State ex rel. McKinlay v. Cardozo

• Court: South Carolina Supreme Court
• Writing for the Court: MOSES, C. J.
• Citation: State ex rel. McKinlay v. Cardozo, 8 S. C. 71 (S.C. 1876)
• Decision Date: 25 July 1876
• Parties: STATE ex rel. MCKINLAY v. CARDOZO, STATE TREASURER.

8 S.C. 71

STATE ex rel. MCKINLAY v. CARDOZO, STATE TREASURER.

Supreme Court of South Carolina.

July 25, 1876

Under an Act of the Legislature, bonds of the State were issued to raise money to be used in the purchase of lands to be sold to settlers thereon, and the interest on the purchase money of the lands, when sold, to be applied by the State Treasurer to the payment of the interest on the bonds issued under the Act: Held , That the Act constituted part of the contract with the holders of the bonds and that the State had no right to divert the fund arising from the interest on the purchase money of the land from the payment of the interest on such bonds.

When the State borrows money on bonds issued by it for that purpose and pledges a certain fund for the payment of the interest to accrue thereon, such pledge is a part of the contract with the holders of the bonds, and the State has no right, under Article I, § 10, of the Constitution of the United States, to impair the obligation of the contract by diverting the fund to other purposes.

This was an application to the Supreme Court by William J McKinlay against F. L. Cardozo, State Treasurer, for a writ of mandamus .

The petition alleged:

1. That Francis L. Cardozo is the Treasurer of the State of South Carolina.

2. That by an Act of the Legislature of the State of South Carolina entitled " An Act to provide for the appointment of a Land Commissioner and to define his duties and powers," approved March 27, 1869, it is provided:

" SEC. 4. That it shall be the duty of the said Land Commissioner to purchase or cause to be purchased any lands in any portion of the State, improved or unimproved, at such prices as the said Advisory Board may determine, not to exceed in the aggregate amount in any one fiscal year the par value of the public stock of this State created by the General Assembly for this purpose.

SEC. 5. The Treasurer of the State is hereby authorized and directed to issue to the Land Commissioner bonds of the State in the sum of two hundred thousand dollars, with coupons attached if, in the opinion of the said Advisory Board, so much be necessary, bearing six per cent. interest, the principal payable in twenty years at the financial agency of the State in the city of New York; the bonds to be signed by the Governor, countersigned by the Comptroller General, and the coupons to be signed by the Treasurer of the State.

The faith and credit of the State is hereby pledged to the payment of the principal and interest of such bonds; and a sufficient amount of taxes is hereby levied to pay the interest accruing on said bonds annually.

SEC. 6. All lands purchased by said Land Commissioner shall be subdivided into sections containing not less than 25 nor more than 100 acres, to be sold to actual settlers, subject to the condition that one-half thereof shall be placed under cultivation within five years from the date of such purchase and that the purchaser shall annually pay interest at the rate of six per cent. per annum upon any moneys remaining unpaid, and also all taxes imposed thereon by the authority of the United States or of this State; and in addition thereto shall, in every year after the third from the date of said purchase, pay one-fifth of the principal. The title to said land shall remain in the State until the amount of said purchases shall be paid, principal and interest; but a certificate of such purchase shall be assignable at three years from the date thereof: Provided , That in every case where a person purchases more than one section of 50 acres, they shall pay on such excess one-fourth cash, and the balance to be paid in equal annual installments of one-fourth the amount of purchase each year Provided , That no person shall be entitled to purchase in his own name or for his own use more than 100 acres.

SEC. 7. It shall be the duty of the said Land Commissioner to deposit with the Treasurer of the State all moneys collected by him as interest due upon the sale of said lands, which shall be used by the Treasurer of the State in the payment of the interest on the stocks and bonds of the State issued for the purchase of said lands, and to invest in bonds of this State all moneys received by the Land Commissioner in payment for said lands as principal; said State bonds to be deposited with the Treasurer of the State to constitute a sinking fund for the final payment and redemption of all stocks or bonds issued by the State for the purchase of said lands. The interest accruing on the bonds of the said sinking fund shall be applied to the payment of the interest upon the stocks or bonds of the State issued for the purchase of lands."

