US SUPREME COURT DECISIONS

Bonds to the amount of $40,000 were issued by the County of Otoe, in the state (then Territory) of Nebraska, to the Council Bluffs and St. Joseph Railroad Company as a donation to that company to aid in the construction of a railroad in Fremont County, Iowa, to secure to said Otoe County an eastern railroad connection. Notwithstanding any defects or irregularities in the voting upon or issuing said bonds, they were validated by § 8 of the Act of the Legislature of the State of Nebraska passed February 15, 1869, Laws of 1869, p. 92, entitled

"An Act to enable counties, cities, and precincts to borrow money on their bonds, or to issue bonds to aid in the construction or completion of works of internal improvement in this state, and to legalize bonds already issued for such purpose,"

taken in connection with another act of said legislature of the same date, Laws of 1869, p. 200.

The decision of this Court in Railroad Co. v. County of Otoe, 16 Wall. 667, cited and applied.

The legislature of a state, unless restrained by its organic law, has the right to authorize a municipal corporation to issue bonds in aid of a railroad and to levy a tax to pay the bonds and the interest on them, with or without a popular vote, and to cure, by a retrospective act, irregularities in the exercise of the power conferred chanrobles.com-redchanrobles.com-red

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The first of said Acts of February 15th, 1869, was not in violation of section 19 of article 2 of the Constitution of Nebraska, of 1867, which provided that "No bill shall contain more than one subject, which shall be clearly expressed in its title."

Where an action of law is tried by a circuit court without a jury, and the facts on which, on a writ of error, the plaintiff in error seeks to raise a question of law are not admitted in the pleadings or specially found by the court, and there is a general finding for the defendant in error on the cause of action which involves such question of law, and there is no exception by the plaintiff in error to any ruling of the court in regard to such question, this Court can make no adjudication in regard to it.

On the first of April, 1882, John T. Baldwin brought a suit at law in the Circuit Court of the United States for the District of Nebraska against the County of Otoe in the State of Nebraska to recover the amount due on sundry coupons cut from bonds issued by that county, the coupons being payable, some January 1st and others July 1st in each year, from and including 1870 to and including 1881, and January 1, 1882. On the 11th of August, 1882, Baldwin brought another suit at law in the same court against the same defendant to recover the amount due on sundry other coupons cut from some of the same bonds, the coupons being payable, some January 1st and others July 1st in each year, from and including 1878 to and including 1882. The bonds were issued by the county, while Nebraska was a territory, to the Council Bluffs and St. Joseph Railroad Company, the principal being payable January 1, 1887, with interest from January 1, 1867 at the rate of ten percent per annum, payable on July 1st and January 1st in each year. The amount of the principal of the bonds was $40,000, they bore date November 12, 1866, and were signed by the chairman of the board of county commissioners and the treasurer and attested by the county clerk, and bore the seal of the county, and were payable to the company or its assigns, and each bond was assigned by it, by an assignment under its seal, to the bearer, endorsed on the bond, and dated November 18, 1869. Each bond contained the following statement:

"This bond is one of a series of one hundred and sixty, of the like tenor and date, one hundred of which are for one hundred

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dollars, and sixty of which are each for five hundred dollars, in the aggregate amounting to the sum of forty thousand dollars, executed and issued, or to be issued, from time to time, as the wants of said county shall require, to pay to the Council Bluffs and St. Joseph Railroad Company, as an appropriation made by said county to said railroad company, to aid in the construction of the railroad of said company, to be located in Fremont County, Iowa, through a point most convenient to Nebraska City. This debt is authorized by a vote of the legal voters of said County of Otoe, taken at an election held under and by virtue of an order of the county commissioners of said county, on the 17th day of March, 1866, in pursuance with the several acts of the Legislature of the Territory of Nebraska in such cases made and provided and a resolution of the board of county commissioners of said county granting such aid."

Nebraska City is in the County of Otoe, on the west bank of the Missouri River. Fremont County, in Iowa, adjoins Otoe County on the east, being separated from it only by the Missouri River. Council Bluffs is in Iowa, on the east bank of the Missouri River, above Fremont County, and 40 to 50 miles above Nebraska City. St. Joseph is in Missouri, on the east bank of the Missouri River, below the other places named.

