The Act of Congress of June 6, 1896, c. 339, 29 Stat. 262,
authorizing the refunding of outstanding obligations of the
Territory of Arizona, was within the power of Congress to pass, and
by it the bonds therein described were made valid.
Under the Territorial Funding Act of Arizona, approved March 19,
1891, it was sufficient for the holder of the bonds to make the
demand for the exchange, and it was not necessary that the demand
should be made by the municipal authorities.
It was the intent of Congress under the said Act of June 6,
1896, to provide that there should be no funding of bonds or other
indebtedness which arose subsequently to January 1, 1897, and the
statute was not intended to limit the mere process of exchanging
one bond for the other to the time specified.
The Territorial Statute of Arizona of 1887 is the foundation for
the appointment of the loan commissioners, and the body thus
created comes directly within its provisions.
Page 184 U. S. 343
This is an appeal by the defendants below from a judgment of the
Supreme Court of the Territory of Arizona affirming a judgment of
the district court granting a mandamus. Upon the trial of the case,
certain facts were agreed upon -- in substance, that the defendants
were the Supervisors of the County of Yavapai, and that, prior to
the year 1890, the County of Yavapai had issued what were known as
railroad bonds in aid of the Prescott & Arizona Central
Railroad Company, upon which there was due on the 17th of
September, 1897, $260,218.80, and on that day they were received in
exchange by the board of loan commissioners, who thereupon issued
258 funding bonds of the territory, each of the denomination of
$1,000, and bearing interest at the rate of five percentum per
annum, payable semiannually. On the 18th of November, 1896, the
board of supervisors of defendant county requested the board of
loan commissioners to fund the bonds issued for the aid of the
railroad company, but the board subsequently, and on December 5,
1896, rescinded such request before it had been acted upon, and on
the 17th of September, 1897, the holders of the bonds requested the
board of loan commissioners to refund the same, which they did upon
such demand. The statement of facts then continues as follows:
"5. At the meeting of said board of loan commissioners at which
said bonds were funded, only two members of said board were present
or acted; the third member of said board of loan commissioners was
at the time of said meeting absent from the Territory of Arizona,
and took no part in the funding of said bonds, and was not in any
manner consulted with relation thereto."
"6. On January 15, 1898, there became due and payable as
interest on the 258 territorial funding bonds issued in exchange
for the bonds of said Yavapai county as aforesaid, the sum of
$4,288.33 according to the tenor of said territorial funding bonds,
and thereafter on the 15th days of July and January of each year,
there became due and payable as interest on said territorial
funding bonds, according to the tenor thereof, the sum of
$6,450.00, payable at the office of the territorial treasurer of
the Territory of Arizona. "
Page 184 U. S. 344
"7. In compliance with the terms and conditions of said
territorial funding bonds the territorial treasurer of said
Territory of Arizona has paid all the interest thereon at the times
when the same became due and payable, amounting in all at the date
hereof to the sum of $23,638.33, and has taken up and cancelled
interest coupons attached to said bonds to that amount."
"9. Save as aforesaid, no demand was ever made by the Board of
Supervisors of said Yavapai county for the funding of said P. &
A.C. Railroad bonds, and no notice was ever given to said board of
supervisors at or about the time of the funding that said bonds had
been funded."
"10. For the year 1899, the territorial board of equalization of
said territory at its annual session for that year, levied the sum
of thirty-seven cents on each one hundred dollars of valuation of
the taxable property in said Yavapai County, for the purpose of
paying interest on the funded indebtedness of said County of
Yavapai, including the interest on the territorial funding bonds
aforesaid maturing in the year 1900, and the territorial auditor
duly certified the levy of said tax to the Board of Supervisors of
said Yavapai County, that the defendants, comprising the board of
supervisors of said county, failed and neglected to levy said tax
of thirty-seven cents on the one hundred dollars, but only levied
the sum of six cents on the one hundred dollars for the purpose of
paying interest on the funded indebtedness of said county; said sum
of six cents on the one hundred dollars was sufficient to pay the
interest on all the funded indebtedness of said county other than
the territorial funding bonds issued in lieu of said P. & A.C.
Railroad bonds as aforesaid, but was insufficient to pay the
interest on said territorial funding bonds or any part
thereof."
"11. The above-mentioned P. & A.C. Railroad bonds were
originally issued by the County of Yavapai in aid of the
construction of the Prescott & Arizona Central Railroad, a line
of railway running from Prescott Junction or Seligman to Prescott,
Arizona, and were granted and issued as a subsidy to the
corporation building and owning said railroad."
