Cheney v. Jones , 14 Fla. 587 ( 1874 )

RANDALL, C. J.,

delivered the opinion of the Court.

Article XII, section 2 of the Constitution of Florida, reads as follows : “ The Legislature shall provide for raising revenue sufficient to defray the expenses of the State for each fiscal year, and also a sufficient sum to pay the principal and interest of the existing indebtedness of the State.”

“ Section 7. The Legislature shall have power to provide for issuing State bonds bearing interest, for securing the debt, and for the erection of State buildings, support of State institutions, and perfecting public works.”

The Legislature in 1871 (Chapter 1833) enacted, “ That for the purpose of funding the floating indebtedness of the State, the Comptroller shall cause to be prepared thirty-year seven per cent, coupon bonds, that is to say,'bonds of the State of Florida due and payable thirty years from the date thereof, bearing interest at the rate of seven per cent, per annum, equal to the amount of Comptroller’s warrants and Treasurer’s certificates now outstanding, and -to be issued prior to the first day of January, A. D. 1872.; provided, that the aggregate amount of bonds issued by authority of this act shall not exceed the sum of three hundred and fifty thousand dollars.”

The act further provided for the levy of a tax of a suffi©iont sum to pay the interest, and one. per cent, of the principal as a sinking fund, annually, upon the amount issued.

In 1872, the Legislature passed a further act ill refereñce to the issuing of these bonds, which act will be hereafter referred to. (Chapter 1,889.)

In 1873 the Legislature passed an act providing for the issue of one million dollars of bonds, with interest payable somi-annually in gold, at the rate of six per cent, per annum, and provided for levying a tax annually of three mills upon the dollar of the assessed valuation of property to pay the interest, and a tax of one mill for the creation of a sinking fund for the ultimate redemption of the bonds; and that no tax shall be levied until one-fourth of the bonds shall be sold. The act required the Comptroller to hold five hunched thousand dollars of such bonds for the purpose of ex-©hanging for and the redemption of the valid bonds of the State, and to exchange such bonds for a like amount of the principal and unpaid interest of the bonds to be redeemed. Rut the bonds held by the Seminary and School Eund, the $350,000 of bonds issued under the act of 1871, the bonds /issued in aid of railroads, and bonds of 1868 and 1869, which were hypothecated in New York or elsewhere, were not to be so exchanged.

The remaining $500,000 of said bonds were directed to be sold for United States currency at not less than eighty cents on the dollar; and out of the proceeds of the sales the Treasurer should, first, pay the amount necessary to redeem the bonds of 1868 and 1869 from hypothecation, and next, pay the indebtedness of the State accruing after the first day of July next ensuing. Laws of 1873, Chapter 1,937.

I. The first question that is presented is this : Does the Constitution authorize the Legislature to provide for issuing bonds of the State to pay any indebtedness (o.ther than “ for the erection of State buildings, the support of State institutions, and perfecting public works,”) unless such indebtedness had been incurred, or existed at the time the Constitution was adopted ?

No rule of constitutional construction is better settled than that if there be a doubt whether a legislative enactment is strictly constitutional, Or that if it be not clearly opposed to constitutional restrictions, the courts will not hold the enactment to be invalid. If the courts were to hold otherwise they would become mere law-makers, undertaking to place obstacles in the way o£ legislation which had not been plainly placed there by the people in framing the charter itself, and deny to the people represented in the Legislature a power they had not. denied to the legislative department.

