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Town of Pana v. Bowler

This was an action of assumpsit brought by James H. Bowler and Isaac H. Merrill against the town of Pana, upon coupons cut from certain bonds issued by the town, dated June 23, 1873. The defendant pleaded the general issue, and the parties having waived a jury, submitted the case to the court upon the facts as well as the law. The court found the issues of fact for the plaintiffs, and rendered judgment in their favor for $7,272.02. This writ of error is brought by the defendant to review that judgment.

The parties made an agreed statement, and the court a special finding of facts. From these and the pleadings in the case the following facts appear:

On February 25, 1867, an act was passed by the Illinois legislature 'to incorporate the Illinois Southeastern Railway Company.' Sections 9 and 10 of this act declared as follows:

'Sec. 9. Any town, in any county under township organization, is hereby authorized and empowered to donate to said company any amount, not to exceed $30,000: provided, that no such donation by any such town to said company shall be made, unless the question of making such donation shall have been first submitted to the legal voters of such town at an election hereafter to be provided for: and provided further, that no donation so made, nor any part thereof, nor any interest accruing thereon, or upon any part thereof, shall be paid, or become due or payable, to said company until said company, or its assigns or employes, shall have completed their said railroad, or some certain part of said road, or its branch, as may have been agreed upon by the contracting parties.

'Sec. 10. No such election for the purpose of submitting the question of making a donation by any such town, authorized by section 9 of this act to donate to this company, shall be held until the directors of said company shall have filed a proposition to the inhabitants of said town with the county clerk of the county wherein such town is situate, and a copy of the same with the clerk of said town, and if there be a newspaper published in said county, said proposition shall be published in full in the same; whereupon it shall be the duty of the clerk of such town to post up printed or written notices of the time and place of holding such election in at least 10 public places in such town, together with a copy of such proposition, at least 20 days before the day for holding such election; at which election the legal voters of such township shall vote for or against such proposition; and if a majority of all the votes cast be for such proposition, the trustees of such town shall so certify the same to the clerk of the county court of the county wherein the town is situated, and such county clerk shall, upon application of the company, after the donation so voted by any such town shall have become due and payable, under the terms and conditions of the proposition under which said election was rendered, compute and assess upon all the taxable property in said town an amount sufficient to pay such donation, or any part or installment of the same so then being due and payable; which taxes so assessed shall be collected as other taxes; and the taxes so collected shall be paid to the treasurer of said company. And the election herein provided for shall be held, canvassed, and returned as other regular town elections.'

Afterwards, on February 24, 1869, another act was passed to amend the act to incorporate the Illinois Southeastern Railway Company, section 10 of which was as follows:

'Sec. 10. That any village, city, county, or township organized under the township organization law, or any other law of this state, along or near the route of said railway or its branches, or that are in anywise interested therein, may, in their corporate capacity, subseribe to the stock of said company, or render donations to said company to aid in constructing and equipping said railway: provided that no such subscriptions or donations shall be made until the same shall be voted for, as hereinafter provided. That whenever 20 legal voters of any such city, village, county, or township shall present to the clerk thereof a written application requesting that an election shall be held to determine whether such village, city, county, or township shall subscribe to the capital stock of said company or make a donation thereto, to aid in building or equipping said railway, stating the amount, and whether to be subscribed or donated, and the rate of interest and times of payment of the bonds to be issued in payment thereof, such clerk shall receive and file such application, and shall immediately proceed to post written or printed notices, calling an election to be held by the legal voters of such village, city, county, or town ship, which notice shall be posted in 10 of the most public places of such village, city, county, or township, for 30 days preceding an election; and said notices shall state fully the object of such election, and such election shall be held and conducted, and returns thereof made, as in general elections provided by law in this state, and as provided by the charters of any such village or city: provided, that at any election held under the provisions of this act it shall not be necessary to cause a registration of the voters of such villages, cities, counties, or townships; and if a majority of the votes cast at such election shall be in favor of such subscription or donation, then the corporate authorities of such village, city, county, or township, organized under the township organization laws of this state,-the supervisors of such township,-shall subscribe to the capital stock of said company or donate thereto, as shall have been determined at such election, the amount so voted at such election, and shall issue the bonds with interest coupons attached; * * * said bonds to be signed, * * * in case of a township, by the supervisor thereof, and * * * to be countersigned by the clerk of said * * * township,' etc.

Afterwards the Springfield & Illinois Southeastern Railway Company, to which the bonds in question in this case were issued, was created by the consolidation of the Pana, Springfield & Northwestern Railroad Company and the Illinois Southeastern Railway Company. The consolidation was authorized by the charters of the two companies, and the new company succeeded to all the rights, franchises, and powers of the constituent companies. Harter v. Kernochan, 103 U.S. 562. In pursuance of section 10 of the said act of February 24, 1869, a petition was presented to the town clerk of Pana township to order an election to be held on April 30, 1870, to decide whether said township should donate to the Springfield & Illinois Southeastern Railway Company the sum of $100,000 in bonds, to fall due in twenty years, or, at the option of the township, in five years from this date, with interest at the rate of 8 per cent. per annum, payable semi-annually. On April 30, 1870, an election was held in said township, in pursuance of the petition, and a notice thereof given according to law. The meeting at which the election was held was called to order by the town clerk, and one J. W. Stark was, on motion, chosen moderator, and was sworn in by the town clerk and presided over the election. At the election thus held 438 votes were cast for and 24 against said donation. In the spring, summer, and fall of the year 1873, the supervisor and town clerk of said township, in pursuance of said election, and without any other authority of law than said election, and the charter and amendments above referred to, issued to the Springfield & Illinois Southeastern Railway Company 100 bonds of the township of Pana, of $1,000 each, payable and bearing interest according to the rate aforesaid. All the bonds were of like tenor and effect, except as to their number. The following is a copy of one of them:

'UNITED STATES OF AMERICA.

'STATE OF ILLINOIS, COUNTY OF CHRISTIAN.

'No. 6.] Pana Township. [$1,000.

'Eight per cent railroad bond. Registered by auditor of public accounts.

Principal and interest collected and paid by the treasurer of state of Illinois.

'Know all men by these presents that the township of Pana, in the county of Christian and state of Illinois, acknowledges itself indebted to the Springfield & Illinois Southeastern Railway Company, or bearer, in the sum of $1,000, with interest from the date hereof at the rate of 8 per cent. per annum, payable semi-annually on the first days of January and July of each year, at the agency of the state treasurer of the state of Illinois, in New York city, on the presentation and surrender of the respective interest coupons hereto attached. The principal of this bond shall be due and payable after 5 years and within 20 years of the date hereof, at the option of said township, at said agency in the city of New York.

'This bond is one of a series amounting to $100,000, issued by said township in compliance with the vote of the legal voters thereof at an election held on the thirtieth day of April, A. D. 1870, under and by virtue of the authority conferred by an act of the general assembly of the state of Illinois, entitled 'An act to incorporate the Illinois Southeastern Railway Company,' approved February 25, 1867, and an act amendatory thereof, approved February 24, 1869, and in accordance with the provisions of an act of said general assembly entitled 'An act to fund and provide for paying the railroad debts of counties, cities, townships, and towns,' in force April 16, 1869. And for the payment of said sum of money and the accruing interest thereon, in the manner aforesaid, the faith of the said township of Pana is hereby irrevocably pledged, as as is also its property, revenue, and resources.

'In testimony whereof the said township of Pana has caused these presents to be signed by its supervisor and countersigned by its clerk, this twenty-eighth day of June, A. D. 1873.

'EDWIN SANDERS, Clerk.

GROVE P. LAWRENCE, Supervisor.'

At the time the bonds and coupons were issued Grove P. Lawrence was the supervisor of said township of Pana, and Edwin Sanders was its clerk, and their signatures to the bonds and coupons are genuine.

The coupons attached to said bonds were all of the same tenor and effect, except in respect of their numbers. The following is a copy of the coupon attached to the above-recited bond:

'$40. The township of Pana, Christian county, Illinois, will pay the bearer forty dollars on the first of January, 1882, at the agency of her state treasurer in the city of New York, it being six months' interest on bond No. 6.

'GROVE P. LAWRENCE,

'Supervisor of said township.'

On the back of every bond was the following indorsement:

'AUDITOR'S OFFICE, ILLINOIS,

'SPRINGFIELD, June 28, 1873.

'I, Charles E. Lippincott, auditor of public accounts of the state of Illinois, do hereby certify that the within bond has been registered in this office this day, pursuant to the provisions of an act entitled 'An act to fund and provide for paying the railroad debts of counties, townships, cities, and towns,' in force April 16, 1869.

'In testimony whereof I have hereunto subscribed my name and affixed the seal of my office the day and year aforesaid.

C. E. LIPPINCOTT, Auditor P. A.'

'[Seal.]

The act referred to in this certificate provided that certain taxes, therein specified, should be applied to the payment of the principal and interest of bonds registered in the office of the auditor of public accounts, and that no bonds should be so registered until the railroad, in aid of which the bonds had been issued, should have been completed near to or in the township issuing the bonds, and unless the subscription or donation creating the debt, to pay which the bonds were issued, had been first submitted to an election of the legal voters of said township under the provision of the laws of the state, and a majority of the legal voters living in such township had been in favor of such aid, subscription, or donation. And it was made the duty of the supervisor of the township, upon the completion of the railroad near to or through the township by which the bonds were issued, to certify under oath to the state auditor that all the preliminary conditions required by the act to be done to authorize the registration of the bonds and to entitle them to the benefits of the act, had been complied with. See Hurd's Rev. St. 1880, p. 807, § 17.

