Knox County v. Ninth National Bank/Opinion of the Court

by David Josiah Brewer

United States Supreme Court

147 U.S. 91

Knox County  v.  Ninth National Bank

No question arises in this case as to the amount of the judgment, or as to the validity of the bonds as obligations of Knox county. The answer in terms admitted the indebtedness, and the only question which was litigated was whether the bonds were issued solely under and by virtue of section 13 of the act incorporation the Missouri & Mississippi Railroad Company, or were supported by a vote of the people under the general railroad law. The difference between the two consists in this: If the bonds were issued under the general statute, and in pursuance of the vote of the people, they are payable without restriction as they fall due, and mandamus will lie to compel a levy sufficient to pay the judgment; if issued only under section 13 of the Missouri & Mississippi Railroad Company act, a special levy of not exceeding one twentieth of 1 per cent. of the assessed valuation for each year is all that can be enforced. U.S. v. County of Macon, 99 U.S. 582.

That this was a matter properly determinable in a suit on the bonds, and one to be finally settled by the judgment therein, is clear from the case of Harshman v. Knox Co., 122 U.S. 306, 7 Sup. Ct. Rep. 1171.

While the bonds on their face recite that they are 'issued under and pursuant to order of the county court of Know county for subscription to the stock of the Missouri & Mississippi Railroad Company, as authorized by an act of the general assembly of the state of Missouri, entitled 'An act to incorporate the Missouri and Mississippi Railroad Company,' approved February 20, 1865,' and while such a recital may be invoked by the holder of the bonds as an estoppel against the county, it is not conclusive in its favor as to the act under which the bonds were in fact issued. Commissioners v. January, 94 U.S. 202. The questions, therefore, to be considered are those which arise in respect to the admission of testimony, its sufficiency, and the instructions of the court. In reference to the former, it may be remarked that several witnesses were called, among them two who were county judges at the time the bonds were issued; that all were asked as to the talk which took place at the time the bonds were issued, and the county judges as to which act they relied upon in the issue of the bonds, and what they thought and intended in the matter. It is unnecessary to express an opinion as to the competency of this testimony, for no exceptions were taken to that which was offered by the plaintiff, and of course the defendant cannot allege error in the admission of that which it offered.

The record evidence consisted, among other things, of these matters: An order of the county court of Knox county, on February 6, 1867, upon a petition therefor, directing a special election to be held on the question of subscribing $100,000 to the stock of a railroad company constructing a road through Knox county, (no particular company was mentioned in the order, and three different lines of road were described, one of them similar to that named in the charter of the Missouri & Mississippi Railroad Company;) a record of the canvass of the votes at such election, showing 510 votes for and 98 votes against the subscription; and an order of the county court of May 13, 1867, authorizing the presiding justice of the court to subscribe in the name of the county of Knox for $100,000 of the capital stock of the Missouri & Mississippi Railroad Company. The terms of this subscription, as prescribed in this order, were the same as those in the order for an election, to wit, that the bonds should be used for work actually done on the road within the limits of Knox county. The plaintiff also introduced the orders of the county court with respect to the levy of taxes to pay the interest on these bonds for the years from 1868 to 1875, inclusive, which ranged from 30 to 75 cents on the $100, until the year 1875, when it was only 5 cents, or one twentieth of 1 per cent. It was admitted that in May, 1874, a decision of the supreme court of the state of Missouri was announced, (State v. Shortridge, 56 Mo. 126,) by which the power of county courts to levy taxes for the payment of bonds issued to the Missouri & Mississippi Railroad Company was limited to one twentieth of 1 per cent., as prescribed in section 13 of its charter, and that the order made by the county court of Knox county on the 23d of April of that year, levying 75 cents on the $100, was on the 1st day of June set aside, and a levy of 5 cents ordered. There was also offered in evidence a certified copy of certain leaves of the bond register of Knox county, showing a statement of the bonded debt outstanding January 1, 1874, on which is a minute that $100,000 of the bonds issued to the Missouri & Mississippi Railroad Company were 'ordered by an election held 12th of March, 1867;' also a statement of the financial condition of the county, published in a county newspaper by order of the county court, in which was a substantially similar statement.

