US SUPREME COURT DECISIONS

1. The act of the General Assembly of Illinois approved Feb. 24, 1860, amendatory of an act entitled "An Act to incorporate the Illinois Southeastern Railway Company," approved Feb. 25, 1867, removed the limitation of $30,000 imposed upon the amount which, by the latter act, "any town in any county under township organization is authorized and empowered to donate to said company."

2. The court reaffirms the ruling in Harter v. Kernochan, 103 U. S. 562, that the duly signed and countersigned township bonds, payable to the company or bearer, which recite that they are duly issued in compliance with the vote of the legal voters of the township, cast at an election held by virtue of the above-mentioned acts of Feb. 25, 1867, and Feb. 24, 1869, are valid in the hands of a bona fide holder.

3. An irregularity in conducting the election will not defeat a recovery on the bonds, or on the coupons thereto attached, nor overcome the presumption that the plaintiff, in the usual course of business, became at their date the holder of them for value.

4. A decree in personam, rendered by a court of the Illinois, declaring the bonds to be void does not bind a nonresident holder of them who was not named as a party to the suit and did not appear therein, and who had no notice of the pendency thereof other than by a publication addressed to the "unknown holders and owners of bonds and coupons issued by the Town of Pana."

6. Coupons after their maturity bear interest at the rate prescribed by the law of the place where they are payable. chanrobles.com-redchanrobles.com-red

Page 107 U. S. 530

This was an action of assumpsit brought by James H. Bowler and Isaac H. Merrill against the Town of Pana upon coupons cut from certain bonds issued by the town dated June 23, 1873. The defendant pleaded the general issue, and the parties having waived a jury, submitted the case to the court upon the facts as well as the law. The court found the issues of fact for the plaintiffs and rendered judgment in their favor for $7,272.02. This writ of error is brought by the defendant to review that judgment.

The parties made an agreed statement and the court a special finding of facts. From these and the pleadings in the case the following facts appear:

On February 25, 1867, an act was passed by the Illinois Legislature "to incorporate the Illinois Southeastern Railway Company." Sections 9 and 10 of this act declared as follows:

"SEC. 9. Any town, in any county under township organization, is hereby authorized and empowered to donate to said company any amount, not to exceed $30,000, provided that no such donation by any such town to said company shall be made unless the question of making such donation shall have been first submitted to the legal voters of such town at an election hereafter to be provided for, and provided further that no donation so made, nor any part thereof, nor any interest accruing thereon, or upon any part thereof, shall be paid or become due or payable to said company until said company or its assigns or employees shall have completed their said railroad or some certain part of said road or its branch as may have been agreed upon by the contracting parties."

"SEC. 10. No such election for the purpose of submitting the question of making a donation by any such town, authorized by section 9 of this act to donate to this company, shall be held until the directors of said company shall have filed a proposition to the inhabitants of said town with the county clerk of the county wherein such town is situate, and a copy of the same with the clerk of said town, and if there be a newspaper published in said county, said proposition shall be published in full in the same, whereupon it shall be the duty of the clerk of such town to post up printed or written notices of the time and place of holding such

Page 107 U. S. 531

election in at least ten public places in such town, together with a copy of such proposition at least twenty days before the day for holding such election, at which election the legal voters of such township shall vote for or against such proposition, and if a majority of all the votes cast be for such proposition, the trustees of such town shall so certify the same to the clerk of the county court of the county wherein the town is situated, and such county clerk shall, upon application of the company, after the donation so voted by any such town shall have become due and payable, under the terms and conditions of the proposition under which said election was rendered, compute and assess upon all the taxable property in said town an amount sufficient to pay such donation, or any part or installment of the same so then being due and payable, which taxes so assessed shall be collected as other taxes, and the taxes so collected shall be paid to the treasurer of said company. And the election herein provided for shall be held, canvassed, and returned as other regular town elections."

Afterwards, on February 24, 1869, another act was passed to amend the act to incorporate the Illinois Southeastern Railway Company, section 10 of which was as follows:

"SEC. 10. That any village, city, county, or township organized under the township organization law or any other law of this state along or near the route of said railway or its branches or that are in anywise interested therein may, in their corporate capacity, subscribe to the stock of said company or render donations to said company to aid in constructing and equipping said railway, provided that no such subscriptions or donations shall be made until the same shall be voted for as hereinafter provided. That whenever twenty legal voters of any such city, village, county, or township shall present to the clerk thereof a written application requesting that an election shall be held to determine whether such village, city, county, or township shall subscribe to the capital stock of said company or make a donation thereto to aid in building or equipping said railway, stating the amount, and whether to be subscribed or donated, and the rate of interest and times of payment of the bonds to be issued in payment thereof, such clerk shall receive and file such application, and shall immediately proceed to post written or printed notices, calling an election to be held by the legal voters of such village, city, county, or township, which notice shall be posted in ten of the most public places of

