Park v. Candler
Opinions
Cobb, J.
We have not undertaken to determine whether any portion of the public-property fund can be lawfully applied to the payment of interest on the public debt, or whether the fund must be appropriated only in payment of the principal. Neither have we undertaken to decide whether the public-property fund can, with other funds in the treasury, be deposited in the State depositories; for .the simple reason that these questions are not involved in the present case, and anything said could not take the form of an authoritative ruling, would not bind any member of this court should such questions hereafter arise, and might have the effect of misleading those upon whom may devolve the duty of determining those questions. As to the question actually before us, we are’ clear that the use of the public-property fund in the discharge of any obligation or demand due by the State, other than the public debt or some portion thereof, would be a violation of the constitution; and this is true whether the fund, or such rportion thereof as is so used, is or can be replaced by funds arising by taxation and in the treasury before the public-property fund is needed for any purpose for which it may be lawfully used under the constitution.
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Cobb, J.
We have not undertaken to determine whether any portion of the public-property fund can be lawfully applied to the payment of interest on the public debt, or whether the fund must be appropriated only in payment of the principal. Neither have we undertaken to decide whether the public-property fund can, with other funds in the treasury, be deposited in the State depositories; for .the simple reason that these questions are not involved in the present case, and anything said could not take the form of an authoritative ruling, would not bind any member of this court should such questions hereafter arise, and might have the effect of misleading those upon whom may devolve the duty of determining those questions. As to the question actually before us, we are’ clear that the use of the public-property fund in the discharge of any obligation or demand due by the State, other than the public debt or some portion thereof, would be a violation of the constitution; and this is true whether the fund, or such rportion thereof as is so used, is or can be replaced by funds arising by taxation and in the treasury before the public-property fund is needed for any purpose for which it may be lawfully used under the constitution.
In declaring that a similar disposition should be made of railroads held by the State, other than the two specifically mentioned in the provision of the constitution above quoted, it was evidently contemplated that the other railroads referred to, in order to be subject to this provision of the constitution, should when sold be held by the State in the same manner in which the two railroads named [658] were held, that is, as absolute owner. Were there any other railroads held by the State as absolute owner at the time the constitution was adopted ? If this question is to be answered by looking alone to the present record, the answer would be, no. If the question is to be answered in the light of the public history of the State, independently of the present record, the answer would still be, no. Neither at the time the constitution was promulgated by the convention, nor at the time it was ratified by the people, did the State 'hold as owner thereof any other railroad than those named in the constitutional provision. It is true that at the time the convention was in session the Governor of the State, in his official capacity, was in possession of the North and South Bailroad, but the State did not at this time own this railroad. The possession of the Governor was due to the fact that the indorsement of the State had been placed upon the bonds of the company, default had been made in the payment of interest thereon, the road had been seized by the Governor, and was in his possession for the benefit of the bondholders and for the protection of the State as indorser of the bonds. House Journal, 1878, pp. 30,3Í. This road was sold by the Governor, under the power given in the charter of the company, on the first Tuesday in September, 1877, a few days after the convention adjourned. The purchasers at this sale having failed to comply with their bid, the Governor negotiated a private sale of the railroad, which seems to have been authorized by the charter of the company, with other persons for the amount bid at the sale. Tins private sale appears to have been made as of the date January 1,1878, the purchase-money to be paid on January 1,1884. In the absence of evidence to the contrary, it possibly may be presumed that the amount for which this road was sold ($40,500) was collected and applied to the payment of the bonds of the company, as was contemplated by the charter of the company. Acts 1870, p. 350 (13); Acts 1868, p. 144. That the amount was collected and paid into the State treasury before the same was due appears from the treasurer’s report of 18.81, published, as required by law, with the acts of the General Assembly. See Appendix to Acts 1880-81. Whether it has ever been paid out does not appear. It might have been lawfully paid out on the bonds of the railroad company, and to this extent have reduced the amount of the State’s liability on account of the indorsement of its bonds. If it was not, and the State has issued its [659] bonds for the full amount due on the bonds of the railroad company, and these bonds are still outstanding, the proceeds of the sale of this road in the treasury are a part of the public-property fund and subject to the provisions of the constitution in relation to that fund.