On the 6th of January, 1860, the Legislative Assembly of the Territory of Nebraska passed an act (Laws 1859-60, 6th Sess. p. 112) entitled "An act to authorize Otoe County to subscribe and take stock in any railroad located or to be located in Fremont County, in the State of Iowa." This act contained the following provisions:

"That the board of county commissioners for Otoe County may at any time, by an order of said board, cause an election to be held for the purpose of ascertaining the will of the people of Otoe County, as to the propriety of said county subscribing stock for any amount, not exceeding seventy-five thousand dollars, to any railroad company, for the purpose of constructing any railroad now or hereafter to be located in Fremont County and State of Iowa. § 2. If a majority of the legal voters of said county shall vote in favor of such proposition, then the Board of County

Page 111 U. S. 4

Commissioners of Otoe County shall issue the bonds of said county, for whatever amount of stock it may have been decided upon by such vote, to any such railroad company, which bonds shall not bear any greater interest than ten percent per annum."

On the 11th of January, 1861, the legislative assembly of the territory passed an act (Laws 1860-61, 7th Sess. p. 146) entitled "An act to define the powers and duties of county commissioners and county clerk." This act created in each county a board of county commissioners, consisting of three persons. It also provided as follows:

"§ 24. The said commissioners shall have power to submit to the people of the county at any regular or special election, the question whether the county will borrow money to aid in the construction of public buildings, the question whether the county will aid or construct any road or bridge, or to submit to the people of the county any question involving an extraordinary outlay of money by the county, and said commissioners may aid any enterprise designed for the benefit of the county as aforesaid, whenever a majority of the people thereof shall be in favor of the proposition as provided in this section."

"§ 25. When county warrants are at a depreciated value, the said commissioners may in like manner submit the question whether a tax of a higher rate than that provided by law shall be levied, and in all cases when an additional tax is laid in pursuance of a vote of the people of the county, for the special purpose of repaying borrowed money, or of constructing or ordaining to construct any road or bridge, or for aiding in any enterprise contemplated by the twenty-first section of this act, such special tax shall be paid in money, and in no other manner."

"§ 26. The mode of submitting the questions to the people contemplated by the last two sections shall be the following: the whole question, including the sum desired to be raised, or the amount of tax desired to be levied, or the rate per annum, and the whole regulation, including the time of its taking effect or having operation, if it be of a nature to be set forth, and the penalty of its violation, if there be one, is to be published at least for four weeks in some newspaper published in the county. If there be no such newspaper, the publication is to be made by being posted up in at least one of the most public places in each

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election precinct in the county, and in all cases the notices shall name the time when such question shall be voted upon, and the form in which the question shall be taken, and a copy of the question submitted shall be posted up at each place of voting during the day of election."

"§ 27. When the question submitted involves the borrowing or expenditure of money, the proposition of the question must be accompanied by a provision to lay a tax for the payment thereof, in addition to the usual taxes under section sixteen of this act, and no vote adopting the question proposed shall be valid unless it likewise adopt the amount of tax to be levied to meet the liability incurred."

"§ 28. The rate of tax levied in pursuance of the last four sections of this act shall, in no case, exceed more than three mills on the dollar, of the county valuation, in one year. When the object is to borrow money to aid in the erection of public buildings, as provided, the rate shall be such as to pay the debt in ten years. When the object is to construct, or aid in constructing, any road or bridge, the annual rate shall not exceed one mill on a dollar of the valuation, and any special tax or taxes levied in pursuance of this act, becoming delinquent, shall draw the same rate of interest as ordinary taxes levied in pursuance of the revenue laws of this territory."

"§ 29. The said commissioners being satisfied that the above requirements have been substantially complied with, and that a majority of the votes cast are in favor of the proposition submitted, shall cause the same to be entered at large upon the book containing the record of their proceedings, and they shall then have power to levy and collect the special tax in the same manner that the other county taxes are collected. Propositions thus acted upon cannot be rescinded by the board of county commissioners."

"§ 30. Money raised by the county commissioners in pursuance of the last six sections of this act is specially appropriated and constituted a fund district from all others in the hands of the county treasurer, until the obligation assumed is discharged."

The records of the Commissioners of Otoe County and the records of that county show the following facts:

The county clerk called a meeting of the Commissioners of Otoe County, to be held February 24, 1866,

"to take into consideration the question of submitting to the people of said county the issuance of the bonds of said county, not exceeding $200,000

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in amount, to be used in securing to said county an eastern railroad connection."

The meeting was held on that day, two commissioners being present, and it was ordered that an election be held on the 17th of March, 1866, in and throughout the County of Otoe,

"for the purpose of ascertaining whether the Commissioners of Otoe County shall issue bonds, not to exceed $200,000, for the purpose of securing an eastern railroad connection for Nebraska City, N.T."

