missioners v. Snuggs, 121 N. C. 394, 28 S. E. 539, 39 L. R. A. 439, the decision would have been different. As I have already said, no bondholder was a party to that suit. It seems to have been argued, however, but there is no reference to the Belo Case in the opinion, and, from that, I take it, there was none in the argument. In addition to the leading opinion of the court, written by Justice Montgomery, there were two concurring opinions, and in none of them is there any mention of the Belo Case. This, to us, is remarkable, when we consider the fact that it is the leading case in North Carolina upon the subject of municipal bonds; and the more remarkable when we consider the principles there laid down, decisive of the case here in favor of the bonds and their validity. What are these principles? The supreme court, in 1877, in Belo v. Commissioners, 76 N. C. 489,-the leading case upon the subject of municipal bonds, and the effect of recitals in the bonds,-lays down the law as follows:

"While the decisions are very uniform that the records of the justice's court, affirming the fact of compliance with the conditions precedent to the subscription of stock, are conclusive and estop the county from denying the validity of the bonds in the hands of a bona fide holder before maturity, they are equally uniform in giving the same effect to the recitals in the bonds themselves that they had been issued in pursuance of the law which authorized their issue. The recital is a determination of the question, and the holder has a right to rely on it. Town of Coloma v. Eaves, 92 U. S. 484, 23 L. Ed. 579; Knox Co. v. Aspinwall, 21 How. 539, 16 L. Ed. 208. Mr. Justice Gray says: 'In the leading case of Knox Co. v. Aspinwall, the decision was rested upon two grounds. One of them was that the mere issue of bonds, containing a recital that they were issued in pursuance of the legislative act, was a sufficient basis for the assumption by the purchaser that the conditions on which the county was authorized to issue them had been complied with, and it was said the purchaser was not bound to look further for evidence of such compliance, though the recital did not affirm it. The position was supported by reference to the Royal British Bank v. Turquand, 6 El. & Bl. 327, in a case in the exchequer chamber, which fully sustains it.'"

Here the court in 1877 approved of the doctrine in the Royal British Bank Case, upon which Knox Co. v. Aspinwall was based, the case Mr. Justice Gray bases his decision upon in the case of Louisville, N. A. & C. R. Co. v. Louisville Trust Co., 174 U. S. 573, 574, 19 Sup. Ct. 817, 43 L. Ed. 1081. The above are the words of Justice Gray, the same used in the Belo Case by Justice Bynum; the leading case on municipal bonds in North Carolina.

To apply these rules to this case, what were the conditions on which the county of Stanly was authorized to issue the bonds? One was, "when necessary to aid in the completion of any railroad"; and another was, "of any railroad in which the citizens of the county may have an interest." Here was a power, legislative in its character, recited in the bond, to be exercised under certain conditions. By whom? The act says, the "board of commissioners." In June, 1889, an order was entered upon the record of the board of commissioners of Stanly county, when they came to consider the proposition to subscribe to the capital stock of the Yadkin Railroad, a part of which was as follows: "It appearing that the citizens of said county have an interest in said railroad," etc. In this same order, reference time and again was made to the Yadkin Railroad and its construction, and

to the conditions upon which it was to be constructed. Among others, it was ordered that "said railroad shall be of standard gauge." It appeared then to the board, and they (the commissioners) acted upon it, that there was a railroad to be completed,-constructed,—and that the citizens of the county had an interest in it. These were the conditions to be complied with, and some authority had to pass upon the same. It was not for the innocent purchaser of the bond to inquire as to whether the conditions were complied with, but for the municipal authorities who put it upon the market, and the recital in the bond that it was issued in pursuance of the power conferred by the sections of the Code "was a sufficient basis for the assumption by the purchaser that the conditions on which the county was authorized to issue it had been complied with." Belo's Case, supra. The proceedings had before the board of commissioners of Stanly county, printed in the record, show that the corporate authorities acted with the sections of the Code recited in the face of the bond before them, and that they passed upon all questions left for their determination, as said by Justice Brewer in his opinion in the Mercer Co. Case, 170 U. S. 601, 18 Sup. Ct. 791, 42 L. Ed. 1156. It shows these corporate authorities. were acting in good faith, and wanted to perform their duty, according to law. On page 660, 30 C. C. A., and page 307, 87 Fed., in the case of Township Ninety-Six v. Folsom, the circuit court of appeals, speaking through Judge Jackson, says:

"It will be observed from the inspection of these bonds that their recitals show upon the face of the bond a compliance with the law under which they were issued. The purchaser had a right to assume that all the conditions of the law were complied with, authorizing the issue of the bonds. The question whether they were issued in compliance with the law was a question that properly belonged to the authorities who were authorized by the acts of the legislature to issue the bonds."

