Court Opinion

ID: 88697
Source: CourtListenerOpinion
Date Created: 2010-04-28 16:01:45+00
Date Added: 2024-06-11T17:21:34.008864
License: Public Domain

83 U.S. 452 (____)
16 Wall. 452
KENICOTT
v.
THE SUPERVISORS.
Supreme Court of United States.

*462 Mr. J.C. Robinson, for the county of Wayne.
Mr. W.B. Scates, contra, for the bondholders.
*464 Mr. Justice HUNT delivered the opinion of the court.
The following propositions may be considered as settled in this court.
1. If an election or other fact is required to authorize the issue of the bonds of a municipal corporation, and if the result of that election, or the existence of that fact, is by law to be ascertained and declared by any judge, officer, or tribunal, and that judge, officer, or tribunal, on behalf of the corporation, executes, or issues the bonds, with a recital that the election has been held, or that the fact exists, or has taken place, this will be sufficient evidence of the fact to all bonâ fide holders of the bonds.[]
2. If there be lawful authority for the municipality to issue *465 its bonds, the omission of formalities and ceremonies, or the existence of fraud on the part of the agents of the municipality issuing the bonds, cannot be urged against a bonâ fide holder seeking to enforce them.[*]
3. There must, however, be an original authority, by statute, to the municipality to issue the bonds. Municipal corporations have not the power, except through the special authority of the legislature, to issue corporate bonds which will bind their towns; neither have they the power to sell or mortgage the lands belonging to such towns without special authority.[]
The alleged absence of such authority is the basis of the defence to the mortgage sought to be foreclosed in the present action. Four several and distinct grounds on which such power is based are urged by the plaintiffs. But one of these will be examined. The court is satisfied with the authority to be found in the 10th section of the act to incorporate the Mount Vernon Railroad Company. An examination of the others is not necessary.
The town of Mount Vernon is situated in Jefferson County, and some 18 miles easterly of the Illinois Central Railroad. This road passes within a short distance of the westerly line of said county, and nearly parallel with it. Wayne County is still east of Jefferson County, the whole of the latter county lying between Wayne and the Illinois Central road. In the month of February, 1855, the legislature of Illinois passed an act to incorporate the Mount Vernon Railroad Company, for the purpose of building a railroad from Mount Vernon to the Illinois Central Railroad, or to its Chicago branch. The 7th section of the act provided that the company might borrow money and secure the same by bond or mortgage. By the 8th section it was enacted that the county of Jefferson might issue its bonds and provide for the payment thereof by the sale or mortgage of its swamp or *466 overflowed lands, or that they might make such other disposition of the lands in aid of the construction and maintenance of the railroad as they deemed best for the public interests of the county.
The 9th section provided that the question of aiding the railroad, and of the mode in which such aid should be given, should be submitted to the decision of the voters of the county.
The 10th section was in the following words:
"Any county through which said road may run, and every county through which any other railroad may run, with which this road may be joined, connected, or intersected, may, and are hereby authorized and empowered to aid in the construction of the same or of such other road with which it may so connect; and for this purpose the provisions of the seventh, eighth, and ninth sections of this act shall extend, include, and be applicable to every such county and every such railroad."
The provisions of the 7th, 8th, and 9th sections of the charter of the Mount Vernon Railroad Company were thus made applicable to any other county than that of Jefferson, through which that road should run, or through which any other railroad should run, which might join, intersect, or connect with the Mount Vernon road. Such other county was expressly authorized to aid in the construction of the Mount Vernon road, or of such other road with which it might so connect.
No reasonable construction of this act will require that the road to be aided should be actually built before the county was authorized to give it aid. That theory would no doubt add greatly to the security of the county, and would relieve it from many of the perplexing questions which so commonly arise. If, however, the road were actually built, no aid would be needed in its construction. The aid might, in that event, be useful to its stockholders, or might relieve it from embarrassments, but a road which is built can neither need nor receive aid in its construction. That is a fact accomplished. The language of this act expressly authorizes the swamp or overflowed lands to be used *467 by the counties in aid of the construction of the road, and it seems to be quite plain that the aid was intended to be given before the road was built, and that the counties were expected to take the ordinary risk of the success of the undertaking in which they embarked their property.
