The Act of May 1st, 1851, to authorize the funding of the floating debt of the city of San Francisco, and to provide for the payment of the same, directs, in its twelfth section, the Commissioners of the Sinking Fund, created by a previous ordinance of the city, to convey to the Commissioners of the Funded Debt created by the act certain property belonging to the city, and empowers the latter Commissioners “ to expose at public sale or to lease ” the property at such time and place as in them discretion the interest of the city may demand; and requires them to apply the proceeds of such sale or lease to the liquidation of the floating debt. Soon after the passage of the act, the Commissioners of the Sinking Fund executed the conveyance directed. The property consisted chiefly, if not entirely, of real estate situated in the city of San Francisco. Portions of this real estate, it is alleged, have never been “ sold, leased, dedicated, reserved or conveyed by the Commissioners,” but are in the actual possession of parties “ who have purchased the same in good faith and for valuable considerations,” and who, by themselves, or tenants, or persons through whom they claim, have been in such actual possession from and including January 1st, 1855. And by virtue of such actual possession, and the operation of an ordinance passed by the Common Council of the city of San Francisco on the *656twentieth of June, 1855, commonly known as the Van Hess Ordinance, and the Act of the Legislature of March, 1858, confirmatory thereof, those parties, it is further alleged, claim to have become entitled to the interest and estate of the city. It is also suggested that the claims of the Commissioners of the Funded Debt to the real estate thus adversely possessed have become barred by the Statute of Limitations. Acting upon these allegations and this suggestion, and reciting them as the basis of its legislation, the Legislature, on the fourteenth of April of the present year, passed an act authorizing the Commissioners of the Funded Debt to compromise and settle with the parties, thus holding adversely to them, portions of the real estate conveyed by the Commissioners of the Sinking Fund. (Laws of 1862, ch. 203.) The act provides that upon receiving a petition from persons thus claiming and in possession of portions of the real estate in question, alleging that they have been in the actual possession, by themselves, them tenants or parties through whom they claim, from and including January 1st, 1855 ; that the lands thus possessed have not been “ sold, leased, dedicated, reserved or conveyed ” by the Commissioners, and that the petitioners are purchasers of the same for a valuable consideration, and asking for a grant of the lands, the Commissioners of the Funded Debt shall proceed to take testimony as to the matters alleged; and empoivers them upon proof of the matters to award a grant, and upon payment of the expenses of the proceedings, and at least ten per cent, of the assessed value of the property, to execute a conveyance to the petitioners. Various provisions are embodied in the act to prevent fraud, and insure good faith in the proceedings, and to protect the rights of third persons, which it is unnecessary to notice for the disposition of the present case. It is sufficient to observe that the act is drawn Avith care, and is well calculated to protect the just rights of all parties, and to assure to the Commissioners of the Funded Debt a full equivalent for their title—such as under the circumstances they could obtain from a public sale of the property.
To this act objection is taken by the Commissioners. It is contended by them that it is unconstitutional, on the ground that it impairs the obligation of the contract Avhich the Act of May 1st, 1851, authorized between the city and her creditors. It is true, *657the act in question authorized a contract between the city and her creditors; and the contract having been executed, its obligation cannot be impaired by any subsequent modification or repeal of the act. By it the creditors of the city, having at the time claims presently payable, were invited to exchange them for bonds payable at a distant period, and drawing a reduced rate of interest; and as a consideration for such exchange, the proceeds derived from certain real property of the city were, among other things, pledged for the payment of the bonds. The object of the provision requiring a public sale of the property, when a sale is made, is to secure a fair price from the purchasers. If this object can be accomplished by a sale in any other mode, the obligation of the contract is not impaired by legislation authorizing such other mode. That the just value in money of the title acquired by the Commissioners might be obtained, was all the act contemplated from the sale. If that title is questionable; if adverse claims are asserted to the property by parties who “ are purchasers in good faith and for valuable considerations and especially, if the title is clouded by a doubt as to the effect of the Statute of Limitations, a public sale would seldom produce more than a mere nominal sum. At a sale under such circumstances, few persons other than speculators would venture to bid. Property thus situated can, as a general thing, be more advantageously disposed of at private sale. Claims to property thus situated are the proper subjects of compromise by private negotiation. By the act in question, the Commissioners of the Funded Debt are authorized to compromise and settle such claims, with a limitation that they are in no event to receive, in consideration of their conveyance, less than ten per cent, upon the assessed value of the property. They may require a greater per centage. They may even exact the full value of the property. The limitation is only in one direction. The act is not, therefore, obnoxious to any constitutional objections; it does not impair the security of the bond-holders; it does not divert the proceeds which may be received from the payment of the funded debt; it only provides a new mode for the disposition of those portions of the property which cannot be advantageously disposed of at public sale, in consequence of existing doubts as to the title of the Commissioners. It is an act, in our *658judgment, beneficial to the bond-holders, by which the Commissioners will be enabled to obtain an amount for the liquidation of the funded debt greater than would be derived by them from a public sale of the property, and without the expense of any litigation.
In Thornton v. Hooper (14 Cal. 9) the Court held that the Act of 1858, authorizing the Commissioners of the Funded Debt to purchase stock or bonds issued by them at & premium oí five percent., was constitutional, although the funding Act of 1851 declared that no stock should be purchased by them at a price higher than par. The decision was placed on the ground that the act was beneficial to the bond-holders, (and this the Court could itself perceive from the facts of the case) and did not impair the security provided for the payment of the funded debt. “ It must be remembered,” said the Court, “ that the Act of 1851 is a law as well as a contract. It is not, in all its provisions, absolutely unchangeable. While in its substantive provisions it partakes of the nature of a contract, and has the sanctity and inviolability of one, yet it is of the very nature of the law, that those of its provisions which are merely legislative modes to give effect to the substantial purposes of the act, may need revision and alteration. The details may, as in other laws, be altered, where the alteration does not affect the security of the bondholders. Hew provisions may be added for then- security, and other provisions may be added for the protection or security of the city. The Constitution does not inhibit all legislation in respect to contracts; it only forbids the impairing of their obligation. The fund here raised is sacred to the objects to which the act devotes it. • The fund cannot be impaired or diverted from the object; but, we apprehend, if a large surplus accumulates, that surplus might be applied to the payment of bonds, even if no provision existed in the act for such payment before they were due; and this, though they had to be paid in full, and although the money placed out at interest might be much more hi amount when the bonds matured than the sum of the bonds and interest. The fund is amply sufficient to pay these debts, and the security is not at all impaired by the calling in of the bonds at the rates proposed by the amendatory act. Indeed, the security of these creditors, as the respondents’ counsel well argues, is increased by this process; for the best invest*659ment a public body can make of its surplus money is to pay its debts. It is true, that possibly the money might be used to greater profit; but all experience shows that the result is nearly always otherwise, and that as a general thing, no speculation a municipal corporation can be expected to enter into will make a profit of five per cent, for the first year, and ten per cent, per annum for a series of years afterward.”
Judgment affirmed.