From the journal of the constitutional convention it seems that •some of the members were of the opinion that the State did own the North and South Railroad. Mr. Tharpe introduced a resolution providing for the appointment of a committee to inquire into the propriety of selling the Western and Atlantic, Macon and Brunswick, and North and South railroads. Jour. Const. Con. 1877, p. 68; Small’s Debates, 47. This committee was appointed to inquire into the propriety of selling all the railroads belonging to the State, and recommended the adoption of an ordinance requiring the General Assembly to create a commission which, with the Governor, should be authorized to sell the three roads mentioned in the Tharpe resolution and also the Memphis Branch Railroad. Jour. Const. Con. 164; Small’s Debates, 129. Consideration of this report was postponed, and, so far as appears, no further action was ever taken thereon. It is significant, however, that the first draft of the constitutional provision now under consideration mentioned only the Western and Atlantic and the Macon and Brunswick railroads, thus showing that upon investigation it had been ascertained that the State owned those two roads only. Jour. Const. Con. 209; Small’s Debates, 183. As the North and South Railroad was not owned by the State, it could not be enumerated as one of the railroads the proceeds of the sale of which were to become a part of the public-property fund. The proceeds of the sale of this road and other roads in a similar situation were to be applied primarily to the payment of the bonds of the company, not only for the purpose of. discharging this debt of the company, but also to relieve the State, to the extent of the amount paid, from any liability on its indorsement. If any surplus remained after paying off the bonds, it went of course to the owners of the railroad. It was, therefore, manifest that this road could not be classed with the Western and Atlantic and the Macon and Brunswick railroads. At the time the constitution was framed it could be foreseen that there was a contingency upon the happening of which the State might become the owner of this road. If the purchasers failed to comply with their bid, and the road 'sras again [660] exposed to sale, the State might be compelled for its own protection to become a purchaser at the sale. With the ownership of the-road there would also come to the State a liability for the full amount of the unpaid bonds of the company, upon which the State-had placed its indorsement. As this liability of the State as indorser upon the bonds of the railroad company would be a part of the bonded debt of the State, and as the scheme of the constitution was that the proceeds of the sale of public property should_ be set apart as a fund for the payment of the bonded debt, it was provided, in furtherance of this scheme, that when the State became the owner of a railroad which was incumbered with a bonded debt upon which the State was liable as indorser, the proceeds of the sale of the railroad should become part of the fund set apart by the constitution for the payment of the public debt. The policy of the constitution' was to prevent the increase of the bonded debt of the State, and it was therein provided that “The bonded debt of the State shall never be increased, except to repel invasion; suppress insurrection,, or defend the State in time of war.” Civil Code, § 5899.
