Esser v. Spaulding

By the Court, Leonard, J.: This appeal is from an order of the court below, denying appellant’s application for an injunction and dissolving the restraining order made at a prior date, enjoining and restraining respondents from transferring money from the general fund into the salary fund of Nye county. Appellant is a citizen and taxpayer of Nye county. He is the holder and owner of certain certificates of ‘ ‘ Nye county indebtedness,” issued to him and his assignors for jurors’ and — 298 — sheriff’s fees, dated April, 1878. Following is the form of the certificates: “I, James A. Service, county recorder and ex-officio auditor, in and for said county and state, do hereby certify that M. W. Esser has due him from said county of Nye, in the said state of Nevada, the sum of * * * dollars * * * for jurors’ fees of sundry persons, November term, 1877, allowed February 15, 1878, on general fund, being allowances No. 2954, 2980, 2981 and 2987. And I further certify that the above named amount will be paid in the order of its allowance to said M. W. Esser, upon the surrender of this certificate, or to his order, properly indorsed herein. Witness my hand and official seal, this twenty-third day of April, 1878. “[seal.] -JAMES A. SERVICE, “ County Recorder and ex-officio Auditor.” Respondents are the county commissioners, county recorder and ex-officio auditor, and county treasurer. On the first day of January, 1881, and at the time this action commenced (August, 1881), there was an indebtedness against the general fund of about thirty thousand dollars, consisting in part of plaintiff’s claims above mentioned. On the eleventh day of March, 1879, the legislature passed what is called the “salary law” of the various county officers in the several counties of the state, the twenty-third section of which provides that “ whenever there is a surplus in said (salary) fund the board of county commissioners may transfer it to- the general fund; and whenever there is a deficiency the board of county commissioners shall transfer to the salary fund a sufficient sum from the general fund to meet all warrants drawn against said salary fund.” (Stat. 1879, 133.) Under this statute, the officers mentioned therein did not receive salaries until the first Monday in January, 1881. On the sixth day of April, 1881, the board of county commissioners ordered that the auditor be authorized “ to transfer from the general fund to the salary fund.all moneys coming into the general fund, as the same are paid into said general fund, for the purpose of liquidating any deficiency in said salary fund for the quarter ending March 31, 1881, until such — 299 — deficiency is liquidated.” And on the sixth day of July, 1881, a similar order was made to cover any deficiency to that date. In pursuance of orders made between April 6 and August 15, 1881, the auditor' and treasurer transferred to the salary fund from the general fund two thousand six hundred and forty-three dollars, which was all the money apportioned, paid in and belonging to the general fund during that time, and that entire sum was paid out by the treasurer upon warrants drawn on the salary fund. It is admitted that the auditor and treasurer, upon proper orders so to do, will continue to transfer and pay out from moneys that may come into the general fund amounts sufficient to satisfy any deficiency that may exist in the salary fund, and that the commissioners will make such orders if they are not enjoined from so doing. Plaintiff alleges that by reason of the transfer of moneys apportioned and belonging to the general fund the value of the allowances on the same is depreciated and its security diminished; that by reason of the indebtedness due and payable from the general fund there is no surplus money in said fund, nor can there be until plaintiff’s indebtedness is paid. There are other, .allegations in the complaint, which we deem it unnecessary to 'mention. A preliminary injunction, with an order to defendants to show cause why it should not be continued, was issued by the court. The several defendants set up the salary law before mentioned in justification of their acts, and thereupon the order appealed from was made by the court. In the argument- of this case counsel for appellant, in their briefs, cited many cases in support of the propositions that, under the constitution of the United States, states are prohibited from passing any law impairing the obligation of contracts; that an existing law enters into and forms a part of a contract made; that vested rights cannot be disturbed by subsequent legislation. Those decisions are undoubtedly good law, and establish the general propositions stated. But we do not think they are applicable to this case. Briefly stated, it is urged on behalf of appellant that the certificates of indebtedness issued by the auditor under the — 300 — statute (O. L., 2993), together with the statute itself, and the one providing that “ county orders shall be redeemed by the treasurer according to the priority of presentment (C. L., 2988), and all other statutes regulating the time and manner of payment, and affecting the value, of indebtedness against the general fund, in force at the date of the certificates set out in the conSplaint, constituted a contract, by which it was agreed to pay the same out of the general fund, in