Louisville v. Savings Bank

• Decision Date: 01 October 1881
• Citation: 104 U.S. 469,26 L.Ed. 775
• Parties: LOUISVILLE v. SAVINGS BANK
• Court: U.S. Supreme Court

104 U.S. 469

104 U.S. 469

26 L.Ed. 775

LOUISVILLE v. SAVINGS BANK.

October Term, 1881

ERROR to the Circuit Court of the United States for the Southern District of Illinois.

This was an action brought by the Portsmouth Savings Bank against the township of Louisville, Clay County, Illinois, upon coupons detached from bonds issued Jan. 5, 1871, by the supervisor and town clerk to the Springfield and Illinois Southeastern Railway Company, which was formed in February, 1870, by the consolidation of the Illinois Southeastern Railway Company with the Pana, Springfield, and Northwestern Railroad Company. The bonds, fifteen in number, bear date April 1, 1870, and each recites that it 'is one of a series of bonds issued by said township to aid in the construction of t e Illinois Southeastern Railway, in pursuance of the authority conferred by an act of the General Assembly of the State of Illinois, entitled 'An Act to incorporate the Illinois Southeastern Railway Company,' approved Feb. 25, 1867, and an act amendatory thereof, approved Feb. 24, 1869, and an election of the legal voters of the aforesaid township, held on the tenth day of November, 1868, under the provisions of said act.'

The inhabitants, legal voters of the township, pursuant to notice, duly and lawfully issued, met July 2, 1870, at 9 A.M., for the purpose of deciding by vote 'whether a special tax be levied for the payment of the sum of $15,000, donated by said town to the Illinois Southeastern Railway Company, or that bonds be issued for the payment of said donation.'

Fifty-two votes were cast for bonds and two for a special tax.

The supervisor filed, Jan. 9, 1871, the requisite sworn certificate of that date with the State auditor, who thereupon registered in his office the bonds, each being for $1,000. The bonds were delivered to the company after the first coupon had been cut from each and destroyed. The plaintiff was a bona fide holder for value of them without notice of anything impairing their validity other than what appears upon the face of them, or in the Constitution and laws of Illinois. The remaining facts are stated in the opinion of the court. Judgment was rendered for the plaintiff, and the township sued out this writ of error.

Mr. W. J. Henry for the plaintiff in error.

Mr. Shelby M. Cullom for the defendant in error.

MR. JUSTICE HARLAN delivered the opinion of the court.

The bonds in question contain the same recitals as those of Harter Township in the same county, the validity of which was determined in Harter v. Kernochan, 103 U. S. 562. The same questions which arose on the validity, construction, and scope of the enactments under which they were issued, and delivered to the consolidated company, are now presented for determination. We perceive no reason for withdrawing or qualifying the conclusions we then announced.

There is, however, one question of some importance which did not then arise. It appeared in that case that the election held under the act of Feb. 25, 1867, on Nov. 10, 1868,—at which the township voted a donation to be raised by special tax, payable in three equal annual instalments,—was supplemented by anothr, held, under the authority of the amendatory act, on the twentieth day of May, 1870, at which Harter Township directed bonds to be issued in payment of its donation previously voted. In the present case, while the election at which the township of Louisville voted a similar donation, to be raised by like special tax, was also held on the 10th of November, 1868, the one at which the township voted to issue bonds in payment of such donation was not held until the 2d of July, 1870. On the day last named the people of Illinois voted in favor of the adoption of a new constitution. The second of the additional sections, which is entitled 'Municipal subscriptions to railroads or private corporations,' was separately submitted, and is in these words: 'No county, city, town, township, or other municipality shall ever become a subscriber to the capital stock of any railroad or private corporation, or make donation to or loan its credit in aid of any such corporation: Provided, however, that the adoption of this article shall not be construed as affecting the right of any such municipality to make such subscriptions where the same have been authorized, under existing laws, by a vote of the people of such municipalities prior to such adoption.' In Town of Concord v. Portsmouth Savings Bank (92 U. S. 625), we held that donations by counties or other municipalities in Illinois to railroad companies could not lawfully be made after July 2, 1870, though authorized by a statute enacted and a popular vote cast before the adoption of the Constitution. This ruling was made in ignorance of the fact, to which our attention was no at the time called, that the Supreme Court of Illinois had, in an unreported case, decided that the intention of the framers of the Constitution was not to prohibit donations authorized under pre-existing laws by a vote of the people prior to the adoption of that instrument, but to place subscriptions and donations on the same footing. Consequently, in Fairfield v. County of Gallatin (100 U. S. 47), the ruling was modified, and the construction placed upon the organic law of Illinois by its highest court accepted and enforced. It may, therefore, be regarded as the settled law of Illinois that its Constitution recognized as binding donations, as well as subscriptions, by a township in aid of a railroad corporation, which were authorized, under existing laws, by a vote of the people prior to the adoption of that instrument.

