Sharp v. County of Contra Costa

By the Court, Sanderson, J.: The law of contracts, as between private individuals, invoked by the learned counsel for the appellant, does not, as we consider, furnish the rule of decision in this case. Whether a given sum of indebtedness can be satisfied by the bare payment of a less sum, though received as payment in full by the creditor, or whether the remedies existing at the date of a given contract become a part of the contract, and cannot therefore be impaired by subsequent legislation, are questions which we do not find it necessary to discuss in this place. In this case a sovereign is one of the contracting parties ; for the government of the Qounty of Contra Costa is a portion of the State Government, and as against a sovereign there are no remedies except such as the sovereign, in the exercise of that good faith by which all Governments are presumed to be actuated, may accord. The State Government, neither in its general nor its local capacity, can be sued by her creditors or made amenable to judicial process except by her own consent. Her creditors must rely solely upon her good faith as to the time, mode, and measure of payment. (Hunsaker v. Borden, 5 Cal. 290; McCauley v. Brooks, 16 Cal. 34.) At the time the contract was made between Gilman and the State, as represented in the local government of Contra [291] Costa County, no remedies in a judicial sense existed either against the State or county. Oilman entered into the contract with full knowledge that he had no security for its performance on the part of the county except the good faith of the Government. He knew that there was no mode by which the State or county could be coerced to pay through the action of the judicial department. He knew that the State or county could make payment only by the exercise of the sovereign power of taxation, and that there was no higher power by which the exercise of that power for his benefit could be coerced. The subsequent passage of the Act by which persons holding claims against counties were allowed to sue them, when such claims were rejected by the county government, did not at all improve the condition of Oilman or his assignee in this respect, nor add to the obligation of the State or county to pay his claim. A judgment, under that Act, against a county only had the effect of converting a disputed into an audited claim. (Emeric v. Gilman, 10 Cal. 404.) Beyond the entry of judgment the judiciary were not authorized to proceed, and hence in respect to payment, Oilman and his assignee had no higher claim after he obtained his judgment than before, and, as before, was still dependent upon the good faith of the State. His remedy—if remedy it may be called—still lay in the voluntary exercise of the taxing power by the State. In other words, the State, by reason of her sovereignty, still held control of the question of payment as to all its incidents of time, mode and measure. By the passage of the Funding Act of 1855 (Statutes 1855, p. 9,) the State made provision for the payment of the debts of Contra Costa County created prior to the 1st day of February of that year, to which class belonged the claim in suit. The Act was the exercise of legitimate and unquestionable power on the part of the Legislature. (Hunsaker v. Borden, supra.) As already shown, the State had the power to pay or not as she pleased, and of course to determine the time, mode and measure of payment. This she did by passing the Funding Act, and in [292] passing it she fully vindicated her good faith, and left all claimants for whom provision was made in that Act without any further claims upon her. She provided that their claims should be met and satisfied in a particular way, and in no other. While claimants were not compelled to fund, yet they were told that payment would be made in no other way. In view of this language, claimants were bound to fund, or forego all further claims founded upon any supposed legal or moral obligation to pay them resting upon the State. If parties who failed to fund made any further claim for payment, they could not invoke the good faith of the State, but must rely entirely upon her generosity. Whatever the State might do for them would be entirely ex gratia, and without the color of legal or moral obligation, for every duty, in that respect, cast upon the State, had been performed by the passage of the Funding Act. By not funding and taking his pay in thé mode provided in the Funding Act, Gilman forfeited all further claim upon the good faith of the State, and the subsequent passage of the Act of the 14th of March, 1860, (Statutes 1860, p. 94,) was in all respects ex gratia. Instead of the State being obnoxious to the charge of bad faith, or an attempt to avoid full payment of a just claim, she is entitled to the doubtful praise of having provided for and paid a claim no longer supported by any foundation in equity or good conscience. Instead of the acceptance of the sum offered by the State in that Act, in full satisfaction of the claim, being a nudum pactum on the part of the plaintiff, the offer was a nudum pactum on the part of the State, and the plaintiff, instead of being the victim of republican ingratitude, is an example of republican generosity. Judgment affirmed. Mr. Chief Justice Currey expressed no opiniqn.