Case ID: ny_23/html/0247-01.html
Source: Caselaw Access Project
Author: {"author": "James, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The People, ex rel. De Forest, v. Denniston, Comptroller.
    A State loan reimbursable at the pleasure of the State after twenty yeara has no term of payment until the legislature has fixed it by law.
    Where such a loan was made under a law passed before the Constitution of 1846, for the benefit of the Long Island Bailroad Company, which was bound to redeem the stock, an act giving to its holders the option of having it made payable in 1876, is not in violation of the constitutional prohibition of the loan of the State credit to corporations.
    Appeal from the judgment at a general term of the Supreme Court in the fourth district, affirming an order of the special term, granting a peremptory mandamus to compel the Comptroller of the State of Hew York to make an indorsement on certain bonds of the State, loaned to the Long Island Bailroad Company.
    It was enacted, by chapter 193 of the Laws of 1840, that whenever the Long Island Bailroad Company should produce to the Comptroller the joint affidavits of five directors of said Company, that the sum of $400,000 of the moneys paid in on the capital stock of said company, had been actually expended by them in the construction of their road, he should issue and deliver to the treasurer of said company, special certificates of stock to the amount of $100,000, bearing an interest not exceeding six per cent, payable semi-annually. This amount was made a lien upon the road in favor of the State, and the money accruing from the sale of the certificates was to be applied to the construction of the road. The company was to pay punctually the interest in such manner as should exonerate the treasury of the State from any advance of money for that purpose; and, also, to pay, on the 1st day of January in each year, to the Comptroller, one per cent on the amount of said stock, to be by him invested as a sinking fund for the redemption of the stock. In case of default in payment of interest or contribution to the sinking fund, the Comptroller was required to sell the road and appurtenances, as therein provided. The -7th section of the act was as follows: “§ 7. The said stock shall be reimbursable at the pleasure of the legislature, at any time after twenty years from the date of the respective issues thereof.” The certificates issued were all dated July 27th, 1841, bearing interest from August 1st, 1841, reimbursable at the pleasure of the State, at any time after the 1st day of August, 1861,
    The interest and the contribution to the sinking fund was duly made as required by the act.
    By the Laws of 1858, chapter 36, it is enacted as follows: “ § 1. The stock of the State of ISTew York, issued to the Long Island Bailroad Company, in pursuance of the provisions of chapter one hundred and ninety-three of the Laws of said State for the year eighteen hundred and forty, is hereby made payable on the first day of August, eighteen hundred and seventy-six, provided any party who may hold certificates of such stock, who may desire the same made payable on the said first day of August, eighteen hundred and seventy-six, shall, on or before the first day of January, eighteen hundred and sixty-one, present such certificates to the Comptroller for indorsement, whereupon the Comptroller shall indorse on each of the said certificates the following words, namely,1 The principal of this bond is payable on the first day of August, eighteen hundred and seventy-six, and the rate of interest thereon is to be five per cant per annum, after the first day of August, eighteen hundred amd sixty-one, payable semi-annually, as heretofore,’ attesting the same by his signature, and stating the date of the act of the legislature authorizing such indorsement.
    “ § 2. Such certificates as shall not be so presented and indorsed shall be payable on the first day of August, eighteen hundred and sixty-one, from the funds to the credit of the railroad company then held by the Comptroller, or other additional funds if necessary, to be furnished by said company.”
    The' 3d section provides, that the company shall pay the interest at five per cent on all the certificates so indorsed, and also pay to the Comptroller $2,000 per annum, to be invested by him as a sinking fund for the redemption of the stock so indorsed in lieu of the $1,000 heretofore annually paid by said company as a sinking fund.
    Section 4 provides, that this law shall not release the said railroad company from any liability imposed by the law of 1840, but the provisions and conditions thereof, not herein modified, shall remain in full force and effect.
    On or about the 1st day of December, 1860, the Long Island Railroad Company filed with the Comptroller its consent that he should indorse such .bonds as should be presented to him for that purpose, and requested the Comptroller to make the indorsement prescribed by the act of 1858.
    On the same day the relator, being the owner and holder of one of said bonds, Ho. 16, presented the same to the defendant, and demanded that he should indorse it pursuant to the act of 1858, which the defendant refused to do on the ground that said act was a nullity.
    The relator, upon affidavits, the several acts of the legislature in relation thereto, and on notice of motion, applied to the Supreme Court, at special term, for a writ of mandamus to compel the Comptroller to indorse said stock; and after hearing the motion, the court awarded the peremptory writ, which was accordingly issued.
    
      Charles G. Myers, Attorney-Greneral, for the appellant.
    
      Alonzo C. Paige, for the respondents.
   James, J.

