Court Opinion

ID: 7985030
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:24:36.305996+00
Date Added: 2024-06-11T16:35:10.483173
License: Public Domain

Simrall, C. J.,
delivered the opinion of the court.
The power of municipal corporations to subscribe for stock,, or to loan its credit in the form of bonds, with coupons for interest attached, in aid of railroad companies, has, under-various legislation in the last few years, been a most fruitful-subject of litigation.
In many aspects in which the subject has been presented, the-argument may be considered closed, and a finality.
In the solution of such questions we can derive very little aid by recurring to the common-law corporations, whose powers and capacities rest on prescription and long usage. In these states corporations, municipal and private, are creations-of the Legislatures, and have such powers and capabilities as-have been expressly conferred upon them, and such implied powers as are necessary to exercise those that are express.
The test of the authority of a municipal corporation to borrow money, or issue its obligations redeemable in the future, is usually its charter, or some statute. The general purpose of bestowing upon cities and towns part of the sovereignty of the state, legislative, administrative, etc., is to aid the state, in the business of government, within their corporate limits — to provide for police, and those conveniencies, such as streets, pavements, wharves, water, gas, etc., needful to the health *138and comfort of the inhabitants, and the prosecution of the various sorts of business in which they engage. The powers usually contained in their charters pertain to these and such like local and municipal objects. The suggestion of reason, that broad and general words and expressions should be referred to the specific powers, and the purposes for which they were granted, is a well-settled rule of construction. Hence, where a city was authorized to construct wharves and other facilities of commerce in its harbor, to erect water-works and gas-works, ¡and in certain formalities create a debt, it was held, and properly so, that a debt could only be contracted for these specific purposes. City of Lafayette v. Cox, 5 Ind. 38.
It has been settled by unanimous concurrence of the courts (so far as we have examined), that a municipal corporation has no implied authority to issue bonds or other securities, or to borrow money or contract debts in aid of a railroad company, either as a donation or to purchase stock. It were a useless parade at this day to cite the authorities. Many of them are collected in a note to the text of Dillon on Municipal ¡Corporations, volume 1, section 106.
The reason is obvious. Such use of the corporate credit is ■foreign to the purposes for which corporate municipalities were created. And such extraordinary exertion of power can «only be justified by an express legislative grant.
■ Did the city of- Columbus have such authority? We have been referred by counsel for plaintiff in error to the 5th section of the act of 1854, incorporating the city. The important parts are that the mayor and aldermen shall • constitute a body corporate and politic; and shall sue and be sued, and shall exercise all the rights, powers, and privileges usually appertaining or belonging to bodies politic; shall have power and authority over all matters of police within the limits of said town; may make and promulgate such orders, ordinances, and rules for the harmony and good government of the town as they may think right and proper; ■ and may levy a tax on property, etc.
*139The section may be thus analyzed :
1. The corporate name, “Mayor, and Aldermen,” is conferred ; and by that name it may plead and be impleaded in the courts.
2. “Power” and “authority” over all matters of police, and to make “rules” for the “harmony and good government of the town.”
3. The power of taxation.
. 4. The powers and privileges usually appertaining to bodies corporate.
We have here, specifically, the authority to make rules for the “police” of the town — a very comprehensive word, extending to matters of health, good order, safety of person and property; the power to pass ordinances for the ‘ ‘ good government and harmony of- the town,” and the powers and privileges usually appertaining to bodies corporate — not all bodies corporate, but those of like character. The mayor and aldermen, under these four specific grants of power, may regulate streets, markets, and other local conveniences, may create a police, may enforce ordinances for these purposes and for the good order and harmony of the inhabitants, and may tax property to obtain the necessary means to carry on the city government. Every power points to an object local and domestic, purely municipal in its character, such as are necessary and usually bestoAved on such corporate bodies. The legislative, executive, or administrative authority is thus restricted. The taxes that may be imposed are for the like limited scope.
We have also been referred to the 17th and 18th sections of the charter of the Mississippi Central Eailroad Company (made part of the charter of the Memphis, Selma & Mobile Eailroad Company). These sections empower the boards of police to subscribe for stock for the several counties. Other enactments have been referred to, Avhich have no influence on the question.
