Baltzer v. . the State

10 S.E. 153, 104 N.C. 265

• Court: Supreme Court of North Carolina
• Decided: September 5, 1889
• Status: Published

Opinion

Merrimon, J.

— after stating the case: The Constitution (Art. 4, §9) provides that “The Supreme Court shall have original jurisdiction to hear claims against the State, but its decisions shall be merely recommendatory; no process in the nature of execution shall issue thereon; they shall be reported to the next session of the General Assembly for its action.” This provision constituted part of the Constitution as established in 1868, and gives this Court such jurisdiction, generally, of claims against the State. It was after-wards, in the year 1880, modified by an amendment of the Constitution (Art. 1, §6), which provides, among other things, as follows: “ Nor shall the General Assembly assume, or pay, or authorize the collection of any tax to pay, either directly or indirectly, expressed or implied, any debt or bond, incurred or issued by authority of the convention of the year one thousand eight hundred and sixty-eight, nor any debt or bond incurred or issued by the Legislature of the year one thousand eight hundred and sixty-eight, either at the special session of the year one thousand eight hundred and sixty-eight, or at its regular session of the year one thousand eight hundred and sixty-eight, one thousand eight hundred and sixty-nine, and one thousand eight hundred and seventy, except the bonds issued to fund the interest on the old debts of the State, unless the proposition to pay the same shall have first been submitted to the people, and by them ratified by a vote of all the qualified voters of the State at a regular election held for that, purpose.”

This amendatory clause was interpreted by this Court in Horne v. The State, 84 N. C., 362, in which it was held that the Court’s jurisdiction- of claims against the State was •so abridged as that it did not thereafter have jurisdiction of the class of claims coming within the inhibition of the clause above recited. The ground of that decision is, that inasmuch as the General Assembly was prohibited by the Constitution “ to assume, or pay, or authorize the collection of any tax to pay, either directly or indirectly, expressed or implied, any debt or bond of the class specified,” it would be an act of supererogation, an act obnoxious to the charge of presumption, for this Court, in the face of-the unmistakable will of the people, declared in the organic law of the land, to recommend to the Legislature the payment -of this claim.” That case was well considered, and it seems to us that it is in entire harmony with the spirit and effect •of the clause of the Constitution interpreted, and, indeed, a necessary consequence growing out of it. It would be idle, futile and ridiculous for this Court to declare and adjudge the validity of a claim against the State, and recommend to the General Assembly to provide for its payment, when the Constitution expressly forbids it to pay, or provide for the payment, of such a claim. The obvious purpose of the jurisdiction so conferred was to have the Court settle and adjudge the legal validity of claims, to the end the Legislature may provide for their payment. But, wherefore adjudge that a claim is valid if the Legislature cannot provide for its payment? The purpose and the jurisdiction are swept away by the amendment mentioned as to the claims embraced by it.

If, then, the claim of the plaintiffs comes within the inhibition last mentioned of the Constitution, the Court has not jurisdiction of it, and the motion of the counsel of the State to dismiss the action must be allowed. Does the claim come within that inhibition ? We think it does, and for the reasons we will now proceed to state.

It was properly conceded that what purported to be two thousand bonds of the State, each of the denomination of one thousand dollars, issued and delivered to the Chatham Railroad Company, were nullities, and of themselves created no obligation upon the State to pay them, and that they come within the inhibitory clause of the Constitution mentioned. They are, therefore, not within the jurisdiction of the Court.

