Carr v. State ex rel. Coetlosquet

• Decision Date: 06 February 1891
• Docket Number: 15,908
• Citation: 26 N.E. 778,127 Ind. 204
• Parties: Carr, Auditor, et al. v. The State, ex rel. Coetlosquet
• Court: Indiana Supreme Court

26 N.E. 778

127 Ind. 204

Carr, Auditor, et al. v. The State, ex rel. Coetlosquet

No. 15,908

Supreme Court of Indiana

February 6, 1891

From the Marion Superior Court.

Judgment affirmed.

A. G Smith, Attorney General, and J. H. Gillett, for appellants.

I. P Gray and P. Gray, for appellee.

OPINION

Elliott, J.

The Legislature of the State in 1846 and 1847 passed laws providing for the funding and payment of the public debt. Those acts authorized the auditor and treasurer of the state to execute certificates pledging the irrevocable faith of the State to the payment of the sum named in each of the certificates. Among the certificates issued were those upon which this action is founded. They are dated the 3d day of May, 1852, and are payable at the pleasure of the State at any time after twenty years from the 19th day of January, 1846. They provide for the payment of interest semi-annually at the rate of five per centum per annum; the days of such semi-annual payments are designated as the first days of January and July in each year. The payee of the certificates is described as Jean Baptiste Maurice du Coetlosquet, of Paris, and provision is made for the registry of the certificates. The place of payment of principal and interest is declared to be the city of New York.

No question is made as to the validity of the certificates, nor could any be successfully made. The certificates were issued under valid legislative authority and in accordance with duly enacted laws. There is, therefore, a complete and binding contract; no element is wanting nor is any incident absent.

As there is a perfect contract, the State is bound to perform it according to its legal tenor and effect, and to redeem the pledge it has declared to be irrevocable. In entering into the contract it laid aside its attributes as a sovereign and bound itself substantially as one of its citizens does when he enters into a contract. Its contracts are interpreted as the contracts of individuals are, and the law which measures individual rights and responsibilities measures, with few exceptions, those of a State whenever it enters into an ordinary business contract. Hartman v. Greenhow, 102 U.S. 672, 26 L.Ed. 271; Poindexter v. Greenhow, 114 U.S. 270, 29 L.Ed. 185, 5 S.Ct. 903; Keith v. Clark, 97 U.S. 454, 24 L.Ed. 1071; Murray v. Charleston, 96 U.S. 432, 24 L.Ed. 760; Gray v. State, ex rel., 72 Ind. 567; State, ex rel., v. Cardozo, 8 S.C. 71; People v. Canal Com'rs, 5 Denio, 401; Georgia, etc., Co. v. Nelms, 71 Ga. 301; Lowry v. Francis, 2 Yerg. 534; Grogan v. San Francisco, 18 Cal. 590.

The principle that a State, in entering into a contract, binds itself substantially as an individual does, under similar circumstances, necessarily carries with it the inseparable and subsidiary rule that it abrogates the power to annul or impair its own contract. It can not be true that a State is bound by a contract and yet be true that it has power to cast off its obligation and break its faith, since that would involve the manifest contradiction that a State is bound and yet not bound by its obligation. It may have the might and means of defeating the enforcement of a contract, yet, in a just sense, have no power to do so. Might and opportunity do not constitute power in the true sense; to constitute power another element must be present, and that element is right. If right is absent there is no power. Legislatures may, by a failure to make an appropriation, defeat a just claim, or, indeed, block the wheels of government, but under the Constitution they have no power to do any such thing. It seems very clear, therefore, that there is no constitutional power to annul or impair a valid contract entered into by a State, and so it has long been settled. Fletcher v. Peck, 10 U.S. 87, 6 Cranch 87, 3 L.Ed. 162; Terrett v. Taylor, 13 U.S. 43, 9 Cranch 43, 3 L.Ed. 650; Trustees, etc., Co. v. Beers, 67 U.S. 448, 2 Black 448, 17 L.Ed. 327; Davis v. Gray, 83 U.S. 203, 16 Wall. 203, 21 L.Ed. 447; Hall v. Wisconsin, 103 U.S. 5, 26 L.Ed. 302; People v. Platt, 17 Johns. 195; Montgomery v. Kasson, 16 Cal. 189; State, ex rel., v. Barker, 4 Kan. 379.

