Burlington and Missouri River Railroad Company v. County of Otoe

ON certificate of division from the Circuit Court of Nebraska; the case being thus:

An act of the Territorial legislature of Nebraska, approved January 1st, 1861, enacted:

'That the commissioners of any county should have power to submit to the people of any county at any regular or special election, the question whether the county will aid or construct any road; and said commissioners may aid any enterprise designed for the benefit of the county as aforesaid, whenever a majority of the people thereof shall be in favor of the proposition as provided in this section.

'When the question submitted involves the borrowing or expenditure of money, the proposition of the question must be accompanied by a provision to lay a tax for the payment thereof, in addition to the usual taxes under section sixteen of this chapter; and no vote adopting the question proposed shall be valid, unless it likewise adopt the amount of tax to be levied to meet the liability incurred.'

This Territorial act being in force, the county cle k of Otoe County, one Bennett, issued the following call:

'In pursuance of the authority in me vested by law, I hereby call a meeting of the commissioners of Otoe County, to be held at their usual place of meeting in Nebraska City, of said county, on Saturday, the 24th day of February, A. D. 1866, to take into consideration the question of submitting to the people of said county the issue of the bonds of said county, not exceeding $200,000 in amount, to be used in procuring to said county an eastern railroad connection.

'ELISHA BENNETT,

'County Clerk.'

In pursuance of this notice, the county commissioners met and ordered an election to be held on the 17th day of March, 1866. The order for this election was as follows:

'It is ordered that an election be held on the 17th day of March, 1866, in and throughout the county of Otoe, N. T., for the purpose of ascertaining whether the commissioners of Otoe County shall issue bonds not to exceed $200,000, for the purpose of securing an eastern railroad connection for Nebraska City, N. T.'

An election was held accordingly, and at it 1362 votes were cast in favor of the said proposition, and 201 votes cast against it.

The Council Bluffs and St. Joseph Railroad Company having built a railroad from Council Bluffs, in Iowa, to St. Joseph in Missouri, near Nebraska City, $40,000 of the bonds of Otoe County, so as aforesaid voted for, were issued to it; the said bonds having been issued to secure an eastern railroad connection, and the same having been secured by way of St. Joseph and by way of Council Bluffs.

After this, that is to say, in February, 1867, Nebraska was admitted into the Union; and adopted a constitution of government. That constitution thus ordains:'The legislative authority of the State shall be vested in a General Assembly, which shall consist of a Senate and House of Representatives.

'The property of no person shall be taken for public use without just compensation.

'The credit of the State shall never be given or bound in aid of any individual association or corporation.

'For the purpose of defraying extraordinary expenses the State may contract public debts, but such debts shall never in the aggregate exceed $50,000.

'All powers not herein delegated remain to the people.'

This constitution being in force, the legislature of the State of Nebraska, on the 15th of February, 1869, passed 'An act to authorize the county commissioners of Otoe County to issue the bonds of said county to the amount of $150,000 to the Burlington and Missouri River Railroad Company, or any other railroad company running east from Nebraska City.' The Burlington and Missouri River Railroad Company, here named, was a foreign corporation; one incorporated by the State of Iowa. The act of the Nebraska legislature was in these words:

'WHEREAS the qualified electors of the county of Otoe, and State of Nebraska, have heretofore, at an election held for that purpose, authorized the county commissioners of said county to issue the bonds of said county in payment of stock to any railroad in Fremont County, Iowa, that would secure to Nebraska City an eastern railroad connection, to the amount of $200,000; and whereas but $40,000 have been issued.

'SECTION 1. Therefore, be it enacted &c., That said commissioners be, and they are hereby authorized to issue $150,000 of the bonds aforesaid to the Burlington and Missouri River Railroad Company, or any other railroad company that will secure to Nebraska City a direct eastern railroad connection, as a donation to said railroad company, on such terms and conditions as may be imposed by said county commissioners.

