1. The court reviews the legislation and judicial decisions of
Missouri, whereby the constitutionality of an act of the General
Assembly, entitled "An Act to facilitate the construction of
railroads in the State of Missouri," approved March 23, 1868, was
recognized and affirmed long after the county authorities had
issued, pursuant to its provisions, the bonds whereon this suit was
brought. The court in this case adheres to its ruling in accordance
with those decisions, as announced in
County of Cass v.
Johnston, 95 U. S. 360,
although the Supreme Court of Missouri has since declared that act
to be in conflict with sec. 14, art. 11, of the Constitution,
adopted by that state in 1865.
2. Where municipal bonds have been put upon the market as
commercial paper, the rights of the parties thereto are to be
determined according to the statutes of the state as they were then
construed by her highest court; and in a case involving those
rights this court will not be governed by any subsequent decision
in conflict with that under which they accrued.
3. The settled judicial construction of a statute, so far as
contract rights were thereunder acquired, is as much a part of the
statute as the text itself, and a change of decision is the same in
its effect on preexisting contracts as a repeal or an amendment by
legislative enactment.
This was an action by Joseph M. Douglass on three hundred and
twenty-one overdue coupons detached from bonds issued by the county
to Pike, Missouri. The bonds are in the following form:
Page 101 U. S. 678
"No. ___] STATE OF MISSOURI [$500.00"
PIKE COUNTY BOND
"
Issued in payment of Stock of the Pike County Short
Line Railroad Company"
"Know all men by these presents that the County of Pike, in the
State of Missouri, acknowledges itself indebted and firmly bound to
the Pike County Short Line Railroad Company in the sum of five
hundred dollars, which sum the said county promises to pay to the
said Pike County Short Line Railroad Company, or bearer, at the
National Bank of the State of Missouri, in St. Louis, Mo., on the
first day of January, A.D. 1892, with interest thereon from the
first day of January, A.D. 1872, at the rate of ten percent per
annum; which interest shall be payable semiannually on the
presentation and delivery at said National Bank, of the coupons of
interest hereto attached, this bond being issued under and pursuant
to an order of the County Court of Pike County by authority of an
Act of the General Assembly of the State of Missouri, approved
March 23, 1868, entitled 'An Act to facilitate the construction of
railroads in the State of Missouri,' and authorized by vote of the
people of Cuivre Township, in said county, taken as required by
law, Feb. 7, 1871."
"In testimony whereof, the said County of Pike has executed this
bond, by the presiding justice of the county court of said county,
under the order thereof, signing his name hereto, and by the clerk
of said court, under the order thereof, attesting the same and
affixing the seal of said court; this done at Bowling Green, County
of Pike aforesaid, this first day of January, A.D. 1872."
"[SEAL]"
"A. G. GRIFFITH"
"
Presiding Justice of County Court of Pike County,
Missouri"
"Attest: H. C. CAMPBELL"
"
Clerk of County Court of Pike County, Missouri"
The declaration avers that the county, in behalf of said
township, subscribed for and received and retains the stock of said
railroad company to an amount equal to the bonds, and paid the
coupons falling due up to Jan. 1, 1876; that the road was built
through the township; that the subscription was authorized by a
vote duly taken, as required by law, on the seventh day of
February, 1871; that he is the holder for value of the coupons sued
on, and that he duly presented them for
Page 101 U. S. 679
payment at said bank as they became due, and that payment was
refused.
Judgment was rendered in favor of the defendant on its demurrer
to the plaintiff's declaration, the question involved being the
constitutionality of the act whereof mention is made in the
bonds.
The plaintiff thereupon sued out this writ of error.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
We are asked to reconsider our decision in
County of Cass v.
Johnston, 95 U. S. 360,
because, since that case, the Supreme Court of Missouri, in
State ex Rel. Woodson, v. Brassfield, 67 Mo. 331, and
Webb v. La Fayette County, id., 353, has held the Township
Aid Act, which we sustained, to be unconstitutional. The question
presented, as we view it, is not so much whether these late
decisions are right as whether they should be followed in cases
having reference to bonds put out and in the hands of innocent
purchasers when they were announced. In the
Cass County
case, we said that the supreme court of the state had often been
called on to construe and give effect to the act, and had never
before that time in a single instance expressed even a doubt as to
its validity. We have again examined all the cases, and find that
what we then said was true. Judge Dillon, who filled the office of
circuit judge in the eighth circuit with such distinguished ability
during nearly all the time the act was in operation, from its
original passage until after the recent decisions, remarked in
Westerman v. Cape Girardeau County, 7 Cent.Law Jour.
