiently appear in the opinion of the majority of the court, and need not be re-stated. The cause was tried before Judge Vinton, who delivered a very able and exhaustive opinion in reference to the constitutionality of the law in question. We fully concur in the views expressed by the learned judge, and make his opinion a part of this dissenting opinion, and which is as follows:
This is a complaint for an injunction. I am asked to enjoin the defendant, as the treasurer of said county, from issuing such certificates as are contemplated by an act entitled “ an act to require railroad companies to issue stock paid for by taxes voted in aid of the construction of their railroads, to the tax-payers or their assigns, and to issue
I am not, I trust, insensible to the importance of the questions, and the magnitude of the interests, involved in this case.
I have given the subject the best examination I could in the time allowed me. If, in the conclusion to which I have arrived, I have erred, I am glad to know that the error can be speedily and effectually remedied by a higher court. I have done the best I could, and that, as I understand it, embraces my whole official duty.
Since the only question before me is one of constitutional power, it is manifest that a discussion of the fitness or unfitness of the members of the board of commissioners for the positions they hold is wholly out of place. Nor can the justice or injustice, policy or impolicy, of the act in question, have any thing to do with the solution of the question.
The question under consideration arises as follows:
In 1869 the legislature passed an act authorizing aid to the construction of railroads, by counties and townships taking stock in, and making donations to, railroad companies. Under this act, such steps were taken as resulted in a submission of the matter, whether a railroad appropriation should or should not be made in aid of the Lafayette, Muncie, and Bloomington Railroad Company, to a vote of the people of this county, which resulted in favor of such appropriation.
Section 14 of said act provides, that “ said board of commissioners may, after the assessment herein provided for, or any part thereof, shall have been collected, take stock in such railroad company, from time to time, in the name of the proper county or township, as the case may be, and pay therefor, when the same is taken, out of the moneys so collected as aforesaid, or they may donate such moneys to such company, for the purpose of aiding in the construction of such railroad, and pay the same over, from time to time, as the work progresses, as hereinafter provided.
As the taxes thus levied were collected from time to time and during the years 1871, 1872, and 1873, the board of commissioners subscribed and paid for stock in the Lafayette, Muncie, and Bloomington Railroad Company, a railroad corporation duly organized under the laws of this State. At the times such subscriptions and payments were made, said railroad company issued its stock certificates to the board of commissioners for six thousand six hundred and ten shares of stock, of the par value of fifty dollars per share.
It is claimed by the plaintiff’s counsel that this stock became and is the property of the county, and that her beneficial ownership cannot be taken away and given to private citizens for private purposes, as is attempted to be done by the act of December 17th, 1872, above referred to.
It is admitted on all sides that the plaintiff is a corporation.
Corporations are of various kinds, but the only division that need be referred to in this discussion is that of public and private corporations.
As to the latter kind, the law is well settled by a long line of decisions, commencing with the celebrated Dartmouth College case, that their rights, privileges, and franchises are protected from legislative interference by that clause of the
It is also well settled that a strictly public corporation (whatever that may be under the authorities) is wholly subject to the legislative control, except as to certain limitations as to proprietary rights.
In the case of Terrett v. Taylor, 9 Cranch, 52, Mr. Justice Story, in the only opinion delivered, uses this language: “ In respect, also, to public corporations which exist only for public purposes, such as counties, towns, cities, etc., the legislature may, under proper limitations, have a right to change, modify, enlarge or restrain them, securing, however, the property for the uses of those for whom and at whose expense it was originally purchased.” .
Again, in the Dartmouth College case, 4 Wheaton, at page 663, Mr. Justice Washington, says: “But the case of Terrett v. Taylor, 9 Cranch, 43, fully supports the distinction above stated, between civil and private corporations, and is entirely in point. It was decided in that case, that a private corporation, created by the legislature, may lose its franchise by misuser, or non-user, and may be resumed by the government under a judicial judgment of forfeiture. In respect to public corporations which exist only for public purposes, such as towns, cities, etc., the legislature may, under proper limitations, change, modify, enlarge, or restrain them, securing, however, the property for the use of those for whom, and at whose expense, it was purchased.”