3. That by the further Act of the Legislature of the State of South Carolina entitled " An Act to amend an Act entitled 'An Act to provide for the appointment of a Land Commissioner and to define his powers and duties, and for other purposes therein mentioned,' " approved March 1, 1870, it is provided:

" SECTION 1. Be it enacted by the Senate and House of Representatives of the State of South Carolina, now met and sitting in General Assembly, and by the authority of the same, The Treasurer of the State is hereby authorized and directed to issue to the Land Commissioner bonds of the State in the sum of $500,000, with coupons attached, if, in the opinion of the Advisory Board, so much be necessary, bearing six per cent. interest, the principal payable within twenty years at the financial agency of this State in the city of New York, the bonds to be signed by the Governor and countersigned by the Treasurer of the State, and the coupons to be signed by the Treasurer of the State, which bonds shall be negotiated in such form and manner as the Advisory Board, by a majority of votes, shall determine.

The faith and credit of the State is hereby pledged to the payment of the principal and interest of said bonds; and a sufficient amount of taxes is hereby levied to pay the interest accruing on said bonds annually."

4. That by virtue of the said Acts the Treasurer of the State of South Carolina issued to the Land Commissioner bonds of the State in the sum of ________ hundred thousand dollars, with coupons attached, which said bonds with coupons attached were, according to the provisions of said Acts and for the purposes therein mentioned, duly negotiated and sold.

5. That your petitioner is now the legal owner and holder of ten (10) coupons, each for the sum of thirty dollars, which matured on the first day of April, 1872; ten (10) coupons, each for the sum of thirty dollars, which matured on the first day of October, 1872; ten (10) coupons, each for the sum of thirty dollars, which matured on the first day of April, 1873; ten (10) coupons, each for the sum of thirty dollars, which matured on the first day of October, 1873; ten (10) coupons, each for the sum of thirty dollars, which matured on the first day of April, 1874; all of which are coupons of bonds issued under the provisions of said Acts and now past due, amounting in the aggregate to the sum of $1,500, a schedule of which said coupons is attached and made a part of this petition.

6. That by the seventh Section of the Act of March 27, 1869, a fund was created for the payment of the interest on the said bonds, and it was further made the duty of the State Treasurer so to use the said funds. And your relator further showeth that there is now in the hands of the said Francis L. Cardozo, State Treasurer, a large sum of money accruing from the sales of lands held by the State for the purposes of the Land Commission and also from the interest accruing on the State bonds purchased by the said Land Commissioner with the proceeds of sales of land, which said fund is only applicable to the payment of the interest on the bonds issued under said Act and ample for the payment of the coupons held by your relator.

7. That your relator has presented the said coupons at the Treasury of the State to the said Francis L. Cardozo and demanded payment thereof, and that the said Francis L. Cardozo, though required by law to apply the said funds in payment of said coupons, has refused so to do.

8. And your relator further shows that he has been informed and believes that the said Francis L. Cardozo, as State Treasurer, is about to apply the said funds to the payment of other claims against the State of South Carolina, and thus divert the same from its legitimate purpose, to the great wrong and injury of your relator.

Wherefore, inasmuch as the said Francis L. Cardozo, State Treasurer, refused and still refuses to pay the said coupons from the fund so applicable thereto, and as your relator has no other adequate remedy by law, your relator prays that the said Francis L. Cardozo, State Treasurer, may be required and commanded to pay to your relator the amount due on said coupons out of the fund in his hands arising under the provisions of said Acts; and that until the further hearing and final disposition of your relator's petition the said Francis L. Cardozo, State Treasurer, be enjoined and restrained from making any disposition whatsoever of the fund aforesaid; and for such other and further reliefs as may be proper.

A rule to shew cause was issued and a return thereto made by the State Treasurer, setting forth the grounds upon which he refused to pay the coupons held by the petitioner.

These grounds sufficiently appear in the opinion of the Court.

Clark , for petitioner:

No one of the causes shown is sufficient to withhold from this petitioner the benefit of the writ prayed.

I. The first objection to the granting of the writ, " that the relator has no right and there is no corresponding duty on the part of the respondent which the Court will enforce by the writ...