1. The provision of the Constitution of Missouri which
ordains
"The General Assembly shall have no power, for any purpose
whatever, to release the lien held by the state upon any railroad
--"
a provision having reference to the statutory liens held by the
state on different railroads for the credit of the state, lent to
them by the issue of state bonds, the principal and interest of
which the railroad companies were to pay -- was not meant, in case
of a failure by the railroad companies, to prevent the state from
making a compromise with any railroad company of any debt due to it
or to become due, and on the compromise's being effected, to
release the lien.
2. This view of the meaning of the clause is not altered by
reading it in the light of the constitutional ordinance "for the
payment of state and railroad indebtedness," adopted at the same
time as the state constitution and as part of it, which ordinance,
after providing for a sale by the state of any railroad indebted to
it, and for the possible case of a purchase by the state of the
road, provides further for a sale of the road after the state has
so become owner, ordaining in such case
"That no sale . . . shall be made without reserving a lien upon
the property and franchises thus sold . . .
for all sums
remaining due."
This expression is to be regarded not as having reference to
what the railroad company originally owed the state -- that is to
say, reference to the debt for which the road was first sold -- but
to any portion of the purchase money which may remain unpaid upon a
second sale -- a sale by the state, after she has become owner.
3. The provision in the same constitution
"That no law enacted by the General Assembly shall relate to
more than one subject, and that shall be expressed in its
title"
is not violated by any act having various details, provided they
all relate to one general subject.
Hence, where an act was entitled "An act for the sale of the
Pacific Railroad and to foreclose the state's lien thereon, and to
amend its charter,"
held that after certain sections
providing for the sale, a section providing that in certain
contingencies no sale should be made was not a violation of the
constitutional provision.
Murdock and others filed a bill in the court below for an
injunction to restrain Woodson, Governor of Missouri, from
advertising for sale or selling the Pacific Railroad
Page 89 U. S. 352
under an alleged existing statutory lien in favor of the State
of Missouri. The complainants were trustees for the bondholders
upon a mortgage upon the road for $7,000,000, subsequent to the
said lien, and dated July 15th, 1868.
The case was thus:
In 1851, and at various times between that year and 1855, the
Legislature of Missouri passed acts lending its credit to the
Pacific Railroad, a railroad whose line extends from St. Louis to
Kansas City. By the same act, it lent its credit also to two other
roads. The object of the legislation was to secure the completion
of the roads. The form in which the aid was extended was this: the
state made its bonds, some at twenty years and others at thirty
years, promising to pay the amount thereof to the company or its
order. Coupons were attached, and by act of the legislature, the
faith and credit of the state were pledged for the payment of the
interest and the redemption of the principal of the bonds.
The company was, by the act, to make provision for the punctual
payment of the interest and principal of the bonds so issued by the
state, so as to exonerate the state from advances for that purpose.
To secure this undertaking on the part of the company, the act
provided that the net tolls and income of the road should be
pledged for the payment of interest, and that the acceptance of the
bonds by the company
"should become and be, to all intents and purposes, a mortgage
of the road of the company, and every part and section thereof and
its appurtenances, to the people of the state, for securing the
payment of the principal and interest of the sums of money for
which such bonds shall, from time to time, be issued and accepted
as aforesaid."
This was to be the first lien or mortgage upon the road, and it
was further provided by the act that if the company should make
default in the payment of either principal or interest, no more
bonds should be issued to it, and it should be lawful for the
governor to sell the road and its appurtenances, at auction, to the
highest bidder, on six months' notice, or to buy in the same at
such sale for the state,
Page 89 U. S. 353
subject to such disposition of the road or its proceeds as the
legislature might thereafter direct.
Under these provisions as to security, the state issued its
bonds for the benefit of the Pacific Railroad to the extent of
$7,000,000 or upwards.
The company paid the interest on the bonds up to 1st July, 1859,
but since that date, had failed to do so.
In 1864, the road not being completed, the Legislature of
Missouri authorized the company to borrow $1,500,000, payable in
four, five, and six years, and to secure it by a first lien on the
road west of a place called Dresden, the state waiving, for this
purpose and to this extent, its priority of lien. The bonds given
as evidence of this debt were called "Dresden bonds."
In 1865 -- the rebellion being now just closed and the state,
which had been the theater of contending parties among its own
citizens, being left in an exhausted and impoverished way, with its
railroads in many cases more or less torn up or greatly injured,
and the companies to which they belonged in default for what they
owed the state -- the state adopted a new constitution and a
constitutional ordinance, the latter being entitled "For the
payment of state and railroad indebtedness."
This constitutional ordinance was adopted in pursuance of a vote
taken under a statute, which enacted:
"The election shall be by ballot. Those ballots in favor of this
ordinance shall have written or printed thereon the words,
'Shall the railroads pay their bonds? Yes.' Those opposed
to this ordinance shall have written or printed thereon the words,
'Shall the railroads pay their bonds? No.'"
The new constitution thus ordained:
"No law enacted by the General Assembly shall relate to more
than one subject, and that shall be expressed in the title, but if
any subject embraced in an act be not expressed in the title, such
act shall be void only as to so
much thereof as is not so
expressed. "
Page 89 U. S. 354
"The General Assembly shall have no power, for any purpose
whatever, to release the
lien held by the state
upon any railroad."
