William Aspinwall, Joseph Alsop, Henry Chauncey, Charles Gould, and Samuel Barbour, Plaintiffs v. the Board of Commissioners of the County of Daviess

• Decision Date: 01 December 1859
• Parties: WILLIAM H. ASPINWALL, JOSEPH W. ALSOP, HENRY CHAUNCEY, CHARLES GOULD, AND SAMUEL L. M. BARBOUR, PLAINTIFFS, v. THE BOARD OF COMMISSIONERS OF THE COUNTY OF DAVIESS
• Court: U.S. Supreme Court

63 U.S. 364

22 How. 364

16 L.Ed. 296

WILLIAM H. ASPINWALL, JOSEPH W. ALSOP, HENRY CHAUNCEY, CHARLES GOULD, AND SAMUEL L. M. BARBOUR, PLAINTIFFS, v. THE BOARD OF COMMISSIONERS OF THE COUNTY OF DAVIESS

December Term, 1859

THIS case came up from the Circuit Court of the United States for the district of Indiana, on a certificate of division in opinion between the judges thereof.

The nature of the case and the certificate of division in opinion are stated in the opinion of the court.

It was argued by Mr. Vinton and Mr. Benjamin for the plaintiffs, upon which side there was also a brief filed by Mr. Judah, and by Mr. Porter, upon a brief filed by himself and Mr. McDonald, for the defendants.

The points for the plaintiffs were very much illustrated by Mr. Vinton and Mr. Benjamin, in their arguments. Essentially, however, they are stated in the brief of Mr. Judah, from which the following statement of them is taken:

The first question on which the judges differed relates to the nature of the right granted by the act of incorporation, and by the amendment to that act to the railroad company, to

receive county subscriptions. In other words, was it a vested right, beyond the reach of a law or Constitution made afterwards?

There is no provision in the new Constitution of Indiana as to existing rights, either personal or corporate, except the ordinary declarations, 'No man's property shall be taken by law, without just compensation.'

Art. 1, sec. 21.

And 'no law impairing the obligation of contracts shall ever be passed.'

Art. 1, sec. 24.

We assume that the property of private corporations is protected by section 21.

By the act of incorporation, a capital of five millions is contemplated; but the company is allowed to organize on the subscription of two hundred thousand dollars, and a payment at the time of subscription is required. By the 12th section, counties are authorized to subscribe for stock, as, by the 6th section, all persons of lawful age and all corporations of the United States may subscribe. Does the power exist anywhere to restrain these rights, against the will of the company? If the company may be deprived of one of these classes of subscribers, it may be deprived of all; and thus its entire capacity may be destroyed, and itself in effect annihilated.

But it is argued that counties are municipal corporations; that municipal corporations are under the control of State legislation; and that those who contract with them contract subject to this control. And we answer, it is true that municipal corporations are subject to the control of the Legislature. That is the general rule. Is there not, in the nature of things, an exception? If the Legislature creates a municipal corporation, and endows it with other powers—with powers 'to contract and be contracted with;' with powers of a private and not of a political nature; with powers including the rights and duties and obligations of private corporations and individuals—does it not creat an exception as to such rights, duties, and obligations? In such case, the Legislature may control, may dissolve the corporation, but the rights, the duties, and obligations,

will remain chargeable on its property. And we refer to the opinions of this court in at least two cases.

Mumma v. Potomac Co., 8 Peters, 280.

Curran v. State of Arkansas, 15 How., 310.

The second question on which the judges differed covers more ground than the first question.

The declaration states and the demurrer admits an election and vote in favor of subscription in March, 1849, before the new Constitution. The question is, whether, by virtue of the act of incorporation and the amendment, and the election, the railroad company acquired such right to the subscription as would be protected by the Constitution of the United States.

We submit that this question only differs from the first question in being, if anything, stronger than the first in favor of the plaintiffs. In the first, a mere right, dependent on a certain discretion, is claimed. In this a right is claimed, so perfected that nothing remained but the discharge of a ministerial duty.

The law is plain: 'And if a majority of the votes given shall be in favor of subscription, the county board of said county shall subscribe.'

Sec. 2, act Jan. 15, 1849.

There is no discretion. There is only a duty; and this, by the law of Indiana, may be enforced by mandamus. Writs of mandate issue 'to compel the performance of an act which the law specially enjoins.'

Section 739.

