German Sav. Bank v. Franklin County, 128 U.S. 526 (1888)

The bill was founded upon the alleged invalidity of the bonds. It sought an injunction to restrain the auditor of the State and the clerk of the county from taking measures to collect taxes to pay the interest on the bonds, and to restrain the railroad company and the holders of the bonds from bringing suit against the county on any of the coupons, and to restrain the state treasurer from paying the coupons, and to restrain the sheriff and collector of the county from collecting any more taxes to pay the interest on the bonds, and from Paying to the state treasurer any money already collected to pay interest on them; and prayed for a decree declaring an election held in the county on the 11th of September, 1869, °n the question of a subscription by the county to the capital p. 528stock of the railroad company, to have been void, and a subscription made by the County Court of the county, on the 6th of November, 1869, to the capital stock of the company, and all amendments, modifications and alterations of such subscription, to have been void, and a so-called subscription of $150,000 to the capital stock of the railroad company, made on the 13th of December, 1876, and an attempt made on the 12th of November, 1877, to amend such subscription and to contract for the building of the railroad, to have been void, and the bonds and coupons to be void, and for a decree requiring the holders of them to surrender them for destruction, and for a perpetual injunction to the above effect, and for general relief.

“This bond is one of a series of fifty of like tenor, for the sum of one thousand dollars each, numbered from one to fifty, inclusive, issued under the provisions of an act of the General Assembly of the State of Illinois entitled ‘ An act to authorize cities and counties to subscribe stock to railroads,’ approved vol . cxxvm—34 p. 530November 6th, a .d . 1849, and authorized by a majority of the qualified voters of said county of Franklin at an election held in said county on the 11th day of September, a .d . 1869, in accordance with the provisions of said act.

On the 6th of November, 1869, the County Court made an order, reciting that the election had been held on the 11th of September, 1869, in pursuance of the order of July 24th, 1869 ; that, at such election, the qualified voters of the county did, by a majority of their votes, (taking as a standard the number of votes cast for county officers at the last general election previous to such vote had upon the question of subscription,) authorize the County Court of the county to subscribe the sum of $200,000 to the capital stock of the railroad p. 532company; and declaring that, by authority of such vote and of the acts of February 22d, 1861, and November 6th, 1849, the county of Franklin “ does hereby subscribe ” to the capital stock of the company $100,000, by virtue of the act of February 22d, 1861, and the further sum of $100,000, by virtue of the act of November 6th, 1849, the stock to be payable in the bonds of the county, to be due in 20 years after the date thereof, and to draw interest, payable semiannually, at the rate of eight per cent per annum, and to be of the denomination of not less than $1000 each. The order proceeded: “ It is further ordered and considered by the court, that said bonds are to be issued upon the following conditions, and never until they are complied with — that is to say.” One of the conditions specified was, “ that said rajlroad shall be commenced in the county of Franklin within nine months from the date of said election, and completed through the county by the first day of June, a .d . 1872.” There was nothing in that order of November 6th, 1869, which authorized or directed any person to make any subscription to stock on behalf of the county on the books of the railroad company, nor is there any evidence in the record showing that that company ever assented to or accepted any subscription under that order.

On the 6th of February, 1871, the County Court made an order reciting the fact of the subscription directed to be made by the order of November 6th, 1869, and that it required that the railroad should be commenced in the county of Franklin within nine months from the date of the election authorizing the subscription to be made, namely, by the 11th of June, 1870, and be completed through the county by the 1st of June, 1872, and that the time for commencing the building of the road had expired; and it therefore ordered, that the time for commencing and completing the road be extended, and that the subscription be made on the stock books of the railroad company “ upon the following terms and conditions, and not until they are fully complied with,” namely, the $200,000 to be payable in the bonds of the county at par, to be due in 20 years from the date thereof, and to draw interest, payable semiannually, at the rate of eight per cent per annum, and to p. 533be of the denomination of not less than $1000 each ; that the railroad should be commenced in the county of Franklin on or before January 1st, 1872, and be completed through the county by the 1st of January, 1874; with other conditions. This order of February 6th, 1871, was the first order of the County Court which authorized a subscription to stock to be made on the books of the railroad company ; but the record contains no evidence that the subscription so authorized by that order was ever made on the books of the company, or that the company assented to or accepted such subscription.

