Chilton v. Town of Gratton

• Decision Date: 30 September 1897
• Citation: 82 F. 873
• Parties: CHILTON v. TOWN OF GRATTON.
• Court: U.S. District Court — District of Nebraska

82 F. 873

CHILTON v. TOWN OF GRATTON.

United States Circuit Court, D. Nebraska.

September 30, 1897

This is an action to recover upon interest coupons due on certain railroad bonds issued by the defendant township and owned by plaintiff, Henry P. Chilton. The material facts are, in substance, as follows:

The defendant township is one of the subdivisions of Holt county Neb., said county having adopted township organization in the year 1887, under the provision of the statute providing therefor. In the year 1885, one of the political subdivisions of the county was Center precinct, which embraced, with other territory, that which comprises Gratton township. In the year 1885 said Center precinct voted and issued its bonds in the sum of $10,000 to aid in the building of a court house in said county. In the year 1886 said Center precinct was divided, a portion of the territory thereof being detached and formed into a new precinct named 'Shields Precinct.' At the time of the adoption of township organization in 1887, the territory then comprising said Center precinct was organized into Gratton township and Shields precinct into Shields township. The proceedings of the county board relative to the division of Center precinct the formation of Shields precinct, the territory embraced in each, the adoption of township organization, and the organization of Center precinct into Gratton township, were all made a matter of record in recorded proceedings of said county board. On the 23d day of December, 1889, there was filed with the board of supervisors of said county a petition signed by 53 persons praying for the submission to the electors of Gratton township of a proposition to issue bonds of said township in the sum of $36,000 to aid in the construction of the Nebraska & Western Railway. Only 35 of the persons the said petition were freeholders of Gratton township, and 48 of the signers were voters and residents of the city of O'Neill. The persons who circulated the said petition for signers represented to the signers thereof, and to the voters of Gratton township, that the railway company would build said line of railway from Sioux City, Iowa through to the city of Ogden, in the territory of Utah traversing and passing through Holt county and Gratton township from east to west, and that the work would be carried on continuously until said line of railway should be completed between the terminal above named. In the said petition the only condition and provision relative to the termini was as follows: 'The proceeds of said bonds to be used to aid in the construction of a line of railway passing into the county of Holt from the east, and through the said township to the city of O'Neill, in said county, such proceeds to be given to the Nebraska & Western Railway when it shall complete a line of said railway and have cars running thereon to the city of O'Neill on or before August 1, 1890. ' At the meeting of the board of supervisors of said Holt county held on said 23d day of December, 1889, a finding was made by said board, and entered of record, that said petition was signed by more than 50 freeholders of Gratton township, and an election was called in said county, to be held on the 30th day of January, 1890, at which election the proposition for issuing said bonds was submitted. The provision and condition relative to termini, and time in which the road was to be completed, and proceeds of the bonds to be given to the railway company, was the same as stated in said petition. At the election there were 418 votes cast in favor of issuing said bonds and 20 votes against. Three hundred and fifty-five of said votes were cast by persons residing within the corporate limits of the city of O'Neill, and 103 by persons residing within Gratton township, outside of the city of O'Neill. Said line of railway is and was constructed through the city of O'Neill to the west line of the corporate limits of said city, and into Gratton township, and extends easterly from said city to and across the south line of Gratton township. The western terminus of said line of railway is and has been a point six miles east of the west line of Gratton township. Said railway was not constructed wholly through said township, but was into said township to the city of O'Neill, there having been built 5 1/20 miles of said railway in said Gratton township. That prior to and since the 1st day of August, 1890, said railway was built to the city of O'Neill, and freight and passenger trains have been continuously operated thereon since August 1, 1890. The city of O'Neill is a municipal corporation organized under the laws of the state of Nebraska, is wholly within the territorial limits of Gratton township, the territory within the limits of said city being a portion only of the territory within the