Roberts v. Bolles, 101 U.S. 119

Each bond, signed by the supervisor of the town, attested by its clerk, and certified upon its face to have been duly recorded in the township registry of bonds, as directed by law, recites that it “ is one of a series, amounting in the aggregate to $30,000, and consisting of thirty bonds, numbered from 1 to p. 12180, inclusive, each of which is for $1,000, and all of which are of even date herewith, and are issued in accordance with the laws of the State of Illinois, in payment of a subscription made by said town of Roberts for three hundred shares of the capital stock of the Hamilton, Lacon, and Eastern Railroad Company, which said subscription was made by said town by virtue of a vote of a majority of the voters of said town in favor thereof, at a special election had for such purpose in said town on the twenty-fifth day of March, 1869, in pursuance of the provisions of the laws of the State of Illinois, and of the several acts of the General Assembly of the State of Illinois incorporating said company.”

Perry (11 id, 467) decides that bank-notes payable to bearer, °r to a particular person or bearer, are not embraced by the provisions of the statute, or by the reasons which caused its passage; and that the holder, by delivery merely, can maintain an action thereon, unless it appears that he obtained them p. 122mala fide. The statute, it was said, applies “ only to instruments that were not negotiable by the common law or the custom of merchants.”

This act, though not in force when defendants in error p. 123acquired the bonds in suit, applies, we think, to actions commenced after it took effect.

Under the act of March 6, 1867, to which reference is made by the act of March 5, 1869, elections, to take the sense of the people upon subscriptions to the capital stock of a railroad company, could be called and held, upon the application of p. 124twenty legal voters and tax-payers of the county, township, city, or incorporated town in whose behalf it was proposed to make the subscription, such application specifying the amount and the conditions of the proposed subscription. The notice of such election was required to be posted, in the case of a township, by the clerk thereof, in three of the most public places of such township. If a majority of such voters voting at said township election favored the subscription, then it was made the duty of the supervisors thereof to make the subscription ; and when the subscription was accepted or received, to cause the bonds to be issued in compliance with the popular vote. Pri. Laws Ill. 1867, vol. i. p. 866.

It is contended that the election mentioned in the bonds declared on was a nullity, because called upon an application signed by only twelve, instead of twenty, legal voters and tax-payers, and because only ten days’ notice thereof was given, ■when the law required twenty; that the law is imperative in p. 125these respects, and that the failure to comply with its requirements rendered the bonds void, even in the hands of innocent holders for value; that such was the settled law of Illinois, as declared by the Supreme Court of that State prior both to the election of March 25, 1869, and to the issuing of the bonds; and, finally, that such prior judicial declarations are to be regarded as part Of the local statutes, binding upon this court, according to its own decisions.

Undoubtedly there are several decisions by the Supreme Court of Illinois of the character indicated by counsel; but unless we are greatly in fault in our examination, no one of them relates to a municipal subscription, or to an issue of bonds, under a statute containing a provision similar to sect. 5 of the act of March 6, 1867, under which the election in question was held. That act rests the validity of bonds issued under its authority upon the essential fact that the majority of voters at the election voted, as in this case, in favor of the subscription. In that event, it expressly declares that the bonds shall not in any way become invalidated by reason of mistake in the giving of the notice, or in the canvass or return of votes, or the issuing of the bonds. These words are without effect if the municipality issuing the bonds can avoid their payment because its agents or constituted authorities committed mistakes such as are specified in the statute. If the town clerk gave a notice of ten instead of twenty days, based upon an application of twelve instead of twenty legal voters and tax-payers, was not this a mistake “ in the giving of the notice ” and “ in the issuing of the bonds ” ? The purchaser of the bonds, if chargeable with notice of these facts, was, in terms, assured by the statute that no such mistakes as those facts indicated would invalidate the bonds, if the majority of the voters at the election had approved the subscription. He had the right to rely upon these legislative assurances, unless the fifth section of the act of March 6, 1867, was in violation of the Constitution of the State. We do not, however, feel justified in declaring that provision of the act to be in conflict with that instrument. We are referred to no decision of the State court which so decides. On the contrary, that court, in Burr v. City of Carbondale (76 Ill. 455), which was a case of municipal bonds, said: p. 126“ These bonds having been issued in the exercise of a power constitutionally conferred, must be binding on the municipality, although some irregularities in the form of notice of the election, want of the precise words on the ballots, and others of like character, may have occurred.” p. 469.

