Court Opinion

ID: 6237931
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:37:04.621309+00
Date Added: 2024-06-11T08:58:06.454408
License: Public Domain

Mr. Justice Paxson
delivered the following dissenting opinion October 5th, 1885, in which Justices Green and Clark concurred.
The complainants below are citizens and taxpajmrs of the city of Pittsburgh, and they filed this bill to prevent the corporate authorities of said city from further proceeding in the execution of a contract by which the appellants had agreed with the said city to place1 some six millions of its five per cent, bonds at par. The complainants allege, 1st, that the contract was tainted with .fraud, and 2d, that it was ultra vires; and upon these grounds they ask what practically amounts to its rescission.
As this is asked of a court of equity, a court whose decree is of grace, not of right, and whose conscience must be moved before it will act, it is proper to pause just here before I enter upon a discussion of the case, and consider intelligently what we are asked to 'do. This is the more necessary from the fact that the case involves large public as well as private interests, and has excited considerable feeling in the locality to be affected by it. The oral arguments to which we have listened, and *206the printed arguments which we have read, plainly reflect this state of things. It is therefore the more necessary to bring to the consideration of the case that calmness which should always mark judicial action.
It is an undisputed fact that the contract has been executed to the extent of $1,500,000; that is to say, bonds to that amount have been delivered by the city authorities to the appellants, who paid for them at par, and who have resold them to innocent parties. We have then an application on the part of persons who were not parties to the contract to strike it down after its execution to this large extent, upon the ground that it was fraudulently made, and was moreover an excess of authority on the part of the city officials. If either ground were well taken, it would be the duty of the court to grant the prayer of the bill. But it ipust be apparent to the dullest comprehension that such action, involving consequences of so serious a nature, ought not to be had excepting after the most mature and careful consideration, and upon the clearest proof.
• The first question to consider is the charge of fraud. Upon this point the Master has found that there was no actual fraud on the part either'of the city authorities or the appellants in the making of the contract, but he finds there was constructive- fraud, in this, that the appellants, Whelen and McCandless, occupied a confidential relation to the’ city; that they did not disclose to the officers of the said city, as they ought to have done, all the facts and circumstances pertaining to the question of the valué of the said bonds, and necessary in order to determine the advisability of the making of said contract of May 14th, 1881, by the city as they (the members of said syndicate) possessed them; and that said syndicate have not shown that they gave to said officers of the city the benefit of their skill and judgment as financiers upon the question as to whether or not it was to the interest of the city of Pittsburgh to execute said agreement. •
The learned judge of the court below, goes further than the Master, and finds both actual and constructive fraud. He says in his opinion: “In our opinion the evidence shows, and we find as a fact, that there was actual fraud in the procurement and making of the contract.”
Actual fraud is a question of fact, and like every other question of fact must be determined upon the evidence. And it should only be found upon satisfactory evidence. When .it is brought against a number of men who have long maintained a high character for integrity, it should never be assumed, nor should it be inferred from weak and inconclusive facts. It is *207a charge which should never be lightly made, affecting as it does the business, moral and social standing of the parties.
It is a significant circumstance that throughout this vast mass of testimony there is no proof that any one concerned in this transaction, whether' as banker, member of councils, city officer or private citizen, was guilty of corruption. The profits of the contract belonged exclusively to the bankers who agreed to negotiate the loan. The evidence shows that not a dollar ever found its way, directly or indirectly, into the pockets of any city official, nor was there any agreement or understanding looking to such an event in the future.
In what then did the fraud consist? It was alleged that the contract was improvident on the part of the city; that the bonds were at that time worth more than par; that they have constantly appreciated in price, and are now selling at 110; that it was unnecessary to contract in advance for the placing of $6,000,000 of bonds, when many of the Street Bonds which they were intended to replace did not mature for two, three or more years. There were some other trifling matters thrown in as make-weights, but the real ground of the charge of fraud consists in the allegation that the contract was so manifestly adverse to the interests of the city at the time it was made, as in itself to constitute evidence of fraud.
It is necessary here to move with caution. It will not do to attach undue weight to the fact that the bonds have largely increased in value, for two reasons, viz.: 1st, that such' advance may be due to some extent to the contract itself, and 2d, that had the price of bonds declined instead of advancing, we would have heard no allegation of fraud; there would have been no bill filed to restrain the city from issuing the bonds, but, on the contrary, the strong probability is that the complainants and the municipality would have united in holding the appellants to their contract.