The plaintiffs, in the course of business, took, and have, one hundred and forty of such bonds, representing one hundred and forty thousand dollars and the interest due thereon. Their claim, however, as they contend, is not founded directly, if at all, upon them, but they contend that they were entitled in equity to have the money they represent paid to them out of the proceeds of the sale of the first mortgage bonds of the railroad company deposited with the State to indemnify it against loss, if it should have to pay the invalid bonds. They contend, further, that, inasmuch as the railroad company returned to the State its invalid bonds mentioned, except two hundred and ninety-seven of them — and as to these, it paid to the State in lieu of them their face value in other valid bonds of the State, which the State received and burned in the course of its practice as to its bonds paid and discharged; and inasmuch as, thereupon, the State returned and surrendered to the railroad company its first mortgage bonds mentioned, they are entitled to have the State pay the money so due them. They insist that the State paid nothing for its valid bonds, to the amount of two hundred and ninety-seven thousand dollars paid to it by the railroad company in lieu of the first mortgage bonds of the-same amount, and in substitution for two hundred and ninety-seven of the State’s invalid bonds mentioned, not surrendered; that the State so received its valid bonds, as and in contemplation of law, they constituted a trust fund for the benefit of its holders of the outstanding two hundred and ninety-seven invalid bonds.

We express no opinion as to the correctness of this contention of the plaintiffs. Whatever may be their equitable rights, we think it clear that the State did not iutend to-receive it-* valid bonds in lieu of its invalid ones, and in substitution of the same amount of the first mortgage bonds of the railroad company, and to hold and treat them as a trust fund for the 'plaintiff, and others having like claims. There is neither statute nor 01 her legislative declaration showing-such purpose, in terms or by reasonable implication. The contrary appears. At the time the valid bonds were so received by the State, there prevailed great public confusion and financial distrust, growing out of disorders resulting from the late civil war and the notoriously reckless and fraudulent legislation of the years 1868 and 18(59. We know this, from the clear history of that lime in this State, as well as from enactments of the Legislatures themselves. The valid bonds of the State had no settled value; they were sold in the market for prices purely speculative.. In such time of public distress and discontent, no one could foresee when or how the valid debt of the State could be paid; no one expected that its void bonds, many of them tainted with the grossest fraud, would be paid at all.

While the State, through its constituted authorities, soon after their issue, regarded and treated ihe bonds issued to the Chatham Railroad Company as invalid, it wars apprehended, not unreasonably, that they might be purchased innocently, in some instances, in the course of business, at some price, and, in other instances, by mere speculators in the markets, who would insist upon their validity and payment, and tliat the State would be greatly annoyed and harassed in a variety of ways, putting it to great trouble and expense to defend itself against such unfounded claims. In view of this state of things, the valid bonds were so received, not for the purpose of paying, directly or indirectly, the invalid ones, but to indemnify the State against cost and expenditure incurred in resisting them. Hence, the valid bonds were treated as the absolute property of the State, and burned, ha\ ing served their final purpose. The intention was not to provide a fund to pay the invalid bonds, but to guard against them ever thereafter.

In view of such purpose, can there be a reasonable doubt that the inhibitor}'' clause of the Constitution under consideration was intended to embrace not only the invalid bonds themselves, but, as well and as certainly, every claim and liability, legal or equitable, founded upon, growing out of, or substituted for them ? In view of that purpose, if the General Assembly should pass an act providing for the payment of the plaintiffs’ claim, would not such an act, in legal contemplation and effect, provide for such indirect payment of the invalid bonds held by the plaintiffs as is prohibited? Can it be that the inhibition intends to leave the General Assembly at liberty to provide for the payment of the equita-blé claims substituted for the invalid ones held by the plaintiffs? Can this be, in the absence of any provisions to that effect, and the further fact that the State disposed of, surrendered, the first mortgage bonds of the railroad company, and treated as its own property its valid bonds substituted for them, as to which the plaintiffs’ alleged equity arises? We think not. The purpose of the inhibitory clause is very comprehensive; it contains but a single exceptive provision, and that is in express terms. The terms employed in it are as broad and sweeping as they can be. The language is: “ Nor shall the General Assembly assume or pay, or authorize the collection of any tax to pay, either directly or indirectly, expressed or implied, any debt or bond incmred or issued,” &c. By the terms “any debt,” so employed, is not meant a debt in a technical sense, as to form and character, but, in a general sense, that of any liability incurred to pay money to a party claiming it — that of a claim. Now, if the plaintiffs’ claim — their debt, in a general sense — exists, and is well founded, and the State is liable for it — is bound in equity or otherwise to pay it — such liability was incurred by the General Assembly in 1868, because the contract constituting the groundwork of it, and out of which it springs, was then concluded and made effectual. The statute cited, authorizing the exchange of bonds between the State and the railroad company, was enacted in August of that year; the exchange was made, and the liability now insisted on was incurred then, if at all.