Certainly the legislature could prescribe the mode of ascertaining the sense of the voters, who alone, it is claimed, were the corporate authorities of the town, within the meaning of the State Constitution. And as it might, in the act of March 6, 1867, have allowed the election to be called upon the application of a less number of voters and tax-payers than twenty, p. 127and to be held after a notice of ten days, rather than twenty, we do not see any ground to question its right, consistently with the State Constitution, to declare, in advance, that if the majority of voters at the election favor the subscription, the bonds issued in payment thereof should not be invalidated by mistakes of the kind specified in the fifth section of that act. The mistakes here complained of were not such as necessarily affected the substance or essence of the election, and consequently it cannot be said that the subscription was made or the bonds issued without the consent of the corporate authorities or the legal voters of the township. The application for the special election and the notice therefor were not so radically defective as to justify us in saying, as matter of law, that a debt for a railroad subscription was thrust upon the legal voters and tax-payers of the township without their having a reasonable opportunity to vote upon the question of subscription. It is not a case where bonds have been issued by the supervisor and town clerk, without any previous election whatever to authorize them so to do. It is a case of bonds issued in pursuance of a popular election, defectively called and held, and as to which the legislature declared that the bonds should not be invalidated by mistakes in giving the notice and in issuing them, if there was “ a majority of votes at such election in favor of such subscription.”

But a further contention of the plaintiff in error is that the p. 128Supreme Court of Illinois, in Williams v. Town of Roberts (88 Ill. 1), decided in June, 1878, nearly four years after the commencement of this action, and three years after the entry of the judgment in this case, held not only that the curative act of April 17, 1869, was in violation of the Constitution of the State, but that the election of March 25,1869, was a nullity, conferring no power upon the supervisor of the town to make the subscription and issue the bonds.

In reference to the alleged conflict of the last-named act with the Constitution of Illinois, we give no opinion. The views we have expressed as to the validity of the bonds, under the act of March 6, 1867, particularly its fifth section, render it unnecessary to consider or determine the constitutional validity of the curative act of 1869. It is, however, claimed that we are obliged to accept the decision in Williams v. Town of Roberts, as conclusive against the validity of these particular bonds. We cannot give our assent to this proposition, for the reason, if there were no other, that that decision does not touch the precise point upon which we sustain their validity, despite the defective application and notice for the election of March 25, 1869. No reference is made, in that case, to the fifth section of the act of March 6, 1867, upon which we have commented. The Supreme Court of Illinois, in the case alluded to, undoubtedly held that the defects in the application and notice rendered that election a nullity, and that, because of such defects, the subscription was made and the bonds issued without authority of law. But we are not informed as to the effect which, in the opinion of that court, is to be given to the fifth section of the act of March 6, 1867. If the court had gone further, and decided that section to be unconstitutional; or that the defective application and notice for the election were not mere mistakes within the meaning of that section; or that the bonds declared on were null and void, notwithstanding the legislative declaration that they should not be invalidated because of any mistake in giving the notice, in issuing the bonds, or in the canvass or return of votes, — then its decision would have been an authority in point, covering the precise question before us. If we are mistaken in this, it does not follow that we should accept that decision as conclusive of this case. That would depend p. 129upon our approval or disapproval of the decision upon its merits. In Pease v. Peek (18 How. 599), we said that this court would not feel bound, “ in any case in which a point is first raised in the courts of the United States, and has been decided in a circuit court, to reverse that decision contrary to our own convictions, in order to conform to a State decision made in the mean time. Such decisions have not the character of established precedent declarative of the settled law of the State.” Morgan n . Curtenius, 20 How. 1.

By sect. 4 of the act to provide a temporary government for the Territory of Dakota, no one session of the legislative assembly shall exceed forty days (12 Stat. 239), and in 1869 Congress declared that the sessions of all territorial legislative assemblies should be biennial. 15 id. 300. The members of the legislative assembly of Dakota met on the 5th of December, 1870, and continued in regular session on all days, except Sundays, until Jan. 13, 1871, when they adjourned without day. The day of adjournment was called on the journals the fortieth day of the session, although there had been but thirty-five days of actual session for the transaction of business. On the 18th of April, 1871, the members of the legislature elected the preceding fall again assembled at the call of the acting governor of the Territory. After organizing themselves as a legislative assembly and proceeding to legislate for the Territory, they passed, among other acts, one entitled “An Act to enable organized counties and townships to vote aid to any railroad, and to provide for the payment of the same.” Under this act p. 131the voters of Yankton County, on the 2d of September, 1871, voted to donate the Dakota Southern Railroad Company $200,000 in the bonds of the county. All the proceedings under which this vote was taken were conducted strictly according to the requirements of the law.

