It is settled law that a municipality has no power to issue its
bonds in aid of a railroad, except by legislative permission.
The legislature, in granting permission to a municipality to
issue its bonds in aid of a railroad, may impose such conditions as
it may choose.
Where authority is granted to a municipality to aid a railroad
and incur a debt in extending such aid, that power does not carry
with it authority to execute negotiable bonds except subject to the
restrictions and directions of the Enabling Act.
Page 132 U. S. 341
The act of the Legislature of Michigan of March 22, 1869, "to
enable any township, city or village to pledge its aid by loan or
donation to any railroad company, etc.," provided that the bonds
when "issued" should be "delivered by the person . . . having
charge of the same to the treasurer of this state;" that the
treasurer should "hold the same as a trustee for the municipality
issuing the same and for the railroad company for which they were
issued;" that whenever the railroad company should
"present to said treasurer a certificate from the governor of
this state that such railroad company has in all respects complied
with the provisions of this act . . . , such of said bonds as said
company shall be entitled to receive shall be delivered to said
company;"
that the treasurer should endorse upon each bond delivered the
date of its delivery and to whom it was delivered, and that in case
the bonds were not demanded in compliance with the terms of the act
within three years from the date of delivery to the treasurer, "the
same shall be cancelled by said treasurer and returned to the
proper officers of the township or city issuing the same." The
township of Clarendon, in Michigan, having complied with the
requirements of the act on its part, delivered to the state
treasurer its bonds to the amount of $10,000, dated July, 1869, for
the benefit of the Michigan Air Line Railroad Company. The company
completed its railroad before February, 1871, and became entitled
to the governor's certificate under the act, but on May 26, 1870,
the supreme court of the state had declared the act to be
unconstitutional, and the governor in consequence thereof refused
to give the certificate. On the 28th May, 1872, before the
expiration of three years from their delivery, the treasurer
returned the bonds to the township. November 12, 1884, the
appellant obtained judgment against the railroad company and an
execution was issued, which was returned
nulla bona. On
the 24th February, 1880, he filed a bill in equity against the
township and the company, claiming that the township was equitably
indebted to the company to the amount of the bonds and coupons with
interest, and that he was entitled to recover the amount of that
indebtedness, and to apply it on his judgment debt.
Held:
(1) That the municipal authorities had no power to deliver the
bonds, after their execution except to the state treasurer, and
that the word "deliver," as used in the statute with reference to
this act, was used in its ordinary and popular sense, and not in
its technical sense.
(2) That to the governor alone was given the power to determine
whether the bonds should ever in fact issue, and if issued, when
they should issue.
(3) That the endorsement by the treasurer upon each bond of the
date of its delivery and of the person to whom it was delivered was
necessary to make it a completed bond, and that this could not be
done until the governor's authorization was made.
(4) That as the bonds were never endorsed and delivered by the
treasurer, they never became operative.
(6) That the rule in regard to escrows could be applied to
these
Page 132 U. S. 342
instruments, because they were never executed in compliance with
the peremptory requirements of the statute.
(6) That if the railroad company had any cause of action against
the township by reason of these facts, it was barred at law by the
statute of limitations of the Michigan.
(7) That by reason of laches in pursuing the remedy, the bar at
law could be set up and maintained in equity.
The constitutionality of the Act of the Legislature of Michigan
of March 22, 1869, which is considered in this case, was fully
settled in the case of
Taylor v. Ypsilanti, 105 U. S.
60, to which the Court adheres.
On the 21st of February, 1885, the appellant exhibited, in the
Circuit Court of the United States for the Eastern District of
Michigan, his bill, in the nature of a creditor's bill, against the
appellees.
The bill averred that on the 12th of November, 1884, the
appellant obtained a judgment against the railroad company for the
sum of $355,865.21; that an execution upon the judgment was issued,
and was returned "
nulla bona;" that the judgment was still
unpaid, and that the railroad company was a corporation, organized
on the 28th of August, 1868, by a consolidation of two companies --
one organized under the laws of Michigan and the other under those
of Indiana, which consolidated company was itself, on October 8,
1880, again consolidated with the St. Joseph Valley Railroad
Company, retaining, however, its name of the Michigan Air Line
Railroad Company.
