Thomson v. Lee County/Opinion of the Court

There is hardly any question, connected with the species of securities on which this suit was brought, that has not been discussed and decided by this court; and it is unnecessary to do more in this opinion than reaffirm the general doctrines of the court on the subject, so far as they apply to the case in hand, without attempting to restate the reasons which were given for our decisions.

A county, or other municipal corporation, has no inherent right of legislation, and cannot subscribe for stock in a public improvement, unless authorized to do so by the legislature. Such a corporation acts wholly under a delegated authority, and can exercise no power which is not in express terms, or by fair implication, conferred upon it. But the legislature of a State, unless restrained by the organic law, has the right to authorize a municipal corporation to take stock in a railroad or other work of internal improvement, to borrow money to pay for it, and to levy a tax to repay the loan. And this authority can be conferred in such a manner, that the objects can be attained, either with or without the sanction of the popular vote.

It is insisted that the constitution of Iowa did lay a restraint on the legislature, and that consequently the county of Lee could have no right, under the constitution and laws of the State, to execute and issue the bonds in controversy. And we understand that the highest court of the State of Iowa, at the present time, adopt that view of the question; but when these bonds were issued, the courts of that State held that there was no defect of constitutional power, and that the legislature could lawfully authorize municipal corporations to subscribe to the capital stock of railroad companies. If the bonds in suit had been executed since the last decision in Iowa, they would be controlled by it; but the change in judicial decision cannot be allowed to render invalid contracts which, when made, were held to be lawful. The courts of Iowa having, when these bonds were issued, construed their constitution and laws so as to give them force and vitality, cannot, by a subsequent and contrary construction, destroy them.

But it is argued that when the county of Lee voted to take the stock for which these bonds were given, they attempted the exercise of a power which had not been delegated to them, or executed it so defectively, that their proceedings were without authority of law, and void.

It is not instructive to inquire into the different laws of Iowa under which this power is claimed to exist, because the legislature of that State, on the 28th day of January, 1857, by an act of confirmation, legalized the issue of these bonds. If the legislature could authorize this ratification, the bonds are valid, notwithstanding the submission of the question to the vote of the people, or the manner of taking the vote may have been informal and irregular. This act of confirmation, very soon after its passage, underwent an examination in the courts of Iowa, and it was held that the legislature possessed the power to pass it, and that the bonds were valid and binding on the county. It is difficult to see how this power could be questioned, after the Supreme Court of the State had decided that there was no written limitation which inhibited the legislature from conferring on cities and counties, the right to take stock in a company organized to build a railroad, or other work of public improvement. If the legislature possessed the power to authorize the act to be done, it could, by a retrospective act, cure the evils which existed, because the power thus conferred had been irregularly executed. The question with the legislature was one of policy, and the determination made by it was conclusive.

Bonds with coupons, payable to bearer, are negotiable securities, and pass by delivery, and, in fact, have all the qualities and incidents of commercial paper.

It is not necessary that the holder of coupons, in order to recover on them, should own the bonds from which they are detached. The coupons are drawn so that they can be separated from the bonds, and like the bonds, are negotiable; and the owner of them can sue without the production of the bonds to which they were attached, or without being interested in them.

The foregoing views dispose of all the questions presented in this record, and it is unnecessary to refer in detail to the charge of the Circuit Court.

JUDGMENT REVERSED, with costs, and the cause remanded for further proceedings in conformity to the opinion of the court.