Mayor of Vicksburg v. Lombard

Simrall, J.,

delivered the opinion of the court.

These three cases involve the validity of the improvement and railroad bonds of the city of Vicksburg. The subject embraces the following questions:

First. When did the charter and supplement thereto, of July, 1870, take effect?

Second. Was the mayor and aldermen, under whose adminstration the bonds were issued, officers de jure or de fado ?

Third. Did the city authorities transcend their power in making the bonds negotiable?

Fourth. Were the bonds registered, as required by the charter?

Fifth. Did the requisite majority of voters approve and consent to the loan of $100,000 of bonds to the Vicksburg & Memphis R. R. Co., and the issuance of a like amount of bonds to the V., *118 P. & S. I. R. R. Co., in payment of subscription for stock. A question common to all of these cases is, whether the mayor and aldermen, in possession of their respective offices at the time the proceedings were begun, continued and ended in the issuance of the bonds, were rightfully in office, or were de facto officers. On the one side it is contended that they are usurpers, or intruders; on the other, that they are either de jure or de facto officers.

In July, 1870, the legislature passed an act to “revise the charter and extend the corporate limits of the city of Vicksburg. ” A critical examination of the act will show that it was intended to go into immediate effect as an act of incorporation. In the first section the city boundaries are enlarged and defined. The declaration is, the limits and boundaries shall “ hereafter be ” as follows, viz: * * The second section constitutes the inhabitants a body politic. The words are, “ be and they are constituted (such) by the name * * of the mayor and aldermen.” The fourth section provides for an election on the second Tuesday in August after the first state election; but the mayor and aldermen may enlarge the time for voting. * * The fifth section limits the mayor and aldermen to making suitable arrangements for voting places, ballot boxes, etc., for holding the election. By the thirty-eighth section the mayor and aldermen “ herein constituted shall be the successors of the mayor and council of the city,” etc. The fortieth section repeals all laws and parts of laws inconsistent with the act, and makes it take effect from and after its passage. If a proper construction of the act be that the mayor and council continued in office until their successors in law, the mayor and aider-men, were elected, as provided for in the fourth and fifth sections, it would be impossible ever to hold that election in compliance with the act, for the direction is, that the election shall be held under regulations to be made by the “mayor and aldermen” whose offices are created by the act itself. On the. 20th of July, 1870, a supplemental and amendatory act was passed, the sixth section of which authorized the issuance of bonds not exceeding $500,000, for the improvement of the city and funding all of its *119 outstanding scrip. In order to the further elucidation of the subject it is proper in this connection to refer to the anomalous condition of things which, at that time and prior thereto, existed. When the state government was organized under the constitution of 1869, all the officers, whether state, county or municipal, were filled by military appointees, under the second reconstruction act of congress, or held at the sufferance of the department commandant. The county offices had not been filled by election when the governor and legislature and state officers were chosen. Their case was provided for by the sixth section of the twelfth article of the constitution, which conferred power on the governor and senate to appoint “all county, township and precinct officers," whose term of office shall continue until the legislature shall provide by law for an election of said officers.” The corporate offices of the towns and cities are not in terms embraced in this section. To meet that case the act of the 20th of April, 1870 (Acts, p. 150), was passed, which provides that the governor, with the senate, if in session, shall fill by appointment all vacancies that now exist, or that may hereafter occur in the public offices of any city, town or county, or district, not embraced expressly in the appointing power conferred in the constitution. The appointments may be made by the governor in recess of senate. Under this statute the mayor and aldermen were appointed and entered upon their offices. The fifth section of the supplemental act, passed by the same legislature a few days after the original, authorized the issuance of $500,000 of bonds for the internal improvement of the city, and for the absorption of the outstanding city scrip. By the act of the 10th of February, 1871, passed by the same legislature, amendatory of the supplementary act aforesaid, the legislature positively and directly recognized the fact that the original act and the supplement, with immediate effect, and the further fact that the incumbents of the city offices were rightfully in the exercise of the functions conferred by the original and supplemental charters. The second section of this last act authorized the mayor and board of aldermen to issue bonds in excess of $200,000, al *120 lowed to be issued for the year 1871. That such excess may be provided for by ordinance of the mayor and aldermen, there has been a distinct recognition by the inhabitants of the city of Vicksburg, who submitted^to their authority, by the payment of taxes levied for three consecutive years to pay interest on the bonds, and by the legislature, that the mayor and aldermen in office under appointment, by virtue of the act of 1870, April 20, were rightfully holding their several places, and discharging the duties and powers conferred by the original and supplemental charters.