The bill also alleged that after the first consolidation as
aforesaid, and on the 22d of March, 1869, the Legislature of
Michigan passed
"An act to enable any township, city, or village to pledge its
aid, by loan or donation, to any railroad company now chartered or
organized or that may hereafter be organized under and by virtue of
the laws of the Michigan in the construction of its road."
Said act authorized the issue of aid bonds. In its fifth and
sixth sections it provided as follows:
"SEC. 5. Whenever any such bonds as provided by provisions of
this act shall have been issued as therein specified, the same
shall be delivered by the person, persons or officers having charge
of the same to the treasurer of this state, who
Page 132 U. S. 343
shall give a receipt therefor and hold the same as trustee for
the municipality issuing the same and for the railroad company for
which they were issued, and to be disposed of by said treasurer in
discharge of his trust, as hereinafter provided."
"SEC. 6. . . . Such bonds shall be safely kept by such treasurer
for the benefit of the parties interested, and be disposed of by
him in the following manner -- that is to say, whenever any
railroad company in aid of which any of such bonds may have issued
shall present to said treasurer a certificate from the governor of
this state that such railroad company has in all respects complied
with the provisions of this act and is thereby entitled to any of
such bonds, the same or such of said bonds as said company shall be
entitled to receive shall be delivered to said company, the
treasurer first cutting therefrom, cancelling and returning to the
municipality the past-due coupons. The treasurer shall endorse upon
each of said bonds the date of such delivery and to whom the same
were delivered, and the same shall draw interest only from the time
when so delivered, and the treasurer shall notify the clerk of the
township or recorder or clerk of the city issuing the same of the
date of the delivery of its bonds to such railroad company. . . .
And in case any bonds so delivered to said treasurer by any such
township or city shall not, within three years from the time when
the same were received by him, be demanded in compliance with the
terms of this act, the same shall be cancelled by said treasurer
and returned to the proper officers of the township or city issuing
the same."
The bill further averred that in conformity with the provisions
of this act, the electors of the township, on the 21st day of June,
1869, voted to pledge the aid of the township by the loan of
$10,000, to be paid by its 10 percent bonds at par, upon certain
terms and conditions in said vote stated, among which were that the
road should be located and constructed through said township; that
the time of payment of each of those bonds was to be postponed a
year in the event of the noncompletion of the roadbed and the
ironing before the 1st of November, 1869, and that the company
would pay yearly
Page 132 U. S. 344
to the township a sum equal
pro rata to the dividends
paid stockholders, and said sums were to be in extinguishment of
the interest on the bonds, and the excess over 10 percent, if any,
to be applied on the principal. The bonds thus voted were issued in
pursuance of said act, and were delivered to the state treasurer,
to be by him held as trustee for both the township and the company
on the terms and conditions of the act as aforesaid.
The bill then averred that the railroad company, in
consideration of the township's action and relying thereon, entered
upon the construction of said railroad, and, previous to the 1st of
February, 1871, had fully constructed and ironed said road through
the township, and at the time of the delivery of the bonds to the
state treasurer as aforesaid, had duly executed and delivered to
the township the agreement specified in the terms on which the aid
was voted and had performed every condition precedent to the
earning of said bonds, and had become fully entitled to have the
same delivered by the treasurer, except that it had not secured the
certificate of the governor as required by said act. While the
road, however, was in the process of construction, the Supreme
Court of the Michigan, on the 26th of May, 1870, declared the act
in question to be unconstitutional, but as the railroad company had
already expended the sum of a million of dollars and upwards in
construction, it could not stop, but went on and completed the road
in full compliance with all the conditions of the vote. The company
then applied to the governor for his certificate under the statute,
exhibiting to him proofs of its title to receive the bonds; but he
refused to give the same, giving as his sole reason for such
refusal the judgment of the Supreme Court aforesaid.
The bill then averred that on May 28th, 1872, the township,
knowing the premises, and without the knowledge or consent of the
company and in violation of the law and of the trust aforesaid and
in fraud of the company's rights, induced the state treasurer, who
had full knowledge of the foregoing facts, to surrender to the
township the said bonds and the coupons thereunto attached; that
the township had since retained the
Page 132 U. S. 345
same, and withheld them from the company; that said bonds and
coupons, by reason of all the premises, became in justice and
equity the property of said railroad company, and the township
became bound thereon according to their tenor and effect; that the
said township was therefore equitably indebted to said company, to
the whole amount of said bonds and coupons, with the interest
thereon to the present time, and that the appellant was entitled to
the said amount toward the satisfaction of his judgment against the
company.
