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ity to levy special taxes bevond the assigned limits, though, if given after the levy, it would doubtless be equally effectual." Cromartie v. Commissioners, 87 N. C. 140. In Herring v. Dixon, 122 N. C. 423, 29 S. E. 369, the supreme court again distinguishes between the power to confer a valid indebtedness without special legislative sanction, and the power to levy a tax to pay said indebtedness, when it says:
“In Vaughn v. Commissioners, 117 N. C. 429, 23 S. E. 354, while it was held that the commissioners could incur a debt for necessary expenses without a vote of the people, it was not held that they could levy a tax in excess of the constitutional limit to pay it, without special approval of the legislature."
So, under the rulings of Cromartie v. Commissioners and of Herring v. Dixon, the commissioners have the right to contract a valid debt without a special act. Here the money is in the hands of the trustee of the complainants, and no levy of any tax is necessary or asked. When a state law confers a general power on a county to subscribe to the stock of any railroad in the state for any amount, not exceeding $100,000, the county may subscribe to the stock of two railroads, $100,000 each. Chicot Co. v. Lewis, 103 U. S. 164, 26 L. Ed. 495. In Daviess Co. v. Huidekoper, 98 U. Š. 104, 25 L. Ed. 112, the court upholds a subscription under a general statute of Missouri, almost identical in language with section 1996:
"Where an innocent purchaser buys bonds (negotiable securities) which recite that they were issued to fund a debt of the municipal corporation, the question of excessive indebtedness does not arise, and the purchaser is not required to consider or inquire concerning it.” School Dist. v. Rew (C. C. A.) 111 Fed. 1.
The supreme court of North Carolina, in a late case (City of Charlotte v. Shephard, 122 N. C. 603, 29 S. E. 842), says that:
"Where such a corporation (speaking of a municipal corporation) bas thus acquired the right to create a debt and issue the bonds, this power carries with it the power to levy the taxes necessary to pay said bonds and the accruing interest thereon.”
Ralls Co. Ct. v. U. S., 105 U. S. 733, 26 L. Ed. 1220; U. S. v. City of New Orleans, 98 U. S. 381, 25 L. Ed. 225.
This doctrine of the North Carolina court is supported fully by the two decisions cited above.
The importance to all parties in interest, the amount involved, and the care with which the case has been presented to the court by counsel, seemed to demand a full discussion of its principles; and on that account I have gone over the entire record and the briefs filed, giving to them the best consideration in my power. The conclusion reached is that these bonds are valid bonds.
It follows that the decree entered in the circuit court in the Stanly Case, 89 Fed. 257, should be affirmed.
GOFF, Circuit Judge. I dissent from the opinion of the court, as well as from the judgment entered in this case.
(113 Fed. 725.)
BOARD OF COM'RS OF WILKES COUNTY et al. v. COLER et al.
The recital in municipal bonds that they were issued under an act which is invalid does not preclude inquiry as to whether there was other valid legislative authority under which the power to issue them
can be upheld. 2. SAME-ESTOPPEL BY RECITALS.
A recital in county bonds of facts precedent to their issuance, which it was the province of the county officers to determine, is conclusive
upon the county in favor of a bona fide holder. 1 3. STATUTE-CONSTITUTIONALITY OF ENACTMENT--PARTIAL INVALIDITY.
The fact that a statute, among other things authorizing a county to issue bonds, was not enacted in conformity to the mandatory requirements of the state constitution relating to that class of legislation, does not render it invalid as to its other provisions, to which such coustitu
tional requirement does not apply. 4. MUNICIPAL Bonds-AUTHORITY TO ISSUE-CONSTRUCTION OF STATUTE.
The constitutional convention of North Carolina on March 9, 1868, passed an ordinance chartering a railroad company to construct a railroad from a point on another road "to some point in the northwestern boundary line of the state to be hereafter determined.” It located the western terminus of the eastern portion of the line, which, when completed, should constitute “its first division." It further provided that all counties or towns subscribing to the stock of the company should do so "in the same manner and under the same rules, regulations and restrictions” as prescribed in the charter of another company previously incorporated, and such charter authorized "any town or county near or through which” the road might pass to subscribe for stock on a vote of the inhabitants, and to issue bonds in payment therefor. Such ordinance was held by the supreme court of the state to be valid, to continue in force after the adoption of the constitution, and to authorize the issuance of bonds in payment for stock of the company by a county into which the first division of the road extended as located by the ordinance. Held, that it conferred like power upon another county into which the road was extended under a subsequent act of the legislature, and that bonds voted and issued by such county in conformity to its requirements were valid obligations, although they purported to have been issued under the subsequent act, which, in so far as it attempted to authorize their issuance, was void.
Goff, Circuit Judge, dissenting. Appeal from the Circuit Court of the United States for the Western District of North Carolina.
