The Sunbury and Erie Railroad Company v. Cooper

• Decision Date: 01 January 1859
• Citation: 33 Pa. 278
• Parties: The Sunbury and Erie Railroad Company v. Cooper.
• Court: Pennsylvania Supreme Court

Page 278

33 Pa. 278

The Sunbury and Erie Railroad Company v. Cooper.

Supreme Court of Pennsylvania.

IN EQUITY.^* This was a bill in equity by the Sunbury and Erie Railroad Company against Lewis Cooper, for the specific performance of a contract for the purchase of $100,000 of the bonds of the Delaware Division Canal Company.

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Knox, Attorney-General, and Gibbons, for the complainants.

Black, Attorney-General of the United States, and Hirst, for the respondent.

The opinion of the court was delivered by LOWRIE, C. J.

The plaintiff is possessed of a large amount of bonds issued by the Delaware Division Canal Company, and has contracted to sell $100,000 of them to the defendant; but he refuses to perform his contract, and the plaintiff has brought this bill in equity to compel him to perform it.

We know of no law giving the Supreme Court in banc original jurisdiction over such a cause of action as this, and we must not assume it. This is not a proper case for this equitable form of remedy, for we can see no reason why the damages that are recoverable in the common law form are not an adequate redress for the breach of contract. And if it were otherwise, this cause, being instituted at Philadelphia, is required by law to pass through the Nisi Prius, before it can properly come up in banc.

Though we do not regard the case as a proper one for the application of this equitable form of remedy, yet the Nisi Prius has jurisdiction of the cause of action, and it may give redress in the equity form, if the defendant does not demur to the form, even though the common law form is the more appropriate one: Brightly's Equity, § 24. The court in banc has original jurisdiction of some classes of cases, if brought in the equity form, and not, if brought in the common law form, and there the form is an essential element of the jurisdiction; but it is not so in the inferior courts, which have original jurisdiction of the cause of action irrespective of the form.

We are therefore of opinion, that this cause may be tried and decided at Nisi Prius; and as we heard it fully argued in banc before adverting to the foregoing considerations, and as it is a case of great and pressing importance, it will be decided there by the judge of this court who shall next hold that one, on this opinion drawn up with the concurrence of the three judges who heard the argument, and will be subject to appeal to a full bench. If the parties desire to be heard again, the case may be argued on appeal, with more direct reference to the views now to be expressed, and with the aid of the experience derived from the argument already had.

The case comes up on bill and answer, and therefore there is no dispute about the evidence.

The plaintiff became the purchaser under the Act of 21st April 1858, of certain canals belonging to the state, and sold a part of them to the Delaware Division Canal Company, and in consideration thereof received the bonds which it afterwards contracted to sell to the defendant, and which he refuses to take and pay for. Has he a sufficient excuse for this refusal?

The defendant founds his refusal on the allegation that the plaintiff had no valid title to the canal sold to the Delaware Division Canal Company, and that, therefore, the bonds in question, given by them on their purchase, are liable to a defence for failure of consideration: and this allegation is attempted to be sustained by various arguments which we now proceed to consider.

1. It is urged, that when the state was contracting her public debt in constructing her canals, she pledged their income for the payment of the principal and interest thereof, and that she cannot, in good faith to her creditors, part with that income for any other purpose.

This objection assumes that this sale is an improper one, and is really a diversion of the pledge; and we may, for the present, allow it the advantage of this assumption. It assumes, moreover, that this court has some sort of authority, directly or indirectly, to enforce the pledge; and this we are not prepared to admit.

How the objection might be answered as a question of morals, we are not to discuss; for we can exercise no authority on that ground in this case. If this court has no legal or constitutional authority to enforce the pledge, we have none to declare that it has been violated. And most certainly no such authority has been proved to us, and we know of none. The state also pledged its faith and credit for the same purpose; and it would not be pretended that we have authority to enjoin the legislature to respect this part of the pledge by providing adequate taxation. For such a pledge, as well as for the one insisted on, the remedy is a moral one, to be enforced by means of the moral sense of the community operating upon the legislature, and by means of the moral sense of the civilized world operating upon both the people and the legislature; an influence and responsibility to which all states are subject.

2. It is objected, that the Act of the 21st April 1858 is a palpable fraud upon the people of the state, and that, therefore, this sale, made under it and depending upon it, is voidable.

In support of this objection, the following facts are relied on:

That works, producing a net revenue which represents a principal of over nine millions of dollars, are sold for three and a half millions.

That they are sold to a railroad corporation that has proved itself totally unable, for want of capital, to build even the half of its own road.

That, though part of the consideration is, for a while, to be secured on the works sold, yet, in the end, this security is to be withdrawn and a mortgage of seven millions, on a still unfinished railroad, is to be substituted, one half of which is for the security of the state and the other half for the security of persons from whom the company may hereafter borrow money at any rate of discount to complete their road; and thus, even the consideration-money is risked upon the chances of a finished and successful road, and by sharing with subsequent creditors the benefit of the mortgage security, when it might have been abundantly and very naturally secured by a mortgage on the works sold.

That the canals are sold to the plaintiff not to be retained and managed, but to be resold at advanced prices to the profit of the plaintiff, and in such a form as to allow the plaintiff to have the ability to pledge them as security for money to be borrowed.

That these, and other facts, show that the Act of Assembly, instead of being what it professes to be — a simple sale of the public works — is fraudulently intended as an act in aid of the Sunbury and Erie Railroad Company.

That its passage was secured by improper influences brought to bear on the members of the legislature — the interests of the state having been sacrificed to local interests on the line of the road; to the interests of Philadelphia, which is a large stockholder; to the interests along the line of the Allegheny Valley Railroad, which is to be aided by a subscription of half a million of dollars; and to interests along the North Branch, by reason of a preference that is given to the inhabitants there in the resale of the North Branch Division.

Certainly, these facts present a case that justifies an argument in support of the proposition, that the Act of Assembly was not passed for the mere purpose of selling the public works, but mainly in aid of the Sunbury and Erie Railroad Company; that its passage was secured by the influence of private, or at least local interest, to the prejudice of the interests of the state; and they furnish elements for the argument that it is a fraud upon the people.

But is this the proper tribunal to try such a question? May the judiciary sit in judgment upon a charge that the legislature have been faithless to their oaths, to the constitution, and to the public interests, by passing a law that is a fraud upon the state? This question was not discussed; and yet, unless it can receive an affirmative answer, all the argument on this branch of the subject must be regarded as out of place.

We cannot hesitate a moment on this question. We have no such authority, and ought not to have. However far the legislature may depart from the right line of constitutional morality, we have no authority to supervise and correct their acts on the mere ground of fraudulent or dishonest motives. We know of no such check upon legislation, and would not desire to see such a one instituted. The remedy for such an evil is in the hands of the people alone, to be worked out by an increased care to elect representatives that are honest and capable. If the judiciary have such authority, then every justice of the peace is competent to sit in judgment upon every act of legislation which disorderly moralists or knavish or ignorant anarchists may choose to charge as fraudulent. Nay more, if the question may be raised in a judicial proceeding, the judges and justices of the peace will be bound to investigate and decide it; and the principal judicial business might then become that of testing, not cases by the standard of the law, but the standard itself by the infinitely various and uncertain judicial notions of morality.

And notice, the principal element of fraud charged here is, that members gave undue prominence to local interests; that is, that they regarded too much the wishes and interests of their constituents. In order to condemn this, there must be some rule of law declaring that undue devotion to the interests of constituents is a fraud upon the state; and there must, besides, be judges possessed of supreme indifference to such interests, and capable of precisely defining what, for each case, is undue...