Court Opinion

ID: 6640148
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:44:45.622713+00
Date Added: 2024-06-11T15:59:12.635679
License: Public Domain

By the Gov/rt.

L. Emmett, Chief Justice.
This proceeding grew out of a diffei’ence of opinion between the Governor of the State, and the Railroad Companies, as to the requirements of Section 10, of Article 9, of the Constitution as amended by a vote of the people, on the 15th day of April, A. D. 1858. The clause material to the matter in controversy, is in these words : — “ And as farther security, an amount of first mortgage bonds, on the roads, lands and franchises of the respective Companies, corresponding to the State Bonds issued, shall be transfei’red to the Treasurer of the State, at the time of the issue of State Bonds.”
This language, in the opinion of the Governor, gives to the State an exclusive lien on the roads, lands and franchises of the respective Companies, to the extent of the bonds which ' may be received from them, and in the words of his written requirements, he insists on “ a deposit of first mortgage bonds, of the Companies, made to the State, based upon a Deed of Trust to the State, equal in amount to the State Bonds issued to such Companies, which Deed of Trust shall specify a priority of lien to such bonds, as the Companies may deliver to the State in exchange for her bonds.” On the other hand, the Companies deny that the State is entitled to any preference as to these securities. The Minnesota and Pacific Railroad Company having tendered and offered to transfer to the Treasurer of the State first mortgage bonds at the rate of one hundred thousand dollars for every ten miles of its road, then completed *15and ready for the superstructure, secured by a Deed of Trust on its road, lands and franchises, and demanded of the Governor that he cause to be issued and delivered to said Company a corresponding amount of State Bonds, which he refused to do, makes the application for a peremptory Writ of Mandamus.
It is admitted that the Company has strictly complied with the provisions of it's Charter, and of the Constitution, in all, save that the Trust Deed, given to secure its first mortgage bonds, does not express a preference, as to such bonds as may be transferred to the State. This Trust Deed conveys the road, lands and franchises of the Company to certain trustees, to secure the payment of bonds issued, or to be issued, for the construction of the fifty miles of its road, then contracted to be built, and such other of its bonds as might thereafter be issued under certain restrictions, amongst which are the following, to wit: Whenever, and as often as the construction of forty additional miles of said road, or its branches, shall be contracted for, additional bonds may be issued for said construction, not exceeding the rate of thirty-five thousand dollars per mile, and so on as the work progresses, until the road is completed. The bonds are all to be made payable at the same time, must be countersigned and registered by the trustees, and bear a rate of interest not exceeding seven per cent, per annum.
From this, it will be seen that the question to be determined is not as has been insisted, whether the Company can issue bonds ad Mbitwn, and thus depreciate and destroy the security given the State by the clause under consideration ; for the Trust Deed expressly limits the amount of the issue, and it was not claimed that the utmost limit allowed exceeds the actual cost of constructing and equipping the road. Doubtless the Courts would interfere to prevent the depreciation of the securities by fraudulent issues of bonds. Here, however, the real question is, whether the State legally or equitably, has a right of priority over all others who may expend labor or money in the construction or equipment of this road. It seems clear, that such a claim could not commend itself very strongly to the favor of a Court of Chancery, and it should follow in all such cases, that the legal right to such undue preference, must be clearly made to appear before it can be admitted,
*16In giving construction to this Section of the Constitution, we will be aided, by recurring to the condition of that instrument before it was amended, and considering the occasion, the necessity and the obj ect of the change. We shall then be better able to determine the precise meaning of the language employed. Prior to the amendment, the State was prohibited from loaning its credit in aid of any individual association or corporation. The Constitution was ratified by the people, when submitted to them, with marked unanimity, as much perhaps out of regard for it as a whole, and to put to rest the vexatious questions of regularity, which attended its formation, as from any peculiar favor with which each particular provision was viewed. Congress had previous to this made a munificent, grant of lands to the Territory, to aid in the construction of certain lines of railroads, and a Territorial Legislature had disposed of these lands to certain Railroad Companies. These several Companies had duly organized, and most if not all of them had located their respective roads. Scarcely had the people paséed upon the Constitution in this form, before the financial embarrassment into which the whole country-was thrown, made it apparent to all, that unless these roads received some assistance from the State they could not be built, and the land grant would thus be lost to us. To secure this Governmental aid, and to prevent so great a misfortune as the loss of the land grant, a change in the fundamental law was deemed necessary, and accordingly the Legislature then in session, passed an act in accordance with Section 1, of Article II, of the Constitution, proposing so to amend Section 10, of Article 9, as to authorize the State to loan its credit to the several Railroad Companies having possession of this grant of lands. This proposition was duly submitted to the people for approval or rejection, and was adopted by a majority quite as decided as that given for the Constitution in its original form, showing that, whatever would have been the result on the provision as it stood originally had there been an opportunity to vote on the proposition separately, they were at last satisfied that a change was necessary. Certain it is, that they gave unequivocal expression to their desire that the State should loan its credit, in aid of these lines of railroads. The first paragraph of the *17Section expresses the object of the change to be “for the purpose of expediting the construction of the lines of railroads, &c,” and in this the State has an interest scarcely inferior to that of the Companies themselves, not an antagonistic interest, but in perfect harmony with the interests of the Companies.
