Source: https://supreme.justia.com/cases/federal/us/156/692/
Timestamp: 2019-04-19 10:22:07+00:00

Document:
that it had not been performed, which being shown, the bonds became subject to the provisions of the constitution of 1870, and were invalid.
The bonds issued by the same county to the Chester & Tamaroa Coal & Railroad Company were issued in obedience to a vote of the people taken at an election ordered and held with reference to the Act of April 16, 1869, referred to in the opinion of this Court, which act required that a majority of the legal voters living in the county should be in favor of the subscription, and as the county court, in ordering the issue of the bonds, certified on its record that all the conditions prescribed had been complied with, and as the fact that a majority of the voters living in the county at the time of the election did not vote for the issue of the bonds is not determinable by any public record, held that it would be rank injustice to permit it to be set up after the lapse of so many years, and that the issue was valid and the bonds are binding in the county.
This action was brought to recover the amount of certain coupons taken from bonds issued in the name of Perry County, Illinois, and made payable, some of them to the Belleville and Southern Illinois Railroad Company or bearer; others, to the Chester and Tamaroa Coal and Railroad Company or bearer.
The bonds, in each instance, were issued in payment of a subscription in the name of that county to the capital stock of the corporations to which they were respectively made payable.
The parties, by written stipulation, waived a jury, and the case was tried by the court.
question of subscription to the capital stock of the Belleville and Southern Illinois Railroad Company, to be paid by the bonds of that county; that the notices for the election contained a clause providing, among other things, that "no bonds should be issued or stock subscribed until the railroad company should locate their machine shops at Duquoin," and that the shops, costing about $150,000, were located at East St. Louis, and not at Duquoin.
In respect of the bonds issued to the Chester and Tamaroa Coal and Railroad Company, it was found that the proposition for a subscription by the county to the capital stock of that corporation, upon which the people voted February 19, 1870, "did not receive a majority of the qualified voters of the county, 986 votes only being cast in favor of it, while at the last preceding general election, held in November, 1869, there were 2,024 votes thrown" -- in other words, that the proposition failed, by 27 votes, to receive a majority of the qualified voters of the county.
The conclusion of law as to each class of bonds was that, by reason of the facts so found, they were void for want of power to issue them.
First. The bonds issued to the Belleville and Southern Illinois Railroad Company.
city, town, or village, and any such subscriptions shall be valid and binding upon any railroad company, corporation, county, city, town, or village making the same, provided said subscriptions shall be made in every respect subject to the provisions and restrictions of an act supplemental to an act entitled 'An act to provide for a general system of railroad incorporations,' approved November 6, 1849."
It was provided that the road should be completed within eight years from the passage of the act.
The act of 1849, here referred to, gave cities and counties authority to purchase or subscribe for shares of the capital stock of any railroad company then organized or incorporated, or which might be thereafter organized or incorporated, in any sum not exceeding $100,000 for each city or county; the stock so subscribed for or purchased to be under the control of the county court of the county or the common council of the city making the subscription or purchase, in all respects as stock owned by individuals. (46} 1. Authority was given to pay for such stock by borrowing money or issuing bonds. § 2. Railroad companies then or thereafter organized or incorporated under the laws of the state were authorized to receive at par the bonds of any county or city becoming subscribers to their capital stock. 1 Gross' Ill.Stat. 1873, p. 552-553.
election for county officers shall be the standard of the number of qualified voters as aforesaid. . . ."
1 Gross' Ill.Stat. 1873, p. 552-553.
"This bond is one of a series of one hundred of like tenor and date, issued under the authority and in accordance with the requirements of an act of the Legislature of the State of Illinois entitled 'An act to incorporate the Belleville and Southern Illinois Railroad,' approved February 14, 1857, and is redeemable at the pleasure of said county at any time after the first day of January A.D. 1876."
"The County of Perry, State of Illinois, will pay to the bearer seventy dollars on the first Monday of January, 1889; being the interest on bond No. ___ issued to the Belleville and Southern Illinois Railroad Company."
certify that all the preliminary conditions in the act in force April 16, 1869, required to be done to authorize the registration of these bonds and entitle them to the benefits of the said act last referred to, have been fully complied with, to the best of my knowledge and belief."
"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 16th, 1869."