the order of presentment or allowance, and out of the first moneys in, or to come into, the treasury and apportioned to that fund; and that thereafter appellant had a vested right in that fund and the moneys therein and to come in, under the laws then in force, which cannot be afiected by subsequent legislation detrimental to him, without impairing the obligation of contracts, which is prohibited by the constitution of the United States. It is incumbent upon appellant, before he can invoke this" constitutional prohibition, to show the existence of such a contract as the framers of the constitution intended to protect' against hostile legislation by the several states; and then he must show that the salary law does, in fact, impair the obligation of such contract. We do not think he has shown either. It is not, nor can it be, contended that there is anything in the certificates themselves which even suggests the idea that the county agreed, or intended to agree, that the same amount' .of its,revenue should continue to go into, and remain in, the general fund; or that the statutes regulating that matter should not be changed. Nor is it claimed that in the laws then in force such a contract is expressed. If it exists at all, it is because such a contract is necessarily implied. The rules of interpretation touching contracts, like the one here claimed, are -well settled and stated in Newton v. Commissioners, 10 Otto 561. -X- -x- -x “ ‘ -¿he contract must be shoAvn to exist. There is no presumption in its favor. Every reasonable doubt should be resolved against it. Where it exists it is to be rigidly scrutinized, and never permitted to extend either in scope or duration beyond what the terms of the concession clearly — 301 — require.’ (Tucker v. Ferguson, 22 Wall. 527.) There must have been a deliberate intention, clearly manifested, on the part of the state to grant what is claimed. Such a purpose cannot be inferred from equivocal language.” In 1785 the legislature of Massachusetts passed “ an act for incorporating certain persons for the purpose of building a bridge over Charles river, between Boston aDd Charlestown, and supporting the same during forty years.” In 1792 the-charter was extended to seventy years. The law provided that the company should pay two hundred pounds annually to Harvard college, which was done, and all other duties imposed by the charter were performed by the corporation. In 1828 the legislature incorporated a- company, by the name of “ The Proprietors of the Warren Bridge,” for' the purpose of erecting another bridge over Charles river. In Charles River Bridge v. Warren Bridge, 11 Pet. 427, it was claimed, among other things, that the act for the erection of Warren bridge impaired the obligation of the contract between the state of Massachusetts and the proprietors of-Charles river bridge. The court said (p. 547): “The continued existence of a government would be of no great value if, by implications and presumptions, it was disarmed of the powers necessary to accomplish the ends of its creation. * * * The rule of construction announced by the court (4 Pet. 514) was not con-’ fined to the taxing power; nor is it so limited in the opinion delivered. On the contrary, it was distinctly placed on the ground that the interests of the community were concerned in preserving undiminished the power then in question; and whenever any power of the state is said to be surrendered or diminished, whether it be the taxing power or any other affect-' ing the public interest, the same principle applies, and the rule of construction must be the same.” * * * ‘ ‘Adopting the rule of construction above stated as the settled one, we proceed to apply it to the charter of 1785 — to the proprietors of the Charles river bridge. * * * It confers on them the ordinary faculties of a corporation, for the purpose of building the bridge, and establishes certain rates' of toll, which the company are authorized to take. This is — 302 — the whole grant. There is no exclusive privilege given to them over the waters of Charles river, above or below the bridge; no right to erect another bridge themselves, nor to prevent other persons from erecting one; no engagement from the state that another shall not be erected, and no undertaking not to sanction competition nor to make improvements that may diminish the amount of the income. Upon all these subjects the charter is silent. * * * No words are used from which an intention to grant any of these rights can be inferred. If the plaintiff is entitled to them, it must be implied simply from the nature of the grant, and cannot be inferred from the words by which' the grant is made. ” And it was held that the rules of construction in such cases forbade the implication claimed. In that case it was urged that the obligation of the contract was impaired, because the building of a new bridge diminished the amount the Charles Biver Bridge Company would otherwise have received, while, under the contract, they were entitled to receive tolls from the entire travel; that by the charter there was an absolute, unconditional grant of all the tolls, which a subsequent legislature could not impair. In, this case-the claim is that the revenue la,ws in force at the date of the certificates became a part of the pontract; that the obligation of that contract was impaired by