Read v. City of Plattsmouth/Opinion of the Court

by Stanley Matthews

United States Supreme Court

107 U.S. 568

Read  v.  City of Plattsmouth

We cannot accept the conclusion, urged upon us by the counsel for the plaintiff in error, that the city of Plattsmouth had authority to issue the bonds in question, under the power conferred upon it as a municipal body, 'to borrow money for any purpose within its discretion,' without reference to the limit as to the amount imposed by the act of 1867, expressly authorizing it to build school-houses. Whatever implications of power as to school buildings might have been admissible, if the law conferring municipal powers had stood alone, must give place to the express declarations, with the accompanying qualifications, contained in the statute, that dealt by name with the very subject. And we must, therefore, assume, at the beginning, that while the city of Plattsmouth was authorized to erect a high-school building, it could not lawfully borrow money or issue its bonds for that purpose in excess of $15,000. We are, therefore, required to consider whether the issue of bonds involved in this litigation can be supported by the subsequent legislation which sought to cure the defects of their origin. No objection is made to either of the statutes relied on, on the ground that the constitution of Nebraska of 1867 forbade retroactive legislation. The twelfth section of article 1 of that instrument declares that 'no bill of attainder, ex post facto law, or any law impairing the obligation of contracts, shall ever be passed.' This prohibition would not include legislation of the class now in question. They are attacked, however, on other grounds.

The first act,-that of February 18, 1873,-it is claimed, is made void by article 8 of section 1 of the constitution of Nebraska, which declares that 'the legislature shall pass no special act conferring corporate powers.' It is contended that the act in question, by legalizing bonds of the city, void because it had no power to issue them, is legally equivalent to an act conferring upon the city power to issue bonds, which is conferring corporate power, and, being a special act, is therefore unconstitutional. But this conclusion we cannot adopt.

The act in question, so far as it relates to the bonds in suit, does not confer any corporate power upon the city in the sense of the constitution of the state. The statute operates upon the transaction itself which had already previously been consummated, and seeks to give it a character and effect different in its legal aspect from that which it had when it was in fieri. Whether such an effect may be given by a legitimate exercise of legislative power, depends upon those considerations which draw the line beyond which retroactive laws cannot pass, and is not affected by the supposed form of the enactment as a special or general act conferring corporate power. For it operates upon the rights of the parties, as determined by the equity of their circumstances and relations, and gives to them the sanction derived from subsequent confirmation, by clothing them with forms which are essential to their enforcement, but not to their existence. Within the usual limitations prescribed by our written constitutions, such as have been quoted from that of Nebraska, this may be done, provided it can be done without the destruction of rights recognized by the law as vested.

In the present case, the statute in question does not impose upon the city of Plattsmouth, by an arbitrary act, a burden without consent and consideration. On the contrary, upon the supposition that the bonds issued, as to the excess over $15,000, were void, because unauthorized, the city of Plattsmouth received the money of the plaintiff in error, and applied it to the purpose intended, of building a school-house on property, the title to which is confirmed to it by the very statute now claimed to be unconstitutional, and an obligation to restore the value thus received, kept, and used, immediately arose. This obligation, according to general principles of law accepted in Nebraska, was capable of judicial enforcement. Clark v. Saline Co. 9 Neb. 516; [S.C.. 4 N. W. Rep. 496;] Louisiana v. Wood, 102 U.S. 294; New Orleans v. Clark, 95 U.S. 644; Hitchcock v. Galveston, 96 U.S. 341; Chapman v. County Com'rs Douglas Co. ante, 62, and City of Parkersburgh v. Brown, 1 SUP CT. REP. 442.

As was said by Mr. Justice FIELD, in New Orleans v. Clark, 95 U.S. 644-654:

'A law requiring a municipal corporation to pay a demand which is without legal obligation, but which is equitable and just in itself, being founded upon a valuable consideration received by the corporation, is not a retroactive law, no more so than an appropriation act providing for the payment of a pre-existing claim. The constitutional inhibition does not apply to legislation recognizing or affirming the binding obligation of the state, or of any of its subordinate agencies, with respect to past transactions.'

