of their respective share or shares of stock in any such corporation or association, for all its debts and liabilities of every kind.

[Const. 1846, art. 8, § 7.]

This section was originally adopted in 1846, but was modified in important particulars by the Convention of 1894.

The measure of the liability of stockholders prescribed by this section "is the amount, or, as it would be better expressed, a sum equal to the amount of their respective shares of stock." This additional security is necessary for the protection of the public. United States Trust Co. v. United States F. Ins. Co. (Empire City Bank) (1858) 18 N. Y. 199, citing Briggs v. Penniman (1826) 8 Cow. 387, 18 Am. Dec. 454; Bank of Poughkeepsie v. Ibbotson (1840) 24 Wend. 473.

This section applies to existing banks as well as to those organized after its adoption. Re Gibson (Oliver Lee & Co.'s Bank) (1860) 21 N. Y. 9. "The existing banks were numerous, and, if they were exempted from the principle of personal liability, it would be a long time before it would be generally established. By the general banking law the associations had the power to prescribe for themselves the duration of their corporate existence, and a long term had generally been named. Hence, if the rule of personal liability only reached the case of future banks, there would continue to be two classes of banking institutions for many years to come." The convention which framed the Constitution "was not obliged, like the legislative bodies, to look carefully to the preservation of vested rights. It was competent to deal, subject to ratification by the people, and to the Constitution of the Federal government, with all private and social rights, and with all the existing laws and institutions of the state." Affirmed as Sherman v. Smith (1861) 1 Black, 587, 17 L. ed. 163.

The section applies to banks chartered by special law. Re Reciprocity Bank (1860) 22 N. Y. 9.

The liability imposed by this section "is limited to stockholders in banking corporations or associations ‘issuing bank notes or any kind of paper credits to circulate as money.' It is well known that state banks, while invested with the power of banks of issue on

complying with certain conditions, are, by the operation of the provisions of the United States laws relating to national banks, practically prohibited from the exercise of this power." The liability of stockholders in such banks is fixed by statute. Hirshfeld v. Bopp (1895) 145 N. Y. 84, 39 N. E. 817; Persons v. Gardner (1899) 42 App. Div. 490, 56 N. Y. Supp. 822, 59 N. Y. Supp. 463.

§ 8. [Preference of billholders.]—In case of the insolvency of any bank or banking association, the billholders thereof shall be entitled to preference in payment over all other creditors of such bank or association.

[Const. 1846, art. 8, § 8.]

This is a part of the plan to protect the holders of bank bills, but is of little practical effect under present banking conditions.

§ 9. [ No state aid to individuals or corporations.] Neither the credit nor the money of the state shall be given or loaned to or in aid of any association, corporation, or private undertaking. This section shall not, however, prevent the legislature from making such provision for the education and support of the blind, the deaf and dumb, and juvenile delinquents, as to it may seem proper. Nor shall it apply to any fund or property now held, or which may hereafter be held, by the state for educational purposes.

[Const. 1846, art. 7, § 9; Am. 1874; Const. 1894, art. 7, § 1.]

I have given in previous chapters a sketch of the conditions which led to the adoption of the policy indicated by this section. The first part of this section was adopted in 1846, and was then § 9 of article 7. It was modified in 1874 by striking out the word "individual" and substituting the words "private undertaking" in the first part, and by the addition of the second part, relating to

appropriations for charitable and educational purposes, and also making the prohibition applicable to the money of the state, which was not included in the original section.

By the act of 1840, chap. 193, the comptroller was authorized to loan to the Long Island Railroad Company $100,000 on "special certificates of stock," to be "reimbursable at the pleasure of the legislature, at any time after twenty years." The act of 1858, chap. 36, made the stock absolutely payable on the 1st of August, 1876, but authorized its redemption in 1861 on specified conditions, and also provided a sinking fund for the payment of the stock. The legislature had power thus to fix the date for the payment of the stock, and this was not a loan of the credit of the state. The loan had already been made under the act of 1840, and the Constitution of 1846 did not prevent the legislature from taking such steps as might be necessary to secure the payment of the loan. People ex rel. De Forest v. Denniston (1861) 23 N. Y. 247.

In People ex rel. Schenectady Astronomical Observatory v. Allen (1870) 42 N. Y. 404, the court denied the power of the legislature to authorize the comptroller to loan a portion of the principal of the common school fund for the purpose of establishing an astronomical observatory in Schenectady, chiefly for the reason that it would impair that fund, contrary to the provisions of article 9, § 1, now, 3. In the opinion the court say that "the legislature may donate any portion of the general fund of the state, or loan it upon any kind of security which it chooses, and such donation or loan will be valid, provided the act be framed and passed pursuant to the requirement of the Constitution." But the legislature cannot make a donation which would impair the capital of the common school fund, nor authorize a loan of it upon inadequate security.

