1. Negotiable coupon bonds were, without authority of law,
issued in October, 1872, by a city in Nebraska for the purpose of
raising money wherewith to construct a high school building within
her limits. They were sold, and the proceeds applied accordingly.
The legislature, by all Act approved Feb. 18, 1813,
infra,
p.
107 U. S. 571,
legalized the proceedings of the city in the premises. The
Constitution of the state then in force declares that "the
legislature shall pass no special act conferring corporate powers,"
and that "no bill shall contain more than one subject, which shall
be clearly expressed in its title." A purchaser of the bonds for
full value, without notice of any informality in their issue, to
whom the city paid the interest thereon for four years, brought
suit to recover the amount of the coupons then due and unpaid.
Held: 1. That as by force of the transaction the city
was bound to refund the moneys he paid it in consideration of its
void bonds, and as the act, by confirming them, merely recognizes
the existence of that obligation, and provides a medium for
enforcing it according to the original intention of the parties, no
new corporate powers were thereby conferred. 2. That the title of
the act is a full and apt description of its contents.
2. Under the second section of the Act of Nebraska approved Feb.
25, 1875,
infra, p.
107 U. S. 573,
the bonds are valid obligations, and neither it nor the said act of
Feb. 18, 1873, is in conflict with the constitution of the state
which was then in force.
Read sought to recover, in an action at law, the amount of
certain overdue interest coupons upon bonds issued by the City of
Plattsmouth, dated Oct. 1, 1872. Each bond contains a recital that
it
"is one of a series of twenty-five of like tenor, date, and
amount, issued in pursuance of the orders of the City Council of
the City of Plattsmouth, in the Nebraska, for the construction of a
high school building in said city, authorized by a vote of the
legal voters of said City of Plattsmouth, and in compliance with
the laws of the Nebraska, and for the payment of which the good
faith, property, and effects of said city are hereby pledged."
These bonds were issued for the purpose of constructing a high
school building in the city. The city sold them, and applied their
proceeds to construct such a building, which is now in actual use
by the city, and the city paid interest on the bonds for four
years.
On the trial the plaintiff proved that he bought the entire
Page 107 U. S. 569
issue of the bonds for full value, without notice of any
informality in their issue. There was no evidence offered in
defense, and the court instructed the jury to find a verdict for
the defendant, to which the plaintiff excepted, and for the alleged
error in this ruling the judgment rendered upon the verdict in
favor of the defendant in error is now sought to be reversed.
This judgment rests upon the assumption that the bonds in
question are void, and this depends on these two propositions:
first, that at the time they were issued, there was no law
which authorized them; and
second, that certain acts of
the Legislature of Nebraska, subsequently passed, purporting to
validate them, are themselves void.
The legislation bearing upon the question appears to be as
follows:
The City of Plattsmouth was originally organized as a municipal
corporation, under that name, by a special act of the Legislature
of Nebraska, while it was under a territorial government, March 14,
1855. That act created the city a body corporate, with all the
powers and attributes of a municipal corporation. The forty-first
section was as follows:
"The council is authorized to borrow money for any object in
their discretion, if at a regularly notified meeting, under a
notice stating distinctly the nature and object of the loan, and
the amount thereof as nearly as practicable, the voters of the city
may determine in favor of the loan by a majority of two-thirds of
the legal voters at the said election, and the said loan can in no
case be diverted from the specified object."
The legislature, in 1867, also passed "An act to authorize the
common council of the City of Plattsmouth to raise money to erect a
central or high school building, and for other purposes."
So much of that act as is material here is contained in the
following:
"SEC 1.
Be it enacted by the council and House of
Representatives of the Territory of Nebraska, that the mayor
and common council of the City of Plattsmouth shall, by virtue of
their office, be commissioners of the school house fund in and for
said city, and the common council shall perform all the duties of
such commissioners, and shall possess all the rights, powers, and
authority, and be subject to the same restraints, of township
boards of education, for the purpose of raising money required for
erecting, purchasing, and
Page 107 U. S. 570
leasing school houses, and procuring sites therefor, and the
fitting up and furnishing thereof."
