This case came into the circuit court of appeals for the Seventh circuit at October term, 1894, on an appeal from a decree of the circuit court of the United States for the Southern district of Illinois.
The original action was a suit in equity brought in the circuit court of Saline county, Ill., by the county of Saline as complainant against the treasurer and auditor of public accounts of the state of Illinois and the collector of taxes and clerk of the county court of Saline county, to restrain the levy and collection of the tax required to be levied by the said auditor of public accounts of the state of Illinois to pay the interest on 100 registered refunding bonds of the said county.
Luther R. Graves, one of the holders of such refunding bonds, intervened in the circuit court of Saline county, and had the cause removed to the circuit court of the United States for the Southern district of Illinois, where the Society for Savings, D. B. Wesson, and William Burgoyne, other holders of such bonds, also filed intervening petitions. That court granted the injunction asked for by the county, and the case was then taken by appeal to the circuit court of appeals of the Seventh circuit, and thereupon the latter court certified to this court the following statement of facts and questions for its opinion and instructions:
The appellants were, prior to the year 1883, bona fide holders for value and before maturity of certain bonds issued by the county of Saline to the Belleville & Eldorado Railroad Company and to the St. Louis & Southeastern Railway Company, respectively. These bonds ($75,000 in amount to the former and $25,000 in amount to the latter company, and bearing interest at the rate of 8 per centum per annum, payable semiannually) were issued under authority of acts of the general assembly of the state of Illinois passed in the years 1861 (Priv. Laws Ill. 1861, p. 485) and 1869 (3 Priv. Laws Ill. 1869, p. 238), and pursuant to an election duly ordered and held according to law on the 9th day of October, 1869, and in payment of subscriptions to stock in said companies, respectively, dated January 15, 1870, duly authorized by said election, upon certain conditions, one of which was that said railroad should be commenced within one year and completed within three years from the date of subscription, and another of the conditions was that the St. Louis & Southeastern Railway should pass, and a depot be established, within one-half mile of the old courthouse in Raleigh, and within one-half mile of the church in Galatia.
These bonds to the St. Louis & Southeastern Railway Company were dated January 1, 1872, payable 20 years after date, with option of paying 5 years after date, and were issued and delivered to that company February 1, 1872, and were purchased in open market by the appellants, and for value, and without notice, prior to the year 1876. The railroad was never constructed within one-half mile of the old courthouse in Raleigh, or within one-half mile of the church in Galatia, but was constructed in a different direction, and the said condition was in no sense complied with, but was waived by the board of commissioners of said county after July 2, 1870.
The time for the completion of the Belleville & Eldorado Railroad was, by the board of commissioners of the county of Saline after July 2, 1870, extended from time to time and until October 20, 1877, and the bonds were issued and delivered on the 19th day of April, 1877, being dated March 9, 1877, and payable 20 years after the 1st day of January, 1873, with option of paying 5 years after date.
The amendment to the constitution of the state of Illinois which went into effect July 2, 1870, provided: 'No county, city, town, township or other municipality shall ever become subscriber to the capital stock of any railroad or private corporation, or make donations to or loan its credit in aid of such corporation; provided, however, that the adoption of this article shall not be construed as affecting the right of any such municipality to make such subscriptions where the same have been authorized, under existing laws, by a vote of the people of such municipalities prior to such adoption.'
The bonds issued to the St. Louis & Southeastern Railway Company were valid obligations of the county in the hands of the appellants under the decisions of the supreme court in the cases of Insurance Co. v. Bruce, 105 U.S. 328, and Oregon v. Jennings, 119 U.S. 74, 7 Sup. Ct. 124.
The bonds issued to the Belleville & Eldorado Railroad Company were void even in the hands of bona fide purchasers for value, within the decision of German Sav. Bank v. Franklin Co., 128 U.S. 526, 9 Sup. Ct. 159.