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122 U. S. 284, 290; Nelson v. St. Martin's Parish, 11 U. S. 716. A contract of this character is discussed in Louisiana v. Pillsbury, 105 U. S. 278, at pp. 287, 288:
These provisions, until the bonds were accepted, were in the nature of proposals to the creditors of the old city, of the municipalities and of Lafayette. The State in effect said to them: the city will give these bonds, running for the period designated, and drawing interest, in exchange for your demands; and as security for the payment of interest, and the gradual redemption of the principal, the city shall annually, in January, levy a special tax for that purpose to the amount of $650,000. The provisions were designed to give value to the proposed bonds in the market of the country, and necessarily operated as an inducement to the creditors to take them. When the bonds were issued and taken by the creditors, a contract was consummated between them and the city as fully as if all the provisions had been embodied as express stipulations in the most formal instrument signed by the parties. On the one hand, the creditors surrendered their debts against the former municipalities; and, on the other hand, in consideration of the surrender, the city gave to them its bonds, which carried the pledge of an annual tax of a specified amount for the payment of the interest on them, and ultimately of the principal. The annual tax was the security offered to the creditors; and it could not be afterwards severed from the contract without violating its stipulations, any more than a mortgage executed as security for a note given for a loan could be subsequently repudiated as forming no part of the transaction. Nearly all legislative contracts are made in a similar way. The law authorizes certain bonds to be issued, or certain work to be done upon specified conditions. When these are accepted, a contract is entered into imposing the duties and creating the liabilities of the most carefully drawn instrument embodying the provisions. Von Hoffman v. City of Quincy, 4 Wall. 535; Hartman v. Greenhow, 102 U. S. 672; People v. Bond, 10 Cal. 563; Brooklyn Park Commissioners v. Armstrong, 45 N. Y. 234.
The case now under consideration appears to be identical in principle with those decisions which deal with a specific source of income appropriated to the discharge of the obligation incurred under the contract; and there are a number of decisions which deal with facts substantially like those under discussion.
In Liquidators v. Municipality, 6 La. Ann. 21, an act of Legislature was passed in the State of Louisiana to provide for the payment of the debts of a municipal corporation, which authorized the creation of a sinking fund which was to be deposited and to be applied as specified in the act. In cases where creditors, acting thereunder, had surrendered the evidences of their debts and received new bonds, for the payment of which the fund was pledged, it was held not competent for a subsequent Legislature, in providing for the payment of the corporate debts, to give a dif
ferent destination to the sinking fund by changing the depositary of the fund, such change being held to be an impairment of the obligation of the contract. In Fuzende v. City of Houston, 34 Fed. Rep. 95, where a municipal corporation, under an ordinance authorized by its charter, issued bonds to provide for erecting a market-house, and agreed in the bonds that the revenue from the market should be devoted to the payment of the interest on the bonds and to the formation of a sinking fund for their redemption, it was held that the city could make no other disposition of such revenue. So in Brooklyn Park Commissioners v. Armstrong, 45 N.Y. 234, where bonds were issued by a municipality to raise funds for the payment of lands for a park, and the lands were specifically pledged for such payment, it was held that a subsequent act of Legislature authorizing a sale of such lands, free of trust and of existing liens under the original act, could not be sustained, such act being an impairment of the obligation of contract. See also Dillingham v. Hook, 32 Kan. 185. In City of St. Louis v. Sheilds, 52 Mo. 351, the facts were substantially like those now before me. The court held that, upon the repeal of a statute which authorized the city of St. Louis to raise money, by the issue of bonds, for harbor improvements and the construction of wharves, and established a wharf tax upon all real estate in such city, which, together with the revenue derived from the wharves after completion, was pledged to meet the payment of interest and to provide for the establishment of a sinking fund for the redemption of the bonds, no contractual relation existed as between the city and the State, and no obligation of contract was impaired by such repeal. It is to be observed, however, that the bondholders were not before the court, and it is intimated in the opinion that were "the bondholders asking for a protection of their rights and showing that the collection of their debts was impaired, a different case would be presented;" and in Gilman v. Sheboygan, 2 Black (U. S.), 510, to the same effect the bondholders were not before the court.
I am therefore of opinion that in so far as House Bill No. 1192 is designed to change the conditions and scheme of payment, and the obligations to secure the same under which the bonds issued to pay for the construction of the East Boston tunnel were sold, and which formed a consideration in such sale, it is unconstitutional.
Very truly yours,
HERBERT PARKER, Attorney-General.
Banking-Receipt of Money on Deposit - Certificates of Deposit - Business Corporation.
The receipt of money on deposit at interest and the issuance of certificates of deposit therefor is " banking" within the meaning of R. L., c. 115, and such business is forbidden to a corporation organized under the provision of St. 1903, c. 437, relating to business corporation.
JUNE 11, 1904. WARREN E. LOCKE, Esq., Chairman, Board of Commissioners of Savings
DEAR SIR: Your letter of January 20 submits for my consideration certain circulars and other advertisements issued by the Equitable Banking Company of Boston, soliciting deposits of money for periods of one, two or three years, and offering to pay interest thereon at six per cent., together with an extract from the charter of such corporation, and you inquire whether such charter "permits of their advertising for deposits and issuing certificates of deposits after the manner of a national bank." Inasmuch, however, as the Board of Commissioners of Savings Banks, as such, are not concerned with, or authorized to inquire as to, the charter powers of the Equitable Banking Company, unless some question presents itself which relates to the business of banking, I conceive your inquiry to be directed rather to the question whether receiving money on deposit at interest, and issuing certificates of deposit, is in fact conducting a banking business, and, if so, whether such business is permitted by the charter of the company.
