Citizens' Saving & Loan Ass'n v. Perry County
156 U.S. 692 (1895)

Annotate this Case

U.S. Supreme Court

Citizens' Saving & Loan Ass'n v. Perry County, 156 U.S. 692 (1895)

Citizens' Saving and Loan Association v. Perry County

No. 56

Argued and submitted March 29, 1894

Decided March 4, 1895

156 U.S. 692

ERROR TO THE CIRCUIT COURT OF THE UNITED

STATES FOR THE SOUTHERN DISTRICT OF ILLINOIS

Syllabus

July 3, 1869, the qualified voters of Perry County, Illinois, voted to subscribe to the capital stock of the Belleville & Southern Illinois Railroad and to issue its bonds in payment thereof, conditioned that "no bonds should be issued or stock subscribed until the railroad company should locate their machine shops at Duquoin." In December, 1870, the county court directed the bonds to be issued, and they were issued duly executed, and were delivered to the company and by it put into circulation, but the shops were never located at Duquoin. Held, in view of the legislation of Illinois reviewed in the opinion, and of the provisions in the constitution of 1870, which came into force after the vote to issue the bonds, but before their issue, that the county court by its order to issue the bonds, and the county officers by issuing them, violated their duty as prescribed by the statutes, and as the bonds contained no recital precluding inquiry as to the performance of the condition upon which the people voted in favor of their issue, it was open to the county to show

Page 156 U. S. 693

that it had not been performed, which being shown, the bonds became subject to the provisions of the constitution of 1870, and were invalid.

The bonds issued by the same county to the Chester & Tamaroa Coal & Railroad Company were issued in obedience to a vote of the people taken at an election ordered and held with reference to the Act of April 16, 1869, referred to in the opinion of this Court, which act required that a majority of the legal voters living in the county should be in favor of the subscription, and as the county court, in ordering the issue of the bonds, certified on its record that all the conditions prescribed had been complied with, and as the fact that a majority of the voters living in the county at the time of the election did not vote for the issue of the bonds is not determinable by any public record, held that it would be rank injustice to permit it to be set up after the lapse of so many years, and that the issue was valid and the bonds are binding in the county.

The case is stated in the opinion.

MR. JUSTICE HARLAN delivered the opinion of the Court.

This action was brought to recover the amount of certain coupons taken from bonds issued in the name of Perry County, Illinois, and made payable, some of them to the Belleville and Southern Illinois Railroad Company or bearer; others, to the Chester and Tamaroa Coal and Railroad Company or bearer.

The bonds, in each instance, were issued in payment of a subscription in the name of that county to the capital stock of the corporations to which they were respectively made payable.

The parties, by written stipulation, waived a jury, and the case was tried by the court.

It was found by the court that an election was held in the County of Perry on the 3d day of July, 1869, upon the

Page 156 U. S. 694

question of subscription to the capital stock of the Belleville and Southern Illinois Railroad Company, to be paid by the bonds of that county; that the notices for the election contained a clause providing, among other things, that "no bonds should be issued or stock subscribed until the railroad company should locate their machine shops at Duquoin," and that the shops, costing about $150,000, were located at East St. Louis, and not at Duquoin.

In respect of the bonds issued to the Chester and Tamaroa Coal and Railroad Company, it was found that the proposition for a subscription by the county to the capital stock of that corporation, upon which the people voted February 19, 1870, "did not receive a majority of the qualified voters of the county, 986 votes only being cast in favor of it, while at the last preceding general election, held in November, 1869, there were 2,024 votes thrown" -- in other words, that the proposition failed, by 27 votes, to receive a majority of the qualified voters of the county.

The conclusion of law as to each class of bonds was that, by reason of the facts so found, they were void for want of power to issue them.

First. The bonds issued to the Belleville and Southern Illinois Railroad Company.

The Belleville and Southern Illinois Railroad Company was incorporated by an act of the General Assembly of Illinois, approved February 14, 1857, with authority to locate, construct, and operate a railroad from the City of Belleville, in St. Clair County, southwardly, by way of the village of Pinckneyville, to some eligible point on the Illinois Central Railroad in Perry County. By the ninth section of its charter, the directors of the company were

"authorized and empowered to take and receive subscriptions to their said capital stock on such terms and in such amounts as they may deem for the interest of said company, and as they may prescribe by their bylaws and regulations, from any other railroad company or corporation, and from any county,

Page 156 U. S. 695

city, town, or village, and any such subscriptions shall be valid and binding upon any railroad company, corporation, county, city, town, or village making the same, provided said subscriptions shall be made in every respect subject to the provisions and restrictions of an act supplemental to an act entitled 'An act to provide for a general system of railroad incorporations,' approved November 6, 1849."

It was provided that the road should be completed within eight years from the passage of the act.

