Newell v. People Ex Rel. PhelpsNewell v. People Ex Rel. Phelps
This case comes before the court on a mandamus, directed by the supreme court to Newell, the auditor of the canal department, commanding him to draw his warrant as auditor, upon the treasurer of the state, for the payment of a draft for $110, made by one of the canal commissioners in favor of Shippey, a contractor to construct certain culverts on the Erie Canal, and endorsed by him to Phelps, the
Having, after a careful examination of the case, come to the conclusion that the act is, in its main provisions, unconstitutional and void, it is unnecessary to decide whether the contract with Shippey was regularly approved and perfected. The decision of the second question disposes of the whole case.
The constitution,
By section 2 it is ordained that, after complying with the provisions of the first section, there shall be appropriated and set apart out of the surplus revenues of the state canals in each fiscal year, commencing on the first day of June, 1846, a further sum as another sinking fund, to pay the interest and redeem the principal of that part of the state debt called the general fund debt. The sum thus appropriated and set apart by section 2, was $350,000 in each fiscal year, until a sufficient
By section 3, it is ordained that after satisfying the requirements of the first and second sections above mentioned, “there shall be paid out of the surplus revenues of the canals to the treasury of the state, on or before the thirtieth day of September in each year, for the use and benefit of the general fund, such sum, not exceeding $200,000, as may be required to defray the necessary expenses of the state; and the remainder of the revenues of the said canals shall, in each fiscal year, be applied in such manner as the legislature shall direct, to the completion of the Erie Canal enlargement and the Genesee Valley and Black River canals, until the said canals shall be completed.”
The third section contains a further provision, that after the general fund debt shall be paid, or the canals shall be completed, then the sum of $672,500, or so much thereof as shall be necessary, may be annually appropriated to defray the expenses of the government.
The first objection to the validity of the act of the 10th of July, 1851, and the only objection which it would seem necessary to discuss, is this: That the act directs the borrowing upon interest of nine millions of dollars upon canal revenue certificates, payable out of the future surplus revenues after the completion of the canals; and further provides for the application of the whole sum to the completion of the canals within three years. This is repugnant to the mandate in the constitution that the remainder of the revenues of the canals shall, in each fiscal year, be applied to the completion of the canals until they shall be completed. And if the act should be carried into effect, it defeats and annuls another clause in the constitution above quoted, by which a power is given to the legislature to apply the remainders of the revenue to the general
In the language of this constitutional mandate, there is no obscurity. We know what is meant by “the remainder of the revenues of the canals.” It is the annual residue of their net income, after having set apart the sums pledged by the constitution for the specific purposes previously mentioned. This remainder has averaged for five years preceding the 30th September, 1837, more than $800,000 annually
The manner in which these remainders are to be applied is left by the constitution to the direction of the legislature, and so far as respects the manner of their application the power of the legislature is unlimited. They may apply each remainder as it accrues to such portion of the enlargement of the Erie Canal, or to the completion of either of the others, as they may deem expedient. They may divide it among the other three, or they may apply the whole to either one. They may direct the width, depth and shape of the trunk of the canals, and the dimensions and mode of constructing the locks. All this relates to the manner of applying the money, and it is therefore within the power conferred on the legislature.
But the manner in which the money is to be applied is one thing; and the time when the application is to be made is another and a different thing. The difference between the manner in which a thing is to be done, and the time when it is to be done, is obvious to the plainest understanding. The mechanic who mends a shoe comprehends it as readily as the contractor who constructs a canal, or the convention which frames a constitution. The distinction can not be reasoned down or even obscured by argument. It perpetually recurs to the mind, whatever attempt may be made to obliterate it. The principal may instruct his agent specifically and strictly as to the time when the agency is to be executed, while he leaves the manner in which it is be performed to the discretion of the agent; or he may give special directions to his agent as to the manner in which a work is to be done, while he leaves the time to the agent‘s discretion. But in either case it is the
The remainder of the revenues “shall, in each fiscal year, be applied,” c. The remainders are annual, separate and successive; and if the remainder be applied in each fiscal year, the application must also be annual, separate and successive. The constitution is disregarded if a year is suffered to pass without the application of a remainder to the purpose specified; and it is disobeyed if by intentional anticipation more remainders than one are applied in the same year. The words are “the remainder” (in the singular number) “shall in each fiscal year be applied;” thus requiring each remainder to be applied successively as it accrues. The direction is not that the remainder shall be applied in some or any fiscal year, but in each fiscal year; thus speaking of and treating each remainder as a separate fund, to be applied by itself in its own year. The language of the constitution by thus fixing the time when each remainder is to be applied, precludes both anticipation and delay. The application can not be intentionally accelerated or retarded without disobeying the command.
This has been said to be too narrow a construction of the clause in question. But the first maxim in the construction of instruments is, “that it is not allowed to interpret what has no need of interpretation. When an instrument is worded in clear and precise terms — when its meaning is evident, and leads to no absurd conclusion — there can be no reason for refusing to admit the meaning which the words naturally import. To go elsewhere in search of conjectures in order to restrict or extend it, is but to elude it. If this dangerous method be once admitted,
This meaning of the clause under consideration is undoubtedly too narrow to admit of the consolidation of the separate and successive remainders of the revenue, for a number of years, into one fund, for the purpose of applying the entire fund at once, or within three years, for the object to be accomplished. Before this can be done we must blot out the words “in each fiscal year,” which fix the time when each remainder is to be applied. In the language of Mr. Justice Bronson, in The People v. Purdy (2 Hill, 32): “For one, I dare not venture on such a course. Written constitutions will soon come to be regarded as of little value if their injunctions may be thus lightly overlooked; and the experiment of setting a boundary to power will prove a failure. We are not at liberty to presume that the framers of the constitution, or the people who adopted it did not understand the force of language.”
The direction contained in the constitution with respect to the time when the remainders of the canal revenues shall be applied to the enlargement and completion of the canals, is too clear and explicit to be disregarded, even if we were at a loss as to the motive and reason on which it was founded. But we are under no such embarrassment. The object and purpose of the convention can not be misunderstood. It was to prevent the contracting of debt for the completion of the canals; and to preclude any device or contrivance by which the state or its revenues should be subjected to the payment of interest on money borrowed, or revenues anticipated, for the completion of the canals. It is an undisputed historical fact, that for the last fourteen years at least, the state has been agitated by a great financial question in regard to the canals, and more especially in regard to the enlargement of the Erie Canal. This question was, whether the enlargement should be gradually carried on and completed by means of the surplus revenue of the canal, after satisfying the pledges to which it had been subjected, or whether it should be more speedily accomplished by means of money borrowed. In 1838, the policy of borrowing money
In 1842 the financial condition of the state had become embarrassed; the means in the treasury were not sufficient to satisfy the demands upon it; money could no longer be borrowed at the ordinary rate of interest; and the credit of the state had become essentially impaired. The cost of the public works had greatly exceeded the estimates upon which they were undertaken. The revenues of some of them had fallen far short of public calculation: instead of contributing to the resources of the treasury they were a burthen upon it. From these and other causes, the policy of the government in relation to the means by which the public works were to be completed, underwent in that year a total and radical change. All further expenditure on the public works, then in progress of construction, was suspended by law. A direct tax was laid, and such further loans at an unusual rate of interest were authorized as were necessary for the purpose of putting the treasury in condition to pay the demands upon it as they should become due; and a portion of the surplus revenue of the canals was devoted to the formation of a sinking fund for the redemption of the canal debt (Laws of 1842, chap. 114).
The enlargement and completion of the canals remained in a state of suspension when the constitution of 1846 was framed. The same financial question was agitated and debated in the convention. The revenues of the Erie Canal had in the mean time greatly increased. Together with the direct tax laid in 1842, they were abundantly sufficient to have paid the interest on the public debt, and to have completed the public works, within a comparatively short period. But the policy of speedily extinguishing the public debt prevailed in the convention over that of a speedy enlargement and completion of the canals. This is manifest not only from the debates and proceedings of the convention, but from almost every section of the financial article in the constitution. It is shown by the large sums devoted to that purpose out of the canal revenues; by the restraints imposed upon borrowing; by the prohibition against the release
No language can be better adapted to the carrying out and enforcing of this policy in the completion of the canals than that which requires each remainder to be applied in its own fiscal year. This direction is incompatible with a sale of the future remainders for the purpose of applying them out of their proper time; and equally so with the plan of borrowing on the credit of the fund, and applying the avails in mass. And it is incompatible with the expenditure of any portion of the remainder for the payment of interest, except in the single case provided for in the tenth section of article seven, by which, if the appropriation should exceed the revenue, a loan not exceeding one million may be contracted for the purpose of meeting the deficit.