To this end, an account was prayed to be stated between the
company and the township, the appellee, and a final decree against
the township for the sum shown to be due in favor of the appellant
was asked.
The bill was dismissed by the Circuit Court on demurrer (26 F.
805), and the cause came here on appeal by the complainant.
MR. JUSTICE LAMAR, after stating the facts in the foregoing
language, delivered the opinion of the Court.
We consider the decisive question in this case to be that of the
laches in pursuit of the railroad company's right against the
township. In this view, the controversy must be narrowed to a
single issue. The township, which is the defendant below and which
defends separately, claims that the cause of action accrued either
13 or 14 years before this bill was filed -- 13 years if the
conversion of the bonds by the township and the treasurer be
considered the gravamen, and 14 years if it be the governor's
refusal to issue his official certificate; that since the statutes
of limitation in Michigan touching these questions vary from 6 to
10 years, the cause of action is long since barred at law as to the
railroad company; that it is therefore barred also in equity, and
lost by laches in its
Page 132 U. S. 346
assertion, and that since the appellant by this bill is
prosecuting a demand in the nature of a garnishment, and the
railroad company's right is barred both at law and in equity,
therefore that of the appellant is also barred. The appellant seeks
to avoid the force of this position by claiming that the bonds had
been so far perfected by the dealings between the parties that the
railroad company was entitled to have them from the state
treasurer; that, such being the case, the tort of the township and
of the treasurer in converting them could not impair the rights of
the company; that therefore the company was and is entitled to
waive the tort and sue directly on the bonds, as in the case of
lost or stolen bonds; that only a few of such bonds, if delivered,
would have been barred at the time of the filing of the bill, since
most of them were so drawn as to mature within 10 years of that
time; and finally that as the company was thus still in possession
of an enforceable demand, the appellant could avail himself of it
by this bill.
The controlling question presented therefore is this: were the
bonds in question so dealt with by the parties as at any time to
vest in the railroad company a right to sue directly on the bonds
themselves, as distinguished from a right to sue for their
nondelivery or because of their cancellation? That question cannot
be satisfactorily or properly answered without constant reference
to the exceptional character of the circumstances by which these
bonds were deprived of their value. It is not the case of a common
negotiable instrument put forth by a natural person as obligor, but
it is that of a railroad aid bond sought to be put forth by the
municipality. In such case, the nature of the bonds, their force
and effect, their value and character while in the hands of the
state treasurer, the rightfulness and sufficiency of their issue,
and all kindred questions must be referred to the statute
authorizing them. In this case, the statute is the act of 1869. It
is the touchstone. Whatever might be the rule in ordinary cases, so
far as the act goes, it controls here, being the enabling act;
outside of it there was no power whatever to issue these bonds. By
an unbroken current of decisions by this Court and by all other
courts too numerous to mention, it is settled law that a
municipality has
Page 132 U. S. 347
no power to make a contract of this character, except by
legislative permission. It is manifest that, such being the case,
the legislature, in granting such permission, can impose such
conditions as it may choose, and even where there is authority to
aid a railroad, and incur a debt in extending such aid, it is also
settled that such power does not carry with it any authority to
execute negotiable bonds except subject to the restrictions and
directions of the enabling act.
Wells v. Supervisors,
102 U. S. 625;
Claiborne County v. Brooks, 111 U.
S. 400;
Kelley v. Milan, 127 U.
S. 139.
The analogy offered between the case at bar and a lost bond is
misleading. There is in fact no analogy. There is no doubt about
the right of the owner of a bond lost or stolen to sue on it, and
in the absence of it to give secondary evidence of its contents,
but the very statement of the principle assumes the existence of
the instrument. A bond lost or a bond stolen is out of the personal
possession and control of the owner, it is true; but it is also an
instrument that has become executed -- to which those things have
been done that were needed to give it legal existence as an
actionable obligation.
