Livingston County v. First Nat'l Bank
128 U.S. 102 (1888)

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U.S. Supreme Court

Livingston County v. First Nat'l Bank, 128 U.S. 102 (1888)

Livingston County v. First National Bank of Portsmouth, New Hampshire

No. 195

Submitted October 9, 1888

Decided October 29, 1888

128 U.S. 102

Syllabus

In this case, bonds issued by Livingston County in Missouri, on behalf of Chillicothe Township in payment of a subscription to the stock of the Saint Louis, Council Bluffs & Omaha Railroad Company were held valid.

The vote of the township, given in May, 1870, was in favor of the issue of the bonds to the Chillicothe & Omaha Railroad Company, a Missouri corporation, afterwards, under a statute existing at the time of the vote, that company was consolidated with an Iowa corporation under the name of the corporation to which the bonds were subsequently issued. Held that the consolidation was authorized, and that the privilege of receiving the subscription passed to the consolidated company.

The vote having contemplated the construction of the railroad which the consolidated company built, there was no diversion from the purpose contemplated by the vote in the fact that the stock was subscribed, and the bonds issued, to the consolidated company.

The doctrine of Harshman v. Bates County,92 U. S. 569, and County of Bates v. Winters,97 U. S. 83, that a county court in Missouri could not, on a vote by a township to issue bonds to a corporation named, issue the bonds to a corporation formed by the consolidation of that corporation with another corporation, would not be, if applied here, a sound doctrine.

On the recitals in the bonds and the other facts in this case, the county was estopped from urging, as against a bona fide holder of the bonds, the existence of any mere irregularity in the making of the subscription or the issuing of the bonds.

Page 128 U. S. 103

This is a suit commenced on the 4th of September, 1882, by the First National Bank of Portsmouth, New Hampshire, against the County of Livingston, in the State of Missouri, to recover the amount of 312 coupons, for $20 each, being 13 coupons, due from July 1, 1876, to July 1, 1882, both inclusive, on each one of 24 bonds for $500 each, each of the bonds, except as to number, being in the following form:

"Fifteen-Year Bond"

"COUNTY OF LIVINGSTON, State of Missouri:"

"Livingston County bond issued in behalf of the Municipal Township of Chillicothe. Interest eight percent per annum, payable on the first days of January and July. Fifteen years. No. 18."

"Know all men by these presents that the County of Livingston, in the State of Missouri, acknowledges itself indebted and firmly bound to the St. Louis, Council Bluffs & Omaha Railroad Company in the sum of five hundred dollars ($500), which sum the said county hereby promises to pay to the said St. Louis, Council Bluffs & Omaha Railroad Company, or bearer at the National Bank of Commerce, in the City of New York, State of New York, on the first day of July, 1885, together with interest thereon from the first day of July, 1870, at the rate of eight (8) percent per annum, which interest shall be payable semiannually on the first days of January and July of each year, on the presentation or delivery at said bank of the coupons of interest hereto attached. This bond being issued under and pursuant to an order of the County Court of Livingston County, authorized by a two-thirds vote of the people of Chillicothe Municipal Township."

"In testimony whereof the said County of Livingston has executed this bond by the presiding justice of the county court of said county under an order of said court, signing his name hereto, and by the clerk of said court, under the order thereof, attesting the same and affixing thereto the seal of said court. "

Page 128 U. S. 104

"This done at the City of Chillicothe, County of Livingston aforesaid, this 10th day of April, A.D. 1871."

"G. W. McDOWELL"

"Presiding Justice of the County Court"

"of Livingston County, Missouri"

"Attest:"

"[Seal of the County Court of Livingston County]"

"W. H. GAUNT"

"Clerk of the County Court of Livingston County, Missouri"

Attached to each of the bonds were coupons for the interest, each, except as to number and date when due, being in the following form:

"$20. CHILLICOTHE, LIVINGSTON COUNTY, Mo., January 1, 1871."

"The County of Livingston acknowledges to owe the sum of twenty dollars on the 1st day of July, 1871, being interest on bond number one for five hundred dollars. This coupon payable at the National Bank of Commerce in the City of New York, State of New York."

"W. H. GAUNT"

"Clerk of the County Court of Livingston County, Missouri"

Successive coupons for each installment of interest were attached to each bond.

