Court Opinion

ID: 6597942
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:04:53.881457+00
Date Added: 2024-06-11T15:57:54.780784
License: Public Domain

Cole, J.,
dissenting. The constitutional questions presented by this record are substantially the same as those involved in the case of Bushnell vs. The Town of Beloit;* upon which I have expressed my views, in the opinion in that case. I have but little to add in the present case further than to observe that, to my mind, the argument in favor of the validity of the bonds mentioned in the complaint, and of the power of the legislature to authorize municipal corporations to make subscriptions to the capital stock of rail roads, in which the corporation may be interested, is greatly strengthened by the language used in section 3 of Article XI. of the constitution. By this section it is made the duty of the legislature to provide for the organization of cities and-incorporated villages, and to restrict their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit, so as to prevent abuses; thus recognizing in the clearest manner that a power may be conferred upon these corporations to borrow money, contract debts, and loan their credit for some lawful purpose. And if the inquiry is made for what purpose municipal corporations have found it necessary to borrow money and loan their credit, it cannot be said that it has been to defray the ordinary expenses of the local government. These expenses are almost invariably met by direct taxation upon the property within the corporation; or at least it is from this source that the revenue is generally derived. When, therefore, municipal corporations have loaned their credit, it has been done for the purpose of aiding some individual association or cor*186poration in constructing some works, or making some internal improvements, calculated directly or indirectly to benefit the city. It is for the accomplishment of objects of this character that municipal corporations have found it necessary to loan their credit and borrow money, and this was well understood by the framers of the constitution. And, since municipal corporations derived the power from the legislature to loan their credit for these purposes, the duty was enjoined upon the legislature in conferring the power so to restrict it as to prevent any abuse in its exercise. The power must be conferred in some degree before it could be restricted in any. But that it was not intended by the framers of the constitution to deprive the legislature of the power to authorize municipal corporations to aid in carrying on works of internal improvement, but to permit that authority to be granted, under such restrictions as to the legislature might seem proper, would seem to follow, in the clearest manner, from the language employed in this section. And in conferring upon the common council of Janesville power, by resolution, to authorize the mayor to subscribe stock for “ any rail road running to or passing through the city,” the legislature undoubtedly supposed that the limitations upon this power contained in the charter would effectually prevent any abuse in its exercise. The common council, in the first instance, had to submit to the legal voters of the city the question whether the city should take stock; giving at least ten days notice, in some newspaper published in the city, of the time and place of voting upon the question, stating the amount to be subscribed, &c. The election was to be by ballot, and if a majority of the votes cast upon the question was in favor of taking the stock, the common council, by a resolution which was required to be entered upon the city records, could authorize the mayor to subscribe for the city the amount of stock so voted to be taken. And as the concurrent action of *187the cjty authorities and people was necessary to authorize the subscription, it was but fair to suppose that no abuse would follow from conferring this power upon the corporation. The power to take the stock was subject to the will of the people directly affected by the indebtedness; and this was all the restriction the legislature deemed necessary to impose upon its exercise in the present instance. But the legislature must grant the power to municipal corporations to contract debts and to loan their credit before it could restrict or regulate the power conferred.
And without pursuing this line of remark further, I will only add, that it is apparent, as well from the clause of the constitution I am now considering as from the whole scope and spirit of that instrument, that the legislature were not inhibited from authorizing the authorities of the city of Janesville to make the subscription to the capital stock of the Rock River Valley Union Railroad, and to issue the bonds in controversy.
It was likewise insisted upon the part of the appellant, that the ordinance passed by the common council of the city, did not properly fix the place for submitting the question of taking stock to the legal voters of such city, and that due notice of the election was not given, &c. Upon an examination of the allegations of the complaint, I am not able to discover, but that the requirements of the charter in reference to holding the election, were substantially complied with, and the election appears to have been regularly and fairly conducted. At all events, if there were any irregularities in the proceedings preliminary to the issue of the bonds, I do not think any of those relied upon by counsel, are of such a character as ought to invalidate the bonds in question in the hands of an innocent holder for value. It is well known that bonds of this description are intended to be thrown into the market and sold, and it would be an inequitable rule to hold that *188they were void in the hands of a bona fide, purchaser, on account of some defect in the notice of election, or some slight irregularity in conducting the same. See Commissioners of the County of Knox vs. Aspinwal et al., 21 How. U. S., 539; Fisher vs. The Morris Canal Banking Company, 1 Stock, Ch. 667; Mechanics’ Bank vs. New York and New Haven Railroad, 3 Kernan, 599; The City of Bridgeport vs. The Housatonic Railroad Company, 15 Conn. 475.
