State v. McCauley

15 Cal. 429 | Cal. | 1860

Field, C. J. delivered the opinion of the Court

Cope, J. concurring.

On the twenty-first of March, 1856, an act was passed creating a Board of State Prison Commissioners, and constituting the Lieutenant Governor, the Controller and the Treasurer of the State such Commissioners. By the act, the Commissioners were, among other things, required to lease the State prison grounds and property, together with the convict labor, for a period of five years, at a price not exceeding $15,000 a month; and to provide, in any contract made by them, for the erection, at the expense of the lessee, of such buildings and improvements upon the property leased as would conduce to the convenient and safe keeping and working of the convicts, and to take from the lessee a bond in the penal sum of $200,000, with two or more good and sufficient sureties, to be approved by the Board, conditioned for the faithful performance of his contract.

Under this act, and assuming to be governed by its provisions, the Commissioners, on behalf and in the name of the State, on the twenty-sixth of March, 1856, entered into an indenture of lease with James M. Estill, by which, in consideration of the covenants and agreements contained therein on his part, the State granted and demised to him and his assigns, for the period of five years from that date, the prison grounds and property, together with the labor of all the convicts then in the prison, or who might be confined therein during the continuance of the lease, and agreed to pay to him the sum of $10,000 a month ; and the said Estill, on his part, covenanted and agreed, in consideration of such lease, and the payment of such monthly sum, to receive and take charge of the convicts then confined in the prison, or who might be thereafter confined during the said period; and to provide, under the direction of the Commissioners, the necessary overseers, guards and employes for the prison, and to furnish the convicts with suitable, proper and wholesome food, drink, clothing and medical attendance, and to treat them humanely, and with all the kindness consistent with their security and safety ; and to erect such, buildings, prisons and walls, and to malte such other improvements on the premises, as would conduce to the convenient and safe keeping of the convicts ; and to use due diligence for the capture and recovery of such as might escape, and to pay reasonable rewards for their apprehension and return. The lessee also further covenanted and agreed, for the same consideration, to release, and by the instrument did release, all claims against the State of California, -whether legal or equitable, which he held, arising from his former connection with the State, as the lessee of the prison and convict labor, or for property or materials sold to or used by the State officers or employes of the prison for the State; and also, a claim for $48,800 for property purchased by the State Prison Directors, or other State officers, from Archibald Wood, and to hold the State harmless from such claim; and also, a claim for two million and two hundred thousand bricks, purchased by the State Prison Directors, and used in the construction of the prison walls.

It was also stipulated by the contract, that simultaneously with its execution, and prior to its taking effect, the lessee should execute to the State a bond in the penal sum of $200,000, with responsible sureties, to be approved by the Commissioners, conditioned for the faithful performance of the duties and obligations of the contract, and the law authorizing the same; and that new or additional bonds might be required, if, from any reason, the Commissioners should deem the bond or bonds taken insufficient.

Immediately upon the execution of this lease and contract, Estili took possession thereunder of the prison grounds and property, and of the convicts confined in the prison ; and continued in such possession until the fourteenth of May, 1857, when he transferred and assigned to McCauley all his interest, rights and privileges under the contract, until the twenty-sixth of February, 1861, with the exception of the right to draw one-half of the monthly sum stipulated to be paid by the State, the lessee reserving to himself that right.

On the twelfth of January, 1859, Estili transferred and assigned to the defendant, Tevis, all his remaining interest in the contract, and in and to all moneys then due, or which might thereafter become due on account thereof.

From the time Estili took possession, until the twenty-sixth day of December, 1857, warrants for the monthly instalments, payable under the contract, were drawn by the Controller upon the Treasurer of the State, and delivered to the lessee or his assignee. The complaint alleges, that up to the period of the assignment to McCauley, the State complied with the contract, so far as to pay to the lessee the sum of $10,000 a month; and that the amount of $210,000 in all has been paid upon the contract. This amount brings the monthly payments to the twenty-sixth of December, 1857. As to these allegations of payment, the answer avers, that on the twenty-first of April, 1856—within one month after the contract was made—an act of the Legislature was passed, prohibiting the Treasurer of the State from paying any money for the redemption of Controller’s warrants, bearing date prior to the first of January, 1857, or of a later date, drawn for any indebtedness which accrued prior thereto; and that on the nineteenth of the same month, an act was passed providing that all such warrants should be funded and bonds of the State, payable on the first of July, 1875, issued in lieu thereof, (See laws of 1856, chaps. 137 and 149), that under the authority of these acts, the Treasurer refused to pay the warrants issued to Estill previous to the first of January, 1857, and in order to provide the means of keeping and maintaining the prison, Estill was obliged to sell them in the market, or have them exchanged for the bonds of the State, and to sell the bonds ; and that both the warrants and bonds were greatly depreciated, and he was forced to dispose of them at a discount of from thirty to fifty cents on the dollar; that after the first of January, 1857, the warrants were not issued as the monthly amounts became due, except on one or two occasions, the Controller refusing to issue them until there was money in the Treasury; and that Estill, previous to the assignment, and McCauley afterwards, were forced to sell their demands for the monthly payments, allowed by the Board of Examiners, at a heavy discount. Since the twenty-sixth of December, 1857, no warrants have been issued for any of the monthly instalments, nor have any payments been made on the contract, but, on the contrary, the payments have been expressly refused.