'SECTION 2. Said bonds, when so issued, are hereby declared to be binding obligations on said county, and to be governed by the terms and conditions of an act entitled 'An act to enable counties, cities, and precincts to borrow money or to issue bonds to aid in the construction or completion of works of internal improvements in this State, and to legal ze bonds already issued for such purpose,' approved February, A. D. 1869.'

On the 23d day of July, 1869, the board of county commissioners of Otoe County reciting that the people of the county had voted $200,000 in bonds, in aid of an eastern railroad connection, of which bonds there remained unappropriated over $150,000, passed a resolution to the effect that if the said Burlington and Missouri River Railroad Company would within a limited time named, build a certain road described (which it was stated the company proposed to build, upon the condition that Otoe County 'will donate and give to said company' $150,000 in the bonds above referred to); and if the said company would equip and work the said road as a through eastern connection, then the county commissioners would issue and deliver to the said railroad company $150,000 of the said bonds theretofore voted by the said county to such eastern connection; the resolution to operate as a contract between the county and the railroad company, if accepted by the latter within a time named. The resolution was accepted by the railroad company. The Burlington and Missouri River Railroad Company within the time built and has ever since worked a railroad such as was contemplated.

In this state of things, on the 23d day of July, 1869, the county commissioners passed a resolution directing the county clerk to deliver to the railroad company the bonds with the coupons attached, which was by him accordingly done on the 27th day of September, 1869. There was no vote of the people other than that above mentioned authorizing the issue of said bonds to said company.

The Burlington and Missouri River Railroad Company sold and transferred the said bonds with the coupons attached, for value, and before maturity of any of the coupons, to the Chicago, Quincy, and Burlington Railroad Company, another foreign corporation, to wit, a corporation of Illinois. The coupons as they came due were detached from their respective bonds, but not being paid, that company sued the county of Otoe in the court below. On the trial the judges were divided in opinion on the two following questions, and the questions were certified and sent here for answers:

First. Whether or not the act of February 15th, 1869, authorizing the county to issue bonds in aid of a railroad outside of the State conflicted with the constitution of the State of Nebraska.

Second. Whether the county commissioners of Otoe County, under the act of February 15th, 1869, could lawfully issue the bonds from which the coupons in suit were detached, without the proposition to vote the bonds for the purpose indicated, and also a tax to pay the same, being or having been submitted to a vote of the people of the county as provided by the act of the Territorial legislature of Nebraska, approved January 1st, 1861.

Mr. G. B. Scofield, for the county:

1. By the constitution of Nebraska all power not delegated to the legislature remains with the people. For defraying extraordinary expenses, the State may contract a debt not exceeding $50,000. Building a railroad is not an extraordinary occasion; nor was the limit here observed.

2. The constitution of Nebraska ordains that 'the property of no person shall be taken for public use without just compensation.' Now persons may be properly taxed for the public benefit; that is to say, for the benefit of all. Private property, indeed, is then taken, but a compensation is received. When, however, their property is taken for the benefit of a private corporation, as in this case, it is taken without compensation. Certainly the property taken here by tax is, in view of the purpose to which it is applied, taken without any due process of law.

3. But if the preceding propositions were questionable, it seems unquestionable that no legislature can take one man's property to make a present of it-to give it by way of donation-to another man, or to a private corporation, which is but an aggregation of men. This has been judicially decided by respectable courts. Still less, if possible, can the legislature delegate to the small political divisions which exist under the names of counties, townships, cities, boroughs, &c., a power of this dangerous kind. The objects for which these small political divisions are brought into existence are quite different.

4. Finally, and above all, the railroad to be aided is wholly outside, not only of the county of Otoe, but of the State of Nebraska. It is a foreign corporation. No benefits local and peculiar arise to the county of Otoe from this railroad. The people of the county have no right to use it, except as all people everywhere have; that is to say, on paying for its use. Even the advantages set up as a justification for the tax are of a speculative kind.

Mr. J. M. Woolworth, contra.

Mr. Justice STRONG delivered the opinion of the court.