Upon this we notice two or three of the principal points made by counsel for plaintiff in error. The order for the election directed that notice thereof 'be given through the Missouri Watchman for five weeks, and by printed handbills, publicly exposed through out the county.' It also named the second Monday in March as the day for the election. No evidence was offered of any printed handbills, or of the publication of notice in the Missouri Watchman. It is insisted that, in the absence of evidence, there can be no presumption that notice was given either by handbills or in the newspaper; and, secondly, that between the date of the order (February 6th) and the date of the election (March 12th) it was not possible to make the prescribed publication, because, excluding the day of the order and including the day of the election, there would be only thirty-four days, or one day lacking the five full weeks. The statutes of Missouri at that time in force provided, in accordance with the general rule in respect to such matters, that 'the time within which an act is to be done shall be computed by excluding the first day and including the last.' Gen. St. Mo. 1866, p. 84, § 6. But the notice required for this election was not prescribed by statute. It was fixed by order of the county court, and, there being but thirty-four days between the day of the order and that named for the election, it must be presumed that what was intended was not a publication for five full weeks of seven days each, but a publication in each of the five weeks, which could easily be made in the thirty-four days. It cannot be supposed that the county court directed a notice which it was impossible to give, or that it was putting the people to the annoyance and the county to the expense of an election which was necessarily void by reason of an inability to comply with the terms of the order. The order must be construed so as to make possible a valid election, and that is accomplished by construing it, and in a reasonable way, as requiring advertisement in five successive weekly issues of the paper named.

Again, the election was held, the votes cast at that election were canvassed by the proper officers, and an order made by the county court for a subscription in accordance with the terms of the order for the election. From these facts it may be presumed that proper notices of the election were given, for it is a rule of very general application that, where an act is done which can be done legally only after the performance of some prior act, proof of the latter carries with it a presumption of the due performance of the prior act. In Bank v. Dandridge, 12 Wheat. 64, 70, it was said: 'The same presumptions are, we think, applicable to corporations. Persons acting publicly as officers of the corporation are to be presumed rightfully in office. Acts one by the corporation which presuppose the existence of other acts to make them legally operative are presumptive proofs of the latter. * * * If officers of the corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers will be deemed rightful, and the delegated authority will be presumed. * * * In short, we think that the acts of artificial persons afford the same presumptions as the acts of natural persons. Each affords precomptions, from acts done, of what must have preceded them, as matters of right or matters of duty.'

But, further, the validity of the bonds is admitted by the answer, and therefore it is annecessary to prove every separate step which otherwise might be required in order to show the legality of this issue. The inquiry here is, under what act and by what authority the county court issued them; and in determining that question any statement on the records of the county may be competent evidence, and from all the acts and circumstances it is to be determined under which act the county was proceeding. Suppose the bonds contained no recitals, but simply an acknowledgment of indebtedness, and in a suit on them their validity was admitted, and there were two statutes, under either of which the bonds might have been issued, a single entry on the records of the county might be sufficient, in the absence of all other testimony, to support a finding that the bonds were issued under one, rather than the other, statute. All that can be said from the omission to introduce in evidence a full recital of all the steps necessary to make a perfect proceeding under the general statute is that such omission detrats from the force of the testimony from the records and proceedings actually produced. In this respect it will be noticed that there is a marked difference between an omission to prove one step that such omission detracts from the force of that such step was not taken, for, if it were established that one essential step in a course of proceeding required by one statute was not taken, it might well be held that the bonds admitted to be valid were in fact issued under the other statute.

This brings us to notice a point made in reference to the instructions. There was testimony tending to prove that a registration had been made of the qualified voters of the county, and that it showed over 1,000 such voters. The vote cast at the election was, for the subscription, 510, and against, 98; that is, more than two thirds of those who actually voted assented to the subscription, but not two thirds of the qualified voters, as shown by the registration. Several decisions of the supreme court of Missouri are cited, the latest being that of State v. Harris, 96 Mo. 29, 8 S. W. Rep. 794, in which that court has held that two thirds of those actually voting is not sufficient, and that it must appear that two thirds of the qualified voters, as ascertained by the registration, assented to the subscription; and it is said that this court follows the settled construction placed upon its statutes by the supreme court of a state. This question has been throughly discussed in this court, and it is unnecessary to enter into any re-examination of it. These decisions were made after the issue of the bonds, and cannot be deemed controlling. Cass Co. v. Johnston, 95 U.S. 360; Daviess Co. v. Huidekoper, 98 U.S. 98; Douglass v. Pike Co., 101 U.S. 677; Carroll Co. v. Smith, 111 U.S. 556, 4 Sup. Ct. Rep. 539.

