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L. Ed. 689. (3) The bond further recites that, “This series of bonds is issued to pay the subscription of $100,000 made to the capital stock of the Northwestern North Carolina Railroad Company by said county of Wilkes." This recital is the same way conclusive of the facts therein stated.
The question now to be passed upon, therefore, is whether, independent of the invalid legislative enactments attempted to be passed subsequent to the convention ordinance of March 9, 1868, Wilkes county had the power under that ordinance to submit the stock subscription to the vote of the qualified voters, and upon authorization by a majority of the votes to issue the bonds and levy taxes to pay the interest and principal. If Wilkes county was in the same category with Forsyth county, the supreme court of North Carolina adjudged in the case of Belo v. Commissioners (1877) 76 N. C. 489, that the power was conferred by the ordinance of the convention, and this ruling remained undisturbed by any subsequent adjudication of the supreme court of North Carolina, and until after these bonds were issued. The power thus held to be sufficient to authorize Forsyth county to subscribe to the stock of this railroad and issue bonds in payment is to be found in the following sections of the ordinance to incorporate the Northwestern North Carolina Railroad Company, ratified March 9, 1868:
"Section 1. That for the purpose of constructing a railroad of one or more tracks from some point on the North Carolina railroad between the town of Greensboro, in Guilford county, and the town of Lexington, in Davidson county, 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, a company is hereby incorporated under the name and style of the Northwestern North Carolina Railroad Company, etc."
"Sec. 2. Be it further enacted that the capital stock of said coupany may be creat' d by subscriptions on the part of individuals, corporations and counties in shares of one hundred dollars."
Section 5 provides that the president and directors shall proceed to locate the eastern terminus of the road and proceed at once to construct said road in five mile sections to the towns of Winston and Salem, in Forsyth county, which portion of the railroad when completed "shall constitute its first division.”
Sections 8 and 9 provide that the state should loan its bonds to the railroad company as each five miles is graded and ready for its superstructure to the amount of $10,000 per mile upon the security of a first mortgage of the entire road and its property.
Section 12 is as follows:
"Be it further ordained that the stockholders of said company may pay the stock subscribed by thein either in money, labor or materials for constructing said road as the board of directors may determine, and that all counties or towns subscribing stock to said company shall do so in the same manner and under the same rules, regulations and restrictions as are set forth and prescribed in the act incorporating the North Carolina and Atlantic Railroad company, for the government of such towns and counties as are now allowed to subscribe to the capital stock of said company."
"Section 13. Be it further enacted that the company shall have the power to construct branches of said road, one of which shall run from the towns of Winston and Salem, by way of Mount Airy, in Surry county, to the line of the State of Virginia."
Section 33 of the charter of the North Carolina & Atlantic Railroad Company, passed in 1852, c. 136, is as follows:
“Sec. 33. Be it further enacted that it shall be lawful for any incorporated town or county near or through which said railroad may pass to subscribe for such an amount of stock in said company as they shall be authorized to do by the inhabitants of said town or the citizens of said county in manner and form as hereafter provided.”
Sections 34, 35, 36, and 37 provide the manner in which the vote of the qualified voters of the counties shall be taken and, if a majority of the qualified voters voting upon the question are in favor of the subscription, provide how the subscription shall be made, and that the county shall negotiate a loan or loans, and shall levy taxes to pay the principal and interest.
It will be seen by reading the sections of the charter of the North Carolina & Atlantic railroad into the charter of the Northwestern North Carolina Railroad, as required by its section 12, that every county near or through which the railroad may pass is authorized to subscribe for its stock to an amount authorized by a majority of the qualified voters of the county, and to issue bonds in payment, and to levy taxes to pay the principal and interest. The first question therefore now is, was the railroad which was constructed into Wilkes county by the Northwestern North Carolina Railroad Company a part of the railroad authorized to be built by its charter? If it was, then it would seem that the powers conferred by the charter operated to validate the action of Wilkes county, just as the same powers in the same charter were held by the supreme court of North Carolina in Belo v. Commissioners to have done in the case of Forsyth county. The convention ordinance authorizes counties to subscribe to the stock of the railroad company, and it provides that all counties subscribing shall do so in the manner and under the same rules, regulations, and restrictions set forth in the charter of 1852, c. 136. The only restriction in that charter which is drawn in question is the provision that the subscription shall be by counties near or through which the railroad may pass. The railroad in aid of which the bonds in suit were issued does pass through Wilkes county. It appears to us that it is the same railroad authorized by the convention ordinance. That ordinance authorizes a railroad running by way of Salem and Winston, in Forsyth county, to some point in the northwestern boundary line of the state, to be thereafter determined, and contemplated and provided for its being built by divisions, and enacted that the portion to Salem and Winston should constitute its first division. The piece of railroad for which the bonds in suit were issued does run from Salem and Winston in the general direction of the northwestern boundary line of the state, and, indeed, it seems evident that such a railroad to a point in the northwestern boundary line of the state must pass near or through Wilkes county. The act of Feb. 20, 1879, which is recited in the bonds as the authority for issuing them, definitely located this road running into Wilkes county. It does it by enacting that section 13 of the convention ordinance shall be amended by adding certain words which make it read, when so amended, as follows:
Sec. 13. Be it further ordained that the company shall have power to construct branches of said road, one of which shall run from the townis of Winston and Salem by way of Mount Airy, in Surry county, to the line of the state of Virginia (amendment), “and one of which shall be constructed 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, which branch shall be known as second division.”