354,
"A hundred cases -- and I do not think I exaggerate -- have been
brought on these township bonds in the federal courts of this
state, and prior to the decision in
Harshman v. Bates Co.,
92 U. S.
569, none of the able lawyers defending these cases ever
made a point that the Act of March 23, 1868, was
unconstitutional."
The reason is obvious. At the very outset, it
Page 101 U. S. 680
was thought best to take the opinion of the supreme court of the
state on that subject. The act went into operation in 1868, and in
1869,
The State v. Linn County, 44 Mo. 504, was decided.
There, a township had voted to subscribe to the stock of a railroad
company, and the county court had made the subscription, but after
this was done, the court refused "to deliver the bonds for the
alleged reason only that the act under which the subscription was
made was unconstitutional and void." An application was then made
for a mandamus to compel the delivery of the bonds, and the only
questions presented by the counsel for the respondent in the
argument of the case, as shown by the report, were those of
constitutionality, and especially was it urged that the act was
repugnant to art. 11, sec. 14, which, quoting from the opinion,
"declares the general assembly shall not authorize any county,
city, or town to become a stockholder in, or loan its credit to,
any company, association, or corporation unless two-thirds of the
qualified voters of such county, city, or town, at a regular or
special election to be held therein, shall assent thereto."
All the objections presented were considered by the court, and
in conclusion it was said, "The county court having made the
subscription, the company is entitled to the bonds." It is quite
true that the precise objection which has since been raised was not
then urged or considered, but the alleged discrepancy between the
act and the constitution was just as apparent then as it is now,
and Judge Dillon, in
Foote v. Johnson County, 6 Cent.Law
Jour. 346, says:
"Suits in great numbers on these township bonds have been
brought in the circuit court of the United states for this
district, and they have been defended by the ablest lawyers in the
state upon every ground that they conceived open to them, but this
difference between the phraseology of the constitution and the act,
so patent that it could not escape attention, was never presented
or urged in any case, so far as either of us recollect, as
invalidating the act."
In
County of Cass v. Johnston, we attributed this to
the fact that in other cases, it had been substantially decided
that the language of the act and that of the constitution were in
legal effect the same, and we at that time took occasion to look
somewhat critically into the rulings on that subject. We have again
examined that
Page 101 U. S. 681
question, and are satisfied with the correctness of our former
conclusion. It is thought, however, that we did not give sufficient
effect to
State v. Sutterfield, 54 Mo. 391. As to that, we
said the question presented related to another clause of the
constitution, and that the decision was placed expressly on the
ground of a difference between the two provisions. In this it is
urged we were in error. The clause of the constitution there under
consideration was art. 4, sec. 30, which is:
"The General Assembly shall have no power to remove the county
seat of any county unless two-thirds of the qualified voters of the
county, at a general election, shall vote in favor of such
removal."
Under this provision of the constitution, a statute was passed
providing for elections in such cases, to the effect,
"if it shall appear by such election that two-thirds of the
legally registered voters of said county are in favor of the
removal of the county seat of such county, then,"
&c. In the opinion, the court said:
"There is no doubt that in general, when an election is held to
determine the choice of a candidate or the determination of some
question of public policy, the plurality required by law, whether
it be a bare majority or two-thirds or three-fourths, is determined
by the result of the vote cast, without regard to the number
declining to vote, and this is upon the ground that a failure to
vote is assumed, or may be presumed, to be an acquiescence in
whatever result may be produced by the action of those who feel a
sufficient interest in the election to go to the polls and vote,
and for the further reason that in most cases, there is no mode by
which the number of absentees can be ascertained. . . . Our
constitution in regard to the proposed removal of county seats, it
seems to me, hardly admits of two constructions. It prohibits the
legislature from removing them unless two-thirds of the qualified
voters shall, at a general election, vote for the removal. The
words do not imply an acquiescence or negative sanction, or a
negative assent inferred from absence, but a positive vote in the
affirmative, and the number of votes required is specifically
named, and there is no difficulty in ascertaining what that number
is, since the same constitution provides for a registration and
points out who qualified voters are, and the statute in this case
uses the words 'legally registered voters,' and requires two-thirds
of them to
Page 101 U. S. 682
vote for the change."