The Legislature is authorized to raise 'revenue, that is, levy and collect taxes sufficient to defray the expenses of the State for each year, and also a sum to meet the principal and interest of existing indebtedness. If, as contended by the appellant, it was intended that the “ existing indebtedness” referred to included only such indebtedness as existed at the time of the ratification of the Constitution, it would have been made entirely clear if it had been so expressed. But it is not so expressed. If it had been written that the Legislature should provide for paying the debts of the State “ existing-at the time the Constitution is ratified,” or equivalent words, there would have been no cavil as to its meaning. That States become indebted from various causes, from extraordinary occurrences, from local or general misfortune, war, pestilence, and famine, beyond the present or immediate means of paying, and for expenditures not strictly included in the terms “ expenses of the State,” is matter of history in the career of every country. And the occurrences of the few years past, the organization of the government upon new foundations, the misfortunes and poverty of the people, and various causes within the knowledge and recollection of every adult person in this State, afford ample sources for the conclusion that the framers of the Constitution must have anticipated that the.expenses of the reorganization of the State and all its municipal divisions would be much greater than could be conveniently borne at the moment of their creation. But what does the language used imply? The Legislature is required to meet annually, and then make provision at their annual sessions for “ defraying the expenses of the State,” and for “ paying the principal and interest of the existing indebtedness.” Most surely it contemplates the indebtedness in “ existence” at the time of the annual session of the Legislature. * If the law should require every man in the State each year to provide for paying his “ existing indebtedness ” and the interest upon it, could it be seriously insisted that this referred only to his debts existing at the time of the enactment of the law ? And yet this is. but the import of the language of the Constitution in regard to State indebtedness.

The framers of the Constitution, foreseeing the necessities of the times, and well knowing, that the revenues miglit often be insufficient to keep tbe State out of debt, and that enhanced taxes to supply deficiencies would be sometimes oppressive and burthensome, provided that State bonds might be issued to secure the ultimate payment of such indebtedness as might “ exist.” It is a permanent, continuing provision, and not couched in such language as would confine its operation to the debt existing before its adoption. Constitutional provisions intended to operate upon some isolated or peculiar transaction are usually inserted among “ miscellaneous provisions” or ordinances ; but this is placed in the chapter or article referring to the current financial transactions of the State. The language is: “ The Legislature shall have power to provide for isuing State bonds, bearing interest, for securing the debt,” &c. And here we find no language which confines its operation to any transaction or indebtedness antedating the Constitution.

The provision relating to the militia of the State, that “ all able-bodied male inhabitants of the State, between the ages of eighteen and fortydive years, who are citizens of the United States, or home declared their intention to become citizens • thereof, shall constitute the militia of the State,” obviously intended to include all who were inhabitants at the time of the adoption of the Constitution, and also those who should subsequently become inhabitants and citizens; and yet the language used refers quite as clearly to those only who were then inhabitants, as do the sections of the article upon finance refer to the then existing indebtedness. The usual and natural interpretation of the language must control, and always with reference to the subject-matter and the evident objects and purposes of its employment.

It is urged that the provisions referred to apply only to such indebtedness as may have existed at the date of the Constitution. If so, it must have been contemplated by the framers of that instrument that without such express authority it was doubtful whether the State to be organized under it would be liable for the debts of the former government, and.that such a provision was proper in order to remove such doubts and to assume such debts as though they were the debts of another government.

But it has been established upon high judicial authority, that as to the State governments there is no limitation upon the power of the Legislature as to the amount or objects of taxation ; that the interest, wisdom, 'and justice of the legislative body, and and its relation with its constituents, furnish the only security against unjust and excessive taxation, unless there be express restrictions upon that power in the Constitution. (Prov. Bank vs. Billings, 4 Peters, 514; Brewster vs. Hough, 10 N. H., 138; Mack vs. Jones, 1 Foster, N. H., 393; McCulloch vs. Maryland, 4 Wheaton, 316; Blanding vs. Burr, 13 Cal., 343.) And if the provisions of the second section of Article XII refer only to the prior indebtedness of the State, and were inserted for the purpose of removing doubts as to the liability of the present government for such debts, it must be construed as a special authority to pay them, and in that case there is no element of restriction to be implied from it as to other subjects.

