Travelers' Ins. v. Township of Oswego

SANBORN, Circuit Judge,

after stating the facts as above, delivered the opinion of the court.

The only question in this case is the constitutionality of the act of the legislature of Kansas under which these bonds and coupons wrere issued. .Before entering upon the discussion of this question, it is well to note the purpose and extent of the authority vested in the commissioners appointed by the act to issue these bonds. They were not empowered to contract for the purchase of any property, or for the performance of any work, on behalf of the township. They were not authorized to incur any new debt, or to increase any *61Old indebtedness of the township. The act did not provide for the payment of any salaries or compensation to these agents, even. _ It did not enable them to add one dollar to the burden of taxation which rested on the property of the township. Laying aside the authority to invest the sinking fund 12 years after the bonds were issued, which is immaterial here, the entire power given to these commissioners was to act as a hoard of auditions, to receive, calculate the amount due upon, and destroy, the old bonds of the township as fast as their owners would consent to cancel and surrender them for new bonds to be issued by the commissioners for only 30 per cent, of the amount justly due. In effect, the act empowered the commissioners to reduce the bonded debt of this township 70 per cent., and to certify that, the remaining 30 per cent, of its debt, and no more, was still owing, with certain interest, and this is the sum and substance of its offending. We turn to the consideration of the objections to its validity.

The principal objection, and the one that was sustained by the court below, is that the passage of this act was a violation of section 17, art. 2, of the constitution of Kansas, which provides that:

"All laws of a general nature shall have a uniform operation throughout the state, and in all cases where a general law can be made applicable no special la,w shall be enacted.”

This refunding act is, without question, a special law, and it is contended that it is void because a general law could have been made applicable to the case of this township, and also because it prevents the uniform operation lliroughout the state of the general laws for the refunding of debts; of the general laws fixing the number and names of township officers, and defining their duties, of the general law providing for the filling of vacancies in township offices; and of the laws establishing the courts, and prescribing their jurisdiction. We are spared the labor of examining this question. It was settled by the supreme court of Kansas, by a long line of unvarying decisions, before these bonds were issued. Xo provision of the national constitution, or of the national laws or treaties, is in question. In determining rights dependent entirely upon the interpretation of the constitution and laws of a state, the national courts uniformly follow the rules of construction and interpretation announced by the highest judicial tribunal of that state where such rules were established before the rights in question accrued. Dempsey v. Township of Oswego, 4 U. S. App. 416, 2 C. C. A. 110, 51 Led. 97; Rugan v. Sabin, 10 U. S. App. 519, 3 C. C. A. 578, 53 Fed. 415, 416; Norton v. Shelby Co., 118 U. S. 425, 439, 6 Sup. Ct. 1121; Bolles v. Brimfield, 120 U. S. 759, 763, 7 Sup. Ct. 736.

In State v. Hitchcock, (decided in 1862,) 1 Kan. 178, the highest judicial tribunal of that state held that a special law locating the county seat of Lranklin county was constitutional and valid, notwithstanding the fact that it prevented the operation in that county of a general law of that state then in existence, providing for the location of county seats. Chief Justice Ewing, in delivering the opinion of the court, said:

*62“Tho legislature must necessarily determine whether their purpose can or cannot he expediently accomplished by a general law. Their discretion and sense of duty are the chief, if not tho only, securities of the public for an intelligent compliance with that i>rovision of tho constitution. Whether wci could, in any conceivable case presenting a flagrant abuse of that discretion, hold a private law invalid, as contrary to that provision of the constitution, we need not decide; but we would certainly not hold such a law invalid merely because it would, in our opinion, have been possible to frame a general law under which the same purpose could have been accomplished.”

Tlie rule thus announced in the first volume of the Kansas Reports- has been affirmed and adhered to in that state ever since. It is true that in Darling v. Rodgers, 7 Kan. 592, and Robinson v. Perry, 17 Kan. 248, general laws which applied to certain counties, only, were held void because they did not have a uniform operation throughout the state; hut the act in question here is not a general law, and no special law of the character here presented has ever been held invalid in that state, so far as we are aware, either because it prevented tlie uniform operation of a prior general law, or because a géneral law might have been made applicable to its subject-matter. On the other hand, ei-ery such special law that has been presented to the supreme court of that state has been sustained. In 1873, in Beach v. Leahy, 11 Kan. 28, a special law authorizing a school district to issue bonds to build a scboolhouse was sustained, although there ivas a general law in force, the opera-'.(ion of which in that district must have been prevented by the special act. Mr. Justice Brewer, then a judge of the supreme court of Kansas, in delivering the opinion of the court, said:

| “It may ho conceded that this is a special law; that it authorizes the issue of bonds in a manner and upon conditions different from those proscribed by the general statute therefor. It is evident, also, that the result could be accomplished by a general law, or,' in the words of the constitution, that a general law could be made applicable, for a general law is on the .statute hook under which great numbers of school districts have issued bonds. Why this distinction was made, we do not know, and there is nothing in tho record to enlighten us thereon. We may imagine many reasons, hut it is useless to speculate. It is enough, in the absence of any showing as to tlie facts, that we can see that there may have been good and sufficient reasons.”

