Court Opinion

ID: 8746506
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:09:08.863944+00
Date Added: 2024-06-11T17:00:42.299868
License: Public Domain

BOYD, District Judge.
In concurring with Judge MORRIS in his opinion in this case, I desire to say: This cause was argued upon the whole record, it being on appeal from a decree entered in the circuit court for the Western district of North Carolina at Greensboro, April *73314, 1899, by Judge Purnell, designated to preside in that district by the circuit judge. The rights of the parties are to be determined upon the whole record, including the answers by the supreme court to the certified questions. The decision is reported in 180 U. S. 506, 21 Sup. Ct. 458, 45 L. Ed. 642. The answers to the questions certified are, in substance, as follows: (1) That the circuit court should have regarded the decisions set out in the questions as controlling upon the inquiry whether the legislative enactments of 1868, 1879, and 1881 were passed in such manner as to become, under the constitution, laws of the state. (2) That the rights of the parties in this case are determinable by the law of the state as it was declared by the state court to be at the time the bonds here involved were made in the name of the county and put upon the market. The questions certified by this court to the supreme court involved the validity of an issue of bonds in the sum of $100,000 by the county of Wilkes, in the state of North Carolina, in the year 1889, in payment of its subscription in this sum to the capital stock of the Northwestern North Carolina Railroad Company, a corporation constructing and owning a railroad running from Greensboro via Winston-Salem, in Forsyth county, to Wilkesboro, in Wilkes county. The power relied on by the complainants in the bill for the issue of the bonds was the ordinance of 1868, the charter of the company, and an act of assembly of the nth of August, 1868, the sections 1996, 1097, etc., of the Code of North Carolina, an act of assembly of February .20, 1879, and an act of March 2, 1881, all referred to in paragraph 21 of the bill, page 7 of the record, etc. After the issue of these bonds, in due course of trade, there came into the hands of complainants 55 of the same, of the denomination of $1,000 each. The purchase of the same was for value, the highest market price, in good faith, and without notice, express or implied, that there was any suggestion of their being void, invalid, fraudulent, or otherwise than legal bonds in their issue and sale. It is alleged that the interest on these bonds was paid regularly for eight years by the county, and that such payment was enjoined by a judgment of the superior court of Wilkes county, affirmed by the supreme court, rendered in an action by the board of commissioners of the county against the treasurer, one Call, who, as such, held in his hands a fund for that purpose. It is alleged in the bill that this railroad runs over 20 miles in the county of Wilkes, and is the only railroad in that county. It is contended upon the part of the appellants that the decision of the supreme court of North Carolina in the action above set out should be followed by the circuit court. The supreme court, in answering the questions certified, disposed of that contention. Therefore I will not discuss it further than I have already in the Stanly Co. Case (No. 290, at this term) 113 Fed. 705. By reference to the decision of the supreme court, it is to be noted one thing decided was that the ordinance of 1868 was valid, and was in force after the constitution was adopted; and, further, that the supreme court of North Carolina had so held in the cases of Hill v. Commissioners, 67 N. C. 367 (June term, 1870), and in Belo v. Commissioners, 76 N. C. 489 (Aug. term, 1877). Further, it was held expressly that the Belo Case decided the ordinance of 1868, March 9th, conferred the power upon Forsyth county to make the subscription *734made by the counfy, and that this was so independently of any other legislation. As to Wilkes county, the court states the question to be as follows: “Whether Wilkes county was so situated with reference to the contemplated road that it could be said to have had the same authority as was given to Forsyth county.” Mr. Justice Harlan, delivering the opinion of the court, says: “Was Wilkes county in the same category as Forsyth county?” In short, if Wilkes county was in the same category with Forsyth county, then it stands decided by the supreme court of the United States that the ordinance of 1868 did give to Wilkes county the authority to issue the bonds in question, irrespective of the legislation of 1868, 1879, and 1881; so that the only question now is, whether Wilkes county was in the same category with Forsyth county. If so, the answer of the supreme court to