The record in this case showed that the certificate above mentioned, in reference to the issue of the bonds in question, had been made by Grove P. Lawrence, the supervisor of Pana township, and transmitted by him to the auditor of public accounts. The interest on said issue of $100,000 of bonds was levied and collected and paid for three years by the state treasurer as provided by law.

It further appeared that in the year 1876 the town of Pana and three tax-payers filed, in behalf of themselves and all other tax-payers of the town, a bill in the circuit court of Christian county against the auditor of public accounts of the state of Illinois, the treasurer of the state of Illinois, the treasurer and the clerk of Christian county, Illinois, the town collector of the town of Pana, and H. N. Schuyler, William E. Hayward, John Vedder, and William Houston, and 'the unknown holders and owners of said bonds and coupons issued by the town of Pana,' as defendants, in which the complainants prayed that said public officers might be perpetually enjoined from levying a tax with which to pay said bonds and coupons, and that said bonds might be declared void, and that said holders and owners of said bonds might be perpetually enjoined from selling or negotiating or suing upon said bonds or the coupons attached to them, or pretending or insisting in any court of law or equity, or elsewhere, in any manner whatsoever, that said town was liable upon said bonds or coupons.

The parties made defendant by name were neither served with process nor voluntarily appeared in the case. It was assumed that 'the unknown holders and owners of said bonds and coupons' were brought in by publication of a notice to them under that designation in a newspaper, according to the laws of the state of Illinois. The circuit court of Christian county dismissed the bill, but the appellate court, upon appeal, reversed its decree and directed it to grant the prayer of the bill, and the decree of the appellate court was affirmed by the supreme court, to which the case was carried by the defendants. Afterwards, at its November term, 1879, to-wit, on December 17th, the circuit court, upon receiving the mandate of the appellate court and of the supreme court, entered a decree in favor of the complainants, in accordance with the prayer of the bill.

The coupons offered in evidence, being those upon which the suit was brought, were, at the time of the trial and before the commencement of the suit, held and owned by the plaintiffs, who were citizens of the state of Maine.

Such were the material facts of the case. The town of Pana, plaintiff in error, by its assignments of error, insisted:

(1) That there was no authority in the charter of the Springfield & Illinois Southeastern Railway Company to hold an election and issue bonds to the amount of $100,000; (2) that the election held on April 30, 1870, was illegal and void, because it was presided over by a moderator, and not by the supervisor, assessor, and collector, as required of general elections by the law of the state, and therefore conferred no authority upon the supervisor and town clerk to issue said bonds and coupons; (3) that it was incumbent on the plaintiffs below, the bonds having been illegally issued, to prove that they were bona fide holders of the coupons for value, which they failed to do; (4) that no judgment could be rendered for the plaintiffs on said coupons after they and the bonds to which they belonged had been declared void by the decree of the circuit court of Christian county; (5) that in any event the judgment was too large by $572.22.

W. J. Henry, for plaintiff in error.

''Geo. A. Sanders'', for defendant in error.

WOODS, J.

title: Town of Pana v. Bowler


text: Talk:Town of Pana v. Bowler

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title: Talk:Town of Pana v. Bowler


text:
Town of Pana v. Bowler/Opinion of the Court

The people of the township of Pana voted almost unanimously for the donation to pay which the bonds in this case were issued. There is no pretense of any fraud in their issue. It is not disputed that the railroad company complied on its part with all the conditions upon which the bonds were to be issued to it, or that the township has received all it bargained for in consideration of the issue of the bonds. The bonds were registered in the office of the auditor of public accounts, where no bonds could be registered according to law unless the election authorizing the donation for which the bonds were issued had been held in pursuance of the statute, and the sworn certificate of the supervisor of the township to that effect had been filed with the auditor. The township has paid the interest on the bonds for three years. Under these circumstances, if the bonds and coupons are in the hands of bona fide holders for value, the defenses through which the township can escape liability will be reduced to narrow limits. The charter of the Illinois Southeastern Railway Company declared that any town in any county under township organization might donate to said company any amount not to exceed $30,000. The question is raised by the first assignment of error whether this limit was removed by the amendatory act of February 24, 1869. We think it was.

Section 10 of the act last named is an entire revision of sections 9 and 10 of the original charter of the company. The original charter authorized townships only to make donations to the railroad company, and it required that the railroad, or some part of it or its branches, should be completed before the donation was paid. It did not authorize the issue of bonds to pay the donations, but required the assessment and collection of a tax upon all the taxable property of the town for that purpose.

The amendatory act authorized noy only townships, but also villages, cities, and counties along the route of the railroad to make donations to the company. It prescribed an entirely different condition precedent to the making of a donation, and required the issue of bonds to pay the donation when made, and it did not require the completion of the railroad, or any part of it, before the bonds were issued. It did not limit the amount which might be donated to $30,000, but declared that if a majority of the votes cast at the election provided for by the act should be in favor of donation, the corporate authorities of the village, city, county, or township, as the case might be, should donate to the company the amount so voted at said election, and issue bonds in payment thereof. It thus appears that the section 10 of the amendatory act covered the entire subject embraced by sections 9 and 10 of the original act. It related to the same railroad company; it prescribed different methods of procedure in reference to the same subject, and embraced entirely new provisions, thus plainly showing that it was intended as a substitute, pro tanto, for the original act. Section 10 of the amendatory act, therefore, operated as a repeal by implication of sections 9 and 10 of the original act, and removed the restriction limiting to $30,000 the amount which could be donated by a township to the railroad company. U.S. v. Tynen, 11 Wall. 88; Henderson's Tobacco, Id. 652; Murdock v. Memphis, 20 Wall. 590; King v. Cornell, [1 SUP. CT. REP. 312,] decided at the present term.

The next question raised by the assignments of error relates to the power of the township of Pana, under the circumstances of this case, to issue the bonds in question. This court has decided in the case of Harter v. Kernochan, 103 U.S. 562, that bonds issued by the township of Harter, dated April 1, 1880, signed by the supervisor and countersigned by the clerk of the township, reciting that they were issued in pursuance of the acts of February 25, 1867, and February 24, 1869, which are the acts relied on in this case, and in pursuance of an election of the legal voters of the township held on November 10, 1868, were valid obligations of the township.

The power of the township of Pana, under the same acts, to issue bonds to pay its donation to the same railroad company, is, therefore, settled beyond dispute, unless what the plaintiff in error insists was a defect in the method of conducting the election by which the donation was voted, is fatal to the authority of the officers of the township to issue the bonds. This defect was that the election was presided over and the returns made, not by the supervisor, assessor, and collector of the township, ex officio judges of elections, but by a moderator chosen by the electors present.

It is insisted by the plaintiff in error that, as the constitution of Illinois, adopted July 2, 1870, by its second additional section, cut off the power of any township or other municipality to subscribe to the capital stock of, or make a donation to, any railroad company, except when such subscription or donation had been authorized under existing laws, by a vote of the people of the municipality prior to the adoption of the constitution, and as, by reason of the defect just mentioned, there was no legal election, it follows that there was no authority in the officers of the township of Pana to make the donation or issue the bonds in question in this case, and that the bonds are not binding on the township. We cannot assent to this conclusion.

It is clear that this case in nowise differs from other cases where the holding of an election and a vote of the people in favor of an issue of bonds is made by law a condition precedent upon which the authority to issue bonds rests.

The bonds in question in this case recite on their face that they were issued by the township, in compliance with the vote of the legal voters thereof, at an election held on April 30, 1870, under and by virtue of the authority conferred by acts of the general assembly of the state of Illinois, specifying the acts of February 26, 1867, and February 24, 1869, above mentioned.

This court has again and again decided that if a municipal body has lawful power to issue bonds or other negotiable securities, dependent only upon the adoption of certain preliminary proceedings, such as a popular election of the constituent body, the holder in good faith has the right to assume that such preliminary proceedings have taken place, if the fact be certified on the face of the bonds by the authorities whose primary duty it. Lynde v. The County, 16 Wall. 6; Town of Coloma v. Eaves, 92 U.S. 484; Com'rs Johnson Co. v. January, 94 U.S. 202; Douglas Co. v. Bolles, Id. 104; Co. of Warren v. Marcy, 97 U.S. 96.

The authority to issue the bonds in question in this case, resting upon the fact that an election was held in pursuance of law before a certain date, namely, the date when the constitution of 1870 was adopted, and the bonds reciting on their face the fact that the election was so held before the date mentioned, the circumstance that the election was irregularly conducted can be of no avail as a defense to the bonds in a suit brought by a bona fide holder.

Our attention has been called to the decision of the supreme court of Illinois in the case heretofore mentioned and reported as Lippincott v. Town of Pana, in 92 Ill. 24, which it was held that the election relied on in this case as the authority for the issue of the bonds was absolutely void, and the issue of the bonds was, therefore, without authority. Our attention is also called to the cases of People v. Santa Anna, 67 Ill. 57, and People v. Town of Laenna, Id. 65, where similar elections under a like statute were held void. These last two cases were decided before the bonds in this case were issued. They were, however, suits brought to restrain the issue of bonds by the township officers, on account of the irregularities in the election. The rights of bona fide holders could not, therefore, arise, and were not passed on in those cases. But in the case first mentioned the bonds had been issued, and were presumptively in the hands of bona fide holders. Nevertheless, the supreme court of Illinois held the bonds to be void in whosoever hands they might be.