The second section, it will be observed, has no reference whatever to the issue of bonds, but only to .the subject of paying the current expenses of the State and the principal and interest of existing indebtedness. The seventh section refers to the issue of bonds to “ secure” indebtedness. And when may such bonds be issued ? The provision contains no direction upon the subject, and the Legislature may act on the occasion of its first meeting, or the tenth or the twentieth. And what then is its duty ? If the State owe a million of dollars at the end of ten years, and owed but half a million at the beginning of the first year, has it no power to “ secure” the debt due at the end of ten years ? The Constitution contains no suggestion that the State must repudiate its debts incurred in pursuance of the authority of the Legislature; and it must pay or repudiate. Common honesty is quite as respectable on the part of the State as in an individual, and hence the State will be honest and not repudiate. But the debt is perhaps too much to be paid 1^ our people at once, and they may prefer to pay in instalments with interest. And what is a State bond but apromise to pay the principal and interest of its debts, equally binding upon us, whether it be in the form of a bond or an open indebtedness ?

The proposition made by the complainant is that taxes cannot be levied except to pay the principal and interest of indebtedness existing at the date of the Constitution, and fc© meet the current expenses of the State, and to pay for State buildings, and the support of “ State institutions.” And so the question arises, can the Legislature create a debt without violating the Constitution ? If not, then we -must pay our taxes into the Treasury in advance to meet current expenses ; for, if this be not done, an indebtedness must follow the issuing of every warrant upon the treasury, .if there is n© money in the treasury at the moment.

We cannot sanction any such absurdity as that valid debts may not be created under the authority of law, and that the Legislature cannot levy taxes to pay the principal and interest thereof; (other than debts existing in 1868, when the Constitution was adopted, and debts incurred “for the erection of State buildings, and support of State institutions ;”■) and it seems to us very plain that if the State owes a debt, at any time, the Legislature may provide for paying it by the levy of taxes. The issuing of bonds does not create a debt, but is simply a means of securing the future payment-of principal and interest, and the Legislature may authorize the issue of bonds for that purpose, whenever a debt has been incurred.

II. The question next arises, whether the Constitution authorizes the issuing of bonds of the State for the purpose of securing any indebtedness not yet actually incurred, or for the purpose of raising money by a sale thereof to. pay the cü’dinaiy expenses of the State ; and do the octs of 1871 and 3873 provide for the issuing of bonds for such purposes ?

¥e have already seen that the general grant of legislative power carries with it by implication and construction all the s&eans necessary for its due execution, and that there is no limitation upon the power of the Legislature as to the amount or objects of taxation, unless such restriction is expressed or necessarily implied from the fundamental law.

Were there no prescriptions in the Constitution of the several objects or purposes for which the Legislature may impose Saxes, there would be no limitation upon the power except ha the wisdom and discretion of the Legislature. And it is not necessary that a limitation of power should he framed in Express terms. If a power is granted to do certain things, as for instance, the levying of taxes for certain specified and «■numerated purposes, and it is not essential to the carrying wat of the purposes of the government that any such power should be exercised except for the purposes specified, the arfteet of such prescriptions is equally prohibitory as to the ■piErposes not specified as though the prohibition were declared in affirmative terms. (See Cooley’s Con. Limitations, 64, 87, 176; People vs. Draper, 15 N. Y., 543; Stewart vs. Supervisors, 30 Iowa, 9; Twitchell vs. Blodgett, 13 Mich., 127, 158; Sharpless vs. The Mayor, &c., 21 Pa., St. Rep., 147; 1 Story’s Com., Sec. 448.)

Measuring the power of the Législ ature by the terms of ilie Constitution in respect to the levying of taxes, we find "that it is permitted “ to raise revenue sufficient to defray the «expenses of the State,” (which includes such expenditures as may be authorized by the Legislature and which are not proIpbited by the Constitution,) and u to pay the principal and interest of the existing indebtedness of the State.”

This provision is so broad that we cannot conceive it to b& necessary to the due exercise of all the powers of government to travel outside of it for any legitimate object. It crests a boundary also, which we think was intended to protect the people from errors which sometimes have been committed by Legislatures. It prescribes what may be done, how far the Legislature may go in levying taxes ; and upon the principles alluded to, it is a limitation not wanting in directness to amount to a prohibition. And as to the power to issue bonds of the State, it says, “ the Legislature shall have power to provide for issuing State bonds bearing'interest for securing the debt,” &c.; and by the same rule, founded in principle and sustained by authority in unbroken currents, it is equally prohibitory as though it should declare that “ the Legislature shall have no power to provide .for the issue of bonds except for secwrvng the debt,” &c.

