1, VJ^ : ^>^ r v^: v - l x >^~xW? -'V t \^--> 7f : v> ' -i< / A -^^K^i^^-^v "i \< s\ .if.*' >^U). v ^T w 'r : r / ll^lS^fe^Cs^^^S ^IM^^^^I^^^S^I^^ '^T c ? & , A ^^, ^ ^C: c r~^& -'Iv^^vL^^ . .^ ^--. \/v i. w - ; r^ ^s^^r b v^.>r^' r>>^ivAV i^33>-^s ^ *fe.-r2iK^, A--<i^-*^r^.- ^ffr< <i~wM?&yn Ox^ frj$*$3^ ^M^ THE LAW OF- MUNICIPAL BONDS, INCLUDING A DIGEST OF STATUTORY LAWS RELATING TO THEIR ISSUE TO WHICH IS ADDED A DIGEST OF THE STATUTORY LAWS GOVERNING THE INVEST- MENT OF CORPORATE AND TRUST FUNDS, SAVINGS BANKS, INSURANCE COMPANIES, GUARDIANS, EXECUTORS, AND OTHER CORPORATIONS AND TRUSTEES. BY J. A. tBURHANS, OF THE CHICAGO BAR. THIS EDITION ALSO INCLUDES THE PUBLISHERS' BOND VALUES AND INTEREST TABLES. PREPARED FOR AND PUBLISHED BY S. A. KE AN & CO., BANKERS, CHICAGO AND NEW YORK. 1889. COPYRIGHT 1889, BY 3. A. KEAN & CO. PRESS OF THE W. t. P. A. PREFACE. A Digest of the Municipal Bond laws of ten of the West- ern states was published by S. A. Kean & Co. several years ago. So many commendatory letters were received from bank- ers and others interested as investors, or otherwise, in this class of public securities, that the publishers decided on the publi- cation of a new and more complete work on the same subject. Much more time and labor has been required in its preparation than was originally anticipated or intended. The scope of the work has been extended, and, as a valuable complement, three additional chapters have been added, embracing a digest of the statutory laws of the New England, Eastern and other older States, relating to investments by savings banks, insurance companies, and of other trust and corporate funds. The first six chapters will be found to contain a statement of the more important legal principles governing the law of municipal bonds, with a review of the latest decisions of the highest courts. Special attention has been given to those questions which, from long experience in the handling and legal exam- ination of these municipal securities, the publishers and editor have found important and liable to arise. Much care has been taken to make the work reliable and correct, and the fact that its preparation has required the examination and digesting of over one hundred and fifty volumes of statutes and session laws, the work being done during such times as it was possible to take from the pressing demands of an active practice, must explain any errors that may have escaped revision. The work makes no pretensions as a text-book, but is rather intended as, what we are assured it will be found to be, a valuable hand- book for all those issuing, handling, investing, or interested in the public securities of which it treats. CHICAGO, January i, 1889. J. A. B. CONTENTS. (For General Index, seepages 331-312.) CHAPTER I. Introduction Law of Municipal Bonds . . 1-4 " II. Power to issue Municipal Bonds 5-18 III. Purposes for which Bonds may be issued . . 19-27 IV. Constitutional Limitations and Provisions . 28-42 V. The Issue of Municipal Bonds 43-52 " VI. Rights and Remedies of Bond Holders . . . 53-60 VII. Digest of Bond Laws of Ohio 62-75 VIII. " " Indiana 76-90 IX. " " Illinois 91-109 X. " " " " " Michigan 110-117 XI. " " " " " Wisconsin .... 118-126 XII. " " Minnesota .... 127-135 XIII. " " Iowa 136-154 XIV. " " Nebraska I55-I79 XV. " " Missouri 180-193 XVI. '' " Kansas 194-221 XVII. " " " " Arkansas 222-225 XVIIL " " " " " Texas 226-231 XIX. " " " " " Colorado 232-238 XX. " " Nevada, Oregon and California 239-246 XXI. Digest of Bond Laws of Dakota 247-263 XXII. " " " " " Territories 264-284 XXIII Investments by Savings Banks 286-305 XXIV.-- " " Insurance Companies . . . 306-320 XXV. " " Guardians, Executors, Trust- ees, Trust Companies, etc . . 321-327 Suggestions as to Issue of Bonds by Municipalities .... 328-330 General Index 331-342 CHAPTER I. LAW OF MUNICIPAL BONDS. 1 . Municipal Bonds: Municipal bonds may be defined as evidences of indebtedness issued by or in behalf of public or municipal corporations, negotiable in form, payable at some future time, transferable by indorsement or delivery, usually under seal, and bearing interest payable annually or semi-annu- ally,with interest notes or coupons attached. They are issued by counties, cities, towns and other municipalities for the pur- pose of raising money for some public or authorized purpose. They are held largely by the municipalities themselves for sinking fund purposes; by insurance companies; trust compa- nies; savings banks, and other public and private investors both in this and foreign countries. The bonded indebtedness of the states and territories,and theirsubdivisions, as shown by the federal census of 1880, exceeded eleven hundred millions of dollars, and it may be fairly estimated that the present amount of municipal bonds outstanding in the United States will reach fifteen hundred millions. 2. Law of Municipal Bonds Importance: The law of municipal bonds is of comparatively recent growth. Nearly all of the legislation and substantially all of the decisions of any importance relating to this class of public securities have been made within the past fifty years. With the growing ac- cumulation of capital demanding safe means for interest-bear- ing investments, and the gradual withdrawal of government bonds, which for the last quarter of a century have largely sup- plied that demand, the importance of municipal bonds is be- coming more and more to be recognized in the monetary world. With the increased constitutional and statutory restrictions thrown around their issue; with the law relating to their issue (0 2 LAW OF MUNICIPAL BONDS. and status becoming more clearly defined and settled, the qual- ity and value of this class of public securities has been greatly improved during the last score of years. They are usually issued to pay for public improvements, the making of which tends to greatly enhance the value of the property within the corporation to be taxed for their payment. 3. Development of the Law: The history of the devel- opment of the law of municipal bonds is one of no little interest to the political economist. During the years following the war, many municipalities, especially in some of the western states and territories, became careless and extravagant in the issue of bonds for all sorts of authorized, and occasionally unauthor- ized, purposes. They were frequently voted with little or no restriction, in aid of all sorts of railroad schemes, in many cases for railroads never built, and in some cases apparently never intended to be built. Instances might be given where bonds were issued to an amount greater than the assessed value of all the taxable property within the municipal or territorial subdivision issuing them. To such an extent was this con- tracting of debts for posterity to pay carried on, as to fairly justify the severest censure of our highest courts. Munici- palities found themselves the victims of scheming speculators; in more than one instance bankrupted, without any compensat- ing benefit. 4. It is not strange that when the reaction came, the improvement frequently not having been made, and payment was required for the indebtedness, that attempts were made through the courts to repudiate the bonds thus obtained, nor that the state courts in some instances have been ready to sustain these attempts wherever possible. It will, however, be found that these cases of extravagance and resulting litigation have usually been in the issue of bonds in aid of railroads or internal improvements which, while they are now recognized as legitimate, are not strictly corporate purposes. An exami- nation of a large number of decisions during the past twenty- five years will disclose the fact that in at least nine cases out of LAW OF MUNICIPAL BONDS. 3 ten where litigation has arisen in regard to the payment of this class of securities, the bonds had been issued in aid of railways or for purposes of questionable legitimacy. 5. Position of the U. S. Supreme Court: It is especially to the Supreme Court of the United States that is due the present importance, stability and value of the municipal bond as an investment security. That court, in a long line of decisions, has sustained the rights of the holders of this class of securities, and prevented repeated attempts of municipalities to avoid paying their bonded obligations when legally issued. The result has been favorable in inducing a higher grade of munic- ipal honor, greater economy, and increased constitutional and statutory restrictions in the incurring of indebtedness by municipalities, and thus giving an advanced and more fixed value to such securities in the monetary markets, and estab- lishing public confidence therein. Judge Dillon, when com- menting upon this subject in 1876, said, "The Supreme Court of the United States has upheld the rights of the holders of municipal securities with a strong hand, and has set a face of flint against repudiation, even when made on legal grounds deemed solid by the state courts, by municipalities which had been deceived and defrauded." The present value of such securities "is largely due to the course of adjudication in respect thereto by the Supreme Court, and the reliance which is felt by the public that it will stand firmly by the doctrines it has so frequently asserted." 1 6. Bona Fide Holder : When a municipal corporation is authorized to issue negotiable bonds, and such bonds are issued for public or corporate purposes, it will be found extremely rare that their validity is questioned after they have reached the hands of a bona fide holder. Such a holder is one who has purchased in good faith the bond before maturity, for value, without notice or knowledge of any defect, or of any of the equities between the original parties. It may be stated as a general rule that he is affected only by the want of power in 1 Dillon Municipal Bonds (1876) p. 7. 4 LAW OF MUNICIPAL BONDS. the municipality to issue the bonds. As the purchaser of bonds in nearly every case is such a bona fide holder, the ques- tions which particularly concern such purchaser are those relating to the authority of municipal corporations to issue this class of securities. CHAPTER II. POWER TO ISSUE BONDS. 7. How Conferred Implied Power : Municipal corporations are subdivisions of a state organized for the purpose of local government, and their corporate powers are limited to the purposes for which they were organized. Whenever it is deemed expedient to confer upon such a municipality the pbwer to borrow money and issue bonds, or other negotiable securities, it is the almost invariable practice to do so by express legislative authority. The question whether municipal cor- porations possess the power to issue negotiable bonds without such express power has been the subject of a great amount of discussion, and much conflict of opinion in this country. Nearly all of the leading elementary writers on the subject of municipal corporations and public securities have argued against the existence of such an implied power. The differ- ence of opinion seems to have arisen largely from failing to make any distinction between private and public corporations. It is the well settled American doctrine that a private corpora- tion, within the scope of its charter powers, and for all legiti- mate purposes, may make contracts, incur debts, and issue therefor negotiable notes or other evidences of indebtedness, unless expressly restricted by law, the power being conceded as necessary to accomplish the purposes for which such a corporation is organized. 8. Municipal corporations are created only for the admin- istration of local government, the providing and care of public buildings, streets, highways and other local improvements of a general nature, necessary for the comfort, protection and well being of the people within the geographical limits of the municipality, and, for those purposes are usually invested with 6 POWER TO ISSUE BONDS. the power of taxation against the property within their limits. It is argued that the issue of negotiable paper is not necessary for the purposes of such public corporations, and therefore does not exist unless expressly authorized. There is, however, a distinction usually made between strictly municipal corpora- tions, and what are termed quasi-public corporations. 9. Counties, Townships, etc.: The corporate powers of counties, townships, parishes and similar subdivisions, or as they are frequently known, quasi-public corporations, are usually more strictly construed than in the case of cities and other incorporated municipalities. The general current of all the decisions, both state and federal, is to the effect that this class of public corporations have not the implied power to borrow money and issue negotiable bonds, and, that such power must be expressly conferred by legislative authority. 10. Claiborne County Case : The position of the United States Supreme Court is expressed in the Claiborne County case, 1 in which they decide that the power of a county to erect a courthouse did not involve or include the authority to issue bonds in payment therefor, and held such bonds as invalid. The opinion was delivered by Justice Bradley, and in the course of which he says, " Our opinion is that mere political bodies, constituted as counties are, for the purpose of local government and administration, and having the power of levying taxes to defray all public charges created, whether they are, or are not formally invested with corporate capacity, have no power or authority to make and utter commercial paper of any kind, unless such power is expressly conferred upon them by law, or clearly implied from some other power expressly given, which cannot be fairly exercised without it." And referring to previ- ous decisions of the court to the same effect, " It is a power which ought not to be implied from the mere authority to make such improvements." As to counties and townships, "We consider such a power as entirely foreign to the purpose of their creation, and, as never to be conceded except by express 1 Claiborne Co. (Tenn.) v. Brooks, in U. S. 400 (1884). POWER TO ISSUE BONDS. 7 legislation, or at least from strong implications from such legislation." This may be also taken as a conservative state- ment of the present law as declared by most of the state courts. 1 1 1 . Implied Power of Cities : Have incorporated cities and other municipal corporations proper an implied power to borrow money and issue bonds ? This question has probably given rise to a more perplexing conflict of opinion and decision than any other relating to the subject of municipal bonds. The law as declared by the highest courts in several of the states is unquestionably in favor of the existence of such an implied power, but it has usually arisen in cases where such a power was held necessary as an incident to the exercise of some other power expressly conferred by law. As to what charter provisions include this incidental power to borrow money and issue bonds, or under what circumstances the power arises, and what is the commercial character of the bonds issued there- under, are questions upon which even the decisions in favor of the existence of such a power are not by any means uniform. A reference to some of the state decisions will illustrate the law as held by this class of cases. 12. Decisions of State Courts Ohio Wisconsin : In one of the first cases in which the question was considered, the Ohio Supreme Court in 1836, decided that the town of Chillicothe, which possessed the authority to purchase real estate, erect public buildings and other usual powers vested in municipalities, had the incidental right to borrow money for such corporate purposes. The suit was on certificates of indebtedness, executed by the mayor under seal, and the decision was based upon the right of the town to borrow money and issue evidences of indebtedness, in carrying out the express powers granted by its charter. 2 This Ohio case was followed by a number of cases in Wisconsin where it was held that an express charter power in the city of Madison to provide hospital and cemetery grounds, authorized the city to issue 1 See however the New York case of Hubbard v. Sadler, 104 N. Y. 223 (15 herein). 2 Bank v. Chillicothe, 7 Ohio, Part II. 31. 8 POWER TO ISSUE BONDS. bonds for grounds purchased for such purposes. 1 In another case in the same state, the Supreme Court decided that when a municipal corporation was authorized by its charter to purchase fire apparatus, establish markets, and to do other things for which money was required, in the absence of any positive restriction, such corporation could borrow the money as an incident to the exercise of those general powers ; that the fact that the legislature had passed acts authorizing such corpora- tions to borrow for purposes clearly municipal, was not conclu- sive upon the question of the right of the corporation to borrow money without such authority; and that the power of taxa- tion conferred by the charter of such a corporation does not exclude the power to borrow money." 13. Pennsylvania Texas : In a Pennsylvania case 3 the Supreme Court held that where a municipal corporation has lawfully contracted a debt, it has the implied power, unless restricted by its charter or prohibited by statute, to evidence the same by a bill, bond, note or other instrument ; that when the purpose for which the money is borrowed is germane to the purpose for which the corporation is created, it has the power to borrow money and issue its bonds ; that the power to con- tract a debt carries with it by necessary implication the right to give an appropriate acknowledgment of such debt, and to agree with the creditor as to the time and mode of payment ; and that in the absence of statutory provisions there is no rule of law limiting the extent of such credit. This would seem to be an extreme view of the rights of such a corporation to issue this class of securities, and three of the judges did not concur therein. In Texas the authority to organize a fire department and regulate the same, was held to include the power to purchase fire engines, and issue negotiable bonds in payment therefor. 4 14. New York : Under the charter authority to establish 1 State v. Madison, 7 Wis. 688. 2 Mills v. Gleason, 1 1 Wis. 470. 8 Williamsport v. Commonweath, 84 Pa. St. 487 (1877). 4 Desmond v. City of Jefferson, 19 Fed. Rep., 483. POWER TO ISSUE BONDS. 9 and regulate markets, it was held in an early New York case 1 that in the absence of any law forbidding, the city of Buffalo could purchase grounds for a market on credit, and issue bonds to pa}' for the same. The city, in pursuance of a resolution of the common council, purchased such grounds for thirty-five thous- and dollars, and gave in payment its bond for that amount, payable in twenty-five years, with semi-annual interest. In a suit by tax-payers for an injunction restraining the levy of a tax to pay the interest upon such bond, the Court of Appeals declared the bond valid, holding that the power to establish markets included the power to purchase grounds on credit and give evidences of indebtedness therefor. The court, however, intimated against the right of the city under the circumstances to borrow money for any such purposes, making a distinction between issuing bonds to pay for an object, and issuing bonds to borrow money to pay for such object, although this question was not involved in the case. 15. In a recent case 2 in the same court, the right of county supervisors to issue bonds in anticipation of assessments levied under certain statutes of that state, seems to have been sus- tained. The board of supervisors of King's County were authorized by statute to lay out and construct certain streets and avenues, and to provide, by limited or general assess- ment, for the payment of damages awarded for property taken. Under this authority the supervisors provided by resolution for an assessment on the property benefited, and that any defi- ciency should be paid by general taxation. In anticipation of such tax and assessment, the board provided for the issue of short time bonds running from two to six years. The court held that the general power conferred, including the author- ity to provide for the estimate and award of damages and other expenses, involved the right of the commissioners, as " a local legislature ' ' to whom had been delegated by the State legislature its power and authority over the streets and avenues improved, to issue municipal bonds for the purpose of antici- 1 Ketchum v. City of Buffalo, 14 N. Y., 356 (1856). 2 Hubbard v. Sadler, 104 N. Y, 223 (1887). 10 POWER TO ISSUE BONDS. pating the slow collection of the taxes and assessments levied. The court appears to hold that municipal corporations, includ- ing such boards of county supervisors, have the implied power to borrow money and issue bonds for corporate purposes without express authority. In referring to the express grant by the legislature of authority to issue bonds for many specified munic- ipal purposes, which, as argued, excluded the intention to bestow it in other cases, the court says, that in the case of special, and to some extent unusual and extraordinary expenditures, doubts might possibly have arisen whether the creation of a long term bonded debt was a necessary incident to the general grant of power. The express authority ' ' may not have been needed, but if it was, it seems to have been rather for the purpose of limiting and defining the power of borrowing money, which might have flowed from a general grant of authority, than to supply its absence, and cannot by inference forbid the borrow- ing of money for short periods in anticipation of a tax ordered to be laid for reimbursement. ' ' 16. Kansas Indiana : The city of Wyandotte had express power to open and improve streets, avenues, alleys and make sidewalks within the city. The statute provided that for making and repairing sidewalks, assessments should be made on all of the lots and lands abutting the improvement. To pay for certain sidewalks, the city issued bonds called ' ' special sidewalk bonds, ' ' which recited upon their face that they were issued in the payment for specified sidewalks. The court sus- tained the validity of the bonds, holding that the authority to contract for the making of such improvements necessarily implied an authority to pay for the same, and in the absence of any statute restricting the manner of such payment, the author- ity to give a suitable acknowledgment of the debt by bond, note or other contract. 1 In Indiana the Supreme Court, in defining the powers of municipal corporations, have said "Municipal charters are to be construed as to carrying into effect every power clearly 1 Wyandotte v. Zeitz, 21 Kas. 649 (1879). POWER TO ISSUE BONDS. Ir intended to be conferred, and every power necessary to be implied for the complete exercise of the powers granted." 1 "Corporations, along with the express and substantive powers conferred by their charters, take by implication all the reason- able modes of exercising such powers, which a natural person may adopt in the exercise of similar powers." 2 It has been held in that state that the trustees of a school township could issue a valid negotiable note for appropriate school supplies, but that such note was subject, in the hands of whomsoever it might come, to all the equities existing between the original parties, and that the proceeds for which the note was given must have been used for school purposes. 3 17. Nebraska: A decision by the Supreme Court of Ne- braska* during the present year (1888) illustrates this same doctrine of implied powers of municipal corporations. The city of Norfolk, a city of the second class, being authorized under the general law to construct drains and sewers and im- prove streets, voted to issue eight thousand dollars in city bonds for the purpose of constructing a sewer along, and grad- ing one of the main streets of such city. The court sustained the validity of the bonds as an incident to the express authority to make such improvements, arguing that the implied power to issue bonds under the circumstances was necessary to carry out and make effective the powers expressly conferred by stat- ute. In this case the court reviews at considerable length sev- eral of the above and other decisions substantially to the same effect and supporting such implied authority in cities, and says : ' ' We are rally aware of the necessity for great care in the ex- ercise of the right to borrow money by municipal corporations, and that the power to do so ought not to be held to have been conferred except when expressly given or when absolutely nec- 1 Smith v. city of Madison, 7 Ind. 81. 2 New England Co. v. Robinson, 25 Ind. 536 ; 19 Ind. 450 ; 60 Ind. 504 ; Miller v. Board of Commissioners of Dearborn Co., 66 Ind. 162 (1879) and cases cited. 3 Sheffield School Tp. v. Andress, 56 Ind. 157 ; also Reeve School Tp. v. Dodson, 98 Ind. 497 (1884) and cases cited. 4 State v. Babcock, 22 Neb. 614. 12 POWER TO ISSUE BONDS. essary to carry out and make effective the power expressly conferred," but decided the case under consideration as fall- ing within the latter class. 18. Iowa Powers of Municipal Corporations: In an early Iowa case, the court held that the charter power to grade streets authorized the city of Alton to borrow money and issue bonds of the city for such purposes. 1 In later cases the court has defined the powers of municipal corporations. ' ' A munic- ipal corporation can possess and exercise the following pow- ers and no others : those granted in express words ; those necessarily implied or necessarily incident to the powers ex- pressly granted ; and those absolutely essential to the declared objects and purposes of the corporation." 2 " Where no express authority is given to issue negotiable paper, and such power is not necessary as an incident to powers granted, it should not be held to exist by implication." 3 " Without express authority municipal corporations cannot bind themselves by paper hav- ing the elements of negotiability, and such paper has no other binding effect in the hands of a bona fide holder for value, before maturity, than in the hands of the original holder."* 19. Illinois: In a case 5 which has been frequently cited by those arguing in favor of the implied power of municipal corpora- tions to issue negotiable bonds, the Illinois Supreme Court in 1868, decided that the power to pay debts or provide for their pay- ment, to fund them and issue the necessary evidence therefor, exists in every corporation to the same extent as in natural persons, and this without any express authority in its charter ; that corporations have all the powers of ordinary persons as to their contracts, except when they are expressly or by necessary implication restricted. In subsequent cases we understand that court to have greatly modified these views. In the case 1 Sturtevant v. city of Alton, 3 McL. Iowa, 393. 2 25 Iowa 163. 3 Clark v. DesMoines, 19 Iowa, 199. 4 Dively v. Cedar Palls, 21 Iowa, 565. Also see 19 Iowa, 21 and 248; 3 9 Iowa, 447 ; 52 Iowa, 193. 5 City of Galena v. Corwith, 48 Ills. 423. POWER TO ISSUE BONDS. 13 of County of Hardin v. McFarlan, 1 the court, in referring to the Galena case, say the decision in that case was based upon the ground that the city by its charter had power to borrow money, and not having been restricted as to the means of exer- cising this power, could issue the bonds, but that more was said in that case than the subject justified, and that it needed modification, confining it to cases where the charter or incor- poration expressly grants the power, for a corporation cannot exercise any powers save those granted or necessarily implied in order to carry into effect the granted power. While the opinion in this latter case was dissented to by Judges Walker and Scott, the principle therein stated seems to have been adopted substantially by the court in subsequent cases. 20. Law Case: In the case of Law v. People 2 in 1877, Justice Walker, in delivering the opinion of the court, says, ' ' The law is, and all persons are presumed to know it, that municipal bodies can only exercise such powers as are conferred upon them by their charters, and all persons dealing with them must see that the body has power to perform the proposed act. Such corporations are created for governmental and not for commercial purposes. Hence, power to borrow money or create indebtedness is not an incident to such local govern- ments, and the power cannot be exercised unless it is conferred by their charter, and no one has the right to presume the exist- ence of such a power, and persons proposing to loan money to these bodies must see that the power exists." However, the evidences of indebtedness involved in this Law case were not bonds, but certificates for temporary loans made by the city of Chicago, and the principal question before the court was the validity of such certificates, they being in excess of the con- stitutional limitation as to the city's indebtedness. And, again in 1880, in the case of Hewitt v. Normal School District, 3 the court decided that ' ' the borrowing of money, the purchase of property on time, and the giving of commercial paper, are not inherent in, or even powers usually 1 82 Ills. 138 (1876). * 87 Ills. 385. 3 94 Ills. 528. 14 POWER TO ISSUE BONDS. conferred upon, municipalities, and, unless endowed with such powers in their charters, they have no authority to make and place on the market such paper, and persons dealing in it must see that the power exists. This has long been the rule of this court." 21. United States Supreme Court: We do not under- stand that the U. S. Supreme Court has ever directly decided the question as to the existence of the implied power in cities to issue negotiable bonds. The question as to such right to issue negotiable paper was before the court in 1874 in the leading case of Mayor of Nashville v. Ray, 1 and although the decision therein \vas based on other grounds, in the opinion of a majority of the court, delivered by Justice Bradley, the position was taken very strongly against the existence of such a right, at least to issue and invest such paper with the character of commercial paper, so as to render them absolute obligations in the hands of a bona fide holder. "The power to borrow money does not belong to a municipal corporation as an incident of its creation. To be possessed it must be con- ferred by legislation, either express or implied. It does not belong as a mere matter of course to local governments to raise loans. Their powers are prescribed by their charters, and those charters provide the means for exercising the powers, and the creation of specific means excludes others. * * * * If in the exercise of their important trusts the power to borrow money and issue bonds or other commercial securities is needed, the legislature can easily confer it under the proper limitations and restrictions, and with proper provisions for future repay- ments. Without such authority it cannot be legally exercised. " 2 22. Municipal Warrants, Orders, Drafts, Certificates, etc.: The same opinion says: "Indebtedness may be incurred to a limited extent in carrying out the objects of the corporation. Evidences of such indebtedness may be given to the public 1 19 Wall. 468; also see Town of Concord v. Robinson, 121 U. S., 165 (1887). 2 In the case of Holmes v. City of Shrevepprt, 31 Fed. Rep., 113 (1887), the implied power of a city to issue negotiable notes or bonds to pay authorized indebtedness appears to be sustained. POWER TO ISSUE BONDS. 