Scates v. King , 110 Ill. 456 ( 1883 )

Mr. Justice Mulkey

delivered the opinion of the Court:

It is claimed by counsel for appellant that the decree of foreclosure in the United States court finally settled, as res judicata, the fact of making the mortgage, the power and authority of the county to make it, and the liability of the county to pay the debt thereby secured; and that these facts being thus conclusively established, there remained to appellee, after such foreclosure, the single right to redeem from the sale under the decree, and that that right not having been exercised within the time allowed by the statute for that purpose, it is forever gone. We do not concur in this view to the extent stated. It is conceded, however, that so far as the county is concerned .the above facts are conclusively settled by the decree in that case, but as against appellee, who was not a party to the proceeding in which it was rendered, and who does not claim under it, but, on the contrary, adversely to it, we are unable to perceive on what principle it establishes anything as to him outside of the mere fact that such a decree was rendered. It is true any one claiming title under it might, in an action of ejectment against one claiming adversely to it, offer it in evidence as a link in his own chain of title. Subject to these limitations we do not understand the decree is of any binding force upon any one who was neither party nor privy to it, as is clearly the case with appellee. Nor is the rule in this respect at all affected by reason of appellee having failed to put one of his deeds upon record before the commencement of that suit, for, notwithstanding such is the fact, it clearly appears that long before, and at the time of the commencement and during the pendency of that suit, appellee was in the actual and exclusive possession of all the land in controversy, which was constructive notice of whatever rights he acquired under his deeds, to the same extent as if they had all been placed upon record at the time of their execution.

A number of authorities are cited in support of the familiar rule that where a mortgagee proceeds to foreclose without making the grantee of the mortgagor a party, as was done in this case, such foreclosure will be valid and binding, subject to the right of such grantee to redeem. We do not at all question this rule, but concede it to the fullest extent. We see nothing in it, however, that conflicts with the other general principle to which we have just adverted, that a decree or other legal proceeding is binding only upon the parties thereto, or their privies. By such a decree the grantee of the mortgagor is not affected at all. His rights are neither changed, enlarged nor diminished. By his conveyance he simply acquired the equity of redemption in the mortgaged lands, or such part of them as he purchased,—or, in other words, he acquired merely a right to redeem from the mortgage, and this right is wholly unaffected by a decree of foreclosure to which he was not a party. Indeed, the decree, as to him, is simply a nullity. Cutter v. Jones, 52 Ill. 84.

Every case supporting the rule contended for, (which, as before stated, we do not at all question,) proceeds upon the hypothesis that the mortgage under which the foreclosure proceedings were had was a valid and legal mortgage, and if it be conceded that the mortgage executed by the county in this ease is valid, we would have no hesitancy in holding,— if this was the only question in the case,—that appellee has, as is claimed by appellant, a mere right to redeem. But such is not the case. Appellee does not admit the validity of the mortgage, or that he is the purchaser of a mere equity of redemption, but, on the contrary, he insists that by his purchase he acquired the absolute fee simple title to the lands in dispute, and that the so-called mortgage and deed of trust were executed without any power or authority on the part of the county officials, and that they were and are, for that reason, absolutely null and void as against the county and all persons claiming under it, including the appellee; and his right to maintain the present proceeding is placed expressly upon this ground, and, assuming the bonds to have passed into the hands of innocent holders, it is scarcely necessary to add that it can not be maintained upon any other hypothesis, for if it be once admitted the county officials had the requisite power and authority to execute the mortgage and trust deed so as to bind the county, and the bonds secured by them were negotiated for value, then the question becomes one of mere conflicting titles between the parties to this suit, which this court is not permitted to determine under the pretext of removing a cloud from the title of appellee. Phelps et al. v. Schrader et al. U. S. Sup. Ct. Oct. T. 1879; Whitney v. Stevens, 77 Ill. 585; Same case, 97 id. 483.

