State ex rel. Attorney General v. Miller

Norton, J. — This is a proceeding in the nature of quo warranto exhibited by the Attorney-General on behalf of the State, to the St. Louis circuit court; in which it is alleged that defendants, without warrant, and in violation of law were engaged in selling lottery tickets under a pretended franchise, and praying that they be required to appear and show by what authority they were acting. Defendants appeared and alleged in their answer that by virtue of a contract entered into on the 1st of June, 1842? by on e Gregory with the trustees of the town of New Franklin, and a modification thereof made' on, the 11th of April? 1849, as ratified by an act of the General Assembly, passed in December, 1855, they were fully authorized to enjoy the privilege of selling tickets and conducting a lottery in the State till the year 1877, they having acquired by purchase and assignment from the representatives of said Gregory all the rights accruing to him under said contracts. It was also averred that the General Assembly passed an act in 1833, incorporating the town of New Franklin, in which it was provided that it might, through its trustees, raise by lottery the sum of $15,000, for the purpose of building a railroad from said town to the Missouri river;- that in 1835 another act was passed authorizing the* said trustees to contract with any person to Imve said lottery drawn, in any part of the United States, on such terms as they might consider the most advantageous; also another act, — 339 — passed in 1839, whereby the trustees were empowered to apply the proceeds of said lottery in constructing a macadamized, instead of a railroad; that it was also provided by this act that the Governor might, by proclamation, authorize the trustees to raise by lottery a sum not exceeding $15,000 to complete the work; that under a proclamation thereafter issued by the Governor, giving the requisite authority, the said trustees, on the 1st of June, 1842, made a contract with one "Walter Gregory, by which they sold and transferred to him the said lottery privilege and all right to control the same, and appointed him the sole manager thereof, in consideration of which the said Gregory agreed to assume the management of said lottery and to pay the trustees, in installments, $250 on the first day of January,-1843, $250 on the first day of June, 1843, and so on, paying the sum of $250 semi-annually till the said sum of $15,000 was fully paid; that the said Gregory further agreed to pay all expenses, costs and charges growing out of the management of said lottery, to sustain all hazards, risks and ’ossos, and pay all prizes drawn or decided in said lottery; that this contract was modified by another made on the 11th of April, 1849, between said Gregory and the board of trustees, whereby the said Gregory, on the payment of $500, was released from all payments under the contract of June 1, 1842, till the 15th of June, 1851, when the semi-annual payments of $250 on the said contract were then to begin and continue until the additional sum of $13,400 was fully paid; that the General Assembly, by an act passed in December, 1855, (Sess. Acts 1855, p. 467,) among other things, provided “that-all contracts made by the said trustees for the purpose of raising the amount of money authorized to be raised by the said act of incorporation, and the acts amendatory thereof, for the purpose of constructing a rail or macadamized road from the bank of the river to said town, be, and the same are hereby declared to be legal, and may be carried out ac — 340 — cording to the true intent and meaning of the parties thereto.” Upon a trial in the circuit court, judgment of ouster was rendered against the defendants, which, on appeal to the St. Louis Court of Appeals, was affirmed, from which defendants have appealed to this court. It is contended by respondents that the judgment is rightful: 1st. Because there was not in being any valid contract conferring upon defendants the right to conduct a lottery. 2nd. Because the privilege of conducting a lottery conferred by the act of 1833 had been forfeited by misuser and a misapplication by the trustees of the town of New Eranklin of the moneys derived from it. Anterior to the adoption of the constitution of 1865, there was nothing in the organic law prohibiting the Legislature from establishing lotteries. Until then, they had the right to pass laws authorizing or forbidding the sale of lottery tickets. Under the constitution of 1.820, the General Assembly had the power to authorize the town of New Eranklin, through its trustees, to raise money by means of a lottery, and this we understand to be conceded. Nor is it denied that the act of 1835, empowering the said trustees to contract with any other person for the drawing’ and management of the lottery was a legitimate exercise of legislative power; nor is the validity of the contract entered into by the trustees with Gregory in June, 1842? questioned, its binding force having been sanctioned by this court heretofore in the cases of Morrow v. State, 12 Mo. 279; State v. Morrow, 26 Mo. 131, and State v. Hawthorn, 9 Mo. 389. It is, however, claimed by respondent' that under the contract of 1842, the defendants, as assignees of Gregory, had no right to operate a lottery after the year 1870, as at that time the whole sum of $15,000 authorized by this means would have been realized. It is insisted on the other hand by the defendants that the contract of 1842 — 341 — was so modified by tbe contract of 1849 as to continue the time for conducting the lottery till the year 1877, and that if the contract of 