Court Opinion

ID: 6642313
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:46:46.407979+00
Date Added: 2024-06-11T15:59:17.547981
License: Public Domain

Maxwell, J.
On the sixteenth day of March, 1866, a special election was held in the county of Otoe for the purpose of determining whether Otoe county should issue its bonds in an amount not exceeding' $200,000 for the purpose of securing an eastern railroad connection for Nebraska City. On a canvass of the votes it was found that 1362 were in favor of the proposition and 201 against it. At a meeting of the board of county commissioners of said county in November, 1866, it was ordered that $40,000 of the bonds voted in the preceding March be donated to the C. B. & St.- Joseph R. R. Co., provided they would locate their road within one and a half miles *232of the ferry landing at Nebraska City. In pursuance of this order $10,000 of the bonds of the county were delivered to the company. On the eighteenth day of February, 1871, the defendant in error instituted proceedings in the district court of Otoe county to enjoin the collection of taxes for the payment of interest on the bonds in question, and praying that said bonds may be declared null and void. Judgment was rendered in his favor in the court below, to reverse which the case is brought into this court by petition in error.
On the sixth day of January, 1860, the territorial legislature passed an act authorizing the boardof county commissioners of Otoe county to submit to the people of that county the question whether Otoe county should subscribe for stock in an amount not exceeding $75,000 in any railroad company then or thereafter located in Fremont county, Iowa. The act provided that in case a majority of the legal voters of said county voted in favor of the proposition, the board of county commissioners of 'said county should issue the bonds of said county for whatever amount of stock it may have been decided upon by such vote.
On the eleventh day of January, 1861, an act was passed by the legislature authorizing county commissioners to submit to the people of their respective counties the question whether the county will aid or construct public buildings, the question whether the county will aid or construct any road or bridge, or submit to the people of the county any question involving an extraordinary outlay of money by the county. The act provided that the proposition of the question must be accompanied by a provision to levy a tax for the payment thereof in addition to the usual taxes, and no vote adopting the question proposed shall be valid unless it likewise adopt the amount of tax to be levied to meet the liability incurred.
*233The only question necessary to be considered is that of the power of the county commissioners to issue the bonds in question. The question whether the territorial legislature, under the organic act, had authority to authorize a county to issue its bonds for the purpose here indicated, has not been raised dvrectVg, either by the pleadings or argument, and will not be discussed.
The rule is well settled in this court that county commissioners can exercise only such powers as are expressly granted, or are incidentally necessary to carry into effect the powers granted. The S. C. & P. R. R. Co. v. Washington Co., 3 Neb., 42. Stewart v. Otoe Co., 2 Neb., 177. The People v. Com'rs. Buffalo Co., 4 Neb., 150.
Whatever may be the rule as to municipal corporations, counties have no authority at common law to issue bonds. They are quasi corporations — mere governing agencies, charged with certain objects of necessary local administration. The power to issue commercial paper must be conferred by statute, and such power must be exercised in the manner prescribed, although it seems to be well settled that where the authority to issue the bonds existed a mere irregularity in its exercise will not invalidate the bonds in the hands of innocent purchasers for value. The authority, if any, given to the county commissioners by the vote of the people was to subscribe for stock in a railroad company. Under such authority can they make a donation of the bonds of the county to a railroad company?
The supreme court of the United States, in the case of the C. B. & Q. R. R. Co. v. Otoe County, 16 Wall., 667, held that there is no solid ground of distinction between a subscription to stock and a donation. In that case much stress is laid on an act of the legislature, approved February 15, 1869, section one of which provides “ that said commissioners *234(of Otoe county) be and they are hereby authorized to issue one hundred and fifty thousand dollars of the bonds aforesaid to the Burlington & Missouri River Railroad Company, or any other railroad company that will secure to Nebraska City a direct eastern railroad connection, as a donation to said railroad company, on such terms and conditions as may be imposed by said county commissioners.”
The title of the act referred to is as follows: “An act to authorize the county commissioners of the county of Otoe to issue the bonds of said county, to the amount of one hundred and fifty thousand dollars, to the Burlington and Missouri River Railroad, or any other railroad running east from Nebraska City.” The second section of the act provides that “ said bonds, when so issued, are hereby declared to be binding obligations on said county, and to be governed by the terms and conditions of an act entitled ‘ an act to enable counties, cities, and precincts to borrow money or to issue bonds to aid in the construction or completion of works of internal improvement in this state, and to legalize bonds already issued for such purpose. Approved February, A.D. 1869.’”
The power of the legislature to legalize a void proceeding like this may be fairly questioned, but it was not the purpose of the act to legalize the bonds.
Section nineteen, article II, of the constitution of 1867, provided that no bill should contain more than one subj ect, which should be clearly expressed in the title. In White v. The City of Lincoln, 5 Neb., 516, it was held that it would be sufficient if the law had but one general object. The only purpose of this act as expressed in the title was to authorize the issue of the bonds. Under such a title the legislature could not (even if it had the power to do so) constitutionally legalize these bonds.
The supreme court of the United States has gone to a *235great length in sustaining municipal bonds, and there is apparently danger that the court will (if it has not already done so) overlook the fact that the taxpayers have rights. In Marcy v. Township of Oswego, 92 U. S. (2 Otto) Sup. Court, 637, it was held that bonds issued by a township in excess of the limit fixed by the statute were valid.
Where a quasi corporation, in pursuance of express authority, deliberately assumes a burden, by issuing its bonds for public purposes, good faith requires their payment. But bonds issued without authority, or in excess of the limit fixed by statute, are no more the bonds of the corporation than if they were forgeries. In the case at bar, so far as the record discloses, there was no submission to the people of the question of taxation for the payment of either the principal or interest of the bonds, as required by statute. The entire proceedings therefore were entirely void, and are not aided by the act of 1869. But if the authority to issue the bonds had existed, the commissioners had no authority under the vote of the people of the county to make a donation thereof to the railroad company. There is no presumption that the stock of a railroad company is of no value; but even if not very valuable the stockholder, to the extent of his stock, has a voice in the election of officers of the company and in the control of its affairs that may be of more value to his locality than the mere market value of the stock. As we see no error in the record, the judgment of the district court is affirmed.
JuD&MENT AFFIRMED.