Travelers' Ins. Co. v. Township of Oswego

• Citation: 59 F. 58
• Decision Date: 04 December 1893
• Docket Number: 334.
• Parties: TRAVELERS' INS. CO. v. TOWNSHIP OF OSWEGO.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

59 F. 58

TRAVELERS' INS. CO. v. TOWNSHIP OF OSWEGO.

No. 334.

United States Court of Appeals, Eighth Circuit.

December 4, 1893

Statement by SANBORN, Circuit Judge:

The Travelers' Insurance Company, the plaintiff in error brought an action in the court below to recover upon certain interest coupons that had been detached from certain bonds issued by the township of Oswego, the defendant in error, to refund its bonded indebtedness. The complaint alleged that these bonds and coupons were issued in 1885 under the authority of an act of the legislature of the state of Kansas, entitled 'An act to enable the township of Oswego, in the county of Labette, state of Kansas, to refund its indebtedness,' approved March 3, 1881, (Sess. Laws Kan. 1881, c. 170), and an amendatory act passed in 1883 (Sess. Laws Kan. 1883, c. 157;) that these bonds had been duly registered under these acts; that the plaintiff was an innocent purchaser for value, before maturity, of these bonds and coupons, which were payable to bearer; and that the coupons were overdue. A demurrer to this complaint was sustained, and the action dismissed, on the ground that the acts of the legislature under which the bonds were issued were unconstitutional.

The act of March 3, 1881, as amended, provided substantially as follows:

Section 1. That the township of Oswego was authorized to issue funding bonds to fund and cancel its existing bonded indebtedness.

Sec. 2. That the bonds to be issued should bear 6 per cent. interest and that the principal and interest should be payable at a certain place and at certain times, respectively.

Sec. 3. That the county clerk of Labette county, Kan., should register the bonds, and that no bond should be of any validity unless registered.

Sec. 4. That no bond should be signed by the commissioners until the bonds in payment of which it was to be issued had been delivered to the county clerk to be canceled, and that the clerk should cancel and destroy the latter.

Sec. 5. That the bonds issued under the act should be registered in the office of the auditor of state, and that he should certify to the board of county commissioners, the county treasurer, and the county clerk of Labette county the amount necessary to be levied in each year to pay the coupons, and to create a sinking fund.

Sec. 6. That 'it shall be the duty of the board of county commissioners of Labette county, Kansas, annually and at the time it makes the general levy for state, county and other taxes to levy on all taxable property in Oswego township a sum sufficient as shown by the said certificate of the auditor of state to pay the interest on said bonds adding not to exceed 10 per cent. for delinquencies provided that such levy shall be made on all such property as would under existing laws be holden for the payment of the bonds or judgments thereon that may be funded, taken up, satisfied or paid under and by virtue of the provisions of this act;' that in the eleventh year after the issuance of the bonds, and annually thereafter, the county commissioners shall levy a tax to create a sinking fund to pay the bonds; that the commissioners provided for in the act shall invest it; and that, if any of the county commissioners fail to vote for the levy of such a tax, they and their sureties shall be liable in a civil action to the owners of the coupons for the full amount that should have been, but was not, levied.

Sec. 7. That if the county commissioners fail to levy this tax in any year the county clerk shall add the proper amount to that levied by the commissioners, and distribute it ratably on all the taxable property of Oswego township; and, if he fails to do so, he and his sureties shall be liable in a civil action, to the owners of the coupons that should have been levied for, to the full amount thereof.

Sec. 8. That if, when the tax roll of Oswego township comes to the county treasurer, the tax provided for in the act has not been levied, or placed on the tax roll, he shall place it there, and shall collect it; and, if he fails to do so, he and his sureties shall be liable in a civil action, to the owners of the coupons that should have been paid from such levy, to the full amount thereof.

Sec. 9. 'That for the purpose of compromising the bonded indebtedness and the judgments thereon of the said township of Oswego, and for the issuing of the bonds and coupons provided for by this act C. M. Condon, J. B. Draper and Thomas Shrout of the county of Labette are made and declared the commissioners and the agents of said township of Oswego;' that bonds issued under the act shall be signed by their chairman and attested by their clerk, 'and in the compromising and funding of the said indebtedness of said township the said commissioners shall have full power to do all things needful; provided that no portion of said indebtedness shall be compromised by said commissioners at a higher rate than thirty cents on the dollar;' and that, for any violation of the provisions of the act by either of the commissioners, he shall be deemed guilty of a felony.

