People ex rel. Manhattan Savings Institution v. Otis

GILBERT, J.: The right of the relator to a mandamxis depends upon the validity of the act of March 12,1880. (Ch. 59.) We are of opinion that the act is invalid for two reasons. 1st. The provision exempting the city of Yonkers from liability on account of the bonds originally issued, after the duplicates shall have been delivered, plainly impairs the obligation of the contracts created by such original bonds. It is not an answer to this objection to say that'the act merely destroys the negotiability of the bonds after a specified time. For that of itself would impair the obligation of the contract. A bond or other obligation payable to bearer is a contract to pay the person who shall be the owner thereof, and who shall present it for payment at the proper time. A statute which exempts an obligor from liability to a person so designated in the bond, changes its legal effect injuriously to the latter, and so impairs its obligation. As well might it be contended that a statute which exempted a maker of a promissory note, putin circulation before the passage of the statute, payable to the payee or order, from liability to an innocent indorsee, did not impair the obligation of the contract. Such legislation not only impairs the obligation of negotiable contracts but in many cases would destroy them altogether. For a transfer of the contract would be equivalent to its cancellation. The transferer could not enforce it, because he had parted with his interest in it, and the transferee could not because the statute had exempted the obligor from liability to him. But the statute of 1880 (ch. 59) does not affect [522] tbe negotiability of the bonds in question. Its language is that, after the delivery of the.duplicate bonds, the city of Yonkers shall be discharged from all liability on the original bonds to the relator, and to all persons purchasing the same after the time referred to, but the lawful owners thereof (if any) shall have a right of action therefor upon the duplicate. This provision preserves the negotiability of the duplicate bonds, but shifts the liability upon the original bonds from the obligor to the first obligee. Surely such an interference with contracts is in the teeth of the constitutional inhibition. We cannot give effect to the direction to issue duplicate bonds, as a provision independent of the exemption of the city from liability on the original bonds, for the reason that the latter is one of the means provided for securing the city against the risk of increased liability incurred by the former. Both provisions are, therefore, inseparably connected. 2d. The statute is a usurpation of power which has been vested exclusively in the judicial department of the government. No doubt the whole law-making power of the State, not expressly or impliedly withheld, has been vested in the legislature. It is equally true, however, that the judicial power of the State has been vested in the courts established by the Constitution, and that the grant of the latter power excludes the right of any other department of the government to exercise the same ¡Dower. The line between legislative and judicial power may not be readily discerned in all cases. But certain tests have been established by common reason and experience. One of these is, that the protection and enforcement of the rights of individual citizens growing out of past transactions belongs to the judicial and are not within the scope of the legislative power. (Cooley Const. Lim., 88, et seq.) Surely the legislature has not the power to pass a statute after the supposed loss of a bond made by an individual, determining the fact of such loss and compelling the obligor to give a new bond to the obligee. Such a statute would not be within the definition of a law, which is “ a rule of civil conduct,” but ought rather to be termed an act of despotic power. Nor would it make any difference whether the statute provided for an indemnity of the obligor or not. The question is one of power only. If the legislature has the power of so acting retrospectively upon the vested rights of citizens, it has it unconditionally. No one [523] I apprehend, would contend for the validity of such a statute. Nor could a double liability so created be enforced except by an infringement of those provisions of the Constitution of the United States and of this State, which declare that no citizen shall be deprived of his property without due process of law. A statute which may produce such a result cannot be upheld. The only question remaining, therefore, is, whether the fact that the bonds in question were issued by a municipal corporation to a savings bank, both of which bodies were incorporated under the laws of this State, makes any difference ih the rule of law applicable to the case. The decision of the Court of Appeals in the case of the People ex rel. Dunkirk, etc., R. Co. v. Batchellor (53 N. Y., 128-140), is conclusive upon this subject. It was there held that municipal corporations might be compelled to enter into contracts for an exclusive public purpose without their consent, but that they could not be when the purpose was private. In answer to the argument that municipal corporations are creatures of the legislature and subject to its control, the court remarked: “ In a certain sense this is true. They are created by the legislature as instrumentalities of the government, and so far as legislation for governmental purposes is concerned, are absolutely subject to its control. * * * It is within the province of legislation to provide for enforcing the performance of contracts when made, but to enforce the making of them by individuals is entirely beyond it. Ye have seen that municipal corporations maybe compelled to enter into contracts for an exclusive public purpose, but they cannot be where the purpose is private. This is equally beyond the province of legislation in the ease*of such corporations as in those of private corporations or individuals.” (P. 140.) It was said on the argument that the issuing of duplicate bonds in the place of others which had been lost, was not an entering into new contracts. Conceding that to be true, it does not affect the applicability of the decision cited. Por the principle of that decision plainly places corporations, in respect to the power of the legislature to compel their action for private purposes against their consent, on the same footing as individual citizens. That principle was again asserted by the Court of Appeals in Horton v. Town of Thompson (71 N. Y., 513, 521-525). Statutes were cited in behalf of the relator as precedents for the act of 1880, but in all of them [524] some mode of judicial inquiry and determination was provided for. That makes a radical distinction between those statutes and the act of 1880. The law, irrespective of the act of 1880, is ample to afford the relator suitable and adequate relief; and we think that such relief should be sought in that way. (Adams Eq., 167; Story Eq. Jur., §§ 82-89; Ches. and O. Canal Co. v. Blair, 45 Md., 102; Farce v. City of Elizabeth, 27 N. J. Eq., 408; N. O., J. and G. N. R. Co. v. Miss. Coll., 47 Miss., 560; and see Lawrence v. Lawrence, 42 N. H., 109.) The order should be reversed with ten dollars costs and disbursements, and an order should be entered denying the motion with ten dollars costs. Dykman, J., concurred; Barnard, P. J., dissented. Order granting mandamus reversed, with ten dollars costs and disbursements, and motion denied with ten dollars costs.