Pursuant to the authority conferred by the act of the
Legislature of the State of Kansas, and by virtue of a popular
election thereby authorized, the Mayor and Council of the "City of
Fort Scott" were empowered to issue $25,000 of bonds of the city
for the purpose of procuring the right of way for the Missouri,
Kansas & Texas Railway Company through that city, and also
procuring grounds for depots, engine houses, machine shops, and
yard room, and donating the same to the company, provided that the
company, in the judgment of the mayor and council, had first given
evidence of their intention to comply with certain specified
conditions. The company did comply with the conditions. The mayor
and council did then, upon an understanding with the company, agree
to deliver to it the $25,000 of bonds in lieu of said grounds and
right of way, and in full satisfaction of all the obligations
resting on the city in relation thereto. Thereupon the bonds were
duly issued, and registered in the office of the state auditor, who
certified upon each bond that it had been regularly and legally
issued, that the signature to it was genuine, and that it had been
duly registered in accordance with the state law. The bonds were
thereupon delivered to the railroad company.
Held that the
bonds were binding on the city.
This was an action to recover the interest on certain bonds
Page 92 U. S. 504
issued by the City of Fort Scott, Kan. One of the bonds (all of
which were similar) is as follows:
"
No. 1 UNITED STATES OF AMERICA $1,000"
"STATE OF KANSAS,"
"
City of Fort Scott, in the County of
Bourbon:"
"Issued under the laws of Kansas and in pursuance of an
ordinance of the City of Fort Scott, approved Dec. 22, 1870.
$25,000 subscription to the Missouri, Kansas & Texas Railway
Company."
"Know all men by these presents that the City of Fort Scott,
County of Bourbon, in the State of Kansas hereby, for value
received, acknowledges itself indebted and firmly bound to pay to
the Missouri, Kansas & Texas Railway Company, or bearer, the
sum of $1,000, lawful money of the United States of America, which
sum of money the said city promises to pay on the first day of
July, A.D. 1890, at the Fourth National Bank, in the City of New
York, with interest thereon at the rate of seven percentum per
annum, payable semiannually at the office of said Fourth National
Bank, in said City of New York, on the first day of January and
July in each year, or presentation and surrender of the annexed
coupons as they severally become due."
"The city, the maker hereof, reserves the right to pay this bond
at its option at any time before maturity."
"In witness whereof, the said City of Fort Scott has caused this
bond to be signed, sealed, and delivered on its behalf and for its
benefit by its mayor, and countersigned by its clerk, duly and
legally appointed and authorized in this respect."
"FORT SCOTT, KAN., July 1, 1870."
"B. P. McDONALD,
Mayor [SEAL]"
"T. A. CORBETT,
City Clerk"
"[Across the face in red ink] $1,000"
Each of said bonds, in order to distinguish it from others of
like character, was numbered and pursuant to law was duly
registered in the office of the Auditor of the State of Kansas.
Attached to each bond was the following certificate of such
auditing; to-wit:
"I, A. Thoman, Auditor of the State of Kansas, do hereby certify
that this bond has been regularly and legally issued, that the
signatures
Page 92 U. S. 505
thereto are genuine, and that such bond has been duly registered
in my office in accordance with an act of the legislature entitled
'An Act to authorize counties, incorporated cities, and municipal
townships, to issue bonds for the purpose of building bridges,
aiding in the construction of railroads or other works of internal
improvement, and providing for the registration of such bonds, the
registration of other bonds, and the repealing of all laws in
conflict therewith,' approved March 2, 1872."
"Witness my hand and official seal this seventh day of January,
1873."
"A. THOMAN,
Auditor of State"
Attached to each bond were coupons falling due on the first days
of January and July, one of which is as follows:
"
$35.00 STATE OF KANSAS "
"City of Fort Scott, in the County of Bourbon, will pay the
bearer hereof thirty-five dollars, at the Fourth National Bank, in
the City of New York, on the first day of July, 1872; being six
months' interest on bond No. 1."
