No. 407 | U.S. Circuit Court for the District of Kansas | Sep 15, 1896
This action is brought to recover upon interest coupons attached to bonds issued by the defendant corporation to aid in the construction of the Kansas Midland Railway, by virtue and under authority of chapter 107 of Uie act of the legislature of 1876, entitled “An act to enable counties, townships and cities to aid in the construction of railroads, and to repeal section 8 of chapter 39 of the Laws of 1871.” The total issue of bonds was $11,000, bearing date December 1, 1887, were to run 80 years, and bore interest at the rate of C per cent, per annum, payable semiannually. The defendant corporation is, and was at the time of the issuance of the bonds, a city of the third class. The defendant makes defense to this action on several grounds, and, first, that the city of Iiurrton, under the provisions of section 1 of chapter 60 of the act of 1871, is a part of the municipal township of Burrton for the purpose of subscribing stock in aid of constructing railroads, and cannot issue bonds as a city; that the city of Burrton never had a population of 1,000 inhabitants, nor an assessed value of real and personal property of $100,000, and hence has never become a separate township for-any purpose under the provisions of paragraph 925 of the (General Statutes of 1889. As a. further defense, the defendant avers that i he total assessed value of all property, real and personal, in Burrton township, including the city of Burrton, for the year 1886, was $226,961.42, and that the law only authorized the issue by townships of bonds in aid of railroads to the amount of $15,000, and 5 per cent, additional of the assessed value of the township. It further avers that the municipal township of Burrton, prior to the issuing of the bonds in controversy, had issued $26,000 of its bonds in aid of the said railway company, that being the full amount which it was authorized by law to issue. As a further defense, it is averred that the total mileage of the main line of the Kansas Midland Railway in Harvey county was 33.18 miles, and, including side tracks and switches 15.1 miles; that, prior to the issuance of these bonds, Lake township, in said county, had issued $20,000 of its bonds to said railway company, in addition to the $26,000 issued by the township of Burr-ton; and that the act of the legislature of 3887 (chapter 183), which was in force at the time the bonds were issued, limited the total issue of bonds for county, township, and city in aid of any railroad to $2,000 for each and every mile constructed in the county, and therefore the said bonds in controversy were in violation of said act, an overissue, illegal, and void. In reply to the last defense, the plaintiff: avers that the limit of $2,000 per mile does not apply, because these bonds were voted in 1886, and the law at: that time permitted the issue of $4,000 pm* mile, and the law of 1887 contained provisos saving all rights acquired under the former act.
The first question to he considered is the intent and meaning of section 4 of chapter 60 of the act of 3871, providing for the organization and government of cities of the third class. It reads as follows:
“Sec. 4. Municipal corporations regulated and governed by this act shall he and remain a part of the corporate limits of the municipal townships in*964 ■which the same is situated for all township purposes of electing justices of the peace, constables, for the purpose of building bridges, and subscribing stock in aid of constructing railroads. All elections for justices of the peace and constables, and for issuing township bonds for building bridges and railroads, shall be held at such place as shall be prescribed for holding the township elections.”
It will be observed that the city is not made a part of the municipal township for all purposes, but for all township purposes of electing justices of the peace, constables, building bridges, and subscribing stock in aid of railroads. The effect of this section was to make the city of Burrton a part of the municipal township of Burrton for issuing township bonds in aid of railroads. So, when the municipal township of Burrton came to act on that subject, as a township, the people and territory of the city of Burrton were to be considered as included in the township. The act of 1S70 (chapter 90) had provided for townships issuing bonds in aid of railroads. An election should be called by the county commissioners on the petition of 50 qualified voters, etc.; and section 5 required three-fifths of the electors voting to favor the subscription in order to carry the proposition. Section 4, before cited, does not, when considered with other provisions of the law, either expressly or by implication deprive the city of the right to issue its bonds as a city in aid of railroads. Section 63 of the same act provides as follows:
“Sec. 63. The council shall take all needful steps to protect the interests of the city, present or prospective, in any railroad leading from or toward the same; but they shall not take or subscribe any stock in any railroad, unless at least two-thirds of the electors of such city voting at a legal election vote in favor thereof.”
Without holding this section sufficient authority for the city to have issued its bonds, at least it indicates the legislative intent. It required a different proportion, of electors of the city (two-thirds) to vote for the subscription than was required by section 5 of the act of 1870 for township subscriptions.
