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fail if a board over which he has no control neglected to levy the assessment within six years after the displacement.
It is a general principle that a right in behalf of the Commonwealth does not fail because of the laches of its officers.
State v. Brewer, 64 Ala. 287; Haehnlen v. Commonwealth, 13 Penn. State, 617; State v. Sponaugle, 45 West Va. 415. Compare Commonwealth v. Bala, etc., Turnpike Company, 153 Penn. State, 47.
The statute of limitations itself could not defeat the right of the Commonwealth except that it is expressly applied to actions by the Commonwealth in R. L., C. 202, § 17. The Commonwealth has all the rights and prerogatives of a sovereignty until by statute it yields them up. One of these prerogatives is expressed in the maxim "Nullum tempus occurrit regi."
I am inclined to the view, there being no authority upon either side of the narrow question, that the principle of the statute of limitations should not by analogy be extended to bar this right of the Commonwealth to levy an assessment which is not expressly limited in time. In any event, if the Treasurer desires to bring suit within six years to recover an assessment levied more than sis years after a displacement, the question whether he may maintain such action is worthy of a test case. Very truly yours,
HERBERT PARKER, Attorney-General.
Constitutional Law Obligations of Contract East Boston
Tunnel Bonds Tolls. St. 1897, c. 500, § 17, which authorizes the construction by the Boston
Transit Commission of the East Boston Tunnel, and its subsequent lease to the Boston Elevated Railway Company at an annual rental fixed thereby and payable to the city of Boston, by pledging such rental together with the tolls which the city is directed to collect from persons passing through such tunnel, “ to meet the principal and interest of the bonds issued to pay for the construction of said tunnel,” and expressing such pledge upon the face of the bonds was one of the terms thereof,” creates a valid contract between the city of Boston and the purchasers of such bonds which cannot be impaired by subsequent legislation; and House Bill No. 1192, which abolishes such tolls and instead thereof requires the city of Boston to set aside from the compensation received by it from the Boston Elevated Railway Company under St. 1897, c. 500, § 10, a sum equal to the amount which it would have received from such tolls, to be pledged in like manner to meet the principal and interest of the bonds, for the reason that it varies the terms of such contract by substituting for the source of income pledged to secure the bondholders another and different source of income, is unconstitutional and void.
MAY 16, 1904. Hon. ALBION F. BEMIS, Chairman, Committee on Metropolitan Affairs.
DEAR SIR : The committee on metropolitan affairs has requested my opinion upon the constitutionality of House Bill No. 1192, entitled “An Act relative to the payment of tolls in the East Boston tunnel.”
This bill is intended to amend St. 1897, c. 500, § 17, which authorizes the construction of the East Boston tunnel, and contains the provision that upon the completion of the tunnel the Rapid Transit Commission shall execute a lease thereof in writing to the Boston Elevated Railway Company, for a term expiring twenty-five years from the date of the passage of the act, at an annual rental equal to three-eighths of one per cent. of the gross receipts for each year ending September 30, of all lines owned, leased or operated by the corporation, to be paid to the city of Boston on or before the last day of November in each rental shall be in full compensation for the exclusive use of said tunnel by said corporation, its sub-lessees, successors or assigns. Such other terms and conditions may be incorporated in the lease as may be agreed upon by the commission and the corporation, or, in case of disagreement, as shall be determined by the Board of Railroad Commissioners.
The material part of the section is as follows:
Said city shall collect from each person passing through said tunnel in either direction a toll of one cent: provided, however, that if in any year ending on the thirtieth day of September the receipts from such tolls, together with the rental above-provided for, amount to a sum so in excess of the interest and sinking fund requirements of said bonds for that year that the board of railroad commissioners is of opinion that the toll may be reduced, said board shall on petition of ten citizens of said city establish such reduced toll for the period of one year from the first day of January next ensuing, as will in its opinion yield an amount sufficient to meet, with said rental, said interest and sinking fund requirements for that year; or said board may altogether discontinue such toll when it is of opinion that such rental alone is sufficient to meet said requirements; but any such reduction shall be carried into effect by a provision for the sale of tickets, and the cash fare shall continue to be one cent. The whole amount of such tolls and of said rentals is hereby pledged to meet the principal and interest of the bonds issued to pay for the construction of said tunnel or tunnels, and this pledge shall be expressed on the face of such bonds as one of the terms thereof; provided, however, that after such tolls have been discontinued if said rentals shall for any year ending on the thirtieth day of September yield an amount more than sufficient to meet the interest and sinking fund requirements of said bonds for such year such excess over said requirements shall be regarded as general revenue of said city. In case in any year the rentals and tolls above-provided for shall not yield a sufficient amount to meet said interest and sinking fund requirements the compensation received by said city under section ten of this act shall be applied so far as may be necessary toward meeting such requirements. Said corporation shall be the agent of said city to collect such tolls under such arrangements as shall be agreed upon by said city and said corporation, or in case of disagreement, as shall be determined by the board of railroad commissioners.
House Bill No. 1192 amends this section by striking out the provision above quoted with regard to the collection by the city of a toll of one cent, to be collected from each person passing through the tunnel in either direction, and enacting in place thereof the following:
Said city shall set aside from the compensation received by said city under section ten of this act a toll of one cent for each person passing through said tunnel in either direction.