The present value of the bonds has little significance in the consideration of the question of fraud. Their value at the time the contract was entered into may have more importance. Was the contract so improvident; so adverse to the interests of the city, as to furnish reasonable grounds to .believe that it was betrayed by those having charge of its affairs, or that the city authorities were fraudulently misled by the bankers who were contracting with them ? It is plain that a mere error of judgment on the part of the city would not stamp the transaction as fraudulent. While, therefore, the wisdom of the contract is not an important element in determining its character, it is nevertheless necessary to refer briefly to the circumstances under which it was made. If made in good faith neither party can repudiate it merely because it was unwise. *208The law was so declared in City of Williamsport v. Commonwealth ex rel. Bair & Shenk, 3 Norris 487.
About the year 1877 the city of Pittsburgh defaulted in the payment of interest in a series of bonds amounting to over «$5,000,000, commonly known as the Penn Avenue Bonds. In Commonwealth ex rel. Whelen v. Select and Common Councils of the City of Pittsburgh, 7 Norris 66, we decided that these bonds were the bonds of the city of Pittsburgh and a part of its funded debt; and ordered a peremptory mandamus to issue to the councils of said city, commanding them to make provision for the payment of the interest. The interest which had accumulated at that time, together with interest for the current year, amounted to about $1,400,000, and the city had not the cash means on hand to pay this large sum. This was in the latter part of 1878. In January, 1879, two gentlemen selected by the finance committee of city councils, visited Philadelphia and New York for the purpose of procuring a loan of money to enable the city to pay this interest. They were unable to obtain the loan at either place, at any rate of interest, and returned and so reported. Subsequently an effort was made to place this loan in Pittsburgh, and after much exertion the movement became a success and the money was secured. The loan was for five years, and the rate of interest was six per cent. It further appears that each subscriber was to be allowed a commission of one per cent., or what would be the equivalent of it. It also appears that eventually more money was offered than was required, and the subscriptions were scaled down. We have no doubt that the taking of this loan by the citizens of Pittsburgh went very far towards re-establishing the credit of the city. That it did so fully, would perhaps be saying too much. Credit is a thing of slow growth, and when once impaired, from whatever cause, can seldom be fully restored by a single transaction, and the eifcyr of Pittsburgh could not reasonably expect, even after this show of confidence on the part of her own capitalists, to place a loan on as favorable terms as a cifcyr which had never defaulted on its bonds, nor litigated with the holders thereof.
At that time the total amount of property in the city subject to taxation was $95,556,668. The Penn Avenue Bonds amounted to $5,273,700; add to this the interest which had just been funded in new bonds, and we have $6,673,700 of debt growing out of the street improvements. The other debt of the city then outstanding amounted to $8,152,405.11, making altogether an indebtedness of $14,826,105.11. It will thus be seen that the city was in debt to an amount far exceeding the limit prescribed by the constitution. As the debt was *209all contracted before the constitution was adopted by'the peo-l pie, no constitutional question arises, and it is only important as bearing upon the credit of the city.
This was the situation in 1879. The Street Bond' debt matured at various times from 1883 to 1885. It thefefo'l’e; became a matter of concern to the city authorities to provide for the maturing of these bond’s. All of them excepting those) given' to fund the interest bore interest at seven per cent. It is a conceded fact that city councils regarded some action to, be essential to meet this emergency. Accordingly we learn that several Acts of Assembly were procured to be passed by councils, and a number of ordinances were passed by them for the purpose' of enabling the authorities of the city to replace these bonds as they matured by bonds bearing a lower rate of interest. We need not go- over this legislation and the' ordinances of councils in detail. It would extend this-opinion to an unreasonable length. It' is sufficient to say that for anything that appears, it was all done openfy, was knownto and discussed by the citizens, and through the papers, and: is free from any imputation of fraud.