The Section is now in these words, “ The credit of the State shall never be given or loaned in aid of any individual association or corporation, except that for the purpose of expediting the construction of the lines of railroads, in aid of which the Congress of the United States has granted lands to the Territory of Minnesota. The Governor shall cause to be issued and delivered to each of the Companies in which said grants are vested by the legislative Assembly of Minnesota, the special bonds of the State, bearing an interest of seven per cent, per annum, payable annually at the City of New York, as a loan of public credit, to an amount not exceeding twelve hundred and fifty thousand dollars, or an aggregate amount to all of said Companies not exceeding five millions of dollars, in manner following, to wit
The Section then proceeds to declare what it is necessary for the several Companies to do, in order to obtain the State Bonds. Provides for the manner in which they shall be issued, pledges the faith and credit of the State for the payment of the interest and the redemption of the principal. And after requiring each Company to make provision for the punctual payment of the principal and interest, provides that “ as security therefor the Governor shall demand and receive from each of said Companies, before any of said bonds are issued, an instrument pledging the net profits of the road, for the payment of said interest, and a conveyance to the State of the first “ two hundred and forty sections of land, free from prior incumbrances, which such Company is, or may be authorized to sell in trust for the ' better security of the Treasury of the State from loss on said bonds,” and authorizing the Governor to make title to such lands to certain purchasers. Then follows that portion already quoted. As has before been stated there can be no reasonable doubt that the end and object of the amendment, taken altogether, was “ for the purpose of expediting the construction of these lines of railroad,” and it seems equally clear that the *18design, of the clause under consideration was to provide the State with a certain class of securities in addition to those already designated as the security required of the Companies for the punctual payment of the principal and interest of those bonds. The language refers to the kind and not to the sufficiency of the security. This clause then shouldbe so construed as not to defeat the object of the Section itself; and a majority of the Court holds that the construction contended for, by the Governor, has a direct tendency to that end. Nothing certainly could more effectually deter capitalists from investing in these roads, than to find that notwithstanding they may furnish, as in this instance, five-sevenths of the money_necessary to construct and equip these roads, the State may nevertheless have a lien on everything, which may be enforced to the loss perhaps of their entire interest. We cannot now object to the sufficiency of the securities provided: all we can do is to require that they be of the kind and class contemplated.
The language is, that “ as fwrtJicr security, an amount of first mortgage bonds, on the roads, lands and franchises of the respective Companies,” &c. Ordinarily, “first mortgage bonds” are simply bonds secured by the first mortgage. Is there any thing to show that the words mean anything more as here used? We think not. . Had it been the intention to give a priority of lien t'o the State, the term “ first mortgage” only, would undoubtedly have been used, which would have left no room for doubt. Again, the words “ an amount of,” preceding the term “ first mortgage bonds,” evidently implies a portion only of a greater amount, and necessarily a remainder after the transfer to the State. What is that remainder, or how can it be ascertained or limited? Some light may be thrown on these questions by reference to the mode of procedure common among Railroad Companies. It is usual for such Companies after surveying and locating their roads, to make careful estimates of the costs of building and stocking the same, and then if sufficient money is not raised otherwise, to provide for the issue of bonds, based upon these estimates, to raise money to build and equip them. These bonds are secured by a mortgage on the road and franchises, and are called first mortgage bonds. They are from time to time put into market and sold as the *19exigencies of the i;oads may require. This course is much in favor, as it gives to all who furnish money to build or equip the roads an equal lien upon the securities, and is considered necessary to success, as it would be next to impossible to obtain money to stock a road, if it were encumbered with a prior lien for the cost of construction. If from any cause these bonds are exhausted, and more money is required, a second mortgage is sometimes executed and the bonds secured by it are termed “ second mortgage bonds.”
The Charter of the Company' making this application is framed, no doubt, with a view to just such a course to raise money as here indicated, (See Sec. 21 of the Charter,) and as this amendment of the Constitution was framed with direct reference to the Charters of the several Companies intended to be benefited, it is not difficult to believe that the words, “ an amount of first mortgage bonds,” refers simply to bonds of this class. When terms of art or peculiar phrases are used, it must be supposed they are used in the same sense as understood by persons familiar and acquainted with such terms. 3 Phillip’s Ev. 1395; 1 Pick. 261.
