98 F. 524 | U.S. Circuit Court for the District of Northern Ohio | 1899
(after stating the facts as above). The first question, which arises is whether the act of 1898, above recited, is valid; for, of course, if the act under which the bonds purport to be issued is without, constitutional authority, then it could confer no power to issue the bonds here in suit. Two objections are made to the validity of the act:
1. It is said that it is in violation of section 1, art. 18, of the constitution of Ohio, providing that the general assembly shall pass no special act conferring corporate powers. It was at first contended that this imposed only a limitation upon the right to pass laws of incorporation, and did not limit the power of the legislature of conferring additional faculties upon a corporation already created. Hut it is now settled that an act confers corporate powers which either creates a corporation or adds to the powers of a corporation already existing. Atkinson v. Railroad Co., 15 Ohio St. 21, and State v. City of Cincinnati, 20 Ohio St. 18, 86. If the trustees of Hardy township are a corporation, within the meaning of this section of the constitution, then the act giving them the power to issue bonds for refunding purposes is certainly a corporate power. It appears that for certain purposes the trustees of a township in Ohio are created a body corporate. Section 1376. Thus, it is argued that the power conferred upon them mast be a corporate power. The contention must fail, however, upon clearly-settled authority. The section of the constitution in question applies only to powers conferred upon private corporations and powers conferred upon public municipal corporations. The constitution recognizes both of these classes of corporations as such. It treats as entities, or quasi entities, of a different character, counties, townships, and school districts; and even though the legislature sees fit by statute to create these so-called quasi corporations, which are mere instru-mentalities or branches of the state government for local purposes, into corporations by- name, it does not thereby bring them within the inhibition of the section under consideration, which applies only to such corporations as were covered in the constitution under that name. It is settled in Ohio that neither the township nor its trustees are invested by section 1376 with the general powers of a corporation. Trustees v. Miner, 26 Ohio St. 452, 456. In State v. Powers, 38 Ohio St. 54, the question was whether an act which conferred upon a particular school district in the township of New London, in Huron county, Ohio, certain povrers, was a special act conferring corporate power, within the inhibition of the constitution. Judge Mc-Ilvaine, in delivering the opinion of the court, said:
“Whether powers conferred by the legislature upon a common-school district he corporate or not, within the meaning of the provisions of the constitution, cannot he determined definitively by the mere fact that such district or its board of education is declared by statute to be a corporation, but rather by*528 the object of its creation and the nature of its functions. The district is organized as a mere agency of the state in maintaining its public schools, and all its functions are of a public nature. The evils which this provision was intended to prevent are not found in the special privileges conferred upon such public agencies. The evils sought to be prevented were such as resulted from special privileges conferred upon private corporations. That the inhibition extends to municipal corporations, cities, and villages, has been settled by adjudications. See State v. City of Cincinnati, 20 Ohio St. 18, and 23 Ohio St. 445; State v. Mitchell, 31 Ohio St. 592, and cases there cited. In reference to these decisions, it is proper to remark that many of the powers and franchises of municipal corporations are of a private and local character, essentially different from those of mere political subdivisions of the state, commonly called ‘quasi corporations.’ And, again, cities and villages are classified as corporations, and provided for in article 13 of the constitution, which relates solely to corporations, section 6 of which provides for their organization by general laws; so that the decisions referred to, in which the inhibition of the 1st section is held to apply to municipal corporations, are of no weight on the proposition that school districts or other political subdivisions of the state are subject to the same inhibition. On the other hand, school districts are constituted so as to partake rather of the character of counties and townships, which are provided for in the tenth article of the constitution, not as corporations, but as mere subdivisions of the state for political purposes, as mere agencies of the state in the administration of public laws. Hunter v. Commissioners, 10 Ohio St. 515; State v. City of Cincinnati, 20 Ohio St. 18. In this article reference is made to ‘similar boards’ in connection with the commissioners of counties and trustees of townships. It is quite obvious to us that county and township organizations, although' quasi corporations, are not within the meaning of this provision of the constitution; and, upon full consideration, we are unanimous in the opinion that school districts, as similar organizations, though declared by statute to be bodies politic and corporate, are not within the reason or meaning of this inhibition of the constitution. Beach v. Leahy, 11 Kan. 23, a case exactly in point.”