A. C. Avery and James E. Shepherd, for appellants.
Charles Price (John F. Dillon, Harry Hubbard, and John M. Dilon, on the brief), for appellees.
Before GOFF, Circuit Judge, and MORRIS and BOYD, District Judges.
MORRIS, District Judge. This is a suit to determine the validity of certain bonds issued by Wilkes county, N. C., in aid of the con
1 Bona fide purchasers of municipal bonds, see note to Pickens Tp. V. Post, 41 C. 0. A. 6.
struction of the second division of the railroad constructed by the Northwestern North Carolina Railroad Company, incorporated in 1868; the second division being from the towns of Winston and Salem, up the valley of the Yadkin, by way of Jonesville and Wilkesboro, in the county of Wilkes, to Patterson's Factory, in the county of Caldwell. After hearing argument in this appeal at the November term, 1899, this court certified to the supreme court of the United States three questions: First, whether this court was controlled in dealing with the case by certain decisions of the supreme court of North Carolina in connection with article 2, S$ 14, 16, article 5, $S 1, 4, 6, 7, and article 7, § 7, of the constitution of North Carolina, adopted April 24, 1868; second, whether, if there was no decision of the supreme court of North Carolina adverse to the validity of the bonds at the time when the appellees acquired them for a valuable consideration without notice, they were valid in the hands of the appellees; third, whether when the appellees acquired the bonds any decision then announced by the supreme court of North Carolina was adverse to the validity of the bonds which affected them in the hands of the appellees. The bonds were dated October 21, 1889, and each one contained the following recital:
"This bond is one of a series of one hundred issued by authority of an act of the general assembly of North Carolina ratified on the 20th day of February. A. D. 1879, entitled 'An act to amend the charter of the Northwestern North Carolina Railroad for the construction of a second division from the towns of Winston and Salem, in Forsyth county, up the Yadkin valley by Wilkesboro to Patterson's Factory, Caldwell county,' and authorized by a vote of the majority of the qualified voters of Wilkes county, by an election regularly held for that purpose, on the 6th day of November, A. D. 1889, and by an order of the board of commissioners of Wilkes county, made on the first day of April, A. D. 1889. This series of bonds is issued to pay the subscription of one hundred thousand dollars, made to the capital stock of the Northwestern North Carolina Railroad Company by said county of Wilkes."
Article 2, $ 16, of the constitution of North Carolina, adopted April 24, 1868, provided that no law should be passed authorizing a county to raise money on its credit, or impose a tax, unless the bill for the purpose was read three several times in each house of the general assembly, and passed three several readings on different days in each house, and unless the yeas and nays on the second and third readings of the bill were entered on the journals. The supreme court of North Carolina in Commissioners v. Call, 123 N. C. 308, 31 S. E. 481, 44 L. R. A. 252; Union Bank of Richmond v. Commissioners of Town of Oxford, 119 N. C. 214, 25 S. E. 966, 34 L. R. A. 487; Commissioners v. Snuggs, 121 N. C. 394, 28 S. E. 539, 39 L. R. A. 439; Rodman v. Town of Washington, 122 N. C. 39, 30 S. E. 118; Commissioners v. Payne, 123 N. Č. 432, 31 S. E. 711,—all cases involving the validity of county bonds,—has held that the provisions of the constitution of North Carolina requiring the entry of the yeas and nays on the journals was imperative, and the failure of such entry was absolutely fatal to the validity of the legislation, so far as it undertook to authorize the county to issue bonds in aid of a railroad. In Commissioners v. Call (1898) the validity of the bonds of the issue now in suit was called in question, and the supreme court of North Carolina
declared that the act of February 20, 1879, under which these bonds are recited to have been issued, was never legally passed so as to become a law giving authority to issue the bonds, for the reason that the yeas and nays were not entered upon the journals. To the questions certified by this court the supreme court of the United States gave the most thorough consideration, and held, Mr. Justice Harlan speaking for the court (Wilkes County v. Coler, 180 U. S. 506, 21 Sup. Ct. 458, 45 L. Ed. 642), that the circuit court was bound by the decisions of the supreme court of North Carolina construing their own state constitution, and holding that the legislative enactments of 1868, 1879, and 1881 were not validly enacted, so as to give Wilkes county power to issue these bonds. But the supreme court of the United States further ruled that notwithstanding the invalidity of the act of February 20, 1879, the bona fide holders of the bonds might look to any valid legislation giving power to issue them, and that whether or not there was such power was to be determined by the law of North Carolina, as declared by the supreme court at the time the bonds were put upon the market. Mr. Justice Harlan, speaking for the court, said:
"But the Belo Case, 76 N. O. 489, involved other considerations. Forsyth county (whose liability on the bonds in suit in that case was directly involved) made the point that it had no authority to issue such bonds. The court, however, held that such authority was conferred by the convention ordinance of March 9, 1868, and the subscription and bonds made in the name of that county to the Northwestern North Carolina Railroad Company were upheld as valid under that ordinance, which was recognized as part of the law of the state and as conferring authority on the county of Forsyth to do what it did. It results that when the bonds here in question were issued, in 1889, it was the law of North Carolina that the ordinance of 1868, constituting the charter of the Northwestern North Carolina Railroad Com. pany, was not superseded by the constitution of 1868, but was in force, and, therefore, gáve power to the counties embraced by its provisions to take stock in that company and pay for it in county bonds, just as Forsyth county had done."
