U.S. Supreme Court
Beloit v. Morgan, 74 U.S. 7 Wall. 619 619 (1868)
Beloit v. Morgan
74 U.S. (7 Wall.) 619
1. A judgment in favor of a bondholder upon certain municipal bonds, part of a larger issue, against the town issuing them, is conclusive on a question of the validity of the issue on a suit brought by the same creditor against the same town on other bonds, another part of the same issue, the parties being identical, and all objections taken by the town in the second suit having been open to be taken by it in the former one.
2. A legislative enactment created the City of Beloit, carving it out of territory previously covered by the Town of Beloit only. The statute enacted thus:
"All principal and interest upon all bonds which have heretofore been issued by the Town of Beloit, for railroad stock or other purposes shall be paid when the same or any portion of the same shall fall due by the City and Town of Beloit in the same proportions as if said town and city were not dissolved, such proportions to be apportioned,"
&c. Held that this made bonds issued by the town valid, assuming that previously to the act they were not so.
The Legislature of Wisconsin, by act of 1853, authorized chanroblesvirtualawlibrary
the supervisors of the Town of Beloit to subscribe to the capital stock of a certain railroad company and to pay for the same in the bonds of the town, payable at the expiration of a term named and with a rate of interest specified.
The supervisors, professing to execute the authority so conferred, did subscribe to the stock of a certain railroad company and issued bonds, of many of which one Morgan became the holder, bona fide.
Whether the bonds were issued pursuant to the authority which the statute gave to the supervisors soon became a matter of controversy between the holders of them and the authorities of Beloit. These last asserted that they were not so issued, but were made without any legal authority, were in violation of the act of the legislature, and constituted a corrupt and usurious contract. They would accordingly pay nothing on the bonds.
In this state of things, the Legislature of Wisconsin in 1856 created the City of Beloit, carving it out of territory which constituted the former Town of Beloit. The charter of the new city provided thus:
"All principal and interest upon all bonds which have heretofore been issued by the Town of Beloit for railroad stock or other purposes, when the same or any portion thereof shall fall due, SHALL be paid by the City and Town of Beloit in the same proportions as if said town and city were not dissolved."
This provision was reenacted in 1857 in an act amending the charter of the city.
With this act in force, Morgan brought suit at law for the interest of some of his bonds against the Town of Beloit, and on the 9th of January, 1861, obtained judgment against it.
He now also brought other suits against the town on other of the bonds -- not the same specific instruments, of course, as those on which he had obtained judgment, but part of the same issue, and a suit on which involved the same questions as did the suit on those on which he had already recovered. chanroblesvirtualawlibrary
Thereupon the Town of Beloit filed a bill, the bill below, in the Circuit Court for Wisconsin to enjoin the proceedings at law and to compel a surrender of the bonds. The answer set up
1. By way of estoppel, the judgment of 9th January, 1861, on certain of the bonds, as conclusive of the validity of the whole issue, and
2. The act of 1856 and its reenactment of 1857, and alleged that it was the intention of the legislature to provide by those acts that the bonds in question should be paid, and that they were a legislative ratification of the bonds, with effect to cure any irregularity or want of authority.
The court below dismissed the bill. Appeal accordingly.