The election was held on the day named, and the vote was 1,362 for, and 201 against, "the issuing of two hundred thousand dollars for the purpose of securing an eastern railroad connection for Nebraska City." On the 9th of November, 1866, the commissioners, three being present, made the following order:

"Ordered that ($40,000) forty thousand dollars be donated to the Council Bluffs and St. Joseph Railroad Company, provided that said railroad company locate their road within one and a half miles of the ferry landing at Nebraska City, N.T., and secure to Nebraska City and to Otoe County an eastern railroad connection on or before the first day of September, 1876, by way of St. Joseph, Mo. The above order was made inconformity of a vote of legal voters of Otoe County, taken at an election duly held under and by virtue of an order of the county commissioners of said county, on the 17th day of March, 1866, in pursuance of the several acts of the Legislature of the Territory of Nebraska in such cases made and provided."

The bonds were issued, and were received by the railroad company, $7,000 on the 24th of November, 1866, $20,000 on the 23d of February, 1867, and $13,000 on the 13th of November, 1867. Nebraska became a state on the first of March, 1867. 14 Stat. 820.

On the 15th of February, 1869, the legislature of the state passed an act, Laws of 1869, p. 92, entitled

"An act to enable counties, cities, and precincts to borrow money on their bonds, or to issue bonds, to aid in the construction or completion of works of internal improvement in this state, and to legalize bonds already issued for such purpose."

The first seven sections of this act authorized counties, cities, and precincts in the chanrobles.com-redchanrobles.com-red

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state to issue bonds to aid in the construction of railroads and other works of internal improvement, and prescribed regulations in respect to the same, embracing the taking of a prior vote of the legal voters of the county, city, or precinct, and the laying of taxes to pay the principal and interest of the bonds. Section 8 was as follows:

"§ 8. All bonds heretofore voted and issued by any county or city in this state to aid in the construction of any railroad or other work of internal improvement are hereby declared to be legal and valid, and a lien upon all the taxable property in such county or city, notwithstanding any defect or irregularity in the submission of the question to a vote of the people, or in taking the vote, or in the execution of such bonds, and notwithstanding the same may not have been voted upon, executed, or issued in conformity with law, and such bonds shall have the same legal validity and binding force as if they had been legally authorized, voted upon, and executed, provided that nothing in this section nor in this act shall be so construed as to legalize or in any way sanction any vote of the people of Nemaha County heretofore had for the purpose of aiding in the construction of any railroad, nor anything done by the county commissioners of said county authorizing said vote, or anything done by them in consequence of such vote."

On the same day, the legislature of the state passed another act, Laws of 1869, p. 260, entitled

"An act to authorize the county Commissioners of Otoe County to issue the bonds of said county to the amount of one hundred and fifty thousand dollars to the Burlington and Missouri River Railroad, or any other railroad running east from Nebraska City."

This act provided as follows:

"Whereas the qualified voters of the County of Otoe and State of Nebraska have heretofore, at an election held for that purpose, authorized the county commissioners of said county to issue the bonds of said county in payment of stock to any railroad in Fremont County, Iowa, that would secure to Nebraska City an eastern railroad connection, to the amount of two hundred thousand dollars, and whereas, but forty thousand dollars have been issued:"

"Section 1. Therefore, be it enacted by the Legislature of the State

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of Nebraska that said commissioners be, and they are hereby, authorized to issue one hundred and fifty thousand dollars of the bonds aforesaid to the Burlington and Missouri River Railroad Company, or any other railroad company that will secure to Nebraska City a direct eastern railroad connection, as a donation to said railroad company on such terms and conditions as may be imposed by said county commissioners."

"Sec. 2. Said bonds, when so issued, are hereby declared to be binding obligations on said county, and to be governed by the terms and conditions of an act entitled 'An act to enable counties, cities, and precincts to borrow money or to issue bonds to aid in the construction or completion of works of internal improvement in this state, and to legalize bonds already issued for such purpose,' approved February, A.D. 1869."

After an answer and a reply in each suit, the two suits were consolidated. The petitions by which the suits were commenced allege, in respect to each of the bonds from which the coupons sued on were cut, that it was issued and delivered to the company and assigned by it in blank, and was sold and delivered by it for value, and has in due course of business come to the plaintiff,

"who has become and is the true and lawful owner and holder thereof, together with the coupons thereto annexed, and without any knowledge of any facts, if any there be, affecting its validity;"

that by the second act of February 15, 1869, supra, (which the petitions call an act of the legislature of the territory), the territory recognized the due issue of the bonds, and that said county paid all of the coupons attached to said bonds when the same were issued, except those which matured on and after January 1, 1870.