The county having refused to levy any taxes for the purpose of
collecting money to pay any of the interest maturing on the
Page 184 U. S. 345
bonds of the territory given in exchange for the bonds issued by
the county, this proceeding was undertaken to compel the board of
supervisors to levy a tax in accordance with the provisions of the
statute, for the purpose of paying the interest which had been paid
by the territory on the bonds.
MR. JUSTICE PECKHAM, after stating the above facts, delivered
the opinion of the Court.
It is claimed on the part of the defendants below that the
railroad bonds for which the territorial bonds were given were
invalid when issued, and it is only by reason of the passage of the
Act of June 6, 1896, 29 Stat. 262, that any action could be
sustained to enforce their payment. That act has been held to be
within the power of Congress to pass, and that by it the bonds
therein described were made valid.
Utter v. Franklin,
172 U. S. 416.
Three grounds are now urged why the judgments of the lower
courts should be reversed. They are:
(1) That the railroad bonds were illegally funded, without any
demand having been made by the Board of Supervisors of Yavapai
County upon the territorial loan commission for such funding.
(2) That said bonds were funded after January 1, 1897, and at a
time when the board of loan commissioners were by the terms of the
statute without power to fund them.
(3) That the bonds were improperly and illegally funded at a
meeting of the board of Loan Commissioners of the Territory of
Arizona at which only two members of the said board were present,
the third member being absent from the territory and not in any
manner consulted with reference to such funding.
(1) In regard to the first ground, the supreme court of the
territory has held that it was not necessary that a demand should
be made by the municipal authorities, but that the
Page 184 U. S. 346
holders of the bonds could themselves make it by virtue of
section 7 of the Territorial Funding Act of Arizona, approved March
19, 1891. The seventh section of that act reads as follows:
"SEC. 7. Any person holding bonds, warrants, or other evidence
of indebtedness of the territory, or any county, municipality, or
school district within the territory existing and outstanding on
the 31st day of December, 1890, may exchange the same for the bonds
issued under the provisions of this act at not less than their face
or par value, and the accrued interest at the time of exchange, but
no indebtedness shall be redeemed at more than its face value and
any interest that may be due thereon."
Where a holder of bonds had made the demand, it was held
sufficient under that section.
Bravin v. Mayor, 56 P. 719;
Yavapai County v. McCord, 59 P. 99.
This construction of the territorial act by the Supreme Court of
Arizona we think was correct, and that it was not necessary in
order to obtain a refunding of the bonds that the demand for the
same must be made by the municipal authorities.
(2) It appears from the records that the bonds were funded after
January 1, 1897, and it is objected that there was no power on the
part of the board of loan commissioners to fund such bonds after
that date.
The act of Congress under which this question arises was
approved June 6, 1896, 29 Stat. 262, c. 339, and is set forth in
the margin.
*
Page 184 U. S. 347
The Supreme Court of Arizona has decided this contention against
the defendants upon the authority of its previous decisions in
Gage v. McCord, 51 P. 977, decided in 1898, which was
approved in
Yavapai County v. McCord, 59 P. 99, decided in
November, 1899. In the first-mentioned case, the following is that
portion of the opinion which discusses this particular
objection:
"Stress is put upon the clause 'until January first, eighteen
hundred and ninety-seven,' found in section 1 of the act, as
bearing out the view that the purpose and intent of Congress was to
limit the time within which the loan commissioners might act, and
to require the completion of the work of funding, by the sale and
disposition of bonds and the liquidation of the indebtedness
allowed by this and prior acts to be funded,
Page 184 U. S. 348
by January 1, 1897. Even were we restricted to the more literal
meaning of the words used in construing remedial statutes of this
kind, the narrow and circumscribed view thus taken of the statute
can hardly be justified if regard be had to the whole of the
statute, including the plain purpose of the act as expressed in its
title. In the latter, it is clearly stated to be an amendment of
previous statutes and the extension and enlargement of their
provisions. Again, an analysis of the body of the act bears out the
view that, instead of the purpose being to limit or restrict the
exercise of any powers, rights, or privileges previously granted,
the legislative will was to add to, extend, and enlarge these. The
first section contains two general provisions -- one authorizing
the amendment and extension of the congressional acts approved,
respectively, June 25, 1890, and August 3, 1894, so as to include
in their provisions 'all outstanding obligations' of the territory,
the other directing the funding of all outstanding bonds, warrants,
and other evidences of indebtedness of the territory, as well as of
the counties, municipalities, and school districts thereof, which
had been authorized by legislative enactments, and which bore a
higher rate of interest than is authorized by the funding law, and
which had been sold or exchanged in good faith. The second section
likewise has reference to two classes of indebtedness, both of
which are recognized obviously so as to confirm, approve, validate,
and effectually fix their status as binding obligations upon the
territory."
