Rogers v. Burlington - 70 U.S. 654 (1865)
U.S. Supreme Court
Rogers v. Burlington, 70 U.S. 3 Wall. 654 654 (1865)
Rogers v. Burlington
70 U.S. (3 Wall.) 654
1. Where a demurrer to a declaration in the circuit court is improperly sustained and judgment is rendered accordingly, the case may be reexamined here upon a writ of error without any formal bill of exceptions.
2. Power "to borrow money for any public purpose" gives authority to a municipal corporation to borrow money to aid a railroad company, making its road as a way for public travel and transportation, and, as a means of borrowing money to accomplish this object, such municipal corporation may issue its bonds, to be sold by the railway company to raise the money.
3. Power to issue the bonds being shown, the municipal corporation, as against bona fide holders of them for value, is estopped to deny that the power was properly executed.
The act of incorporation of the city of Burlington, in Iowa, vested the government and legislative power of the city in a city council, composed of the mayor and a board of aldermen. In addition to conferring various police powers, it authorized the city council to establish and organize fire companies and provide them with proper engines and such other instruments as might be necessary to extinguish fires; to establish and construct landing places, wharves, docks, and basins within the city; to cause all grounds within the city, where water should at any time become stagnant, to be raised, filled up, or drained; and to cause to be opened, paved, repaired, or improved, any street, lane, alley, market space, public landing, or common. The act then provides, in its 27th section, as follows:
"That whenever, in the opinion of the city council, it is expedient to borrow money for any public purpose, the question
shall be submitted to the citizens of Burlington, the nature and object of the loan shall be stated and a day fixed for the electors of the said city to express their wishes; the like notice shall be given as in cases of an election. The loan shall not be made unless two-thirds of all the votes polled at such election shall be given in the affirmative."
Assuming to act under this section, the city council, on the 23d of June, 1856, passed
"Ordinance No. 44"
"An ordinance to authorize a loan of city bonds to the Burlington & Missouri River Railroad Company &c."
"Whereas, at a meeting of the city council held on the 19th of May, 1856, a resolution was adopted authorizing the mayor to call an election and to submit the question whether or not the city issue and lend to the Burlington & Missouri River Railroad Company $75,000 in the bonds of said city, said bonds payable in twenty years from date of issue, with an interest of 10 percent per annum, and to be secured by the first mortgage bonds of said company &c. And whereas the said election was duly and legally held on the 2d of June, 1856, and the said question was legally decided in favor of the same, whereby said loan is duly authorized to be made. Therefore,"
"Be it ordained, by the City Council of the City of Burlington,"
"1st. The bonds of the city, to the extent of $75,000, and in such amounts as the mayor may direct, bearing interest, and payable as aforesaid, and duly signed, sealed, and authenticated, and with coupons for interest, be issued by said city."
"2d. That the mayor execute, with the said company, a contract of loan thereof, taking therefor the obligation of said company, and as collateral security therefor the mortgages aforesaid, and deliver said bonds to said company, and receive said mortgages."
Under the authority of this ordinance, bonds of the city to the amount of $75,000 were issued. The bonds were coupon bonds in the ordinary form, except insofar, perhaps, as they declared on their face that they were issued, by the City of Burlington, under Ordinance 44, to authorize a loan of city bonds, to the amount of $75,000, to the Burlington
& Missouri Railroad Company and as they contained a copy of the ordinance printed at large upon their back.
Certain of these instruments having got, after this, into the hands of one Rogers, a bona fide holder for value, and the interest being unpaid, he brought suit in the Circuit Court for Iowa to recover it.
The defendant demurred, among other grounds, on the following:
1st. That the petition did not aver nor show that the city had any authority to issue the bonds therein described.
2d. That the bonds on their face showed that they were not issued for any municipal purpose, but as a loan of the credit of the city to the Burlington & Missouri River Railroad Company.
3d. That there was no law of the State of Iowa authorizing the city to issue such bonds, or to lend her credit to any railroad company.
The demurrer was sustained, and judgment rendered for the defendant. To review this judgment, the case was brought here on writ of error.