Town of Queensbury v. Culver

ERROR to the Circuit Court for the Northern District of New York; the case being this:

In May, 1857, the State of New York passed 'An act to authorize the town of Queensbury, in the county of Warren, to issue bonds to aid in the construction of a railroad from the village of Glenn's Falls to interest the Saratoga and Whitehall Railroad.' The act enacted:

'SECTION 1. On the application, in writing, of twelve or more freeholders, residents of the town of Queensbury, it shall be the duty of the county judge of said county to appoint five freeholders, residents of said town, to be commissioners of such town to carry into effect the purposes of this act. A majority of the said five shall constitute a quorum for the doing of any act contemplated in this act.

'SECTION 2. It shall be lawful for the said commissioners to borrow, on the faith of the credit of the town, $100,000, &c.,. . . at a rate of interest not exceeding 7 per cent., and to execute bonds therefor. The bonds may be in such form as the commissioners shall deem expedient.

'SECTION 3. The said commissioners may dispose of such bonds to such persons or corporation and upon such terms as they shall deem most advantageous for the town, but not for less than par; and the money which shall be so raised shall be donated to such railroad corporation or association as has now or shall hereafter file articles of association to build and operate a railroad from the village of Glen's Falls to the Saratoga and Whitehall railroad, its buildings and necessary appurtenances, and for no other purpose whatsoever. For the completion of said road and the expenditure of the sum so donated by said town, said corporation shall give full and adequate security to said commissioners, and for the more effectual enforcement of this act, the commissioners shall not pay over any money or bonds to the said railroad corporation until they have been furnished with satisfactory assurances that the sum of $100,000 shall have been subscribed and paid in, and actually expended in the construction and building of the said road. And this act shall not be construed so as to make the said town a party to this corporation, and the said town shall not be taxed hereafter for any appropriation required for said road beside the amount donated in the second and third sections of this act, but such additional amount shall be raised by said corporation.

'SECTION 4. The commissioners shall report annually to the board of supervisors of the county of Warren, the amount required to pay the principal and the interest on the bonds authorized to be issued under and by virtue of this act; and it is hereby made the duty of the board of supervisors, and they are hereby authorized and required to cause to be assessed, levied, and collected of the real and personal property of said town of Queensbury, such sum of money as shall have been reported to the said board of supervisors by the said commissioners to be necessary; and the same when collected, shall be paid to such commissioners, and by them be applied to the payment of the bonds, with the interest.

'SECTION 5. No money shall be borrowed, or bonds issued, until the question whether or not it is expedient to borrow such money and issue such bonds, for the purpose named in this act, shall have been submitted to the taxable electors of the town of Queensbury, and affirmatively determined by them.

'SECTION 8. The said company so to be formed may charge the sum of not exceeding six cents per mile for passengers riding over said road.'

Commissioners (including among them H. R. Wing, D. Peck, and W. A. Wait) were appointed under the act, and an election was held at which the majority of those voting were in favor of the project. The commissioners prepared and executed bonds to the amount authorized, with interest warrants attached.

The bonds acknowledged 'that the town of Queensbury was indebted to the bearer in the sum mentioned for value received in money borrowed, payable on the 6th day of February, 1868, with interest thereon, at the rate of 7 per cent., on presentation and delivery of the coupons for the same thereto attached.'

The warrants were in this form:

No money was raised by the commissioners upon the bonds or interest warrants, but both were delivered by the commissioners to the railroad corporation.

One Culver was a contractor with the corporation for the construction of its road. He received certain bonds and interest warrants from the railroad corporation on its contract, and the warrants not being paid he sued the town of Queensbury in assumpsit upon them. Plea, non-assumpsit. The warrants sued on were detached from the bonds.

The counsel for the defendant requested the court to give various instructions, as:

1st. That the act was in violation of the constitutions of New York and of the United States.

2d. That if valid, assumpsit would not lie against the town on the interest warrants sued on; they not purporting to be made or issued by or in behalf of the town; and the town not being liable in assumpsit on them.

3d. That the only remedy to enforce the payment by the town was to compel an assessment, collection, and payment, such as was contemplated by the fourth section of the act.

4th. That in delivering the bonds and warrants to the railroad company as they had done, the commissioners had not disposed of them or raised money on them at not less than par as the statute required them to do; and that they had thus violated the statute.