15 creditors, but they must look to and rely on the legitimate mode of raising the funds for its payment. That mode is taxa- tion. * * * * Vouchers for money due; certificates of in- debtedness for service rendered, or for property furnished for the uses of the city; orders or drafts drawn by one city officer upon another, or any other device of the kind used for liquidating the amounts legitimately due to public creditors, are of course necessary instruments for carrying on the machinery of mu- nicipal administration, and for anticipating the collection of taxes. * * * * Custom and usage may have so far as- similated such orders, drafts, or certificates to regular commercial paper as to make them negotiable or transferable by delivery or indorsement. This quality renders them more convenient for the purpose of the holder, and has frequently, but we think erroneously, led to the idea that they are invested with the other characteristics of commercial paper that is, freedom from all legal and equitable defenses in the hands of a bona fide holder. But every holder of a city order or certificate knows that to be valid and genuine at all, it must have been issued as a voucher for city indebtedness. It could not be lawfully issued for any other purpose. He must take it therefore subject to the risk that it has been properly and lawfully issued. The face of the paper itself is notice to him that its validity depends upon the regularity of its issue." And the same court, in a later case, 1 decided that county warrants, although in form negotiable, are not negotiable in the sense of the law merchant, as to shut out in the hands of a bona fide purchaser inquiries as to their validity, or preclude defenses or setoffs which could be made of them in the hands of the original parties. ' ' All the courts agreed that the instruments are mere prima facie and not con- clusive evidences of the validity of the allowed claims against the county by which they are issued." 2 1 Wall. v. Monroe Co., 103 U. S., 74 (1881); 103 U. S., 559. 2 Nashville v. I/indsey, 19 Wall., 485. For a general discussion of warrants and similar classes of munici- pal paper, see Dillon's Municipal Corporations, $ 487 et seq., and cases cited. Burroughs' Public Securities, pp. 623-639. 1 6 POWER TO ISSUE BONDS. 23. Galveston Case : The city of Galveston contracted for the building of certain sidewalks, and agreed in payment thereof to issue bonds of the city, denominated " Galveston City Bonds for Sidewalk Improvement." Before the work was entirely completed the city council declared the contract null and void, and suit was brought by the contractors thereon. The city defended especially on the ground that the contract to issue bonds was ultra vires. The U. S. Supreme Court decided that the city was liable under the contract, but did not decide directly whether the city could issue bonds, but intimated to the contrary. They say in substance that the issue of the bonds not appearing to be prohibited by statute, there was at most a defect of power ; that if it were conceded that the city had no lawful authority to issue the bonds, it does not follow that the contract was wholly illegal, and that the plaintiffs had no rights thereunder ; that, at most, the issue was unauthor- ized, and in such case, though a specific performance of an engagement to do a thing transgressive of its corporate powers might not be enforced, the corporation could be held liable on the contract. The city was liable for whatever benefits it had received, whether or not that part of the contract relating to the issue of such bonds was valid. 1 24. Review: It will be noticed that in nearly every case in which the implied power to issue municipal bonds has been sustained, the bonds appear to have been issued to the con tractors, or in payment of some legitimate corporate debt. In the opinion of a number of the cases, and of some of the leading elementary writers, there is a fundamental difference between issuing bonds to pay for corporate improvements, and the issuing of such bonds for the purpose of borrowing money to pay for such improvements. 2 The general weight of authority is in support of the proposition that if express powers are granted, for the accomplishment of which it is evident that ordinary taxation will be insufficient, the power to borrow money 1 Hitchcock v. City of Galveston, 96 U. S. 341 (1878). 2 Ketchmn v. City of Buffalo, 14 N. Y. 356 ; Daniel's Negotiable Securities, 81530. POWER TO ISSUE BONDS. 1 7 and issue bonds may be held to be implied, as a necessary inci- dent to the express powers thus conferred. But such bonds cannot be safely said to be free from equities, or to possess the usual elements of commercial paper. In very few of the cases holding such implied pow r er is the character of the bonds issued thereunder discussed, although we do not understand that such bonds have all the attributes of bonds issued under express authority, but are usually subject to any equities exist- ing between the original parties to the transaction, on account of which they were issued. Some of the cases place the holder of such bonds as merely the equitable assignee of the original creditor of the municipality, with the same rights as, and no more than, such creditor. 25. Conclusion: While the cases cannot be harmonized, the right of municipal corporations to issue bonds by implica- tion under some circumstances seems to be recognized in nearly all of the decisions. It has been held in a number of cases that the power to borrow money includes the right to issue bonds therefor. 1 The U. S. Supreme Court has held that " authority to borrow money for any public purpose ' ' authorized the city of Burlington to subscribe to railroad stock and issue bonds to the company ; that authority to a city ' ' to borrow money for any object in its discretion" authorized the issue of bonds to pay for money borrowed as a subscription to a railroad corpo- ration ; that authority to a city to subscribe to stock in a rail- way company as fully as an individual, authorized the issue of negotiable bonds in payment for such stock or subscription. Whether the power to borrow money and issue bonds exists must be ascertained from an examination of the entire charter or statutes specially applicable to the municipality, and of all the circumstances surrounding the particular case. We do not think that such corporations usually have the incidental or in- herent power, in their grants of municipal powers, as a means to discharge their ordinary municipal functions, or that such an implication exists in respect to debts or liabilities arising 1 Folsom v. School Directors, 91 111. 404 ; Dillon's Mun. Corps. 3d Ed. 1 25- 1 27, and cases cited. 1 8 POWKK TO ISSUE BONDS. from the discharge of their ordinary municipal duties. It is undoubtedly the only safe rule for investors in this class of se- curities as well as for the municipalities themselves, to assume the position of the non-existence of an implied power in muni- cipal corporations to issue negotiable bonds except where the circumstances are such as have been decided to give such authority. Also, in those cases where the right to issue such bonds has been clearly recognized, in the absence of authorita- tive decisions to that effect, such bonds should not be considered to possess all the characteristics of commercial paper, but subject to any existing equities between the original parties, substan- tially the same as municipal warrants. 1 1 As to the general subject of Implied Powers of Municipal Corpora- tions in the issue of bonds, see Burroughs on Public Securities (1881), pp. 167-211; Dillon's Municipal Corporations, 3d Ed. (1881), ^117-129, 307-509; Daniel oil Negotiable Instruments, 3d Ed., ? 1527-1532. CHAPTER III. FOR WHAT PURPOSE BONDS MAY BE ISSUED. 26. Purpose Must Be Public : The power of munic- ipal corporations to issue bonds is limited to public or corporate purposes. The means for the payment of municipal debts must be obtained almost entirely from some form of tax- ation on the property or inhabitants within the municipality. It follows that the purposes for which municipal bonds may be issued are confined to those for which taxes may be legally levied. That municipal taxation cannot be exercised or bonds issued in aid of persons or enterprises purely private, is a legal proposition now settled beyond successful controversy ; but to distinguish between public and private purposes in the appli- cation of the above principle has not always been an easy task. To do this it is necessary to keep in view the object for which municipal corporations are created. Among the purposes clearly public are : the providing of courthouses, schoolhouses, and other public buildings ; the paving and improving of streets and other highways ; the construction of waterworks or the providing of a water supply for domestic and fire protection ; the laying out of cemeteries and parks ; the building of public bridges, etc. There are other purposes for which bonds may be issued, but which are not so evidently public as those men- tioned. 27. Railroad Aid Bonds: Probably no question in American jurisprudence has been more persistently and thoroughly litigated than the validity of municipal bonds issued in aid of railroads. For nearly a score of years the question in some form was almost continually before our state and federal courts, and its judicial history is one of much interest. 1 1 Coler's Municipal Bonds, a two-volume work published in 1872, was almost wholly devoted to a review of the leading cases on this question. 09) 2O FOR WHAT PURPOSE BONDS MAY BK ISSUED. The U. S. Supreme Court has repeatedly sustained the validity of laws authorizing the issue of such bonds, in the absence of special constitutional restrictions. In the state courts, after more or less change in the decisions of some of them, at present we know of only one which continues to hold against the right of municipalities to grant aid to railroads. 1 The Supreme Court of Michigan has steadily held such aid to be unauthorized, and legislative acts granting power to munic- ipalities to issue bonds in aid of railroads to be unconstitu- tional. 2 Othenvise the validity of, this class of bonds, in the absence of constitutional restrictions, and when expressly authorized, may be considered as fully settled in this country. 3 But it is also well settled that the issue of such bonds must be expressly authorized. 28. Aiding Railroads: The correctness of the principle that taxation could be made, and bonds issued in aid of private railroad corporations has been ably and vigorously contested by several leading elementary writers and jurists, but the legality at least of the principle is now too well established for further controversy. That the doctrine has led to extravagant municipal bonding, which in many cases has been disastrous, and in more than one instance has resulted in municipal bank- ruptcy, cannot be denied. Our federal reports, especially from 1860 to 1880, are filled with cases where municipalities have 1 See a list of cases sustaining such aid in Dillon's Mun. Corps., 3d Ed., Sec. 453, Note. 2 Thomas v. Pt. Huron, 27 Mich., 320 (1873), where the former cases are cited to the same effect. In Pine Grove Tp. v. Talcott, 19 Wall., 666 (1873), the U. S. Supreme Court refused to follow the Michigan decisions, which held such aid un- constitutional, at least as to bonds issued before the state decisions were rendered. This case was argued for plaintiff in error by J. A. Garfield. In Iowa in 1853 (Dubuque Co. v. D. & P. R. R., 4 Green i,) the majority of the court affirmed the validity of the railroad aid acts. Later, in 1859 (Stokesy. Scott Co., 10 Iowa, 166), and in a half dozen subsequent cases, the earlier cases were overruled and such aid decided to be unconstitutional. In 1870 (Stewart v. Polk Co., 30 Iowa, 9), and again in 1877 (Renshaw v. D. & N. W. R. R., 47 Iowa, 511) the validity of such acts was again recognized. 3 Besides the federal courts, the courts of at least thirty-one states have recognized the validity of such bonds. FOR WHAT PURPOSE BOXDS MAY BE ISSUED. 21 attempted to avoid the payment of this class of bonds. It is not surprising that municipalities have resisted the payment of bonds, issued perhaps under misrepresentations, in anticipation of benefits, usually largely overestimated, or in aid of roads never built. The effects, though disastrous to many western munic- ipalities, have been to create a growing conservatism on the subject of contracting municipal indebtedness, and increasing the statutory and constitutional restrictions in the issue of such bonds, and in many states absolute constitutional prohibitions against the granting of aid in any form to railroad or other simi- lar corporations. We think it is evident that the evils complained of have arisen, not so much from the principle, as from its abuse, and the remedy lies with the legislature, and in increased consti- tutional limitations. As the special need for such aid grows less or ceases to exist, the necessary limitations will be made, as has been done in most of the older states. 29. Private Purposes Bonds to Aid Manufacturing: It has been decided in a number of cases that it is not within the power of legislatures to authorize, or of municipalities to issue, bonds or levy taxes to aid private manufacturing enter- prises. In Maine, bonds issued by the town of Jay, under legislative authority, to encourage manufacturing by securing the location of a new saw mill and box factory therein, were declared void on the ground that the purpose for which they were issued was private. 1 The Kansas Act of 1872 for the in- corporation of cities of the second class in that state, provided, among other things, that the municipality should ' ' have power to encourage the establishment of manufactories and such other enterprises as may tend to develop and improve such city." The cities of Topeka and lola issued bonds for the purpose of aiding in the establishment of shops for the manufacture of bridges in such cities. The bonds were held void for the same reason. 2 The U. S. Supreme Court held invalid bonds issued to 1 Allen v. Inhabitants of Jay, 60 Me., 124. 2 Nat'l Bank of Cleveland v. City of lola, gth Kan., 689. Savings and Loan Assoc'n v. Topeka, aoth Wall., 655 (1875). Coin 1 Nat'l Bank of Cleveland v. lola, reported in Bk. 22. I*, C. P. Co., U. S. Repts., 463 (1875). 22 FOR WHAT PURPOSE BONDS MAY BE ISSUED. aid in the erection of foundry and machine shops in the city ol Parkersburg, West Virginia. 1 In Illinois the city of Kankakee issued bonds, as a donation to the Douglas Linen Company, to enable it to engage in the manufacture of linen thread and other fabrics. The bonds were held void by the Illinois Supreme Court. 2 The same court declared as invalid a tax levied to pay ' ' rolling mill bonds, ' ' issued to aid a private manufacturing company. 3 30. La Grange Case: The question was again before the U. S. Supreme Court in a recent case (1885) from Missouri. 4 By its charter the city of L,a Grange was authorized to donate or subscribe to the capital stock of any manufacturing company, or for the securing and maintenance of any manufacturing com- pany, on certain conditions. For the purpose of securing the location and establishment of a rolling mill, the city donated certain land and $200,000 in city bonds to the L,a Grange Iron and Steel Companj\ In an opinion declaring such bonds invalid, the court say, "The general grant of legislative power in the constitution of a state does not enable the legislature, in the exercise either of the right of eminent domain or of the right of taxation, to take private property, without the owner's consent, for any but a public object. Nor can the legislature authorize counties, cities or towns to contract, for private objects, debts which must be paid by taxes. It cannot, there- fore, authorize them to issue bonds to assist merchants or man- ufacturers, whether natural persons or corporations, in their private business. These limits of the legislative power are now too firmly established by judicial decisions to require extended argument upon the subject." 31. Ottawa Cases Municipal Recital: The city of 1 City of Parkersburg v. Brown, U. S. 487 (1883). 2 Bissell v. City of Kankakee, 64 Ills., 249(1872). 3 English v. People, 96 111., 566 (1880). Also see Weismer v. Village of Douglas, 64 N. Y., 91. Curtis v. Whipple, 24 Wis., 350 (aid to private educational institute void). Weeks v. Milw., 10 Wis., 242 (exemption of hotel from taxation void). * W. O. Cole v. City of La Grange, 113, U. S. i. FOR WHAT PURPOSE BONDS MAY BE ISSUED. 23 Ottawa was authorized to provide for the payment of its debts, and upon a vote of the people, to borrow money and issue bonds. In 1869, under an ordinance passed and approved by a popular vote, bonds of the city were issued, the proceeds to be expended in developing the natural advantages of the city for manufacturing purposes. By a subsequent ordinance the mayor was directed to issue the bonds and deliver them to one Cushman, "to be used by him in developing the natural resources and surroundings of the city," and authorizing him to expend the same in improving the water power of the Illinois and Fox rivers within, or in the vicinity of such city. The bonds were issued and delivered to Cushman, under his written agreement to cause the necessary works to be completed, as specified, within a reasonable time, and if not to return the bonds or a part thereof. The bonds recited that they were issued under the charter power of the city to borrow money and issue bonds, and under ordinances providing "for a loan for municipal purposes." Some of the bonds came before the U. S. Supreme Court in the case of Hackett v. Ottawa, 1 in 1879, when the city was held liable on the ground that the recital therein, that they were issued under ordinances providing for a loan for munic- ipal purposes, constituted, under the circumstances, an estop- pel which would prevent the city from showing otherwise, as against a bona fide holder, as the plaintiff in that case was. In 1882, some of the same bonds were again before that court in the case of the City of Ottawa v. First National Bank of Portsmouth, 2 and the validity of the bonds in the hands of the plaintiff bank was sustained on the same grounds. 32. But later, in the case of the City of Ottawa v. Carey, 3 the bonds were declared to be invalid, the holder in that case having taken them with knowledge of the circumstances under which they were issued. This last case was submitted and decided in 1882, the opinion declaring the bonds invalid, being given by Justice Harlan, but this judgment was rescinded, and the case re-submitted and decided in 1883, the opinion of the court, by Chief Justice Waite, again declaring the bonds invalid. 1 99 U. S., 86. 2 105 U. S., 342. 3 108 U. S.,uo. 24 FOR WHAT PURPOSE BONDS MAY BE ISSUED. The former opinion appears to have been based on the failure of Cushman to perform his agreements, in consideration of which the bonds were issued. In the latter opinion it is strongly inti- mated that the purpose for which the bonds were issued was not a corporate purpose, but the court held that the facts did not require a decision on that question. It was clear that bonds could not be issued for the purpose indicated with- out express authority, which in this case was not claimed except as it existed under the general power to borrow money and issue bonds. ' ' It has been over and over again held, as often as the question was presented, that, unless a specific power was granted, all such subscriptions and all such dona- tions, as well as the corporate bonds issued for their payment, w r ere absolutely void, even as against bona fide holders of the bonds. ' ' The special grounds upon which the last opinion was rested, was that as between Cushman and the city the bonds were illegal and void, and the holder in that case had bought with full knowledge of all the facts, and occupied no better postion than Cushman, but the language quoted would intimate an intention to overrule the former Ottawa cases. 33. Bonds for Internal Improvements : Nebraska, and possibly other states, have statutes authorizing the issue of bonds in aid of internal improvements. Considerable litigation has arisen as to what purposes were included within this class of improvements. In Kansas, where another statute declared all custom grist-mills to be public mills, such mills, whether run by steam or water power, were held to be internal improve- ments, and public purposes for which bonds could be issued. 1 This decision, however, appears to have been based upon the right of the legislature to regulate the charges of such mills under the law of that state. Under the Nebraska law a steam grist-mill was held not to be a work of internal improvement, in aid of which bonds could be issued, 2 but that bonds issued to aid a company in improving the water power of the river for the purpose of propelling grist-mills, were issued for a work of 1 Burlington v. Beasley, 94 U. S., 310 (1877). 2 Osborne v. Adams, 106 U. S., 181, and 109 U. S. i, (1883). FOR WHAT PURPOSE BOXDS MAY BE ISSUED. 25 internal improvement, within the meaning of the statute of that state, and were valid. ' Among other works of internal improve- ment for which bonds may be issued, the Nebraska Supreme Court has decided, or suggested, public bridges, railroads, turnpikes, canals and similar enterprises, not objects of private concern purely. 2 A courthouse is not a work of internal improvement under that law. 3 34. Other Private Purposes : The legislature of Kan- sas at a time when there was a failure of crops, authorized the raising of money by the sale of bonds for the purpose of making loans to destitute citizens; to provide them with provis- ions and grain for seed and feed. The Supreme Court of that state decided that the purpose for which the loans were made was not a public purpose. 4 After the great Boston fire in 1872, the legislature authorized the issue of bonds by the city for the purpose of aiding, by loan, the ow r ners of land in rebuilding their destroyed improvements. The Supreme Court of Massa- chusetts declared the act of the legislature to be unconstitu- tional. 5 In all of the foregoing cases, especially those in which bonds were issued for the encouragement and development of manufactories within the cities issuing the bonds, it was strenu- ously argued that the benefits derived by the municipality were such as to make the purpose sufficiently public to support the exercise of the power of taxation. It was not denied that the enterprises aided would have increased the material growth and prosperity of the cities, and have added a larger tax-pay- ing element thereto; but the same may be said of any other business pursuit which employs capital or labor. No line could be drawn in favor of those objects which would not open the public treasury to the importunities of two-thirds of the business men of the city or town. 8 1 Blair v. County of Cumin g, in U. S., 363 (1884). 2 State v. Thomas, 9 Neb., 458 (1880); also see 4 Neb., 156; 7 Neb., 260; 14 Neb., 327; 15 Neb., 568. ' 10 Neb., 281. 4 State v. Osawkee, 14 Kans., 418. 5 Roe v. Boston, in Mass., 454. 6 2oth Wall., 665, opinion of Justice Miller. 26 FOR WHAT PURPOSE BONDS MAY BE ISSUED. 35. Purpose How Determined : A determination of the question, whether or not a purpose is sufficiently public to support taxation, must be influenced more or less by circum- stances. What may be a public purpose in one section of the country, under certain conditions, might not be in another, under different conditions. To illustrate, while the country was new and capital not easily attainable for the erection of saw-mills and grist-mills, which were a public necessity, it w y as essential that the government should offer inducements to parties who would supply such mills. Before steam came into general use, water was almost the sole reliance for motive power, and public assistance was frequently necessary to obtain and improve such water power by exercising the right of eminent domain and otherwise. The reason for such public aid or encouragement having largely ceased with the introduction of steam power and the progress of improvements, there would appear to be no longer the necessity for that class of laws, and purposes which at one time may have been rightfully deemed public would now seem to be merely private, and therefore not subject to public aid by taxation or otherwise. Public policy must affect largely the determination as to what is a public purpose for which this power of taxation may be exercised. The determination may be said to be furnished not so much by the law, as by circum- stances, or public policy and political economy. 1 36. Where does such determination rest ? In some of the earlier cases it was intimated that the legislature was the exclu- sive judge as to the purposes, for which the power of taxation should be exercised, and that there was no means of avoiding a legislative act for a purpose deemed by the legislature to be public, by an appeal to the courts. 2 This idea is clearly erroneous. It may be stated as a fundamental principle, usually embodied in a constitutional form, that private prop- erty cannot be taken by taxation or otherwise for a strictly private purpose. This provision or principle exists as a limita- 1 Jones' Railroad Securities, Sec. 228, Perry v. Keene, 56 N. H. 514. 2 Coler's Municipal Bonds, Vol. I, p. 50, and cases cited. FOR WHAT TURPOSE BONDS MAY BE ISSUED. 27 tion on the power of the legislature, and such limitation would not be effective, if the legislature was to be the judge of its own infraction of such constitutional or fundamental law. The question is undoubtedly one for judicial decision, but as in all similar limitations, an act of the legislature in any such case will not be declared unconstitutional or void, except there appears to be a clear violation of the principle. The rule laid down by Judge Cooley in the exercise of the right of eminent domain is applicable to the question under consideration. ' ' The reason "of the case, and the settled practice of free governments, must be our guides in determining what is, or is not, to be regarded as public use; and that only can be con- sidered such where the government is supplying its own needs, or is furnishing facilities for its citizens in regard to those mat- ters of public necessity, convenience, or welfare, which, on account of their peculiar character, and the difficulty perhaps impossibility of making provision for them otherwise, it is alike proper, useful, and needful for the government to provide." 1 1 Cooley Constitutional Limitations, 530 et seq., 175; People v. Mor- ris, 13 Wend. 328. CHAPTER IV. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 37. Limitations on Municipal Indebtedness : The constitutions of many of the states contain limitations on the amount of indebtedness which may be contracted by municipal- ities, the amount of, or purpose for which municipal bonds may be issued, or other provisions relating to or affecting the issue of such bonds. As such provisions restrict and control both the municipality and the legislature, they are of great importance in a consideration of the law of municipal bonds. To prevent the dangers of extravagant municipal bonding, a number of the states have recently incorporated in their constitutions limitations on the amount of indebtedness which may be incurred by the municipal corporations therein. In Indiana no political or municipal corporation can become indebted, in any manner or for any purpose, to an amount exceeding, in the aggregate, two per cent of the taxable prop- erty therein, as shown by the last general assessment. In Illinois, Iowa, Wisconsin and West Virginia, such indebted- ness is limited to five per cent of the taxable property of any municipality, ascertained in the same manner. In Missouri the limitation is five per cent, except in case of indebtedness to provide a courthouse or jail, but the limitation in this state is computed on the assessment next before the last. Colorado, Minnesota, Nebraska, and some of the other states, have limita- tions, either general or special, on the same subject. By act of Congress of 1886, municipal indebtedness within the territories is limited to four per cent of the taxable property of any municipality, as shown by the last previous general assessment, and all obligations in excess of such limitation is declared to be void. 38. Constitutional Provisions Prospective : All con- stitutional limitations on municipal indebtedness are construed (28) CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 29 so as to affect only the future indebtedness. They cannot affect the existing indebtedness, although it may be in excess of the prescribed constitutional limitation. It is a fundamental prin- ciple that an existing contract cannot be impaired by a consti- tutional provision. Where powers have been delegated to municipalities, and the constitutional limitation prohibits the legislature from granting such powers, the prohibition does not affect those already granted. The constitutional limitation applies only to the future action of the legislature. When, however, the prohibition is against the exercise of the power by the municipalities, the constitution operates at once. If the power has not been exercised, the subscription or other author- ized act completed, so as to constitute a contract, the constitution operates so as to prohibit all further action under the former power. 1 39. It is well settled that any bonds issued or indebted- ness contracted in excess of the constitutional limitation is absolutely void. Municipal corporations have no inherent power to issue such obligations. Such power must proceed from positive enactment in some form. Every person is bound to take notice of the limitations on such power or its exercise. All persons dealing with such corporations are bound to know the existence of any constitutional limitation affecting its powers to contract. A question frequently arising under the above prohibitions is as to what constitutes an indebtedness within the meaning of such limitations. As usually construed under most of the state constitutions, these limitations include every form of municipal indebtedness. However, warrants or orders drawn against funds in the hands of the municipality, or payable exclusively from current assessments already levied, have gen- erally been held as not to constitute an indebtedness within the meaning of these limitations. 2 1 Burroughs, Public Securities, 489; County of Scotland v. Thomas, 94 U. S., 682; Henry County v. Nicolay, 95 U. S., 624; Rails County v. Douglass, 103 U. S., 730; Greene County v. Conness, 109 U. S., 104; State v. Town of Clark, 23 Minn., 422. 2 Dillon's Municipal Corporations, 3d Ed., \ 136; Dively v. Cedar Falls, 37 Iowa, 227; Grant v. Davenport, 36 Iowa, 396; Law v. People, 87 111., 400; Fuller v. Heath, 89 111., 296. 3O CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 40. Municipal Contracts Payable in Installments Indiana Case: In Indiana it has been held that a contract with a water work's company to pay six thousand dollars a year for twenty years for water furnished the city, did not, in the aggregate, constitute an indebtedness within the mean- ing of the constitutional limitation in that state. In that case' the court held that the limitation did not apply to such indebtedness incurred for water, to be paid for as the water was furnished, provided the contract price could be paid from the current revenues, as the water is furnished, without increasing the corporate indebtedness beyond the constitutional limit, or encroaching upon funds set apart for other purposes. ' ' The items of expenses essential to the maintenance of corporate existence, such as light, water, labor and the like, constitute corporate expenses, payable out of current revenues, and where the current revenues are sufficient to discharge all such current expenses without increasing the indebtedness of the city, there is no corporate debt incurred for such expenses. ' ' There would be no corporate indebtedness until the water was furnished or other sendee performed under the contract. It would appear to be otherwise, if bonds or other evidences of indebtedness were issued. 