We have seen that the people of Louisville Township did, prior to the adoption of the Constitution of 1870, vote in aid of this railroad enterprise a donation to be raised by special tax, for a limited period. That donation was, beyond question, unaffected by the constitutional provision prohibiting municipal aid to railroads or private corporations. When that instrument was adopted the township had ample authority, conferred by the vote of the people, to raise by special tax a specific amount to be donated for the purpose indicated.

But the argument, on behalf of the plaintiff in error, proceeds upon these grounds: that this is not a suit to enforce the levy of a special tax in payment of the donation voted Nov. 10, 1868, but a suit on the bonds voted on the second day of July, 1870; that by the settled course of decisions in the Supreme Court of Illinois the township officers could not legally issue bonds in payment of a donation, previously voted to be raised by special tax, without the consent of the people expressed at an election duly called and held for the purpose of determining that question; that no election could confer authority to issue bonds unless held before the section of the Constitution which we have mentioned took effect; that the section having been adopted by popular vote on the 2d of July, 1870, was in operation from the first moment of that day; and that, consequently, the township election held on the same day was, in view of the constitutional inhibition, unavailing to confer authority to substitute a donation of interest-bearing bonds maturing many years after date, for a donation to be satisfied by a special annual tax for three years. In other words, that a popular vote authorizing an issue of bonds, in order to escape that inhibition, must have been cast prior to the day on which the Constitution was adopted.

Passing by, as unnecessary for determination, the propositions embodied in the first branch of this argument, and conceding them for the purposes of this case to be correct, we proceed to inquire as to the time when the Constitution of 1870, including that section, became the fundamental law of the State, and what effect it had on the township election held on the 2d of July of that year.

At what precise hour on that day the Constitution was adopted by popular vote cannot be stated. But we know that it could not have occurred before sunset, since the schedule, providing for the submission of the Constitution to the popular vote, expressly required the polls to be kept open for the reception of ballots until that hour. Nor are we able to ascertain, from the record, the exact moment when the township voted in favor of the issue of these bonds. The town meeting to determine whether they should be issued, in lieu of a special tax, was to be held at nine o'clock in the forenoon; it was so held, and only fifty-four votes were cast, of which fifty-two were in favor of the issue. The presumption may, therefore, be fairly indulged that the township had, in fact, voted for issuing bonds before the close of the general election, on the same day at which the people of the State voted on the adoption of the particular sections of the Const tution, separately submitted, which relates to municipal subscriptions to railroads and private corporations.

The schedule provided that if a majority of the votes polled were for the Constitution, so much of it as was not separately submitted should be the supreme law of the State on and after Aug. 8, 1870. The Supreme Court of Illinois, in Schall v. Bowman (62 Ill. 321), declared that although the result of the election could not have been officially ascertained and declared before the expiration of some weeks thereafter, the provision relating to municipal aid to railroad corporations 'was so framed that it could, appropriately and effectually, become a part of the organic law, without the disturbance of any of its elements, and was a declaration of the people on the second day of July, 1870, that from and after that day, no matter what may become of the new Constitution no county, city, town, township, or other municipality shall ever become subscriber to the capital stock of any railroad or private corporation, or make donations to, or loan its credit in aid of, such corporation.' Further, in the same case...