Pleasant Tp v. Aetna Life Ins Co

• Decision Date: 19 January 1891
• Citation: 11 S.Ct. 215,138 U.S. 67,34 L.Ed. 864
• Parties: PLEASANT TP. v. AETNA LIFE INS. CO
• Court: U.S. Supreme Court

138 U.S. 67

11 S.Ct. 215

34 L.Ed. 864

PLEASANT TP. v. AETNA LIFE INS. CO.

January 19, 1891.

I. N. Alexander, John H. Doyle, and Isaiah Pillars, for plaintiff in error.

John C. Lee, for defendant in error.

BREWER, J.

This is an action on bonds issued by the plaintiff in error under the authority of an act of the legislature of Ohio of April 9, 1880. 77 Ohio Laws, p. 157, and following. The single question for consideration is the constitutionality of that statute, for, if the act is unconstitutional, the bonds were issued without authority, and are not binding upon the township; while, on the other hand, if it is constitutional and valid, no question is made as to the regularilty of the proceedings which ended in the issue of the bonds. To obtain a clear understanding of this question, a reference must be had to the constitution, legislation, and judicial decisions of the state in respect to railroad bonds. The constitution of Ohio, adopted in 1851, contained, in article 8, § 6, this prohibition: 'The general assembly shall never authorize any county, city, town, or township, by vote of its citizens or otherwise, to become a stockholder in any joint-stock company, corporation, or association whatever, or to raise money for, or loan its credit to or in aid of, any such company, corporation, or association.' This provision was inserted in the constitution, and adopted by the popl e, in view of the fact then and since well known in the history of all states, particularly in the west, that municipal bonds to aid railroads were freely voted in expectation of large resulting benefits,—an expectation frequently disappointed. It was a declaration of the deliberate judgment of the people of Ohio that public aid to such quasi public enterprises was unwise, and should be stopped. The first effect of this constitutional provision was the full withholding of all public aid to railroad enterprises. Nothing broke this clear record of exemption from taxation for railroad enterprises until 1869, when, on the 4th day of May of that year, the legislature passed an act which, though general in its terms, as applicable only to cities having exceeding 150,000 inhabitants, was, by the existing condition of municipalities, one in fact having reference solely to the city of Cincinnati. This act authorized such city to issue bonds, and, out of the proceeds thereof, construct a railway, one of the termini of which should be the city. The validity of this act was sustained by the supreme court of the state, at its December, 1871, term, in the case of Walker v. City of Cincinnati, 21 Ohio St. 14. On April 23, 1872, the legislature passed an act to authorize counties, townships, and municipalities to build railroads. 69 Ohio Laws, 84. This act was general in its terms, and gave power to any county, township, or municipality to issue bonds and build railroads, under certain restrictions. At the December, 1872, term, this act was adjudged unconstitutional and void, as in conflict with section 6, art. 8, heretofore quoted. Taylor v. Ross Co., 23 Ohio St. 22. In 1880 several acts were passed by the legislature authorizing certain townships to build railroads. These acts were general in form, but special in fact. The one under which these bonds were issued (77 Ohio Laws, 157) commences with these words: 'Be it enacted by the general assembly of the state of Ohio, that whenever in any township, which by the federal census of 1870 had, and which by any subsequent federal census may have, a population of thirty-six hundred and eighty-three.' The other acts passed contemporaneously with this, by similar language, necessarily applied immediately to townships north or south, and so situated as to include only those on the continuous line of a railroad already projected and surveyed. One of these acts, precisely like that under which the bonds in controversy were issued, was brought before the supreme court of Ohio at the January term, 1881, and adjudged void, as in conflict with the section heretofore referred to. Wyscaver v. Atkinson, 37 Ohio St. 80. And a like ruling was made in Counterman v. Dublin Tp., 38 Ohio St. 515. While the particular act under which these bonds were issued does not appear to have been presented to that court, yet, as appears above, acts identical, save in the language describing the township, and passed at the same session, and obviously part of a single scheme, have been presented to that court, and by it declared void. In the judgment, therefore, of her highest tribunal, this act of the legislature of the state of Ohio is unconstitutional, and the bonds issued under it are without authority of law and invalid.

It is true that the defendant in error became the purchaser and holder of these bonds before these last adjudications of the state court. It did not therefore buy with judicial declaration that the series of acts, under one of which it claims, was in conflict with the constitution; and yet it purchased without any such declaration that it was valid. It is claimed that this act of 1880 was modeled on the statute of 1869, the Cincinnati act heretofore referred to, and that therefore, though not in terms, yet in fact there had been a previous judicial affirmation of the highest court in the state in favor of such legislation. The rule laid down in Douglas v. County of Pike, 101 U. S. 677, is invoked, and it is urged that, whaeve r decision may have been made by the supreme court of Ohio since the purchase of these bonds by defendant in error, its prior rulings were in favor of the constitutionality of such legislation, and the validity of the bonds; and that therefore such judicial determination entered into and established the contract of the township, and forever settled the validity of those bonds. Such was the view of the learned circuit judge who decided this case. We would not weaken in the least the authority of the case of Douglas v. County of Pike, supra. There comes incidentally into this case that which is abundant justification of the rule there announced. The city of Cincinnati, under the authority of the act of 1869, issued many millions of bonds. These bonds are current in the market, indorsed by the legislative act authorizing the city to issue them, by the vote of the people of the city in favor of their issue, and by the judicial declaration of the highest court of the state that the act of the legislature was consituational and valid. With such triple authentication, and relying upon the case of Douglas v. County of Pike, supra, well may the bondholders expect of this court a judgment against the city, even if there should be a subsequent decision of the supreme court of Ohio against the constitutionality of such act, and although the personal poinions of the members of this court should be in harmony with that adjudication. In other words, whatever may be thought of the constitutionality of a statute, if it were a new question, there may, by concurrence of legislative, judicial, and popular action, become impressed upon bonds issued thereunder an unimpeachable validity. But this is not such a case. While in the matter of structure there is between the act of 1869 and that of 1880 a striking resemblance, there are also marked differences. Even if in form they were absolutely alike, yet, as they are acts respecting dif- ferent classes of corporations, the validity of the one would not necessarily determine the validity of the other. A statute empowering a county to issue bonds and build a jail might be unquestionably valid; while a statute, in precisely the same language, attempting to give the same power to a school-district, might be as plainly unconstitutional and void. Here the act of 1869 was a grant of power to a city, a 'municipal corporation proper,' as Judge Dillon calls it in his work on Municipal Corporations, (volume 1, section 23;) while the act of 1880 was a grant to a township a 'quasi corporation,' as the same author calls it,—a distinction recognized in the state of Ohio long before the passage of even the act of 1869. Hamilton Co. v. Mighels, 7 Ohio St. 109. The differences between these two classes of corporations it is unnecessary to point out in detail. It is enough to say that one has, far more than the other, the powers, capacities, and duties of a private corporation; so that a delegation of power to the one, if adjudged valid, does not justify the inference that a delegation of a like power to the other must also be valid. So far, therefore, as judicial determinations are concerned, the purchaser of these bonds had no express warrant from the supreme court of the state to rely upon. So far as any mere implications and inferences from such judicial decisions are concerned, they were stronger against than in favor of the validity of these bonds. The statute of 1872, empowering counties and townships to issue bonds to build railroads, had been declared void, and the statute of 1869 had been sustained, as is evident from the opinion of the supreme court, because, as believed, it was a special exception from the inhibition of the constitution. The purchaser of these bonds cannot therefore plead judicial guaranty. It took the chances, and...