Court Opinion

ID: 7984543
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:24:09.087749+00
Date Added: 2024-06-11T16:35:07.374253
License: Public Domain

Tarbell, J.,
dissenting.
By an act of congress approved July 2, 1862, there was granted to the several states, an amount of public lands to be apportioned to each state, a quantity equal to 30,000 acres for each senator and representative in congress.
Section four of that act declares “that all moneys derived from the sale of the land aforesaid by the states to which the lands are apportioned, and from the sales of land scrip” (therein) “provided for, shall be invested in stocks of the. United States, or of the states or some other safe stocks, yielding not less than *369five per centum upon the par value of said stocks; and that the moneys so invested shall constitute a perpetual fund, the capital of which shall remain forever undiminshed * * and the interest of which shall be inviolably appropriated * * to the endowment, support and maintenance of at least one college, where the leading object shall be, without excluding other scientific and classical studies, and including military tactics, to teach such branches of learning as are related to agriculture, and the mechanic arts, in such manner as the legislatures of the states may respectively prescribe, in order to promote the liberal and practical education of the industrial classes in the several pursuits and pro fessions in life.”
By section five, it is declared that no state should be entitled to the benefit of this act until it should signify its acceptance by legislative enactment.
This grant was accepted by the legislature of this state in 1866, upon the conditions stated.
On the 18th of April, 1873, an act of the legislature of this state was approved, entitled “an act to aid in the construction of the Yicksburg and Nashville Railroad.” Section one of that act declares “ that all moneys, bonds, or securities, now in the state treasury, belonging to the three per cent, fund, and all moneys, bonds, or securities belonging to the fund derived from the sale of land scrip received from the United States under the act supplementary thereto, known as the agricultural land scrip fund, and all moneys, bonds or securities of whatsoever kind, which may hereafter be paid into the treasury of the state of Mississippi, for and on account of either of the aforesaid funds, be, and the same are hereby appropriated and set apart in the hands of the treasurer of the said state, to be used in the construction of the Yicksburg and Nashville Railroad.”
Sections 2 and 3 of this act provide that the company shall issue to the state, as security for this loan, its first mortgage bonds.
The funds in controversy exceed, considerably, the sum of *370$200,000, invested in state bonds by act of 1871, and dedicated to the University of Mississippi and to Alcorn University.
To restrain the treasurer from issuing these funds to the V. & N. R. R. Co., the attorney general filed a bill in which it is charged, among other things, in addition to the acts already quoted, that it was never contemplated that these funds should be loaned to arailway company or used in the construction of a railroad; that the attempted loan is in violation of the fundamental conditions of the grant; that the said railroad company is absolutely and hopelessly insolvent; that their notes, obligations and bonds will not be of any value, being entirely worthless for any purpose; that said line of railroad is a mere projected railroad, not possessing any elements of success or hope of completion, having now only between two and five miles of road completed ; that the road will never be able to return the fund proposed to be loaned ; that this act of the legislature was procured to be passed by the fraud of tbe railroad company, and is in violation of the trust, and endangers the state in her liabilty to make good this fund, which was never intended by congress to be used in the building of railroads.
The injunction which was granted in this case was on motion dissolved, and hence the case comes to this court.
That a state may become a trustee, the authorities are abundant.
That the act of congress created a trust, with the most explicit conditions, it is only necessary to refer to the act itself, already quoted.
If it was the intention of congress to transfer this princely donation to the treasury of the states, to be used in their discretion in the construction of railroads and other enterprises, and to permit it to become mingled and blended with their revenue, subject to appropriation in the ordinary course of legislation, the language of the act sounds like absurd folly. In this view, the terms of the grant would be little else than a stupendous cheat and a deliberate piece of hypocrisy on the part of the national au*371thorities. On the contrary, the terms of the grant must be accepted as imposed in good faith.
At the very outset of this case we have in the act of the legislature of April 18, 1873, a plain, palpable, undeniable, if not admitted violation of the grant of congress. By the very title of the act itself, the loan is declared to be to aid in the construction of a railroad; whereas, by the act of congress, the fund is required to be invested in safe, paying stocks. With the same propriety, these funds might be employed in the experiment of a cotton or woolen manufactory or in running a cotton plantation.
Probably few, perhaps none, approve the legislation which is-thus assailed, but the idea seems to obtain chat the legislature cannot be restrained.
There were good lawyers in congress. They must have known whether there was power in the courts to prevent a waste of these funds. If not, they enacted a farce in the insertion of such stringent conditions in the grant. But the whole difficulty vanishes when we hold the state to be a trustee; that the legislature derives its power over these funds from the grant, and not from its ordinary political power; that the state acts through agencies, of which the legislature is only one, and the state treasurer is another. As in numerous other matters of legislation, in violation of a constitutional or natural right, or in violation of the positive conditions of a trust, the legislature is controlled by courts operating upon legislative agencies. It is important to note here that in the case under consideration, the funds involved are not the property of the state. The state controls them only as trust funds, under the grant in her fiduciary, and not in her political character. Over such control, by enjoining the state treasurer, the courts of equity have the same jurisdiction as over any other trustee.
These propositions are assumed:
1. That the act of congress of July, 1862, with its amendment, is an authority originating a trust charity, defining its nature, ap*372pointing the state as trustee, and prescribing and limiting the powers and duties of the trustee.
