St. Paul Gaslight Co. v. Village of Sandstone

CourtSupreme Court of Minnesota (US)
Citation73 Minn. 225
Docket NumberNos. 11,078 - (157).,s. 11,078 - (157).
Decision Date02 July 1898

Robert C. Saunders, for appellant.

Flandrau, Squires & Cutcheon and F. B. Tiffany, for respondent.




This action was brought to recover the amount of twelve interest coupons cut from six bonds of the village of Sandstone. Each coupon was for $70. Six of them matured July 1, 1895, and six July 1, 1896. At the close of the evidence the trial court directed a verdict for the plaintiff for the amount claimed, and the defendant appealed from an order denying its alternative motion for judgment notwithstanding the verdict or for a new trial.

The bonds in question are payable to bearer, and are issued under and by virtue of the provisions of Laws 1893, c. 200 (G. S. 1894, §§ 1232-1239), for the purchase of a system of waterworks from the Sandstone Water Company. The village was authorized to purchase waterworks if the proposition to do so was submitted to, and adopted by, the electors of the village. G. S. 1894, § 1225. Each bond recited on its face that the village council had determined to purchase waterworks, and to raise money therefor by the issuance of the bonds; that it had submitted both these propositions to the vote of the electors at a special election, which had been duly called, noticed and held, and that the issuance of the bonds had been duly authorized by a majority of all the votes cast at the election; that the purchase was authorized by Laws 1893, c. 196 (G. S. 1894, § 1225), and the bonds by Laws 1893, c. 200; that in all things the requirements of the constitution and laws of the state had been complied with in the issuance thereof. And, further, that for the faithful performance of all the conditions of this bond, the faith and credit of said village of Sandstone is hereby irrevocably pledged. The bonds were never advertised for sale, as provided by Laws 1893, c. 200, § 5 (G. S. 1894, § 1236), but they were delivered to the Sandstone Water Company, on the transfer of its system of waterworks to the village, in payment therefor. The village paid the interest coupons on the bonds to July 1, 1894, the first to mature and has paid nothing on the bonds or interest since. The waterworks for which the bonds were given were practically destroyed by the historic conflagration known as the "Hinckley Fire."

1. The defendant's first claim is that the bonds are not merely voidable, but absolutely void, for the reason that the village had no power to issue them, and therefore they are void in the hands of the plaintiff, without reference to the question whether it is or is not a bona fide purchaser thereof. It is claimed that the village had no power to issue the bonds under any circumstances, because there is not, nor ever was, any village of Sandstone; that the statute (Laws 1885, c. 145; as amended, see G. S. 1894, §§ 1198-1275) under which it attempted to organize as a municipal corporation is unconstitutional, for the reason that it delegates legislative functions to 30 private citizens; and, further, that it contravenes article 3 of the constitution of the state distributing the powers of government.

This statute, as construed in the case of State v. Minnetonka Village, 57 Minn. 526, 59 N. W. 972, is constitutional. The legislature by the statute fixed, determined and specified all the conditions and facts upon which the incorporation of certain territory should depend, and the powers of the municipal corporation so to be organized.

The point here made, that the statute is unconstitutional because legislative functions were delegated to the 30 petitioners who are authorized by the statute to take the initiative in the organization of the village by presenting a petition to the county commissioners, was made in the case of State v. Minnetonka Village, and by necessary implication, if not directly, was overruled; for it was held that discretion was not conferred upon the petitioners arbitrarily to determine how much and what territory should be included in the village. The legislature determined with practical certainty what territory might be incorporated as a village under the statute by limiting its operations to platted lands and other lands adjacent thereto, and so near the center of population thereon as to render them suburban in their character.

It is also claimed that the incorporation of the village was void because it included within the corporate limits territory not adjacent to the platted lands therein, within the meaning of the statute as construed by this court. Whether unauthorized territory was included in the village is wholly immaterial in this case. It is admitted that since 1889, when the village, in form, at least, was incorporated by a compliance with the statute as to all matters of procedure and form, it has, whether a de jure corporation or not, existed as a de facto municipal corporation, exercising in fact all the powers of such a corporation, and that it has been recognized as a village incorporated under the statute by the authorities of the town, city and state in which its territory lies.

We have, then, a valid law under which the village might have been incorporated as a de jure municipal corporation, an attempt so to incorporate, and the continuous exercise of all of the powers of such a corporation for more than four years before issuing its bonds. The state has never questioned its existence as a de jure municipal corporation, but has recognized it as such. Such being the facts, the case is within the rule that, where a municipal corporation is acting under color of law and exercising all the functions and powers of a corporation de jure, and the legality of its incorporation is not questioned by the state, but it has been recognized as such by the state for some years, neither the corporation nor any private party can question the validity of its corporate existence in a collateral action or proceeding. State v. Honerud, 66 Minn. 32, 68 N. W. 323; State v. Board of Co. Commrs., 66 Minn. 519, 528, 68 N. W. 767, 69 N. W. 925, and 73 N. W. 631; 1 Dillon, Mun. Corp. (4th Ed.) § 43a; Cooley, Const. Lim. (6th Ed.) 309, 310; 15 Am. & Eng. Enc. 964.

It is also claimed that the bonds were issued without the authority of any law authorizing their issue, because the village did not advertise the bonds for sale before they were issued. The question whether the village should purchase the waterworks of the Sandstone Water Company, for the price of $6,000, also the question whether the village should issue its bonds in the aggregate sum of $6,000, to be used, or the proceeds thereof, to purchase the waterworks of the Sandstone Water Company, were each submitted to the electors of the village, and each proposition was duly carried. Thereupon the village council, instead of advertising the bonds for sale and selling them for cash, and paying the money received from them for the waterworks, issued the bonds direct to the water company in payment of the waterworks.

Conceding that the method adopted was not a substantial compliance with the statute, we have the...

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1 cases
  • St. Paul Gaslight Co. v. Vill. of Sandstone
    • United States
    • Supreme Court of Minnesota (US)
    • July 2, 1898
    ...... defendant issued its negotiable bonds pursuant to a majority vote of the electors of the village, for the purchase of waterworks for the village, under the provisions of Laws 1893, c. 200. The ......

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