In the same case, at pages 694 and 695, Judge Story says:
' “ It may also be admitted, that corporations for mere public government, such as towns, cities and counties, may in many respects be subject to legislative control. But it will hardly be contended, that even in respect to such corporations, the legislative power is so transcendent, that it may at its will take away the private property of the corporation, or change the uses of its private funds acquired under the
The limitation of the legislative power, as expressed by Judge Story, has been generally received and quoted as the true rule upon 'she subject. Thus, Chancellor Kent, in the second volume of his commentaries, at page 305, declares: “ In respect to public or municipal corporations, which exist only for public purposes, as counties, cities, and towns, the legislature, under proper limitations, have a right to change, modify, enlarge, restrain, or destroy them; securing, however, the property for the uses of those for whom it was purchased. A ipublic corporation, instituted for purposes connected with the administration of the government, may be controlled by the legislature, because such a corporation is not a contract within the' purview of the Constitution of the United States. In those public corporations, there is, in reality, but one party, and the trustees or governors of the corporation are merely trustees for the public.”
Judge Cooley, in his work on constitutional limitations, quotes the rule laid down by Judge Story, with entire approbation. Under the head “ Legislative Control of Corporate Property,” at page 233, he declares: “The legislative power of the State controls and disposes of the property of
This author then quotes the rule as laid down by Judge Story, and by Judge Washington, in the Dartmouth College case, and then proceeds as follows:
“The rule upon the subject seems to be this: When corporate powers are conferred, there is an implied compact between the State and the corporators that the property which they have the capacity to acquire under their charter shall not be taken from them and appropriated to other uses. If the State grants property to the corporation, the grant is an executed contract, which can not be revoked. The rights
Judge Dillon, in his work on municipal corporations, at page 85, holds this language: “ The weight of opinion seems to be in favor of the doctrine, that there may be, in such corporations, rights under contracts and grants which are beyond destruction by the legislature, though not beyond legitimate legislative authority and control; but in the present state of the decisions the subject can not be fairly said to be settled.”
I know of no American text writer who asserts a contrary view, and I know of but one decision, Darlington v. Mayor, etc., of New York, 31 N. Y. 164, where the legislative control is claimed to be quite without limit.
Before proceeding to the cases, so far as they exist, in which this rule has been applied, it will be well to examine our own decisions, to see whether they have recognized the rule laid down by'Judge Story; for if they have, notwithstanding its repudiation by so able a jurist as Judge Denio, in the case last referred to, I am bound' by it and its fair logical consequences.
In the case of Armstrong v. The Board of Commissioners of Dearborn County, 4 Blackf. 208, a case growing out of the re-location of the county seat, the rule as laid down by Story and Kent is quoted with approval. The court says: “ Our counties are all incorporated. They are public corporations, created for public political purposes; and the
' In Edwards v. Jagers, 19 Ind. 407, a case involving the validity of a clause in our constitution of 1852, authorizing the sale of county seminaries, Worden, Judge, speaking for the court, says: “ The language of the Supreme Court of the United States, in the case of Terrett v. Taylor, 9 Cranch, 43, is in point here. The court say: ‘ In respect to public corporations which exist only for public purposes, such as counties, towns, cities, etc., the legislature may, under proper limitations, have a right to change, modify, enlarge, or restrain them; securing, however, the property for the uses of those for whom, and at whose expense, tt was originally purchased.' ” This emphasis is Judge Worden’s.
In the case just quoted from, the corporation before the court, namely, the Switzerland County Seminary, was held to be a private eleemosynary corporation, and that its charter, and the rights accruing under it, were protected by the federal constitution. The point there ruled does not directly affect the question before me, but the limitation upon legislative supremacy, as announced by Story, is recognized with emphasis.
Numerous adjudged cases lay down this rule of limitation, but I shall not take the trouble to cite them, except as they may hereafter be referred to, to illustrate the application of the principle. In my j udgment, the rule is abundantly established by authority, and is founded in reason and sound policy.
Is this rule to be applied in this case ?