1849 was tainted with any infirmity it was cured by the confirmatory and validating act of December, 1855. The question then presents itself, Were the defendants . engaged in selling lottery tickets under any valid contract made with the State or its agencies, when this proceeding was instituted ? It is not an open question that, under the contract of 1842, the defendants, as the assignees of Gregory, could rightfully manage and carry on a lottery till 1870. The cases above cited put this question to rest. Was the contract of 1842 so modified by the contract of 1849 as to continue this right till 1877? It is insisted by respondent that the contract of 1849 had no such effect, because it extended the time for conducting the lottery from five to seven years, in violation of the acts of 1842 and 1845, which prohibited the sale of lottery tickets in the State, and was therefore void. This argument, if sound, would prove that the contract of 1842 was also void, because the Legislature in 1836 passed an act prohibiting the sale of lottery tickets, which was in full force when the contract of 1842 was entered into. This court pronounced that contract valid, notwithstanding the existence of the act of -1836. We are not to presume that the court overlooked that'act when the validity of that contract was the direct question before them in two cases. i. contracts op tions?ratification of, by state. It is also said that the contract of 1849 is void because it is not supported by any consideration. Whether this be s0 or not can make no difference, if, by the act °f 1855, it was validated — ratified by the State speaking through the General Assembly. It is declared in the acts of 1855, p. 467, “that all contracts made by the trustees of the town of New Franklin for the purpose of raising the amount authorized in the act of incorporation * * * be, and the same are hereby declared to be legal and may be carried out according — 342 — to the true intent and meaning of the parties thereto.” The words of this act are unambiguous. At the time of its passage but two contracts had been made by the trastees — one in 1842, the other in 1849. Besides these no others were in existence to which the language of the act could be applied. The Legislature could not have referred alone to the contract of 1842, because they used the word “ contracts,” which embraced not only that but all others. The contract of 1842 needed no legislative ratification to support it, because long prior thereto it had been upheld by the judgment of this court. The contract of 1849 had not at that time undergone judicial scrutiny, nor had its legality been passed upon — and the presumption is that the General Assembly, because of the existence of doubts as to its validity, intended to remove them and make that clear which before was questionable. We are unacquainted with any pi’inciple of construction which would justify us in applying the act of 1855 to the contract of 1842, which needed no aid or support, to the exclusion of that of 1849, which, the argument of respondent tends to show, did require confirmation to give it force and effect. Both are embraced in the terms of the act, and we cannot do violence to it by giving to the words it contains a more restricted meaning than they import. It is settled that a subsequent ratification by the State of a contract made by one of its own agencies is equivalent to a previous authorization. (Steines v. Franklin Co., supra) 2.--: der. ° The contract of 1849 was so made because by the act of 1833 the town of New Eranklin became a public as contradistinguished from a private corporation; and such public corporations are called into being at the pleasure of the State, and neither the charter nor act of incorporation is in any sense a contract between the State and the corporation. The same voice which speaks them into existence may speak them out. (2 Dill. Mu. Cor., See. 30.) Such corporations are the auxiliaries of the government in the important business of municipal — 343 — rule and cannot have the least pretension to sustain their privilege or their existence upon anything like a contract between them and the Legislature. (Ang. and Ames Cor. Sec. 31.) When the State, however, does create' such agency, and through it contracts with a third person, whereby rights become vested in such person, it is then beyond its power to divest them; for, such contract is pro hac vice the contract of the State, the obligation of which, it cannot impair without trampling under foot that provision of the constitution, which declares that no State shall pass any law impairing the obligation of a contract; and, if such agency make a contract with a third person touching a subject in reference to which the State has authorized it to. contract, and such contract is imperfectly made, it is within the power of the State to validate it. If, therefore, the contract of 1849 was not, as is contended, in conformity to law, the act of 1855 declared it to be legal, and that it should be carried out “ according to the intent and meaning of the parties thereto.” If the General Assembly in the act of 1855, instead of referring in general terms to all contracts made by the trustees of the town of New Franklin, had incorporated in the act the contracts of 1842 and 1849, in the very words in which they were expressed, they would not have been rendered more valid than they are under the act which includes both of them by the reference therein contained. Both stand upon the same footing and are to be regarded as the contracts of the State, which it, no more than an individual, can violate. 3.