The petition by which the suit was commenced alleged that the defendant made and delivered the bonds in behalf of the Municipal Township of Chillicothe; that the bonds were issued under and pursuant to an order of the County Court of Livingston County, authorized by a two-third vote of the people of that township, as is recited in the bonds, and in aid of the St. Louis, Council Bluffs, and Omaha Railroad, under authority of an act of the Legislature of the State of Missouri entitled "An act to facilitate the construction of railroads in the State of Missouri," approved March 23, 1868, and of the Constitution of the State of Missouri; that as each coupon for the semiannual interest had, prior to July 1, 1876, matured, the same was paid by the officers of the county, on behalf of said township,

Page 128 U. S. 105

with the proceeds of a tax levied and collected each year by the county from the taxpayers of the township, for that purpose; that before the coupons sued on became due and payable, the bonds and coupons were sold to, and for value became the property of, the plaintiff, which had ever since been the legal holder, owner, and bearer thereof, and that the defendant, on and after July 1, 1876, had refused to pay any of the coupons then or since becoming due, or to levy any tax for their payment.

The provisions of the Act of March 23, 1868, in regard to the issuing of bonds in the name of a county in behalf of a municipal township therein, which apply to the present case, are as follows (1 Wagner's Statutes of Missouri of 1870, 313):

"Section 51. Whenever twenty-five persons, taxpayers and residents in any municipal township, for election purposes, in any county in this state, shall petition the county court of such county, setting forth their desire as a township to subscribe to the capital stock of any railroad company in this state building or proposing to build a railroad into, through, or near such township, and stating the amount of such subscription, and the terms and conditions on which they desire such subscription shall be made, it shall be the duty of the county court, as soon as may be thereafter, to order an election to be held in such township to determine if such subscription shall be made, which election shall be conducted and returns made in accordance with the laws controlling general and special elections, and if it shall appear from the returns of such election that not less than two-thirds of the qualified voters of such township voting at such election are in favor of such subscription, it shall be the duty of the county court to make such subscription in behalf of such township according to the terms and conditions thereof, and if such conditions provide for the issue of bonds in payment of such subscription, the county court shall issue such bonds in the name of the county, with coupons for interest attached; but the rate of interest shall not exceed ten percent per annum, and the same shall be delivered to the railroad company."

"Section 52. In order to meet the payments on account of the

Page 128 U. S. 106

subscription to the stock, according to its terms, or to pay the interest and principal on any bond which may be issued on account of such subscription, the county court shall from time to time levy and cause to be collected, in the same manner as county taxes, a special tax, which shall be levied on all real estate lying within the township making the subscription, in accordance with the valuation then last made by the county assessor for county purposes."

"Section 53. The county treasurer shall be authorized and required to receive and collect of the sheriff of the county the income from the tax provided in the previous section and to apply the same to the payment of the stock subscription, according to its terms, or to the payments or interest and principal on the bonds, should any be issued in payment of such subscription. He shall pay all interest on such bonds out of any money in the treasury collected for this purpose by the tax so levied, as the same becomes due, and also the bonds as they mature, which shall be cancelled by the county court, and this service shall be considered a part of his duty as county treasurer."

The answer of the defendant to the petition contains a general denial and also sets forth that no petition was ever presented to the County Court of Livingston County by the taxpayers of the Municipal Township of Chillicothe, as required by the act of 1868, praying for the election named in the act; nor did that court ever order any election to be held in the township as to whether it would subscribe any amount to the capital stock of the St. Louis, Council Bluffs, and Omaha Railroad Company; nor did the county court ever order, direct, or authorize the bonds or the coupons in question to be issued; nor was any election ever held in the township to determine whether it, or the voters therein, would consent to any subscription on its account to the capital stock of the said railroad company, or to the issuing of the bonds and coupons, and that the issuing and delivery of them were without authority of the county court, and in violation of the Constitution and laws of Missouri. The answer also denied that the plaintiff was the owner and holder in good faith and for value of the bonds and coupons in question.

Page 128 U. S. 107

The plaintiff put in a replication to the answer, denying each and every allegation of new matter therein contained. The cause was in due form heard by the court without the intervention of a jury, and it made a finding of facts and of conclusions of law in favor of the plaintiff, upon which a judgment for it was rendered on the 6th of January, 1885, for $8,476.60, with costs, against the County of Livingston,

"to be collected, if necessary, by mandamus against the county court of said county, commanding it to levy and collect from Chillicothe Municipal Township, in said county, a special tax according to law for the payment of said judgment, interest, and costs, and to pay the same."

To review this judgment, the defendant has brought a writ of error.

