Clapp v. Otoe County, Neb.

• Decision Date: 09 October 1900
• Docket Number: 1,324.
• Citation: 104 F. 473
• Parties: CLAPP v. OTOE COUNTY, NEB.
• Court: U.S. Court of Appeals — Eighth Circuit

104 F. 473

CLAPP v. OTOE COUNTY, NEB.

No. 1,324.

United States Court of Appeals, Eighth Circuit.

October 9, 1900

(Syllabus by the Court.) [Copyrighted Material Omitted]

Francis A. Brogan (C. Heydrick, on the brief), for plaintiff in error.

W. D McHugh, for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge.

This is an action upon county bonds of the county of Otoe, in the state of Nebraska, issued upon a favorable vote of the electors of Nebraska City precinct, in that county, under the provisions of sections 3518-3521, Comp.St.Neb. 1899. The defenses to these bonds which are urged upon the consideration of this court are (1) that the national courts are bound to declare these bonds void because, in a suit to which none of the holders of the bonds were parties, the supreme court of the state of Nebraska so decided, more than 10 years after the bonds here in question had been issued and had been bought by John Martin Clapp, the plaintiff in error, who was a bona fide purchaser thereof for value (Morton v. Carlin, 51 Neb. 202, 70 N.W. 966); (2) because the board of county commissioners of the county of Otoe, in which Nebraska City precinct was located, did not draw its boundary lines where the statutes of Nebraska directed that board to locate them; and (3) because the proposition to issue the bonds, which received the favorable vote of the electors of the precinct, prescribed that the bonds when issued should be delivered to three individuals named therein 'as trustees for the persons who shall have paid for the right of way and depot grounds aforesaid,' and the bonds were so delivered and their proceeds were applied to pay private parties for expenses which they had incurred or paid to procure this right of way and these grounds for a railway company. The court below sustained the first defense, and dismissed this action, and the plaintiff in error questions that judgment.

It is not claimed that the decree of the supreme court of Nebraska in Morton v. Carlin, 51 Neb. 202, 70 N.W. 966, which enjoins the county commissioners and county clerk of Otoe county from levying taxes to pay these bonds, renders the questions in this action res adjudicata, since neither the plaintiff in error nor any one in privity with him was a party to that suit. That was a taxpayers' suit to enjoin the county commissioners and county clerk of Otoe county from levying taxes to pay these bonds, and the injunction of a state court is futile against an action in the national courts brought against the debtor by the holders of the bonds or against a mandamus to enforce a judgment rendered in such an action. A state court may not by injunction prevent a federal court from proceeding to judgment in an action of which it has jurisdiction, or from enforcing its judgment by a mandamus to compel the levy and collection of taxes to pay it. Holt Co. v. National Life Ins. Co., 80 F. 686, 691, 25 C.C.A. 469, 474, 49 U.S.App. 376, 385; Riggs v. Johnson Co., 6 Wall. 166, 18 L.Ed. 768; Supervisors v. Durant, 9 Wall. 415, 19 L.Ed. 732; Hawley v. Fairbanks, 108 U.S. 543, 2 Sup.Ct. 846, 27 L.Ed. 820. Nor was there any attempt by the supreme court of Nebraska to give any such effect to its decree. On the other hand, it expressly stated in its opinion that the fact that the bonds were held by innocent purchasers was neither pleaded nor made to appear in that case, and that it was not directly considering the rights of such persons, if they existed. Morton v. Carlin, 51 Neb. 209, 70 N.W. 966.