Another matter is this: It will be remembered that the court permitted the plaintiff to offer in evidence the tax levies for several years after the issue of the bonds; a copy of the entries made on the bond register of the county in 1874, showing the bonded indebtedness of the county; and a financial statement of the county, published by direction of the county court. It also instructed the jury that they might consider these matters in determining what was the intent of the county court in issuing the bonds; 'that is to say, whether they intended to act exclusively under the railroad charter, or under authority conferred by a popular vote, or under both powers.' It was not said by the court that these matters created an estoppel upon the county, or concluded it as to the question, but simply that they were matters to be considered. It is a familiar rule that the interpretation given to a contract by the parties themselves is competent, and oftentimes very weighty, evidence in determining its meaning and force. So in a matter of this kind, the whole conduct of the county, both before, at the time, and after the issue of the bonds, may be shown to aid in determining under what statute and by what authority the county proceeded in the issue of these bonds. Chicago v. Sheidon, 9 Wall. 50, 54; Steinbach v. Stewart, 11 Wall. 566, 576; Canal Co. v. Hill, 15 Wall. 94; Merriam v. U.S., 107 U.S. 437, 2 Sup. Ct. Rep. 536; U.S. v. Gibbons, 109 U.S. 200, 3 Sup. Ct. Rep. 117.

Again, it is urged that the order for the election was invalid, inasmuch as no corporation was named as the proposed recipient of the subscription; but it has been held to the contrary, and that it is sufficient if the route is designated, leaving to the county authorities the selection of the particular corporation to be the recipient of the subscription. Commissioners v. Thayer, 94 U.S. 631; Scipio v. Wright, 101 U.S. 665.

Another matter requires notice, and it is of great significance: The constitution of the state of Missouri, adopted July 4, 1865, article 11, § 14, provided that 'the general assembly shall not authorize any county, city, or town to become a stockholder in, or to loan its credit to, any company, association, or corporation, unless two thirds of the qualified voters of such county, city, or town, at a regular or special election, to be held therein, shall assent thereto.' At the October term, 1867, of the supreme court of Missouri, the case of State v. Macon County Court, 41 Mo. 453, was decided, in which it was held that the constitution had no retroactive effect upon statutes passed before its adoption, and that, therefore, under the Missouri & Mississippi Railroad Company act, passed February 20, 1865,-a few months before the adoption of the constitution, there was power in the county authorities to subscribe without the assent of the voters. It may well be believed, as asserted by counsel for defendant in error, that, until that decision was announced, the understanding that the prohibition in the constitution superseded all unexecuted authority given by prior charters was so general that no county court would have dared to subscribe stock and issue bonds without the assent of two thirds of the qualified voters. This subscription was made, some of the bonds issued, as well as the vote held, before the decision in the Macon County Court Case, and it is difficult to believe that the county court did not issue these bonds in reliance upon the authority given them by the vote of the people, in pursuance of the general laws of the state, although referring on the face of the bonds to the Missouri & Mississippi Railroad Company act, which specially authorized the company to receive, and the counties through which it ran to make, subscriptions. It is very likely that the county court had in mind the special act creating the Missouri & Mississippi Railroad Company, as well as the general law, and the vote of the people under it, and that it meant to exercise all the authority conferred by both. It is enough for this case that the vote of the people authorizing this issue of bonds was given, and that the county court acted in reliance thereon, for by assent, through their vote, to such issue of bonds, the people, in the way prescribed by the statutes of the state, in effect consented that a levy beyond the meager one provided for by the Missouri & Mississippi Railroad Company act might be resorted to for the payment of these bonds.

These are the substantial matters involved in this litigation. We find no error in the proceedings of the circuit court, and its judgment is affirmed.

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