41. Iowa: The Iowa Supreme Court, in considering a similar contract to supply the city of Davenport with water, held that where a contract made by a municipal corporation pertains to its ordinary expenses, and is, together with other like expenses, within the limit of its current revenues and such special taxes as it may legally levy, and in good faith intends to levy therefor, such contract does not constitute ' ' the incur- ring of indebtedness ' ' within the meaning of the constitutional provision limiting the power of municipal corporations to con- tract debts. 2 42. Illinois: In Illinois the city of East St. lyouis made a contract for gas, agreeing to pay a certain price per lamp for 1 City of Valparaiso v. Gardner, 97 Ind., I 2 French v. City of Burlington, 42 Iowa, 614 ; Grant v. Davenport, 36 Iowa, 396 ; Burlington Water Company v. Woodward, 49 Iowa, 58. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 31 a period of thirty years. The amount payable in one year would not increase the city's indebtedness beyond the five per cent limitation. It was argued that the contract price in the aggregate constituted an indebtedness within the meaning of the constitution. The court held to the contrary. 1 There was no indebtedness in advance of anything being furnished, but indebtedness arose, as gas should be furnished. When the company has furnished the gas for a certain month, the price being payable monthly, then there is a liability, an indebted- ness arises, and not before. Hence the amount that might become due and payable under the contract in future years did not constitute a debt against the city at the time of making the contract. The Supreme Court of the same state subse- quently in 1883, in a case 2 where the city of Quincy had entered into a contract for the construction and operation of a system of waterworks, and agreed to pay for the use of water by the city $2,600 per month, for a period of thirty years, it appearing that the city at the time of making the contract, was already indebted in excess of the constitutional limitation, held the contract void. The plaintiff claimed that the money sought to be recovered pertained to the ordinary expenses of the city, and that the contract price, under the terms of pay- ment, together with other ordinary expenses of such city, were within the limits of the current revenues of the city. The court held that this claim did not afford a sufficient answer; that under the language of the Illinois constitution it would be a gross absurdity to say that the limitation did not include indebtedness for supplies to meet a city's ordinary wants and necessities. The court further said that in the East St. L,ouis case above, a recovery was permitted only because it did not affirmatively appear that, at the time the gas was furnished, the city was indebted beyond the constitutional limit. In another case that court has said, " The purpose of the debt is expressly excluded from consideration: It can make no difference whether 1 City of East St. Louis v. East St. Louis Gas Company, 98 Ills. 430 (1881). 2 Prince v. City of Quincy, 105 Ills. 138 (1883). 32 CONSTITUTIONAL LIMITATIONS AND PROVISIONS. the debt be for necessary current expenses or for something else." 1 43. Special Assessment Bonds : There is a class of bonds, of which a large amount have been recently issued, and which apparently are becoming very popular with municipali- ties. They may be denominated special assessment bonds. They are usually bonds issued to pay for local improvements, in anticipation of special assessments levied against the lands or property benefited by such improvement. City improvement bonds authorized in anticipation of sewer, paving and other assessments in Nebraska and Iowa, and the road bonds in Indiana and Ohio, are examples of this class of municipal bonds. Several important questions arise in connection with their issue. Are they a general liability of the city or county by which, or in the name of \vhich, they are issued, or must they be collected exclusively from the special assessments in anticipa- tion of which they are issued ? This question affects both the value of the bonds to the purchaser, and in those states where municipal indebtedness is limited, the amount which the municipality can issue. We understand the general rule of law to be, that where such bonds are issued in the name of the city or county, if there is nothing to the contraiy clearly expressed in the act authorizing the issue, or in the bonds themselves, they constitute a general municipal liability, although payable from special assessments against the property benefited. The municipality is primarily liable for the pay- ment of the bonds, but has the right to insist on being reim- bursed from such special assessments. We think this rule correct in principle, and borne out by nearly all of the decisions. 44. Ohio : An Ohio case is in point. County Commis- sioners in that state were authorized to construct roads, on the petition of a majority of the resident land owners along and adjacent to such road. To pay the expense of such improve- ment, all lands within two miles were assessed, and county bonds were authorized to be issued in anticipation of the collec- tion of such assessment. The commissioners of a certain 1 City of Springfield v. Edwards, 84 Ills. 626 (1877). CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 33 county received a petition asking for the establishment of a road, under the provisions of this act, which was done and bonds issued. After the bonds had been sold a perpetual injunction was granted by the Supreme Court against the levy of the assessment, on the ground of irregularity in the prelim- inary proceedings relating to such levy. In a suit on the bonds, the county was held liable for their payment to a bona fide holder, and a writ of mandamus was issued for the levy of a general tax on the property of the county to make such pay- ment. It was held that as between the county and the bene- fited district the burden of the improvement should be borne by the district improved, but between the county and the holder of the bonds, the county was liable. 1 45. Kansas : In the case of the special sidewalk bonds issued by the city of Wyandotte, hereinbefore referred to, while the act under which the improvement was made provided that payment therefor should be made by special assessments on the adjacent property, the court held that the indebtedness constituted a general liability against the city. It was therein held that the statutory provisions as to special assessments against the abutting property related to the ultimate liability therefor, for the purpose of reimbursing the city for the amount paid for such improvement, a question, as the court said, between the city and the lot owners benefited, and with which the contractors or his assignees had nothing to do, but that the city was liable primarily and was bound to pay the debt with- out regard to the collection of such special assessment. 2 46. Ft. Scott Case: The city of Ft. Scott, Kansas, a city of the second class in that state, under the statutory authority conferred upon cities of that class, for the purpose of grading, paving, guttering and macadamizing one of its streets, issued bonds, and provided by ordinance that they should be "paid principal and interest, solely from special assessments to be made upon and collected solely from the lots and pieces of 1 State v. Commissioners, 37 Ohio, 526 (1882). 2 Wyandotte v. Zeitz, 21 Kas., 649 (1879); Atchison v. Byrnes, 22 Kas., 68 (1879). 34 CONSTITUTIONAL LIMITATIONS AND PROVISIONS. grounds fronting upon, or extending along the street, the dis- tance improved." The act under which the bonds were issued, provided that "for the payment thereof, assessments should be made upon the taxable property chargeable therewith," that is, ' ' upon all lots and pieces of ground to the center of the block, extending along the street or avenue the distance improved. ' ' The bonds had printed upon their margin a state- ment that they had been issued in accordance with such act, and in pursuance of such ordinance, describing the same. The special assessments, collected under the provisions of the ordi- nance, proved insufficient to pay the bonds and interest, as they became due, and the city repudiated any obligation to pay the bonds, except from such assessments. The U. S. Supreme Court, Justice Harlan giving the opinion, decided that the city was liable, and that the council had the power, and it was their duty to provide for the payment of the judgment obtained on the unpaid bonds by taxation upon all the taxable property within the city, and that the holder of the bonds was entitled to a mandamus to compel the levy of such a tax, in case of the city's default so to do ; that as between the city and the owners of the property liable, the payment of the bonds should be made by special assessment against the property, but as between the city and the holder of the bonds, the city was primarily liable. ' ' Experience informs us that the city would have met with serious, if not insuperable, obstacles in its negotiations, had the bonds upon their face, in unmistakable terms, declared that the purchaser had no security beyond the assessments upon the particular property improved. If the corporate authorities intended such to be the contract with the holders of the bonds, good faith required an explicit avowal of such purpose in the bond itself, or in some other form, by language brought home to the purchaser, which could neither mislead nor be misunderstood." 1 47. Indiana Cases : In Indiana the present gravel road act of 1877 authorizes county commissioners to construct roads and to issue bonds of the county to raise the required money 1 U. S. v. Ft. Scott, 99 U. S., 152 (1879). CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 35 for the purpose, and to provide for the payment of such bonds by making a special assessment against the land adjacent to the road improved. The question first arose in the federal court in 1884, as to whether the bonds issued under this act, constituted an indebtedness of the count}', under the constitu- tional limitation prohibiting any municipal corporation from becoming indebted "in any manner or for any purpose to an amount in the aggregate exceeding two per cent of the taxable property within such corporation. ' ' Judge Woods of the U. S. District Court for that state held, 1 that such bonds constituted a general liability, and were within the constitutional limitation, citing and approving the Ohio and other cases, to the same effect. The Indiana gravel road act is referred to, as having been copied substantially from the Ohio law on the same subject, and therefore to be construed under the decisions of the latter state. The position of the federal court in this case would seem to be supported by both principle and authority, but the state courts have seen fit to hold otherwise. 48. Subsequently in 1887, some of these gravel road bonds were before the state supreme court, in a case that arose from the same county, 2 and that court, without referring to the federal case, decided substantially as follows : We are of opin- ion that the bonds do not constitute an indebtedness of such county, and do not evidence an indebtedness incurred by such county, within the inhibition of the constitution. The bonds are payable out of a particular fund, raised by the collection of the special assessment made on the land adjacent to such road, ' ' divided in such manner as to meet the payment of principal and interest on such bonds, ' ' and when collected to "be applied to no other purpose than the payment of said bonds and interest. No other provision is made for the payment of either bonds or the interest thereon, and such fund is pledged by the statute for the payment of such bonds and interest. * * * * It is manifest, we think, from the provisions of the act, that the legis- lature intended that the entire cost and expenses of constructing 1 Kimball v. Grant Co., 21 Fed. Rep. 145. 2 Strieb v. Cox, in Ind. 299; Burton v. State, in Ind. 600. 36 CONSTITUTIONAL LIMITATIONS AND PROVISIONS. any free gravel, macadamized or paved road, and all bonds of the county, issued for the purpose of raising the money necessary to meet the expense of such improvement, should be borne and paid out of the particular fund raised by and from the collec- tion of the assessments, made on the lands adjacent to such road." 49. While conceding the correctness of the court's argu- ment that the intention of the legislature was that the expense of tlje improvement was to be borne by the benefited property, in the absence of the above authoritative decision, our opinion would be that the bonds in question constitute an indebtedness of the county within the meaning of the constitutional pro- hibition. The act authorizes the issue of "bonds of the county," and, while the payment of the bonds was to be made from the fund provided from the special assessments, it would seem that it was the intention to lend the credit of the county to the bonds negotiated, the county having the right to collect such assessments in order to meet the payment of the bonds. Such we understand to be the law as to this class of bonds, as decided in all of the other states and courts where the ques- tion has been adjudicated. These last Indiana decisions appear to have been influenced by the necessity of the circum- stances, arising from the extremely low rate of indebtedness allowed under the state constitution, rather than by precedent. Although we are aware that, in the opinion of some able law- yers, the law as laid down by these Indiana cases is correct in principle, and must be adopted by other states, whose constitu- tions contain similar limitations on municipal indebtedness. The large number of such bonds now being issued in states having such constitutional limitations will probably result in a more settled adjudication of this important question at an early date. 50. Limitations on State Indebtedness Statutory and Charter Limitations : Many states have in their consti- tutions, limitations on the amount of indebtedness which may be incurred by the legislature or other authorities by or in behalf of such states. Such constitutional limitations apply CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 37 only to the state, and do not limit or affect her municipal or political subdivisions. 1 Any charter or statutory limitation on the amount of indebtedness which a municipal corporation may contract, is always subject to repeal or modification by the legis- lature. This repeal may be effected by a subsequent general law, where it appears that such was the intention of the legis- lature. 2 51. Bonds Issued to Pay Judgments: It has been held that city bonds issued to pay a valid judgment against such city, even where the amount of the bonds was in excess of the constitutional limit, were valid in the hands of an innocent holder, it being assumed in such cases that all legal defenses have been interposed by the municipality, at the time the judg- ment w r as obtained, and the issue of such bonds does not increase the indebtedness of the city. , 52. Over Issue of Bonds : All bonds issued or indebt- edness incurred in excess of the constitutional limitation will, as we have seen, be absolutely void, but it frequently happens that a part of the issue is within the limitation, and an inter- esting and important question arises as to which bonds are valid in such a case. It appears that the bonds first delivered, up to the amount of the limitation, will be held valid. 3 But in case of an issue of bonds dated and delivered at the same time, where it is impossible to ascertain which were issued and delivered first, the usual practice has been to pay the bonds pro rata in proportion, as the amount of bonds issued, bear to the amount within the prescribed limitation. There is no presump- tion that the bond bearing the lowest number was the first issued or sold, but that where there is no proof as to which was first delivered the bonds will be paid pro rata. This rule has been applied in a number of cases. 4 1 Dillon's Municipal Corporations, 3d Ed., $ 138; Sioux City v. Weare, 59th Iowa, 95. 2 Dalton v. City of Aurora, 114 Ills., 138 (1885); Amey v. Allegheny City, 24 Howard, 373. 3 Daviess Co. v. Dickinson, 117 U. S., 657 (1886). - McPherson v. Foster, 43 Iowa, 48. (1876); Burroughs on Public Securities, p. 24, and cases cited. 38 CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 53. Special Legislation : The constitutions of Ohio, Kansas and Nebraska, contain a provision prohibiting the legis- lature from passing any ' ' special act conferring corporate powers." A legal construction of this provision, as applied to municipal corporations, has been the subject of judicial decis- ion in a large number of cases. It is settled that the provision applies to municipal as well as private corporations. The general current of the decisions is to the effect that it amounts to a prohibition against special acts authorizing municipal corporations to issue bonds, but that it does not prevent such acts as to quasi-corporations, as counties and townships, although they may have been declared by statute to be bodies corporate. However, the decisions have not been entirely uniform, some of them holding school districts, which had been vested with corporate powers by the statute, to come within the prohibition mentioned. A brief review of a few of the leading cases in those three states, will best show the construction placed on the above clause, as held by the courts of those states. 54. Nebraska School Districts and Precincts : An act of the Nebraska legislature authorizing a certain school district to issue bonds for the building of a school house was declared by the supreme court of that state to be a special act confer- ring corporate powers, and therefore void, as repugnant to the above provision in the Nebraska constitution. 1 The U. S. Supreme Court decided to the same effect, the opinion by Justice Miller holding that, as the Nebraska statutes declared every duly organized school district to be a body corporate possessing all the usual powers of a corporation for public purposes, such districts were corporations in the fullest sense of the word, and came within the constitutional prohibition; that a power to issue bonds was to be exercised by such district; as a corporation, and was, therefore, a corporate power, and void, as unconstitutional. 2 The supreme court of the same state has also decided that an act authorizing a precinct to issue bonds to aid in the construc- tion of a courthouse, was unconstitutional for the same reason. 3 1 Clegg v. School Dist. No. 56, Richardson Co. , 8 Neb.; 178 (1879). 2 School Dist. v. St. Joseph F. & M. Ins. Co., 103 U. S., 707 (i88i> 3 Dundy v Richardson Co., 8 Neb., 508 (1879). CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 39 55. A'ebraska Counties : It has been held, however, that a county is not a corporation under the Nebraska consti- tution. 1 An act of the same state authorizing a county to issue bonds for its indebtedness was held by the U. S. Supreme Court as not violating these provisions of the Nebraska con- stitution. The court gave several reasons for sustaining the validity of the bonds, distinguishing the cases from the Nebraska school district cases already referred to, by saying that in this case a debt already exists, and the statute simply authorized a change in the form of the obligation by which the debt was evidenced, that as the statute operated upon a trans- action already consummated, only seeking to change its char- acter and form, it did not confer corporate powers. The court further said, " It is a sufficient answer to say that the word ' corporate, ' as used in this section of the constitution, does not apply to a county, ' ' citing the Nebraska cases to that effect. 2 56. Kansas Cases School Districts Cities ' An act of the Kansas legislature authorizing a specified school district to issue bonds to build a schoolhouse, was held not to conflict with the provision in question of the Kansas state constitution. 3 The court said that school districts were only quasi-corpora- tions, and not corporations, under the meaning of such provis- ions, but that cities, towns and villages were municipal corporations proper, and therefore included in such prohibition. An act in this state authorizing a single city to issue bonds has been held to be a special act conferring corporate powers and repugnant to the above prohibition. 4 As defining the meaning of such provision, the Kansas supreme court has said that any act conferring powers limited in operation to a single 1 Jefferson Co. v. People, 5 Neb., 127; Wood v. Colfax Co., 10 Neb., 552. 2 Sherman Co. v. Simonds, 109 U. S., 765 (1884); Reed y. City of Plattsmouth, 107 U. S., 568 (1883). We understand the court in this case to hold that a special act ratifying and confirming city bonds issued with- out authority, but to pay a just and equitable indebtedness previously existing against the city, is not such a conferring of corporate powers within the meaning of this constitution. 3 Beach v. Leahy, n Kas., 23 (1883). 4 Com'l Bk. of Cleveland v. City of lola, 2 Dill., C. C. R., 353 (1873); Gilmore v. Norton, 10 Kas. 491; State v. Maloy, 20 Kas., 619 (I8 7 8J. 4O CONSTITUTIONAL LIMITATIONS AND PROVISIONS. city is manifestly a special act conferring corporate powers, and void, as forbidden by the constitution. 57. Ohio Cases : In a leading Ohio case, the opinion of a majority of the court held that the general assembly cannot by special act confer additional powers upon corporations already existing; that in the purview of those provisions of the constitution, there is no distinction between private and munic- ipal corporations, and that the conferring on a municipal cor- poration of the power of assessment and taxation was within the constitutional prohibition. 1 In a later case the supreme court of that state declared that the question whether powers conferred by the legislature upon a common school district were corporate or not within the meaning of the constitution, could not be determined definitely by the mere fact that such a district, or its board of education, had been declared by statute to be a corporation, but rather by the object of its creation, and the nature of its functions. After a full consideration of that case the court said, " It is quite obvious to us that county and township organizations, although quasi-corporations, are not within the meaning of those provisions of the constitution, and upon a full consideration, we are unanimous in the opinion that school districts, and similar organizations, although declared by statute to be bodies politic and corporate, are not within the reason or meaning of this inhibition of the consti- tution," citing and approving the Kansas cases. 2 58. Ohio Municipal Classification : In order to avoid the application of the above and similar constitutional provisions relating to special legislation, a number of the states have adopted a classification of their municipal corporations accord- ing to population. That of Ohio is more extensive than any other state. We understand the rule to be in such cases that any act, the application of which is limited to one municipal corporation, and cannot by any possibility include any other, is a special act and prohibited by the provisions in question, but 1 State v. Cincinnati, 2oth Ohio, 18 (1870); State v. Mitchell, 31 Ohio, 592 (1877). 2 State v. Powers, 38 Ohio, 54 (1882). CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 41 that an act, which although only applicable to one corporation at the time of its passage, but which may subsequently include others, is not repugnant to such constitutional provision. To illustrate, an act authorizing the issue of bonds by all cities containing over two hundred thousand population, as shown by the federal census of 1880, could not possibly include any other city except Cincinnati, but such an act which included in its terms all cities, which contained over two hundred thou- sand by such or any subsequent census, might subsequently include other cities, and would be sustained under the rule as generally laid down by the courts in such cases. 59. Ohio Cases: An act authorizing any city of the second class, having a population of over thirty-one thousand at the last federal census to levy a special assessment against abutting property to pay for city improvements and issue bonds of the city in anticipation of such assessment, was held by the Ohio supreme court to be a special act within the meaning of the constitution, and therefore unconstitutional, as conferring corporate powers. But in that case the court held the objectors estopped, on the ground that they had participated in the levy of the assessment by voting therefor, receiving the benefit of the improvement, and allowing the indebtedness to be created, and bonds to be issued, without objection, the court holding that the doctrine of estoppel was applicable even where the indebtedness was incurred under an unconstitutional law. 1 In another case before the same court an act creating the office of police judge, in all cities having a population of 16,512, at the last federal census, was held to be applicable only to the city of Akron, and therefore unconstitutional, as a special act con- ferring corporate powers. 2 60. Municipal Subscriptions and Donations : The present constitution of the following states contain provisions prohibiting the municipalities therein from becoming stock- holders in or granting public aid to any association, corpora- tion or company : Alabama, Arkansas, Colorado, Florida, 1 State v. Mitchell, 31 Ohio, 592 (1877). 2 State v. Anderson, 44 Ohio, 247 (1886). 42 CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Georgia, Illinois, Indiana (as to counties), Missouri, New Hampshire, New York, Ohio, 1 Oregon, Pennsylvania and Texas. In some of the other states the power to grant aid to such corporations is restricted by constitutional provisions. In some cases, by limiting the amount of such aid, and in other cases, by requiring the consent of a majority or more of the electors or tax-payers. - 61. Other Constitutional Provisions : In the con- stitutions of a number of the states will be found a provision that ' ' in all cases where a general law can be made applicable no special law shall be enacted." The decided weight of authority is that it is for the legislature to decide as to when a case has arisen the purposes of which cannot be effected by a general law, and when a special law is required, and the courts will not interfere with the exercise of that discretion. 3 In the states of New York, Kansas, Nebraska, Nevada, Ohio, Wis- consin and California, by constitution, it is made the duty of the legislature to provide for the organization of cities and incorporated villages, and to restrict their power of taxation, assessment, borrowing money, contracting debts and loaning their credit, so as to prevent the abuse thereof. This provision has been held not to restrict the discretionary powers of the legislature, on the subjects mentioned. While it is the duty of the legislature to enact laws restricting the powers of such municipal corporations, it is left solely to the discretion of the legislature, as to what restrictions shall be made, and how or under what circumstances they shall be imposed. For a gen- eral consideration of other constitutional provisions relating to the passage of acts by the legislature, and the validity of such acts, reference is made to the authorities cited in the note.* 1 Under the Ohio provisions (Art. 8, Sees. 4 and 6) a statute author- izing a city to build an entire railroad as a public work, was sustained. 2 Minn. Art. 9-15, (1879); Tenn. Art. 2, Sees. 29-31; Neb. Art 2, " Mun. Corps." prohibits subscriptions to the capital stock, but allows donations under restrictions, when authorized by vote. For a general consideration of the above provisions as applicable to the granting of railroad aid by municipalities, see Jones on Railroad Securities, Sees. 231 to 266. 3 Dillon, Municipal Corporations, 3d Ed. 48. 4 Cooley on Constitutional Limitations, 130 to 188; Burroughs on Public Securities, 406 to 495; Dillon, Mun. .Corps. $45 to 51. CHAPTER V. THE ISSUE OF MUNICIPAL BONDS. 62. Performance of Conditions Preceding Issue: As the power to issue municipal bonds is derived from the charter of the corporation, or the constitution or statutes of the state, the provisions and conditions of such derived authority should always be carefully followed and complied with by the officers having charge of the issue. A frequent condition precedent is that the question of issuing the bonds must be submitted to, and authorized by, a vote of the people or qualified electors. In such cases the requisite notice must be given for the time, the election called and held, and the result declared and certified, in the manner provided by law. If the necessary majority vote is not obtained at such election, no authority exists for the issue of the bonds. When the proposition has thus been voted upon, no material deviation from the terms submitted can be made by the officers issuing the bonds. 63. Regularity Record : If action is required to be taken by a city council, county board, or other similar body, or board of officers, all proceedings should be had at legally convened meetings with the requisite quorum present and in the manner required by law. So with all other preliminary proceedings or precedent conditions or provisions relating to the issue of such bonds, special care should be taken in their strict performance, as prescribed in the enabling acts. Not only should all the prescribed requirements and conditions be fol- lowed and performed, but a full and complete record should be made of all proceedings relating to the issue of the bonds, showing affirmatively the performance of all such conditions and acts requisite to the validity of the issue of the bonds. How- ever, as we shall see under the subject of municipal estoppel, (43) 44 THE ISSUE OF MUNICIPAL BONDS. mere irregularities in the issue of such bonds will not usually affect their validity in the hands of a bona fide holder without notice. 64. Rule as to Determining Majority : It is fre- quently provided that the issue of bonds or other acts relating thereto, depends upon, or must first be authorized by a vote of a majority or more of the electors, legal voters, or tax-payers of the municipality. The question then arises as to what con- stitutes such majority, and what is the rule for determining the same. The generally accepted doctrine is that such majority is determined by those voting upon the submitted proposition. 1 This rule has been laid down by the U. S. Supreme Court in several cases. The Missouri constitution prohibits subscriptions by towns to the capital stock of railroad companies unless two-thirds of the qualified electors thereof, at a regular or special election, shall assent thereto. In an opinion of that court, delivered by Chief Justice Waite it was held that if two-thirds of such electors, voting at an election held for that purpose, voted in favor of the submitted propo- sition, it was a sufficient compliance with the constitution. ' ' This was the mode provided by law for ascertaining the sense of the qualified voters of the city upon that question. There would appear to be no other way practicable in which the mat- ter could be determined." 2 65. The Mississippi constitution requires the assent of two-thirds of the qualified voters of counties, cities and towns at an election held therein to authorize the issue of bonds for railroad subscriptions. The U. S. Supreme Court held that this meant the assent of two-thirds of the qualified voters pres- ent and voting at such election. In that case it was contended, in behalf of the county, that as there was a registration of the qualified voters required by law to be kept, that such registra- tion was the proper means from which to obtain the number of qualified voters, but the court held to its previous rule, 1 McCrary on Elections, 133, Sec. 183. 