"T. A. CORBETT,
City Clerk"
MR. JUSTICE STRONG delivered the opinion of the Court.
The general legislation of Kansas confers unusual power upon
municipal corporations in that state. Not only are they authorized
to subscribe for and take stock in any railroad company duly
organized under any law of the state or territory, and to loan
their credit to such corporations upon such conditions as they may
prescribe (Acts of 1869, c. 29), but the Act of Feb. 28, 1868 (Gen.
Stat. c. 19), confers upon some of them much more extended powers.
It enlarges the range of municipal authority and duty far beyond
the limits within which such corporations are commonly understood
to be confined. That was an act providing for the incorporation of
cities of the second class, of which the City of Fort Scott is one.
By the twenty-ninth section, the mayor and council of each such
city governed by the act are empowered to enact, ordain, alter,
modify, or repeal such ordinances as it shall deem expedient "for
the benefit of trade and commerce" among
Page 92 U. S. 506
others. Sec. 30, subsec. 32, grants power
"To take all needful steps to protect the interest of the city,
present or prospective, in any railroad leading from or towards the
same, but not to take stock in any railroad without a vote of a
majority of the legal voters."
Subsec. 33 of sec. 30 authorizes all such ordinances as may be
expedient, and not inconsistent with the laws of the state,
maintaining inter alia "the trade, commerce, and manufactories" of
the city, and the thirty-seventh subsection (which has a very
direct bearing upon the case now before us) empowers the mayor and
council
"To take private property for public use, or for the purpose of
giving the right of way or other privilege to any railroad company,
or for the purpose of erecting or establishing market houses and
market places, or for any other necessary public purpose.
Provided, however, that in all cases the city shall make
the person or persons whose property shall be taken or injured
thereby adequate compensation therefor, to be determined by the
assessment of five disinterested householders of the city,"
&c.
Subsec. 39 authorizes the mayor and council to borrow money on
the credit of the city, with no other limitation than that no money
shall be borrowed on any contract thereafter made exceeding $2,000,
without the instruction of a majority of all the votes cast at an
election held in the city for that purpose; and subsec. 40
authorizes the issue of bonds to fund any and all indebtedness
existing, or subsequently created, due or to become due.
By these sections, the legislature manifestly contemplated a
lawful acquisition by the city of interests in railroads leading
from or towards it, and authorized municipal legislation in their
favor for the promotion of trade and commerce. The thirty-seventh
section expressly conferred the power to give to a railroad company
a right of way into or through the city, authorized the expenditure
of money to enable the city thus to aid the company, and, for the
purpose of such aid, empowered the city to make use of the state's
right of eminent domain. Nothing can be clearer, it appears to us,
than that the power to make a donation of a right of way, or of a
site for stationhouses, machine shops, and other like conveniences,
was thus vested in the mayor and city council.
Page 92 U. S. 507
If we are correct, therefore, it remains only to inquire whether
the issue of the bonds held by the plaintiff was within the
authority thus conferred on the city. On the twenty-fifth day of
July, 1870, a city ordinance was passed by which it was ordained,
among other things, that a special election should be held in the
several wards of the city on the 30th of August next following for
the purpose of submitting to the qualified electors the question of
authorizing the mayor and city council to issue bonds in a sum not
exceeding $25,000 for the purpose of procuring the right of way for
the road of the Missouri, Kansas & Texas Railway Company
through the corporate limits of the city, and also procuring
grounds for depots, engine houses, machine shops and yard room, and
donating the same to the company. By the eighth section of the
ordinance it was declared to be the duty of the mayor and council,
in case the election should result in favor of the donation, to
confer forthwith with the officers of the railroad company and
ascertain at the earliest possible moment the route selected by the
company for the line of their road through the corporate limits of
the city, and also the ground chosen by them for depots and other
purposes, and to proceed in such manner as might be deemed most
conducive to the interests of the city; to purchase so much land as
might be necessary for the right of way, and also twenty-five acres
exclusive of the right of way, at such convenient point within the
city as the officers of the railroad company might select, for
depots, engine houses, machine shops and yard room, and to issue
the bonds of the city to an amount not exceeding $25,000 to pay for
the same. The tenth section ordained that as the mayor and city
councils purchased or procured the right of way and grounds above
specified, they should donate or convey the same for a nominal
consideration, or cause the same to be donated or conveyed for a
nominal consideration by an indefeasible title in fee simple to
said company, provided however that in their judgment the company
had first given evidence of their determination to comply with
certain conditions specified in the fourth section of the
ordinance.