On the twenty-sixth of February, 1858, an act was passed authorizing and empowering the Governor of the State, and in fact, making it his duty, through such agent or agents as he might appoint, to take immediate possession of the State prison and grounds, together with all the property of the State therein situated; and to assume the custody, control and management of the State prison convicts therein confined, or to be therein confined, and thereafter to continue the possession of the property, and the control of the convicts, until further provided by law. At this time, McCauley was in the peaceable possession of the property and convicts, but the Governor, believing the act to be constitutional and binding upon him, proceeded and took forcible possession of the premises, ousted McCauley therefrom, and retained possession until restitution was made by a regular judgment, rendered in judicial proceedings, instituted by McCauley against him and others. This Court, in considering the judgment on appeal, held that the validity of the lease could not be tried in an action of forcible entry and detainer, and that McCauley could not be deprived of the advantages resulting from the possession of the premises, by a forcible ouster, under any legislative enactment; that if the lease were valid, there was in him a property which could not be divested for public use, without just compensation ; and if it were invalid, it still gave a color of title, and took from his possession the character of intrusion without claim of right, which alone the Government could remedy by force.

On the twenty-sixth of April, 1858, which was after the seizure by the Governor and the dispossession of McCauley, and before any legal proceedings for the recovery of the premises were taken, an act was passed, entitled “An Act to authorize the settlement of the accounts of James M. Estill and John F. McCauley, arising out of State prison matters ”—by which the Governor, Controller and Secretary of State were constituted a Board of Commissioners, with power to examine, audit and allow any and all claims, legal or equitable, of Estill and McCauley or either of them (except only one of McCauley’s) arising out of any matters connected with the State prison; and for that purpose to take evidence, and to hear counsel for or against any such claim. The claim excepted was one of $20,000, preferred by McCauley for keeping the prison from December 26th, 1857—the period to which the State had made the monthly payments—up to March 2nd, 1858, the day on which he was forcibly dispossessed by Governor Weller and others. The act provided, that the award of the Board should be in writing, and be final and conclusive between the State and Estill and McCauley; and when it was filed with the Secretary of State, it should be the duty of the Controller to draw his warrant on the Treasurer in their favor for the amounts awarded to them respectively—provided, they executed and delivered to the Board, before receiving such warrants, full and complete releases of all their claims against the State, arising out of, or in connection with the State prison, with the exception of the claim above mentioned of $20,000, preferred by McCauley; and provided, they first made a good and sufficient fee-simple title to the site of the premises upon which the buildings stood, in front of the east wall of the prison. For the payment of the amounts awarded, the act appropriated and set apart the sum of $75,000. To this act neither Estill or McCauley ever paid any attention. They never consented to the appointment of the Commissioners, or presented any claims to them. They rested upon the validity and legality of the contract, and denied the right of the State to withdraw from its obligations; asserting at the same time, that their claims, exclusive of the one excepted by the act, greatly exceeded the sum appropriated for their payment; and that they neither possessed or had control of the title to the premises which the act required them to make to the State, as a condition precedent to any payment.

On the nineteenth of April, 1859, an act was passed to condemn and appropriate to the use of the State, the interest of Estill and his assigns in the State prison grounds and property, but owing to some question, it is believed, as to the constitutionality of its most material provisions, no proceedings were taken under it on behalf of the State.

In July following, the present suit was instituted. Its object is to obtain a cancellation of the lease and contract with Estill, and the assignment thereof, and a surrender of possession to the State of the prison, grounds and property pertaining thereto, and of the convicts. Other relief, by way of injunction against threatened legal proceedings of the defendants, and by the appointment of certain directors or receivers, to take charge of the property and convicts pending the action, is also sought, but these matters are only incidental to the other objects of the bill.

To maintain the action and obtain the decree prayed, the plaintiff alleges and relies upon several grounds: 1st. The unconstitutionality of the Act of March 21st, 1856, directing a lease of the prison and convicts. 2nd. The want of authority in the Commissioners, even if the act were constitutional, to make the lease and contract in question. 3rd. The defective execution of the contract, the same being signed by the Commissioners in their individual names, and not in the name of the State. 4th. The forfeiture of the lease and contract, by the assignment to McCauley; and 5th. A failure on the part of the lessee and his assigns, to perform the covenants and agreements of the lease.