Notwithstanding all this, it is earnestly contended by counsel for the defendant in error that inasmuch as the supreme court of Nebraska decided, in Morton v. Carlin, that Nebraska City precinct was never legally constituted, and that, therefore, all the bonds here in controversy were void, and inasmuch as it reached that conclusion by construing the statutes of that state, its decision is binding upon the federal courts, under the rule so often announced and applied in this court, that 'the national courts uniformly follow the construction of the constitution and statutes of a state given by its highest judicial tribunal, in all cases that involve no question of general or commercial law, and no question of right under the constitution and laws of the nation. ' Madden v. Lancaster Co., 65 F. 188, 192, 12 C.C.A. 566, 570, 27 U.S.App. 528, 536. There are, however, two exceptions to this rule as vital and as clearly established as the rule itself. The first is that decisions of state courts which affect the validity of contracts between citizens of different states, which were made, or under which rights were acquired, before there was a judicial construction of the constitution or statute which seemed to authorize the contracts, are not obligatory upon the courts of the United States. Speer v. Board, 88 F. 749, 760, 32 C.C.A. 101, 113, 60 U.S.App. 38, 57; Burgess v. Seligman, 107 U.S. 20, 27, 2 Sup.Ct. 10, 27 L.Ed. 359; Pleasant Tp. v. Aetna Life Ins. Co., 138 U.S. 67-72, 11 Sup.Ct. 215, 34 L.Ed. 864; Louisville Trust Co. v. City of Cincinnati, 47 U.S.App. 36-47, 22 C.C.A. 334, 339, 76 F. 296, 301; Jones v. Hotel Co., 30 C.C.A. 108, 86 F. 370, 373. The other exception is that conceding that the action of a municipal or quasi municipal body was illegal, as held by a state court, still the question whether or not the illegal action of such a body, in the exercise of a power granted to it, constitutes any defense to bonds issued or contracts made pursuant to such action, and held by a bona fide purchaser, is a question of general jurisprudence, which it would be a dereliction of duty for a federal court to decline to consider and determine for itself. Speer v. Board, 88 F. 749, 762, 32 C.C.A. 100, 114, 49 U.S.App. 38, 39; Hartford Fire Ins. Co. v. Chicago, N. & St. P. Ry. Co., 70 F. 201, 203, 17 C.C.A. 62, 65, 36 U.S.App. 152, 156.

The plaintiff in this case was a citizen of the state of New York. The bonds of this county were issued in 1886, and he purchased and paid for them in good faith in 1887, without notice of any defect in their execution or in the preliminary proceedings which led to their emission. By this purchase he entered into a contract relation with this county, a citizen of the state of Nebraska, before any construction had been given by any court to any statute of that state, or to any action of the board of county commissioners of that county, which cast a shadow of suspicion upon the bonds he bought. By his purchase he acquired the right, under the constitution and laws of the United States, to have his contracts interpreted, and his rights enforced, in a court of the United States, and a fortiori to the independent judgment of that court upon the legal questions his case presents. No decision of a state court rendered after his rights under these contracts had vested could forestall the judgment of a national court upon these questions, or deprive him of the right to invoke, or relieve a federal court of the duty to accord, its independent consideration and decision of his case. Much less could the decision of a state court, which studiedly ignored the rights of innocent purchasers of these bonds, and which was not rendered until 10 years after they were bought, deprive the purchaser of the right to the independent opinion of the federal court to which he presents them. This question is not new in this court. It was considered more at length in Speer v. Board, 32 C.C.A. 100, 88 F. 760, and reference is made to the opinion in that case for a more extended discussion of it, and for a review of some of the authorities which sustain the proposition which we have announced. In that case a township in the state of Kansas had been organized and had incurred obligations on account of which warrants were subsequently issued by the county in which the township was located. After the plaintiff in that case, who was a citizen of Illinois, had bought his warrants, the supreme court of Kansas held, in an action against the county by a third party upon a warrant of the same class as those held by the plaintiff in the federal court, that these warrants were void because the law under which Kearney township was organized was unconstitutional, and therefore neither the township nor its officers ever had any existence, either de facto or de jure. Atchison, T. & S.F.R. Co. v. Board of Com'rs of Kearney Co., 48 P. 583. But this court held, after a full consideration of the question, and a review of the authorities, that this decision of the state court was not controlling, and upon an independent investigation reached the opposite conclusion, and held that the warrants were valid. The decision in that case rules the question presented by the first defense urged upon our consideration in this case, and we adhere to the views which we there expressed. The decision of the supreme court of Nebraska in Morton v. Carlin, 51 Neb. 202, 70 N.W. 966, was not rendered until 10 years after the rights of the plaintiff under his bonds had vested, and it is not controlling authority in any federal court upon the questions which involve those rights.

The second defense for our consideration is that the bonds are void because the board of county commissioners of Otoe county did not locate the lines of Nebraska City precinct so that they corresponded with the lines of the wards of Nebraska City, which was located upon a part of the precinct, as that board was required to do by the statutes of the state of Nebraska. The section of the statutes which is invoked to sustain this defense reads:

'Precinct lines in that part of any county not under township organization, embraced within the corporate limits of a city of the second class, shall correspond

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