U.S. Supreme Court
Morgan v. Beloit, 74 U.S. 7 Wall. 613 613 (1868)
Morgan v. Beloit
74 U.S. (7 Wall.) 613
Where the legislature creates a city, carving it out of a region previously a town only, and enacts that all bonds which had been previously issued by the town should be paid when the same fell due by the city and town in the same proportions as if said town and city were not dissolved, and that if either at any time pays more than its proportion, the other shall be liable therefore, a bill will lie in equity to enforce payment by the two bodies respectively in the proportion which the assessment rolls chanroblesvirtualawlibrary
show that the property in one bears to the property in the other. A bondholder is not confined to mandamus or other legal remedies, if such exist.
In 1853, the Legislature of Wisconsin authorized the Town of Beloit to subscribe to the stock of a railroad company, and to pay therefor in bonds of the town. The town subscribed and issued its bonds, a portion of which came to the hands of one Morgan, a bona fide purchaser.
In 1856, the legislature created the City of Beloit, this city being carved out of a portion of the territory which had constituted the Town of Beloit. The charter of the new city thus provided:
"All principal and interest upon all bonds which have heretofore been issued by the Town of Beloit, . . . shall be paid when the same or any portion thereof shall fall due by the City and Town of Beloit in the same proportions as if said town and city were not dissolved. And in case either town or city shall pay more than their just and equal portion of the same at any time, the other party shall be liable therefor."
This provision was reenacted in 1857.
After the date of this act, and between it and 1867 inclusive -- the interest on the bonds being unpaid for every year after 1854 -- Morgan brought several suits in the Circuit Court for Wisconsin against "the Town of Beloit" for the interest due for the years respectively, and on the 25th of September, 1867, got judgment against the town for it. The judgments being unpaid, he now filed a bill in the court below against the Town and City of Beloit. The bill set forth facts above stated, alleged that the "amount of said judgments ought to be paid by said defendants in the proportions respectively as provided in the said acts," that the taxable property of the city exceeded that of the town, and that though the city "ought to pay the proportion provided in the acts," yet that the complainant was remediless at law. It then showed by tabular exhibit the amount of the interest due on the bonds held by him in each year respectively from 1855 chanroblesvirtualawlibrary
to 1867; then by like exhibit the proportion in value which, taking the rates of assessment made in each year as a basis, the taxable property of what was now the town bore to what was now the city in every year from 1855 to 1867; then showed, by similar exhibit that, taking these relative exhibits, the town would be liable on the coupons for each respective year for so much and the city for so much, the balance -- namely the whole making, with interest from the date of the judgments obtained (which the bill alleged "ought to be paid by the said town and city respectively"), the sum of $60,443 as against the city and $17,986 as against the town.
After alleging that "the city and town ought respectively to pay interest" on the respective total amounts, from the day when the judgments were obtained till the actual payment of them, and "ought each to pay one-half the costs recovered in the judgments," the bill concluded thus:
"To the end, therefore, that the said defendants may, if they can, show why your orator should not have the relief hereby prayed, and may upon oath &c. . . . and that your orator may have such other and further relief as the nature of his case may require and as shall be agreeable to equity and good conscience."
Prayer for subpoena &c.
The defendants (town and city) demurred, and the bill was dismissed. Appeal accordingly. chanroblesvirtualawlibrary