In Ray v. Murdock, 36 Miss., 699 , speaking in reference to an “officer” who had been appointed, the court say: “No provision is expressly made in the statute for supplying a vacancy in' such a case, and it appears manifestly to be a casus omissus." It is clear, say the court, it did not constitute the “ officer ” such “de jure.,” because the power to make the appointment did not exist in the circumstances. The conclusion is, that being in under color and reputation of office, his acts as to the public are valid. The principle upon which the case rests is, if the power to appoint exists in any state of case, an appointment, though made in circumstances not warranted by law, constitutes the appointee a de facto officer. The power to fill the municipal offices of towns and cities is conferred upon the governor in recess of senate, and with the approval of the senate when in session, by act of April, 1870. The mayor and aldermen could have been appointed, and being in quiet and undisturbed possession, exercising the functions, their acts are valid. Kimball v. Alcorn et al., 45 Miss., 158 ; Cooper v. Moore, 44 id., 392; Brady, Dist. Att’y, v. Howe, 50 id., 623. The law is well settled that an officer who comes in by color of title may do all acts incident to the de jure officer, so far as the public and third persons are concerned. People v. Collins, 7 Johns., 552 - 553. Strangers ai’e not bound to investigate his title, nor look for them; then the person is in actual exercise of the office under color of claim. Riddle v. County of Bedford, 7 Serg.. & R., 392. The mayor and aldermen took possession of their offices by executive appointment under the act of the 20th April *121 1870. They referred their right to the appointment, and the statute plainly that created “ a color of title,” if not a “ de jure right.” Certainly they were not usurpers, for such persons take possession “ without any authority.” It was observed with truth by the supreme court of North Carolina (People ex rel. v. Staton, 73 N. C., 551 ), that there is no difference between the acts of a de facto and de jure officer, so far as the public and third persons are concerned. And that is settled by the decisions in England and America. The only substantial difference is, that the former may be ousted by direct proceedings, whilst the latter cannot be. In that case the acts of a judge who came into office under án illegal election were held to be valid, because he entered the office by color of title. The principle is salutary, essential to the repose and good order of society, that officers who are in possession without dispute, and with the acquiescence of the public and government, and who can refer their right to such an appointment as was made in this case, are for all the purposes of official acts as competent to do them as if no question could be made as to the strict rightfulness of the appointment. Whether., therefore, their appointment was strictly regular or not, yet as they came in under appointments made by authority of an act of the legislature, they entered upon their offices under color of right, and all things done by them are valid, if valid done in similar circumstances. *

We are of opinion, therefore, that the mayor and aldermen were competent to do all the acts and exercise all the functions within the provisions of the charter and its supplement, which took effect as provided in the last section thereof, from their passage.

*122 The features of the 5th section of the supplemental and amended charter, so far as they bear upon the subject under investigation, are: First, “ That the mayor and board of aldermen shall, by ordinance, provide for the issuance by said city of bonds to an amount not exceeding $500,000; which bonds shall be employed for the improvement of said city as the mayor and board of aider-men may from time to time direct, and for the funding of all outstanding scrip of said city. The treasurer of the city shall give a bond, * * * conditioned, among other things, for the faithful accounting for, and paying over of, all bonds issued by virtue of this section, and of all moneys which shall come to his hands by reason of said bonds;” provided: “the treasurer of said city shall keep a book open at all times for public inspec - tion, wherein shall be registered, at the time of its issuance, each bond issued in accordance with this section, which registry shall state the amount of said bond, its number, date of issuance, date of maturity, and to whom issued; and no bond shall be of any validity unless so registered.” Bonds may be issued in payment of work done at par; “ and whenever said bonds shall be disposed of for any other purpose, they shall not be valued in the transfer at less than five per cent, below par.” Section 1 of the amendment of the charter, passed February 10, 1871, provides: “ That so much of the 5th section of the above act as limited the rate of interest on the bonds, * * * to eight per cent., and the value of said bonds in the negotiation of the same to five per cent, below par, be so amended as to authorize the bonds to bear ten per cent.; and the negotiation of the same to be made at a valuation of not less than eighty cents on the dollar.” In construing an act of the legislature, we must look to its scheme, the object proposed to be accomplished, as an aid to the construction of any part of it, so that the entire law may be made harmonious in all its parts, and a consistent whole. Two objects are presented in the 5th section of the amended and supplemental charter. One is, that the outstanding scrip of the city should be withdrawn from circulation. Second, that costly and extensive improve *123 ments might be made of the character set forth in the second section. The scheme proposed for this accomplishment was the issuance of interest bearing bonds, having a long time to run. If the holders of scrip exchange them for bonds, they must take the bonds at par. So if contractors, who have done work for the city, accept bonds in payment, they must take them at par. But since the amount of improvements contemplated would be too onerous to be paid for out of the current revenues of each year, the plan was to improve the city on a credit, so as to distribute the burden over a term of years. Common experience would suggest that those who took contracts would require large sums of money to pay laborers, etc, and that means must be provided for those who could not take the bonds in payment and hold them as an investment. It was also desirable to induce the holders of scrip to exchange it for bonds; that object would be promoted by putting the bonds in such form as that they would easily be converted into money. That exigency could be met by making the bonds negotiable. But the city objects to the validity of the bonds, because the legislature did not confer the power expressly to make them negotiable (all of them are payable to bearer). But if express power is needed, is it not granted by the 5th section of the supplemental charter. “But whenever the bonds are disposed of for any other purpose, they shall not be valued in the transfer at less than five per cent, below par.” What other purpose, except absorption of scrip and delivery in payment of work done, is meant, except it be a conversion of them into money, and its application to pay for improvements. For, as to what is known as the internal improvement and scrip bonds, they could be used for no other purpose except the specific object named in the charter. But it might be highly expedient to “ sell a portion ■of the bonds and pay the money for the work,” and- that, we think, was what was intended, “ as the other purpose for which they might be transferred. ”