2 Cass Co. v. Johnston, 95 U. S., 360 (1887); State v. Mayor of St. Joseph, 37 Mo. 270; State v. Binder, 38 Mo. 450. Also see Note to \ 3 under Missouri Digest post. THE ISSUE OF MUNICIPAL BONDS. 45 declaring that the words "qualified voters," as used, must be taken to mean not those qualified and entitled to vote, but those qualified and actually voting. In that connection the voter is one who votes, not one who, though qualified to vote, does not vote. 1 However it has been held in several cases in the state courts that where several questions were submitted at the same time, a majority vote on the particular question was not sufficient, unless such vote was also a majority of all the votes cast on any other question submitted at the same time. 2 The law or enabling act frequently provides for a decision of the submitted question by a majority or other proportion of those voting thereon. 66. Municipal Officers: The issue of bonds, like all other acts of municipal corporations, must be done through agents or officers. The bonds are usually signed by the prin- cipal officer of the municipality, as the mayor in the case of cities, and countersigned by the officer having charge of the municipal records, and sometimes also by the treasurer. We are required to look to the charter of the corporation, or the enabling act under which the bonds are issued, to ascertain the proper officers to make the issue, and execute the bonds, and to ascertain the extent of such officers' powers. To a limited extent, the law of principal and agent is applicable to munic- ipal officers, but one important distinction is, that while a private principal may be bound by the unauthorized acts of his agent, if within the scope of his general authority, the powers of a municipal officer are limited and defined by law, of which all persons must take notice. 67. Form of Bonds : It being determined that the municipality has the power to issue bonds, the particular form in which they may be issued, if not prescribed by law, is not material to their validity. However, if the form is prescribed by the enabling act or other law governing their issue, that form should be followed. 3 Municipal bonds usually have the 1 Carroll Co. v. Smith, in U. S., 556 (iJ 2 People v. Winant, 48 Ills. 263, and State v. Winkelmier, 35 Mo. 103. 3 Anthony v. Jasper Co. 101, U. S. 693 (1880). 46 THE ISSUE OF MUNICIPAL BONDS. body of the bonds, printed or engraved with some appropriate caption, contain a formal acknowledgment in the name of the corporation of the amount of indebtedness evidenced by the bond, with a promise to pay such amount to a payee named, or bearer, at a designated place, with interest at a specified rate per annum, payable annually or semi-annualby, as evidenced by coupons attached. The bond also frequently recites the pur- pose for which it is issued ; the aggregate amount of the issue; contains a reference to the law under which the issue was made ; recites a compliance therewith; a pledge of the munic- ipal faith and credit to the payment of the bond; and closes with a formal recital of its execution, and has the signatures of the proper officers subscribed, and the corporate seal attached. 68. Illustrative Form: The following will illustrate a form for a municipal bond : No. 9. CHICAGO CITY FUNDING BOND. $1,000.00. UNITED STATES OF AMERICA. (City Seal or other figure.} STATE OF ILLINOIS. COOK COUNTY. Know all Men by These Presents, That the city of Chicago, in the County of Cook, and State of Illinois, acknowledges itself as legally indebted, and hereby promises to pay to S. A. Kean & Co. or bearer, the sum of ONE THOUSAND DOLLARS on the first day of July, 1908, with interest thereon at the rate of five per cent per annum, payable semi-annually, on the first days of January and July in each year, on the presentation and surrender of the annexed coupons as they severally become due. Both principal and interest are payable at the banking house of the said S. A. Kean & Co. in the city of New York. This bond is one of a series of fifty bonds, of the same date and tenor, for the aggregate sum of fifty thousand dollars, issued for the purpose of funding outstanding city warrants, Said issue has been authorized by an ordinance legally passed THE ISSUE OF MUNICIPAL BONDS. 47 by the council of the said city of Chicago, and the said bonds are issued, and all proceedings relating thereto have been had in strict compliance with, and conformity to, the charter of the said city of Chicago, and the laws and constitution of the state of Illinois. And for the payment of the said bonds and coupons, according to the tenor thereof, the full faith and credit of the said city of Chicago is hereby irrevocably pledged. In Witness Whereof, the said city of Chicago has caused this bond to be signed by its Mayor, and counter- L. s. signed by its City Clerk, and its corporate seal attached hereto, this first day of July, A. D. 1888. (Signatures.) Coupon. $25. ON JANUARY i, 1890, No. i. The City of Chicago, Illinois, promises to pay S. A. Kean & Co. or bearer, at the Banking House of the said S. A. Kean & Co. in the City of New York, the sum of Twenty-five Dollars, being six months' interest due that day on its Funding Bond No. 9, dated July i, 1888. (Signature.) 69. Number of Bond Payee : For convenience in issuing, registering, and paying, bonds are nearly always numbered, but such number is held not to be a material part of the bond, so that its alteration will not affect a bona fide holder. Bonds are usually issued payable to some designated payee, or bearer. The issuing of bonds with the payee in blank makes them negotiable by delivery, and payable to the holder or bearer, and authorizes any legal holder to fill up the blanks with his own name, or make them payable to himself or bearer. 1 If they are payable to the order of a payee named, a blank indorsement by such payee makes them likewise paya- ble to bearer, and thereafter they may be passed by delivery, as other negotiable paper. 1 White v. Vt. & M. R. R. Co., 21 How. 575. 48 THE ISSUE OF MUNICIPAL, BONDS. 70. Place of Payment : As a matter of convenience, bonds are usually made payable at some bank or banking house in one of the larger cities of the country. It has been repeat- edly decided by the state and federal courts that municipalities may make their bonds payable beyond the limits of the state in which they are issued. The decisions of the Illinois courts are the only exception, as far as we are aware, to this univer- sally approved doctrine, that such bonds may be made payable at any place in or out of the state. In Illinois the supreme court has decided that in the absence of special legislative authority to make the place of payment elsewhere, a munici- pality of that state cannot be required to pay its obligations, except at the usual office of its treasurer. But even in Illinois the making of such bonds payable without the state is held not to effect the validity of the bonds, but should the munici- pality issuing them fail or refuse to pay them at the place named, the holder would be required to present them to the municipal treasurer, where, in law, they would be deemed payable, the place of payment named in the bond being treated as surplusage in that case. 1 However, many Illinois acts rela- ting to the issue of various bonds, provide that they may be made payable at other places than at the treasury, or that the place of payment may be submitted with the proposition to issue, or be decided by the authorities issuing the bonds. Nebraska, Kansas and possibly other states have provided by statute for the establishment of a fiscal agency in New York where their municipal bonds may be made payable. 71. Signatures : The validity of coupons \yith the sig- natures engraved, lithographed or stamped thereon, have been sustained in several cases. 2 Whether such lithographed or 1 People v. Tazewell Co., 22 Ills., 151; Pekin v. Reynolds, 31 Ills., 530; Johnston v. Stark Co., 24 Ills., 91; Sherlock v. Village of Winnetka, 68 Ills.. 530; Burroughs, Pub. Securities, 248. 2 McKee v. Vernon Co., 3 Dill., 210; Town of Weyauwega v. Ayling, 99 U. S., 118 (1879). In this case the bonds contained the signature, and the coupons the lithographed signature of one who filled the office of Town Clerk at the date of the bonds, but who had resigned, and another clerk had been elected prior to their execution and delivery. The bonds were held valid and the town estopped from setting up the facts, as against a bona fide holder. THE ISSUE OF MUNICIPAL BONDS. 49 stamped signatures on the bond itself would be sufficient, is a question which, as far as we are aware, has not yet been decided, but from the general principle governing other nego- tiable instruments and their execution, we presume that such a signature, if adopted by the officer, would be sustained, and the bonds so executed held valid. However, it is undoubtedly the better and safer practice that the bond at least should be subscribed with the written signature of the officer executing the same. 72. Seal : It is the almost universal practice to issue municipal bonds under the seal of the corporation issuing them, and such seal should always be attached when the corporation has one. A seal was formerly considered essential to the issue of a municipal bond, but from the later decisions it seems that such bonds, from which the seal has been omitted, are valid, at least as obligations against the municipal corporation issuing them. Even where the enabling act provides for the issue of bonds under seal, the omission of such seal was held to be no defense against the payment of the bonds which had been issued and purchased in good faith. In case the seal is omitted by mistake, a court of equity will not allow a municipality to set up such omission, in a suit on the bonds by a bona fide purchaser. 1 73. Execution by Less than a Full County Board: Where the law requires bonds to be issued by the board of county commissioners, or any similar board or body acting in behalf of a municipality, and it appears that a majority, or less than the whole number of such board, are a legal quorum authorized to act therefor, or represent a legal board for the transaction of business, then the execution of such bonds by a majority or such designated number of the board, will be a sufficient execution thereof. A Pennsylvania act authorized the issue of railroad bonds by the county commissioners, of whom there were three. The bonds were signed by only two commissioners, but as it appeared that under the state statute 1 San Antonio v. Mehafly, 96 U. S., 312 (1878); Draper v. Springport, 104 U. S., 501 (1881); Bernard Tp. v. Stebbins, 109 U. S., 341 (1883). 5O THK ISSUE OP MUNICIPAL BONDS. two formed a board for the transaction of business, the execu- tion was held sufficient. 1 74. Registration by State Officers : Under recent statutes passed by several states, municipal authorities are required to present a transcript of the proceedings relating to the issue of bonds to the state auditor, or other officer, whose duty it is to make an examination thereof, and if found suffi- cient and regular, to register the bonds in his office, and certify the same by indorsement thereon. These provisions are intended as an additional safeguard to the purchaser of such bonds, and a protection to the tax-payer of the municipality against unauthorized issues. In Nebraska the state constitu- tion provides that no bonds issued as donations to railroads or works of internal improvement .shall be valid, unless they shall have indorsed thereon a certificate signed by the secretary and auditor of state, showing that that same is issued pursuant to law. 75. Effect of Auditor's Certificate: The legal effect of such registration and certificate has been the subject of consid- erable discussion and several adjudications. It must depend to a great extent upon the language of the statute and the form of the certificate. In Missouri the registration statute provides that the state auditor's certificate shall be prima facie evidence of the facts stated. The Kansas act of 1872 provides that the auditor, upon being satisfied that the bonds have been issued according to the provisions of the law, and that the signatures thereto are genuine, shall register the same in his office, and certify upon the bonds that they have been regularly and legally issued, and that the signatures are genuine. 76. Opinion of U. S. Supreme Court : These acts have been before the U. S. Supreme Court in several cases. From an examination of all such cases in which this question has been under consideration, we understand that court to hold that such a certificate is not conclusive, except perhaps as to facts, the existence of which it was made the duty of the audi- 1 Curtis v. Butler Co., 24 How., 435. THE ISSUE OF MUNICIPAL BONDS. 5! tor to ascertain. " Xo conclusive effect is given by the consti- tution or the statute to this registration or to these certificates. In any event they could not be considered as more comprehen- sive or efficacious than the statements contained in the body of the bonds, and verified by the signatures of the county officers and the seal of the county, except as additional steps required to be taken in the process of issuing the bonds and rendered necessary to their validity." 1 * * * * jf complete and conclusive effect were given to the ex-parte record of the auditor of state, the obvious design and just purpose of the statute would be not secured, but subverted, and municipal corporations might be subjected to liability for bonds purporting to be issued by them, which in fact and in law were not their obligations, by virtue of a proceeding of which they had no notice, resulting in an adjudication which they had no opportunity of contesting. A construction of the statute that necessarily leads to that con- clusion would be repugnant to fundamental principles of common right." 2 The certificate does not cover questions of law. But as to the fact of the bonds having been duly registered, although no registration had been made in the auditor's office, his certificate to that effect would be sufficient, and proof that they had not been so registered would not be admissible to contradict the certificate after the bonds were in the hands of an innocent holder. 3 77. Legislative Control : Municipal powers and their exercise, including all questions relating to the issue of munic- ipal bonds, are under the control of the state legislature, subject only to the limitations of the state constitution or other organic law, already considered. The legislature may authorize the issue of bonds for any corporate purpose; may prescribe the amount, manner in which and by whom, the issue shall be made; the form of the bonds and their execution, and the effect of the bonds when issued. The legislature may require or dis- 1 Dixon Co. v. Field, in U. S., 83 (1884). 2 Bissell v. Spring Valley Township, no U. S., 162 (1886). 8 Rock Creek Township v. Strong, 96 U. S., 271; Lewis v. Barbour Co., 105 U. S., 739 (1882); Crow v. Oxford Township, 119 U. S., 215 (1886). 52 THE ISSUE OF MUNICIPAL BONDS. pense with a precedent election or any other preliminary pro- ceeding. 78. Curative Acts: Cases are frequent where the legis- lature attempts to cure irregularities or defects in the issue of bonds, or other acts of municipal corporations. How far can this be done ? The legislature may validate any law or act which it might originally have authorized. Where the power to issue the bonds or do the acts is derived from the legisla- ture, it is always within the power of such legislature to declare valid, acts irregularly or defectively performed, when it could have originally dispensed with any condition omitted, or made the law valid, in spite of the irregularity. In other words, we understand the law to be, that the legislature in such cases can do retrospectively, what it could have done in the first place and no more. 1 1 Cooley's Const. L,im. 371, et seq. ; St. Joseph Township v. Rogers, 83 U.S., 666 (1878) ;Jonesborov. Cairo, no U. S., 162 (1884); Otoe v. Baldwin, in U. S., i (1884); Grenada Co. v. Brown, 112 U. S., 261(1884); Bolles v. Town of Brimfield, 120 U. S., 759 (1887). CHAPTER VI. RIGHTS AND REMEDIES OF MUNICIPAL BOND HOLDERS. 79. Negotiability of Municipal Bonds: Municipal bonds issued under an authorized power, and in a negotiable form, have the usual qualities and incidents of commercial paper. This we understand to be the law of all the courts, both state and federal, as shown by numerous decisions. 1 Coupons for installments of interest, when severed from bond, are likewise negotiable, and bear interest from the date of their maturity. 2 Overdue interest coupons, of bonds which have not matured, are still negotiable under the law merchant. 3 80. Equitable Estoppel: One of the most important legal principles in the consideration of the subject of munici- pal bonds, is the doctrine of equitable estoppel in the various forms which it is applied to the protection of a bona fide holder of this class of public securities. While any material omission or deviation from the preliminary proceedings prescribed will be good cause to prevent the issue, if properly raised before the delivery of the bonds, or before the rights of an innocent purchaser becomes involved, it is well settled by repeated judicial decisions that if the municipality has the power to issue bonds, and the bonds are issued in proper form, and recite a compliance with the law authorizing the issue, or the per- formance of the facts necessary to the issue, no mere irregular- ity in the exercise of the authorized power or in the proceedings 1 Gelpecke v. Dubuque, i Wall., 175 (1863); Mercer v. Hackett, Id. 83 (1864); Nashville v. Ray, 19 Wall., 468; Ottawa v. First National Bank of Portsmouth, 105 II. S., 342 (1882). 2 Walnut v. Wade, 103 U. S., 683 (1881); Stewart v. pausing, 104 U. S., 305 (1882). 3 Town of Thompson v. Perrine, 106 U. S., 589 (1883). (S3) 54 RIGHTS OF BOND HOLDERS EQUITABLE ESTOPPEL. preliminary to the issue, will avail against a bona fide holder of the bonds. 81. Municipal Decision: Where certain officers are authorized to issue bonds of the municipality on the perform- ance of prescribed conditions, and it is provided, or appears by fair implication, that such officers are the proper judges to determine as to the performance of the conditions, when they do so determine, and issue the bonds, the municipality is pre- cluded from asserting the non-performance of the preliminary conditions as a defense to the bonds in the hands of a bona fide holder. The power of the officers to decide the question may be express, or may be deduced from the necessities of the case, or the general provisions of the law under which the bonds are issued, or the action taken. If it appears that the question was determined by the proper officers and the decision is shown by a recital in the bonds, or otherwise, it is sufficient. Such deci- sion estops the municipality from denying that the conditions have not been complied with as required. 82. Illustrations: Where commissioners were authorized to issue bonds of the county when a majority of the vaters had so voted; whether the election was properly held, and the required majority obtained, were questions for the board to decide, and a general recital by them in the bonds that such bonds had been issued in pursuance of an act authorizing the same, was held to be conclusive against the county in favor of a bona fide holder. 1 A recital in bonds that they were issued in pursuance of the written assent of two-thirds of the resident tax-payers (as was required), was held as a conclusive decision that such assent had been properly obtained. 2 A recital that the bonds were issued in pursuance of a vote of the electors, has been held to be equivalent to a statement that the vote was regular and lawful, that the required election was held in conformity with law and that the proper notice thereof was given; and evi- 1 Knox v. Aspinwall, 21 How., 589; Bissell v. City of Jeffersonville, 24 How., 287; Buchanan v. Litchfield, 102 U. S., 290. 2 Town of Venice v. Murdock, 92 U. S., 494; Rock Creek v. Strong, 96 U. S., 271. RECITALS IN MUNICIPAL BONDS. 55 dence that the notice was insufficient would be inadmissible against a bona fide holder. 1 83. .4s to Amount of Bonds which May be Issued: It has been held in several cases that municipal bonds are not invalid in the hands of a bona fide holder by reason of their having been voted and issued in excess of the statutory limit, if the recitals import a valid issue." It has been decided in a recent federal case 3 that the doctrine is good even against a constitu- tional limitation on the amount of municipal indebtedness. County funding bonds recited a compliance with the act under which they were issued, but did not show the amount of the issue. The court held that the county was estopped from alleging against a bona fide holder, that the bonds were issued in violation of the constitutional limitation on the amount which the county could legally issue. 84. Doctrine Considered: Such recitals are in legal effect equivalent to a representation, warranty, or certificate on the part of the officers, that everything necessary has been done, and every necessary fact existed to make the bonds lawful and binding. But this does not extend to, or cover, matters of law. The estoppel does not arise except upon matters of fact which the corporate officers were authorized to determine and certify. The general recital that the bonds have been issued in conform- ity with the law will suffice to embrace every fact which the officers making the statement are authorized to determine and certify. The ground of the estoppel is that the recitals are the official statement of those to whom the law refers the public for authentic and final information on the subject/ 85. Municipal Estoppel by Ads: The omission or irregu- lar performance of preliminary conditions, may be cured by the 1 Ind. School Dist. v. Stone, 106 U. S., 183 (1882); Pana v. Bower, 107 U. S., 529(1883); Anderson v. Beal, 113 U. S..227 (1884); Oregon v. Jennings, 119 U. S., 74 (i888l 2 Marcy v. Oswego, 92 U. S., 637 (1876); Humboldt Tp. v. Long, Id., 642; Wilson v. Salamanca, 99 U. S., 499; Dallas County v. McKenzie, TIO U. S., 686 (1884); New Providence v. Halsey, 117 U. S., 336 ( 1886). 3 Potter v. Bd. of Comrs. of Chaffee Co. (Col.), 33 Fed., Rep. 614 (1888); also see 59, p. 41, herein. * Dixon Co. v. Marshall Field, in U. S., 83. (1883.) 56 RIGHTS OF BONA FIDP; HOLDERS OF BONDS. failure to enjoin the issue and long acquiescence, accompanied by acts recognizing their validity. The principle that the acts of agents irregularly or defectively exercised may be thus ratified applies to municipal as well as private corporations and individ- uals, although to a much less extent. The levying of taxes to pay bonds, and the payment of interest thereon for a number of years cures mere irregularities in their issue in the hands of a bona fide holder. 1 Where a municipality receives for its bonds stock which it holds and accepts benefits from for several years, the defense that the bonds were issued irregularly and that some of the conditions precedent were not complied with, will not be allowed. 2 Failing to enjoin the issue of bonds, and paying the interest thereon for ten years, estopped a county from defending against a holder for value, for want of a proper notice of the election authorizing their issue. 3 But neither the payment of interest on, or other acts of the municipal officers relating to bonds issued tillra vires will amount to a ratification of such bonds, or estop the municipality from setting up an absolute want of power to issue them. 4 86. Rights of Bona Fide Holders: It is a general rule that a bona fide purchaser of municipal bonds for value, before maturity, takes them free from all infirmities in their issue, un- less they are absolutely void for want of power to issue them. Such bonds if issued in pursuance of a power conferred by the legislature are valid commercial paper, and if purchased for value in the usual course of business before they are due, the holder takes a good title free from all prior equities. The holder of a municipal bond or other commercial paper, in the absence of proof to the contrary, is presumed to have taken it before maturity for a valuable consideration, and without notice of any objection to which it was liable. If bonds show by their recitals that a power was exercised in the manner 1 Clay Co. v. Society for Savings, 104 U. S., 579 (1882). 2 Comrs. of Johnson Co. v. January, 94 U. S., 202 (1877). 3 Anderson v. Beal, 113 U. S., 227 (1884). 4 Parkersburg v. Brown 106 U. S., 487 (1883). See "Ottawa cases," pp. si -24, ante. Loan Association v. Topeka, 20 Wall. , 655(1875). RIGHTS OF BOXA FIDE HOLDERS OF BONDS. 57 required, and that they were issued in conformity to prescribed regulations, and pursuant to required conditions, proof that any or all of the recitals are incorrect will not constitute a defense in a suit thereon. 1 If the municipality had the power under any circumstances to issue the securities, a bona fide holder has the right to presume they were issued under the circum- stances which gave the authority. 2 Where the bonds on their face recite the circumstances which bring them within the power, the corporation is estopped to deny the truth of the recital. Irregularities in an election at which the issue of bonds was authorized does not require the plaintiff to prove, in the first place, that he is a holder for value, 3 but if fraud or illegality in the issue is shown, a purchaser must prove that he is a holder for value. 4 Even a bona fide holder of a municipal bond is bound to show legislative authority for its issue. Recitals therein, or acts operating by way of estoppel, may cure irregularities in the execution of a statu- tory power, but they cannot create such power. 5 87. Lis Pendens: The doctrine of Us pendens does not apply to municipal bonds. The pendency of a suit to enjoin the issue and delivery of bonds does not affect the title of a bona fide purchaser, not a party to the suit. Any judgment or decree relating to bonds will not bind or affect holders or purchasers in good faith for value, who were not parties to the proceeding in which the judgment or decree was rendered. 8 88. Lost or Stolen Bonds Overdue Coupons: It follows from the principles already laid down, that if a munici- pal bond payable to bearer is lost or stolen before maturity, and comes into the hands of an innocent holder for value, he will 5 Warren Co. v Marcey, 97 U. S., 96 (1878); Comrs. of Marion Co. v. Clark, 94 U. S., 278 (1877), and cases cited. 2 San Antonia v. Mehaffy, 96 U. S., 312; Pompton v. Cooper Union, 101 U. S., 196 (1879). 3 Chambers Co. v. Clews, 21 Wall., 317 (1874). 4 Stewart v. Lansing, 104 U. S-, 505 (1882). 8 Hayes v. Holly Springs, 114 U- S., 120 (1885). 6 Cass Co. v. Gillett, 160 U. S., 535 (1879); Carroll Co. v. Smith, in U.S., 556 (1884). 5<S RIGHTS AND REMEDIES OF BOND HOLDERS. hold the same even against the losing owner. It is well settled that the purchaser of coupon bonds, before diie, without notice and in good faith, is unaffected by want of title in the seller, and that the burden of proof in respect to notice and want of good faith is on the claimant of the bonds as against the pur- chaser. 1 It was formerly held that bonds having attached coupons for several years overdue and unpaid were dishonored on their face, and the purchaser would take them subject to all equities, but the present law, at least as laid do\vn by the fed- eral courts, is that the mere presence upon the bonds before maturity of such coupons, without other circumstances to put the purchaser on notice, does not make the bonds and the subsequently maturing coupons dishonored paper. 2 89. Enforcement of Payment of Bonds: The holder of municipal bonds should first establish the validity and amount of his claim by a suit at law and judgment there- under. A bona fide holder of bonds is entitled to a judgment thereon, even if the corporation by reason of a limit on its tax- ing power cannot levy a tax to pay such judgment. 3 Public buildings, and other property held for public purposes cannot be subjected to the payment of the debts of the corporation. 4 The usual method of enforcing the payment of any judgment obtained against a municipal corporation on its bonds, is by a writ of mandamus against the proper officers, requiring them to levy the necessary tax for the payment of such judgment. This writ is one of the principal remedies by which municipal and public corporations are compelled to perform their duties toward their creditors. 5 90. What Decisions Control: It is a general principle of the jurisprudence of the United States that the construction 1 Morgan v. U. S., 113 U. S., 476 (1885); Murray v. Gardner, 2 Wall., 118(1865). 2 Cromwell v. Sac Co., 96 U. S., 51 (1878); Ind. & Ills. Cent. R. R. Co. v. Sprague, 103 U. S., 756 (1881); Daniel's Negotiable Securities, 3d ed., 1560 a. 3 Moultrie Co. v. Fairfield, 105 U. S., 370 (1882). 4 Meri wether v. Garrett, 102 U. S., 472 (i{ 5 Dillon's Mun. Corps. 3d ed. \\ 849-887. RIGHTS AND REMEDIES OF BOND HOLDERS. 59 given to a statue of a state by the highest courts thereof is a part of the statute itself, and is as binding upon the federal courts as the text of the statute. A purchaser of municipal bonds, how- ever, has a right to rely upon the law as judicially construed by such highest court at the time the bonds were issued. 1 Rights accruing under a construction of a statute authoriz- ing the issue of public securities will not be lost merely by a change of opinion in the local court. The federal court in such cases will follow the construction of the statute by the state courts as declared at the time the securities were issued. 2 "It is undoubtedly a question of local policy with each state what shall be the extent and character of the powers which its various political and municipal organizations shall possess, and the settled decisions of its highest courts on the subject will be regarded as authoritative by the federal courts." The federal courts, however, have held that they- are not bound by the decisions of the state courts upon questions of general com- mercial law in their application to municipal bonds. 4 91. Taxes to Pay Bonds: When authority to borrow monej- or incur an obligation for public purposes is conferred upon a municipal corporation, the power to levy a tax for the payment thereof accompanies the authority without a special grant to that effect. 5 Provision is generally made in the law under which bonds are iss.ued for the levy of a special tax for their payment. However, unless it clearly appears otherwise, the municipality will be liable for the payment of the bonds regardless of the special levy, and for any balance remaining due thereon, after the application of the proceeds of the special tax, the holders are entitled to payment from the general fund 1 Elmwood v. Marcey, 92 U. S., 289 (1876); Eucber v. Cheshire R. R. Co., 125 U. S., 555 (1888). 2 Bolles v. Town of Brimfield, 125 U. S. 759 (1887). 3 Claiborne Co. v. Brooks, in U. S., 400 (1884). * Pine Grove v. Talcott, 86 U. S.,666; Cromwell v. Sac Co., 96 U. S., 51; Oats v. National Bank, 100 U. S-, 239. 5 U. S. v. New Orleans, 98 U. S., 393 (1879); Quincy v. U. S., 113 U. S- 332 (1885). 60 RIGHTS AND REMEDIES OP BOND HOLDERS. of the corporation. 1 The general liability of municipal cor- porations for the payment of special assessment bonds has already been considered. 2 In the bond acts of several of the states will be found provisions for the collection of taxes for the payment of bonds through the state officers in case the local officers fail to collect such taxes. 