Franklin County v. German Savings Bank

Action by the German Savings Bank against the county of Franklin, Ill., on the coupons of certain railroad aid bonds. Jury waived, and trial by the court. Judgment for plaintiff. Defendant brings error. Affirmed.

The facts of the case fully appear in the following statement by Mr. Justice BROWN:

This was an action by the German Savings Bank of Davenport, Iowa, upon 128 coupons cut from bonds issued by the county of Franklin in payment of its subscription to the capital stock of the Belleville & Eldorado Railroad Company. The allegation of the declaration was that such bonds had been issued on the 10th day of November, 1877, by the said defendant, 'being thereunto duly authorized by an affirmative vote of the legal voters of said county, as required by law.' There was a further averment that plaintiff became the owner of 20 of these bonds, whose numbers were given, from which the coupons in suit had been cut. To this declaration a plea of non assumpsit, and a replication thereto, were filed. A jury being waived, the cause was tried by the court, which found in favor of the plaintiff, and a judgment was rendered on February 4, 1891, in its favor, for the sum of $5,120, damages and costs. The bonds purported on their face to have been 'issued under the provisions of an act of the general assembly of the state of Illinois entitled, 'An act to incorporate the Belleville and Eldorado Railroad Company,' approved February 22nd, 1861, authorizing subscriptions to the capital stock of said railroad, and in accordance with the majority of votes cast at an election held in said county on the 11th day of September, 1869, in conformity with the provisions of said act.'

Upon the trial of the case, the plaintiff bank, after presenting the bonds and coupons set forth in the declaration, put in evidence the record of a suit in equity, begun in the same court, and carried to a final decree on July 3, 1883. The bill was originally filed by the county of Franklin in the circuit court of Franklin county, Ill., on the 4th day of August, 1880, against the Belleville & Eldorado Railroad Company, the clerk, sheriff, and collector of said county, the auditor of public accounts of the state of Illinois, the state treasurer of Illinois, several private individuals, and the unknown holders of bonds issued by the said Franklin county in aid of the said railroad company. The bill alleged the issuing suing by the county of $150,000 of its bonds, dated November 13, 1877, to the Belleville & Eldorado Railroad Company; $100,000 of which were subscribed and issued under the act of the general assembly of Illinois entitled, 'An act to incorporate the Belleville and Eldorado Railroad Company,' approved February 22, 1861, authorizing a subscription to the capital stock of said company, and $50,000 of which were subscribed and issued under an act of the general assembly entitled, 'An act to authorize cities and counties to subscribe stock to railroads,' approved November 6, 1849. The bill alleged that both classes of bonds were subscribed and issued in pursuance of the vote of the people of the county at an election held the 11th day of September, 1869, and that the order of the county court submitting the proposal to the voters named certain conditions to be complied with before the bonds should be issued, one of which was that the railroad should be commenced in the county of Franklin within nine months from the date of the election, and completed through the county by the 1st day of June, 1872. The bill further alleged that the orders submitting the question to the voters were never complied with, and particularly that the road was not completed within the time provided; that all of the orders and resolutions of the county court and the board of supervisors subscribing and attempting to subscribe, stock to said railroad company, were in conflict with the constitution of the state, and were void; that the state auditor had no right to levy taxes for the purpose of paying the principal or interest of said bonds; that the state treasurer had no right to receive or pay out the same; and that the act to provide for paying railroad debts by counties, approved April 16, 1869, was unconstitutional, contrary to public policy, and void. The bill prayed an injunction restraining the officers of the state from collecting or paying out taxes in liquidation of said bonds, and that the individual defendants and unknown holders of the bonds be enjoined from suing the county upon any of the coupons attached to such bonds.

A temporary writ of injunction was issued as prayed. Service by publication was made upon the unknown holders of the bonds. Upon the 27th day of October, § 880, a decree was taken by default. At the October term, 1881, the German Savings Bank appeared in the cause, had the decree opened, and removed the case to the circuit court of the United States for the southern district of Illinois, to which it was submitted upon proofs taken, and upon a stipulation that the defendant was the bona fide holder of the bonds set up in its answer, and purchased the same, for value, without notice of any defense. The answer of the bank, which was also adopted by other defendants intervening for their own interests, put in issue every material averment of the bill, and prayed that, as to the bonds and coupons held by it, the bill might be dismissed for want of equity, and the injunction dissolved. On July 3, 1883, a decree was entered, declaring that all bonds involved in the case, and purporting on their face to have been issued under the provisions of the railroad act of November 6, 1849, were issued without authority of law, and were therefore void, and decreeing that as to the holders of such bonds the injunction be made perpetual. The decree further provided that, as to the specific bonds designated by their numbers, and among others the bonds belonging to the German Savings Bank, 'purporting on their face to be of the series issued under the charter of the said Belleville & Eldorado Railroad Company, approved February 22, 1861, the court doth decree in favor of said defendants, the said several respective holders thereof, and that the said several bonds, and the coupons thereof, are valid and legal obligations against the county of Franklin; and as to said last-mentioned series of said bonds and coupons thereunto attached, as held as aforesaid, the court doth decree that the injunction issued in this cause be dissolved, and the complainant's bill be dismissed for want of equity.'

The German Savings Bank in June, 1885, appealed from so much of this decree as adjudged that nine bonds, which had been issued under the act of 1849, and were held by the bank, were void, and upon such appeal this court affirmed the decree of the circuit court. German Sav. Bank v. Franklin Co., 128 U.S. 526, 9 Sup. Ct. Rep. 159. The county of Franklin, however, did not appeal from the decree establishing the validity of the bonds issued under the act of 1861.

After the plaintiff had put in the said record, decree, and mandate of this court in the equity case, it introduced in evidence the eighteen bonds which, with the coupons thereof, had been decreed to be valid and legal obligations against the county, and also put in evidence coupons cut from two other bonds which had also been adjudged to be valid. The defendant introduced no evidence, but claimed that the evidence contained in the record introduced by the plaintiff showed that the bonds and coupons therefrom, upon which this action was brought, were invalid. The plaintiff contended that the validity of said bonds and coupons had been established in the said equity case, and that the question was res adjudicata; and the court so decided. To reverse the judgment of the circuit court in this behalf, this writ of error was sued out.

D. M. Browning, for plaintiff in error.

E. E. Cook and S. P. Wheeler, for defendant in error.

Mr. Justice BROWN, after stating the facts as above, delivered the opinion of the court.