Section 2 of the act of February 20, 1879, provides for convici labor being furnished for the purpose of constructing this second division; and section 4 provides for bond subscriptions by any county in the state. This act was invalid so far as it attempted to give power to the counties to create a debt, because it was not passed as laws for that purpose are required by the constitution of North Carolina to be passed, but that invalidity does not affect the sections of the law which deal with other matters. Rodman v. Town of Washington, 122 N. C. 39, 42, 30 S. E. 118; Russell v. Ayer, 120 N. C. 180, 189, 27 S. E. 133, 37 L. R. A. 246; Gamble v. McCrady, 75 N. C. 509; Union Bank of Richmond v. Commissioners of Town of Oxford, 119 N. C. 214, 25 S. E. 966, 34 L. R. A. 487. So far as now appears, the amendment locating the road into Wilkes county was validly passed, and became a valid law of North Carolina. If section 13 had been originaliy enacted as it now reads as amended, it would seem clear that as when built this piece of road was declared to be the second division of said road, and as power was given to all counties “near or through which said railroad may pass” to subscribe for stock, that Wilkes county would be in the same category with Forsyth county, which is mentioned in the section locating the first division. Wilkes would be one of the counties through which the second division of the road was authorized to be constructed, just as Forsyth was a county into which the first division of the road was to be built. Has the supreme court of North Carolina ever interpreted this amendment and declared its meaning? We do not find that it has. In Commissioners v. Call, the majority opinion does not place the decision upon the contention that Wilkes county is not in the same category with Forsyth county, but upon a want of power affecting both alike, and upon the fact that an invalid enactment is recited on the face of the Wilkes county bonds as authority to issue them.
The original charter ordinance of 1868 having given authority to construct a railroad by way of Salem and Winston, in Forsyth county, to some point on the northwestern boundary line of the state, and to construct branches, and the legislature having afterwards validly enacted that one of these branches running towards the northwestern boundary line of the state, to be called the second division, should be constructed by way of Wilkes county, there would seem no sound reason for construing the legislation so as to deny to Wilkes county that power to issue bonds which the supreme court of North Carolina had in 1877 held that Forsyth county had.
it is urged in argument that the policy of North Carolina was declared by the constitution of 1868 to be hostile to permitting counties to bond themselves in order to subscribe to railroads which passed near or through them. We do not think this anywhere appears. The constitution does not, as it might easily have done, if such had been the policy of its framers, declare that no county should have the power to create a debt for such a purpose; it merely provided that new laws for that purpose should be enacted with a special formality tending to insure their careful consideration by the legislature. The only inhibition which the constitution enacts against counties is by article 7, § 7, which is that no county shall loan its credit unless by a vote oi the majority of the qualified voters, and the constitutional convention itself passed the charter of the Northwestern North Carolina Railroad with the power to the counties near or through which it should pass to issue bonds for subscription to its stock, and the constitution did not inhibit the execution of any powers previously given to counties to make subscriptions to railroad stock and issue bonds therefor. 180 U. S. 531, 21 Sup. Ct. 458, 45 L. Ed. 642. Nor does section 1996 of the Code of North Carolina, prescribing that counties shall have power to subscribe to aid in the completion of railroads in which their citizens may have an interest, nor the many enactments of the state legislature conferring upon counties the power to aid railroads, indicate such a policy, but, rather, a contrary one.
