Feldman & Co. v. City Council of Charleston

• Decision Date: 23 April 1885
• Citation: 23 S.C. 57
• Parties: FELDMAN & CO. v. CITY COUNCIL OF CHARLESTON. STANLEY v. SAME.
• Court: South Carolina Supreme Court

23 S.C. 57

FELDMAN & CO. v. CITY COUNCIL OF CHARLESTON.

STANLEY v. SAME.

Supreme Court of South Carolina.

April 23, 1885

1. A large portion of the city of Charleston having been laid waste by fire, the legislature authorized the City Council to issue its bonds and lend them to persons who desired to rebuild in the burnt district. Bonds of said city, called " Fire Loan Bonds," were accordingly issued and lent after the year 1868, and put upon the market. Held , that these bonds were not valid obligations of the city.

2. The legislature has no power to levy taxes for the purpose of assisting private individuals in carrying out private enterprises, even though incidental advantages may result to the public.

3. Under art. I., § 41, of the constitution of 1868, the taxing power of the legislature, even in the absence of any express restrictions upon them, can be exercised only for some public purpose.

4. Authority given to a municipal corporation to issue bonds necessarily involves the power to levy taxes for their payment.

5. Where bonds were issued by a city to be lent " to such applicants as will build up and rebuild the waste places and burnt districts of said city, or erect improvements upon their lots." Held , that the bonds so issued and lent were for private purposes, notwithstanding advantages might incidentally accrue to the city.

6. This case distinguished from cases sustaining local taxation in aid of railroads; and also from the case of Herndon v. Moore , 18 S.C. 339.

7. In doubtful cases the constitutionality of an act of the legislature will be affirmed, but it is for the courts, not the legislature, to determine whether a statute is beyond the powers granted to the legislature; and when that body has clearly overstepped its constitutional powers, it is the right and the duty of the courts to so declare.

8. As the City Council had no power to create the obligation, their payment of interest on these Fire Loan Bonds, their suits upon the securities received in exchange therefor, and the purchase by them in market of such their bonds, do not estop the city from now disputing the validity of these bonds.

Before WITHERSPOON, J., Charleston, November, 1883.

The opinion of this court fully states these two cases. The Circuit decree in the cause first stated, B. Feldman &amp Co. v. The City Council of Charleston, was as follows:

This cause came on for trial by the court. The complaint is filed in this case to establish the liability of the defendants for coupons due on certain obligations known as " Fire Loan Bonds." The defence set up in answering is that the " defendants are advised that the issue of said bonds was unconstitutional, and that the City Council are not liable for the same." It appears that the bonds in question were issued subsequent to the adoption of the constitution of 1868.

The history of the bonds now in issue is briefly stated. On August 28, 1866, the City Council of Charleston, " for the purpose of aiding in the rebuilding of the city of Charleston, a great part of which is now (then) lying in ruins," passed an ordinance authorizing the mayor of the city, in the name of the City Council, to issue certain bonds, not to exceed in amount $2,000,000. In the ordinance special provision is made to secure the city, as far as it could be done, against loss, because of the assistance so afforded in rebuilding the city. On December 19, 1866, the ratification of this ordinance was made by the legislature of the State in its act " giving authority to the City Council of Charleston to proceed in the matter of a fire loan, with a view to aid in building up the city anew." On February 28, 1870, the legislature declared that " authority is hereby given to the City Council of Charleston to amend an ordinance entitled 'An ordinance to aid in rebuilding the burnt district and waste places, ratified the 28th August, 1866,' " which said ordinance was confirmed and ratified by an act of the general assembly passed September 19, 1866.

