County of Jefferson v. B. C. Lewis & Sons

The Chief-Justice delivered the opinion of the court.

The first and second assignments of error relate to the overruling of the demurrer to the declaration. The declaration alleges that the county of Jefferson issued its bond, and then and there acknowledged itself indebted to bearer in a sum of money payable at a day certain with interest at eight per cent per annum, and at the day payment was refused, plaintiffs being the bearer and entitled thereto. Copies of bonds are annexed to the declaration. On their face is written and printed : “ Issued in pursuance of an order of the Board of County Commissioners on the-day of-, A. D. 1857.” “ Subscription to Pens. & Geo. R. R. Co. by a vote of county.” “ Convertible into stock of the company.” They are signed, “ Thos. J. Chase, Judge of Probate and ex-officio President of the Board of County Commissioners. Attest: Sam. Puleston, County Treasurer.” Sealed with the seal of the Judge of Probate.

Defendant demurred on the grounds, (1) that it does not appear that defendant had any power or authority to make and execute the alleged bonds. (2.) That the county could not make such bonds unless under and by virtue of some legislative enactment, and plaintiff does not aver that the alleged bonds. were so executed. The demurrer was overruled.

It is an admitted and undisputed doctrine that the power of public and municipal corporations to subscribe to the stock of railway companies and issue bonds therefor must be expressly conferred. And hence as a matter of pleading the authority or power to issue the bonds in suit ought to appear on the face of the declaration, or by some recital in the bonds made part thereof; that is, it should thus appear that they were issued for some purpose authorized by statute. 1 Dillon’s Mun. Corp., §509.

In Thayer vs. Montgomery Co., 3 Dillon, C. C., 389, which was a suit on county bonds, defendant demurred to the declaration on the ground that the authority or power of the county to issue the bonds is not averred and does not appear on the face of the bonds. Miller, J., says: “The third ground of demurrer presents to my mind a more serious question. It is, that an authorized lawful purpose for which the bonds were issued should be alleged in the declaration or be recited in the bonds which are made part thereof. This I think is a sound proposition.”

In the same volume in Kennard vs. Cass Co., p. 149, Dillon and Krekel, J. J., it is said: “But where the maker is a county or other corporative body which has no inherent or general power to make such instruments, and can make them only by virtue of special authority, the principles of pleading require that such authority should appear by distinct averment of the special act conferring it, or by recital of the bond in that respect.” And see Smith vs. Tallapoosa County, 2 Woods, 574.

In order to recover on the bonds of a county it should appear by special averment in the declaration (unless the same appears on the face of the annexed bond) that the authority for issuing is an act of the Legislature, citing the act, and that all the essential conditions had been complied with, the power depending upon such conditions, and where compliance with these conditions does not appear on the face of the bonds it must be otherwise proved.

The bonds in question are supposed to have been issued in pursuance of the provisions of the1 Internal Improvement Act of 1855. That act is not referred to in the declaration, nor is it averred that the Pens. & Geo. Railroad, referred to on the face of the bonds, is a road embraced in the provisions of the act or that this railroad, company had accepted the provisions of the act, nor that said railroad or its extensions were contemplated to pass through or to terminate in or near the county of Jefferson; nor that the county subscribed for the stock after consent thereto duly obtained by submitting the question “ whether or not stock should be subscribed and taken ” at an election duly held according to the provisions of the act, a majority of the legal voters having voted in favor thereof in pursuance whereof subscription to the stock of said company was made by the Board and the bonds in question duly issued and “ disposed of for the payment of such subscription.”

These conditions were essential to create a liability on the part of the county, according to the requirements of the act, and should be averred in appropriate form. Lincoln vs. Iron Works Co., 103 U. S., 412; Clay Co. vs. Society, &c., 104 U. S., 579, 586; Smith vs. Tallapoosa, 2 Woods, C. C., 574, referred to by respondent, do not conflict with but support this doctrine. In all these cases the declaration or the bonds recite the source of the power to issue the bonds.

The result is that the demurrer should have been sustained and the plaintiffs allowed to amend their declaration.

The case having been tried upon the issues presented by the pleadings, and various questions arising thereon having been fully discussed upon this appeal, we proceed to examine these questions, as the case may be again tried after amendment of the pleadings.

The third andfourth errors assigned are in effect that in deciding upon the motion to strike out the defendant’s pleas on the ground. that they were not properly verified, the court in ruling that the verification was not sufficient to require plaintiffs to prove the execution of the bonds sued on.