Pu ic lands between the termini aforesaid, the right of way through 8ai public lands is hereby granted to said company to the extent p. 132of one hundred feet in width on each side of said road: Provided, that nothing in this act shall relieve said Dakota Southern Railroad Company from constructing and completing said railroad in accordance with the conditions and stipulations under which the citizens of the counties therein named voted aid to said railroad in accordance with the laws of said Territory, approved April 21, 1871: Provided further, that said Dakota Southern Railroad Company shall issue to the respective counties and townships voting aid to said railroad paid-up certificates of stock in the same in amounts equal to the sums voted by the respective counties and townships.”

We do not consider it necessary to decide whether the governor of Dakota had authority to call an extra session of the legislative assembly, nor whether a law passed at such a session or after the limited term of forty days had expired would be valid, because, as we think, the act of May 27, 1872, is equivalent to a direct grant of power by Congress to the county to issue the bonds in dispute. It is certainly now too late to doubt the power of Congress to govern the Territories. There have been some differences of opinion as to the particular clause of the Constitution from which the power is derived, but that it exists has always been conceded. The act to adapt the ordinance to provide for the government of the Territory northwest of the river Ohio to the requirements of the p. 133Constitution (1 Stat. 50) is chap. 8 of the first session of the first Congress, and the ordinance itself was in force under the confederation when the Constitution went into effect. All territory within the jurisdiction of the United States not included in any State must necessarily be governed by or under the authority of Congress. The Territories are but political subdivisions of the outlying dominion of the United States. Their relation to the general government is much the same as that which counties bear to the respective States, and Congress may legislate for them as a State does for its municipal organizations. The organic law of a Territory takes the place of a constitution as the fundamental law of the local government. It is obligatory on and binds the territorial authorities ; but Congress is supreme, and for the purposes of this department of its governmental authority has all the powers of the people of the United States, except such as have been expressly or by implication reserved in the prohibitions of the Constitution.

Turning, then, to the particular act of Congress now under consideration, we find that the attention of that body was in some way brought to the fact that the legislative assembly of Dakota had, on the 21st of April, 1871, passed an act to enable organized counties and townships to vote aid to railroads. In addition to this, it was known that the Dakota Southern Railroad Company had been organized as a corporation under certain acts of the territorial legislative assembly, and that votes had been taken under the aid act in some of the counties and p. 134townships granting aid to or authorizing subscriptions of stock in this corporation. It is clear that Congress disapproved the policy of the aid act, and was unwilling to have it go into general operation ; but to the extent it could be made available for the construction and completion of the main stem of the Dakota Southern Railroad the contrary is distinctly manifested. The act as a whole was “ disapproved and annulled,” but in substance re-enacted by Congress “ for the purpose of validating any vote of aid or subscription ” to that company, but “ for no other purpose whatever.” A careful examination of the statute leaves no doubt in our minds on this subject. To make it sure that the organization of the company was complete, the “ Dakota Southern Railroad Company, as organized under and in conformity to the acts of the legislative assembly of said Territory,” was “ recognized and declared to be a legal and valid corporation.” It is then in terms enacted that the provisions of the aid act, “ so far as the same authorize, and for the purpose of validating any vote of aid and subscriptions to said company, for the construction, completion, and equipment of the main stem of said railroad, . . . are hereby declared to be and remain in full force.” And again : “ that said Dakota Southern Railroad Company shall issue to the respective counties and townships voting aid to said railroad, paid-up certificates of stock in the same in amounts equal to the sums voted by the respective counties and townships.” In the light of these distinct and positive declarations and enactments of Congress, it is impossible to bring our minds to any other conclusion than that, when the bonds now in controversy were put out, there existed full and complete legislative authority to bind the people of the county for their payment. No complaint is made of any irregularity in the proceedings under the law. The question in the case is one of power only. As we think, the vote of the people of the county was “ validated by Congress, and express authority given to issue the bonds for the purposes originally intended. The only change which Congress saw fit to make was to require the company to give stock in return for the donation as voted.

The judgment of the Supreme Court of the Territory will be reversed, and the cause remanded with instructions to reverse p. 135the judgment of the District Court and direct a judgment for the plaintiff on the facts found for such amount as shall appear to be due on the coupons sued for; and it is