The issue of the bonds in question depends on the power of the legislature to give validity, by its ratification of it, to this ordinance of the City Council. It is otherwise stated simply, equivalent to the question of the power of the legislature to issue these bonds. This question must be regarded as having been too distinctly decided by the highest tribunal in this State to be now disturbed. In Copes v. City of Charleston (10 Rich. , 491), the Court of Errors said, in deciding the question whether the terms of the charter were " sufficient to cover the power exercised by the City Council in subscribing to railroads," that there were " no restrictions in legislative power which in this State is vested by the constitution in the general assembly except those which deny certain powers, or which by implication arise because certain powers are conferred by Congress. So far as legislative power is concerned, subject to the restrictions suggested, the general assembly have all the powers of the parliament of Great Britain." The validity of the subscription was sustained. In 1872, the principle of this decision was brought under review in the case of Gage v. Charleston (3 S.C. 491), and the court reaffirmed the decision in Copes v. Charleston . In Brown v. C. & L. R. R. Co. (13 S.C. 290, November term, 1879), the court said: " There is no constitutional restriction depriving the legislature of the power of authorizing counties to incur obligations."

In this case, the general assembly of the State was fully advised of the purpose contemplated by the City Council for which this and the like bonds were to be issued. The ratification of the ordinance manifested by the act giving authority to the City Council was so clearly the expression that it was for a public and not a private purpose, that without the judicial exposition of the legislative power, and the subsequent ratification in 1870, it cannot be supposed that the power given to the City Council was outside of the power it had under the constitution.

If the question before the court was involved in doubt, the language of the State Supreme Court, in Ex parte Lynch (16 S.C. 32), would direct me in the judgment I must render. " The constitutionality of the law (said the court) must be presumed until the violation of the constitution is proved beyond all reasonable doubt, and a reasonable doubt must be solved in favor of the legislative action and the act be sustained." This act is not of recent date. These bonds have been issued; have passed through various hands without question as to their validity, and it would be necessary that the alleged violation of the constitution should be plainly demonstrated before the court would declare the bonds invalid. I must conclude that the legislature did not exceed its power in authorizing the issue of these bonds, and the judgment of the court is that the plaintiff is entitled to the relief asked for.

It is therefore ordered and adjudged that the above named plaintiff do recover judgment against the City Council of Charleston for, & c.

In the case of Robert B. Stanley v. the same defendant, the same decree was rendered.

From these two decrees, the defendants appealed upon the following exceptions: " I. That his honor erred in not dismissing the complaints in the said cases when he found that the bonds and coupons set forth in the complaints were issued by the defendants after the adoption of the constitution of 1868. II. That his honor erred in not dismissing the complaints on the ground that the issue of the bonds and coupons set forth in the complaints were in violation of section 23 of article I., and section 8 of article IX., of the State constitution of 1868. III. That his honor erred in holding that the bonds and coupons sued on in the complaints stand on the same footing as bonds issued in aid of railroads and are governed by the same principles. IV. That his honor erred in not dismissing the complaints on the ground that the issue of said bonds and coupons was in violation of article 5 of the amendments of the constitution of the United States."

Messrs. G. D. Bryan and B. H. Rutledge , for appellants.

Messrs. A. G. Magrath, S. Lord , and Simons & Seigling , contra.

OPINION

MR JUSTICE MCIVER.

These two cases, involving the same principles, were argued and will be considered together. They grow out of the following state of facts: All the buildings on a very large portion of the city of Charleston having been destroyed by fire, the City Council passed an ordinance on August 28, 1866, providing for the issue of bonds of the said city to an amount not exceeding $2,000,000, to be loaned to individuals for the purpose of enabling them to " build up and rebuild the waste places and burnt districts of the city of Charleston, or erect improvements upon their lots," under such terms and regulations as were prescribed in the ordinance. Doubts being entertained as to the power of the City Council to accomplish the proposed object " without the permission and license of the general assembly," an act was passed by that body September 19, 1866, which, after setting out in full the ordinance which had been passed by the City Council, declared: " That all and singular the provisions of the aforesaid ordinance of the City Council of Charleston be, and the same are hereby, authorized and confirmed; and authority is hereby given to the said City Council of Charleston to proceed in the premises and to carry into effect the foregoing provisions."

In pursuance of the provisions of this ordinance, the City Council of Charleston, from time to time, issued its bonds commonly called " Fire Loan Bonds," and loaned the same to various individuals, under the terms and...