There can be no error in this ruling because it was not pertinent to the decision of the motion, but was in the nature of an opinion of the court upon a question not yet reached in the cause, thrown out as a suggestion to the parties, and did not preclude the defendant from making any objection to evidence to be subsequently offered by the plaintiffs. The question did not arise upon the trial as there was evidence given by the plaintiffs at the trial showing the signing of the bonds by the persons whose names were appended thereto, and that they were the officers of the county as indicated upon the bonds.

The fifth and sixth grounds of error, are that the court upon the examination of the persons drawn as jurors, permitted the plaintiffs counsel to examine them “ as to their ability to calculate interest, and to work interest in case of partial payments such. as might arise upon the pleadings and proofs in this case.”

The Statute of 1877, chapter 8010, section 7, provides that when the nature of any case requires that a knowledge of reading, writing or arithmetic is necessary to enable a juror to understand the evidence to be offered on the trial, it shall be a cause of challenge if he does not possess such qualification, to be determined by the judge. McC. Dig., 446, section 9.

Under this statute the qualifications of the juror in respect to the sufficiency of his knowledge and education, in other words, his practical education upon the questions likely to arise on the trial, are to be determined by the judge.

The object is to procure a jury sufficiently intelligent to understand the testimony and to render a proper verdict upon it. The ruling of the court here was ’ within the scope of the statute and there is no error. It would be difficult to find error where the discretion of the judge is so broad in cases of this character.

The seventh and eighth grounds'of error are in deciding that Einlayson and Bailey were competent jurors, they having each stated on their voir dire that they owned bonds of Jefferson county similar to those involved in this suit, and of the same issue, and Bailey’s bonds were in litigation in another suit in the same court. On challenge by defendant for cause the court overruled the challenge and decided that they were competent jurors, whereupon defendant challenged them peremptorily, and this exhausted defendant’s right of peremptory challenge before the jury was completed.

The statute law says the court shall examine on oath any person who is called as a juror, to know whether he is related to either party, or has any interest in the cause, or has expressed or formed any opinion, or is sensible of any bias or prejudice in a suit. .Chapter 1628, sec. 24, Acts 1868 The court is to determine whether any of the grounds exist.

That the juror is interested in the pending or a similar suit, are grounds of challenge. Fleming vs. State, 11 Ind., 234; Davis vs. Allen, 11 Pick., 466; Profatt on Jury Trial, §168.

A principal challenge to the polls is founded on a causé of bias or partiality, which, if admitted or proved to the satisfaction of the court, will, as a matter of law, render the juror incompetent. Profatt, §167.

The fact that jurors are owners of similar bonds, that their validity is in question in this and in other suits pending, and that the decision or verdict in one is practically decisive of the other, is cause of bias and prejudice. The defendant’s challenge of Einlayson and Bailey for cause should have been allowed.

The ninth assignment of error will be disposed of in subsequent portions of this opinion.

The tenth alleged error is in the exclusion of the returns of an election in Jefferson county, held in 1856, to show the number of voters in the county soon after the election held with reference to the issue of the bonds.

The number of votes cast on the subject of the issuing of bonds upon a subscription for railroad stock is not material to the validity of the bonds. It was only required by the Internal Improvement act, section 22, that a majority of the votes cast should be in favor of the measure. The returns of another election upon another question could not affect the validity of the election on the question of subcription for stock. The ruling was, therefore, correct.

On the motion for a new trial it was insisted the act of the Judge of Probate, as ex-officio President of the Board of Commissioners, was nugatory and in' violation of the Constitution.

The following question is presented: Was it within the power of the Legislature in 1845, to impose upon the Judge of Probate the office and duties of President of the Board of County Commissioners ?

The Constitution divided “ the powers of government ” into three departments, Legislative, Executive and Judicial, and declared that “ no person, being of one of those departments, shall exercise any power properly belonging to either of the others, except in the instances expressly provided in this Constitution.” Const, of 1889, Art. 2; Thomp. Dig., 25.

The judicial power of this State shall be vested in a Supreme Court, Courts of Chancery, Circuit Courts and Justices of the Peace. Art. 5, sec. 1; Thomp. Dig., 49.

The General Assembly shall provide by law for the appointment in each county of an officer to take probate of wills, to grant letters testamentary, of administration and guardianship, &c. Art. 5, sec. 9 ; Thomp.' Dig., 44.

The General Assembly shall have power to establish in each county a Board of Commissioners, for the regulation of the county business. Art. 5, section 19; Thomp. Dig., 44.

By act of July 25, 1845, the General Assembly provided for the appointment of a Judge of Probate, and prescribed his duties. Thomp. Dig., 57. The Judge of Probate in each county shall be ex-officio a member and President of the Board of County Commissioners. Ibid, 58.