Purchasing these bonds with the recitals they contained, was it required of the purchasers to find out whether the citizens of the county of Stanly had an interest in the railroad? Was it required of them to find out whether the railroad was completed or uncompleted? These are matters for the corporate authorities, and for them alone. Says Justice Brewer in Provident Life & Trust Co. v. Mercer Co., 170 Ú. S. 601, 18 Sup. Ct. 791, 42 L. Ed. 1156:

"By a long series of decisions, such recitals are held conclusive, in favor of a bona fide holder of bonds, that precedent conditions prescribed by statute, and subject to the determination of those county officers, have been fully complied with."

In the case of Provident Life & Trust Co. v. Mercer Co., 170 U. S. 601, 18 Sup. Ct. 788, 42 L. Ed. 1156, it will be seen that the recitals in the bond, which are printed in the volume, are similar to those in the Stanly bonds. See, also, the recent case of Gunnison Co. v. E. H. Rollins & Sons, 173 U. S. 255, 19 Sup. Ct. 390, 43 L. Ed. 689, as to recitals in bonds; also School Dist. v. Rew, 49 C. C. A. 198, III Fed. 1.

We understand the rule to be that the purchaser has to look no further than to ascertain if a power has been granted to issue the bonds. If there is a power, then he can depend upon the recitals in the bonds for the proper exercise of that power.

The above are the rules which have obtained in North Carolina since 1877,-the first time they were considered. They are to be found in the case of Belo v. Commissioners, 76 N. C. 489; and in the light of the same, so clearly and forcibly stated by Justice Bynum, we must assume, if that case had been called to the attention of the court when the Snuggs Case was argued, as suggested by Judge MORRIS, the decision might have been different. In Union Bank v. Commissioners of Town of Oxford, 116 N. C. 368, 21 S. E. 419, the court says:

The purchaser of such coupons as those sued upon must so far act upon the notice contained in the recitals, as a general rule, as to examine the statutes referred to, and ascertain at his peril whether the essential prerequisites to the validity of the bonds have been met both by legislative and popular action. We hold that upon a fair construction of the organic law and pertinent statutes, and their application to the facts of this case, there has been a sufficient compliance with the essential requirements of the law to render the election valid. We think, therefore, that the court erred in holding that the plaintiff was not entitled to recover, and the judgment of nonsuit must be set aside and a new trial granted."

The recitals in the bonds in question, as they appear in the record,

are:

"This bond is one of a series of eighty of the denomination of one thousand dollars each, and forty of the denomination of five hundred, issued by authority of an act of the general assembly of North Carolina ratified the third day of March, 1887, entitled 'An act to amend the charter of the Yadkin Railroad Company,' and of sections 1996, 1997, 1998, and 1999 of the Code of North Carolina, and authorized by a majority of the qualified voters of Stanly county at an election held for that purpose on the 15th day of August, 1889, duly ordered by the board of commissioners of Stanly county.”

Under the decision in the Belo Case, and the rule to which the court calls attention in Union Bank v. Commissioners of Town of Oxford, both referred to above, the purchaser of the bonds "had only to examine the statutes referred to, and ascertain, at his peril, whether the essential prerequisites to the validity of the bonds have been met both by legislative and popular action." These sections of the Code recited in the bond as authority for their issue. were passed by the legislature according to the constitution, and there is no doubt but that there was a large majority of the voters of the county of Stanly in favor of the issue of the bonds. These things are admitted. So that the bondholder had to look no further than to see if there was a power conferred to issue the bonds. The performance of the conditions was a matter to be determined by the corporate authorities. The bondholders had the right to rely on the recitals for that. They did rely on them. They did all that was required of them.

It was contended by the appellants in the argument that the provisions of section 1996 of the Code refer only to those roads that were unfinished in April, 1868, the time of the adoption of the constitution; and in support of this the attention of the court is called to the following:

"This reasoning leads us to the still further conclusion that, at the time when the act of 1868-69 was brought forward, in the Code (section 1996 and the four succeeding sections), it could have had reference to no cases

except those where the counties had a pecuniary interest in unfinished railroads at the adoption of the constitution of 1868." Commissioners v. SLuggs (1897) 121 N. C. 403, 28 S. E. 542, 39 L. R. A. 439.