the twenty-third section of the salary law, because it diminished the amount of money in the general fund, while by the prior laws, and consequently by the contract, there was an absolute pledge and grant to the holders of certificates on that fund that the same percentage of the .entire revenue should continue to go into, and remain in, that fund until all the certificates outstanding against it should be paid. In other words, the claim is that the legislature and the county contracted not to do that of which appellant complains, and that the state relinquished its right to control its revenues according to its necessities. The legislature possesses the entire control and management of the financial affairs of the state. (Sangamon Co. v. City of Springfield, 73 Ill. 66; People Ex. Rel. City of Springfield v. Power, 25 Ill. 191; McCauley v. Brooks, 16 Cal. 34.) — 303 — In the last case, referring to McDonald v. Maddux, 11 Cal. 187, the court said: “ By the act of 1854, to fund the floating debt of the county, it was made unlawful to redeem any warrants of the county drawn for indebtedness arising prior to May, 1854, except with funds then, on hand, or which might be received after that date, properly belonging to the previous revenue of the county. The legislature, in this particular, only directed the application of future revenues of the county to certain purposes, and in that respect only exercised an acknowledged constitutional power. By the mandamus the appellant sought to subject to the payment of his warrants of 1853 funds collected in 1856, which belonged to the revenue of the county of the latter year,, and this the court held he could not do under the prohibition contained in the funding act, and observed that there could be no serious question of the power of the legislature to direct in what manner the debts of the county shall be paid, or its funds disbursed, subject to certain well known restrictions.” (And see Youngs v. Hall, 9 Nev. 224.) The power of the legislature to control the revenues of the state has not been relinquished in this case. But if we admit there was a contract, what was its extent ? Only that certificates against the general' fund should be paid out of that fund in the order of presentation or allowance. The salary law does not impair the obligation of that contract, even though it exists, unless it is impaired by the passage of a general law, the effect of which is merely to postpone payment. The contract to pay out of the fund stated in the certificates has not been changed or impaired. It is still incumbent on the county to pay out of the general fund and in the order of presentment or allowance. The language of the court in Charles River Bridge Company v. Warren Bridge, supra, is especially applicable here: “ None of the faculties or franchises granted to that corporation have been «.revoked by the legislature, and its right to take the tolls granted by the charter'remains unaltered. In short, all the franchises and rights of property enumerated in the charter, and there mentioned to have been granted to it, remain unimpaired. But its income is destroyed by the War — 304 — ren bridge, which, being free, draws off the passengers and property which would have gone over it, and renders their franchise of no value. This is the gist of the complaint, for it. is not pretended that the erection of the Warren bridge would have done them any injury, or in any degree affected their right of property if it had not diminished the amount of their tolls. In order, then, to entitle them to relief, it is .necessary to show that the legislature contracted not to do the act of which they complain, and that they impaired, or, in other words, violated that contract by the erection of the Warren bridge.” (See, also, Newton v. Commissioners, supra; Harris v. Shaw, 13 Ill. 463; Elwell v. Tucker, 1 Blackf. 285; Armstrong v. Board of Com., 4 Blackf. 209; Adams v. The Co. of Logan, 11 Ill. 339.) So, in this case, it is at least necessary for appellant to show that the legislature, by the laws in force at the date of these .certificates, contracted not todo what was done by the twenty-third section of the salary law; that is, authorize county commissioners to transfer money thereafter, collected from the general fund to the salary fund, should any deficiency exist in the latter fund, or what is the same thing, pass a law, the effect of which is, in a certain contingency, to put less money in the general fund than would have gone into it under the former law. And again, it is well settled that the constitutional prohibition against the passage of laws that impair the obligation of .contracts “ has no application where the statute in question is a public law relative to a public subject within the domain of the general legislative power of the state, and involving the public rights and public welfare of the entire community affected by it.” ‘ ‘ The framers of the constitution did not intend to restrain the states in the regulation of their civil institutions adopted for internal government. * * The provision of the .constitution ne/er has been understood to embrace other contracts than those which respect property or some object of value, and confer rights which may be asserted in a court of justice.” (Dartmouth College Case, 4 Wheat.; Newton v. Commissioners, supra.) And in East