At the election thus ordered, the proposition submitted was
approved by a large majority of the legal voters, and the case
Page 92 U. S. 508
finds that the railroad company did comply with the conditions
mentioned in the ordinance.
Why this action of the city councils and the donation proposed
to be made under it were not authorized by the Act of the state
legislature of Feb. 28, 1868, we are unable to perceive and the
argument submitted to us on behalf of the defendant in error has
made no serious attempt to show. Indeed, it may be doubted whether
the Act of 1868 was called to the attention of the circuit court.
It has been contended here that another act, passed in 1869, gave
no such authority to the mayor and city council, but the argument
quite overlooks the grant of powers expressly made by the Act of
1868. The act of 1869 authorized the council of any city to
subscribe for stock for the city in any railroad company organized
under the laws of the state or Territory of Kansas or to loan the
credit of the city to such company upon such conditions as might be
prescribed by the city authorities, provided such subscription was
previously assented to by a majority of the qualified electors
voting at a general or special election, and, in case such an
assent was given, the act made it the duty of the city authorities
to make the subscription. This act speaks only of subscriptions and
loans of credit, but the Act of 1868 contemplated donations.
If, then, the mayor and city council were authorized to make
donations of land for the right of way and other privileges to a
railroad company, and to expend money for the purpose of acquiring
land to be given, and if they were authorized to borrow money to an
unlimited extent when instructed so to do by a popular vote, and
further to issue bonds to fund any indebtedness of the city,
existing or to be created, it is clear they had the power to agree
to give upon conditions. We have noticed that by the ordinance of
July 25, 1868, conditions were attached to the proposed gift --
conditions to be performed by the railroad company. It was after
this, after the submission of the proposition to the people and its
approval and after a compliance with its conditions by the company,
that the ordinance of Dec. 22, 1870, was passed. Its preamble
recites the submission of the proposition to issue the bonds for
the purposes mentioned to a popular vote; its approval by a large
majority; that the railway company had so far complied with the
conditions on
Page 92 U. S. 509
their part to be done and performed as to enable them to demand
from the city the right of way and grounds; that in the exercise of
this right they had made a proposition to the city to accept the
$25,000 of bonds so voted in lieu of said grounds and right of way
and in full satisfaction and discharge of all the obligation
resting on the city in relation thereto, and that after full and
careful consideration, it was deemed advisable to accept the
proposition and issue to the company the bonds.
With such a preamble, the ordinance directed the mayor and city
clerk to execute and deliver to the railroad company bonds to the
amount of $25,000 for the avowed purpose of discharging the city's
obligation.
The bonds were accordingly issued and registered in the office
of the auditor of the state, who certified upon each that it had
been regularly and legally issued, that the signature to it was
genuine, and that it had been duly registered in accordance with a
statute of the state. The plaintiff then purchased the bonds and
coupons before their maturity, without any actual knowledge of the
defenses set up against them. Indeed, no defense is set up except
an alleged want of authority for their issue -- a defense which, in
view of the legislation of the state and of the city ordinances,
has in our opinion no foundation. Certainly it has none unless a
power conferred upon a municipality is different from what the same
power would be when possessed by another holder, a doctrine which
no one will venture to assert. It follows that on the facts found
by the circuit court, the judgment should have been given for the
plaintiff.
Judgment reversed and cause remanded for a new
trial.
