l. A provision in the charter of a city corporation authorizing
it to borrow money for any public purpose whenever, in the opinion
of the City Council, it shall be expedient to exercise it, is a
valid power.
Rogers v.
Burlington, 3 Wall. 654, affirmed.
2. Money borrowed by such a corporation to construct a plank
road, if the
Page 71 U. S. 271
road leads from, extends to, or passes through the limits of the
corporation, is borrowed for a public purpose within the meaning of
the provision.
3.
Havemeyer v. Iowa
County, 3 Wall. 234, and
Gelpcke v.
City of Dubuque, 1 Wall. 175, affirmed and the
doctrine reasserted that if municipal bonds, when made, were valid
by the constitution and laws of a state as then expounded by the
highest judicial authority whose duty it was to interpret them, no
subsequent judicial exposition of an opposite kind will make them
invalid.
Mr. Justice CLIFFORD delivered the opinion of the Court.
Plaintiffs sued the corporation defendants in a plea of debt,
declaring on five bonds of one thousand dollars each, issued by the
city on the 23d day of March, 1850, and made payable ten years
after date, to E. W. Clark, Brother & Co., or bearer, with
interest on the same at ten percent per annum. The bonds were
signed by the mayor and recorder of the city, and purport to have
been issued in pursuance of an ordinance of the city
"to provide for procuring and investing the loan of ten thousand
dollars to the city, to be invested in the stock of the Burlington
& Mount Pleasant Plank road Company and for other
purposes."
Declaration alleged that the plaintiffs became the lawful owners
and holders of the bonds before they were due, and that the
defendants were liable to pay to them the amount of the bonds.
Defendants appeared and pleaded, among other defenses, as set up
in the answer, that the plank road company mentioned in the
declaration was a private corporation; that the bonds were executed
for the purpose of procuring money to invest in the stock of that
company, and that the obligees of the bonds purchased the same and
loaned the money well knowing that the proceeds of the bonds were
to be used for that purpose. They also set up the defense that
Page 71 U. S. 272
the officers of the city had no authority to issue the bonds and
that the bonds, as against the defendants, were void.
Parties defendant, under the rules of practice which prevail in
the court below, may set forth in the answer as many causes of
defense as they may have, but when the facts stated in the answer
or any division of the same are not sufficient to constitute a
defense, the plaintiff may demur. [
Footnote 1] Neither party is allowed to demur generally,
but the requirement in all cases is that the demurrer must
distinctly specify, as the grounds of objection, the matters of
error intended to be argued as defects in the pleadings, and no
joinder in demurrer is required. [
Footnote 2]
Pursuant to those rules of pleading, the plaintiffs demurred to
the answer of the defendants and assigned, among others, the
following causes of demurrer:
1. That the answer did not allege that the plaintiffs knew for
what purpose the bonds were to be issued or to what use the
proceeds of the same were to be applied.
2. That the answer is defective because the allegation that the
plank road company was a private corporation contradicts the law of
the state, of which the court will take judicial notice.
3. That the answer is insufficient because the defendants, in
their corporate capacity, had a right to borrow money, upon a
proper vote of their citizens, for any public purpose, and that the
construction of the plank road mentioned in the pleadings was a
public purpose within the meaning of their charter, and that
inasmuch as the money was not borrowed for any illegal purpose, the
defense set up was no bar to the action.
Such being substantially the state of the pleadings, the court
overruled the demurrer of the plaintiffs and decided that the
answer of the defendants disclosed a good defense to the action,
and the plaintiffs electing to stand on that demurrer, judgment was
rendered for the defendants, and the plaintiffs sued out this writ
of error.
Page 71 U. S. 273
1. The pleadings raise the question as to the validity of the
bonds mentioned in the declaration, and the effect of the decision
in the court below was that they were issued without authority.