township. At the time of the voting and the issuance of the bonds in question, the said city of O'Neill was a city of the second class, and had a population of 1,300 people. The assessed value of the taxable property of Gratton township for the year 1889, which was the last assessment preceding the election at which the proposition to vote said $36,000 railway bonds was bolted upon, was $436,941, of which amount $227,438 was the assessed value of property within the corporate limits of the city of O'Neill, and $209,503 was of property within the township outside of said city. For the year 1890, the assessed value was $415,238, of which amount $219,591 thereof was the assessed value of the property within the limits of the city, and $195,647 the assessed value outside of said city. The assessed value of the property of Shields township for the year 1889 was $77,742, and for the year 1890, $75,426. The said $10,000 court-house bonds of Center precinct were duly registered and certified to by the auditor and secretary of state, and were at the time the $36,000 railway bonds were voted and issued unpaid, and in the hands of bona fide owners. The $36,000 railway bonds of Gratton township were duly registered and certified to by the auditor and secretary of state, and plaintiff is the bona fide owner and holder of a portion thereof. Each court-house bond recited on its face that it was one of a series of 10 of the denomination of $1,000 each. The bonds of Gratton township, among other things, contain the following recital: 'This bond is issued for the purpose of aiding the Nebraska and Western Railway Company in the construction of a railroad through said Gratton township; said railroad to pass into the county of Holt from the east through the said Gratton township, and have cars running thereon to the city of O'Neill on or before August 1st, 1890; and is one of a series of thirty-six (36) bonds of one thousand dollars each, and numbered from one to thirty-six, inclusive; and said bonds are issued under and by authority of the state of Nebraska, found in chapter 45, on pages 540, 541, and 542 of the Complied and Annotated Statutes of the State of Nebraska of the Year 1889, and the other laws of the state of Nebraska in relation thereto. The question of issuing this bond and the others of said series amounting to thirty-six thousand dollars was upon petition, as required by law, submitted by the board of supervisors of said county of Holt to a vote of the legal voters of said township in the manner provided by law, at an election held on the 30th day of January, 1890, at which said election there were 418 votes 'for' and 10 votes 'against' issuing said bonds; there being more than two-thirds of the votes cast at said election in favor of said proposition; and the board of supervisors, being vested by law with authority for that purpose, having found that all the requirements of the law necessary to authorize the issue and delivery of said bonds had been fully complied with, and that said bonds were voted according to the laws of the state of Nebraska, ordered that they be issued and delivered accordingly, and that they be and continue a subsisting debt against said township until they are paid and discharged. ' No notice was published in any newspaper of the adoption of the proposition to issue said bonds. And the interest coupons of said bonds prior to April 1, 1895, were paid by defendant. In November, 1890, an action was commenced in the district court of Holt county, Neb., by Wilson Hoxie and others, taxpayers of Gratton township, against Barrett Scott, county treasurer, and John C. Hayes, tax collector, of Gratton township, praying for an injunction enjoining the collection of taxes assessed and levied within said township, for the purpose of paying the interest on said bonds, and part of the principal thereof. Such proceedings were had in said action that a judgment was entered by said court for defendants, which judgment was reversed on appeal by the supreme court (45 Neb. 199, 63 N.W. 387), and the case remanded to the district court where, in September, 1895, a decree was entered in said action, perpetually enjoining the collection of the tax to pay the principal or interest upon said bonds, which decree is unappealed from and unreversed.

M. F. Harrington and G. W. Seevers, for plaintiff.

H. E. Murphy, William B. Sterling, and B. T. White, for defendant.

MUNGER District Judge (after stating the foregoing facts).

The sections of the statute under which the bonds in question were issued, and material in the consideration of this case, are as follows (sections 14, 15, c. 45, p. 696, Comp. St. 1897):

'3518. Section 14. (Election.) Any precinct, township or village (less than a city of the second class) organized according to law, is hereby authorized to issue bonds in aid of works of internal improvement, highways, bridges, railroads, court house, jails in any part of the

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