These cases clearly show what character has been given to this class of securities, and how far courts have gone in excluding defenses, where the suit was not between the or-ginal parties, which was grounded upon some defect in the notice of, or some alleged irregularity in the issue of the bonds. It is true, that the right of the common council to authorize the mayor to subscribe the stock, depended entirely upon the fact that a majority of the legal votes cast at the election, should be in favor of the subscription, but it is not to be presumed that the city authorities did not proceed according to law in ascertaining the will of the people upon the subject, and did not comply with the provisions of the charter authorizing the election. The complaint in the present case sets forth, with great fullness, the prelimin.ary steps which were taken, and I cannot perceive but the city authorities substantially complied with the conditions to the grant of power to subscribe the stock.
The question was likewise made as to whether an action could be maintained upon the coupons described in the complaint, because the bonds to which they are attached are not drawn payable to bearer or order, but to the railroad company or its assignees. The bonds were assigned by the president of the company to-or bearer; and the coupons are made payable to the railroad company or bearer. These securities are of a peculiar character, designed to be thrown into the market for sale, to raise money upon, or to *189pass from hand to hand by delivery, and by common usage, are, in fact, so transferred. Though they may not be commercial paper, in the strict sense of the word, like bills of exchange, or promissory notes, yet they circulate in market much like those instruments, and are intended to answer much the same purpose. They can be transferred by delivery or assignment, so as to confer a complete title upon the holder, relieved from the equities existing at the time of the assignment, between the maker of the instrument and the assignor. Morris Canal and Banking Co. vs. Fisher; Mechanics’ Bank vs. New York and New Haven Railroad Co.; supra.
In the case of The Commissioners of Knox Co. vs. Aspinwall, the court decided that a suit could be maintained upon the coupons without the production of the bonds to which they had been attached.
Although this action is brought to recover the amount due upon the coupons set forth in the complaint, still it appears that the bonds to which the coupons in question are attached, belong to the respondents. And under the provisions of our code, § 15, which requires every action to be prosecuted in the name of the real party in interest, I cannot doubt but that the respondents, to whom the bonds and coupons belong, properly instituted this suit, and are entitled to recover the amount due upon the coupons. See Wookey vs. Pole, 4 B & Al. 1; Gorgier vs. Mierrile, 3 B. & C., 45; Lang vs. Smyth, 7 Bing., 284.
Neither do I see any force in the objection that the subscription by the city for the stock of -the company, was not made payable in installments, upon call, as required by section 6 of the charter of the railroad company. The city was, undoubtedly, authorized to make the subscription in the way it was made, and it would seem logically to follow from this fact,.that the company was authorized to receive such *190subscription. At all events, if the charter required any modification to enable the company to make the contract, such modification was made by the city charter, which is full and complete for all purposes. The City of Bridgeport vs. The Housatonic Railroad Company, 15 Conn., 475.
Some further objections are taken to the validity of the bonds mentioned in the complaint, but I only deem one of sufficient importance to be noticed, and that is, whether the charter of the city of Janesville is a general law, within the meaning of the constitution of this state. It appears that before there was any authorized publication of the charter, the city government of Janesville was organized, and the election was held, at which the electors voted in favor of the common council making the subscription to the railroad stock, and for issuing these bonds; and it is contended that as the charter was a general law, it was not in force until published, and the subscription and election were unauthorized and void for this reason. The majority of the court have adopted this view of the character of the city charter, holding it to be a general law, and not in force until published, and from their conclusions upon this point, I am compelled to dissent. Where the act, in pursuance of which the bonds are issued, is a public statute of a state, I have no doubt but that any person dealing in them is chargeable with knowledge of it, and must take notice, whether the authority to subscribe the stock has been conferred. In this case the common council were acting under the city charter, and if that was not in force, it follows, of course, that their power to act did not exist. It is obvious that the question is not whether an irregularity has intervened in the exercise of the power to subscribe the stock, but whether any power, in fact, existed to make the subscription.
Is, then, the charter of the city of Janesville a general law, within the meaning of section 21, of Article VII., of the con*191stitution of this state ? That section reads as follows : “The legislature shall provide by law for the speedy publication of all statute laws, and of such judicial decisions made within the state, as may be deemed expedient. And no general law shall be in force until published.” The argument mainly turns upon the force which is given to the words “ general law,” as used in this section. The majority of the court consider that the word “ general,” here employed, should have the signification and meaning as is given to the word “ public,” by authorities, when speaking of the classification of statutes. It is not to be denied, that many authorities use the words “ general” and “public,” when applied to statutes, as being synonomous, and strictly convertible terms.
In the case of The State of Wisconsin, ex rel. Cothren vs. Lean, decided at the last term, 9 Wis., 279, where the question raised was whether the act of the legislature, providing for the removal of the county seat of Iowa county, from Mineral ¿Point to Dodgeville, in case a majority of the legal voters of the county voting upon the question, should be in favor of the removal, was a general statute, and we held that law to be a general law, and not in force until published. Although I concurred in the decision in that case, yet I had difficulty in arriving at the result reached by my brethren, and I am free to admit, that my doubts as to the correctness of that decision have been strengthened rather than removed by subsequent reflection upon the subject. It is by no means clear to my mind that the “ general law” spoken of in the provision of the constitution above cited, is not a law which affects all the citizens generally, and operates territorially over the whole state. The law providing for the removal of the county seat of Iowa county, or the charter of the city of Janesville, is unquestionably a public act, expressly made so by a clause declaring them to be such.
But a distinction is made, and to my mind may well exist, *192between public general acts, and public 'local acts. Smith, in his Commentaries upon Statute and Constitutional Law, § 797, p. 914, says: “In parliamentary language, another sort of distinction is also usual, and some acts are called public general acts, and often others, public local acts, such as church acts, canal acts, &c. These in their objects and oper-atións, are merely local, or limited, but they are, nevertheless, treated as public acts, either by virtue of a special clause, declaring them to be so, or because, although limited to a particular section, or locality, yet they affect the public at large, when acting within that section or locality, in reference to matter within the purview of the act. To this class may also be added some acts which, though public, are merely personal, such as acts of attainder, and patent acts, and all that class of acts which have for their object the security of the right of some particular individuals or class of persons, but which, in effect, are operative and of binding force upon all the citizens generally.” The distinction here pointed out is, to my mind, rational and proper, founded in the nature of things, and I think should be adopted. Particularly do I deem it applicable to the laws of this state, when we bear in mind the construction placed upon this clause of the constitution by the legislature, and the officers of the government, in the classification and publication of the statutes, since the organization of the state government. The legislature provided, § 2, sub-division 22, chap. 4, R. S., 1850, that all acts of incorporation shall be deemed public acts, and as such may be declared on, and given in evidence without especially pleading the same; and as a matter of fact, most of the acts passed by the legislature contain a clause declaring that they shall be deemed public acts.
Further, in conformity to law, the statutes have for some years been published in two volume; those of a general nature in one, and those of a local character in another. And *193although the latter class have mostly been declared to be public acts, still the understanding of the officers and people of the state has been that they were not general laws, which came within the provisions of the constitution. Hence cities and villages have been organized, officers elected, taxes levied, real estate purchased and conveyed, and other obligations incurred, before there was any authorized publication of the acts of incorporation. Now if all these statutes, which elementary writers and courts have declared to be public laws, are held to be general laws within the meaning of the constitutional provision, and were not in force until published in some authorized manner, it is difficult to foresee the confusion which will arise, or the serious consequences which will follow from such a construction.
But there is another clause of the constitution which has a very important bearing upon this question, and shows most conclusively to my mind, that the charter of the city of Janes-ville is not a general law, within the meaning of that instrument I refer to section 1, Art. XI, which reads as follows: “ Corporations without banking powers or privileges, may be formed under general laws, but shall not be created by special act, except for municipal purposes, and in cases where, in the judgment of the legislature, the objects of the corporation cannot be attained under general laws. All general laws or special acts, enacted under the provisions of this section, may be altered or repealed by the legislature at any time after their passage.” This is the whole provision, and it seems to me little more need be said to show that a charter of a city is not a general law, than to quote this language. The section declares, in substance, that corporations shall be formed under general laws, except those for municipal purposes, which may be created by special act. But what is understood by the language, a municipal corporation created by a special act ? What is the special act referred to ? Is it anything different *194from a city charter ? Does not the special act here referred to, mean those laws of incorporation granted by the legislature to villages and cities for police and governmental purposes ? Is not this the plain, obvious, universal understanding of the language ? These questions suggest their own answers. The framers of the constitution, then, evidently contemplated that municipal corporations would bé created by special act, in other words, by charters. General acts might be passed, applicable to all villages, and cities, like the general banking law, or plank road law, but it was doubtless supposed that there might be some details or some peculiar provisions which could not be well comprehended in a general law, and that special acts of incorporations would therefore become necessary. Hence the exception that charters or special acts of incorporation for municipal purposes might be passed, and those special acts are spoken of in this section, and placed in immediate connection with, and are used in direct contradistinction to the general laws mentioned in the same section. If a city charter is held to be a general law, then it is difficult to give this section any rational construction. I am not aware that there are peculiar provisions in the charter of the city of Janesville, which distinguish it from other city charters in this and other states. It is quite probable that it differs in some unimportant particulars, but the main, leading features of these city charters are the same. I have no doubt, but it is substantially such an act of incorporation as the framers of the constitution had in view when they speak of special acts in this section. It is the special act “ creating a corporation for municipal purposes,” which the legislature was authorized to pass.
Holding, therefore, that the charter is not a general law within the meaning of the constitution, the clause in reference to the publication of general laws does not apply to it. I have no doubt but that the organization of the city government of *195Janesville, and the election held under the charter, at which the people voted in favor of the common council making the subscription and issuing the bonds in controversy, were all regular and proper.
I therefore think the order of the circuit court, overruling the demurrer, should be affirmed. ..

See this case below.