92. Tax Laws Irrepealable as to Outstanding Bonds: Where a state has authorized a municipal corporation to con- tract, and to exercise the power of local taxation to an extent necessary to meet its engagements, the power thus given can- not be withdrawn until the contract is satisfied. The state and corporation in such cases are equally bound. The power given becomes a trust which the donor cannot annul, and which the donee is bound to execute. The laws requiring taxes to the requisite amount to be levied, in force when bonds were issued, remains in force for the purpose of the payment of such bonds until they are fully paid. 3 A Virginia act repealing a previous act which provided that certain coupons of its bonds should be receivable for taxes, was declared unconstitutional as to such outstanding coupons. 4 It has been repeatedly decided that laws passed after the issue of municipal obligations, taking away the power to levy the necessary taxes to meet their pay- ment, are invalid. 5 It may be stated as well settled law that every right that existed to enforce the payment of bonds when they were taken by the holder remains unimpaired, and that the state is powerless to make any changes affecting such rights. 1 U. S. v. Fort Scott, 99 U. S. ( 152 (1879); Knox Co - v u - s -> IO 9 U.S. ,229(1883). 2 See pp. 32-36 herein. 3 Von Hoffman v. City of Quincy, 4 Wall., 535 (1866). V. 4 Poindexter v. Greenhow, 114 U. S., 270 (1885); Royal v. Virginia, 116 U. S., 572 (1886). 5 Galena v. U. S., 5 Wall., 705 (1867); United States v. New Orleans, 103 U. S., 358 (1881); Rails Co. v. U. S., 105 U. S., 783 (1882). DIGEST OF STATUTORY LAWS RELATING TO MUNICIPAL BONDS. The following chapters (VII. to XXII.) contain a digest of the statute laws governing or relating to the issue of munici- pal bonds in the states and territories named. 1 The list includes those states and territories in the West and North- west, from which come the larger portion of the municipal bond issues usually offered investors. For evident reasons the purchasers of these bonds must generally be sought in the older states where money is more abundant and interest rates lower than where they are issued. In these cases the laws governing the issue are usually inaccessible to the proposed purchaser, however desirable or necessary their examination. While a large number of municipal bonds are issued in the New England and Middle states, such issues are usually taken by local purchasers, who can more readily examine the laws governing the same. These facts explain the selection of the list in the following pages. A few of the states and territories are included rather for geographical completeness than because of the general importance of their bond laws. We have aimed in all cases to give a reference to the statutes or session laws where the digested laws may be found, so that an examination of the full text of the law may be more readily made, and any further change therein followed. 1 This digest does not include the provisions of any special acts or charters applicable only to particular cities or other municipal corpora- tions. If a municipality is acting under a special act or charter,reference should be had thereto for its power. (61) CHAPTER VII. OHIO. References are to the Revised Statutes of iSSo and Supplements thereto, e.rcept as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution in force September ist, 1851. 1. State Indebtedness: To supply casual deficiencies in the revenues, or to meet expenses not otherwise provided for, the state may contract debts to an amount in the aggregate not exceeding seven hundred and fifty thousand dollars. (Art. 8, Sec. i.) 2. State Credit : The credit of the state shall never be given or loaned to or in aid of any individual, association or corporation, nor shall the state ever become a joint owner or stockholder in any company or association. The state shall never assume the debts of any county, city, township, or of any corporation, unless the same have been created to repel inva- sion, suppress insurrection, or defend the state in war. The state is prohibited from contracting any debt for purposes of internal improvement. (Art. 8, Sees. 4 to 5; Art. 12, Sec. 6.) 3. Municipal Credit : The general assembly is pro- hibited from authorizing any county, city, town or township, by vote of its citizens, tc become a stockholder in any joint stock company, corporation, or association, or to raise money for, or to loan its credit to, or in aid of any such company, corporation, or association. (Art. 8, Sec. 6.) 4. Special Legislation: 1 The general assembly shall pass no special act conferring corporate powers. (Art. 13, Sec. i.) The general assemby shall provide for the organization of cities and incorporated villages by general laws restricting their power of taxation, assessment, borowing money, contracting 1 See subject considered in a previous chapter. (62) OHIO COUNT V BONDS. 63 debts and loaning their credit, so as to prevent its abuse. (Ibid. Sec. 6.) COUNTIES. 5. County Board: The board of county commissioners consists of three qualified electors, elected for a term of three years. They hold four regular sessions annually at the county- seat, on the first Mondays of March, June, September and December. Special sessions may be held as often as deemed necessary. A majority of the board constitutes a quorum at any meeting. The county auditor is ex-officio clerk of the county board. (839 and 847-1021.) 6. County Bonds: For the purpose of erecting or providing a courthouse, jail, count)- offices, county infirmary or county bridges; for the purpose of repairing or improving the same; or for the relief or support of the poor, the county commissioners may borrow such sums of money as they may deem necessary and issue therefor county bonds. But no proposition involving an expenditure of one thousand dollars or upwards shall be agreed to by the board, unless twenty days have elapsed since its introduction, except by the unanimous consent of all the members present taken by yeas and nays, and entered of record. * 7. How Issued: Said bonds shall be signed by the county commissioners, or any two of them, countersigned by the auditor, and bear interest at a rate not to exceed six per cent per annum, payable semi-annually at the county treasury, the principal to be payable at such times as the commissioners may prescribe, within seven years from date. The interest on all bonds issued for any of said purposes shall be made payable at the same time, the first payment being for the unexpired portion of time to the end of the first six months. The bonds shall be issued in sums of not less than fifty, nor more than one thousand dollars each, payable to bearer, and shall specify distinctly the object for which they were issued. 8. Tax for Payment: The county commissioners are required annually to levy sufficient taxes to provide for the 6 4 OHIO COUNTY BONDS. payment of the maturing interest, and at least one-seventh of the principal. In case the commissioners refuse or neglect to make such levy, the county auditor is required so to do. (851 to 874.) 9. County Bonds for Children's Home: The com- missioners of any county, when the interests of the county so demand, or upon the written request of two hundred or more tax-payers, shall submit the question of establishing a Children's Home, and the issue of county bonds therefor, to the qualified electors of the county or district, at the next regular election. Previous notice of such election shall be published at least four weeks, in two or more newspapers there- in, stating the maximum amount of loan proposed to be raised. If a majority of the votes at such election are in favor of the question, the commissioners are authorized to provide for such Home, and for the purpose may issue notes or bonds of the county, bearing interest at a rate not to exceed six per cent, payable semi-annually, to be sold at not less than par. (929 , as amended in 1881.) 10. County Bonds for Workhouse, Built Jointly by Counties: A workhouse may be built jointly by adjoining counties, and bonds may be issued therefor, as provided above in the case of county bonds for other county buildings. (2107 A to 2107 C.) 11. Bonds to Purchase Toll Bridges: The commis- sioners of any county in which there is a toll bridge may pur- chase the same at such terms as may be agreed upon, and for the purpose of paying therefor, may issue county bonds, in sums of not more than five hundred dollars, payable in installments during a period not exceeding twenty years, with interest at not to exceed the legal rate, payable semi-annually, to be sold at not less than par. (4941, 4942.) 12. Bonds for County Ditches: The county commis- sioners of any county are authorized, in the manner provided by law, to lay out ditches upon the petition of any interested owner, where they find the same necessary or conducive to , OHIO COUNTY BONDS. 65 the public health or welfare, and to assess the cost of the improvement against the lands benefited. They may determine at what time, and in what number of sums they will require the same to be paid, and whether they will issue county bonds to pay the cost and expenses of the improvement, a record of which determination shall be made upon their journal. 13. How Issued: To pay the expenses of such improve- ment, bonds may be issued for not to exceed twenty years, bearing not to exceed six per cent interest, payable semi- annually, and signed by the county commissioners, and coun- tersigned by the county auditor, with his seal affixed. Such bonds shall be sold at not less than par. The commissioners are required to make assessments against the property benefited, the proceeds of which shall be applied to the payment of the bonds so issued. (4479-4482.) 14. Bonds for the Purchase of Toll Roads: In any county, where the purchase of any or all toll roads therein has been authorized by vote at some general election, and the price thereof has been fixed by three appraisers appointed, one by the court of common pleas, one by the probate judge, and one by the toll road company, the county commissioners are authorized to make such purchase if they are satisfied with the price fixed, and to pay such company or companies, owning such roads the price thus agreed upon in money, or to issue bonds of the county therefor. 15. How Issued: The bonds issued for such purpose, or for the purpose of refunding any assessments due parties having paid the same on account of such road, shall be made payable at such times and in such amounts as will be, as near as practicable, equal to the semi-annual collection of taxes levied for that purpose. The bonds shall bear interest at a rate not to exceed six per cent, payable semi-annually, and may be delivered to such companies or sold at not less than par, but no such bonds shall run more than eight years from date. For their payment, the commissioners shall levy annually, upon the taxable property of the county, a sufficient sum to pay said bonds and interest as they become due. (3499-3501.) 66 OHIO COUNTY BONDS. 16. Bonds for Turnpike Roads : For the purpose of constructing any public turnpike road which has been author- ized by a majority vote of the qualified electors voting thereon at any general election, the county commissioners may issue the bonds of the county, payable at such times as they may deem advisable, with interest not exceeding the legal rate, payable semi-annually. Said bonds shall not be sold at less than par. (4758-4773-) 17. Free Turnpike Road Bonds : Upon petition of a majority of all the resident land owners, within one mile of the proposed road, the count} r commissioners may appoint three commissioners to lay out and establish a free turnpike road. Whenever they deem it necessary for the purpose, such road commissioners may issue bonds payable at the county treasury, in installments at intervals not exceeding eight years, and bearing interest, at not to exceed six per cent. 18. Registry Sale Tax : Said bonds shall be regis- tered by the count)* auditor previous to their issue, in a book kept for that purpose, showing the number, date, amount of each bond issued, rate of interest and when payable. They shall be sold at not less than par. A petition asking for the appointment of such road commissioners must include a request for the extra tax or assessment to be levied upon the property benefited by the establishment of such road, which tax it is the duty of the county commissioners to direct the auditor to levy for the year specified, and the proceeds of which must be applied to the payment of the bonds thus issued. (4774-4808, " One mile assessment pikes.") 19. Village Bonds for the Same Purpose : For the pur- pose of constructing any free turnpike road terminating or running through any village, the council of such village may levy a tax or issue bonds to be sold at not less than par. For the payment of bonds so issued, a tax of not to exceed five mills on the dollar may be levied on the taxable property of the village, but in no case shall such tax be levied or bonds issued until, at some regular election held therein, a majority OHIO CITY AND VILLAGE BONDS. 67 of the qualified electors thereof approve such tax. (4823- 4825, Ibid.) 20. Bonds to Improve Public Roads : When a major- it}' of the resident land owners of the county whose lands will be benefited so petition, the county commissioners may cause to be laid out, constructed or improved any public, state, county or township road, and to assess the cost of the same against the lands benefited. For the purpose of raising the expenses of any such improvements, the commissioners friay issue county bonds payable in installments, or at intervals not exceeding in all the period of twenty years, and bearing interest at not to exceed six per cent payable semi-annually. Such bonds shall be sold at not less than par. The assessments shall be divided in such manner as to meet the payment of the bonds as they become due, and the cost of all bridges and culverts shall be paid out of the general bridge fund of the county. (Sees. 4829-4846, "Two mile assessment pikes," as amended in 1883.) 21. City or Village Bonds for the Same Purpose: When any such road to be made begins or terminates in a city or village, the corporate authorities thereof may, upon a rec- ommendation of the county commissioners, issue bonds of such city or village, in the same manner, to an amount not exceeding one-fifth of the entire cost of the road, but the entire tax for road purposes in any one year shall not exceed five mills on the dollar of the taxable property in such corporation. 1 (4850, Ibid.) CITIES, VILLAGES, ETC. 2 22. Classification: This state has made a somewhat elaborate classification of its cities, evidently to avoid the pro- visions of the constitution as to special legislation. Municipal corporations are divided into cities, villages and hamlets. Cities are divided into cities of the first-class and cities of the second class. Cities of the first class are subdivided into three grades, the first grade being those cities having July ist, as 1 There are also a number of acts relating to the issue of bonds by certain counties for the purchase of toll roads, construction of high- ways, etc. , appearing as Sections 8038 to 8063 of the Revised Statutes. 2 Also see \\ 19 and 21. 68 OHIO CITY AND VILLAGE BONDS. shown by the last preceding federal census, more than two hundred thousand inhabitants (Cincinnati 1 ); the second grade, those shown in the same way to have more than ninety thou- sand and less than two hundred thousand (Cleveland); the the third grade, those with more than thirty-one thousand five hundred and less than ninety thousand (Toledo). Cities of the second class are subdivided into four grades, the first grade, those shown in the manner above provided, to have more than thirty thousand five hundred, and less than thirty-one thousand five hundred (Columbus); second grade, those with more than twenty thousand and less than thirty thousand five hundred (Dayton); third grade, with more than ten thousand and less than twenty thousand; and fourth grade, those with more than five thousand and less than ten thousand. Munici- pal corporations having more than three thousand and less than five thousand population, as above determined, are villages of the first class, and those having more than two hundred and less than three thousand, are villages of the second class. Other incorporated villages for special purposes are known as hamlets. 2 (1546-1552.) 23. Bonds to Extend Payment of Indebtedness : The trustees or council of any municipal corporation, for the purpose of extending the time of the payment of any indebt- edness, which from its limit of taxation it is unable to pay at maturity, may issue bonds or borrow money, so as to change but not increase the indebtedness, in such amounts, for such length of time, and at such rate of interest, not exceeding eight per cent per annum, as the council or trustees may deem proper. Such bonds shall express upon their face the purpose for which they were issued, and under what ordinance. (2701.) 24. Bonds in Anticipation of Special Assessments : The council of any municipal corporation making any au- thorized special assessment, may borrow upon the credit of the corporation, money sufficient to pay the cost of the improve- 1 This classification when made, under the federal census of 1870, placed the larger cities in the state, as above indicated. 2 See subject considered, pp. 40-41, herein. OHIO CITY AND VILLAGE BONDS. 69 ment, and issue therefor notes or other certificates of indebted- ness, bearing interest at a rate not to exceed seven per cent per annum, payable annually, to be sold at not less than par. (2704-2705.) Street improvement bonds of the city of Colum- bus are payable seven years from date, but redeemable at any time at option of city, and have the interest payable semi- annually. (2352.) 25. How Issued. All bonds, notes or certificates of indebtedness issued by municipal corporations shall be signed by the mayor and by the auditor, comptroller or clerk thereof, and be sealed with the seal of the corporation. When issued for street improvements, they shall have the name of the street or portion thereof so improved, and for which the same were issued, written or printed thereon. Where the corporation is divided into districts for sewerage purposes, bonds issued for construct- ing or repairing sewers therein, shall have the name of the district for which they were issued so written or printed thereon. Bonds may have interest coupons attached at the discretion of the council. (2706 to 2708.) 26. Sale of Bonds : Whenever any municipal corpora- tion shall issue its bonds, it shall first offer them at par and accrued interest, to the trustees, commissioners or other officers of such corporation having official charge of its sinking fund or debt, and only after their refusal to take all or any of such bonds, shall any of them be advertised or offered for public sale. In no case shall they be sold at less than par. Sales other than to the sinking fund shall be to the highest bidder, after thirty days' notice in at least two newspapers of general circulation in the county in which such municipal corporation is situated, setting forth the nature, amount, rate of interest and time to run of such bonds, with the time and place of sale. (2709, as amended 1883.) 27. Exchange of Coupori for Registered Bonds : (Cincinnati.) Cities of the first grade of the first class, on demand of the owner or holder of its coupon bonds, shall issue in lieu thereof registered bonds of such city of like amount, 7O OHIO CITY AND VILLAGE BONDS. time, rate of interest and tenor. A complete record of all such registered bonds issued shall be kept, and payment thereof made only to the order of the person in whose name the same are registered. (2711.) 28. Tax for Sinking Fund: For the purpose of creat- ing a sinking fund for the gradual extinguishment of the bonds and funded debt of a municipal corporation, the council may annually, to make provision for the full payment thereof, levy and collect, in addition to other taxes, a tax of not less than one or more than three mills upon the taxable property of the corporation. In case of bonds issued for sewerage purposes, where the corporation is divided into sewerage districts, such levy shall be upon the property of the district for which the bonds were issued. (2712, 2713.) 29. Refunding Bonds by Fund Commissioners of Certain Cities: The sinking fund commissioners in cities of the first and third grades of the first class, and of the first grade of the second class (Cincinnati, Toledo and Columbus), for the purpose of refunding the bonded indebtedness thereof, exclu- sive of street improvement bonds, at a lower rate of interest, and for the purpose of paying for any real estate held by such city under perpetual leases, where the interest on such bonds will be less than the rental of such real estate, may issue coupons or registered bonds, due in fifty years, and redeemable after thirty years, bearing interest at not to exceed five per cent, payable semi-annually, and to an aggregate amount not exceed- ing twenty-six millions. Such bonds shall be known as the Cincinnati (or as the case may be) Consolidated Sinking Fund Bonds. They shall be signed by the president and treasurer of the sinking fund, countersigned by the city auditor with the city seal affixed. If issued for refunding any bonded debt, payable out of a special fund or from a special revenue, they shall show the debt to which it is applicable. (2729 a, et seq.} 30. City and Village Bonds for Fire Engines, etc.: Any incorporated village with a population of not less than two thousand, or any city not provided with sufficient appara- OHIO CITY, VILLAGE AND TOWNSHIP BONDS. 71 tus for fire protection, for the purpose of purchasing a fire engine or other apparatus, the council thereof may issue bonds bearing interest at not to exceed seven per cent, payable semi- annually. Such issue of bonds must first be submitted to and approved by a majority of two-thirds of the qualified electors of such city or village voting at a regular election on the ques- tion of borrowing such money. A majority vote of the council must pass a resolution submitting the question to such vote, and ten days' notice of such election must be given by publication in some newspaper of general circulation in such city or village. (8304 to 8305, Act of 1878.) 31. Bonds for Market Houses and City Buildings: The council of any city of the second class, third grade, two- thirds of the elected members concurring, may issue bonds for the purpose of erecting a market house and city offices and the procuring of the necessary real estate therefor, when authorized by two-thirds of the electors voting on such ques- tion submitted at an annual or special election. Ten days' notice of such election must be given by publication in one or more newspapers of general circulation in the city. 32. How Issued Amount: Said bonds may be issued in denominations of not less than five hundred dollars, payable at any time within forty years, at a rate of interest not exceeding six per cent, payable semi-annually, and shall be issued, advertised and sold according to the law governing other city bonds. The amount of bonds so issued shall not exceed one hundred and fifty thousand dollars. (Act of 1887, page 30.) 33. Township Bonds for Cemetery Vault: The trustees of any township are authorized to levy a tax to pur- chase a hearse and build a vault for the use of the township, when authorized by a majority of the votes cast at some gen- eral election, after twenty days' notice by posting in at least three public places therein, stating the amount, and purpose for which such money is to be raised. In anticipation of such tax the trustees may issue township bonds, not exceeding the amount of such tax voted, in denominations of not less than 72 OHIO SCHOOL BONDS. fifty dollars, bear interest at not to exceed six per cent, and payable not later than four years from date. The bonds shall be signed by the trustee, countersigned by the township clerk, shall be sold at not less than par, and repaid from such tax when collected. (1485 to 1487.) 34. Village Bonds for Same Purpose: When authorized, as in the case of townships, the council of any village may levy a tax to purchase a hearse or to construct a vault for the use of such village, and issue village bonds to the amount of such tax, substantially in the same manner and form as pro- vided in the case of townships, but payable not later than two years from date, and signed by the mayor and clerk of the vil- lage. (2556 to 2558.) 35. Joint Township Refunding Bonds: When the township has been divided into two or more parts subsequent to the original issue of bonds for purposes of public improve- ment, it shall be competent for the authorities of the parts so divided, jointly to issue new bonds for the amount becoming due. (1489.) SCHOOL BONDS. 36. School Districts Classified: Each city, which with the territory annexed for school purposes, and excluding any detached for such purposes, had a population of two hun- dred and fifty thousand or more by the last preceding United States census, constitutes a city district of the first grade of the first class. Each city which has, as ascertained in the same manner, a population of one hundred and fifty thousand or more, and less than two hundred and fifty thousand, constitutes a city district of the second grade of the first class; each city which thus has a population of ten thousand and less than one hundred and fifty thousand, constitutes a city district of the first class. Each city of the second class thus having a popu- lation of less than ten thousand, constitutes a city district of the second class. Villages, with the territory thus belonging thereto for school purposes, are village districts. Organized townships, exclusive of any territory therein included in a OHIO SCHOOL BONDS. 73 city, village or special district, are township districts; and any other districts legally established under any special act or otherwise, for school purposes are known as special school dis- tricts. The school affairs of the several school districts are managed by boards of education. (3885 to 3891, as amended in 1887.) 37. School District Bonds : When the board of edu- cation of any school district, except in city districts of the first class, determines that it is necessary, for the proper accommo- dation of the schools of such district, to purchase a site and erect a schoolhouse thereon, and ascertains that such purpose and the furnishing of such schoolhouse requires a greater tax upon the property of the district than the board is authorized to levy, and that to provide means therefor it will be necessary to issue bonds, the board shall make an estimate of the amount required for such purposes, and at a general election, or a special election called for the purpose, shall submit to the elec- tors of the district the question of levying taxes for such pur- poses, or either of them, and whether the levy shall be made from time to time, and what amount shall be levied each year until such amount is raised. Ten days' notice of such election shall be given by posters, put up in five of the most public places in the district, stating the time, place and object of the election. 38. How Issued : If a majority of the electors at such election vote in favor of such tax levy, the same shall be certi- fied to the county auditor and made as authorized. Thereupon the board to anticipate the money so to be raised may borrow a sum, not exceeding the amount so authorized to be levied, and issue bonds therefor, payable as indicated by such vote, and bearing interest at not to exceed six per cent per annum, payable semi-annually. The bonds shall be in such sums as the board may determine, be numbered consecutively, payable to bearer, dated- the date of sale, and signed by the board officially. The clerk of the board shall keep a record of the number, date, amount, the rate of interest and the name of the person to whom sold and the time when payable. The 74 OHIO SALE OF BONDS SPECIAL ACTS. bonds shall not be sold at less than par, nor bear interest until the purchase money for the same shall have been paid. (3991- 39930 39. School Bonds in City Districts of the First Class: The board of education of any school district of the first class, except a district embracing a city of the first grade of the first class (Cincinnati), may issue bonds to obtain or improve public school property, and in anticipation of income from taxes for such purpose, levied or to be levied, may, from time to time as occasion requires, issue and sell bonds under the restrictions, and bearing the rate of interest specified in the preceding sec- tion in the case of other school district bonds, but no greater amount of such bonds shall be issued in any one year, than will equal the aggregate of a tax at the rate of two mills for the previous year. An order to issue such bonds shall be made only at a regular meeting of the board and by vote of a majority of all the members, taken by yeas and nays, and entered on the journal thereof. (3994.) GENERAL. 40. Sale of Bonds: All bonds issued by boards of county commissioners, boards of education, commissioners of free turnpikes, shall be sold to the highest bidder, after being advertised three times weekly in a newspaper of general circu- lation in the county, and if the amount of bonds exceeds twenty thousand dollars, in an additional newspaper of general circula- tion in the state three times weekly. The advertisement shall state the total amount of bonds to be sold, the amount of each bond, how long they are to run, the rate of interest, whether payable annually or semi-annually, the law or section of law authorizing their issue, the date, hour and place of sale. No such bonds shall be sold for less than par and accrued interest, and the privilege of rejecting any or all bids shall be reserved, and said bonds may be again advertised for sale. (Act of March 22, 1883, page 68.) 41. Note: Special Acts Relating to Bond Issues: Among the general statutes and session laws of this state are a OHIO SPECIAL ACTS. 75 large number of acts authorizing or relating to the issue of bonds, the provisions of which are applicable only to one or more particular counties, cities or other municipalities. Many such acts refer to the issue of bonds for various city improve- ments and purposes in Cincinnati, Cleveland, Toledo, Colum- bus and other large cities of the state, by classes and grades. Other such acts by their terms refer to cities, villages or counties having at a certain specified census a designated pop- ulation, or a population within such specified numbers, as would confine the act to one particular municipality. Whatever may be the legal aspect of some of these acts, which is discussed elsewhere 1 , they are in effect special acts, and it would be altogether impracticable to attempt a digest of their provisions in this work. In the case of bonds issued under any such acts, reference must be made to the act itself. 1 See p. 40, et seq., herein. CHAPTER VIII. INDIANA. References are to the Revised Statutes of 1888, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution Adopted in 1851. 1. State Indebtedness: No debt can be contracted in behalf of the state, except to meet casual deficits in the reve- nue, to pay interest on the state debt, to repel invasion, sup- press insurrection, or, if hostilities be threatened, to provide for the public defense. The state is prohibited from assuming the debts of any municipality or corporation. (Art. 10, Sec. 66.) 2. Municipal Indebtedness: No political or munic- ipal corporation shall ever become indebted, in any manner, or for any purpose, to an amount in the aggregate exceeding two per cent of the taxable property within such corporation, to be ascertained by the last assessment for state and county taxes previous to the incurring of such indebtedness; and all bonds or obligations in excess of such amount shall be void. Pro- vided that in the time of war, foreign invasion or other public calamity, on petition of a majority of the property owners, in number and value, within such corporation, the public author- ities, in their discretion, may incur obligations necessary for the public protection and defense, to such an amount as may be requested in such petition. (Art. 13, as amended March i4th, 1881.) 