Van Hostrup v. Madison City - 68 U.S. 291 (1863)
U.S. Supreme Court
Van Hostrup v. Madison City, 68 U.S. 1 Wall. 291 291 (1863)
Van Hostrup v. Madison City
68 U.S. (1 Wall.) 291
l. An authority to a city to take stock in any chartered company for making "a road or roads to said city" authorizes taking stock in a road between other cities or towns, from the nearest of which to the city subscribing there is a direct road, the road in which the stock is taken being in fact a road in extension and prolongation of one leading into the city.
2. Where authority is given to a city to take stock in a road provided the act be "on the petition of two-thirds of the citizens," this proviso will be presumed to have been complied with where the bonds show on their face that they were issued in virtue of an ordinance of council of the city making the subscription, the bonds being in the hands of bona fide holders for value. In the case before the Court, the minutes of council recorded that the citizens "with great unanimity" had petitioned.
The suit was brought in the court below against the City of Madison, in Indiana, for moneys due upon coupons attached to certain bonds issued by the city authorities, signed by the mayor and the city clerk, and to which was affixed the seal of the corporation, by which the city acknowledged, that in virtue of an ordinance of the common council, passed 2d September, 1852, it owed and promised to pay the president of the Columbus & Shelby Railroad Company, or bearer, $1,000, redeemable on the 1st of November, in the year 1872, with interest at the rate of six percent per annum, semiannually, on the first days of May and November of each year, from the date of the bonds, at the banking house of Winslow, Lanier & Co. in the City of New York.
These bonds were negotiated and put into circulation by the Columbus & Shelby Railroad Company, and purchased in the market by the plaintiffs, bona fide, and for a valuable consideration. They had been issued to the railroad company for stock subscribed in that company by the City of Madison aforesaid.
As respected the authority of the city to subscribe, it appeared that one section of its charter * authorized it
stock in any chartered company for making a road or roads to said city, provided that no stock shall be subscribed &c., unless it be on the petition of two-thirds of the citizens who are freeholders &c., and provided that in all cases where stock is taken, the common council shall have power to borrow money,"
At the time when the subscription to the Columbus & Shelby road was made and the bonds issued, a railroad called the Madison & Indianapolis Railroad, a road leading from
Indianapolis, in the interior of the state, to Madison was in operation, and brought down from one part of the interior, where Indianapolis is, to Madison, on the Ohio River, the products of the state. This road passed through Columbus. The Columbus & Shelby Company (the company to which the subscription was made) was organized to construct a road from Columbus to Shelby County, terminating at Shelbyville. But Columbus was forty-six miles from Madison, Shelbyville being about twenty-three north of it. Through Columbus, and by means of the connection with the Madison & Indianapolis road, the Columbus & Shelby road did lead to Madison and nowhere else; though if regarded as an independent and isolated road, and as one between Shelby and Columbus only, it could not be said to be a road to the city designated. The diagram will elucidate the matter.
As respected the required "petition of two-thirds of the citizens," the matter rested apparently upon an entry on the minutes of the city council, which stated that "the freeholders of the City of Madison, with great unanimity, had petitioned," &c.
The defenses set up by the city were
"that the bonds were issued to the Columbus & Shelby Railroad Company, to pay for a subscription by the city to the capital stock of the said railroad company, and for no other consideration;
that the said Columbus & Shelby Railroad Company was not a chartered company for the purpose of making a road to the City of Madison aforesaid, but to make a road from Columbus to Shelbyville, the nearest terminus of said road being forty-six miles distant from Madison."
2. That the bonds were issued without the petition or memorial of two-thirds of the freeholders of said city requesting the common council to take the stock and issue the bonds.
The court below gave judgment in the case, which was upon the pleadings wholly, for the city. On error here, the validity of the defenses -- as in the court below -- were the points in issue.