The county of Wayne held an election in November, 1858, and voted that these lands should be applied in aid of any company that would build a railroad through the county. Soon after this time Van Duser & Smith entered into a contract with Wayne County for building that part of the road of the Belleville and Fairfield Company lying between the east line of Wayne County and Mount Vernon, thus running across the entire width of Wayne County. This contract was assigned to the Mount Vernon Railroad Company, who undertook the construction of this portion of the road.
The county of Jefferson entered into a like contract for the construction of the Mount Vernon road, from Mount Vernon to the Illinois Central.
It was for the purpose of aiding in the construction of the road thus undertaken to be built by the Mount Vernon Railroad Company from the east line of Wayne County to Mount Vernon, the charter of that company also requiring its road to be built from Mount Vernon to the Illinois Central, that the bonds in question were issued. They were sold under the authority of the county of Wayne, by its agents, and the proceeds were applied as was intended by the county. The Belleville and Fairfield Railroad Company, afterwards changed to the St. Louis and Louisville Railroad Company, was chartered for the construction of a railroad from St. Louis, on the Mississippi, to Mount Carmel, on the Wabash River. Its proposed line crossed the Illinois Central, and was located directly through five different counties, among which was the county of Wayne. It was that portion of the line of this road through the county of Wayne that was located and surveyed by the Mount Vernon Railroad Company and of which the construction was undertaken by that company, as the assignee of Van Duser & Smith. *468 Some portion of the work had then been done. This brought the county of Wayne within the terms of the 10th section already quoted, and authorized its action in the issue of bonds to aid in its construction.
These were existing contracts, under which the contracting parties were taking efficient measures for the construction of the road. Those contracting parties could make no objection to the power of the counties so to contract. The contracts were valid and obligatory against them, and would be effectual, if carried out, to make the railroad connections needed by the county.
The authority to construct the connecting road, and the entering into a contract for its construction, formed a connection within the meaning of the 10th section.
Such was also the opinion and the assertion of the county of Wayne, when, in November, 1856, it conveyed these lands to Charles Wood, in trust for certain railroads that should build a road through that county.
The deed to Wood recites that a connection had been made between the Mount Vernon road and the others mentioned, that a vote had been taken in the county of Wayne authorizing that deed, and that it was made in pursuance thereof. This deed was recognized and confirmed by the legislature, and expressly declared to be valid in the passage of the act of February 14th, 1857, to amend the charter of the Belleville and Fairfield Railroad Company. The lands were afterwards reconveyed to the county by Mr. Wood.
Holding that there was valid power for the giving of the mortgage in question by the county of Wayne under the 10th section of the Mount Vernon charter, and that there was in fact and in law a sufficient connection with other roads, we do not deem it necessary either to examine the other alleged sources of authority for the execution of the mortgage, or the alleged acts of the county in confirmation of it. Under the circumstances stated, we are also of the opinion that there was a sufficient submission of the question to the voters of the county, and that as against bonâ fide holders for value the question is not an open one. It *469 has been decided at the present term of this court, that where a note secured by a mortgage is transferred to a bonâ fide holder for value before maturity, and a bill is filed to foreclose the mortgage, no other or further defences are allowed as against the mortgage than would be allowed were the action brought in a court of law upon the note.[*]
In this action to foreclose the mortgage, the case stands in this respect as it would stand had the present suit been brought directly upon the bonds, and without reference to the mortgage.