It is insisted that this court is bound to follow this decision of the supreme court of Illinois and hold the bonds in question void. We do not so understand our duty. Where the construction of a state constitution or law has become settled by the decision of the state courts, the courts of the United States will, as a general rule, accept it as evidence of what the local law is. Thus, we may be required to yield against our own judgment to the proposition that, under the charter of the railway company, the election in this case, which was held under the supervision of a moderator chosen by the electors present, was irregular and therefore void. But we are not bound to accept the inference drawn by the supreme court of Illinois, that, in consequence of such irregularity in the election, the bonds issued in pursuance of it by the officers of the township, which recite on their face that the election was held in accordance with the statute, are void in the hands of bona fide holders. This latter proposition is one which falls among the general principles and doctrines of commercial jurisprudence, upon which it is our duty to form an independent judgment, and in respect of which we are under no obligation to fllow implicitly the conclusions of any other court, however learned or able it may be. Swift v. Tyson, 16 Pet. 1; Russell v. Southard, 12 How. 139; Watson v. Tarpley, 18 How. 517; Butz v. Muscatine, 8 Wall. 575; Boyce v. Tabb, 18 Wall. 546; Oates v. ''Nat. Bank, 100 U.S. 239; Railroad Co. v. Nat. Bank'', 102 U.S. 14. See, also, Burgess v. Seligman, [ante, 10,] decided at the present term, where the question, how far the courts of the United States are bound by the decisions of the state courts, is carefully re-examined, and the rule on the subject stated with precision.

We cannot follow the decision of the supreme court of Illinois in Lippincott v. Town of Pana, ubi supra, without overruling a uniform current of the decisions of this court, beginning with the case of Com'rs Knox Co. v. Aspinwall, in 21 How. 539, and continuing down to the present time. The rights of the bona fide holder of negotiable municipal bonds, as we have stated them in this opinion, are too firmly settled by the decisions of this court to be shaken.

Our conclusion is, therefore, that the bonds in question in this case are valid in the hands of a bona fide holder, notwithstanding the irregularity in the conduct of the election by which they were claimed to be authorized.

The next question presented by the assignments of error is, does the irregularity in the conduct of the election throw on the plaintiffs the burden of proving that they are holders for value?

It is a general rule that when the holder of a negotiable instrument, regular on its face and payable to bearer, produces it in a suit to recover its contents, and the same has been received in evidence, there is a prima facie presumption that he became the holder of it, for value at its date, in the usual course of business. Murray v. Lardner, 2 Wall. 110; Bank of Pittsburgh v. Neal, 22 How. 96; Collins v. Gilbert, 94 U.S. 753; Brown v. Spofford, 95 U.S. 474. And municipal bonds, payable to bearer, are subject to the same rules as other negotiable paper. Cromwell v. Sac Co. 96 U.S. 51.

But the plaintiff in error insists that this case falls within an exception to that rule, and cites to sustain his position the cases of Smith v. Sac Co. 11 Wall, 139, and Stewart v. Lansing, 104 U.S. 505. The exception relied on by plaintiff in error is well settled, and is this: If, in a suit brought by the indorsee or transferee of a negotiable instrument, the maker or acceptor, or any party who is primarily bound by the original consideration, proves that there was fraud or illegality in the inception of the instrument, the burden of proof is thrown on the plaintiff to show that he is a holder for value. Smith v. Sac Co. and Stewart v. Lansing, ubi supra; Com'rs v. Clark, 94 U.S. 285; Collins v. Gilbert, Id. 753; Fitch v. Jones, 5 El. & Bl. 238; Smith v. Brane, 16 Q. B. 244; Hall v. Featherstone, 3 Hurl. & N. 284; Bailey v. Bidwell, 13 Mees. & W. 73; Vathir v. Zane, 6 Grat. 246; Hutchinson v. Boggs, 28 Pa. St. 294; Perrin v. Noyes, 39 Me. 384; Cottle v. Cleaves, 70 Me. 256; Sistermans v. Field, 9 Gray, 331; Woodhull v. Holmes, 10 Johns. 231; Thompson v. Armstrong, 5 Ala. 383; Harbison v. Bank of Indiana, 28 Ind. 133; Fuller v. Hutchings, 10 Cal. 526; Redington v. Wood, 45 Cal. 406; Conley v. Winsor, 41 Mich. 253; Sloan v. Union Banking Co. 67 Pa. St. 470; Holme v. Karsper, 5 Binn. 469; Vallett v. Parker, 6 Wend. 615; Munroe v. Cooper, 5 Pick. 412; 1 Daniel, Neg. Inst. (3d Ed.) § 815.

In most of the cases above cited the defense relied on was fraud in the inception of the instrument. Thus, in the case of Smith v. Sac Co. 11 Wall. 139, the report shows that the bonds were issued to a contractor to pay for the building of a court-house; that the county judge who executed and delivered the bonds was bribed to do so; and that the court-house never was built.

In the case of Stewart v. Lansing, 104 U.S. 505, the county judge, assuming to act under authority of a law of the state, rendered a judgment appointing commissioners to execute bonds of the town of Lansing. This judgment was carried by certiorari to the supreme court and there reversed. The county judge, the commissioners, and the railroad company to which the bonds were ordered to be issued, all has notice of the writ of certiorari and of the subsequent proceedings under it. Before the judgment of reversal, however, the commissioners, notwithstanding the pendency of the writ of certiorari, issued the bonds in suit in the case, taking from the railroad company an obligation for their personal indemnity. This court held that, as between the railroad company and the town, the judgment of reversal was equivalent to a refusal by the county judge to make the original order, and invalidated the bonds.

There is no pretense of any fraud in the inception of the bonds in question in this case. It is not denied that they were issued in good faith and for a valuable consideration. The question, then, is, was the irregularity in the conduct of the election such an illegality as throws on the plaintiff the burden to show that he paid value for the coupons? We are clearly of opinion that it is not.

It will appear from an examination of the cases above cited, in which the defense was illegality in the inception of the instrument, that the illegality which shifts the burden of proof on the holder to prove that he paid value, must be something which relates to the consideration of the paper sued on. It must appear that the consideration arose out of a transaction contrary to law, or against public policy. Thus, in the case of Sistermans v. Field, 9 Gray, 333, the illegality which the court held threw the burden on the plaintiff of proving that he gave value for the notes sued on, was the fact alleged by the defendant that they were given in payment for intoxicating liquors sold by the payees of the notes to the defendant in violation of law. Precisely the same illegality was held in the case of Cottle v. Cleaves, 70 Me. 256, to throw upon the plaintiff, who was indorsee, the burden of showing that he paid value for the note.

* So in Fuller v. Hutchings, 10 Cal. 526, the paper sued on was given for losses at a public banking game called 'faro.' Gaming was prohibited by statute. It was declared by the laws of California to be a felony in the keeper of the game and a misdemeanor in the player. In this case the court held that, the illegal consideration being admitted, it devolved upon the plaintiff to show that he took the paper without notice and for value.

In the case of Bailey v. Bidwell, 13 Mees. & W. 73, it was alleged, as a matter of defense, that the consideration for the note sued on was an agreement that the payee should not oppose a petition in bankruptcy filed by the defendant, the maker of the note, and that the note was indorsed to the plaintiff without value. The court, by Baron PARKE, held the rule to be that if the note was proven to have been obtained by fraud, or affected by illegality, that afforded a presumption that the person who had been guilty of the illegality would dispose of it, and place it in the hands of another person to sue on it, and that such proof casts upon the plaintiff the burden of showing that he was a bona fide indorsee for value.

In Fitch v. Jones, 5 El. & Bl. 238, the note which was sued on by an indorsee was given for a wager on the hop duty. This, the court said, was not within the statute of Anne or any other statutes which prohibit wagers. There was no penalty imposed for such a wager; and, therefore, as between the maker and payee, there was no illegality or violation of law, but it was a mere nudum pactum. And the court held that the defendant was bound to prove his plea by showing that the plaintiff did not give value for the note.

The authorities illustrate the rule and show that it does not apply to this case. There was no illegality whatever in the consideration of the bonds in question in this suit. The mere irregularity in the conduct of the election was not such an illegality as is contemplated by the rule, and does not deprive the holder of the coupons of the presumption that he acquired them for value.

The next contention of the plaintiff in error is that the decree of the circuit court of Christian county, Illinois, by which the bonds in question were declared void, is binding upon the plaintiffs in this case, and is a bar to the action upon the coupons sued on. The plaintiffs in this case are citizens of the state of Maine. It is sought to bind them by a decree rendered in a proceeding purely in personam in a case in which they were not named as parties, when there was no personal service upon or appearance by them, and when the only pretense of notice to them of the pendency of the suit was a publication addressed to the 'unknown holders and owners of bonds issued by town of Pana.' It is contended that, under the statutes of Illinois, parties may be thus brought in and a valid personal decree rendered against them. Whatever may be the effect of such a decree upon citizens of the state of Illinois, this court has held that, as to non-residents, it is absolutely Cooper v. Reynolds, 10 Wall. 308; Pennoyer v. Neff, 95 U.S. 714; Brooklyn v. ''Ins. Co. 99 U.S. 370; Empire v. Darlington'', 101 U.S. 92.

In a case decided at the present term it was declared by this court, speaking by Mr. Justice FIELD, that 'the courts of the United States only regard judgments of the state courts establishing personal demands as having validity or importing verity when they have been rendered upon personal citation of the party, or upon his voluntary appearance.' St. Clair v. Cox, 106 U.S. 350; [S.C.. 1 SUP. CT. REP. 354.]

