County of Daviess v. Dickinson/Opinion of the Court

by Horace Gray

United States Supreme Court

117 U.S. 657

County of Daviess  v.  Dickinson

 Argued: April 12, 1886. --- Decided: States for the district of Kentucky, by Dickinson against the county of Daviess, on bonds and coupons alleged to have been issued under the statute of Kentucky of February 27, 1867, (chapter 1505,) incorporating the Owensboro & Russellville Railroad Company, the material provisions of which were as follows: By section 1, five persons named, in Daviess county, and certain other persons named, in each of four other counties, are 'appointed commissioners, under the direction of whom, or any three of whom, in each of said counties, subscription may be received to the capital stock of the Owensboro & Russellville Railroad Company hereby incorporated' By section 2, 'the capital stock of said Owensboro & Russellville Railroad Company shall be one million dollars, in shares of twenty-five dollars each' By section 19, 'the county courts of Daviess' and those four other counties 'shall have power, and are hereby authorized, to subscribe to the capital stock of said company in such number of shares as may be determined by said county courts, respectively, and to levy upon the tax-payers of such counties, respectively, such taxes as may be necessary to pay the stock so by them respectively subscribed; and said county courts may, if they shall deem it prudent, issue the bonds of said counties, respectively, for the amount of stock subscribed, or any part thereof; said bonds to be in such sums, and payable at such times, as said county courts may determine upon But before such stock shall be subscribed by such county courts, the said county courts shall submit to the voters of said counties the proposition to subscribe stock and the amount thereof, (to be suggested and fixed by the commissioners named herein in each of said counties,) at an election to be held on the third Monday in April, 1867, in each of the counties aforesaid, due notice of which shall be given by the sheriffs in each of said counties, by written advertisements posted in each of the voting precincts thereof for at least thirty days before said day of election; and said stock shall not be subscribed unless a majority of all the votes cast at said election be in favor of such proposition; and said county courts shall have power to appoint suitable and necessary officers to conduct such election, and to provide for the collection of the tax aforesaid, if a majority of the votes cast at such election is in favor of the proposition aforesaid'

The county court had no power to subscribe for stock in the railroad corporation, or to issue bonds therefor, except as authorized by statute. The statute authorized the county court to subscribe for such an amount of stock only as should be fixed and proposed by the commissioners named in the statute, and be approved by the vote of a majority of the voters of the county; and the authority of the county court, either to levy taxes or to issue bonds, was limited to the amount so proposed and voted. That amount was $250,000. The county court therefore had no authority to issue bonds for a greater amount, and any bonds issued in excess of that amount were unlawful and void. By the statute, the bonds were to be in such sums, and payable at such times, as the county court should determine. The county court ordered that the bonds should be executed and made payable, $50,000 in five years, $50,000 in ten years, $75,000 in fifteen years, and $75,000 in twenty years, and that the bonds should be signed by the judge and the clerk of the county court, and have the seal of the county impressed on each. Notwithstanding this, bonds so signed and sealed were issued of each class to larger amount, amounting in all to $320,450, showing, after deducting bonds returned and canceled, an excess of $67,350. To the extent of this excess the bonds were invalid, and the county is liable upon bonds to the amount of $250,000 only. It does not deny its liability to that amount.

Then comes the question which of the bonds are valid and which invalid. We can have no doubt that the test is which were first delivered if that can be ascertained, and without regard to the classification of bonds according to times of payment in the order of the county court; for, as the county court was authorized to determine at what time the bonds should be payable, any one taking a bond signed by the presiding judge and the clerk, and bearing the seal of the county, had the right to presume that it was valid, provided the county court had not already issued bonds to the amount limited by the statute and by the vote. The certificate of the judge of the county court upon the back of each bond that it was issued as authorized by the statute, and by an order of the county court in pursuance thereof, cannot estop the county to deny that the particular bond is void because the county court, at the time of issuing it, had exhausted the power conferred by the act of the legislature and the vote of the people. The certificate is not a recital in the bond. It is not the act of the county court, is not under its seal, nor signed by its clerk; but is simply the certificate of the person holding the office of judge of that court. Neither the statute, nor the vote of the people, nor the order of the county court, empowered him to make such a certificate, or to determine the question whether the county court had exceeded the power conferred upon it. An officer's certificate of a fact which he has no authority to determine is of no legal effect. Dixon Co. v. Field, 111 U.S. 83; S.C.. 4 Sup. Ct. Rep. 315. Nor can the payment of interest on all the bonds have the effect of ratifying bonds issued beyond the lawful limit; for a ratification can have no greater force than a previous authority, and the county cannot ratify what it could not have authorized. Marsh v. Fulton Co., 10 Wall. 676.

The necessary consequence is that the court below erred in instructing the jury that the plaintiff was entitled to recover on all the bonds and coupons sued on, if he purchased them before their maturity and for value, and without notice that more than $250,000 of bonds had been issued by the defendant. Merchants' Bank v. Bergen Co., 115 U.S. 384; S.C.. 6 Sup. Ct. Rep. 88.

The judgment must therefore be reversed, and the case remanded, with directions to set aside the verdict and order a new trial. What part of his bonds and coupons the plaintiff may enforce against the county may depend upon further evidence of the exact dates of the delivery and the purchase of the several bonds, that may be introduced upon another trial of this case, or perhaps in some other suit to which all the bondholders may be made parties, and therefore no opinion is expressed upon that question.

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