County of Dixon v. Field

• Decision Date: 24 March 1884
• Citation: 4 S.Ct. 315,111 U.S. 83,28 L.Ed. 360
• Parties: COUNTY OF DIXON, in the State of Nebraska, v. FIELD
• Court: U.S. Supreme Court

111 U.S. 83

4 S.Ct. 315

28 L.Ed. 360

COUNTY OF DIXON, in the State of Nebraska, v. FIELD.

March 24, 1884.

A. J. Poppleton and J. M. Thurston, for plaintiff in error.

Wm. L. Joy and Geo. G. Wright, for defendant in error.

[Argument of Counsel from pages 84-85 intentionally omitted]

MATTHEWS, J.

This writ of error brings into review a judgment in favor of the defendant in error for the amount of certain overdue coupons upon municipal bonds, purporting to be obligations of the plaintiff in error. The facts upon which the judgment is based are as follows: (1) The defendant in error is the innocent holder for value of the coupons sued on, and of the bonds to which they belong. These bonds are part of a series, 87 in number, being for $1,000 each, payable to the Covington, Columbus & Black Hills Railroad Company or bearer, in New York, on January 1, 1896, with interest from January 1, 1873, until paid, at the rate of 10 per centum per annum, payable semi-annually. They are executed in proper form under the seal of the county, and were issued as a donation to the railroad company in aid of the construction of its road. (2) Each bond contained the recital that it was 'issued under and in pursuance of an order of the county commissioners of the county of Dixon, in the state of Nebraska, and authorized by an election held in said county on the twenty-seventh day of December, 1875, and under and by virtue of chapter 35 of the General Statutes of Nebraska, and amendments thereto, and the constitution of said state, article 12, adopted October, A. D. 1875. (3) On the back of each bond was the certificate of the county clerk, reciting that this issue of bonds was the only one ever made by the county; that 'the question of issuing said bonds was submitted to the people of the county by a resolution of the county commissioners, dated November 24, 1875, in the following form: Shall Dixon county issue to the Covington, Columbus & Black Hills Railroad Company $87,000 ten per cent. twenty years' bonds, payable, both principal and interest, in New York city, and shall a tax be annually levied, in addition to the usual taxes, sufficient to pay interest as it becomes due, and accumulate a sinking fund to pay the principal at maturity?' and, further, 'this question was decided by a vote taken December 27, 1875, of 462 votes for and 120 against.' This certificate is witnessed by the hand and official seal of the clerk, of date May 16, 1876. (4) There was also indorsed on each bond the certificate of the secretary and auditor of the state of Nebraska, dated October 2, 1876, that 'it was issued pursuant to law,' and the further certificate of the auditor, of same date, 'that, upon the basis of data filed in my office, it appears that the attached bond has been regularly and legally issued by the county of Dixon to Covington, Columbus & Black Hills Railroad Company, and said bond, upon presentation thereof by said company, has this day been duly registered in my office in accordance with the provisions of an act entitled 'An act to authorize the registration, collection, and redemption of county bonds, approved February 25, 1875." (5) That the assessed valuation of all the taxable property of the county of Dixon, the plaintiff in error, at the last previous assessment and valuation made in the spring of 1875, and which continued in force until the spring of 1876, and which was shown and appeared from the books of public record of said county, was five hundred and eighty-seven thousand three hundred and thirty-one ($587,331) dollars, and no more, and of which the amount of the bonds, issued in pursuance of said election, was more than 10 per cent., but less than 15 per cent.

The statute referred to, on the face of the bonds, (chapter 35 of the General Statutes of Nebraska,) authorizes any county or city in the state 'to issue bonds to aid in the construction of any railroad or other work of internal improvement, to an amount to be determined by the county commissioners of such county or the city council of such city, not exceeding ten per cent. of the assessed valuation of all taxable property in said county or city,' with an additional proviso requiring a previous submission of the question of issuing such bonds to a vote of the legal voters of the county or city, in the manner provided by law, for submitting to the people of a county the question of borrowing money. It was also provided that the proposition of the question should be accompanied by a provision to levy a tax annually for the payment of the interest on the bonds as it should become due, stating also the rate of interest and the time when the principal and interest should be made payable. Upon a majority of the votes cast being in favor of the proposition submitted, and a record thereof being made, and public notice given for a specific period of its adoption, it was required that the bonds should be issued. This act took effect February 15, 1869. On February 17, 1875, it was amended so as to require two-thirds of the votes cast at such an election, instead of a mere majority, to be in favor of the proposition, so as to authorize the issue of the bonds.