These authorities settle the rule which is conclusive of this question. It would be a reproach to jurisprudence if the rights of citizens of Maine to recover the contents of a chose in action, held and owned by them, could be cut off by a suit in Illinois to which they were not made parties by name, and in which there was no presonal service or appearance.

It is insisted by counsel for plaintiff in error that the decree of the appellate court recites the fact that the persons made defendant under the designation of 'the unknown holders and owners of bonds and coupons of the town of Pana,' which includes the defendants in error, appeared in that court, and that they are, therefore, concluded by the decree in the case. There is no pretense that there was any appearance in fact of the parties referred to. It is sought to conclude them by a loose expression in the decree, which, in our opinion, was clearly not intended to recite their appearance, and is not fairly open to such a construction.

Lastly, it is assigned for error that, in computing the amount due upon the coupons described in the declaration, the court allowed 7 per cent. interest, the legal rate in New York, where the coupons were payable, instead of 6 per cent., the legal rate in Illinois, where they were made. There was no error in this. The coupons, after their maturity, bore interest at the rate fixed by the law of the place where they were payable. Gelpcke v. Dubuque, 1 Wall. 175. What we have said covers all the assignments of error. We find no error in the record. The judgment of the circuit court must, therefore, be affirmed.


text: Talk:Town of Pana v. Bowler/Opinion of the Court


text:
Myers v. Swann

T. T. Crittenden and F. H. Mackey, for plaintiffs in error.

S. F. Phillips, for defendants in error.

WAITE, C. J.

title: Myers v. Swann


text: Talk:Myers v. Swann

title: Talk:Myers v. Swann


text:
Myers v. Swann/Opinion of the Court

This is a writ of error brought under the act of March 3, 1875, c. 137, to reverse an order of the circuit court remanding a cause removed from a state court under the third subdivision of section 639 of the Revised Statutes, on account of 'prejudice and local influence.' At the time the application for removal was made in the state court, the suit was being prosecuted by citizens of North Carolina, as plaintiffs, against George Myers, then in life, a citizen of New York, and certain other persons, all citizens of North Carolina, to recover the possession of a lot in Wilmington, occupied by Myers, and to obtain a conveyance of the legal title held by the other defendants. The suit was originally begun on the nineteenth of May, 1873, against Myers alone, to recover the possession and damages for the detention, but on the twenty-ninth of May, 1877, an amended complaint was filed, not changing the action as against Myers, but bringing in the other defendants, who, it was alleged, held the legal title, and asking for a conveyance from them. Myers alone answered the amended complaint on the eighth of September, 1877, and on the twelfth of March, 1878, petitioned for a removal, filing an affidavit to the effect that he had reason to believe, and did believe, that from prejudice or local influence he would not be able to obtain justice in the state court. The state court of original jurisdiction refused to allow a removal, but on appeal to the supreme court this was overruled, on the ground that the new defendants were merely nominal parties as trustees, and thereupon the cause was docketed in the circuit court of the United States on the eighteenth of November, 1878. In November, 1879, the circuit court, 'being of opinion that the action in its present form' could not be maintained in that court, remanded the suit to the state court, and from that order this writ of error was taken.

As the suit was pending in the state court against Myers from 1873 to 1878, his application for removal was too late to secure the benefit of the separate-controversy provision in the act of 1875. Such an application should have been made at or before the term at which the cause could be first tried; or, rather, as this suit was begun before the act of 1875 was passed, it should have been at or before the term at which the cause could be first tried after that act went into operation. Removal Cases, 100 U.S. 473.

Under the local-prejudice act there can be no removal unless all the necessary parties on one side of the suit are citizens of different states from those on the other. This was decided in Vannevar v. Bryant, 21 Wall. 41. It is not enough that there be a separable controversy between parties having the necessary citizenship, nor that the principal controversy is between citizens of different states. If there are necessary parties on one side of the suit, citizens of the same state with those on the other, the circuit court cannot take jurisdiction. There is no doubt that in this case the principal controversy is between Myers and the plaintiffs, but the relief that is asked cannot be granted without the presence of all the defendants. The possession of the land is in Myers or his heirs, but the legal title is thought to be in the other defendants. It is true that the other defendants are mere trustees, who may be compelled to convey if they do have the title, but one of the objects of the suit is to get such a conveyance. This part of the relief asked for cannot be had unless the trustee defendants are parties. The record shows that they refused to join as plaintiffs. This implies that they deny the trust and leave the plaintiffs to their remedies. In effect they have put themselves on the record as contending that the conveyance made by their ancestor passed the title to Myers and discharged the trust. This also is claimed by Myers. Consequently it appears that under the ruling in Gardner v. Brown, 21 Wall. 41, the plaintiffs required the presence of the trustee defendants in order to get Myers out of possession even. Without the legal title they could not recover in ejectment against him. The trustee defendants were unwilling to join with the plaintiffs. Therefore the plaintiffs had to make them defendants in order to recover at all. It follows that the trustee defendants were not only not nominal parties, but, if they actually did hold the legal title, as is assumed, necessary parties.

The order remanding the cause was right, and it is affirmed.

title: Myers v. Swann/Opinion of the Court


text: Talk:Myers v. Swann/Opinion of the Court


text:
City of Quincy v. Cooke

Carl E. Epler, for plaintiff in error.

''Wm. McFadon'', for defendant in error.

HARLAN, J.

title: City of Quincy v. Cooke


text: Talk:City of Quincy v. Cooke

title: Talk:City of Quincy v. Cooke


text:
City of Quincy v. Cooke/Opinion of the Court

On the seventh day of August, 1868, the city council of Quincy, Illinois, in conformity with a vote of the people at an election held under the authority of a resolution adopted by that body on the ninth day of June previous,-passed an ordinance empowering and directing the mayor to subscribe $100,000, payable in city bonds, to the capital stock of the Mississippi & Missouri River Airline Railroad Company, a corporation created under the laws of Missouri. The object of the subscription was to aid in the construction of a railroad (lying wholly within the state of Missouri) from West Quincy north-westerly, connecting, Quincy with the road of that company. The ordinance made it a condition of the issue and payment of the bonds that there should be expended the sum of $50,000 in grading, bridging, and tieing the road, commencing at West Quincy, for a distance of 25 miles; further, that due guaranties be given, before the bonds WERE ISSUED, THAT THEIR PROCEEDS SHOULD BE SO EXPENDED-'THE CITY OF quincy to determine on the compliance with said conditions and issue of bonds in payment of the subscription.' On the succeeding day, August 8, 1868, the city, by its mayor, made the subscription upon the required conditions. Subsequently, March 27, 1869, the general assembly of Illinois passed a statute declaring 'that the acts of the city council of the city of Quincy, from June 2, 1868, to August 28, 1868, in ordering an election on the proposition to subscribe $100,000 to the capital stock of the Mississipi & Missouri River Air-line Railroad Company, and the subscription of said stock, and all other acts of said council in connection therewith, are hereby legalized and confirmed.' 3 Priv. Laws Ill. 1869, p. 376.

On the first day of January, 1870, the city council issued to the company, in part payment of said subscription, 50 bonds of the city, of $500 each, numbered from 1 to 50, inclusive; and on May 18, 1870, in further payment, 75 additional bonds, numbered from 51 to 125, inclusive. The remainder, dated July 1, 1870, were issued on November 12, 1870, in further and full payment. Upon each delivery of bonds the city received in exchange an equal amount at par value of the stock of the railroad company. The bonds, negotiable in form, were made payable to the railroad company or bearer at the National Bank of Commerce in New York. They purport to have been issued under and by virtue of the ordinance of August 7, 1868, and of the said act of assembly. The present action was brought to recover the amount of certain coupons of the bonds so issued.

The special finding shows that all of the coupons sued on, except one, were of the bonds issued and delivered January 1 and May 18, 1870; that the bonds from which the coupons sued on were taken, with and their coupons, were purchased by plaintiff for value, before maturity, in open market, in the usual course of business, and without notice of any infirmity therein; that the railroad company, from the commencement of the construction of its road, owned and ran its trains from West Quincy into and out of Quincy over the bridge connecting those two places; that the city, for six years after issuing the bonds, paid the successive annual installments of interest, and by an agent, regularly appointed for that purpose, voted its stock at one or more meetings of stockholders held after July 2, 1870.

It is not necessary to consider separately the various questions of law upon which there occurred, at the trial, a difference of opinion between the judges. They are all more or less involved in the general inquiry as to the existence of legislative authority for this issue of bonds.

1. Such authority cannot be found in the original charter of the city or in the act of February 16, 1857. The former gives the city council power 'to appropriate money and provide for the payment of the debt and expenses' of the city; the latter authorized that body 'to issue city bonds to any amount not exceeding, at one time, in the aggregate, the sum of $75,000.' These provisions manifestly relate to debts and expenses incurred for ordinary municipal purposes, and not to railroad subscriptions, the authority to make which must be expressly conferred by statute. These bonds upon their face show that they were executed in payment of a subscription of the latter character, and, consequently, purchasers were charged with notice that they were not issued for ordinary municipal purposes under any power conferred by the charter of the city or by the act of 1857.

2. The question of legislative authority is not determinable by that provision of the Illinois constitution of 1870 which saving municipal subscriptions made under existing laws by a popular vote prior to its adoption-declares that—

'No county, city town, township, or other municipality shall     ever become subscriber to the capital stock of any railroad      or private corporation, or make donation to, or loan its      credit in aid of, such corporation: provided, however, that      the adoption of this article shall not be construed as      affecting the right of any such municipality to make such      subscriptions when the same have been authorized, under      existing laws, by a vote of the people of such municipalities      prior to such adoption.'