"SEC. 4. All common, graded, and central schools organized
within the City of Plattsmouth shall be public and free to all
children residing within the city. And the common council, by a
vote of the majority of all the council elected, are hereby
authorized to include in the general annual city tax list such
additional sum as in their opinion, with the public school moneys
for the year, will be sufficient to support the school system of
said city."
"SEC. 5. The common council shall have power and it shall be the
duty"
"
First, to designate and purchase or lease in said city
all necessary sites for school houses therein, and to improve and
fence the same, as to them shall appear suitable and proper."
"
Third, to make such bylaws and regulations as they may
deem necessary for the proper security and preservation of the
school houses and other property owned by the city for school
purposes."
"SEC. 7. The mayor and common council are hereby authorized and
directed to raise by loan, in anticipation of the taxes, when
deemed necessary, moneys, not exceeding in the aggregate $15,000,
required for erecting, purchasing, or leasing school houses and
procuring sites therefor."
"SEC. 8. That for the purpose of effecting such loan the mayor
and common council are authorized to issue the bonds of said city,
under the seal of the said city, to the amount of $15,000, and no
more, and bearing interest at a rate not exceeding ten percent per
annum, redeemable in one, two, three, four, five, and six
years."
"SEC. 17. The title of all school houses, sites, lots,
furniture, and all other school property, shall be vested in the
City of Plattsmouth."
"SEC. 20. The general school laws of this territory, in force at
the time of the passage of this act, shall, so far as the same are
applicable, be taken and construed as part of this act."
Territorial Laws 1867 P. 38.
The Constitution of Nebraska, which took effect March 1, 1867,
soon after the passage of the foregoing act, provided in art. 1,
sec. 16, that "it shall be the duty of the legislature to pass
suitable laws to encourage schools and the means of instruction."
Sec. 1, art. 8, declared that "the legislature shall pass no
special act conferring corporate powers;" and sec. 4
Page 107 U. S. 571
of the same article, that "the legislature shall provide for the
organization of cities and incorporated villages by general laws,"
&c.
Immediately after the admission into the Union of the state
under this constitution, the Legislature of Nebraska made a
revision of its general school laws and provided in sec. 60 of the
act that
"Nothing in this act shall be construed so as to interfere with
or abrogate any of the rights, privileges, and immunities, duties
or liabilities, conferred or prescribed by special enactment for
any school district comprised within any incorporated city."
Laws of the State of Nebraska, 1867, pp. 102, 110.
And accordingly, the provisions of the special school law of
1867 were continued in force, and were in substance reenacted in
the Act of February 18, 1873, "to regulate the public schools of
Plattsmouth city and provide means for their support."
The same authority to borrow money and to issue bonds therefor
for school and school house purposes, and subject to the same
limitations, is conferred by this act as that contained in the
original statute restricting the amount to $15,000.
The original charter of the City of Plattsmouth was superseded
under the constitution by a general law organizing municipal
corporations, under which Plattsmouth became a City of the second
class. This act, passed March 1, 1871, authorized the city "to
borrow money on the credit of the city and pledge the credit,
revenue, and public property of the city for the payment thereof,"
without any limit as to amount, where the city council was
instructed to do so by a majority of all the votes cast at an
election held in such city for that purpose. Gen.Stats.Nebraska,
1873, p. 148.
After the issue of the bonds in suit, the Legislature of
Nebraska passed the following act, which was approved Feb. 18,
1873:
"
An act to legalize the proceedings of the City Council of
the City of Plattsmouth in reference to the construction of a high
school building, and to authorize the city council to complete the
same."
