PUBLICATION OF STATUTES OF 1881.
On motion by Mr. RYAN the bill [H. R. 437] for an act concerning the publication of the Revised Statutes for 1881, was read the third time and passed-yeas, 70; nays, 14.
Mr. Cauthorne's bill [H. R. 435), to repeal an act to provide for the payment of sundry bonds and stocks of the State issued prior to the year 1841, approved December 12, 1872, being read the third time--
Mr. CAUTHORNE said: This bill simply repeals the act passed December 12, 1872, which was intended to make provision for the payment of sundry bonds issued by the State for internal improvement purposes. I propose to briefly urge upon the House the propriety of passing this bill for two reasons. First, Because the State of Indiana is under no legal or moral obligation to pay any part, either of principal or interest of the bonds referred to in the act of December 12, 1872. All the bonds referred to in that act were issued for internal improvement purposes, and were issued before any member on this floor had any concern with the management of the affairs of the State. They are evidences of the folly and improvidence of our ancestors. The State of Indiana should not attempt to shrink from any legal liability incurred, nor, on the other hand, should not assume by new legislation any additional liability than that already fixed and determined by the laws authorizing the issue of these bonds. I hold that it is a clear and tenable legal proposition that the State is not legally liable to pay any part of these bonds, and that the act of December 12, 1872 should never have been enacted.
I was a Member of this House at the time it was passed, and did all in my power to prevent it. Under its operation there has already been taken from the State Treasury several hundred thousand dollars, and if it is not repealed many more thousands of dollars will flow out for the same purpose, all of which I regard as no more than a donation on the part of the State to the holders of these bonds. The bonds provided for by the act repealed by this act were issued under various acts of the General Assembly which made different provisions for the bonds authorized under them, and imposed upon the State different liabilities. All the bonds referred to were issued under acts passed in 1832, 1834, 1835 or 1836. Under the act of 1832, found in acts of that year on page 4, the fifth section provides for the payment of the bonds authorized to be issued under it, and for that purpose irrevocably pledges the canal and its revenues. The act of 1834, by section two on page 30 of the acts of that year, provides for the payment of the bonds authorized to be issued by it and again pledges for that purpose the canal and its revenues. The general improvement act of 1836 by Section 9 on page 10 of the acts of that year provides for the payment of the $10,000,000 loan authorized by it, and again pledges the canal and other internal improvements and the revenues thereof for that purpose. The act of 1835 by Section 3 on page 25 of the acts of that year makes provision for the payment of the bonds authorized to be issued under it, and for that purpose "the faith of the State of Indiana is hereby irrevocably pledged." This was the only act ever passed authorizing the issue of bonds for internal improvement purposes, which pledged for their payment the faith of the State and made them directly a charge upon the State Treasury. Every one of the bonds issued under that act have been fully paid by the State. Not one of the bonds issued under that act was ever surrendered under the acts of 1846 or 1847. All the bonds therefore outstanding are bonds issued under the acts either of 1832, 1834 or 1836, and for the payment of which the canal was pledged and not the faith of the State. The holders of these bonds were aware of the means provided for their payment when they took them. They remained unpaid with accumulated interest until 1846, when the act of that year, called the "Butler bill," was passed at the instance and request of the holders of the outstanding bonds. By the pro- page: 267[View Page 267] visions of the act of 1846, which has been held by the Courts to be in the nature of a contract between the State and the holders of the unpaid bonds, provision was made for the adjustment and satisfaction of all these bonds; and by the act of 1847, called the "Supplement," the State declared she would never make any other or different arrangement for the payment of these bonds than that provided by the act of 1846. The act of 1872 is in violation of this express declaration, and does make another and different provision for their payment, and is so far in bad faith with the great body of the holders of such bonds who accepted the provisions of the act of 1846 in the belief that it was the only arrangement the State would ever make. I hold no such thing should be done. There is no legal or, moral obligation resting on the State to provide for their payment. All of the outstanding internal improvement bonds were liens on the canal, and when the compromise was effected between the State and the holders of these bonds under the acts of 1846 and 1847 and the State transferred to Trustees the canal and its tolls and revenues and all the lands donated by the General Government to aid in its construction. The transfer was made and accepted subject to existing liens. The act of 1846 authorizing the Governor to make such transfer in Section 8, pages 6 and 7 of the acts of that year contains the following: The transfer of said property shall be made "Subject nevertheless to all existing rights and equities against the State on account of the same or liabilities of the State growing out of or in relation thereto." This, we think, makes it clear that the Trustees received the canal subject to all liens. The view we have taken has been judicially determined by the Supreme Court of the United States in the case of Trustees of the Wabash and Erie Canal Company vs. Beers, 2 Black, 448. That case decides that these bonds are in the nature of liens on the canal and have priority according to date, as mortgages, and that the Trustees accepted the canal subject to them and must provide for their payment. It also decides that they are in the nature of contracts, and that the State is precluded by the Constitution of the United States of diverting, altering, impairing or otherwise varying their force and effect. We therefore hold that the act of 1872 should never have been passed and should be at once repealed.