There is one essential and far-reaching difference between the contracts of citizens and those of sovereigns, not, indeed, as to the meaning and effect of the contract itself, but as to the capacity of the sovereign to defeat the enforcement of its contract. The one may defeat enforcement, but the other can not. This result flows from the established principle that a State can not be sued. Hans v. State, 24 F. 55. Nor is this the only method under such a Constitution as ours by which a State may defeat the enforcement of its obligation, for the failure to make the necessary appropriation will effectually accomplish that object. State, ex rel., v. Porter, 89 Ind. 260; May v. Rice, 91 Ind. 546; Rice v. State, ex rel., 95 Ind. 33. The Legislature has, therefore, the ability to avoid payment of the obligations of the State by a failure or refusal to make the necessary appropriation, although that body can not impair the obligation of the contract. Creditors who accept the obligations of a State are bound to know that they can not enforce their claims by an action against the State directly, nor by an action against its officers where no appropriation has been made as the Constitution requires. If, however, there is an effective appropriation, then an officer whose duty it is to draw a warrant upon the fund set apart by statute may be coerced into a performance of that duty. Gray v. State, ex rel., supra. But there is no power that can coerce the Legislature into making an appropriation, no matter how strong the justice of the creditor's claim, nor how plain the duty seems. Neither directly nor indirectly can such a result be accomplished; hence it is that where there is no statute making an appropriation no action will lie against the officers of the State. State v. Stanton, 73 U.S. 50, 6 Wall. 50, 18 L.Ed. 721; Hans v. State, supra. Whether an appropriation shall or shall not be made is a legislative question, and over purely legislative questions the courts have no supervision or control. A question of that character is beyond the touch of the judiciary, for one department of government can not enter the domain of another. Smith v. Myers, 109 Ind. 1, 9 N.E. 692, and authorities cited; State, ex rel., v. Haworth, 122 Ind. 462, 23 N.E. 946, and authorities cited; Wilson v. Jenkins, 72 N.C. 5; Goddin v. Crump, 35 Va. 120, 8 Leigh 120; Burch v. Earhart, 7 Ore. 58; Franklin v. State Board, etc., 23 Cal. 173; People v. Pacheco, 27 Cal. 175.

The right of the relator to compel the auditing and payment of his claim must, it is evident, depend upon whether there is an appropriation upon which a warrant can be rightfully drawn, and out of which it can be lawfully paid; for if there is no such appropriation the courts are powerless to assist him to enforce his contract, although they may not doubt its validity.

It is clear upon authority that the promise to pay, contained in the certificate, is not an appropriation. Ristine v. State, ex rel., 20 Ind. 328; State, ex rel., v. Ristine, 20 Ind. 345; Newell v. People, 3 Seld. 9; Sunbury, etc., R. R. Co. v. Cooper, 33 Pa. 278.

It does not, however, follow that because no claim can be enforced where there is no appropriation, the appropriation must be made in a particular form or in express terms. It is sufficient if the intention to make the appropriation is clearly evinced by the language employed in the statutes upon the subject, or if it is evident that no effect can possibly be given to a statute unless it be construed as making the necessary appropriation. In Ristine v. State, ex rel., supra, it was said: "An appropriation of the money to a specified object would be an authority to the proper officers to pay the money, because the auditor is authorized to draw his warrant upon an appropriation, and the treasurer is authorized to pay such warrant if he has appropriated money in the treasury. And such an appropriation may be prospective, that is, it may be made in one year, of the revenues to accrue in another or future years, the law being so framed as to address itself to such future revenues. So a direction to the officers to pay money out of the treasury upon a given claim or for a given object, may, by implication, include in the direction an appropriation." The point affirmed in the case of Reynolds v. Taylor, 43 Ala. 420, is thus stated by the reporter: "If the salary of a public officer is fixed, and the times of payment prescribed by law, no special annual appropriation is necessary to authorize the auditor to issue his warrant for its payment." To the same effect is the decision in Nichols v. Comptroller, 4 Stew. & P. 154. The same principle was asserted in a case where the Constitution, in general terms, provided what salary should be paid a public officer. Thomas v. Owens, 4 Md. 189. That case was followed and approved in the case of Green v. Purnell, 12 Md. 329. In the fully considered case of State, ex rel., v. Hickman, 8 Law. Ann. R. 403, the doctrine of the Maryland cases was approved and enforced. A similar doctrine was declared in the case of State, ex rel., v. Weston, 4 Neb. 216. The question as to what constitutes an appropriation was discussed by Field, C. J., in McCauley v. Brooks, 16 Cal. 11 (28), in an able opinion, and it was there said: "To an appropriation within the meaning of the Constitution, nothing more is requisite than a designation of the amount, and the fund out of which it shall be paid. It is not essential to its validity that the funds to meet the same should be at the time in the treasury. As a matter of fact, there have seldom been in the treasury the...