Board of Com'rs v. Gardiner Sav. Inst.

119 F. 36, 15 Ohio F. Dec. 33, 1902 U.S. App. LEXIS 4635

Opinion

DAY, Circuit Judge,

after making the foregoing statement of facts, delivered the opinion of the court.

In this case counsel have elaborately argued questions as to the authority of the commissioners of Franklin county to levy a general tax for the payment of the bonds sued upon; it being insisted on behalf of the bondholders that, notwithstanding a method of assess ment upon the property abutting upon the road is set forth, which may provide a means of ultimate payment as between the county and the property owners, the bonds constitute a general indebtedness of ■the county, to be collected by general taxation. On the other hand, it is contended that as the bonds, on their face, stipulate that they shall be paid out of the assessments on the property, and, no authority being conferred in the act authorizing the improvement to incur a general liability of the county, the only obligation of the county is to use diligence to collect and to apply the assessments for the benefit of the bondholders. These contentions can be considered now only in so far as they bear upon the authority of the county commissioners to obligate the county, under the powers conferred in the act under consideration, by the issue of the bonds in suit. This case is not one asking the issue of a writ of mandamus either to levy a tax or require assessments as provided in the statute. The present case is a straight action at law, asking a money judgment on the bonds, and no more. It stands confessed by the demurrer, and the answer that the commissioners executed and sold the bonds and received the proceeds thereof. By way of defense, it is urged that the commissioners had no authority to issue the bonds of the county under the terms of this act in such wise as to make any obligation upon the county beyond the collection of the assessments. The commissioners are a quasi corporate body, having the authority to sue and be sued as such, and to enter into contracts and obligations within the scope of their duties duly conferred by law. Rev. St. Ohio, § 845; State v. Commissioners of Hancock Co., 11 Ohio St. 190. It is this quasi corporate body which by the terms of the act is authorized to construct the improvement. The law is entitled:

“To authorize county commissioners in counties in which there are situated ■cities of the first grade of the second class to improve roads extending from said cities and other roads and streets in certain cases.”

While the making of the roadway is to be upon the petition of the abutting land'owners, the road is only established when the commissioners deem the same to be a judicious improvement. The commissioners are charged with the duty of seeing to it that, with the proposed improvement, the foot frontage of the abutting lands shall be worth double the estimated expenses of such improvement. The commissioners are to let the contract for the work. These provisions indicate the general purpose to make a county improvement, to be •contracted for by the representatives of the county. The improvement was to be paid for by the sale of bonds to raise money for that ■purpose, and we find it provided in section 7:

“In order to provide for the payment of the costs and expenses of said improvement to be assessed upon the abutting property, the commissioners may, from time to time, as such improvement progresses, issue the bonds for' such improvement in such sums as will be required in all to an amount not exceeding the contract price of the work and the expenses attending the same •and interest.”

The following section (8) provides that the bonds shall be negotiated at not less than par, as other bonds of said county are negotiated, and the proceeds applied solely to pay for said improvement. We find in section 7 authority to issue “the bonds for such improvement.” What bonds are herein referred to? We find no suggestion in the act that they are to be other than the bonds of the county. We are not now considering the power of assessment or taxation to pay the bonds, but solely the question of whose obligations are authorized in the law. To say the bonds must have an obligor is to state a self-evident truth. The county commissioners are not authorized to issue any other. The spirit and letter of this act indicate the intention to authorize the' execution and negotiation of these bonds “as other bonds of the county are negotiated.” In determining whether the bonds are county obligations, the provisions of section 12 of the act are not to be lost sight of. By the terms of that section, if any bond or interest shall be due, and there is no money to pay the same, the commissioners are authorized to make a temporary loan to pay the same. The lien of the assessment for such temporary loan is to continue for the benefit of the county. Such provisions are generally held to be for the benefit of the holder of the obligation of the corporation which is thus empowered to raise money, to meet a legal indebtedness. Supervisors v. U. S., 4 Wall. 435, 18 L. Ed. 419; City of Little Rock v. U. S., 43 C. C. A. 261, 103 Fed. 418; Village of Kent v. U. S., 51 C. C. A. 189, 113 Fed. 232. While we are not now called upon to pass upon the question as to whether the commissioners can be compelled to exercise this authority in favor of bondholders, this feature of the law is entitled to weight, in view of the contention that it was the purpose of the act to impose no obligation upon the county beyond the collection and application of the assessments. It is the county that is here authorized to make loans to meet deficiencies in assessments in order that the bonds may be met at maturity. The Commissioners represent the county, and no other political or corporate body. They are authorized to issue the bonds of that quasi corporation whose officers they are. The commissioners exercised this authority, and issued bonds which upon their face purported to be the obligation of the county. It is true that the act requires that, although the bonds shall be issued as other bonds for road improvement are issued, they shall bear the name of the street for whose improvement they are issued, and shall state therein that they are to be paid for by assessments upon the property abutting said improvements; but there is no requirement that they can b.e only paid for by such assessment, and no express limitation upon the undertaking of the county in issuing and selling these securities. The obligation to pay is unconditional, and there is no statement in the act or in the bond that the holder shall await payment until assessments can be collected. It is not unlikely that the bonds could not have been negotiated, had the act required, and the bonds stated that payment was to be made only from assessments. We do not think anything short of such clear expression of limitation of the right of the bondholder to the assessments on the property, without any general liability on the bonds by the county, will have the effect to thus restrict the obligation oí the contract. State v. Fayette Co. Board of Com’rs, 37 Ohio St. 526; U. S. v. Ft. Scott, 99 U. S. 152, 25 L. Ed. 348; U. S. v. Clark Co., 96 U. S. 211, 24 L. Ed. 628. These obligations upon which the money was received by the county being authorized by the law, and the county having defaulted in payment, a money judgment must be rendered upon the bonds unless some good defense is shown. It is claimed that the act under which the bonds were issued is unconstitutional, as being in contravention of article 26 of the constitution of Ohio, which provides that all laws of a general nature shall have a uniform operation throughout the state. Since the decision in Hixson v. Burson, 54 Ohio St. 470, 43 N. E. 1000, there can be no question as to this law falling within the category of those condemned as attempts to enact special legislation, when general laws having a uniform operation throughout the state can only be passed. Hixson v. Burson expressly overruled the prior decision of the Ohio supreme court in State v. Board of Franklin Co. Com’rs, 35 Ohio St. 459, holding legislation of the character of that now under consideration to be valid. The latter decision was the declared law of the state when these bonds were issued. As late as Wilkes Co. v. Coler, 180 U. S. 506, 21 Sup. Ct. 458, 45 L. Ed. 642, Mr. Justice Harlan, speaking for the supreme court, said:

“It is a settled doctrine in this court that the question arising in a suit in a federal court of the power of a municipal corporation to make negotiable securities is to be determined by the law as judically declared by the highest court of the state when the securities were issued, and that the rights and obligations of parties accruing under such a state of law would not be affected by a different course of judicial decisions subsequently rendered, any more than by subsequent legislation. Loeb v. Trustees, 179 U. S. 472, 21 Sup. Ct. 174, 45 L. Ed. 280, and authorities there cited.”

Up to the time of the issue of these bonds, acts similar to the one under consideration had been upheld by the supreme court of Ohio. The fact that the plaintiffs below purchased the bonds after the decision in Hixson v. Burson cannot affect its title as a bona fide holder if the bonds were issued under a law held to be valid .at the time of the issue. Gunnison Co. v. E. H. Rollins & Sons, 173 U. S. 255, 19 Sup. Ct. 390, 43 L. Ed. 689.

It is further contended that the bonds are of no validity, as they are issued in violation of the guaranties of the constitution of the United States against taking private property without compensation, and depriving any person of property without due process of law. This argument is aimed against the feature of the law which undertakes to provide for assessments upon the property abutting upon the improvement. A similar question was before the supreme court in Loeb v. Trustees, 179 U. S. 488, 21 Sup. Ct. 174, 45 L. Ed. 280. In that case it was held that, even if the assessment was invalid because of the constitutional objection raised, the law could stand as valid, authorizing the making of obligations of binding force upon the township. Finding in this law authority to issue the bonds for purposes held to be lawful at the time the authority was granted, and the bonds having been issued accordingly, they became the obligations-of the county, irrespective of the question—not herein involved —of the validity of any attempted assessments to pay the bonds. As was said by Mr. Justice Harlan in Loeb v. Trustees, supra:

“The relief asked and the only relief that could be granted in the present ¡action is a judgment for money. If the township should refuse to satisfy •a judgment rendered against it, and if appropriate proceedings are then in-, stituted to compel it to make an assessment to raise money sufficient to pay the bonds, the question will then arise whether the mode prescribed by the third section of the act of 1893 can be legally pursued, and, if not, whether the laws of the state do not authorize the adoption of some other mode by which the defendant can be compelled to meet the obligations it assumed under the authority of the legislature of the state. All that we can now •decide is that, even if the third section of the statute in question be stricken ■out as invalid, the petition makes a case entitling the plaintiff to a judgment against the township. Whether a judgment, if rendered, could be collected, without further legislation, depends upon considerations that need not now be examined.”

What we hold is that the bonds in suit constitute a valid obligation of the county, upon which a judgment may be rendered in favor of the holder. Whether the same can be compelled to be paid through the assessments provided for in the act, or whether there exists legislation under which the commissioners can be required to levy a general tax for the payment of such judgment, are questions not made in this record, and upon which we express no opinion.