Under the foregoing provisions of the Constitution, in force from the organization of the State until long after the bonds in question were executed, the officer called a Judge of Probate, created by the Legislature, was not one of those, in whom was vested “ the judicial power of this State.” The prohibition to exercise any duty not strictly pertaining to the judicial power, did not extend to the county officer thus created. The officer was called into existence and his duties prescribed, not only to take probate of wills, &c., but to record his proceedings, to have the custody of the records of the office, to certify copies thereof, to preside over the Board of County Commissioners, to keep the record of the proceedings of the board, &c.

These provisions of law were enforced and were assented to by all the departments of the government for more than twenty years, and the published proceedings of the county do not show that their validity has been ever before questioned. We, therefore, hold that the Legislature could and did rightfully confer upon the Judge of Probate the functions of a County Commissioner and the Presidency of the Board.

As to the Issuing of the Bonds:

The 22d section of the Internal Improvement Act of 1855 contains the law under which these bonds are supposed to have been issued', and provides that it shall be lawful for the Board of County Commissioners of any county through or near which such railroads or their extensions may pass, and they are authorized to subscribe and hold stock in said company upon the same terms and conditions and subject to the same restrictions as other stockholders : Provided, It shall be first submitted to the vote of the legal voters of said county, to be taken at such times and places and in such manner as said authorities respectively may appoint, whether or not stock shall be subscribed and taken ; and if, when the vote be thus taken, it shall appear that a majority of the votes shall be in favor of such subscription it shall thereupon be lawful for thé Board of County Commissioners, by agents by them appointed, t5 subscribe and take in such company such amount of stock as they may determine? the amount not to exceed fifty per cent, of the cost of construction through the county; and to issue bonds of the county, payable with interest at such times and places as they may deem proper, and to dispose of the same for the payment of such subscription.

The plaintiff' offered in evidence the record of'the proceedings of the County Commissioners of Jefferson county at their meeting held June 5,1856, page 130, as follows: “ Be it known that after public notice, duly given, the question was submitted to a vote of the legal voters of Jefferson county on the 7th of May last, whether this county should subscribe for stock in the Pensacola and Georgia Railroad Company,, and it was decided in favor of such subscription by a majority of 278 votes out of 297, being all the votes polled.

“ Row, therefore, the. Board of County Commissioners of Jefferson county, by virtue of the said vote and of the power and authority on them conferred by an act to provide for and encourage a liberal system of internal improvement, approved 6th Janaary, 1855, have determined to subscribe for twelve hundred and fifty shares, of one hundred dollars each, of the stock of said company, which sum, it is estimated, will not exceed one-half of the cost of construction of said railroad across Jefferson county.

“ And further, the said County Commissioners do authorize and appoint Robert H. Gamble to be the agent to make the above subscription for and in behalf of Jefferson county.”

And thereupon the plaintiffs further offered in evidence from the same book the proceedings of said Board at their meeting held March 31,1856, as found on page 1147 of said book, and the proceedings of said Board at their meeting held January 10,1857, as found on page 153 of said book.

The said proceedings were then read from said book as follows, from page 147 : “ Whereas, the Board of Directors of the Pensacola and Georgia Railroad Company have called for an installment of ten per cent, on the subscription to the capital stock of said company; and whereas, this Board has subscribed to said railroad company for twelve hundred and fifty shares of said stock; it is, therefore, ordered, that Thomas J. Chase, Judge of Probate and ex-officio President of this Board, be and he is hereby required to issue bonds, with coupons of annual interest, of one hundred dollars each, drawing eight per cent, interest, payable annually from their date, pledging the faith and resources of this county for the payment of the same to the amount of twelve thousand five hundred dollars, being ten per cent, of said stock, said bonds to be attested by Samuel Puleston, Treasurer of this county; said bonds to be dated on the 10th day of April next, and made payable on the 10th day of April, 1861. And it is further ordered, that the President of this Board be and he is hereby required to pay said bonds over to the President of the Pensacola and Georgia Railroad Company, taking his receipts for the same; and that he, the President of this Board, be and he is hereby required to keep a register of all such, bonds issued by the order of this Board.”