Although these bonds did not upon their face expressly refer to the Railroad Act of 1849, the recital in them that they were issued under the authority of and in accordance with the act of 1857, incorporating the railroad company, imports a compliance with the provisions of the former act, for the act of 1857 declares that the subscriptions authorized by it should be made in every respect subject to the provisions and restrictions of the act of 1849. If, therefore, the case depended alone on the acts of 1857 and 1849, in connection with the recitals in the bonds, the conclusion would be that the County of Perry rightfully subscribed to the stock of the Belleville and Southern Illinois Railroad Company to the extent of $100,000 (for which amount the subscription was made and the bonds issued), and that the county was estopped by the representations made in the recitals of the bonds, as between it and bona fide holders thereof, from relying upon any irregularities in the exercise of its power to subscribe that did not involve the substance of the power itself.
"No county, city, 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 where the same have been authorized, under existing laws, by a vote of the people of such municipalities prior to such adoption."
"no municipal corporation of Illinois has possessed authority to subscribe to the stock of a railroad or private corporation, or to make donations to or loan its credit to them, except that a subscription or donation lawfully voted by the people before the adoption of that section could be completed upon the terms and conditions approved by the electors. There is no saving of the right of such corporation to loan their credit to railroad corporations, where such loan of credit was not embraced in a vote previously taken under existing laws, and which was favorable to a subscription of stock or a donation. . . . The Constitution took away all power to impose upon the township any greater burdens than the people had by vote lawfully assumed under existing statutes. . . . They [purchasers of the township bonds] were bound to know that the power of the township, after July 2, 1870, was restricted by the Constitution to a completion of such subscription or donation as had been lawfully voted before that date; if not upon the precise terms and conditions attached thereto by the vote of the people, upon such terms as did not increase the burden."
Concord v. Robinson, 121 U. S. 165, 121 U. S. 169.
with, and shall transmit the same to the state auditor, with a statement of the date, amount, number, maturity, and rate of interest of such bonds, and to what company and under what law issued, and thereupon the said bonds shall be subject to registration by the state auditor, as hereinbefore provided."
Pub.Laws Ill. 1869, pp. 317, 319.
Now it is found as a fact that the people voted for the subscription on the condition, specified in the election notices, that no subscription should be made nor bonds issued until the company's machine shops were located at Duquoin. The act of 1869 not only authorized the electors to prescribe such a condition, but declared that no bonds, subscriptions, or donations that were voted on prescribed conditions shall have been "valid and binding until such conditions precedent should have been complied with." That the location of the company's machine shops at Duquoin was a condition precedent to the making of a subscription or the issuing of bonds in payment thereof, is placed beyond question, not only by the special finding of facts, but by the orders of the county court, which were made part of the record for the purpose of presenting the exceptions taken to those orders as evidence in the case.
court, bearing interest at the rate of 7 percent per annum, and issued under the provisions of the act of the Legislature of Illinois of November 6, 1849, and Act of April 16, A.D. 1869, entitled 'An act to fund and provide for the paying of the railroad debts of counties, townships, cities, and towns."
Looking, then at the Act of April 16, 1869, and the Constitution of Illinois, there is no escape from the conclusion that the condition precedent, imposed by popular vote, that no bonds should be issued until or unless the company located its machine shops at Duquoin was in full force when the election was ordered and held, as well as when the constitutional limitation upon municipal subscriptions was prescribed, and that both the county court, by its order of December 5, 1870, directing the issue and delivery of the bonds, and the county officers who executed them, violated their duty as prescribed by the statute.
But it is urged that, the bonds having been executed and issued by those whose duty it was to execute and issue them whenever that could be rightfully done, the county is estopped to plead their invalidity, as between it and a bona fide purchaser for value. This argument would have force if the material circumstances bringing the bonds within the authority given by law were recited in them. In such a case, according to the settled doctrines of this Court, the county would be estopped to deny the truth of the recital, as against bona fide holders for value. But this Court, in Buchanan v. Litchfield, 102 U. S. 278, 102 U. S. 292, upon full consideration, held that the mere fact that the bonds were issued, without any recital of the circumstances bringing them within the power granted, was not in itself conclusive proof, in favor of a bona fide holder, that the circumstances existed which authorized them to be issued.
1857 and 1849. Those who took them must be held to have known that the constitution of 1870 withdrew from municipal corporations authority to subscribe to the stock of, or to lend their credit to, railroad corporations except for the purpose of completing subscriptions authorized under previous laws by a vote of the people. And they must also be held to have known that, by the act of 1869, no subscription voted on conditions precedent could be rightfully made nor bonds rightfully issued until such conditions were performed. If, notwithstanding the express declaration in the act of 1869 as to the invalidity of bonds issued without the performance of conditions precedent imposed by popular vote, the county court, prior to the constitution of 1870, without the sanction of a popular vote, could have waived the condition as to the location of the machine shops at Duquoin, there is no evidence, on its records or otherwise, that it did so. And it is clear that they could not, after the second of July, 1870, materially change the conditions imposed by the electors. It is equally clear that the recitals by the county officers in the bonds themselves do not import any such change nor a compliance with the provisions of the act of 1869 in respect to the performance of the conditions voted.
of the bonds in the markets of the county, or because it had full confidence that the railroad company would meet the prescribed conditions. It should not now be heard to make a defense inconsistent with the recitals upon its bonds, or upon the ground that the conditions imposed, of which the purchasers had no notice, have not been performed."
