Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1904-12-03
Muscatine Journal Man Tells
About an Incident in Ca
reer of Embezzler.
SOME ILL GOTTEN WEALTH
How tho Firm Of Smith & Grant Sc.
cured Decision Making Valid Bonds
For Which tho Communities Which
Had to Pay Thorn Received No Ben
fit Whatever.
specIa, to Tlmes-Republican.

Davenport. Dec. 3-S. r. Smith. ex
mayor Of this city who was recently
prosecuted for embezzlement, convict
ed and sentenced to eleven years in
the penitentiary. at one time prosecu-
ted a case against this city. involving
nearly 100000. John Mahin OF the
Journal Of this city, In writing OF the
Smith case refers to the fact that the
ex-mayor was member OF the law
firm Of Grant & Smith of this city
which about 80 years ago was engaged
in prosecuting the famous railroad bond
cases. Mr.. Mahln says:
1T may not be generally known to
the present generation that along In
the sos many bonds to secure the
sued. Muscatine county issued
$4,000 and Muscatine city $780,
900 OF such bonds in 1884 to the
Mississippi and Missouri Railroad
Company, with the distinct promise
that this company would build rail-
road north from Muscatine to Cedar
Rapids and another west to Oskaloosa
These roads were never built by the
company. About the same time Louisa
county issued 100000 in bonds to the
AIRLINE Railroad Company. which
proposed to cross the Mississippi at
Burris City Ga few miles above New
Boston) and run westward thru Lou
lisa county This road was never built
tho some grading was done on the pro-
posed line. Altogether about eleven
million dollars were issued in bonds
for railroad purposes by counties and
cities in eastern Iowa.
ut was supposed in those days that
a bond was in the nature of contract
between two parties, and that fail
ure to comply with the conditions by
the party Of the second part would re-
l'eve the party of the first part from
any obligation. The nisi prius courts
OF this state held these bonds to be
invalid and issued injunctions against
the collection of taxes to pay them
The supreme court OF Iowa affirmed
this position Of the lower courts, hold
ing that there was no authority I'M
der the constitution Of the state for
counties and cities to incur such OBJ
legations and that the bonds were null
and void.
Grant & Smith then appealed to the
federal court at Chicago and Judge
Underwood made a decision overruling
the Iowa courts He held that the fed
eral court is, as a rule. bound to ac-
cept the construction placed by state
court on Its own constitution, yet he
professed to find a contrary decision
on the point involved by the supreme
court Of Iowa which. he claimed, gave
a right to the federal court to make
a choice, and in this instance 1t made
a choice favorable to the bondholders.
He said that the counties and cities
that had issued these bonds would
have valid reasons for not paying
them If they were owned by the COM
panies that had failed to build the rail-
roads as promised, but in the hands of
innocent purchasers they had no de-
Tense. Thus by the stroke Of a pen this
federal judge made negotiable paper
out Of bonds which were before I'M
derstood to be contracts between the
parties named in the bonds. And this
judge made law-unjust and tyrannic-
al in the extreme was enforced
against every possible, effort for the
protection of the deceived and outrag-
ed taxpayers. Muscatine city, for
instance, put in as barrier, the plea
that the charter Of the city granted by
the legislature limited the amount of
tax that could be imposed for any and
all purposes upon property owners In
the city, and that the bonds could not
be paid without exceeding this limit
without violating contract made by
the state with the taxpayers - but it
was Of no avail. The federal court re-
morselessly declared that the bonds
must be paid If it took one hundred
cents on the dollar Of taxable property
to pay them.
I'VE all know the result Of this I'M
just ruling-how for years 1t was a
burden upon our city and county. 9th
err cities and counties in the state suf-
fered in like manner.
ut was understood that the law firm
Of Grant & Smith were the chief bene-
ficiaries Of this unjust and oppressive
taxation. Judge Grant died number Of
years ago. His remaining partner, S. F.
Smith, seemed for decade or two to
roll in wealth and to have every lux
II f1,{1