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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 631 Since this action was commenced, and since the judgment appealed from was rendered, some of the questions which were discussed by the learned judges of the Supreme Court have been decided in other cases in this court. The money which was to be raised by the city of Rochester was, by the statutory provisions which are drawn in question, to be applied in promoting the construction of a rail road terminating in that city, by means of the purchase of shares of stock in the rail road corporation. And it was considered by some of the judges that this was a power which, from its nature and on account of certain constitutional provisions, could not be exercised by a municipal corporation, even with the sanction of the legislature. But it has been determined otherwise by this court in some cases to which reference will presently be made, and the point is, consequently, no longer insisted on by the counsel for the plaintiff.
The only questions which are now open for discussion, and the only ones which have been urged on behalf of the plaintiff, are raised by these two propositions: first, that the sections of the act amending the charter of the city of Rochester, (§§ 285 to 292 inclusive, of ch. 389 of the Laws of 1851,) were not constitutionally passed by the legislature, and hence were never a part of the law of this state; and secondly, if this were otherwise, that the contract between the parties to this suit under which the plaintiff advanced the money which is sought to be recovered in this action, was void, because the common council of the city exceeded the authority which these sections conferred, in entering into that contract. If either of these positions can be maintained, it is further contended that the money advanced by the plaintiff to the defendant can not be retained by the latter, but is to be considered as money received by the city for the plaintiff's use.
(1.) The general purpose of the sections referred to was to enable the city corporation, upon certain conditions, to subscribe for and become the purchaser of stock in the Rochester and Genesee Valley Rail Road Company, an existing *Page 632 corporation whose road was to terminate in the city, to the amount of three hundred thousand dollars; to issue the corporate bonds for that amount of money; and to dispose of the stock by sale; and to raise by taxation the money to discharge the interest of these bonds. The provisions are challenged as not being an emanation of the law-making power which the constitution has committed to the legislature; but it is argued that, on the other hand, they derive whatever authority they possess, as statutory enactments, from the vote of the electors of the city of Rochester. The six sections which precede section 291 contain detailed provisions authorizing the common council of the city to subscribe for the stock and to issue their bonds. They are in the ordinary form of an enabling statute, enacted by the legislature by its proper authority, and then the section 291 declares that these preceding sections shall not take effect until they shall have been submitted to the electors at a special election. Detailed arrangements respecting the election were then made, the purpose being stated to be that of determining "whether or not it is expedient for said city to borrow the money mentioned in said section, for the purposes therein specified." Prior to the election, the sections in question are to be published in two daily papers. The form of the ballots are to be "For the railroad," and "Against the rail road." And it is declared that the former "shall be deemed to approve of said section," and the latter "shall be deemed as not approving it." Provision is then made for canvassing the votes, and the mayor and clerk are to make a certificate that the sections are approved, or are not approved, as the case may be, by two thirds of the electors voting. The next section, (292,) declares if the section shall be approved by the requisite majority, "that the same shall take effect immediately after the filing of the certificate of such approval of the said act." The final section declares that "this act shall take effect immediately."