But here the very question to be determined is whether there
ever were any bonds. It is a question, in substance, of the very
existence of the instruments themselves. As before remarked, the
act of 1869 fixes the rights of parties in this case. All the
questions concerning the execution of the bonds in controversy must
be referred to that statute, tested by it, and decided in strict
conformity with its terms. It is an enabling act, conferring a
power not before existent, and any departure from its requirements
cannot be allowed.
Harshman v. Bates County, 92 U. S.
569.
In the case of
Sheboygan Co. v.
Parker, 3 Wall. 93,
70 U. S. 96, this
Court said:
"The commissioners or board of supervisors of a county, in the
exercise of their general powers as such, have no authority to
subscribe stock to railroads, and bind the people of the county to
pay bonds issued for that purpose without special authority
conferred upon them by the legislature. But when special authority
is given to the people of a county to do these
Page 132 U. S. 348
acts, and bind themselves by the issue of such bonds, the
legislature may properly direct the mode in which it shall be
effected. The persons specially appointed to act as agents for the
people have a ministerial duty to perform in issuing the bonds,
after the people at an election held for the purpose, have assented
that they shall be bound."
In the case of
Anthony v. County of Jasper,
101 U. S. 693, the
Township of Marion had, by authority, subscribed in aid of the
railroad. Afterwards the legislature passed an act requiring such
bonds to be registered and certified by the auditor of the state.
The Court said (pp 696-698):
"There can be no doubt that it is within the power of a state to
prescribe the form in which municipal bonds shall be executed in
order to bind the public for their payment. If not so executed,
they create no legal liability. Other circumstances may exist which
will give the holder of them an equitable right to recover from the
municipality the money which they represent, but he cannot enforce
the payment or put them on the market as commercial paper. The act
now in question is, we think, of this character. It in effect
provides that no bond issued by counties, cities, or incorporated
towns shall be valid -- that is to say, completely executed --
until it has been countersigned or certified in a particular way by
the state auditor. For this purpose, after being executed by the
corporate authorities, it must be presented to that officer and he
must inquire and determine whether all the requirements of the law
authorizing its issue have been observed and whether all the
conditions of the contract in consideration of which it was to be
put out have been complied with. To enable him to do this, evidence
must be submitted, which he is required to file and preserve. If he
is satisfied, the registry is made and the requisite certificate
endorsed on the bonds. This being done, the execution of the bond
is complete, and, under the law, it may then be negotiated -- that
is to say, put on the market as valid commercial paper. . . . When
the bonds now in question were put out, the law required that to be
valid, they must be certified to by the auditor of state. In other
words, that officer was to certify them before their execution was
complete, so as to bind
Page 132 U. S. 349
the public for their payment. We had occasion to consider in
McGarrahan v. Mining Co., 96 U. S.
316, the effect of statutory requirements as to the form
of the execution of patents to pass the title of lands out of the
United States, and there say:"
"Each and every one of the integral parts of the execution is
essential to the validity of a patent. They are of equal importance
under the law, and one cannot be dispensed with more than another.
Neither is directory, but all are mandatory. The question is not
what, in the absence of statutory regulations, would constitute a
valid grant, but what the statute requires."
"The same rule applies here. The object to be accomplished is
the complete execution of a valid instrument, such as the law
authorizes public officers to put out and bind for the payment of
money the public organization they represent. For this purpose, the
law has provided that the instrument must not only be signed and
sealed on behalf of the county court of the county, but it must be
certified to or countersigned by the auditor of state. . . . In
order to recover in this case, it became necessary for the
plaintiff to prove that the bonds from which the coupons sued on
were cut had been executed according to law. He did prove that they
were signed by the presiding justice and clerk of the court, and
were sealed with the seal of the court. This, before the Act of
March 30, 1872, would have been enough, but after that, more was
necessary. The public can act only through its authorized agents,
and it is not bound until all who are to participate in what is to
be done have performed their respective duties."
The bonds in that case were declared void.
See also, to
the same effect,
Coler v. Cleburne, 131 U.
S. 162.
Turning now to the statute involved in the case at bar, we find
its directions, among others, to be as follows:
"Such bonds shall bear interest at the rate of not exceeding ten
percent per annum, and shall have attached thereto the necessary
and usual interest coupons, corresponding in dates and numbers with
the bonds to which they are attached, which shall be signed by
written signatures by the same person or persons executing such
bonds. Such bonds shall, if issued by a city, be executed by the
mayor and clerk or recorder
Page 132 U. S. 350
thereof, as the case may be, under the seal of said city, and if
issued by a township they shall be executed by the supervisor and
clerk thereof, and if any city or township issuing such bonds shall
have a seal, the same shall be impressed upon each of such bonds.