This case was decided in 1897. The statute of April 10, 1869 (section 1996 of Code), made no reference to the constitution of 1868, nor to any other point of time in the past. Every word in section 1996 denoting tense is in the future tense, and the Code went into effect November 1, 1883. It is a universal rule of construction that all statutes are prospective in their operation, unless the statute itself says to the contrary. "No statute should be given a retrospective operation unless its words expressly require such construction. State v. Littlefield, 93 N. C. 614. What words in section 1996 require that its operation be referred to April, 1868,-15 years before it was re-enacted in the Code, and one year before it was ever put in any shape on the statute books of North Carolina? "Upon the same principle of construction, if section 1996 should be re-enacted in the Code of 1900, it would have no application to any road that might be built during the next century, but would apply to roads incomplete in the year 1868,-thirty-two years before its enactment." This principle has been passed on by the supreme court of the United States in James v. City of Milwaukee, 16 Wall. 159, 21 L. Ed. 267. In that case a statute authorized a city to lend its credit to any railroad company incorporated and organized, and the court held that companies thereafter organized were intended to be included, and the statute was applicable to them as well as those in existence. The court said (16 Wall. 160, 161, and 21 L. Ed. 267):

"The defendant in error insists that the power conferred was confined to companies already in existence at the date of the act, and such was the opinion of the court below. We entertain a different opinion."

In that case there was no word denoting the future tense,-no "shall," as in section 1996,-but the only words used were "incorporated" and "organized."

In this connection we observe that the supreme court of North Carolina, in the Snuggs Case, has construed the words of section 1996 of the Code, "the citizens of the county may have an interest," not to mean what the language imports. The court holds that these words require the county, as a county, to have a pecuniary interest in the railroad, in order that the section may apply. In answer to this, it is only necessary to say no such words are to be found in section 1996 of the Code. This construction takes out the words "the citizens," and inserts the word "pecuniary," and thus it holds that the words "any railroad in which the citizens of the county may have an interest" are to be construed as follows, to wit: "any railroad in which the county has a pecuniary interest." A mere statement of such a construction is enough to refute it. Here we may call attention to the language of article 5, § 6, of the constitution of the state, when it was dealing with the question of the right of the state to issue railroad aid bonds. There it refers to a railroad "in which the state has a direct pecuniary interest." This section 1996 of the Code was adopted about one year after article 5, § 6, of the constitution. Doubtless the legislators had be

fore them this provision of the constitution, or at least were familiar with it. The difference in the language was obviously intentional and significant.

The history of the adoption of this provision of the state constitution as to state railroad aid bonds shows that it had a different purpose from that of the Code (sections 1996-2000). The report of the treasurer shows that prior to the meeting of the convention the state had undertaken to issue its bonds in aid of certain railroads, and that under the statutes then existing the state was liable to be called upon for the issue of additional bonds, or for the guaranty and payment of additional bonds; and the state owned stocks in certain railroads, thus having a direct pecuniary interest in them. The amendment made to section 5, article 5, of the constitution, above quoted, was designed to enable the state, without a vote of the people, to carry out its contracts already entered into on railroads, etc., already begun, and to protect its interest in the railroads, etc., already begun. With a vote of the people, the state was allowed to aid railroads, without restriction. As the constitution (article 7, § 7) did not allow counties to incur any debt in any case, except for necessary expenses, without a vote of the people, the reason for the provision as to unfinished railroads in case of state aid did not apply to counties, and was purposely omitted. in the act of April 10, 1869 (now sections 1996-2000 of the Code). This view is supported by the following decision rendered by the North Carolina supreme court in 1869, the year following the constitutional convention. In Galloway v. Jenkins, 63 N. C. 147, the suit was to enjoin an issue of state bonds in aid of the railroad company. The court held that the bonds were unauthorized, under the provisions of the constitution. In the course of the opinion. (Pearson, C. J., writing the same) the court says with respect to the restriction of the power of the state to incur debt,-speaking of the debt existing at the time of the adoption of the constitution of 1868 (page 153):

"It will be found that most of the public debt was incurred in three modes: (1) By subscribing for stock in railroad and navigation companies, and issuing bonds to pay for the stock; the state becoming a member of the corporation. This is the heaviest item, and amounts to, say, eight million dollars. (2) By issuing bonds of the state, and exchanging such bonds for a like amount of the bonds of the corporation; the state not becoming a stockholder, and taking the collateral security, of more or less value. This is the next heaviest item, and amounts to about three millions of dollars. (3) By indorsing the bonds of corporations, and taking a mortgage or some other collateral security. This item amounts to two millions. These are the three modes by which, judging from the past, it was apprehended the public debt might be so run up as to ruin the credit of the state, and tarnish her honor and her reputation for good faith. [Page 155.] The suggestion that the credit of the state was given by this statute to aid in the completion of an unfinished railroad was not strongly urged on the argument, and, indeed, it could not be. An unfinished road is one that has been begun and partly worked on, and such a road is made an exception on the ground that it might be proper to finish it, in order to prevent a sacrifice of the work that had been done. There is no evidence that such was the fact in regard to this road. The other suggestion, that the state has a direct pecuniary interest in this road, was properly abandoned. The word 'has' is in the present tense. The exception is obviously confined to roads in which the