The court then refers to
Bassett v. The Mayor of St.
Joseph, 37 Mo. 270,
State v. Binder, 38
id.
450, and
State v. Winkelmeier, 35
id. 103, and
says:
"In none of these cases, however, was there any examination of
or construction given to the precise language of the constitutional
provision now under consideration. . . . The present case, however,
presents very different considerations. The question of removing
county seats was regarded by the framers of the constitution as of
sufficient importance to require very stringent provisions in that
instrument, and an examination of the laws in force on this subject
at the time of the adoption of the new constitution will show the
great importance of requiring a strict compliance with its
provisions."
We think, then, we were not in error in supposing that the court
believed there was an essential difference between the two
provisions of the constitution, and especially so as the judge who
delivered the opinion of the court in
State v.
Sutterfield, by his dissent in the later cases of
State v.
Brassfield and
Webb v. La Fayette County, clearly
indicates his disapproval of the effect upon the question now under
consideration which was then given that case.
The legislative recognition of the difference between these two
clauses of the constitution is equally apparent. The constitution
went into effect in July, 1865, and it became the duty of the
legislature, at its next session, which commenced in November, to
adapt the old laws to the new order of things. In this connection
it must be borne in mind that the provision for a registration of
voters was first introduced into the policy of the state by this
new constitution.
The then existing law regulating the removal of county seats
provided that
"Whenever three-fifths of the taxable inhabitants of any county,
as ascertained by the tax list made and returned last preceding the
application, shall petition the county court praying a removal of
the seat of justice thereof to a designated place, the court shall
appoint five commissioners,"
&c. Rev.Stat.Mo. 1855, p. 514, sec. 1. To meet the
requirements of the new constitution on this subject, an election
was provided for, and it was enacted that if it should appear by
such election that two-thirds of "the legally registered voters"
were in favor
Page 101 U. S. 683
of the removal, commissioners should be appointed to perform the
same duties prescribed in the old law. Gen.Stat. Mo. 1865, p. 223,
secs. 20-22. Here it is evident the legislature had in mind both
the provision for registration of voters and the somewhat unusual
requirement that two-thirds of the qualified voters of the county
should vote for the measure.
The old law respecting the subscription by the county courts to
the capital stock of railroad corporations was as follows:
"It shall not be lawful for the county court of any county to
subscribe to the capital stock of any railroad company unless the
same has been voted for by a majority of the resident voters who
shall vote at such election under the provisions of this act."
Acts of 1860-61, p. 60, sec. 2. In adapting this to the new
constitutional requirements, this is the language used:
"It shall be lawful for the county court of any county, the city
council of any city, or the trustees of any incorporated town, to
take stock, &c., provided that two-thirds of the qualified
voters of such county, city, or town, at a regular or special
election to be held therein, shall assent to such
subscription."
Gen.Stat.Mo. 1865, p. 338, sec. 17. This, it will be seen, is
the exact language of the constitution itself, and the intention
evidently was to leave its meaning to be ascertained by judicial
construction. By another statute passed at the same session of the
legislature, the charter of the City of St. Joseph, which had
before authorized subscriptions to the capital stock of railroad
companies if a majority of the real estate owners in the city
sanctioned the same, was amended so as to require that question to
be submitted "to a vote of the qualified voters of said city, and
in all such cases it shall require two-thirds of such qualified
voters to sanction the same." Acts of 1865-66, p. 269, sec. 1. At
the same session, in amending the charter of the town of
Clarksville, evidently to accomplish the same object, this is the
language employed: "After first having obtained the consent of the
inhabitants, as required by the constitution of the state."
Id., p. 254, sec. 1.
At the February Term, 1866, of the supreme court of the state,
that court was called on, in
Bassett v. The Mayor of St.