It is contended by the plaintiff’s counsel that, under our constitution and under the peculiar powers conferred upon county commissioners by the act providing for the organization of county boards, approved June 17th, 185 2, they are, as to certain powers conferred (including the power to acquire railroad stock), private corporations.
Section 5 reads: “ Such commissioners shall bé considered a body corporate and politic by the name and style of ‘The Board of Commissioners of the County of-,’ and as such, and in such name, may prosecute and defend suits, and have all other duties, rights and powers incident to corporations, not inconsistent with the provisions of this act.”
It is also contended that a distinction is to be drawn between such powers as are conferred upon the plaintiff for public purposes exclusively, and such as are conferred for the purposes of private advantage and emolument; that the former powers belong to the plaintiff in its public, political, or municipal character, but as to the latter, though the public may derive a common benefit therefrom, the plaintiff is, quoad hoc, to be regarded as a private corporation. This distinction is taken and maintained by numerous cases, though there are some that hold that no such distinction can or does exist.
If this distinction may be relied upon as the basis of a decision in any case where the powers of a public corporation are under review, it seems quite clear to me that it can be relied upon here. I say this upon the following considerations: the constitution of Indiana expressly forbids the State to become á stockholder in any corporation or association. Section 12 of article 11 reads thus: “The State shall not be a stockholder in any bank, after the 'expiration of the present bank charter; nor shall the credit of the State ever be given or loaned in aid of any person, association, or corporation ; nor shall the State hereafter become a stockholder in any corporation or association.”
The constitution in other parts of it, as construed by the Supreme Court, declares that counties may become stockholders in a corporation, if the stock is paid for at the time of the subscription. According, then, to the fundamental.
Now, the county levying a tax to create a fund with which to make a. donation to, or to take stock in, a railroad company, is using a power given it as a public corporation; but in subscribing for stock in such company, to be held for its private advantage and emolument, it may be acting as a private corporation. At all events, it is difficult to- see how a county holds such stock, in the strict sense spoken of in the books, as public property.
In legal contemplation, the board of commissioners of a county is the county (4 Ind. 315), and in my judgment, when such board acquires stock in a railroad company under the constitution and the act of 1869, it takes it and holds it, not strictly as an instrument of governmental agency, but as the trustee of the inhabitants-of the county; not as property held for state purposes, but as property held for the benefit of the people of the county.
I do not mean to say that the board of commissioners took and held this stock, to all intents and purposes, as an individual holds his property, for under the authorities I do not think such a doctrine is maintainable. But I hold that stock thus acquired by a board is not acquired or held for public purposes, in the sense that the power of the legislature over it is omnipotent.
But whatever may be said of the soundness of an argument or a decision based upon the double character of the plaintiff, the one- governmental, legislative, or public, the-other in a sense proprietary or private, I feel that I am standing on absolutely sure ground, when I rely upon the
Does this rule, fairly applied, render the act in question clearly and palpably in conflict with that clause of our state constitution which declares that no law impairing the obligation of contracts shall ever be passed ?
I think it is plain that the plaintiff acquired the stock in question by virtue of a contract with the railroad company. Here were two parties, the plaintiff on the one side, and the railroad company on the other, each competent to contract as to the subscription of stock. At all events, the plaintiff paid the money to the company, and the company in consideration thereof issued to the plaintiff the stock certificates in question; and as between them these acts created reciprocal rights and obligations. It is not questioned that the legal title to the stock certificates for a large number of shares of stock in the Lafayette, Muncie, and Bloomington Railroad Company was vested in the plaintiff in trust for somebody, at the time the act of 1872 was passed. Eor whom did the board hold this stock ? Who were the beneficiaries ?
The defendant’s counsel claim that, as to this stock, the plaintiff was the trustee for the persons who paid the taxes with which the stock was purchased, and that, therefore, the statute does nothing more than compel the trustee to execute the trust in favor of the beneficiaries, and that in this view the statute is not only valid, but highly just and commendable.