The bonds and coupons attached thereto shall be payable at the
office of the treasurer of the county in which such township or
city may be situate. Whenever any such bonds as provided by the
provisions of this act shall have been issued as therein specified,
the same shall be delivered by the person, persons, or officers
having charge of the same to the treasurer of this state, who shall
give a receipt therefor, and hold the same as trustee for the
municipality issuing the same, and for the railroad company for
which they were issued, and to be disposed of by said treasurer in
discharge of his trust, as hereinafter provided. Upon receipt of
any such bonds from any township or city in aid of any such
railroad company, the treasurer of this states shall immediately
register or record the same in a book or books to be kept by him
for that purpose in his office, which record shall show the amount,
date, and number of each bond, the rate of interest which it bears,
by what township or city issued, to the benefit of what railroad
company the same are issued, and the time when payable, which
record shall be always open for the inspection of any citizen of
this state or other interested person. Such bonds shall be safely
kept by said treasurer for the benefit of the parties interested,
and be disposed of by him in the following manner -- that is to
say, whenever any railroad company, in aid of which any of such
bonds may have issued, shall present to said treasurer a
certificate from the governor of this state that such railroad
company has in all respects complied with the provisions of this
act, and is thereby entitled to any of such bonds, the same, or
such of said bonds as said company shall be entitled to receive,
shall be delivered to said company, the treasurer first cutting
therefrom, cancelling, and returning to the municipality the
past-due coupons. The treasurer shall endorse upon each of said
bonds the date of such delivery, and to whom the same were
delivered, and the same shall draw interest only from the time
Page 132 U. S. 351
when so delivered, and the treasurer shall notify the clerk of
the township or recorder or clerk of the city issuing the same of
the date of the delivery of its bonds to such railroad company. . .
. And in case any bond so delivered to said treasurer by any such
township or city shall not, within three years from the time when
the same were received by him, be demanded in compliance with the
terms of this act, the same shall be cancelled by said treasurer,
and returned to the proper officers of the township or city issuing
the same."
Laws Mich. 1869, p. 91.
A critical analysis of this statute indicates this to have been
the plan: in the preparation and perfecting of the plan persons
described by certain official titles, and probably selected because
of their titles, were to participate.
(1) The bonds were to be "executed" -- that is to say, written
or printed, signed and sealed by the supervisor and clerk of the
township. Here, the powers of those persons ceased. They could not
perfect the instruments by delivery. The word "executed," used in
the statute in connection with the acts mentioned, manifestly does
not import the final delivery, for that is expressly directed to be
done by the treasurer. Such delivery as they could make was clearly
not the technical delivery needed to complete the bonds as
negotiable instruments, because the power to hand over to the payee
was not conceded to them in any event. The delivery which they were
directed to make to the treasurer in his capacity of statutory
trustee was only such as amounted to a "giving up" or the
"committing" of them to the treasurer for his safekeeping. The word
was used in its ordinary and popular sense, not in the technical
one.
(2) To the governor, and the governor alone, was given the power
to determine whether the bonds should ever in fact issue, and, if
issued, when they should issue. For to him was committed the
decision of the important question whether the railroad had
performed its part of the common undertaking. His certificate was
to be the evidence of that fact, and the only admissible
authentication of it to the trustee, the depositary. So far as the
investigation and determination of that question were concerned,
and the certifying of it, the governor was to
Page 132 U. S. 352
discharge that function in the process of issuing the bonds
which was imposed on the auditor in the case of
Anthony v.
County of Jasper, supra, the difference being that in that
case, the certificate was to be endorsed on the bonds themselves,
but not so in this case.
