Township of Rock Creek v. Strong

ERROR to the Circuit Court of the United States for the District of Kansas.

This was an action by Strong, against the township of Rock Creek, Jefferson County, Kansas, upon interest coupons attached to bonds issued by it to aid in constructing within its limits the depots and side-tracks of the Atchison, Topeka, and Santa Fe Railroad. The bonds refer to the act of the legislature under which they were issued, and are of tenor following:--

'$1,000.] UNITED STATES OF AMERICA. [No. ___.

'ROCK CREEK TOWNSHIP RAILROAD AND DEPOT BONDS.

'State of Kansas, County of Jefferson.

'Thirty years from the fifteenth day of October, 1872, the township of Rock Creek, in the county of Jefferson and State of Kansas, for value received, promises to pay to the Atchison, Topeka, and Santa Fe Railroad Company, or bearer, the sum of $1,000, in lawful money of the United States, with interest from the said fifteenth day of October, 1872, at the rate of seven (7) per cent per annum, payable semi-annually on the fifteenth days of April and October of each year, upon the presentation and surrender, as they severally become due, of the proper coupons therefor hereto attached, both principal and interest payable at the Fourth National Bank in the city of New York, and State of New York.

'This bond is one of a series, amounting to the sum of $20,000, made and issued to the said Atchison, Topeka, and Santa Fe Railroad Company in payment of a subscription and donation to the said company in aid of the construction of its railroad depots and sidetracks, in said township, under and in pursuance of the provisions of an act of the legislature of the State of Kansas, entitled 'An Act to authorize counties, incorporated cities, and municipal townships to issue bonds for the purpose of building bridges, aiding in the construction of railroads, water-power, or other works of internal improvement, and providing for the registration of such bonds, the registration of other bonds, and the repealing of all laws in conflict therewith,' approved March 2, 1872; and the faith of the said township is hereby pledged for the redemption and payment of said bonds and the interest coupons thereto attached.

'In testimony whereof, the township trustee and clerk of said Rock Creek township have hereunto set their hands as such trustee and clerk, as by law it is provided shall be done, this tenth day of September, A.D. 1872.

'N. A. LAFON, Trustee.

'Attest: ALBERT OWEN, Clerk.'

Indorsed on the back thereof as follows:--

'STATE OF KANSAS, SS.

'I, auditor of the State of Kansas, do hereby certify that this bond has been regularly and legally issued, and the signatures thereto are genuine, and that the same has been duly registered in my office according to law.

'In witness whereof, I have hereunto set my hand and affixed my seal of office, at the city of Topeka, this seventeenth day of October, A.D. 1872.

[L. S.] 'A. THOMAN, Auditor.'

The coupons are in the usual form.

The plaintiff having at the trial introduced evidence tending to show that he was an innocent purchaser for value of the coupons before maturity, the defendant offered evidence tending to show,--

1. That the only election held in the township upon any proposition of issuing the bonds was one held Aug. 27, 1872, pursuant to the notice of the trustee and clerk of the township, dated July 30, of that year, for the purpose of submitting to the qualified voters of the township 'the question of aiding in the construction of two permanent depots, with side-tracks to accommodate the same, on the line of the Atchison, Topeka, and Santa Fe Railroad, in said township, by a donation to the Atchison, Topeka, and Santa Fe Railroad Company of the bonds of said township, in the sum of $20,000, to be issued in sums of $1,000 each, payable in thirty years from the date of issue, payable in the city of New York, and bearing interest at the rate of seven per cent per annum, payable semi-annually in the city of New York, signed by the trustee of said township and attested by the township clerk, and upon the following conditions, to wit: Said bonds to be issued as aforesaid, and delivered to the said company whenever said company shall have constructed and completed said depots and said side-tracks in said township, the same to be located as follows, to wit: one depot at some point within one-half of one mile of the point where said company's railroad intersects the line between the north-east quarter of the south-east quarter of section twenty, township nine, in range seventeen east; and the other depot at a point within one-half of one mile of the point where said company's failroad intersects the west boundary line of section seven, in township ten, range seventeen east, and each to be accommodated with side-tracks suitable and of sufficient length for the accommodation of the business to be done at said depots, the said company to erect said depots and each of them, and to construct the said side-tracks of the same, so that the same shall be ready for use, and the reception of business thereat, on or before the fifteenth day of October, A.D. 1872; otherwise, the said company to forfeit all claims to the said bonds.' That the total number of votes cast by qualified electors of said township was one hundred and two, of which fifty-one were for, and fifty-one were against, the said proposition; and that one Rice, who was not a qualified elector of said township, cast his vote in favor of said proposition.