By far the strongest objection to the borrowing of money for public purposes, arises from the obligation to pay interest on the loan. The debts thus incurred have usually a long time to run; and the interest often amounts in the end to a greater sum than the principal. In this respect it makes no difference whether the debt is contracted on the general credit of the state, or on the credit of a fund belonging to the state. When the interest on the loan is raised by a tax, it comes from the pockets of the people individually. When it is paid out of a fund belonging to the people, it is paid out of their common purse. In respect to the profit and loss of the transaction, the objection is as great to the one mode of borrowing as to the other. The chief object of the restraint imposed by the 12th section of article seven of the constitution, upon the contracting of public debt, was to protect the people against the exhausting burthen of paying interest. The fifth section authorizes a loan upon the credit of the sinking funds to procure means to satisfy the
It has been suggested that the remainders of the canal revenues can not be appropriated and applied during the fiscal year in which they accrue, because their amount can not be actually ascertained until the close of the year. If this were true, it would not, in the slightest degree, affect the question under consideration. It would prove nothing except that the year in which the remainder is ascertained, is the proper year for its application. The objection to the act of 1851 is, that it applies the revenues in mass, and not successively as required by the constitution; and if it be admitted that the year when the amount of the remainder is ascertained is the fiscal year to which the remainder belongs in respect to its application, the force of the objection remains undiminished.
But there is no impracticability nor indeed any difficulty in applying each remainder during the year in which it accrues. The revenue of previous years affords the basis of an estimate sufficiently accurate for the appropriation for the current or following year; and if there should be a deficit in the surplus revenue to meet any prudent engagement, made upon the faith of the appropriation, the deficiency may be supplied by a loan in pursuance of the 10th section of the 7th article of the constitution. This is understood to be in conformity with the practice of the government since the adoption of the constitution of 1846. Most of the appropriations in the United States government, and in this state, are made before the revenues out of which they are to be paid are actually collected. They are
The act of 1851 is also repugnant to the last clause of section 3, of article 7, of the constitution. By this clause it is ordained that “after the general fund debt shall be paid, or the said canals shall be completed, then the sum of $672,500, or so much thereof as shall be necessary, may be annually appropriated to defray the expenses of the government.” This power, conferred by the constitution upon the legislature, takes effect immediately upon the completion of the canals. It is a power to apply to the general expenses of the government, a part — a large part — of the subsequent remainders of the canal revenues which by the completion of the canals will be released from their pledge to that object. The power can not be exercised by the legislature until the revenue is released by the completion
One answer to this objection to the validity of the act, as given upon the argument, was, that the canals are not to be regarded as completed until the canal revenue certificates shall have been paid. This is an extraordinary proposition; a proposition not only at variance with the plain import of the language of the constitution, but in direct contradiction of the act of 1851. It has always been understood that the canals will be completed when the work shall have been done, and so the act of 1851 regards it. But for the purpose of reconciling the act with the constitution, we are required to reject the plain meaning of the words used, and to understand them in a newly invented sense; in a sense in which they were never understood either by the convention of 1846, or by the legislature of 1851. We are required to say not only that the canals are
It was not contended on the argument, and it can not be successfully contended, that the legislature of 1851 could control or defeat the exercise of a power which the constitution confers on a future legislature. It was even admitted that the disposition which the act of 1851 makes of the remainders in advance beyond two years from the passing of the act, was inoperative except as a pledge of the remainders. The act purports, however, to give explicit directions for the funding of the remainders, and to make an absolute disposition of the fund.
But if it is to be regarded only as a valid pledge, it defeats the execution of the constitutional power as effectually as an absolute disposition of the fund, unless it be admitted that the legislature may rightfully violate lawful pledges made by its predecessors. The design of the constitution was, that the remainders, subsequent to the completion of the canals, should be left subject to the disposition of the legislature at and after their completion; and they can not therefore be disposed of nor pledged until that time arrives, without subverting that design.
It is true that, if the remainders are applied annually according to the constitutional requirement, the canals can not be completed as soon as the end of the fiscal year in 1854, according to the plan of the act of 1851; and the revenues will not, until after that time, be released and made applicable to the
But the concluding part of the third section above quoted, is important in another point of view. It confirms the construction already given to the previous part of the same section, which directs the annual application of the remainders to the completion of the canals. The concluding clause shows that the completion of the canals and the release of the remainders from their application to that object, were events to happen at the same time. The release of the revenues was to be the immediate consequence of the completion of the canals. But this consequence can not follow unless the work is paid for as it progresses, by the annual application of the remainders as directed
The act in question is therefore invalid on the following grounds:
1. Because it is in disobedience of the command of the constitution, that the remainder of the canal revenues shall, in each fiscal year, be applied to the completion of the canals, until they shall be completed.
2. Because it applies a large portion of the revenues to the payment of interest on the loan which it authorizes; whereas the constitution requires the revenues to be directly and wholly applied to the work itself, as fast as they accrue, and therefore without the payment of interest on money borrowed, or revenue anticipated, unless upon a loan made in the case specified in section 10.
3. Because if the plan of the act is to be regarded as a loan on the pledge and credit of the revenues, and not on the general credit of the state, it is nevertheless forbidden by the spirit and intent of the 12th section of the 7th article, and is incompatible with the annual and direct application of the remainders required by the constitution. The remainders can not be made the basis of a loan, because, if applied as directed by the constitution, they can not be paid or pledged to the lender.
4. Because the act withholds the remainders of the canal revenues, after the completion of the canals, from being applied to the general expenses of the government, and defeats the power which the constitution vests in the legislature to devote them to that use upon the happening of the event specified by the constitution.
5. Because, if carried into effect, the act might, and in all probability would defer and postpone the application of these revenues to the general expenses of the government, beyond the time when the canals would have been completed by the successive application of the remainders.
I concur also in the opinion entertained by the majority of my brethren, that if this act should be carried into effect, it would impose an obligation upon the state to pay the canal revenue certificates in case the remainders pledged for that purpose should, by the course of future legislation, or from other causes, become insufficient.
There is no legal remedy to recover a debt against the state in favor of its own citizens. In general the state pays only by reason of its moral obligation. The fact that money borrowed under the authority of a statute is applied to the use of the state, creates of itself such an obligation as future legislatures would feel bound to respect. No one acquainted with the history of the legislation of this state can doubt that money borrowed under the act of 1851, if applied to the completion of the canals, would be repaid on the ground of this moral obligation, in case of a failure of the revenues. The provision contained in the 14th section of the act professing to limit the liability of the state, might give rise to objection and controversy; but sooner or later the claim would prevail, and could not be effectually resisted. It is, therefore, in this respect, an evasion if not a direct violation of the constitution.
The judgment of the supreme court should be reversed, and the application for a mandamus denied, with costs in the court below.
The question of the constitutionality of the canal
Before proceeding to the consideration of the principal question involved in these cases, it may not be amiss to advert very briefly to one or two topics which were urged upon our attention on the argument. For there may be found persons so little familiar with the grounds of judicial procedure, as to attach to them much more importance than they really deserve. These topics were presented to us under a great number of distinct heads, but are reducible to two. The one, that the governor and other state officers and two successive legislatures had been of opinion and had officially acted upon the opinion, that the act in question was not repugnant to the constitution. The other, that several gentlemen, occupying no official station, but of acknowledged learning and ability as lawyers and statesmen, had expressed opinions to the same effect. As to the first ground, although the action of the other departments of the government is always entitled to the respectful consideration of the judiciary, it can and ought to weigh nothing when it conflicts with their settled conviction of the requirements of the constitution. As to the latter ground, it seems quite obvious that we should be very forgetful of our duty, and of the obligation and responsibility officially imposed upon us, if we allowed our judgments to be swayed by the opinions of any number of men, however respectable.