The sub-finance-committee of councils actiifg under direct authority of a city ordinance, held a number of interviews, with the appellants, and with some of the leading business men and financiers of Pittsburgh, the particulars whereof I; have not the'timé, nor is it necessary to specify. It is suffi-" cient to saj*- that it finally resulted in the contract of May 14th,: 1881, between the sub-committee and Henry Whelen and Wilson MeCandless, two of the appellants, by which the appellants agreed to take $6,000,000 of the bonds at par and accrued interest, and were to be.allowed a commission of one per cent. This contract was subsequently reported to the finance committee, and by them unanimously approved. Afterwards the finance committee reported the same to councils,, and the repoft was there read. It does not appear that any-action wás taken upon it by councils ;»the Master reports that' it was never formally approved. There was evidently an,, opinion prevailing among some at least of the committee that; no action was necessary on the part of councils. We are not; required to pass upon this question, as the city is not here-denying the validity of the contract nor of the bonds issued: under it; nor is she repudiating the action of her finance com-; mittee. On the contraiw, she is an appellant in this case ; has filed an answer expressly disclaiming any participation in this.' blow at her crédit,and asking that this decree may be reversed.Nor is the course of the city open to criticism on this account.; She has received about $1,500,000 of the appellant’s money,which she has applied-to the extinguishment of that much of ' *210her public'debt-. To now repudiate the contract under which this was done, would have been a blow at her financial standing far more serious in its consequences than could be com-! pensated by any doubtful gain she could possibly receive by assisting in striking down this contract.
"Was tlie contract made in good faith ? Upon this point the: evidence is overwhelmingly in favor of the appellants. W) R. Ford, one of the members of the finance committee who signed; the contract, testifies:
Q. So far as you came in contact with financiers, so far as you were conversant with the financial outlook at that time, did you or did you not believe that it was a favorable time for-the securing of a low rate of interest for the city of Pittsburgh ?
A. I did, sir, because at that time I thought money was ruling pretty low, and we could not tell what the circum-, stances of trade might hereafter be, which might make a bet-; ter demand for money, and my idea was that if we could secure the contract at a low rate of interest, as I took it, a fair rate of interest, as I thought 5 per cent, was, it would be better for us than*to take' the risk of what might occur at the time of the presentation of the bonds for payment.
A. F. Keating, a member of the sub-committee, and also a party to the contract, testifies as follows:
Q. Give the Master the reasons which led you to believe it (the contract) to be expedient and advantageous.
A. That is a pretty long tale to tell. Well, I was pretty conversant with the management of the city’s finances at that time, and had spent a great deal of time in framing the, Penn Avenue compromise. I necessarily had to have a good: deal of knowledge with regard to the matter in which the city’s debt, its interest and appropriation and the expenditures, that had been made ; and I also knew the fact that when the; city was in distress, requiring money to paj*- its interest that; it had defaulted on, that the citizens of Pittsburgh had sub-, scribed $1,405,000 for that purpose, but 1 was also aware of.' the fact that they made these bonds five year bonds, and that-they matured just previous to a large amount of Street Bonds which the}' were to paj^ the interest on, and I concluded froni that that there was not very much hope for a permanent loan for any great amount, for any great length, to be taken by her own citizens. I knew that the reputation of the city had gone before it in every financial centre, and that she had defaulted on her railroad debts, and had defaulted on the interest of the Street Bonds ; that she was very greatly in debt, and that our people had previously decried the credit of the city. That we never had introduced an appropriation ordinance without its; *211being looked upon as exceedingly harsh in its rate of taxation, and I knew that the credit of Allegheny county had always been above ours ; that she had placed a loan in February or March of 1880 at 5 per cent., sold $1,128,000 of it at par, and subsequently sold a smaller amount, $400,000, at a premium. Knowing that her bonds had always sold higher, I thought if we could get, I believed if we could get, a contract that would give us the same rate of interest for a sum of money that was more than the county debt entire, we would be doing a very good thing.
R. B. Carnahan, Esq., a member of councils and of the finance committee, also testified that in December, 1881, the Monongahela Navigation Company had decided to issue a new loan for $500,000, and that the directors after consultation had fixed the rate of interest at five per cent, as the best terms they could get. That this circumstance had some weight with the witness, as he regarded that corporation as good as any in the state of Pennsylvania. The witness also referred to some School Bonds in his School District which they were not able to get below five per cent, in 1881, and to the five per cent, bonds issued by Allegheny county in payment of riot losses, which were issued in 1880 at par; subsequently they commanded a small premium. The witness then continued : “ There were other matters, too, if you want me to give the whole subject; I considered the credit of the county was good and the credit of the city was bad. There was no interest appropriated and no money for interest, I think, in 1877 and 1878. In 1879 a mandamus was issued by one of the judges of the Court of Common Pleas No. 1; he had rendered a long opinion which went abroad against the'validity of the bonds ; I remember reading it in the New York newspapers ; we were in the position of repudiators, forced to pay under an order of court, and under the opinion of one of our local judges that the bonds were not good; these things were against the credit of the city; and I was informed that you, sir, had gone East to negotiate a loan, and found the doors of the bankers closed, and they would not talk to you.”