The Legislature in 1871 (Chap. 1883) passed an act providing that “ for the purpose of funding the floating indebtedness of the State,” the Comptroller should cause to be prepared bonds not exceeding the amount of $350,000, bearing interest at seven per cent., equal to the amount of Comptroller’s warrants and Treasurer’s certificates now outstanding and to be issued prior to the first day of January, 1872, and further authorizing the Comptroller to exchange said bonds for said Comptroller’s warrants and Treasurer’s certificates at par. A tax was also authorized sufficient to pay the interest and to provide a sinking fund'for the ultimate redemption of the principal.

On the 15th February, 1872, another act was passed (Chap. T889) authorizing the Comptroller to issue the bonds of 1871, not yet issued, for the purpose of taking up Comptroller’s warrants issued on and after January 1, 1872.

Was this act of 1871 authorized by the Constitution,? From the principles already laid down, we' must hold that 'ag far as the act authorized the issuing of bonds to secure any indebtedness, which had accrued up to the time of its passage, it was authorized by the Constitution ; and so' far as it authorized the issue of bonds at a future time, in exchange for any indebtedness not yet incurred, and growing out pf the ordinary expenses of the State, it was not in accordances with the provision of the Constitution.

A law may be constitutional in part and unconstitutional! in part, as it may be in part within the scope of constitutional authority and in part outside of it, if a part of the; law can be executed without the aid of that part which fe invalid. (See Cooley’s Const. Lim., 177, and authorities-cited.)

It does not appear, however, from the bill that the outstanding floating indebtedness was less $ian three hundred and fifty thousand dollars. The act says “ not exceeding?5, that amount may be issued for the purpose of funding the floating indebtedness of the State; and it must be presumed that the Legislature, in authorizing the exchange of these bonds for State warrants issued prior to the ensuing January, referred to warrants to be issued for such indebtedness as had teen incurred at the date of the? act, whether warrants had yet been issued therefor or not.

The act of 1872 is of equal validity with the act of 1871r so far as it authorized the issuing of the bonds provided fear by the latter for any actual indebtedness, and so far as the-bonds mentioned in these acts were issued to secure any indebtedness which had been incurred up to the 15th of February, 1872, when the act of that date was approved, we cannot hold that they were unauthorized by the terms or the spirit of the Constitution.

We do not mean to say that an act which is unconstitutional, or any thing done in pursuance of such act can be-ratified and made valid by subsequent legislation. This is not the purpose of the law of February 15, 1872, but so far as the law of 1872 authorized the issuing of the bonds off 1871 for any indebtedness which had been incurred at the date of its enactment, it is valid, and the bonds which hadl been issued up to that date for indebtedness then accrued! were from that date good, because they were then authorized by law to be issued.

III. The act of 1873, (Chap. 1,937) authorized the issue-of one million dollars of bonds, bearing interest at six per cent, in gold, and provided for the levying of a tax to pay the interest and to provide a sinking fund. Five hundred' thousand dollars of these bonds were required to be used in exchange for valid bonds previously issued and the unpaid interest thereon.

So far, upon the principle already referred to, the act and the issue of the bonds for such purpose was authorized by the Constitution ; for whatever the language used, whether to be “ exchanged” for the indebtedness secured by former bonds, or to “ secure” such indebtedness, the effect and the result is the same.

The act of 1873 further directed the remaining half million of bonds to be sold for United States currency at a price not less than eighty cents on the dollar, and. out of the proceeds the Treasurer was required to pay an amount necessary to redeem the bonds of 1868 and 1869 from hypothecation, and next to pay the indebtedness of the State to accrue after the first day of July then next ensuing.

