Block v. Commissioners - 99 U.S. 686 (1878)


U.S. Supreme Court

Block v. Commissioners, 99 U.S. 686 (1878)

Block v. Commissioners

99 U.S. 686

Syllabus

1. A., the lawful holder of coupons detached from bonds issued by a county in Kansas, applied to a court of competent jurisdiction for a mandamus to compel the county commissioners to pay such of them as were then due, and levy a tax sufficient to pay those shortly thereafter falling due. The commissioners denied the validity of the bonds and the obligation of the county to pay them. Judgment was rendered for the defendants. Subsequently, A. delivered the same coupons to B., to be collected for the benefit of A. B. brought suit. Held that the judgment was a bar to the suit.

2. The Court again decides that a bona fide purchaser of municipal bonds for a valuable consideration, who had no actual notice of any defense which could be sat up against them, is not bound to look further than to see that there was legislative authority for their issue, and that the officers who were thereunto authorized have decided that the precedent conditions upon which

Page 99 U. S. 687

it was allowed to be exercised have been fulfilled. If such authority was conferred and such a decision made, the bonds are valid obligations which he may enforce.

3. Where, pursuant to a statute entitled "An Act authorizing counties and cities to issue bonds to railroad companies," approved Feb. 10, 1865, as amended Feb. 28, 1888, an election was held in a county in Kansas upon the question of a county subscription to the capital stock of "any railroad company" then or thereafter to be organized which should construct a railroad from a point in Missouri to a point in the county, and the result having, May 8, 1887, been declared by the proper authorities to be in favor of the subscription and so entered on their minutes, the bonds were, in 1870, issued in payment of the subscription to a Missouri company, which caused the road to be built, held that the subscription was binding, and that the county in an action on the bonds by such a purchaser is estopped from asserting that in fact a majority of the qualified electors had not voted in favor of the issue of the bonds.

This was an action brought, March 17, 1875, by Block against the

Board of Commissioners of the County of Bourbon, Kansas, upon overdue coupons, amounting in the aggregate to $16,800, detached from bonds issued by that county.

A copy of one of the bonds and coupons is as follows:

"No. ___] STATE OF KANSAS [$1,000"

"Stock Bond of Bourbon County"

"Thirty years after date, the County of Bourbon promise to pay to the Tebo and Neosho Railroad Company, a corporation organized by authority of the laws of the State of Missouri, and by virtue of an act of incorporation passed by the legislature of the state aforesaid, and approved the sixteenth day of January, 1860, or bearer, the sum of one thousand dollars, for value received, with interest at the rate of seven percent per annum, payable semiannually, at the New York National Exchange Bank, in the City of New York, from and after the first day of January, 1871."

"City of Fort Scott, Kansas, July 1, 1870."

"By order of the Board of County Commissioners of the County of Bourbon, Kansas, dated March 8, 1867."

"[SEAL] D. GARDNER"

"Chairman, Board of County Commissioners, Bourbon County"

"Attest: C. FITCH, Clerk"

"FORT SCOTT, KANSAS, July 1, 1870"

"Treasurer of Bourbon County will pay bearer thirty-five dollars, at the New York National Exchange Bank, in the City of New

Page 99 U. S. 688

York, being semiannual interest due on the ___ day of _____, 18__, on the bond of the County of Bourbon, No. ___, to the Tebo and Neosho Railroad Company, issued in pursuance of an order of the board of county commissioners of said county, dated March 8, 1867."

"D. GARDNER"

"Chairman, Bourbon Board of County Commissioners"

"C. FITCH, County Clerk"

Under its charter, granted Jan. 16, 1860, the company had power to construct a road between certain points and to extend and operate it or its branches beyond the limits of Missouri. It transferred, in October, 1870, by authority of a statute of that state, its franchises, rights, and privileges, "including subscriptions," south of a designated point, to the Missouri, Kansas, and Texas Railway Company, a Kansas corporation. The latter company assumed all indebtedness incurred for the construction or otherwise of the line between Sedalia, Mo., and Fort Scott, the county seat of said county, and constructed in due time the road through that county, via Fort Scott, to Texas. The road is now in full operation.

