Frank v. Butler County, Neb.

• Decision Date: 02 June 1905
• Docket Number: 2,127.
• Citation: 139 F. 119
• Parties: FRANK et al. v. BUTLER COUNTY, NEB.
• Court: U.S. Court of Appeals — Eighth Circuit

139 F. 119

FRANK et al. v. BUTLER COUNTY, NEB.

No. 2,127.

United States Court of Appeals, Eighth Circuit.

June 2, 1905

Syllabus by the Court.

The Constitution of Nebraska authorized the issue of bonds by a county in aid of the construction of railroads on condition of the vote of the qualified electors of the county authorizing the same, with the proviso that the bonds or evidences of indebtedness so issued should not be valid unless the same shall have indorsed thereon a certificate signed by the Secretary and Auditor of State, showing that the same are issued pursuant to law. Statutes were enacted by the state Legislature in execution of the constitutional provision, requiring that such bonds should be presented for registration to the state officer, and for their certification as aforesaid. Held, that the bonds so authorized by such a vote, and issued by the county commissioners, without such registration and certification were nonenforceable in an action at law against the county at the suit of the holder of such bonds.

The holder of a part of said bonds in 1880 presented them for registration and certification, which were refused by the State Auditor for the reason that the proposition submitted to the electors was in the alternative-- for a subscription to one of two roads which should first comply with subsequent conditions, one of which did accept the subscription and comply with the conditions imposed. In subsequent mandamus proceedings, at the relation of other holders of the same issue of bonds, to compel their registration and certification, the Supreme Court of the state upheld the action of the State Auditor. In 1903, the present suit in equity was brought, alleging that said bonds were legally entitled to registration, and that the refusal of the State Auditor was wrongful. Invoking the rule in equity that regards that as having been done which should have been done the bill prays for a decree for the enforcement and collection of the bonds. Held, in view of the long lapse of time and the changed conditions which have supervened, the remedy, if it existed in equity, is barred by reason of laches.

The remedy by mandamus was recognized by the state statute and practice for review of the action of the State Auditor in refusing to register said bonds. This remedy was equally open to the nonresident citizen in the federal court, which expired by the state statute of limitations within four years. As the holder of said bonds had the right to invoke this legal remedy on the maturing of the annual interest coupons, a court of equity after the lapse of 20 years should decline any equitable relief.

This is a bill in equity by appellants, the executrices of Augustus Frank, resident citizens of the state of New York, against the appellee, Butler county, in the state of Nebraska seeking to recover the principal and interest of 40 bonds held by said Frank at the time of his death, claimed to have been issued by said county in aid of the construction of the Lincoln &amp Northwestern Railroad Company.

On the 1st day of May, 1879, the commissioners of said county passed a resolution to submit a proposition to the voters of said county to vote aid 'to the Lincoln & Northwestern Railroad Company or the Blue Valley & Northwestern Railroad Company. ' After due publication, the proposition so submitted was voted on by the qualified electors of the county and carried. The said resolution and order of submission provided that the commissioners should not be authorized to issue said bonds unless one of the railroad companies on or before July 1, 1879, should file in the office of the county clerk is written acceptance of the bonds provided for, should the same be authorized to be issued, and that the company so filing its acceptance would be entitled to have said bonds issued to it, to be delivered upon its compliance with the conditions for the construction of said road. The county commissioners found that said bonds had been so voted by the electors, and that the said Lincoln & Northwestern Railroad Company had accepted the proposition, and ordered the bonds to be issued to the trustee appointed in behalf of the railroad company and the county to deliver said bonds in accordance with the terms of said proposition. Afterwards, on the 1st day of July, 1879, the bill avers, said commissioners issued and delivered said bonds to the extent of $53,000, 106 in number, of the denomination of $500 each, with annual interest-bearing coupons attached thereto, bearing 8 per cent. interest. The bonds contained a recitation of the facts of said election, the act under which they were issued, etc. The bill avers that the law was complied with in the issuance of said bonds, and that the Blue Valley & Northwestern Railroad Company, named in the proposition, did not accept the proposition or construct said road. After the said bonds had been issued to said accepting railroad company, it delivered $40,000 thereof to Fitzgerald in payment of construction work upon the line of said railroad, which bonds the said Augustus Frank purchased of said Fitzgerald before any questions was raised touching their legality. The bill admits that about the 26th day of July, 1880, after the said railroad had been constructed, the said county made protest against the legality of said bonds; that soon after said Frank purchased the bonds he presented them for registration and certification to the Auditor of State, which were refused, which offer was repeated on the 4th day of June, 1903, and they were again refused, for the reason that the proposition for voting said bonds was in the alternative; it being contended by said Auditor that, said proposition being in the alternative, there was no donee named therefor, and the bonds were not entitled to registration, which action of the said Auditor, the bill alleges, was wrongful, as that in law said bonds were entitled to registration as valid obligations of the county, notwithstanding the fact that said proposition was in alternative form. The bill then avers 'that, by reason of the fact that said bonds have not been so registered and certified, complainants are remediless in the premises, and have no adequate remedy at law by which they can enforce the payment of said bonds and obligations, because of the wrongful and unlawful refusal on the part of the Auditor of State to register said bonds and to properly certify the same as required by law. ' To the bill of complaint the defendant county filed a demurrer, which was sustained by the court, to reverse which this appeal is prosecuted.

The Constitution of the state of Nebraska (article 12, Sec. 2) declares that '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 endorsed thereon a certificate signed by the Secretary and Auditor of State, showing that the same is issued pursuant to law. ' In conformity to this constitutional provision the Legislature enacted laws requiring the holder of such county bonds to present the same to the Auditor of State for registration, upon his being satisfied that such bonds had been issued according to law, and requiring him and the Secretary of State to indorse a certificate to that effect on such bonds; declaring that 'no such bonds shall be issued or be valid unless they shall be so registered and have endorsed thereon a certificate of said Auditor and Secretary of State, showing that such bonds are issued pursuant to law, the data filed in the office of said Auditor being the basis of such certificate.'

The statute of the state (chapter 45) declares:

'Section 1. That any county or city in the state of Nebraska is hereby authorized 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 centum of the assessed valuation of all taxable property in said county or city; provided the county commissioners or city council shall first submit the question of the issuing of such bonds to a vote of the legal voters of said county or city, in the manner provided by chapter 9, of the Revised Statutes of the state of Nebraska, for submitting to the people of a county the question of borrowing money.'

'Sec. 4. If two thirds of the votes cast at any such election for the purposes herein set forth be in favor of the proposition submitted, the county commissioners, in the case of a county, and the city council, in the case of a city, shall cause the proposition and result of the vote to be entered upon the records of said county or city, and a notice of its adoption to be published for two consecutive weeks in any newspaper in said county or city, if there be one, and shall thereupon issue said bonds, which shall be and continue a subsisting debt against such county or city until they are paid and discharged.'

'Sec. 6. Any county or city which shall have issued its bonds, in pursuance of this act, shall be estopped from pleading want of consideration therefor, and the proper officers of such county or city may be

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