And 'obedience to such writs may be enforced by attachment, and fine or imprisonment, or both.'

Sec. 745, 2 Rev. Stat., 197, 198.

Hence, when the new Constitution took effect, there was an absolute vested right in the company to $30,000 subscription from the county of Daviess, to be paid in bonds of a certain description; and we submit, that this right is a matter of contract, secured by the Constitution of the United States.

Planters' Bank v. Sharp, 6 How., 301.

Slack et al. v. Lex. and Maysville Railroad Co., 13 B. Munroe, 1.

And so in 12 Ben. Munroe, 150.

The counsel for the defendants, after stating the case, made the following points:

By the statutes of Indiana, county commissioners are bodies 'corporate and politic.'

1 R. S. of 1852, p. 225.

The declaration charges them as 'a corporation created by the State of Indiana.' Touching the matter in controvercy, the first act which they performed—that of subscribing the stock—they performed as a corporation, on the 10th September, 1852. And the question is, did the Constitution of 1850 prohibit that act? We say it did. And in support of this view, we suggest the following considerations:

1. The constitutional prohibition is that 'no county shall subscribe for stock in any incorporated company, unless the same be paid for at the time of such subscription.' The spirit and intent of this clause seem very plain. Certainly the design was to prohibit counties from involving their people in debt for corporation stocks. And it is equally certain that any subscription by which such a debt is created is within the prohibition. Nor is it less clear that the prohibition applies to all such debts, whether created directly or indirectly for such stocks. The mischief intended to be guarded against was the burdening of the people with taxes to pay debts contracted for corporation stocks. And the power to impose that burden in any manner is the thing prohibited.

2. Was the stock 'paid for at the time of the subscription?'

The existence of this suit is an answer to the question.

The phrase, 'paid for at the time,' in the Constitution, certainly means more than the making of a promise or obligation to pay. The writer of the declaration in question no doubt intended, in drawing it, to escape the prohibition in the Constitution by averring that 'in payment for the said stock' the bonds were executed. But this is a mere evasion. The making of the coupon bonds could not be a payment within the meaning of the Constitution; at most, it was only an engagement to pay. If the Constitution tolerates such a mode of payment as that, its provision is utterly idle. For then every county may run in debt as much as it pleases for corporation stock by the mere trick of saying the stock was 'paid for at the time' by making bonds. It is obvious that, upon such a construction, the very evil intended to be guarded against—burdening the county with debt would still exist in full vigor; and that not only the chief object, but the sole object of the prohibition would be thwarted.

Payment is a technical term, and in strictness implies the discharge of a debt by the delivery of money. Thus, in pleading, if the defence is that we have done what we engaged to do, we allege, in cases of engagements to do something besides paying money, performance, and in cases of money debts, we plead payment. Every lawyer knows the distinction between the pleas of performance and payment. The Supreme Court of Indiana has held that a plea of payment in anything else than money is a bad plea.

Sinard v. Patterson, 3 Blackf., 353.

The two words debt and payment always refer to money. Thus we say we pay a debt, and we perform a contract for the delivery of property, or to do work.

The constitutional provision in question requires that the stock subscribed 'be paid for at the time of such subscription.' Payment must be simultaneous with subscription. In this case, we contend that payment has not yet been made; but if even in this we were wrong, still it does not appear that the payment alleged in the declaration was made 'at the time' of the subscription. The averment is, that 'afterwards, to wit: on the day and year aforesaid, in payment for said stock,' the bonds were issued.

The 'subscription' mentioned in the declaration must, in terms, have been a money subscription, an engagement to pay money for stock. The declaration says, that 'in conformity with the said acts, the defendants subscribed for 600 shares,' &c., 'of the value of $30,000.' The subscription, then, was 'in conformity with the acts.' These acts give the form of the subscription. It is found in the fifth section of the charter of 1848, thus:

'We, whose names are subscribed hereto, do promise to pay to the president and directors of the Ohio and Mississippi Railroad Company the sum of fifty dollars for every share of stock set opposite to our names, respectively, in such manner, proportions, and times, as shall be determined by said company in pursuance of the charter thereof.'

This is the only form of subscription given in the two acts. Section 5 of the charter requires this form to be pursued. Both by the declaration and the charter, it must be supposed to have been pursued in the subscription under consideration. It was undoubtedly an engagement to pay money 'in such manner, proportions, and times,' as the company should afterwards determine.

Now, as the engagement...