On the 13th of December, 1876, the board of supervisors of the county, which had taken the place of the County Court in respect to the matter in question, made an order, which recited the fact of the election of September 11th, 1869, and the result and terms of the vote, and then proceeded to state, that the board, by authority of the vote and of the acts of February 22d, 1861, and November 6th, 1849, did thereby subscribe to the capital stock of the company $150,000, being $75,000 by virtue of each of the two acts, payable in bonds of the county at par, the bonds to be due in 20 years, and to be payable after the expiration of five years from their date, at the option p. 534of the county, and to draw interest at the rate of 8 per cent per annum, payable semiannually, and to be of the denomination of not less than $1000 each, the bonds to be issued and placed in the hands of a trustee, to be paid out on certain specified conditions, one of which was, that the railroad should be commenced within 30 days from the date of the order, and be completed by the 15th of October, 1877.

On the 12th of November, 1877, the board of supervisors made an order amending the order of December 13th, 1876, subscribing $150,000 to the stock of the company, so as to read, that the county, under the act of February 22d, 1861, and in accordance with the vote of September 11th, 1869, subscribed $100,000 to the stock, payable in bonds of the county at par, the bonds to be due 20 years after their date, and payable, at the option of the county, after 5 years, and to bear interest at the rate of 8 per cent per annum, payable semiannually, and to be of the denomination of $1000 each, and that the county, under the act of November 6th, 1849, and under such vote, subscribed $50,000 to the stock of the company, payable in bonds of the like tenor. The order directed the chairman of the board and its clerk to execute 100 bonds of $1000 each, and of the above tenor, for the subscription under the act of February 22d, 1861, and 50 bonds of $1000 each, of the above tenor, for the subscription under the act of November 6th, 1849, the bonds to be placed in the hands of a trustee and to be delivered to the railroad company “ only on the same p. 535conditions and under the same restrictions as specified in the order ” of the board of December 13, 1876.

We are of opinion that the decree of the Circuit Court must be affirmed. At the time the vote of September 11th, 1869, was had, the act of the General Assembly of Illinois, which became a law on the 16th of April, 1869, entitled “An act to fund and provide for paying the railroad debts of counties, townships, cities and towns,” Laws of Illinois of 1869, p. 316, was in force. Section 2 of that act provided that bonds to be issued in payment of a debt created by a county, to aid in the construction of a railroad, should, in order to receive the benefits of that act, be registered by the holder thereof at the office of the auditor of public accounts, who should cause the same to be registered in a book kept for that purpose. The same section provided, that the registration should show the date, amount, number, maturity and rate of interest of each bond, and under what act and by what county issued, and that the auditor should, under his seal of office, certify upon each bond the fact of such registration. Section 7 of the same act was in these words: “ And it shall not be lawful to register any bonds under the provisions of this act, or to receive any of the benefits or advantages to be derived from this act, until after the railroad, in aid of the construction of which the debt was incurred, shall have been completed near to or in such county, township, city, or town, and cars shall have run thereon; and none of the benefits, advantages or provisions of this act shall apply to any debt, unless the subscription or donation creating such debt was first submitted to an election of the legal voters of said county, township, city or town, under the provisions of the laws of this State, and a majority p. 536of the legal voters living in said county, township, city or town were in favor of such aid, subscription or donation ; and any county, township, city or town shall have the right, upon making any subscription or donation to any railroad company, to prescribe the conditions upon which such bonds, subscriptions, or donations shall be made, and such bonds, subscriptions or donations shall not be valid and binding until such conditions precedent shall have been complied with. And the presiding judge of the County Court, or the supervisor of the township, or the chief executive officer of the city or town, that shall have issued bonds to any railway or railways, immediately upon the completion of the same near to, into or through such county, township, city or town, as may have been agreed upon, and the running of the cars thereon, shall certify under oath that all the preliminary conditions in this act required to be done to authorize the registration of such bonds, and to entitle them to the benefits of this act, have been complied with, and shall transmit the same to the state auditor, with a statement of the date, amount, number, maturity and rate of interest of such bonds, and to what company and under what law issued; and thereupon the said bonds shall be subject to registration by the state auditor, as is hereinbefore provided.”

