Board of Com'rs of Wilkes County v. Call

• Decision Date: 09 November 1898
• Citation: 31 S.E. 481,123 N.C. 308
• Parties: BOARD OF COM'RS OF WILKES COUNTY v. CALL et al.
• Court: North Carolina Supreme Court

31 S.E. 481

123 N.C. 308

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

Supreme Court of North Carolina

November 9, 1898

Appeal from superior court, Wilkes county; Starbuck, Judge.

Action by the board of commissioners of Wilkes county and another against Clarence Call, sheriff and ex officio treasurer of Wilkes county, and others. From a judgment refusing to vacate an order enjoining defendant sheriff from paying any portion of the principal or interest of the bonds in controversy until the final hearing, defendants J. M. Turner and another appeal. Affirmed.

Furches J., and Faircloth, C.J., dissenting.

A. C Avery, for plaintiff.

DOUGLAS J.

This is an action brought to test the validity of certain bonds issued by Wilkes county in payment of its subscription to the stock of the Northwestern North Carolina Railroad Company. The suit was brought by the commissioners of the county of Wilkes against the county treasurer. The defendants Turner and Wellborn, who had become the owners of one of the bonds after the bringing of this action, by leave of the court became parties defendant, and invited all other bondholders to come in and join them in resisting the action.

On the face of each bond, dated October 1, 1889, appears the explicit statement that "this bond is one of a series of one hundred bonds, of the denomination of one thousand dollars each, issued by authority of an act of the general assembly of North Carolina, ratified 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,"' etc. The bond does not allude in any way to any other legislative act, nor does it profess to claim further validity than that derived from the recited act. It is admitted, as well as clearly shown by the evidence, that this act of February 20, 1879, was not passed in accordance with the mandatory provisions of the constitution of this state, as construed by this court, inasmuch as upon the passage of said bill, upon its second reading in the house of representatives, there was no call of the ayes and noes, and, further, that the vote upon such reading was not recorded in the journal of the house. Const. art. 2, § 14. The amendatory act of 1881 is subject to the same objection. In view of the recent decisions of this court, it is useless to discuss this question now, as the rule has been definitely settled in the following cases: Union Bank of Richmond v. Commissioners of Town of Oxford, 119 N.C. 214, 25 S.E. 966; Commissioners v. Snuggs, 121 N.C. 394, 28 S.E. 539; City of Charlotte v. Shepard, 120 N.C. 411, 27 S.E. 109; Id., 122 N.C. 602, 29 S.E. 842; Rodman v. Town of Washington, 122 N.C. 39, 30 S.E. 118. Under the authority of these decisions, we are compelled to hold that the entire issue of these bonds is null and void, for want of legislative authority. An act of the legislature passed in violation of the constitution of the state, or in disregard of its mandatory provisions, is, to the extent of such repugnance, absolutely void; and all bonds issued thereunder bear the brand of illegality stamped upon their face by the hand of the law. The act under which these bonds profess to have been issued was never legally passed, and never became a law. As was said in Norton v. Shelby Co., 118 U.S. 425, 6 S.Ct. 1121: "An unconstitutional act is not a law. It confers no rights. It imposes no duties. It affords no protection. It creates no office. It is, in legal contemplation, as inoperative as though it had never been passed." The constitution of the state is plenary notice to the world of its organic law. There can be no bona fide holders of unconstitutional obligations, nor can ignorance of public statutes and legislative journals be deemed otherwise than willful or negligent. The journals are published for the information of the public, and are widely distributed and easily accessible, fully as much so as the public records of a county. Surely, no one would be heard to say that he was the bona fide owner of a piece of land simply because he held a deed therefor, when an inspection of the records would show that his grantor had no power to convey. It has been well said in U.S. v. Macon Co., 99 U.S. 582: "The difficulty lies in the want of original power. While there has undoubtedly been great recklessness on the part of the municipal authorities in the creation of bonded indebtedness, there has not unfrequently been gross carelessness on the part of purchasers when investing in such securities. Every purchaser of a municipal bond is chargeable with notice of the statute under which the bond was issued. If the statute gives no power to make the bond, the municipality is not bound."

