County of Macon v. Shores

ERROR to the Circuit Court of the United States for the Western District of Missouri.

This was an action by John F. Shores, a citizen of New Hampshire, against the county of Macon, in the State of Missouri, to recover upon certain overdue coupons, detached from bonds which had been issued by that county, May 2, 1870, payable at the National Bank of of Commerce in New York City, May 2, 1890,-the interest payable there semi-annually, upon presentation of the coupons. The bonds, signed by the presiding justice and the clerk of the county court, under its seal, recite that they are 'issued under and pursuant to orders of the county court of Macon County, for subscription to the stock of the Missouri and Mississippi Railroad Company, as authorized by an act of the General Assembly of the State of Missouri, entitled 'An Act to incorporate the Missouri and Mississippi Railroad Company,' approved Feb. 20, 1865.' The declaration alleges that the county paid the interest on the bonds for the year 1870, and that the coupons sued on were, on their becoming due, presented at the place where they were payable, and that payment was refused. It also alleges that the plaintiff is the holder of the coupons for value.

The county answered, denying that it promised to pay said bonds; that they were issued pursuant to the orders of the county court; that the subscription was authorized by law; that any subscription was made or authorized to be made by order of the county court; and that the plaintiff was the holder for value of the coupons sued on. The answer then avers, in substance, that said bonds and coupons are fraudulent, and were issued in fulfilment of a combination, confederation, and conspiracy, entered into between a majority of the members of the county court and the railroad company, for the purpose of cheating and defrauding the county and its taxpayers, and pursuant to a pretended order of said court authorizing, without the assent of two-thirds of the qualified voters of the county, a subscription to the stock of said company, and the issue of bonds; that the building of the road as contemplated by the charter granted to the company by the act of Feb. 20, 1865, was 'a wild or visionary scheme or enterprise;' that the company had, at the time of said pretended subscription, no corporate power or existence, never having organized or accepted said act of Feb. 20, 1865, within one year, as required by law, nor did it commence the transaction of its business within the time prescribed by law for that purpose; that on June 11, 1870, a suit, in which process was duly served, was commenced in the Circuit Court of Macon County by two tax-payers, against the county court and the company, to annul the pretended order of subscription, and cancel the bonds, and that it was pending and undetermined when the plaintiff and those under whom he claims purchased the bonds and coupons; that said subscription not having been made by the assent of two-thirds of the qualified voters of the county, expressed at any election, was repugnant to the Constitution of Missouri; and that the plaintiff had due and full notice of the foregoing facts when he purchased the bonds and coupons.

The plaintiff filed a replication, denying all the allegations of the answer, and averring specially that he was a holder for value before maturity of the instruments sued on, without notice, actual or constructive, of the defences set up.

The plaintiff, to maintain the issue on his part, having produced one of said bonds and all the coupons sued on, the order of the county court of April 12, 1870, making the subscription, the resolution of the board of directors of the railroad company accepting the same, and the charter of the company, offered evidence to prove that he was a bona fide holder and owner for value before maturity of the coupons sued on, without notice. The county objected to the offered evidence, but the court admitted it. The county thereupon excepted.

The county then introduced evidence as to the alleged frauds and irregularities in issuing the bonds, and offered to prove by depositions what had taken place in the county court touching its action respecting said subscription. The plaintiff objected, on the ground that the proceedings of the court could be proved only by its record, or a certified copy thereof. The objection was sustained, and an exception noted.

The county then offered to prove that the company did not, as required by the statute of Missouri, organize and accept its charter within one year from the time of granting it; and that, at the time of making the subscription, the building of the road was a wild and visionary enterprise. It also offered to read in evidence the proceedings of public meetings of tax-payers and citizens of various townships in Macon County, held between April 14 and June 6, 1870, and published in the Macon 'Weekly Times' and the Macon 'Weekly Journal,' newspapers published in Macon City; to all of which offers the plaintiff objected, and the objection having been sustained by the court, the county excepted. The county then read in evidence a certified copy of the record of the suit against the county court and the railroad company, referred to in its answer. The evidence having been closed, the court, at the request of the plaintiff, instructed the jury that the evidence of the county was insufficient to support the defence, and that he was entitled to verdict for the amount of the coupons sued on; to which instruction the county excepted. The jury returned a verdict for the plaintiff; and upon the judgment entered thereon the county sued out this writ, and here assigns for error that the court below erred—

1. In admitting evidence to prove that the plaintiff was a bona fide holder and owner for value before maturity of the coupons sued on without notice.

2. In excluding the evidence offered by the defendant at the trial of the cause.

3. In instructing the jury to find for the plaintiff.

4. In not giving judgment for the defendant.

5. In holding that the county court had authority to subscribe $175,000 to the capital stock of the Missouri and Mississippi Railroad Company, on the twelfth day of April, 1870, without the assent of two-thirds of the qualified voters of Macon County.

6. In not holding the subscription void on account of the fraud, bribery, and corruption by which it was secured, and the constructive notice thereof which the plaintiff below had.

The act of the General Assembly, mentioned in the bonds, contains the following section:--

'SECT. 13. It shall be lawful for the corporate authorities of any city or town, the county court of any county desiring so to do, to subscribe to the capital stock of said company, and may issue bonds therefor, and levy a tax to pay the same, not to exceed one-twentieth of one per cent upon the assessed value of taxable property for each year.'Sect. 14 of art. 11 of the Constitution of Missouri, which took effect July 4, 1865, is as follows:--

'The General Assembly shall not authorize any county, city, or town to become a stockholder in, or loan its credit to, any company, association, or corporation, unless two-thirds of the qualified voters of such county, city, or town, at a regular or special election to be held therein, shall assent thereto.'

Mr. James Carr for the plaintiff in error.

Mr. John D. Stevenson, contra.

MR. JUSTICE SWAYNE delivered the opinion of the court.