As the city of Plattsmouth was bound, by force of the transaction, to repay to the purchaser of its void bonds the consideration received and used by it, or a legal equivalent, the statute which recognized the existence of that obligation, and, by confirming the bonds themselves, provided a medium for enforcing it according to the original intention and promise, cannot be said to be a special act conferring upon the city any new corporate power. No addition is made to its enumerated or implied corporate faculties; no new obligation is, in fact, created. The language of the constitution, forbidding special legislation of that description, evidently refers to grants of authority to be exercised by the body itself and in the future, and a consideration of the evil intended to be remedied by the prohibition will confine it to grants of that character, and will not include a statute like that now under discussion. Here the power of the legislative department of the state is directly exercised upon the transaction itself, and upon a matter clearly within the scope of its authority. It was the constitutional duty of the legislature 'to pass suitable laws to encourage schools and the means of instruction.' Under the terms of this authority, having created, as it did, the city of Plattsmouth a separate school-district, it might prescribe the number and character of the school-houses to be provided, and impose, if it saw fit, directly, a tax upon the locality to defray the cost of erecting and maintaining them. What the state might properly have done by direct action it may do through the public agency of a municipal body, such as the city of Plattsmouth, which, in the performance of the duty assigned, does not so much exercise a corporate power of its own as discharge a function of the statute. An illustration and example of the distinction is found in the case of Foster v. Com'rs Wood Co. 9 Ohio St. 540, where it was held that a public corporation for the construction and repair of highways was really only a part of the machinery of the state, and its officers, county or township officers discharging duties in connection therewith, and that consequently an act of the general assembly authorizing the body by name to complete the construction of a particular highway, and to make an assessment of the cost upon the property benefited, was not a special act conferring corporate power within the meaning of the constitutional prohibition. So it was held in State v. Squire, 26 Iowa, 340, that while the legislature would not, in view of the constitutional provision of that state, have the power to pass a special law incorporating an independent school-district, it would nevertheless have the power to pass a curative act, legalizing the defective organization of a school-district already in existence under the general law authorizing the creation of independent school-districts.

In view of the decisions of this court and the courts of the several states in this county, affirming the capacity of municipal corporations to accept and administer trusts of property, given or devised for purposes of public charity, it would not be denied that the city of Plattsmouth might lawfully receive and apply a gift of money bestowed in trust to pay the principal and interest of the bonds involved in this litigation, as having been issued for the purpose of obtaining means with which to erect a public-school building. The administration of such a trust would not be contested on the ground that it was enlargement of its corporate powers. But the duty to repay the consideration for them, employed by it in the same uses, already existed; and its enforcement through the legislative act, which prescribed a remedy, is not more open to the same objection. It is not a special act conferring corporate power; it is merely a special act taking away from the corporation the power to interpose an unconscionable defense against a just claim, and to avoid an obligation to pay an equivalent for public benefits, which it has continued to enjoy.

The very proposition involved here was maintained by the supreme court of Nebraska in the case of Com'rs Jefferson Co. v. People, 5 Neb. 127. There it was decided that a special act of the legislature, authorizing the county commissioners of Jefferson county to provide funds for the payment of certain outstanding warrants of said county, by issuing bonds, selling the same, and using the proceeds in payment of warrants issued to contractors for the erection of a court-house and jail, was valid and effectual. The court said: 'That Jefferson county is justly indebted to the relator for the amount of the warrants in question will not be controverted; and, where such is the case, there is no doubt of the power of the legislature to require the county to issue its bonds for the amount of its indebtedness.' In one aspect, this case goes beyond the argument; for it contemplated further action by the corporation it the issue of its bonds.

