Full control over the matter of the organization of new counties
in the Kansas is, by its constitution, article 9, § 1, given
to the legislature of the state, which has power not only to
organize a county in any manner it sees fit, but also to validate
by recognition any organization already existing, no matter how
fraudulent the proceedings therefor were.
When a legislature has full power to create corporations, its
act recognizing as valid a
de facto corporation, whether
private or municipal, operates to cure all defects in steps leading
up to an organization, and makes a
de jure out of what was
before only a
de facto corporation.
When both the executive and legislative departments of the state
have given notice to the world that a county within the territorial
limits of the State of Kansas has been duly organized and exists,
with full power of contracting, it is not open to the county to
dispute those facts in an action brought against it by a holder of
its bonds, who bought them in good faith in open market.
The debts of a county, contracted during a valid organization,
remain the obligations of the county although for a time the
organization be abandoned and there are no officers to be reached
by the process of the court.
A recital in the bond of a municipal corporation in Kansas that
it was issued in accordance with authority conferred by the Act of
March 2, 1872, Kansas Laws of 1872, 110, c. 68, and in accordance
with a vote of a majority of the qualified voters, is sufficient to
validate the bonds in the hands of a
bona fide holder, and
the certificate of the auditor of the state thereon that the bond
was regularly issued, that the signatures were genuine, and that
the bond had been duly registered is conclusive upon the
municipality.
A recital in a bond issued by a county in Kansas for the purpose
of building a bridge need not necessarily refer to the particular
bridge for the construction of which it was issued.
In Kansas, a county has power to borrow money for the erection
of county buildings and to issue its bonds therefor.
At law to recover on coupons of bonds issued by a municipal
corporation in Kansas. Judgment for plaintiff. Defendant sued out
this writ of error. The case is stated in the opinion.
Page 133 U. S. 199
MR. JUSTICE BREWER delivered the opinion of the Court.
This is an action on coupons. There were three classes of bonds
-- namely, courthouse, bridge, and current expense bonds. The
circuit court held the latter void, the others valid, and judgment
was rendered accordingly.
Lewis v. Comanche County, 35 F.
343. The county alleges error. Our inquiry therefore is limited to
the bridge and courthouse bonds.
The first and principal contention of the plaintiff in error is
that at the time of the issue of these bonds, there was no valid
county organization, no corporate entity, capable of contracting;
that the pretended organization in 1873 was fraudulent and void,
and shortly thereafter abandoned, the county remaining unorganized
until 1885, when, upon memorial presented and census taken, it was
organized anew as in the case of an unorganized county. In order to
fully understand the question here presented, a brief retrospect of
the condition, the legislation, and judicial decisions of the state
is necessary.
At the time of its admission into the union in 1861, the
settlements were confined to the eastern portion of the state, the
west being wholly unoccupied. The territory of the state was
divided into counties, those in the eastern portion being
organized, and those in the western unorganized, the legislation as
to the latter being limited to the matter of names and boundaries.
Of course, there were no courts in these unorganized counties, for
the machinery was wanting; there were no county buildings, county
officers, or jurors. So they were by statute attached to the
organized counties for judicial purposes. It was foreseen that they
would in course of time become occupied, and that provision must be
made for their organization as political subdivisions of the state.
So, by the constitution,
Page 133 U. S. 200
in section 1 of article 9, power was given to the legislature in
these words: "The legislature shall provide for organizing new
counties, locating counties, and changing county lines."
The first legislature, on the 4th day of June, 1861, passed an
act entitled "An act relating to the organization of new counties."
This was amended in 1872, and under the act as so amended the
County of Comanche was organized. Section 1 of this chapter
prescribes the proceedings, and is as follows:
"SECTION 1. Section one of an act relating to the organization
of new counties is hereby amended so as to read:"
" Section 1. When there shall be presented to the governor a
memorial, signed by forty householders, who are legal electors of
the state, of any unorganized county showing that there are six
hundred inhabitants in such county and praying that such county may
be organized, accompanied by an affidavit attached to such memorial
of at least three householders of such county showing that the
signatures to such memorial are the genuine signatures of
householders of such unorganized county, and that the affiants have
reason to and do believe that there are six hundred inhabitants in
such county as stated in the memorial, it shall be the duty of the
governor to appoint some competent person who is a
bona
fide resident of the county to take the census and ascertain
the number of
bona fide inhabitants of such unorganized
county, who shall, after being duly sworn to faithfully discharge
the duties of his office, proceed to take the census of such county
by ascertaining the name and age of each of the
bona fide
inhabitants of such unorganized county, who shall receive for
services rendered under this section pay at the rate of three
dollars per day, from the state treasurer, upon an itemized
account, verified by affidavit. The person who shall take the
census as required shall return to the governor, upon appropriate
schedules, the census authorized to be taken herein, certified to
be correct and true, and if it appear by such return that there are
in such unorganized county at least six hundred
bona fide
inhabitants, he shall appoint three persons, who shall be
recommended in the memorial herein before provided for, to act as
county commissioners, and a proper person to act as county clerk,
to be recommended in
Page 133 U. S. 201
like manner as the commissioners, and shall designate such place
as he may select, centrally located, as a temporary county seat for
such county, and shall commission such persons as such officers,
and declare such place the temporary county seat of such county,
and from and after qualification of the officers appointed under
this section, the said county seat shall be deemed duly
organized."
