Town of Queensbury v. Culver - 86 U.S. 83 (1873)
U.S. Supreme Court
Town of Queensbury v. Culver, 86 U.S. 19 Wall. 83 83 (1873)
Town of Queensbury v. Culver
86 U.S. (19 Wall.) 83
1. There being nothing in the Constitution of the State of New York which makes unconstitutional an act of the legislature authorizing the people of a town to decide whether they will donate its bonds to a railroad company and collect taxes for the amount, such an act (the same being enabling merely and not mandatory) is binding.
2. Where a town, issuing bonds to which coupons or interest warrants are attached, acknowledges in the body of the bond that the town is indebted to the bearer or his assigns in such a sum of money, payable at a future day named, "with interest thereon at the rate of 7 percent, on presentation and delivery of the coupons for the same thereto attached," it may be sued on the coupons alone, though they may have been issued by commissioners specially made agents of the town by the legislature, and by it charged with the matter of issuing the securities, and not made by the ordinary town authorities.
3. This liability of the town is not taken away by the fact that the legislature has directed a special mode in which the money to pay the principal and interest of the bonds is to be raised, the directions being given to the town and county agents, and not to the holders of the bonds or coupons.
4. An act empowered commissioners to dispose of certain town bonds (whose issue for the benefit of a railroad company named, the act authorized), "to such persons or corporation and upon such terms as the commissioners should deem most advantageous for the town, but not for less than par," and to "donate the money which should be so raised to the railroad company." The act, however, required that they should not "pay over any money or bonds" except upon certain conditions specified. The commissioners did not sell the bonds, but handed them over to the railroad company in discharge of the authorized donation. On suit against the town by a bona fide holder of the bonds, held that there was no violation of the act by the commissioners in what they had done.
In May, 1857, the State of New York passed
"An act to authorize the Town of Queensbury, in the County of Warren, to issue bonds to aid in the construction of a railroad from the Village of Glenn's Falls to interest the Saratoga & Whitehall Railroad."
The act enacted:
"SECTION 1. On the application, in writing, of twelve or more freeholders, residents of the Town of Queensbury, it shall be the duty of the county judge of said county to appoint five freeholders, residents of said town, to be commissioners of such town to carry into effect the purposes of this act. A majority of the said five shall constitute a quorum for the doing of any act contemplated in this act."
"SECTION 2. It shall be lawful for the said commissioners to borrow, on the faith of the credit of the town, $100,000 &c., . . . at a rate of interest not exceeding 7 percent, and to execute
bonds therefor. The bonds may be in such form as the commissioners shall deem expedient."
"SECTION 3. The said commissioners may dispose of such bonds to such persons or corporation and upon such terms as they shall deem most advantageous for the town, but not for less than par, and the money which shall be so raised shall be donated to such railroad corporation or association as has now or shall hereafter file articles of association to build and operate a railroad from the Village of Glen's Falls to the Saratoga & Whitehall railroad, its buildings and necessary appurtenances, and for no other purpose whatsoever. For the completion of said road and the expenditure of the sum so donated by said town, said corporation shall give full and adequate security to said commissioners, and for the more effectual enforcement of this act, the commissioners shall not pay over any money or bonds to the said railroad corporation until they have been furnished with satisfactory assurances that the sum of $100,000 shall have been subscribed and paid in, and actually expended in the construction and building of the said road. And this act shall not be construed so as to make the said town a party to this corporation, and the said town shall not be taxed hereafter for any appropriation required for said road beside the amount donated in the second and third sections of this act, but such additional amount shall be raised by said corporation."
"SECTION 4. The commissioners shall report annually to the Board of Supervisors of the County of Warren the amount required to pay the principal and the interest on the bonds authorized to be issued under and by virtue of this act, and it is hereby made the duty of the board of supervisors, and they are hereby authorized and required to cause to be assessed, levied, and collected of the real and personal property of said Town of Queensbury, such sum of money as shall have been reported to the said board of supervisors by the said commissioners to be necessary, and the same when collected, shall be paid to such commissioners and by them be applied to the payment of the bonds, with the interest."
"SECTION 5. No money shall be borrowed or bonds issued until the question whether or not it is expedient to borrow such money and issue such bonds for the purpose named in this act shall have been submitted to the taxable electors of the Town of Queensbury and affirmatively determined by them. "
"SECTION 8. The said company so to be formed may charge the sum of not exceeding six cents per mile for passengers riding over said road."
Commissioners (including among them H. R. Wing, D. Peck, and W. A. Wait) were appointed under the act, and an election was held at which the majority of those voting were in favor of the project. The commissioners prepared and executed bonds to the amount authorized, with interest warrants attached.
The bonds acknowledged
"that the Town of Queensbury was indebted to the bearer in the sum mentioned for value received in money borrowed, payable on the 6th day of February, 1868, with interest thereon, at the rate of 7 percent, on presentation and delivery of the coupons for the same thereto attached."
The warrants were in this form:
No money was raised by the commissioners upon the bonds or interest warrants, but both were delivered by the commissioners to the railroad corporation.
One Culver was a contractor with the corporation for the construction of its road. He received certain bonds and interest warrants from the railroad corporation on its contract, and the warrants not being paid he sued the Town of Queensbury in assumpsit upon them. Plea, non-assumpsit. The warrants sued on were detached from the bonds.
The counsel for the defendant requested the court to give various instructions, as:
1st. That the act was in violation of the Constitutions of New York and of the United States.
2d. That if valid, assumpsit would not lie against the town on the interest warrants sued on, they not purporting to be made or issued by or in behalf of the town and the town not being liable in assumpsit on them.
3d. That the only remedy to enforce the payment by the town was to compel an assessment, collection, and payment such as was contemplated by the fourth section of the act.
4th. That in delivering the bonds and warrants to the railroad company as they had done, the commissioners had not disposed of them or raised money on them at not less than par as the statute required them to do; and that they had thus violated the statute.
The court refused all of these requests for instructions or to nonsuit the plaintiff, and verdict and judgment having gone accordingly for him, the Town of Queensbury brought the case here.