In Commissioners v. Shoemaker, (decided in 1882,) 27 Kan. 77, a special act had been passed, excepting the couniy clerks and county treasurers of two counties from the operation of a general law then in force, fixing the salaries of county officers thrc-ughout.the state, and it was sustained. In Washburn v. Commissioners, (decided in 1887,) 37 Kan. 217, 221, 15 Pac. 237, while there was a general law in force authorizing the county commissioners of any county in the state to build a jail and jailer’s residence after a vote of the electors of the county approving the project, a special law had been passed, authorizing the county commissioners of Shawnee county to build a jail and jailer’s residence, to levy a tax of six mills upon the taxable property of the county, and to issue scrip to pay for the buddings, without submitting the project to a vote of the electors, and this law was sustained by the supreme court of Kansas. In State v. Sanders, (decided in 1889,) 42 Kan. 228, 233, 21 Pac. 1073, *63that court, in answer t;o the suggestion that the special law then before it prevented the uniform operation of a prior general law, and that there was a general law applicable to its subject-matter, cited the authorities to which we have referred, and declared that:

"The interpretation which was placed upon this provision of the constitution at an early day, and which has been accepted and acted upon by both the legislature! and the courts since that time, must be regarded as settled, and binding upon the court, whatever the views of the present members might be.”

See, also, City of Wichita, v. Burleigh, 36 Kan. 34, 12 Pac. 332; Elevator Co. v. Stewart, 50 Kan. 378, 32 Pac. 33.

In view of this long-established and uniform interpretation by the highest judicial tribunal of Kansas of the provision contained in section 17, art. 2, of (lie constitution of that state, the objection to this law founded upon that, provision ought not to be, and cannot be, sustained by the federal courts. The interpretation given by the state court must, be followed, in the interest; of a wise public, policy, of uniformity of decision and harmony of action between the two systems of jurisprudence, and of stability and certainty in the rights of citizens. It would be intolerable that these bonds, issued, and sold upon the faith of this uniform interpretation of the constitution by both the legislature and the courts of Kansas for 23 years before their Issuance, should be held valid and enforced in the slate court,s, and should be declared void in the federal courts, when no impingement upon the federal constitution, laws, or treaties, and no question of commercial or general law, demands an independent, examination and determination of this question by tlie latter.

The second objection interposed to this act is that it was passed in violation of section 1, art. 12, of the constitution of Kansas, which provides that:

“The legislature shall pass no special act conferring corporate powers. Corporations may be created under general laws; but all such laws .may be amended or repealed.”

This provision is found in the article of the constitution entitled “Corporations,” and most of the provisions of that article relate to private corporations. Section 5 of the article, however, provides that:

"Provision shall be made by general law for the organization of cities, towns and villages; and their power of taxation, assessment, borrowing money, contracting debts, and loaning- tlieir credit shall be so restricted as to prevent the abuse of such power.”

Tint perusal of these sections at once suggests the thought that t.lie restriction of section 1 relates to corporations proper, only,— t,o private corporations, and cities, towns, and villages, — and that it in no way restricts or affects the legislative authority over counties, townships, and school districts. We are also relieved from a consideration of this question. The supreme court of Kansas decided it; in 1873, and has constantly adhered to that decision. In Beach v. Leahy, 11 Kan. 28, 31, in which a special law was under consideration which conferred upon a school district authority to build a schoolhouse, and to issue bonds to pay for it, on terms different from those of a general law then in force, giving such authority, *64this question was presented and determined. Mr. Justice Brewer, who delivered the opinion of the court, in speaking of the effect of section 5, said:

“On the other hand, in order that there might be no question whether this article was intended for other than private corporations, section 5 names certain public corporations to which its provisions extend. It was probably well that these were named, to avoid question, for all the sections other than the fifth have reference — principally, at least — to private' corporations. Yet, as these are corporations proper, there would be weighty reasons for holding them included, even though not in terms named. But with reference to counties, townships, and school districts the case is different. True, they are called in the statute ‘bodies corporate.’ Gen. St. p. 253, § 1; Id. p. 1082, § 1; Id. p. 920, § 24. Yet they are denominated in the boohs, and Known to the law, as ‘quasi corporations,’ rather than as corporations proper. They possess some corporate functions and attributes, but they are primarily political subdivisions, — agencies in the administration of civil government, — and their corporate functions are granted to enable them more readily to perform their public duties.”