This is quite clear in view of the twenty-fourth section of the schedule of that constitution, which provides:

'Nothing contained in this constitution shall be so construed     as to deprive the general assembly of power to authorize the      city of Quincy to create any indebtedness for railroad or municipal purposes, for which the people of      said city shall have voted, and to which they shall have      given, by such vote, their assent, prior to the thirteenth      day of December, in the year of our Lord one thousand eight      hundred and sixty-nine: provided, that no such indebtedness      so created shall, in any part thereof, be paid by the state,      or from any state revenue, tax, or fund, but the same shall      be paid, if paid at all, by the said city of Quincy alone,      and by taxes to be livied upon the taxable property thereof:      and provided further, that the general assembly shall have no      power in the premises that it could not exercise under the      present constitution of the state.'

The supreme court of Illinois, in Q., M. & P. R. Co. v. Morris, 84 Ill. 412, had occasion to consider the scope and effect of that section. In that case an election was held August 7, 1869, under the authority of a resolution of the city council, to take the sense of the people upon a subscription to the capital stock of the Quincy, Missouri & Pacific Railroad Company, also a Missouri corporation, whose road lay wholly within that state. That election was held without any law authorizing a vote on the question, or empowering the city to become a stockholder in that company. But by an act passed July 1, 1871, after the constitution of 1870 went into operation, the city of Quincy-subject to the terms and requirements embodied in the proposition submitted to the people-was authorized to make, upon such conditions as the city council deemed best, a subscription to the stock of that company, for which the people may have voted prior to the thirteenth day of December, 1869. The act further provided:

'Any election held in said city prior to said day, for the     purpose of such vote being taken, and any contract or      subscription made, or to be made, by said city to the capital      stock of said railroad company in pursuance thereof, and any      bonds or other evidence of such indebtedness issued or to be      issued by said city, are hereby declared valid.'

Under that act the subscription was made and bonds issued; and the controlling question was as to their validity. The court waiving any expression of opinion as to the validity of that part of the act which in terms purported to legalize the election decided that the obvious effect and intent of the twenty-fourth section of the schedule of the constitution was to leave the action of the city of Quincy, in assuming, by vote prior to December 13, 1869, to create indebtedness for a railroad subscription, and the power of the legislature over it, 'unaffected by the constitution of 1870; in other words, to leave the vote and the power of the legislature to confer the right to take stock precisely as they would have been under the constitution of 1848;' that the city council were the corporate authorities of Quincy, upon whom, within the meaning of the constitution of 1848, the legislature could confer, without the intervention of a popular vote, authority to make the subscription and issue the bonds; that section 24 of that schedule embraced a vote taken without authority of law, prior to December 13, 1869, because, had the vote been legal, the language, 'for which the people of said city shall have voted, and to which they shall have given, by such vote, their assent,' would have been unnecessary in view of the proviso in the general section forbidding municipal subscriptions in aid of railroad corporations; lastly, that the construction of the Quincy, Missouri & Pacific Railroad, although no part of it lay in Illinois, was a corporate purpose of the city of Quincy, because thereby its trade and commerce were increased, its property enhanced in value, and its welfare promoted.

3. It remains to inquire as to the authority of the city, under the constitution of 1848, to issue the bonds in question. Its power to do so is denied upon these principal grounds: (1) That the election held under the sanction of the city council, and the action of that body in directing the subscription to be made, were of no legal effect, since the election was held without authority of law, and the subscription was made when there was no legislative authority to create such indebtedness; (2) that without such authority no subscription could be legally made; (3) that the curative act of March 27, 1869, was invalid, because it assumed to impose indebtedness upon the city without the consent of its corporate authorities.

The soundness of the first and second of these propositions cannot be disputed, whether reference be had to the decisions of this court or to those of the supreme court of Illinois. But we are unable to concur in the suggestion that the corporate authorities of Quincy did not, after the passage of the act of March 27, 1869, have authority to issue these bonds. In support of the position taken by the city, counsel refer to numerous decisions of the supreme court of Illinois construing the fifth section of the ninth article of the constitution of 1848, which provides that 'the corporate authorities of counties, townships, school-districts, cities, towns, and villages may be vested with power to assess and collect taxes for corporate purposes.' From those decisions the following propositions, among others, may be deduced: That the clause was intended to define as well the class of municipal officers upon whom the power of taxation, for local purposes, might be conferred, as the purposes for which such power could be constitutionally exercised; that by the phrase 'corporate authorities' must be understood those municipal officers who were selected with some reference to the creation of municipal indebtedness, and who were either directly elected by the population to be taxed, or appointed in some mode to which they have given their assent; that the construction of a railroad, at least one within or near a county, township, town, village, or city, was a corporate purpose of such municipality; and that a debt for a subscription to the stock of a railroad corporation, or for bonds in payment thereof, could not be imposed upon a municipal corporation without the consent or against the will of its corporate authorities. But it has been quite as distinctly ruled by the supreme court of Illinois that the city council, and not the voters, of an incorporated city were its corporate authorities, within the meaning of the constitution of 1848, and, if empowered by legislative enactment, could, under that instrument, subscribe to the stock of a railroad corporation, and issue bonds in payment thereof, without submitting the matter to a popular vote. Such was the decision in Q., M. & P. R. Co. v. Morris, where the court reaffirmed the ruling upon this point in Keithsburg v. Frick, 34 Ill. 421, 422. In the latter case, a subscription made by a town to the capital stock of a railroad corporation-without authority of law, as was alleged-was, by an act passed after the town was incorporated under a special charter, declared to be legal, and bonds authorized to be issued therefor. The court said: 'It is by no means a necessary element in these subscriptions that there should be a vote of the inhabitants of the town or city authorizing them. It is competent for the legislature to bestow the power directly on the corporation without any intermediary, as they did in this case.' In Marshall v. Silliman, 61 Ill. 225, the right of the legislature to grant such an authority to the trustees of an incorporated town was conceded. And in Williams v. Town of Roberts, 88 Ill. 21, the court, speaking by Chief Justice SCHOLFIELD, said:

'County boards, such as boards of supervisors, county     commissioners, and the municipal authorities of incorporated      cities, towns, and villages, may, when empowered so to do by      proper legislation, subscribe to the capital stock of      railroad corporations without first submitting the question      to the electors of the municipality. They are elected as     representatives of the electors, and the-oretically, in      appropriate cases, their acts are the acts of those they      represent. Hence it has been held, where a vote of the     electors has been required as a precedent condition to the      making of a subscription for stock in a railroad company, and      the law prescribing the mode of calling and holding the      election has not been observed, inasmuch as the legislature      might have empowered the municipal authorities to make the      subscription without first submitting the question to the      electors, it may, by a subsequent enactment, declare the      non-compliance with the law in the holding of the election of      no consequence, and validate the subscription; in other      words, validate the subscription without reference to the      election. This, however, it will be observed, is upon the     theory that power to make the subscription does not in any      degree necessarily depend upon a vote of the electors of the      municipality upon that question, but solely upon the will of      the legislature.'

The authorities to which we have referred sustain the judgment against the city. This case is clearly distinguishable from those in which the legislature has attempted to impose upon a municipal corporation, without the consent of its corporate authorities, an indebtedness for subscription to the capital stock of a railroad corporation.

The cases mainly relied on by counsel for the city are those in which certain officers of limited authority were, in terms or in effect, required by legislative enactment to issue bonds or incur indebtedness in the name of a municipality, without the the consent, expressed in legal form, of those who were, in the constitutional sense, its corporate authorities. Here there can be no question but the city council are the corporate authorities of Quincy. And there is no ground whatever upon which to rest the suggestion that the indebtedness was created without their consent. In no just sense were they compelled to issue bonds in exchange for stock in the railroad company. If, as claimed by the city, the act of March 27, 1869, was inoperative in so far as it assumed to legalize and confirm what had been previously done without the sanction of the law, nevertheless by that act it was intended to confer upon the city council power, in execution of the expressed will of the voters, to issue bonds to the amount of $100,000 for stock in this railroad company. The vote of the electors, we have seen, was not essential to the validity of bonds issued, under legislative sanction, by the corporate authorities of the city. The city council was not required or directed, but only empowered, to proceed as if they had been originally invested with authority to make the subcription. The legislature, in substance, declared, as it might constitutionally have done, that the corporate authorities of the city had its consent to issue bonds to be exchanged for stock in the railroad company. If the corporate authorities could have been compelled by legal proceedings to issue the bonds, that is only another form of saying that the curative act was constitutional, and, consequently, that the bonds are valid. If, however, they could not have been so compelled, then the execution and delivery of the bonds, under the authority of the act of March 27, 1869, was a voluntary creation of indebtedness for a corporate purpose by the corporate authorities of the city.

What has been said disposes of all the questions certified, including that one relating to the coupon of a bond delivered to the railroad company after the constitution of 1870 went into effect. In Q., M. & P. R. Co. v. Morris all the bonds there involved were executed and issued under an act passed in 1871. They were sustained upon the ground that the validity of that act depended upon the power which the legislature possessed under the constitution of 1848. That decision, it would seem, determines the present case as to the coupon of the bond delivered in November, 1870.