The state treasurer was appointed to be a trustee for both the
township and company, to receive the bonds, to register them, and
to finish their clerical execution, using the word in its popular
sense, by his endorsements on them of the date of delivery, and of
the person to whom delivered. Such endorsements are clearly a part
of the very form of the completed bond, as laid down in the
Jasper County case,
supra. He was also to cancel
them and to return them so cancelled to the township authorities if
not demanded in three years, and, finally, if demanded in
compliance with the terms of the act within the three years, to
complete their execution (using the word in its technical sense) by
delivering them. Such, as we understand it, was the intention of
the legislature. If it be said that such details are useless and
technical, a sufficient answer is so the statute is written, and
the courts cannot unmake or modify it. As already shown, the
legislature in this class of cases has the right to provide the
processes by which the contract is to be perfected. Moreover, we do
not think these details are either useless or technical. When it is
remembered that the whole policy of allowing contracts of this
class has been deprecated by some of the oldest publicists and
jurists, and that the negotiable form of such bonds has often led
to the imposing of great burdens on municipalities for which there
has been no return, we are not disposed to criticize the care of a
legislature to establish a system of even rather severe checks as a
condition to its concession of such extraordinary powers.
The appellant claims that the bonds were perfected instruments
when delivered to the state treasurer; that the ministerial duties
had been performed in full. The argument proceeds largely upon the
idea that, as to this transaction, the township and its agents, the
supervisor and clerk, were a complete and rounded organism,
distinct from the state treasurer,
Page 132 U. S. 353
and capable of dealing with the treasurer as if he were a third
party -- in making delivery to him, for instance. We do not so
regard it. All the steps directed by the statute to be taken
leading up to the final act of delivery to the railroad company
constitute one progressive process. To adopt the language of the
court in the
McGarrahan case,
supra, "each and
every one of the integral parts of the execution is essential to
the validity of the bond."
We hold, therefore, that since the bonds were never endorsed and
delivered by the treasurer, as required by the statute, they never
became operative. The act of delivery is essential to the existence
of any deed, bond, or note. Although drawn and signed, so long as
it is undelivered, it is a nullity; not only does it take effect
only
by deliver, but also only
on delivery.
Bayley v. Taber, 5 Mass. 285;
Marvin v. McCullum,
20 Johns. 288;
Ward v. Churn, 18 Grattan 801;
Lovejoy
v. Whipple, 18 Vt. 379.
The appellant, however, contends that these bonds were, in
effect, delivered; that
"by the delivery to the treasurer and by the performance of the
conditions the title to the bonds vested in the company, the state
treasurer holding them as trustee for the township and for the
railroad company."
We cannot concur in this view. The law in reference to escrows
seems to be involved in some uncertainty. What the effect is of a
performance of the conditions by the grantee, the instrument
remaining in the hands of the depositary -- whether, in such case,
the second delivery by the depositary is or is not necessary to
gave effect to the deed -- are questions about which the courts yet
differ. But concede the appellant's position to be correct as a
general rule, yet that general rule does not necessarily control
this case. These are extraordinary instruments, and certain
fundamental questions of power to contract and of details of
execution underlie any action brought upon them, which render the
usual rules in regard to escrows very unsafe guides. Too much
stress cannot be laid on the necessity for consulting the statute.
Even in the case of an ordinary escrow, nothing passes by the deed
until the condition is performed.
Calhoun
County v.
Page 132 U. S. 354
American Emigrant Co., 93 U. S.
124. Here, the condition prescribed by the statute as
that upon which the delivery was to be made to the railroad
company, and on which the bonds were to be perfected instruments in
its hands, was never performed. On this point, the statute seems to
be very simple and clear. Indeed, it would be difficult to make it
more clear. By its very terms, the bonds received by him in their
uncompleted condition were to be by the state treasurer "safely
kept," and for three years after their reception could only be
parted with by him in one way -- that is, to the railroad company
interested, on its production of the governor's certificate. On
that condition could they be delivered, not on any other. The
certificate was not a mere formal act on the part of the governor,
but was a condition precedent to the power of the treasurer to
deliver. The statute is not only emphatic on this point, but also
repetitious in its emphasis. Section 5 says the bonds are "to be
disposed of by said treasurer in discharge of his trust, as
hereinafter provided," and § 6 provides that
"such bonds shall be safely kept by said treasurer for the
benefit of the parties interested, and be disposed of by him in the
following manner -- that is to say, whenever any railroad company .