The constitutional ordinance provided for the levy of a heavy
annual tax -- 10 percent on gross receipts from October, 1864, to
October, 1868, and 15 percent thereafter -- upon the Pacific
Railroad and other roads, to be
"appropriated to the payment of principal and interest now due,
or hereafter to become due upon the bonds of the state, or the
bonds guaranteed by the state issued to the aforesaid railroad
companies."
By the fourth section of the ordinance, it was provided
that,
"Should either of said companies refuse or neglect to pay said
tax as herein required,
and the interest or principal of any of
said bonds, or any part thereof remain due and unpaid, the
General Assembly shall provide by law for the sale of the railroad
and other property, and the franchises of the company that shall be
thus in default, under the lien reserved to the state, and shall
appropriate the proceeds of such sale to the payment of the amount
remaining due and unpaid from said company."
And the fifth section of this ordinance provided that,
"
Whenever the state shall become the purchaser of any
railroad, or other property,
sold as hereinbefore provided
for, the General Assembly shall provide by law in what manner
the same shall be sold for the payment of the indebtedness of the
railroad company in default; but no railroad or other property or
franchises purchased by the state shall be restored to any such
company until it shall first have paid in money or Missouri state
bonds, or in bonds guaranteed by the state,
all interest due
from said company. And all interest thereafter accruing shall
be paid semiannually in advance, and no sale or other disposition
of any such railroad or other property or their franchises shall be
made
without reserving a lien upon all the property and
franchises thus sold or disposed of, for all sums remaining
unpaid, and all payments therefor shall be made in money or in
bonds or other obligations of the state."
In 1866, the road was finished and put in running order
Page 89 U. S. 355
to the west line of the state; but in order to effect this, the
company had in 1865 received aid from St. Louis County to the
amount of $700,000., On the 31st day of March, 1868, the road was
in a bad condition as to repairs and equipments, and the company
owed a floating debt of $1,092,848, an unadjusted debt of about
$200,000, and the first installment of the Dresden bonds, amounting
to $500,000. Of its stock, $3,614,500 was held by citizens and
municipalities of Missouri -- over $2,000,000 by St. Louis City and
County or taxpayers therein.
In this condition of the company as respects its road and its
debt to the state and to others, and with the above-quoted
provisions of the constitution and constitutional ordinance in
force, the legislature, on the 31st of March, 1868, passed an act
entitled "An act for the sale of the Pacific Railroad, and to
foreclose the state's lien thereon, and to amend the charter
thereof."
By section one, the governor was directed to sell the road and
its appurtenances and all the property belonging thereto, in
accordance with the provisions of section five of an act entitled
"An act to expedite the construction of the Pacific Railroad,"
&c., approved February 22d, 1851.
The act then proceeded:
"SECTION 2. Upon a sale of the road as provided in the foregoing
section, the price and sum for which the same shall be sold shall
not be less than $8,350,000, payable to the state treasurer, in the
bonds of this state, or in money, within ninety days from the date
of sale. No bid, except the bid of the governor on behalf of the
state, shall be accepted unless there is paid to the state
treasurer, who shall attend the sale, an amount of not less than
$300,000, in such bonds or money, as a part of the purchase money,
to be paid when the road is stricken off, and such bonds or money
shall be forfeited to the state in case the purchaser or purchasers
shall fail to the amount of the purchase money bid within the time
above provided for."
"If said sum of $8,350,000 is not realized at such sale, the
governor shall, by himself or agent, buy in the same for and in the
name of the State of Missouri. "
Page 89 U. S. 356
"SECTION 4. Upon the payment of all the purchase money, as
specified in section two of this act, and upon the delivery of an
obligation in conformity with section three of this act, the
governor shall execute a deed to the purchaser or purchasers
conveying all such right, title, and interest, in and to said
Pacific Railroad, its franchises, appurtenances, and the property
belonging thereto, as are subject to the lien of this state."
Then followed section five, upon which the principal question
made in this case turned.
"SECTION 5. If the Pacific Railroad shall at any time within
ninety days after the first day of April, 1868, pay into the
treasury of the state the sum of $350,000 in bonds of this state or
in money, then and in that event the governor shall not advertise
said road for sale, and if the company shall, within ninety days
thereafter, pay into the state treasury an additional sum equal to
$5,000,000 in all (the same being either in cash or Missouri state
bonds), the governor shall, upon the production of the receipts of
the state treasurer for said amounts, execute and deliver to the
Pacific Railroad Company a deed of release for all claims, title,
and interest which the State of Missouri has in and to the said
Pacific Railroad, its property and appurtenances, and the said
Pacific Railroad Company shall, from and after the delivery of said
deed, be fully discharged from all claims or debts due the state
and all liability growing out of the issue of the bonds of the
state to aid in the construction of said road, and no sale shall in
any event take place under this act."
"If, however, for any cause, the said company shall be unable to
pay the additional sum as herein provided, the governor shall
proceed to advertise said road; but if the said company shall,
during the pendency of said advertisement, pay into the state
treasury the additional sum, with interest thereon from the first
day of October, 1868, at the rate of six percent per annum, then
and in that case no sale of said road shall take place and the
governor shall execute and deliver to the said Pacific Railroad
Company the deed of conveyance and release provided for in this
act, and the said Pacific Railroad Company shall be exempt from all
the liabilities and obligations herein specified; but in case the
said company shall, after the payment of $350,000 above stated,
fail to pay the additional sum specified (being the
Page 89 U. S. 357
remainder of the $5,000,000), then and in that case the sum
first paid shall be forfeited to the state."
