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It is also stated in your letter that the amount of bonds authorized by the ordinance aforesaid, namely, $390,000, together with the existing indebtedness of the municipality of Ponce, will not exceed 7 per cent of the aggregate tax valuation of the property of said municipality.
As these bonds are to be issued by a duly constituted municipality for purposes authorized by section 38 of the organic act, by section 4 of the act of January 31, 1901, and by section 89 of the act of March 8, 1906, namely, of funding the floating indebtedness of said municipality and for necessary public improvements (see also sec. 25, municipal code, as amended, supra); as they are not in excess of the limitations in the proviso to section 38 of the organic act, and as the ordinance authorizing them has been approved by the executive council of Porto Rico-in short, as the power to issue bonds of this general character has been granted by Congress and the legislative assembly to the municipality of Ponce, it would seem that no objection of a general nature can be made to them. In this broad aspect their validity is sustained by the opinion of my predecessor, Mr. Bonaparte, in 27 Op. 104, and by my opinion in 28 Op. 245. When, however, the particular provisions of these bonds, as authorized by the ordinance, are examined, they appear to be open to serious objection. Section 5 of the act of January 31, 1901, quoted above, expressly provides that the bonds must be “ of the demoninations of five hundred and one thousand dollars," and section 8 that the bonds “shall be redeemable in ten years and payable in twenty years.” Section 89 of the municipal code expressly provides that bonds can only be issued by municipalities “upon complying with the provisions” of the act of January 31, 1901, “ which act is hereby continued in force and made applicable to all of the municipalities mentioned in this act.” So far as I can discover, the legislative assembly has never repealed or modified this provision. An act approved March 9, 1911 (laws of 1910–11, p. 166), provides that, as incident to the issuing of any bonds, municipalities may provide by ordinance that any public work, the cost of which is to be met by the sale of
bonds, shall be constructed in accordance with plans and specifications approved by the Commissioner of the Interior, “ and may further set forth and provide in any such ordinance all such other and further stipulations or details as the executive council may deem advisable or require in any particular case as a condition precedent to the granting of such loan, or advance, or the authorizing of such bond issue ; ” but this can hardly be meant to modify the general provisions of the municipal code on the subject of municipal obligations. It probably only refers to stipulations covering the form and execution of the contracts of construction.
Although, therefore, the law of Porto Rico requires municipal bonds to be issued in denominations of $500 and $1,000, and to be redeemable in 10 years and payable in 20, the ordinance submitted by you authorizes by section 4 bonds of the denomination of $400, payable in from 3 to 15 years, with no special provision for optional redemption. This variance, it appears, would render the bonds issued in that form entirely invalid. In Young v. Clarendon Township, 132 U. S. 340, 346, 347, the Supreme Court of the United States, in holding bonds void without the certificates of the governor which the law required, said:
In such case the nature of the bonds, their force and effect, their value and character while in the hands of the state treasurer, the rightfulness and sufficiency of their issue, and all kindred questions, must be referred to the statute authorizing them. In this case the statute is the act of 1869. It is the touchstone. Whatever might be the rule in ordinary cases, so far as the act goes, it controls here, being the enabling act; outside of it there was no power, whatever, to issue these bonds. By an unbroken current of decisions by this court and by all other courts, too numerous to mention, it is settled law that a municipality has no power to make a contract of this character, except by legislative permission. It is manifest that, such being the case, the legislature in granting such permission can impose such conditions as it may choose; and even where there is authority to aid a railroad and incur a debt
in extending such aid, it is also settled that such power does not carry with it any authority to execute negotiable bonds except subject to the restrictions and directions of the enabling act.
To the same effect are Wells v. Supervisors, 102 U. S. 625, 631; Barnum v. Okolona, 148 U. S. 393; Provident Life & Trust Company v. Mercer County, 170 U. S. 593, 600. Dillon on Municipal Corporations, ed. 1911, sec. 889.
I can not regard the provisions of sections 5 and 8 of the act of January 31, 1901, as merely directory, nor speculate as to the motives of the legislature in enacting them. It is enough that they are positive and unambiguous in their terms and are contained in the only act I have been able to find authorizing such bond issues at all. They must, therefore, be substantially complied with. And this applies not only to the points referred to above, but also to the signing of the bonds by those persons who are mayor and secretary of the council of Ponce at the time they are issued (Coler v. Cleburne, 131 U. S. 162), and the registering of the date of issue by the secretary (Anthony v. County of Jasper, 101 U. S. 693).