It further appeared that on April 1st, 1880, $141,000 Temporary Loan Street Bonds fell due. On the 19th of March preceding the sub-finance committee had advertised in the official papers of the city of Pittsburgh for a loan of that amount to redeem these bonds. The advertisement invited bids at par for bonds at four, four and a half and five per cent., to be accompanied with a certified check for ten per cent, of each bid, and the right was reserved to reject any and all bids. Not a single bid was received for either class of bonds. This advertisement has been the subject of much *212criticism, and the court below evidently regarded’ it as a link in the chain of fraud. The learned judge said : “If it were intended to make a show of inviting proposals where none were desired, it would be intelligible. Of course no bids were received.” It would have been more satisfactory if the grounds of his objection had been stated. We see nothing upon the face of it to indicate fraud or bad faith. The notice was short, it is true, but the learned judge omits to state, what the evidence clearly shows, that this was no fault of the committee, and it is not alleged that the appellants had anything ■to do with this advertisement. -The truth is the finance committee had inserted the $141,000 in the appropriation ordinance for that year, but one branch of councils struck it out, and -in'its amended form the ordinance only passed about two .weeks before the advertisement appeared, and as the Street Bonds' matured on the first of April, all the notice appears to have been given that was practicable. The proposal for the three kinds of bonds was proper, and while the stipulation for •ten per cent, in cash was perhaps unnecessary, it was not unusual in such transactions, and would not be likely to deter bidders. The fact remains that not a bid was offered.
There was also a large amount of testimony given by respectable and prominent gentlemen of Pittsburgh — bankers, •merchants and manufacturers — to the effect that under the circumstances they regarded the contract at the time it was made as wise and judicious, and to the advantage of the city; There was also testimony of an opposite character ; that it was unwise, and that in the opinion of the witnesses the bonds could have been placed at a better rate. They were but opinions, however, and do not touch the question of good faith. It may be, looking at the transaction from the standpoint of 1884, we might conclude that the bonds could have been placed to better advantage, but even this is by no means certain. The occasional sale of a small lot of bonds in 1880 and 1881 at a premium would not of itself furnish any safe guide 'to assume that the large quantity of $6,000,000 could be disposed of in excess of par, and it furnishes no justification for branding as rogues all concerned in the transaction. I am clear that there is not a scintilla of proof within the four corners'of this record to show that'any actual fraud was committed by any one.
Thus far we agree with the Master, but we dó not assent to his finding of constructive fraud. This charge, as before oN served, rests 'upon .the existence of an alleged confidential relation between Messrs. Whelen and .McCandless and the sub-committée, and .the neglect on the part of the former to giye the committee full information as to the value óf the bonds. *213Granted the confidential relation, what fact did they suppress or withhold from the committee which they ought to have communicated? The finding of the Master, already quoted, upon this point is flatly contradicted by the evidence. When Mr. Whelen was on the stand he was asked this question: “ Mr. Whelen, I wish you would state whether, at the time or before the making of these contracts, from time to time you furnished the city authorities that you met with all the information possessed by you bearing upon the question of placing these securities properly, their value,” &c.; to which question the witness replied : “ I did as fully and frankly 'as it was in my power to do.” It also appears that Mr. Whelen and Mr. McCandless furnished some of the members of the finance committee with accounts of the sales or quotations of bonds, Pittsburgh and others, in different financial centres, and there is not a word of testimony that any such information was withheld. Some importance was attached to the fact that in November, 1880, Mr. Whelen had sold to the Dollar Savings Bank of Pittsburgh a small amount of what are known as Pittsburgh Railroad Compromise five per cent, bonds at 105. Mr. Ford knew of this transaction, however, and it is of slight importance from the fact that the bonds in question appear to have been of a higher market value; they were issued by the city in compromise.of a long litigation, and the holders thereof had no reason to anticipate further difficulty in regard to them.
That the committee sought information and were not denied it, is manifest from the following extract from Mr. Ford’s testimony :
Q. Did you discuss, Mr. Ford, from time to time with Messrs. Whelen and McCandless, or either of them, the price and value of Pittsburgh securities between the making of the first contract and the third contract ?