Page 107 U. S. 532

such village, city, county, or township, for thirty days preceding an election, and said notices shall state fully the object of such election, and such election shall be held and conducted, and returns thereof made, as in general elections provided by law in this state, and as provided by the charters of any such village or city, provided that at any election held under the provisions of this act, it shall not be necessary to cause a registration of the voters of such villages, cities, counties, or townships, and if a majority of the votes cast at such election shall be in favor of such subscription or donation, then the corporate authorities of such village, city, county, or township, organized under the township organization laws of this state, the supervisors of such township shall subscribe to the capital stock of said company or donate thereto, as shall have been determined at such election, the amount so voted at such election and shall issue the bonds with interest coupons attached, . . . said bonds to be signed, . . . in case of a township, by the supervisor thereof, and . . . to be countersigned by the clerk of said . . . township,"

&c.

Afterwards the Springfield and Illinois Southeastern Railway Company, to which the bonds in question in this case were issued, was created by the consolidation of the Pana, Springfield, and Northwestern Railroad Company and the Illinois Southeastern Railway Company. The consolidation was authorized by the charters of the two companies, and the new company succeeded to all the rights, franchises, and powers of the constituent companies. Harter v. Kernochan, 103 U. S. 562. In pursuance of section 10 of the said Act of February 24, 1869, a petition was presented to the Town Clerk of Pana Township to order an election to be held on April 30, 1870, to decide whether said township should donate to the Springfield and Illinois Southeastern Railway Company the sum of $100,000 in bonds, to fall due in twenty years, or at the option of the township, in five years from this date, with interest at the rate of eight percent per annum, payable semiannually. On April 30, 1870, an election was held in said township in pursuance of the petition, and a notice thereof given according to law. The meeting at which the election was held was called to order by the town clerk, and one J. W. Stark was, on motion, chosen moderator, and was sworn in by the town clerk and presided over the election. At the election chanrobles.com-redchanrobles.com-red

Page 107 U. S. 533

thus held, 438 votes were cast for and 24 against said donation. In the spring, summer, and fall of the year 1873, the supervisor and town clerk of said township, in pursuance of said election and without any other authority of law than said election and the charter and amendments above referred to, issued to the Springfield and Illinois Southeastern Railway Company one hundred bonds of the Township of Pana, of $1,000 each, payable and bearing interest according to the rate aforesaid. All the bonds were of like tenor and effect except as to their number. The following is a copy of one of them:

"UNITED STATES OF AMERICA"

"STATE OF ILLINOIS, COUNTY OF CHRISTIAN"

"No. 6] Pana Township [$1,000"

"Eight percent railroad bond. Registered by Auditor of Public Accounts. Principal and interest collected and paid by the Treasurer of State of Illinois."

"Know all men by these presents that the Township of Pana, in the County of Christian and State of Illinois, acknowledges itself indebted to the Springfield and Illinois Southeastern Railway Company or bearer in the sum of one thousand dollars, with interest from the date hereof at the rate of eight percent per annum, payable semiannually on the first days of January and July of each year at the agency of the State Treasurer of the State of Illinois, in New York City, on the presentation and surrender of the respective interest coupons hereto attached. The principal of this bond shall be due and payable after five years and within twenty years of the date hereof at the option of said township at said agency in the City of New York."

"This bond is one of a series amounting to one hundred thousand dollars issued by said township in compliance with the vote of the legal voters thereof at an election held on the thirtieth day of April, A.D. 1870, under and by virtue of the authority conferred by an act of the General Assembly of the State of Illinois, entitled 'An act to incorporate the Illinois Southeastern Railway Company,' approved February 25, 1867, and an act amendatory thereof, approved February 24, 1869, and in accordance with the provisions of an act of said General Assembly entitled 'An act to fund and provide for paying the railroad debts of counties,

Page 107 U. S. 534

cities, townships, and towns,' in force April 16, 1869. And for the payment of said sum of money and the accruing interest thereon in the manner aforesaid the faith of the said Township of Pana is hereby irrevocably pledged, as is also its property, revenue, and resources."

"In testimony whereof, the said Township of Pana has caused these presents to be signed by its supervisor and countersigned by its clerk, this twenty-eighth day of June, A.D. 1873."

"GROVE P. LAWRENCE, Supervisor"

"EDWIN SANDERS, Clerk"

At the time the bonds and coupons were issued, Grove P. Lawrence was the Supervisor of said Township of Pana, and Edwin Sanders was its Clerk, and their signatures to the bonds and coupons are genuine.

The coupons attached to said bonds were all of the same tenor and effect except in respect of their numbers. The following is a copy of the coupon attached to the above-recited bond:

"$40. The Township of Pana, Christian County, Illinois, will pay the bearer forty dollars on the first of January, 1882 at the agency of her state treasurer in the City of New York, it being six months' interest on bond No. 6."