The company within the ninety days paid into the state treasury
the $350,000, and within ninety days thereafter the balance of
$5,000,000, and received a deed from the governor in pursuance of
the act releasing and discharging it and its property from all
liens and claims on the part of the state, and from all liabilities
growing out of the issue of the bonds of the state to aid in the
construction of its road. The governor's deed was made July 1,
1868.
In order to take up the "Dresden bonds" and to raise the
$5,000,000 to be paid to the state and to put its road in repair,
the company, on July 15, 1868, made a mortgage to Murdock and
others (the complainants in the case), as trustees, to secure
$7,000,000 of bonds. This mortgage recited the Act of March 31,
1868, and it was the professed intention to make it, after the
payment of the $5,000,000 to the state, and upon the payment of the
Dresden bonds, a first lien on the entire Pacific road, its
property and franchises. Subsequently, on July 1, 1871, a second
mortgage was made by the company for $3,000,000, the proceeds of
which it is alleged were exclusively used in improving the road and
in purchasing rolling stock. Both of these mortgages were
outstanding and unpaid, as also another mortgage for $800,000,
secured upon certain lands in St. Louis, purchased for a
station.
In March, 1873, the General Assembly of Missouri adopted a
concurrent resolution reciting that grave doubts had arisen as to
the constitutionality of the Act of March 31st, 1868, just quoted,
and directing proceedings to protect and enforce all the rights and
claims of the state against the road.
Upon this authority, the governor advertised the road and its
appurtenances for sale under the original statutory lien in favor
of the state. This proceeding on the part of the state authorities
assumed that the fifth section of the Act of March 31, 1868, was
unconstitutional; that the statutory lien of the state was yet in
full force, and that it was the first lien on the Pacific road, its
property and appurtenances.
Page 89 U. S. 358
If this assumption was well founded in point of law, then, of
course, the proposed sale, if made, would cut off the mortgage to
Murdock and the others (the complainants), and the rights of the
holders of the $7,000,000 of bonds secured thereby. On the other
hand, if the said fifth section was not unconstitutional, then the
state had no lien to be enforced, and the proposed sale, if made,
would be wholly nugatory.
The controlling question in the case, therefore, was whether the
said fifth section violated either provision of the constitution or
violated the constitutional ordinance of the state, as all are
above quoted.
It was insisted:
1st, and in regard to the merits, that the transaction
authorized by the said section, and carried out under it, evaded
that provision of the constitution which ordained that "the General
Assembly shall have no power whatever to release the lien held by
the state upon any railroad." And that the transaction did evade
the said provision of the constitution, it was argued, was made
more obvious by the provisions in the fifth section of the
constitutional ordinance, that when the state sold any railroad for
debt due the state and bought it in, and afterwards sold it, it
should not be sold "without reserving a lien upon all the
property &c., thus sold, for all sums remaining
unpaid;" a provision which the counsel insisting on it,
interpreted as meaning all those sums "remaining unpaid," at the
time when the sale was made by the state,
in the first
instance, and not as meaning those sums which might remain
unpaid after making any cash payment on the occasion of the second
sale --
i.e., the sale made by the state after she had by
the first sale herself become the owner.
2d, and on grounds more technical, that the said section was
unconstitutional, because it made the act in which it was, relate
to more than one subject; the subject presented by the said section
not being the one embraced in the title.
This title, as the reader will remember, was "An act for
Page 89 U. S. 359
the sale of the Pacific Railroad, and to foreclose the state's
lien thereon, and to amend the charter thereof."
The court below decided that the said section was not
unconstitutional by reason of either objection urged against
it.
1st. That the transaction under consideration was in effect a
sale of the state's interest to the company for $5,000,000; that
the legislature had the power to order a sale, and, not being
restrained by the constitution, it necessarily had the power to fix
the price and terms of the sale.
2d. That only the general purpose (which was to be a single one)
of the act needed to be expressed in it was its title, and that
this had been sufficiently done in the present case.
An injunction against a sale by the governor was accordingly
decreed. From that decree he took this appeal.
Page 89 U. S. 365
MR. JUSTICE STRONG delivered the opinion of the Court.