A. Yes, sir.
Q. Did they give you the information that you sought front them ?
A. Yes, sir; I never asked Mr. Whelen or Mr, McCandless a question that they did not tell me what I wanted to know.
Where all the parties to a contract expressly deny under oath any concealment or withholding of material facts, it requires something more than the unsupported allegations of strangers to the transaction to convict any of the parties of süch concealment. •
The gravamen of this charge rests in the fact that the appellants did not inform the committee that for the next few years there would be an increasingly easy money market, and that all municipal bonds would advance in value. How were' *214the appellants to know this ? The future was concealed from their vision as well as from others. The opinion of many prominent men of Pittsburgh whose testimony is before us, shows that they entertained a different view of the situation. They thought that the revival of business would increase the demand for, and the rates of money, and that the time was favorable for providing for the large indebtedness of the city soon to mature, by securing a five per cent, loan at par. And the appellants may well have thought that by taking such a loan — thereby guaranteeing the credit of the city for several years — they were assuming a serious risk. There is much testimony which tends to prove that the very fact of this loan having been taken, at par, by capitalists admittedly able to carry out their contract, hada beneficial effect upon the credit of the city, and was an important element in the rise in value of its bonds.
The change in the contract by which the appellants, instead of being merely the agents of the city to place the loan, agreed to take all the bonds at a fixed price, was made at the request of the city authorities. This change may or may not have been wise. We express no opinion upon it. The effect of it was to relieve the city from'the risks of the money market and to throw such risk upon the appellants. If the latter must take the venture, of a possibly tight money market and a fall in the price of the bonds, it would be a harsh rule which would deny them the advantage of a rising market.
It was also urged as evidence of fraud that the contract was executed by the sub-committee on the last day of the life of the councils of which they were members; that. the existence of the contract itself was concealed, and that the said contract was withheld from the newspapers for publication.
The fact appears to have been overlooked that the contract was but the close of a long negotiation, which had required much time, thought and labor on the part of the committee, and had the matter hot been closed then, it might have been necessary to commence de, novo. This would have involved further delay. And if the committee honestly believed, as it is manifest they did, that the contract was for the best interests of the city, no good reason appears why they should not have completed their work when they did. That their belief was shared by many of the best citizens of Pittsburgh is clear upon the evidence.
The alleged concealment of the contract was much magnified. There was no attempt to prove that either of the appellants participated in or approved of any concealment. The contract was reported’ by the sub-committee to the finance committee, and by the latter to city councils. This was done *215in- ail orderly and regular manner. The contract was then handed to the City' Controller for safe keeping. It was not the business of that officer to give such papers to the press for publication without authority. Subsequently, when the demand for its publication became general, a copy was furnished by authority and published in the newspapers. There was nothing in all this to show a fraudulent concealment of the contract.
Considerable stress was laid upon the fact that Mr. Wlielen, one of the appellants, stated in his testimony that his firm did not purchase Pittsburgh five per cent, bonds at a premium prior to the final arrangement of May 14th, 1881, and that he did not consider it prudent to do so. Further, that he could have made the price either 95 or 105.
This was pressed as evidence of fraud.
If so, it must’be from the fact that his firm was under' a duty to buy Pittsburgh bonds, or (2) that they were in duty bound to put up the price.
The first proposition is no.t worth discussing. The second rests upon an entire’ misapprehension of Mr. Whelen’s testimony. • It is assumed that he could, by a nod of his head or wave of his hand, put up the price of the bonds. But the market for municipal bonds is not affected in that way. The' way, and the only way by which such a result could have been accomplished, would have been to buy at a fixed price all the bonds that were offered on the market. This, in time, would give the bonds a fixed market value, when the purchaser could begin to sell and reimburse himself for his outlay. This course of dealing is known to every intelligent man at all conversant with the negotiation of municipal and other corporation bonds. It was the way Jay Cooke kept the Northern Pacific Railroad Bonds at par some years ago, when he was acting as the financial agent of the company, and it resulted in his financial bankruptcy. The load became too heavy to carry. To say that Mr. Whelen was in duty bound to employ his capital in this manner, and to assume the risk involved, and that his failure to do so is evidence of fraud, is too absurd a proposition to be seriously considered.
We find nothing in the evidence from which even a constructive fraud can be properly inferred.
The remaining question is one of power. Upon this point the report of the- Master is entirely satisfactory, and we do not consider it necessary to discuss it at length.
