US SUPREME COURT DECISIONS

When the settled decisions of the highest court of a state have determined the extent and character of the powers which its political and municipal organizations shall possess, the decisions are authoritative upon the courts of the United States.

In the absence of state statutes or of settled decisions of the highest court of a state, the rule of interpretation in respect of the powers of political and municipal corporations is to be found in the analogies furnished by their prototypes in the country of common origin, varied and modified by circumstances peculiar to our political and social condition. chanrobles.com-redchanrobles.com-red

Page 111 U. S. 401

The power to issue commercial paper is foreign to the objects in the creation of political divisions into counties and townships, and is not to be conceded to such organizations unless by virtue of express legislation, or by very strong implication from such legislation.

The power which the statutes of Tennessee confer upon a county in that state to erect a courthouse, jail, and other necessary county buildings does not authorize the issue of commercial paper as evidence or security for a debt contracted for the construction of such a building. Ross v. Anderson County, 8 Baxter 249, shown to be consistent with this decision.

This was an action of debt brought by the appellee (the plaintiff below), as bankrupt assignee of Howard, Cole & Co., against the County of Claiborne, Tennessee, on its bond or obligation, dated the 7th day of April, 1868, payable to one V. H. Sturm, or order, for $5,000, with interest, and endorsed by Sturm to Howard, Cole & Co. The following is a copy of the bond, together with the endorsement thereon, to-wit:

"COUNTY COURT, April Term, 1868"

"The State of Tennessee, County of Claiborne:"

"On or before the first day of January, 1870, the County of Claiborne is hereby bound and promises to pay to V. H. Sturm or order the sum of five thousand dollars, bearing interest from this date at the rate of six percent per annum until paid. And this bond is redeemable by the county at any earlier date if they choose to do so."

"By order of the county court of said county at its quarterly term, on the first Monday of April, 1868, a majority of the acting justices of the peace for said county having voted the same and ordered the bond of the county to be issued therefor."

"Witness, Thomas L. Davis, chairman of the county court of said county, and the seal of the court, this 7th day of April, 1868."

"[Seal] THOS. L. DAVIS, Chairman"

"Attest: DAVID CARDWELL, Clerk"

"Endorsed: 'Pay to Howard, Cole & Co., waiving demand, notice, and protest. Victor H. Sturm'"

The case was commenced in the state court and was removed into the circuit court of the United States, and came up for trial on the pleas of non est factum, nil debet, and payment, other pleas having been overruled on demurrer. chanrobles.com-redchanrobles.com-red

Page 111 U. S. 402

A verdict being rendered in favor of the plaintiff under the charge of the court, and exceptions being taken to the charge, the case is brought here by writ of error.

The bill of exceptions states that on the trial, the plaintiff introduced proof tending to show that the County of Claiborne, by its county court, appointed commissioners, who contracted with Sturm for the erection of a courthouse in Tazewell, the county seat; that by the original contract, he was to receive $8,000, and that the contract was subsequently modified so as to enlarge the building, without fixing specifically the additional price to be paid. The plaintiff further exhibited proof of the following orders made by the county court and entered of record, namely on the 6th of April, 1868, the following:

"Ordered by the court that V. H. Sturm be allowed the sum of ten thousand dollars, in part pay for the courthouse."

And on the 4th day of January, 1869, the following:

"It was this day ordered by the court that Benjamin Ausmus, Revenue Collector of Claiborne County, be permitted to examine and investigate the payment or transfer of certain county bonds issued in favor of V. H. Sturm, and whether or not said bonds have been paid, transferred, or assigned to any party for a full and valid consideration before the 7th July, 1868, and if so that the said Ausmus, as revenue collector, be allowed to pay over or deposit what funds he may have on hand, collected for that purpose, to the person or persons holding the legal and lawful possession of said bonds. But should the bonds have been enjoined before or since the above date, then the money so collected and in the hands of said revenue collector will be deposited with the clerk of the Chancery Court at Knoxville, taking his receipt therefor."

There was also evidence tending to show that the bond sued on was made and delivered to Sturm by the chairman of the county court, together with another similar bond, which has been paid.

The defendant introduced evidence tending to show that the value of the additional work on courthouse was $3,000; that between $10,000 and $11,000 had been paid to the contractor chanrobles.com-redchanrobles.com-red

Page 111 U. S. 403

V. H. Sturm, and his order, outside of the amount called for in the bond sued on.

The following sections of the Code of Tennessee show the powers of counties in that state in relation to the erection of public buildings and the making of contracts:

"§ 402. Every county is a corporation, and the justices in the county court assembled are the representatives of the county and authorized to act for it."

"§ 403. Suits may be maintained against a county for any just claim as against other corporations."

"§ 404. Each county may acquire and hold property for county purposes, and make all contracts necessary or expedient for the management, control, and improvement thereof, and for the better exercise of its civil and political power; may do such other acts, and exercise such other powers as may be allowed by law."

"§ 408. It is the duty of the county court to erect a courthouse, jail, and other necessary county buildings."

"§ 410. Such buildings shall be erected within the limits of the county town."

"§ 411. The county buildings are to be erected and kept in order and repair at the expense of the county under the direction of the county court, and it may levy a special tax for that purpose."

"§ 414. [Confers power on the justices of the county court, when deemed for the public interest, to change the site of the county jail or courthouse, and to order a sale of the site or materials,] and they may also order that a more eligible, convenient, healthy, or secure site be purchased, and cause to be erected thereon a new jail or courthouse, better suited to the convenience of said town, and secure the safe custody, health, and comfort of the prisoners."

"§ 415. The said justices shall appoint not less than three nor more than five commissioners, a majority of whom shall be competent to make such sale and purchase, to contract for and superintend the erection of the new jail and courthouse, and to carry into execution all such orders as said justices may deem necessary and proper in the premises. "

Page 111 U. S. 404

The defendant's attorney requested the court to instruct the jury

"First, that in the absence of express power conferred by statute, the County of Claiborne, as a corporation, had no power to make and issue a negotiable interest-bearing bond, such as the one sued on, there being no implied power to issue such a bond."

"Second, there being no authority for the issuance of such bond, the chairman of the county court had no right to make or issue it, and the payment of a similar bond by the county would not operate as a ratification of this bond, or make it valid."

Among other things not excepted to, the judge instructed the jury as follows, to-wit:

"First. That the defendant, Claiborne County, a corporation under the laws of Tennessee, through the county court, was authorized to erect a courthouse; that the power to erect implied the right to contract for the same, and if the court had the right to make a contract for the erection of the courthouse, he instructed them that the court had the incidental or implied power to execute a note, bond, or other negotiable security in payment of such contract, and might legally issue such an instrument as the bond sued on."

"That a corporation with power to make a contract, like an individual, might make and issue commercial paper as evidence of or security for the contract."

"The court further instructed the jury that they would look to the evidence and ascertain whether the county court ordered the chairman to make the bond sued on; if it did not so order, the chairman had no power or authority to make it, but if, after its execution, the county court made an order on the tax collector to hunt up the holders of this and another bond like this and pay it, that this would be a ratification of the action of the chairman, and would validate the bond sued on. If the jury should so find, they would then find in favor of the plaintiff the amount of the bond and interest thereon at six percent per annum from its date."

To these portions of the charge the defendant excepted, and assigns the same for error. chanrobles.com-redchanrobles.com-red

Page 111 U. S. 405

The jury returned a verdict of $8,741 for the plaintiff, being for principal and interest of the bond.

Judgment was entered for plaintiff accordingly, and the defendant sued out this writ of error.