The execution of the deed and mortgage by Wilson and Scott, the judges of the county court of Wayne County, and on behalf of the county, was a sufficient execution by the county. In the mortgage and trust deed all the proceedings to authorize a conveyance by the county are recited  the title of the swamp lands in the county through an act of Congress; the authority of the State to dispose of the same by the courts or county judges; the passage of the act incorporating the Mount Vernon Railroad Company  and that the parties of the first part were duly authorized on behalf of the county to make disposition of the land in aid of the construction of the railroad; that the question had been referred to and passed upon by the voters of the county; that, by virtue of all the proceedings recited, the said judges, parties of the first part, had become endowed with power to dispose of the lands; therefore they conveyed, as set forth. This conveyance was, on the 20th of April, 1859, by an order that day entered in its minutes, recognized and confirmed as the act of the county of Wayne by its authorized agents, and by which the lands were mortgaged and conveyed. The 7th section of the Mount Vernon Railroad act, above referred to, vests the power to dispose of these lands in the county court. This body must act by agents, and none can be more suitable and appropriate than the judges of the court. By the 2d section of the act to dispose of swamp and overflowed lands, passed January 22d, 1852, it is provided that in the *470 cases in the 1st section mentioned, the deed of conveyance shall be made by the judges of the county court as such, and countersigned by the clerk with his official seal. In reference to sales at auction, it is provided by the 11th section that a conveyance shall be executed by "the court, signed in their official capacity," and countersigned by the clerk. The signature of the clerk is nowhere declared to be an absolute prerequisite. In effect this was a conveyance on behalf of the county, by their agents for that purpose duly appointed. By the 7th section of the Mount Vernon charter the county court was authorized to sell or mortgage the lands, or to make such other disposition of them "as they may deem best for the public interest." No mode was pointed out in which a conveyance should be made. No particular signature was made a condition to the validity of the conveyance. There is no ground for the objection to the form here adopted, viz.: by a deed of trust and mortgage, signed by the judges of the county court. In form and in substance the deed was well executed, and valid as the deed of the county.
The objection to the word "bonus" in the proposition submitted to the voters of Wayne County is not valid. This submission, in connection with the general subject of a failure to comply with the requisites prescribed by the statute, has been already discussed. Upon its individual merits we are also of the opinion that the objection is not valid. It is a verbal criticism merely  an objection to the words and not to the substance of the submission. A proposition was submitted to the votes, of which the affirmative was in these words: "For appropriating the swamp lands of Wayne as a bonus to any company for building a railroad through said county." It is said that the word "bonus" condemns the submission; that this word means a gratuity, a voluntary donation, a gift, and that a town or county cannot, although it have the direct authority of the legislature, give away its property. When this question is properly before us it will be disposed of. It does not, however, arise in this case. In the first place, if it be assumed that the word is correctly *471 defined as a gift, or gratuity, that meaning is controlled and limited by the connection in which it is here used, to wit: that in consideration of it the company receiving the lands will undertake to build a railroad through the county. It is not simply a bonus, but a bonus to any company who shall undertake the great task of building a railroad through the county, a task which, it is loudly complained, has not yet been performed by any one.
But, secondly, the meaning of the word bonus is not that given to it by the objection. It is thus defined by Webster: "A premium given for a loan or a charter or other privilege granted to a company; as, the bank paid a bonus for its charter; a sum paid in addition to a stated compensation." It is not a gift or gratuity, but a sum paid for services, or upon a consideration in addition to or in excess of that which would ordinarily be given.
Upon the principles announced in the opening of this opinion, the plaintiffs are entitled to a judgment for the amount of the bonds held by them. If we are right in the positions taken, there was indeed no real defence to the bonds.
We think there was error in the decision of the case; that the judgment must be
REVERSED, AND A NEW TRIAL HAD.
Mr. Justice MILLER and Mr. Justice FIELD dissented.
Mr. Justice DAVIS did not sit.
NOTES
[]  Authorities, infra.
[*]  Grand Chute v. Winegar, 15 Wallace, 355; Commissioners of Knox Co. v. Aspinwall, 21 Howard, 539; Gelpcke v. Dubuque, 1 Wallace, 203; Moran v. Miami County, 2 Black, 722.
[]  Marsh v. Fulton County, 10 Wallace, 676.
[*]  Carpenter v. Longan, supra, p. 271.