Jr. Justice Harlan then calls attention (page 531) to the rule that as in 1877 in the Belo Case the supreme court of North Carolina had recognized the power of the counties embraced within the provisions of the convention ordinance of 1868 to issue bonds to pay for stock in this same railroad, when the power was exercised by a county under the restrictions imposed by the constitution of 1868, that is to say, "not unless by a vote of a majority of the qualified voters therein,” that no subsequent decision of the supreme court of North Carolina, made after county bonds had been put upon the market, could alter vested rights by holding that the constitution of 1868 abrogated the power given by the convention ordinance, and by holding that no subscription in aid of a railroad could be made except by virtue of a new statute passed in conformity to the requirements of section 14 of article 2, and thus invalidate bonds issued before the rendering of such a decision. The supreme court of the United States, while recognizing that the Belo Case (76 N. C. 489) and the Hill Case (67 N. C. 367) had held that the convention ordinance of 1868 gave power to the counties embraced within its terms to issue bonds such as those now in suit, declined to corsider, under the questions certified by this court, whether likes county was embraced within the general powers of that ordinance, and suggested the following as some of the various questions which might arise in considering whether Wilkes county had the power under that or linance, unassisted by any of the subsequent enactments, to issue the bonds sued on in the present case, viz.:
"Did the general power given by that ordinance to the Northwestern North Carolina Railroad Company to construct a railroad from its eastern terminus, 'running by way of Salem and Winston, in Forsyth county, to some point in the northwestern boundary line of the state to be hereafter determined,' invest Wilkes county with authority to subscribe to the stock of the company and to issue bonds in payment of such subscription? Was Wilkes county in the same category with Forsyth county? Was the route of the road northwest of Salem and Winston to some point in the nortnwestern boundary line of the state to be determined by the legislature or by the company? If by the legislature, was that route ever determined otherwise than by the act of 1879, which has been adjudged nerer to have become a law of the state? Did Wilkes county have authority, under the ordinance of 1868 alone, to aid by a subscription of stock and bonds the construction of the second division of the road referred to in the act of 1879. extending from the towns of Winston and Salem up the valley of the Yadkin by way of Jonesville and Wilkesboro, in the county of Wilkes, to Patterson's Factory, in the county of Caldwell?"
The supreme court said:
"These are matters about which we do not feel disposed to express an opinion under the very general and indefinite questions certified from the circuit court of appeals. Nor do we deem it proper to express any opinion as to the scope and the effect upon the rights of the parties of sections 199 1999 of the Code of North Carolina."
The recitals of the bonds in suit are as follows: (1) That the bond is issued by authority of an act of the general assembly of North Carolina ratified the 20th day of February, A. D. 1879. This act being an invalid enactment, and not a law, so far as it undertakes to give power to issue bonds, this recital does not preclude inquiry as to whether or not there was such a law, and the existence of legislative authority. Northern Nat. Bank v. Trustees of Porter Tp., 110 U. S. 608, 4 Sup. Ct. 254, 28 L. Ed. 258. But the recital of an invalid act does not preclude inquiry as to whether there was in existence any other valid legislative authority under which power to issue the bond could be upheld. Wilkes Co. v. Coler, 180 U. S. 506, 524, 21 Sup. Ct. 458, 45 L. Ed. 642; Board of Commissioners v. Beal, 113 U. S. 227, 5 Sup. Ct. 433, 28 L. Ed. 966; Commissioners v. January, 94 U. S. 202, 24 L. Ed. 110; City of Evansville v. Dennett, 161 U. S. 434, 443, 444, 16 Sup. Ct. 613, 40 L. Ed. 760; Knox County v. Ninth Nat. Bank, 147 U. S. 91, 13 Sup. Ct. 267, 37 L. Ed. 93. (2) The second clause of the recital is to the effect that the bond is authorized by a vote of the majority of the qualified voters of Wilkes county by an election regularly held for that purpose on the 6th day of November, A. D. 1889, and by an order of the board of commissioners of Wilkes county, made on the ist day of April, A. D. 1899. This is a recital of facts which it was for the board of commissioners of Wilkes county to ascertain and decide, and which, therefore, the county is estopped from denying as against a bona fide holder. Board of Commissioners v. Beal, 113 U. S. 227, 229, 5 Sup. Ct. 433, 28 L. Ed. 966; Gunnison County v. E. H. Rollins & Sons, 173 U. S. 255, 19 Sup. Ct. 390, 43