The ground upon which the Comptroller placed his refusal to do the act required, was, that the act of March, 1858, authorizing it, was in conflict with the 9th section of article YII of the Constitution of this State, and therefore void. That section of the Constitution declares that the credit of the State shall not, in any manner, be given or loaned to or in aid of any individual, association or corporation. The Constitution was adopted in 1846, and by the 17th section of article I, it was declared that' such acts of the legislature of the State as were then in force, should be and continue the law of the State, subject to such alterations as the legislature should make concerning the same. The operation of the Constitution was therefore wholly prospective.

The Comptroller’s refusal rests on the assumption that the act of 1858 was a loaning of the credit of the State to the Long Island Railroad Company, and unless that assumption be correct, he is without excuse.

To determine this question, it is necessary to ascertain the duration of the loan as authorized by the act of 1840. The argument of the Attorney-General is, that by the true construction of the statute, it falls due on the 1st day of August, 1861; that the words “at the pleasure of the legislature,” contained in the act, are mere surplusage, and that such has been the uniform construction given to acts containing similar provisions by the State officers. I cannot concur in that construction. In construing a statute, it is the duty of the court, if possible, to give force and effect to every word used, if it can be done without a violation of the organic law. The words employed are to be understood according to their natural signification and import. When the words are plain and clear, and their sense distinct and perfect, there is generally no necessity to resort to any constructive means of interpretation. There is no room for construction. The words themselves declare the meaning of the instrument, and courts have no right to add to, or take away from, that meaning. (8 Seld., 97.) In this case, the words used are plain and clear; they embody a meaning precise and distinct, and that meaning cannot well be misunderstood. Taking the language of the act, and giving to every word its full force, according to its most common and popular signification, the intention of the legislature is plain and clear—it makes the stock reimbursable at the pleasure of the legislature after twenty years from its issue. Ho other construction can be given to the act, unless a part of its words are omitted. To give it the construction contended for by the defendant, the words “ at the pleasure of the legislature at any time after,” would have to be erased. I cannot think those words were inserted by the legislature without a purpose, and that purpose was, as hereinbefore stated, to vest in the legislature the power to fix the time for the reimbursement of said stock, after a period of twenty years from their issue.

The conclusion of the court below, that the act of 1858 was not a loan of the credit of the State, was therefore correct. The credit of the State had been previously loaned: The stock had a valid existence, its holders were the legal creditors of the State, yet they could not call for its redemption until after the expiration of twenty years from its issue; not then until thú legislature should fix a period for its payment. The statute of 1858 was enacted for that purpose, and it designated two periods when the stock might be redeemed, one present, the other future, leaving the option of accepting the one or the other with the holders of the bondsj if that option" was made manifest within the period limited by the act.

Of the power of the legislature to do this, I have no doubt. The whole law-making power is vested in the legislature, which is omnipotent, unless restricted by the express or implied provisions of the Constitution. It is for those who claim that a statute is unconstitutional to show that it is forbidden. The section, which it is claimed prohibited the enactment of 1858, does not reach the case. Had this act simply declared that the bonds in question should become due in 1876, the option being with the legislature, no one would have deemed it a loan of the credit of the State. If it were, fixing any period after the lapse of twenty years from the issue of the bonds, would' be equally void; and thus the option vested in the legislature by the act of 1840, entirely defeated. Fixing two periods instead of one for the redemption of the bonds, with the conditions given to the holders, did not change the nature of the act, nor render the law for that reason unconstitutional.

It is true, that the original loan, if the holders so elect, may, under the act of 1858, continue fifteen years after the first twenty years have expired, and so it might had not the act of 1858 been passed. The option was with the legislature, and it had the power, either by affirmative or negative acts, to allow the loan to run; and having seen fit to act affirmatively in the matter, the act is not without the limits of the Constitution, nor the law invalid.

I fully agree with the learned Attorney-General that “ the whole scope and object of the seventh article of the Constitution was to pay the public debt at the earliest practicable .period, and to extricate the State from its liabilities, incurred for the benefit of corporations,” and I trust that the object will never be departed from. Although it may be that the legislature in fixing a day so remote for the redemption of these bonds, has acted unwisely, and departed from the intent of the framers of the Constitution, in allowing the credit of the State to be continued for the benefit of the corporation; still the power being vested in that body, its unwise exercise affords no ground for the courts to nullify it.

In my judgment, the act of 1858 was constitutional, and the Comptroller should have "indorsed the bonds presented to him ■ for that purpose, as required by the provisions of the act.

The order must be affirmed, with costs.

Davies, J., did not hear the argument; all the other, judges concurring,

Judgment affirmed.