Joseph, 37 Mo. 270, to give a construction to the act
amending
Page 101 U. S. 684
the charter of St. Joseph. Under that act, an election was held
on the 13th of January, 1866, to vote upon the question of an issue
of bonds, and four hundred and four votes were polled, of which
three hundred and thirty-six were in favor of and fifty-eight
against the measure. The mayor refused to sign the bonds after the
vote had been taken, and a mandamus was asked to require him to do
so. The only reason he gave for declining to sign the bonds was,
that
"he was in doubt whether the matter was to be determined by
two-thirds of the votes polled at the special election, or by
two-thirds of all the voters resident in the city, absolutely,
whether voting or not."
In the argument in support of the application for the writ, the
attention of the court was called to the fact that here was "no
registry law by which the qualified voters in the city could be
ascertained," and it was further said,
"the votes cast at the last election for city officers and the
votes cast at said subsequent election furnish the only correct
criterion to ascertain the number of qualified voters in the city
at the time said special election was held."
In the opinion, mention is also made of the number of votes
polled at the next preceding election, but the court, after stating
the exact question put by the mayor as indicating his own doubts,
uses this direct and unmistakable language:
"We think it was sufficient that two-thirds of the qualified
voters who voted at the special election authorized for the express
purpose of determining that question, on public notice duly given,
voted in favor of the proposition. This was the mode provided by
law for ascertaining the sense of the qualified voters on that
question. There would appear to be no other practicable way in
which this matter could be determined."
It is true, the bonds voted at this election were not to be used
in payment of subscriptions to the stock of railroad companies, but
the law construed was the one in which provision was made for such
subscriptions. Following this, at the October Term, 1866, of the
same court, was the case of
State v. Binder, 38 Mo. 450,
in which similar language in another statute was construed, and
Bassett v. The Mayor of St. Joseph, cited as establishing
the doctrine
"that an election of this kind authorized for the very purpose
of determining that question, on public notice duly given, was the
mode contemplated by the
Page 101 U. S. 685
legislature as well as by the law for ascertaining the sense of
the legal voters upon the question submitted, and that there could
not well be any other practicable way in which such a matter could
be determined. And,"
continues the court,
"certainly, in the absence of any evidence to the contrary, it
may be presumed that the voters voting at an election so held were
all the legal voters of the city, or that all those who did not see
fit to vote (if there were any) acquiesced in the action of those
who did vote, and so are to be considered as equally bound and
concluded by the result of the election.
Rex v. Foxcroft,
2 Burr. 1017; Wilcox on Corp. 546."
Certainly, after these two decisions, made under the
circumstances that attended them, and with the mind of the court
directed by counsel in their argument to the registration laws, it
might fairly be assumed by the legislature to have been judicially
determined that the assent of two-thirds of the qualified voters
voting at an election duly called and notified was the legal
equivalent of the assent of two-thirds of the qualified voters of
an election precinct. Hence it was that, at the session of the
legislature which began in January, 1868, and as soon, probably, as
the effect of these decisions had become generally understood, to
avoid all future doubts as to what was meant, the equivalent
language, as construed by the courts, was used instead of that of
the constitution itself. And so we find not only in the Township
Aid Act, but in other acts depending for their authority on the
same clause of the constitution, the requisite assent of those
voting at an election was deemed by the legislature to be the
assent of the qualified voters.
It was under this state of facts and the law that
State v.
Linn County, supra, was heard and decided. Other objections to
its constitutional validity than those which had formerly been
considered were raised, argued, and decided in favor of the law.
From that time forward, and until long after the issue of the bonds
now in question, the law was treated by the courts and the people
as valid and constitutional. No lawyer asked for a professional
opinion on that subject could have hesitated to say that it had
been settled. It would seem as though every question which could be
raised had in some form, directly or indirectly, been presented and
decided. While some of the
Page 101 U. S. 686
decisions were rendered before the passage of the township act,
it is so clear that the peculiar language of that act was the
consequence of those decisions that we do not deem it unreasonable
to give them all the effect they would have if made afterwards.
We are, then, to consider whether, under these circumstances, we
must follow the later decisions to the extent of destroying rights
which have become vested under those given before. As a rule, we
treat the construction which the highest court of a state has given
a statute of the state as part of the statute, and govern ourselves
accordingly; but where different constructions have been given to
the same statute at different times, we have never felt ourselves
bound to follow the latest decisions if thereby contract rights
which have accrued under earlier rulings will be injuriously
affected. The language of Mr. Chief Justice Taney, in
Rowan v.
