Supervisors v. Schenck - 72 U.S. 772 (1866)
U.S. Supreme Court
Supervisors v. Schenck, 72 U.S. 5 Wall. 772 772 (1866)
Supervisors v. Schenck
72 U.S. (5 Wall.) 772
The levy of a tax and payment of interest by the proper county authorities validates, in the hands of bona fide holders for value, county bonds, issued in their origin, irregularly, as ex gr. in virtue of a popular vote ordered by a "county court," instead of one ordered by the "board of supervisors;" the vote, however, and other proceedings having been in all respects other than the source of order, regular. [In this case the tax had been levied and the interest paid by the county for nine years before it was set up that the bonds were void.]
An Illinois statute, passed in 1849, authorized the "county court" of counties wishing to subscribe to stock in railroads, to make subscriptions and to issue bonds. But the statute provided that no subscription should be made or bonds issued whereby any debt should be created by the county court, except after an election to be held in a mode prescribed in the statute, and after at such election two-thirds of the qualified voters of the county had voted to have it.
In 1851 -- that is to say, two years after the statute just mentioned had been passed -- the legislature passed another statute, called The Township Organization Law, thus:
"No county under this organization shall possess or exercise any corporate powers, except such as are enumerated in this act, or shall be specially given by law, or shall be necessary to the exercise of the powers so enumerated or given. "
"The powers of a county as a body politic can only be exercised by the board of supervisors thereof, or in pursuance of a resolution by them adopted."
"The board of supervisors of each county in this state shall have power . . . to perform all other duties, not inconsistent with this act, which may be required of or enjoined on them by any law of this state relating to the county courts."
One of the counties of Illinois -- Marshall County -- had adopted the township organization which this statute of 1851 authorized before the 28th day of February, 1853, and was on that day so organized and acting.
In this state of the statute law and of facts, Schenck brought assumpsit in the Circuit Court for Northern Illinois against the Board of Supervisors of this same Marshall County, to recover interest which had become due September 12, 1865, on the coupons of certain bonds issued nine years before, signed by the board of supervisors of the said county, for stock in the Western Air-Line Railroad. The narr. was in the ordinary form.
Special plea that on the 28th day of February, 1853, the County Court of Marshall County ordered an election, to vote for and against a subscription &c. That such election was held under said order; that the board of supervisors, on the 14th of November, 1854, acting by authority of said election, subscribed; that the bonds and coupons were issued in payment of the said subscription; that no election was ever held by order of the board of supervisors, and that the said Marshall County had been organized and was acting under the Township Organization Law since prior to 28th of February, 1853, all of which appeared from the public records of said county. The plea alleged, therefore, that the bonds and coupons had been issued without authority of law, and were void.
Special replication, not denying the facts alleged in the plea, but alleging that the bonds and coupons were issued in payment for stock of the company, which stock was received by the county; that the county enjoyed all the benefits of a stockholder; that the bonds were sold by the railroad company to the plaintiff, for value, without any notice of any
want of authority to execute the same, other than the constructive notice, which might be implied from the record of the said proceedings; that ever since the date of the bonds (1856), the board of supervisors had annually levied and collected the necessary taxes, and paid the interest on them; ,and that therefore the bonds and coupons had been ratified, and were now valid and binding on the county.,
General demurrer and judgment on it against the supervisors of the county for the amount of the coupons declared on.
The county now brought the case to this Court; the error complained of being that the circuit court had overruled the demurrer, instead of sustaining it, and the question being, whether the bonds were void in the hands of bona fide holders before maturity, because the election which authorized their issue was called by the County Court of Marshall County, instead of the board of supervisors of the county, notwithstanding that all the subsequent proceedings as was admitted were regular, and the county had, for seven or eight years, levied and collected taxes to pay the interest upon them, and had paid the interest as it fell due, until the default stated in the declaration of this case.