3. Municipal Subscriptions: No county shall sub- scribe for stock in any incorporated company, unless the same shall be paid for at the time of such subscription, nor loan its credit to, nor borrow money for the purpose of taking stock in any such company. (Art. 10, Sec. 6.) (76) INDIANA COUNTY BONDS. 77 4. Special Legislation: The General Assembly is prohibited from passing local or special laws, for regulating county and township business, the assessment and collection of taxes, and other cases enumerated; and also in all other cases where a general law can be made applicable, all laws shall be general. (Art. 4, Sec. 22-23.) COUNTIES. 5. County Board: The corporate powers of counties are exercised by a board of three commissioners, under the name of ' ' County Commissioners of the County of " Regular sessions of the board are held on the first Monday in March, June, September and December in each year. Special sessions may be called, whenever required by the public interests, by the county auditor, or in case of his death or dis- qualification, by the clerk of the circuit court, or in case of the disqualification of both auditor and clerk, by the recorder. At least six days' notice of a special session shall be given, unless in the opinion of the officer calling the same, an emergency exists requiring a shorter notice, and in that case the officer may fix the time at his discretion. 1 The county auditor is ex- officio clerk of the board. (5731-5740, 5895.) 6. County Bonds for Public Buildings and Fund- ing: Whenever it shall be necessary to construct, complete or repair the courthouse, jail or other county buildings, or when- ever it may be desirable to fund or average any existing debt incurred for county purposes, and the revenues afforded by reasonable taxation are insufficient therefor, the county com- missioners may borrow for that purpose any sum not exceed- ing one per cent on the assessed valuation of the real and personal property of the county, and issue bonds therefor, in amounts of not less than $25 each, and bearing a rate of inter- est not exceeding the legal rate in the state or territory where the same are negotiated, not exceeding ten per cent per annum. Provided that no subsequent loan shall be made or author- 1 The judgment of the auditor or officer calling a special meeting seems to be conclusive as to the public interest requiring the same. Oliver v. Keightly, 24lnd., 514. 78 INDIANA COUNTY BONDS. ized * * * * as long as any former loan, made under the provisions of this act, shall remain unpaid. 1 (5749.) 7. Form and Sale of Bonds : The form of such bonds shall be substantially as follows : STATE OF INDIANA, COUNTY OF The county of will pay to the bearer .... years from the date hereof, the sum of. . . .dollars and. . . .cents, with interest thereon at the rate of. . . .per cent, payable annually, 2 at , in the state of on the .... day of. ... in each year. Commissioners of County. And attached to each bond shall be a certificate by the county auditor as follows : I , County Auditor, do hereby certify that the annexed bond was issued to the County Treasurer this .... day of , A. D., 1 8 . . In testimony whereof I have hereunto set my hand and affixed the seal of said Board of County Com- missioners, this .... day of . . . . , 18 . . County Auditor. The bonds shall be delivered by the county auditor to the county treasurer, and not sold at a greater discount than eight per cent. 8. Special Tax : The county commissioners are required to levy a tax of not less than one-tenth of one per cent on the taxable property of the county, to constitute a sinking fund for the payment of such bonds as they mature, and also by a spe- cific levy to provide by taxation for the annual interest thereon. (5749-5754-) 9. Courthouse Bonds, Act of 1885 : In counties where the construction of a courthouse was commenced and entered upon before January i, 1885, and in which the ordinary rev- 1 The above proviso only forbids a further loan when prior loans unpaid reach the limit of one per cent. (56 Ind., 550.) 2 Interest may be made payable semi-annually since April 8, 1885. (L/aws of 1885, Chap. 45, p. 149.) Prior to that date no authority existed to issue bonds with interest payable otherwise than annually. English v. Smock; 34 Ind., 115. * INDIANA COUNTY BONDS. 79 enues, together with one per cent of the taxable property thereof, are insufficient for its completion, the commissioners are authorized for the purpose of completing the same, to issue bonds in amounts not to exceed one per cent of the assessed valuation, in addition to bonds previously issued, provided the courthouse was under construction at the date of the passage of this act, and the exigencies of the case absolutely demand such issue. (Laws of 1885, Chap. 39, p. 70.) 10. Funding Bonds : Where the aggregate indebted- ness of the county having a voting population of over twenty thousand, as shown by the vote for governor at the last pre- ceeding election, amounts to or exceeds, at the date of the passage of this act, one per cent of the taxables of the county for the current year, the county commissioners may fund all or any part of such outstanding indebtedness with bonds bearing not to exceed six per cent interest, payable annually or semi- annually, at such time and place as the board may provide by an order spread upon the record of its proceedings. Such bonds can only be issued to fund or pay bonds or other eviden- ces of county indebtedness existing at the passage of this act, and in amount not in excess of such indebtedness. (5816- 5817, in force March 7, 1879.) 11. Temporary Loans Limitations: Whenever the aggregate indebtedness of any county having a voting popula- tion of twenty thousand, as shown by the last vote for gov- ernor, reaches one per cent of the county's taxables, no further indebtedness can be incurred in any manner or form, except temporary loans in anticipation of the revenue of the current fiscal year, payable out of such revenue and within such fiscal year, and not exceeding two-thirds of the tax duplicate of the preceding year. No such temporary loans shall be made until all temporary loans upon the revenue of any preceding year have been fully paid. Any ordinance, order, resolution, obli- gation, contract, note or other evidence of indebtedness to increase the debt of such county, except as herein provided, shall be absolutely null and void. (5818.) 12. Limit of Tax : The limit of taxation for one year 80 INDIANA TURNPIKE ROAD BONDS. is for county purposes thirty-three cents on the one hundred dollars, and for township purposes three cents, except for the township wherein is located the county seat, where it is limited to one per cent on the one hundred dollars. (5819.) 13. Turnpike Road Bonds : For the purpose of con- structing or improving any state or county road, the board of county commissioners of any county, are authorized to issue bonds of the county, in the aggregate not exceeding one-half per cent of the taxable property of the county, maturing at annual intervals after two years, and not exceeding eight years, bearing interest at a rate not to exceed six per cent per annum, payable semi-annually, to be sold at not less than their par value. 14. Improvement, How Made : Upon the presentation to the board of a petition describing the improvement desired, and signed by five or more of the landholders whose lands will be assessed for the costs of the improvement, and the filing of a bond to protect the county against the preliminary expenses, the board shall appoint three disinterested freeholders, with a competent surveyor and engineer, as viewers, to examine and lay out said road, and to assess and determine the damages to any premises through which it shall pass. Notice of the meet- ing of said viewers, describing the proposed improvement, shall be given by the auditor by publication for three consecutive weeks previously. At the next regular session of the commis- sioners, the viewers shall make a report showing the public necessity of the contemplated improvement, the damages claimed, and by whom, the amount assessed to each claimant, an estimate of the expenses thereof, and the benefited lots or lands lying within two miles of such improvement. There- upon, if public utility requires it, the commissioners shall enter an order that the improvement be made, describing the same, and the lands to be assessed for the expense thereof. But such order shall not be made until a majority of the resident land- holders of the county whose lands are reported as benefited, and ought to be assessed, and also the owners of the majority of the whole number of acres of all lands that are reported as INDIANA TURNPIKE ROAD BONDS. 8 1 so benefited, shall have subscribed to the petition first men- tioned, but minor heirs, unless represented by a legal guardian, shall not be counted. 15. Assessments of Benefits: Upon making such order the commissioners shall appoint three disinterested freeholders to apportion the estimated expense of said improvement upon the property embraced in the order, and report the same to the county auditor, who shall give notice by publication, for at least three consecutive weeks, of the time when the commissioners shall meet to consider said report. The commissioners may confirm or amend said report, or refer the same to a new com- mittee for re-assessment, upon whose report the same action shall be taken. The final action of the commissioners shall be entered upon their records, together with the report as con- firmed, with the estimated expense apportioned. The assess- ment constitutes a first lien on the real estate assessed, and shall be divided in such manner as to meet the payment of the principal and interest of the bonds issued as above, collected as other taxes, and applied only to such purpose. (5091-5097, as amended by Chap. 31, p. 35, Acts of '83.) 16. Cities or Towns May Issue Such Bonds: When any road to be improved, as above, begins or terminates in a city or incorporated town, said city or town may, upon the recom- mendation of the county commissioners, agree to pay in the bonds of such city or town (issued as above in the case of counties) in addition to any amount that may be assessed upon the real property of such city or town, an amount not exceed- ing one-fifth of the entire cost of said road, providing that the entire tax imposed for road purposes hereunder, shall not in any one year exceed fifty cents on the one hundred dollars. 17. Note: By an act approved April 8, 1885, the board of commissioners of any county are authorized to construct or improve any state or county road, substantially in the same manner, and under provisions very similar to the above, except that it provides that the original petition presented to the board shall, in the first place, be signed by a majority 82 INDIANA ROAD BONDS. of the resident landholders of the county, whose lands are within two miles of the proposed improvement, and does not require a preliminary bond. The viewers first appointed are authorized to apportion the estimated costs, expenses and dam- ages upon benefited lands within such two miles. It further provides for a superintendent of such improvement, and the execution by him of negotiable certificates, bearing six per cent interest, for the sum assessed against each tract of land, for the payment of such assessment, in six equal installments, in six to thirty-six months from the dates of such certificates; that the whole amount thereof may be paid at any time; and the cer- tificates may be given for any sum due on account of such improvement, or negotiated at not less than par. This act does not provide for the issuing of bonds by tha county, but includes substantially the same provisions as the former act as to any city or town issuing bonds. 1 (Chap. 57, Acts of 1885.) 18. Purchase of Toll Roads: The county commis- sioners of any county, when petitioned by fifty citizen free- holders, shall submit the question of purchasing the toll roads of the county, to the voters thereof, at any regular spring or fall election, or when no such election is near at hand, at any special election called by giving at least twenty days' public notice. If a majority of those voting are in favor thereof, and a majority of the commissioners conclude to make such pur- chase, they shall enter an order to that effect. Thereupon there shall be appointed as appraisers, for each road to be pur- chased, three competent, disinterested freeholders and house- holders; one by the commissioners, one by the judge of the circuit court of the county, and one by the directors of the road 1 It has been expressly decided that this does not repeal previous acts on the same subject. Robinson v. Rippey, in Ind., 112, County of Montgomery v. Fullen, Id., 410 (1887.) The proceedings and orders of county boards establishing a free gravel road, over which they have jurisdiction, cannot be collaterally impeached unless absolutely void. Also bonds issued by county commis- sioners under the above provisions do not constitute a county indebted- ness within the meaning of Article 13 of the Constitution ; they being payable out of the particular money derived from the assessment on adjacent lands, and from no other source. Strieb v. Cox, in Ind., 299 (1887). See pp. 32-36 herein. INDIANA ROAD BONDS. 83 to be purchased. The appraisers, after being duly qualified, shall within twenty days after their appointment make an appraisement of the road, and within thirty days after such appraisement they shall make a written return to the commis- sioners, under oath, of the valuation of said road, including the bridges and culverts. The commissioners are authorized to purchase the road at a price not to exceed said appraisal, or may reject appraisal and have other appraisers appointed with the same powers and duties. No county under this act can purchase any turnpike while in debt for one previously pur- chased. 19. Bonds Issued : The commissioners of any county, in the treasury of which there is not sufficient money to pay for such purchase, may issue the bonds of the county, payable in installments, or at intervals not exceeding in all a period of eight years, bearing not to exceed six per cent interest, and such bonds and the interest thereon shall be paid in such in- stallments as the board shall deem best by a special tax levied for that purpose. (5107-51 10.) 20. Same, Act of 1883 : Upon the presentation of a petition to the board of commissioners, praying for the appraise- ment, purchase, repair and conversion of any gravel or macad- amized toll road into a free road, signed by stockholders owning or representing more than one-half of the stock of such toll road company, fully describing the road and showing that it is of public benefit and utility, the board shall appoint three disinterested freeholders as viewers, and a practical engineer, to view and estimate the cash value of such road, the total cost of putting the same in good repair, and report the same to the commissioners with the names of the owners of all benefited lands lying within one and one-half miles of such road, stating the number of acres owned by each. If it appears that said petition is also signed by persons owning a majority of the lands benefited, the board shall order the repair, purchase and conversion of such road into a free gravel road. 21. Assessment of Benefits : The expense thereof shall be assessed against the lands benefited, by three disinterested 84 INDIANA CITY BONDS. freeholders, appointed by the commissioners. The board has full power to hear and consider all objections, or to refer the matter to another set of viewers for re- appraisal. The final action of the board shall be entered in full upon the records thereof, together with the report of the viewers confirmed. The assessment constitutes a first lien upon the property assessed. 22. Bonds Issued : To meet the expenses .of such pur- chase and repair, the board of county commissioners may issue the bonds of the county, maturing at annual intervals after a period of two years, and not extending beyond ten years, bearing interest at not to exceed six per cent, payable semi- annually. Such bonds shall be sold at not less than par, to the highest bidder, after three weeks' publication in not less than two newspapers of general circulation, published in the county, and by posting notices at the door of the courthouse. The said assessment shall be divided into such sums as shall be sufficient to pay principal and interest of the bonds as they become due, and applied only to their payment. (Chap. 128, Acts of 1883, as amended by Chap. 85, Acts of 1885.) CITIES AND TOWNS. 23. Bonds In Cities of Fifteen Thousand and Over: Any incorporated city containing a population of fifteen thou- sand or over, may borrow money for legitimate corporate purposes to an amount in the aggregate not exceeding two per cent of the taxable property of the city as shown on the tax duplicate for the year in which such loan is effected. Before the issue of any such bonds is ordered, the city assessor, clerk and treasurer shall join in an affidavit stating the total value of the taxable property of such city, as shown by the tax duplicate, and also the fair valuation thereof, which affidavit shall be re- ported by the city clerk to the council. Thereupon the council shall cause an ordinance to be introduced providing for said loan, and referred to a committee for report at the next regular meeting. Such ordinance requires for its passage a two-thirds vote of all the members of the council. 24. How Issued : The rate of interest, not exceeding ten INDIANA CITY BONDS. 85 per cent, the manner and time of payment of such bonds, not exceeding twenty years, and of the interest thereon, may be prescribed by the council. The bonds shall be signed by the mayor and countersigned by the city clerk under the corporate seal of the city, and be delivered to the city treasurer, who shall keep a proper record thereof. 25. Sale : The council, through a committee appointed for that purpose, of which committee the treasurer shall be a member, may negotiate the sale of such bonds. They shall sell the same to the highest bidder, but at not less than par, after notice published for such time as they deem proper, in a newspaper of general circulation. (3116-3119, in force March 10, 1873.) 26. Funding Bonds In Cities of over Sixteen Thou- sand Voters: Such cities as had, at the passage of an act, February 13, 1877, an aggregate debt of two per cent of their taxables, were authorized to fund so much of said indebted- ness as was outstanding May i, 1877, with bonds bearing not more than six per cent interest, payable semi-annualty, at such time and place as the council by ordinance might provide. When such aggregate debt amounts to or exceeds such two per cent, any further increase and any and all evidence thereof shall be null and void. 27. Tax Limit. Cities of over sixteen thousand are prohibited from levying or assessing a tax for any year in excess of ninety cents on the one hundred dollars, and boards of school commissioners of such cities are limited to twenty cents on the hundred dollars, exclusive of the library tax provided for under Sec. 4460 of Statutes. So much of any law as requires the common council to levy of a tax for sinking fund is repealed as to such cities. (3120-3122, in force February 13, I877-) 28. Funding Bonds: In Cities of under Sixteen Thou- sand Voters: Any city or town having a voting population of under sixteen thousand voters, as shown by the votes cast for secretary of state at the last preceding election, by a two- thirds vote of the members of the common council, or board 86 INDIANA CITY BONDS. of trustees, may fund any outstanding indebtedness evidenced by bonds, notes or other obligations, heretofore issued or negotiated, and issue bonds therefor, bearing interest at a rate not to exceed six per cent, payable semi-annually, in denomi- nations of not less than fifty nor more than one thousand dol- lars, payable at any place named therein, and at any time not later than twenty-five years from date. 29. Special Tax : The council or board of trustees are required to provide by taxation for the payment of the interest as it accrues on said bonds, and also may provide a sinking fund to liquidate the principal thereof at maturity. The inter- est coupons of said bonds, by order of such council or board of trustees, may, when due, be receivable for any taxes levied to pay such interest, and when so ordered and expressed on the face of such coupons, they shall be receivable for any such taxes thereafter levied. (Chap. 13, Acts of 1887, in force February 15, 1887.)' 30. Water- works Bonds : The common council of any city engaged in constructing water-works, to supply such city with wholesome water, may, by a vote of two-thirds thereof, at any regular or adjourned meeting, issue bonds bearing not to exceed ten per cent interest, to be negotiated at not less than ninety-seven cents on the dollar, and the proceeds applied only to the construction of such water- works. (3114, in force March 7, 1873.) 31. Same, in Certain Cities : The common council of any city or board of trustees of any incorporated town having a population of less than forty-five thousand, which shall by ordinance or resolution decide to erect, extend, or improve water-works, are authorized to issue the bonds of such city or town in denominations of not less than fifty nor more than one thousand dollars, payable at any place designated therein, in not less than five nor more than twenty years from date, with interest payable annually or semi-annually, and to be sold at not less than ninety-four cents on the dollar. 1 This act appears to repeal the former acts of March 3, 1877, and March 7, 1881, relating to the same subject. (3125-3126, 3230-3231.) INDIANA CITY BONDS TOWN LOANS. 87 32. Election : The erection of said water-works must be first approved by a majority of all the votes at a general or special election, which may be ordered upon a petition of one hundred freeholders and resident tax-payers, and notice there- of, signed by the clerk, shall be given by publication in some newspaper printed and published in such city or town for three weeks successively, before the day of such election. 33. Tax: A tax of not to exceed fifty cents on each one hundred dollars, and one dollar on each poll shall be levied each year for the purpose of paying the principal and interest of such loans. (3265-3283, in force March 25, 1879.) 34. Any incorporated city is authorized to construct and establish water-works and gas-works, or to become a part stockholder in any incorporated company or association author- ized by such city to construct water- works. (Sec. 3106, sub- divisions 26 and 28.) 35. Aid to Roads, Bridges, etc.: 1 Any incorporated city, upon petition of a majority of resident freeholders thereof, is authorized to borrow money to subscribe to the stock of any plank road, macadamized road or railroad, hydraulic company or water power running in or through such city, or near the corporate limits thereof, or to any bridge company to construct a bridge across any river or water course within or bordering on this state, where such bridge has either terminus within such city, or to public improvements or public works, but such debt shall not be payable, either in money or bonds, until the completion of such improvements to be aided; and the council of such city shall add to the tax duplicate of each year thereafter a levy sufficient to pay the annual interest on such debt or loan, with an addition of not less than five cents on the one hundred dollars, to create a sinking fund for the liquidation of the principal and interest thereof. (3152-3153.) 37. Town Loans : No incorporated town shall have power to borrow money or incur any debt or liability unless the owners of five-eights of the taxable property of such town, as 1 Also see % 16 and 17 under " Counties " herein. 88 INDIANA TOWNSHIP DEBTS SCHOOL BONDS. evidenced by the assessment roll of the preceding year, petition the board of trustees to contract such debt or loan. And such petition shall have attached thereto an affidavit verifying the genuineness of the signatures to the same. The trustees shall add to the tax duplicate of each year a levy sufficient to pay the annual interest 011 such debt or loan, with an addition of not less than five cents on the one hundred dollars, to create a sinking fund for the payment of the principal. 1 (3342. ) 37. Township Debts : Whenever it becomes necessary for the trustee of any township to incur on behalf of the town- ship any debt in excess of the fund on hand to which such debt is chargeable, and of the tax for the current year, the trustee must first procure an order from the board of county commis- sioners authorizing him to incur such debt. Before the board of commissioners can grant such an order the trustee must first file a petition in the county auditor's office, stating the object for which the debt is to be contracted, and the amount required, and make affidavit that notice has been given of the filing of such petition, by posting notices in five public places in his township, for at least twenty days prior to the first day of the meeting of the county board. (6006-6007.) 38. School Bonds : For the purchase of any ground, and the erection of building for school purposes, or for the payment of any debt created by the school trustees there- for, any city or incorporated town in this state on the filing by the board of trustees of such city or town of a report, under oath, with the council or board of trustees, showing the actual or esti- mated amount required for such purpose, and on the passage of an ordinance authorizing the same, may issue the bonds of such city or town. 39. Amount Form Sale : The amount issued shall not exceed in the aggregate fifty thousand dollars, in denomina- tions of not less than one hundred nor more than one thou- sand, and payable at any place designated therein in not less than one nor more than twenty years from date, with interest 1 This has been repealed as to school bonds. 44 Ind., 83. INDIANA RAILROAD AID BONDS PLACE OF PAYMENT. 89 payable annually or semi-annually. Said bonds shall be sold at not less than ninety-four cents on the dollar. 40. Tax: The common council or board of trustees of any such incorporated towns issuing such bonds, are required to levy annually a special tax sufficient to pay the interest and principal as the same becomes due; but such additional special tax shall not in any one year exceed fifty cents on the one hundred dollars of taxable property and one dollar on each poll. (4488.) 41. School Corporations: Each civil township and each incorporated town or city is declared to be a distinct municipal corporation for school purposes, by the name and style of the civil township, town or city corporation. 1 (4438.) 42. General Railroad Aid Bonds : Counties border- ing on the state line, and cities and townships therein, upon the petition of a majority of the resident freeholders thereof, are authorized to subscribe to the capital stock of any railroad company to aid in the construction of its road, opposite such county in any other state, to form connection with other rail- roads in such counties, and to issue bonds therefor. 2 (4077- 4092. ) 43. Bonds Place of Payment : It seems that under the Indiana statute municipal bonds must be made payable at 1 This section has been construed by the supreme court, in connec- tion with section 4437 previously enacted, to the effect that the legal name of the several school corporations, is the name of the civil corpor- ation, with the word "school " prefixed. That court has also decided that " the township and school township, the city and school city, and the town and school town are as distinct and separate legal entities, as if they existed in different territory and had an entirely different set of offi- cers. * * * * The two corporations are as distinct legal personages as if they had no connection with each other. * * * The school corporation of the several townships, towns and cities have the same name as the civil corporation with the word ' school ' prefixed to distinguish them from the latter. ' Utica Tp. v. Miller, 62 Ind., 230 (1878). City of Huntington v. Day, 55 Ind., 7 (1876). McLaughlin v. Shelby Tp., 52 Ind., 114 (1875). Sims v. McClure, 52 Ind., 267 (1875.) State v. City of Terre Haute, 87 Ind., 212 (1882). 3 But see the constitutional prohibition as to such subscriptions by counties. 9O INDIANA BONDS PLACE OF PAYMENT. some bank to make them free from equities in the hands of a bona fide holder. Otherwise the municipality can make the same defense against such holder as against the original party. 1 1 Madison Co. v. Brown, 28 Ind., 161. CHAPTER IX. ILLINOIS. References are to Hurd^s Revised Statutes of 1887, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Present Constitution in force August 8, 1870. 1. State Credit : The state shall never pay, assume or become responsible for the debts or liabilities of, or in any manner give, loan or extend its credit to, or in aid of any public or other corporation, association or individual. (Art. 4, Sec. 20. ) 2. State Indebtedness ; The state may, to meet casual deficits or failures in revenues, contract debts not to exceed in the aggregate two hundred and fifty thousand dol- lars. The general assembly is also required to provide for all appropriations necessary to meet the ordinary and contingent expenses of the government until after the adjournment of the next regular session. No other debts, except for the purpose of repelling invasion, suppressing insurrection, or defending the state in war, shall be contracted, unless the law authoriz- ing the same shall be submitted to and approved by a majority of voters voting for members of the general assembly at a gen- eral election, which law must be accompanied by a provision for levying a tax for the payment of the interest as it accrues. A previous notice thereof shall be given by publication for three months at least prior to such election. (Art. 4, Sec. 18.) 3. Municipal Subscriptions, Donations and Credits: Neither the general assembly nor any county, city, town, township, school district, or other public corporation shall ever make any appropriation or grant any donation of land, (9') 92 ILLINOIS CONSTITUTIONAL PROVISIONS COUNTIES. money, or other property, in aid or support of any church for sectarian purposes, or to any educational institution controlled by any church or sectarian denomination whatever. No county, city, town, township or other municipality shall ever become a subscriber to the capital stock of any railroad or private corporation, or make donation to or loan its credit in aid of such corporation. This provision does not affect sub- scriptions which had been authorized and voted for under existing laws. (Art. 8, Sec. 3; and amendment adopted with present constitution.) 4. Municipal Indebtedness : No county, city, town- ship, school district or other municipal corporation shall be allowed to become indebted in any manner or for any purpose to an amount in the aggregate exceeding five per cent of the taxable property therein, as shown by the last previous assess- ment for state and county taxes. Any municipal corporation incurring any such indebtedness shall, before or at the time of doing so, provide for the collection of a direct annual tax suffi- cient to pay the interest on such debt as it falls due, and also to pay the principal within twenty years. (Art. 9, Sec. 12.) 5. Special Legislation : The general assembly is pro- hibited from passing local or special laws (among other things) incorporating cities, towns, or villages, or changing or amend- ing the charter of any town, city or village. (Art. 4, Sec. 22.) COUNTIES. 