*140It is well established by the authorities that, if the power did not exist, the bonds are not obligatory in the hands of the railroad company, or a remote holder who has paid value for them.
Municipal authority being a delegation of part of the state sovereignty, for the advantages and conveniences of local government, it would follow that those who deal with the municipality must take note of the extent of its power, and of any restriction, in the charter or in the general law, of its power of contracting. Brady v. Mayor, 20 N. Y. 312; Swift v. Williamsburg, 24 Barb. 427; 23 How. 381; Marsh v. Supervisors of Fulton County, 111 Wall. 675; Hawkins v. Carroll County, 50 Miss. 763.
It is quite plain, we think, that the city of Columbus did not have express power to incur the obligations sued on to the railroad company, and that there is an utter absence of implied power, since such aid to the railroad company was not necessary to accomplish any of the purposes declared in the Charter.
But it is said that although there may have been a lack of power in the mayor and council to have entered into the obligations originally, the act of the Legislature of 1872 has confirmed and ratified their acts.
The ratification or confirmation of an act which affects the rights, duties, and obligations of the parties to it, by legislative enactment, is the exercise of a most delicate power. The difficulty is to define precisely the limits of the rightful authority to pass curative statutes. The Legislature cannot make a contract between the city of Columbus and the railroad company. It could not by statute compel the city to take stock in the company, to loan its credit, and issue its bonds for the one purpose or the other. The authorities agree that the Legislature may validate and legalize a corjoorate act which the municipality might have legally done at the time, but which was invalid because of some irregularity in the exercise of its power. And there are, also, adjudications which hold *141that where there was an absence of legislative authority, at the time the act was done, a subsequent ratification by the Legislature would make it legal.
It is, therefore, insisted that the 4th section of the act of 1872 supplied the want of power when the bonds were issued, and is of the same efficiency as the express grant of authority previously given.
But, in considering the effect of this statute, we must take into the account the provision of the Constitution adopted in 1869, as it may influence the question. The 14th section of the 12th article is : “ The Legislature shall, not authorize any -county, city, or town to become a stockholder in, or lend its credit to, any * * * corporation,” etc., except on the condition that two-thirds of the qualified electors assent “thereto at an election. It would require no argument to prove that a Legislature, sitting under this Constitution, could not authorize the city of Columbus to become a stockholder, -or loan its credit to this railroad company, except on the condition prescribed. But whilst that is conceded, it is insisted that it was competent to ratify this subscription, or loan of' ■credit, made before the Constitution went into operation. Does not the Constitution, in such a case, forbid or deny the-power to pass the ratifying act altogether ?
We must clearly have before the mind the precise question for solution. It might be conceded that the Legislature in 1872 might pass a curative act, healing mere irregularities in the ■exercise of a power to subscribe, or loan credit previously given; and still we must encounter the further question, whether the Legislature could ratify and confirm a subscription •or loan which had been made without previous legislative •authority, and before the Constitution became operative.
For the very reason that the city of Columbus incurred this ■debt without legislative authority, the contract is without validity, and so continued to be until the passage of the act of 1872. That act has the effect of imparting validity to the bonds by retroaction, or it has none whatever. But, before the *142Legislature came to act, the new Constitution intervened and prohibited its consent, except on conditions. The legislative authority was not discretionary or absolute, but was subject to a condition which it could not dispense with.
The consequence is that a municipal subscription, or loan of credit, to a railroad company, made before December, 1869, cannot be validated by the mere expression of legislative consent or ratification ex post facto; but such obligations must stand or fall as the municipality had power or not to incur them. Since it was in the discretion of the Legislature to authorize such aid to railroads, so the authority could be withdrawn before the transaction had actually consummated into a contract with the obligation of which the state could not interfere. Thus, it was ruled in Concord v. Savings Bank, 2 Otto, 628, that although the act of 1867 permitted the town of Concord to lend aid to the enterprise on a vote of a majority of its electors, and the town had passed the needful ordinances, and a majority of the voters were for the “ aid,” yet before the ‘ ‘ donation ’ ’ was actually made to the railroad the revised Constitution of 1870 took effect, which annulled the powers of the municipality to make donations to the railroad company. The court say that the real question is, “ whether power to make the donation existed when it was made, and it followed, if not made under authority of the act of 1867, before its annullment by the new Constitution, it could not be made at all.” The corollary from the ruling in that case is that the Legislature could not, after the new Constitution went into effect, by retrospective act, have confirmed a donation which had not been authorized by statute.
