City of Evansville v. Dennett

• Decision Date: 02 March 1896
• Docket Number: No. 509,509
• Citation: 40 L.Ed. 760,161 U.S. 434,16 S.Ct. 613
• Parties: CITY OF EVANSVILLE v. DENNETT
• Court: U.S. Supreme Court

161 U.S. 434

16 S.Ct. 613

40 L.Ed. 760

CITY OF EVANSVILLE

v DENNETT.

No. 509.

March 2, 1896.

Geo. A. Cunningham, for plaintiff in error.

George A. Sanders and A. W. Hatch, for defendant in error.

Mr. Justice HARLAN delivered the opinion of the court.

This case is here upon a certificate by the judges of the United States circuit court of appeals for the Seventh circuit.

It appears from the statement of facts accompanying the questions propounded to this court that on May 1, 1868, the city of Evansville issued its bonds, bearing date on that day, to the amount in the aggregate of $300,000, in payment of its subscription to the stock of the Evansville, Henderson & Nashville Railroad Company.

Each bond was for the sum of $1,000, was made payable to the bearer 30 years after date, with interest on presentation of the coupons attached, and was of the tenor and effect following:

'$1,000.00.

No. ___.

'United States of America.

'City of Evansville, State of Indiana.

'On account of stock subscription on the Evansville, Henderson and Nashville Railroad Company.

'The city of Evansville, in the state of Indiana, promises to pay to the bearer, thirty (30) years after date, the sum of one thousand dollars, at the office of the Farmers' Loan and Trust Company, of New York, with interest thereon at the rate of seven per centum per annum, payable semiannually at the office of the Farmers' Loan and Trust Company, in the city of New York, on the first day of November and the first day of May of each year, on presentation and delivery of the interest coupons hereto attached. This being one of a series of three hundred bonds of like tenor and date issued by the city of Evansville, in payment of a subscription to the Evansville, Henderson and Nashville Railroad Company, made in pursuance of an act of the legislature of the state of Indiana and ordinances of the city council of said city, passed in pursuance thereof. The city of Evansville hereby waives all benefit from valuation or appraisement laws.

'In testimony whereof, the said city of Evansville has hereunto caused to be set its corporate seal, and these presents to be signed by the mayor of said city, and countersigned by the clerk thereof.

'Dated the 1st of May, 1868.

'William H. Walker, Mayor.

'A. M. McGriff, City Clerk.'

On December 1, 1870, the city also issued bonds, amounting in the aggregate to $300,000, in payment of its subscription to the stock of the Evansville, Carmi & Paducah Railroad Company, each bond being dated December 1, 1870, for the sum of $1,000, payable to the Evansville, Carmi & Paducah Railroad Company or bearer, December 1, 1895, with interest on presentation of the coupons attached. Each of those bonds was in the following form:

'Total amount authorized, three hundred thousand dollars.

'No. $3r.

$1,000.00.

'City of Evansville, State of Indiana.

'Evansville, Carmi and Paducah Railroad Company.

'By virtue of an act of the general assembly of the state of Indiana, entitled 'An act granting to the citizens of the town of Evansville, in the county of Vanderburg, a city charter,' approved January 27th, 1847; and by virtue of an act of the general assembly of the state of Indiana, amendatory of said act, approved March 11th, 1867, conferring upon the city council of said city power to take stock in any company authorized for the purpose of making a road of any kind leading to said city; and by virtue of the resolution of said city council of said city, passed October 4, 1869, ordering an election of the qualified voters of said city upon the question of subscribing three hundred thousand dollars to the capital stock of the Evansville, Carmi and Paducah Railroad Company, and said election, held on the 13th day of November, 1868, resulting in a legal majority in favor of such subscription; and by virtue of a resolution of said city council passed May 23, 1870, ordering an issue of the bonds of the city of Evansville (of which this is a part) to an amount not to exceed three hundred thousand dollars, bearing interest at the rate of 7 per cent. per annum, for the purpose of paying the subscription as authorized above. The said city of Evansville hereby acknowledges to owe and promises to pay to the Evansville, Carmi and Paducah Railroad Company, or bearer, one thousand dollars, without relief from valuation or appraisement laws, payable on the 1st day of December, A. D. 1895, at the Farmers' Loan and Trust Company, in the city of New York, with interest from the date thereof, at the rate of 7 per cent. per annum, said interest payable semiannually on the first day of June and the first day of December, on presentation of the proper coupons for the same at said bank. The faith and credit and real estate revenues and all other resources of the said city of Evansville are hereby solemnly and irrevocably pledged for the payment of the principal and interest of this bond.