6. County Board : The corporate powers of each county are exercised by a county board. In counties not under township organization the board consists of three county commissioners elected for three years. The county affairs of Cook county are managed by a board of fifteen commissioners, and in other counties under township organization the county board is composed of the town and other supervisors. Annual meetings of the board of supervisors are held on the second Tuesday of September, and regular meetings are also held on the second Monday of July, of each year. Special meetings are called by the clerk on the written request of one-third of the ILLINOIS COUNTY BONDS. 93 members of the board, by a written notice sent to each mem- ber and published in some newspaper in the county. In counties not under township organization regular sessions of the board are held on the first Mondays of December, March, June and September, and the second Monday of July, and special sessions on the call of the chairman or any two mem- bers of the board. A majority of the members, in each case, constitutes a quorum. The county clerk is ex-officio clerk of the county board. (Const. Art. 10, Sees. 5 to 7; and Chap. 34, Sees. 22 to 63; Chap. 35, Sec. 10.) 7. Tax Limit Additional Amount Authorized: County authorities cannot assess taxes, the aggregate of which shall exceed seventy-five cents on the one hundred dollars valuation, unless authorized by a vote of the people. When the county board deem it necessary to assess taxes exceeding this limit they may, by an order entered of record setting forth the amount required and the purpose for which the same is desired, provide for the submission of the question to assess the addi- tional rate to a vote of the people at the next election of county officers, of which submission the county clerk is required to give notice in his election notice. A majority of the votes cast upon the question are required to authorize the additional tax. The question of raising an additional tax may be included in a question for issuing bonds. (Const. Art. 9, Sec. 8; and Chap. 34, Sees. 27-28. 8. County Bonds i 1 When the county board of any county deem it necessary to issue county bonds to enable them to perform any of the duties imposed upon them by law, they may, by an order entered of record, specifying the amount of bonds required and object for which they are to be issued, submit to the legal voters of their county at any general elec- tion the question of such issue. The vote shall be by ballot, on which shall be written or printed, ' ' for county bonds' ' or "against county bonds," and a majority of the votes thereon is required to authorize the issue. g. Amount Form: The amount of bonds so issued 1 Also see \ 25, et seq. 94 ILLINOIS CITY AND VILLAGE BONDS. shall not exceed, including the then existing indebtedness of the county, five per cent of the taxable property of the county. The bonds shall be issued in denominations of not less than twenty-five nor more than one thousand dollars each, payable in not less than one nor more than twenty years, with interest payable annually or semi-annually, at a rate of not more than eight per cent per annum. 1 (Chap, 34, Sec. 40.) CITIES, VILLAGES AND TOWNS. 10. City and Village Bonds : The city council in cities, and the president and board of trustees in villages, are authorized to borrow money on the credit of the corporation for corporate purposes, and issue bonds therefor in such amounts and form, and on such conditions, as may be prescribed, but in no case must the aggregate indebtedness exceed five per cent of the taxable property therein. Before or at the time of incurring any indebtedness, provision shall be made for a direct annual tax sufficient to pay the interest on such debt as it falls due, and to discharge the principal thereof within twenty years. 11. Refunding Bonds: 2 Cities and villages through their proper authorities are authorized to issue bonds in place of or to supply means of meeting maturing bonds, or for the consolidation or funding of the same. ( Chap. 24, Art. 5, Sec. i. ) 12. Water-works: Cities, incorporated towns and vil- lages in this state are authorized to provide for a supply of water for the purpose of fire protection, and for the use of the inhabitants thereof, by the erection, construction and maintain- ing of a system of water- works, or by uniting with any adjacent city, town, or village therein, or by procuring such supply of water, through any adjacent city, town, or village having water-works. Contracts for the erection or construction of such works are let to the lowest bidder upon not less than three weeks' public notice of the terms and conditions, given by publication in a newspaper in such city, town or village; or if there be none, in one published in the county. 1 The Act of 1873 authorizing counties to fund their war bounty indebtedness, is not deemed of sufficient importance at this date to include herein. (Chap. 34, Sees. 86-90.) 2 Also see \ 25 et seq. ILLINOIS CITY AND VILLAGE BONDS. 95 13. Borrowing Money for Water-works: Such cities, and incorporated towns and villages may borrow money and levy and collect a general tax for the erection, construction and maintaining of such water-works. (Chap. 24, Sees. 226, 227.) 14. Record of City Bonds: The city comptroller, or if there shall be no such officer, the city clerk, is required to keep in his office a book kept for that purpose showing a cor- rect list of all the outstanding bonds of the city, number and amount of each, for what, and to whom said bonds are issued; and when any city bonds are purchased, paid or cancelled, a record of such fact shall be made therein. (Ibid., 106.) 15. Bonds for "Water Supply Pipe: Whenever the corporate authorities of any city, town or village shall provide by ordinance for the laying of water supply pipes, to be paid for by special assessment, as provided by law, they may in their discretion provide by ordinance, any time prior to the issuance of the warrant for assessment to the collector, that the amount of the assessment or cost of such improvement appor- tioned to the municipality as a public benefit, or any part thereof, may be paid for with bonds payable at such time or times within twenty years, as may be provided in the ordinance. (Ibid., Sec. 234.) 16. Improvement Districts in Cities and Villages: The proper authorities of any incorporated city or village, the site of which is wholly or partially subject to overflow, and which site may be surrounded in whole or in part by levees, dikes or embankments to prevent such overflow, may lay off such city or village or any part thereof into improvement dis- tricts for the purpose of draining, protecting and improving the same. The cost of such improvement may be provided for by special assessment against the property benefited, pay- able in installments or otherwise. 17. Improvement District Bonds: When the cost of any such improvement has been estimated and ascertained by a competent engineer, and the benefit assessed, such city or vil- lage may cause a series of bonds to be issued sufficient to pay 96 ILLINOIS CITY, VILLAGE AND SCHOOL BONDS. the special assessment or special tax so ascertained. The bonds shall bear interest at a rate not exceeding six per cent, and may run for any term, not exceeding twenty years, as may be designated by ordinance. Said bonds shall be a lien upon the lots and blocks, or parts thereof, which shall be designated therein, but before any bond shall be issued, the owners of such lots or blocks to be charged .shall indorse upon the back of .such bond his consent substantially as follows: "I hereby indorse the within bond, and consent that the lot or lots, or parts thereof therein designated, shall become liable for the interest and principal therein named, and the same shall be a lien upon said property from this date until paid off and dis- charged." Said bond, when executed by such city or village, and indorsed by such owner, shall be recorded in the record- er's office of the county, which record shall be notice of the lien created to the same extent, as in the case of mortgages, and shall have the same force and effect. No coupon shall be recorded. 18. Payment of Said Bonds: It is the duty of any city or village issuing such bonds to provide by ordinance for the collection of the interest and principal from the property so charged, but such city or village shall not be liable for the interest or principal thereof out of any fund except the special fund of the improvement district to which the bonds apply, and for the faithful enforcement of the ordinance providing for the collection thereof. 19. Rights of the Holder: The owner or holder of any such bond, may in addition to the above provisions, have his remedy in any court upon the indorser thereof, for failure to pay interest or principal, and in case of two successive failures by any person liable to pay the interest thereof, such bonds shall be held to be due, and the holder may enforce his lien for interest and principal by foreclosure in any court of competent jurisdiction. (Chap. 24, Sees. 297 to 304.) SCHOOL BONDS. 20. School Officers : Each congressional township is a school township, and is under the management of a board of ILLINOIS SCHOOL BONDS. 97 three trustees. Townships are divided by such trustees into school districts, each of which is under the control and man- agement of three directors. In all school districts having a population of not less than two thousand inhabitants, and not governed by any special act in relation to free schools, there is a board of education consisting of six members, and three additional members for every ten thousand inhabitants. Such boards of education have all the powers of directors in school districts. 21. School District Bonds: When authorized by a majority vote of the people at an election called for that pur- pose, the directors of any school district may borrow money and issue bonds for the purpose of building schoolhouses or purchasing school sites, or for repairing and improving the same. Notice of such election shall be given by the directors at least ten days previously, by notices posted in at least three of the most public places in the district, specifying the place where the same is to be held, the time of opening and closing the polls and the questions to be voted upon. All elections are required to be held on Saturday, but may be adjourned for one week, if required by the public good in the opinion of the directors or a majority of the voters so desiring. 22. Amount of Bonds How Issued: The amount of bonds so issued shall in no case exceed five per cent, including the existing indebtedness of the taxable property of the dis- trict, nor shall the tax levied in any one year for building schoolhouses exceed three per cent of such taxable property. Said bonds shall be executed by the officers, or at least two members of the board, in sums of not less than one hundred dollars, and bear interest at a rate not to exceed eight per cent per annum. 23. Bonds Registered: All such bonds before being issued shall be registered, numbered and countersigned by the school treasurer of the township wherein the schoolhouse of such dis- trict is or is to be located. Such registration shall be known as the "bond register," in which shall be entered the record of the election authorizing the directors to borrow money, and a 98 ILLINOIS SCHOOL .VXD FUNDING BOND. description of the bonds so issued, giving the number, date, to whom issued, amount, rate of interest and when due. The exact amount received for each and every bond issued shall be entered in the bond register, and also the payment and can- cellation of all such bonds, when the same are paid. (Chap. 122, Sees. 42 and 47.) 24. Township Bonds for High School: Upon petition of fifty voters of any school township, filed with the township treasurer, at least fifteen days preceding a regular election of trustees, it is made the duty of said treasurer to submit to the voters at that election, the question of establishing a high school for such township. If a majority of the votes at such election shall be in favor of the question, the trustees are required to establish such a school. For the purpose of build- ing a schoolhouse for that purpose, and supporting and main- taining said school, the township is regarded as a school dis- trict, and the trustees have the power and discharge the duties of directors for such district, in all respects. In like manner the voters and trustees of two or more adjoining townships, or parts thereof, may co-operate in the establishment and mainte- nance of a high school, on such terms as may be made in writ- ing by the boards of trustees. These provisions evidently authorize the issue of township bonds by trustees, for the pur- poses name'd, in the same manner as school district bonds are issued" by district directors. (Chap. 122, Sec. 35.) 25. School Bonds in the City of Chicago : In cities having a population exceeding one hundred thousand inhabit- ants, the board of education, with the concurrence of the city council, are authorized to issue bonds for the purpose of build- ing, furnishing and repairing schoolhouses, for purchasing sites for the same, to provide for the payment of said bonds, and to borrow money for school purposes upon the credit of the city. (Ibid., Sec. 80.) 26. Funding Bonds : Any county, city, town, town- ship, school district or other municipal corporation having out- standing any indebtedness evidenced by bonds or otherwise, or ILLINOIS GENERAL FUNDING BONDS. 99 having contracted debts which are subsisting obligations, is au- thorized to issue new bonds to the holders of such indebtedness, or any portion thereof, or for the purpose of obtaining pro- ceeds for the payment of such indebtedness. Such issue must first be authorized by a majority vote of the legal voters of such municipality, voting at some general election or at a special election held for that purpose. 27. Election How Called : Any such election may be called by the proper authorities on the petition of ten legal resident voters asking that the question of issuing such bond be submitted to the voters at such election. Notice shall be given by posting in ten of the most public places therein, and by publishing the same in the nearest newspaper twenty days previously. The notice shall state the number and amount of bonds proposed to be issued, the kind or class, as hereafter specified, the amount of each, rate of interest, when and where payable, for what purpose issued, and when and where the election is to be held. 28. How Issued: The bonds shall be issued in such sums as may be agreed upon, and shall run not to exceed twenty years, and bear interest at a rate not exceeding seven per cent, except that bonds maturing within five years may bear interest at not to exceed eight per cent. All bonds so issued shall show upon their face that they are issued under this act, and the purpose for which they are issued, and shall be of uniform design and style throughout the state, to be pre- scribed by the state auditor. 29. Bonds Classified : The bonds may be of three differ- ent classes, the first class to consist of bonds of which only the interest is payable annually; the second class to consist of those of which the interest and five per cent of the principal are to be paid annually; and the third class to consist of a graded series, the principal and interest of the first grade being pay- able at the end of one year from date, the second at the end of two years, and thus to the end of the series; the class to be issued to be at the option of the legal voters voting thereon. 30. Bonds -by Whom, Executed: Said bonds, when is- 100 ILLINOIS GENERAL, FUNDING BONDS. sued in behalf of counties under township organization, shall be executed by the chairman of the board of supervisors, and the clerk of the county court attesting the same with his sig- nature and official seal; in counties not under township organi- zation, by the acting chairman of the county commissioners and said clerk of the county court; when issued in behalf of cities, by the mayor and city clerk with the city seal attached; in behalf of towns organized under the township organization law, by the supervisor or supervisors thereof and the town clerk; and when issued in behalf of other municipalities, by the president, treasurer, or chief executive officer, together with the clerk or secretary thereof. 31. Valuation of Taxable Property Indorsed on Bonds : It is the duty of the county clerk of the county, or other proper officer of the municipality to whom the assessment rolls for state taxes are returnable, within five days after the total value of the property subject to taxation therein shall be returned to him, to make out and transmit to the state auditor, to be filed in his office, a certificate showing the total value of all the tax- able property of such municipality. It is the duty of the auditor to place on the back of all of said bonds or other evidences of indebtedness, a certificate showing the aggre- gate amount of the taxable property of the municipal corpora- tion issuing the same, setting forth separately the value of the real estate and personal property. In case no such return has been made to the auditor, his certificate shall be based on the affidavit made by the officers of the corporation issuing the bonds. (See Sec. 33. ) 32. Amount of Bonds Sale : The new bonds or other evidences of indebtedness issued under this act shall not be for a greater sum in the aggregate than the principal and accrued or earned interest unpaid of such outstanding bonds or indebt- edness. It is made the duty of the state auditor, on the request of the corporate authorities issuing them, and at the expense of such corporation, to negotiate such bonds at not less than par and on the best terms which can be obtained; or any such municipality may, through its corporate authorities, so nego- ILLINOIS GENERAL FUNDING BONDS. IOI tiate and sell said bonds without the intervention of the auditor. 33. Registry of Bonds : All bonds or other evidences of indebtedness so issued shall be registered by the clerk or other proper municipal officers having the custody of its records, in a book kept for that purpose, showing the date, amount, num- ber, class, date of maturity, rate of interest, place of payment, and a description of the bond or indebtedness for which, or for the payment of which, the same was given, as nearly as prac- ticable. On presentation to the state auditor he shall also register said bonds in his office, showing the same facts and also when and where principal and interest are payable, under what act, and by what authority, for what purpose, and by what municipal corporation the same were issued, and the name of the person presenting the same for registry. The auditor shall also certify under the seal of his office upon each bond the fact of such registry. 34. Preliminary Certificate Required : No such bonds shall be entitled to registry until a sworn certificate shall have been filed with the auditor showing that all the requirements of this act have been fully complied with in their issue. In the case of county bonds this affidavit shall be made by the chairman of the county board, in the case of township bonds by the supervisor, in the case of city bonds by the mayor, in the case of town or village bonds by the chairman of the town or village board, and in case of school district bonds by each of the directors. The certificate shall set forth the date of the election at which the issue was authorized, and shall state the class, date, number, amount, rate of interest, and date of maturity of bonds, the aggregate equalized value of real prop- erty and of the personal property assessed in such locality for the previous year, together with any other information relating thereto required by the auditor. 35. Auditor to Certify Tax Rate : When bonds or other evidences of indebtedness have been so registered, the state auditor shall annually ascertain the amount of principal and interest due, or to become due, for the current year thereon, and upon the basis of such certificate of valuation he shall IO2 ILLINOIS FUNDING BONDS. ascertain and certify to the county clerk of the county, or other proper officer, wherein the same is to be raised, the rate of tax required to meet the payment of the amount so due, and the rate certified shall thereupon be deemed added to and a part of the per cent which is or may be levied or provided for the purpose of state revenue, and shall be so treated by such clerk or other officer. 36. Application of Tax Collected : The amount of such tax collected for such purpose shall be transmitted to the state treasurer together with other state taxes, except that it shall be legal for the county collector to pay therefrom any such bonds or interest coupons presented to him before such money is transmitted. Upon receipt of the funds so collected by the state, they shall be held in trust for and applied to the payment of said bonds or other evidences of indebtedness. 37. Default in Payment : In case of the default in the payment of any such registered bond, the holder thereof may cause the same to be registered in the office of the state auditor as a matured or unsatisfied bond, and thereupon for the pur- pose of providing for the payment of the principal, at the rate of five per cent thereof annually, and of the interest in arrears, the same proceeding shall be had as provided above, by the collection of an annual tax for said purposes from year to year until the full satisfaction of such indebtedness. (Chap. 113. Sees, i to n, as amended in 1879.) 38. Funding Bonds Act of 1872 :' The proper author- ities of any county, city, town, township, school district or other municipal corporation which has issued bonds or other evidences of indebtedness on account of any subscription to the capital stock of any railroad company, in aid of any public buildings or other public improvements, or for any other pur- pose, which are now outstanding legal obligations against such municipalities, may, upon the surrender thereof, issue in the place of such outstanding bond or other indebtedness to the 1 We omit from this digest an act " to fund and provide for paying the railroad debts of counties, townships, cities and towns." In force April 16, 1869, and appearing as Sees, n to 24, Chap. 113. ILLINOIS FUNDING BONDS SINKING FUND. 103 holders or the owners of the same, new bonds or other evi- dences of indebtedness, in such form, for such amount, upon such time, not exceeding twenty years, and drawing such rate of interest, not exceeding ten per cent, as may be agreed upon with such holders and owners. Said bonds shall show on their face that they are issued under this act. 39. Must be Authorized Limit : The issue of said new bonds must first be authorized by a majority vote of the legal voters of the municipality voting either at some annual or special election therein. The}^ must not be issued to an amount so as to increase the aggregate indebtedness of the municipal corporation beyond five per cent of the taxable property therein. (Ibid., Sec. 27, in force March 26, 1872, as amended by act in force July i, 1875.) 40. Sinking Fund for Local Indebtedness : In any county, township, city, town or school district having out- standing bonds registered in the office of the state auditor, the board of supervisors, or board of county commissioners, town auditors, city council, town trustees, or school directors, as the case may be, may, by resolution spread upon their records and certified to the auditor, request said auditor to create a sinking fund to provide for the payment of such outstanding bonded debt, or any part thereof, as it may become due. The resolu- tion shall specify the number, amount to be provided for, the time when the same shall become due, and the amount desired to be raised annually to meet the same. 41. Aiiditor to Certify Rate Fund Invested : The audi- tor shall file such resolution in his office, and thereafter it shall be his duty in certifying the amount of taxes to be raised within said district, to fix and certify a rate, to be denominated "Sinking Fund Tax," sufficient to produce the required amount, to be levied and collected as other state taxes. The state treasurer shall invest the said taxes in government bonds or in the bonds of the municipality to which such fund belongs and for which it is created, at the lowest price at which they can be purchased, not exceeding par and accrued interest, and the proper officers of such municipality shall have the 104 ILUNOIS SINKING FUND ROAD AND BRIDGE BONDS. right to determine the kind of bonds they will authorize to be purchased, and to fix the maximum price to be paid. Any surplus remaining after the payment of the indebtedness for which the same was collected shall be returned to the proper municipality upon legal request. (Ibid. , Sec. 34-44.) 42. Bonds for Roads and Bridges : In counties under township organization the commissioners of highways have charge of roads and bridges. When such commissioners desire to expend on any bridge or other distinct and expensive work on a road, a greater sum of money than is available to them by other means, they may petition the town supervisors to call a special town meeting and vote upon the proposition, w r hich shall be clearly stated in the petition. This petition shall be signed by the commissioners, officially, and by at least twenty-five free- holders of the town, and filed in the office of town clerk. Thereupon the town clerk, upon the written order of the super- visors, shall post up in ten of the most public places in such town, notices of a special town meeting, stating the object, time, place (being that of the last town meeting), maximum sum to be borrowed, and the manner of voting, which shall be by ballot. 43. How Issiied: If a majority of the legal voters voting at such election shall be in favor of the submitted proposition, the supervisors and town clerk, acting under the direction of the commissioners, shall issue from time to time as the work progresses, a sufficient amount in the aggregate of the bonds of such town for said purpose. The bonds may be of such denomination, bear such rate of interest, not exceeding six per cent, upon such time, and be disposed of at not less than par, as the necessities and conveniences of the said town officers require. (Chap. 121, Sec. 20.) 44. Bonds for Bridges Over Division Streams : Bridges over streams which divide towns or counties, and bridges over streams on roads, or county or town lines, shall be built and repaired at the expense of such towns or counties. Whenever the commissioners of either such adjoining towns refuse to enter into such joint contracts to build and maintain ILLINOIS BRIDGE BONDS DRAINAGE BONDS. 105 any such bridge, the commissioners of the other town ma} 7 submit to a special town meeting a proposition whether such town shall build and maintain such bridge at its own expense, and if the proposed bridge require a greater sum of money than is available to the commissioners, they may also submit the question of borrowing money for the purpose. The elec- tion shall be held and bonds issued substantially in the same manner as provided in the two previous sections, except that the bonds may bear interest at a rate not exceeding eight per cent. In both cases the town is required to provide for the payment of the bonds and interest by appropriate taxation. (Ibid., Sees. 21 to 23.) 45. Same, in Counties Under Township Organization: Whenever the commissioners of adjoining districts, as above, refuse to enter into a joint contract to build and maintain such a bridge, the commissioners of the other district may submit to the legal voters thereof, at any annual or special election, the question of building such bridge at its own expense, and also, if required, of borrowing money to construct the same. The annual election is held on the first Tuesday in March. Notice of the time and place of holding any annual or special election is given by the district clerk, or in his absence, by the commissioners, by posting written or printed notices, in at least three of the most public places in the district at least fifteen days previously. 46. Bonds Issued: If the issue of the bonds is author- ized by a majority vote, at a meeting so called, the commis- sioners are authorized, from time to time as the work pro- gresses, for the purpose of building such bridge, to issue bonds, to be countersigned by the district clerk of such town, bear such rate of interest, not exceeding eight per cent, upon such time, and to be disposed of at not less than par, as may be required. (Ibid., 150 to 151; 196.) DRAINAGE DISTRICT BONDS. 47. Drainage Districts Assessments: The drainage laws of Illinois are unusually lengthy and elaborate in their provisions. They provide for the organizing and setting apart 106 ILLINOIS DRAINAGE BONDS. of drainage districts for the purpose of draining and reclaim- ing lands therein. Under the act of 1879, drainage districts may be organized by the county court upon petition of a major- ity of the owners, representing one-third in area of the lands to be reclaimed or benefited. Three drainage commissioners are appointed to superintend the proposed work or improve- ment. The cost of the work is assessed against the lands benefited, and the county court has full power as to all matters connected with the organization of such district or the making of such assessment, and may order the assessments paid in installments, which shall draw interest at the rate of six per cent per annum from the date of confirmation until paid. 48. Bonds May be Issued : Said commissioners are au- thorized to borrow money, not exceeding ninety per cent of the amount of the unpaid assessment, for the construction of any such work, or for the payment of any indebtedness incurred therefor, and issue notes or bonds bearing interest at a rate not to exceed six per cent, and not running beyond one year after the last installment of assessment on account of which the loan was made shall fall due, or bonds may be issued to the amount of ninety per cent of any one installment, payable in one year after the same falls due. The bonds constitute a lien upon the assessment against which the same were issued. 49. Funding Such Indebtedness : When authorized by the county court, the commissioners may refund any outstand- ing notes and bonds issued for the above purposes with new notes or bonds, payable as the commissioners may determine, not later than one year after the last postponed installment matures, and not to exceed in the aggregate the amount refunded. The court also has the power, on the petition of the commissioners, to order that the collection of any one or more of the assess- ment installments be postponed for such time as the court may determine, the postponed installments, unless otherwise ordered, to bear eight per cent interest. 50. Bonds How Executed: Each bond issued under any of the above provisions shall be attested by the clerk of the county court, who shall also make a certified statement ILLINOIS DRAINAGE BONDS. IOJ thereon of the total amount of assessments and rate of interest thereon, pledged for the payment of said bonds, the date, number, denomination and time due of all bonds issued, which are a lien upon the assessments or installments of assessments of the district; when the assessments were confirmed by the county court, and the number of acres of land in the district against which said assessments were made. (Chap. 42, Sees. 1-74, Act of 1879, amended 1885.) 51. Special Drainage Districts Bonds : When the proposed work lies in three or more towns in the same or differ- ent counties, the county court, upon petition of a majority in number of the adult owners, representing more than one-third of the lands lying in the proposed district, or of not less than one-third of such owners, who represent a major part of such land, may organize what is known as "Special Drainage Districts." Three drainage commissioners elected for such district, or in districts containing less than fifteen land owners, appointed by the county court, have charge of the proposed improvements in the district. They shall assess the costs thereof against the land benefited, and may provide that the assessment be paid in installments. The commissioners may postpone the payment of the assessment or any installment, but not longer than fifteen years from such levy. Money may be borrowed and bonds issued substantially as provided above. (See Sees. 48-50.) 