The judgment is affirmed.


text: Talk:City of Quincy v. Cooke/Opinion of the Court


text:
Mills Iowa v. Burlington

C. B. Lawrence and D. H. Solomon, for plaintiff in error.

S. Shellabarger and J. M. Wilson, for defendant in error.

BRADLEY, J.

title: Mills Iowa v. Burlington


text: Talk:Mills Iowa v. Burlington

title: Talk:Mills Iowa v. Burlington


text:
Mills Iowa v. Burlington/Opinion of the Court

These cases were consolidated and heard together in the state courts, both relating to the same subject-matter, viz., the validity of a compromise agreement made on the twenty-seventh of October, 1868, between Mills county, in the state of Iowa, and the Burlington & Missouri River Railroad Company, in reference to certain lands lying in said county, claimed by the county as swamp and overflowed lands, and claimed by the railroad company as railroad grant lands. The claim of the county was based on the act of congress approved September 28, 1850, entitled 'An act to enable the state of Arkansas and other states to reclaim the swamp lands within their limits;' and an act of the general assembly of the state of Iowa, entitled 'An act to dispose of the swamp and overflowed lands in the state of Iowa, and to pay the expenses of selecting and surveying the same,' approved January 13, 1853; and other acts of the general assembly of said state. The claim of the railroad company was based upon the act of congress of May 15, 1856, granting to the state of Iowa certain lands for the purpose of aiding the building of a railroad from Burlington, Iowa, to a point on the Missouri river, at or near the mouth of Platte river in Nebraska. The act of congress first referred to (9 St. 519) declared in effect 'that to enable the state of Iowa to construct the necessary levees and drains to reclaim the swamp and overflowed lands therein, the whole of those swamp and overflowed lands, made unfit thereby for cultivation, which shall remain unsold at the passage of this act, shall be, and the same are hereby, granted to said state.' And, after providing for listing and patenting the lands, it was, by section 2, enacted that 'the fee-simple to said lands shall vest in the state of Iowa, subject to the disposal of the legislature thereof: provided, however, that the proceeds of said lands, whether from sale or direct appropriation in kind, shall be applied exclusively, as far as necessary, to the purpose of reclaiming said lands, by means of the levees and drains aforesaid.'

The general assembly of Iowa, by an act passed January 13, 1853, declared 'that all swamp and overflowed lands granted to the state of Iowa by the act of Congress (September 28, 1850) be, and the same are, hereby granted to the counties respectively in which the same may lie or be situated, for the purpose of constructing the necessary levees and drains to reclaim the same; and the balance of said lands, if any there be, after the same are reclaimed as aforesaid, shall be applied to the building of roads and bridges, when necessary, through or across said lands, and if not needed for this purpose, to be expended in building roads and bridges within the county.'

On the twenty-second of March, 1858, the general assembly passed another act containing, among others, the following provisions:

(1) 'Be it enacted by the general assembly of the state of     Iowa, that it shall be competent and lawful for the counties      owning swamp and overflowed lands to devote the same, or the      proceeds thereof, either in whole or in part, to the erection      of public buildings for the purpose of education, the      building of bridges, roads, and highways; for building      institutions of learning, or for making railroads through the      county or counties to whom such lands belong: provided, that      before any of said lands, or the proceeds thereof, shall be      so devoted to any of the purposes aforesaid, the question      whether the same shall be so done shall be submitted, at some      general or special election, to the people of the county.'

(2) 'The proper officer or officers of any county may     contract with any person or company for the transfer and      conveyance of said swamp or overflowed lands, or the proceeds      thereof, or otherwise appropriate the same to such person or      company, or to their use, for the purpose of aiding or      carrying out any of the objects mentioned in the first      section of this act, which said contract shall be reduced to      writing and signed by the respective parties or their lawful      authorized agents.'

Another section prescribed the mode in which elections should be called and held, and without which any contract should be void, and concluded with the following proviso:

'Provided, that no sale, contract, or other disposition of     said swamp or overflowed lands shall be valid, unless the      person or company to whom the same are sold, contracted, or      otherwise disposed of, shall take the same subject to all the      provisions of the acts of congress of September 28, 1850, and      shall expressly release the state of Iowa, and the county in      which the lands are situated, from all liability for      reclaiming said lnad.' The Burlington & Missouri River Railroad Company was incorporated under the laws of the state of Iowa, January 23, 1852, for the purpose of constructing a railroad from Burlington to the most eligible point on the Missouri river. The act of congress under which said company claimed the lands, passed May 15, 1856, (11 St. at Large, 9,) granted to the state of Iowa, for the purpose of aiding in the construction of railroads 'from Burlington, on the Mississippi river, to a point on the Missouri river near the mouth of the Platte river,' etc., 'every alternate section of land, designated by odd numbers, for six sections in width on each side of said roads;' but it was provided that if any sections should be sold, or become subject to pre-emption, before the lines of the roads should be definitely fixed, other lands might be selected in lieu thereof, nearest to the tiers designated, but not to exceed 15 miles from the lines of the roads. It was further provided that the lands thus granted to the state should be subject to the disposal of the legislature thereof, for the purpose aforesaid, and no other. The general assembly of Iowa, by an act dated June 3, 1856, accepted this grant, and enacted (section 2) 'that so much of the lands, interests, rights, powers, and privileges as are or may be granted and conferred, in pursuance of the act of congress aforesaid, to aid in the construction of a railroad from Burlington, on the Mississippi river, to a point on the Missouri near the mouth of the Platte river, are hereby disposed of, granted, and conferred upon the Burlington & Missouri River Railroad Company, a body corporate, created and existing under the laws of the state of Iowa.' The acts and clauses of acts referred to are sufficient to show the general nature of the litigation which sprang up between the parties now before the court. The railroad company having claimed the right to appropriate certain of the lands in Mills county, which the county authorities claimed to be swamp and overflowed lands, the county, in December, 1863, commenced a suit in chancery against the railroad company to establish its title to the lands in question between them. The county court and the supreme court of the state decided in favor of the county, and the railroad company brought the case to this court by writ of error, where it was pending when the compromise agreement in question was entered into. That agreement consisted of a proposition made by the county authorities to the railroad company, which was accepted by the latter. The following is a copy of the papers which passed between them:

PROPOSITION OF THE COUNTY.

'In order to settle and finally adjust the lawsuit now     pending in the supreme court of the United States, wherein      Mills county, in the state of Iowa, is plaintiff, and the      Burlington & Missouri River Railroad Company is defendant,      and secure the completion of said road through Mills county,      via Glenwood, in said county, we, the undersigned, agents of      said county, submit the following proposition to the board of      directors of said railroad company, to wit:

'There are in dispute between the parties to the said lawsuit     23,316 acres. For the purpose of having our proposition     understood, we acknowledge that we owe you acres of land to      the amount of 23,316; to pay which we have and offer you odd      sections, vacant, (most of which is a part of the 23,316      acres,) and even sections patented to the county and unsold,      in the aggregate 9,080 acres; balance of the land due you,      14,236 acres. For further payment we have and offer to you of     the odd sections, (about all of which is of the 23,316      claimed by you,) subject to pre-emption made through the      county, acres to the amount of (on which nothing has been      paid to the county) 4,660. Of these pre-empted lands we     estimate that about one-half of the pre-emptions are      fraudulent, and ought not to be recognized; but the county      must ask that where bona fide improvements have been made on      the same, the pre-emptors must be secured in their right to      the same, and have the privilege of purchasing at $1.25 per      acre of the county or company, which amount shall, in any      event, go to the railroad company. Now you will have land for     land, subject only to the pre-emptor's claims, until there      will be due you in acres 9,576.

'The remainder, 9,576 acres, belong to bona fide settlers and     purchasers, who, we must insist, shall be protected by the      county. And as we have paid you all the land we have, we     offer you for this balance $10,000 in money.

'The company should understand that the balance of 9,576     acres is the land, portions of which it has been settling with our      individual citizens for, and there is included in the 9,576      acres all the lands the company has sold to citizen settlers      at $1.25 per acre. With this understanding, the $10,000     balance we offer you will be just as much less than 9,576      acres as the company has thus sold, and therefor our pay      would, perhaps, amount to $1.50 or more.

'It is understood that the said suit now pending shall be     continued, by agreement of the parties, from term to term,      until the conditions of this contract or proposition shall be      complied with.

'It is also further understood that the foregoing proposition     shall not be binding on the county of Mills, unless said      railroad company shall complete said railroad through Mills      county via Glenwood and build a depot at Glenwood, in said      county; and in case said railroad company shall fail or      neglect to build said railroad through Mills county via      Glenwood, and also to build and establish a depot at      Glenwood, in said county, then, and in that event, the said      lawsuit shall stand for final hearing in the supreme court of      the United States, the same as if this proposition had never      been made. In case the suit shall be settled on the basis of     this proposition, each party shall pay their own costs. The     manner of transferring the land, whether the county shall      deal with the purchasers and pre-emptors, or whether the      railroad company under the restrictions indicated, the county      is not particular about, but will agree to what may seem the      most practicable.

'The amount in acres, as stated above, may not be exactly     correct and probably is not, but it is believed to be nearly      so; but we wish it understood that the company shall have all      the swamp lands the county now hold or are entitled to in      Mills county, Iowa, subject only to the conditions indicated      in the foregoing. Witness our hands this July 13, 1868. [Signed] William Hale, E. C. Bosbyshell, D. H. Solomon, L. W.     Tubbs, majority of the committee.'

ACCEPTANCE.

'BURLINGTON, IOWA, October 27, 1868.