No authority was cited in support of the assumption that the tax-payers above referred to were the only beneficiaries, and I imagine none can be found, or the persistent diligence of the counsel would have supplied it. The inhabitants of the county are the beneficiaries. The corporation known as the Board of Commissioners of Tippecanoe County, in my judgment, is the trustee, as to the property in question and all other property which it has, or can by law acquire, of the whole people of the county. Property is taxed to support
But, as a matter of fact, are the persons designated in the act, as entitled to the stock, the only ones who contributed to its purchase ? Directly they undoubtedly are, but indirectly they certainly are not.
The three hundred and seventy-three thousand dollars voted to aid in the construction of the Lafayette, Muncie, and Bloomington Railroad, though nominally laid on the property of the county, was in fact a burden laid on the productive industry, on the labor, of the county. Tax burdens like this, though laid in the first instance on the property holden, distribute themselves on the entire labor of the community by a law as inevitable and uncontrollable as that which constrains water to find a common level. It is as impossible to ascertain, with any degree of certainty; who in reality shared the burdens of this tax, as it is to ascertain who bear the burden of the wholesale license tax to the United States government, nominally paid by O. W. Peirce & Co. This firm paid the tax to the government, but they charged the same, in whole or in part, upon the goods they sold, and these goods went charged with the same through
The assumption of law, that the persons described in the act are the only beneficiaries, and the assumption of fact, that they alone shared in the burden of the tax, are, in my judgment, wholly unfounded. The board of commissioners is the trustee of the inhabitants of the county, and the inhabitants of the county, not some of them, but all of them,' are the beneficiaries.
It was admitted in argument by the defendant’s counsel, that an act which should attempt to take this stock from the county, and give it to an individual for his own use, would be clearly beyond the legislative power. Yet what is sought to be done by the act in question, when stripped of the specious but unfounded assumption that the persons described in the act are the sole beneficiaries, is just what is admitted could not be done.
Could the legislature, under the rule limiting its power, as laid down by Judge Story and approved with emphasis by Judge Worden of our own Supreme Court, constitutionally divest the county of its legal and beneficial ownership in this stock, and give it to the individuals contemplated, to hold as their private property ?
If I am correct in the positions already laid down, the conclusion is inevitable, that the act in question, when viewed in the light of this rule, is unconstitutional and void. That the legislature might change the trustee or do many other things which need not be specified, so long as- the uses to which the stock was devoted are left intact, is admitted. But this act, divesting the beneficial ownership of the plaintiff, and investing it in individuals, converting the public county use to individual private use, is, to my mind, clearly and plainly beyond the legislative power.
Many authorities were referred to by the counsel on both sides during the able and protracted argument, as bearing more or less directly upon the question in hand. I have given them all such examination as I could, but I have neither the
I will, however, briefly allude to the case of The Town of Milwaukee v. The City of Milwaukee, 12 Wis. 93, relied upon as most strongly in point by the plaintiff’s counsel, and the case of Darlington v. Mayor, etc., of New York, 31 N. Y. 164, equally relied upon by the defendant’s counsel.
As to the opinion of Chief Justice Denio in the latter case, it has already been said, that it repudiates the rule of limitation so generally recognized by text writers and adjudged cases, including the cases in our own court. He arrives at the conclusion that the legislative power over the property of public corporations is entirely without limitation. In my judgment, his conclusion is opposed to the great weight of the authorities, and is not, if I may be allowed to say so, sustained by the force of sound reasoning.
The former case was decided by Chief Justice Dixon, and the question, as he put it, and which he discussed, must be admitted to be almost exactly in point in this case. The question that he examined was, whether the legislature could constitutionally take property that belonged to the town (township) of Milwaukee by purchase, and give it to the city of Milwaukee. He denies emphatically the power of the legislature to do this, and goes into a very elaborate and candid discussion of the whole question. But it is claimed that all Judge Dixon said on this subject was obiter, and ought not to have the force of authority. Blit the question was assumed to be in the case, and it must be admitted that its solution was decisive of it. The same criticism urged against this case as authority may be made with equal, if not greater force, to the decision of Judge Denio, in the case referred to. But whether what was said by Judge Dixon was said in the decision of a question necessarily before him or not, his argument is in my judgment sound, and his conclusion sustained by reason and the great weight of authority.