"The Acts of June 25, 1890, and August 3, 1894, being referred
to, we must therefore consider the Act of June 6, 1896,
in pari
materia with the former. The former act confirmed and
approved, with amendments, chapter 1, tit. 31, Rev.Stat., passed by
the territorial legislature March 10, 1887. These amendments had
reference to the rate of interest, the time bonds issued for
funding purposes should run, and as to what indebtedness might be
founded, the act being amended in this particular to include
county, municipal, and school indebtedness. Congress added to the
legislative enactment a provision that in effect validated a class
of obligations otherwise invalid, because incurred in violation of
the organic law of the territory,
Page 184 U. S. 349
as found in the 'Harrison Act,' and provided for the funding of
all the then existing and outstanding indebtedness, and that which
might thereafter be evidenced by warrants issued for the necessary
and current expenses of carrying on territorial, county, municipal,
and school government for the year ending December 31, 1890, and
added to the foregoing the declaration that thereafter, no
warrants, certificates, or other evidence of indebtedness should be
allowed to issue or be legal when the same is in excess of the
limit prescribed by the Harrison Act. The Act of August 3, 1894,
provided"
"that an act entitle 'An Act Approving, with Amendments, the
Funding Act of Arizona,' approved June twenty-fifth, eighteen
hundred and ninety, and paragraph twenty-two hundred and fifty-two
(section 15) of said act, be and the same is hereby amended by
adding thereto as follows:"
"Provided further, however, that the present outstanding
warrants, certificates, and other evidences of indebtedness issued
subsequent to December thirty-first, eighteen hundred and ninety,
for the necessary and current expenses of carrying on the
territorial government only, together with such warrants as may be
issued for such purpose for the years ending December thirty-first,
eighteen hundred and ninety-four, and December thirty-first,
eighteen hundred and ninety-five, may also be funded and bonds
issued for the redemption thereof, and thereafter no warrants,
certificates or other evidences of indebtedness shall be allowed to
issue, or to be legal where the same is in excess of the limit
prescribed by the Harrison Act."
It is to be noted that, in both the acts referred to, the only
limitation imposed had reference to the class of obligations which
were permitted to be funded, and did not in any manner restrict the
territorial officers in the method of their procedure previously
prescribed by the territorial law, or limit the time within which
the acts of funding, by the sale and disposition of bonds, might
lawfully be done. Bearing in mind the remedial character of this
legislation and reading the Act of June 6, 1896, in the light of
the previous congressional enactments upon the same subject matter,
we construe the former act to express only what obviously appears
to be the congressional intent,
viz.,
Page 184 U. S. 350
to extend and enlarge the class of obligations which may be
funded, and not to limit the time within which the board of loan
commissioners might complete the acts of funding indebtedness,
which has expressly been recognized by Congress as fundable. We
therefore read section 1 of this act as authorizing the funding of
all obligations of the territory which existed and were outstanding
prior to January 1, 1897, and not as limiting the sale and
disposition of bonds for funding purposes by the loan commissioners
to the absurdly short period of six months for the successful
accomplishment of the funding of the varied class of obligations
validated and recognized by the act as fundable, and which
necessarily amounted to large sums. It is not to be assumed that
Congress would in one breath grant liberal and generous
concessions, and in the next breath take away their practical
benefits by the imposition of a seemingly unreasonable and
unnecessary restriction, and thus defeat its own purpose and
intent. It is to be noted that no contention is made that any of
the indebtedness proposed to be funded by the sale and disposition
of the bonds in question has been incurred since January 1, 1897,
but the sole contention is as to the time within which the funding
of the territorial indebtedness as limited by law may be done.