Leaving these matters without further observation, let us turn to the main question which we are called upon to examine. The people of this state, in the exercise of their underived and sovereign authority, established the constitution. As part of the machinery of government under it, they created a senate
The provisions of the constitution which bear most immediately upon the question before us, are contained in
To look at the provisions bearing upon the first of these questions from the same point of view, and in the light of the same
When the convention assembled in 1846, these two financial schemes were fresh in the recollection of every one. That the difference between them is not formal, but of their very essence, may be rendered entirely apparent from a consideration of the results which would follow the adoption of each plan, taking, for the sake of illustration, certain assumed amounts for the revenues of the canals, and for the total cost of construction. These amounts are obviously wholly unessential, and in no way affect the principle of application. They are assumed, not because they are supposed to represent with accuracy the actual condition of the canals, or the probable results of the bill in question, but because they afford a striking illustration of the different results which may follow from the adoption of the one plan or the other. In order therefore to determine the question proposed, let us assume the annual remainder of revenues to be $500,000, and the total cost of completion $15,000,000. By the annual application of the remainders, the canals would certainly be completed in thirty years. What would be the result on the principle of anticipation adopted by the act in question? The annual interest on the loan of $9,000,000, at six per cent, is $540,000; the annual remainder applicable to its payment $500,000; and the annual deficit $40,000. So that
It is obvious, therefore, that the difference between these two schemes is not formal or modal merely, but is a difference in their very nature and essence. Having fruits so widely different, they do present a choice, and we might not unnaturally expect that a convention or any other body having to act upon the subject, would perceive the difference, and signify their choice. Does the section in question show that the convention and the people did choose between these two schemes?
Whether we are considering an agreement between parties, a statute or a constitution, with a view to its interpretation, the thing we are to seek is, the thought which it expresses. To ascertain this, the first resort in all cases is to the natural signification of the words employed, in the order and grammatical arrangement in which the framers of the instrument have placed them. If thus regarded the words embody a definite meaning, which involves no absurdity, and no contradiction between different parts of the same writing, then that meaning apparent upon the face of the instrument is the one which alone we are at liberty to say was intended to be conveyed. In such a case there is no room for construction. That which the words declare, is the meaning of the instrument; and neither courts nor legislatures have the right to add or to take away from that meaning. This is true of every instrument, but when we are speaking of the most solemn and deliberate of all human writings, those which ordain the fundamental law of states, the rule rises to a very high degree of significance. It must be very plain, nay, absolutely certain, that the people did not intend what the language they have employed, in its natural signification, imports, before a court will feel itself at liberty to depart from the plain reading of a constitutional provision. On this subject Chief Justice Marshall says, speaking
Applying these principles to the section in question, we are unable to see that the words “in each fiscal year,” are not placed in such connection with the residue of the sentence, as to convey the meaning which the convention and the people intended. We see no ground for thinking that a different arrangement of the words of the clause would be better calculated to express that meaning, and no ground for altering the arrangement, except a dislike of the meaning which is now clearly conveyed. The words in question, placed where they are, are full of significance, and say as plainly as language can, that the application of the remainders of revenue to the enlargement and completion of the canals, is to be made in each fiscal year, until their completion. The convention and the people have then chosen between the two schemes of finance of which we have spoken, both of which had been tried and their results ascertained. Taught by experience, they selected that scheme which they saw ensured success, avoided debt and facilitated economy — the scheme of paying as the means of payment should be produced from the revenues of the canals.
It is however contended, that conceding the words “in each fiscal year” to be so placed as to convey the meaning which
If the words of the constitutional provision had been “in such manner as the Canal Board shall direct,” no one would have supposed that board entrusted with the power to get up such a financial scheme as the act in question contains. No one would have doubted that the clause fixed, in the first place, the thing to be applied, viz.: the remainders of revenue; next, the object to which they were to be applied, the enlargement and completion of the canals; and next, the time of application “in each fiscal year until the canals shall be completed.” And no one would have hesitated to admit that the discretion conferred by the use of the words “in such manner as the canal board shall direct,” had reference to other points than those which had thus been fixed. Now it was never heard of as matter of law that the character of the agent had any thing to do with the extent or nature of the power conferred upon him That depends altogether upon the terms in which it is conferred, and not at all upon the character of the agent. This proposition is abundantly plain, and in general terms would scarcely be denied by any one. Yet the position we are examining is founded upon its practical denial, on the notion of the sovereignty of the legislature, which, although entirely accurate in reference to the parliament of Great Britain, as to which body it was first announced, has a very limited application to legislative bodies existing under and subject to the provisions of a written constitution. That the legislature possesses the legislative power of the state under the constitution is true; but this does not touch the question of the extent of that power. That depends upon the restrictions which the
In respect to the revenues of the state, the legislature has not been entrusted by the people with unlimited power. On the contrary, the limitations to be placed on its power seem to have called for and received the anxious attention of the convention. The whole scope of the 7th article of the constitution manifests the most careful purpose to assign limits to a power which would otherwise be unrestrained. These restrictions, it is to be remembered, are imposed by the sovereign power upon one of the agents it has constituted to carry on government. We are not at liberty to think that restrictions upon the power of the legislature are unnecessary. The fact that such restrictions are contained in the constitution under which we sit, is, for us, conclusive proof that these restrictions are necessary. Nor can we regard them as unwise, or against a liberal and enlightened policy, and therefore to be evaded or construed otherwise than according to the spirit and policy of the provision themselves. If that policy differs from any other line of policy, then the latter is that which we are bound to avoid. The policy of the constitution is, for us, liberal enlightened, wise, and must be sustained by us so long as it remains embodied in the fundamental law.
Under the constitution, the thing to be applied to the enlargement of the canal is revenue — money. It is that which is to be applied; not something else, the product of the use of that money. It is to be applied, moreover, in each fiscal year.
The application is not to be delayed by accumulation, nor hastened by anticipation, but is to proceed year by year, using the revenues of the year for the work of the year, until the canals shall be completed. We are not at liberty so to construe the discretion conferred on the legislature as to the manner of application, as to bring it into conflict with the time of application which the constitution expressly specifies. The act in question provides that after 1854, the remainder of the revenues shall be applied, not to completing the canals, nor conditionally in case the canals shall then be completed, but
We might with entire confidence rest the determination of these cases upon the grounds which we have already considered; but we think it proper also to consider the question whether this act does not purport to authorize the creation of a debt against the state, within the meaning of the prohibitions contained in the 7th article of the constitution. In considering that question, we will for the present omit to take into account the latter part of the 14th section of the canal act, because, if that has the effect ascribed to it by the counsel who maintain the constitutionality of the law, then it matters not what obligation the residue of the act seems to create, though it be the incurring of a debt in the most direct and unequivocal form. Even if the act and the certificates contained a positive promise to pay, and a pledge for payment of the faith of the state and of all its revenues, this clause in the 14th section would, in their view, prevent the act from being unconstitutional. Confining our attention at present, however, to the inquiry, what obligations, if any, are assumed by the state in case the provisions of the act are constitutional, let us consider the extent and nature of those obligations. For if the act creates any obligation which is to be regarded as a debt, within the meaning of the constitution, then even if we might have thought the scheme a mode of application, within the meaning of the 3d section of the 7th article, looking at that section alone, we should nevertheless be bound to construe the two sections together, and hold that the 3d section did not intend to authorize what the 12th section forbade.
If language has any meaning, the legal effect of the act, if valid, is at least to devote so much of the surplus revenues of the canals as shall actually be received after 1854, to the creation of a fund to pay the canal revenue certificates and the
It may be objected that there is a distinction between a pledge of the revenues of property owned by the state and of the revenues to be derived from taxation; but the distinction does not affect the question. Whatever consumes the revenues of the property of the state, tends to render a resort to taxation necessary just to the extent to which the revenues from property have been consumed. It is therefore a matter of entire indifference whether one or another part of the resources of the state is drawn upon; for the substantial effect upon the financial condition of the state is the same in either case. If the constitutional provision against incurring debts permits such a scheme as this to be effectual, it is of small moment to inquire what it prohibits; for it provides no practical restraint whatever upon the power of the legislature. To attribute such an intention to the convention or to the people as to permit the one and prohibit the other, is to attribute to them an entire incapacity to comprehend the subject on which they were acting, and the effect of their own language. It is construing the constitution as if it were a penal statute, or a disfavored agreement in conflict with public policy, rather than as being the supreme law of the state, prescribed by the immediate source of all authority, to set bounds to the power delegated to its agents.
National or state debts assume a great variety of forms. Sometimes they take the most usual form of private debt — an obligation to pay the principal at a specified period, with interest in the mean time. Sometimes the period of payment of the principal is wholly at the election of the government; while at others the government is at liberty to pay at any moment after a fixed period. Sometimes the principal is not to be paid at all, but only a perpetual annuity, and sometimes only an annuity dependent on a life or lives, or for years. In short, these obligations assume every form which can tempt the possessor of money to part with it to the government, and are varied from time to time as one or the other seems most likely to accomplish the purpose of putting out promises and getting money in return. In all these forms, one common attribute is found, and one only; viz: that in consideration of money advanced to the state, the state promises whatever it is thought will be most likely to procure money to be advanced, it matters not what; and that which is thus promised is a debt. It may relate only to the income of particular property, or it may embrace the whole resources of the state. The extent of the obligation does not affect or qualify its nature. So long as there is an obligation assumed by the state, it constitutes a debt — something due from the state.