We fully endorse the conclusion thus reached by Judge Vinton. The primary and controlling question in the case is, whe'ther the stock subscribed by the board of commissioners, in the name of the county of Tippecanoe, became the-property of the county. The opinion of the majority of the court is based upon the theory that it did not, and it is manifest that if such theory is untrue, the conclusion based thereon is unsound and can not be supported. It is said in the opinion of the majority, that “the tax when collected does not go into the county treasury as such. It does not become the property of the county.” We controvert both propositions. The tax when collected does go into the county treasury and is retained by the treasurer until he is required, by the warrant of the auditor, to pay it out for the purposes for which it was levied and cob lected. Such warrant can only issue upon the order of the commissioners. It is provided by the twelfth section of the act authorizing aid to railroads, that such “ tax shall be collected in all respects as other taxes are collected for state and county purposes.” Taxes collected for state and county purposes are paid into the. county treasury, and are retained by the treasurer until paid out upon the warrant of the auditor. The difference is this, when taxes are collected for county purposes and paid into the county treasury, the money becomes a part of the general fund of the county, and may be expended for any legitimate county purpose; but the money collected under the railroad act is collected for a specific purpose and is held in trust by the county, until the ■ commissioners have either subscribed for stock or donated the money to aid in the construction of the railroad indi
We are unable to appreciate the distinction which is attempted to be drawn between the payment for stock out of
The constitutionality of the act of May 12th, 1869, was sustained upon the ground that the sixth section of article 10 of the constitution authorized a county to subscribe for stock in an incorporated company, on the condition that it was paid for at the time the subscription was made, and that this express grant of power carried with it, by necessary implication, the power to adopt such means as may be adequate to accomplish the end proposed. It is a settled rule of construing a constitution that a court should look to the history of the times and examine the state of things existing when the constitution was framed and adopted. When the section of the constitution in question was framed and adopted, which empowers counties to subscribe for stock in an incorporated company, there was in existence, and had been for more than ten years, a statute which reads as follows:
Is it not reasonable to suppose that the sixth section of article io was framed and adopted in view of and in reference to the existing law and long settled practice of the State, and that it was intended that when a county should subscribe for stock in an incorporated company, such county should hold such stock as individual stock was held in such company?
It is unreasonable to suppose that the framers of the constitution intended to provide that a county might use the money which had been raised by taxation, and by right belonged to all the inhabitants of the county, in paying for' stock which had been subscribed for, the title to which was to be vested in some other person. We think the true meaning of the constitution is, that when a county should subscribe for stock, the subscription should be made in the name of the county, and that the county should hold it as corporate property, and in trust for all the inhabitants of the county; that the county should be a stockholder and have a voice and vote in the management of the incorporated company, and that the commissioners of the county might sell and assign such stock, and that the proceeds of such sale should go into and constitute a part of the general fund of the county. The act of the 28th of January, 1842, provided that a county might take stock in such association, etc.
The act of the 14th of February, 1848, relating to the Ohio and Mississippi Railroad, provided, that “it shall be lawful for the county commissioners of any county in the State of
.The sixth section of article 10 provides that a county may subscribe for stock, etc.
The act of May 12th, 1869, provides that the commissioners shall subscribe for stock in the name of the county.
Is it not plain and obvious that the constitutional convention and the legislature intended that when money which had been raised by taxation was used in paying for stock subscribed for in an incorporated company, it should be taken in the name of the county and held and disposed of as other corporate property? We deny the power of the legislature to require or authorize a county to pay for stock with money which had been procured by taxation, and appropriate the •stock to a private use. If the legislature had possessed the power and had provided that the stock should be taken in the name of the sheriff of the county, the stock would still have belonged to the county, though held in trust by the sheriff! and could not have been appropriated to any private use. In such case, the sheriff would hold such stock charged with a trust so sacred that even the legislature'could not destroy it and convert it to private uses.
