Livingston County v. First National Bank

This is a suit commenced on the 4th of September, 1882, by the First National Bank of Portsmouth, N. H., against the county of Livingston, in the state of Missouri, to recover the amount of 312 coupons, for $20 each, being 13 coupons, due from July 1, 1876, to July 1, 1882, both inclusive, on each one of 24 bonds for $500 each, each of the bonds, except as to number, being in the following form:

'FIFTEEN-YEAR BOND.

'County of Livingston, State of Missouri.

'Livingston County bond issued in behalf of the municipal     township of Chillicothe. Interest eight per cent. per annum,     payable on the first days of January and July. Fifteen years. No. 18.

'Know all men by these presents, that the county of     Livingston, in the state of Missouri, acknowledges itself      indebted and firmly bound to the St. Louis, Council Bluffs &      Omaha Railroad Company in the sum of five hundred dollars,      ($500,) which sum the said county hereby promises to pay to      the said St. Louis, Council Bluffs & Omaha Railroad Company,      or bearer, at the National Bank of Commerce, in the city of      New York, state of New York, on the 1st day of July, 1885,      together with interest thereon from the 1st day of July,      1870, at the rate of eight (8) per cent. per annum, which     interest shall be payable semi-annually on the 1st days of      January and July of each year, on the presentation or      delivery at said bank of the coupons of interest hereto      attached. This bond being isued under and pursuant to an     order of the county court of Livingston county, authorized by      a two-thirds vote of the people of Chillicothe municipal      township.

'In testimony whereof the said county of Livingston has     executed this bond by [L. S.] the presiding justice of the     county court of said county, under an order of said court,      signing his name hereto, and by the clerk of said court,      under the order thereof, attesting the same and affixing      thereto the seal of said court.

'This done at the city of Chillicothe, county of  Livingston aforesaid, this 10th day of April, A. D.   1871.

'G. W. McDOWELL,

'Presiding Justice of the County Court of Livingston County,     State of Missouri.

'Attest: [Seal of the County Court of Livingston County.]

'W. H. GAUNT,

'Clerk of the County Court of Livingston County, State of     Missouri.'

Attached to each of the bonds were coupons for the interest, each, except as to number and date when due, being in the following form:

'$20. CHILLICOTHE, LIVINGSTON COUNTY, Mo., January 1, 1871.

'The county of Livingston acknowledges to owe the sum of     twenty dollars on the 1st day of July, 1871, being interest      on bond number one for five hundred dollars. This coupon     payable at the National Bank of Commerce in the city of New      York, state of New York.

W. H. GAUNT,

'Clerk of the County Court of Livingston County, State of     Missouri.'

Successive coupons for each installment of interest were attached to each bond. The petition by which the suit was commenced alleged that the defendant made and delivered the bonds in behalf of the municipal township of Chillicothe; that the bonds were issued under and pursuant to an order of the county court of Livingston county, authorized by a two-third vote of the people of that township, as is recited in the bonds, and in aid of the St. Louis, Council Bluffs & Omaha Railroad, under authority of an act of the legislature of the state of Missouri, entitled 'An act to facilitate the construction of railroads in the state of Missouri,' approved March 23, 1868, and of the constitution of the state of Missouri; that, as each coupon for the semi-annual interest had, prior to July 1, 1876, matured, the same was paid by the officers of the county, on behalf of said township, with the proceeds of a tax levied and collected each year by the county from the tax-payers of the township, for that purpose; that, before the coupons sued on became due and payable, the bonds and coupons were sold to, and for value became the property of, the plaintiff, which had ever since been the legal holder, owner, and bearer thereof; and that the defendant, on and after July 1, 1876, had refused to pay any of the coupons then or since becoming due, or to levy any tax for their payment.