- The Act of 1879 expressly empowers the city councils to authorize by ordinance “ the making, execution and negotiation of bonds,” &c. It may fairly be inferred from this language that city councils were not expected to issue the bonds-*216themselves. Indeed, it was impracticable to do so. Corporations, whether private or municipal, act by agents. This is what councils did. They authorized the finance committee, or its sub-committee to make this loan. They authorized it to be made at six per cent, if they could' do no better. They did better' and procured it at five per cent. How then can it be said that the committee fixed the rate of interest without consulting councils. Where an agent is authorized to contract for six per cent, and contracts at seven, tliere is good reason why the consent of the principal shall be had before he can be bound. But where the agent contracts for five per cent, under an authority to give six, no reason is apparent why the principal may not be bound for the lesser sum.
But it was urged that there was an excess of power in this that while the sub-committee were authorized to pay a commission of one .per cent, upon a negotiation.‘of the bonds by the agents of the city, yet when the syndicate became -the' purchasers of the bonds they ceased to be -agents, and were-not entitled to the commissions; hence, that in point of fact the allowance of. one per cent, as commissions reduced the sale from a sale of bonds at par to a sale at 99 cents.. • ■
This is a very narrow point and does not call for'.an extended discussion. Giving it the widest scope claimed for it,' we see nothing in it to justify a chancellor in striking down a partly, executed contract, where the rights of other' parties; have grown up. But I am unable to see any force in the point. The contract was in terms a sale of the bonds at par. and accrued interest. Was the agreement for a commission illegal? Councils had expressly authorized it in- case the appellants negotiated the bonds. Does the form which the-transaction finally assumed make any difference? We are considering this question in a court of equity; a court which disregards form and grasps the substance. The substance of this contract was that appellants should place these bonds at a fixed price, the appellants taking the risk .of the market. No one supposed then, no one supposes now,, that the appellants were taking these bonds upon their own account as a private investment.. The bonds were placed at par and-accrued interest; and- the agreement to pay appellants a commission of one per cent, in no way affects their validity. It' does not touch the question of power to issue the bonds. The question of the appellants’ right to commissions cannot be decided in this .proceeding. It is a matter between, the. appellants and the .city, with which the appellees have .no standing to interfere. The appellees cannot control the dis-. cretion of..the city in a matter in which it,has the power to. act, A. .taxpayer as. .such can only come, in and .be. heard, *217’where the city is proceeding in excess of power and in violation of law. This is the scope of Sharpless v. The;City, 9 Harris 147, and the cases which have followed. It cannot be seriously contended that the city of Pittsburgh may not lawfully pay this, commission.
The court below was of opinion that the contract permitted the syndicate to demand of the City Controller the full amount of the $6,000,000 of bonds even if that amount should not be required to redeem the Street Bonds, and attention was called to the fact that there was a considerable amount in the city treasury,’the proceeds of the claims compromised under the Penn Avenue Act, and that more would be realized hereafter; that the proceeds from this source would altogether amount to $2,000,000, all of which would be applicable to the retirement of the Street Bonds. The evidence shows that the learned judge was probably over sanguine in his expectations upon this point. Be this as it may, I see nothing to interfere with the right-of the city to apply this money when and as it is received, to the payment of Street Bonds. The contract means, taking it as a whole, that the appellants are to furnish so much money, and no more, as may be necessary to retire said bonds. That was the subject matter about which the parties had been negotiating, and which culminated in the contract of May 14th, 1881. The amount inserted in the contract, $6,000,000 was the sum supposed to be necessary; and taking the whole amount of Street Bonds with the interest, and the probable receipts from the compromise referred to, would appear not far from accurate. It would be a strained construction of the contract to hold that the appellants are entitled to $6,000,000 of bonds without reference to the amount required to retire the Street Bonds.
I have not overlooked the constitutional question involved,' notwithstanding its extreme minuteness. Neither the Master nor the court below appear to have treated it with much favor. The sixth section of Article III. of the constitution provides that: “No law shall be revived, amended, or the provisions thereof extended or conferred, by reference to its title only, but so much thereof as is revived, amended, extended or conferred shall be re-enacted and published at length.” It ■jvas urged that the Act of. 11th March, 1881, supplementary to the Act of May 9th, 1879, was in conflict with this constitutional provision for the reason that the second section of the Act of 1881 repeals the fifth section of the Act of 1879 with-* out repeating the language of the repealed section.