Laws of Kansas of 1872, p. 243.
Obviously, full control over the matter of organization of new
counties was, by the constitutional provision quoted, given to the
legislature, as was held by the supreme court of the state in the
case of
State ex Rel. Attorney General v. Commissioners of
Pawnee County, 12 Kan. 426, in which case the court says:
"The whole power of organizing new counties belongs in this
state to the legislature. It may provide for their organization by
general law, and through the intervention of the governor, or of
any other officer, agent, commissioner, or person it may choose, or
it may directly organize a new county itself by special act. The
provision of article 12 of the constitution has no application to
counties as counties.
Beach v. Leahy, 11 Kan. 23. It may
organize a county with six hundred inhabitants or with any other
number more or less than six hundred. It may organize a county
whenever there shall be a sufficient number of persons to hold the
county offices, and the legislature may provide for a less number
of county officers than the usual number.
Borton v. Buck,
8 Kan. 308;
Leavenworth v. State, 5 Kan. 688."
In the fall of 1873, proceedings looking to the organization of
Comanche County were had which were in form in full compliance with
the requirements of section 1, above quoted. These proceedings
closed, as required, with the proclamation of the governor, and
upon the face of the papers was presented a clear case of a regular
and valid organization. But while these proceedings were regular on
their face, the agreed statement of facts shows that
"said organization was effected solely for purposes of plunder,
by a set of men intending to secure a
de facto
organization and issue the bonds of said county, register and sell
them to distant purchasers ignorant
Page 133 U. S. 202
of the facts, and enrich the schemers while plundering the
future inhabitants and taxpayers of the county, and upon the
consummation of said scheme in the spring or early summer of 1874,
all of said schemers, together with those who were the said
de
facto officers of the said county, left said county and never
returned, and said county remained with said organization totally
abandoned until in February, 1885, when said county was, upon
memorial presented and census taken, organized as in cases of
unorganized counties."
If these were all the facts, a very interesting inquiry would
arise as to how far an organization fraudulent in fact but regular
in form, and duly approved by the executive, could bind the county
by an issue of bonds
prima facie valid, and passing into
the hands of a
bona fide holder. But that inquiry is not
before us. The ample power delegated by the constitution to the
legislature enabled it not only to organize a county in any manner
it saw fit, but also to validate by recognition any organization
already existing, no matter how fraudulent the proceedings therefor
had been.
This proposition has been distinctly ruled by the supreme court
of the state.
See the case in 12 Kan.,
supra.
See also State ex Rel. Atty. Gen. v. Stevens (Harper
County), 21 Kan. 210, and
State v. Yoxall (Wallace
County), 40 Kan. 323.
Nor is this ruling peculiar to the jurisdiction of Kansas. It is
universally affirmed that when a legislature has full power to
create corporations, its act recognizing as valid a
de
facto corporation, whether private or municipal, operates to
cure all defects in steps leading up to the organization and makes
a
de jure out of what before was only a
de facto
corporation. It is true that there must be a
de facto
organization upon which this recognition may act, as was held in
State ex Rel. Attorney General v. Ford County, 12 Kan.
446, and in this case it appears from the findings as well as from
the testimony that there was such
de facto organization.
