1. This Court concurs in opinion with the Supreme Court of
Illinois that the fifth section of the Act of the general assembly
of that state approved Feb. 18, 1861, conferred no authority upon a
municipal corporation to subscribe to the capital stock of the
Paris & Decatur Railroad Company.
2. The Township of East Oakland subscribed to that capital stock
without being thereunto authorized, and its bonds, bearing date
April 20,1871, and reciting that they are issued in payment of such
subscription, are void.
3. Where there is a total want of authority to issue municipal
bonds, there can be no
bona fide holding of them.
This was an action of assumpsit on fifty-four coupons cut from
certain bonds issued by the Township of East Oakland, Ill., in
payment of its subscription of $75,000 to the capital stock of the
Paris & Decatur Railroad Company.
The election authorizing the subscription was held Feb. 1, 1870,
and the subscription made Aug. 15 of that year. The bonds bear date
April 20, 1871. The other facts and the provisions of the statute
applicable to the case are set forth in the opinion of the
Court.
The case was tried by the court below without a jury, and
resulted in a judgment for the plaintiff for $9,207.32 and costs.
The township thereupon brought the case here.
Page 94 U. S. 256
MR. JUSTICE HUNT delivered the opinion of the Court.
The defendant in error brought this suit in the Circuit Court of
the United states for the Southern District of Illinois against the
Township of East Oakland to recover the amount of certain interest
coupons issued with certain bonds by Charles Clement, supervisor,
and as the agent of the said town upon a subscription to the stock
of the Paris & Decatur Railroad Company.
The Paris & Decatur Railroad Company is a corporation of the
State of Illinois, organized under an Act of the general assembly
of said state, entitled "An Act to incorporate the Paris &
Decatur Railroad Company," approved Feb. 18, 1861, with authority
to construct, maintain, and operate a railroad from the Town of
Paris to the Town of Decatur in said state.
By the fifth section of said act it is provided that
"Said corporation shall cause books to be opened for
subscriptions to the capital stock thereof, to be divided into
shares of fifty dollars each, at such times and places as they may
choose, and shall give at least thirty days' notice thereof by
publication in a newspaper published in the town or city where said
books may be opened, and if there be no newspaper published
therein, then in the nearest newspaper thereto. It shall be lawful
for all persons of lawful age, or for the agent of any corporate
body, to subscribe any amount to the capital stock of said
company."
It was by the authority of this section that the subscription we
are considering was made and the bonds and coupons issued in
payment therefor. Did this language, "the agent of any corporate
body," give power to a municipal organization to subscribe and to
issue its bonds as was here done?
In the recent case of
Campbell v. Paris & Decatur
Railroad Co. (not yet reported), the Supreme Court of Illinois
passed upon the effect of this statute. After quoting the section
as given above, the court said:
"This is the only provision in the charter in reference to
subscriptions by either persons or
Page 94 U. S. 257
corporations. It confers no power on municipal corporations to
subscribe for such stock. The provision manifestly refers to
private corporations when it authorizes agents to subscribe. It
does not refer to counties, cities, towns, or townships, and cannot
be held to embrace them. No power is conferred to call the
election, or for the town officer to make the subscription, or to
issue these or any other bonds."
We have not been furnished with a copy of this decision, but it
is referred to in the briefs of both parties. While its effect or
conclusiveness is a subject of difference, the decision itself is
not denied.
If the supreme court of a state gives construction to the
language of a statute, and there have been no conflicting
decisions, this Court as a general rule follows the construction
thus given.
Township of Elmwood v. Marcy, 92 U. S.
289. It is said that this decision was
ex parte
and that the decision was given on a made-up case -- that the
contest was not a real one. There is no evidence of the truth of
these assertions, and we do not well see how evidence of that
character could be produced to us. If the decision is to be
attacked on such grounds, the proceeding must be had before the
court that made it, and upon notice to all interested.
We are, however, all of the opinion that the unreported case to
which we have referred was rightly decided, and as an original
question we concur in the opinion given by the Supreme Court of
Illinois. We think the authority to "the agent of any corporate
body" to subscribe for stock in the railroad company was not
intended to include and did not include municipal corporations. It
meant private and moneymaking, trading or business, corporations.
It did not intend to give authority to any township, however remote
from the road, to become one of its stockholders.
A provision of the Constitution of the State of Illinois, which
took effect on the second day of July, 1870, positively prohibited
a subscription to the capital stock of a railroad corporation by
any county, city, township, or other municipality, unless such
subscription had been authorized under existing laws by a vote of
the people prior to the date mentioned.
The subscription in question was made after July 2, 1870.
Page 94 U. S. 258
Had it before that date been authorized under existing laws by a
vote of the people of that town? The record shows that a vote of
the people had before that time been taken, but it does not show
that it was authorized by existing laws. There was no authority for
submitting that question to the people, and its absence in the
fifth section of the act incorporating the Paris & Decatur
Company is a strong argument that municipalities were not intended
to be included under the general designation of corporations.
We have held that a town cannot subscribe for stock in a
railroad corporation unless it has the authority of the legislature
for the act. The legislature usually requires the approval of the
electors of the town, at an election for that purpose, as a
condition to such subscription. Doubtless the legislature can
impose or omit conditions, in its discretion. But when the sanction
of a popular vote is required, it must be obtained. We are
therefore compelled to hold that the subscription of the town of
East Oakland had not been authorized under existing laws by a vote
of the people prior to July 2, 1870.
We have held that there can be no
bona fide holding
where the statute did not in law authorize the issue of the bonds.
The objection in such case goes to the point of power. There is an
entire want of jurisdiction over the subject. It is not the case of
an informality, an irregularity, fraud, or excess of authority in
an authorized agent. Where there is a total want of authority to
issue the bonds, there can be no such thing as a
bona fide
holding.
Judgment reversed.