Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1890-01-22

city, acting as such officers and trustees acting
merely as trustees, created for special pur-
pose, must not be lost sight OF. In the first in
stance the relation of principal and agent IS es-
tablished, and the act of the agent is the act of
the principal. in the second instance the rela-
ton of trustee and ceStui que trust is established
These are radically and essentially different re-
lations. as every lawyer knows.
As above stated. such funding schemes, by
the Intervention OF trustee have been for mauy
years upheld, both in this country and IN Eng
land. but for some reason not apparent the new
Constitution of this State prohibits them. Act
II, Section IS, is in my Judgment entirely con-
elusive upon this question. 1t declares that
1.-THE Legislature shall not delegate to any
special Commission or individual any power to
control, appropriate, supervise or IN any way
interfere with any county, city. town or NUM-
cipality, money, property or effects, whether
held in trust or otherwise, or perform any mu-
nicipal functions whatever" have before me
the opinion of several attorneys, for whose
opinions / have the highest respect; they at
tempt to overcome this express inhibition in
the Constitution each in his own way. II IS
needless to say that l disagree with both. It is
claimed, on the one hand, in substance, That
the powers now exercised by the Fund Com
missions might be conferred on the Mayor or
other officer provided for in the new charter.
This l understand admits, implicitly st least,
that this power-to buy up the funded
debt-cannot be conferred on persons not
connected with the City government. Ihey
must be city officers named in the char
ter, such as the Mayor, Common Council,
ttC.f luef uuSl DC AReDlS vi Tue tAtg " SthllS
on the municipal affairs. Now these officers,
under the new charter, in the exercise OF this
p0wer-tO buy up the city debt-must act in one
of two capacities either as city officers as in
diyiduals whose official names were merely used
to designate the individuals who shall oonsti-
tute the Commission, the same way as If the
Board should be formed by appointing the
Cashier OF the National Bank of d. o. Mills q
Co., the President of the Board OF Trade the
Secretary of the Agricultural Society, etc. In
the first instance they would be acting as
the city's agents in buying up the debt; and the
debt, when purchased, would simply be paid
In the second instance, where the duty of Fund
Commissioners is entirely disconnected from
their official duties as city officers, they would
constitute special Commission or individuals
with power to control, and appropriate, and
supervise the money, property and effects OF the
city so far necessary to discharge their duties
as such Commissioners. which is prohibited by
the Constitution above cited. On the other hand it
is claimed that the inhibition is directed against
the Act of the Legislature, and not against
the act of the fifteen freeholders, who are to
form this charter. The first objection 10 the
view is that the charter must be consistent
with and subject to the Constitution and laws of
this State Constitutional amendment, Statute
1887, page 49, The substance of Section 13
Article XI., is to prevent special Commissions
or individuals from controlling, appropriating
or supervising, or in any way interfering with
the money, property or effects of a municipal
corporation The form in which that inhibi-
ton is expressed has little to do with the ques-
ton; what the Legislature cannot do without
the fifteen treeholders, it can, most certainly
not do with their assistance. The second objee
does, in fact, delegate this power, if it is dele
gated at all. The charter must be submitted to-
and approved by, the Legislature; whatever is
delegated or authorized by the charter is dele
gated or authorized by the Legislature for with
out the Legislature approves the charter there
is no charter, nor can there be one, Under this
peculiar provision of the Constitution the fifteen
freeholders are, in my opinion, little more than
the draughtsmen of bill and petitioners to the
Legislature to adopt it.
These reasons are to my mind entirely con-
elusive of the questions here discussed; but if
had reasonable doubt, should still be op-
posed to new charter for two reasons:
First-The bond holders would be benefited
TO the extent of hundreds of thousands of dol-
lars if the Funded Debt Commission was de-
strOyed. In any doubtful case, therefore, the
city would be overwhelmed with suits to break
up the Commission by these persons so deeply
Second-The benefits of the Commission are
so much greater to the city than any possible
advantage that she cou.d derive from q new
charter, that no sensible business man would
jeopardize the great certain benefit of the Com
mission for the lesser one of a new charter.
And now in conclusion l will state, not for
your information-that is needless-but for
those who may read this letter, what under
stand to be the benefits derived from the Funded
Debt Commission by the city. l shall not at
tempt to do more than approximate to figures
nor will space permit me to go into detail and l
will take what understand will be the opera
tions of the Commission this year, as sample
of what is being done and what may be done
First, then, the city is compelled to pay into a
sinking and interest fund fifty-iYe per cent of
all her general revenue, including the gross re-
ceiptS of the water works out of this fund is
paid the annual interest on our city debt and
finally on the debt itself. l understand that in
this year 1890 there will be paid into this fund
by the city over $50, 000 That within the next
six months this sum will be paid to the bond
holders and coupon-holders of our city.
Now, as l understand this matter, our Fund
Commissioners stands ready to join this in
Vulnerable carayan-of bond and coupon
holders-that lead to the City Treasurer's office,
and out OF this sum Of $4,000 they (the Com
missioners) will take $4,000, leaving the bal
ance to be divided between Sam Davis, Daniel
Meyer, George Z. Bates and other holders of the
eity's debts. This $4,000 will again be used to
buy other bonds and other coupons. Thus the
Funded Commission, il continued, will take
$4,000 (Which would otherwise go to the gen.
eral bondholders) and apply it to the purchase
of the city debts, and that this process will be
kept up from year to year until our debt is
practically paid that this $4,000 is due for
annual interest upon bonds held by the Com
missioners in trust for the city and upon cou-
pOns purchased below their face value; that, if
the Commission is abolished, the bonds and
coupons now in their hands will revert to the
city and be Cancelled while the interest now
collected thereon for the benefit of the city will
go to swell the plethoric purses of the Davises
and Meyers and other holders of the city debt.
Very respectfully yours, S. SoLoN HoLL.
Sacramento, January DIST