Section 1 of the act of 1876 (chapter 107), under which these bonds were issued, provides that:
“* * * Whenever two-fifths of the resident tax payers of any ' incorporated city shall petition the mayor and council of such city to submit to the qualified voters of such * * :: city a proposition to subscribe for the capital stock of, or to loan the credit of such * * * city to any railroad company constructing or proposing to construct a railroad through or into such * * * city, * * the mayor and council for such city shall cause an election to be held to determine whether such subscription or loan shall be made. * * * And in no case shall the total amount of county, township and city aid to any railroad company exceed four thousand dollars per mile for each mile of railroad constructed in said county.”
This section confers the authority to aid the construction of railroads on any incorporated city. It is general, and later than the act of 1871. Section 5 requires two-1 hirds of the qualified electors voting, to favor the subscription, in order to carry it.
Passing to the question of the overissue: It appears from the agreed statement of facts that the election for voting on the subscription and bonds was duly held on the 12th day of August, 1886; that 107 electors voted for the subscription, and 8 against it; that on August 13th the vote was duly canvassed by the mayor and council, and
“Bun-ton. Kansas, December 22, 1887.
“Received of the mayor and council of the city of Burrton, Kansas, tweutyelglit bonds of said city, aggregating $14,000, made to the Kansas Midland Railway Company, and heretofore voted in aid of the consi ruction’ of said railroad. The Kansas Midland Railway Company,
“By O. H. Bentley, Its Secretary and Attorney.
“The St. Louis <fc San Francisco Railroad Company,
“By Colin R. Wise, Its Resident Engineer and Agent.”
It is further agreed that the stock was subscribed and the bonds delivered to the railway company on the 22d day of December, 1887, and the said bonds were duly registered according to la,w in the office of the auditor of state on the 31st day of December, 1887, as shown by the certificate of the auditor of slate on each of said bonds. It is further agreed that on the 30th day of December, 1887, Burrton town-' ship executed and delivered bonds to said railway company in the sum of $26,000, and that Lake township, in said county, executed and delivered bonds to said company in the sum of $20,000; that all of said bonds bear date December 1, 1887, and were duly registered in the office of the auditor of state on the 31st day of December, 1887.
The following preamble and resolution is a part of the records of the city of Burrton:
“The following preamble and resolution was passed at a meeting of tile city council of tbe city of Burrton, held in the city of Burrton, December 22, 1887: Whereas, the city of Burrton lias heretofore voted bonds in the sum of $14,-000 to aid in the construction of the 1-tansa.s Midland Railway Company;*966 and whereas, said railway company has completed its line of railway through Harvey county, Kansas, with a. depot and telegraph station at the city of Burrton, Kansas, in accordance with the terms of said proposition; and whereas, the mayor and councilmen of said city have passed over the completed line of said railway in said Harvey county; and whereas, said company has fully complied with all the terms and conditions of its preposition, to said city, and now has trains running upon its line of railway: Therefore, be it resolved, that the mayor of the city of Burrton. and the city cleric of said city, are hereby authorized to sign, execute, and deliver to the Kansas Midland Railway Company, its successors and assigns, the bonds of said city in the sum of $14,000, as heretofore voted to the Kansas Midland Railway Company.”
It is further agreed that, before the maturity of the interest coupons or bonds, the plaintiff became the bona fide purchaser thereof for value.
The act of 1887 (chapter 188) amended section 1 of the act of 1876, and reduced the amount of bonds to be issued from $4,000 to $2,000 for each and every mile of road built in the county; but said act contained the following provisions:
“Provided, nothing herein contained shall be construed to impair any rights accrued under the acts hereby repealed. Provided, that nothing in this act shall affect any aid voted, or election pending a,t or prior to the time when this act goes' into effect.”
It seems to me that these provisos clearly saved to the Kansas Midland Railway Company all the rights it had acquired under the act of 1876. It is true the contract between the city and the railway company was not completed, but it was in process of execution. The company had until December 81, 1887, to perform it. It had acquired vested rights under the act of 1876 by the vote of the electors of the defendant corporation, and those rights were expressly saved by the provisos above quoted.
Rut it is contended that, even at $4,000 per mile, there was an over-issue, unless the side tracks are included. The total of all the bonds, city and township, was'$60,000. This demanded at least 15 miles of railroad to be constructed in the county. Of the main line, there was 13.18, and, with the side tracks, 151 miles in the county. How far this discrepancy, if a discrepancy there is, would affect a bona fide holder of these bonds, I am not prepared to say; but one thing is clear under this feature of the law, and that it this: The first issue of bonds, all of which were within the limit of the law, would not be affected by a subsequent overissue of other bonds. These bonds were delivered to the railroad company on the 22d day of December, 1887, eight days before the Burrton and Lake township bonds were issued, as appears from the agreed facts, and from the certificates from the office of the auditor of state. That they all bear date and were registered on the same day is not so material as the date of their actual issue and delivery. Judgment must go for the plaintiff.