In the present case, the only vote of the people of the county of Franklin had prior to July 2d, 1870, authorizing a subscription to the capital stock of the railroad company, was the vote of September 11th, 1869. By § 7 of the act of April 16th, 1869, then in force, the county had the right, in p. 537voting for the subscription, to prescribe the conditions upon which the subscription should be made; and that section declared, that such subscription should not be valid and binding until such conditions precedent should have been complied with. Under such circumstances, any condition imposed by the vote, as a condition precedent to the issuing of the bonds in payment of the subscription, was a part of the vote, and a part of the authority for the subscription, within the meaning of the proviso to the article of the constitution above cited. So, also, any condition prescribed by the vote as a condition precedent upon which the bonds should be issued, must have been complied with, in order to make the bonds valid and binding. In the present case, the vote of September 11th, 1869, as a vote in favor of the subscription of $200,000 to the stock, payable in the bonds described in the order of the County Court of July 24th, 1869, was a vote in favor of such subscription, payable in the bonds, “ said bonds to be issued,” (in the language of the order of July 24th, 1869, directing the election to be held,) “ upon the following conditions, and not until they are complied with.” One of those conditions was that the railroad “should be commenced in the county of Franklin within nine months from the date of such election, and completed through the county by the 1st day of June, 1872.” The bonds in question were not issued until November, 1877, and the road was not completed through the county until about the 1st of November, 1879. No change was made in the conditions prescribed by the vote, prior to the 2d of July, 1870, and there was no power, after that, to make any material change in those terms and conditions.

The evident purpose of the provision of § 7 of the act of April 16th, 1869, was to prevent the issue of bonds in payment of subscriptions to railroad companies until the conditions imposed by the vote, as conditions precedent, had been complied with, and to declare that the bonds, if issued in violation of such conditions precedent, should not be valid and binding. When the Savings Bank, in April and May, 1880, purchased the bonds in question, it was, notwithstanding the recitals on the face of them, chargeable with notice of the p. 538provision of § 7 of the act of April 16th, 1869, which had been in force for nearly five months before the date named on the face of the bonds as the date of the election, and for more than eight years before the date named on the face of the bonds as the date of their issue. It was also required to take notice of the construction given to such statutory provision by the Supreme Court of Illinois, at its September Term, 1876, prior to the issue of these bonds, in the case of Town of Eagle v. Kohn, 84 Illinois, 292.

In regard to the case of Town of Eagle v. Kohn, it is urged by the Savings Bank, that it does not appear, by the report of that case, that the bonds there in question had been registered by the state auditor, as contemplated by the act of April 16th, 1869; that the provisions of §§ 2 and 7 of the act of April 16th, 1869,. imply that the state auditor shall ascertain and determine whether or not the evidence is sufiicient to authorize him to register the bonds and to indorse thereon his certificate of registration; that it must be presumed that the presiding judge of the County Court, whose duty it was, under § 7, to certify to the auditor that all the preliminary conditions required by the act to be done, to authorize the bonds to be registered and to entitle them to the benefits of the act, had been complied with, had performed his duty; that, after such registration and the certificate of the auditor on the p. 540bonds had been made and other persons have acquired rights in the bonds so registered and certified, upon the faith of the registration and certificate, those rights cannot be affected by subsequently showing that some of the facts entitling the bonds to registration did not exist; that, although bonds issued after the passage of the act of April 16th, 1869, were required to be registered in order to entitle them to the benefits of that act, a tribunal was provided to determine whether the conditions precedent upon which the bonds were to be issued had been complied with ; that the decision of that tribunal, as evidenced by the registration of the bonds, is conclusive ; and that the legislative intention must have been, that the registration of the bonds should settle definitively the question of compliance with the conditions precedent.