"GROVE P. LAWRENCE"

"Supervisor of said township"

On the back of every bond was the following endorsement:

"AUDITOR'S OFFICE, ILLINOIS"

"SPRINGFIELD, June 28, 1873"

"I, Charles E. Lippincott, Auditor of Public Accounts of the State of Illinois, do hereby certify that the within bond has been registered in this office this day pursuant to the provisions of an act entitled 'An act to fund and provide for paying the railroad debts of counties, townships, cities, and towns,' in force April 16, 1869."

"In testimony whereof I have hereunto subscribed my name and affixed the seal of my office the day and year aforesaid."

"[Seal] C. E. LIPPINCOTT, Auditor P.A."

The act referred to in this certificate provided that certain taxes, therein specified, should be applied to the payment of the principal and interest of bonds registered in the office of the chanrobles.com-redchanrobles.com-red

Page 107 U. S. 535

Auditor of Public Accounts, and that no bonds should be so registered until the railroad in aid of which the bonds had been issued should have been completed near to or in the township issuing the bonds, and unless the subscription or donation creating the debt to pay which the bonds were issued had been first submitted to an election of the legal voters of said township under the provision of the laws of the state and a majority of the legal voters living in such township had been in favor of such aid, subscription, or donation. And it was made the duty of the supervisor of the township, upon the completion of the railroad near to or through the township by which the bonds were issued, to certify under oath to the state auditor that all the preliminary conditions required by the act to be done to authorize the registration of the bonds and to entitle them to the benefits of the act had been complied with. See Hurd's Rev.Stat. 1880, p. 807, sec. 17.

The record in this case showed that the certificate above mentioned in reference to the issue of the bonds in question had been made by Grove P. Lawrence, the Supervisor of Pana Township, and transmitted by him to the Auditor of Public Accounts. The interest on said issue of $100,000 of bonds was levied and collected and paid for three years by the state treasurer as provided by law.

It further appeared that in the year 1876, the Town of Pana and three taxpayers filed, in behalf of themselves and all other taxpayers of the town, a bill in the Circuit Court of Christian County against the Auditor of Public Accounts of the State of Illinois, the Treasurer of the State of Illinois, the Treasurer and the Clerk of Christian County, Illinois, the Town Collector of the Town of Pana, and H. N. Schuyler, William E. Hayward, John Vedder, and William Houston, and "the unknown holders and owners of said bonds and coupons issued by the Town of Pana," as defendants, in which the complainants prayed that said public officers might be perpetually enjoined from levying a tax with which to pay said bonds and coupons, and that said bonds might be declared void, and that said holders and owners of said bonds might be perpetually enjoined from selling or negotiating or suing upon said bonds or the coupons attached chanrobles.com-redchanrobles.com-red

Page 107 U. S. 536

to them, or pretending or insisting in any court of law or equity, or elsewhere, in any manner whatsoever, that said town was liable upon said bonds or coupons.

The parties made defendant by name were neither served with process nor voluntarily appeared in the case. It was assumed that "the unknown holders and owners of said bonds and coupons" were brought in by publication of a notice to them under that designation in a newspaper, according to the laws of the State of Illinois. The Circuit Court of Christian County dismissed the bill, but the appellate court, upon appeal, reversed its decree and directed it to grant the prayer of the bill, and the decree of the appellate court was affirmed by the supreme court, to which the case was carried by the defendants. Afterwards, at its November term, 1879, to-wit, on December 17, the circuit court, upon receiving the mandate of the appellate court and of the supreme court, entered a decree in favor of the complainants in accordance with the prayer of the bill.

The coupons offered in evidence, being those upon which the suit was brought, were at the time of the trial and before the commencement of the suit held and owned by the plaintiffs, who were citizens of the State of Maine.

Such were the material facts of the case. The Town of Pana, plaintiff in error, by its assignments of error, insisted:

1. That there was no authority in the charter of the Springfield and Illinois Southeastern Railway Company to hold an election and issue bonds to the amount of $100,000.

2. That the election held on April 30, 1870, was illegal and void because it was presided over by a moderator, and not by the supervisor, assessor, and collector, as required of general elections by the law of the state, and therefore conferred no authority upon the supervisor and town clerk to issue said bonds and coupons.

3. That it was incumbent on the plaintiffs below, the bonds having been illegally issued, to prove that they were bona fide holders of the coupons for value, which they failed to do.

4. That no judgment could be rendered for the plaintiffs on said coupons after they and the bonds to which they belonged chanrobles.com-redchanrobles.com-red

Page 107 U. S. 537

had been declared void by the decree of the Circuit Court of Christian County;

5. That in any event the judgment was too large by $572.22.