After an exhaustive examination of the authorities, he says:

“The conclusion'to. which these investigations have led us is that, among public corporations, only corporations proper are included within the scope of article 12 of the state constitution, and that a school district is only a quasi corporation, and not covered by its provisions.”

This decision has been uniformly followed by the supreme court of Kansas, and it is decisive of this objection in this court. State v. County of Pawnee, 12 Kan. 426, 439; Commissioners v. O’Sullivan, 17 Kan. 58, 61; Eikenberry v. Township of Bazaar, 22 Kan. 556; Marion Co. v. Riggs, 24 Kan. 255, 258. In the two cases last cited, it is held that counties, townships, school districts,' and road districts are not liable for neglect of public duty; that they exist only for the purposes of the general political government of the state; that all the powers with which they are intrusted are the powers of the state, and all the duties with which they are charged are the duties of the state; that in the performance of governmental duties the sovereign power is not amenable to individuals; and, therefore, that these organizations are not liable for such neglect, in the absence of a statute imposing such a liability.

The third objection to the constitutionality of this law is that its passage was in violation of section 16, art. 2, of the constitution of Kansas, which provides that:

“No bill shall contain more than one subject, which shall be clearly expressed in its title.”

The title of this act is, “An act to enable the township of Oswego, oounty of Labette, to compromise and refund its present indebtedness.” The provision here cited is common to- the constitutions of many states, and it has frequently been the subject of judicial construction. The settled rule for its interpretation is that, where the subject of the bill is clearly stated in the title, the law will not be held obnoxious to this clause of the constitution on account of the presence in it of any provisions that are germane to the subject, expressed in the title, or that would be naturally suggested by it as necessary or proper to the complete accomplishment of the purpose *65it discloses. State v. Barrett, 27 Kan. 213, 218, and cases cited; State v. Cassidy, 22 Minn. 312, 322, 326, and cases cited.

The act before us is fully protected by this rule. Its subject was the refunding of the indebtedness of Oswego township, and the provisions fixing the terms on which its indebtedness should he refunded, naming ihe persons authorized to refund it, authorizing the issuance of new bonds and coupons, and providing for the levy of taxes to pay them, and enforcing by proper provisions the performance of the duties devolved upon the several agents selected, were all germane to this subject, naturally suggested by the title, and proper, if not necessary, to the accomplishment of the purpose that title disclosed. The object of the constitutional provision is 10 secure separate consideration of each subject hv the legislature, and to this end tills provision has been held to make void legislation on subjects foreign to that expressed in the title to a hill. But there is no subject mentioned in this act that is foreign to that expressed in its title, and it does not come within the terms or the purpose of the constitutional inhibition.

We have now considered all the provision® of the constitution of Kansas that it is claimed expressly prohibited the passage of this law. It is, however, argued that the act is void (1) because the appointment of the commissioners was an executive, and not a legislative, function; (2) because it is claimed that the commissioners were township officers, and that ihe constitution provides for the election of such officers; (3) because these commissioners were to determine the amount of the indebtedness of the township, and that is claimed to be a judicial function; and (4) because the enactment of this special law was not within the scope of legislative authority, and was a usurpation of the power of local self-government that is claimed to have been reserved to the electors of this township by the provision of section 20 of the bill of rights of the constitution of Kansas which declares that “all powers not herein delegated remain with the people.”

The decisions of the supreme court of Kansas to which we have already adverted, and which must control this case, render extend ed notice of these objections unnecessary. There is nothing in the constitution of Kansas which declares the appointment of agents of the state, whose positions are created and duties prescribed by the. legislature, to he an executive, rather than a legislative, power. Primarily, the appointment of such agents pertains no more to the functions of the executive than to that of the legislative department of the government, and it was competent for the people of the state to vest it in either the one or the other. Section 1, art. 15, of the Kansas constitution, provides that:

“All officers, wliose election or appointment is not otherwise provided for, shall be chosen or appointed, as may be prescribed by law.”