The answer to these suggestions is, that the preliminary conditions required by § 7 of the act of April 16th, 1869, to exist, in order to authorize the registration of the bonds, are only that “ the railroad in aid of the construction of which the debt was incurred shall have been completed near to or in such county, township, city or town, and cars shall have run thereon ; ” and that the subscription creating the debt should have been voted for by a majority of the legal voters of the county, township, city or town, living therein. Those preliminary conditions are the only ones which are required to be certified to, by the presiding judge of the county court, in order to authorize the registration of the bonds. It is not required by § 7, that the presiding judge of the County Court shall make any certificate as to a compliance with the terms and conditions of any subscription. Section 7 requires, as a preliminary to registration, that the railroad shall have been completed near to or in the county, and that cars shall have run thereon ; bue it does not require that the road shall have been completed by any time prescribed as a condition precedent in the vote. The registration of the bonds by the state auditor has nothing to do with any of the terms or conditions on which the stock was voted and subscribed. Neither the registration nor the certificate of registry covers or certifies any fact, as to compliance with the conditions prescribed in p. 541the vote, on which alone the bonds were to be issued. The recital in the bonds does not contain any reference to the act of April 16th, 1869, or certify any compliance with the provisions of that act; and the certificate of registry merely certifies that the bond has been registered in the auditor’s office pursuant to the provisions of the act of April 16th, 1869. The statute does not require that the auditor shall determine or certify that the bonds have been regularly or legally issued. The case of Lewis v. Commissioners, 105 IT. S. 739, does not aid the Savings Bank. In that case, under an act of Kansas in regard to registry, the auditor had certified that the bonds had been “ regularly and legally ” issued. In Dixon County v. Field, 111 U. S. 83, and in Crow v. Oxford, 119 IT. S. 215, the first case arising in Nebraska, and the second in Kansas, the certificate of the auditor in each case was that the bonds were “regularly and legally ”, issued, but this court held, in both cases, that the municipality issuing the bonds was not estopped by the registry or the certificate, and that no conclusive effect was given by the registration statute to the registration or to the certificate.

In the case of Insura/nce Co. v. Bruce, the bonds were issued by the town of Bruce, in the State of Illinois, on the 1st of December, 1870, in payment of a subscription to the capital stock of a railroad company. The bonds recited upon their face that they were issued by virtue of two statutes of the State, one of which was the before-named act of April 16th, 1869; and the bonds also certified on their face, that, at a special election held in the township, on the 7th of September, 1869, a majority of the legal voters participating at the same had voted in favor of the subscription and of the issue of the bonds. Certain of the conditions as to time, imposed by the vote of the people, had not been complied with, and the bonds were in the hands of bona fide holders p. 542for value. In the opinion in that case, the terms of § 7 of the act of April 16th, 1869, and the ruling in the case of Town of Eagle v. Kohn were considered; and the decision of this court, in favor of the bondholder, was placed upon the ground that the case was distinguishable from that of Town of Eagle v. Kohn, in that it did not appear from the latter case that the town had, by the recitals in its bonds, estopped itself from asserting, as against a bona fide holder, the non-performance of conditions imposed by the vote of the people, while, in the case then before this court, the town of Bruce had, by the recitals in its bonds, represented to the public that the bonds were issued in all respects in conformity to law, and that nothing remained to be done which was essential to its liability thereon. The view taken was that, as the town of Bruce had power, under the 7th section of the act of April 16th, 1869, to make an unconditional subscription, and to issue and deliver its bonds in advance of the construction of the road, and as the bonds recited that they were issued by virtue of the act of April 16th, 1869, it was too late for the town, as against bona fide purchasers of the bonds, to claim that they had been issued in violation of the special conditions. In the case now before us, as before said, there is no reference, in the bonds, to the act of April 16th, 1869, and no statement in the bonds that they were issued by virtue of that act. Moreover, in the case of Insurance Co. n . Bruce, the bonds had been issued on December 1st, 1870, prior to the decision in Town of Eagle v. Kohn, which was made at September Term, 1876. •

In Pana v. Bowler, the bonds were issued by the town of Pana, in Illinois, June 23d, 1873, prior to the decision in Tbwn of Eagle v. Kohn. The vote of the people of the township was had on April 30th, 1870, while the act of April 16th, 1869, was in force, and the bonds, as in the case of Insurance Co. v. Bruce, recited on their face, not only that they were issued in compliance with the vote, but that they were issued in accordance with the provisions of the act of April 16th, 1869. No point was raised in that case that, the bonds having been issued after the new constitution of Illinois came p. 543into force, on July 2d, 1870, in pursuance of a vote of the people had on April 30th, 1870, conditions prescribed by that vote had not been complied with.