Construing this provision in connection with that provision in reference to the public-property fund, it is clear that it was the intention of the framers of this instrument, that if the bonded debt which was owed by the State as a principal debtor was increased on account of the State being compelled to assume, as principal, bonded debts for which it had become legally bound as indorser when the policy existed of lending State aid to the construction of public improvements, the debt brought about by the assumption of these obligations would take its appropriate place as a part of the public debt of the State, and the railroad property which came with this debt should take its appropriate place, and the proceeds of the same when sold be set apart for the payment of the public debt. In view of the status of the North and South Railroad and other railroads similarly situated, the expression “ other railroads held by the State” is language which must be held at least to apply to railroads which might, after the adoption of the constitution, be acquired by the State as a consequence of the indorsement of the bonds of these railroad companies; for in no other way, unless at a tax sale or other sale under a claim in favor of the State, could the State ever acquire railroad property, the direct acquisition of such property being prohibited by the terms of the constitution. As' [661] above stated, the bonded debt of the State conld never be increased; and the State was prohibited from levying a tax to be used for any other purposes than those enumerated in the constitution; and none of those so enumerated were broad enough to include the acquisition of a railroad. Civil Code, § 5882. It would be a narrow construction indeed, and one not at all warranted, when all the circumstances and the public history of the State are taken into consideration, to hold that the expression, “ other railroads held by the State,” applied only to the North and South Railroad simply because, at the time the constitution was framed, the State had actually seized this road under the power given in the company’s charter and was making efforts to sell the same for its protection and for the benefit of the bondholders. It was altogether probable that other roads would in the future he placed in exactly the same position. That the framers of the constitution meant to include only such roads as the State might, in some contingency, own is absolutely certain; for in no other way could the State ever own the proceeds arising from the sale of any property. The constitutional provision is a pledge of the proceeds arising from the sale of public property, that is property owned by the State, and not property owned by other persons against which the State holds a claim or demand of some nature. Keeping this clearly in view, it seems ■entirely plain that it was intended to include those roads which might in the future be seized and sold by the State, as well as the one which had already been seized. Indeed, so far as the North and South road was concerned, the State had manifested a purpose not to become the owner of this road, for it had allowed it to he bid off at $40,500, a sum so much smaller than the amount of the bonds indorsed by the State as to indicate a purpose on the part of the State to allow the road to be sold to other purchasers at almost any price rather than become the purchaser itself. This sale, it is true, took place after the convention adjourned, but sometime before the constitution was adopted'; and the people, when they came to vote upon that instrument, were consequently acquainted with the purpose of the State with reference to this road.
There was also a contingency, doubtless well known to the members of the convention, that the State might become the owner of the Memphis Branch Railroad, that road having been seized by the Governor under authority given in its charter, growing out of the [662] fact that the State’s indorsement was upon the bonds of that company, and the road had been sold, upon credit extending to January 1, 1881, just a few days before the convention met. House Jour. 1878, pp. 31, 32. Under authority of an act approved September 26, 1868, the Governor placed the indorsement of the State upon the bonds of the South Georgia and Florida Railroad Company. These bonds were outstanding at the time the constitution was adopted. Consequently there was also a contingency that the State might become the owner of this road. Acts 1868, p. 145. The status of this railroad was known to. the members of the constitutional convention. Jour. Const. Con. 209; Small’s Debates, 183. The only railroad of which the State could have become owner without at the same time becoming chargeable with a debt by reason thereof, at the time the constitution was framed, was the Marietta and North Georgia Railroad. By the act of February 24, 1877, the State loaned to the company operating this road the net amount received into the treasury from convict labor. Acts 1877, p. 29. To secure this loan the State took a first lien on all of the property of the road then existing'or thereafter to be acquired. It was provided that, in the event of default in the payment of the principal or interest of the loan, the Governor, in behalf of the State, should seize the property of the railroad company, and, after advertisement for thirty days, sell the same to the highest bidder. Whether or not if this road had ever become the property of the State it would have been subject to the provisions of the constitution under consideration in the present case, certainly the fact that the State might have become the owner of this one road only, without incurring a debt by reason of such ownership, when there were at least four others in such a condition that ownership of any of them by the State would bring ultimate liability upon the bonded debt oRthe company which would, on account of the liability of the State thereon as indorser, be a part of the bonded debt of the State, would not be a sufficient reason to justify a construction of the constitution which would exempt from the operation of this provision the proceeds of the sale of those railroads which did actually become the property of the State, and which brought with them a bonded debt upon which the State was liable as indorser.