the second question applies, which is that the rights of the parties in the Wilkes county case, this case, are determinable by the law of the state as it was decided by the state court to be at the time when the Wilkes county bonds were put upon the market. It results, therefore, that if Wilkes county was in the same category with Forsyth county the question is conclusively decided, in favor of the validity of the bonds by the supreme court of the United States, without anything more, and the circuit court of appeals should affirm the judgment of the circuit court in this case. The supreme court of North Carolina, in Commissioners v. Call (1898) 123 N. C. 308, 317, 31 S. E. 481, 484, 44 L. R. A. 252, undertakes to distinguish the case of Belo v. Commissioners, 76 N. C. 489, as follows:
“We have not overlooked the fact that in Belo v. Commissioners, 76 N. C. 489, this court strongly intimates that section 12 of the charter did confer the authority given in section 33 of the act of 1852. [Section 2 of the ordinance of the constitutional convention gave the power, and section 12 prescribed the manner of its exercise], but it does so incidentally, and with little discussion, because it was not denied in the pleadings. This was not the'determining point in the ease, which turned chiefly upon the recitals in the bonds and the ratifying act of 1868. This is clearly shown in the opinion itself, which devotes four pages to the discussion of equitable estoppel arising on the recitals, and about half a page to the possible binding effect of the ordinance, winding up with the significant sentence on page 497, that ‘as the case is presented to us, that question does not arise, and we do not decide it.’ It evidently did not receive careful investigation, as it apparently did not arise in the pleadings. The court stated that the ‘principle of equitable estoppel is a most important element in the transaction,’ and that the "recitals in the bonds (which were essentially different from those now before us) constituted an estoppel in pais upon the county of Forsyth.”
There can be no estoppel by recitals in bonds in the absence of absolute legislative authority — power—to issue the same.
The whole discussion of the supreme court of North Carolina in Belo v. Commissioners, which, as stated by the court in the case of Commissioners v. Call, occupied four pages, proceeded upon the only possible ground, — that there was legislative authority in the ordinance of 1868, but that perhaps that authority had not been strictly followed. The question which the court on page 497 says “does not arise” is this question, stated in the very words of the opinion of the court, in Belo v. Commissioners, to wit:
*735‘‘When the subscription was voted there is authority and reason for asserting that the justices could have been compelled, by process of law, to make the subscription, unless in defense they could have shown that the election was not fairly conducted, but was influenced by the fraud of the railroad company. People v. Board of Sup’rs of City and County of San Francisco, 27 Cal. 655. As the case is presented to us, that question does not arise and we do not decide it.”
On the question of whether there was power to issue the bonds, the court said distinctly:
“The county was clothed with the power to issue them, and It is admitted that a majority vote sanctioned the'subscription of stock and the issue of the bonds.”
Again, the court said:
“It has been one purpose of this opinion to show that the bonds were valid in the hands of bona fide holders without the aid of this healing act;” that is, the act of August 11, 1868, the only other authority being the said ordinance.
The case of Belo v. Commissioners was decided in 1877, many years before the issue of these bonds, and, as before said, is the great leading case upon this subject in North Carolina. This decision, and the impression it made upon the supreme court of the United States, as shown by the importance attached to it by Justice Harlan, has left but little for this court to decide. As said by Bynum, J., the author of the Belo decision — opinion—there was but one purpose he had in mind: To show the ordinance of the convention of 1868, the original charter of the company, gave the power to Forsyth county to issue the bonds, and was not, and did not become, ineffective upon the ratification of the constitution. No recital in any bond ever did confer power to issue it. There must, in every case, first, be shown a power to issue, after which the recitals may be relied on by an innocent purchaser as assurance of the proper exercise of the power, and of the performance of the conditions precedent to the issue by the corporate authorities,'putting the bonds upon the market. This rule — this principle — is axiomatic, universal, and has no exception.