The opinion of the majority of the court seems to have been greatly influenced by the alleged fact, that the act of May. 12th, 1869, does not provide how the stock to be subscribed for by the county shall be held, how it shall be managed, or to what purpose it or its dividends shall be applied. The act of May 12th, 1869, provides, that the stock must be taken in the name of the county, and as it was paid for with the funds of the county, it must necessarily be held for the use of the county. It was wholly unnecessary that the said act should provide how it should be managed, or to what purpose it or its dividends should be applied, as ample provision had already been made for such management and use. Section 10 of article 6 of the constitution provides, that “the General Assembly may confer upon the.boards doing county
An act approved June 17th, 1852, provides, that there shall be organized in each county in this State a board of commissioners for transacting county business, to consist, etc.
It is provided by the thirteenth section of said act, that “ such commissioners in their respective counties shall have power at their meetings: 1. To make orders respecting the property of the county in conformity to law,” etc.
By the above act, the Board of Commissioners of Tippecanoe county was vested with full and ample power to manage and control the stock subscribed in the name of the county, and to appropriate to legitimate county purposes the proceeds or dividends arising therefrom. It is a settled rule of construction that the legislature is presumed to have in view, in the passage of a law, all existing laws relating to the same subject.
Having arrived at the conclusion that the stock subscribed in the name of the county of Tippecanoe became the property of the county, and that the right and title thereto was vested in the county, we proceed to inquire whether the legislature possesses the power to divest a vested right, or, in other words, to take from the county of Tippecanoe the property which belongs to her and give the same to private citizens for private purposes, thus defeating the public purpose to which it had been dedicated.
Before we proceed to .an examination of the authorities bearing upon the question under examination, we desire to express our appreciation of the fairness of the majority of the court in citing and quoting from authorities bearing upon both sides of the question tin dispute. This action of the court will greatly relieve us of labor; but the proper illustration of our views renders it necessary for us to make a brief reference to the authorities cited in the opinion of the court, and this we will do in the order in which the references are made.
Judge Cooley, one of the most eminent and distinguished writers upon constitutional law, deduces from all the author
The case of Darlington v. Mayor, etc., of New York, 31 N. Y. 164, goes further than any other American case in asserting the absolute and unrestrained control of the legislature over property belonging to municipal corporations, but in our opinion it does not -go far enough to sustain the constitutionality of the law in question. The question in that case was, whether the legislature possessed the power to make the property of the city liable to the payment of a judgment recovered against the city for damages sustained by a riot, and it was held that such power existed. The question was not whether the legislature could take the property of the city and give it to private persons, but whether the property of the city was subject to be sold upon execution to satisfy a judgment against the city. The court held that the property of the city was subject to sale upon execution to satisfy such a judgment, in the same manner and to the same extent as upon any other judgment. It is plainly inferable from the reasoning of the court, that an act would have been held unconstitutional which directed the appropriation of public property to private use. The learned judge says: "Let us suppose the city to be the owner of a parcel of land not adapted to any municipal use, but valuable only for sale to private persons for building purposes, or the like. No one, I think, can doubt but what it would be competent for the legislature to direct it to be sold, and the proceeds to be devoted to some municipal or other public purpose, within the city, as a court-house, a hospital, or the like.”
We do not doubt the power of the legislature to so far control the action and discretion of a municipal corporation as to divert public property from one public use to another
In our opinion, the above case does not support the opinion of the majority of the court, but sustains the view taken by us.
The case of The State of Maryland v. The Baltimore, etc., R. R. Co., supra, has but little application to the present case, for the reason that it was held that the payment of the million of dollars was not a matter of contract, but was a penalty imposed by the state, and that as the counties named had no vested right in such penalty, it might be released by the state. There can be no doubt as to the power of the state to release a penalty. The power was not called in question in the above case, but it was conceded that if it was a penalty and not a vested right, the state might release it.
The case of The County of Richland v. The County of Lawrence, supra, is clearly distinguishable from the present one. In that case, the money was donated by the state to Lawrence county, to be expended in the construction of bridges and repairs of the roads. Subsequently, a portion of Lawrence county was detached, and a new county was formed of that and a portion taken from Clay county, and the legislature directed that a portion of the money which had been paid to Lawrence county should be paid to Rich-land county, and expended therein in the improvements of roads and the construction of bridges, and the like. The effect of the act was to take from one county money which had been donated by the state, and direct the expenditure of the same for public purposes in another county, which had been in part formed out of the territory which had belonged to Lawrence county. This was not diverting public property to private use. The decision of the court was based upon the fact that the money had not been expanded. ■ The court say: “ Before its expenditure, we cannot doubt that the legislature had entire control over the fund, either to resume it altogether, -or to change the purposes for which it was originally designed to be expended.”