"Whereas, at a session of the City Council of the City of
Plattsmouth, County of Cass, and State of Nebraska, held on the
first day
Page 107 U. S. 572
of July, A.D. 1872, the proposition of issuing the bonds of said
city of the amount of $25,000 for the purpose of erecting a high
school building was submitted to the voters of said city, and,"
"Whereas, at a special election held in said city for the
purpose of voting on said proposition, on the twenty-second day of
July, 1872, a majority of the votes cast were in favor of issuing
said bonds; and,"
"Whereas, in pursuance of said submission and vote, the City
Council of said City of Plattsmouth have issued and sold said
bonds, and with the proceeds thereof have proceeded to let the
contract for the construction and completion of said house, and
have appointed C. F. Driscoll and M. L. White superintendents of
the construction of the same, and the work on said building has
commenced; therefore,"
"
Be it enacted by the Legislature of the State of
Nebraska:"
"SEC. 1. That all acts and proceedings of the City Council of
said City of Plattsmouth in relation to issuing said bonds and
letting the contract for the construction of said high school
building, and the appointment of said C. F. Driscoll and M. L.
White to superintend the construction of the same, and all matters
and proceedings connected therewith which may in any way affect the
validity of said bonds or of the contract for the construction of
the said school house be, and the same are hereby, legalized,
confirmed, and made valid in law."
"SEC. 2. And be it further enacted that the City Council of the
said City of Plattsmouth are hereby authorized and empowered to
proceed with the construction of said high school building until
its completion, and for that purpose shall have full and exclusive
control of all funds realized from the sale of bonds issued by the
said City of Plattsmouth for that purpose."
"SEC. 3. All funds now in the hands of the said city treasurer
of the said City of Plattsmouth which have been created by the sale
of the high school bonds of the said city shall be applied to the
erection of said high school building, and shall not be
appropriated or diverted to other use or purpose whatever."
"SEC. 4.
And be it further enacted that the right and
title of the said City of Plattsmouth in and to block No. 24 in
said city, which has heretofore been platted and designated on the
recorded plat of said city as a park and dedicated to public use,
and on which the said school house is being erected, shall vest and
remain in the said City of Plattsmouth for school purposes, and the
same shall be held exclusively for said purpose. "
Page 107 U. S. 573
"SEC. 5. This act shall take effect and be in force from and
after its passage."
Session Laws, 1873, p. 72.
Subsequently, in 1875, the legislature passed another statute,
entitled
"An act to amend an act to incorporate cities of the second
class and to define their powers, approved March 1, 1871, and to
legalize certain taxes therein mentioned."
The text of the act is as follows:
"
Be it enacted by the legislature of the State of
Nebraska:"
"SEC. 1. That no tax heretofore levied in any City of the second
class shall be held to be invalid, illegal, or irregular because
the same was not levied within the time prescribed by the law in
force when the same was so levied, nor on account of any mere
irregularity in the time or manner of assessment of property, or
other irregularity or omission not affecting the equality or
substantial justice of such tax, and such taxes shall be inserted
in the tax list, and shall be collected in the same manner as other
general taxes are."
"SEC. 2. That all bonds heretofore issued by any city of the
second class in good faith for the erection of or to procure the
means for erecting a high school building within such city or for
heating or furnishing the same, whether issued under a general or
special law providing therefor, or any bonds hereafter issued by
such city in exchange for any such bonds, shall be legal and valid,
and any tax heretofore or hereafter levied to pay the interest or a
portion of the principal of any such bonds, not exceeding five
mills on the dollar valuation of the taxable property in the city
in any one year, shall be legal and valid."
"SEC. 3. That in all cases in which cities of the second class
have collected and expended, for the use and benefit of such
cities, either in works of internal improvement or otherwise,
moneys collected from licenses for the sale of intoxicating
liquors, such expenditures are hereby declared to be legal, and the
same is hereby ratified and confirmed, and such cities of the
second class are hereby exonerated from any and all liability
therefor."
"SEC. 4. This act shall take effect and be in force from and
after its passage."
Laws of Nebraska, 1875, p. 205.
Page 107 U. S. 574
MR. JUSTICE MATTHEWS delivered the opinion of the Court, and
after making the foregoing statement, proceeded as follows:
We cannot accept the conclusion, urged upon us by the counsel
for the plaintiff in error, that the City of Plattsmouth had
authority to issue the bonds in question under the power conferred
upon it as a municipal body "to borrow money for any purpose within
its discretion," without reference to the limit as to the amount
imposed by the act of 1867, expressly authorizing it to build
school houses. Whatever implications of power as to school
buildings might have been admissible if the law conferring
municipal powers had stood alone must give place to the express
declarations, with the accompanying qualifications, contained in
the statute that dealt by name with the very subject. And we must
therefore assume at the beginning that while the City of
Plattsmouth was authorized to erect a high school building, it
could not lawfully borrow money or issue its bonds for that purpose
in excess of $15,000.