The legislature in the act of the 10th of February, 1871, manifestly supposed that the bonds were intended to be negotiable for *124 the “words are,” the “value of the bonds in the negotiation of the same * * shall not be less than eighty cents on the dollar.” If it were doubtful, therefore, whether the express power were Conferred (and we think it is not), after the city authorities have placed the construction upon the law, that they had the power, and after the legislature that granted the charter has placed the same construction upon it, the courts should conform to this practical interpretation as settling the doubt. That construction, too, is manifestly to the interest of the city. For whether the bonds are delivered over in payment for Work or scrip, or sold, they would be worth more, and would realize more to the city in either use of them, if they were invested with the privileges and immunities of commercial obligations. But if this were too strained a construction to be placed upon the text of the law, would it follow that the holder of a bond or coupon for interest, must point to express words of authority in the statute. The question under consideration is common to each of the cases, under the act of April 5, 1872. Acts, pp. 28, 284. The city loaned to the Vicksburg & Memphis R. R. Co., $100,000 of these bonds. By the 20th section of the charter of the Vicksburg, P. & Ship Island R. R. Co., the city became a subscriber to its stock, and issued to it bonds to amount of $100,000 (Acts 1871, pp. 249, 250). These bonds are not expressly made negotiable. The object of loaning' the bonds to the one company, and of delivering bonds to the other, was to place in their control facilities and means in and of their respective enterprises. One of the distinguishing features in the history of the internal improvements of the last quarter of a century, has been the vast stimulous and assistance furnished by municipal bonds (in many instances pushed too far). By the same means have the cities been paved, sewered, supplied with gas, and water, wharves, etc., to a great degree. Bonds thus issued bear interest, payable generally semi-annually, and have a long time to run (as in these cases), and are intended to be sold in the money markets as stocks and securities. They are assigned to be placed in these money centres, in or out of the state, where money is *125 most plenty and cheapest. Where, therefore, municipal bonds, bearing annual or semi-annual interest, with long maturities, are authorized to be issued for these, or such purposes, it must be presumed that the legislature intended that they shall conform to the known usage; that they shall have that form, and those incidents necessary to their availability. It is necessary that they should be negotiable, readily so, that each purchaser and holder would acquire a legal title, divested of all equities that might exist between the original parties. If they have not, the characteristics of negotiable instruments under the law merchant, they would not be readily saleable, and would not accomplish the object designed. Whether, therefore, the supplemental charter of the city, or the 20th section of the act incorporating the V., P. & S. I. R. R. Co. authorized in specific and express terms the bonds to be made payable to bearer or not, the right to put them in that form must be implied in the general power conferred. Commissioners of Knox Co. v. Aspinwall, 21 How. (U. S.), 539; Morris C. Banking Co. v. Fisher, 1 Stock. Ch., 667; Mechanics Bank v. R. R. Co., 3 Kern., 599; Clark v. Janesville, 10 Wis., 189 ; Clark v. Des Moines, 19 Iowa, 213 ; Lexington v. Butler, 14 Wall., 282 .