The case of Demis v. Maynard, supra, involved, in substance, the same question as in the preceding case and was mainly decided on that case.
The validity of the law was sustained, because the money which belonged to the county was directed to be expended for a public purpose within the county. There was no attempt on the part of the legislature to divert public funds to private use, as is done in the present case. The law, as we understand it to be, is stated with great clearness, accuracy, and force by the learned and very eminent jurist who delivered the opinion of the court, when he says: “ Whilst the legislature cannot take away from a county its property, it has full power to direct the mode in which the property shall be used for the benefit of the county.”
The only question decided in Grim v. Weissenberg School District, supra, having any application to the present case, is, that the legislature cannot impair the obligation of a contract and to that extent is opposed to the opinion of the majority of the court.
The case of The Town of Milwaukee v. The City of Milwaukee, 12 Wis. 93, deserves a more extended review than is given in the opinion of the majority of the court. The following extract from the opinion of the court has a direct and important bearing upon the question involved in this case. The court say:
“ The difficulty about the question is, to distinguish between the corporation as a civil institution or delegation of merely political power, and as an ideal being endowed with the Capacity to acquire and hold property for corporate or other purposes. In its political or governmental capacity, it is liable at any time to be changed, modified or
The same court, in the subsequent case of The State of Wisconsin, ex rel., etc., v. Haben, 22 Wis. 660, uses this language:
“ It is well settled as to all matters pertaining to vested rights of property, whether real or personal, and to the obligation of contracts, that municipal corporations are as much within the protection of the federal constitution as private individuals are. The legislature cannot divest a municipal corporation of its property, without the consent of its inhabitants, nor impair the obligation of a contract entered into with or in behalf of such corporation.”
■ The case of Bailey v. The Mayor, etc., 3 Hill N. Y. 531, was an action against the corporation of the city of New York for injuries occasioned by the negligent and unskilful construction of a dam on the Croton river, it appearing that the dam was a part of the work undertaken pursuant to the act for supplying the city with pure and wholesome water, and that It
“ If, as reason and observation prove, and as the authorities referred to assume, a municipal corporation may acquire property which does not thereby belong to the State, and may appropriate it to uses which the State can not defeat or control, it is not, in such acts of acquisition and appropriation, the mere instrument or agent of the government representing and acting for it, and these acts, though done under the authority of law, cannot be regarded as acts of the State or its government, or as a part of its administration, nor can they of themselves impart that character to the object of the appropriation, nor subject it to a legislative power which did not attach either to the object of the appropriation or to the property itself before it was appropriated;
Let us apply the principle above enunciated to the present case. Although the tax, which was levied to aid in the construction of the railroad, was levied and collected in pursuance of law, it was collected from the property and polls of the county, for the purpose of aiding in the construction of a work of public importance, yet, when such aid had been rendered, the public purpose of the law was accomplished, and the stock which had thus been paid for became the property of the county, and “ so far as the State is concerned, has all the attributes and is entitled to all the protection of private property.”
In the case of The Louisville, etc., R. R. Co, v. The County Court of Davidson County, supra, no questions of contract or divesting vested rights arose or were decided by the court, for the reason that the original act provided that the stock should be issued to the tax-payers in proportion to the tax paid by them. If the subscription had been made in the name of the county, and the stock issued to the county, the question would then have arisen as it does in this case, whether the legislature could have taken the property of the county and given it to private citizens of the county.
Upon that point, the language of the Supreme Court of Vermont, in Atkins v. The Town of Randolph, 31 Vt. 226, is very appropriate. The court say:
“ Since some early judicial notions of Chief Justice Gibson, no judge or court has intimated that the property of one person could be taken without his consent and transferred to another, either with or without compensation, merely by force of legislative enactment. In whatever form the question may arise, the uniform judgment of the courts of this country has settled that such would be unconstitutional and void legislation.”