We are therefore required to consider whether the issue of bonds
involved in this litigation can be supported by the subsequent
legislation which sought to cure the defects of their origin.
No objection is made to either of the statutes relied on on the
ground that the Constitution of Nebraska of 1867 forbade
retroactive legislation. The twelfth section of article 1 of that
instrument declares that "No bill of attainder,
ex post
facto law, or any law impairing the obligation of contracts,
shall ever be passed." This prohibition would not include
legislation of the class now in question. They are attacked,
however, on other grounds.
The first act -- that of February 18, 1873 -- it is claimed, is
made void by article 8 of ยง 1 of the Constitution of Nebraska,
which declares that "The legislature shall pass no special act
conferring corporate powers." It is contended that the act in
question, by legalizing bonds of the city, void because it had no
power to issue them, is legally equivalent to an act conferring
upon the city power to issue bonds, which is conferring corporate
power, and, being a special act, is therefore unconstitutional.
Page 107 U. S. 575
But this conclusion we cannot adopt.
The act in question, so far as it relates to the bonds in suit,
does not confer any corporate power upon the city in the sense of
the constitution of the state. The statute operates upon the
transaction itself which had already previously been consummated,
and seeks to give it a character and effect different in its legal
aspect from that which it had when it was
in fieri.
Whether such an effect may be given by a legitimate exercise of
legislative power depends upon those considerations which draw the
line beyond which retroactive laws cannot pass, and is not affected
by the supposed form of the enactment as a special or general act
conferring corporate power. For it operates upon the rights of the
parties as determined by the equity of their circumstances and
relations, and gives to them the sanction derived from subsequent
confirmation by clothing them with forms which are essential to
their enforcement, but not to their existence. Within the usual
limitations prescribed by our written constitutions, such as have
been quoted from that of Nebraska, this may be done provided it can
be done without the destruction of rights recognized by the law as
vested.
In the present case, the statute in question does not impose
upon the City of Plattsmouth, by an arbitrary act, a burden without
consent and consideration. On the contrary, upon the supposition
that the bonds issued, as to the excess over $15,000, were void
because unauthorized, the City of Plattsmouth received the money of
the plaintiff in error and applied it to the purpose intended of
building a school house on property, the title to which is
confirmed to it by the very statute now claimed to be
unconstitutional, and an obligation to restore the value thus
received, kept, and used, immediately arose. This obligation,
according to general principles of law accepted in Nebraska, was
capable of judicial enforcement.
Clark v. Saline County, 9
Neb. 516;
Louisiana v. Wood, 102 U.
S. 294;
New Orleans v. Clark, 95 U. S.
644;
Hitchcock v. Galveston, 96 U. S.
341;
Chapman v. County of Douglass, ante, p.
107 U. S. 348, and
Parkersburgh v. Brown, 106 U. S. 487.
As was said by MR. JUSTICE FIELD in
New Orleans v.
Clark::
"A law requiring a municipal corporation to pay a demand
Page 107 U. S. 576
which is without legal obligation, but which is equitable and
just in itself, being founded upon a valuable consideration
received by the corporation, is not a retroactive law, no more so
than an appropriation act providing for the payment of a
preexisting claim. The constitutional inhibition does not apply to
legislation recognizing or affirming the binding obligation of the
state, or of any of its subordinate agencies, with respect to past
transactions."
P.
95 U. S.
654.