Again, if in the natural and expected course of events a period will come when the promises made by the certificates in question will ripen into a perfect obligation on the part of the state, then the issue of them conflicts with the prohibition of the constitution as clearly as if the debt arose immediately upon their being signed. When remainders of revenue from the canal shall have been received into the treasury of the state after 1854, the obligation of the state will have become perfect to pay upon these certificates the amount so received. It is true the payment can not be made without further legislative action, nor could it be if the certificates were immediate and general obligations on the part of the state. An appropriation is always necessary to effect actual payment, but the obligation is as complete without the appropriation as with it.
There is another view in reference to the obligations assumed by the state, which clearly shows that they amount to a debt. The 9th section of the act appropriates $540,000 to pay
It remains to consider the effect of the last clause of the 14th section of the act. This provides as follows: “The certificates to be issued under the act shall in no event or contingency be so construed as to create any debt or liability against the state, or the people thereof, within the meaning of section twelve, article seven of the constitution.” The section of the constitution referred to had already rendered it impossible that the certificates should create any debt or liability against the state or the people, and a legislative provision of this sort was not necessary for the protection of that instrument. Is its effect to preclude us from inquiring whether the certificates, or the provisions of the act taken in connection with the certificates, purport to create a debt or liability against the state or the people thereof? We think not. It does not alter, or profess to alter, any one provision of the act. It leaves them all standing on the statute book, with the apparent force of law, and with the sanction of legislative approval, forming together a single scheme for raising money, on the faith of which capital is invited to assist the state. Under this state of things, can we be asked to take the ground that the state is to be regarded as coming into the money market, with a cunningly devised plan of promises, seemingly efficacious, but really known to be wholly unlawful and incapable of conferring any legal right, and by such means seeking to procure the advance of money? The respect which we owe to the legislature forbids us to listen for one moment to the suggestion. The clause in question is
In conclusion, we have seen that the act under consideration, in its material provisions and general scope, conflicts with the constitution of the state. Its provisions constitute a single financial scheme, and must stand or fall together. We have not been entrusted with the power of determining whether the policy of the constitution is wise or not. Nor has any discretion been given to us to enforce its provisions, or to refrain, as we may think the public welfare demands. Our duty is simply to declare what we believe to be the law, viz: that the act in question, being repugnant to the constitution, is void.
The judgment of the Supreme Court should therefore be reversed, and the mandamus refused.
Dissenting Opinion
Two questions are presented for our consideration in this case: 1st. Whether the contracts made by the letting board are valid and complete without the approval of
The first question is of minor importance — perhaps, if we are correctly informed as to the action of the legislature, of no moment whatever, except as to its influence on the decision of this particular case.
I have examined it, however, and am inclined to believe that the contracts were not valid, for want of the approval of the canal board.
The twelfth section of the act directs the canal commissioners, state engineer, &c., to contract for the completion of the Erie Canal enlargement, &c., upon such terms, and in such manner as the canal board shall direct and approve.
The return to the mandamus shows that the canal board have merely directed the terms in which the subordinate board shall contract, and that the canal board never have approved of the manner in which their directions have been carried out; never have inquired in what manner they have been attempted to be followed, nor whether they have not been entirely disregarded.
It is evident to me that it was the intention of the statute to require the judgment and decision of the canal board, and to commit to the subordinate board the mere executive duty of carrying out such decision. It is in no other manner that I can find aliment for the provision that the canal board shall “approve.” Their refusing to do more than than they have done, is, in effect, striking the word “approve” out of the statute. It was their duty to do more than merely direct the terms on which the contracts should be made. It was necessary for them to approve the manner in which it was proposed to contract. When they did that and approved of the action of the other board, and not till then, were the contracts valid and effectual. It is thus alone that full force can be given to all the provisions of the statute.
The other question involves the constitutionality of the law, and whether the contracts executed under it, even if duly approved, would be valid?
In examining this question, I shall inquire,
1. What is the scheme of the constitution?
2. What that of the statute? And,
3. Whether they are repugnant to each other?
And I enter upon the examination thoroughly imbued with the principle, that the task of determining that a law is void by reason of its repugnancy to the constitution, is at all times one of extreme delicacy: that it ought seldom, if ever, to be done in a doubtful case: that it is not on slight implication and vague conjecture, that the legislature is to be pronounced to have transcended its powers (Fletcher vs. Peck, 6 Cranch, 128): that it is only in express constitutional provisions, limiting legislative power and controlling the temporary will of a majority by a permanent and paramount law, settled by the deliberate wisdom of the nation, that we can find a safe and solid ground for the authority of courts of justice to declare void any legislative enactment (Cochran vs. Van Sarlay, 20 Wend. 382): that in construing the language of a constitution we have nothing to do with arguments ab inconvenienti, for the purpose of enlarging or contracting its import, the only sound principle being, to declare ita lex scripta est, to follow and to obey (People vs. Morrell, 21 Wend. 584): that there is no safe rule for construing the extent or the limitation of powers in a constitution other than is given by the language of the instrument which confers them, taken in connection with the purposes for which they were conferred (Gibbons vs. Ogden, 9 Wheat. 188): and that the opposition between the constitution and the law should be such that the judge feels a clear and strong conviction of their incompatibility with each other (6 Cranch. 188; 1 Cowen, 564).
When such an incompatibility is manifested, I agree with Ch. J. Marshall, whose sentiments I have already quoted, that the court, when impelled by duty to render such a judgment, would be unworthy of its station, could it be unmindful of the high obligations which that station imposes.
I proceed, then, to inquire,
What is the scheme of the constitution in that part bearing upon the question before us?
In order properly to understand it, we must become acquainted with the circumstances out of which its provisions sprung, and upon which it was designed they should act.
The Erie and Champlain canals, extending a distance of 427 miles, were completed in October, 1823, so far as to allow of their navigation to the whole extent. On the 1st of January, 1825, it was ascertained that their cost had been about $10,000,000, and the state was then owing a debt, contracted for their construction, amounting to $7,467,770.99. It was then already apparent that their revenues would be sufficient to discharge that debt at an early period. And as early as that date, there sprung up from these circumstances two conflicting systems of canal policy, which have more or less agitated our public councils for the last quarter of a century. One of them proposed an extensive scheme of internal improvements, involving the construction of many other canals, and the expenditure of many millions, which were to be obtained in the first instance by loans, and to be repaid out of the canal revenues. The other deprecated the creation of a debt, and insisted that such works could be safely undertaken and carried on only out of surplus revenues as they should accrue.
As one or the other of these systems of policy prevailed, and in the process of time each had by turns the ascendancy, our works of internal improvement advanced or halted, producing, however, in the mean time, as additions, the Cayuga and Seneca, the Crooked Lake, the Chemung and the Chenango canals, adding many miles of canal to our public works, and involving the expenditure of many millions more. The means for these expenditures, also, were obtained by loans. No one, at that day, was bold enough to advocate the policy of an irredeemable debt, but all looked forward to an early extinguishment of whatever might be contracted. This sentiment prevailed in the constitutional convention of 1821, and hence it was provided in the instrument which they framed, that the
During the ten years that ensued from 1824, the construction of five other canals had been authorized, and the canal revenues had already produced nearly enough to extinguish the debt that was owing in 1825.
On the 1st of January, 1835, the Erie and Champlain Canal debt was about $5,000,000; there was in the treasury accumulated from the revenues about $3,000,000, and it was evident that the revenues of the ensuing two or three years would be more than sufficient to pay the whole of that debt nearly ten years before it should become due.