In the charter of the Northeastern Railroad Company there was,, as has been stated, a provision that upon certain conditions the [663] Governor was authorized to place the indorsement of the State upon the bonds of the company. On January 9, 1877, a board of commissioners, which had been previously appointed by the Governor, reported that forty miles of this road had been completed and equipped and put in running order, and-in effect that the conditions prescribed by the charter to be complied with before the State’s indorsement should be applied for had been substantially complied with. While the then incumbent of the Governor’s office had, before the meeting of the convention, declined to place the State’s indorsement upon the bonds of this company, there was still outstanding this claim of the company to have such indorsement placed upon its bonds; and there was, while the convention was in session, pending in the Supreme Court of this State a case in which the company was asserting its right to have the Governor place the indorsement of the State upon the bonds, and attempting to defeat the application of a citizen to enjoin it from applying to the Governor. A decision holding that the company had a right to apply to the Governor to have the State’s indorsement placed upon its bonds was rendered on August 28, 1877, just three days after the constitutional convention adjourned. Northeastern Railroad Co. v. Morris, 59 Ga. 364. See also House Jour. 1878, p. 33. It may be legitimately presumed from these facts that the members of the convention were at least aware that this railroad was still asserting its claim to the State’s indorsement upon the bonds. If this claim was ever recognized by the State and the bonds of the company indorsed, it could be foreseen that there was a possibility that the State might, at some time in the future, not only become the owner of the road but become charged with a liability to pay the bonded debt of the company. When the framers of the constitution named all of the railroads then owned by the State, and added to this enumeration the words, “ or other railroads held by the State,” no other intention can be ascribed to the framers of this instrument than that these words should, at least, apply to railroads thereafter acquired by the State, when acquired in such a way that with them there came a bonded debt upon which the State was liable as indorser. There were no railroads owned by the State at the time of the adoption of the constitution, except the two named. It was known to the framers of the constitution that there were at least three which might, upon the happening of a given contingency, be[664] come in the future the property of the State. Certainly these as well as all other railroads which were so situated were in contemplation of the framers of the constitution, and when acquired by the State should be dealt with in the same manner as those which were then owned. The State having, through the Governor, recognized the claim of the Northeastern Railroad Company to have the State’s indorsement placed upon its bonds, and the Governor having recognized the validity of this indorsement by seizing the road in the behalf of the State for the benefit of the bondholders as well as to secure the State against loss on account of its indorsement, and the General Assembly having recognized the validity of the indorsement by providing for the purchase by the Governor of the property of the company at a sale had under authority of the company’s charter, and having replaced the bonds of the company with bonds of the State, and the bonded debt of the State, upon which it was liable as. a principal, being to that extent increased, the proceeds of the sale of this railroad, which came to the State at the same time with its liability upon the bonds, and in consequence of the State’s indorsement thereon, come within the terms of the provision of the constitution in regard to the sale of railroads held by the State, and must be set apart and faithfully kept for the purpose indicated by the constitution, and used, laid out, and expended for no other purpose whatsoever, so long as the State has a bonded debt.