We think that Wilkes county when the bonds in suit were issued was in the same category with Forsyth county, and that the purchasers of the bonds had a right to rely and rest upon the decisions in the cases of Hill v. Commissioners (1870) 67 N. C. 367, and Belo v. Commissioners (1877) 76 N. C. 489, as to the power conferred by the ordinance of March 9, 1868, and that the different conclusion as to the power conferred by that ordinance arrived at and declared by a majority of the supreme court of North Carolina, long after the date of the issuing of the bonds in suit, cannot destroy the validity of the bonds in the hands of bona fide holders. Loeb v. Trustees, 179 U. S. 472, 492, 21 Sup. Ct. 174, 45 L. Ed. 280.
It is, of course, with great reluctance that we feel constrained to differ from the conclusion arrived at by the supreme court of North Carolina as announced in the majority opinion in Commissioners v. Call (1898), and it may be that the difference would not have arisen had the contentions in support of the validity of the bonds been as fully presented in that case in behalf of holders as deeply interested in thein as they have since been in the supreme court of the United States and in this court in the litigation over their validity.
Having reached 11- conclusions herein expressed, it does not appear necessary to consider the effect of sections 1996–1999 of the Code of North Carolina giving power to counties to aid in the completion of railroads in which the citizens of the county have an interest.
The majority of the judges sitting in this appeal are of opinion that the decree of the circuit court should be affirmed.
BOYD, District Judge. In concurring with Judge MORRIS in his opinion in this case, I desire to say: This cause was argued upon the whole record, it being on appeal from a decree entered in the circuit court for the Western district of North Carolina at Greensboro, April 14, 1899, by Judge Purnell, designated to preside in that district by the circuit judge. The rights of the parties are to be determined upon the whole record, including the answers by the supreme court to the certified questions. The decision is reported in 180 U. S. 506, 21 Sup. Ct. 458, 45 L. Ed. 642. The answers to the questions certified are, in substance, as follows: (1) That the circuit court should have regarded the decisions set out in the questions as controlling upon the inquiry whether the legislative enactments of 1868, 1879, and 1881 were passed in such manner as to become, under the constitution, laws of the state. (2) That the rights of the parties in this case are determinable by the law of the state as it was declared by the state court to be at the time the bonds here involved were made in the name of the county and put upon the market. The questions certified by this court to the supreme court involved the validity of an issue of bonds in the sum of $100,000 by the county of Wilkes, in the state of North Carolina, in the year 1889, in payment of its subscription in this sum to the capital stock of the Northwestern North Carolina Railroad Company, a corporation constructing and owning a railroad running from Greensboro via Winston-Salem, in Forsyth county, to Wilkesboro, in Wilkes county The power relied on by the complainants in the bill for the issue of the bonds was the ordinance of 1868, the charter of the company, and an act of assembly of the 11th of August, 1868, the sections 1996, 1997, etc., of the Code of North Carolina, an act of assembly of February 20, 1879, and an act of March 2, 1881, all referred to in paragraph 21 of the bill, page 7 of the record, etc. After the issue of these bonds, in due course of trade, there came into the hands of complainants 55 of the same, of the denomination of $1,000 each. The purchase of the same was for value, the highest market price, in good faith, and without notice, express or implied, that there was any suggestion of their being void, invalid, fraudulent, or otherwise than legal bonds in their issue and sale. It is alleged that the interest on these bonds was paid regularly for eight years by the county, and that such payment was enjoined by a judgment of the superior court of Wilkes county, affirmed by the supreme court, rendered in an action by the board of commissioners of the county against the treasurer, one Call, who, as such, held in his hands a fund for that purpose. It is alleged in the bill that this railroad runs over 20 miles in the county of Wilkes, and is the only railroad in that county. It is contended upon the part of the appellants that the decision of the supreme court of North Carolina in the action above set out should be followed by the circuit court. The supreme court, in answering the questions certified, disposed of that contention. Therefore I will not discuss it further than I have already in the Stanly Co. Case (No. 290, at this term) 113 Fed. 705. By reierence to the decision of the supreme court, it is to be noted one thing decided was that the ordinance of 1868 was valid, and was in force after the constitution was adopted; and, further, that the supreme court of North Carolina had so held in the cases of Hill v. Commissioners, 67 N. C. 367 (June term, 1870), and in Belo v. Commissioners, 76 N. C. 489 (Aug. term, 1877). Further, it was held expressly that the Belo Case decided the ordinance of 1868, March gth, conferred the power upon Forsyth county to make the subscription