The acts of 1866, chap. 576, 1867, chap. 708, and 1869, chap. 90, authorizing the North America Life Insurance Company to deposit with the superintendent of insurance securities for the protection of registered policy holders, and providing a special fund for the same purpose, did not constitute a loan of the credit of the state. The state "simply became the custodian of the securities deposited with it. It incurred or assumed no responsibility, except as a depositary." Atty. Gen. v. North America L. Ins. Co. (1880) 82 N. Y. 172.

The phrase "money of the state" means "money raised by general

taxation throughout the state, or revenues of the state, or moneys otherwise belonging in the state treasury or payable out of it. . . and not money raised by ordinary local taxation for local purposes, and to be disbursed by the local authorities." The fact that money is raised by local taxation by the supervisors of a county, pursuant to an act of the legislature, does not make it money of the state. (Citing People v. Ingersoll [1874] 58 N. Y. 1, 17 Am. Rep. 178, and People v. Fields [1874] 58 N. Y. 491.) Construing together §§ 9 and 10 (formerly 10 and 11), the court say that "the general scheme of the constitutional provision referred to seems to be that the general funds of the state shall not be given to local charitable institutions, except in aid of the blind, the deaf and dumb, and juvenile delinquents, and that the poor are to be provided for in their localities: counties, cities, towns, and villages being allowed to make any provision for the support of their poor which may be authorized by law. Carrying out the designated charities through the instrumentality of private corporations is not prohibited by the Constitution, but the giving away of the money, either of the state or of its counties or other local divisions, to individuals or private corporations, except for the designated purposes for which each is authorized to provide, is forbidden." The plaintiff was an institution authorized to receive and care for certain classes of children in New York, and therefore city money raised by taxation might lawfully be paid to it for such care. Shepherd's Fold v. New York (1884) 96 N. Y. 137.

What is the money of the state was considered in People ex rel. Einsfeld v. Murray (1896) 149 N. Y. 367, 375, 32 L. R. A. 344, 44 N. E. 146, where the court, construing the liquor tax law of 1896, providing for the distribution of excise moneys between the state and local communities, say: "There is a well-settled distinction between the money of the state and money levied under corporate powers conferred upon cities, villages, and towns for local and corporate purposes. In the latter case money levied and collected is not the money of the state. It is the money of the town, city, or village in which, under the exercise of corporate powers, it was levied and collected, and to it the state has no title."

The same court, in Fox v. Mohawk & H. R. Humane Soc. (1901) 165 N. Y. 517, 51 L. R. A. 681, 80 Am. St. Rep. 767, 59 N. E. 353, say that, from the enumeration in this article of the money "of the state, of a county, city, town, and village, it is plain that the Constitution meant to include all public moneys which are raised in any manner throughout the state as an exaction from the citizen by

the taxing or licensing power of government." The court held to be unconstitutional the act of 1896, chap. 448, which, among other things, required every owner of a dog in specified cities to pay to an incorporated society for the prevention of cruelty to animals an annual license fee. "If the appropriation to the defendant of license fees prescribed by this statute is a gift of money to, or in aid of, an association, corporation, or private undertaking, then it is in conflict with the constitutional provision." The society is not a subordinate governmental agency, and the statute, "so far as it compels the owners of dogs to pay license fees to the defendant for the purposes prescribed in the statute, is an unauthorized appropriation of public moneys, and is in conflict with the Constitution."

In People ex rel. New York Inst. for Blind v. Fitch (1897) 154 N. Y. 14, 38 L. R. A. 591, 47 N. E. 983, it was held that "the state could appropriate its funds for the education and support of the blind, and that counties might appropriate the sum required for clothing the indigent pupils therein who were residents of the county making the appropriation."

§ 10. [Counties, cities, and towns not to give or loan money or credit; limitation of indebtedness. ]-No county, city, town, or village shall hereafter give any money or property, or loan its money or credit to or in aid of any individual, association, or corporation, or become directly or indirectly the owner of stock in, or bonds of, any association or corporation; nor shall any such county, city, town, or village be allowed to incur any indebtedness except for county, city, town, or village purposes. This section shall not prevent such county, city, town, or village from making such provision for the aid or support of its poor as may be authorized by law. No county or city shall be allowed to become indebted for any purpose or in any manner to an amount which, including existing indebtedness, shall exceed ten per centum of the assessed valuation of the real estate of such county or city subject to taxation, as it appeared by the assessment-rolls of said county or city on the last assessment for state or county taxes prior to the incurring of such indebtedness; and all indebt