The provisions of the act of March 23, 1868, in regard to the issuing of bonds in the name of a county, in behalf of a municipal township therein, which apply to the present case, are as follows (1 Wag. St. Mo. 1872, p. 313:) 'Section 51. Whenever twenty-five persons, tax-payers and residents in any municipal township, for election purposes, in any county in this state, shall petition the county court of such county, setting forth their desire, as a township, to subscribe to the capital stock of any railroad company in this state, building or proposing to build a railroad into, through, or near such township, and stating the amount of such subscription, and the terms and conditions on which they desire such subscription shall be made, it shall be the duty of the county court, as soon as may be thereater, to order an election to be held in such township, to determine if such subscription shall be made; which election shall be conducted and returns made in accordance with the laws controlling general and special elections; and if it shall appear from the returns of such election that not less than two-thirds of the qualified voters of such township voting at such election are in favor of such subscription, it shall be the duty of the county court to make such subscription in behalf of such township, according to the terms and conditions thereof, and if such conditions provide for the issue of bonds in payment of such subscription, the county court shall issue such bonds in the name of the county, with coupons for interest attached; but the rate of interest shall not exceed ten per cent. per annum; and the same shall be delivered to the railroad company. Sec. 52. In order to meet the payments on account of the subscription to the stock, according to its terms, or to pay the interest and principal on any bond which may be issued on account of such subscription, the county court shall from time to time levy and cause to be collected, in the same manner as county taxes, a special tax, which shall be levied on all real estate lying within the township making the subscription, in accordance with the valuation then last made by the county assessor for county purposes. Sec. 53. The county treasurer shall be authorized and required to receive and collect of the sheriff of the county the income from the tax provided in the previous section, and to apply the same to the payment of the stock subscription, according to its terms, or to the payments or interest and principal on the bonds, should any be issued in payment of such subscription. He shall pay all interest on such bonds out of any money in the treasury collected for this purpose, by the tax so levied, as the same becomes due, and also the bonds as they mature, which shall be canceled by the county court, and this service shall be considered a part of his duty as county treasurer.' The answer of the defendant to the petition contains a general denial, and also sets forth that no petition was ever presented to the county court of Livingston county by the tax-payers of the municipal township of Chillicothe, as required by the act of 1868, praying for the election named in the act; nor did that court ever order any election to be held in the township, as to whether it would subscribe any amount to the capital stock of the St. Louis, Council Bluffs & Omaha Railroad Company; nor did the county court ever order, direct, or authorize the bonds or the coupons in question to be issued; nor was any election ever held in the township to determine whether it, or the voters therein, would consent to any subscription on its account to the capital stock of the said railroad company, or to the issuing of the bonds and coupons; and that the issuing and delivery of them were without authority of the county court, and in violation of the constitution and laws of Missouri. The answer also denied that the plaintiff was the owner and holder in good faith and for value of the bonds and coupons in question. The plaintiff put in a replication to the answer, denying each and every allegation of new matter therein contained. The cause was in due form heard by the court without the intervention of a jury, and it made a finding of facts and of conclusions of law in favor of the plaintiff, upon which a judgment for it was rendered on the 6th of January, 1885, for $8,476.60, with costs, against the county of Livingston, 'to be collected, if neceesary, by mandamus against the county court of said county, commanding it to levy and collect from Chillicothe municipal township, in said county, a special tax according to law for the payment of said judgment, interest, and costs, and to pay the same.' To review this judgment the defendant has brought a writ of error.