It has not been contended here that the complainants are not
entitled to the injunction decreed by the circuit court, if the Act
of the Missouri Legislature, approved March 31, 1868, was a
legitimate exercise of the legislative power. But it is insisted
that the fifth section of that act is in conflict with the
constitution of the state, and therefore that the arrangement made
under it with the Pacific Railroad Company cannot be held to
operate as a discharge of the company from the debt due by it to
the state, or as a release of the railroad from the lien of the
state's mortgage. The question presented, then, is this: was the
fifth section of the act mentioned prohibited by the constitution
of the state? By the first section, the governor was directed to
sell the Pacific Railroad and its appurtenances, in accordance with
the provisions of section five of the act, and of an Act approved
February 22, 1851, entitled "An act to expedite the construction of
the Pacific Railroad and the Hannibal and St. Joseph Railroad." By
the second section the price for which the railroad was directed to
be sold was required to be not less than $8,350,000 payable to the
state treasurer, in bonds of the state or in money, within ninety
days from the day of sale. If that sum was not obtained the
governor was required to buy in the railroad for the state. By the
third section it was made a condition of the sale that the
purchaser or purchasers should bind himself or themselves to change
the gauge of the road within ten years from the date of sale, so as
to conform to the gauge of the Union Pacific Railroad. The fourth
section enacted that upon the payment of all the purchase money,
and upon
Page 89 U. S. 366
the delivery of an obligation, in conformity to the requirement
of the third section, the governor should execute a deed to the
purchaser or purchasers conveying all such right, title, and
interest in and to the said Pacific Railroad, its franchises,
appurtenances, and the property belonging thereto as were subject
to the lien of the state. Then followed the fifth section, which is
the one mainly in contest. It enacted that if the Pacific Railroad
Company should, at any time within ninety days after the 1st day of
April, 1868, pay into the treasury of the state the sum of
$350,000, in the bonds of the state or in money, then, and in that
event, the governor should not advertise the road for sale; and if
the company should, within ninety days thereafter, pay into the
state treasury an additional sum equal to $5,000,000 in all (either
in cash or in Missouri state bonds), the governor should, upon the
production of the receipts of the state treasurer for the said
amounts, execute and deliver to the said Pacific Railroad Company a
deed of release for all claims, title, and interest which the State
of Missouri had in and to the railroad, its property and
appurtenances, and that the Pacific Railroad Company should, from
and after the delivery of the deed, be fully discharged from all
claims or debts due the state, and all liability growing out of the
issue of the bonds of the state to aid in the construction of their
railroad.
Within ninety days after the passage of this act, the company
paid into the state treasury $350,000, and within ninety days after
such payment $4,650,000 more, in all $5,000,000, the sum specified
in the fifth section, and received from the governor a deed
conveying all the right, title, and interest of the state, and
discharging it from all liens and claims of the state, and from all
liability growing out of the issue of state bonds to aid in the
construction of its road.
That this was a compromise of the claims of the state against
the company; practically, a sale to the company of the state's
interest growing out of its advance of state
Page 89 U. S. 367
bonds under the statutes of 1851, and the following years, is
very plain, and such was its obvious intention. The principal of
the debt was not then payable. The bonds issued by the state had
not then fallen due. All of them were either twenty or thirty-year
bonds, and the company was under no obligation to pay the principal
until the bonds became payable. The extent of her obligation was
measured by the provisions of the Act of 1851. That act required
the company to make provision for the payment of the principal and
interest of the bonds in such manner as to exonerate the state from
any advances of money for that purpose, and, had the interest been
paid up to 1868, the state could then have exacted no more. The
interest, it is true, was in arrears from July 1, 1859. To that
extent the state had an immediate claim upon the company, but as
the whole debt, according to the agreed statement of facts, was
$7,000,000, the aggregate of unpaid interest in 1868 was less than
$4,000,000. The arrangement then made, by which $5,000,000 was
received in full satisfaction, and the deed given, included,
therefore, not only interest due, but principal which had not
fallen due, and, hence, it may properly be regarded as a
commutation or a sale of the rights of the state to the
company.
We come then to the question whether anything in the
constitution of the state prohibits such a transaction. A new
constitution was adopted in 1865, the fifteenth section of the
fourth article of which is as follows: "The General Assembly shall
have no power, for any purpose, to release the lien held by the
state upon any railroad." This provision, it is insisted by the
appellants, denied to the legislature the power to make such a
disposition of the interests of the state as was made in 1868 in
virtue of the fifth section of the Act of March 31 of that
year.
The language of the prohibition is remarkable. It is not that
the General Assembly shall not release the
debt due to the
state by any railroad company. Legislative control over the debt is
left untouched. The provision has reference only to a security for
the debt. Had it been intended
Page 89 U. S. 368
to put the debt beyond the disposition of the legislature, it
would be difficult to find a reason for confining the prohibition
to a release merely of the lien. But it is easy to see why it
should be ordained that while the debt remained, the security for
it should not be given up. And that such was the intention appears
quite plainly in view of the state of things which existed when the
constitution was framed and adopted. Prior to its adoption it may
be said to have become almost a legislative habit to release the
liens held by the state upon railroads without discharging the
debts. In numerous cases statutes had been enacted by which
railroad companies were authorized to borrow money, and to mortgage
their roads as security for the loans, the state releasing its
lien, to give the mortgagees a priority. The purposes for which
these releases were made were various, and they were generally
avowed in the statutes. Thus, in 1864, the legislature released the
state's lien upon a part of the Pacific road, avowedly for the
purpose of enabling the company to complete its main road to Kansas
City. At the same time the lien of the state on the North Missouri
Railroad was released for several avowed purposes -- to enable the
company to complete their main road to the Iowa state line; to
enable the company to construct its west branch; and to enable it
to build a bridge across the Missouri River. And again in 1865,
February 16, the legislature released the first lien of the state
upon the road of the same company for the same purposes, retaining,
however, a second lien. All this took place very shortly before
the
brk:
constitution was adopted. That such releases were contemplated
when the convention framed the constitutional inhibition, and when
the people ratified it, can hardly be doubted. The constitution was
plainly intended to prohibit them, and therefore language was
employed denying the power to release the lien, and saying nothing
of the debt. Certainly there is no expressed restriction of
legislative power over the debt itself. If any exists, it must be
supplied by implication. Keeping in mind, then, that the
constitutional prohibition is directed only against a release of
liens, what
Page 89 U. S. 369
should be regarded as its meaning? We agree it is not to be
frittered away by doubtful construction, but like every clause in
every constitution it must have a reasonable interpretation, and be
held to express the intention of its framers. It must be held to
have been intended for the public protection, for the preservation
of the public property, and to make available claims the state held
against railroads. But if it is to be construed reasonably, and in
accordance with what must have been the intentions of those who
adopted it, it cannot be construed literally. It cannot mean that
the lien of the state upon a railroad shall not be released upon
full payment of the debt, to secure which the lien was created. If
it does, it is equivalent to a prohibition against the state's
receiving payment. Surely it will not be contended to deprive the
legislature of power to make use of the lien to enforce
satisfaction of the debt, though thereby the lien be discharged.