The studied comprehensiveness of the inhibition further appears from the other words, “to pay, either directly or indirectly, expressed or implied, any debt or bond incurred or issued,” &c. — that is, such debts or bonds shall not be paid as such, nor shall they be paid in any way, “indirectly,” as under the guise or semblance of another debt or bond, or transaction, or any other substituted liability or obligation growing out of the debt or bond, or arising otherwise, whether such indirect payment be “expressed” in terms or in any way “implied.” The comprehensive purpose is to prohibit and prevent the payment of the debts and bonds referred to in any possible way, unless with the sanction of the people, expressed by a majority of the qualified voters of the State.

It is no sufficient answer to what has been said, to say that the plaintiffs do not ask the State to pay its invalid bonds held by them — that they only ask it to pay their claim, on the ground, that it is properly chargeable in equity for their benefit, with its valid bonds, which it received from the railroad company, as above explained, in L eu of part of its invalid bonds, and in place of part of that company’s first mortgage bonds, all of which were improperly surrendered to it by the State, and out of which they were entitled to have their claim satisfied, as they contend.. This argument is without force, because, as we have already seen, the State held and treated the first mortgage bonds of the company as for its sole benefit; surrendered them to the company, receiving in lieu for them part of its invalid bonds, and certain of its valid bonds, which latter it held and treated as its absolute property, and burned them, thus clearly showing that it did not recognize its liability, in any way, to pay the plaintiffs’ claim, or any claim like it. In pursuance of its agreement with the railroad company, it received, and intended to receive, its valid bonds in the place of its invalid ones. To pay the valid ones thus received, would, it seems to us, in contemplation of the inhibitory clause under consideration, be to pay, indirectly, the invalid ones they represent, whether the purpose be expressed or implied. We cannot doubt that the purpose is to forbid and prevent such payment, hence, without reference to the merits of the plaintiffs’ claim, in any aspect of it, this Court has not jurisdiction there'if.

It was contended in the argument that the inhibitory clause of the Constitution which we have applied, is inoperative and void as to the plainliffs, because it denies and destroys their remedy, and was, therefore, in conflict with the Constitution of the United States.

This contention is unfounded. Parties cannot sue or have their action against the State, except as the same may be allowed by the Constitution or statute, and they must accept or have their judicial remedy only in the cases and as to the matters and causes of action prescribed.

The remedy prescribed and allowed by the Constitution (Art. 4, § 9), invoked by the plaintiffs, is not a judicial remedy in any proper sense. This Court has, by virtue of this provision, jurisdiction “to hear claims,” but its decisions as to them are not conclusive, are “merely recommenda-tory;” no process, final or otherwise, can be issued upon them; the Court has no authority to enforce them in any way. The simple purpose is to have the Court decide that such claims are legal, or illegal, in proper cases.

This Court decided in Horne v. The State, cited, supra, that an abridgment of its jurisdiction, as to claims against the State, even after the suit had been brought was not inhibited by the Constitution of the United States. That case followed, and cited with approval, Railroad Co. v. Tennessee, 101 U. S. R., 337; Railroad Co. v. Alabama, Id. 832—both these cases being almost directly in point.

We think we ought to add, that if the facts are, as they appear strongly in the pleadings, indeed such, the plaintiffs’ claim, as against some party, is one of real merit. They supplied the iron now on the railroad of the railroad company mentioned, and it seems that they have been paid but a small part of the large sum of money it cost them. We do not mean to intimate that the State is liable, legally or otherwise, for their debt, but surely some party ought to pay it.

The motion to dismiss the claim must be allowed.

Action dismissed.