In Concord v. Robinson, 121 U. S. 165, this court held, that subscriptions and donations in aid of railroads, voted by municipal corporations of Illinois, prior to July 2d, 1870, such vote being authorized by laws in force when it was taken, could be completed after that date, according to the conditions attached to the vote. In that case, the vote of the town of Concord, Illinois, had been had on November 20th, 1869, in p. 544favor of levying a tax to raise a sum of money as a donation to a railroad company, provided the company should run the road through two specified villages. The road was never constructed into or through either of them, and the vote was not for the issue of bonds, but for levying a tax; but bonds were issued, in 1871, and this court held them void, in a suit against the town on coupons.cut from them, the bonds reciting on their face that they were issued under and by virtue of a specified law of Illinois, which law, however, only authorized towns, including the town in question, to make a donation in aid of the particular road in question, the money to be raised by taxation.

There were two actions, each brought to recover the price of goods sold and delivered by the plaintiff to the defendant, which actions were consolidated into one. The trial was had before Judge Shipman and a jury, which, on the 25th of January, 1888, rendered a verdict for the plaintiff for $9574.53. The docket minute of the court, of the proceedings after vervol . cxxvm—35 p. 546diet, as first entered, showed that the court then made the following order: “ It is ordered that the defendant have forty days from January 25, 1888, within which to prepare and serve a case herein, with leave to turn the same into a hill of exceptions. It is further ordered that judgment may be entered on said verdict, and that the defendant have a stay of execution until the decision of the motion for a new trial herein.” On the 31st of January, 1888, a judgment was rendered in the action, in favor of the plaintiff, for $9665.39, being the amount of the verdict and costs.

On the 17th of April, 1888, the court, after hearing both parties, made an order amending the docket minute of the proceedings after verdict, and. the judgment roll founded thereon, by striking out, in such docket minute, everything p. 548after the words “it is ordered,” and inserting the following: “ Mr. Kellogg moves orally to set aside the verdict as against evidence and for a new trial, upon a bill of exceptions, to be thereafter drawn. The court overruled the motion to set aside the verdict and denied the same, and ordered judgment for plaintiff upon the verdict to be entered, and that the defendant have a stay of forty days to prepare and serve its bill of exceptions, and a further stay until the decision of such motion for a new trial upon said bill of exceptions.” The same order directed that the order of April 11th, 1888, be resettled and entered with the following recital: “In this case, at the October term of this court, and on the 25th day of January, 1888, after verdict for the plaintiff, counsel for the defendant having orally moved for a new trial, upon a bill of exceptions, to be thereafter drawn, and the court having then ordered judgment for the plaintiff to be entered on said verdict, and that a stay of proceedings upon the judgment f<?r forty days, and until the decision of said motion, be granted to the defendant, and the said October term of this court having ended on the 31st day of March, 1888, and the said forty days having elapsed, and no bill of exceptions having been presented to or allowed by the court, and there being no bill of exceptions upon which said motion for a new trial is to be based ; ” and with a direction “ that the said stay of proceedings so granted be vacated and set aside.”

We are of opinion that the writ of mandamus must issue. By rules 67 and 69 of the Circuit Court for the Southern District of New York, which took effect on the first Monday of August, 1838, it is provided that, when exceptions to the opinion of the court are taken by either party on the trial of a cause, he shall not be required to prepare his bill of exceptions at the trial, but shall merely reduce the exceptions to writing, or the court will, on request, note the point, and the bill of exceptions shall afterwards be drawn up, amended, and settled, under the following regulations: The bill of exceptions shall be prepared and a copy thereof served upon the opposite party before judgment is rendered on the verdict; the p. 552opposite party may, within four days after such service, propose amendments to the bill and serve a copy upon the party who prepared it; if the parties cannot agree in regard to the amendments, then, within four days after such service of a copy of the amendments, either party may give to the other notice to appear within a convenient time, and not more than four days after service of such notice, before the judge who tried the cause, to have the bill and amendments settled ; the judge shall thereupon correct and settle the same as he shall deem to consist with the truth of the facts; but, if the parties shall omit, within the several times above limited, unless the same shall be enlarged by a judge, the one to propose amendments, and the other to notify an appearance before the judge, they shall respectively be deemed, the former to have agreed to the bill as prepared, and the latter to have agreed to the amendments as proposed; and if the party omit to make a bill within the time above limited, unless the same shall be enlarged as aforesaid, he shall be deemed to have waived his right thereto.