'This proposition is hereby accepted, and the terms and     stipulations and conditions are agreed to by the Burlington &      Missouri River Railroad Company. [Signed] Burlington &     Missouri River Railroad Company. By C. E. Perkins, Supt.'

This proposition and acceptance being reported by the committee to the board of supervisors of Mills county, the said board passed the following resolution: 'After giving the report due consideration, it is  resolved by the board of supervisors of Mills county,   Iowa, at their regular session in November, 1868, that   the proposition submitted to the Burlington & Missouri   River Railroad Company, by our special railroad   committee, and the acceptance of the same by the said   company, be, and the same is hereby, confirmed and   ratified, and that the same be spread upon the records   of this board.

'The ayes and nays being called for, the vote stands as     follows:

'Ayes-Allis, Forrester, Haynie, Lamb, Utterback, Wing, Ward,     Russell, Summers, and Mr. Chairman. Nays-None.'

Several deeds of conveyance were executed by the board of supervisors of Mills county to the Burlington & Missouri River Railroad Company in the years 1869, 1870, and 1871, in pursuance of this compromise agreement, conveying altogether 13,720 55-100 acres of land. The suit of Mills county (one of the consolidated suits now before us) was brought in January, 1874, against the Burlington & Missouri River Railroad Company and others, in the Mills county district court, by petition, seeking to have the said compromise agreement and the said deeds of conveyance declared void, on the ground that the said agreement was not authorized by a vote of the people of the county, but was obtained by fraud; that it involved a diversion of a trust fund, and a surrender by agents of the whole subject-matter in controversy in a suit of their principal; that the judgment of the supreme court of Iowa, in the original suit, was duly affirmed by this court in February, 1870; and that, at an election held in October, 1871, for affirming or disaffirming said agreement, the people of Mills county disaffirmed the same by a vote of 1,031 against 357. The suit of the Chicago, Burlington & Quincy Railroad Company (successor to the Burlington & Missouri River Railroad Company) against Mills county, (the other of the consolidated suits now before us,) was brought in May, 1875, to recover the sum of $10,000, which, by the said compromise agreement, was to be paid by Mills county to the Burlington & Missouri River Railroad Company; and as the answer of the county set up the matters alleged in the petition in the other suit, the two suits were consolidated. The Mills county district court decided against the county in both suits, and the supreme court of Iowa affirmed the decrees of the district court. The decrees of the supreme court are brought here for review upon the allegation that they are repugnant to the laws and authority of the United States.

The principal federal question which arises in these cases is whether the compromise agreement made between Mills county and the Burlington & Missouri River Railroad Company was in violation of the act of congress by which the swamp and overflowed lands in the state of Iowa were granted to that state. It is alleged that this grant was made for a special purpose, and upon express trust, viz., to be applied exclusively, as far as necessary, to the purpose of reclaiming said lands by means of levees and drains, as declared in the act of 1850. It is not our province, on these writs of error, to inquire whether the compromise in question was or was not in violation of the state laws. That question was for the state court to determine; and it has been determined in the negative. Nor is it our province to inquire whether any fraud or excess of authority was committed by the agents of the county in making the compromise. That was also a question for the state court to determine; and it has been determined in the negative. We are only to inquire whether the state laws themselves, by virtue of which the said transaction was allowed and sanctioned, were such a violation of the act of congress as to require a reversal of the decrees of the supreme court of Iowa.

The statutes in question have already received some consideration at the hands of this court in the cases of Emigrant Co. v. Co. of Wright, 97 U.S. 339, and Emigrant Co. v. Co. of Adams, 100 U.S. 61. Those cases came before us on appeal from the circuit court of the United States for the district of Iowa. In both of them certain contracts for the purchase of swamp and overflowed lands from the county authorities were assailed by charges of fraud, and as not being in conformity with the statutes of Iowa; and those questions were necessarily discussed. It was also contended that the disposition of the lands operated as a diversion of the fund in violation of the original grant. In the first case, the contract was declared to be void for actual fraud of the grossest character, and the other questions were not fully considered. In the latter case, this court did not consider the evidence of fraud as sufficient to avoid the purchase, and this rendered it necessary to examine the question of repugnancy between the state laws and the act of congress with more care. On the first consideration of the case we were disposed to think that the act of assembly of the state of Iowa, passed in 1858, by which the several counties owning swamp and overflowed lands were authorized to devote the lands, or the proceeds thereof, either in whole or in part, to the erection of public buildings for the purpose of education, the building of bridges, roads, and highways, or for building institutions of learning, or for making railroads through the county, was repugnant to the provisions of the act of congress, as authorizing a diversion of the fund from its proper purposes, and that this repugnancy rendered such dispositions of the lands void. But, on a reconsideration of the subject, we were inclined to modify our first impressions. The following extract from the opinion then delivered will show the final view which we took of the subject:

'The argument against the validity of the scheme [namely,     that created by the act of 1858] is that it effects a      diversion of the proceeds of the lands from the objects and      purposes of the congressional grant. These were declared to     be to enable the state to reclaim the lands by means of      levees and drains. The proviso of the second section of the     act of congress declared that the proceeds of the lands,      whether from sale or direct appropriation in kind, should be      applied exclusively, as far as necessary, to these purposes. This language implies that the state was to have full power     of disposition of the lands; and only gives direction as to      the application of the proceeds, and of this application,      only 'as far as necessary' to secure the objects specified. It is very questionable whether the security for the     applicaion of the proceeds thus pointed out does not rest      upon the good faith of the state, and whether the state may      not exercise its discretion in that behalf without being      liable to be called to account, and without affecting the      titles to the lands disposed of. At all events, it would seem     that congress alone has the power to enforce the conditions      of the grant, either by a revocation thereof, or other      suitable action, in a clear case of violation of the conditions. And as the application of the proceeds to     the named objects is only prescribed 'as far as necessary,'      room is left for the exercise by the state of a large      discretion as to the extent of the necessity.' Page 69.

Upon further consideration of the whole subject we are convinced that the suggestion then made, that the application of the proceeds of these lands to the purposes of the grant rests upon the good faith of the state, and that the state may exercise its discretion as to the disposal of them, is the only correct view. It is a matter between two sovereign powers, and one which private parties cannot bring into discussion. Swamp and overflowed lands are of little value to the government of the United States, whose principal interest in them is to dispose of them for purposes of revenue; whereas the state governments, being concerned in their settlement and improvement; in the opening up of roads and other public works through them; in the promotion of the public health by systems of drainage and embankment,-are far more deeply interested in having the disposal and management of them. For these reasons it was a wise measure on the part of congress to cede these lands to the states in which they lay, subject to the disposal of their respective legislatures; and although it is specially provided that the proceeds of such lands shall be applied, 'as far as necessary,' to their reclamation by means of levees and drains, this is a duty which was imposed upon and assumed by the states alone, when they accepted the grant; and whether faithfully performed or not, is a question between the United States and the states; and is neither a trust following the lands, nor a duty which private parties can enforce as against the state.

We are, therefore, of opinion that the act of congress cannot be invoked by the county of Mills for the purpose of showing that its provisions have been violated by the state laws, under which alone the county itself can set up any title to the lands, and by virtue of which, as decided by the state court, it has disposed of them for railroad purposes.

But it is contended that the decision of this court, rendered in February, 1870, affirming the decree in the original suit, and adjudging the title of the lands to be in Mills county, and not in the Burlington & Missouri Railroad Company, is rendered null and ineffective by the decrees of the supreme court of Iowa in these cases; and hence that these decrees are against the right of Mills County as established by authority of the supreme court of the United States, and ought for that cause to be reversed. We do not think that this result necessarily follows. The compromise agreement of 1868 was made while the writ of error in that original suit was pending in this court, and before the cause was heard. That compromise settled the matters in difference between the parties. There may have been reasons, independent of the controversy relating to the particular lands in question in that suit, why it was desirable to have the legal questions involved therein settled by the judgment of this court. The county of Mills and the railroad company may have been respectively interested in other lands similarly situated in respect to title as the lands involved in that suit. But, if this were not so, the result would only be that the litigation was continued here after the parties had adjusted their rights by agreement,-an improper proceeding, undoubtedly, but one which would not abrogate or render null the agreement itself, unless the parties voluntarily waived and abandoned it. That they did not waive or abandon it is manifest from the fact that deeds of conveyance were executed by the county to the railroad company in pursuance of the compromise agreement after the decision of this court was rendered; namely, one deed dated September 6, 1870, for 3,560 acres; and another deed dated June 19, 1871, for 240 acres.