There being this
de facto organization, there was ample
recognition by the legislature. The very matter appears which in
the Harper County case was, by the Supreme Court of Kansas,
declared a legislative
Page 133 U. S. 203
recognition sufficient to cure all defects -- namely an act
detaching the county from an organized county to which for judicial
purposes it had theretofore been attached, and establishing courts
therein. This act was approved March 9, 1874, the day before these
bonds were signed. But this, which, by the Supreme Court of Kansas,
was adjudged alone sufficient, is not all. Chapter 24 of the
General Statutes of 1868, creating some new counties, divided the
state into seventy-nine counties, numbered, named, and described,
among which was the unorganized County of Comanche, and provided
that no county should be entitled to representation in the
legislature until it should have been organized. During the session
of 1874, the session immediately succeeding this attempted
organization, and before the issue of these bonds, A. J. Mowry
represented Comanche County in the legislature, taking active part
in its proceedings, voting for senator, introducing bills, and
otherwise. His right to a seat was challenged, examined by the
committee on elections, and, after report therefrom, he was
admitted and acted as a member during the entire session. Further
than that, this organization having become a matter of discussion
and challenge, the legislature passed a joint resolution which
recited that it appears from the report of the secretary of state
that there were but 634 inhabitants in the County of Comanche, and
from the report of the auditor of the state that the bonded
indebtedness of the county was $72,000; that the interests of the
people and the honor of the state required an investigation, and
directed that a committee of two should be appointed, one from each
house who, together with the attorney general, should make an
investigation and report to the succeeding legislature. By that
report, in January, 1875, the character of the organization was
disclosed, and from that time on, the county was, as stated,
treated as an unorganized county until 1885. It also appears that
in December, 1873, not only was a member of the legislature
elected, but, in addition, a new commissioner and a new county
clerk in the places of those temporarily appointed by the governor.
There thus appears ample recognition, on the part of the
legislature of the validity of the organization, and
Page 133 U. S. 204
under repeated adjudications its validity cannot now in this
collateral way be challenged. And this is no mere technical ruling.
It rests on foundations of substantial justice. It is true that the
present inhabitants have been wronged by the fraudulent acts of
these conspirators in 1873-74, and it is a hardship for them to be
bound for debts they did not contract and from which they received
no benefit; but, on the other hand, it would be an equal hardship
to the plaintiff to lose the money he has invested in securities
placed on the market whose validity was attested to the fullest
extent by both the executive and legislative departments of the
state. When both of those departments give notice to the world that
a county within the territorial limits of the state has been duly
organized and exists with full power of contracting, can it be that
a purchaser cannot at open market safely purchase the securities of
that county? Does the duty rest on him to traverse the limits of
the county, and make personal inspection of the number of the
inhabitants? If any wrong has been done to the county through the
want of attention on the part of the state authorities, equity
would suggest that the state should bear the burden, and not cast
it upon an innocent party residing far from the state and acting in
reliance upon what it has done.
But it is urged that whatever may be said as to the organization
in 1873-1874 and its temporary validity, that organization was in
1874 abandoned, the county deserted, and a new organization made in
1885, and, it being a new organization, there is no responsibility
on its part for debts fraudulently contracted more than a decade
before by a confessedly fraudulent organization. Why should honest
and industrious citizens who have recently moved into hitherto
unoccupied territory be held responsible for debts fraudulently
contracted years before by a set of rascals who stopped but for a
day and then decamped with the proceeds of their rascality? But it
must be borne in mind that the county, as a territorial subdivision
of the state, has been in existence and unchallenged for more than
a score of years. It matters not how many political organizations
there may have been or what changes in the form of
Page 133 U. S. 205
organization the county has been ever the same, and although the
name of the political community given by the statutes is the "board
of county commissioners" of the county, it is, after all, the
county, with its property and population, which is the debtor. No
one would for a moment suppose that when a county has contracted a
valid obligation, the fact, if it could be made to appear, that all
its inhabitants had removed and their places been supplied by
others would affect that obligation. There has been no subdivision
of the original territory; no addition to or subtraction from it.
The only change has been in the continuity of political
organization, and that neither by municipal law nor the law of
nations destroys the territorial responsibility for legal
obligations. Even a change in form does not destroy responsibility.
The Republic of France recognizes as valid the debts of the empire.
A town whose growth enables it to cast off its village organization
and assume the habiliments of a city continues liable for all debts
theretofore contracted. And so the debts of a county contracted
during a valid organization remain the obligations of the county
although for a time the organization be abandoned and there be no
officers to be reached by the process of the courts.
State ex
Rel. v. Yoxall, 40 Kan. 323;
The
Sapphire, 11 Wall. 164;
Broughton v.
Pensacola, 93 U. S. 266;
Mount Pleasant v. Beckwith, 100 U.
