Board of Com'rs of Wilkes County v. Coler

• Decision Date: 04 February 1902
• Docket Number: 319.
• Citation: 113 F. 725
• Parties: BOARD OF COM'RS OF WILKES COUNTY et al. v. COLER et al.
• Court: U.S. Court of Appeals — Fourth Circuit

113 F. 725

BOARD OF COM'RS OF WILKES COUNTY et al. v. COLER et al.

No. 319.

United States Court of Appeals, Fourth Circuit.

February 4, 1902

A. C Avery and James E. Shepherd, for appellants.

Charles Price (John F. Dillon, Harry Hubbard, and John M. Dillon, on the brief), for appellees.

Before GOFF, Circuit Judge, and MORRIS and BOYD, District Judges.

MORRIS District Judge.

This is a suit to determine the validity of certain bonds issued by Wilkes county, N.C., in aid of the construction of the second division of the railroad constructed by the Northwestern North Carolina Railroad Company, incorporated in 1868; the second division being from the towns of Winston and Salem, up the valley of the Yadkin, by way of Jonesville and Wilkesboro, in the county of Wilkes, to Patterson's Factory, in the county of Caldwell. After hearing argument in this appeal at the November term, 1899, this court certified to the supreme court of the United States three questions First, whether this court was controlled in dealing with the case by certain decisions of the supreme court of North Carolina in connection with article 2, Secs. 14, 16, article 5, Secs. 1, 4, 6, 7, and article 7, Sec. 7, of the constitution of North Carolina, adopted April 24, 1868 second, whether, if there was no decision of the supreme court of North Carolina adverse to the validity of the bonds at the time when the appellees acquired them for a valuable consideration without notice, they were valid in the hands of the appellees; third, whether when the appellees acquired the bonds any decision then announced by the supreme court of North Carolina was adverse to the validity of the bonds which affected them in the hands of the appellees. The bonds were dated October 21, 1889, and each one contained the following recital:

'This bond is one of a series of one hundred issued by authority of an act of the general assembly of North Carolina ratified on the 20th day of February, A.D. 1879, entitled 'An act to amend the charter of the Northwestern North Carolina Railroad for the construction of a second division from the towns of Winston and Salem, in Forsyth county, up the Yadkin valley by Wilkesboro to Patterson's Factory, Caldwell county,' and authorized by a vote of the majority of the qualified voters of Wilkes county, by an election regularly held for that purpose, on the 6th day of November, A.D. 1889, and by an order of the board of commissioners of Wilkes county, made on the first day of April, A.D. 1889. This series of bonds is issued to pay the subscription of one hundred thousand dollars, made to the capital stock of the Northwestern North Carolina Railroad Company by said county of Wilkes.'

Article 2, Sec. 16, of the constitution of North Carolina, adopted April 24, 1868, provided that no law should be passed authorizing a county to raise money on its credit, or impose a tax, unless the bill for the purpose was read three several times in each house of the general assembly, and passed three several readings on different days in each house, and unless the yeas and nays on the second and third readings of the bill were entered on the journals. The supreme court of North Carolina in Commissioners v. Call, 123 N.C. 308, 31 S.E. 481, 44 L.R.A. 252; Union Bank of Richmond v. Commissioners of Town of Oxford, 119 N.C. 214, 25 S.E. 966, 34 L.R.A. 487; Commissioners v. Snuggs, 121 N.C. 394, 28 S.E. 539, 39 L.R.A. 439; Rodman v. Town of Washington, 122 N.C. 39, 30 S.E. 118; Commissioners v. Payne, 123 N.C. 432, 31 S.E. 711,--all cases involving the validity of county bonds,-- has held that the provisions of the constitution of North Carolina requiring the entry of the yeas and nays on the journals was imperative, and the failure of such entry was absolutely fatal to the validity of the legislation, so far as it undertook to authorize the county to issue bonds in aid of a railroad. In Commissioners v. Call (1898) the validity of the bonds of the issue now in suit was called in question, and the supreme court of North Carolina declared that the act of February 20, 1879, under which these bonds are recited to have been issued, was never legally passes so as to become a law giving authority to issue the bonds, for the reason that the yeas and nays were not entered upon the journals. To the questions certified by this court the supreme court of the United States gave the most thorough consideration, and held, Mr. Justice Harlan speaking for the court (Wilkes County v. Coler, 180 U.S. 506, 21 Sup.Ct. 458, 45 L.Ed. 642), that the circuit court was bound by the decisions of the supreme court of North Carolina construing their own state constitution, and holding that the legislative enactments of 1868, 1879, 1881 were not validly enacted, so as to give Wilkes county power to issue these bonds. But the supreme court of the United States further ruled that notwithstanding the invalidity of the act of February 20, 1879, the bona fide holders of the bonds might look to any valid legislation giving power to issue them, and that whether or not there was such power was to be determined by the law of North Carolina, as declared by the supreme court at the time the bonds were put upon the market. Mr. Justice Harlan, speaking for the court, said:

'But the Belo Case, 76 N.C. 489, involved other considerations. Forsyth county (whose liability on the bonds in suit in that case was directly involved) made the point that it had no authority to issue such bonds. The court, however, held that such authority was conferred by the convention ordinance of March 9, 1868, and the subscription and bonds made in the name of that county to the Northwestern North Carolina Railroad Company were upheld as valid under that ordinance, which was recognized as part of the law of the state and as conferring authority on the county of Forsyth to do what it did. It results that when the bonds here in question were issued, in 1889, it was the law of North Carolina that the ordinance of 1868, constituting the charter of the Northwestern North Carolina Railroad Company, was not superseded by the constitution of 1868, but was in force, and, therefore, gave power to the counties embraced by its provisions to take stock in that company and pay for it in county bonds, just as Forsyth county had done.'

Mr. Justice Harlan then calls attention (page 531) to the rule that as in 1877 in the Belo Case the supreme court of North Carolina had recognized the power of the counties embraced within the provisions of the convention ordinance of 1868 to issue bonds to pay for stock in this same railroad, when the power was exercised by a county under the restrictions imposed by the constitution of 1868, that is to say, 'not unless by a vote of a majority of the qualified voters therein,' that no subsequent decision of the supreme court of North Carolina, made after county bonds had been put upon the market, could alter vested rights by holding that the constitution of 1868 abrogated the power given by the convention ordinance, and by holding that no subscription in aid of a railroad could be made except by virtue of a new statute passed in conformity to the requirements of section 14 of article 2, and thus invalidate bonds issued before the rendering of such a decision. The supreme court of the United States, while recognizing that the Belo Case (76 N.C. 489) and the Hill Case (67 N.C. 367) had held that the convention ordinance of 1868 gave power to the counties embraced within its terms to issue bonds such as those now in suit, declined to consider, under the questions certified by this court, whether Wilkes county was embraced within the general powers of that ordinance, and suggested the following as some of the various questions which might arise in considering whether Wilkes county had the power under that ordinance, unassisted by any of the subsequent enactments, to issue the bonds sued on in the present case, viz.:

'Did the general power given by that ordinance to the Northwestern North Carolina Railroad Company to construct a railroad from its eastern terminus, ' running by way of Salem and Winston, in Forsyth county, to some point in the northwestern boundary line of the state to be hereafter determined,' invest Wilkes county with authority to subscribe to the stock of the company and to issue bonds in payment of such subscription? Was Wilkes county in the same category with Forsyth county? Was the route of the road northwest of Salem and Winston to some point in the northwestern boundary line of the state to be determined by the legislature or by the company? If by the legislature, was that route ever determined otherwise than by the act of 1879, which has been adjudged never to have become a law of the state? Did Wilkes county have authority, under the ordinance of 1868 alone, to aid by a subscription of stock and bonds the construction of the second division of the road referred to in the act of 1879, extending from the towns of Winston and Salem up the valley of the Yadkin by way of Jonesville and Wilkesboro, in the county of Wilkes, to Patterson's Factory, in the county of Caldwell?'

The supreme court said:

'These are matters about which we do not feel disposed to express an opinion under the very general and indefinite questions certified from the circuit court of appeals. Nor do we deem it proper to express any opinion as to the scope and the effect upon the rights of the parties of sections 1996-1999 of the Code of North Carolina.'

The recitals of the bonds in suit are as follows: (1) That the bond is issued by authority of an act of the general assembly of North Carolina ratified the 20th day of February, A.D 1879. This act being an invalid enactment, and not a law, so far as it undertakes to give...