We are disposed to agree with the conclusions arrived at by the
territorial supreme court. While it may be said that, by the strict
letter of the statute of 1896, there could be no funding of a bond
after January 1, 1897, although the bond had been issued long prior
to that date and represented an indebtedness of the county which
was provided for by the act of 1896, yet taking into consideration
the series of acts which have been passed and the provisions made
therein relating to the funding of the indebtedness of the
territory and of the various counties and other municipal divisions
therein, we think the intent of Congress was to provide that there
should be no funding of bonds or other indebtedness which arose
subsequently to January 1, 1897, the date named in the statute, and
that date was named as the limit of the indebtedness that could be
refunded, and the statute was not intended to limit the mere
process of exchanging one bond for the other to the time
specified.
Page 184 U. S. 351
There was no special reason for a limitation of time for the
mechanical exchange of bonds under the statute, so long as the time
was limited which applied to the indebtedness to be recognized.
Although bonds executed by many counties in favor of railroads
had been held invalid because the acts of the legislature of
Arizona permitting the counties to issue such bonds were violations
of the restrictions imposed upon the territorial legislature by
Congress,
Lewis v. Pima County, 155 U. S.
54, yet the Legislative Assembly of the Territory of
Arizona had adopted a memorial asking Congress to pass such
curative legislation in regard to such bonds as would protect the
bondholders, when such bonds had been issued under the authority of
the acts of the territorial legislature. A copy of the memorial is
to be found in the report of the case of
Utter v.
Franklin, 172 U. S. 416,
172 U. S.
421.
It was therefore the desire of the Territory of Arizona to have
the bonds validated, and that they should be paid, and to pay them.
We think it quite plain that the second section of the federal
statute of June 6, 1896, was passed in response to the request of
the Legislature of Arizona. When these bonds were validated by such
statute, it would seem hardly reasonable that the short period of
six months from June 6, 1896, to January 1, 1897, should be given
not alone for their presentation and exchange, but also for all the
indebtedness mentioned in that act, while, on the contrary, having
made all such bonds valid, it would seem to be quite reasonable
that the limitation of time provided for in the federal act
referred to the character of indebtedness which was to be limited,
and not to the particular time when the bonds were actually to be
exchanged.
It is to be noted that, by the acts prior to that of June 6,
1896, there was no limit whatever placed upon the time for the
board of loan commissioners to act upon the funding of the
indebtedness of the territory, but the limitation was in regard to
the time when the debts which were to be refunded were created. The
only limit named in the act of Congress of June 25, 1890, 26 Stat.
175, c. 614, was as to the date when the indebtedness was created.
Section 7 of the Territorial Act of March 19,
Page 184 U. S. 352
1891, it will be perceived, did not limit the date of refunding,
but did limit the indebtedness to that which was existing or
outstanding on December 31, 1890. By the Act of Congress approved
August 3, 1894, 28 Stat. 224, c. 200, the time for the creation of
debts of the territory which might be funded was extended from
December 1, 1890, to December 31, 1895, which was over a year
beyond the date of the passage of the act, but the time of
refunding was not limited.
In none of these acts, as stated, was there any limitation as to
the time of refunding, but the limitation in each was in regard to
the indebtedness which was to be refunded. Upon consideration of
all the circumstances existing when the various acts of Congress
were passed, we are inclined to concur with the Supreme Court of
Arizona on the construction it has placed upon the act of Congress
of 1896. While we admit that it is against the strict letter of the
statute, we think the construction adopted is within its clear
meaning and intention.
(3) The last objection raised to the validity of the funding is
that the bonds were improperly and illegally funded at a meeting of
the Board of Loan Commissioners of the Territory of Arizona at
which only two members of the board were present, the third member
being absent from the territory, and not in any manner consulted
with reference to the funding.
There is a statute of Arizona (Revised Statutes, par. 2932,
subdivision 2) which reads as follows:
"All words purporting to give a joint authority to three or more
public officers or other persons shall be construed as giving such
authority to a majority of such officers or other persons unless it
shall be otherwise expressly declared in the law giving the
authority."
The objection is made that the Loan Commissioners of Arizona
obtained their authority from the act of Congress, and not from the
territorial legislature, and hence the statute above referred to
does not apply. The Territory of Arizona passed an act in 1887
known as the Revised Statutes, in which was "Title XXXI. Funding."