This view of the matter is much strengthened when all of the provisions of the present constitution of the State relating to the subject of State aid in matters of public improvement are read together and in the light of the antecedent history of the State in relation to-this subject. Prior to the constitution of 1868 the State had, by an act of the General Assembly, loaned its aid in the construction of at least one railroad, by placing its indorsement upon the bonds of the railroad company. As has been seen, the indorsement of a portion of the bonds of the Macon and Brunswick Railroad was under an act passed in 1866. The constitution of 1868 authorized the State to aid in works of public improvement under certain conditions, among them being that the State should have a prior lien on all of the property owned by the company to which the State’s aid was granted,' and that an amount equal to that loaned by the State should be invested by private persons. Art 3, sec. 6, par. 5 (Code 1873, § 5068). Under this authority the leg[665] islature granted numerous charters incorporating railroad companies, each of them containing a provision that the State’s indorsement should be placed upon the bonds of the company upon the conditions prescribed in the constitution. An examination of the acts of 1868, 1869, and 1870 will show how freely charters of this ldnd were granted between, the dates named. Under many of the acts just referred to, the State’s indorsement was placed upon the bonds of the companies. In 1872 the General Assembly entered into an investigation to determine whether the State was bound upon all of the bonds upon which the State’s indorsement had been placed; and the result of this investigation was that the indorsement of the State upon bonds of several railroad companies was, by acts of the General Assembly, declared to be null and void for several reasons. See Acts 1872, pp. 5, 6, 7. In 1874 the General Assembly passed an act repealing that part of all charters’ to railroad companies which provided for the State’s indorsement upon the bonds of such companies. Acts 1874, p. 98. In 1877 an-amendment to the constitution of 1868 was adopted, declaring that the indorsement of the State upon the bonds of certain railroad companies was illegal and void, and should never he paid. Code •of 1882, p. 1329. See also Const. 1877, art. 7, sec. 11, par. 1 {Civil Code, § 5898). This was the condition of affairs in reference to the matter of State aid when the convention of 1877 met. The purpose of the constitution framed by that body was to provide that •every valid bond of the State should be paid, whether the State was liable thereon as principal or as indorser; but that the State, should never incur any new debt by aiding in the construction of nny work of public improvement. State aid was entirely prohibited for the future. The consequences of State aid in the past, wherever it had been lawfully granted to any railroad company, were to be recognized, and the debt due by the State on this account was to be treated as a part of the public debt of the State. It was the intention of the framers of the constitution that this •should he true, whether at the time the constitution was adopted the State had already become liable on account of State aid in the past, or might in the future become so liable. The bonded debt of the State was never to be increased, except for the purpose of defending the State. The bonded debt, using this term to include not only the debt the State owed at the time the constitution was [666] adopted, whether as principal or as indorser, but also whatever debt of that character it might thereafter owe on account of liabilities lawfully incurred before the constitution was adopted, was to be recognized as a valid debt against the State, and its payment was provided for. One source from which the framers of the constitution intended that the fund for the payment of the bonded debt of' the State was to be derived was from the sale of railroad property. The bonded debt of the State and the ownership of railroads by the State are no more intimately connected with each other in the history of this State than they are in the terms of the Constitution-Ownership of railroads brought debt to the State. This property when disposed of must therefore go to discharge the liability which Its ownership has imposed. This was undoubtedly the intention of the framers of the constitution, and railroad property acquired by the State as a result of State aid to railroads must, under the-plain provisions of the constitution, be applied to the payment of the public debt, a portion of which has been incurred on account of the ownership of this class of property, and to no other purpose whatever. The framers of the constitution of 1877 intended that the provisions of that instrument should be exhaustive of the subject qi State aid. There should be no State aid in the future; and debts incurred as a result of'State aid in the past must be'paid, as. far as possible, by property which has come to the State as a result of State aid.
4. The duties of the State treasurer are prescribed by law. Among those duties we find it declared in the code: “ He shall pay all funds pledged to the payment of the public debt, or interest thereon, or to any object of education, and to these objects only, and in nowise to any other purpose. All payments from the treasury shall be paid from the fund appropriated for such purpose, and not from any other.” Political Code, § 199 (8). It is said that this section prohibits the treasurer from paying a claim against the school fund out of funds appropriated for other purposes, and that if the constitution prohibits the payment of such claims out of the public-property fund, and this section prohibits the payment out of any other fund than the school fund, the act of 1897 has nothing upon which to operate. Of course, it will never be held, unless from necessity, that the General Assembly has done either an absurd or a vain thing. The General Assembly must not violate the constitution; and repeals by implication are not favored. If, however, an act of the General Assembly is capable of being construed three ways, the first making it violative of the constitution, the second having the effect to repeal a former act by implication, and the third making the General Assembly do an idle or a vain thing, either the second or third construction must be adopted; and as between these two it would seem that the second should prevail.
[670]
Judgment reversed.
39 S.E. 89 (Park v. Candler) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.