2. That the state, as trustee, is subject to the same rules of equity as would, under like circumstances, be applied to an individual as trustee.
3. That the acts of the legislature, with reference to this trust fund, are the acts of the state as trustee, and not as sovereign, through this agency, whose acts, as trustee, are to be adjudged by fiduciary, and not political standards and maxims.
4. That because the act of congeess holds the state responsible, at all events, for the loss of the fund, as ordinary trustees are so held in some events, that this does not expand her powers as trustee (any more than similar risks do those of individual trustees), beyond the limits prescribed by the acts of congress, nor give her a discretion to violate the trust.
It is understood to be conceded that the act of the legislature of April 18, 1873, clearly and unquestionably violates the act of congress..
And it is understood to be further conceded that, in loaning this fund, the legislature, in behalf of the state, assumes all responsibility for the funds, and concedes the duty of replacing or making good any loss occasioned by the loan. Thus, a portion of the terms of the grant are repudiated, while other conditions are acknowledged as binding.
The pretext or excuse for such legislation is, that the courts have no power to restrain it. How futile this is I have endeavored to show by the fact that the courts operate upon the agents who execute these laws, and not directly upon the legislature.
With reference to the magnificent donations of congress, two theories have obtained in different states, followed by corresponding results. In one class of states these donations have been faithfully employed within the letter and spirit of the grants, the people, the legislatures and the courts cooperating to the same end. Take Iowa as an illustration of one class. She has a school fund, in land and money, valued at not much less than $5,000,000. Every *373school district has its school building; every neighborhood, town and village a seminary or academy; normal schools and colleges accommodate the entire educable population, and her children are educated almost without taxation. In another class of states, on one pretext or another, there has been an indifference toward these donations, except to squander them. Hence, in this class, these moneys and lands have been wasted, with no acknowledged power to prevent the disaster. Under such a policy, schools have languished; compared with the other class, there is no fund for their support; no system of free schools, except by taxation, of which the people complain; no normal schools or academies, and a solitary university is but poorly supported. If, in the history of our state, there is a chapter which can cause more regret than another, it is the management of these donations of congress.
Upon the same grounds now advanced, the funds belonging to the state university were some years ago appropriated by the legislature. Then, as now, it was urged that there was no control over legislation, and the appropriation of the funds of the university by legislative enactment was said, then as now, to be the creation of a debt by the state to the institution upon which interest would be paid. Unfortunately, this promise and hope have not been realized. The debt to the university doubtless exceeds $1,000,000, and amounts, according to the public records, to about $1,500,000. The interest on this indebtedness cannot be less than from $60,000 to $90,000 a year, the whole of which is essential to the efficiency of the university, and could be profitably expended; yet only a fraction of this interest has been paid, and these fractional allowances have been dispensed with murmurs and complaints, and as a charity, not as a right. As in the past, so, it is feared, it may be in the future. ' The greatest hope of this-state, for black and white, is an efficient system of free public schools, within the neighborhood of every child therein. The unfortunate theories, as they seem to me, which have prevailed in this state seem again to obtain, and thus “ the largest and (in my judgment) the most important charity in the state is, by this *374theory, turned adrift, without chart, compass, rudder or anchor ; bereft of that protection which all trusts and charities have always secured, the beneficient control of a court of conscience, thus placing in imminent danger of perpetual loss this perpetual fund.”
It is said there is no right without a remedy, and this is the especial boast of chancery. In my judgment, the bill in this case presents peculiar equities for the favorable consideration of the courts having cognizance of such matters. The appeal in this case is in behalf of the 350,000 educable children of the state, and of the people who justly complain of taxes.
Counsel on both sides have made the most exhaustive arguments, leaving unreferred to no authority bearing upon the points discussed. I do not propose to review the questions involved beyond what I have already done, which is a mere general expression of views as to the law and the policy which seem to be embraced in this case.
The contest is between our universities, organized for the dissemination of education, and employed to utilize a great public charity provided by the bounty of the "United States, with prospects of increasing usefulness, if fostered and protected, on the one hand, and a railway company on the other, with no hope of ever returning any portion of this loan Thus will be done indirectly what the constitution prohibits being done directly, viz: that “ the credit of the state shall not be pledged or loaned in aid of any person, association or corporation.” Constitution, art. 12, sec. 5. By this loan the state becomes the indorser and guarantor of an insolvent railway. The only course left to the people to escape taxation for this debt will be repudiation. This is being done as to the indebtedness to the University at Oxford, and judging from the past, there is, perhaps, danger of a repetition of such action in the future.
At least it seems to me to be the part of wisdom to avoid the opportunity and the temptation, by restoring the injunction in this case and enjoining the treasurer. If this could be done, either by the courts, or as the result of legislation, our universi*375ties would more than repay a generous government for its bountiful gift; but if not, they will continue to eke out an inefficient existence, which has characterized them from the first, owing to the same policy which appears to be prevailing in the present instance. Without standing in the courts, the hope of the universities is, of course, in the legislature, which, for their sake and for the cause of education, I trust, will prove to be in reality, as probably it is in fact, the assembled wisdom of the commonwealth.
In my view, the law, justice and policy concur in the conclusions herein set forth.
The decree dissolving the injunction should be reversed, and the injunction restored.