In regard to the possibility of making the bonds payable, principal and interest, in the United States as well as in Porto Rico, in the absence of legislative restriction, municipal bonds may be made payable anywhere (Meyer v. City of Muscatine, 1 Wall. 384, 391). It is true the ordinance (sec. 4) makes these bonds payable, principal and interest, at the office of the treasurer of Porto Rico at San Juan, but the provisions of section 7 of the act of January 31, 1901, have clearly the effect to transfer the place of payment to New York City as to those bonds whose holder gives the proper notice of his desire to have them so payable. Of course they can not be made or considered payable anywhere else in the United States than in New York.
As to making them transferable in the United States, the ordinance expressly provides (sec. 4) that they shall be transferable on the books of the treasurer of Porto Rico, and the ordinance must be followed.
In Brenham v. German American Bank, 144 U. S. 173, 188, the Supreme Court said:
“ It is also to be remarked that the ordinance of June 7, 1879, provided that the city should have the right to redeem the bonds at any time after five years from date, while each bond on its face states that it is redeemable by the city after the expiration of ten years from date hereof.' The officers of the city had no power to depart from the terms of the ordinance by varying the time limited for redemption.”
The situation as to the right to make the bonds transferable in the United States is different from that as to the right to make them payable in New York, because the enabling act has no provision on the subject of the transferability of the bonds, so that the terms of the ordinance must control.
I also call your attention to the fact that section 4 of the act of January 31, 1901, evidently contemplates the issuance of coupon bonds. While the power to issue coupon bonds may be deemed to include the power to issue registered bonds (the kind authorized by the ordinance passed by the council of Ponce), yet it seems proper to bring this matter to your notice as an additional evidence that the provisions of the act of January 31, 1901, do not seem to have been followed in the provisions of the said ordinance. It is, of course, possible that the act of January 31, 1901, has been repealed or modified by some later enact ment of the legislative assembly of Porto Rico not called to my attention. Unless this be the case, however, in my opinion the provisions of said act should be complied with.
You also request my opinion on the form of the bond submitted by you.
Section 9 of the act of July 31, 1901, expressly provides that the form of the bond must be approved by the executive council, so that it would be manifestly improper for me to express any opinion on this subject. Respectfully,
GEORGE W. WICKERSHAM. The SECRETARY OF WAR.
POSTAL SAVINGS SYSTEM-SETTLEMENT OF ACCOUNTS
OF DECEASED DEPOSITORS.
The Postmaster General is authorized to make regulations dispens
ing with administration proceedings in the settlement of accounts of deceased depositors in the Postal Savings System, provided such regulations be reasonable, adapted to the discovery of truth, and based upon the general legal principles governing the distribu
tions of decedents' estates. Perhaps it would be well to have the regulations printed in the pass
book or otherwise brought to the attention of the depositors, and it would also seem wise, out of abundant caution, to have the regulations adopted by the board of trustees.
DEPARTMENT OF JUSTICE,
June 26, 1912. SIR: I have the honor to acknowledge the receipt of your letter of the 27th ultimo, having reference to the settlement of accounts of deceased depositors in the Postal Savings System, and requesting my opinion whether you have authority to dispense with administration proceedings in cases where such proceedings would be a burden and hardship to the relatives of the deceased depositor, and to prescribe an uniform rule for the settlement of the accounts of deceased depositors, without regard to the present practice of accounting officers or the laws of the several States relating to the distribution of personal property.
The postal savings act of June 25, 1910, ch. 386 (36 Stat. 814), provides (sec. 1) that the board of trustees “ shall have power to make all necessary and proper regulations for the receipt, transmittal, custody deposit, investment, and repayment of the funds deposited at postal savings depository offices ”; that the postal savings depository offices are declared “ to be authorized and required to receive deposits of funds from the public and to account for and dispose of the same, according to the provisions of this act and the regulations made in pursuance thereof” (sec. 3); " that any depositor may withdraw the whole or any part of the funds deposited to his or her credit, with the accrued interest, upon demand and under such regulations as the board of trustees may prescribe” (sec. 8); that the Postmaster General " is also authorized to make, and with the approval of the board of trustees to promulgate, and