We have said that the power of the Legislature to issue bonds was circumscribed and limited to the issuing of bonds for securing existing public indebtedness, the erection of State buildings, the support of State institutions and perfecting public works. The Constitution has specified these as the objects for w'hich bonds may be authorized. The purpose and intent of the Constitution must have been to limit the exercise of the legislative power upon this subject, for we must impute to it some purpose and some object to be’ accomplished by it. If that was not the object, we must, disregard it entirely, for it would be utterly meaningless. We think it was intended to prevent the profligate increase: of the public burthens by putting afloat promises to pay more-than we received; to prevent the depreciation of our credit by hawking it about at a large discount for the sake of a temporary relief, almost sure to result in future- disaster-And though, such disaster has not and doubtless will not overtake the State of Florida on account of any action yet had, the fate of some of the States does serve as an example of the point sought to be guarded by our Constitution upon this subject.

The bill of complaint in this cause alleges that the State was indebted to L. P. Bayne & Co. of New York in the sum of $160,000, and that that firm held a large amount of bonds issued in 1868 and 1869 as security for that indebtedness, and this was doubtless the hypothecation referred to in the act of 1873.

The provision of the Constitution authorizing the issue of bonds to “ secure” indebtedness may well, without a too broad or too narrow construction, warrant the sale of bonds for money with which to liquidate an existing indebtedness; for such a transaction is but the “ securing” of the same indebtedness transferred from one creditor to another.

We will not here determine whether the sale of the $200,-000 in bonds in exchange for or to “ secure ” $160,000 of actual debt may be authorized under the Constitution. The Legislature has authorized the officers of the State to do that, so far as they could confer such authority, and as there are no parties before us as holders of the bonds, whose interests may be affected, it would be scarcely just toward them or toward the State to determine it in this proceeding, where they have not been heard. But we have no hestitation in holding that the issue and sale of bonds for the purpose of raising funds with which to pay the current and future ordinary expenses of the State is not warranted by the Constitution, and that so much of the act as purports to give such authority is void.

The act of 1873 further provides that no tax shall be levied for the purpose of paying the interest or the sinking fund until one-fourth of the whole amount of the bonds shall be sold.

The bill alleges that one fourth of the bonds have not been “ soldthat the Comptroller pretends that he has sold $250,-000 of them to Bayne & Co. at eighty cents on the dollar, whereas in fact Bayne & Co. have taken said bonds at eighty cents on the dollar, in pursuance of an agreement, in satisfaction of his claim, and therefore a tax to pay the interest and sinking fund is not authorized by the act; and that a tax has been levied for the payment of the interest and sinking fund of the whole of the one million dollars named in the act, while a great portion of them remain in the hands of the Comptroller undisposed of.

The bill does not disclose what amount if any of the bonds have been sold for cash, or what amount has been delivered in exchange and for the redemption of former valid bonds, of the State. As to the words of the act that “ no tax shaffi be levied until one-fourth of the bonds shall be sold,” while'í technically it may be insisted that the word “ sold ” means-, exchanged for lawful currency, the word is often used in. regard to ordinary transactions among men to include (Caii exchange for a consideration, whether in money or other valuable thing.” This is not necessarily a Iwrter and not a sale. One may sell his horse for an agreed amount and receive in payment a note of the buyer or of a third person. If no part of these bonds had been sold for money, but the half million of past due bonds had been delivered to the Comptroller in exchange for the new bonds, was not this, in the contemplation of the Legislature, a sale of the new bonds ? Did the Legislature intend that in taking up the old interest bearing bonds and giving in exchange the new, that the holder should have no interest or principal upon the new bonds unless a certain other portion should be sold for money 1 Did they intend thus to practice “ Chinese ” sagacity, and play the game of a trickster upon the confidence of its creditors ?