The Equitable Banking Company is a Massachusetts corporation incorporated under the provisions of St. 1903, c. 437, known as the "Business Corporation Law." Section 1 of this chapter provides that it "shall not apply to corporations organized under general or special laws of this Commonwealth for the purpose of carrying on within the Commonwealth the business of a bank, savings bank, co-operative bank, trust company, surety or indemnity company, safe deposit company," etc. The business which the corporation is authorized by its charter to carry on is as follows:
To carry on a general mercantile, mining and brokerage business, and also to carry on the business of buying and selling wages, salaries, contracts, accounts, notes, drafts and other choses in action, and to purchase the same at a price consistent with the security offered. Also to raise money either by the issue of bonds or on a mortgage, to organize corporations to buy or acquire other corporations, syndicates or business. Also the acquiring of any property, real or personal, such as mining,
mining rights, land, buildings, machinery, tools, patents, patent rights, leases or licenses essential or convenient for such business, and generally to do any and all things necessary or incident thereto, but not to carry on any business within the Commonwealth prohibited by the laws of Massachusetts under the act relating to business corporations.
Since St. 1903, c. 437, expressly exempts from the operations of its provisions corporations organized for the purpose of carrying on the business of banking, such business being regulated by R. L., c. 115, I am of opinion that the Equitable Banking Company is not authorized to carry on a banking business in this Commonwealth, and if the receipt of money on deposit, and the issuance of certificates of deposit and the payment of interest on the money so deposited is banking, the corporation has exceeded its charter powers.
A bank is defined to be an institution, usually incorporated, with power to issue promissory notes intended to circulate as money, or to receive the money of others on general deposit, to form a joint fund, to be used by the institution for its own benefit, for one or more of the purposes of making temporary loans and discounts, of dealing in notes, foreign and domestic bills of exchange, coin, bullion, credits and the remission of money, with the additional privilege of receiving special deposits and making collections for the holders of negotiable paper, if the institution sees fit to engage in such business. "Practically, a bank is a place where deposits are received and paid out on checks, and money is loaned on security." Morse on " Banks and Banking," 4th ed., par. 2. The receipt of money on deposit and the creation thereby of a fund which may be used by the institution for its own benefit, is, therefore, an important function of the business of banking.
A certificate of deposit is "the written acknowledgment of the bank that it has received from a certain person a certain sum on deposit." Morse on "Banks and Banking," 4th ed., par. 297. Such certificates differ from promissory notes, not only because the certificate must be returned or tendered before payment becomes due, but also because it is in itself a declaration that a certain fund has been deposited which is payable to the depositor, or his order, on the return of the certificate; and such certificates are issued with the design that they shall be used as money and taken with as much confidence as the bills of the bank." Shute v. Pacific National Bank, 136 Mass. 487.
In view of the nature of such certificates and the use to which they are intended to be put, I am of opinion that the authority to issue them must be held to be strictly limited to banks or other
similar corporations organized under and regulated by the statutes applicable to the business of banking, and that a corporation organized under the provisions of St. 1903, c. 437, as a business corporation, has no authority to receive money on deposit and to issue certificates therefor.
Very truly yours,
Veto Power of Executive Passage of Bill or Resolve over Veto originating Measure.
HERBERT PARKER, Attorney-General.
Two-thirds of Branch
The Constitution of Massachusetts, Part II., chapter I., article II., by providing that where the veto power of the Executive is exercised, the bill or resolve, with his objection thereto in writing, shall be returned to that branch of the Legislature in which such bill or resolve originated, two-thirds of which branch may upon reconsideration agree to pass the same, and if approved in the other branch by two-thirds of the members present, it shall have the force of a law, - imposes upon that branch of the Legislature in which a particular act originates a different relation to and responsibility for such act from that attaching to the other branch, and requires that "two-thirds of the said Senate or House of Representatives," whichever may have originated the measure, should be two-thirds of the full membership thereof, and not merely two-thirds of the members present, as in the case of the remaining branch.
It follows that St. 1904, c. 458, which originated in the House of Representatives and which was therein passed over the veto of the Executive by a two-thirds vote of the members then present but not by a two-thirds vote of its entire membership, was not passed over such veto in accordance with the provision of the Constitution (Part II., chapter I., article II.), and is null and void. The Treasurer has no authority, therefore, to issue the bonds authorized and required by the terms of such statute.
JULY 11, 1904.
Hon. EDWARD S. BRADFORD, Treasurer and Receiver-General. SIR :- I have the honor to acknowledge your communication of June 15, in which you ask my opinion as to the "constitutionality and legality" of chapter 458 of the Acts of 1904, which communication has had my attention and study since its receipt.
I am advised that the act in question originated in the House of Representatives, and I am informed that after the said act had been returned to that body by His Excellency the Governor, without his approval and accompanied by his reasons therefor, it appears by the journal of the House that two-thirds of its entire membership did not vote affirmatively to pass the said act notwithstanding the Executive veto. I am further informed that