Chicago, B. & Q. R. v. Otoe County

DILLON, Circuit Judge. There are three causes of demurrer set down against the sufficiency of the petition. The second ground of demurrer cannot be considered, since it refers to and rests upon matters de hors the petition. By the petition it does not appear that the bonds mentioned in the coupons were issued to the Burlington and Missouri Railroad Company or to any railroad company, or to aid in the building of, or to pay for stock in, any railroad company whatever. It is alleged in the petition that the defendant made and issued its negotiable bonds, with interest coupons attached; that before the coupons now in suit became due, the bonds together with the-coupons, for value became the property of the plaintiff, the Chicago, Burlington & Quincy Railroad Company. The first ground of demurrer raises the-question whether the petition must set forth the facts showing that the county commissioners were authorized to issue the bonds. There are two acts of the state of Nebraska, under either of which (assuming their constitutional validity) bonds to aid in the construction of a railroad (assuming also, the bonds now in controversy to be of this character) might have been properly made and issued by the defendaut. Laws Neb. 1869, pp. 92, 260. One of these is a general act to enable public and municipal corporations to borrow money on their bonds, or to issue bonds to aid in the construction of railroads or other works of internal improvement, after the proposition shall have been submitted to and approved by a vote of the people. The other is a special act “authorizing the county commissioners of Otoe county (the defendant) to issue $150.000 of its bonds to the Burlington & Missouri River Railroad Company, or any other company that will secure to Nebraska City a direct eastern railroad connection, as a donation to said railroad company, or on such terms and conditions as may be imposed by said county commissioners.” Under which of these acts, if either, the bonds were issued, is not alleged. It appears, however, from an act ol’ the legislature which this court will notice, that on certain terms the defendant was authorized to issue its bonds; and bonds having been issued, and being, as [600] alleged in the petition, in the hands of holders for value, before maturity, the presumption is that the election was held and the other necessary terms complied with, which would authorize the commissioners to issue the bonds. NOTE. Constitutional question: See Gilchrist v. Little Rock [Case No. 5,421]; King v. Wilson [Id. 7.810], Remedy of creditor: Welch v. Ste. Genevieve [Id. 17.372]; Muscatine v. Mississippi & M. R. Co. [Id. 9,971]; Lansing v. Treasurer [Id. 1G,53S]. [NOTE. On the trial upon the merits, the judges of the court were divided in opinion, and certified the case to the supreme court. The queMious upon which the circuit court judges divided were as follows: [1. Whether the act of the Nebraska legislature (Feb. 15, 18G9) authorizing the issue of bonds by the county of Otoe in aid of the eon-struction of a railroad outside the state conflicted with the state constitution. [2. “Whether the county commissioners of Otoe county could, under the act of February 15, 1869, lawfully issue the bonds from which the coupons in suit were detached, without the proposition to vote the bonds for the purpose indicated, and also a tax to pay the same being or having been submitted to a vote of the people of the county, as provided by the act of the territorial legislature of Nebraska passed January 1, 1861.” [The certificate o' the supreme court is as follows: First, that the act of February 15, 1SG9, is not unconstitutional; and, second, that the county commissioners of Otoe county could lawfully issue the bonds from which the coupons in suit were detached, without any submission to a vote of the people of the county of the proposition to approve the bonds, or a tax for the payment thereof. Chicago. B. & Q. R. Co. v. County of Otoe, 16 Wall. (S3 TJ. S.) GG7.] The question on this record is one of pleading; and a holder, under such circumstances, of bonds negotiable in their character, is not bound, when suing in the federal courts to allege in his petition, the election or other facts showing a compliance with the preliminary steps required of the officers before they are authorized to issue and deliver the bonds. Such is the doctrine of the supreme court, which it is obligatory on this court implicitly to follow. If in the given case, the authority to issue bonds did not arise or exist, and the corporation is not liable thereon, the facts may be pleaded in defence. Knox Co. v. Aspinwall, 21 How. [62 U. S.] 539; Moran v. Commissioners, 2 Black [67 U. S.] 722; Rogers v. Burlington, 3 Wall. [70 U. S.] 364; Cincinnati v. Morgan, Id. 275; Mercer Co. v. Hackett, 1 Wall. [68 U. S.] 83; Gelpeke v. Dubuque, Id. 220; Curtis v. Butler Co., 24 How. [65 U. S.] 435; Bissell v. Jeffersonville, Id. 287; Meyer v. Muscatine, 1 Wall. [68 U. S.] 385; City of Kenosha v. Lamson, 9 Wall. [76 U. S.] 477; Supervisors v. Schenck, 5 Wall. [72 U. S.] 772; De Voss v. Richmond [18 Grat. (Va.) 338]. The averments in the petition show prima facie liability; and this view is entirely consistent with the case of Marsh v. Fulton Co., 10 Wall. [77 U. S.] 679, recently decided by the supreme court. The result, as well as the reasoning, of Mr. Justice Field in that case, is entirely satisfactory to my mind. It only remains to add that it is not necessary to set out in the petition the bonds to which the coupons are attached. Knox Co. v. Aspinwall, 22 How. [63 U. S.] 539; Thompson v. Lee Co., 3 Wall. [70 U. S.] 377; City of Kenosha v. Lamson, 9 Wall. [76 U. S.] 477; Ring v. Johnson Co., 6 Iowa, 265; McCoy v. Washington Co. [Case No. 8,731]; Johnson v. Stark Co., 24 Ill. 75. The constitutional question argued by the counsel for the defendant is not legitimately presented by the demurrer, and is not examined nor decided. The demurrer is overruled, and the defendant has leave to answer. Demurrer overruled.