It is apparent that both parties in this case acted upon the view that the rule of practice of the Supreme Court of the State applied to the case; because the plaintiff, instead of serving on the defendant his proposed amendments to the bill within four days after the 3d of March, as required by p. 553the rule of the Circuit Court, waited ten days, under the rule of the Supreme Court of the State, and then, on the 13th of March, obtained a stipulation from the defendant giving ten days’ additional time to prepare and serve amendments. It may be that the defendant, in serving, on the 27th of March, a notice of settlement of fourteen days, for the 10th of April, on the plaintiff, intended to comply, as it in fact did comply, with the requirement of the rule of the state court that such notice should be a notice of not less than four nor more than twenty days; yet it also sufficiently complied with rule 67 of the Circuit Court, which required a notice of not more than four days, because a notice of four days, served on the 27th of March, would have been for the 31st of March, and Judge Shipman was not then within the Southern District of New York, so as to be able to perform any judicial act there, nor did he come there, so as to be able to do so, until the 2d of April, 1888. Under these circumstances, the notice for the 10th of April was a reasonable compliance with the rule of the Circuit Court.

This court has had occasion several times to construe § 914. In Nudd v. Burrows, 91 U. S. 426, a state statute required a judge to instruct a jury only as to the law of a case, and provided that the written instructions of the court should be taken by the jury in their retirement and returned with the verdict, and that papers read in evidence plight be carried from the bar by the jury. The court charged the jury upon the facts p. 554and refused to permit them to take to their room the written instructions given by the court or papers read in evidence. This court held that this was not error, because the personal conduct and administration of the judge in the discharge of his separate functions was not practice or pleading, or a form or mode of proceeding, within the meaning of those terms in the act of Congress.

In harmony with the foregoing decisions, we are of opinion that 8 914 does not extend to the means of enforcing or revising a decision once made by the Circuit Court. Section 914 does not extend to proceedings to enforce a judgment, because by § 916 special provisions are made as to a remedy by execution or otherwise, to reach the property of a judgment debtor, by borrowing from the laws of the State only those remedies then already existing, or which should thereafter be adopted by general rules of the Circuit Court. Lamaster v. Keeler, 123 U. S. 376. The object of § 914 was to assimilate the form and manner in which the parties should present their claims and defence, in the preparation for the trial of suits in the Federal courts, to those prevailing in the courts of the State. As we have seen, it does not include state statutes requiring instructions to the jury to be reduced to writing, or those which permit such instructions and certain papers read in evidence, to be taken by the jury when they retire, or those which require the jury to be directed, if they return a general verdict, to find specially upon particular questions of fact involved in the issues; and, as it does not apply to a motion for a new trial, nor affect the power of the Circuit Court to grant or refuse a new trial at its discretion, so it does not cover any p. 555other means of enforcing or revising a decision once made by the Circuit Court. The manner or the time of taking proceedings as a foundation for the removal of a case by a writ of error from one Federal court to another is a matter to be regulated exclusively by acts of Congress, or, when they are silent, by methods derived from the common law, from ancient English statutes, or from the rules and practice of the courts of the United States. The only regulation made by Congress as to bills of exceptions is that contained in § 953 of the Revised Statutes, which provides that they shall be sufficiently authenticated by the signature of the presiding judge, without any seal.

On the facts of the present case, the decision in Muller v. Ehlers, 91 U. S. 249, has no application. In that case, on a trial by the court, without a jury, of an action at law, there was a general finding for the plaintiff, and a motion for a new p. 556trial. The motion was continued until the next term, when it was overruled, and judgment was entered on the finding. At the latter term, a writ of error, returnable to this court, was sued out, and the term was adjourned without any bill of exceptions having been signed or allowed, or any time having been given, either by consent of the parties or by order of the court, to prepare one. At the next ensuing term, and after the return day of the writ of error, a bill of exceptions was signed and filed by order of the court, as of the day the finding was made, and it did not appear that that had been done with the consent or knowledge of the plaintiff. On these facts, this court held, that the order of the court below, directing the filing of the bill of exceptions as of the date of the finding, was a nullity, on the ground that the parties had, in due course of proceeding, both in law and in fact, been dismissed from the court. That decision has no application to the present case, because the rights of the defendant were saved by the express order of the court, made during the term, and by a sufficient compliance on the part of the defendant with the rules of the Circuit Court, and by what must be held to have been the consent of the plaintiff.