That would be to destroy the value of the lien. Nor can it mean
that the lien may not be employed to obtain from the property bound
by it all that the property is worth and all that the indebted
company can pay, though that be less than the entire amount of the
debt. It is not a restriction upon the power of the legislature to
make the most which in its judgment is possible from the security.
In terms the legislature is left unrestricted as to the mode of
receiving payment, or settling with its debtors. Composition,
accord and satisfaction, and full payment in cash are left within
the legislative discretion, at least so far as the liquidation of
the debt is concerned. So there is nothing in the clause of the
constitution quoted which can be regarded as a restriction upon the
power of the legislature to sell any claims held by the state
against a railroad company. It is not an ordinance that the
legislature shall not deal with debts due to the state from
railroad companies as it may deal with debts due from other
debtors. It is that the lien shall not be released
for any
purpose whatever, that is, for the accomplishment of any
object the legislature might have in view, and unless we can hold
this means it shall not be released even by full payment of the
debt, it
Page 89 U. S. 370
can mean no more than this that while the debt remains, the
legislature may not let go the security for it. Such a construction
accounts for the peculiarity of the language employed. There is a
very palpable distinction between the lien which the state holds
upon a railroad and the debt, obligation, or duty which the lien
was created to secure. The two could not have been confounded by
the framers of the constitution. If it was intended that, under all
circumstances, every dollar due from a railroad company should be
exacted, and that no settlement should be made, or sale authorized,
without payment of the uttermost farthing, it is incredible that
the constitution would not have so declared. That such was not the
intention is plainly shown by the railroad ordinance adopted with
the constitution, and a part of the organic law of the state. By
that ordinance the legislature was authorized and directed to sell
the railroads on their failure to pay a tax levied, and when the
sale should be made to others than the indebted companies, no
limitation was directed to be affixed to the price, and such a
sale, we have no doubt, would have discharged the road from the
state's lien. The state itself was empowered to become a purchaser
at the sale at any price at which it could buy, and whenever it
purchased, the lien, of course, was merged in the title, and the
General Assembly was required to provide by law in what manner the
railroad, or franchises, or other property, should be sold for the
payment of the indebtedness of the company in default. But the
ordinance does not require that at such sale the purchaser from the
state shall pay the full amount of that indebtedness. A lien is
required to be reserved for all sums remaining unpaid -- that is,
very clearly, for all that part of the purchase money from the
state at her sale which remains unpaid. If this is not the meaning,
the state may never be able to sell at all, and the plain purpose
of the ordinance may be entirely frustrated. And that such is its
meaning has been determined by the Supreme Court of Missouri.
[
Footnote 1] The fifth
Page 89 U. S. 371
section of the ordinance does, indeed, require that no railroad
or other property, or franchise purchased by the state shall be
restored to the company in default until it shall have first paid
in money, or in Missouri state bonds, or in bonds guaranteed by the
state, all interest due from said company, and requires that all
interest coming due thereafter shall be paid semiannually in
advance; but even this is no assertion that such a restoration
shall not be made for a sum less than the original indebtedness.
Whether it may or not it is unnecessary to decide, for the
provision applies only to a case where the road has been sold, and
where the state has become the purchaser, which is not this
case.
Neither the clause in the body of the constitution, therefore,
nor any provisions of the railroad ordinance forbid the legislature
to sell the railroad, or compromise the debt claimed by the state,
for less than the entire indebtedness. It follows, then, that
though the legislature had no power to release the lien while the
debt remained, it was not prohibited from selling the claim or
commuting the debt. And there is no inconsistency in this. The
legislature may well have been trusted with the management of the
obligation, responsible only to its constituents, while the
security for the fulfillment of the obligation may have been
withdrawn from its control. A trustee may have no right to give up
a security for a claim, and yet be at full liberty to settle and
adjust the claim itself or to sell it. It need hardly be added that
if the legislature had power to accept a commutation of the claim
of the state, or to sell the debt for what in its judgment it
deemed best for the public interests, it had also power to make a
formal relinquishment of the lien after the debt had been
liquidated. The constitutional provision was not designed to
continue in existence liens that the law had extinguished.
For these reasons, we hold that the fifth section of the Act of
the legislature of March 31, 1868, was not in conflict with that
provision of the constitution which forbids, for any purpose
whatever, a release of the lien held by the state upon any
railroad.