Whether valid or invalid, it is certain that they were issued under
the provision in the charter of the city which authorized the
corporation defendants to borrow money for
any public
purpose whenever in the opinion of the city council it should
be deemed expedient to exercise that power. Certain important
conditions, however, are annexed to the exercise of the power, as
appears by the provision itself, but it is unnecessary to examine
those conditions, as it is conceded by the defendants that there is
no formal objection to the exercise of the authority. All the
conditions annexed to the exercise of the power, as expressed in
the provision, having been fulfilled, the only questions which
under any circumstances could arise in the case are whether the
provision is a valid one, and if so whether the power conferred was
exercised for a purpose within the meaning of the provision?
Questions of a similar character have been repeatedly before the
court, and they have uniformly been decided in the same way.
Present defendants presented the same questions to this Court at
the last term, and the court held that the power to borrow money
for any public purpose within the meaning of the provision was
conferred by the charter in express terms, and that there was
nothing in the constitution of the state which limited the
authority so conferred or rendered it invalid. Satisfied with that
conclusion, it is not deemed necessary to assign new reasons in its
support or to repeat those adduced in our former opinion.
Proceeds of the bonds in that case had been appropriated in the
construction of a railway, and the Court held that railways were so
far to be considered as in the nature of improved highways, and as
indispensable to the public interest and the successful pursuit
even of local business, that a state legislature might authorize
the towns and counties of a state through which a railway passes to
borrow money, issue their bonds, subscribe for the stock of the
company, or purchase
Page 71 U. S. 274
the same with a view of aiding those engaged in constructing or
completing such a public improvement, and that a legislative act
conferring such authority was not in contravention of any implied
limitation of the power of the legislature. [
Footnote 3] Substantially the same decision as to
the power of the legislature was made in the case of
Gelpcke v.
City of Dubuque, [
Footnote
4] and it is proper to remark that the opinion of the Court in
that case was chiefly founded upon a provision in the charter of
that city, expressed in the same words as the provision under
consideration in this case. Same question was presented to this
Court on a second occasion at the last term, and the Court
unanimously held that unless restrained by the organic law, the
legislature of a state had the right to authorize a municipal
corporation to take stock in a railroad or other work of internal
improvement, to borrow money to pay for it, and to levy a tax to
repay the loan. [
Footnote
5]
2. Applying these decisions to the present case, it is clear
that nothing remains open for discussion except the question
whether the bonds issued to aid in constructing a plank road fall
within the same principle as those issued granting aid to a
railway? Plank roads are as much highways as railroads, and if
authorized to be constructed by the legislature, they are public
improvements. Money borrowed to aid in the construction of such a
work by a municipal corporation is borrowed for a public purpose,
and if the road leads from, extends to, or passes through the
limits of the corporation furnishing the aid, the bonds of the
corporation given as the means of raising the money are within the
power conferred by that provision. [
Footnote 6]
3. Attention is also called to the fact that the courts of the
state have recently decided in several cases that the city had no
authority to issue the bonds, and reference is made to the
decisions of this Court where it is held that this
Page 71 U. S. 275
Court follows the decisions of the state courts in the settled
construction of their constitutions and statutes.
Similar suggestions in this class of cases have several times
been presented to this Court, and the Court has on two occasions
carefully examined the subject and shown to a demonstration that
they cannot avail where the bonds, at the time they were issued,
were valid by the constitution and laws of the state as expounded
by the courts of the state. Discussion upon that topic is
unnecessary, as the point is controlled by those decisions.
[
Footnote 7]
For these reasons, we are of the opinion that the circuit court
should have sustained the demurrer of the plaintiffs to the answer
of the defendants.
The judgment of the circuit court is therefore reversed with
costs, and the case is remanded for further proceedings in
conformity to the opinion of this Court.
Judgment accordingly.
[
Footnote 1]
Revised Code of Iowa 520, 527.
[
Footnote 2]
Ibid., 518.
[
Footnote 3]
Rogers v.
Burlington, 3 Wall. 654.
[
Footnote 4]
68 U. S. 1
Wall. 202.
[
Footnote 5]
Thomson v. Lee
County, 3 Wall. 330.
[
Footnote 6]
Meyer v. City of
Muscatine, 1 Wall. 384.
[
Footnote 7]
Gelpcke v.
Dubuque, 1 Wall. 202;
Havemeyer
v. Iowa Co., 3 Wall. 294.