The court refused all of these requests for instructions, or to nonsuit the plaintiff, and verdict and judgment having gone accordingly for him, the town of Queensbury brought the case here.

Mr. Francis Tiernan, for the plaintiff in error:

1. The act by which the donation was authorized was void. The farthest that the courts of New York have gone is to hold that the legislature has power to authorize municipal corporations to become owners of stock in a railroad company, and to incur debt and impose taxes to pay for the same; but it has never been decided that the legislature has power to order money to be taken by taxation from the people of a town and 'donated,' that is to say, given away as a present to a railroad company; and still less that the legislature, in which alone by the constitution of New York the legislative power of the State is vested, can appoint a sublegislative body to do it for them.

In 1868, before the making of the instruments in question, an act of the legislature of New York, precisely like the act under consideration, was held to be void by the Supreme Court of that State. This adjudication has never been reversed or questioned.

It will hardly be pretended that this depriving the parties of their property was 'by the law of the land' or 'by due process of law.' To hold that it was would be to render those well-known provisions of the Constitution, which say that no one shall be otherwise deprived of his property, nugatory as against the arbitrary will of the legislature; and be contrary to the settled meaning of those terms.

Conceding that this taking of property was for public use, it was for a public use without compensation made. The very purpose of the act was to enforce a gift. It requires a donation.

But the money was not for public use within the legal signification of the terms. It was not to be paid into the treasury of the State, or to any State officer. It was not to be applied to the construction of any work owned by the State or any political division thereof, or in which either has any legal interest. The money is to be taken from the owners of property in a particular town, and given away to a private corporation.

For that the road to be constructed by the corporation is private property is obvious. Indeed the corporation has a vested right, by virtue of the act in question, if it be valid, to expel any person from the road who will not pay six cents per mile for riding in its cars thereon. The fact that the business of this corporation is to be that of a common carrier of persons and property for hire, and that as such the corporation is liable at common law to certain duties and responsibilities, and doubtless may be subjected by statute to others, does not make the road cease to be private property, and its business private, and to be carried on for the private gain of its stockholders.

The occupation of an innkeeper is in the nature of a public employment. Inns are necessary for the accommodation of the public. The innkeeper is bound to receive all travellers who apply peaceably to be received as guests, so long as he has room; and he is an insurer of the property of the guest. But the legislature has not power to order money to be levied upon the inhabitants of a locality and given away to a company, even to aid it in the erection and maintenance of an inn.

So it may be for the public good that a factory be built and worked. Such enterprises as making railroads, opening good inns, building factories, &c.,-although done by individuals or corporations-may enhance the value of property and may tend to general prosperity. But this does not authorize the legislature, under the guise of an exercise of the taxing power, to compel citizens who are not regarded as public spirited to donate a portion of their property to individuals or corporations who propose to construct such works. There is a wide difference between exacting money from the citizen for the use of the State or a political division of it, and commanding him by legislative enactment to present to another individual or to a private corporation money to aid in constructing a work to be owned and worked by them for their private gain. This may be for the public good, but it is not taking the money for public use.

2. Conceding the statute to be valid, the plaintiff was not entitled to recover in assumpsit. The interest warrants do not purport to be and were not made by or in the name of the town. There was no evidence of any promise by the town to pay the amount sought to be recovered; and none from which a promise by the town could be implied.

3. The town is not liable in its corporate capacity to an action at law for the non-payment of the instruments made and issued by the commissioners. The statute which authorized the money to be borrowed on the credit of the town and the instruments in question to be issued, prescribes how they shall be paid; and the holder must pursue the remedy prescribed.

4. The bonds and coupons were disposed of by the commissioners in violation of the act of the legislature, and, therefore, the plaintiff cannot recover. By the third section, the commissioners were required to dispose of the bonds for money at not less than par, and pay over the money to the company to aid in constructing the road. The commissioners raised no money on the bonds, but delivered them to the railroad company, and the latter gave them to the plaintiff and others who were contractors to build the road. The plaintiff occupied no better position than the railroad corporation.

Mr. C. Hughes, with whom was Mr. J. P. Stockton, contra.

Mr. Justice STRONG delivered the opinion of the court.