And from page 153 thé said proceedings were further read as follows : “Whereas, the Board of Directors of the Pensacola and Georgia Railroad Company called an installment of ten per cent, on the -capital stock of the company, payable on the first day of October, 1856, being the fourth installment called in, and another installment of twenty-five per cent., payable on the first day of December, 1856, being the fifth installment, amounting to thirty-five per cent.; and whereas, this Board has subscribed to said railroad company for twelve hundred and fifty shares of said stock; it is, therefore, ordered, that Thomas J. Chase, Judge of Probate and ex-officio President of this Board, be and he is hereby required to issue bonds and coupons amounting to forty-three thousand seven hundred' dollars, said bonds to be attested by the Treasurer of the county, and made payable on the first day of January, 1877, drawing interest from the first day of January last at eight per centum per annum.”

In Com’rs of Knox Co. vs. Aspinwall, 21 How., 155, 158, we find the following language :

“ The ground upon which the want of authority to execute the bonds in question is placed is the alleged omission to comply with the requisition of the statute of 1849 in respect to the notices to be given of the election to be held on the first Monday of March, at which a vote was to be taken for or against a subscription of stock to the railroad company-

“ It is insisted that an irregularity or omission in those notices had the effect to deprive the Board of this authority or rather furnish evidence that the power had never vested-in it under the act; and, further, that the plaintiffs are chargeable with the knowledge of all substantial defects or irregularities iu these notices of the election, and not therefore entitled to the character of bona fide, holders of the securities.

“ The act in pursuance of which the bonds were issued is a public statute of a State, and it is undoubtedly true that any person dealing in them is chargeable with a knowledge of it; and as -this Board was acting under delegated authority he must show that the authority has been properly conferred. The court must, therefore, look into the statute for the purpose of determining this question ; and upon looking into it we see that full power is conferred upon the Board to subscribe for the stock and issue the bonds, when a majority of the voters of the county have determined in favor of the subscription, after due notice of the time and place of the election. The case assumes that the requisite notices were not given of the election, and hence that the vote has not been in conformity with the law.

“This view would seem to be decisive against the authority on the part of the Board to issue the bonds, were it not for a question that underlies it; and that is, who is to determine whether or not the election has been properly held, and a majority of the votes of the county cast in favor of the subscription? Is it to be determined by the court, in this collateral way, in every suit upon the bond, or coupon attached, or by the Board of Commissioners, as a duty imposed upon it before making the subscription ?

“ The court is of the opinion that the question belonged this Board. The act makes it the duty of the sheriff to give the notice of the election for the day mentioned, and then declares if a majority of the votes given shall be in favor of the subscription, the county board shall subscribe the stock. The right of the board to act in an execution of the authority is placed upon the fact that a majority of the votes had been cast in favor of the subscription; and to have acted without first ascertaining it would have been a clear violation of duty ; and the ascertainment of the fact was necessarily left to the inquiry and judgment of the board itself, as no other tribunal was provided for the purpose. This board was one, from its organization and general daties, fit and competent to be the depository of the trust thus confided to it. The persons composing it were elected by the county, and it was already invested with the highest functions concerning its general police and fiscal interests.

“ We do not say that the decision of the board would be conclusive in a direct proceeding to inquire into the facts previously to the execution of the power, and before the rights and interests of third parties h.ad attached ; but, after the authority has been executed, the stock subscribed, and the bonds issued, and in the hands of innocent holders, it would be too late, even in a direct proceeding, to call it in question. -Much less can it be called in question to the prejudice of a bona fide holder of the bonds in this collateral way.”

“Another answer to this ground of defence is, that the purchaser of the bonds had a right to assume that the vote of the county, which was made a condition to the grant of the power, had been obtained, from the fact of the subscription, by the board, to the stock of the railroad company, and the issuing of the bonds.”

Referring to the above case, the same court, in St. Joseph Township vs. Rogers, 16 Wall., 644, 665, says:

“Eon-compliance with one of the conditions was clearly shown in that case, as the notices of the election as required by law had not been given in any form, but the decision was that the question as to the sufficiency of the notice and the ascertainment of the fact whether the majority of the votes had been cast in favor of the subscription was necessarily left to the inquiry and judgment of the county board, as no other tribunal was provided for the purpose, and the court held that after the authority had been executed, the bonds issued, and they had passed into the hands of innocent holders, it was too late, even in a direct proceeding, to call the power in question, and that it was - beyond all doubt too late to call the power in question to the prejudice of a bona fide holder of the bonds in a collateral way, which is attempted to be done in the case before the court.” See also on this subject Lynde vs. The County, 16 Wall., 613, where the court says: “The County Judge is the officer designated by the statute to decide whether the voters have given the required sanction. He executed and issued the bonds, and the requisite popular sanction is set forth on their face. • It is a settled rule of law that where a particular functionary is clothed with the duty of deciding such a question, his decision, in the absence of fraud or collusion, is final. It is not open for examination, and neither party can go behind it.”