2. That the board of county commissioners of said county never canvassed the returns of said election, and never determined nor declared the result of any election in said township to be in favor of issuing any of the bonds of said township; but upon the records of the county the following entry, certified in due form, was made prior to the issue of the bonds:--

'FRIDAY, Aug. 30, 1872. At this, a called meeting of the board, there were present H. W. Wellman and P. M. Gilbert.

'The board proceeded to canvass the vote of Rock Creek township, on the proposition to donate the bonds of said township to the Atchison, Topeka, and Santa Fe Railroad Company, and determine the following as a result of said election:--

'For the issuing of said bonds 52 votes.

Against the issuing of said bonds 51 votes.

'Total 103 votes.

'Adjournment: Upon motion, it was ordered that the board adjourn, to meet Monday, Sept. 2, 1872.'

3. That there is not now, and never has been, in the office of the auditor of the State of Kansas, any registration of any such bonds of said township; but his certificate of registration was placed on them.

4. That the depots and side-tracks mentioned in said bonds were located and erected upon and appurtenant to a railroad built and in operation through said township prior to said election.

Whereupon the following questions arose, upon which the judges were divided in opinion:--

1. Does the act of the legislature of the State of Kansas, referred to in said bonds, authorize the issue of the bonds of a township to aid in the construction of depots and side-tracks, as recited in the bonds in suit?

2. Are the bonds mentioned in plaintiff's petition void, for the reason that they are made payable thirty years and thirty-five days from their date of execution therein written, but only drawing interest for the last thirty years of said time?3. Is the defendant estopped by the recitals in said bonds from introducing the testimony as above stated?

4. On the foregoing facts, is the plaintiff entitled to recover?

Judgment having been entered in favor of the plaintiff, in accordance with the opinion of the presiding judge, the defendant sued out this writ of error.

There being no express authority conferred by the act of March 2, 1872, for a municipal township in Kansas to issue its bonds in aid of the construction of depots and side-tracks for a railroad which was then built, any doubt as to the existence of the power supposed to be conferred must be resolved against it. Minturn v. Larue, 23 How. 435; Thompson v. Lee County, 3 Wall. 327; Thomas v. City of Richmond, 12 id. 349.

The legislature did not intend to confer such authority, as it is the legal duty of a railroad corporation to furnish the necessary depots and side-tracks for the accommodation of the public. St. Joseph & Denver City Railroad Co. v. Ryan, 11 Kan. 602; Pacific Railway Co. v. Seeley, 45 Mo. 212.

The objects in aid of which the bonds were issued cannot be claimed to be works of internal improvement, within the meaning of that act. Township of Burlington v. Beasley, 94 U.S. 310.

The bonds having been issued for a period of time in excess of that fixed by law, they are void on their face. Commissioners of Marion County v. Clark, 94 U.S. 278. The presumption is that they were delivered on the day of their date. 1 Pars. Bills and Notes, 42; Edwards, Bills, 144; Anderson v. Weston, 6 Bing. N. C. 296.

The plaintiff in error was not estopped by the recitals in the bonds from showing that the conditions precedent to their issue had not been complied with, because the right to determine those questions was vested in an entirely different tribunal from the one authorized to issue the bonds. Town of Coloma v. Eaves, 92 U.S. 484.

The record shows that the bonds were never registered as required by the statute. They were, therefore, not negotiable. Negotiability could be imparted to them only by the fact of registration, not by the mere certificate of the auditor.

Mr. George R. Peck for the plaintiff in error.

Mr. H. Strong, for the defendant in error, in support of the judgment below, cited Leavenworth v. Miller, 7 Kan. 536; Knox County v. Aspinwall, 21 How. 544; Moran v. Miami County, 2 Black, 732; Mercer County v. Hacket, 1 Wall. 83; Supervisor v. Schenck, 5 id. 784; Town of Coloma v. Eaves, 92 U.S. 484; Town of Venice v. Murdock, id. 494; Converse v. Fort Scott, id. 503; Marcy v. Town of Oswego, id. 637; Humboldt Township v. Long, id. 642; Leavenworth County v. Barnes, 94 id. 70; Douglas County v. Bolles, id. 104; Johnson County v. January, id. 202; Township of Burlington v. Beasley, id. 310; County of Moulton v. Rockingham Bank, id. 631; Town of East Lincoln v. Davenport, id. 801.

MR. JUSTICE STRONG delivered the opinion of the court.