The act of 1849, here referred to, gave cities and counties authority to purchase or subscribe for shares of the capital stock of any railroad company then organized or incorporated, or which might be thereafter organized or incorporated, in any sum not exceeding $100,000 for each city or county; the stock so subscribed for or purchased to be under the control of the county court of the county or the common council of the city making the subscription or purchase, in all respects as stock owned by individuals. (46} 1. Authority was given to pay for such stock by borrowing money or issuing bonds. § 2. Railroad companies then or thereafter organized or incorporated under the laws of the state were authorized to receive at par the bonds of any county or city becoming subscribers to their capital stock. 1 Gross' Ill.Stat. 1873, p. 552-553.

By that act it, was further provided:

"§ 4. No subscription shall be made, or purchase or bond issued by any county or city under the provisions of this act, whereby any debt shall be created by said judges of the county court of any county or by the common council of any city to pay any such subscription unless a majority of the qualified voters of such county or city (taking as a standard the number of votes thrown at the last general election previous to the vote had upon the question of subscription under this act for county officers) shall vote for the same, . . . and if a majority of the voters of said county or city, assuming the standard aforesaid, shall be in favor of the same, such authorized subscription or purchase, or any part thereof, shall be then made by said judges or common council. In case any election had under this act is held upon a day of a general election, then the number of votes thrown at such general

Page 156 U. S. 696

election for county officers shall be the standard of the number of qualified voters as aforesaid. . . ."

1 Gross' Ill.Stat. 1873, p. 552-553.

These bonds were dated January 1, 1871, and made payable, twenty years after date, to the railroad company or bearer, with interest at seven percent per annum. Each bond, signed by the county judge and the county clerk, and attested by the county seal, contained the following recitals:

"This bond is one of a series of one hundred of like tenor and date, issued under the authority and in accordance with the requirements of an act of the Legislature of the State of Illinois entitled 'An act to incorporate the Belleville and Southern Illinois Railroad,' approved February 14, 1857, and is redeemable at the pleasure of said county at any time after the first day of January A.D. 1876."

Each coupon, signed by the same officers, was in this form:

"The County of Perry, State of Illinois, will pay to the bearer seventy dollars on the first Monday of January, 1889; being the interest on bond No. ___ issued to the Belleville and Southern Illinois Railroad Company."

On the day the bonds were directed by the county court to be issued, namely, December 5, 1870, the following communication and certificate under the county seal, and verified by the oath of the county judge, was sent to the auditor of public accounts of Illinois:

"Sir: I herewith transmit to you, for registration in your office under the provisions of the act entitled 'An act to fund and provide for paying the railroad debts of counties, townships, cities, and towns, in force April 16th, 1869,' the following bonds, being one hundred in number, dated January 1st, 1871, amounting to ($100,000) one hundred thousand dollars, payable on the first day of January, 1891, and bearing interest at the rate of seven percentum per annum, payable annually. these bonds are issued by the County Court of the County of Perry and State of Illinois to the Belleville and Southern Illinois Railroad Company, under and by authority of the provisions of an act entitled 'An act to incorporate the Belleville and Southern Illinois Railroad,' approved February 14, 1857, and I, as judge of the county court of said county, do hereby

Page 156 U. S. 697

certify that all the preliminary conditions in the act in force April 16, 1869, required to be done to authorize the registration of these bonds and entitle them to the benefits of the said act last referred to, have been fully complied with, to the best of my knowledge and belief."

Upon each bond was endorsed a certificate by the Auditor of Public Accounts of the State of Illinois, under his seal of office,

"that the within bond has been registered in this office this day, pursuant to the provisions of an act entitled 'An act to fund and provide for paying the railroad debts of counties, townships, cities, and towns,' in force April 16th, 1869."

Although these bonds did not upon their face expressly refer to the Railroad Act of 1849, the recital in them that they were issued under the authority of and in accordance with the act of 1857, incorporating the railroad company, imports a compliance with the provisions of the former act, for the act of 1857 declares that the subscriptions authorized by it should be made in every respect subject to the provisions and restrictions of the act of 1849. If, therefore, the case depended alone on the acts of 1857 and 1849, in connection with the recitals in the bonds, the conclusion would be that the County of Perry rightfully subscribed to the stock of the Belleville and Southern Illinois Railroad Company to the extent of $100,000 (for which amount the subscription was made and the bonds issued), and that the county was estopped by the representations made in the recitals of the bonds, as between it and bona fide holders thereof, from relying upon any irregularities in the exercise of its power to subscribe that did not involve the substance of the power itself.

But we are not at liberty to look alone to the acts of 1857 and 1849 and the recitals in the bonds. Although the election relating to the subscription of the stock was held July 3, 1869, the county court did not make its order for the issue of bonds until after the section of the Constitution of Illinois of 1870 forbidding municipal subscriptions to the stock of railroad corporations went into operation, which, as held in Schall v. Bowman, 62 Ill. 321; Louisville v. Savings

Page 156 U. S. 698

Bank,104 U. S. 469, and Concord v. Robinson,121 U. S. 165, 121 U. S. 169, was on the second day of July, 1870. That provision was in these words:

"No county, city, township, or other municipality shall ever become subscriber to the capital stock of any railroad or private corporation, or make donation to or loan its credit in aid of such corporation, provided, however, that the adoption of this article shall not be construed as affecting the right of any such municipality to make such subscriptions where the same have been authorized, under existing laws, by a vote of the people of such municipalities prior to such adoption."

