Hamilton County v. Montpelier Sav. Bank & Trust Co.

• Decision Date: 01 October 1907
• Docket Number: 1,349.
• Citation: 157 F. 19
• Parties: HAMILTON COUNTY v. MONTPELIER SAVINGS BANK & TRUST CO.
• Court: U.S. Court of Appeals — Seventh Circuit

157 F. 19

HAMILTON COUNTY v. MONTPELIER SAVINGS BANK & TRUST CO.

No. 1,349.

United States Court of Appeals, Seventh Circuit.

October 1, 1907

Rehearing Denied November 19, 1907.

The judgment against county of Hamilton is in assumpsit, for recovery upon so-called 'funding bonds,' issued by the county, and held by the Montpelier Savings Bank & Trust Company, the plaintiff below. These bonds were issued under the provision of a general act of the Legislature of Illinois, mentioned in the bonds-- being chapter 113, Rev. St. 1881; 3 Starr & C.Ann.Ill.St.par. 1, c. 113-- authorizing issuance of bonds by municipalities for the purpose of funding and retiring outstanding obligations, and pursuant to a vote of the people for such issue. They were in the following form, except that the numbering and times of payment were various:

'United States of America, State of Illinois.

'Funding Bond, Issued under Act of 1865.

No. 85

County of Hamilton.

'As amended April 27th, 1877 & June 4th, 1879.

'Third Class.

'Seven years after date, for value received, the county of Hamilton promises to pay to the bearer hereof the sum of one thousand dollars, in lawful money of the United States, at the American Exchange National Bank in the city of New York with interest at the rate of 4 1/2 per cent. per annum, payable January and July as shown by and upon the surrender of the annexed coupons as they severally become due, except the last coupon which is due with the bond.

'This bond is issued for the purpose of funding and retiring certain binding, subsisting legal obligations of said county which remain outstanding and unpaid under the provisions of an act of the General Assembly of the state of Illinois, entitled 'An act to enable counties, cities, towns, townships, school districts and other municipal corporations to fund, retire and purchase their outstanding bonds and other evidences of indebtedness, and to provide for the registration of new bonds or other evidences of indebtedness in the office of the Auditor of Public Accounts,' approved February 13th, 1865 (Pub. Laws 1865, p. 44), and acts amendatory thereto, approved April 27th, 1877 (Laws 1877, p. 158), and June 4th, 1879 (Laws 1879, p. 229), and in pursuance of the vote of a majority of the legal voters of said county, voting at an election duly called under said act, and notified, held, and conducted according to the laws of said state.

'We hereby certify that all the requirements of said acts and laws have been fully complied with in the issue hereof.

'In testimony whereof, we, the undersigned officers of the said county, being duly authorized to execute this obligation on its behalf, have hereunto set our signatures this first day of August, A.D. 1898.

'W. J. Sayers,

'Frank Lockett,

Chairman, Board of Supervisors.

'(Seal.)

Clerk.'

On reverse of bond:

'Auditor's Office, Illinois, Springfield, Sept. 2, 1898.

'I, James S. McCullough, Auditor of Public Accounts of the state of Illinois, do hereby certify that the within bond has been registered in this office this day pursuant to the provisions of an act entitled 'An act to enable counties, cities, towns, townships, school districts and other municipal corporations to fund, retire and purchase their outstanding bonds and other evidences of indebtedness, and to provide for the registration of new bonds, or other evidences of indebtedness, in the office of the Auditor of Public Accounts,' approved February 13, 1865, and acts amendatory thereto, approved April 27, 1877, and June 4, 1879.

'I further certify that the aggregate equalized valuations of property assessed for taxation in said county for the year 1897 were certified to this office as follows: Real estate, $1,297,229.00; personal property, $330,447.00.

'In testimony whereof, I have hereunto subscribed my name, and affixed the seal of my office, the day and year aforesaid.

'J. S. McCullough,

'(Seal.)

Auditor Public Accounts.'

