1. Unless restrained by a constitutional prohibition of some
sort, the legislature of at state may properly authorize a county
to aid, by issuing its bonds and giving them as a donation to a
railroad company, the construction of a road outside of the county
and even outside of the state if the purpose of the road be to give
to the county a connection which is desirable with some other
region.
2. There is no such prohibition on the legislature in the
Constitution of Nebraska.
3. A legislative act prescribing the mode in which counties
shall issue their bonds is but the act of one legislature, and
accordingly a special act giving to a county a right to issue their
bonds in disregard of the ordinary legislative provisions,
authorizes such last-named sort of issue.
An act of the Territorial Legislature of Nebraska, approved
January 1, 1861, enacted:
"That the commissioners of any county should have power to
submit to the people of any county at any regular or special
election, the question whether the county will aid or construct any
road; and said commissioners may aid any enterprise designed for
the benefit of the county as aforesaid, whenever a majority of the
people thereof shall be in favor of the proposition as provided in
this section."
"When the question submitted involves the borrowing or
expenditure of money, the proposition of the question must be
accompanied by a provision to lay a tax for the payment thereof, in
addition to the usual taxes under section sixteen of this
chapter,
Page 83 U. S. 668
and no vote adopting the question proposed shall be valid,
unless it likewise adopt the amount of tax to be levied to meet the
liability incurred."
This territorial act being in force, the County Clerk of Otoe
County, one Bennett, issued the following call:
"In pursuance of the authority in me vested by law, I hereby
call a meeting of the Commissioners of Otoe County, to be held at
their usual place of meeting in Nebraska City, of said county, on
Saturday, the 24th day of February, A.D. 1866, to take into
consideration the question of submitting to the people of said
county the issue of the bonds of said county, not exceeding
$200,000 in amount, to be used in procuring to said county an
eastern railroad connection."
"ELISHA BENNETT"
"County Clerk"
In pursuance of this notice, the county commissioners met and
ordered an election to be held on the 17th day of March, 1866. The
order for this election was as follows:
"It is ordered that an election be held on the 17th day of
March, 1866, in and throughout the County of Otoe, N.T., for the
purpose of ascertaining whether the commissioners of Otoe County
shall issue bonds not to exceed $200,000, for the purpose of
securing an eastern railroad connection for Nebraska City,
N.T."
An election was held accordingly, and at it 1362 votes were cast
in favor of the said proposition, and 201 votes cast against
it.
The Council Bluffs & St. Joseph Railroad Company having
built a railroad from Council Bluffs, in Iowa, to St. Joseph in
Missouri, near Nebraska City, $40,000 of the bonds of Otoe County,
so as aforesaid voted for, were issued to
it; the said
bonds having been issued to secure an eastern railroad connection,
and the same having been secured by way of St. Joseph and by way of
Council Bluffs.
After this, that is to say, in February, 1867, Nebraska was
admitted into the Union; and adopted a Constitution of government.
That constitution thus ordains:
Page 83 U. S. 669
"The legislative authority of the state shall be vested in a
General Assembly, which shall consist of a Senate and House of
Representatives."
"The property of no person shall be taken for public use without
just compensation."
"The credit of the state shall never be given or bound in aid of
any individual association or corporation."
"For the purpose of defraying extraordinary expenses the state
may contract public debts, but such debts shall never in the
aggregate exceed $50,000."
"All powers not herein delegated remain to the people."
This constitution being in force, the Legislature of the State
of Nebraska, on the 15th of February, 1869, passed
"
An act to authorize the county commissioners of Otoe County
to issue the bonds of said county to the amount of $150,000 to the
Burlington & Missouri River Railroad Company, or any other
railroad company running east from Nebraska City."
The Burlington & Missouri River Railroad Company, here
named, was a foreign corporation; one incorporated by the State of
Iowa. The act of the Nebraska legislature was in these words:
"WHEREAS the qualified electors of the County of Otoe, and State
of Nebraska, have heretofore, at an election held for that purpose,
authorized the county commissioners of said county to issue the
bonds of said county in payment of stock to any railroad in Fremont
County, Iowa, that would secure to Nebraska City an eastern
railroad connection, to the amount of $200,000; and whereas but
$40,000 have been issued."
"SECTION 1.
