Read v. City of Plattsmouth

The plaintiff in error, who was plaintiff below, sought to recover, in an action at law, the amount of certain overdue interest coupons upon bonds issued by the defendant, dated October 1, 1872. Each bond contains a recital that it 'is one of a series of 25 of like tenor, date, and amount, issued in pursuance of the orders of the city council of the city of Plattsmouth, in the state of Nebraska, for the construction of a high-school building in said city, authorized by a vote of the legal voters of said city of Plattsmouth, and in compliance with the laws of the state of Nebraska, and for the payment of which the good faith, property, and effects of said city are hereby pledged.' It is alleged, and not denied, that these bonds were issued for the purpose of constructing a high-school building in the city of Plattsmouth; that the city sold them, and their proceeds were used to construct such building; that such building is now in actual use by the city; and that the city paid interest on the bonds for four years. On the trial the plaintiff proved that he bought the entire issue of the bonds for full value, without notice of any informality in their issue. There was no evidence offered in defense, and the court instructed the jury to find a verdict for the defendant, to which the plaintiff excepted, and for the alleged error in this ruling the judgment rendered upon the verdict in favor of the defendant in error is now sought to be reversed. This judgment rests upon the assumption that the bonds in question are void, and this depends on these two propositions: First, that at the time they were issued there was no law which authorized them; and, second, that certain acts of the legislature of Nebraska, subsequently passed, purporting to validate them, are themselves void. The legislation bearing upon the question appears to be as follows:

The city of Plattsmouth was originally organized as a municipal corporation, under that name, by a special act of the legislature of Nebraska, while it was under a territorial government, March 14, 1855. That act created the city a body corporate, with all the powers and attributes of a municipal corporation. The forty-first section was as follows:

'The council is authorized to borrow money for any object in their discretion, if, at a regularly-notified meeting, under a notice stating distinctly the nature and object of the loan, and the amount thereof as nearly as practicable, the voters of the city may determine in favor of the loan by a majority of two-thirds of the legal voters at the said election, and the said loan can in no case be diverted from the specified object.'

The territorial legislature, in 1867, (Terr. Laws 1867, p. 38,) also passed 'An act to authorize the common council of the city of Plattsmouth to raise money to erect a central or high-school building, and for other purposes.'

So much of that act as is material here is contained in the following:

'Section 1. Be it enacted by the council and house of representatives of the territory of Nebraska, that the mayor and common council of the city of Plattsmouth shall, by virtue of their office, be commissioners of the school-house fund in and for said city, and the common council shall perform all the duties of such commissioners, and shall possess all the rights, powers, and authority, and be subject to the same restraints, of township boards of education, for the purpose of raising money required for erecting, purchasing, and leasing school-houses, and procuring sites therefor, and the fitting up and furnishing thereof.

'Sec. 4. All common, graded, and central schools organized within the city of Plattsmouth shall be public and free to all children residing within the city. And the common council, by a vote of the majority of all the council elected, are hereby authorized to include in the general annual city tax list such additional sum as in their opinion, with the public-school moneys for the year, will be sufficient to support the school system of said city.

'Sec. 5. The common council shall have power and it shall be the duty-First, to designate and purchase or lease in said city all necessary sites for school-houses therein, and to improve and fence the same, as to them shall appear suitable and proper. Third, to make such by-laws and regulations as they may deem necessary for the proper security and preservation of the school-houses and other property owned by the city for school purposes.

'Sec. 7. The mayor and common council are hereby authorized and directed to raise by loan, in anticipation of the taxes, when deemed necessary, moneys, not exceeding in the aggregate $15,000, required for erecting, purchasing, or leasing school-houses and procuring sites therefor.

'Sec. 8. That for the purpose of effecting such loan the mayor and common council are authorized to issue the bonds of said city, under the seal of the said city, to the amount of $15,000, and no more, and bearing interest at a rate not exceeding 10 per centum per annum, redeemable in one, two, three, four, five, and six years.

'Sec. 17. The title of all school-houses, sites, lots, furniture, and all other school property, shall be vested in the city of Plattsmouth.

'Sec. 20. The general school laws of this territory, in force at the time of the passage of this act, shall, so far as the same are applicable, be taken and construed as part of this act.' Terr. Laws 1867 p. 38.

The constitution of Nebraska, which took effect March 1, 1867, soon after the passage of the foregoing act, provided in article 1, § 16, that 'it shall be the duty of the legislature to pass suitable laws to encourage schools and the means of instruction.' Section 1, art. 8, declared that 'the legislature shall pass no special act conferring corporate powers.' And section 4 of the same article, that 'the legislature shall provide for the organization of cities and incorporated villages by general laws,' etc.

Immediately after the admission into the Union of the state, under this constitution, the legislature of Nebraska made a revision of its general school laws, (Laws Neb. 1867, pp. 102, 110,) and provided, in section 60 of the act, that 'nothing in this act shall be construed so as to interfere with or abrogate any of the rights, privileges, and immunities, duties or liabilities, conferred or prescribed by special enactment for any school-district comprised within any incorporated city.'

