58 Kan. 491 | Kan. | 1897
This was an action to recover interest claimed to be due upon refunding bonds alleged to have been issued by the Board of County Commissioners of Scott County, and which were purchased by the State as an investment of the permanent school fund.
In August, 1887, the Board of County Commissioners of Scott County issued $120,000 of bonds in aid of the construction of two railroads : — $80,000 for the C. K. & N. railroad, and $40,000 for the D. M. & A. railroad. The bonds had previously been authorized by a vote of the electors of the county, the railroads had been built, and the bonds were issued and exchanged for equal amounts of the capital stock of the companies, in pursuance of law and in compliance with the conditions of the contract between the companies and the county. After a number of years, the county failed to pay the interest accruing upon the bonds, and two different actions to recover the defaulted interest were brought in the Circuit Court of the United States for the District of Kansas by the holders of the bonds. In one of these, judgment was rendered against the county, on January 11, 1892, for $11,745.41; and, upon the same day, judgment was taken against the county, in the other case, for $21,479.20.
Soon afterward, negotiations looking toward the refunding of the entire debt were begun, and, in March, 1892, after a number of public meetings of
The indebtedness was refunded in pursuance of the provisions of chapter 50, Laws of 1879, as amended by chapter 163, Laws of 1891. The question of issuing refunding bonds was never submitted to a vote of the electors, and it is earnestly contended that a vote is indispensable, and that the refunding bonds in suit are therefore invalid. This question and some others closely related to it, yrhich have been argued by counsel for the county, have been decided, adversely to his contention, in the recent case of Riley v. Garfield Township, ante, p. 299.
When they returned to the county seat, the clerk entered at length upon the journal the order previously made authorizing the compromise and the refunding of the debt and the order approving the execution and delivery of the bonds in exchange for the old indebtedness. The orders have remained in the journal, which was kept under the Board’s supervision, and must now be deemed to have been entered and recorded with its sanction ' and approval. No effort was made to prove that fraud was contemplated or committed, nor that the commissioners had acted clandestinely or secretly in issuing the bonds. On the other hand, the proof shows that the bonds were issued in accordance with the desire of most of the people of Scott County. The refunding of the debt, a portion of which was then in judgments, had been under serious consideration by the commissioners and the people of the county for months prior to the time when the bonds were issued. Public meetings of the electors and taxpayers were called at which this question was openly considered. Propositions from the creditors were received and discussed at these meetings, and the action there taken was reported to, and published in, the local newspapers. Finally, a proposition was made which was favorably received ; .and, at a largely attended public meeting, a resolution was adopted, with practical unanimity, instructing
The Board could not have chosen a more effective way of confirming and ratifying its irregular action, nor can a case be conceived where the doctrine of ratification is more justly applicable than in this. The Board made and maintained a record of its proceedings which invited confidence and would leave no doubt in the mind of a purchaser of the validity of the bonds. For a number of years after the issue was made, the Board acted as if its authority had been regularly exercised and the bonds valid. Instead of rescinding or attempting to rescind its action, it has repeatedly acknowledged the validity of the debt, and has availed itself of the benefits derived from the issuance and sale of the refunding bonds. The County has been relieved from the burdens of the old indebtedness, which was confessedly legal, and yet, notwithstanding this, it seeks to have the new bonds declared invalid, and thus escape liability entirely. Having recognized the validity of the bonds, retained and availed itself of the benefits of the compromise and refunding of the old indebtedness, levied and collected taxes and paid the interest upon the refunding bonds for a number of years, the County is not in a position to raise the question of irregularity in the issue, nor to contest the validity of the bonds, as against the State, which is an innocent purchaser and bona fide holder of the same. Comm’rs of Morris Co. v. Hinchman, 31 Kan. 737 ; Brown v. City of Atchison, 39 id. 37 ; Brown v. Milliken,
There is no force in the point that judgments cannot be refunded, as the statute expressly authorizes a county to “ compromise and refund its matured and, maturing indebtedness of every kind and description whatsoever.” Laws 1879, ch. 50; Riley v. Garfield Township, supra.
None of the objections urged against the validity of the bonds can be sustained; and therefore the judgment of the District Court will be reversed and the cause remanded for further proceedings.