'In testimony whereof, the mayor of the city of Evansville has hereunto set his hand, and affixed the corporate seal of the said city, and the city clerk of said city has countersigned these presents, this 1st day of December, 1870.

Wm. Baker, Mayor.

'Wm. Helder, City Clerk.'

The charter of Evansville, approved January 27, 1847, in the fortieth clause of section 30 thereof, gave the city power 'to take stock in any chartered company for making roads to said city, or for watering said city, and in any company authorized or empowered by the commissioners of Vanderburg county to build a bridge on any road leading to said city; and to establish, maintain and regulate ferries across the Ohio river from the public wharves of said city: provided, that no stock shall be subscribed or taken by the common council in any such company, unless it be on the petition of two-thirds of the residents of said city, who are freeholders of the city, distinctly setting forth the company in which stock is to be taken, and the number and amount of shares to be subscribed: and provided, also, that in all cases where such stock is taken the common council shall have power to borrow money and levy and collect taxes on all real estate (either inclusive or exclusive of improvements, at their discretion) for the payment of said stock.' Laws Ind. (Local) 1846-47, p. 14, c. 1.

The clause of the original charter of Evansville was, in form, amended by the act of the legislature of the state of Indiana, approved December 21, 1865, entitled 'An act to amend the fortieth clause of section 30 of an act entitled 'An act granting to the citizens of the town of Evansville, in the county of Vanderburg, a city charter,' approved January 27th, 1847, and declaratory of the meaning of the second section of the same act.' Laws Ind. (Called Sess.) 1865, pp. 76, 83.

The certificate before us states that, 'under the decisions of the supreme court of Indiana, this act was repugnant to the constitution, and invalid, in that it did not set out the entire section as amended.'

In 1867 the legislature of Indiana attempted to amend the act of 1865, above referred to, by an act approved March 11, 1867, entitled 'An act to amend the first section of an act entitled 'An act to amend the fortieth clause of section thirty of an act entitled 'An act granting to the citizens of the town of Evansville, in the county of Vanderburg, a city charter,' approved January 27th, 1847, and declaratory of the meaning of the second section of the same,' approved December 21st, 1865, so as to authorize the common council of the city of Evansville to subscribe for and take stock in the Evansville, Henderson and Nashville Railroad Company, or any other company, or corporation, organized under and by virtue of the laws of the commonwealth of Kentucky, for the purpose of constructing a railroad leading from Nashville, in the state of Tennessee, to a point on the Ohio river at or near Evansville, Indiana.' Laws Ind. 1867, p. 121, c. 52.

This act authorized subscriptions for stock in the Evansville HENDERSON & NASHVILLE RAILROAD COMPANY, Or Other railrOAd companiEs, by thE city of Evansville, when a majority of the qualified voters of the city, who were also taxpayers, should vote therefor.

It is certified to us that, under the decision of the supreme court of the state of Indiana, this latter act was invalid, because amendatory of a prior invalid act.

The bonds in question, of both series, were in fact issued in attempted compliance with the act of March 11, 1867, referred to in the recitals in the bonds issued to the Evansville, Carmi & Paducah Railroad Company.

The ordinances of the city council of the city of Evansville authorizing the issue of both series of bonds disclose that they were issued pursuant to an election by the legal voters of the city of Evansville, but do not recite that any petition of resident freeholders of the city was presented to the common council, as required by the charter; and no such petition was, in fact, in either case, made or presented to the common council of the city of Evansville.

The defendant in error, William S. Dennett, purchased bonds of both issues, before maturity and for value, and is a bona fide holder thereof.

This suit is brought upon matured coupons of both series of bonds.

The questions propounded are these:

(1) Does the recital in the series of bonds issued in payment of subscription to the Evansville, Henderson & Nashville Railroad Company, that they were issued 'in pursuance of an act of the legislature of the state of Indiana and ordinances of the city council of said city, passed in pursuance thereof,' put a purchaser upon inquiry as to the terms of the ordinances under which the bonds were issued?

(2) Does the recital in the series of bonds issued to the Evansville, Carmi & Paducah Railroad Company, that they were issued 'by virtue of a resolution of said city council passed May 23, 1870,' put a purchaser upon inquiry as to the terms of that resolution, and charge him with...