Section 10, herein referred to, provides that the Boston Elevated Railway Company may establish a maximum toll or fare of five cents, which sum shall not be reduced by the Legislature during the period of twenty-five years from and after the passage of this act, and further provides for a payment as compensation for the privileges therein granted and for the use and occupation of the public streets, squares and places by the lines of elevated and surface railroad owned, leased and operated by the corporation of an annual sum, the amount of which is to be determined by the amount of the annual dividend paid in each year, as therein provided. “ The above sum shall be paid into the treasury of the Commonwealth and distributed among the different cities and towns in proportion to the mileage of elevated and surface main track reckoned as single track which is owned, leased and operated by said corporation and located therein."
The question submitted is whether or not the change made by House Bill No. 1192 is unconstitutional as impairing obligations of contract.
A consideration of the statutes above referred to in my opinion clearly shows that no obligation of contract subsisting between the Commonwealth and the Boston Elevated Railway Company is impaired or affected by the proposed amendment, and the bill, if unconstitutional, must be so by reason of the existence of a contract between the city and the purchasers of the bonds referred to in sections 17 and 18, which is impaired by its provisions.
The first question to be determined, therefore, is whether or not such a contract exists. Section 17 provides that the city shall collect a toll of one cent from each person passing through the tunnel in either direction, and for an annual rental of three-eighths of one per cent. of the gross annual earnings of the corporation, the amount received from both these sources being pledged to meet the principal and interest of bonds issued to pay for the work of constructing such tunnel. This pledge is expressed upon the face, and forms one of the terms of each of such bonds, and, in my opinion, constitutes a valid contract between the city and the bondholders, the obligations of which cannot be impaired by any subsequent legislation.
The second question to be considered is whether the cbange proposed to be made by House Bill No. 1192 is an impairment of the obligation created by this contract.
It is to be observed that the pledge above referred to is obviously designed to afford security for the full and timely payment of the principal and interest of the bonds issued to pay for the work of constructing the tunnel by specifically devoting a certain income to that purpose. If the income as assigned exceeds the amount necessary, the surplus may be treated as the general revenue of the city of Boston. If, on the other hand, the specified sources are not sufficient to provide the necessary sum, a third source of income is made available, pamely, the income received by the city as compensation for the use of the public streets, ways and places, under the provisions of section 10. If, after experiment, it appears to the Board of Railroad Commissioners that the tolls and rental exceed the amount required for principal and interest of the bonds issued by the city, they may reduce the toll by making provision for the sale of tickets, though cash fares must still be paid in the same amount by passengers; and if the rental alone becomes sufficient for the specified purposes, the tolls may be discontinued.
House Bill No. 1192 in effect abolishes one source of income, viz., the tolls, and provides that the amount which would have been furnished to the city from such tolls shall be payable out of the compensation received by the city under section 10. This may or may not diminish or materially affect the sources of income available as security for the bonds issued, since the amount received as compensation under section 10 by the city may or may not be sufficient to provide for all deficits which may exist from year to year in the rental, the significant effect of the provision being to abolish the tolls entirely. This, in my judgment, constitutes a material interference with and impairment of the obligation of contract between the city and the bondholders created by section 17. If the effect of the proposed legislation were merely to substitute one security for anotber of equal value, it would be, if compulsory, objectionable on constitutional grounds; if the compulsory substitution be to provide a security of less value than the original, or one of a lower grade, it certainly conflicts with constitutional requirements.
It is forcibly argued by those in favor of House Bill No. 1192 that the change suggested is merely one of bookkeeping, transferring the liability to pay the amount due as tolls from the general public to the city of Boston, and designating the sum from which it is to be drawn, and that as regards the bondholders, the contract is not in any respect affected.
It appears, however, upon careful consideration, that the change is more material than the petitioners admit.
Section 17 provides a scheme for meeting the interest and sinking fund requirements of the bonds issued which involves the setting aside of a certain fixed and definite income as it accrues, and dedicating and appropriating the same directly and in specie, to meet the bond obligations; and further provides that the tolls paid by the public shall be discontinued upon certain contingencies set forth by the Board of Railroad Commissioners. This scheme and these conditions may well have been, and in my opinion were, considerations of weight with those intending to purchase bonds, when coupled with the distinct pledge that the receipts from such sources should be set aside for meeting the obligations of the bonds, and for this reason the conditions prescribed are material to the contract and formed a consideration for the purchase of the bonds.
The adjudicated cases upon this subject seem clearly to recognize the principle that the power of taxation as it existed at the time when the contract was made becomes a part of the contract, and, if necessary, can be availed of by the creditor under such contract without regard to subsequent legislation. Von Hoffman v. City of Quincy, 4 Wall. 535; Ralls County Court v. United States, 105 U. S. 733, 738; Mobile v. Watson, 116 U. S. 289. In these cases the power to tax was the general power of taxation vested in a municipality, and the courts, in substance, held that if under subsequent changes in the method of taxation and in the classes of property to be taxed the income derived from such taxation was insufficient to meet the requirements of the contract, the obligation of contract was impaired to the extent of the deficiency thus created.
Where a special tax levy or a special fund raised by taxation is made security for the payment of contract obligations, the creditor may insist upon payment from that source, notwithstanding the repeal of the law by which it was established. Seibert v. Lewis,