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The complaint sets out the act of the legislature of April 4, 1864, “to aid the construction of the Central Pacific Railroad Company,” etc.; and avers that on the fourth day of May, 1864, the defendant made, executed, and delivered an agreement in writing, as required by said act of the legislature, which alleged agreement is also set out at length. It also alleged that the state of California “has duly performed all the conditions mentioned in said act of the legislature by it to be performed,” and has paid the interest on the one million five hundred thousand dollars bonds, as provided in the act; the aggregate of payments of interest being one milliom nine hundred and forty-two thousand, five hundred dollars, and the last of such payments having been made December 31, 1882. The judgment prayed is for one million nine hundred and forty-two thousand five hundred dollars, and interest and costs. The complaint also avers that since the approval of the
act and filing of the agreement aforesaid, and during each and every year since said times, “there have been nec
essarily transported on and over the railroad of said defendant numerous public messengers of the state of Cali
fornia, and of the various counties of said state, and numerous convicts, and numerous public messengers in charge
thereof, going and sent on and over the railroad of said de
fendant to the state prison of said state; and numerous luna
tics, and numerous public messengers in charge thereof, going
and sent on and over the railroad of said defendant to the
state insane asylum of said state from the various counties
and cities and counties of said state; and various materials,
and various public messengers in charge thereof, transported
on and over the railroad of said defendant for the construc
tion of the state capital building of said state, and various
articles intended for public exhibition at the fairs of the
State Agricultural Society of said state, transported on and over the railroad of said defendant.
“That at the date of the passage of said act of the legislature and of the execution of said agreement, and since, the said defendant was and has been the owner and in possession of the said south half of section 19, in township 11 north, of range 7 east, Mount Diablo meridian, referred to in said act of the legislature and said agreement, and it has been within the power and ability of the said defendant and its agents at all times since the passage of said act, and the execution, delivery, and filing of the agreement aforesaid, to apply for, accept, and receive a patent from the United States of America for the lands and premises described in said act of the legislature and said agreement, and to execute, acknowledge, and deliver to the state of California a deed in fee-simple for the conveyance thereof.
“Nevertheless the plaintiff alleges that although often requested and required so to do, the defendant had willfully and designedly, during all of the time aforesaid refused and neglected to transport or convey over its said railroad free of charge, or without any other compensation than as provided in said act, all or any of the public messengers aforesaid, or all or any of the convicts aforesaid to the state prison of said state, or all or any of the lunatics aforesaid going to the state insane asylum aforesaid, or all or any of the materials aforesaid for the construction of the state capitol building aforesaid, or all or any of the articles aforesaid intended for public exhibition at the fairs of the State Agricultural Society aforesaid, and has, although often thereunto requested and required, refused and neglected to apply for, or accept or receive, a patent from the United States for the lands and premises aforesaid, or to execute, acknowledge, and deliver to the state of California a deed for the conveyance thereof in fee-simple, or otherwise.”
It is contended by appellants that the questions of “compensation” or of a “penalty” are utterly foreign to the issues herein; that the statute and its acceptance by the defendant constitute a contract between the state and the defendant; the terms and conditions whereof fix the rights of the parties herein; that the covenants or promises on the part of the defendant, in consideration of payments by the state of interest upon the bonds, were to transport and convey, “at all times when required,” all public messengers, convicts ordered to the state prison, lunatics sent to the insane asylum, materials for the construction of the state capitol, articles intended for exhibition at the fairs of the State Agricultural Society, and troops and munitions of war of the state, free of charge, and also within ninety days after receiving a patent therefor, to convey the land described, or to repay to the state the amount by it paid as and for interest upon the bonds mentioned in the act.
The proposition is, that the money to be paid by the state for interest on the bonds was, in effect, a loan by the state to the defendant, to be repaid in either one of two ways, by doing for all time the things specially agreed to be done by defendant, or by paying back the money. It is claimed the promise of the defendant was in the alternative; the defendant having the option at any time to refuse to perform any of the things promised, and to pay the money advanced by the state in lieu of such performance.
But the language of the act does not bear out the suggestion that the money paid by the state for interest was a loan to the defendant. The act is entitled “An act to aid the construction of the Central Pacific Railroad Company, and to secure the use of the same for military and other purposes,” etc. The preamble recites that whereas war exists, and Congress “has granted aid” for the construction of the Central Pacific railroad, which is insufficient to complete the road, etc.; and “whereas it is important in view of the present state of war that the railroad be constructed as soon as possible,” etc.
Neither in the title nor in the preamble is there any hint that it was the intent to provide for lending money to the defendant, although the general language employed might be held to include “aid” in the form of a loan, did the body of the act clearly provide for it.
The first section of the act authorizes the defendant herein to issue bonds of one thousand dollars each, the interest on the first fifteen hundred to be payable at the state treasury. The second section provides for the levy of a tax to pay the interest on the fifteen hundred bonds. The fourth section begins: “The said grant to said company is made upon the express condition and in consideration that the said company shall and do at all times when required, from and after the passage of this act, transport and convey,” etc. The fifth section appropriates the money to be paid as interest on the bonds. The fourth section also requires that the railroad company shall enter into an “agreement,” promising to comply with the terms and conditions set forth in the act. At the close of the fourth section is the sentence that in case the company shall fail or refuse to perform any of such conditions, “it shall be liable to repay to the state the amount which shall have been paid by the state under this act.” The word “repay” purports a payment to the state of the moneys granted by the state, but does not of itself necessarily imply a promise to repay the moneys as moneys advanced by way of loan to the defendant. By the act, the state pledged its faith to pay, and provided for taxation to pay, the interest upon certain bonds; and defendant, by its acceptance and agreement filed, promised to carry public messengers free of charge, etc. The act does not provide for an agreement by defendant promising to repay the moneys advanced by the state. The liability of defendant to pay money arises entirely out of the defendant’s acceptance of the bene.
fits of the act, which fixes the penalty in case of default in LXXVI. Cal.—3
the performance of these conditions, which the defendant is to agree to perform by written agreement filed. True, the acceptance of the grant bound the railroad company by all the provisions of the act, including the provision for “repayment” in case of default. But the foregoing statement explains the nature of the defendant’s obligations thus assumed. The state grants, by appropriation, certain moneys to aid the construction of defendant’s railroad; in consideration of the grant, the defendant promises to do certain things for the state, and for the benefit of oitizens of the state. The money for interest is appropriated, and the recurring payments of interest are to be made, even though the company shall fail to perform any of the conditions on its part. In case of failure to perform, however, the company is liable in damages at least up to the amount previously paid by the state. But the amount which may have been paid by the state is either an amount stipulated to be paid as damages, or it is merely a penalty. The contract on the part of the defendant is not in the alternative; it is not an agreement to perform the conditions, or, at its option, to pay the amount. The promise to carry all public messengers free of charge, etc., is an absolute promise. The distinct and separate clause of the statute, that “in case the said company shall fail and refuse,” etc., does not give to the defendant the right at its election to pay the amount stated instead of performing the conditions by it to be performed. If by accepting the benefits of the statute the defendant became liable to pay a stipulated sum, it was to be paid only in case of default in the performance of conditions otherwise absolute. The defendant, like any other contracting party, had power to violate its contract and take the consequences. But it was not authorized by the terms of a contract (derivable from its written agreement or from that agreement and the statute) to pay an agreed sum, and thus discharge itself. (1 Sutherland on Damages, 477.)