At the same time the state owed a debt of over $2,000,000, contracted on account of the lateral canals, whose construction, as already mentioned, had been authorized within the preceding ten years, and an additional debt of at least $1,000,000 was anticipated to be necessary for their completion. The general fund, out of which alone the ordinary expenses of government were provided for, had been reduced by various drains upon it, from about $5,000,000 to about $200,000, so that it was evident that the ordinary expenses of government, which amounted to about $450,000 a year, must be provided for by resort either to the canal revenues, to a system of continual borrowing, or to direct taxation. The duties on auctions and on salt, which at that time amounted to $330,000 a year, and which by the constitution had been pledged to the payment of the canal debt, had been diverted for that purpose, from the general fund, to which they had once belonged, and where they had performed the office of contributing to defray the expenses of government. By amendments proposed to the constitution in 1832 and 1834,
Under this state of things, the legislature, at their session of 1835, directed the Erie Canal to be enlarged and a double set of lift locks to be constructed, and enacted that the cost of constructing, completing and maintaining the works, should be paid out of any moneys which might be on hand belonging to the Erie and Champlain canal fund, and provided that after 1837 the expenditures should be so limited as to leave from the canal revenues besides the auction and salt duties, an annual income to the state of at least $300,000. Thus appropriating out of the revenues previously pledged to the canal debt, five or six hundred thousand dollars a year for the ordinary expenses of government, and devoting the remainder of the revenues, when received and “on hand,” to the task of enlarging the canal; and clearly defining the policy of effecting the enlargement by means of earnings actually on hand, and not by contracting a debt for that purpose.
But in 1838 that policy was abandoned, and instead of it was adopted the policy of hastening the enlargement by loans. The sum of $4,000,000 was authorized to be borrowed that year, and that policy continued until 1842, when the whole debt of the state, over funds on hand, which in 1835 had been about $4,500,000 was now $24,674,000.
In the mean time, the construction of two additional canals had been authorized — the Black River Canal at an expense of about $1,000,000, and the Genesee Valley canal at the cost of at least $2,000,000, and the moneys raised by loans for their construction had been in part expended. In that year (1842) the canal policy of the state again changed. Alarmed at the
And when the new constitutional convention assembled in 1846, the enlargement of the Erie Canal, and the construction of the Black River and Genesee Valley canals were unfinished; the total of the liabilities of the state was $25,258,597.95; the canal revenues, derived from tolls and water rents since the completion of the Erie and Champlain canals, had exceeded the expenditure, on account of them, nearly $19,000,000; the nett revenue for the preceding five years had averaged a fraction over a million and a half dollars, with every reason to believe that in ten years’ time such nett revenue would exceed two millions and a quarter a year.
It was under such circumstances, and for such a state of things, that the constitutional convention of 1846 entered upon the duty of making permanent provision in relation to the finances of the state.
Each of the conflicting systems of policy already mentioned had its friends and advocates in that body and among the people, and they were distinctly presented to view when the constitution was framed and adopted.
These considerations must necessarily be borne in mind in examining the question now before us; for without them we can not know what were the purposes for which the constitution granted its powers or imposed its limitations, nor can we well comprehend the meaning or intention of the provisions it contains.
Such, then, was the subject on which the constitution was to operate, and the next inquiry is: What was its action on that subject? What rights, powers and privileges did it confer? And what obligations or restrictions impose?
In answering these questions in a becoming spirit of candor, it will never do to content ourselves with confining our attention to detached portions of the instrument, but its whole scope and tenor must be considered, and in such a manner that full force must be given to all its provisions.
Nor will it do to invoke the aid of the familiar, though not very well understood distinction between peremptory enactments, which must at all hazards be obeyed, and directory ones, which may be disregarded with impunity. The principle relative to directory statutes applied to a fundamental law, granting or limiting power, would be fraught with very dangerous tendencies.
Besides, when an enactment imposes an obligation to do or to abstain, its language is always imperative.
Keeping these principles in view, we find that this was the scheme of the constitution:
1. That no debt for the purpose of internal improvement, exceeding $1,000,000 should ever be contracted, unless sanetioned by the people, not speaking through the legislature, but voting directly on the subject at a general election:
2. That out of the canal revenues a certain amount should be set apart each year as a sinking fund, to pay the interest and redeem the principal of the canal debt then existing:
3. That a certain portion of the canal revenues should be set apart as a sinking fund, in like manner to redeem and pay the other debts of the state, and not comprehended in the term “canal debt:”
4. That after paying those sums, a certain amount ($200,000) should be annually set apart to defray the ordinary expenses of government; an amount not enough to meet all those expenses, but thereby relieving the people in some degree from the necessity of bearing direct taxation to carry on the ordinary operations of the government:
5. That the remainder of the revenues of the canals, after these objects should be accomplished, should, in each year, be applied to the purpose of enlarging the Erie Canal, &c.:
6. That after these debts were all paid, and those works all
7. And that whenever any debt should be contracted under the direct authority of the people, the same law which they should approve should impose a direct tax sufficient to pay the interest and redeem the principal within eighteen years.
Such, in a few words and in plain terms, are the provisions of the constitution on this subject. The next inquiry is, what are those of the act in question?
1. It appropriates the surplus revenues of the canal, for the years 1851, 2, 3 and 4, directly to the work of enlarging the canal, &c.;
2. It authorizes, by its peculiar machinery of canal certificates, the officers of the state to borrow $9,000,000, within three years, and expend that for the same purpose;
3. It directs that sum to be returned within twenty-one years, and in the mean time an interest, not over six per cent, be paid on it;
4. It pledges the surplus revenues for that period of twenty-one years to the repayment of that sum of $9,000,000, and the interest upon it; and
5. It does not submit the question to the electors to be passed upon directly at a general election, but instead of that, declares that the certificates shall in no event or contingency be so construed as to create a debt or liability against the state or the people thereof within the meaning of the constitution.
It only remains to inquire whether there is any incompatibility between the statute and the constitution.
1. This act of borrowing $9,000,000, and providing for its repayment within a certain time, with interest for its use in the mean time, seems to me to create a debt. No subtlety of reasoning, no refinement of argument have been sufficient to dispel from my mind this plain and simple idea.
It is said that it is not a debt, but merely anticipating the resources of the state as derived from the canals. Now, it seems
Then again it is said that it is no debt, because only a portion of the resources of the state are devoted to the repayment. Does the fact that every householder has certain property that is not liable for the payment of his debts destroy or even change the character of the obligation that rests upon him to repay money that he has borrowed.
These, and such like suggestions, which were made to us on the argument, have not had the effect to persuade me that borrowing money is not contracting a debt.
And, if I read aright, the national debt of Great Britain — the existence of which no one probably will, at this day, deny — was begun in the precise manner adopted in this statute.
Smith‘s Wealth of Nations (vol. 2, p. 449), says that “When the resource of borrowing on personal credit was exhausted, and it became necessary, in order to raise money, to assign or mortgage some particular branch of the public revenue, government has done this in two different ways. Sometimes it has made this assignment or mortgage for a short period only — a year, or a few years, for example — and sometimes for perpetuity. In one case, the fund was supposed sufficient to pay, within the limited time, both principal and interest of the money borrowed; in the other it was supposed sufficient to pay interest only, or a perpetual annuity equivalent to interest. When money was raised in the one way, it was said to be raised by anticipation — when in the other, by perpetual funding.
“In Great Britain, the annual land and malt taxes are regularly anticipated every year, by virtue of a borrowing clause constantly inserted into the acts which impose them. The Bank of England generally advances at an interest, which, since the revolution, has varied from eight to three per cent, the sums for which those taxes are granted, and receives payment as their produce gradually comes in. If there is a deficiency, which there always is, it is provided for in the supplies of the ensuing year. The only considerable branch of the public revenues which yet remains unmortgaged is thus regularly spent before
If then, it is a debt which this statute creates, it is in direct violation of the constitution, because it has never been submitted to or passed upon by the people.
2. It seems to me that the payment of interest on borrowed money, out of the canal revenues, was not intended by the constitution, because it tends to retard the advent of the period when the canal revenues can be applied to the general support of the government. Under this law, $540,000 a year, for twenty-one years, must be withdrawn from those revenues to pay interest on the $9,000,000 borrowed, and to that extent the appropriation, under section 3 of article 7 of the constitution, of $672,500 a year, to defray the ordinary expenses of government, must be postponed or affected, and to precisely that extent, a resort to direct taxation be rendered necessary to meet those ordinary expenses.
This consideration is not an unimportant one, for both in and out of the convention, and long prior to it, it was insisted by a portion of the citizens of the state, that they had derived no benefit from the canals, and yet funds belonging equally to them as to others had been expended for their construction, until direct taxation was necessary to carry on government, and they claimed that the canals should return those funds to the treasury, at least to the extent of avoiding taxation for the necessary expenses of government. Hence the appropriation in
Thus the constitution provided, by a regard to all the interests involved, and in a spirit of compromise, that the debt should be paid, the works completed, and the people at large be exempted from direct taxation, nnless by a direct vote, given at a general election, they should themselves impose such tax.