Page 89 U. S. 372
Nor do we perceive that there is any conflict between it and the
railroad ordinance. The appellants insist that the ordinance
forbids any sale of a defaulting railroad except at public auction
for a price equal to the full amount of the debt of the defaulting
company and without a reservation of a lien upon the property sold,
not merely for the unpaid part of the purchase money, but for all
that remains unpaid of the debt for which the property is sold.
Such is not our reading of the ordinance, nor is it that of the
supreme court of the state. We have already said that the lien
required to be reserved is only to secure the unpaid balance of the
purchase money. This is too clear for argument. It is equally clear
to us the ordinance does not require that the sale shall be for a
price equal to the whole debt, or that it shall be at public
auction. The first, second, and third sections impose upon each of
three railroad companies, of which the Pacific Railroad Company is
one, an annual tax of ten percentum of the gross receipts for two
years and fifteen percentum thereafter until the principal and
interest of the bonds for which the companies were liable should be
fully paid. Then followed the fourth section, as follows:
"Should either of said companies refuse or neglect to pay said
tax as herein required, and the interest or principal of any of
said bonds or any part thereof remain due and unpaid the General
Assembly shall provide by law for the sale of the railroad and
other property, and the franchise of the company that shall be thus
in default, under the lien reserved to the state, and shall
appropriate the proceeds of such sale to the payment of the amount
remaining due and unpaid from said company."
There is nothing in this which takes away from the legislature
the power to determine the time, the manner, or the price of the
sale which it was directed to cause to be made. It is true the sale
is ordered to be made under the lien reserved to the state,
referring doubtless to the mortgage taken under the Act of 1851,
and it is also true that by that act it was enacted that if either
of the companies to which bonds might be issued should make default
in the payment of either principal or interest of the said bonds,
the
Page 89 U. S. 373
governor might sell their road by auction, giving six months'
notice, or buy it in for the use of the state, but these provisions
were no part of the lien. They were means specified for enforcing
it. The legislature was at liberty to provide other means of
collecting the debt and enforcing the lien. The sale directed by
the ordinance was for nonpayment of the tax imposed, and the
direction to sell under the lien reserved was simply an order to
proceed to collect the mortgage. The lien is not to be confounded
with proceedings for its foreclosure.
Finally it is insisted by the appellants that the fifth section
of the Act of 1868 is unconstitutional because its subject is not
embraced in the title of the act and because the constitution
ordains that
"No law enacted by the General Assembly shall relate to more
than one subject, and that shall be expressed in the title, but if
any subject be not embraced in the title, such act shall be void
only as to so much thereof as is not so expressed."
The title of the Act of 1868 is "An act for the sale of the
Pacific Railroad and to foreclose the state's lien thereon, and to
amend the charter thereof." That the subject of the fifth section
is embraced in this title is very apparent. If the subject is not
the foreclosure of the state's lien, it is impossible to say what
it is. And we think it cannot be justly said the act embraces more
than one subject. It has many details, but they all relate to one
general subject, which is the sale of the railroad and the
foreclosure of the state's lien thereon. [
Footnote 2]
We cannot sustain this objection.
Nothing, then, in our judgment, warrants the conclusion that the
fifth section of the Act of March 31, 1868, was not a legitimate
exercise of the legislative power of the general assembly of the
state. It follows that the arrangement made in pursuance of it with
the Pacific Railroad Company, and the deed of the governor to the
company, extinguished the debt due to the state, and consequently
put an end to the lien.
Page 89 U. S. 374
The $5,000,000 paid to the state were raised upon bonds of the
company and a mortgage, of which the complainants in the court
below are trustees. The money was advanced on the faith of the
legislation of 1868, and so were $3,000,000 more, for which a
subsequent mortgage was given. If that legislation was not
unconstitutional, as we have endeavored to show it was not, it
would be a gross wrong to the bondholders who thus advanced their
money, were the defendants permitted to sell the railroad, its
property, and franchises, for the satisfaction of a claim or lien
which has no longer any existence.
Decree affirmed.
[
Footnote 1]
See 37 Mo. 129.
[
Footnote 2]
Cooley's Constitutional Limitations 141
et seq.
MR. JUSTICE MILLER, with whom concurred Mr. Justice DAVIS,
dissenting.
I cannot agree to the judgment of the Court, and think the
principle involved of sufficient importance to justify an
expression of my views.
For many years previous to the late civil war, the principal
railroads in the State of Missouri had been the objects of the
special care of the people, and had received large pecuniary aid
from the state. This aid had been given at various times and in
divers sums, in the shape of the bonds of the state, to the extent,
in the aggregate, of twenty-five millions of dollars or more. For
these sums, which were treated as loans, the railroad companies had
consented to statutory liens in the nature of mortgages, with
conditions to pay the bonds of the state, interest and principal,
as they fell due. If the terms of the loan were not precisely as I
have stated in all cases, they were substantially so, and any
variations in special instances do not affect the question under
consideration.
The State of Missouri was, almost as much as any state in the
Union, the seat of the worst calamities of that war. Its people
were divided among themselves; regular armies marched and
countermarched over its soil, and each side used or abused the
railroads to their utmost capacity when within their control. But
above all the local guerrilla
Page 89 U. S. 375
warfare, to which the disputed control of her territory and the
divided allegiance of her people subjected them, was the cause of
immense destruction and damage of her railroads. These companies
therefore emerged from the war with their roads in a state of
repair which hardly admitted of use and the rolling stock so
deteriorated that new supplies were indispensable. Their credit was
low, their means exhausted, and their property apparently worth but
little. They were unable to meet their obligations to the state,
and were largely in arrears for the interest on the state
bonds.