The right to prescribe the method of appointment thus vested in the legislature necessarily carried with it the right to authorize that appointment to be made by the legislature itself. Moreover, these commissioners were named in the body of the act in question. *66The governor — the chief executive officer of the state — had the veto power, under the constitution of the state, and he approved this law. They were therefore appointed by the exercise of both the legislative and the executive power of the state. .These commissioners were not township officers, within the meaning of the constitution of Kansas, and hence they were not elective. They had no duties to discharge in the general management of the business of the township, or in the management of any general department of that business. They were mere fiscal agents, charged with the simple duties of refunding the bonded indebtedness of the township at not more than 30 per cent, of its face, and investing the sinking fund to be raised to pay the bonds. A banker who is appointed to pay the bonds of a town or city, or to exchange new bonds or notes for old ones, is not an officer of the town or of the city. He is a mere financial agent. And these commissioners took no higher rank. Nor were their duties judicial. The indebtedness of this township was evidenced by its bonds. The duty of the commissioners in determining their amount was of the same character as that of the banker, who determines before payment the amount of the bonds of a city which he has been directed to pay when presented at his counter. This was not the discharge of a judicial function.

But a single question remains: Was the right to determine whether or not this township would reduce its indebtedness TO per cent., and issue new bonds for the remaining 30 per cent., and, if so, the right to determine the manner of issuing them, reserved by the constitution of Kansas to the people of this township, or was it vested in the legislature of Kansas? Undoubtedly, the legislative power of that state is not omnipotent. It is limited by the federal constitution, laws, and treaties; by the express restrictions of the constitution of the state; by the implied restrictions evidenced by certain provisions of that instrument, such as the grant of executive and judicial power to other departments of the government, which necessarily prohibits the exercise of executive and judicial functions by the legislature; and by its nature and purpose. A flagrant and outrageous abuse of its power, such as the attempted passage of an act authorizing the destruction of the life or property of the citizen without cause, or an act authorizing the commission of those very offenses against which it is the great purpose of every good government to protect its people, could not be sustained as a valid exercise of legislative power, even in the absence of any express prohibition in the constitution. There is, however, nothing of this character in the law we are considering; and, subject to the limitations we have suggested, the legislative power of a state is supreme, within the scope of its authority. The power to levy taxes upon any of the property in the state, to build schoolhouses, roads, courthouses, jails, and to make other public improvements at the expense of the people; the power to borrow money, to incur indebtedness, to make contracts, to issue bonds on behalf of the people of the state, or on behalf of any political subdivision of the state, — all these are essential legislative powers, and *67depend for their exercise upon the will of the representatives of the people assembled in the legislature. If these and like powers are exercised in various political subdivisions of the state by school districts, road districts, townships, counties, villages, and cities, the latter are but the agents and instrumentalities of the legislature for the more convenient administration of the local government of the people within its jurisdiction. All the governmental powers and privileges these instrumentalities enjoy are derived from the legislature through the general or special laws that recognize their existence and limit their powers. It goes without saying that the power which established these agencies can destroy them, can revoke the whole or a part of the powers it delegated to them, and can delegate these powers, or any portion of them, to other agents, unless restrained by some of the limitations we have referred to. Meriwether v. Garrett, 102 U. S. 472, 511; U. S. v. Baltimore & O. R. Co., 17 Wall. 322, 329; State v. Hunter, 38 Kan. 578, 582, 17 Pac. 177; Philadelphia v. Fox, 64 Pa. St. 169, 180; People v. Draper, 15 N. Y. 533, 545; Mayor, etc., of Baltimore v. State, 15 Md. 376; People v. Langdon, 8 Cal. 1, 16; Ohio v. Covington, 29 Ohio St 102; Jensen v. Board, 47 Wis. 298, 309, 310, 2 N. W. 320; Daley v. City of St. Paul, 7 Minn. 390, (Gil. 311;) Bridges v. Shallcross, 6 W. Va. 562; Biggs v. McBride, (Or.) 21 Pac. 878, 881; People v. Freeman, (Cal.) 22 Pac. 173; State v. George, (Or.) 29 Pac. 356; President, etc., of Revenue v. State, 45 Ala. 399.

Without a delegation of the legislative power of the state, the township of Oswego had no authority to issue the original bonds, or to refund them by the issuance of new bonds. In all that that township did or could do in this regard, it was but the instrumentality or agency through which the legislature was exercising its power of administering the local government of the township. It was in the discretion of the legislature to determine by what argents it would exercise that power. It might have delegated the power to audit and destroy the old bonds, and to issue the new ones, to the trustee or to the clerk of the township, but it had the like right and the same power, in its discretion, to delegate the performance of this duty to the commissioners named in the act; and it is not the province of the courts to review or restrict the exercise of that discretion, in a case clearly within the scope of legislative authority.

The judgment below is reversed, witb costs, and the cause remanded, with directions for further proceedings in accordance with law.