People ex rel. Tallant v. Woods

Murray, C. J., delivered the opinion of the Court—Burnett, J., concurring. After a full re-examination of this case, I am satisfied that our former opinion was wrong. The error consisted in assuming [584] that the act to fond the indebtedness of the city, was a simple legislative provision, whereby a fond was provided to secure an antecedent debt, when, in fact, it must be regarded as a law authorizing a contract between the City of San Francisco and her creditors, who surrendered the old indebtedness, which was a present charge against her, and took a new security, or bonds bearing a different rate of interest, in lieu thereof. This transaction between the city and the sctip-holders, was in the nature of a new contract, and having been entered into in conformity with the provisions of a law expressly authorizing the parties to contract in the mode they have, it follows that the law entered into and became a part of the contract, and that it cannot be so altered or amended as to impair or destroy the rights of the parties, or the security, which was the moving consideration between them. We do not mean to say that the Legislature could not alter or amend the law, in such particular as would serve to carry out the trust more fully, provided such amendment did not destroy the fund, or seriously impair the security which the law had offered to the bond-holders. In the present case, the effect of the Consolidation Act, if maintained, would be to withdraw from the hands of the commissioners of the funded debt, a large amount of money, which they are authorized to loan for the benefit of bond-holders, and the direct consequence is to diminish the fund out of which they are entitled to be paid. Such legislation is obnoxious to that provision of the State and Federal Constitution which forbids the Legislature from passing laws impairing the obligation of contracts. Judgment affirmed.