We are, therefore, of opinion that the decrees made by the supreme court of Iowa in these cases do not violate any act of congress, nor disaffirm the judgment of this court, or impair any right, title, or immunity which the county of Mills has a right to claim under any authority of the United States. The said decrees must, therefore, be affirmed.


text: Talk:Mills Iowa v. Burlington/Opinion of the Court


text:
Read v. City of Plattsmouth

The plaintiff in error, who was plaintiff below, sought to recover, in an action at law, the amount of certain overdue interest coupons upon bonds issued by the defendant, dated October 1, 1872. Each bond contains a recital that it 'is one of a series of 25 of like tenor, date, and amount, issued in pursuance of the orders of the city council of the city of Plattsmouth, in the state of Nebraska, for the construction of a high-school building in said city, authorized by a vote of the legal voters of said city of Plattsmouth, and in compliance with the laws of the state of Nebraska, and for the payment of which the good faith, property, and effects of said city are hereby pledged.' It is alleged, and not denied, that these bonds were issued for the purpose of constructing a high-school building in the city of Plattsmouth; that the city sold them, and their proceeds were used to construct such building; that such building is now in actual use by the city; and that the city paid interest on the bonds for four years. On the trial the plaintiff proved that he bought the entire issue of the bonds for full value, without notice of any informality in their issue. There was no evidence offered in defense, and the court instructed the jury to find a verdict for the defendant, to which the plaintiff excepted, and for the alleged error in this ruling the judgment rendered upon the verdict in favor of the defendant in error is now sought to be reversed. This judgment rests upon the assumption that the bonds in question are void, and this depends on these two propositions: First, that at the time they were issued there was no law which authorized them; and, second, that certain acts of the legislature of Nebraska, subsequently passed, purporting to validate them, are themselves void. The legislation bearing upon the question appears to be as follows:

The city of Plattsmouth was originally organized as a municipal corporation, under that name, by a special act of the legislature of Nebraska, while it was under a territorial government, March 14, 1855. That act created the city a body corporate, with all the powers and attributes of a municipal corporation. The forty-first section was as follows:

'The council is authorized to borrow money for any object in their discretion, if, at a regularly-notified meeting, under a notice stating distinctly the nature and object of the loan, and the amount thereof as nearly as practicable, the voters of the city may determine in favor of the loan by a majority of two-thirds of the legal voters at the said election, and the said loan can in no case be diverted from the specified object.'

The territorial legislature, in 1867, (Terr. Laws 1867, p. 38,) also passed 'An act to authorize the common council of the city of Plattsmouth to raise money to erect a central or high-school building, and for other purposes.'

So much of that act as is material here is contained in the following:

'Section 1. Be it enacted by the council and house of representatives of the territory of Nebraska, that the mayor and common council of the city of Plattsmouth shall, by virtue of their office, be commissioners of the school-house fund in and for said city, and the common council shall perform all the duties of such commissioners, and shall possess all the rights, powers, and authority, and be subject to the same restraints, of township boards of education, for the purpose of raising money required for erecting, purchasing, and leasing school-houses, and procuring sites therefor, and the fitting up and furnishing thereof.

'Sec. 4. All common, graded, and central schools organized within the city of Plattsmouth shall be public and free to all children residing within the city. And the common council, by a vote of the majority of all the council elected, are hereby authorized to include in the general annual city tax list such additional sum as in their opinion, with the public-school moneys for the year, will be sufficient to support the school system of said city.

'Sec. 5. The common council shall have power and it shall be the duty-First, to designate and purchase or lease in said city all necessary sites for school-houses therein, and to improve and fence the same, as to them shall appear suitable and proper. Third, to make such by-laws and regulations as they may deem necessary for the proper security and preservation of the school-houses and other property owned by the city for school purposes.

'Sec. 7. The mayor and common council are hereby authorized and directed to raise by loan, in anticipation of the taxes, when deemed necessary, moneys, not exceeding in the aggregate $15,000, required for erecting, purchasing, or leasing school-houses and procuring sites therefor.

'Sec. 8. That for the purpose of effecting such loan the mayor and common council are authorized to issue the bonds of said city, under the seal of the said city, to the amount of $15,000, and no more, and bearing interest at a rate not exceeding 10 per centum per annum, redeemable in one, two, three, four, five, and six years.

'Sec. 17. The title of all school-houses, sites, lots, furniture, and all other school property, shall be vested in the city of Plattsmouth.

'Sec. 20. The general school laws of this territory, in force at the time of the passage of this act, shall, so far as the same are applicable, be taken and construed as part of this act.' Terr. Laws 1867 p. 38.

The constitution of Nebraska, which took effect March 1, 1867, soon after the passage of the foregoing act, provided in article 1, § 16, that 'it shall be the duty of the legislature to pass suitable laws to encourage schools and the means of instruction.' Section 1, art. 8, declared that 'the legislature shall pass no special act conferring corporate powers.' And section 4 of the same article, that 'the legislature shall provide for the organization of cities and incorporated villages by general laws,' etc.

Immediately after the admission into the Union of the state, under this constitution, the legislature of Nebraska made a revision of its general school laws, (Laws Neb. 1867, pp. 102, 110,) and provided, in section 60 of the act, that 'nothing in this act shall be construed so as to interfere with or abrogate any of the rights, privileges, and immunities, duties or liabilities, conferred or prescribed by special enactment for any school-district comprised within any incorporated city.'

And accordingly the provisions of the special school law of 1867 were continued in force, and were in substance re-enacted in the act of February 18, 1873, 'to regulate the public schools of Plattsmouth city and provide means for their support.'

The same authority to borrow money and to issue bonds therefor, for school and school-house purposes, and subject to the same limitations, is conferred by this act as that contained in the original statute restricting the amount to $15,000.

The original charter of the city of Plattsmouth was superseded under the constitution by a general law organizing municipal corporations, under which Plattsmouth became a city of the second class. This act, passed March 1, 1871, (Laws Neb. 1871, p. 26,) authorized the city 'to borrow money on the credit of the city and pledge the credit, revenue, and public property of the city for the payment thereof,' without any limit as to amount, where the city council was instructed to do so by a majority of all the votes cast at an election held in such city for that purpose. Gen. St. Neb. 1873, p. 148.

After the issue of the bonds in suit the legislature of Nebrasks passed the following act:

'An act to legalize the proceedings of the city council of the city of Plattsmouth, in reference to the construction of a high-school building, and to authorize the city council to complete the same.

'Whereas, at a session of the city council of the city of Plattsmouth, county of Cass, and state of Nebraska, held on the first day of July, A. D. 1872, the proposition of issuing the bonds of said city of the amount of $25,000, for the purpose of erecting a high-school building was submitted to the voters of said city; and,

'Whereas, at a special election held in said city, for the purpose of voting on said proposition, on the twenty-second day of July, 1872, a majority of the votes cast were in favor of issuing said bonds; and,

'Whereas, in pursuance of said submission and vote, the city council of said city of Plattsmouth have issued and sold said bonds, and with the proceeds thereof have proceeded to let the contract for the construction and completion of said house, and have appointed C. F. Driscoll and M. L. White superintendents of the construction of the same, and the work on said building has commenced; therefore,

'Be it enacted by the legislature of the state of Nebraska:

'Section 1. That all acts and proceedings of the city council of said city of Plattsmouth, in relation to issuing said bonds and letting the contract for the construction of said high-school building, and the appointment of said C. F. Driscoll and M. L. White to superintend the construction of the same, and all matters and proceedings connected therewith, which may in any way affect the validity of said bonds, or of the contract for the construction of the said school-house, be and the same are hereby legalized, confirmed, and made valid in law.

'Sec. 2. And be it further enacted, that the city council of the said city of Plattsmouth are hereby authorized and empowered to proceed with the construction of said high-school building until its completion; and for that purpose shall have full and exclusive control of all funds realized from the sale of bonds issued by the said city of Plattsmouth for that purpose.

'Sec. 3. All funds now in the hands of the said city treasurer of the said city of Plattsmouth, which have been created by the sale of the high-school bonds of the said city, shall be applied to the erection of said high-school building, and shall not be appropriated or diverted to other use or purpose whatever.

'Sec. 4. And be it further enacted, that the right and title of the said city of Plattsmouth in and to block No. 24 in said city, which has heretofore been platted and designated on the recorded plat of said city as a park, and dedicated to public use, and on which the said school-house is being erected, shall vest and remain in the said city of Plattsmouth for school purposes, and the same shall be held exclusively for said purpose.

'Sec. 5. This act shall take effect and be in force from and after its passage.

'Approved February 18, 1873.' Sess. Laws 1873 p. 72.

Subsequently, in 1875, the legislature passed another statute, entitled 'An act to amend an act to incorporate cities of the second class and to define their powers, approved March 1, 1871, and to legalize certain taxes therein mentioned.' The text of the act is as follows:

'Be it enacted by the legislature of the state of Nebraska:

'Section 1. That no tax heretofore levied in any city of the second class shall be held to be invalid, illegal, or irregular because the same was not levied within the time prescribed by the law in force when the same was so levied; nor on account of any mere irregularity in the time or manner of assessment of property, or other irregularity or omission not affecting the equality or substantial justice of such tax, and such taxes shall be inserted in the tax list, and shall be collected in the same manner as other general taxes are.

'Sec. 2. That all bonds heretofore issued by any city of the second class in good faith for the erection, of, or to procure the means for erecting, a high-school building within such city, or for heating or furnishing the same, whether issued under a general or special law providing therefor, or any bonds hereafter issued by such city in exchange for any such bonds, shall be legal and valid; and any tax heretofore or hereafter levied to pay the interest or a portion of the principal of any such bonds, not exceeding five mills on the dollar valuation of the taxable property in the city in any one year, shall be legal and valid.

'Sec. 3. That in all cases in which cities of the second class have collected and expended, for the use and benefit of such cities, either in works of internal improvement or otherwise, moneys collected from licenses for the sale of intoxicating liquors, such expenditures are hereby declared to be legal, and the same is hereby ratified and confirmed, and such cities of the second class are hereby exonerated from any and all liability therefor.

'Sec. 4. This act shall take effect and be in force from and after its passage.

'Approved February 25, 1875.' Laws Neb. 1875, p. 205.

John F. Dillon and Wager Swayne, for plaintiff in error.

John L. Webster, for defendant in error.

MATTHEWS, J.

title: Read v. City of Plattsmouth


text: Talk:Read v. City of Plattsmouth

title: Talk:Read v. City of Plattsmouth