In the same opinion the following language is used:
“ So far as a municipal corporation is endowed by law with
In Touchard v. Touchard, 5 Cal. 306, it is said: “ On the other hand, a corporation, both by the civil and common law, is a person, an artificial person, and although a municipal corporation has delegated to it certain powers of government, it is only in reference to those delegated powers that it will be regarded as a government. In reference to all other of its transactions, such as affect its ownership of property in buying, selling or granting, ,and in reference to all matters of contract, it must be looked upon and treated as a private person, and its contracts construed in the same manner and with like effect as those of natural persons.”
We have arrived at a very different conclusion, in respect to the weight and effect of the authorities bearing upon the constitutionality of the act in question, to what the majority of the court have. We think they satisfactorily and conclusively show that the act in question is unconstitutional and void.
A doubt is suggested in the opinion of the majority of the court as to whether the same principles of law apply to counties that do to cities. There is a difference as to the liability of counties and cities for injuries occasioned by the wrongful acts of the officers of such municipal corporations. The liability of cities is much greater than that of counties. But we have found no authority which holds that the legislature has any greater power or control over the property of
Finally, it is said in the opinion of the majority of the court that the act, the validity of which is involved, is eminently just and equitable, and the question is asked, what objection can be urged against it?
In answer to the question propounded, we urge the following objections:
1st. In our opinion the act is not only against natural right, but the spirit of the constitution, because it violates the obligation of contract and attempts to divest a vested right.
2d. It is an act of bad faith to such counties as have subscribed for stock in railroads in the name and for the use of the county.
3d. It is unfair to the voters of such counties as have imposed a tax upon their property and polls, under the act of May 12th, 1869, to aid in the construction of some railroad, and especially is such the case in reference to the county of Tippecanoe; for in that county the question, and the only one, submitted to the voters was, whether they were in favor of subscribing for stock in the name of the county. The result of the vote might have been very different, if the proposition voted upon had been that the voters should become stockholders in the railroad company in proportion to the amount of taxes paid, and that such stockholders should be individually liable for all labor done in the construction of said road that should remain unpaid after the assets of the corporation should have been exhausted.
4th. The act in question is unfair and unjust to the creditors of the railroad company, because it provides that the persons who shall become stockholders by virtue thereof shall hold the same relieved of any individual liability.
5th. The act in question will operate injuriously upon the railroad and upon the citizens of the county. When the county was the owner of the stock,' her voice and vote exercised a controlling and healthy influence upon the management of the railroad, and inspired confidence in the
6th. The act in question is a fraud and imposition upon the other stockholders. It is provided by section 38 of the railroad act of May nth, 1852, that “the stockholders shall be individually liable for all labor done in the construction of said road that shall remain unpaid after the assets of the corporation shall have been exhausted.” It is provided by the third section of the act of December 17th, 1872, “ that the stock so issued under the provisions of this act being involuntary in its character, no personal liability shall attach to the original holder thereof for any debt contracted by the railroad company.” The effect will be, that while the other stockholders will be individually liable for the debts of the railroad, they may have their voice stifled, and their influence in the mahagement of the railroad destroyed, By the voice and influence of stockholders who
7th. In our opinion, all such legislation will have a demoralizing and deleterious influence upon the people of the State, because it teaches a disregard for the sacredness and binding force of contracts and obligations, and makes the purposes and interests of a few persons paramount to the best interests of the community.
Believing as we do, that, under the constitutions of the United States and of this State, the legislature is prohibited from divesting or attempting to divest, without its consent, a municipal corporation of its rights of property lawfully acquired, we have felt it to be our duty to so declare and to state our reasons for such convictions at considerable length.
In our opinion, the judgment of the court below should be in all things affirmed.
Note,—Since the decision of this case, the case of Spaulding v. Town of Andover has. been decided by the Supreme Court of New Hampshire, to which we refer as strongly sustaining the views expressed in the opinion of the minority of the court.
Petition for a rehearing overruled.
Appealed to the Supreme Court of the United States.—Rep.