It is hardly necessary to observe that all persons assuming to act as the official agents of a county or other municipal corporation must have the requisite power or authority for that purpose, otherwise the municipality will not be bound, and every one dealing with them must know, at his peril, the extent of their authority. It is also a familiar doctrine, of general recognition by the courts and text-writers, that counties are political divisions of a State for governmental purposes, only possessing a low order of corporate existence, and for this reason they are generally designated “quasi corporations, ” and are conceded to possess no powers except such as are expressly, or by necessary implication, conferred upon them by the legislative department of government. In conformity with this well recognized principle it was settled at an early period in our judicial history, and the rule has been steadily adhered to ever since, that a county has no power to give away or otherwise dispose of i'ts funds or property for a purpose not authorized by law. Colton v. Hanchett et al. 13 Ill. 615; Perry et al. v. Kinnear, 42 id. 160.

In the light of these well recognized principles let us examine the question whether the county officials of Wayne county were authorized to execute the mortgage and deed of trust through which appellant claims, at the time, in the manner, and for the purpose they did. That such power.is not to be found among their general powers,—if, indeed, they may be said to have any such powers,—is too palpable to admit of serious discussion. Indeed, nothing of the kind is claimed by appellant, but, as we understand it, the power in question is claimed to be derived from the act incorporating the Mt. Vernon Railroad Company, and a vote of a majority of the qualified electors of Wayne county, given and cast at a special election called and held by the proper authorities under that act, and if it can not be thus derived it must be conceded that it does not exist. The 7th section of that act authorizes the county of Jefferson to subscribe to the capital stock of the company, to issue bonds of the county, and to provide for the jiayment of the same by sale or mortgage of the swamp and overflowed lands of the county, and to apply the bonds, or their proceeds, to the payment of the stock so subscribed, and to “make such other disposition of said swamp and overflowed lands, in aid of the construction and maintenance of said railroad, as they deem best for the public interest for said county.” The 8th section then declares that before any such disposition shall be made of the swamp and overflowed lands the same shall be authorized by a majority vote of the qualified electors of the county, and it also provides : “The county court shall prepare a proposition or propositions of the mode or modes, one or more, containing a brief, clear, distinct idea of the plan or plans proposed by them for aiding in constructing of said road, which said proposition shall be printed at large as an election ticket, and the voters may express their will on said proposition by writing ‘Tea,’ and ‘Nay,’ on said ticket,” etc. The 9th section then provides that “any county through which said road may run, and every county through which any other railroad may run, (with) which this road may be joined, connected or intersected, may and are hereby authorized and empowered to" aid in the construction of the same, or of such other road with which it may so connect, and for this purpose the provisions of the 7th, 8th and 9th sections of this act shall extend to, include and be applicable to every such county and every such railroad.”

Now, the simple, plain English of all this is, that upon an affirmative vote authorizing it, tile county of Jefferson, or any county through which the Mt. Vernon railroad should run, is empowered to aid in the building of that road; and in addition to this, any other county having a railroad running through it, which intersects or connects with the Mt. Vernon railroad, is also authorized to aid in the construction of the latter road, or of the one so passing through such county, as it may prefer. So with Wayne county. Assuming there was a railroad running through that county, and intersecting or connecting with the Mt. Vernon railroad, as is claimed there was, but which we find there was not, Wayne county, in that case, would have been authorized to aid in building either of said roads, upon an affirmative vote of the people of the county empowering it to do so. Now, as the Mt. Vernon Kailroad Company had no line of road, either actual or potential, running through-Wayne county, and had no power or authority under its charter to build such a road, it would seem clear the county officials were not warranted in hypothecating or mortgaging the county’s lands to secure the bonds of that company, upon the mere expectation that it would at some future day build and operate a railway, wholly unauthorized by its charter. We say upon a mere expectation, for as the company could not, under its charter, legally' bind itself to build such a road, the county authorities had no right to rely on any inducements held out by the representatives of the company in that direction,— much less had they any right or power to dispose of the county’s lands in the manner we have seen. All the county authorities could lawfully have done, under the circumstances assumed, would have been, upon an affirmative vote of the county to that effect, to have aided in the building of' the Mt. Vernon railroad. Assuming there was a road running through Wayne county, and' connecting or intersecting with that company’s road, they might have done that, but nothing more, so far as the Mt. Vernon Kailroad Company was concerned. But it is not claimed, nor, indeed, could it be, with even a shadow of consistency or truth, that the vote of the county authorized the county board to aid in the construction of that company’s road. The people of Wayne county voted to appropriate these lands as a bonus to any company for building a railroad through Wayne county, and not to secure the construction bonds of the Mt. Vernon Railroad Company, as was attempted to be done. No company has ever built the road contemplated by the vote of the people of Wayne county, or made even a substantial effort to do so, nor has any company authorized to build it ever entered into any valid contract or obligation to do so.