The answers deny all the allegations of the petitions except those expressly admitted. They deny that the county issued or delivered the bonds. They admit that the board of county commissioners issued and delivered the bonds and coupons to the company, but aver that they did so without legal authority; that neither the question of issuing the bonds nor the proposition to lay or levy a tax for the payment of the bonds or coupons was ever submitted to or voted or passed upon by the voters or people of the county; that the bonds chanrobles.com-redchanrobles.com-red

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were a donation by the commissioners to the company, for which the county received no consideration; that the company was an Iowa corporation, having its road wholly in that state; that it obtained the bonds upon an agreement with the commissioners, with which it did not comply, as to where it would build its road and establish a depot; that the plaintiff had notice of all said facts when he received the bonds and coupons, and paid no consideration for them; that the Territory of Nebraska did not, by said second act of February 15, 1869, recognize the due issue of the bonds, and that said act was unconstitutional and void, and was not retrospective or retroactive, and did not pretend to authorize or legalize any bond or bonds made or issued before that act was passed. The answer in the second suit alleges as an additional defense that the question of issuing the bonds, and the sum to be raised, and the amount of tax, and its rate were not published before March 17, 1866, or at any time, in any newspaper published in the county, nor posted up in any election precinct, nor was any question of issuing any bonds to said company ever so published or posted up, and no copy of any question to be submitted and voted on by the people of the county at said election was posted up at any place of voting in the county during the 17th of March, 1866. The replies deny the matters set up in the answers.

A trial by jury having been duly waived in the consolidated action, it was tried before the circuit judge and the district judge. There was no special finding of facts. The judgment, entered May 19, 1883, states that

"the court finds for the defendant upon all the causes of action pleaded by the plaintiff, upon coupons which were more than five years past due when these actions were brought, and, upon all other causes of action pleaded by the plaintiff in the said two several actions, the court finds for the plaintiff, and assesses his damages at"

$19,537.65. The judgment is for the plaintiff for that amount, with costs. In the first suit, the answer sets up as a defense to the causes of action on the coupons which were more than five years past due when the suit was brought, the Nebraska statute of limitations. chanrobles.com-redchanrobles.com-red

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There is in the record a bill of exceptions which states that it contains all the evidence offered or given by either party in the trial of the case, but it contains no exception to anything by either party, nor does the record contain any exception to any ruling of the court. The bonds and coupons, and the records of the county commissioners, are made a part of the bill of exceptions. The rest of the bill consists of oral testimony.

There is, however, in the record a certificate signed by the circuit judge and the district judge, and filed the same day the judgment was entered, stating that in the course of the trial the following questions arose for determination; that is to say:

"First. Whether the commissioners of the defendant had the power to issue bonds under either of the statutes, copies of which are hereto attached, marked 'A' and 'B,' without first giving four weeks' notice of the election, as provided by section 26 of act marked 'B,' so that the same would be good and valid in the hands of a bona fide holder? Second. If the power to issue bonds existed under either of said statutes, was it a defense available to the county, against a bona fide holder of the bonds in suit that the election in pursuance of which they were issued was for the purpose of determining whether the county should issue its bonds to the amount of $200,000 for the purpose of securing an eastern connection for Nebraska City, when only $40,000 was issued under said vote? Third. The order for the election not providing for the submission of a provision to levy a tax, as required by section 27 of the act marked 'B,' should it be presumed that the proposition to issue the bonds submitted and voted on at an election was not accompanied by a provision to lay the tax as required in said act, and, if such presumption is to be indulged, was the presumed fact a defense available to the county against a bona fide holder of the bonds? Fourth. Was it a defense available to the county against a bona fide holder that the bonds in suit, after being issued in pursuance of a vote held under one or both of said acts, were donated to the railroad company, provided it were located within one and one-half miles of Nebraska City? Fifth. If originally illegal and void, were the bonds validated by the

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acts, copies of which are hereto attached, marked 'C' and 'D'? The act marked 'A' is the Territorial Act of January 6, 1860; the act marked 'B' is the Territorial Act of January 11, 1861, and the acts marked 'C' and 'D' are the two State Acts of February 15, 1869. The certificate further states that"

"The circuit judge being of the opinion that, all of said questions notwithstanding, judgment should be for the plaintiff and the district judge being of the contrary opinion, it is ordered that judgment be entered for the plaintiff, and the said questions be certified to the Supreme Court for its consideration and answer, . . . at the request of counsel."

Each party has sued out a writ of error to review the judgment.