. . shall present to said treasurer a certificate from the
governor,"
etc.; also that
"in case any bond so delivered to said treasurer . . . shall not
within three years . . . be demanded in compliance with the terms
of this act, the same shall be cancelled by said treasurer,"
etc. The certificate was designed to be the treasurer's sole
authority to deliver. The question whether the railroad company had
"in all respects complied with the provisions of this act" was one
that he could not inquire into except by consulting the governor's
certificate. This was his only and conclusive evidence, by the very
terms of the statute. The company's compliance with the provisions
of the act gave it the right to receive the governor's certificate,
but it did not confer the right to receive the bonds. That was
given by the governor's certificate alone. Had the treasurer made
delivery without the certificate, he would have acted without
authority of law, and the bonds would have been voidable in the
hands of the company.
Anthony
Page 132 U. S. 355
v. County of Jasper, supra. These requirements are not
novel. They are matters of administrative detail fixed by the
statute. We cannot declare them to be merely directory or annul
them by construction. It does not matter, so far as the question of
the statutory power of the treasurer is concerned, that the failure
of the company to produce the certificate might not be because of
any fault in the company. The failure might be due to the
governor's mistaken view of the law, or to his misconception of the
facts, or even to his willful refusal to discharge his official
duty -- all is immaterial to this aspect of the statutory scheme. A
miscarriage in this particular was one of the risks taken by the
company. The company knew the statute, was held by the law to know
and understand it. It contracted with the township through the
statute, and could so contract with it in no other way. Availing
itself of the statute, it must take it
cum onere. If the
governor failed to give the certificate when he should, and could
not be reached by a mandamus, those were but features of the
company's risk.
There is another provision of the statute in question which
supports the foregoing views. It is the direction that when the
treasurer should make the delivery to the company, he should cut
the overdue coupons from the bonds and cancel them, and that he
should at the same time endorse the bonds with the date of that
delivery, from which date the bonds should bear interest. Had the
legislature inserted in the statute a declaration, in set and
formal phrase, that it should be the issue of the bonds on the
governor's certificate, and not the completion by the railroad
company of the portion of its contract, that should perfect the
bonds and give them effect, such declaration would not in any
degree be clearer than this provision.
Lovejoy v. Whipple,
supra. It is to be observed that no question arises in this
case of a
bona fide purchaser of bonds improperly issued.
The appellant stands exactly in the shoes of the railroad company,
and his rights are no greater.
Smith v. Bourbon County,
127 U. S. 105.
Holding these views, it is unnecessary to pursue this discussion
further. Whether the railroad acquired a cause of action against
the township by the failure to deliver the bonds, or by
Page 132 U. S. 356
their cancellation prior to the lapse of the three years fixed
by the statute, on the one hand, or the whole project was a mere
fiasco, on the other, and if such cause of action arose, what was
its precise nature and form, are matters rather of curious
speculation than of practical consequence. If no real cause of
action arose, that is the end of the matter. If it did arise, then
its form and nature are immaterial, since all forms are barred
alike, being actionable as of the then date. It is not even
suggested that any other method exists by which to escape the bar
save the one considered and herein before rejected. We consider the
question of the constitutionality of the act of 1869, herein mooted
again, to be fully settled by the case of
Taylor v.
Ypsilanti, 105 U. S. 60, but
this case is decided on other grounds, and it is unnecessary to
dwell on that question.
It is further claimed by the appellant that the bonds in
question were invested by the statute with the character of trust
property, and that therefore they can be followed into any hands to
which they may be traceable, and that that right is not subject to
the limitation prescribed for a conversion. To this view there are
two answers: first, the fact that the bonds were never perfected
instruments, as already decided, and, while the treasurer returned
them cancelled a few weeks prior to the lapse of the three years
fixed by the statute, that error became immaterial from this point
of view so soon as the three years did expire; secondly, the laches
of the railroad company in pressing what claim it may have had.
New Albany v.
Burke, 11 Wall. 96.
We apply the doctrine of laches to this case with the less
reluctance because, after all, we see but little of substantial
merit in the bill. The scheme contemplated was a loan, not a
donation. A loan on rather indifferent security, perhaps, but a
loan nevertheless. While, therefore, it is possible that a loan may
be so proposed and accepted as to give to the intended borrower a
cause of action for any failure to perform the agreement, and a
right to recover damages at law, yet on a bill in the nature either
of a bill for specific performance or for an equitable garnishment,
the court may well inquire where is the substantial equity in the
case.
The decree of the circuit court is
Affirmed.