1. The unconstitutionality of the Act of March 21st, 1856, is asserted on two grounds: 1st, that it appropriated the sum of $600,000, and thus created a debt or liability against the people of the State, exceeding the limit prescribed by the eighth article of the Constitution ; and 2nd, that it authorized a transfer of the convicts to private individuals, and a lease of the labor of future convicts, which was beyond the power of the Legislature.

The contract provides for the payment of ten thousand dollars a month, and the act appropriates this sum per month. The appropriations are to take effect, and the services are to be rendered in future. Until the services are rendered, there can be no debt on the part of the State. The lessee could not have claimed, at any time after the making of the contract, the aggregate of all the monthly instalments— because the State never owed him that amount. The State only became indebted as the services were each month performed. The aggregate amount of the salaries of the Judges of the Supreme Court, and of the several District Courts of the State, will exceed, during the period of six years for which they are elected, the limit of three hundred thous- and dollars fixed by the Constitution, and yet it will hardly be contended that an act of the Legislature appropriating the money for their salaries, as they respectively became due, would be for that reason unconstitutional. Yet the argument of the Attorney General is as applicable in the one case as in the other. The support of the convicts is as much the duty of the State as to provide for the salaries of her officers. It constitutes one of the ordinary sources of the State’s expenditures, and a law authorizing a contract for keeping the prisoners at a fixed price—the payment and the services being future acts— is no more in conflict with the Constitution than the law fixing the salaries of the Judges and other officers of the Government, and providing for their payment from the Treasury of the State. The eighth article was intended to prevent the State from running into debt, and to keep her expenditures, except in certain cases, within her revenues. These revenues may be appropriated in anticipation of their receipt, as effectually as when actually in the Treasury. The appropriation of the moneys, when received, meets the services as they are rendered, thus discharging the liabilities as they arise, or rather anticipating and preventing their existence. The appropriation accompanying the services operates in fact in the nature of a cash payment.

The objection to the constitutionality of the act on the second ground—that it authorizes the transfer of the convicts to private individuals, and a lease of the labor of future convicts, is untenable. The power over the whole subject of punishment for crime is vested in the Legislature. The only limitation upon its exercise is the inhibition against the infliction of cruel and unusual punishments, which are held to mean those of a barbarous character, and unknown to the common law. The first object of punishment is the protection of society; the reformation of prisoners is only subsidiary and incidental to this. Their conviction has subjected them to a constitutional, involuntary servitude; and their labor and the proceeds of it belong to the State, and may be disposed of in such way as the Legislature, in its discretion, may determine. The practice of leasing out the labor of convicts prevails in several, and as we are informed, in a majority of the States; and the power of the Legislature to authorize contracts of this kind has never, we believe, been questioned. The rights of every lessee must, of course, be subordinate'to the right of the Governor to pardon, and thereby discharge convicts from custody; and to such modifications in the extent of punishment as may be made by future legislation.

2. Whether the Commissioners did or did not exceed their authority in making the contract in question, it is unnecessary to determine. They were authorized to contract at a price not exceeding fifteen thousand dollars a month; they made the contract for ten thousand dollars a month. Had the contract stopped here, the objection would not have been urged. It is the additional stipulations for releases of claims against the State which constitute the point of objection. It is said that these claims entered into the consideration of the contract, in fixing the sum- of ten thousand dollars a month, and that the sum would have been less but for these extraneous matters. If this be true, it is too late to raise the objection at this day—three years after its execution, and after it has been in part performed on both sides, and thus acquiesced in and affirmed.

3. The contract was not defectively executed by the Commissioners, from the fact that they signed it with their individual names, and not with the name of the State. The contract purports, in its body, to be between the State, acting by the Commissioners, under the Act of the twenty-first of March, 1856, of the one part, and Bstill on the other, and is signed by the Commissioners, with the affix of “ Board of State Prison Commissioners.” The instrument does not purport to be the act of the Commissioners alone, but the act of the State by them. The State, by them, makes the lease and contract, and it is with the State that the lessee enters into the covenants and agreements contained in the indenture.

The objection is applicable only to contracts of a private character, made in cases of a mere private agency. A different rule exists in reference to contracts executed by agents of the Government. “In such cases,” says Mr. Justice Story, in speaking of the liability of public agents, “the presumption prevails that the parties contract, not personally, but merely officially, within the sphere of their appropriate duties. Thus a charter party, sealed and executed by a public officer in his own name, but describing himself as acting in behalf of the King or Government, for purposes connected with the public service, has been held not to bind him personally, but to be merely obligatory upon the Government. So an indenture, executed between A B, describing himself as “ Secretary of War,” of the one part, and C D, of the other part, for a demise of certain buildings for public purposes, and for a certain period, and containing a covenant on the part of A B to pay the stipulated rent during that period, has been held not to bind A B personally, but to bind the Government alone.” (Unwin v. Woolseley, 1 Term R. 678; Macbeath v. Haldimand, Id. 172; Hodgson v. Dexter, 1 Cranch. R. 345.) “ Where a contract,” says the Supreme Court of Maine, in Stinchfield v. Little, “ is entered into, or a deed executed, in behalf of the Government by a duly authorized public agent, and the fact so appears, notwithstanding the agent may have affixed his own name and seal, it is the contract or deed of the Government, who alone is responsible, and not of the agent.” (1 Greenl. 231.)