Tbe case cited by the supreme court, with approval, from 11 Kan., involved the validity of an act authorizing school district No. 2, Neosho county, Kan., to issue bonds to build a school house. The constitution of Kansas contained a clause exactly like the one under consideration, forbidding the legislature to pass “any special act conferring corporate powers.” By statute the legislature of Kansas had provided that every school district organized in pursuance of the act should be a body corporate, and should possess the usual powers of a corporation for public purposes. It was held by the supreme court -of Kansas (Mr. Justice Brewer delivering the opinion) that school districts, though created into corporations by the legislature, were not corporations within the meaning of the constitution, and that power conferred upon them by the special act was not thereby inhibited. See, also, Hunter v. Commissioners, 10 Ohio St. 515; State v. City of Cincinnati, 20- Ohio St. 18, 37; Finch v. Board, 30 Ohio St. 37.
The opinion of Judge Scribner in delivering the opinion of the circuit court of Huron county in the case of Eckstein v. Board, 10 Ohio Cir. Ct. R. 480, 490, expressing the .view that an act conferring upon the authorities of the Chicago Junction village school district power to borrow money and issue bonds is a special act conferring corporate power, within the» Ohio constitution, cannot, in view of the cases already cited, be regarded as an authoritative exposition of this constitutional limitation. It seems to be
2. A more serious objection to the validity of this act is based upon article 2, § 26, of the Ohio constitution, providing that all laws of a general nature shall have a uniform operation throughout the state. In the case of Cass v. Dillon, 2 Ohio St. 607, it was held that an act of the general assembly, passed on March 24, 1851, to authorize the county of Muskingum to subscribe to the capital stock of the Cincinnati, Wilmington & Zanesville Railroad Company, upon the condition that such subscription should be first approved by a majority of the qualified electors of the county, to be ascertained at an election held upon notice for that purpose, was not an act which, having been passed by the legislature prior to the going into effect of the constitution of 1851, was repealed by section 1 of the schedule, providing that all laws in force on the 1st day of September, 1851, not inconsistent with this constitution, should continue in force until amended or repealed. It was held expressly in this case that such a law was not inconsistent with article 2, § 26, providing that all laws of a general nature shall have a uniform operation throughout the state. Judge Thurman, delivering the majority opinion of the court, said:
“We are also referred to section 26 of article 2, which provides that ‘all laws of a general nature shall have a uniform operation throughout the state; nor shall any act, except such as relates to public schools, ho passed, to take effect upon the approval of any other authority than the general assembly, except as otherwise provided in this constitution.’ That the first branch oí this section has had the effect to abolish certain laws of a general nature, whose operation was confined to particular localities, I have not the least doubt; but the act under consideration is not a law of that character. That it is a public law, of which the courts ex officio take notice, may well be admitted; but It does not follow that it is of a general nalure. It is no more of a gem eral nature than would be an act to authorize the construction of a bridge or the erection of a poor house. As well might it be said that the act authorizing Hamilton county to build a jail (19 Ohio Laws, p. 1150) was of a general nature, and therefore repealed. All such acts are, of necessity, local in their character. The origin of this section is perfectly well known. The legislature had often made it a crime to do in one county, or even township, what it was perfectly lawful to do elsewhere, and had provided that acts, even for the punishment of offenses, should be In force, or not, in certain localities, as the electors thereof respectively might decide. It was to remedy this evil and prevent its recurrence that this section was framed. How far it reaches, it is not now necessary to decide. That it may be difficult sometimes to say whether an act Is within the meaning, or not, is very probable. But certainly it cannot*530 be doubted that where, in the nature of things, the character of an act is necessarily local, the first branch of the section has no application.”
Cass v. Dillon was followed in a number of cases thereafter presenting substantially the same question.