"The view taken was that as the Town of Bruce had power, under the seventh section of the Act of April 16, 1869, to make an unconditional subscription, and to issue and deliver its bonds in advance of the construction of the road, and as the bonds recited that they were issued by virtue of the Act of April 16, 1869, it was too late to claim that they had been issued in violation of the special conditions. In the case now before us, as before said, there is no reference in the bonds to the Act of April 16, 1869, and no statement in the bonds that they were issued by virtue of that act."
merely certifies that the bond has been registered in the auditor's office pursuant to the provisions of the Act of April 16, 1869. The statute does not require that the auditor shall determine or certify that the bonds have been regularly or legally issued."
In Cairo v. Zane, 149 U. S. 122, 149 U. S. 141-142, this Court, while holding, upon the authority of German Bank v. Franklin County, that the certificate of registry was not conclusive that the bonds were issued in full compliance with the terms and conditions of a subscription of stock, adjudged that the certificate of registry in the office of the state auditor could be relied upon as showing that what the City of Cairo did, in that case, amounted to a subscription of stock, which the statute gave it a right to make, rather than to a donation, which it could not legally make. It is to be observed also that the bonds there in suit recited that they were issued pursuant as well to an ordinance of the City Council of Cairo as to a vote of the citizens of that city, and in accordance with the laws of the state. The recital that they were issued in accordance with the laws of the state brought that case within the rule announced in Insurance Co. v. Bruce, rather than within that announced in German Bank v. Franklin County.
We cannot assume that the location of the company's machine shops at Duquoin was deemed by the voters to be a matter of no consequence. It may well be that the election turned upon the question of the location of those shops in the county at a named place.
It results from what has been said that, as the recitals in the bonds issued to the Belleville and Southern Illinois Railroad Company neither expressly nor by necessary implication imported a compliance with the condition precedent imposed by popular vote in reference to the location of the company's shops at Duquoin, it was open to the county to show that that condition was not performed when the bonds were issued by order of the county court, and had never been performed. That being shown, the case is not brought within the reservation or saving made by the state constitution in favor of subscriptions authorized by popular vote prior to July 2, 1870.
In this view, the judgment, holding the bonds issued to the Belleville and Southern Illinois Railroad Company to be invalid, was right.
Second. The bonds issued to the Chester and Tamaroa Coal and Railroad Company.
The Chester and Tamaroa Coal and Railroad Company was incorporated by an Act approved March 4, 1869, with authority to construct, complete, and operate a railroad from Chester, in Randolph County, Illinois, easterly, on the most eligible route, by the way of Pinckneyville, to Tamaroa, in Perry County.
The history of the bonds issued to this company is fully disclosed in the orders of the County Court of Perry County.
said road shall commence at Tamaroa, and depot and depot buildings shall have been established or built within the corporate limits of said Town of Tamaroa, and be it further ordered that the residue, $50,000, shall be issued when said road shall be completed through the county, and thence to the terminus of said road, and cars shall have been run thereon, and all necessary depot and depot buildings have been established or built as above required and specified. The ballots in favor of subscribing the stock shall contain the words 'For subscription' and those against the subscription, 'Against subscription.'"
"And whereas, in pursuance of said order and published notices thereof, as required by law, said election was held in said county on the 19th day of February, A.D. 1870, and whereas it appears from the returns of said election, on file in the county clerk's office of said county, and the certificate of the board of canvassers, that a majority of the legal voters of said County of Perry (assuming the standard required by law and the said order of the court, taking as a basis the number of votes cast at the last general election for county officers) having voted in favor of subscribing said stock, now therefore it is ordered by the court, in pursuance of said order of court and the election held thereunder, and the statutes in such case made and provided, that the County of Perry, in the State of Illinois, do subscribe one hundred thousand dollars to the capital stock of the Chester and Tamaroa Coal and Railroad Company, to be paid in bonds issued in accordance with said order of court under which said election was held, and to be registered and paid as provided by an Act of the General Assembly of the State of Illinois in force April 16, 1869, entitled 'An act to fund and provide for paying the railroad debts of counties, townships, cities, and towns,' and it is further ordered by said court that the judges of this Court subscribe said stock on the books of said company, and that the same be attested by the clerk of this Court, under the seal of this Court."
