County of Pandolph v. Post

ERROR to the Circuit Court of the United States for the Southern District of Illinois.

This was an action of assumpsit on certain coupons attached to bonds issued by the county of Randolph, in payment of a subscription of $100,000 to the capital stock of the Chester and Tamaroa Coal and Railway Company.

On the 3d of May, 1870, the county court of Randolph County, at a special term thereof, passed an order, which provided that the question of such subscription be submitted to the legal voters of the county; that until the railroad of the company should be built, and cars run thereon from within the corporate limits of the city of Chester to the line of the county, no bonds should be registered or paid; and that no bonds should be registered or paid unless the said railroad should be completed from Chester to that line within eighteen months from the time of subscription.

At an election, held June 6, 1870, the vote resulted in favor of the subscription. The county thereupon, on the twenty-seventh day of that month, made its subscription on the books of the company. On July 26, 1870, the county court ordered that the bonds be executed and placed in the hands of certain trustees. On Aug. 17 following, it modified that order, by directing that the bonds be executed only at a regular term of the court; and again, on the 6th of September, 1871, further modified it, by requiring the judge and clerk of the court to execute them, attach its seal thereto, and deliver them to the trustees, and that the company should issue to the latter a certificate of stock to the amount of $100,000; which was accordingly done.

On the 6th of October, 1871, upon the representation of the president of the company and others, that the work on said railroad was far advanced toward completion through the county of Randolph, but that from unavoidable difficulties of transportation, caused by unprecedented low water in the rivers, the company found itself unable to get its iron upon the ground in the time contemplated by the previous orders of the county court, the latter made an order, which, after reciting those before issued, concluded as follows:--

'Whereas, the time for completing said road will expire on the twenty-seventh day of December, 1871, and it appearing that said company are doing all they can to complete said road within said time, it is therefore ordered by the court that the time for completion of said railroad be extended to the first day of February, A.D. 1872, and that, in case said road shall be completed, and cars shall have run thereon, from within the corporate limits of the city of Chester to the county line between the counties of Randolph and Perry, by the first day of February, A.D. 1872, the said trustees shall deliver said bonds to said company, or their authorized agent, and shall deliver said certificate of stock to said county court or their order.'

Plaintiff proved that the road was built and completed within the time required by the county court through the county of Randolph, according to contract; that it was upon its completion, and ever since has been, in full operation, with trains of cars carrying freight and passengers as a common carrier through said county, on the line prescribed by the contract; that said bonds were not issued and delivered to said railroad company until after the officers of said county had gone over said railroad in the cars of said company through said county, and expressed themselves satisfied with the construction of said railroad.

The bonds were delivered to the company Jan. 19, 1872. The coupons sued on were as follows, differing only in the time of maturity and number of the bond to which each was attached:--

'COUNTY OF RANDOLPH, STATE OF ILLINOIS:

'The county of Randolph will pay to the bearer, on the first day of July, 1872, at the agency of the State treasurer, in the city of New York, forty dollars, it being one year's interest on bond No. 183, for $500.

'JOHN R. SHANNON,

County Clerk of Randolph Co.The bonds were in the following form:--

'UNITED STATES OF AMERICA. 'State of Illinois, Randolph County.

'No. 1.] RAILROAD BOND. [$500.

'Know all men by these presents, that the county of Randolph, State of Illinois, is indebted to the Chester and Tamaroa Coal and Railway Company, or bearer, in the sum of $500, lawful money of the United States, with interest from date, at the rate of eight per cent per annum, payable annually on the first day of July in each year, at the agency of the State treasurer, in the city of New York, on the presentation and surrender of the respective interest-coupons hereto annexed.

'The principal of this bond shall be due and payable ten years from the date hereof, at said agency of State treasurer, in New York.

'This bond is one of a series of bonds issued by the county of Randolph in payment for $100,000 of the capital stock of the Chester and Tamaroa Coal and Railway Company, in pursuance of an election held by the legal voters of Randolph County, Ill., on the sixty day of June, 1870, and by virtue of the provisions of an act of the general assembly of the State of Illinois entitled, 'An Act supplemental to an act to provide for a general system of railroad corporations.'

'And for the payment of said sum of money and accruing interest thereon in the manner aforesaid the faith of the county of Randolph is hereby irrevocably pledged, as also property, revenue, and resources.

'In testimony whereof, the county court of said county of Randolph have caused these presents to be signed by the county judge and by the clerk of the county court of said county, and sealed with the seal of said court, at Chester, Ill., in said county, on this first day of January, A.D. 1872.

'ALEXANDER WOOD, County Judge.

'JOHN R. SHANNON, County Clerk.'

The act of the general assembly, referred to in the bonds, is, together with the provision of the constitution bearing upon the case, set forth in the opinion of the court.

The case was, by agreement, tried by the court below without the intervention of a jury. Judgment was rendered for the plaintiff; whereupon the county sued out this writ of error.

Submitted on printed argument by Mr. John M. Palmer for the plaintiff in error.

The county of Randolph had no authority to subscribe to the capital stock of the Chester and Tamaroa Coal and Railway Company. Kenicott v. Supervisors, 16 Wall. 452.

That corporation was not a 'railroad company' within the meaning of the act of the general assembly of Illinois of Nov. 6, 1849, which confers authority upon counties to become shareholders only in corporations organized solely for the construction of railroads.

If, from the nature of this corporation, the county could not become the purchaser of shares of its capital stock, and participate in all its doings to the extent that private individuals might, every other fact or circumstance in its conduct or acts, or in those of the people of the county, or of their officers, imposes no liability and creates no estoppel.

The argument that a county may bind itself to secure the construction of a railroad, without becoming a subscriber to, or a purchaser of shares of, the capital stock of the company by which it is constructed, assumes that a county may issue bonds in aid of such construction, without reference to the act of 1849, or, in other words, that it may do so without law; for that act alone is recited in the bonds, and relied on to sustain their validity.

The argument, that the bonds and coupons sued on are valid because the proceeds were used in the construction of a railroad, not only rests on a fact which is not alleged nor proved, but impliedly concedes their invalidity, if the proceeds had been otherwise used, and thus deprives them of the character of commercial paper claimed for them, reduces them to the class of simple contracts, and renders it necessary to prove the consideration upon which they were given.

To assert that a county may own stock in a corporation, to the extent of participating in the exercise of some but not all of the powers of a stockholder, is to disregard the statute, as well as the general principles of law.

But even if the subscription was made by proper authority, it was a contract between the county and the railroad corporation. The constitution of the State, which took effect July 2, 1870, deprived the county of all power in respect to such contracts, beyond what was necessary to enable it to complete them according to the measure of its duty as therein defined, and incapacitated it to assume new obligations, or to waive any of the conditions upon which its duty to issue bonds was by contract made to depend. All the powers of the county officers, after the adoption of the constitution, were, with respect to the execution of the contract, merely ministerial, and in no sense discretionary.

The railroad was not completed from within the limits of the city of Chester to the line of Randolph County, within eighteen months from the date of the subscription, as provided by the contract of subscription. The bonds were therefore made by the officers of the county, without authority of law, and are for that reason void.

The test of the soundness of this conclusion is, that the company, by reason of its failure to complete its road within the time and in the manner contemplated by the vote of the people and by the contract pursuant thereto, had no just claim to the bonds; and the officers of the county had no rightful power or authority to issue them.

Mr. S. M. Cullom, contra.

MR. JUSTICE HUNT delivered the opinion of the court.