Judge MORRIS has shown clearly that Wilkes county was in the same category with Forsyth county, — the only question left open by the supreme court of the United States. The importance, however, of the interests involved demands that J should add something to what he has said upon this question. In the case of Union Bank of Richmond v. Commissioners of Town of Oxford, 119 N. C. 214, 25 S. E. 966, 34 L. R. A. 487, the act is expressly held valid as a charter, and for all purposes except as a taxing act. For that purpose it was void, because not passed as required by the constitution. Section 1 of the act of 1879, directing that the road should run “up the valley of the Yadkin, by way of Jonesville and Wilkesboro, in the county of Wilkes,” etc., is valid, and an amendment to the charter, the ordinance of 1868. This puts Wilkes county in the same category as Forsyth county, in the sense suggested by Justice Piarían. The route of the road was determined by the legislature, and by the company also. Justice Harlan was not advertent *736to the fact that the act of 1879 was only adjudged void as a taxing act by the court, not for all purposes, but for this purpose only. In the case of Union Bank of Richmond v. Commissioners of Town of Oxford, 119 N. C. 214, 25 S. E. 966, 34 L. R. A. 487, the act is expressly declared valid as a railroad charter, because the certification cannot be impeached by the journals, but void as a taxing act, because, for that purpose, under the constitution, it can be impeached by the same journals. It is well settled in all courts that an act may be unconstitutional in part and constitutional in other respects. So section 1 of the act of 1879 is valid, because passed in all respects and certified as required by the constitution. See act of 1879, and especially section 5, etc., where, upon its face, it is shown to have been read three times and ratified. The case of Union Bank of Richmond v. Commissioners of Town of Oxford, 119 N. C. 214, 25 S. E. 966, 34 L. R. A. 487, is decisive of this, being directly in point, and, indeed, is the case out of which all this litigation has sprung. And, further, if the route was not a proper one, it was acquiesced in by the county when the company could have been forced, by mandamus, to have selected the proper one;- or it could have been enjoined anyhow from constructing the road on the route determined upon if not the proper one. Rodman v. Town of Washington, 122 N. C. 39, 42, 30 S. E. 118; Russell v. Ayer, 120 N. C. 180, 189, 27 S. E. 133, 37 L. R. A. 246; Gamble v. McCrady, 75 N. C. 509, — all cited by Judge MORRIS. So it appears the route was determined by the legislature, by the company, and, at last, acquiesced in by the county. I say by the company, because this legislation, — that is to say, the ordinance, — conferred the power upon the county of Forsyth and a privilege upon the company. Wilkes county is in the same category with Forsyth, so far as these powers are concerned, and it was one of the privileges of the company conferred also to determine the route of the road. These powers are not only conferred upon the counties, but are privileges of the company, the Northwestern North Carolina Railroad Corporation. It follows, therefore, that Wilkes county was in “the same category” with Forsyth county.
The route of the road was determined by both the legislature and the corporation. This was one of the privileges conferred upon the company. And, besides, as before said, it is not for the county of Wilkes, which participated in the determination of the route, to be heard to say, in a suit by an innocent bondholder, years after it was determined, there was no power to do it. In the case of the Scotland Co. v. Thomas, 94 U. S., on page 689, 24 L. Ed. 219, Justice Bradley says:
“The specific question in the present case, therefore, is whether the authority given the counties and towns, in 1847, to subscribe to the capital stock of the Alexandria and Bloomfield Bailroad Company has become extinguished by the subsequent consolidation of that company with other companies.”
Justice Bradley says, also, on page 688, 94 U. S., 24 L. Ed. 219, after quoting the words of the constitution of Missouri similar to the words of the North Carolina constitution of 1868, that:
*737“This prohibition, It will he observed, Is against the legislature’s authorizing municipal subscriptions or aid to private corporations. It does not purport to take away any authority already granted.”
On page 693, 94 U. S., 24 L. Ed. 221, Justice Bradley goes on to say:
“But the cuso has other aspects which it is necessary to take into consideration. * * * The project oí the railroad promised a great public improvement, conducive to the interests of Alexandria and the counties through which it would pass. The power was sought at the hands of the legislature, and was given.”
It was relied on by those who subscribed their private funds to the enterprise. Speaking of this power, he says:
“Why it should not stiil attach to this portion of the road as one of the rights and privileges belonging to it, into whose hands soever it comes, by consolidation or otherwise, it is difficult to see. * * * Subscription to the stock was not only a power of the county, but a privilege of the company.”
I have not discussed the sections of the Code in this connection, because I do not consider it necessary, having already done so in the Stanly Case (at this term), before referred to. The supreme court, in answer to the certified questions, has narrowed the issues between the parties to a small compass in this case. It is clear that the two counties, Forsyth and Wilkes, were in the same category, as I say, in the sense expressed by Justice Harlan. Having determined that, our duty seems to me plain. The decree entered upon the circuit should, in my opinion, be affirmed.