duPont v. Mills

196 A. 168, 39 Del. 42, 9 W.W. Harr. 42, 119 A.L.R. 174, 1937 Del. LEXIS 67
CourtSuperior Court of Delaware
DecidedDecember 22, 1937
StatusPublished
Cited by32 cases

This text of 196 A. 168 (duPont v. Mills) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
duPont v. Mills, 196 A. 168, 39 Del. 42, 9 W.W. Harr. 42, 119 A.L.R. 174, 1937 Del. LEXIS 67 (Del. Ct. App. 1937).

Opinions

Layton, C. J.,

delivering the opinion of the majority of the Court:

The enabling act provides that any or all of the bonds issued under its authority may be redeemed at the option of the Board of School Trustees at par and accrued interest at any interest period after the expiration of five years from their date; and it provides, further, that if the Board shall elect to redeem any or all of the bonds, the redemption shall be in pursuance of a prescribed notice.

The bonds tendered the plaintiff by the defendant are, specifically, not redeemable prior to their respective maturity dates. Wherefore, the plaintiffs contend that they do not meet the conditions of their bid for them, in that they are not legally issued, direct obligations of the school district.

The precise question presented is whether the permissive language of Section 6 of the act, gives absolute discretion and power to the Board to determine, at the time of issuance, the redeemable or non-redeemable character of the bonds, or, whether the language is descriptive of the bonds in the particular that they must be redeemable after the expiration of five years, the discretion then to be exercised as circumstances may warrant.

It will be agreed that the Legislature, under Article 10 of the Constitution, has, subject to certain excep[51]*51tians, plenary power over free public schools; and that, with respect to the building of a school house and the manner and method of defraying its cost, the defendant school district is subject to that power. It will not be denied that the Legislature had the power to prescribe the kind and character of the security to be issued by the school district to secure the money which it was authorized to borrow.

The general principle, as expressed in Dillon on Municipal Corporations, 4th Ed., Vol. 1, 156, is that

“Powers are conferred upon municipal corporations for public purposes; and as their legislative powers cannot * * * be delegated, so they cannot without legislative authority, express or implied be bargained or bartered away. Such corporations may make authorized contracts, but they have no power, as a party, to make contracts or pass by-laws which shall cede away, control or embarass their legislative or governmental powers, or which shall disable them from performing their public duties.”

The defendant does not deny the principle. It contends that as the Act confers upon it full power to issue and sell bonds in any amount not exceeding the maximum, and that, as it was vested with discretion with respect to series, dates, maturities, rate of interest, denomination, time and place of payment, registration and whether they should be coupon bonds or not, it was intended by the Legislature to confer the widest discretion upon it to use its special knowledge of local conditions, and its general knowledge of the state of security markets, in the determination of the kind and character of the bond to be issued; and it points to the seemingly permissive quality of the word “may” as supporting its contention.

But, the word, “may,” ordinarily permissive in quality, is frequently given a mandatory meaning, and is given that meaning where a public body or officer is clothed by statute with power to do an act which concerns the public interest, or the rights of third persons. In such cases, what they are empowered to do for the sake of justice, or the [52]*52public welfare, the law requires shall be done. The language, although permissive in form, is, in fact, peremptory. Supervisors of Rock Island County v. U. S., 4 Wall. 435, 18 L. Ed. 419; Mayor, etc., of New York v. Furze, 3 Hill (N. Y.) 612. See State ex rel. Foulger v. Layton et al., 8 W. W. Harr. (38 Del.) 556, 194 A. 886.

In National Bank v. City of St. Joseph, (C.C.) 31 F. 216, it appeared that the plaintiff had purchased bonds of the City payable twenty years after date. Before maturity, the city desiring to pay them, deposited the necessary amount of principal and accrued interest in the designated depository. The plaintiff refused to accept payment, and brought suit upon interest coupons. The statute authorizing the issue provided that it should not be construed so as to prevent the city authorities from calling in and paying off the bonds in whole or in part, at any time, and that upon tender of the principal to the holders, interest should cease. The Court, in giving judgment for the defendant, said that the statute clearly empowered the authorities to call in and pay off the bonds; that the exercise of the power though permissive in terms, imposed a duty, which the city officers could not effectually abridge; that the power to issue the bonds was derived exclusively from the legislature, and the laws which conferred the power entered into and formed a part of the bonds themselves; and that the city authorities could not curtail or impair the effect of the condition declared by the statute by issuing bonds of a different tenor.

In Catholic Order of Foresters v. State, (N. D.) 271 N. W. 670, 674, 109 A. L. R. 979, an action was brought to determine the right of the Industrial Commission to call bonds issued by the State. The statute provided for the issuance of bonds “payable in not less than ten or more than thirty years from the passage of this act; provided, however, that at the option of the industrial commission they shall be payable at any time after five years from the [53]*53date of their issue, upon public notice.” Comp. Laws Supp. N. D. 1925, § 229064. The bonds were issued upon the faith and credit of the State, and were specifically secured by first mortgages on real estate deposited with the State Treasurer as trustee. It appeared that the purchaser had stipulated for bonds “without option.” They contained no provision for call and redemption prior to maturity, nor that they might not be called. Prior to maturity notice of call and redemption was given. The Court said,

“Clearly the purpose of the option proviso is to enable the Industrial Commission to call the bonds in case the mortgagors take advantage of their pre-pasonent privilege. Thus the Commission in the public interest is charged with the duty to take up the bonds at any time after five years from the date of their issue should the payments realized from the primary security (the mortgages) and other circumstances and conditions make it advantageous to do so. The amounts that may be thus prepaid by the mortgagors cannot be ascertained in advance, so the statute does not require the Industrial Commission to exercise the option in advance of issue, and since the statute must be considered as part of the bond, there can be no object in requiring the Industrial Commission to recite in the bonds when issued that such bonds may be callable after the expiration of five years from the date of their issue. In short, the option cannot be exercised in advance.”

In Carlson v. City of Helena, 39 Mont. 82, 102 P. 39, 17 Ann. Cas. 1233, action was brought by a taxpayer to test the validity of proposed bond issues of the City. The statute, authorizing the issue, provided that the bonds should be made payable in not to exceed twenty years, and redeemable at such times as are prescribed in the ordinance directing their issue.

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Cite This Page — Counsel Stack

Bluebook (online)
196 A. 168, 39 Del. 42, 9 W.W. Harr. 42, 119 A.L.R. 174, 1937 Del. LEXIS 67, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dupont-v-mills-delsuperct-1937.