The general question involved in the present appeal has *Page 633 been passed upon by this court on several occasions. (Barto v.Himrod, 4 Seld. 483; The Bank of Rome v. The Village ofRome, 18 N.Y. Rep. 37; S.C. 19 id. 20; Starin v. The Town ofGenoa, 23 id. 239; Gould v. The Town of Sterling, Id. 456.) The principles settled in these cases are, first, that the legislature can not commit the power of enacting laws to any other body than itself, not even to all the electors of the state; and that this principle can not be evaded by a statute which shall prescribe the details of a particular legislative act, and then provides that the question whether it shall be established as law shall be determined by a vote of the electors. This was the plan resorted to in respect to the free school act which was in question in Barto v. Himrod. It was said, with entire accuracy, as I conceive, that what was done by the legislature in that case was to propose to the people the details of a statute, and then to put it to the electors to determine whether they would or would not clothe it with the attributes of law. If it met their approval it was to become a statute of the state; otherwise it was to be entirely void. The statute which was thus proposed, and which was approved of by the voice of the electors, was one of the most general character, affecting the whole state, and the deliberate judgment of this court was that such statutory provisions could not be brought into existence in that manner. The government organized by the constitution was considered to be, as it undoubtedly is, that of a representative republic, and no power existed in the legislature to convert it, on any occasion, or for any purpose, into a pure democracy. The organization of the law making power is one of the principal purposes of a constitutional charter of government, and, in all communities of considerable extent, this must be effected by means of a system of representation, by which the people at stated periods delegate to citizens chosen by them the power of enacting general laws, by which all the members of the state are to be governed. That purpose is expressed in the constitution of this state by the declaration *Page 634 that the legislative power shall be vested in the senate and assembly. (Art. 3.) But all general reasoning is rendered unnecessary by the explicit determination in the case of Barto v. Himrod. But while general statutes must be enacted by the legislature, it is plain the power to make local regulations, having the force of law in limited localities, may be committed to other bodies representing the people in their local divisions, or to the people of those districts themselves. Our whole system of local government in cities, villages, counties and towns, depends upon that distinction. The practice has existed from the foundation of the state, and has always been considered a prominent feature in the American system of government. It is recognized in the constitution itself, in the section which prescribes to the legislature the duty to provide for the organization of cities and incorporated villages, c., restricting their power of taxation and borrowing. It contains an irresistible implication that the authority to lay local taxes and to borrow money for local objects, may be constitutionally committed to local boards or councils within the cities and villages. And if such power may be conferred to be exercised according to the judgment of such boards or councils, and without the condition that the electors shall concur in the measure, it is plain that it may be granted upon that condition, or with any other reasonable safeguards which may be prescribed. I do not say that it can be submitted to the electors of a city or village to determine what powers its local legislature shall possess, but only that these bodies may be made the depositories of such powers of local government as the legislature may see fit to prescribe, and the exercise of which is not repugnant to any of the general arrangements of the constitution. This position has also been settled by this court. In The Bank of Rome v. TheVillage of Rome, above referred to, the question arose upon a statute very similar, in its main features, to the one we are now considering. Power was given to the board of trustees to subscribe for stock in a rail road to be organized, and which *Page 635 should terminate in the village of Rome, and to issue the bonds of the corporation for the purpose of raising the necessary moneys. But it was provided that the trustees should not have the power to make the subscription or issue the bonds or create any liability under the act, until the scheme had been previously approved by two-thirds of all the electors whose names were on the assessment roll for the last preceding year, and who had paid taxes. The action was upon one of these bonds, and it was held that it was a legal obligation, and the plaintiff recovered. The court considered that the power was conferred by a perfected act of the legislature, which act did not require, in order to become a law, the assent of any person, and that the vote of the tax payers, which was prescribed, was simply a condition which the law making power thought proper to annex to the exercise of the authority conferred upon the trustees. It was held not to be at all within the principle of the case of Barto v. Himrod, which was a general act, of universal application to the whole state, and was to have no operation until approved by the electors of the state. (18 N.Y. Rep. 38.) The same doctrine was directly held, or tacitly acted upon as a settled doctrine, in the other cases to which I have referred. The precise question in the present case is, therefore, whether the sections of the act to amend the charter of the city of Rochester