It is further objected, that the interest is made payable in New York, without warrant of law. In Maddox v. Graham and Knox, 2 Met. (Ky.), 78-80, the same exception was taken; but the court said it was evidently the intention (of the legislature) to leave the place of payment to the uncontroverted discretion of the makers of the bonds. It was further remarked “ that it was a well known fact that all such securities and the coupons for interest are made payable in one great commercial metropolis,” which adds to their value. If there be any plausibility in the point, that the mayor and aldermen did not approve the form of the bond, it is answered by the same case, p. 77. It is said also that the $500,000 bonds were not registered, as directed by law, in this — that the law requires that the registry shall show to whom issued — where, as the entry upon it, is to whom “sold.” In every other respect, as to number, date of maturity, amount, *126 the direction is pursued. Considering this clause of the act, in connection with the context, and it is manifest that it was devised so as to prevent an overissue and a fraudulent one. The several particulars were designed, as the law marks of each bond. That purpose is as well observed by the use of the word “ sold ” as “issued.” The one word, as well as the other, would show the recipient of the bond, whether taken in payment for work or scrip, or purchased. If delivered to the one or the other, it can be said with accuracy, it had been “ sold,” or that it had been “ issued ” to him. It would be unsafe to apply so nice a criticism to words, when either express the act done and required to be done. The last question made, which is applicable, alone, to the bonds issued on account of the railroad corporations, consists in the offer, of the city, to prove that the loan of the bonds, in the one case, and their issuance in payment of subscription to stock, in the other, was not approved by a majority of two-thirds of the electors. The statutes under which the proceedings were had, required that the propositions should be submitted to a vote, and should be sustained by a two-thirds majority. CaD that question be opened and litigated against the relators, purchasers of the bonds and coupons in question ? It was suggested, and some observations made in respect of it, in Hawkins v. Carroll Co., 50 Miss., 735 . A vote and the requisite majority may be conceded to be necessary, they may be conceded to be the conditions upon which the right to issue the bonds depends. But the election, in reference to these bonds, was held under the auspices of the city authorities. The mayor and aldermen canvassed the returns, and declared the result to be in 'favor of suscription and loan. If a purchaser had consulted the record of their proceedings, he would have found a recital “ that the reports, certificates and proofs of the judges of said election ” (had been canvassed) “ showing that said election had been duly held, and that two-thirds of the qualified electors had voted in favor of ” the proposition; “and the board did declare the decision of the qualified electors of said city to be in favor of,” etc. Manifestly the law *127 referred the decision of that question to the mayor and aldermen, not conclusively, however, as we held in Hawkins v. Carroll County, supra, if those concerned, as the tax payers, intervene and contest, before the bonds have passed into the hands of purchasers for value. But their decision is conclusive against the city, after the bonds have been negotiated and have come to the hands of an innocent holder. That doctrine has been uniformly announced by the supreme court of the United States, commencing with the leading case of Knox County v. Aspinwall, 21 How., 589 ; Bissell v. Jeffersonville, 24 id., 287; followed by numerous cases reported in Black and Wallace. Of the many cases decided by the state courts, we refer to City of San Antonio v. Lane, 82 Texas, 405 ; 33 Mo., 449 ; 24 Ind., 457 ; 25 Ill., 317 .

The principle rests upon the sound reason, that if the constituted authorities of the city put the bonds on the market or deliver them to the railroad company for sale, on the assertion that the proper vote was given, the eity ought to be estopped from setting up against the Iona fide holder the plea that the assertion is untrue. If irregularities had occured in giving notice of the election, or in conducting it, a purchaser would have a right to conclude that the mayor or a board of aldermen would have examined into them, and if of a grave character would have ordered a new relation. A purchaser would have a right to conclude that there was no irregularity in the election, otherwise the mayor and board of aldermen would have (as was their plain duty) set it aside. He might well conclude, also, that the tax payers who had a deep interest in the matter, would closely watch the proceedings, and arrest them if the law was not complied with. When the authority exists, mere irregularities do not affect the title of the bona fide holder. Bissell v. Jeffersonville, 24 How., 287 ; Bank v. Rome, 19 N. Y., 20 ; Gelpcke v. Dubuque, 1 Wall., 208 ; Royal British Bank v. Turquand, 5 E. & B., 248 a.

Counsel on both sides, in a written agreement, expressed the desire that the court should waive objections to the form of proceedings and consider the cases on their merit. We have bestowed *128 such examination and reflection on the important questions discussed, as the pressure of business would allow.

The conclusion reached is, that the judgments ought to be affirmed.

The same principle is embodied in positive law. Code of 1871, § 317. The official acts of any person in possession of any public office, and exercising the functions thereof, shall be valid and binding, as lawful and official acts, in regard to all persons interested or affected thereby, whether such person shall be lawfully qualified or not, “ or lawfully entitled to hold such office or not,” which is a literal transcript of art. 194, Code 1857, p. 138.