And I entertain no doubt that it was the intention of the constitution to afford to the people of the state, in due time, out of the canal revenue, a full protection against direct taxation for the support of government, by appropriating what the public works might yield to that purpose.
Whatever may be our individual views of the policy that prevailed in and characterized that instrument, it is our solemn duty, as a court, sacredly to preserve its compromises. And it requires no argument to show that any act diverting those revenues to the payment of interest, or any other purpose, from that thus clearly defined in the constitution, must be in derogation of it.
3. The plain language of the constitution in reference to the surplus revenues is, that they “shall in each fiscal year be applied to the enlargement of the canal,” &c.
Does this authorize them to be anticipated, so that they may be expended before the fiscal year in which they accrue? If it does, then, with equal propriety, they may be withheld a series of years from the object to which they are devoted, for if any deviation from the explicit injunction of the instrument is to be tolerated, it may be as well in one direction as another.
It seems to me that it was the intention of the constitution to adopt fully the policy of 1835, and have the contemplated works carried on just as fast and no faster than funds were actually on hand for the purpose; and that it would be as wrong for the state to delay the application of those funds on the one hand, as it would be to anticipate them on the other; as wrong to divert them to any other purpose as to encumber and consume them by the payment of interest.
It is the plain language of the constitution which brings me to this result, and here, as throughout, I am governed by the rule laid down by the supreme court of the United States, in Gibbons v. Ogden (9 Wheat. 184), that as men whose intentions require no concealment generally employ the words which most aptly and directly express the ideas they intend to convey, the framers of the constitution must be understood to have employed words in their natural sense, and to have intended what they have said.
I have thus been conducted to the conclusion that this statute, in its general scope and purposes, is incompatible with the constitution, and must be declared void.
I have not been unmindful of the consequences that may flow from such a result, and which were so strenuously pressed upon our consideration by one of the counsel. I see much in those anticipated consequences to awaken regrets, but nothing to justify me in construing the constitution otherwise than according to its plain import. It would be a dangerous principle to permit the consequences that may flow from correcting an infraction of the fundamental law to perform the office of perpetuating such infraction. “The constitution and laws of a state are the basis of public tranquility, the firmest support of political authority, and a security for the liberty of the citizen. But this constitution is a vain phantom, and the best laws are useless, if they be not religiously observed. The nation ought then to watch very attentively, in order to render them equally respected by those who govern, and by the people destined to obey.”
Such is the duty which now devolves upon this court in behalf of the state, and it ought to be performed with a fidelity commensurate with its importance.
Judges GARDINER and JEWETT concurred in the opinion of the chief judge and judges Johnson and Edmonds.
Dissenting Opinion
The appeal in this case presents but one question for our decision, viz: whether the act of the legislature entitled “An act to provide for the completion of the
The case was submitted while the argument was in progress in the case of George W. Newell, auditor, &c. plaintiff in error, against The People ex. rel. Erastus R. Phelps, defendants in error, which involved the same question; with the understanding that the argument in that case should be regarded as applicable to this.
The case of Newell against the People also involved another question, entirely subordinate to the one mentioned; the decision of which becomes unnecessary, in consequence of the views entertained by a majority of this court upon the main question, and which dispose of both cases.
As I have not been able to agree with my brethren who have united in declaring unconstitutional the law referred to, it is proper, and due to myself, to state the reasons which have led me to dissent from them.
The complaint in this case in the supreme court was upon a promissory note given by the defendant, Munson, to J. Watson Williams, or order, for $515, dated January 23d 1852, payable on the first day of February next, thereafter, at the Bank of the State of New York, and endorsed and transferred by Williams to the plaintiff Rodman.
The answer admits the making, endorsement and transfer of the note, as stated in the complaint, but avers that the plaintiff became the purchaser and owner thereof on the 6th day of February, 1852, and after the same was due and payable. It then sets up as a bar to the action, that the note was executed and delivered to Williams in consideration of the sale and assignment by him to the defendant, of a canal revenue certificate for five hundred dollars, issued by the comptroller under and in pursuance of the second section of the act before referred to, and for no other consideration whatever; setting out the certificate particularly, and alleging that the act is unconstitutional, that it gave the comptroller no authority to issue the certificate, which was therefore null and void, and that the note was therefore
To this answer the plaintiff demurred, on the ground that the matters therein stated did not constitute a defence.
Judgment was given, at the special term, in favor of the defendant, on the demurrer, which was affirmed on appeal to the general term. From that judgment of affirmance by the general term, this appeal is brought
The judgment in the court below, holding the note upon which the action was brought to be void, was upon the ground that the act in question, by virtue of which the certificate which constituted the sole consideration of the note was issued, was in conflict with the constitution; that the certificate created no valid claim upon the state or any of its revenues, was without pecuniary value, and was therefore incapable of becoming by its sale or assignment to the defendant, a valid or sufficient consideration for a promise.
That is the question now to be considered.
The act is confessedly within the general scope of legislative power, and must be held valid and operative, unless shown to be an act of legislation which is forbidden, either in express terms, or by plain and obvious implication, by the organic law of the state. It is not pretended that the plan or scheme for the completion of the canals contemplated by the act in question, is in terms prohibited; so far from it, one of the arguments urged against the law is, that such a plan never entered the minds of the convention who formed the constitution, or of the people who adopted it. The objections to the law are of a character resting in argument and inference. The substance of them is, that it can not be carried into execution without transcending or overturning certain provisions of the constitution. Such objections, if they are sustained, should be, and are, as efficacious to defeat the law, at if it was in plain and express terms in contravention of the constitution.
It has, however, become a maxim, that a statute, the object and provisions of which are among the acknowledged powers
In Fletcher v. Peck, the question was whether a statute of the state of Georgia was in conflict with the constitution of that state — and Chief Justice Marshall remarks, that “the question, whether a law be void for its repugnancy to the constitution, is, at all times, a question of much delicacy, which ought seldom, if ever, to be decided in the affirmative, in a doubtful case.” And again: “The opposition between the constitution and the law, should be such that the judge feels a clear and strong conviction of their incompatibility with each other.”
In ex parte M‘Collum, Chief Justice Savage says: “Before the court will deem it their duty to declare an act of the legislature unconstitutional, a case must be presented in which there can be no rational doubt.” In the case of Morris v. The People, Lott, senator, says: “The presumption is always in favor of the validity of the law, if the contrary is not clearly demonstrated.” And in the opinion in this case in the supreme court, his honor, Justice Brown, correctly remarks that “for all the purposes of this argument the authority must be assumed in the first instance, because the legislative power extends over all the known and recognized subjects of municipal regulation, unless restrained by some positive rule of the fundamental law. Those, therefore, who put the legislative authority in controversy, take upon themselves the burthen of showing the limitation or prohibition.”
In determining whether the law-making power has confined itself within its constitutional authority, there is this marked difference between the state legislature and the congress of the United States. The former is clothed with universal legislative power, excepting what is specifically withheld; while the latter possesses none but what is expressly granted, together with such as may become indispensable to their execution. An act of the
In the consideration of this case, therefore, I propose to examine the several objections to the constitutionality of the law in question, as they were presented upon the argument; and if any or either of them shall be found to be unanswerable, and such as to establish beyond a reasonable doubt that the statute in question and the constitution are incompatible with each other, the former must yield to the latter, and be declared void, whatever may be the consequences to the state or to individuals.
A variety of considerations conspire to admonish us against such a conclusion, productive as it must be of wide-spread and universal disaster, unless impelled thereto by the soundest logic and the clearest principles of interpretation.
1. The act in question was passed by a large majority of the people‘s representatives, upon a full and deliberate examination of the question of its constitutionality; and it has been ratified by a legislature subsequently elected by substantially the same people who chose the delegates constituting the convention which framed the constitution, and who afterwards approved and adopted it.
2. The executive of the state has given his sanction to the law, and the state officers have carried it into partial execution
3. A number of the most distinguished and able jurists and expounders of constitutional law have deliberately examined the question, without any supposable bias from professional employment, and have written opinions in favor of the validity of the law, which are clear and decided, and without the expression of a doubt.
4. Important rights, in a great multitude of cases, involving immense sums of money, have become vested under this law,
5. A large amount of the currency of the state is based upon the security of the canal revenue certificates, issued by the comptroller under the act, which is liable to be suddenly withdrawn from circulation, and thereby great confusion and derangement result to the pecuniary and commercial interests of the citizens. And, finally, a decision by this court, adverse to the validity of this law, will greatly delay a favorite and cherished object of the people of the state, upon the speedy accomplishment of which their prosperity greatly depends.
