The City v. Lamson

ERROR to the Circuit Court for the District of Wisconsin, the case being thus:

The 3d section of the 11th article of the Constitution of Wisconsin ordains that

'It shall be the duty of the legislature to provide for the organization of cities and incorporated villages, and to restrict their power of borrowing money, contracting debts, and loaning their credit, so as to prevent abuses in contracting debts by such municipal corporations.'

With this provision in force as fundamental law, the legislature of the State, on the 2d March, 1857, by an act which amended and consolidated the several acts relating to the city charter, authorized the common council of the city of Kenosha to 'borrow, on the corporate credit of the city, any sum of money, for any term of time, at any rate of interest, and payable at any place deemed expedient, issuing bonds or scrip therefor.' The city accordingly did borrow $100,000 to aid in the construction of the Kenosha and Rockford Railroad, and it issued bonds in sums of $500 and $1000 each for payment. They were headed,

Issued according to law to the Kenosha and Rockford Railroad Company, to aid in the construction of their railroad;

and were made payable twenty years from date, at the People's Bank, in the city of New York, with interest, at the rate of ten per cent. per annum, to be paid semi-annually, upon the presentation of the proper coupons for said interest. For the payment of the bonds and interest, the faith of the city was declared to be pledged. The bonds were certified by the mayor and city clerk to have been issued under an act of the legislature, passed March 2d, 1857, giving authority to the city to lend its credit, for the sum specified; and also, in pursuance of a vote of the freeholders of the city, taken for the purpose of the loan of the $100,000 to the railroad company.

Attached to each bond were a series of coupons, like those now usually attached to railroad bonds, for the semi-annual interest as it should become due in each year. The following was the form of those on the bonds for $500:

$25. The city of Kenosha, Wis., will pay to the bearer twenty-five dollars on the 1st day of September, 1860, at the People's Bank, in the city of New York, on presentation of this coupon, being the interest due on the day on the bond of said city, numbered 1, dated this 1st day of September, 1857.

G. H. PAUL, Mayor.

H. T. WEST, Clerk.

Subsequent to the issue of the bonds the name of 'The Kenosha and Rockford Railroad Company' was changed to 'The Kenosha, Rockford and Rock Island Railroad Company;' and a statute of 1859 provided that 'the common council of the city of Kenosha should have generally the charge and control of all interest the city of Kenosha now has, or may hereafter have in that railroad.' The act then provided that the common council should appoint a railroad commissioner, that when duly appointed he should be ex officio a member of the board of directors of the railroad; and a statute of 1862 authorized the city 'to issue new bonds, in exchange for the bonds and scrip heretofore issued by said city, on railroad account, now outstanding and unredeemed, for the purpose of compromising the indebtedness of said city on such terms as may be agreed upon between the city and its creditors.'

One Lamson having one hundred and seventy-two coupons for the interest due on the bonds in 1860 and 1861, and unpaid, brought suit against the city to recover it. The declaration recited in very general terms, the several bonds to which the coupons that the plaintiff held had been originally annexed, setting forth that these bonds themselves had been sold and disposed of, to bon a fide purchasers, and had since passed from hadn to hand in the stock market, like other negotiable securities, so that the plaintiff could not produce them to the court; that the interest had accrued on the same; that the city had neglected and refused to pay it at the time and place designated; and that the interest and coupons were owned by the plaintiff, and that he brought the coupons into court to be cancelled.

The defendant pleaded, 1st, nil debet; 2d, that the several supposed causes of action had not accrued to the plaintiff within six years from the commencement of the suit; the statute of limitations. The plaintiff took issue on the first plea, and demurred to the second, which demurrer was sustained.

From the bill of exceptions, it appeared that the plaintiff gave in evidence the one hundred and seventy-two coupons, his doing which was objected to, but that the objection was overruled. It was admitted that all the coupons, with the exception of four, which were annexed to a bond produced, were coupons of different bonds of the same issue, but the bonds were not given in evidence. It was admitted also that more than six years had elapsed since the interest accrued on them.

After the plaintiff rested, the counsel for the defendant prayed the court to charge the jury, 1st, that the bonds declared on, as well as the coupons, should have been produced, in order to sustain the declaration under the issue; and 2d, that the city of Kenosha had no authority to issue the bonds. Both prayers were refused.

The jury found a verdict for the plaintiff on the first issue to the amount of the several coupons, and judgment having been given accordingly the city brought the case here.

Mr. Cary for the city of Kenosha, plaintiff in error:

1. If the declaration was upon the coupons, the plea of actio non accrevit infra sex annos should have been sustained and the plaintiff's demurrer thereto overruled, for all the coupons recovered upon were more than six years past due. If the declaration counts upon the bonds, then the plea of nil debet not having been demurred to put in issue every fact necessary to the plaintiff's recovery, and required them to be proved. Certainly no recovery could be had upon the bonds without producing them, when they were counted upon as the cause of action and their existence denied by the plea. There was no proof that any such bonds had ever been made.

2. The only pretence of authority in the city to issue these bonds, rests in an act which is in plain repugnance to the constitution of the State. It is difficult to conceive a more absolute grant of power, or one that would more completely subject the whole property of the city to the wild and reckless schemes of the city council, for fancied improvements, than that act gives. It would be the duty of this court, under any circumstances, to hold the act unconstitutional and void. But the act has already been declared void by the Supreme Court of the State of Wisconsin, which is the proper tribunal to determine its validity under the constitution of Wisconsin, and the decision of that court on this question, is conclusive upon this court.

Messrs. Carpenter and Lynde, contra.

Mr. Justice NELSON delivered the opinion of the court.