The state itself was in little better condition. To the heavy
burdens of increased taxation imposed by the federal government to
support the war and pay its debt was now added the necessity of
paying the interest on the large debt of the state incurred in aid
of the railroad companies.
The question forced itself upon the people of the state and the
railroad companies what is to be done in this emergency? The people
of the state felt the injustice in their overburdened condition of
being called on to pay, without aid from the corporations, the debt
incurred for their benefit, and this hardship was not diminished by
the consideration that the roads were owned and controlled by
stockholders, very few of whom were citizens of Missouri. The
railroad companies felt that if their roads were to be made capable
of accomplishing the purpose of their creation, all their means and
all their credit must be devoted to repairing and rebuilding the
roads and refurnishing the rolling stock.
The railroad companies and that part of the people of the state
who felt a stronger interest in the roads appealed to the
generosity of the legislature to relieve the roads from the burden
of the debt to the state. Those who believed that the credit of the
state and the relief of the people from the burden of excessive
taxation were of paramount importance thought the state should
relieve herself as far as possible by enforcing her lien at the
expense of the stockholders, and by sale of the roads, realize all
they would bring, and, appropriating this to the payment of the
bonds of the
Page 89 U. S. 376
state, diminish to that extent the taxation necessary to pay the
interest on her large public debt.
The appeal for leniency to the railroad companies had many and
able advocates, and was warmly urged by them and assisted by all
the appliances which that class of corporations use with so much
effect. The legislature had in several instances released liens
altogether on some roads, and had postponed liens to let in
subsequent ones, thus showing what might be expected of that
body.
It was in the midst of the discussion of this question that the
members of the constitutional convention of 1865 were elected, and
in the face of the difficulties which it presented that the
convention assembled.
They took cognizance of the matter. They understood that they
were expected to adopt some plan of relief, and whatever plan was
adopted must be based mainly, if not exclusively, on one or the
other of the two propositions we have named. We are now called upon
to give judicial construction to what they did, and, by all the
rules of sound interpretation, it must be done in view of the
condition of affairs which their action was intended to relieve and
of the public sentiment which they intended to represent.
It was very clear then, it is equally clear now, looking alone
to what was incorporated into the constitution by that convention,
that it wholly rejected the idea of leniency to the railroad
companies and that its sole care was to conserve the pecuniary
interest of the state.
As the constitution stood when the convention assembled it was
in the power of the legislature -- of any legislature -- at any
time, under the pressure of any influence, to release the lien of
the state on the roads, or to make any other compromise of the
claim of the state. If the convention was fully determined against
this policy, it was their first duty to take this power from the
legislative body altogether. The first thing to be done was to
forbid the legislature from granting this relief. In the effort to
carry out this purpose the convention placed in the body of the
constitution, article IV, section 15, the declaration that "the
General Assembly
Page 89 U. S. 377
shall have no power
whatever to release the lien held
by the state upon any railroad."
It seems to me strange that this provision should be the subject
of a divided opinion as to its meaning. The release here meant
could not have been the execution of a technical instrument called
a release. No such absurdity can be imputed to the convention,
because if the debt was paid, or otherwise discharged, so that the
lien no longer existed, the making of such an instrument was of no
value to anyone. The thing prohibited was the discharge or
remission in any shape of the specific lien which the state had on
the roads for the repayment of the bonds she had advanced or loaned
to the companies. To make this more emphatic all power whatever on
this subject was taken away. No pressing exigency, no motive,
however pure or generous, and no consideration even of pecuniary
wisdom in which the legislature might indulge, or believe, was to
justify this discharge of the lien which the state held as security
for her advances. How can it be maintained in the face of this that
while the legislature could not release from motives of grace, and
for the purpose of a gratuity, it could release on a purpose of
compromise by accepting one-third or one-half of the debt secured
by the lien? If one-third could be accepted, then one-tenth. If
five millions could be accepted when ten were due, then five
dollars could be accepted. It is to be borne in mind that we are
considering the constitutional power of the legislature to release
the lien, and on this question we are not at liberty to consider
whether it acted wisely or reasonably. If they could release at
all, or for any consideration, the court cannot say they have
exceeded their power. But the constitution seems to place all this
beyond question by saying it shall not have any power
whatever to do this thing.
The work of the convention was, however, to be submitted to a
vote of the people. If it received a majority of the votes cast, it
became the fundamental law of the land. Otherwise it passed for
nothing. Other propositions were submitted separately, and might be
adopted or rejected
Page 89 U. S. 378
without hazarding the whole instrument. But so important did the
convention deem this provision that they put it into the body of
the new constitution, so that the latter could not be adopted
without including the former.
If, however, the question of releasing the road from its debt to
the state was thus settled in the negative, there still remained
the question of the present enforcement of the lien by sale or
otherwise. This question was left by the convention to a vote of
the people in a separate ordinance, which might be adopted or
rejected without defeating the constitution itself, but which, if
adopted, became part of the constitution.
