13 Barb. 63 | N.Y. Sup. Ct. | 1852
This cause comes before the court upon a demurrer, and under the rule which requires such issues to be first heard at a special term. The answer asserts that the only equivalent for the note which the plaintiff seeks to recover, was a canal revenue certificate, for the sum of $500, and that it was negotiated and passed to the plaintiff after it became due and payable. These facts are admitted by the demurrer to be true. Any good defense which the defendant had to the note in the hands of the payee, he may now urge against it in the hands of the present holder. If the certificate is void and without pecuniary value, then the note is without consideration, and its payment cannot be enforced. (Parish v. Stone, 14 Pick. 198, 217. Bank of Troy v. Topping, 9 Wend. 278. Slade v. Halstead, 7 Cowen, 322, and the cases there cited.) And we are thus brought to consider whether the certificate had any real or actual value, and whether the legislature had authority to pass the law under which it was issued. 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.
The fundamental principle of the English constitution, that the power and jurisdiction of the legislature “ is so transcendent and absolute, that it cannot be confined for causes or persons within any bounds,” does not obtain in this state. Written con
By the 10th section of the 7th article of the constitution, “ the state may, to meet casual deficits or failures of revenue, or for expenses not provided for, contract debts, 'but such debts, direct and contingent, singly or in the aggregate, shall not at any time exceed one million of dollars.” By the 11th section of the same article, the state may also in addition contract debts to repel invasion, suppress insurrection, or defend the state in time of war. And section 12 expressly declares that no other debts “shall be thereafter contracted by, or on behalf of the State, unless such debts shall be authorized by a law for some single work or object to be distinctly specified therein, and such law shall impose and provide for the collection of a direct annual tax to pay, and sufficient to pay, the interest on such debt as it falls due, and also to pay and discharge the principal of such debt within
The 2d section of the act directs the comptroller to prepare certain certificates, to be denominated “ canal revenue certificates,” in the manner specified in the 2d section of the act of 1831, in regard to the public stocks of the state, for any sums of money not less than $50. They are to be signed by the comptroller officially, and countersigned by any transfer agent appointed by him. They shall be made payable at such times —not exceeding twenty-one years from the date of their issue— as the comptroller shall designate, and bear an interest not exceeding six per cent, payable semi-annually, on such days and in such places as the comptroller shall direct. All the existing provisions of law in relation to certificates of stock issued by the commissioners of the canal fund, so far as they are applicable, shall extend to and be applied to such canal revenue certificates, and in respect thereto the comptroller shall perform the duties and possess the power which such commissioners possess and perform in respect to certificates of stock. Such canal revenue certificates shall also purport on their face to be issued by virtue of such act, and without any other liability or pledge on the part of the state, than such as is contained in the said act, of the surplus revenues of the canals, and they are to be redeemed, and
What then is the character of the transaction between the purchasers of the certificates and the state, and what is the relation which the contracting parties maintain towards each other ? In one of the printed arguments to which I have been referred, it is said the act “ asks no loan, invites no deposit, which in its terms creates a primary obligation to return what is deposited; but it provides for the sale of an article, of the right to receive certain moneys expected to accrue from a specified source, a sale for such a price as the purchaser chooses to give, not below a certain rate, without warranty or stipulation of any kind creating any obligation on the part of the vendor.” If this be a true exposition of the effect of the law—if the holders of the certificates have really and truly become the purchasers of the remainders of the canal revenues, then it certainly does not create a debt; because a mere sale implies no obligation on the part of the vendor, except a warranty of title in the thing sold. And without an obligation there is no debt. “ Sale is the transmutation of property from one man to another, in consideration of some price or recompense in value.” The right of property in the Subject of the sale passes from the vendor to the purchaser, and the right to the purchase money vests absolutely in the vendor. The same results follow a sale with the option to re-purchase at the same or a different price. Neither of these consequences ensue from the advance of the money upon the canal certificates. The right of property in the canal remainders does not vest in the purchasers of the certificates, and the right to the money does not vest absolutely in the state. The subject of the sale— if there be a sale—is the remainders of the canal revenues. And the law, and the sale of the certificates in conformity with the law, does not effect a sale of the remainders, because, 1. The purchasers have no common interest in the property alledged to be purchased. Each purchaser buys for himself, separately and independently of all others. Sales to the value of three millions have been effected. A sale of three millions more is to be effect
In the printed points and argument furnished upon -the hearing, it is also intimated that the transaction may be regarded as a mortgage of the remainders of the canal revenues, and that when a mortgage is given without any covenant or engagement to pay, no debt is created, and the only remedy is on the property mortgaged.” The legal principle cannotbe disputed, but the authorities cited to sustain it go very far, I think, to show that the contract under consideration lacks all the distinguishing features of such a mortgage. Culver v. Sisson, (3 Comst. 264,) was an action upon a chattel mortgage which transferred to the plaintiff certain goods and chattels for the purpose of securing the payment of the sum of $345,70, and to be void on payment of the money at a certain day, with authority in the event of nonpayment to sell and apply the proceeds to the payment of the money, rendering the overplus to the defendant. The court held that the plaintiff could not recover, because there was no acknowledgment of indebtedness, and no agreement, express or implied, to pay the money. That the mortgage might have been given to secure “ the debt of another, without intending to become personally bound for its payment.” In Salisbury v. Phillips, (10 John. 57,) Jacob Phillips, for the consideration of £12, assigned and transferred to Abraham Salisbury a lease, together with all his interest in the lands demised, with a condition annexed, that .upon payment of the £12, with the interest, at the time appointed, the assignment should be void. The money was not paid, and the action was brought to recover it, with the interest. Judgment was rendered for the defendant, the court saying the condition was exclusively for the benefit of the as