The facts found by the circuit court, other than those which are merely formal, are as follows: The defendant issued 24 bonds, on the 10th of April, 1871, numbered consecutively from 1 to 24, inclusive, signed by the presiding justice of the county court, attested by its clerk, and with the seal thereof, each in the form before set forth, and with coupons in the form before given. The plaintiff in April, 1871, bought all of the bonds and the coupons thereto attached and not then matured, in the open market, for cash, and without notice of any defect or infirmity therein, or in the action of the county court in issuing the same, and has ever since been and still is the holder of the bonds and the unpaid coupons thereon, and at the time of the institution of this suit was the holder of the coupons then matured and described in the petition. The bonds were issued under the following circumstances: By articles of association entered into on the 18th of June, 1867, and filed in the office of the secretary of state of the state of Missouri on the 14th of July, 1868, a corporation was created by the name of the St. Louis, Chillicothe & Omaha Railroad Company. The articles declared that the object of the association was to construct, maintain, and operate a railroad for public use in the conveyance of persons and property from the city of Chillicothe, in the county of Livingston and state of Missouri, to such point on the boundary line between Missouri and Iowa as should be deemed, after actual survey, 'to be on the most direct and feasible route for constructing, maintaining, and operating a railroad between the said city of Chillicothe and the city of Omaha in the state of Nebraska;' that the length of the railroad should be about 90 miles, and it should be made into or through the counties of Livingston, Daviess, and Gentry, and into or through one or more of the counties of Nodoway, Harrison, and Worth. The articles also declared that the association was 'organized under and subject to the laws of the state of Missouri contained in chapters 62 and 63 of title 24 of the General Statutes of Missouri of 1865, possessing all and singular the powers therein contained.' Gen. St. Mo. 1865, pp. 326-344. At a meeting of the stockholders of the St. Louis, Chillicothe & Omaha Railroad Company held on the 4th of June, 1869, its name was changed by their vote to that of the Chillicothe & Omaha Railroad Company, and evidence thereof was filed in the office of the secretary of state of the state of Missouri on the 25th of June, 1869. On the 3d of May, 1870, a petition signed by more than 25 taxpayers and residents of the municipal township of Chillicothe was filed in the county court of Livingston county, setting forth that the petitioners, as a township, desired to subscribe $15,000 to the capital stock of the Chillicothe & Omaha Railroad Company, subject to the following conditions: 'First. Payment of said subscription to be made in bonds of Livingston county, [issued in accordance with the law regulating subscriptions by municipal townships to railroad companies,] at par: said bonds to be payable fifteen years from the 1st day of July, 1870, and bearing interest at the rate of eight per cent. per annum, payable semi-annually. Second. The bonds to be issued to said company when it shall have continuously graded its road-bed on or near its present located survey from the city of Chillicothe to the western boundary of Livingston county.' The county court, on the 3d of May, 1870, made an order reciting the contents of the petition, and directing that an election be held at the usual place place of voting in the township, Chillicothe election district, on the 27th of May, 1870, to determine if such subscription should be made. The order prescribed the forms of the respective ballots, for and against the subscription. On the 25th of May, 1870, the county court made an order that the question to be voted upon at the election so to be held should be whether the township should subscribe $12,000 to the capital stock of the said railroad company, upon the same conditions as before mentioned, the ballots to be in like form. The election was held on the 27th of May, 1870. On the 30th of May, 1870, the votes cast were duly canvassed, and an abstract thereof was made and entered of record in the county court, signed by the president of that court and a justice of the peace, and attested by the signature of the county clerk, showing that 320 votes had been cast for and 50 votes against the subscription of $12,000 to the capital stock of said company. On the 23d of September, 1870, there were filed in the office of the secretary of state of the state of Iowa articles of association, in conformity to chapter 52 of title 10 and other laws of Iowa, of the Revision of 1860, incorporating the St. Louis, Council Bluffs & Omaha Railroad Company in Iowa, to construct and operate a railroad. The articles contained the following clause: 'The main line of said railroad city of Council Bluffs, in the state of Iowa, city of Council Blaffs, in the state of Iowa, and from such other point adjacent to the eastern terminus of the Union Pacific Railroad, on the banks of the Missouri river, as the board of directors may hereafter designate; thence in a south westerly direction to the state line between the states of Iowa and Missouri, at a point where the Chillicothe & Omaha Railroad shall reach said state line; and, in the event of the consolidation of this company and corporation with the said Chillicothe & Omaha Railroad Company, a company incorporated under the general laws of the state of Missouri, then, in connection with the last-mentioned railroad, to form a continuous line of railroad from the city of Omaha, in the state of Nebraska, and the city of Council Bluffs, in the state of Iowa, to the city of St. Louis, in the state of Missouri; and the board of directors of the corporation hereby created shall have the power at any time, when the same can be lawfully done, to consolidate this corporation with the Chillicothe & Omaha Railroad, in Missouri, aforesaid, and this corporation shall have, hold, and by its board of directors exercise, all the powers, rights, privileges, and franchises granted and conferred by the laws of the state of Iowa, Revision of A. D. 1860, and of all laws amendatory thereof and supplemental thereto.' These articles had, on the 13th of September, 1880, been filed for record in the office of the recorder of Pottawatomie county, in the state of Iowa.