The Supreme Court of Illinois, in Marshall v. Silliman, 61 Ill. 224, and Wiley v. Silliman, 62 Ill. 171, went further than is necessary to go in our case. That court held that, the election held in the township being illegal and void, the Legislature could not validate it, and authorize the township officials to issue the bonds. ' The reasoning is summed up thus : “ If the debt is binding, it became so for the first time at the *143passage of this law; ” and that, in effect, the act imposed a ■debt upon the township for which it was under no legal •obligation.
In Hawkins v. Carroll County, 50 Miss., it was not questioned that the Legislature might cure a defective or irregular exercise of a power previously granted; it might cure irregularity in the election, but it could not dispense altogether with an election. The act of 1872 is not relied upon to waive mere irregularities in the execution of the power — but as conferring power by retrospective operation. If the bonds are obligatory on the city of Columbus, they become so for the first time by virtue of this statute. The Legislature of 1872 could not by relation put itself back to 1869, and exercise power not denied or restricted by the Constitution of 1832. The measure of its power was the Constitution of December, 1869, and it could not ratify an act previously done, if at the date it professed to do so it could not confer power to do it in the first instance. It could authorize a municipal loan conditionally. In order to ratify and legalize a loan previously made, it was bound by the constitutional limitation of its ■power.
The act of 1872 might, with great plausibility, be construed as embracing only municipal subscriptions and aids to railroad companies made after the Constitution was adopted. It confirms and ratifies those not in violation of the Constitution. It might well be supposed to refer more especially to the act of 1870, which authorized counties, cities, and towns to extend .aid to railroad companies in whose enterprises they were specially interested, on complying with the terms of the Constitution. It is well known that aid was extended, or attempted to be, to railroad companies by many of the counties, cities, and towns, under that act. The.language of the law of 1872 indicates that it had special reference to obligations incurred under the act of 1870, when not incurred in violation of the Constitution. It ought never to be assumed that the law-making department of the government intended to usurp *144or assume power prohibited to it. And such construction (if the words will admit of it) ought to be put on its legislation as will make it consistent with the supreme law. Confining the act to the confirmation of municipal subscriptions and loans incurred since the adoption of the Constitution, under statutes enacted under it, and it may have full effect to cure mere irregularities in executing the power conferred.
But such legislation cannot cure radical defects — as, where the terms of the Constitution have been dispensed with, eitheiin the statute or by the city. If the broad meaning of the-act of 1872, contended for, be given to it, then we are met with the constitutional limitation.
The idea implied in the ratification of a municipal act performed without previous legislative authority is that the ratifying communicates authority, which relates back to, and retrospectively vivifies and legalizes, the act, as if the power-had been'previously given. Such statute is of the same import, as original authority.
It is analogous to the ratification by the principal of an unauthorized act'by a person who assumed to be his agent. The act had no validity of itself, but the ratification relates to-the time of doing it, and is of the same import as original authority. But if the principal falls under disability, or from any cause is disabled or incapacitated to confirm — as by insanity— then the unauthorized act stands on its original ground of absolute invalidity.
The principle is accurately stated in Thompson v. Lee County, 3 Wall. 331: “If the Legislature possessed the power to authoi’ize the act to be done, it could by a retrospective act cure, etc., * * * because the power thus-conferred had been irregularly executed.” But the Constitution of 1869 prohibited the legislative authority to do the act, except conditionally. If the Constitution had altogether denied to the Legislature the delegation of such power to counties, cities, and towns, it is manifiest that it could not vitalize and legalize a subscription made before its adoption, *145and without authority of law. If that he so; it follows that, in-dealing with the subject at all, it is bound by the limitation of section 14 of article 12 of the Constitution.
The result reached by the Circuit Court is in accordance-with these views ; wherefore, the judgment is affirmed.