Wade v. Travis County - 174 U.S. 499 (1899)
U.S. Supreme Court
Wade v. Travis County, 174 U.S. 499 (1899)
Wade v. Travis County
Argued April 26, 1899
Decided May 15, 1899
174 U.S. 499
Mitchell County v. Bank of Paducah, 91 Tex. 361, which was an action upon interest coupons on bonds issued by the county for the purpose of building a courthouse and jail and for constructing and purchasing bridges, in which it was held that as the Constitution and laws of Texas authorizing the creation of a debt for such purposes require that provision should be made for the interest and for a sinking fund for the redemption of the debt, it was the duty of the court, in an action brought by a bona fide holder of bonds issued under the law, to so construe it as to make them valid and give effect to them, is followed by this Court even if it should be found to differ from previous decisions of the Supreme Court of Texas, in force when the decision of the court below in this case was made.
This was an action brought in the Circuit Court for the Western District of Texas by the plaintiff, Wade, who is a citizen of the State of Illinois, against the County of Travis to recover upon certain interest coupons detached from forty-seven bonds issued by the defendant for the purpose of building an iron bridge across the Colorado River.
The petitioner set forth that in July, 1888, the defendant, being authorized so to do, entered into a contract with the King Iron Bridge Manufacturing Company of Cleveland, Ohio, for the construction of a bridge for public use over the Colorado River, the company agreeing to complete the same by November 15, 1888, in consideration of which the defendant
agreed to pay the sum of $47,000 in six percent bonds, payable in twenty years after date.
That, prior to the making of such contract, to-wit, February 23, 1888, the defendant, acting through its commissioners' court, levied for the year 1888 and subsequent years, until otherwise ordered, an annual ad valorem tax of twenty cents for general purposes, and an annual ad valorem tax of fifteen cents for road and bridge purposes, on each one hundred dollars' worth of taxable property in such county. That on February 13, 1889, the commissioners' court of the county levied for the year 1889 an ad valorem tax of fifteen cents on each one hundred dollars' worth of property for road and bridge purposes, and an ad valorem tax of five cents to create a sinking fund for bridge bonds, and to pay the interest on such bonds. That the defendant delivered to the bridge company, upon its contract for erecting the bridge, five bonds on December 6, 1888, ten bonds on December 22, 1888, ten bonds on February 12, 1889, and the remaining twenty-two of such bonds on July 3, 1889, such bonds being signed by the county judge, countersigned by the county clerk, and registered by the county treasurer. That the several levies in question had not been appropriated for any other purpose by the county, or at least a sufficient portion of them remained unappropriated to pay the interest and sinking fund upon such bonds, and that it was the intention of the commissioners' court to use these levies with a view of providing an annual fund sufficient to pay the interest and to provide the sinking fund required by law. The petition further averred that plaintiff purchased the coupons for a good and valuable consideration in open market, and that he is the legal owner and holder of the same; that, on January 16, 1896, he presented such coupons to the county treasurer, and demanded payment thereof, which was refused.
The county demurred to the petition upon six different grounds, the first and material one of which was that the petition failed to allege that,
"at the time the debt was created for which the bonds were issued upon the coupons of which this suit is brought, any provision was made for the
interest, and at least two percent sinking fund upon such bonds."
The circuit court was of opinion that, at the date of the execution of the contract for erecting the bridge, the commissioners' court should have made a distinct and specific provision for the interest upon such bonds and for a sinking fund, and thereupon sustained the demurrer, and dismissed the cause. 72 F. 985.
The plaintiff appealed to the circuit court of appeals, which affirmed the judgment of the circuit court. 81 F. 742. Upon plaintiff's petition, a writ of certiorari was subsequently allowed by this Court.