The facts found by the circuit court, other than those which are merely formal, are as follows:

The defendant issued twenty-four bonds on the 10th of April, 1871, numbered consecutively from 1 to 24, inclusive, signed by the presiding justice of the county court, attested by its clerk, and with the seal thereof, each in the form before set forth, and with coupons in the form before given. The plaintiff, in April, 1871, bought all of the bonds and the coupons thereto attached and not then matured, in the open market for cash and without notice of any defect or infirmity therein or in the action of the county court in issuing the same, and has ever since been and still is the holder of the bonds and the unpaid coupons thereon, and at the time of the institution of this suit was the holder of the coupons then matured and described in the petition. The bonds were issued under the following circumstances:

By articles of association entered into on the 18th of June, 1867, and filed in the office of the Secretary of State of the State of Missouri on the 14th of July, 1868, a corporation was created by the name of the St. Louis, Chillicothe and Omaha Railroad Company. The articles declared that the object of the association was to construct, maintain, and operate a railroad for public use in the conveyance of persons and property from the City of Chillicothe, in the County of Livingston and State of Missouri, to such point on the boundary line between Missouri and Iowa as should be

Page 128 U. S. 108

deemed, after actual survey,

"to be on the most direct and feasible route for constructing, maintaining, and operating a railroad between the said City of Chillicothe and the City of Omaha in the State of Nebraska;"

that the length of the railroad should be about ninety miles, and it should be made into or through the Counties of Livingston, Daviess, and Gentry, and into or through one or more of the Counties of Nodoway, Harrison, and Worth. The articles also declared that the association was

"organized under and subject to the laws of the State of Missouri contained in chapters sixty-two and sixty-three of Title XXIV of the General Statutes of Missouri of 1865, possessing all and singular the powers therein contained."

General Statutes of Missouri of 1865, 326-344.

At a meeting of the stockholders of the St. Louis, Chillicothe and Omaha Railroad Company held on the 4th of June, 1869, its name was changed by their vote to that of the Chillicothe and Omaha Railroad Company, and evidence thereof was filed in the office of the Secretary of State of the State of Missouri on the 25th of June, 1869.

On the 3d of May, 1870, a petition signed by more than 25 taxpayers and residents of the Municipal Township of Chillicothe was filed in the County Court of Livingston County setting forth that the petitioners, as a township, desired to subscribe $15,000 to the capital stock of the Chillicothe and Omaha Railroad Company, subject to the following conditions:

"1st. Payment of said subscription to be made in bonds of Livingston County, [issued in accordance with the law regulating subscriptions by municipal townships to railroad companies] at par, said bonds to be payable fifteen years from the 1st day of July, 1870, and bearing interest at the rate of eight percent per annum, payable semiannually."

"2d. The bonds to be issued to said company when it shall have continuously graded its roadbed on or near its present located survey from the City of Chillicothe to the western boundary of Livingston County."

The county court, on the 3d of May, 1870, made an order reciting the contents of the petition and directing that an election be held at the usual place of voting in the township, Chillicothe election district, on the 27th of

Page 128 U. S. 109

May, 1870, to determine if such subscription should be made. The order prescribed the forms of the respective ballots, for and against the subscription. On the 25th of May, 1870, the county court made an order that the question to be voted upon at the election so to be held should be whether the township should subscribe $12,000 to the capital stock of the said railroad company, upon the same conditions as before mentioned, the ballots to be in like form.

The election was held on the 27th of May, 1870. On the 30th of May, 1870, the votes cast were duly canvassed, and an abstract thereof was made and entered of record in the county court, signed by the president of that court and a justice of the peace, and attested by the signature of the county clerk, showing that 320 votes had been cast for and 50 votes against the subscription of $12,000 to the capital stock of said company.

On the 23d of September, 1870, there were filed in the office of the secretary of State of the State of Iowa articles of association, in conformity to chapter 52 of Title X and other laws of Iowa, of the Revision of 1860, incorporating the St. Louis, Council Bluffs, and Omaha Railroad Company in Iowa, to construct and operate a railroad. The articles contained the following clause:

"The main line of said railroad City of Council Bluffs, in the State of Iowa, City of Council Bluffs, in the State of Iowa, and from such other point adjacent to the eastern terminus of the union Pacific Railroad, on the banks of the Missouri River, as the board of directors may hereafter designate; thence in a southwesterly direction to the state line between the States of Iowa and Missouri at a point where the Chillicothe and Omaha Railroad shall reach said state line, and in the event of the consolidation of this company and corporation with the said Chillicothe and Omaha Railroad Company, a company incorporated under the general laws of the State of Missouri, then, in connection with the last-mentioned railroad, to form a continuous line of railroad from the City of Omaha, in the State of Nebraska, and the City of Council Bluffs, in the State of Iowa, to the City of St. Louis, in the State of Missouri, and the board of directors of the corporation

Page 128 U. S. 110

hereby created shall have the power at any time, when the same can be lawfully done, to consolidate this corporation with the Chillicothe and Omaha Railroad, in Missouri, aforesaid, and this corporation shall have, hold, and by its board of directors exercise all the powers, rights, privileges, and franchises granted and conferred by the laws of the State of Iowa, Revision of A.D. 1860, and of all laws amendatory thereof and supplemental thereto."