which are under examination, are to be considered as not having been enacted by the legislature, and hence not to be any part of a public law, or a law of any kind, until passed upon by the electors of Rochester; and as thus being of the same character with the free school law; or whether these sections did, of their own proper force, and before the taking of the vote of the electors, and, whether any such vote were taken or not, become public law as distinguished from corporate legislation, and thus to assimilate the case to that respecting the village of Rome just mentioned. As I have remarked, the general purpose of both acts was precisely the same. The intent was to enable the corporate authorities of the two municipalities *Page 636 to embark in the respective rail road enterprises, to raise the requisite funds by borrowing on corporate bonds, and finally to pay the money borrowed by local taxation; and it is only on account of the peculiar language made use of in the provisions respecting the city of Rochester, in the sections in question, that a distinction between the two cases has been attempted. That language has been already referred to. The declaration that these sections shall not take effect until submitted to the electors, and that they shall take effect immediately after their approval shall be certified, do certainly tend to the conclusion that the legislature did not suppose that they were creating a binding public law, but rather that they were proposing such a law, to the electors, to be established or disallowed by them at their pleasure. But then the last section is equally emphatic the other way. It is distinctly declared that the whole act, of which these sections are a part, shall take effect immediately. It follows, from the general view which I have taken of the power of the legislature to confer a more absolute power of local legislation, that if the 291st section, instead of employing the words used respecting the taking effect of these sections, had provided that it should be a condition to the exercise of the power conferred, that the scheme should be first submitted to the electors in the precise form in which it was submitted, and that it might be exercised, if the electors should approve of the plan, and not otherwise, the case would have been perfectly plain, and the judgment we gave respecting the Rome bonds would have been a precise precedent in favor of the plaintiff. The act would have been no more obnoxious to the charge that the legislature had abdicated its authority in favor of the voters of Rochester, than would any of the numerous acts conferring taxing and borrowing powers on cities, villages, towns and counties, where the question of the exercise of the power is to be contingent upon the volition of the electors, or of local boards or councils. The whole of the language of these sections, it should be observed, is not *Page 637 of a character to denote that the existence of the law was to depend upon the vote. The form in which the will of the voters was to be expressed looks rather to the expediency of the entorprise than to the establishment of the sections as law. The ballots were to be for the rail road, and against the railroad. These words, though not precisely expressive of what was designed, were plainly intended to indicate the mind of the voters as in favor of or against the scheme of embarking the city in the improvement, in the manner set forth in the sections. I am of the opinion that we ought rather to regard the substance and intention of these sections than their peculiar phraseology. If it can not be denied — and I am sure that it can not — that the legislature could confer the authority in question upon the common council on condition that it should be submitted to and should meet the approbation of the electors, we should not be astute to find in the verbiage made use of, an intention to do an illegal and unconstitutional act. If upon one construction of that language the constitution would be violated, while on the other construction the transaction would be wholly without objection, and the substantial object intended to be effected, according to either interpretation, would be the same, every principle of constitutional interpretation would admonish us to adopt the legal rather than the unconstitutional meaning. The mandate of the last section is certainly repugnant to the same words used in one of the preceding ones. If we are to settle which shall prevail, we should hold to those which shall accomplish the object intended, it being a perfectly legal one, rather than those which shall prostitute that intention, ut resmagis valeat quam pereat. Hence I am in favor of deciding that the law was enacted by the legislature, and not by the people of Rochester, and that the subscription for the stock and the making of the bonds were valid acts.
(2.) The other question is whether the contract between the parties contains provisions not warranted by the statute, considering it to be a valid law. The provisions of the act *Page 638 necessary to be considered in resolving this question, are these: The common council were authorized to exchange the stock, in whole or in part, for the bonds, and in the event of such exchange they were to cancel the latter; they were authorized to dispose of the stock to any one who would purchase it for cash; but they might not sell it for less than par, except at public sale, of which notice by advertisement was to be given, and if it should be sold, the proceeds were to be strictly applied to the redemption of the bonds. As to the bonds, the directions were that the $300,000 might be borrowed for a term not exceeding twenty years, at a rate of interest not exceeding seven per cent per annum, and corporate bonds might be given therefor; and it