And in Supervisors vs. Schenck, 5 Wall., 772, 784, it is said : “ When a corporation has power, under any circumstances, to issue negotiable securities, the decision of this court is that the bona fide holder has a right to presume they were issued under the circumstances which give the requisite authority, and they are no more liable to be impeached for any infirmity in the hands of such a holder than any other commercial paper.” Similar language is used in Gelpcke vs. Dubuque, 1 Wall., 203; Town of Caloma vs. Eaves, 2 Otto, 484, 490.

The Board of County Commissioners, was, by the 22d section of the Internal Improvement Act, before referred to, made the proper agent of the county to decide whether the necessary pre-requisites to the subscription for stock and the issue of the bonds had been complied with. Beyond the reasonable presumption that the officers of the law have discharged their duty, we have the official record that the contingency has happened, on the occurrence of which the authority to subscribe for stock and issue bonds was complete. They have certified in their records that' “ after public notice duly given the question was submitted to a vote of the legal voters of Jefferson county, * * * and it was decided in favor of such subscription by a majority of 278 votes out of 297, being all the votes polled.”

It will be observed in the cases determined by the Supreme Court of the United States, the court especially entrusted under the Constitution with the function to determine questions as to the obligation of contracts, that recitals in municipal bonds are conclusive in favor of bona fide holders. With equal, if not with greater force, it may be said that innocent holders are protected where the municipal records themselves show, that the preliminary conditions have happened,.to wit: That the election was duly held, after public notice duty given and the question was submitted, and the result in favor of the action was decided, and so recorded, and in pursuance thereof the subscription was made and the bonds ordered to be issued. The board was the only tribunal appointed by law to determine the question, and upon the faith of their public record and action the bonds were issued and the board, representing the county, is now estopped to deny the truth of its own record as against bona fide holders of the bonds.

The defendant introduces certain papers on file in the clerk’s office, showing that the name of the Judge of Probate was signed to the call for the election and the call does not say it is authorized by the Board. We see no objection to the election arising out of this fact. The Judge was the President of the Board, and the keeper of its records, its secretary also. Their record asserts that his action was authorized, was “ duly ” taken and that is sufficient. See Supervisors vs. Schenck, 5 Wall., 772.

As to the question of interest:

The board were authorized, by the law, in case bonds were issued, to contract to pay interest at a rate not exceeding ten per cent, per annum. The bonds issued bore interest at eight per cent., and the principal became due in 1877. At the time they were issued the legal rate of interest for the loan of money was six per cent. Defendant now claims that after the bonds' became due, if they were properly issued, they should bear the rate fixed by the statute in force when the contract was made, the special contract to pay eight per cent, extending only to the time of maturity. .

There is much conflict in the decisions of the courts on this question. In many of the States it is held that the contract rate ceases at the time the principal is payable, the contract being, that interest at a certain rate is payable for the certain time only, after which the rate fixed by statute, in cases where no rate is specified in the contract, will be the rule. In other States it is the rule that the contract rate will control until payment or judgment. The preponderance of opinion is in favor of the doctrine that the Stipulated rate attends the contract until it is satisfied or merged in judgment. Cromwell vs. Co. of Sac, 96 U. S., 51, 61.

When a tenant agrees to pay a stipulated rent for one year and holds over, the law will imply that he is to. pay at the same rate during the entire term of occupancy. What is paid for the use of a house is called rent; what is paid for the use of money is called interest.. I fail to see why the contract rate of interest should not control until the contract is extinguished ; or why a man ought to be excused from paying what in his judgment the use of money is worth, as evidenced by his contract, merely because he has failed to pay the money when it was due. If that were the rule he may find it to his advantage to violate his agreement to pay his debt when it becomes due. The better rule, most consonant with morality as well as law, is that the agreed rate of interest attends the contract until it is satisfied or extinguished.

Seal. Objection to the bonds was made upon the ground that they were sealed with the seal of the Judge of Probate. The county had no official seal. The Judge being the President of the Board, and being ordered to execute the bonds, it was not inappropriate that he used his official seal or any other device in the way of a seal that was most convenient.

We have considered, as we believe, questions which cover all the exceptions presented. As to the charge of the court and the instructions which were prayed it is unnecessary to consider them in detail. Our discussion of the several matters relating to the bonds and the evidence necessary to sustain them will indicate what instructions to the jury should be given.

As we have indicated, there are errors in the record for which we are obliged to reverse the judgment and remand the cause for further proceedings according to law.