We will briefly state the reasons why this bill should pass from another view, Even admitting the State should provide for the payment of these bonds, the act of 1872 is so loosely and inartificially drawn that it should be wiped out. It purports to appropriate money to pay these old bonds, but no certain amount is named as being appropriated. It simply says that sufficient money is appropriated to pay them, and confers power upon the Governor, Auditor, Attorney General and Treasurer of State to adjust the amount. This was certainly going very far in the direction of appropriating money contrary to the Constitution. The Constitution, in Article 10, Section 3, provides that "no money shall be drawn from the Treasury but in pursuance of appropriations made by law." What would this House think of the Committee of Ways and Means if they had reported to you a bill appropriating to the Benevolent, Educational, Penal and Reformatory Institutions as much money as might be needed for them? Such a bill would undoubtedly have been rejected. But the act we propose to repeal makes just such an appropriation, and for that reason should be repealed. But in addition the act confers power upon the State officials named to make the computation of the amount due upon these bonds and to pay the amount they shall find due. The holders of such of these bonds as have not yet been paid are not satisfied with the decision of the Board so constituted under said act and demand the shape of interest more than said Board thinks due and by resort to the Courts by way of mandate proceedings are attempting to compel the Treasurer of State to pay more money out of the Treasury than said Board have found due. The Supreme Court of the State has already reached a decision in the mandate case adverse to the interests of the State Treasury, and unless the General Assembly interferes and repeals this law will compel the State officers to pay more money than the Board constituted by said act have found due.
The repeal of this act will not prevent the State in future making any just and proper provision for the payment of the outstanding bonds if such a course is thought right and just. We therefore think this bill should pass.
Mr. BUSKIRK--From what the gentleman from Knox (Mr. Cauthorne) has said I am entirely and utterly opposed to the bill because it seeks to forego an obligation due from the State to certain parties, as has been decided by the Courts of the State and the United States Supreme Court. I infer that the object of this bill is to relieve the State from the legal obligation resting upon her, and which has been decided by the Supreme Courts to be valid. The credit and honor of the State is of more importance than the dollars and cents involved in this bill.
Mr. KENNER--The Court, by its mandate, has ordered to be paid out by the Treasurer of State more money than was appropriated by the body legally elected by the State to appropriate money. There never has been appropriated a dollar to pay these bonds by the State of Indiana. This bill simply says that the Treasurer of State shall pay no money except as appropriated by the Legislature. If this is a good debt let it come before the Legislature, and if they refuse it then the State is not in honor bound to pay it.
Mr. RYAN--I hope this bill will pass. The holders saw fit to withhold the bonds when notified by the act of 1847, and not accept the proposition then made by the State, therefore it is not bound to pay these bonds. It would be wrong to make the people pay these old debts. I hope every member will vote cheerfully and heartily in support of this bill.
The bill passed--yeas, 86; nays, 3.