Runnels, 5 How. 134, expresses the true rule on
this subject. He said, p.
46 U. S.
139:
"Undoubtedly this Court will always feel itself bound to respect
the decisions of the state courts, and, from the time they are
made, regard them as conclusive in all cases upon the construction
of their own laws. But we ought not to give them a retroactive
effect and allow them to render invalid contracts entered into with
citizens of other states which, in the judgment of this Court, were
lawfully made."
Afterwards, in
Ohio Life Insurance &
Trust Co. v. Debolt, 16 How. 416, the same learned
Chief Justice, after reiterating what he had before said in
Rowan v. Runnels, uses this language:
"It is true the language of the Court in that case is confined
to contracts with citizens of other states, because it was a case
of that description which was then before it. But the principle
applies with equal force to all contracts which come within its
jurisdiction."
This distinction has many times been recognized and acted upon.
Supervisors v. United
states, 18 Wall. 71;
Fairfield v. County of
Gallatin, 100 U. S. 47.
Indeed, if a contrary rule was adopted, and the comity due to state
decisions pushed to the extent contended for, "it is evident," to
use again the language of Mr. Chief Justice Taney in
Rowan v.
Runnels,
"that the provision of the Constitution of the United states
which secures to the citizens of another state the right to sue in
the courts of
Page 101 U. S. 687
the United states might become utterly useless and
nugatory."
The true rule is to give a change of judicial construction in
respect to a statute the same effect in its operation on contracts
and existing contract rights that would be given to a legislative
amendment -- that is to say, make it prospective, but not
retroactive. After a statute has been settled by judicial
construction, the construction becomes, so far as contract rights
acquired under it are concerned, as much a part of the statute as
the text itself, and a change of decision is to all intents and
purposes the same in its effect on contracts as an amendment of the
law by means of a legislative enactment.
So far as this case is concerned, we have no hesitation in
saying that the rights of the parties are to be determined
according to the law as it was judicially construed to be when the
bonds in question were put on the market as commercial paper. We
recognize fully not only the right of a state court, but its duty
to change its decisions whenever in its judgment the necessity
arises. It may do this for new reasons, or because of a change of
opinion in respect to old ones, and ordinarily we will follow them
except so far as they affect rights vested before the change was
made. The rules which properly govern courts in respect to their
past adjudications are well expressed in
Boyd v. Alabama,
94 U. S. 645, where
we spoke through MR. JUSTICE FIELD. If the Township Aid Act had not
been repealed by the new constitution of 1875, art. 9, sec. 6,
which took away from all municipalities the power of subscribing to
the stock of railroads, the new decisions would be binding in
respect to all issues of bonds after they were made; but we cannot
give them a retroactive effect without impairing the obligation of
contracts long before entered into. This we feel ourselves
prohibited by the constitution of the United states from doing. We
always regret to find ourselves in conflict with the courts of the
states in matters affecting local law, but when necessary, we
cannot refrain from acting on our own judgment without abrogating
our constitutional jurisdiction.
For these reasons, the judgment of the circuit court will be
reversed and the cause remanded with directions to overrule the
demurrer to the petition and take such further proceedings
Page 101 U. S. 688
not inconsistent with this opinion as law and justice may
require, and it is
So ordered.
NOTE -- In
Darlington v. County of Jackson, error to
the Circuit Court of the United states for the Western District of
Missouri, which was argued by Mr. John B. Henderson for the
plaintiff in error and by Mr. John C. Gage for the defendant in
error, and in
Foote v. County of Pike, error to the
Circuit Court of the United states for the Eastern District of
Missouri, which was argued by Mr. John B. Henderson and Mr. Odon
Guitar for the plaintiff in error and by Mr. George F. Edmunds, Mr.
Thomas J. C. Fagg, and Mr. Fillmore Beall for the defendant in
error, MR. CHIEF JUSTICE WAITE delivered the opinion of the Court
reversing the judgments below on the authority of
Douglass v.
County of Pike, supra, p.
101 U. S. 677.