4. The lease was not forfeited by the assignment. The law authorized the Commissioners to execute a lease, and prescribed no specific form, and the lease is in terms made to Estill and his assigns. No objections to this form of the contract were made at the time, and it is too late to interpose them now, after the contract has been acted upon on both sides, and been thus adopted and approved. The personal liability of the assignor continued after the assignment. The security of the bond of two hundred thousand dollars was in no respect impaired thereby.

If it be admitted that some of the covenants do not bind the assignee, no ground of relief can spring from this circumstance. The State can claim no greater exemption than an individual, from the usual consequences of an unvyise and impolitic contract.

5. It follows from the views we have expressed, that the Act of March 21st, 1856, was constitutional, and that the contract under it was valid and binding upon the State. It only remains to consider the alleged failure of the lessee and his assignee to perform the covenants of the lease, as furnishing ground for the equitable relief sought by the bill. The breaches alleged to have been committed are fully controverted by the answer, into which we can look in considering the action of the Court in refusing the preliminary injunction. As to the demurrer, we must look to the case made in the complaint, and we are clear that the State is not entitled to a rescission of the contract upon her own showing. In the first place, she has equally failed to perform the contract on her part. She neglected to make the monthly payments as they became due, and for months previous to the institution of the present suit, she refused to make any payments whatever. And the rule is general, that the right to rescind a contract rests only with the party who is without default. One party cannot, as is well observed by counsel, violate the contract himself, and then seek a rescission on the ground that the other party has followed his example. (Chitty on Cont. 636.)

In the second place, the contract has been in part performed, and the parties cannot be restored to their original position. The right of rescission cannot exist under such circumstances. How could Estill and McCauley, after being in possession for nearly three years, and performing valuable services, be placed in their previous condition ? A contract, says Parsons in his valuable work, cannot be rescinded “ if the failure of the other party be but partial, leaving a distinct part as a subsisting and executed consideration, and leaving also to the other party his action for damages for the part not performed. Generally, no contract can be- rescinded by one of the parties, unless both can be restored to the condition in which they were before the contract was made. If, therefore, one of the parties has derived any advantage from a partial performance, he cannot hold this and consider the contract as rescinded because of the non-performance of the residue, but must do all that the contract obliges him to do, and seek his remedy in damages.” (2 vol. 191; Story on Cont. sec. 844, a; Hunt v. Silk, 5 East. 449; Mason v. Bovet, 1 Denio, 69, 74; Reed v. Blandford, 2 Young & J. 278; Turnpike Company v. Commonwealth, 2 Watts, 433.)

In the third place, the State does not offer to make restitution of the property received, or pay the value of the claims relinquished at the execution of the contract, or to pay what she shows in the complaint remains due thereon. Such restitution and payment must precede the right of the State to ask for a rescission. The rule is universal and inflexible, and rests upon natural justice. He who seeks equity must do equity.

As indemnity against breaches of the contract, the law of 1856 required the execution of a bond in the penal sum of two hundred thousand dollars, and the contract expressly provides that new and additional bonds may be required of the lessee, whenever the Commissioners may deem those taken insufficient. It is too late to complain that other security was not exacted by stipulations, or the reservation of a right to reenter and resume the possession of the premises, and the control of the prisoners, whenever the State should deem such proceeding proper.

Some of the breaches alleged—such as the neglect of the lessee to furnish suitable and proper food, clothing and medical attendance for the convicts, or sufficient overseers, guards and employees for the prison, are urged with ill grace by the State, who has made to the lessee and his assignee the payments stipulated, for a part of the time, only in depreciated paper, and for a part of the time has withheld such payments entirely—thus depriving them, either partially or wholly, of the means to which they had a right to look to provide such food, clothing, attendance, guards and employees. Indeed, the legislation disclosed in the pleadings, and to which we have referred in this opinion, has tended to greatly embarrass the lessee and his assignee in the management of the affairs of the prison, and in the discharge of the obligations of the contract.

When the State has complied, in good faith, with her own engagements, it will be time to consider whether she can invoke the interposition of a Court of Equity to cancel her contract for breaches of its stipulations by the lessee, or those who represent him.

Judgment affirmed.

Baldwin, J., having been counsel for Respondents in the Court below, did not sit in the case.