S. 514.
Passing to the question of the bonds themselves, the first to be
considered are the bridge bonds. The recital is in these words:
"This bond is executed and issued in pursuance of and in
accordance with an act of the Legislature of the State of Kansas
entitled"
"An act to authorize counties, incorporated cities, and
municipal townships to issue bonds for the purpose of building
bridges, aiding in the construction of railroads, water power or
other works of internal improvement, and providing for the
registration of such bonds, the registration of other bonds, and
the repealing of all laws in conflict therewith,"
"approved March 2, 1872, and also in accordance with the vote of
a majority of the qualified electors of said County of Comanche at
a special election duly and regularly held therefor on the 31st day
of January, 1884 [1874]. "
Page 133 U. S. 206
The act referred to therein gave to counties full power to issue
bonds for the building of bridges, and prescribed the proceedings,
including therein a vote of the people, essential to the vesting of
authority in the county commissioners. The recital that the bond
was executed and issued in pursuance of and in accordance with that
act, and also in accordance with the vote of the majority of the
qualified electors, is, within repeated rulings of this Court,
sufficient to validate the bonds in the hands of a
bona
fide holder. It shows, in the language of
School District
v. Stone, 106 U. S. 183, "a
compliance in all substantial respects with the statute giving
authority to issue the bonds," and does not come within the
limitations noticed in that case. Further than that, the bonds are
endorsed with the official certificate of the auditor of the state
that the bonds had been regularly and legally issued; that the
signatures were genuine, and that the bonds had been duly
registered in his office in accordance with the act of the
legislature of March 2, 1872. Inasmuch as these bonds were issued
after the act of 1872 went into effect, they fall within the
decision in the case of
Lewis v. Commissioners,
105 U. S. 739,
rather than within that in the case of
Bissell v. Spring Valley
Township, 110 U. S. 162, as
to the conclusiveness of the certificate of the auditor.
The suggestion that the recitals are not sufficient because the
particular bridge for the building of which the bonds were to be
issued is not specified carries no weight. Power is given by the
first section of the act of 1872 to issue bonds for building
bridges, and while the subsequent sections providing for a vote and
other preliminaries seem to contemplate that a particular bridge
should be the subject of consideration, yet it has never been held
by this Court, and ought not to be, that a full and minute detail
of all the proceedings is essential to the validity of a recital.
The main thing is that the county has promised to pay, and that the
people by their vote have authorized such a promise for one of the
purposes for which, under the statute, they may bind
themselves.
The other series of bonds is what is known as "courthouse
bonds," so named on the face of the bonds themselves. The
Page 133 U. S. 207
recital in this bond is as follows:
"This bond is executed and issued for the purpose of erecting
county buildings in pursuance of and in accordance with an act of
the Legislature of the State of Kansas entitled 'An act relating to
counties and county officers,' approved February 29, 1868, and 'An
act to authorize counties,'"
etc., reciting the title of the act referred to in the bridge
bonds, as well as a vote similar thereto. On the back of each bond
appears the auditor's certificate, as in the bridge bonds.
But it is insisted that county buildings are not works of
internal improvement within the meaning of the act last referred
to. Be that as it may -- and it is unnecessary to decide this
question, although in considering it reference may well be had to
the opinion of the Supreme Court of Kansas in the case of
Leavenworth County v. Miller, 7 Kan. 479 -- the act first
referred to (the Act of February 29, 1868) gave ample authority.
That act, section 16, provides:
"The board of county commissioners of each county shall have
power at any meeting: . . .
Fourth, . . . to borrow, upon
the credit of the county, a sum sufficient for the erection of
county buildings, or to meet the current expenses of the county in
case of a deficit in the county revenue."
Prior to the issue of these bonds, the supreme court of the
state had held, in the case of
Doty v. Ellsbree, 11 Kan.
209, that the power to borrow money carries with it the power to
issue the ordinary evidences and security of a loan, and, among
them, county bonds. So that, by that act, the county had power to
borrow money for the erection of county buildings, and issue bonds
therefor. There is no force in the suggestion that the purpose
expressed in the recital is that of erecting county buildings,
instead of borrowing money for the erection of county buildings. A
general statement of the purpose, with direct reference to the act
granting authority, and a recital that the bond is issued in
pursuance of and in accordance with the act, is sufficient. The
case of
Scipio v. Wright, 101 U.
S. 665, rested entirely on the fact of the uniform and
continuous ruling on the part of the highest court in the State of
New York, in which the bonds were issued, and was a case
arising
Page 133 U. S. 208
between a municipality and a purchaser who took with notice of
the manner in which the bonds had been disposed of. So that this
cannot be considered an authority in the case before us.
These are all the matters we deem necessary to notice, and,
there appearing no error in the ruling of the circuit court, its
judgment is
Affirmed.