Court Opinion

ID: 7091925
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:06:57.654408+00
Date Added: 2024-06-11T16:13:04.296422
License: Public Domain

Stockton, J.
I concur in opinion with the Chief Justice that there is no power in the counties of this State, under the provisions of the Code, sections 114,116, to subscribe to the capital stock of railroad companies, and issue county bonds in payment of the same.
This is the first time, to the court as at present constituted, this question has been made previous to the taking of the stock and the issuing of the bonds. In the case of Clapp v. The County of Cedar, 5 Iowa 15, it ivas held by a majority of this court, in which ruling I concurred, that the bonds of Cedar county issued to the “ Lyons Central Railroad Company,” in payment for stock in said company subscribed by said county, were valid and binding, and the holders thereof wore entitled to recover the amount of the bonds from the county.
A decision to the same effect was made in the case of Ring v. Johnson County, 6 Iowa 265. These are the only cases before this court of actions brought upon the bonds or coupons, in which the validity of such bonds has been questioned; and in each of these cases, in my opinion, the plaintiff was entitled to recover upon grounds entirely distinct from the question of the power in the county to take the stock and issue the bonds.
Independent of the question that the bonds had passed from the possession and ownership of the railroad companies, into the hands of innocent purchasers, who had in good faith paid their money for the same, which money had gone to the use of the counties, and been expended by them, the *179General Assembly, by the acts of January 25th, 1855, chapters 128 and 149, in effect legalized these bonds, and made them valid and binding in the hands of the holders thereof. The -cases above named, therefore, did not necessarily involve the question of the power of the counties to subscribe the stock and issue the bonds under the sections of the Code above referred to.
In the case of McMillan v. County Judge and Treasurer of Lee County, 6 Iowa 304 and 391, the question ivas upon the legality of the tax levied to pay the interest on bonds by the county of Lee in payment of its subscription of stock in certain railroads. The vote taken by authority of the county judge, upon the question of taking said stock had been by this court decided to be illegal, null and void. 3 Iowa 311. The General Assembly had, howerer, by the act of January 29, 1857, (Session acts p. 447,) not only legalized the vote taken by the county judge, but had further declared the bonds issued in pursuance of such vote legal and valid, and a valid lien upon the taxable property of said county, and had required the county judge to levy and collect a tax to .meet the payment of the principal and interest of said bonds. Under these circumstances the only question to be determined, was whether the legislature had the power to legalize the vote, and to declare the bonds valid and binding on the county.
As to the power in the legislature there has been at no time any doubt in my mind. I think the power may by them be conferred upon the counties to take the stock and issue the bonds without any constitutional objection; and where it has been conferred, and the bonds have been issued in conformity with it, or where the bonds, though illegally or informally issued, have been subsequently legalized by the legislature, I think they are binding upon the county and must be paid.
In the case at present under consideration, the objection is taken, in the first instance, to the power of the county to issue the bonds. They are not 'yet issued — they have not *180passed into the hands of the railroad company, nor of innocent purchasers for value.
The question is made, in my opinion, at the proper time to test the power of the county to take stock and issue the bonds. It is made at a time when it is unincumberred by any question of bona fide holders, or of subsequent legalization of the bonds by the legislature; and looking at the provisions of the Code under which the power is attempted to be derived, and upon which it is placed by the opinion of the Court in the case of Dubuque County v. The Dubuque & Pacific Railroad Company, 4 G. Greene 1, I am clearly of opinion that no such power was intended to be, or has in reality been conferred upon the counties.
The question in this case is to be viewed simply in the light of the power and authority conferred by the legislature, or intended so to be. Such being the caso I am constrained to dissent from the ruling of this court in the above entitled case, which in my opinion is the only one in which the question has been authoritatively determined. There is a distinction to be observed between the question of the power of the counties to issue the bonds, when made, as in this case, in the first instance, and before their issue; and when made in a suit brought upon the bonds to recover their amount from the county, by one to whom they have been transferred as an innocent purchaser. The courts, in my opinion, may well allow the question whether the power has been conferred by the legislature upon the counties to issue such bonds, to be made upon an application for an injunction to restrain their issue, when it would not be allowed to be made when the bonds had gone into the hands of an innocent purchaser for value, after the county had received the proceeds of the bonds and after the money had been expended for its use and benefit. The plainest rules of justice and equity would seem to require, when such is the case, that the county should not be allowed to urge, as a defence in an action on the bonds, that they had been issued without the authority of law. To say nothing of public opinion, something is due to good faith, and *181to the obligation recognized and resting upon all subordinate authorities, and particularly upon those standing in so close a relation to the supreme authority of the State, as do our county corporations, to maintain the public credit.
In the attitude in Avhichthe question now presented stands, I am of opinion that there is no power in the county to issue these bonds, and that the injunction should be made perpetual.
The counsel for appellants refers to the following authorities in support of the position assumed by him. We have not been able to obtain the volume referred to, but we give the citation for the benefit of those who may be disposed to examine them: 7 Am. Law Reg. 90 and 193; 21 Howard U. S. Rep.