It is worthy of remark, that when the state proceeds to borrow money and contract a debt, the process is in all respects similar to that by which the money has been obtained upon the canal revenue certificates. The law creates the stock, and the certificates are sold in the market. They are signed by one or more of the officers of the government, are subject to transfer
The purchase of the canal revenue certificates has all the essential properties of a loan of money, and none of the properties of a purchase of the remainders of the canal revenues. The holders of the certificates have advanced their money to the state, at 'the request of the state, to be applied to the uses of the state. In return they have received—not a written conveyance or instrument of title to the canal remainders—but a written evidence of the sums advanced, signed by the chief financial officer of the government, acknowledging that it is to be repaid, and specifying the time when, and the public fund out of which it is payable. It does more than this: It declares that a compensation shall be paid for the use of the money advanced, part of it out of the principal sums advanced, and the residue out of the fund created by the remainders of the canal revenues; and it determines the times when this compensation is also payable. The payment of usance or interest at given times, and at a given rate, is one of the unerring tests of a loan of money. A loan is said to be that which is furnished for temporary use, with a condition that it shall be returned, or its equivalent, with a compensation for the use. The thing furnished is the money mentioned in the certificates; the time is the twenty-one years from the date when it is to be returned; and the compensation for the use is the six per cent, payable semi-annually. It is possible that
I am next to determine whether the provisions of the act of the 10th July, 1851, conflict with the disposition made of the remainders of the canal revenues by the 3d section of the 7th article of the constitution. The predominant objects of the first three sections of the 7th article are, the payment from the canal revenues of the canal debt, the general fund debt, and the completion of the Erie canal enlargement, and the Genesee Valley and Black river canals. Those who recognize and reverence the sovereign authority of the people, and their right to all the attributes of self-government, will not dispute their power to prescribe for themselves, in a written constitution of government, the means they would employ, the- manner in which, and the time when, they would proceed to accomplish those objects. Until the 1st of June, 1855, the sum of $1,300,000, in each fiscal year, and after that time the sum of $1,700,000 in each fiscal year, is devoted, by the 1st section, to pay the interest and redeem the principal of the canal debt until it shall be wholly paid. After complying with the requisition of the first section, and until the canal debt is extinguished, the sum of $350,000, in each fiscal year, and after the canal debt is • extinguished the sum of $1,500,000, in each fiscal year, is by the 2d section set apart from the canal revenues for the redemption of the principal and interest of the general fund debt, until the same shall be fully paid. After complying with the requisitions of the 1st and 2d sections, and the payment of the expense of superintendence and repairs, a sum not exceeding $200,000, out of the surplus revenues of the canals, shall in each year be paid to the treasurer to defray the necessary “ expenses of the state and the remainder of the revenues of the said canal 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 the Black liver canals, until the said canals shall be com
It may be useful in this connection to ascertain under what circumstances the law regards time as of the essence of an agreement, or as a condition to be observed in the execution of a trust. “ Time is not generally deemed, in equity, to be of the essence of a contract, unless the parties have expressly so treated it, or it necessarily follows from the nature and circumstances of the contract.” (2 Story's Eq. Jur. 776.) “ When a court of equity holds that time is not of the essence of a contract, it proceeds upon the principle that having regard to the nature of the subject, time is immaterial to the value, and is urged only by way of pretense and evasion. But that principle can have no application when, from the nature of the subject, the value is exposed to daily variation. (Doloret v. Rothschild, 1 Sim. & Stu. 590.) I do not see, therefore, why, if the parties choose even arbitrarily—provided both intend so to do—to stipulate for a particular thing to be done at a particular time, such a stipulation is not to be carried literally into effect in a court of equity. This is the real contract. The parties had a right to make it. Why then should a court of equity interfere to make a new contract which the parties have not made.” (Opinion of Baron Alderson in Hepwell v. Knight, 1 Y. & C. 415.) It is a general rule that a power cannot be exercised before the time in which it was the intention of the grantor of the power that it should be exercised. This was the principle assumed by Lord Coke; (Coke Litt. 113, a ;) and in Cox v. Day, (13 East, 118,) it was adjudged that when a power of leasing was given to B., to be exercised after the death of A., it could not be exercised during the life of A. (4 Kent's Com. 334. Vide also Blacklow v. Laws, 2 Ha. 40; Johnstone v. Baber, 8 Beav. 233,) where the power of the court of chancery to decree a sale of real property in anticipation of the time appointed in the instrument creating the trust is expressly denied. Time becomes a controlling question in determining when the absolute power of alienation of real, or the absolute ownership of personal estate is
The canals and the canal revenues were the common property of the people of the state. The three first sections of the 7th article pledge the principal portion of the revenues to the redemption of the public debt—a small portion to defray the necessary expenses of the government, and the remainder to the completion of the unfinished canals. In the payment of the public debt, and in defraying the necessary expenses of the gov-
Brown, Justice.]
Judgment is given for the defendant, with leave to the plaintiff to withdraw the demurrer and answer within twenty days, on payment of costs.(a)
(a) Affirmed on appeal to the general term.