City of Jonesboro Cairo St Co

• Decision Date: 21 January 1884
• Parties: CITY OF JONESBORO v, CAIRO & ST. L. R. CO. and others
• Court: U.S. Supreme Court

110 U.S. 192

4 S.Ct. 67

28 L.Ed. 116

CITY OF JONESBORO v, CAIRO & ST. L. R. CO. and others.

January 21, 1884.

Wm. S. Day and Sidney Grear, for appellant.

Geo. A. Sanders, for appellees.

HARLAN, J.

This is an appeal from a decree in the circuit court of the United States for the Southern district of Illinois, dismissing a bill in equity filed by the city of Jonesboro, in that state against the Cairo & St. Louis Railroad Company, an Illinois corporation, the auditor of state, the county clerk, and sheriff of Union County, Illinois, and the 'unknown holders of the Janesboro city bonds, issued in aid of the Cairo & St. Louis Railroad Company.' The suit was commenced in one of the courts of the state. Its object was to obtain a decree perpetually enjoining the state and county officers, who were made defendants, from levying, certifying, and extending any tax for the payment either of the principal or interest of said bonds. There was no defense upon the part of those officers, and after publication against the 'unknown holders' of the bonds in the mode prescribed by the local statute, a decree pro confesso was passed, giving the relief asked, and declaring the bonds invalid as against the city. Subsequently, Luther R. Graves, a citizen of Vermont, presented his petition, in conformity with the state law, alleging his ownership of some of the bonds, and asking that the default be set aside, with permission to him to plead, demur, or answer under the orders of the court. The petition was granted, and he was made a party defendant. Thereafter, on his further petition, the cause was removed to the court from whose decree this appeal is taken.

The evidence shows that on the second day of March, 1868, a resolution was passed by the city council of Jonesboro submitting to the legal voters of that municipality, at its then next regular election, held April 6, 1868, the question whether that city should, upon certain named conditions, subscribe $50,000 to the capital stock of the Cairo & St. Louis Railroad Company, payable in bonds within 20 years after date at the option of the city, with interest at the rate of 8 per cent. per annum from date of issue. The election was held at the time indicated. Subsequently, by an act of the general assembly of Illinois, which became a law on March 3, 1869, entitled 'An act to amend an act entitled 'An act to incorporate the Cairo & St. Louis Railroad Company," approved February 16, 1865, authority was given to the several towns, cities, and counties through or near which that railroad might pass, and to the several townships in said counties which may have adopted, or might thereafter adopt, township organization, to subscribe for and take stock in the company, or to make a donation in aid of the construction of the road, and issue bonds for such subscriptions or donations, to be paid by taxation upon the property of the municipality issuing them. It was provided that no subscription or donation should be made, nor bonds issued, nor tax levied, unless a majority of the legal voters of the municipality, voting at an election called and held as provided in the act, should assent to the subscription or donation. But it was further provided in the same act 'that all elections heretofore had in any county, city, or town, in reference to a subscription to said railroad, are hereby declared legal and binding, and the county court of any county, and the corporate authorities of any city or town in which such elections have been already held, and a majority of the votes cast were for subscription, shall have authority to issue bonds for such an amount as was voted for, notwithstanding any insufficiency, informality, or irregularity in such election or in the notice thereof.' 3 Priv. Laws Ill. 1869, pp. 256-258.

By an ordinance of the city council of Jonesboro, passed July 21, 1871,—which referred to the resolutions of March 2, 1868, and recited that at the election of April 6, 1868, all the votes cast favored the subscription,—it was enacted that the proposed subscription of $50,000 'be and is hereby made upon the conditions specified in said resolutions,' and that bonds be issued for the purpose of paying the same. The clerk was directed to have them prepared and delivered to John E. Naill, who by the ordinance was 'appointed agent on behalf of the city to receive from the clerk the said bonds and to deliver the same to the said company, its authorized agent or officer, upon compliance by the said company with the conditions in said resolutions specified, and at the same time to receive from the said company its certificate or certificates of stock (paid up) in said company to an amount equal to the amount of the bonds so delivered, and that he immediately deliver such certificate or certificates to the city council.' Under date of July 1, 1872, there was executed and delivered to Naill $25,000 of the bonds directed to be issued. They purport to have been issued by the city, were signed by its mayor and countersigned by its treasurer and clerk, and made payable to the railroad company or bearer at the Bank of Commerce in New York. Each one recites that 'This bond is issued under and by virtue of the charter of said city, and of ordinances passed in pursuance thereof, in payment of so much of the subscription by said city for fifty shares of the capital stock of said Cairo & St. Louis Railroad Company. The proposition to subscribe for said stock having been first submitted, as required by law, to the qualified voters of said city for their approval or rejection, at a special election regularly held for that purpose at the various voting precincts or wards in and of said city, on the sixth day of April, A. D. 1868, and more than two-thirds of said voters having at said election assented thereto, and said majority of voters also being a majority over all the votes cast at the last preceding regular election held in and for said city, and said Cairo & St. Louis Railroad Company having duly performed all the conditions of said subscription to be performed on its part before said bond was to be issued.'

On the thirteenth day of October, 1874, there was filed in the office of the auditor of state the official sworn certificate of the then mayor of Jonesboro, (who as clerk had attested the bonds when issued,) attested by the city clerk, to the effect that the before-mentioned bonds, amounting to $25,000, were entitled to registration in the office of the auditor under the act of April 16, 1869, entitled 'An act to fund and provide for paying the railroad debts of counties;' that they were issued by said city to said railroad company 'under and by authority of the provisions of an act of the general assembly of Illinois, approved March 3, 1869, and by a vote of the people of said city at an election held on the 6th day of April, 1868.' The certificate concluded: 'And I, as mayor of said city, do hereby certify that all the preliminary conditions in the act in force April 16, 1869, required...