. It is very plain that the evil which the constitution was intended to prevent was the revival of laws by their title merely, or the amending or extending the same in like man*218ner.- The learned Master has given a sample of this kind of legislation in an Act to be found at page 85 of the P. L. of 1872, which provides that “an Act entitled,” &c., be further amended by striking out from the first section thereof the words following, viz: “ Montgomery county,” and the “ village, of Bustleton,” and inserting in lieu of the words “Montgomery county ” the word “ Newtown,” and in lieu of the words “village of Bustleton,” “Newtown, Bucks county;” and by striking out from the third section of said Act the words “four” and “twenty-five,” and inserting in lieu of the word “four” the word “thirty,” and in lieu of the words “ twenty-four ” -the word “ fifty,” &e., &e. There is abundance of this character of legislation running through the Pamphlet Laws for many years prior to 1874. There are two objections to it which no doubt influenced the constitutional convention; 1. Such an Act can only be understood by reference to the Act which it was intended to amend, and 2. Such legislation furnishes great facilities for what are commonly known as “ snakes,” a homely but apt phrase to denote something of a vicious nature concealed in the body of the Act.
It would have been entirely competent for the constitution to have required that when an Act or a section of an Act was repealed, the Act or section so repealed should be recited at length in the repealing Act, but it has not done so. The section which supplies the one repealed is given and published at length. This is all the constitution requires. “ So much thereof as is , amended.....shall be re-enacted and published at length.” If the whole amended law was intended to be republished at length, of what force are the words “so much thereof?”
We are of opinion that the Act of 1881 does not come within either the letter or the spirit of the constitutional prohibition.
It was further objected to these bonds that the provision contained therein by which the interest is made payable at the banking house of Henry Whelen & Co., in the city of Philadelphia was not authorized by the Act of 1879 or its supplements. Conceding this to be so it furnishes no reason why a chancellor should interfere with a partly executed contract.It was not a fraud upon or by the city and will involve the complainants, as tax-payers, in no loss. The change was doubtless made when it was found necessary to seek an eastern market for the bonds. If not absolutely essential, it was at least calculated to increase the facility for their negotiation, and in this sense may be said to bé a positive benefit to the city. It is well known that to negotiate such bonds to advantage the interest must be made payable at the financial centre from which the money is expected to come.
*219The foregoing was written shortly after the rising of the court at the last Terna in the Western District, as embodying my individual view of the case. It is.now filed as a dissenting opinion.
I regret that the majority of the court have not been enabled to reach the same result. I hope I may be mistaken,.but I fear this decision will be a disaster to the city of Pittsburgh in the distrust which it may excite as to future issues of bonds under its corporate seal. It is true the act is not that of its corporate authorities, but it comes from her citizens and taxpayers, and if any one or more of them may thus trifle with her credit upon such grounds as have been developed in this case, her outlook for the future to my mind is not cheering.
The majority of the court have relieved the appellants of the charge of fraud. There is nothing to sustain it, and it should never have been made. The decision rests upon the single narrow point that the contract was in reality a sale.of the bonds at 99. In terms it was a sale of the bonds at par, and in point of fact I believe not a bond has been sold for less. Whether the appellants, after having retired all the Street Bonds, would have been entitled to a commission of one per cent., is a question which in my judgment might well have been left until it arises. That is a question which could only be raised by the city. The complainants have no standing to raise it, as the city possesses the power to contract for and paya commission. As before observed, it is only where the city is exceeding its power that a tax-payer can be heard.
The case was argued as though the city derived its sole authority from the Acts of Assembly cited. But it is settled law that a municipal corporation may issue bonds in payment of its debts, or to procure money to pay them, without authority from the legislature : See Com. ex rel. Bair & Shenk v. City of Williamsport, supra. This was all that the city of Pittsburgh was attempting to do in this case. It was doubtless thought the Acts of Assembly were necessary; the city possessed all the power needed outside of them.
I have no desire to criticise the views of the majority of my brethren, for whom I entertain profound respect. It is enough to say that the somewhat labored attempt to show that the bonds already issued are good because not issued in excess of power, while the issue of the remainder is enjoined because it would be in excess of power, sufficiently indicates the strain of the case. And since the question of fraud has been decided in favor of the appellants I am unable to see any foundation for the court to rest its decree upon.
My brothers Green and Clark desire me to say that they concur in what I have said.
I would reverse the decree of the court below.
*220CASES IN THE SUPREME COURT OF PENNSYLVANIA. EASTERN DISTRICT — PHILADELPHIA, 1885.