And accordingly the provisions of the special school law of 1867 were continued in force, and were in substance re-enacted in the act of February 18, 1873, 'to regulate the public schools of Plattsmouth city and provide means for their support.'

The same authority to borrow money and to issue bonds therefor, for school and school-house purposes, and subject to the same limitations, is conferred by this act as that contained in the original statute restricting the amount to $15,000.

The original charter of the city of Plattsmouth was superseded under the constitution by a general law organizing municipal corporations, under which Plattsmouth became a city of the second class. This act, passed March 1, 1871, (Laws Neb. 1871, p. 26,) authorized the city 'to borrow money on the credit of the city and pledge the credit, revenue, and public property of the city for the payment thereof,' without any limit as to amount, where the city council was instructed to do so by a majority of all the votes cast at an election held in such city for that purpose. Gen. St. Neb. 1873, p. 148.

After the issue of the bonds in suit the legislature of Nebrasks passed the following act:

'An act to legalize the proceedings of the city council of the city of Plattsmouth, in reference to the construction of a high-school building, and to authorize the city council to complete the same.

'Whereas, at a session of the city council of the city of Plattsmouth, county of Cass, and state of Nebraska, held on the first day of July, A. D. 1872, the proposition of issuing the bonds of said city of the amount of $25,000, for the purpose of erecting a high-school building was submitted to the voters of said city; and,

'Whereas, at a special election held in said city, for the purpose of voting on said proposition, on the twenty-second day of July, 1872, a majority of the votes cast were in favor of issuing said bonds; and,

'Whereas, in pursuance of said submission and vote, the city council of said city of Plattsmouth have issued and sold said bonds, and with the proceeds thereof have proceeded to let the contract for the construction and completion of said house, and have appointed C. F. Driscoll and M. L. White superintendents of the construction of the same, and the work on said building has commenced; therefore,

'Be it enacted by the legislature of the state of Nebraska:

'Section 1. That all acts and proceedings of the city council of said city of Plattsmouth, in relation to issuing said bonds and letting the contract for the construction of said high-school building, and the appointment of said C. F. Driscoll and M. L. White to superintend the construction of the same, and all matters and proceedings connected therewith, which may in any way affect the validity of said bonds, or of the contract for the construction of the said school-house, be and the same are hereby legalized, confirmed, and made valid in law.

'Sec. 2. And be it further enacted, that the city council of the said city of Plattsmouth are hereby authorized and empowered to proceed with the construction of said high-school building until its completion; and for that purpose shall have full and exclusive control of all funds realized from the sale of bonds issued by the said city of Plattsmouth for that purpose.

'Sec. 3. All funds now in the hands of the said city treasurer of the said city of Plattsmouth, which have been created by the sale of the high-school bonds of the said city, shall be applied to the erection of said high-school building, and shall not be appropriated or diverted to other use or purpose whatever.

'Sec. 4. And be it further enacted, that the right and title of the said city of Plattsmouth in and to block No. 24 in said city, which has heretofore been platted and designated on the recorded plat of said city as a park, and dedicated to public use, and on which the said school-house is being erected, shall vest and remain in the said city of Plattsmouth for school purposes, and the same shall be held exclusively for said purpose.

'Sec. 5. This act shall take effect and be in force from and after its passage.

'Approved February 18, 1873.' Sess. Laws 1873 p. 72.

Subsequently, in 1875, the legislature passed another statute, entitled 'An act to amend an act to incorporate cities of the second class and to define their powers, approved March 1, 1871, and to legalize certain taxes therein mentioned.' The text of the act is as follows:

'Be it enacted by the legislature of the state of Nebraska:

'Section 1. That no tax heretofore levied in any city of the second class shall be held to be invalid, illegal, or irregular because the same was not levied within the time prescribed by the law in force when the same was so levied; nor on account of any mere irregularity in the time or manner of assessment of property, or other irregularity or omission not affecting the equality or substantial justice of such tax, and such taxes shall be inserted in the tax list, and shall be collected in the same manner as other general taxes are.

'Sec. 2. That all bonds heretofore issued by any city of the second class in good faith for the erection, of, or to procure the means for erecting, a high-school building within such city, or for heating or furnishing the same, whether issued under a general or special law providing therefor, or any bonds hereafter issued by such city in exchange for any such bonds, shall be legal and valid; and any tax heretofore or hereafter levied to pay the interest or a portion of the principal of any such bonds, not exceeding five mills on the dollar valuation of the taxable property in the city in any one year, shall be legal and valid.

'Sec. 3. That in all cases in which cities of the second class have collected and expended, for the use and benefit of such cities, either in works of internal improvement or otherwise, moneys collected from licenses for the sale of intoxicating liquors, such expenditures are hereby declared to be legal, and the same is hereby ratified and confirmed, and such cities of the second class are hereby exonerated from any and all liability therefor.

'Sec. 4. This act shall take effect and be in force from and after its passage.

'Approved February 25, 1875.' Laws Neb. 1875, p. 205.

John F. Dillon and Wager Swayne, for plaintiff in error.

John L. Webster, for defendant in error.

MATTHEWS, J.