"to be paid in Perry County bonds, as provided by the terms of subscription made by the county court on the books of the company, and the election held on the 19th day of February, 1870, authorizing said court to make said subscription, and transferable on conditions as provided in the bylaws."
entitled 'An act to fund and provide for paying the railroad debts of counties, townships, cities, and towns."
On the 15th of November, 1871, a certificate similar in form to the one issued December 5, 1870, in reference to the bonds to the Belleville and Southern Illinois Railroad Company, and verified by the oath of the county judge and under the county seal, was sent by that officer to the auditor of public accounts of Illinois. And on the 6th day of December, 1871, a like certificate was made by the county judge in respect to fifty other bonds issued by the county to the Chester and Tamaroa Coal and Railroad Company.
"This bond is one of a series of bonds issued by the County of Perry in payment of one hundred thousand dollars of the capital stock of the Chester and Tamaroa Coal and Railroad Company, in pursuance of an election held by the legal voters of Perry County, Illinois, on the 19th day of February, 1870, and by virtue of the provisions of an act of the General Assembly of the State of Illinois entitled 'An act to provide for a general system of railroad incorporation,' approved November 6, 1849. And for the payment of said sum of money, and accruing interest thereon, and in the manner aforesaid, the faith of the County of Perry, State of Illinois, is hereby irrevocably pledged, as also its property, revenue, and resources."
"The County of Perry will pay to bearer on the first day of July, 1888 at the American Exchange Bank, in the City of New York, thirty-five dollars, it being six moths' interest on bond No. 52, for $1,000."
"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 16th, 1869. "
We have seen that the only ground upon which the court below held these bonds to be not binding obligations of the county was that the proposition to subscribe $100,000 to the capital stock of the company received only 986 votes in its favor, whereas at the last general election in the county, 2,024 votes were cast. The court, we infer, had in mind the provision of the Act of November 6, 1849, under the authority of which the bonds purport upon their face to have been issued.
issued not merely for themselves, as the ground of their own action in issuing the bonds, but equally as authentic and final evidence of their existence, for the information and action of all others dealing with them in reference to it."
In the same case it was said that although, the power existing, a municipality may be estopped by recitals to prove irregularities in its exercise, and when the law prescribes conditions upon the exercise of the power granted, and commits to the officers of such municipalities the determination of the question whether those conditions have been performed, the corporation will also be estopped by recitals importing such performance, nevertheless "the question of legislative authority in a corporation to issue bonds in aid of a railroad company cannot be concluded by mere recitals."
said county shall have voted for the same at said election." Two more than that number of votes were cast in favor of the subscription, and only ninety-one against it. There is no finding to the effect that nine hundred and eighty-four votes was not a majority of legal voters living in the county at the time of the election.
the next preceding general election for county officers. But as has already been shown, that was not the true test.
"Before railroad aid bonds can be properly registered under the above act, it must appear that they were issued in pursuance of a vote of a majority of the voters living in the municipality issuing them. When once registered, the presumption is they were rightfully registered, and the burden of establishing the contrary rests upon the party affirming it. It is well settled by the decisions of this Court, where a majority of those voting at an election of the kind vote in favor of subscription or donation, as the case may be, for the purposes of registration, it will be presumed that such majority so voting is a majority of all the legal voters living in the municipality at the time of the election, and where in such case the authorities, acting upon such presumption, have admitted the bonds to registration, and the municipality issuing them has, as in this case, treated them as properly registered by paying previous taxes levied by the auditor for the liquidation of accruing interest, and the bonds thus registered have passed into the hands of innocent holders, nothing but the clearest and most satisfactory proof will authorize a court of equity to enjoin the collection of a tax levied by the auditor on account of such bonds on the alleged ground that the majority voting for such subscription or donation was not a majority of the legal voters."
In the case now before us, it appears that the county paid interest on the bonds in suit for about seventeen years, and there is no proof whatever that the votes cast for subscription, payable in bonds, did not represent a majority of all qualified voters living at the time in the county.
102 U. S. 278; Dixon County v. Field, 111 U. S. 83, 111 U. S. 92-93; Cairo v. Zane, 149 U. S. 122.
We are of opinion that the court below erred in holding that the bonds issued to the Chester and Tamaroa Coal and Railroad Company were not binding upon the County of Perry, and in not giving judgment against the county for the amount of the coupons of such bonds in suit.
The judgment is reversed, and the cause remanded for a judgment, upon the facts found, in conformity with this opinion.

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