These considerations, either separately or collectively, I admit, are not controlling upon this court; yet it is not too much to say that they should lead us to the most profound circumspection, and induce us to require an exceedingly clear case before holding the law unconstitutional beyond a reasonable doubt.
The first objection to the validity of this law, is that it proposes to create a state debt in a manner not authorized by the constitution, but prohibited by that instrument. The objection is founded upon the
The question is, does it contemplate the creation of a state debt, in the proper and just sense of the term, and within the spirit of the twelfth section?
A debt, in its most general sense, is defined to be, that which is due from one person to another, whether money, goods or services; that which one person is bound to pay or perform to another; and it makes no difference, where the obligation is to pay money, whether it is payable out of, and limited to a specific fund, or whether the fund shall prove adequate or not, provided
I regard it essential to the idea of a state debt, that, by possibility, its satisfaction may directly or indirectly involve taxation, or require the application of funds of which the state has the unlimited control and disposition. If the fund out of which the payment is to be made, and to which the obligation is limited, be so circumstanced, that it can not be otherwise applied, and is connected with a preexisting duty on the part of the state to make the application, the contract superadds no obligation or burthen, and therefore creates no debt.
The only indebtedness of the state which, as I understand, is by any one claimed to be created by the act, on the supposition of its validity, arises in favor of the holders of the “canal revenue certificates,” issued under the second section. The same section declares that the certificates shall purport on their face to be issued by virtue of the act, and without any other liability, obligation or pledge, on the part of the state, than such as is contained in the act. These certificates are to be of the surplus revenues of the canals, which, by the
Section fourteen provides against any claim upon the state under the certificates, in case of failure of revenues from the canals, by reason of pestilence, deficiency of crops, or breaches or damages to the canals, or from any other cause; and declares that the state shall in no event be liable to make up any deficiency of revenue or to redeem the certificates, in any other manner, than out of the canal revenues of the state, as before directed for such purpose, and that the certificates shall in no event or contingency be so construed as to create any debt or liability against the state or the people thereof, within the meaning of
It seems quite manifest that the legislature intended to guard this enactment against the objection under consideration; and if they have failed of their object, it must be because of the inadequacy of language to express such intention, or by reason of some inherent principle, or the object and provisions of the law, which render it repugnant to the twelfth section of said financial article. If there be any such principle, object, or provision, I confess I have not been able to discover either.
The principle is the anticipation and accumulation of such of the canal revenues as the constitution devotes to the object, which is declared by the same instrument to be the completion of the canals. The provisions, so far as I can discover, are in perfect harmony with such principle and object, so far, at least, as the question of state indebtedness is concerned. The question whether these revenues may be anticipated, or be allowed to accumulate, belongs to another branch of the argument, and will be considered in its proper place. The government is bound by the law of its organization to apply them to this object, and the same law has determined the legislature
In ascertaining what is meant by a state debt, in the sense of the
In the execution of the act, a large number of creditors would be made; but in my judgment they would not be creditors of the state, or the state their debtor; certainly not in the sense of the restraining clause referred to. All obligations to them would arise upon the credit of the fund exclusively, beyond which they could have no claim upon any legal or equitable principle. All they would have a right to demand of the state
I know of no rule of jurisprudence or morals, nor of any theory of political economy, by which, in any given case, a man would have any superior or other claim upon the state, or by which the obligation of the latter would be greater or different than if the claim was upon an individual person. What would be due to the claimant must depend upon the intrinsic circumstances and merits of his case, and could not be measured by the nature or character of his adversary. In neither case should he receive more than he deserved, and that should be accorded to him in both.
The holders of the canal revenue certificates, and contractors under the act, are distinctly and repeatedly told, in the act, by the form and tenor of the certificates, and in the provisions of the contracts, that they are to look to the fund to be created by these remainders, and to no other source, for remuneration; and that the state is in no other event or contingency to be
With what propriety or show of justice, then, it may be asked, could the state be required to make good any deficiency, should there happen to be one, in the revenues, for the purpose of satisfying these claims? Such a demand might with entire fairness be met with an answer to the following effect:
“We offered to receive your money, or to employ you to do the work, upon certain terms and conditions, and in view of an expected state of things in the future, which you as well as we confidently believed would be realized; all of which you understood as well as we did. We possessed no knowledge of facts which were not accessible to you, equally with us. No deception has been practiced upon you. You have acted with your eyes open, with a view to your own interest, and with no regard to ours. We have in good faith performed the contract on our part, and if it has proved an unprofitable enterprise to you, it is not our fault, but your misfortune.”
If the legislature should make any allowance to the applicants in the case supposed, it would be done as a gratuity, and not in satisfaction of demands which could be enforced in a court of justice, provided the state could be impleaded there.
If these surplus revenues were under the control of the legislature in regard to the object of their application, as is the case in respect to many of the state revenues, the case would be entirely different. The certificates would then be a state debt, and the whole frame work of the bill would be a plain and palpable violation of the constitution.
There would, in that case, be an agreement to apply moneys when received, which belonged to the state, and under the control of the legislature, in liquidation of the certificates, without any preexisting obligation to do so, or to make any particular application of the fund.
That the existence or amount of the remainder are matters of uncertainty, would not render the transaction the less a state debt; because the whole scheme is founded upon the assumption that there will be remainders to some extent; otherwise the
But suppose it be admitted that the plan for the completion of the canals which the act proposes, does fall under the denomination of a state debt, of what consequence is it, in view of the objection under consideration, provided it is a debt created not by the act but by the constitution? The only way a debt can be contracted by and on behalf of the state, is by the action of the legislature, in the enactment of a law for the purpose. Where is the burthen created or debt contracted by the act, which the constitution has not authorized and directed? None whatever has been, or can be shown. On the contrary, it is perfectly demonstrable that, by the act in question, no duty or burthen is assumed beyond what the constitution itself imposes, and which the legislature is not at liberty to decline. As well might a contract to pay for a job on the canals out of a single ascertained remainder, which had been received and in the treasury, be regarded a violation of the clause of the constitution restraining the state from contracting debts. There is not, to my mind, the shadow of a reason in support of the proposition embraced by the objection.
The next objection to the validity of the law, is that the constitution limits the application of the annual remainders of revenue to the time when the canals shall be completed, and that the act allows of and requires their application, until the nine millions of dollars, to be raised by the sale of the canal revenue certificates, and interest thereon, shall be paid out of the fund to be raised by the accumulation of such remainders; which, according to the plan and object of the act, would postpone the application far beyond the time when the canals would be completed.
This objection proceeds upon the ground that by the expression, “until the said canals shall be completed,” is to be understood, the time when the canals are constructed and ready
If it were necessary, in order to vindicate the validity of the act, in view of the objection under consideration, I think it capable of demonstration that these remainders are applied to the completion of the canals long before their construction is finished. The act anticipates them, and makes the application before they accrue, to an amount equal to the aggregate of the certificates authorized to be sold, with the interest to accrue thereon. The constitution itself makes the application in reality, by setting them apart for the purpose declared.
To say that these revenues can not be applied to the completion of the canals, except by the act of paying out the money to contractors and agents, would be maintaining a view so narrow as to amount to a perversion of language, and defeat the object of the provision. The application is made, as far as the act makes it, in the creation of the fund provided for in the
The next objection relates to the application of the remainders to the payment of interest on the certificates. It is similar in character, and subordinate to the last, and if an answer has been furnished to that, it also disposes of this.
It will be proper in this connection to consider the question, whether the legislature, in obedience to the behests of the constitution, were at liberty to anticipate the future surplus revenues, with the view to the more expeditious accomplishment of the object to which they were devoted.
