English v. Bd. of Supervisors of Sacramento , 19 Cal. 172 ( 1861 )

Baldwin, J. delivered the opinion of the Court

Field, C. J. concurring.

Application for mandamus against defendants to compel them to levy and assess a tax of one-fourth of one per cent, on all the taxable property of the county, to be set apart as a sinking fund for the gradual redemption of the outstanding bonds, issued under the Act of 1854, entitled “ An Act to Fund the Floating Debt of Sacramento County, and to provide for the Payment of the same.” (See Laws of 1854, 201.) By this act the county of Sacramento was authorized to fund its floating debt, Commissioners were appointed for that purpose, the power was given them to issue bonds, etc. By the fourth section it is provided, that of the moneys received by the County Treasurer from the taxes assessed for county purposes, there shall be first set apart a sum sufficient to pay the January interest on said bonds, “ and no payment shall be made except upon account of said interest from the treasury until such amount is secured; and from the same fund there shall be set apart, previous to the first of June in each year, a sum sufficient to pay the July interest on said bonds.” The fifth section is that mainly insisted on as giving the rights claimed by the plaintiff here. It is in these words: “ Section 5. It shall be the duty of the Court of Sessions of said county to assess annually, in addition to the taxes now by law authorized to be assessed, a tax of one-fourth of one per cent, upon all the taxable property of the county as a sinking fund, for the gradual redemption of the bonds issued by virtue of this act.” By the Act of 1855, the duties of a civil character, which by previous acts had been cast upon the Court of Sessions, were cast upon the Boards of Supervisors for the respective counties. The plaintiff here i*s the holder of one of the bonds issued under this Funding Act, and in pursuance of its provisions he claims that this act assures to him, as a part of his contract, the right to demand that the fifth section of the Act of 1854 shall be carried into effect, and prays that the defendants be ordered to levy the tax therein mentioned.

The question involved is, whether this provision of the Act of 1854 entered into and formed part of the contracts—the bonds— executed in pursuance of its provisions. Before the passage of the Act of 1854, the plaintiff or his assignor held claims which we assume to have been valid debts against the county. It may be that he had no means of enforcing payment by the ordinary process of legal coercion. But still as high an obligation, moral and honorary, rested upon the county to pay them. This obligation, if no provision otherwise existed, might have been enforced by the Legislature, and it is to be presumed it would have been upon proper representation by the parties interested. After the passage of the act and in accordance with its provisions, the holders of this indebtedness exchanged them claims presently due, for bonds payable ten years after date, with interest at the rate of ten per cent, per annum; after which act the holders, of course, had no claim for immediate payment, or other payment than according to the terms of the bonds. This surrender, therefore, and this change of securities, were a good consideration for the instruments executed by the county. As an inducement to the holders to fund the debts, the provisions before referred to were inserted in the act; and we must presume that the creditors of the county relied upon them as their security for the payment of the bonds. The act and the bonds issued in pursuance of its provisions must be taken together. Indeed, the act is an authority given for a contract on these terms; and we do not see that it is not as inviolable as a trust-deed would be, pledging certain revenue, to be raised in a prescribed mode, for the payment of the debt. Though this tax was to be levied in advance of the maturity'of the debt, yet this fund was a necessary provision to its ultimate payment. The collection and preservation of this fund gave value to the bonds as money securities, and by a gradual process of accumulation, assured the ultimate payment, by removing the apprehension that a heavy tax for the payment of old debts, laid at or near the end of the ten years, and coming all at once upon the taxpayers, might not be levied or collected. The section providing for this Sinking Fund, therefore, was a most important term in this arrangement; and it would not be an act of justice or good faith to refuse to give effect to it. We have decided the principle of this case in several cases. (See People v. Bond, 10 Cal. 563 ; People v. Tillinghast, Id. 584 ; McCauley et al. v. Brooks, 16 Id. 11.)

It is true that the act makes it the duty of the Court of Sessions to levy this tax; but it was in the power of the Legislature, as we have heretofore held, to give validity to acts of this sort, by the general act of 1855, which declares that the powers conferred on the Court of Sessions by any law shall be exercised by the Board of Supervisors. We think this amendment made by the Legislature to this Funding Act, in the change of the tribunal directed to levy the tax, did not impair the obligation of its provisions as a contract between the bond holders and the county. We see nothing in the case of McDonald v. Maddux (11 Cal. 187) which at all clashes with the doctrine here asserted. That case merely held that the Legislature may direct the mode and time of payment of municipal debts, and prescribe the debts so to be paid, and in what order. It has the right of the debtor it represents in this respect; but this supposes that the Legislature has not already charged the fund so to be used by a valid contract. But a Legislature has no more right to violate a contract than an individual; nor can it authorize any person, natural or artificial, to do so. This we have decided in several cases, and it is a plain and well recognized principle of constitutional law. In the case of McDonald, there was no contract shown pledging any fund to the payment of any debt. We think that by the Act of 1854, now under consideration, a fund was pledged, as in the case of Bond, and this was done by the very act under which the contracts were executed. We see no difference between pledging a fund to be raised in a certain way, and a fund already in hand. In either case, the provision is a contract, whereby money, whether levied or not, raised by assessment laid upon property, is devoted to a specific purpose. This provision, made prior to the execution of the contracts—-the bonds here—becomes a part of the contract, and furnishes the security and sanction provided by law for the performance of the contract, and has, upon the execution of the bonds and the cancellation of the claims provided for, every element of a valid and irrevocable agreement, so far as the substantial matter of the act is concerned. The case might be different if these bonds had already been executed, and this provision had been made for their payment; the act would then be an ordinary act of legislation, subject to repeal; a mere voluntary provision by the debtor, or on his behalf, for the payment of his debt. But when an act is passed authorizing bonds to be;issued upon certain terms, and among these a provision for payment or security, these terms go with the bonds, and are as well the sanction as the inducements of the contract.

It becomes unnecessary in this view to inquire whether the Consolidation Act of 1858 is in conflict with this provision of the Act of 1854. If it is not, of course the Act of 1854 is not repealed. If it is, the Consolidation Act must, in this respect, yield to the law of 1854.

We are aware, as has been suggested, that the burdens upon the taxpayers of Sacramento are heavy enough already, and that the people of that county are the more entitled to sympathy from the honorable submission they have made to these burdens, rather than seek refuge in disreputable shifts to avoid payment of their obligations. But we cannot afford them relief or protect them from further taxation, if such be the result of this decision, at the expense of what we deem to be the plain injunctions of the Constitution, and of the legal rights of the plaintiff and those representing like claims.

Judgment reversed and cause remanded.