United States v. County of Macon - 99 U.S. 582 (1878)
U.S. Supreme Court
United States v. County of Macon, 99 U.S. 582 (1878)
United States v. County of Macon
99 U.S. 582
1. Where the statute authorizing a county to subscribe for stock in a railroad company and issue its bonds therefor limits its power to provide for the payment of them to an annual special tax of one-twentieth of one percent, and other laws then and still in force empowered it to levy a tax for general purposes not exceeding one-half of one percent upon the assessed value of the taxable property of the county, held that, in the absence of further legislation, a mandamus will not lie to compel the levy of taxes beyond the amount so authorized.
2. A holder of such bonds who has recovered judgment for the amount thereof does not thereby obtain an increased right to a levy of taxes.
The United States, on the relation of Alfred Huidekoper, filed, on the eighth day of May, 1875, a petition for a mandamus against the County Court of Macon County, Missouri. The case exhibited by the pleadings is this:
The relator, Nov. 25, 1874, recovered in the court below against said county a judgment upon interest coupons detached from bonds issued by it under and by authority of an act of the general assembly of said state entitled "An Act to incorporate the Mississippi and Missouri Railroad Company," approved Feb. 20, 1865.
He alleges that the company received the bonds, which are negotiable in form and payable in New York, in satisfaction of the county's subscription to its capital stock, and delivered the requisite stock certificates to the county; that the latter has ever since retained them and exercised the right of a stockholder in the company, and has levied and collected taxes at the rate of one-half of one percent to pay the interest on the bonds, and has paid the first four installments thereof; that an execution was sued out on the judgment, and returned nulla bona; that he then made a demand of the county court to levy and collect a tax for the purpose of paying the judgment, with which demand it has refused and neglected to comply. The county court, in its return to the alternative mandamus awarded, admits the rendition of the judgment and alleges that the act incorporating the company provides, by its thirteenth section, that
"It shall be lawful for the corporate authority of any city or town or the county court of any county desiring to do so to subscribe to the capital stock of said company, and may issue bonds therefor and levy a tax to pay the same not exceeding one-twentieth of one percent upon the assessed value of the taxable property for each year;"
that under the authority so conferred, the county court subscribed, April 2, 1867, for $175,000, and April 12, 1870, for another $175,000, of stock in the company, and issued its bonds in payment of each subscription; that the judgment rendered in favor of the relator was on interest coupons detached from a portion of the bonds issued in payment of the last subscription; that all of said bonds, with the interest thereon, are still outstanding and unpaid; that both subscriptions were made without the assent of two-thirds of the qualified electors of said county, no regular or special election having been held to procure such assent; that the tax of one-twentieth of one percent on the assessed value of all the taxable property of and in Macon County has been annually levied for the years between 1867 and 1875, inclusive, but is not sufficient to pay the interest annually accruing on the bonds issued in payment and satisfaction of said first subscription; that the county has neither money nor property with which to pay them or the interest thereon, and the county court has no authority, under any law of the state, to levy for that purpose a tax other
than the said one-twentieth of one percent; that it is ready to continue to levy it, and apply the same as far as it will go in payment and satisfaction of the principal and interest of said bonds issued in payment of said first subscription, unless otherwise ordered by a court of competent jurisdiction; and that there is and was no other consideration for said bonds from which were detached the interest coupons sued on by the relator than the payment and satisfaction of said second subscription.
The county court prays judgment whether the levy of the tax of one-twentieth of one percent and the collection and appropriation thereof pro rata to the payment of the bonds and interest thereon, issued in payment and satisfaction of said first subscription, are not a full discharge of its duty in the premises until the tax thus levied, collected, and appropriated shall have fully paid said bonds and interest, and that the residue of said tax shall be applied pro rata in payment of the principal and interest of the bonds issued in payment and satisfaction of the second subscription.
The relator demurred to the return. The demurrer was overruled and the proceeding dismissed.
The judges were opposed in opinion upon the following questions, and the requisite certificate was filed and made a part of the record:
First, whether the provision in the thirteenth section of the Act of the General Assembly of the State of Missouri, entitled "An Act to incorporate the Missouri and Mississippi Railroad Company," approved Feb. 20, 1865, recited in the bonds, writ, and return in respect of the levy of taxes to pay the bonds, was intended only to provide a sinking fund for the eventual payment of the principal of the bonds, leaving the county court power to provide for the payment of the interest thereon under the then existing general statutes of the state or by implication, or whether the said provision in said act is an absolute and existing limitation on the power of the said county court in respect to both the principal and interest.
Second, whether the said limitation in the said thirteenth section of the said act, if it existed when said act was passed, was removed, or the power to levy taxes enlarged, by the subsequent
legislation of the state so as to give the respondent power to levy such an amount and rate of tax from year to year as might be necessary to pay the interest on the said bonds.
Third, whether the said limitation in said thirteenth section applies to the case of a creditor who has recovered judgment on coupons on said bonds, and whose execution has been returned nulla bona.
Fourth, whether the relator, a judgment creditor, is entitled only to his proportion of the levy of one-twentieth of one percent, said proportion to be ascertained by the ratio which his bonds bear in amount to the whole bonded debt, or whether he, by reason of his judgment, is entitled to priority of payment over the bondholder who has obtained no judgment?
Fifth, whether the judgment creditors, upon bonds issued in payment of the second subscription, are on an equal footing with creditors who recovered judgment on the bonds issued in payment of the first subscription?
The plaintiff sued out this writ, and assigns for error that the demurrer should have been sustained, and a peremptory mandamus awarded.