As the City of Plattsmouth was bound by force of the transaction
to repay to the purchaser of its void bonds the consideration
received and used by it, or a legal equivalent, the statute which
recognized the existence of that obligation, and, by confirming the
bonds themselves, provided a medium for enforcing it according to
the original intention and promise, cannot be said to be a special
act conferring upon the city any new corporate power. No addition
is made to its enumerated or implied corporate faculties; no new
obligation is in fact created. The language of the constitution
forbidding special legislation of that description evidently refers
to grants of authority to be exercised by the body itself and in
the future, and a consideration of the evil intended to be remedied
by the prohibition will confine it to grants of that character, and
will not include a statute like that now under discussion. Here,
the power of the legislative department of the state is directly
exercised upon the transaction itself, and upon a matter clearly
within the scope of its authority. It was the constitutional duty
of the legislature "to pass suitable laws to encourage schools and
the means of instruction." Under the terms of this authority,
having created, as it did, the City of Plattsmouth a separate
school district, it might prescribe the number and character of the
school houses to be provided, and impose, if it saw fit, directly,
a tax upon the locality to defray the cost of erecting and
maintaining them. What the state might properly have done by direct
action it may do through the public agency of a municipal body such
as the City of Plattsmouth which, in the performance of the duty
assigned, does not so much exercise a corporate power of its own as
discharge a function of the statute. An illustration and example of
the distinction is found in the case of
Foster v. Commissioners
of Wood
Page 107 U. S. 577
County, 9 Ohio St. 540, where it was held that a public
corporation for the construction and repair of highways was really
only a part of the machinery of the state, and its officers, county
or township officers discharging duties in connection therewith,
and that consequently an act of the General Assembly authorizing
the body by name to complete the construction of a particular
highway, and to make an assessment of the cost upon the property
benefited, was not a special act conferring corporate power within
the meaning of the constitutional prohibition. So it was held in
State v. Squire, 26 Ia. 340, that while the legislature
would not, in view of the constitutional provision of that state,
have the power to pass a special law incorporating an independent
school district, it would nevertheless have the power to pass a
curative act legalizing the defective organization of a school
district already in existence under the general law authorizing the
creation of independent school districts.
In view of the decisions of this Court and the courts of the
several states in this county affirming the capacity of municipal
corporations to accept and administer trusts of property given or
devised for purposes of public charity, it would not be denied that
the City of Plattsmouth might lawfully receive and apply a gift of
money bestowed in trust to pay the principal and interest of the
bonds involved in this litigation as having been issued for the
purpose of obtaining means with which to erect a public school
building. The administration of such a trust would not be contested
on the ground that it was enlargement of its corporate powers. But
the duty to repay the consideration for them, employed by it in the
same uses, already existed, and its enforcement through the
legislative act, which prescribed a remedy, is not more open to the
same objection. It is not a special act conferring corporate power;
it is merely a special act taking away from the corporation the
power to interpose an unconscionable defense against a just claim
and to avoid an obligation to pay an equivalent for public benefits
which it has continued to enjoy.
The very proposition involved here was maintained by the Supreme
Court of Nebraska in the case of
Commissioners Jefferson County
v. People, 5 Neb. 127. There, it was
Page 107 U. S. 578
decided that a special act of the legislature authorizing the
county commissioners of Jefferson County to provide funds for the
payment of certain outstanding warrants of said county by issuing
bonds, selling the same, and using the proceeds in payment of
warrants issued to contractors for the erection of a courthouse and
jail was valid and effectual. The court said:
"That Jefferson county is justly indebted to the relator for the
amount of the warrants in question will not be controverted, and
where such is the case, there is no doubt of the power of the
legislature to require the county to issue its bonds for the amount
of its indebtedness."
In one aspect, this case goes beyond the argument, for it
contemplated further action by the corporation it the issue of its
bonds.
The second statute -- that of February 25, 1875 -- is not
subject to the objection to the former one just disposed of, for it
is a general act "to amend an act to incorporate cities of the
second class and to define their powers, approved March 1, 1871,
and to legalize certain taxes therein mentioned," and the terms of
its second section embrace the case of the bonds in controversy in
this suit. It expressly declares
"That all bonds heretofore issued by any city of the second
class in good faith for the erection of or to procure the means for
erecting a high school building within such city or for heating or
furnishing the same, whether issued under a general or special law
providing therefor or any bonds hereafter issued by such city in
exchange for any such bonds, shall be legal and valid, and any tax
heretofore or hereafter levied to pay the interest or a portion of
the principal of any such bonds, not exceeding five mills on the
dollar valuation of the taxable property in the city in anyone
year, shall be legal and valid."