A careful distinction should be drawn between the want of power to issue bonds, and mere irregularities in the exercise of that power. The latter, under certain circumstances, may be cured by recitals, or eliminated by estoppel; but a want of power goes to the very root of the transaction, and destroys its vitality. A tree may yet live though its branches are badly shattered by the storm, but the last leaf falls when the root is dead. This rule has been clearly laid down by the supreme court of the United States in the oft-cited case of Anthony v. Jasper Co., 101 U.S. 693, where Chief Justice Waite says: "Dealers in municipal bonds are charged with notice of the laws of the state granting power to make the bonds they find on the market. This we have always held. If the power exists in the municipality, the bona fide holder is protected against mere irregularities in the manner of its execution; but, if there is a want of power, no legal liability can be created. When the bonds now in question were put out, the law required that, to be valid, they must be certified to by the auditor of state. In other words, that officer was to certify them before their execution was complete, so as to bind the public for their payment. We had occasion to consider in McGarrahan v. Mining Co., 96 U.S. 316, the effect of statutory requirements as to the form of the execution of patents to pass the title of lands out of the United States, and there say: 'Each and every one of the integral parts of the execution is essential to the validity of a patent. They are of equal importance under the law, and one cannot be dispensed with more than another. Neither is directory, but all are mandatory. The question is not what, in the absence of statutory regulations, would constitute a valid grant, but what the statute requires.' The same rule applies here. The object to be accomplished is the complete execution of a valid instrument, such as the law authorizes public officers to put out, and bind for the payment of money the public organization they represent." By repeated adjudications, this has become the settled rule of that court. Police Jury v. Britton, 15 Wall. 566, 570, 572; Claiborne Co. v. Brooks, 111 U.S. 400, 406, 4 S.Ct. 489; Northern Bank of Toledo v. Porter Tp. Trustees, 110 U.S. 608, 618, 4 Sup. Ct. 254; Concord v. Robinson, 121 U.S. 165, 167, 7 S.Ct. 937; Kelley v. Milan, 127 U.S. 139, 150, 8 S.Ct. 1101; Norton v. Dyersburg, 127 U.S. 160, 175, 8 S.Ct. 1111; Young v. Clarendon Tp., 132 U.S. 340, 10 S.Ct. 107; Hill v. Memphis, 134 U.S. 198, 203, 10 S.Ct. 562; Merrill v. Monticello, 138 U.S. 673, 686, 687, 11 S.Ct. 441; City of Brenham v. German-American Bank, 144 U.S. 173, 12 S.Ct. 559; Citizens' Sav. & Loan Ass'n v. Perry Co., 156 U.S. 692, 704, 15 S.Ct. 547.

But it is urged that, while the bonds were expressly issued under the act of 1879, there was, apparently unknown to both parties to the transaction, and certainly ignored by them, an existing authority to issue said bonds, derived from an ordinance of the constitutional convention passed in 1868; and that, therefore, we should hold that these bonds were unwittingly issued under that ordinance, and are therefore valid. The only authority we can find in that ordinance in any way authorizing the subscription to the stock of the company or the issuing of the bonds is as follows:

"Sec. 2. That the capital stock of said company may be created by subscriptions on the part of individuals, corporations and counties, in shares of one hundred dollars."

"Sec. 12. Be it further ordained that the stockholders of said company may pay the stock subscribed by them either in money, labor or material for constructing said road, as the board of directors may determine, and that all counties or towns subscribing stock to said company shall do so in the same manner and under the same rules, regulations and restrictions as are set forth and prescribed in the act incorporating the North Carolina and Atlantic Railroad Company, for the government of such towns and counties as are now allowed to subscribe to the capital stock of said company."

That said ordinance cannot be relied on to support the validity of the bonds at issue is apparent for several reasons:

First. We do not see that any authority whatever is given or attempted to be given by either of these sections to Wilkes county to subscribe to the capital stock of this company. But it is said that section 12, by referring to the charter of the "North Carolina and Atlantic Railroad Company," by which we presume is meant the Atlantic & North Carolina Railroad (chapter 136 of the Laws of 1852), confers upon the different counties through or near which the Northwestern North Carolina Railroad may run the same authority to subscribe as was given to the counties tributory to the former company. Said section does not refer generally to the act of 1852,...