It further appears that at the time of the execution of these" instruments, through which appellant claims, by Wilson and Scott, on behalf of the county, the former was a director in the Mt. Vernon Kailroad Company, and Wilson himself swears the business was not transacted at any general or special term of the county court, and the law is well settled that the members of the county court can only bind the county when duly convened and acting as a board. Here we find two members of the court casually meeting together, and in the absence of the other member, and without any notice to him, executing a mortgage and deed of trust upon all the lands of the county to secure the so-called construction bonds, amounting to hundreds of thousands of dollars, of a railway company located in a foreign county, and in which one of the parties assuming to act for the county was a director. Such a transaction as this can not, in our judgment, be regarded as imposing any legal obligations or liability on the county, or those claiming through it. It further appears, from the testimony of Wilson, that while these bonds were still in the hands of the agents of the railroad company the whole scheme of building the road through Wayne county had been abandoned, and that subsequently, in December, 1862, the county court passed an order directing the commissioners to proceed to sell the swamp lands, just as though these transactions had never occurred. Under these circumstances any one subsequently purchasing the bonds, by the exercise of ordinary care and qirudence would have seen these transactions were illegal in their inception; and moreover, whether illegal or not, that the whole matter had been abandoned, and that the consideration for the instruments in question had failed. The truth is, the execution of the mortgage and deed of trust was unauthorized, and in palpable violation of law, and, as against appellee, all titles to the land in question derived through them must be regarded as void, and a cloud upon appellee’s'title.

Counsel for appellant have pressed upon our attention the decision of the Supreme Court of the United States in Kennicott v. Wayne County, 16 Wall. 452, based upon substantially the same state of facts appearing in the present record, wherein a different conclusion was announced from the one reached in this ease. We readily perceive and concede the inconvenience and embarrassment that may arise from this diversity of holding, and would most cheerfully avoid it if it could be done without sacrificing our own convictions with respect to the rights of the parties, as founded upon an unbroken current of decisions of this court running through a period of many years,—but it can not. As is well known, there is, and for many years past has been, a manifest material diversity, in one respect, in the holdings of the Federal courts and the courts of this State as to the liability of counties and other municipalities on bonds issued by them in aid of railroads or other like enterprises, the former holding, if there is a valid law authorizing the issuing of such bonds upon certain specified conditions, and the corporate authorities, or legally constituted agents of the municipality, whose duty it is to determine whether these conditions have been performed or not, find as a fact the law has been complied with respecting such conditions, and issue the bonds containing recitals to that effect, the municipality will be liable on the bonds in the hands of innocent holders, whether the conditions have been really performed or not; while on the other hand, the courts of this State' have uniformly held there must not only be a valid law authorizing the issuing of the bonds, but also a substantial compliance on the part of the municipal authorities with the requirements of the law, otherwise the municipality will not he hound; that it is the performance of the conditions specified in the law ivhich authorizes the corporate authorities to issue the bonds, and not the recitals which, from ignorance or corrupt motives, they may happen to make with reference to such performance ; that such municipal agents are powerless, to enlarge them own jurisdiction and authority by making a false record, as was done in this case, and by that means bind the municipality. In the light of this diversity of holding it is not difficult to perceive how the Supreme Court reached a different conclusion in the Kennicott case from that reached by us in this; yet even in that case, viewed in the light of the rule which obtains in the Federal courts, as above stated, the soundness of the conclusion therein reached is not at all free from douht. In the first place it was contrary to the conclusion reached by the Circuit Court of the United States. In the second place it was concurred in by only six of the nine judges constituting that court; and lastly, two of the non-concurring judges dissented on the record from the conclusion reached by the majority. Under these circumstances it is certainly going a long ways to ask us to recognize that case as an authority in this. We could not do so without overruling all the previous decisions of this court relating to the question under consideration.

Perceiving no error in the decree below, it is therefore affirmed.

Decree affirmed.