In construing a constitution or law, the history of its passage through the Convention or Legislature, is often of great assistance, and the history of this amendment to the Constitution during its progress through the two branches of the Legislature fully sustains the position, that the State has no priority of lien as to these first mortgage bonds.
By reference to the printed journals of the two houses, (which however do not contain any proceedings had in Committee of the Whole, where most amendments are proposed and discussed,) it will be found that the bill proposing this change in the Constitution, originated in the Senate, and passed that body on the 2d day of March, 1858. On the day previous to its passage, Senator Cook' moved to amend by inserting in the clause under consideration, the following: “ And the first mortgage (bonds) thus transferred to the State Treasurer, shall be the first lien upon and take precedence over any other bonds that may be issued, upon the first fifty miles of road which said Companies may respectively construct.” This amendment was lost, and the bill was immediately ordered *20to be engrossed for a third reading. Journal of the Senate, pages 266-7. Afterwards, on the 5th day of March, while the bill was pending in the House, Mr. Libbey offered an amendment, giving to the State an “ exclusive priority of all other Mens,” on the roads, lands and franchises of the respective Companies, and this amendment was also rejected by a very decided vote. House Journal 447.
Thus it will be seen that each branch of the Legislature expressly negatived a proposition giving to the State any priority of lien as to these first mortgage bonds, and yet it is insisted that the State has this priority by implication. We think it is against the reason and spirit as well as the letter of the Constitution so to contend. Authorities were read to show that where words are doubtful in their meaning, as between the government and an individual, that construction should be given which is most favorable to the public. We have'been unable, however, to discover such a degree of doubt or uncertainty in the meaning of the language used, as will make these authorities applicable to this case. On the contrary the words are explicit and free from obscurity.
In construing a statute or constitutional provision, the great object is to ascertain and interpret so as to carry out the intention of the law given; and as a primary rule, the language used is to be first considered as being the best evidence of what that intention is, and when the words are clear, explicit, unambiguous and free from obscurity, Courts are bound to expound the language according to the common sense and ordinary meaning of the words. Broom's Legal Maxims, 365-6-7; Story's Com. on Const., 383; Smith's Com. on Const.. 627-8-9; 1 Kent Com., 462; 17 Ver., 479; 4 Hill, 402-3. It is only by interpolating words in the Constitution which the framers thereof expressly rejected, that any well-founded doubt can be entertained as to the meaning of the language used.
Other cases were cited to establish the old doctrine, that in a grant from the State or Sovereign to an individual, nothing can pass by implication; but this rule however well established, can have no application to a case like the present, when nothing is asked by implication, except by the party who insists on *21tlie role. The rule applicable to this case is, that nothing clearly granted can be taken away by implication.
Another and insurmountable objection to the construction , claimed by the Governor, is to be found in this fact: Each Company is first required to give to the State an instrument pledging the net profits of the road for the payment of the interest on these bonds, and also a conveyance of the first two hundred and forty sections of land, which it is or may be authorized to sell, in trust for the better security of the State. These two separate securities are rendered entirely unnecessary, if the first mortgage bonds mentioned are to be secured by an instrument giving them a pi’ior lien on everything belonging to the Company. This would be to require different securities of the same nature upon the same property. It is not necessary to involve the framers of this amendment in such an absurdity. Eull force and effect can be given to each of these instruments, without doing violence to the language of the Constitution, or the intention of the law-makers. They evidently intended to provide the State with an exclusive lien on the net profits of the road, and the control of the first two hundred and forty sections of land, and to place her on an equal footing only, with other creditors, as to the bonds received from the Companies. Whether the amount or character of the securities thus provided is sufficient to secure the State from loss, is of no importance in the consideration of this question, except as far as it may show the reasonableness of the construction about to be given. With this view it is not improper to notice that the State has all the security that is offered to capitalists to induce them to build and equip this .road, and has in addition thereto, a pledge of the net profits, and a conveyance in trust of lands, worth, even at the government price, nearly four hundred thousand dollars, nearly one-third of the amount of State Bonds which the Company can by any possibility obtain. If therefore it may reasonably be expected, that capitalists will advance money on the securities offered to build these roads, it is not unreasonable to suppose that those who framed as well as those who approved this amendment to the Constitution were satisfied with thé class of securities which the State, was to receive for the simple loan of its credit. We think that the *22Company has done all that is necessary under the Constitution to entitle it to the amount of State Bonds demanded, and as it is well settled, that this writ lies in all cases, when the relator, has a clear legal right to the performance of some official act by a public officer, and no other adequate and specific remedy, we award a peremptory mandamus, and direct that it be served by the Clerk of this Court or any other disinterested person, by reading and delivering a certified copy thereof if demanded: