Court Opinion

ID: 6235579
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:31:45.149208+00
Date Added: 2024-06-11T08:57:57.171968
License: Public Domain

The following dissenting opinion was filed, October 4th 1877, by
Agnew, C. J.
On leaving Harrisburg, where this cause was argued at the close of the session, I was under the belief that an instruction had been given to reverse the decree. Three of us were of that mind. No fault is found with the report of a contrary opinion ; but it is a source of deep regret that this misunderstanding leaves now no opportunity in a two months session to examine and reply to an elaborate argument of twenty-six closely written pages. No option is left but to indicate in a general way the grounds of those who differ from it.
The leading doctrine of the opinion is dangerous in its character, *506imperilling the interests of the inhabitants and taxpayers of all our cities, to an extent bounded only by the true character of those who administer their affairs. The recent arid too lamentable history of corporations, public and private, teaches us how unreliable this dependence is. The doctrine of the opinion, reduced to a few words, is, that a power to make improvements and perform other duties, involving an expenditure of money, imports, by inference, and without special legislative consent, the power to issue and sell negotiable bonds in the market, without limit, except in the discretion of the city officials, and as a consequence at the market price which may be a discount on the face of the bonds. That no injustice may be done to the argument, I may state what the opinion fails to notice or distinguish, that of the bonds issued by the city of Williams-port, sixty-seven were for “unknown purposes,” and one hundred and eighty-three were to “persons unknown,” and for “purposes unknown” (vide Table D., p. 25, et seq.); that of six hundred and ■ forty-five bonds issued, one hundred and forty were sold'at sixty-three cents on the dollar, two at sixty-seven cents, and twenty at eighty-seven cents. These were all bonds of $1000 each. Also, that of the whole sum of $645,000, in bonds, $123,339 were not authorized by councils, and that one hundred and sixty-two one thousand-dollar bonds were issued to pay old debts and sold at a large discount. (Vide Statement C., pp. 23 and 24,-and testimony of H. Mudge, Jr., p. 9.) In this connection it may be also stated that the old debts thus taken up were bought in by the party receiving the bonds at discounts varying from five to forty cents on the dollar. Of the $645,000 of debt thus incurred in negotiable bonds, but $200,000 were authorized by Act of Assembly. Finally, the ordinance of June 22d 1868, is an ordinance for the “ advance” of money to pay old debts and make future improvements, and the ordinance of September 22d 1868, provides for issuing bonds in sums of $1000, payable to “ bearer.” Now the citizens of Williams-port find themselves involved in a debt of $645,000, none of Avhich can be contested, when they find their way into the hands of bona fide holders for value, if the power to issue this amount be sustained, whether they be legitimate or illegitimate. Here it is the doctrine of the opinion does a great wrong. It sustains the illegitimate as well as the legitimate issues, on the ground that the implied power to issue them exists, and with this segis covers the entire sum. The rightful and the wrongful rest upon the same basis of power, and the decree commands the city to raise the entire interest by taxation. No distinction is made and no remedy afforded to contest the wrongful. All these bonds are not invalid. Two hundred thousand were specially authorized by law, and others were probably given to honest contractors in payment of debts, and may be supported on the proper ground that bonds given for actual debts are binding. But the doctrine of the opinion goes far beyond this *507legitimate line of argument, and by a sweeping power derived from inference only, as a theory of municipal government, all are cast into the same pool to pay both honest contractors and gamblers in the city credit.
In substance, and when stripped of all verbiage and general statement, what is the argument which sustains this abuse ? That a power to make certain improvements and perform certain municipal duties, implies a power to contract and a duty to pay, and these again imply a power to give a suitable evidence of the debt, or the obligation to pay. To the extent of these powers and duties let the position be'granted. This may be conceded to be a legitimate argument, when the instrument evidences an actual debt incurred in the execution of these powers, but it cannot be carried a step beyond without violating both law and logic, and endangering the safety of the people. That logic is false which deduces from the power of a mere municipal corporation to contract debts for improvements and the like, and give the contracter or the laborer an evidence of the debt due to him; a power on part of such a corporation, created by law for governmental purposes, to issue commercial paper, be it bonds or notes, payable to the bearer, and negotiable according to the law merchant or general usage, and either'to sell them in the market, or pass them off to individuals by way of a general loan. This power belongs to individuals and private corporations, whose directors are the agents of stockholders, but not to a mere municipality, unless specially authorized by law. If a city contracts with A. to lay a pavement or do other legitimate work, the contract or the work measures the payment to A., and fixes the liability of the city. To him, therefore, a bond or note or warrant may be given as the evidence of his debt, and so far an implied power to issue the paper may be urged. The same may be said of any other service or duty which a city is authorized to perform. So when a power to borrow money is conferred, the loan measures the sum, and the instrument evidences the debt thus incurred. But here again the city is protected by the actual contract of loan, and if the lender be guilty of usury by deducting a large discount, the city may defend. To this extent an inference from the power to borrow money may legitimate the instrument given as the evidence of the debt. But on what principle of logic or right reason, and on what ground of public security- can it be inferred that a mere city government, for certain public purposes, can issue negotiable bonds, not to actual creditors, or for debts actually incurred and measured by the contract or the work done, but to be thrown upon the market or offered at private sale, in any amount the mere will of the councils may choose to resolve. This is not a municipal power. It flows from no relation of the citizens to the corporation. They are not stockholders, nor partners, nor associates, but are a portion of the people, living under a local government for *508certain local purposes. The officers of a municipal corporation are not the agents of the people. They are merely officers elected or appointed to perform certain municipal or local governmental duties defined by law in the'charter or by those ordinances which the charter has authorized to be made. These duties cannot be extended by mere implication to grave and important acts not authorized by the law. Nothing but legislative grant can do this.
The labored argument to distinguish between cities and counties, evidences the strain upon the logic of the opinion. No difference exists to give color to an argument in support of an implied power, such as is inferred. Both are merely local governmental bodies to perform those local duties which the general legislative power cannot attend to. In nature they are the same, though differing in the extent and ends for which their powers are conferred. Neither can exercise a merely discretionary, or a merely commercial, or business power, not conferred by a legislative grant, for both are the mere creatures of the law, for government, and not for business purposes.
A power to issue at discretion an unlimited amount of commercial paper, not to actual creditors, but designed for the market, or for private investment, is not in its nature a municipal function or local governmental act, but is a mere business or commercial act, and if the councils can issue $645,000 or $445,000 beyond the legislative grant of power in this case, they can issue as many millions. They were not elected to exercise any such power; they do not represent the people for any such purpose, and they ought not to be intrusted with any such wild discretion.
Again, the doctrine of the opinion is contrary to the genius of the people and the spirit of their constitution. It was doubted at first whether even the legislature could constitutionally confer powers beyond those simply .municipal, and when the case of Sharpless v. Philadelphia and kindred cases sustained the legislative power the people straightway interfered, and the series of amendments of 1857 curtailing this power was adopted. Since that time the people have again spoken in emphatic terms in the new constitution of 1873, further curtailing both legislative and municipal power. Yet this opinion by a stroke of the pen clothes the councils of cities with a sweeping authority drawn from inference and unlimited by law, by which the people of all our cities, great and small, are left at the mercy of ringsters, jobbers and plunderers. Will no example bid us shun this vortex of corruption ? How long is it since this city of Pittsburgh, wherein we sit, has suffered losses by the issue and improper manipulation of its bonds of such magnitude its credit staggers under the load. What body, public or private, is safe from the machinations of dishonest men ? It is but a few days since the city of Philadelphia has been thrown into wild consternation by a fraud of such dimen*509sions its business men scarcely know their condition or where to look for honest men.
Another fact is noticeable. Left without time for examination, I cannot state it as a known fact, yet from my general recollection of legislation, and the policy of the state, I believe it to be a fact that a power to borrow money by the issue and sale of negotiable bonds, payable to bearer, with or without coupons, has never been known to exist in any city except by special legislative grant. In the opinion, the example of the city of Philadelphia is referred to upon the power to borrow money, which, as I have shown, is measured and limited by the contract of loan, and therefore not within the case under discussion. If, however, there has been any departure in that city, I can only say that a calculation for the meridian of Philadelphia is wholly unsuited to the rest of the state.
Of course I cannot, in this hasty effort, examine the judicial decisions referred to, but I venture to assert that the real weight of judicial opinion is against the doctrine of such implied power, and that the cases cited in its support are chiefly those where the bonds or instruments in question were issued to actual creditors, or for debts actually contracted. Looking at the interests of the people and the genius of their institutions, ours should be the duty of restraining the capability of mere public servants to rob the people, instead of giving it wider scope for injury.
There is much more that ought to be said, and which might be better said than it can be in this work of a night. But, hasty as it is, I feel it an incumbent duty to put on record my dissent from a doctrine fraught with so much danger, resting on such slender grounds of implication, and opposed by so much respectable authority.
I hold, therefore, that a public corporate body, created by law for merely governmental purposes, has no implied power to issue negotiable bonds to raise money either in the open market or by sale to individuals for investment, at the mere will or discretion of the city councils, unauthorized by Act of Assembly, and unlimited in amount or in price. It is not a known municipal power, but one of the most dangerous kind, and I dissent, therefore, from a decree which places the bastard issues on the same plane of right as the issues for actual indebtedness for proper municipal purposes. The case before us calls for a just discrimination between them, and the decree should have been so framed.
In reply to the addenda, it may be said the Act of 20th May 1874 is foreign to the question here. It is not retrospective and does not help the unlawful issue of these bonds. As to the future, while it is a restraining statute when a city debt is sought to be increased, it justifies no implication of the prior existence of the power to issue and sell negotiable bonds either in open market, or *510to an individual for investment at sixty three, sixty-seven and eighty-five cents on the dollar. On the contrary it is a legislative expression against the power.
Nor does the fact that the bonds, or rather the proceeds of them, may be applied to the various purposes stated in the conclusion of the opinion, justify the manner of issuing and selling them at the enormous discount shown by Table D. The application of sixty-three dollars received on a bond, to a lawful debt, does not atone for creating a debt of $100. It does not help the argument for an implied power to launch them out in the illegal manner stated; nor justify a sweeping decree to compel payment of the interest on the whole issue without discrimination.
Justices Woodward and Sterrett concurred in this dissenting opinion.
The plaintiffs in error subsequently applied to the court for a reargument, which application was refused by a majority of the court, Agnew, C. J., and Woodward, J., dissenting.