These articles had, on the 13th of September, 1880, been filed for record in the office of the recorder of Pottawatomie county, in the State of Iowa.

At a meeting of the stockholders of the Chillicothe and Omaha Railroad Company held on the 20th of September, 1870, "all the stock of the company being present thereat," a resolution was passed by the stockholders unanimously directing the board of directors of the company to effect a consolidation of it with the St. Louis, Council Bluffs, and Omaha Railroad Company of the State of Iowa. Articles of consolidation were on the same day entered into between the two corporations consolidating the two into one

"for the purpose of constructing, owning, maintaining, using, and operating a continuous line of railroad from the City of Omaha, in Nebraska, and the City of Council Bluffs, in Iowa, to the City of Chillicothe, in Missouri, under the name of the St. Louis, Council Bluffs, and Omaha Railroad Company."

These articles of consolidation were executed by the president of the Chillicothe and Omaha Railroad Company on behalf of that company under a resolution of its board of directors to that effect which was approved by more than three-fourths of all the stock in the company. The articles of consolidation and the proceedings thereon on the part of the Chillicothe and Omaha Railroad Company were filed in the office of the Secretary of State of the State of Missouri on the 7th of October, 1870, and the same articles of consolidation and the proceedings of the meeting of stockholders of the Chillicothe and Omaha Railroad Company, authorizing the consolidation, were filed in the office of the Secretary of State of the State of Iowa on the 19th of December, 1870.

In the year 1871, a railroad was constructed by the corporation

Page 128 U. S. 111

acting under the name of the St. Louis, Council Bluffs, and Omaha Railroad Company, from the City of Chillicothe, in Livingston County, Missouri, upon and over the line set forth and described in the articles of association filed in the office of the Secretary of State of the State of Missouri on the 14th of July, 1868, to a point on the boundary line between the States of Missouri and Iowa, and has been continued thence to the City of Omaha, Nebraska, and has ever since been operated on that line.

The County of Livingston paid all the interest coupons on the 24 bonds as they respectively matured, to and including those falling due July 1, 1876, from the proceeds of taxes levied in each year upon the taxable property of Chillicothe township in that county.

On the 21st of February, 1877, the County Court of Livingston County entered an order on its records, as follows:

"Whereas, by a decision of the Supreme Court of the United States in a case wherein Bates county, of this state, was a party, it was held that all township bonds issued under and by virtue of an act of the State of Missouri entitled"

"An act to facilitate the construction of railroads in the State of Missouri, approved March 23, 1868, are mull and void, owing to the unconstitutionality of said act, which decision, as we are informed, has since been reaffirmed by U.S. Circuit Judge Dillon, and whereas, under and by virtue of said act above recited, the County of Livingston, for the use and in behalf of the Municipal Township of Chillicothe, did, in A.D. 1870, issue and deliver, under said act above recited, to the St. Louis, Council Bluffs, and Omaha Railroad Company, a series of bonds in amount twelve thousand dollars, to run for fifteen years, and each for the sum of five hundred dollars, now therefore, it appearing that all of said bonds are null and void, it is hereby ordered that, from and after this date, the treasurer of the county be commanded and directed to refuse payment of said bonds or any of them, together with all coupons for interest thereto attached, in whosoever hands they may be found or by whomsoever they may be presented, until otherwise directed by this Court or by some competent superior authority. "

Page 128 U. S. 112

The conclusion of law of the circuit court upon the foregoing facts was in these words:

"Upon consideration of the foregoing facts, which constitute all the facts and evidence produced in the cause, the court finds that the County of Livingston, in the State of Missouri, is indebted to the plaintiff, the First National Bank of Portsmouth, New Hampshire, by reason of the nonpayment of the coupons described in the petition and the facts aforesaid, in the sum of eight thousand four hundred and seventy-six dollars and sixty cents ($8,476.60)."

There is also found in the record a bill of exceptions. When the plaintiff offered in evidence the 24 bonds, the defendant objected on the ground that the bonds were void on their faces and showed no authority for their issue. The court overruled the objection and permitted the bonds to be read in evidence, to which ruling the defendant excepted. A like objection and exception were taken by the defendant to the reading in evidence of the coupons sued on. When the plaintiff offered in evidence the tax levies for the years 1872, 1873, 1874, 1875, and 1876 for the purpose of showing that in each of those years the County Court of Livingston County made a levy upon the property in the Township of Chillicothe of taxes for the payment of the interest on the bonds in question, the defendant objected to the evidence on the ground that there could be no ratification of the issuing of the bonds if the issue was unlawful. The objection was overruled, and the defendant excepted. No other exceptions appear by the bill of exceptions.

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