Therefore, be it enacted &c., that said
commissioners be, and they are hereby authorized to issue $150,000
of the bonds aforesaid to the Burlington & Missouri River
Railroad Company, or any other railroad company that will secure to
Nebraska City a direct eastern railroad connection,
as a
donation to said railroad company, on such terms and
conditions as may be imposed by said county commissioners."
"SECTION 2. Said bonds, when so issued, are hereby declared to
be binding obligations on said county, and to be governed by the
terms and conditions of an act entitled"
"An act to enable counties, cities, and precincts to borrow
money or to issue bonds
Page 83 U. S. 670
to aid in the construction or completion of works of internal
improvements in this state, and to legalize bonds already issued
for such purpose,"
"approved February, A.D. 1869."
On the 23d day of July, 1869, the board of county commissioners
of Otoe County reciting that the people of the county had voted
$200,000 in bonds, in aid of an eastern railroad connection, of
which bonds there remained unappropriated over $150,000, passed a
resolution to the effect that if the said Burlington & Missouri
River Railroad Company would within a limited time named, build a
certain road described (which it was stated the company proposed to
build, upon the condition that Otoe County "will
donate
and give to said company" $150,000 in the bonds above referred to);
and if the said company would equip and work the said road as a
through eastern connection, then the county commissioners would
issue and deliver to the said railroad company $150,000 of the said
bonds theretofore voted by the said county to such eastern
connection; the resolution to operate as a contract between the
county and the railroad company, if accepted by the latter within a
time named. The resolution was accepted by the railroad company.
The Burlington & Missouri River Railroad Company within the
time built and has ever since worked a railroad such as was
contemplated.
In this state of things, on the 23d day of July, 1869, the
county commissioners passed a resolution directing the county clerk
to deliver to the railroad company the bonds with the coupons
attached, which was by him accordingly done on the 27th day of
September, 1869.
There was no vote of the people other than
that above mentioned authorizing the issue of said bonds to said
company.
The Burlington & Missouri River Railroad Company sold and
transferred the said bonds with the coupons attached, for value,
and before maturity of any of the coupons, to the Chicago, Quincy
& Burlington Railroad Company, another foreign corporation,
to-wit, a corporation of Illinois. The coupons as they came due
were detached from their
Page 83 U. S. 671
respective bonds, but not being paid, that company sued the
County of Otoe in the court below. On the trial, the judges were
divided in opinion on the two following questions, and the
questions were certified and sent here for answers:
First. Whether or not the Act of February 15, 1869,
authorizing the county to issue bonds in aid of a railroad outside
of the state conflicted with the Constitution of the State of
Nebraska.
Second. Whether the County Commissioners of Otoe
County, under the Act of February 15, 1869, could lawfully issue
the bonds from which the coupons in suit were detached, without the
proposition to vote the bonds for the purpose indicated, and also a
tax to pay the same, being or having been submitted to a vote of
the people of the county as provided by the Act of the Territorial
Legislature of Nebraska, approved January 1, 1861.
Page 83 U. S. 672
MR. JUSTICE STRONG delivered the opinion of the Court.
The first question upon which the judges of the circuit court
divided was whether the Act of the Legislature of Nebraska,
approved February 15, 1869, authorizing the County of Otoe to issue
bonds in aid of a railroad outside of the state, conflicts with the
constitution of that state.