Touching this constitutional provision, we have heretofore held that since July 2, 1870,

"no municipal corporation of Illinois has possessed authority to subscribe to the stock of a railroad or private corporation, or to make donations to or loan its credit to them, except that a subscription or donation lawfully voted by the people before the adoption of that section could be completed upon the terms and conditions approved by the electors. There is no saving of the right of such corporation to loan their credit to railroad corporations, where such loan of credit was not embraced in a vote previously taken under existing laws, and which was favorable to a subscription of stock or a donation. . . . The Constitution took away all power to impose upon the township any greater burdens than the people had by vote lawfully assumed under existing statutes. . . . They [purchasers of the township bonds] were bound to know that the power of the township, after July 2, 1870, was restricted by the Constitution to a completion of such subscription or donation as had been lawfully voted before that date; if not upon the precise terms and conditions attached thereto by the vote of the people, upon such terms as did not increase the burden."

Concord v. Robinson,121 U. S. 165, 121 U. S. 169.

At the time -- May 26, 1869 -- the county court ordered an election to ascertain the popular will as to the proposed subscription, to be paid by bonds of the county, the Act of April 16, 1869, entitled "An act to fund and provide for paying the railroad debts of counties, townships, cities, and

Page 156 U. S. 699

towns," was in full force. That act was referred to in the endorsement made on each bond by the auditor of state, as well as in the official communication of the County Judge of Perry County transmitting them for registration. It applied to every county, township, incorporated city, or town that had created a debt in aid of the construction of railways that were to be completed within ten years after its passage, as well as those which should create a debt of the character named under any law of the state. It contained the following, among other provisions:

"§ 7. And it shall not be lawful to register any bonds under the provisions of this act, or to receive any of the benefits or advantages to be derived from this act, until after the railroad in aid of the construction of which the debt was incurred shall have been completed near to or in such county, township, city, or town, and cars shall have run thereon, and none of the benefits, advantages, or provisions of this act shall apply to any debt unless the subscription or donation creating such debt was first submitted to an election of the legal voters of said county, township, city, or town under the provisions of the laws of this state, and a majority of the legal voters living in said county, township, city, or town were in favor of such aid, subscription, or donation, and any county, township, city, or town shall have the right, upon making any subscription or donation to any railroad company, to prescribe the conditions upon which bonds, subscriptions or donations shall be made, and such bonds, subscriptions or donations shall not be valid and binding until such conditions precedent shall have been complied with. And the presiding judge of the county court, or the supervisor of the township, or chief executive officer of the city or town, that shall have issued bonds to any railway or railways, immediately upon the completion of the same near to, into, or through such county, township, city, or town as may have been agreed upon, and the cars running thereon, shall certify under oath that all the preliminary conditions in this act required to be done, to authorize the registration of such bonds and to entitle them to the benefits of this act, have been complied

Page 156 U. S. 700

with, and shall transmit the same to the state auditor, with a statement of the date, amount, number, maturity, and rate of interest of such bonds, and to what company and under what law issued, and thereupon the said bonds shall be subject to registration by the state auditor, as hereinbefore provided."

Pub.Laws Ill. 1869, pp. 317, 319.

Now it is found as a fact that the people voted for the subscription on the condition, specified in the election notices, that no subscription should be made nor bonds issued until the company's machine shops were located at Duquoin. The act of 1869 not only authorized the electors to prescribe such a condition, but declared that no bonds, subscriptions, or donations that were voted on prescribed conditions shall have been "valid and binding until such conditions precedent should have been complied with." That the location of the company's machine shops at Duquoin was a condition precedent to the making of a subscription or the issuing of bonds in payment thereof, is placed beyond question, not only by the special finding of facts, but by the orders of the county court, which were made part of the record for the purpose of presenting the exceptions taken to those orders as evidence in the case.

The order of the county court, made May 24, 1869, submitting to popular vote at an election to be held July 3, 1869, the question of subscription, provided:

"And be it further ordered that no bonds be issued or stock be subscribed by said court to the Belleville and Southern Illinois Railroad Company unless twelve hundred and thirty legal voters of said county shall have voted in favor of the same at said election, nor until said company shall have built said road, and put the same in operation from Belleville to Duquoin, through the Town of Pinckneyville, with depot and depot buildings at said town, nor unless said road shall be in operation from Belleville to Duquoin on or before the first day of January, A.D. 1871, and shall locate their machine shops at said Duquoin. And be it further ordered that said bonds shall be in the sums of not less than one hundred nor more than one thousand dollars, payable at any time within twenty years from their date at the option of the said county

Page 156 U. S. 701

court, bearing interest at the rate of 7 percent per annum, and issued under the provisions of the act of the Legislature of Illinois of November 6, 1849, and Act of April 16, A.D. 1869, entitled 'An act to fund and provide for the paying of the railroad debts of counties, townships, cities, and towns.

Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.