The only objection worthy of notice, which has been urged against it, arises out of the order of the words enjoining the duty. The requirement of the constitution is in the following language: “And the remainder of the revenues of the said canals, shall, in each fiscal year, be applied in such manner as the legislature shall direct, to the completion of the Erie Canal enlargement, and the Genesee Valley and Black River canals, until the said canals shall be completed.” The argument of some of those who urge the objection is, that the times in which the moneys are to be expended are here fixed and determined; that the time for expending each remainder, is the same fiscal year in which it accrues, or is earned by the canals in operation. The fallacy of this view it seems to me is perfectly apparent. It consists in its utter impracticability. There never can be an ascertained remainder until after the close of the fiscal year; because, by the first and second sections, and the first part of the third section of the seventh article, large sums are to be first deducted and taken out of the net earnings of the canals, and applied to other objects, and what may be left is to constitute the remainder. The sections referred to evidently contemplate this process, once at least in each year, and it can not be done until after the year has expired, because the last hour of the year may increase or diminish the amount, and then, further
I can conceive no way in which this can be done unless the canal commissioners shall let out a portion of the work for a sum, which shall correspond exactly with the amount of the remainder — not a dollar of it can go to the next year‘s work, and not a dollar of the next year‘s revenue can be anticipated. The work contracted for, must be completed the same year, or be paid for in advance. If in consequence of any accident or unforseen event, the work is unfinished at the end of the year, the contractor must forever go unpaid; and this rule must be observed every year, until the canals are finished — and all this, notwithstanding any inconvenience or sacrifice of the public interests, or the injustice to individuals which may result. Can any one in his senses deliberately entertain the belief that the constitution requires or admits of a construction, involving such folly and absurdity?
These difficulties have been attempted to be met and answered. It has been said that the canal commissioners may enter into contracts for the work founded upon an estimated balance or remainder, in advance of the time when it shall be ascertained; and if it proves insufficient to meet the contracts, provision is made in the
Admitting the tenth section referred to authorizes the state to borrow money to provide for a deficiency in the estimated surplus, how does it answer the case of an unexpended balance? Suppose the contracts made the first of October (assuming the fiscal year to commence on that day), founded upon an estimate of what the remainder will amount to at the end of the year, and the event shows the remainder to be $500,000 more than the estimate, what shall be done with the excess? It can not go into the next year‘s operations, because that would be not only delaying the work contrary to the spirit of the constitution, but would produce accumulation, which is quite as objectionable, even in the mind of the objector, as anticipation. If $500,000, or $100,000, or any other portion of one year‘s remainder, may be added to that of the succeeding year, there is nothing in the constitution to prevent hoarding the entire remainders for ten or twenty years, before commencing the work of completing the canals.
But the conclusive reply is that there is no authority in the constitution for entering into contracts, founded on remainders which do not exist, and which, as has been shown, can not exist until the expiration of the year in which they accrue, and then there would be no necessity for it, because the amount would be ascertained. The tenth section referred to, is therefore totally inapplicable.
It has also been said, that contracts may be entered into, which may in their execution reach beyond the year in which they are made, and involve the expenditure of a larger amount than the ascertained remainder in the treasury, and pledging subsequent remainders for payment. But that would be anticipation in every sense of the term.
It must be nearly inevitable, it seems to me, that there would be balances on hand to a greater or less amount, or that there would be a deficiency, at the close of each year. It is possible that the whole ascertained remainder of a year would either with or without the fault of those charged with the administration of the fund, be in the treasury for years. What would in that case be done with the money? If applying, necessarily means expending or disbursing, and the constitution requires that to be done each year, I do not see but such unexpended remainder or balance, by a sort of non user, would escape from its destined object, and go into the general fund to be appropriated to any other purpose the legislature might direct.
The plan contained in the act of anticipating the remainders, obviates every difficulty which has been suggested. By it they are in each fiscal year applied to the completion of the canals, by becoming, in virtue both of the constitution and of the act, attached to the fund created for the same object the moment they came into existence. The object of the constitution is thus secured, and the manner of the application, which is left in express terms to the legislature, in no way conflicts with any of its provisions. That this plan was never thought of by the framers of the constitution, proves nothing against it. It certainly was not forbidden, and the legislature was at liberty to adopt it.
The constitution indicates no plan or manner of applying the surpluses, but leaves it entirely to the discretion of the legislature. It directs the time when they shall be applied, and that is all. That direction, as has been shown, has been complied with.
The next objection in order is, that as the act assumes to authorize the application of the remainders, exclusively to the payment of the certificates and the interest thereon, for a long period of time after the completion of the canals, and until the nine millions of dollars and interest are fully paid, it will, if effective, deprive the legislature of the power conferred by the
To my mind there are several sufficient answers to this objection:
1. If by the first section of the act nothing is to be applied to the work of completing the canals, except what the constitution directs, then, surely, the difficulty which the objection anticipates, is imaginary. All the means contemplated for creating and continuing the fund, out of which the principal and interest of the certificates are to be paid, are those specified in the first section. That section is a mere echo of the constitution, and must of course be limited in its effect by a just and sound interpretation of the constitution.
2. The
While it can not be maintained as a general proposition, that one legislature can absolutely bind their successors, it is equally true that they may give pledges and assurances, in relation to the future action of those who come after them in power. The pledge, for good reasons, may not be fulfilled, or it may be repudiated, and the state disgraced; but this is never to be presumed, any more than if the state should borrow money on the faith of a law, directing a tax for its repayment, that a subsequent legislature would repeal the law, or refuse or neglect to levy the tax. And if the law under consideration contains a pledge, that no future legislature will make the diversion referred to of the revenues, it should be taken for granted, that the pledge will in good faith be observed. If no such assurance can be implied, it forms no part of the contract, its fulfillment can never with propriety be urged, and the objection falls to the ground.
It is furthermore objected that the act assumes to appropriate the canal remainders for more than two years, and without undertaking to specify any sum as the amount appropriated, contrary to the provisions of the
The said 8th section declares that no money shall be paid out of the treasury of this state, or any of the funds under its management, except in pursuance of an appropriation by law; nor unless such payment be made within two years next after the passage of such appropriation act; and that every such law, making a new appropriation, or continuing or reviving an appropriation, shall distinctly specify the sum appropriated, and the object to which it is to be applied, &c.
The thing here forbidden is the payment of money out of the treasury, &c., after two years from the passage of an appropriation act, specifying the sum appropriated, and the object to which it is to be applied.
I have examined the act in vain to find any direction or provision for the payment of any money whatever for any purpose except what is contained in the 8th and 9th sections; and there is certainly nothing in those sections in conflict with the provision of the constitution above referred to; but, on the contrary, they are in strict conformity with it.
The 8th section of the act appropriates $3,500,000, to be paid out of the avails of the sales of certificates, &c., to be applied to the completion of the canals during the year next after the passage of the act, and the like sum from the same source, for like object, during the second year next after the passage of the act. And the 9th section appropriates $180,000 for the payment of the first year‘s interest on the canal revenue certificates, and the sum of $360,000 for the payment of the second year‘s interest on the certificates, out of the same avails, &c. I can discover no other appropriations in the act; all its provisions which assume to dispose of the remainders, for a longer period than two years, amount to nothing more than a pledge or assurance for a faithful administration of the fund and can not be effectuated without further legislation. No future legislature could refuse or neglect to make the necessary appropriations to redeem the pledge, without proving recreant to their high duties, their oaths and their consciences; a supposition which is not to be admitted.
It is also objected that the act violates that clause of the constitution which declares that “the legislature shall not sell, lease or otherwise dispose of any of the canals of the state; but they shall remain the property of the state, and under its management forever” (
Assuming that a sale of the revenues for a series of years to come, would be regarded a partial sale of the canals, it must be shown, in order to give force to the objection, that the transaction amounts to a sale. I, for one, do not think it does; and it was urged as I think with entire success, by one of the counsel who argued against the validity of the law, that it lacked several essential ingredients of a sale. But, however this may be, whether it amounts to a sale or not, if the act does
It is likewise contended that the sixth section of the act, which requires the canal revenue certificates to be received as the basis of banking is repugnant to the
A sufficient and conclusive answer to this objection is, that the legislature are the exclusive judges of the sufficiency of the security to be taken, and it is not for the courts to call in question their judgment. If they deem these certificates ample security for the redemption in specie of circulating notes, their decision is final and can not be inquired into.
I have now gone through with a consideration of all the objections, which counsel have thought worthy of being presented, to the constitutionality of the act in question. My own mind is not perplexed with the slightest doubt in regard to either of them. I have attempted to meet them fairly and candidly, and have shown, as it seems to me, that they are separately and collectively entirely untenable.
In the conclusion to which I have arrived, I regret to find myself standing alone among the members of the court of dernier resort, who take part in the decision.
This circumstance, perhaps, should lead to a distrust of my own judgment, even if it fails to shake my confidence in the correctness of the views I have expressed. However this may be, I yield to the decision, if not willingly, yet respectfully.
WATSON, J. — Did not hear the argument.
GRIDLEY, J. — Was not present at the decision.
Judgment reversed and mandamus denied.