State ex rel. Hahn v. Young

• Decision Date: 09 September 1881
• Parties: State of Minnesota ex rel. William J. Hahn, Attorney General, v. Austin H. Young and others
• Court: Minnesota Supreme Court

9 N.W. 737

29 Minn. 474

State of Minnesota ex rel. William J. Hahn, Attorney General, v. Austin H. Young and others

Supreme Court of Minnesota

September 9, 1881

By an act approved March 3, 1857, (11 U.S. St. at Large, 195,) congress granted to the then territory of Minnesota, to aid in the construction of six lines of railroad on routes designated in the act, six sections of land per mile, in alternate sections, along the lines of such roads as they should thereafter be located. By an act approved May 23 1857, (Laws 1857, Ex. Sess. c. 1,) the territory bestowed these grants on the Southern Minnesota Railroad Co., the Transit Railroad Co., the Minneapolis & Cedar Valley Railroad Co., and the Minnesota & Pacific Railroad Co. By act of congress of February 23, 1857, (11 U.S. St. at Large, 166,) the people of the territory had been authorized to form a constitution and state government, with a view to admission into the Union, and on October 13, 1857, a constitution was adopted, containing the following provisions, in article 9:

"Sec 2. The legislature shall provide for an annual tax sufficient to defray the estimated expenses of the state for each year and whenever it shall happen that such ordinary expenses of the state for any year shall exceed the income of the state for such year, the legislature shall provide for levying a tax for the ensuing year sufficient, with other sources of income, to pay the deficiency of the preceding year, together with the estimated expenses of such ensuing year."

"Sec 10. The credit of the state shall never be given or loaned in aid of any individual, association or corporation."

The financial depression occurring in the autumn of 1857 made it impossible for the land-grant companies to obtain money to build their roads, and on March 9, 1858, the first legislature elected under the constitution, passed an act proposing an amendment to section 10 of article 9 of the constitution, which was submitted to the people on April 15 1858, and adopted, the vote being 25,023 in favor of, and 6,733 against, the proposed amendment. As thus amended, this section read as follows:

"Sec 10. The credit of this state shall never be given or loaned in aid of any individual, association or corporation, except that for the purpose of expediting the construction of the lines of railroads, in aid of which the congress of the United States has granted lands to the territory of Minnesota, the governor shall cause to be issued and delivered to each of the companies in which said grants are vested by the legislative assembly of Minnesota, the special bonds of the state, bearing an interest of seven per cent. per annum, payable semi-annually in the city of New York, as a loan of public credit, to an amount not exceeding twelve hundred and fifty thousand dollars, or an aggregate amount to all of said companies not exceeding five millions of dollars, in manner following, to-wit:

"Whenever either of the said companies shall produce to the governor satisfactory evidence, verified by the affidavits of the chief engineer treasurer and two directors of said company, that any ten miles of the road of said company has been actually constructed and completed, ready for placing the superstructure thereon, the governor shall cause to be issued and delivered to such company, bonds to the amount of one hundred thousand dollars; and, whenever thereafter, and as often as either of said companies shall produce to the governor, like evidence of a further construction of ten miles of its road, as aforesaid, then the governor shall cause to be issued to such company further like bonds to the amount of one hundred thousand dollars for each and every ten miles of road thus constructed; and whenever such company shall furnish like evidence that any ten miles of its road is actually completed and cars running thereon, the governor shall cause to be issued to such company like bonds to the amount of one hundred thousand dollars; and whenever thereafter, and as often as either of said companies shall produce to the governor like evidence that any further ten miles of said road is in operation as aforesaid, the governor shall cause to be issued to such company further like bonds to the amount of one hundred thousand dollars until the full amount of the bonds hereby authorized shall be issued: provided, that two-fifths, and no more, of all bonds issued to the Southern Minnesota railroad company, shall be expended in the construction and equipment of the line of road from La Crescent to the point of junction with the Transit Road, as provided by law: and further provided, that the Minneapolis and Cedar Valley railroad company shall commence the construction of their road at Faribault and Minneapolis, and shall grade an equal number of miles from each of said places.

"The said bonds thus issued shall be denominated 'Minnesota State Railroad Bonds,' and the faith and credit of this state are hereby pledged for the payment of the interest and the redemption of the principal thereof. They shall be signed by the governor, counter-signed and registered by the treasurer, sealed with the seal of the state, of denominations not exceeding one thousand dollars, payable to the order of the company to whom issued, transferable by the endorsement of the president of the said company, and redeemable at any time after ten and before the expiration of twenty-five years from the date thereof. Within thirty days after the governor shall proclaim that the people have voted for a loan of state credit to railroads, any of said companies proposing to avail themselves of the loan herein provided for, and to accept the conditions of the same, shall notify the governor thereof, and shall, within sixty days commence the construction of their roads, and shall, within two years thereafter, construct, ready for the superstructure, at least fifty (50) miles of their road. Each company shall make provision for the punctual payment and redemption of all bonds issued and delivered as aforesaid to said company, and for the punctual payment of the interest which shall accrue thereon, in such manner as to exonerate the treasury of this state from any advances of money for that purpose; and, as security therefor, the governor shall demand and receive from each of said companies, before any of said bonds are issued, an instrument pledging the net profits of its road, for the payment of said interest, and a conveyance to the state of the first two hundred and forty sections of land, free from prior encumbrances, which such company is or may be authorized to sell, in trust for the better security of the treasury of the state from loss on said bonds, which said deed of trust shall authorize the governor and secretary of state to make conveyances of title to all or any of such lands to purchasers agreeing with the respective railroad companies therefor. Provided, that before releasing the interest of the state to such lands, such sale shall be approved by the governor, but the proceeds of all such sales shall be applied to the payment of interest accruing upon the bonds in case of default of the payment of the same, and as a sinking fund to meet any future default in the payment of interest and the principal thereof when due; and, as further security, an amount of first mortgage bonds on the roads, lands and franchises of the respective companies, corresponding to the state bonds issued, shall be transferred to the treasurer of the state at the time of the issue of state bonds; and in case either of said companies shall make default in payment of either the interest or principal of the bonds issued to said companies by the governor, no more state bonds shall thereafter be issued to said company, and the governor shall proceed in such manner as may be prescribed by law, to sell the bonds of the defaulting company or companies, or the lands held in trust as above, or may require a foreclosure of the mortgage executed to secure the same: provided, that if any company so in default, before the day of sale, shall pay all interest and principal then due, and all expenses incurred by the state, no sale shall take place, and the right of said company shall not be impaired to a further loan of state credit: provided, if any of said companies shall at any time offer to pay the principal, together with the interest that may then be due, upon any of the Minnesota state railroad bonds which may have been issued under the provisions of this section, then the treasurer of state shall receive the same; and the liabilities of said company or companies in respect to said bonds shall cease upon such payment into the state treasury of principal, together with the interest as aforesaid: provided further, that in consideration of the loan of state credit herein provided, that the company or companies which may accept the bonds of the state in the manner herein specified, shall, as a condition thereof, each complete not less than fifty miles of its road on or before the expiration of the year 1861, and not less than one hundred miles before the year 1864, and complete four-fifths of the entire length of its road before the year 1866; and any failure on the part of any such company to complete the number of miles of its road or roads, in the manner and within the several times herein prescribed, shall forfeit to the state all the right, title and interest of any kind whatsoever in and to any lands, together with the franchises connected with the same not pertaining or applicable to the portion of the road by them constructed, and a fee-simple to which has not accrued to either of said companies by reason of such construction, which was granted to the company or companies thus failing to comply with the provisions...