Lewis v. City of Shreveport/Opinion of the Court

This was a suit brought to recover the amount of certain coupons cut from bonds issued by the city of Shreveport, Louisiana, which appear on their face to have been issued 'in aid of the Texas and Pacific Railroad Company.' In point of fact, the bonds were used to buy lands to be donated to the railroad company as a site for depots and machine-shops.

We have had occasion at this term, in the case of City of Ottawa v. Carey, ante, 361, to repeat and apply a rule which has always been recognized and adhered to in this court, to the effect that, unless power has been given by the legislature to a municipal corporation to grant pecuniary aid to railroad corporations, all bonds of the municipality, issued for such a purpose, and bearing evidence of that fact on their face, are void even in the hands of bona fide holders, and this whether the people voted the aid or not. Every purchaser of such a bond is chargeable in law with notice of the want of power in the municipal authorities to bind the body politic in that way. This principle is elementary.

In the present case it is not pretended that any such power was expressly granted to the city of Shreveport, and we find no provision of the charter from which anything of the kind can be implied. The authority to purchase and hold property of all kinds relates only to such property as is needed for municipal purposes. It is a matter of no importance that the city employed agents to sell the bonds, or that its law officer gave an opinion in favor of their validity, or that they have been recognized in official statements as binding obligations, or that taxes have been levied to pay either principal or interest. Corporate ratification, without authority from the legislature, cannot make a municipal bond valid which was void when issued for want of legislative power to make it. These bonds carried on their face full notice to every purchaser that they were issued for a purpose not authorized by law; that is to say, to aid a railroad corporation. This whole subject was so fully considered in City of Ottawa v. Carey, supra, that we deem it unnecessary to discuss the subject further now.

In Edey v. Shreveport, 26 La. Ann. 636, which is relied upon as establishing the power of the city to issue the bonds, the question was whether the vendor of the land, which had been only partly paid for out of the proceeds of the bonds, could enforce his mortgage and vendor's privilege on the land to recover the balance of purchase money due him, and it was decided that he could. This is no more than was in effect held by this court at the present term in City of Parkersburg v. Brown, 1 SUP. CT. REP. 442. All that was said by the supreme court of Louisiana must be construed in connection with the question then up for decision. There is not a word about the validity of the outstanding bonds, nor of the right of the holders to recover upon them in a suit against the city. The whole effect of the decision is that the city could not keep the land as against the vendor without paying for it. That the court would have held the bonds void, if it had been called on to decide that question, is shown beyond all doubt in the case of Wilson v. Shreveport, 29 La. Ann. 673, where the power to issue bonds, apparently of a much less objectionable character, was expressly denied.

The judgment is affirmed.