Hartford v. The — 305 — Hartford Bridge Co., it is said: ‘ ‘ The parties to this grant did not by their charter stand in the attitude towards each othei- of making a contract by it, such as is contemplated in the constitution, and so could not be modified by subsequent-legislation. The legislature was acting here on the one part, and public municipal corporations on the other. They were acting, too,, in relation to a public object. * * * From this standing and relation of these parties, and from the subject matter of their action, we think that the doings of the legislature as to this ferry must be considered rather as public laws than as contracts. They related to public interests. They changed as those interests demanded. The grantees, likewise the-towns, being mere organizations for public purposes, were liable to have ther public powers, rights and duties modified or abolished at any moment by the legislature. * * * It is hardly possible to conceive the grounds on which a different result could be vindicated without destroying all legislative sovereignty, and checking most legislative improvements and amendments, as well as over its subordinate public bodies.” Section twenty-three of the salary law does not impair the obligation of contracts. We now come to the question of vested rights. In Humboldt County v. The County Commissioners of Churchill County, this court said: “The legislature undoubtedly has the power to direct that certain claims against the county shall have a preference over all others which are not so situated as to give the holder a vested right to money in, or to come into, the treasury, at the time of the legislative action.” (6 Nev. 38.) What are vested rights? In State Bank v. Knoop, 16 How. 408, Mr. Justice Campbell says: “A captor maybe deprived of his share of prize money, pensioners of their-promised bounty, at any time before their payment. * * Salaries may be reduced; offices having a definite tenure,, though filled, may he abolished ” (except so far as restrained! by the state constitution, 10 Otto 559); “ faculties- may be-withdrawn, the inducements to invest capital impaired and — 306 — defeated without impairing constitutional obligation. * * The multifarious interests of a civilized state must be continually subject to the legislative control. General regulations, affecting the public order or extending to administrative arrangements of the state, must overrule individual hopes and calculations, though they may have originated in its legislation. It is only when rights have vested under laws, that the citizen can claim a protection to them as property. Rights do> not vest until all the conditions of the law have been fulfilled with exactitude during its continuance, or a direct engagement has been made limiting legislative power over and producing an obligation. * * * A plain distinction exists between the statutes which create hopes., expectations, faculties, conditions, and those which form contracts.” In his Const. Lim., 445, Judge Cooley says: “It would seem that a right cannot be considered a vested right, unless it is something more than such a mere expectation as may be based upon an anticipated continuance of the present general laws; it must have become a title, legal or equitable, to the present or future enforcement of a demand, or a legal exemption from a demand made by another.” The legislature of 1879 had an undoubted right and power to direct the application of the future revenues of the several counties, unless deprived of that power by contract. If plaintiff has vested rights, they cannot extend beyond the contract made by the certificates and the statutes, in force at their date; and as to those rights, if such there are, he can claim protection in this action so far only as they are affected by the twenty-third section of the salary law'. Should it be admitted then, that the right to be paid out of the general fund in the order of presentment or allowance, was a vested right that could not be taken away by subsequent legislation, that fact would not entitle appellant to relief,, because the right to be so paid has not been disturbed. It may be, and probably is, true that the payment of his certificates has been delayed by the salary law, and that he has received consequential injury thereby. But against such injuries, arising from a proper exercise of public powers, the law does not protect him. (Cooley’s Const. Lim. 481.) And — 307 — see note, page 482, where, in referring to the Charles River Bridge case, supra, it is said: “The necessary effect would be to decrease greatly the value of the first franchise, if not to render it altogether worthless. But the first charter was not •exclusive in its terms; no contract was violated in granting the second; the resulting injury was incidental to the exercise of an undoubted right by the state, and as all the vested rights of the first corporation still remained, though reduced in value by the new grant, the ease was one of damage without legal injury.” The same is true here, and this faet renders it unnecessary to discuss the question at greater length, except to state that no ordinary creditor of a county acquires any vested right to its revenues, until the money is actually in the treasury. It follows, if a law is passed, as in this case, before money comes into the treasury, which makes