was enacted that the common council might `dispose of such bonds to such persons or corporations as they shall deem most advantageous to the city, but not for less than par.' Prior to the entering into the contract between the city and the plaintiff, the former had executed bonds to the amount of $100,000, and had disposed of the same for a premium amounting in the aggregate to $4655. The contract was dated March 2, 1853. It recites that the city had subscribed for and obtained the $300,000 worth of stock, for which it was to pay that amount, or such part of it as the rail road company should require. By its terms the city sells, and the plaintiff purchases, the whole of the stock at $300,000, payable $20,000 down, and $2000 on the 1st day of January in each year thereafter for twenty years, and the whole residue on the 1st day of January, 1873, with interest on the part at any time unpaid at six per cent, payable semi-annually. This interest was to be received on $100,000 from January 1, 1853, that being the date of the $100,000 of stock sold, and on the residue from the time the city should be required to pay the money to the rail road company as its subscription for stock. The city was to issue to the plaintiff or his appointee corporate bonds to the amount of $180,000, for which he was to pay them the par amount in money as they should be issued. The *Page 639 plaintiff was to have paid to him the premium realized on the $100,000 of stock which had been sold "so that the sale," as the contract reads, "of the whole amount of bonds shall be, when taken together, a sale at par." The city was to retain the title to the stock and the scrip issued for it, and to have all the rights of stockholders, but the plaintiff was to have all dividends made by the rail road company. The plaintiff was entitled to anticipate his payments upon surrendering an equal amount of bonds, and might then call for a transfer of a proportionate amount of stock. A failure by the plaintiff to perform in any respect was, at the election of the city, to involve a forfeiture of the contract and all payments made by him. The bonds issued were, and those to be issued were to be, on interest at the rate of six per cent per annum. It is urged in the first place, by the plaintiff's counsel, that the sale of the stock was on credit and not for cash as required by the statute; but I think the position is satisfactorily answered by the suggestion that the stock was not to be parted with until the money was paid. Nothing depended upon the personal responsibility of the purchaser. The sale was in one sense conditional and executory, but when executed in such manner as to divest the city of the title to the stock, it was to be paid for in cash. There is nothing in the act forbidding such a transaction. The inhibition to sell otherwise than for cash was inserted to guard against a sale upon the credit of any person, or upon any security other than the stock itself. As long as the city retained the stock until the money should be paid, it can not be said that they sold it on credit, or otherwise than for cash. It is then insisted that the stock and the bonds, one or both of them, were sold at less than par, which was forbidden, except as to the stock which might be sold at a discount if it should be subjected to a public sale. But the sale was not a public one. The violation of these provisions is inferred from the undertaking of the city to allow the premium which it had realized on the first sale. As to the bonds, they might *Page 640 have been made to bear an interest of seven per cent consistently with the act, but those sold, as well as those which were to be issued, carried but six per cent interest. In my opinion the intention of the legislature was simply to limit the interest to be paid by the city to seven per cent. This will not be exceeded or equaled by the amount actually made. Considered simply as a sale of the $180,000 of bonds, the payment of the $4655 would not bring the interest upon the money to be paid by the plaintiff up to seven per cent per annum, if the bonds should be made to run until the closing up of the affair in 1873, and the city had the right to determine what time of payment should be inserted in them. The difference between the seven per cent and six per cent on the $180,000 would absorb the premium in less than three years. Supposing the prohibition to be against selling the bonds at less than par, at whatever rate of interest they might be issued, it is yet doubtful whether, if, taking the sale of all the bonds together, the rate would not be exceeded, (and such would not be the case taking the whole $280,000 into the account,) the statute would be violated. Without, however, placing any considerable reliance upon this last view, I am of opinion, upon the whole, that the spirit and effect of the act was not violated.
No objection can be made to the price at which the stock was contracted to be sold. The plaintiff was to pay par and interest for it, and although it was connected with the agreement to sell the bonds, the paying over to the plaintiff of the realized premium should not be attributed to the depreciation of the stock, for it was, in terms, made a part of the transaction respecting the bonds, and the circumstances do not afford any occasion for transferring that feature of the contract to the sale of the stock, if, as I have supposed, it was a legitimate portion of the bargain respecting the bonds.
I am in favor of affirming the judgment of the Supreme Court. *Page 641
HOGEBOOM, J. read an opinion in favor of affirmance, and DAVIES, WRIGHT and MULLIN, JJ. concurred.
JOHNSON, J. dissented. INGRAHAM, J. thought the statute, and the contract entered into in pursuance of it, void.
SELDEN, J. took no part in the decision.
Judgment affirmed.