We think the Legislature intended to do what the Constitution authorizes: to “ secure” the principal and interest of the debts of the State," by providing for their payment! If, therefore, the amount of one-fourth of the bonds have been sold for cash or by taking up its money obligations, the law intends that good faith shall be kept with creditors, and that they shall be paid according to the promise, and it was the duty of the proper officers to collect the necessary amount of tax for that purpose. The objection, however, that a tax ’swas levied to raise the amount of interest and sinking fund ■qpon the whole one million of bonds, including a large -amount unsold and yet in the hands of the Comptroller, -Stands upon a different footing. The Constitution authorizes the raising of taxes for paying the interest and principal of the debt of the State. This indebtedness was not created by the printing and signing of the bonds and depositing them in the Comptroller’s vault.' The amount of tax to be collected for this purpose is the amount accruing upon the bonds legitimately held bp the bona fids creditors of the State at the time of the levying of the tax, for there is no interest accruing upon bonds not so held.

The bill prays for a decree that the tax levied upon the property of the complainants is not lawful, and that the collection thereof be enjoined.

The bill does not show, however, what proportion of the tax was illegal and what portion was legal. It does not show that the entire amount of the tax, levied to pay interest upon these bonds, was improperly levied. It does not show what amount had been disposed of by the State in payment of or to secure its just debts. It admits that the State owed debts, and that the purpose of the issuing of at least a part of the bonds was to pay and secure them. The bill confines itself, as to that subject, to the sale of one-fourth of the bonds to Bayne & Co., and says nothing of the bonds issued to other parties. If a part of the tax was legally imposed, the collection of such part should not be enjoined.

The Supreme Court of Michigan, in Conway vs. Waverly, 15 Mich. R. p. 263, says: “ The bill must be certain enough to furnish the means of giving the precise relief needed. No court can give assistance to a party who does not show what he is entitled to demand. The bill asks relief against what must be presumed to be legal as well as illegal taxes,, and the court has no means of ascertaining one from the «other, while complainants could have given the means but. have neglected to do so.”

In Taylor vs. Thompson, 42 Ill., p. 17, the court say: M When a bill in chancery is filed to enjoin the collection of taxes on the ground that they are in part illegal, the bill must show to what extent they are so, in order that the ■court may enjoin only the illegal portion, or that they are so levied that it is impossible to discriminate between the legal and illegal portions.”

■“ No objection which did not go to the very groundwork mi the tax, so as to affect materially its principle and show it must necessarily be illegal,, ought to have the effect of rendering the whole invalid.” Mills vs. Gleason, 11 Wis., 470.

“ If the court can, under this bill, ascertain the proportion tthat the illegal bears to the legal bonds, it could thereby be «determined what portion of this tax would be illegal, and when ascertained, the portion of the tax necessary and which would go to pay those illegally issued bonds, should be ■restrained, and the remainder collected.” Briscoe vs. Allison, 43 Ill. R., 291.

The Circuit Court refused to grant an injunction restraining the collection of the entire tax levied for interest and sinking fund of the several bonds issued, under the acts of 1871 and 1873. Wo think the court was correct in thus refusing to grant it. The prayer of the bill was too broad in ithis respect. The collection should be restrained only as to «so much or such proportion of the tax as may be shown to have been improperly levied.

For the purpose of determining this, it will be necessary ito amend the bill of complaint so that it may appear definitely what portion of the tax should not be collected. Otherwise it can only be ascertained on the final ■ hearing, upon the proofs.

The court dismissed the bill on the hearing of the motion for an injunction, and in this the court erred, for in the absence of any pleadings oh the part of the defendant, there are sufficient facts alleged to show that the complainants were entitled to ultimate relief of some sort, but of which the court should be more definitely informed, so that the precise relief to which they were entitled may be seen by the court.

The order of the Circuit Court dismissing the bill must therefore be reversed.

It was suggested that the Comptroller should be made a party, so that he may answer and file such exhibits as will bring the whole facts before the court. "We do not think it necessary that he shall be made a party for that purpose. All the facts within his knowledge and under his control are accessible by the ordinary methods, and he certainly does not desire to be compelled to disclose them.

The decree of the Circuit Court, so far as it dismissed the complainants’ bill, is reversed.