Accordingly, objections are made to its validity for want of
conformity to other provisions of the constitution of the state,
the first of which -- that it conflicts with sec. 19, art. 2, which
declares that "no bill shall contain more than one subject, which
shall be clearly expressed in its title" -- it is claimed applies
to both acts.
In regard to the Special Act of February 18, 1873, however, it
seems to us unnecessary to say more than that the title appears to
be a full and apt description of the whole contents of the
Page 107 U. S. 579
act. The proceedings of the city council in reference to the
construction of a high school building, which it is the object of
the act, as expressed in the title, to legalize necessarily
includes the issue of the bonds authorized by it for that
purpose.
In
White v. City of Lincoln, 5 Neb. 505, 516, it was
said that
"The object of this constitutional provision is to prevent
surreptitious legislation by incorporating into bills obnoxious
provisions which have no connection with the general object of the
bill and of which the title gives no indication. It will be
sufficient, however, if the law have but one general object which
is fairly expressed in the title of the bill."
Accordingly it was held in that case, as it was also in
City
of Tecumseh v. Phillips, 5 Neb. 305, that the third section of
the Act of February 25, 1875, which ratified expenditures by cities
of the second class of moneys illegally collected for licenses for
the sale of intoxicating liquors, was void because there was
nothing in the title of the act to indicate the object contemplated
by that section. "It is in nowise amendatory," said the court in
City of Tecumseh v. Phillips, supra, "of the general
incorporation law for cities of the second class, nor does it make
any allusion to the legalization of any taxes whatever." And in the
same case, speaking of the entire act, the court said: "But we fail
to discover wherein it is in any particular amendatory of the
general act relating to cities of the second class." The act
therefore may be considered as if its title were simply that of "An
act to legalize certain taxes therein mentioned."
The second section, which is the only one material in this
controversy, does legalize taxes theretofore or thereafter levied
to pay the interest on certain bonds -- namely, such as having been
theretofore issued by any City of the second class in good faith
for the erection of, or to procure the means for erecting, a high
school building within such city or for heating or furnishing the
same, whether issued under a general or special law providing
therefor, etc., are thereby declared to be legal and valid.
It is impossible to say that legalizing the bonds and the taxes
levied to pay them are two diverse subject when to
Page 107 U. S. 580
legalize the taxes necessarily makes the bonds valid, for
nothing more strongly confirms an invalid bond than to make
provision for its payment. We have no hesitation, therefore, in
upholding the second section of the Act of February 25, 1875, as a
valid enactment so far as the present objection is concerned.
As we do not consider it as an act to amend the general law
incorporating cities of the second class, rejecting that portion of
the title, it is not subject to the further objection that it does
not conform to the constitutional requirement that "no law shall be
revived or amended, unless the new act contain the entire act
revived and the sections amended."
The remaining objection is not to its validity, but to its
application to the present case. It is argued that the second
section of the act relates only to bonds that have been issued
"under a general or special law providing therefor," and that the
bonds now in controversy were not so issued, and cannot therefore
claim support from this provision. If by this is meant that no
bonds are within the purview of this section except such as have
been lawfully issued, the conclusion results in an absurdity, for
it supposes an act of the legislature passed to cure the invalidity
of valid bonds. If, on the other hand, the section is construed to
mean that all bonds that have been issued in good faith for the
purposes mentioned, and under color of law, whether general or
special, but without actual authority, shall be deemed to be legal
and valid, the only rational and worthy effect is given to the
enactment that can be deduced from its terms. We do not doubt that
such was the purpose of the legislature, and that it is the meaning
of the law.
In our opinion, the bonds in controversy are valid obligations
of the City of Plattsmouth under either of the two Acts, of
February 18, 1873, and of February 25, 1875, respectively, and the
circuit court erred in its instructions to the jury to the
contrary. For that error, the judgment is reversed and the cause
remanded, with instructions to grant a
New trial.