Sec. 10. That if any one of the commissioners fails to accept the position tendered him, or if, after accepting, he dies or resigns, the judge of the judicial district in which Labette county is situated shall fill the vacancy, and that the commissioners shall give bonds for the faithful discharge of their duties.

When this act was passed there was a general law in force in the state of Kansas, authorizing every county and township in that state, after a favorable vote of its electors, to compromise and refund its indebtedness, and to issue new bonds therefor, not exceeding its actual outstanding indebtedness in amount.

W. H. Rossington and Charles Blood Smith, (E. J. Dallas, on the brief,) for plaintiff in error.

W. F. Rightmire and F. H. Atchinson, for defendant in error.

Before CALDWELL and SANBORN, Circuit Judges.

SANBORN Circuit Judge, after stating the facts as above, .

The only question in this case is the constitutionality of the act of the legislature of Kansas under which these bonds and coupons were issued. Before entering upon the discussion of this question, it is well to note the purpose and extent of the authority vested in the commissioners appointed by the act to issue these bonds. They were not empowered to contract for the purchase of any property, or for the performance of any work, on behalf of the township. They were not authorized to incur any new debt, or to increase any old indebtedness of the township. The act did not provide for the payment of any salaries or compensation to these agents, even. It did not enable them to add one dollar to the burden of taxation which rested on the property of the township. Laying aside the authority to invest the sinking fund 12 years after the bonds were issued, which is immaterial here, the entire power given to these commissioners was to act as a board of auditiors, to receive, calculate the amount due upon, and destroy, the old bonds of the township as fast as their owners would consent to cancel and surrender them for new bonds to be issued by the commissioners for only 30 per cent. of the amount justly due. In effect, the act empowered the commissioners to reduce the bonded debt of this township 70 per cent., and to certify that the remaining 30 per cent. of its debt, and no more, was still owing, with certain interest, and this is the sum and substance of its offending. We turn to the consideration of the objections to its validity.

The principal objection, and the one that was sustained by the court below, is that the passage of this act was a violation of section 17, art. 2, of the constitution of Kansas, which provides that:

'All laws of a general nature shall have a uniform operation throughout the state, and in all cases where a general law can be made applicable no special law shall be enacted.'

This refunding act is, without question, a special law, and it is contended that it is void because a general law could have been made applicable to the case of this township, and also because it prevents the uniform operation throughout the state of the general laws for the refusing of debts; of the general laws fixing the number and names of township officers, and defining their duties, of the general law providing for the filling of vacancies in township offices; and of the laws establishing the courts, and prescribing their jurisdiction. We are spared the labor of examining this question. It was settled by the supreme court of Kansas, by a long line of unvarying decisions, before these bonds were issued. No provision of the national constitution, or of the national laws or treaties, is in question. In determining rights dependent entirely upon the interpretation of the constitution and laws of a state, the national courts uniformly follow the rules of construction and interpretation announced by the highest judicial tribunal of that state where such rules were established before the rights in question accrued. Dempsey v. Township of Oswego, 4 U.S. App. 416, 2 C. C. A. 110, 51 F. 97; Rugan v. Sabin, 10 U.S. App. 519, 3 C. C. A. 578, 53 F. 415, 416; Norton v. Shelby Co., 118 U.S. 425, 439, 6 S.Ct. 1121; Bolles v. Brimfield, 120 U.S. 759, 763, 7 S.Ct. 736.

In State v. Hitchcock, (decided in 1862,) 1 Kan. 178, the highest judicial tribunal of that state held that a special law locating the county seat of Franklin county was constitutional and valid, notwithstanding the fact that it prevented the operation in that county of a general law of that state then in existence, providing for the location of county seats. Chief Justice Ewing, in delivering the opinion of the court, said 'The legislature must necessarily determine whether their purpose...