Both the constitution and this ordinance were submitted at the
same time, and both were adopted and became part of the fundamental
law of the land at the same time. This ordinance throws a flood of
light on the intention of the men who framed the constitution in
adopting the section we have just discussed. It imposed a tax of
ten percent on the gross receipts of the three principal roads from
October, 1864, to October, 1868, and fifteen percent thereafter; to
be devoted to the payment of the principal and interest of the
bonds loaned by the state, and it required that if either of said
companies neglected or refused to pay said tax, the General
Assembly should provide by law for the sale of that road. The fifth
section of this ordinance is as follows:
"Whenever the state shall become the purchaser of any railroad
or other property or the franchises sold as hereinbefore provided
for, the General Assembly shall provide by law in what manner the
same shall be sold for the payment of the indebtedness of the
railroad company in default; but no railroad or other property or
franchises purchased by the state shall be restored to any such
company until it shall have first paid, in money or in Missouri
state bonds, or in bonds guaranteed by this state, all interest due
from said company, and all interest thereafter accruing shall be
paid semiannually in advance, and no sale or other disposition of
any such railroad or other property or their franchises
Page 89 U. S. 379
shall be made without reserving a lien upon all the property and
franchises thus sold or disposed of, for all sums remaining unpaid,
and all payments therefor shall be made in money or in the bonds or
other obligations of this state."
The manner in which this ordinance was put to the people is
significant. The ballot was to be, "Shall the railroads pay their
bonds? Yes." "Shall the railroads pay their bonds? No." The former
was a vote for adopting the ordinance; the latter was a vote
against it. It is thus seen that if this ordinance was adopted,
both the convention and the people were in earnest in their
determination not to release any claim the state had in those
companies. The peculiar provision of the above section makes this
very clear. If the state became the purchaser, the legislature
should provide for the manner of its resale; but in no event was it
to be restored by resale or otherwise to the company who had owned
it until that company had first paid in money, or bonds of the
State of Missouri, all the accrued interest due from said company,
and all interest thereafter to accrue was to be paid in advance
semiannually. It was also provided that no sale or other
disposition of such railroad should be made without reserving a
lien upon all the property and franchises thus sold or disposed of
for all sums remaining unpaid.
The sale or disposition here spoken of had reference to a sale
to other parties than to the defaulting company. And even in that
case, the ordinance provided that none should be made which did not
secure the state for all her liabilities on account of the road.
The clause can have no other meaning but this, though it is ably
argued that it means such part of the consideration of the new sale
as may be on credit. But, taking the constitutional provision, the
prohibition in the ordinance against a restoration of the roads
without payment of what is due, and security for what is to become
due, it seems to me hardly to admit of a doubt that
in no
event was the road to pass from the control of the state
without security against any loss by reason of these bonds. But
however this may be, the constitutional prohibition
Page 89 U. S. 380
against releasing the lien, the provisions of the ordinance for
the levy of a severe tax on the gross receipts, the direction for a
sale if it was not paid, and the two provisions against restoration
to the same company until full payment, indicate to my mind the
unmistakable determination of the convention and the people that
the companies should, in the language of the prescribed ballot,
"pay their bonds," -- pay them in full -- or lose their
roads, their property and franchises.
The answer made to all this is, that while the legislature could
not release the lien they could remit the
debt. That while
they could not restore the road to the same company after the state
had bought it in, they could sell to the company the debt which
that company owed the state at any price it chose. That while the
state could not release the lien by any legislative act, it could
compromise or sell the debt, and thus defeat, destroy, or part with
that lien.
It is said if the convention intended to prohibit the
legislature from dealing as it chose with the
debt, it
could easily have said so, instead of using the word
lien.
If the convention had said that the legislature shall have no power
to discharge the
debt without full payment, it could then
be argued with much more force that the
lien might be
released though the debt could not be touched. On the other hand,
so long as the lien remained, the debt must remain, for there could
be no lien without the debt. It seems to me, therefore, that the
convention used the stronger and better term, the one which
included both, and which expressed precisely what they meant --
namely that both the debt and the lien of the debt should remain
inviolate except by payment. If there could be any doubt of this,
the form of submission of the ordinance on which the people voted,
that the "roads should pay their bonds," makes it too clear for
dispute.
But of what avail are constitutional restrictions of legislative
power, or legislative restrictions of municipal power, if they are
disregarded by the legislatures and municipalities?
It may be said that there remains to the people the
protection
Page 89 U. S. 381
of the courts. But language is at best a very imperfect
instrument in the expression of thought, and the fundamental
principles of government found in constitutions must necessarily be
declared in terms very general, because they must be very
comprehensive.
The ingenuity of casuists and linguists, the nice criticism of
able counsel, the zeal which springs from a large pecuniary
interest, and the appeal of injured parties against the bad faith
of the legislatures who violate the constitution are easily
invoked, and their influence persuasive with the courts, as they
always must be.
And if language as plain as that we have been considering, a
purpose so firmly held and clearly expressed is to be frittered
away by construction, then courts themselves become but feeble
barriers to legislative will and legislative corruption, and the
interest of the people, which alone is to suffer, has but little to
hope from the safeguards of written constitutions.
These instruments themselves, supposed to be the peculiar pride
of the American people and the great bulwark to personal and public
rights, must fall rapidly into disrepute if they are found to be
efficient only for the benefit of the rich and powerful, and the
absolute majority on any subject will seek to enforce their views
without regard to those restrictions on legislative power which are
used only to their prejudice.