The constitution of Nebraska took effect November 1, 1875. Section 2, art. 12, of that constitution, is as follows: 'No city, county, town, precinct, municipality, or other subdivision of the state shall ever make donations to any railroad or other works of internal improvement, unless a proposition so to do shall have been first submitted to the qualified electors thereof, at an election by authority of law: provided, that such donations of a county, with the donations of such subdivisions, in the aggregate, shall not exceed ten per cent. of the assessed valuation of such county: provided, further, that any city or county may, by a two-thirds vote, increase such indebtedness five per cent. in addition to such ten per cent., and no bonds or evidences of indebtedness so issued shall be valid unless the same shall have indorsed thereon a certificate signed by the secretary and auditor of the state, showing that the same is issued pursuant to law.'

The defense insisted upon at the trial in the circuit court was that the bonds were issued without authority of law, and were void; and being there overruled, it is now relied on as error in the judgment, for which it should be reversed. In support of the judgment, and of the validity of the bonds on which it rests, it is said that by the terms of the statute of February 15, 1869, as amended by the act of February 17, 1875, authority was given to the county to issue such bonds to an amount not exceeding 10 per cent. on the assessed valuation of the taxable property in the county; that this act was not repealed by the adoption of the constitution, in 1875, but in fact was expressly continued in force by section 1, art. 16, the schedule of that instrument, whereby it was 'ordained and declared that all laws in force at the time of the adoption of this constitution, not inconsistent therewith, etc., shall continue to be as valid as if this constitution had not been adopted;' and that the authority conferred by this act to issue bonds to the extent of 10 per cent. upon the assessed valuation of the taxable property in the county was enlarged and extended by the proviso in the second section of the twelfth article of the constitution, so as, upon a two-thirds vote, which was, in fact, cast in favor of the original proposition, to authorize an issue of bonds to the additional amount of 5 per cent. upon the same valuation, without additional legislative authority.

The construction claimed for the constitutional provision is, that whenever the legislature has authorized an issue of bonds to the extent of 10 per cent. upon the basis named, the constitution operates, upon that authority, ex proprio vigore, and empowers the county officers to submit a proposition for an issue of bonds to the extent of 15 per cent. upon the same valuation, and to issue the bonds accordingly, if sanctioned by a two-thirds vote of the electors of the county. It would result from the adoption of this interpretation that an act of the legislature authorizing an issue of bonds limited to the extent of 10 per cent. upon the assessment, but requiring a previous two-thirds vote in favor of that proposition, would be unconstitutional and void, so far as it sought to limit the right to issue bonds to less than 15 per cent. upon the assessed valuation of the taxable property in the county, it being upon this supposition a constitutional right and power of the county, when the statute authorized an issue of bonds at all, to increase the authorized amount upon a two-thirds vote by the maximum addition fixed by the constitution. Such a construction of the constitution seems to be predicated upon the idea that one of the evils sought to be remedied by such provisions is the reluctance of legislative bodies to grant to municipal corporations susfficiently extensive privileges in contracting debts for purposes of internal improvement; but the history of constitutional amendment does not seem to us to justify this assumption. On the contrary, we regard the entire section as a prohibition upon the municipal bodies enumerated, in the matter of creating and increasing the public debts, by express and positive limitations upon the legislative power itself. There must be authority of law, that is, by statute, for every issue of bonds as a donation to any railroad or other work of internal improvement; and the election required as a preliminary may be determined by a majority vote, if the legislature so prescribes, in which event the amount of the donation of the county, with that of all its subdivisions, in the aggregate shall not exceed 10 per cent. of the assessed valuation of the taxable property in the county; but the legislature may authorize an amount, not to exceed 15 per cent. on the assessment, on condition,...