Board of Commissioners of Tippecanoe County v. Lucas

by Stephen Johnson Field

United States Supreme Court

93 U.S. 108

Board of Commissioners of Tippecanoe County  v.  Lucas

ERROR to the Supreme Court of the State of Indiana.

By an act of the legislature of Indiana, passed on the twelfth day of May, 1869, counties and townships in that State were authorized to aid in the construction of railroads, by taking stock in railroad companies, and making donations to them. Before giving the aid, it was necessary for the officers of the county, the board of commissioners, to consult the electors of the county upon the subject, and obtain their approval of the proceeding at an election called for that purpose. Such approval having been obtained from the electors of Tippecanoe county, the board of commissioners of the county, during the years 1871, 1872, and 1873, subscribed and paid for stock in the Lafayette, Muncie, and Bloomington Railroad Company, a corporation organized under the laws of the State, and engaged at the time in building a railroad passing through the county. The stock thus subscribed and paid for amounted to six thousand six hundred and ten shares, of the par value of fifty dollars a share; and for them the company issued its certificates to the commissioners. The money with which the stock was paid was collected by a special tax levied for that purpose. The act provided for collecting the money before the subscription could be made.

Afterwards, on the 17th of December, 1872, the legislature passed an act 'to require railroad companies to issue stock, paid for by taxes voted in aid of the construction of their railroads, to the tax-payers or their assigns, and to issue unclaimed stock for the benefit of the common-school fund.' This act provided, that, in all cases where stock had been taken by counties and paid for from taxes levied and collected under the act of May, 1869, it should be the duty of the treasurer of the proper county, upon request prior to Jan. 1, 1874, to issue to the several tax-payers living, and to the personal representatives of such as may have died, a certificate, stating the amount of tax paid by them respectively, the date of payment, and the name of the company in aid of which the tax was paid, as the fact should appear from the proper tax duplicates and record in his office.

The certificates thus issued were made assignable, and any lawful holder could present and surrender them to the proper company previous to Jan. 1, 1874, in sums equal in amount to any number of shares, and it was made the duty of the company to issue a certificate of paid-up capital stock to the amount of the certificate of taxes paid which was surrendered. For the stock unclaimed within the time designated a certificate was to issue to different townships in the county, for the benefit of the common-school fund. The act declared that the issuing of the stock to individuals or townships, as thus provided, should operate to cancel pro tanto the stock held by the county under the provisions of the act of May, 1869.

The present complaint was filed by the commissioners of the county in the Tippecanoe Civil Circuit Court, to restrain the treasurer of the county from issuing to tax-payers the certificates of taxes paid, as provided by the act of 1872. The treasurer had previously, against the remonstrance of the commissioners, issued a number of certificates to different parties, and declared his intention to issue certificates to all parties applying who were entitled to receive them under the act. In the complaint, the commissioners denied the power of the State to take the stock, or any part of it, from them, and give it to individuals for their private benefit; and alleged, that by the issuing of the certificates their right was made questionable, a cloud was cast upon their title, and the market value of the stock held by them was destroyed, and that they were deprived of their rights as stockholders in the company. They, therefore, prayed that a temporary injunction be granted against the treasurer, and that it might be made perpetual on the hearing.

The complaint was verified; and, after notice and argument of counsel, an order was made granting a temporary injunction, as prayed. On appeal to the Supreme Court of the State, the order, or the judgment, as it is termed in the language of the record, was reversed, and the cause remanded to the lower court, with instructions to dismiss the complaint. From this judgment the cause is brought to this court on a writ of error.

Mr. Z. Baird, for the plaintiff in error.

Under the Indiana Code of Procedure, the judgment of the Supreme Court, reversing that of the inferior court, and remanding the cause with instructions to dismiss the complaint, determined the merits of the controversy. It was, therefore, a final judgment within the meaning of the act of Congress. Whiting v. The Bank of the United States, 13 Pet. 15; Forgay et al. v. Conrad et al., 6 How. 202; French v. Shoemaker, 12 Wall. 86; Atherton et al. v. Fowler et al., 91 U.S. 143.

The plaintiff in error is a municipal corporation, exercising delegated powers, legislative, executive, and judicial. 1 Gavin & Hord, 247 et seq. It lawfully acquired the stock in controversy, and became the owner thereof in its corporate name, and cannot be deprived of it in the manner prescribed by the act of Dec. 17, 1872.