In State v. Trustees, 8 Ohio St. 394, the question was whether an act conferring authority on the trustees of Union township, Fayette county, to subscribe for stock in a railroad company, and to issue bonds, was invalid, as being inconsistent with the constitution of 1851, though passed before the going into effect of the constitution; and the act was sustained. In State v. Judges, 21 Ohio St. 1, it is held that an act limiting the compensation of certain officers therein named, intended to apply to Hamilton county only, was not a law óf a general nature, but of a local nature, and therefore not in conflict with the section under consideration. In State v. Covington, 29 Ohio St. 102, it was held that an act to regulate the police force in cities of the first class was not a law of a general nature, which should have uniform operation throughout the state. In McGill v. State, 34 Ohio St. 228, the act of May 7, 1877, regulating the selection of jurors in the county of Cuyahoga, was held not to be a law of a general nature, within the meaning of this section. In State v. Hoffman, 35 Ohio St. 435, an act providing for the relief of W. M. Corry from an assessment under public improvement in the city of Cincinnati, in Hamilton county, is held to be an act of local and temporary nature, and that the relief was not of the character which should necessarily be granted by general law. In State v. Commissioners, 35 Ohio St. 458, it is held that an act providing for the improvement of a certain designated county road was local in its nature, and not in conflict with this section. In State v. Board, 38 Ohio St. 3, it is held that an act requiring the board of education of a city to release the sureties of a county treasurer from liability for school funds of the board which came to the hands of the treasurer for disbursement was not a general act. In State v. Powers, 38 Ohio St. 54, an act to consolidate the territory comprising the township of New London, Huron county, into a special school district, was held to be in conflict with the section in question, on the ground that the public schools in the state of Ohio, and their conduct and management, were matters of a general nature. The case of State v. Powers, in this regard, was expressly overruled in the case of State v. Shearer, 46 Ohio St. 275, 20 N. E. 3'35, in which it was held that the subject of dividing territory into school districts is in its nature local, and hence the formation of a special school district from territory within the limits of a township, by special act, was not in conflict- with section 26, art. 2, of the constitution. The first paragraph of the syllabus in the Shearer Case, which, in Ohio, states the law of the case, is as follows:
“(1) A law is not necessarily of a general nature by reason simply of its being upon a general subject. (2) Special legislation upon a subject-matter in its nature local is not prohibit®! by section 26 of article 2 of tbe constitution, notwithstanding- tbe subject-matter is the subject of a general law.”
The case of State v. Shearer was cited approvingly in the case of Metcalf v. State, 49 Ohio St. 586, 31 N. E. 1076.
These cases show the condition of the law down to 1he time when the bonds in the present case were issued and paid for. It seems to me that a consideration of this act shows clearly that its object was of a local and temporary nature. At this time townships were not authorized by general law to refund their indebtedness. It might very well be (and we must assume in support of the law that it was the case) that the indebtedness of this tpwnship was of such a character that it could not he paid off readily by taxation, and needed to be refunded in long-time obligations. The law does not apply to the future indebtedness of the township, but only to that which was in existence at the time of the passage of the act. Now, while it is true that the refunding of township indebtedness may he juo-vided for by general laws, lids, under the decisions already quoted, and especially that in State v. Shearer, 46 Ohio St. 275, 20 N. E. 335, is not a reason for holding that the subject-matter of the special law is necessarily general. In accordance with these decisions, it seems to me clear that at the time these bonds were issued the result of judicial construction of the constitution was that particular township indebtedness, as well as particular county indebtedness,
3. Beliance is had upon section 7 of article 10, whereby it is provided that the commissioners of counties, trustees of townships, and similar boards, shall have such power of local taxation for police purposes as may be prescribed by law. It is said that this limits the power of the trustees of townships to incur any indebtedness except for police purposes, because it is implied that the township cannot contract debts except for purposes for which it may levy a tax. This contention cannot be reconciled with the language of Judge Thurman in the case of Cass v. Dillon, 2 Ohio St. 607, 622, already referred to. But it is immaterial, in this case, whether the township has power to contract debts for other than police purposes, because there was nothing on the face of the bonds to show that the existing indebtedness was contracted for anything but police purposes.
The act under which the bonds were issued being valid, for the purposes of this suit by the plaintiff, the question next arises whether, in the face of the recitals of the bonds, the defendant is entitled to show that there was no valid existing indebtedness at the time the bonds were issued, and that the real purpose of issuing the bonds was to obtain money with which to comply with another act of the legislature authorizing the township to issue bonds for railroad purposes, — a purpose plainly in violation of the constitution of Ohio. The act contains no express provision as to who shall determine what was the amount of the present existing, outstanding indebtedness. The bonds, however, were to be issued by the trustees of the township. They were the officers of the township properly charged
It is plain that it was not the legislative intention to refer the purchasers of these bonds to the records of the township, from which it might be possible to make out the liabilities of the township accruing from time to time; but it was intended by the recital on the face of the bonds to save the purchaser from this necessity, and to justify him in relying upon the honesty of those recitals, which were to be made, it may be observed, by the same officers of the .township who, under the law, would contract that indebtedness, and must provide for its payment.
These views lead me to the conclusion that the plaintiff is, in this case, entitled to a judgment for the full amount of the bonds and coupons sued upon, with interest, as claimed in the petition.