-: moaification of. when validatedhyiegislative act: such act not obnoxious as a retrospective law. It is also urged that the act of 1855 is obnoxious to that provision of the constitution which declares that the Legislature shall not pass any law retrospec- ..... ,. , , . , tive in its operation, ihe cases to which we ... have been cited m support of this view are . rr. cases m which the Legislature undertook to make acts valid between individuals which were void in their inception, .as, for instance, that a deed executed by A — 344 — to B, though, void when made, should he held valid; or that a deed made hy an insane person should be legal and binding. The principle decided in such cases has no application here, for the reason that the State, as one of the contracting parties, had the same right to consent to the modification of the contract made in 1849, as it had to confer original authority on the town of New Eranklin, through its trustees, to enter into the contract of 1842. (H. & St. Jo. R. R. Co. v. Marion Co., 36 Mo. 303; Barton County v. Walser, 47 Mo. 189 ; Steines v. Franklin Co., 48 Mo. 167.) _. vestea whfithay cannot quo mato.137 It is further urged that because of the misuser of the money paid to the trustees under this contract, the assignees of Gregory have lost all rights acquired by them, and that the State can claim a forfeiture of the privilege granted on that account. The evidence in the case clearly shows that the trustees did not apply the funds realized to the object for which they were intended, and while this breach of duty might have been addressed to the Legislature as a cogent reason for the withdrawal of the bounty bestowed, or the total destruction of the town of New Eranklin as a municipality, .it does not follow that the State through a proceeding in quo warranto can for such cause forfeit and take away the light acquired by the assignees of the Gregory contract. So long as the power conferred by the act of 1835 upon the trustees to contract with other persons for drawing and managing said lottery remained unexecuted by them, the State, through its Legislature, could have taken from the town of New Eranklin the right to raise money in that way, such right being a' mere bounty, subject to recall or repeal without such repealing law being obnoxious to the prohibition against the passage of a law impairing the obligation of contracts. "When, however, this power is executed and a contract concluded, whereby a third person acquires the right to conduct and manage a lottery, another and different question is presented, and the rights thus acquired become vested by the act of the — 345 — State, and cannot be taken away except by tbe terms of the contract. (State v. Miller, 50 Mo. 129 ; Clark v. Mitchell et al., 64 Mo. 576.) The contract in question imposed no obligation on Gregory or his assignees, to look (;o the application of the money which the town of New Eranklin was authorized to raise. His obligation was to pay semi-annually the sum of $25(yg^K trustees, in consideration of which he acquired the ngnS|) exercise the privilege of conducting a lottery until such payments amounted to the sum of $15,000, and we are at a loss to perceive on what principle the right thus acquired can be taken away, because the town of New Eranklin, through its trustees, wasted or misapplied the payment •. Neither he nor his assignees had power over the town or its trustees. His duty was to pay, and theirs to make the proper application. If, even, the defendants stood in the place of the trustees, and were responsible for their acts, it might, under the doctrine as laid down in 2 Bill. Mun. Cor., Sec. 720, well be doubted whether the privilege or franchise could be forfeited in this proceeding.It is there stated “ that in no instance have the courts of this country declared forfeited the charter or franchise of a municipal corporation for the acts or misconduct of its agents or officers. That this Vas done by English courts prior to the revolution of 1688, is well known. The ease of the city of London is the most conspicuous historical example. It is believed that such a remedy is not applicable to our corporations created as they are by statute for the benefit, not of the officers or a few persons, but of the whole body of the inhabitants and the public.” We have been driven to our conclusions by former adjudications of this court, the correctness of which we do not question. As to the impolicy of the act of the General Assembly in granting the privileges it did to the town of New Eranklin, whereby the sale of lottery tickets has for years been authorized, against the sense of the people of the State, and to the debauchery of the public — 346 — morals, we have nothing to say. Nor have we anything to.do with the fact that-the trustees, in making the Gregory contracts, and the Legislature in ratifying them, have acted unwisely and continued till the year 1877 a business yielding large profits and gains to one contracting party and comparatively small to the other. We are to look, to the contract, and, if fairly made, uncorrupted by fraud and untainted by illegal considerations, it is our duty to enforce and uphold the legal rights which it confers. Security to the rights of person and property demands a strict adherence to this rule, and it cannot he overleaped even though the purpose be to correct either a supposed or real great evil. We are of the opinion that the judgment of the Court of Appeals, as well as that of the circuit court, should he reversed, and the complaint dismissed, which is accord.ingly hereby done, in which the other judges concur, except Judge Napton, who did not sit. Reversed.