The second statute-that of February 25, 1875-is not subject to the objection to the former, one just disposed of, for it is a general act 'to amend an act to incorporate cities of the second class and to define their powers, approved March 1, 1871, and to legalize certain taxes therein mentioned;' and the terms of its second section embrace the case of the bonds in controversy in this suit. It expressly declares 'that all bonds heretofore issued by any city of the second class in good faith for the erection of, or to procure the means for erecting, a high-school building within such city, or for heating or furnishing the same, whether issued under a general or special law providing therefor, or any bonds hereafter issued by such city in exchange for any such bonds, shall be legal and valid; and any tax heretofore or hereafter levied to pay the interest or a portion of the principal of any such bonds, not exceeding five mills on the dollar valuation of the taxable property in the city in any one year, shall be legal and valid.' Accordingly objections are made to its validity for want of conformity to other provisions of the constitution of the state, the first of which,-that it conflicts with section 19, art. 2, which declares that 'no bill shall contain more than one subject, which shall be clearly expressed in its title,'-it is claimed, applies to both acts.

In regard to the special act of February 18, 1873, however, it seems to us unnecessary to say more than that the title appears to be a full and apt description of the whole contents of the act. The proceedings of the city council in reference to the construction of a high-school building, which it is the object of the act, as expressed in the title, to legalize, necessarily includes the issue of the bonds authorized by it for that purpose.

In White v. City of Lincoln, 5 Neb. 505-516, it was said that 'the object of this constitutional provision is to prevent surreptitions legislation by incorporating into bills obnoxious provisions which have no connection with the general object of the bill, and of which the title gives no indication. It will be sufficient, however, if the law have but one general object, which is fairly expressed in the title of the bill.' Accordingly it was held in that case, as it was also in City of Tecumseh v. Phillips, 5 Neb. 305, that the third section of the act of February 25, 1875, which ratified expenditures by cities of the second class of moneys illegally collected for licenses for the sale of intoxicating liquors, was void, because there was nothing in the title of the act to indicate the object contemplated by that section. 'It is in nowise amendatory,' said the court in City of Tecumseh v. Phillips, supra, 'of the general incorporation law for cities of the second class, nor does it make any allusion to the legalization of any taxes whatever.' And in the same case, speaking of the entire act, the court said: 'But we fail to discover wherein it is in any particular amendatory of the general act relating to cities of the second class.' The act, therefore, may be considered as if its title were simply that of 'An act to legalize certain taxes therein mentioned.'

The second section, which is the only one material in this controversy, does legalize taxes theretofore or thereafter levied to pay the interest on certain bonds, namely, such as having been theretofore issued by any city of the second class, in good faith, for the erection of, or to procure the means for erecting, a high-school building within such city, or for heating or furnishing the same, whether issued under a general or special law providing therefor, etc., are thereby declared to be legal and valid.

It is impossible to say that legalizing the bonds, and the taxes levied to pay them, are two diverse subject, when to legalize the taxes necessarily makes the bonds valid; for nothing more strongly confirms an invalid bond than to make provision for its payment. We have no hesitation, therefore, in upholding the second section of the act of February 25, 1875, as a valid enactment, so far as the present objection is concerned. As we do not consider it as an act to amend the general law incorporating cities of the second class, rejecting that portion of the title, it is not subject to the further objection that it does not conform to the constitutional requirement that 'no law shall be revived or amended, unless the new act contain the entire act revived and the sections amended.'

The remaining objection is not to its validity, but to its application to the present case. It is argued that the second section of the act relates only to bonds that have been issued 'under a general or special law providing therefor;' and that the bonds now in controversy were not so issued, and cannot, therefore, claim support from this provision. If by this is meant that no bonds are within the purview of this section except such as have been lawfully issued, the conclusion results in an absurdity; for it supposes an act of the legislature passed to cure the invalidity of valid bonds. If, on the other hand, the section is construed to mean that all bonds that have been issued in good faith for the purposes mentioned, and under color of law, whether general or special, but without actual authority, shall be deemed to be legal and valid, the only rational and worthy effect is given to the enactment that can be deduced from its terms. We do not doubt that such was the purpose of the legislature, and that it is the meaning of the law.

In our opinion, the bonds in controversy are valid obligations of the city of Plattsmouth, under either of the two acts, of February 18, 1873, and of February 25, 1875, respectively; and the circuit court erred in its instructions to the jury to the contrary. For that error the judgment is reversed and the cause remanded, with instructions to grant a new trial.

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