The said board, March 8, 1867, adopted an order, which was duly entered on its minutes, as follows:

"Be it ordered by the County Commissioners of Bourbon County, Kansas, that there be subscribed, in the name and for the benefit of the County of Bourbon, in the State of Kansas, $150,000 to the capital stock of any railroad company now organized or that shall hereafter be organized that shall construct a railroad commencing at a point on the Tebo and Neosho Railroad, running westward via Fort Scott, and that the bonds of said county be issued to said company for the same, said bonds to be payable within thirty years from the date thereof, and bearing interest at the rate of seven (7) percentum per annum, provided that said bonds shall not be issued until the question shall have been submitted to a vote of the qualified electors of the County of Bourbon, and shall have received a majority of the votes cast in favor of the same, in pursuance of the provisions of an 'Act to authorize counties and cities to issue bonds to railroad companies,' approved Feb. 10, 1865, and that said question shall be submitted to said electors at a special election on the seventh day of May, A.D. 1867. "

Page 99 U. S. 689

"At said election, the votes shall be cast 'For railroad bonds' and 'Against railroad bonds,' and if it shall appear, upon a canvass of said votes by the proper officers, according to law, that a majority of the votes cast are in favor of the said subscription, then the above order shall be carried into practical operation by the issuing of said bonds to said company whenever the County Commissioners of Bourbon County are satisfied that the roadbed of the Tebo and Neosho Railroad is completed to such a point that the amount of said bonds shall be sufficient and adequate to construct the roadbed and connect the said point with the City of Fort Scott."

Said order was duly published, and the election held pursuant thereto. On canvassing the returns, the board declared, May 10, 1867, that there was a majority of twenty-six votes "for railroad bonds," and that there was no evidence that an election had been held in the Township of Franklin.

The poll book from that township did not arrive at the clerk's office until after the commissioners had adjourned.

The board, July 23, 1869, made a further order providing for a special election on the twenty-fourth day of the following August. The election was duly held accordingly, and on canvassing the votes, the board declared that a majority of them had been cast in favor of the proposed subscription.

The board thereupon appointed an agent to subscribe, in the name and for the benefit of the county, $150,000 to the capital stock of said Tebo and Neosho Railroad Company upon the express condition, "which was made a part of said subscription," that the county bonds should not be delivered to the company, nor the county become liable to pay any portion of its subscription, until the roadbed of the company should be completed to such a point that the amount of bonds should be sufficient to complete the road from Sedalia, Mo., to Fort Scott. There was a further condition that the subscription should be void unless the roadbed was completed to Fort Scott, Jan. 1, 1872.

The board, July 2, 1870, ordered that the bonds bearing date July 1, 1870, of the tenor and effect of the foregoing copy, be issued and deposited with a certain person as trustee of the county, for delivery to the company when the conditions

Page 99 U. S. 690

upon which they had been voted should be complied with.

The board, Jan. 2, 1871, upon a report made to it, approved the delivery, on the fifth day of November, 1870, of the bonds to the company, the coupons covering interest from July 1 to Sept. 1, 1870, having been detached therefrom.

The board, June 27, 1872, ordered that the poll book of Franklin Township of the election held May 7, 1867, which had remained sealed since it had been delivered by the messenger of the township, should be opened. The board declared, after inspecting said book, that if the vote then cast by that township had been computed in canvassing the county vote, the proposition to vote the bonds would have been rejected.

The board thereupon ordered the treasurer of the county to withhold the payment falling due on said bonds July 1, 1872, and to notify the New York National Exchange Bank of the City of New York, as the fiscal agent of the county, that no more interest would be paid on them and that the principal would not be paid at maturity.

The county levied and collected taxes for 1870, 1871, and 1872, to pay interest on the bonds in suit, and paid the first three installments of interest thereon.

Certain coupons, on which this suit was brought, numbered four, originally attached to said bonds, from one to one hundred, had been in controversy in a mandamus proceeding in the Supreme Court of Kansas, instituted by one Lewis, then and still the real and beneficial owner of them. They were in possession of Block for collection.

The remaining facts are stated in the opinion of this Court. The circuit court gave judgment in favor of the county on the coupons in suit which were attached to the bonds numbered from one to one hundred, inclusive, and against it for the remaining coupons, being on bonds owned by Block, numbered one hundred and thirty-one to one hundred and fifty.

Each party sued out a writ of error.

Page 99 U. S. 691



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