That act, by paragraph 2039, created the governor of the territory,
together with the territorial auditor and the territorial secretary
and their successors in office a board of commissioners to be
styled the "Loan Commissioners of the
Page 184 U. S. 353
Territory of Arizona," who should have and exercise the powers
and perform the duties provided for in the act, which gave them
power to provide for the payment of the existing territorial
indebtedness and such future indebtedness as might be authorized by
law, and granted them power to issue negotiable coupon bonds of the
territory under the conditions named in the act. This act was
somewhat amended and then approved by Congress June 25, 1890, 26
Stat. 175, c. 614. The powers of the commissioners have been
extended from time to time. It is claimed that the power vested in
them came from Congress instead of the territorial legislature, and
that therefore the statute relating to the exercise of powers given
to a board of public officers does not apply.
We think that the territorial statute, although approved by
Congress, is the foundation for the appointment of the loan
commissioners, and that the body thus created comes directly within
the provisions of the Arizona statute just referred to. Upon this
subject, it was said by the Supreme Court of Arizona as
follows:
"There is no provision in the funding act of 1887, as amended by
Congress in 1890, that the commissioners should jointly act, but
the board was treated as a unit. The funding act is not a strictly
congressional act; it is a territorial act, passed by the
legislature of the territory and embodied in the Revised Statutes
of 1887. For the purpose of assuring the validity of the act, and
of placing any issuance of bonds under it beyond dispute, the act
was presented to Congress for its affirmative approval, which it
gave with some few amendments, generally verbal in their nature and
evidently for the purpose of making the act more specific. The
title of the act passed by Congress clearly carries out that view,
for the first provision of that act is"
"that the Act of the Revised Statutes of Arizona of 1887 known
as Title XXXI, 'Funding,' be and is hereby amended so as to read as
follows, and that as amended the same is hereby approved and
confirmed, subject to future territorial legislation."
"The act being a territorial act, and the commission being the
creation of the territory, is directly affected by par. 2932,
supra."
The record does not show that the absent commissioner had
Page 184 U. S. 354
not been notified to attend the meeting at which the bonds were
funded. It is not to be presumed that notice of the intended
meeting was not given. Under the provisions of the territorial act,
the proceedings of the board of loan commissioners were legal.
We think the three objections made by the appellants are
untenable, and the judgment of the Supreme Court of Arizona was
right, and must be
Affirmed.
*
"Chap. 339. An Act Amending and Extending the Provisions of an
Act of Congress Entitled 'An Act Approving with Amendments the
Funding Act of Arizona,' Approved June Twenty-fifth, Eighteen
Hundred and Ninety, and the Act Amendatory Thereof and Supplemental
Thereto Approved August Third, Eighteen Hundred and
Ninety-four."
"
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled that the
provisions of the Acts of Congress approved June twenty-fifth,
eighteen hundred and ninety, and August third, eighteen hundred and
ninety-four, authorizing the funding of certain indebtedness of the
Territory of Arizona, are hereby amended and extended so as to
authorize the funding of all outstanding obligations of said
territory, and the counties, municipalities, and school districts
thereof, as provided in the Act of Congress approved June
twenty-fifth, eighteen hundred and ninety, until January first,
eighteen hundred and ninety-seven, and all outstanding bonds,
warrants and other evidences of indebtedness of the Territory of
Arizona, and the counties, municipalities, and school districts
thereof, heretofore authorized by legislative enactments of said
territory bearing a higher rate of interest than is authorized by
the aforesaid funding act approved June twenty-fifth, eighteen
hundred and ninety, and which said bonds, warrants, and other
evidences of indebtedness have been sold or exchanged in good faith
in compliance with the terms of the acts of the legislature by
which they were authorized, shall be funded, with the interest
thereon, which has accrued and may accrue until funded into the
lower interest-bearing bonds, as provided by this act."
"SEC. 2. That all bonds and other evidences of indebtedness
heretofore funded by the Loan Commission of Arizona under the
provisions of the Act of Congress approved June twenty-fifth,
eighteen hundred and ninety, and the act amendatory thereof and
supplemental thereto approved August third, eighteen hundred and
ninety-four, are hereby declared to be valid and legal for the
purposes for which they were issued and funded, and all bonds and
other evidences of indebtedness heretofore issued under the
authority of the legislature of said territory, as hereinbefore
authorized to be funded, are hereby confirmed, approved, and
validated, and may be funded, as in this act provided, until
January first, eighteen hundred and ninety-seven:
Provided, That nothing in this act shall be so construed
as to make the government of the United States liable or
responsible for the payment of any of said bonds, warrants, or
other evidences of indebtedness by this act approved, confirmed,
and made valid, and authorized to be funded."
Approved June 6, 1896.