Court Opinion

ID: 9298758
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:05:20.271233+00
Date Added: 2024-06-11T17:13:35.870990
License: Public Domain

BLODGETT, District Judge,
(after stating tlie facts). The only question raised by tlie demurrer is, whether the city had power to issue the bonds in question, and whether sufficient appears upon the face of the bonds to put the plaintiff upon notice of the purpose for which the bonds were issued. It is conceded that no special authority was ever given by the legislature to the city to mate this donation to Cushman or the Ottawa Manufacturing Company. The manufacturing company was a purely private corporation, with no public duties or obligations imposed upon it by its charter or any general law. The power given the city council, by the charter, to “borrow' money on the credit of the city and issue bonds therefor,” is given in connection with the general grant of powers to the city council, and must, undoubtedly, be construed as a grant to borrow money, and issue bonds only for the purpose of carrying out some of the purposes for which the city corporation is created. Article 9. of tlie constitution of 1848. in force at the time these bonds were issued, clothed municipal corporations with power to levy and collect taxes for corporate purposes. The courts of this state have gone to their extreme tether in sustaining issues of municipal bonds for corporate purposes, when special authority has been delegated by the legislature, to the corporation, to aid or foster such purpose. Of this class are the donations and subscriptions authorized to be made by municipalities, to aid in the construction of railroads, bridges, etc., and, more notably, a class of bonds which were issued by towns, cities, and counties, to pay bounties to persons who should enlist in the aimy during the late war, of which Taylor v. Thompson, 42 Ill. 9, is a leading case. Rogers v. Burlington, 3 Wall. [70 U. S.] 633; and Mitchell v. Same, 4 Wall. [71 U. S.] 270, are to the same effect. But in all these cases there was found by the court to be an express legislative authority for tlie corporation to do what it had assumed to do; the principle running through all the cases where these bonds have been sustained being that the legislature had made the object for which the debt was created a “corporate purpose,” within the meaning of the constitution; but I find no case going so far as to uphold .an issue of bonds by a municipality' in aid of even a quasi public enterprise in the hands of a corporation or individuals, unless there was an express or necessarily implied delegation cf authority to issue such bonds, or levy a tax. The charter of the defendant city clothes its common council with various powers and duties, such as maintaining and improving streets and alleys, building school-houses and maintaining schools, to provide for lighting the streets of the city, to establish hospitals, and adopt sanitary measures, adopt a system of sewerage, to sustain a police, etc. These are all corporate purposes. That is, tlie corporation was created to accomplish these purposes, and I do not intend to be understood us saying that the legislature might not have delegated to this city council the right to make a donation to Mr. Cushman or the manufacturing company, in its enterprise of developing the water-power of the Pox and Illinois rivers, because that question is not now before me. But it is admitted that no such express delegation of power was made; I'am, therefore, of opinion that there was no power in the city council to issue the bonds. It is contended, however, that inasmuch as the city council is empowered “to borrow money on the credit of the city and issue bonds therefor,” these bonds are therefore valid in the hands of a bona fide holder who has purchased them for value on tlie market. This position might be correct if the recitals on the face of the bonds did not fully inform any purchaser of the object for which the bonds were issued. The bonds on their face state that they are issued in pursuance of tlie clauses in the charter authorizing the city to borrow' money and issue bonds,, and of two ordinances described by title and date. These ordinances state specifically the object to which the bonds were to be applied, and put the purchaser up'on inquiry as to whether such W'as a corporate purpose or not. If the corporation is bound by the recitals in its bond, certainly the purchaser is also; and this plaintiff, in my opinion, had ample notice that these bonds were not issued to carry out any of the express or implied powers granted to this corporation. Demurrer overruled.