other disposition of a part of a certain fund, that the holders of certificates on that fund can acquire no vested light to such moneys, until the provisions of the last law shall have been complied with. We do not deny that, if a state enters into a contract which it has power to make as was the case in McCauley v. Brooks, supra, and Louisiana v. New Orleans, 12 Otto, 204, it cannot impair its obligation by subsequent legislation. The rule in sueh a case is the same as with an individual. But, in ascertaining the terms of a contract affecting the public, nothing can be presumed against the state, and, except as it is plainly bound, the legislative power is unlimited within the restrictions of the state constitution. There is a wide distinction between the certificates in question and court-house and railroad bonds referred to by counsel for appellant. In one case there is no covenant that the laws then existing shall not be changed, or that the same amount of money shall continue to go into the general fund, or remain therein, if the necessities of the state shall require a modification of its financial policy. There is no contract that has been violated. In the other cases there are legislative contracts pledging payment, interest and principal, within stated periods, and making it - the duty of the county commissioners to levy a yearly tax until full payment, and place the proceeds thereof in a separate fund. — 308 — The language used by courts in the last class, of cases is referred to in support of appellant’s position here. The facts being dissimilar, the language and reasoning are inapplicable. If the theory of appellant is correct, then the legislature had not power to change any law that was in force at the date of these certificates, the effect of which would be to reduce the general fund; and all the redemption laws of the state, including that of Nye county, are unconstitutional. At the date of the certificates seventy-five per cent, of the revenues were required to be placed in the general fund. Carrying out appellant’s theory, it would follow, and in fact it is so claimed to be, that no less than that percentage can be allowed to go into that fund, so long as there are certificates outstanding against it which were issued while the requirement above mentioned was in force. Suppose at the date of the certificates, officers had been paid a salary, and it had been the law that, in addition to the seventy-five per cent, of the revenues before mentioned, all fees of officers should be placed in the general fund; that the fees were exorbitant, and the welfare of the state demanded a change. If this theory is correct those fees would have to remain until the whole indebtedness against that fund should be paid, because the'indirect effect of a change would be to delay payment, and thus impair the obligation of the contract, and the result would be to perpetuate legislative errors, or compel the continuance of laws demanded under certain circumstances, but detrimental under others. Such a claim is not supported by the law. The salary law does not interfere with any of plaintiff’s vested rights, and he is presumed to have taken the certificates with the knowledge that the legislature had the power to change the law in any respect, if, in so doing, they did not impair the obligation of any contract or interfere with vested rights. Section 23 of the salary law is not in conflict with section 17, art. IY. of the constitution of this state. The law embraces but one subject and matter properly connected therewith, and the subject is briefly expressed in the title. (Humboldt Co. v. Commissioners of Churchill Co., supra; Youngs v. Hall, supra, and State v. Ah Sam, 15 Nev. 30.) — 309 — It is a general law which has uniform operation throughout the state, and was enacted in obedience to the mandate contained in section 32, art. IV. (Youngs v. Hall, supra; State v. California M. Co., 15 Nev. 254; State v. Con. V. M. Co., 16 Nev. 438.) Our constitution does not forbid the passage of retrospective laws, whether the salary law is of that character or not (State v. Con. V. M. Co., 16 Nev. 404), and the inhibition contained in the constitution of the United States against the passage of any ex post facto law does not embrace civil laws like this. (Cooley’s Const. Lim. 324.) The objection that section 23 takes money belonging to plaintiff and other creditors without “due process of law,” has been sufficiently answered in the preceding discussion. The last objection is that “ section 23 is repugnant to an act entitled 1 an act to authorize the county commissioners in the several counties in this state to loan or transfer surplus money from one fund to another’ ” (Stat. 1881, p. 32), and that the last act repeals section 23 of the former. The object in passing the last named statute was to permit a temporary use of surplus money in any fund, in payment of indebtedness against another fund. But any money so used must be paid back. Section 23 of the salary law requires a permanent transfer from the general fund to the salary fund, to the extent of any deficiency in the latter. Both laws may be enforced. There is no conflict between them. Our conclusion is the same in relation to the ‘ ‘ act concerning the allowance and payment of demands,” etc. (Stat. 1881, p. 25.) The order appealed from is affirmed.-