Where corporate powers are conferred, there is an implied contract between the State and the corporators that the property held under their charter shall not, without their consent, be taken and appropriated to other uses. Trustees of Dartmouth College v. Woodward, 4 Wheat. 518; Cooley on Const. Lim. 235; Dillon on Mun. Corp. 8; Armstrong et al. v. The Board of Commissioners of Dearborn County, 4 Blackf. 208; Edwards v. Jaggers et al., 19 Ind. 406; Terrett v. Taylor, 9 Cranch, 43.

Under the constitution of Indiana, and the peculiar powers conferred by law upon the board of county commissioners, the latter, as to certain of such powers,-including that to acquire railroad stock,-is a private corporation. In levying the tax to create a fund with which to take the stock, it exercised power as a public corporation; but in making the subscription and acquiring the stock, for its advantage and emolument, it acted as a private corporation. It certainly does not hold the stock for public purposes in the sense that the power of the legislature over it is without limit, but, on the contrary, as a trustee for the benefit of the whole people of the country in their aggregate capacity. Its title is as valid as if the stock had been purchased with the funds collected for general purposes, if such funds could be lawfully applied thereto, or as if it had been acquired by gift, bequest, or in any other legitimate mode. The act in question attempts to divest that title, and vest it in individuals. It is, therefore, clearly beyond the scope of the legislative power. Town of Milwaukee v. City of Milwaukee, 12 Wis. 93; State of Wisconsin, ex rel., &c., v. The County Court, 34 id. 546; Trustees of Dartmouth College v. Woodward, supra; Terrett v. Taylor, supra; State of Wisconsin, ex rel., &c., v. Haben, Treasurer, &c., 22 Wis. 660; Bailey v. The Mayor, &c., 3 Hill, 531; Atkins v. Town of Randolph, 31 Vt. 266.

Powers granted exclusively for public purposes are vested in the corporation in its public, political, or municipal character; but if the grant is for the purpose of private advantage and emolument, though the public may derive a common benefit therefrom, the corporation, quoad hoc, stands on the same footing as any individual or body of persons upon whom the like special franchises have been conferred. Trustees of Dartmouth College v. Woodward, supra; Philips v. Berry, 1 Ld. Raym. 8; S.C.. 2 T. R. 352; Allen v. McKean, 1 Sumn. 297; The People v. Morris, 13 Wend. 331; 2 Kent, Com. 275 (4th ed.); United States Bank v. Planters' Bank, 9 Wheat. 907; Clark v. Corporation of Washington, 12 id. 40; Moodalay v. East India Co., 1 Bro. Ch. 469.

As the act of Dec. 17, 1872, invades the right of private property and impairs the obligations of a contract, it is in violation of the Constitution of the United States, and void.

Mr. H. W. Chase and Mr. J. R.Coffroth for the defendant in error.

1. The judgment of the Supreme Court of Indiana is not final. The order of the Circuit Court awarding an injunction was merely interlocutory, passed at a preliminary state of the proceedings, and not upon the final hearing of the case, and the action of the Supreme Court was had upon that order.

2. A county, being a political organization for public purposes, is under the complete control of the State. Within the expressed constitutional restrictions, it or its property may be dealt with by the legislature as it deems wise and expedient, provided that the property be secured for the uses of those for whom and at whose expense it was originally purchased. Darlington v. Mayor, &c., 31 N. Y. 164; Lycoming v. Union, 15 Penn. St. 166; Grim v. Weissengery, 57 id. 433; Philadelphia v. Fox, 64 id. 169; County v. County, 12 Ill. 1; Dennis v. Maynard, 15 id. 477; Love v. Schenck, 12 Ired. 304: Louisville, &c. Railroad Co. v. County Court, &c., 1 Sneed, 637; Sharp v. Contra Costa Co., 34 Cal. 288; State v. St. Louis Co., 34 Mo. 546; City of Augusta v. North, 57 Me. 392; Wade v. Richmond, 18 Gratt 583; State v. Votaw, 8 Blackf. 2; Sloan v. State, id. 364; State Bank v. Madison, 3 Ind. 43; Goodrich v. Winchester, 26 id. 119; Maryland v. Baltimore & Ohio Railroad Co., 3 How. 534; East Hartford v. Hartford Bridge Co., 10 id. 511; Mulligan v. Corbins, 7 Wall. 487.

3. The stock in question was purchased by a fund raised for that specific purpose by the exercise of the taxing power. Dividing it among the tax-payers, in proportion to the amount by them severally contributed, conflicts with no constitutional provision. The board had but a naked legal title. The individual tax-payers were alone beneficially interested. The road having been completed, all participation in the management of the company was wisely withdrawn from the county board, which was organized solely for the administration of the affairs of the county.

MR. JUSTICE FIELD, after making the foregoing statement of the case, delivered the opinion of the court.

Notes