At a meeting of the stockholders of the Chillicothe & Omaha Railroad Company, held on the 20th of September, 1870, 'all the stock of the company being present thereat,' a resolution was passed by the stockholders unanimously, directing the board of directors of the company to effect a consolidation of it with the St. Louis, Council Bluffs & Omaha Railroad Company of the state of Iowa. Articles of consolidation were on the same day entered into between the two corporations, consolidating the two into one, 'for the purpose of constructing, owning, maintaining, using, and operating a continuous line of railroad from the city of Omaha, in Nebraska, and the city of Council Bluffs, in Iowa, to the city of Chillicothe, in Missouri, under the name of the St. Louis, Council Bluffs & Omaha Railroad Company.' These articles of consolidation were executed by the president of the Chillicothe & Omaha Railroad Company, on behalf of that company, under a resolution of its board of directors to that effect, which was approved by more than three-fourths of all the stock in the company. The articles of consolidation and the proceedings thereon on the part of the Chillicothe & Omaha Railroad Company were filed in the office of the secretary of state of the state of Missouri on the 7th of October, 1870, and the same articles of consolidation and the proceedings of the meeting of stockholders of the Chillicothe & Omaha Railroad Company, authorizing the consolidation, were filed in the office of the secretary of state of the state of Iowa on the 19th of December, 1870. In the year 1871, a railroad was constructed by the corporation acting under the name of the St. Louis, Council Bluffs & Omaha Railroad Company, from the city of Chillicothe, in Livingston county, Mo., upon and over the line set forth and described in the articles of association filed in the office of the secretary of state of the state of Missouri on the 14th of July, 1868, to a point on the boundary line between the states of Missouri and Iowa, and has been continued thence to the city of Omahs, Neb., and has ever since been operated on that line. The county of Livingston paid all the interest coupons on the 24 bonds as they respectively matured, to and including those falling due July 1, 1876, from the proceeds of taxes levied in each year upon the taxable property of Chillicothe township in that county. On the 21st of February, 1877, the county court of Livingston county entered an order on its records, as follows: 'Whereas, by a decision of the supreme court of the United States in a case wherein Bates county, of this state, was a party, it was held that all township bonds issued under and by virtue of an act of the state of Missouri entitled 'An act to facilitate the construction of railroads in the state of Missouri, approved March 23, 1868, are mull and void, owing to the unconstitutionality of said act, which decision, as we are informed, has since been reaffirmed by U.S.C.ircuit Judge DILLON, and whereas, under and by virtue of said act above recited, the county of Livingston, for the use and in behalf of the municipal township of Chillicothe, did, in A. D. 1870, issue and deliver, under said act above recited, to the St. Louis, Council Bluffs & Omaha Railroad Company, a series of bonds, in amount twelve thousand dollars, to run for fifteen years, and each for the sum of five hundred dollars: Now, therefore, it appearing that all of said bonds are null and void, it is hereby ordered that, from and after this date, the treasurer of the county be commanded and directed to refuse payment of said bonds or any of them, together with all coupons for interest thereto attached, in whosoever hands they may be found, or by whomsoever they may be presented, until otherwise directed by this court or by some competent superior authority.' The conclusion of law of the circuit court upon the foregoing facts was in these words: 'Upon consideration of the foregoing facts, which constitute all the facts and evidence produced in the cause, the court finds that the county of Livingston, in the state of Missouri, is indebted to the plaintiff, the First National Bank of Portsmouth, N. H., by reason of the non-payment of the coupons described in the petition and the facts aforesaid, in the sum of eight thousand four hundred and seventy-six dollars and sixty cents ($8,476.60.)' There is also found in the record a bill of exceptions. When the plaintiff offered in evidence the 24 bonds the defendant objected, on the ground that the bonds were void on their faces and showed no authority for their issue. The court overruled the objection and permitted the bonds to be read in evidence, to which ruling the defendant excepted. A like objection and exception were taken by the defendant to the reading in evidence of the coupons sued on. When the plaintiff offered in evidence the tax levies for the years 1872, 1873, 1874, 1875, and 1876, for the purpose of showing that in each of those years the county court of Livingston county made a levy upon the property in the township of Chillicothe of taxes for the payment of the interest on the bonds in question, the defendant objected to the evidence, on the ground that there could be no ratification of the issuing of the bonds if the issue was unlawful. The objection was overruled, and the defendant excepted. No other exceptions appear by the bill of exceptions.

Henry N. Ess, for plaintiff in error.

G. S. Eldridge, for defendant in error.

BLATCHFORD, J.