Unless we close our eyes to what has again and again been
decided by this Court, and by the highest courts of most of the
states, it would be difficult to discover any sufficient reason for
holding that this act was transgressive of the power vested by the
constitution of the state in the legislature. That the legislative
power of the state has been conferred generally upon the
legislature is not denied, and that all such power may be exercised
by that body, except so far as it is expressly withheld, is a
proposition which admits of no doubt. It is true that, in
construing the federal Constitution, Congress must be held to have
only those powers which are granted expressly or by necessary
implication, but the opposite rule is the one to be applied to
the
Page 83 U. S. 673
construction of a state constitution. The legislature of a state
may exercise all powers which are properly legislative, unless they
are forbidden by the state or national Constitution. This is a
principle that has never been called in question. If, then, the act
we are considering was legislative in its character, it is
incumbent upon those who deny its validity to show some prohibition
in the constitution of the state against such legislation. And that
it was an exercise of legislative power is not difficult to
maintain. No one questions that the establishment and maintenance
of highways, and the opening facilities for access to markets, are
within the province of every state legislature upon which has been
conferred general legislative power. These things are necessarily
done by law. The state may establish highways or avenues to markets
by its own direct action, or it may empower or direct one of its
municipal divisions to establish them, or to assist in their
construction. Indeed, it has been by such action that most of the
highways of the country have come into existence. They owe their
being either to some general enactment of a state legislature or to
some law that authorized a municipal division of the state to
construct and maintain them at its own expense. They are the
creatures of law, whether they are common county or township roads,
or turnpikes, or canals, or railways. And that authority given to a
municipal corporation to aid in the construction of a turnpike,
canal, or railroad is a legitimate exercise of legislative power,
unless the power be expressly denied, is not only plain in reason,
but it is established by a number and weight of authorities beyond
what can be adduced in support of almost any other legal
proposition. The highest courts of the states have affirmed it in
nearly a hundred decisions, and this Court has asserted the same
doctrine nearly a score of times. It is no longer open to
debate.
Then what is there in the Constitution of the State of Nebraska
which denies this power to the legislature? There is no direct or
express prohibition. General legislative power is vested in the
legislature. None was reserved to
Page 83 U. S. 674
the people of the state. There are, however, certain
restrictions that may be noticed. The constitution declares that
"the property of no person shall be taken for public use without
just compensation," and it is earnestly contended that this
prohibits the legislature from passing any laws in aid of the
construction of a railroad that may result in the imposition of
taxes. It is said that the Act of February 15th, 1869, is taking
private property for a public use without compensation. It would be
a sufficient answer to this to say that a similar provision is
found in the constitution of almost every state the legislature of
which has been held authorized to legalize municipal subscriptions
in aid of railroad companies. It has never been held to prohibit
such legislation as we are now considering. But the clause
prohibiting taking private property for public use without just
compensation has no reference to taxation. If it has, then all
taxation is forbidden, for "just compensation" means pecuniary
recompense to the person whose property is taken equivalent in
value to the property. If a county is authorized to build a
courthouse or a jail, and to impose taxes to defray the cost,
private property is as truly taken for public use without
compensation as it is when the county is authorized to build a
railroad or a turnpike, or to aid in the construction and to levy
taxes for the expenditure. But it is taken in neither case in the
constitutional sense. The restriction is upon the right of eminent
domain, not upon the right of taxation.
We find nothing else in the constitution of the state that can
with any reason be claimed to restrain the power of the legislature
to authorize municipal aid to railroads, or other highways. There
is a clause that declares "the credit of the state shall never be
given to, or bound in aid of any individual association or
corporation," and another that ordains that the debts of the state
shall never, in the aggregate, exceed $50,000, but these refer only
to state action and state liability. [
Footnote 1]
Page 83 U. S. 675
In view, therefore, of the organic law of the state, and of the
decisions which have been made in regard to other similar
constitutional provisions, both in the highest courts of the states
and in this Court, we think it cannot be doubted the Legislature of
Nebraska had authority to authorize its municipal divisions to
incur indebtedness and to impose taxation in aid of railroad
companies.