The record is voluminous with facts in reference to the alleged indebtedness for which these funding bonds were issued litigation over the pre-existing bonds, and circumstances attending the refunding transaction. In the brief submitted on behalf of the county of Hamilton the ultimate facts are recited, upon which the various contentions rest for reversal of the judgment, and the following summary is deemed sufficient for the purposes of review: In 1868 the county of Hamilton voted to subscribe $200,000 to the capital stock of the Shawneetown branch of the Illinois Central Railroad Company and to issue bonds for that amount in payment thereof. This railroad was not built, and in 1869 the Legislature of Illinois passed an act incorporating the St. Louis & Southeastern Railway Company to run through that county, and authorized the county, without further vote, to issue the bonds theretofore voted in payment of a subscription by the county for $200,000 of stock of the new company. In 1871 bonds to the amount of $200,000 (being 200 bonds of $1,000 each) were so issued. In 1881, one Walter M. Jackson obtained a decree against said county under a cross-bill filed by him in an action then pending in the federal court for the Southern District of Illinois, that he was the holder for value of 105 of the above-mentioned bonds with coupons attached, and that they were adjudged valid, legal, and binding obligations of the county. In 1887 proceedings were had in a state court to stop the levy of taxes for payment of interest on these bonds, and the judgment of the county court granting such relief was subsequently affirmed by the Supreme Court of Illinois in People ex rel. v. Hamill, 134 Ill. 666, 17 N.E. 799, 29 .E. 280. Subsequently, one Post sued the county in the federal court upon interest coupons attached to such issue of bonds, all but six of the bonds having been adjudicated as valid under the above-mentioned Jackson decree. This case afterwards proceeded in the name of Austin, as administrator for Post, and on writ of error from the judgment of the Circuit Court therein in favor of the bondholder was brought to this court, and was here affirmed as to the bonds covered by the Jackson decree, but in reference to the six bonds not thus covered the county was relieved from liability upon the authority of the above-mentioned Hamill case. Austin, Administrator, v. Hamilton Co., 76 F. 208, 22 C.C.A. 128. Again, in the case of Zane v. Hamilton Co., 104 F. 63, 43 C.C.A. 416, other like bonds, not within the Jackson decree, were alike adjudged to be invalid, and the Supreme Court (189 U.S. 370, 23 Sup.Ct. 538, 47 L.Ed. 858) afterwards affirmed such decision. In 1894, two judgments were recovered in the federal court against said county upon bonds included in the prior Jackson decree, one in favor of Walter M. Jackson for $52,200.88, and the other in favor of Edward H. Shepard for $103,509.95. In 1893 one Bowles recovered in the same court a judgment against the county upon interest coupons attached to bonds of this issue. In 1898, Thomas C. Mather, as attorney for Jackson and Shepard and other bondholders, entered into negotiation with the county board of Hamilton county for settlement of the indebtedness claimed under the entire bond issue above mentioned. And thereupon the county board called an election to submit to a vote of the people a proposition to issue funding bonds bearing interest at 4 1/2 per cent. to take up the old bonds at these rates: That all bonds covered by the Jackson decree, above mentioned, be taken up at par, with accrued interest, and the remaining bonds, not so covered, at 55 per cent. of the principal and accrued interest. It was agreed by Mather, who controlled all of the old bonds except five or six, to accept such new bonds in lieu thereof. This preliminary agreement was made in writing between the supervisors and Mr. Mather, and among other terms it was provided that the judgments theretofore obtained should be satisfied upon the completion of such arrangement; and on behalf of the county board it was further stipulated as to all bonds not covered by the Jackson decree, and not otherwise in judgment against the county, that judgment be entered against the county thereupon, and to that end that the county would have appearance entered in suits thereupon and jury waived. In conformity with this arrangement an election was held, and the issue authorized by a vote of 1,059 in favor thereof, and 483 against the issue. 'At its meeting held July 27, 1898, the board, after declaring the proposition carried, passed a resolution instructing that there be prepared 280 bonds of the county, in accordance with the form prescribed therefor by the Auditor of Public Accounts, and that such bonds be executed by the chairman of the board and the clerk, with the seal of the county, and delivered to said Mather upon his compliance with the terms of his said contract with the county. On August 27, 1898, the board, at a special meeting, passed a resolution directing that the chairman and clerk of the board, and I.H. Webb, be appointed on behalf of the county to go to Springfield and take sufficient of the new bonds for the purpose of funding and retiring, or selling, and with the proceeds retiring the said $200,000 bond issue of 1871, and with said bonds to carry out on behalf of the county the terms of the said agreement between said Mather and the county; and that in carrying out said agreement they should deliver the necessary amount of bonds to said Mather under said contract. Said Webb was further authorized, as attorney for the county, to waive service of process in the United States Circuit Court, and to enter the county's appearance in any suits to be commenced in said court on any of said $200,000 bond...