It is urged, however, against the validity of the act now under
consideration that it authorized a donation of the county bonds to
the railroad company, and it is insisted that if even the
legislature could empower the county to subscribe to the stock of
such a corporation, it could not constitutionally authorize a
donation. Yet there is no solid ground of distinction between a
subscription to stock and an appropriation of money or credit. Both
are for the purpose of aiding in the construction of the road; both
are aimed at the same object, securing a public advantage,
obtaining a highway or an avenue to the markets of the country;
both may be equally burdensome to the taxpayers of the county. The
stock subscribed for may be worthless, and known to be so. That the
legislature of the state might have granted aid directly to any
railroad company by actual donation of money from its treasury will
not be controverted. No one questions that in the absence of some
constitutional inhibition the power of a state to appropriate its
money, however raised, is limited only by the sense of justice and
by the sound discretion of its legislature. If the power to tax be
unrestricted, the power to appropriate the taxes is necessarily
equally so. Accordingly nothing has been more common in the state
and federal governments than appropriations of public money raised
by taxation to objects, in regard to which no legal liability has
existed. State legislatures have made donations for numerous
purposes, wherever, in their judgment, the public well being
required them, and the right to make such gifts has never been
seriously questioned. As has been said, the security against abuse
of power by a legislature in this direction is found in the wisdom
and sense of propriety of its members,
Page 83 U. S. 676
and in their responsibility to their constituents. But if a
state can directly levy taxes to make donations to improvement
companies, or to other objects which, in the judgment of its
legislature, it may be well to aid, it will be found difficult to
maintain that it may not confer upon its municipal divisions power
to do the same thing. Counties, cities, and towns exist only for
the convenient administration of the government. Such organizations
are instruments of the state, created to carry out its will. When
they are authorized or directed to levy a tax, or to appropriate
its proceeds, the state through them is doing indirectly what it
might do directly. It is true the burden of the duty may thus rest
upon only a single political division, but the legislature has
undoubted power to apportion a public burden among all the
taxpayers of the state, or among those of a particular section. In
its judgment, those of a single section may reap the principal
benefit from a proposed expenditure, as from the construction of a
road, a bridge, an almshouse, or a hospital. It is not unjust,
therefore, that they should alone bear the burden. This subject has
been so often discussed, and the principles we have asserted have
been so thoroughly vindicated, that it seems to be needless to say
more, or even to refer at large to the decisions. A few only are
cited. [
Footnote 2]
One other objection to the constitutionality of the act is
urged. It is that it authorized aid to a railroad beyond the limits
of the county, and outside the state. There is nothing in this
objection. It was for the legislature to determine whether the
object to be aided was one in which the people of the state had an
interest, and it is very obvious that the interests of the people
of Otoe County may have been more involved in the construction of a
road giving them a connection with an eastern market than they
could be in the construction of any road wholly within the
county.
Page 83 U. S. 677
But that the objection has no weight may be seen in
Gelpcke
v. Dubuque, [
Footnote 3]
and in
Walker v. Cincinnati. [
Footnote 4]
We conclude, therefore, that the Act of the legislature of
February 15, 1869, is not in conflict with the constitution of the
state.
The second question upon which the circuit court divided was
"whether the county commissioners of Otoe County could, under
the Act of February 15, 1869, lawfully issue the bonds from which
the coupons in suit were detached, without the proposition to vote
the bonds for the purpose indicated, and also a tax to pay the same
being or having been submitted to a vote of the people of the
county, as provided by the Act of the Territorial Legislature of
Nebraska, passed January 1, 1861."
This question we answer in the affirmative. If the legislature
had power to authorize the county officers to extend aid on behalf
of the county or state to a railroad company, as we have seen it
had, very plainly it could prescribe the mode in which such aid
might be extended, as well as the terms and conditions of the
extension, and it needed no assistance from a popular vote of the
municipality. Such a vote could not have enlarged legislative
power. But the Act of 1869 was an unconditional bestowal of
authority upon the county commissioners to issue the bonds to the
railroad company. It required no precedent action of the voters of
the county. It assumed that their assent had been obtained. That
prior to 1869 the sanction of approval by a local popular vote had
been required for municipal aid to railroad companies, or
improvement companies, is quite immaterial. The requisition was but
the Act of an annual legislature which any subsequent legislature
could abrogate or annul.
It must therefore be certified to the circuit court,
first, that the Act of February 15, 1869, is not
unconstitutional; and
second, that the County
Commissioners of Otoe County could lawfully issue the bonds from
which the coupons in suit were detached, without any submission to
a vote of the
Page 83 U. S. 678
people of the county of the proposition to approve the bonds, or
a tax for the payment thereof.
Certified accordingly.
THE CHIEF JUSTICE, MR. JUSTICE MILLER, and MR. JUSTICE DAVIS
dissented from the opinion in this case.
[
Footnote 1]
Patterson v. Board of Supervisors of Yuba, 13 Cal.
175.
[
Footnote 2]
Blanding v. Burr, 13 Cal. 343;
Town of Guilford v.
Supervisors of Chenango County, 3 Kernan 149;
Stuart v.
Supervisors, 30 Ia. 9;
Augusta Bank v. Augusta, 49
Me. 507;
Railroad Co. v. Smith, a case decided by the
Supreme Court of Illinois and not reported.
[
Footnote 3]
68 U. S. 1 Wall.
175.
[
Footnote 4]
21 Ohio 14.