52. Funding Bonds and Indebtedness : The commission- ers of any special drainage district may fund any maturing bonds or notes with new bonds and notes, to the amount of any unpaid assessments upon which such outstanding notes or bonds may have been issued. The new notes or bonds shall bear not to exceed seven per cent interest, and run not to exceed one year beyond the time fixed for the payment of the last install- ment of such assessment. Upon a petition of a majority in number of the adult owners representing at least one-third of the lands assessed, the commissioners may extend the time of payment of any unpaid assessment for not to exceed ten years from the time the same was confirmed. Bonds of the district IO8 ILLINOIS DRAINAGE BONDS. may be issued to the amount thus extended, bear interest at not to exceed seven per cent, and run not longer than one year beyond the time such extended assessments fall due. ' 53- Registration by State Auditor : On presentation, the state auditor is required to register all bonds so issued, in his office, showing the number, date, amount, date of maturity, rate of interest, and when payable, place of payment, under what act and by what district issued, and the name of the per- son presenting the same for registration. He shall also certify upon each bond the fact of such registration, but no bonds shall be entitled to such registry, until a sworn statement by the corporate authorities of the district issuing the same shall have been filed with him, showing the date of the organization of the district, in what county organized, the time when the assessment, on account of which the bonds were issued, will become due, and the date, number, amount, rate of interest, and the date of maturity of the bonds, with any other infor- mation relating thereto required by the auditor. The district authorities are also required to keep a full record of such bonds. 54. Auditor to Certify for 7 ax Levy : It is made the duty of the auditor to ascertain and certify to the proper county clerk for levy and collection on the amount required for the payment of any interest or principal due on bonds so reg- istered. The amount so collected shall be returned to the state auditor with other state taxes, and applied to the pay- ment of the bonds and interest for which the same was levied. In case of non-registered bonds, it is the duty of the commis- sioners to certify the required amount to the county clerk. 55. Lien of Assessments : All assessments so made for the improvement of such drainage districts are a lien upon the land assessed, but such lands shall not be liable for more than its proportionate share. In case of non-payment of any assess- ment or tax levy, the drainage commissioners may foreclose the lien in chancery, or maintain a suit at law against the person liable. 1 (Ibid., Sees. 124-147. In force July i, 1885.) 1 For fuller details of the foregoing drainage laws and other provisions relating to the organization of drainage districts, the levying and collec- tion of assessments, etc., reference is made to Chap. 42 of Statutes. ILLINOIS PARK BONDS. IOQ BONDS FOR PARKS. 56. Note : A number of acts authorizing or relating to the issue of bonds for public park purpose, applicable espe- cially to the Chicago parks, are omitted here. They may be found as Chapter 105 of the Revised Statutes, with its various amendments. CHAPTER X. MICHIGAN. References are to the Sections in the Revised Statutes of 1882, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution in Jorce January ist, 1851. 1. State Indebtedness : To meet deficits in the rev- enue, the state may contract debts in the aggregate at no one time exceeding fifty thousand dollars. (Art. 4, Sec. 3.) 2. State Credit: The credit of the state shall not be loaned to, or in aid of, any person, association, or corporation, nor shall the state subscribe to or be interested in the stock of any company, association or corporation, or be interested in any work of internal improvement. (Art. 14, Sees. 6, 8 and 9.) 3. County Indebtedness: A board of supervisors, consisting of one from each organized township, is established in each county. Such board may borrow, or raise by tax, one thousand dollars for constructing or repairing public buildings, highways or bridges, but no greater sum, unless authorized by a majority of the electors of such county voting thereon. (Art. 10, Sees. 6 and 9.) 4. Cities and Villages : The legislature shall provide for the incorporation and organization of cities and villages, and shall restrict their powers of taxation, borrowing money, contracting debts, and loaning their credit. (Art. 15, Sec. 13,) COUNTIES. 5. County Board : Counties in this state are managed by a board of supervisors consisting of one from each organized township, and also such representatives from cities as may be by law provided. Annual meetings are held on the second (no) MICHIGAN COUNTY LOANS CITIES. Ill Monday of October. Special meetings, when necessary, may be called by the county clerk on the written request of at least one-third of the board, by giving a written notice to each supervisor personally, or leaving the same at his residence, at least six days before such meeting. The county clerk is ex- officio clerk of the board of supervisors. (473 to 482.) 6. Borrowing Money : The board of supervisors may borrow, or raise by tax, any sum which may be necessary for the purchase of, or to provide real estate and buildings for the care of the poor, for courthouses, jails and other county build- ings, or which may be necessary for the construction of bridges or highways. 7. Limit Time Tax: No greater sum than one thou- sand dollars shall be borrowed or raised by tax in any one year for the purpose of constructing or repairing public buildings, highways or bridges, unless authorized by a majority of the electors of such county voting therefor. It is the duty of the board to provide by taxation for the payment, within fifteen years, of any loan made by them. (483.) 8. Submission of Question to Borrow Money: When- ever it shall be necessary to submit to a vote of the electors of any county, the question of raising any sum of money by loan or tax, the board of supervisors shall determine the amount required and give notice of such submission, to be made at the annual meeting, by publishing a notice in a newspaper in such county, and posting copies of such notice, which shall con- tain the time and place of the election, in at least three public places in each township, and in each ward of any city in the county, for thirty days previously. In case no news- paper is published in the county, publication of the notice must be made in the nearest paper for three weeks prior to such election. A majority vote is required to authorize the loan. (490 to 492.) CITIES, VILLAGES AND TOWNSHIPS. 9 City Buildings, etc.: Any city, through its common council, is authorized to erect or purchase all necessary build- 112 MICHIGAN CITY LOANS. ings for the use of such city, and to purchase such real estate as shall be necessary for public grounds, markets, parks ceme- teries, prisons, hospitals, or for the construction of water- works. (26002602.) 10. Tax Limit: The amount ot taxes for general pur- poses which may be levied by the city council, is limited in cities of more than six thousand population, to one and one- fourth per cent of the taxable property of such city for any one year; in cities of over six thousand and not more than nine thousand, one and one-half per cent; in cities of more than nine thousand and not exceeding fourteen thousand, one and three-fourths per cent; and in cities of more than fourteen thousand, two per cent. This limitation is exclu- sive of taxes levied for school purposes, and the council may raise an additional three mills to provide for a sinking fund to pay the funded debt of the city, and also in any street improve- ment district, a tax of not to exceed one- fourth per cent for the care of streets. No public work or improvement shall be commenced until a tax or assessment to pay its cost shall have been levied, or ordered levied. No tax or assessment can be levied by the council of any city unless by a concurring vote of two-thirds of all the aldermen elected, and no resolution or appropriation passed except by a vote of the majority of such elected aldermen, except as otherwise specially provided. (2515; 2697 to 2698.) 11. Loans to Anticipate Special Assessments: In addition to taxes above provided for, the council of any city may raise by special assessments in any sewer district, or in any special assessment district, for local improvements of a public nature, any sum necessary, not to exceed five per cent of the property of such district, and in anticipation of the collection of any such special assessment, may borrow money to defray the cost of any improvement for which such assessment has been levied, such loan not to exceed the amount of the as- sessment. (2699, 2711.) 12. Loans for Public Improvements : If, for the pur- pose of providing public buildings or grounds or for other public MICHIGAN CITY AND VILLAGE LOANS. 113 improvements or works, a greater sum is required than the council is authorized to raise by taxation, such amount may be raised by tax or loan, when authorized by a majority vote of the electors of such city at an annual city election. The ques- tion shall be submitted by an ordinance or resolution, stating the amount required, and whether by tax or loan, published in some newspaper in such city and posted in five of the most public places in each ward, for at least two weeks previous to such election. 13. Amount Record : For any loan thus authorized the common council of the city may issue bonds bearing any legal rate of interest, but the amount so raised shall not exceed in any one year two per cent of the assessed valuation of such city. The city clerk or comptroller shall keep a record of all bonds issued, w r ith their date, number, amount and when due. Each bond must show upon its face to what class of indebted- ness it belongs and out of what fund it is payable. (2712-2717.) 14. Funding Bonds to Extend Time of Payment: The common council of any city, when necessary, is author- ized to issue new bonds for the purpose of extending the time of payment of any outstanding bonds, but in no case must the amount of indebtedness be increased by the issue of such new bonds. (2717.) 15. Village Government : Incorporated villages are managed by a council consisting of six trustees and a presi- dent, and are authorized to provide public buildings, grounds and improvements, substantially the same as cities. The levy of taxes and the appropriation of money must be by ordinance or resolution concurred in by a vote of two-thirds of all the trust- ees elected. Ordinances within one week from their passage must be published, and copies posted in three public places in the village. (2776, 2852.) 16. Loans in Anticipation of Taxes or Special Assessments : The council of any organized village may, by a concurring vote of two-thirds of the trustees elected, borrow in any one year, in anticipation of the taxes for the same year, a sum not exceeding one-half of such tax, and in like 114 MICHIGAN VILLAGE, TOWNSHIP, AND WATER BONDS. manner in anticipation of the collection of any special assess- ment, made for any local improvements, they may borrow any sum necessary, not exceeding such assessment. (2952.) 17. Loans for Public Improvements: In case a greater amount is required to provide public buildings or other necessary corporate purposes than can be raised by general taxation or temporary loans as above, such amount may be raised by tax or loan, as in the case of cities, when authorized by a majority vote at an annual or special election. The ques- tion must be submitted by ordinance or resolution, distinctly stating the amount and purposes of the proposed expenditure, published in a newspaper in the village, if one is published therein, and copies posted in six of the most public places therein at least two weeks before such election. The vote shall be taken by ballot, the contents of which shall be prescribed by the ordinance or resolution. Bonds, wich the same two per cent limitation, may be issued, and a record kept, as provided in the case of cities. New bonds may also be issued by villages to extend the time of payment of any outstanding bonds, as pro- vided in the case of cities. (2953-2957.) 18. Township Bonds : For the purpose of providing a town hall or other public buildings for the use of the town- ship, the authorities of any township, when authorized by a majority vote of the qualified electors thereof at a legally called meeting, may grant any sum of money, not exceeding one per cent in any one year upon the taxable property thereof, and issue bonds in payment for the same. A notice, stating the amount, that such question will be submitted, must be signed by at least twelve freeholders, and copies posted in five of the most public places in the township, for ten days prior to the meeting. WATER BONDS. 19. City or Village Bonds for Water-works : Any city or incorporated village, for the purpose of purchasing grounds or providing water-works, may borrow money to meet the cost thereof, and issue bonds of such city or village, when MICHIGAN WATER BONDS SCHOOL BONDS. 115 authorized by a majority of the votes cast thereon at an elec- tion called for the purpose. 20. Amount : The total sum borrowed or raised by tax- ation the first year, for any such purpose, shall not exceed ten per cent of the assessed valuation of the city or village, and no more than five per cent thereon shall be borrowed any subse- quent year for that purposes. The rate of interest on any indebtedness thus incurred must not exceed ten per cent per annum. (3090-3091.) 21. Cities or Villages Purchasing Water-works: Any city, town or village may purchase any water- works from com- panies owning the same, or may take stock in any such company, and issue bonds therefor, payable at such times as may be deter- mined by the council, and bearing not more than eight per cent interest. No stock shall be subscribed in any such company until authorized by a vote of the electors of the city, town or village, as the case may be. A special tax of not to exceed two per cent may be levied for the payment of such bonds. (3125-3126.) 22. Village Bonds for Water-works: Incorporated vil- lages are also specially authorized to borrow any sum of money to be used exclusively for the construction and maintaining of water-works. The council shall cause an estimate of the expenses thereof to be made, and the question of borrowing such money submitted to the electors at an annual or special election. The amount of such loan is limited as in the case of cities or villages above, except that after the works have been constructed the council may expend in the extension or repair- ing of the same any sum not exceeding one and one-half per cent of the taxable property of the village, without submitting the question to a vote. (2970 to 2973, as amended in 1887.) SCHOOL, BONDS. 23. School District Bonds : For the purpose of pur- chasing sites, and erecting and furnishing schoolhouses there- on, any school district, by a two-thirds vote of the qualified electors present at any annual or special meeting called for that Il6 MICHIGAN SCHOOL BONDS. purpose, may borrow money and issue the bonds of the district therefor. 24. Amount of Bonds: The amount of money which may be borrowed by school districts is limited as follows: those having less than thirty school children between the ages of five and twenty years may borrow not to exceed three hundred dollars; those having thirty such school children may borrow not to exceed five hundred dollars; those having fifty, not to exceed one thousand dollars; those having one hundred, three thousand dollars; those having one hundred and twenty-five, with an assessed valuation of not less than one hundred and fifty thousand dollars, may borrow five thousand dollars; those having two hundred such children, may borrow eight thousand dollars; those having three hundred, fifteen thousand dollars; those having four hundred, twenty thousand dollars; those having five hundred, twenty-five thousand, and those having eight hundred or more, thirty thousand dollars. 25. How Issued: The bonds issued for the above pur- poses shall be payable in not to exceed ten years, and shall be executed by the moderator and director of the district. The electors of the district, may, at any regular meeting, levy a tax to pay the principal of such bonds as they may become due. (5103 to 5106, as amended in 1887.) 26. School District Funding Bonds: Any school district may issue bonds to provide means for the payment of any bonded indebtedness, when authorized so to do by a majority vote of the electors of such district, at any annual or special meeting, previous notice that such question would be submitted having been given in the call for such meeting. (Ibid.) 27. City School Districts : Kach incorporated city con- stitutes a single school district. The mayor and other elected school inspectors constitute a board of education having charge of the schools in such city districts. (2425, 2739, 2741.) 28. Borrowing Money: For school purposes, the board of education may borrow not exceeding in any one year one per cent of the taxable property of the district, and issue bonds MICHIGAN CITY SCHOOL BONDS. 1 17 therefor. If a greater sum is required, an additional one per cent may be raised by tax or loan, if authorized by a majority vote of the district, at a special meeting called for such pur- pose by the board of education; notice of the time, place and object having been given by publication in some newspaper, and by posting in ten public places in such city, for ten days previously. (2749, 2750.) 29. Bonds to Extend Loans: The board of education of such school district may also issue new bonds for the pur- pose of renewing or extending any outstanding and maturing loans. (2749.) CHAPTER XL WISCONSIN. References are to the Sections in the Statutes oj 1878, and Supple- ment of /88j, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 1. State Credit and Indebtedness : The credit of the state shall never be given or loaned in aid of any individ- ual, association or corporation. By a majority vote of all the members elected to each house, the state may contract debts, under the provisions of the constitution, not exceeding in the aggregate one hundred thousand dollars, for the purpose of defraying extraordinary expenditures. (Art. 8.) 2. Municipal Indebtedness : No county, city, town, village, school district or other municipal corporation shall be allowed to become indebted, in any manner, for any purpose, to an amount in the aggregate exceeding five per cent of the value of its taxable property, as shown by the last previous assessment for state and county taxes therein. Any such corporation incurring any indebtedness, shall before or at the time of doing so, provide for an annual tax sufficient to pay the interest thereon as it accrues, and also to discharge the princi- pal within twenty years. (Art. II, Sec. 3, as amended Nov. 3, i874.) 3. Special Legislation : The legislature is prohibited from enacting any special or private laws: (among other things) for granting corporate powers or privileges except to cities. (Art. 4, Sees. 31 and 32, as amended Nov. 7, 1871.) COUNTIES. 4. County Boards : The corporate powers of counties are exercised by a county board of supervisors, composed of V.'ISCOXSIN COUNTY BONDS. I 19 the chairman of each of the several town boards (or in case of the chairman's inability to act, some other designated member of such town board) and the supervisor of each ward or part of a ward of every city, and of each incorporated village or part thereof, situated within such county. When the county is one town only, the supervisors of such town shall constitute the county board of supervisors. The regular annual meeting of the county board is held at the county seat on the second Tuesday succeeding the first Monday in November of each year. Special meetings may be called by the county clerk, on the written request of a majority of the members of the board, specifying the time and place of such meeting, not less than one week therefrom. A majority of the supervisors entitled to seats in the county board constitute a quorum for the transac- tion of business. The county clerk is ex-officio clerk of the county board. (658, 709.) 5. Bonds for County Buildings For Exchange Amount Limited : Counties are authorized to issue bonds, in amount not exceeding one and a half per cent of the last assessed valuation thereof, for the purpose of providing necessary county buildings. Also for the purpose of exchanging or compromis- ing any outstanding bonds, new bonds may be issued, not exceeding the amount of principal of the bonds to be exchanged or compromised. (658.) 6. How Issued Tax Form : Said bonds shall be issued in pursuance of a resolution or ordinance of the county board, providing the amount, denomination, time (not exceeding twenty years), manner in which and by whom to be negotiated, and also for an annual tax sufficient to pay the interest as it accrues and the principal at maturity. This tax shall be inca- pable of repeal, but collected annually and held as a separate fund for the payment of such bonds. The bonds shall be signed by the chairman of the county board and by the county clerk and sealed with the county seal. 1 (658-659.) CITIES AND VILLAGES. 7. Bonds For What Purpose 1 : Any city or village 1 Also see \ 14 et seq. I2O WISCONSIN TOWN BONDS. may issue bonds to provide public buildings, school buildings, fire engines and apparatus, water-works, pumps, mains and res- ervoirs; for grading, paving, laying out or altering streets, public grounds or parks; for the purchase or improvement of cemeteries; to exchange or compromise outstanding bonds (to an amount not exceeding the principal of such outstanding bonds), or to accomplish any other purpose w r ithin the lawful power of such corporation. The proposition to issue such bonds must be submitted to and adopted by a majority vote of the people. (943.) TOWNS. 8. Town Board : The corporate powers of towns are exercised by a town board, composed of three supervisors, elected at the annual town meeting held on the first Tuesday of December. One of the board is designated as chairman, and two constitute a quorum. 9. Town Bonds' : When authorized by a majority vote of the qualified electors at any annual town meeting, the town board may issue bonds to provide a town hall or other town buildings, to settle or compromise any legal outstanding indebtedness, evidenced by bonds or otherwise, to an amount not exceeding such indebtedness; or for the purpose of building a bridge, costing over two thousand dollars, over any stream in such town, the issue in such case not to exceed five thousand dollars. (776.) 10. How Issued : Previous notice that such a proposi- tion will be presented at the town meeting must be given by the town clerk not less than fifteen nor more than twenty days before such meeting, by posting in three of the most public places, and publication for five days in a newspaper published in such town. No bonds shall be issued except in pursuance of a resolution or order publicty read at such meeting, provid- ing the amount, denomination, time and place of payment, interest not exceeding eight per cent, manner in which and by whom to be negotiated, and also providing an annual tax suffi- cient to pay the interest as it accrues and the principal at Also see \ 14 et seq. WISCONSIN SCHOOL BONDS. 121 maturity. This tax shall be irrepealable. Town bonds shall be signed by the chairman of the town board and by the town clerk. (777.) SCHOOL BONDS. 1 1 . District Meetings : Annual meetings of school districts, in which graded schools of two or more departments are taught, shall be held on the second Monday of July, and of all other districts on the last Monday of September, unless it may have been determined by the preceding annual meeting to hold the same on the last Monday in August. The clerk must give at least six days' notice of such meeting by posting notices therefor in four or more public places in the district, one of which shall be at the door of the schoolhouse. Special meetings may be called by the clerk, or in his absence, by the director, on the written request of five legal voters, in the same manner, the notice specifying the object of the meeting. No tax, loan or debt shall be voted at any such meeting, unless three-fourths of the legal voters shall have been notified either personally or by a written notice left at their places of resi- dence at least six days previously. (425-427.) 12. District Board: The officers of the school district are a director, treasurer and clerk, who are elected for three years at the annual school meeting, and constitute the school board of such district for the management of its school affairs. (431-432.) 13. Borrowing Money : The qualified electors of the school district, at a legally called school meeting, may authorize the district board to borrow money for the purpose of aiding in the erection of 'a schoolhouse. The question shall be sub- mitted by a written resolution, read at the meeting, specifying the amount to be borrowed, rate of interest and the time and manner of payment, which shall be in annual installments, the last of which shall be made payable in not exceeding ten years from the first day of February next ensuing. The vote thereon shall be taken by ballot, and a majority shall be required to authorize the loan. After the loan has been made the vote 122 WISCONSIN REFUNDING AND BRIDGE BONDS. thereon cannot be reconsidered. The district board are required to levy a tax annually to pay the interest and principal as they become due. (470, 474-476.) GENERAL. 14. Refunding Bonds : Counties, cities, villages and towns are authorized to fund their bonded indebtedness by issuing new bonds of the same amount and at a same or less rate of interest, whenever such outstanding bonds can be retired by the proceeds realized from the sale of the new bonds. (960 a.) 15. Same, to Exchange : The authorities of the munic- ipalities may issue new bonds, running not to exceed ten years, in exchange at par, for outstanding bonds, provided that no such extension shall be for more than twenty years from the time the debt was created, except in case of bonds issued prior to Nov. i, 1884, or they may, in their discretion, issue new bonds, having not more than twenty years to run, to pay off maturing bonds. (960 b, 960 c.) 16. Sale of Refunding Bonds : Such bonds must first be offered for sale for thirty days within the municipality issuing . the same. Notice of such sale shall be given by publication in a newspaper published in such municipality, or if no news- paper is published therein, by posting notices in five public places therein. The bonds shall be sold, at not less than par, to the highest bidder, offering to accept the lowest rate of interest. Should there be no sale in whole or part, said bonds may be disposed of at the discretion of the proper authorities, but in no case shall they bear a higher rate of interest than the bonds so funded, and shall be payable at some stated place in Wisconsin. They shall be of denomination not exceeding one hundred dollars nor less than twenty-five dollars, but after the expiration of the said thirty days, during which they are required to be offered as above, the bonds may be issued in any denomination deemed best by the authorities. (960 c, as amended in 1883.) 17. Bonds for Bridges : Any county, town, city or village bordering upon or through which any navigable or WISCONSIN BRIDGE AND RAILROAD AID BONDS. 123 meandering stream runs, or any two adjoining towns having a mutual highway crossing such stream, are authorized to issue bonds, not exceeding in amount two per cent of the taxable property thereof, for the purpose of building, aiding or main- taining a bridge across such stream. But if a tax shall have been levied for such purposes in any such corporation, its bonds shall not be issued for an amount exceeding the difference between such tax and two per cent of the assessed valuation. 18. Question Submitted : No such bonds shall be issued unless the question of issuing the same shall have been sub- mitted, by a majority of the corporate board or council, to a vote of the electors of such municipality, and adopted by a majority vote at an annual election, town meeting or charter election, or at an election specially called for that purpose by such board or council. Previous notice must be given as for a special election, and voting must be by ballot, and the votes canvassed and result returned as in other elections. (1320 to 1322, as amended by laws of 1885.) 19. Railroad Aid Bonds : Counties, cities, villages and towns are authorized to issue bonds, running not longer than twenty years, for the purpose of paying authorized subscrip- tions to the capital stock or mortgaged bonds of any company or corporation organized for the purpose of building a rail- road. (942.) 20. Proposition How Submitted: Whenever any rail- road company desires a subscription to its capital stock or mortgaged bonds from any such municipality, it shall deliver to the clerk thereof, to be filed and recorded by him, a definite written proposition, signed by the president and secretary and under the corporate seal of the company, stating the manner in which the subscription is to be made, amount of bonds desired, time, when, how and where payable, rate of interest thereon, when deliverable, with reference to the construction of the road, when the road is to be constructed as proposed, an agreement to issue the proposed stock or mortgage bonds, equal at par to such bonds issued, and all other authorized terms pro- 124 WISCONSIN RAILROAD AID BONDS. posed. This proposition must be acted upon and accepted in either one of the following methods: 21. (First:} Within three months after the filing thereof the company may, by written request, require the clerk to give notice (as hereinafter provided in the case of calling an elec- tion to vote upon such proposition) that within five or more days from the date of such notice, a petition to the proper authorities of such municipality praying that the proposition be accepted, will be presented to the resident tax-payers thereof for signatures. This petition, with a copy of the proposition must be a part of the notice. If the railroad company, within four months thereafter, deliver to said clerk such petition bear- ing signatures (verified by affidavit of a witness) of a majority of the resident tax-payers, as shown by the last assessment roll of such municipality, the proposition shall be deemed accepted and the bonds shall be issued in accordance therewith. 22. (Second:} Any time within three months after the filing of said proposition, together with a request signed by at least twelve resident freeholders that a vote be had thereon, the county, town or village board of trustees, or common council, may, in their discretion, order an election to be had on such proposition. The clerk shall publish notices, embracing the proposition, calling such election to be held at a time not less than thirty nor more than sixty days from the date there- of, by posting in three public places in each election district, at least twenty days before such election, and by publication at least three times in a newspaper published in such munic- ipality, and if none is published therein, then in one published in the county. In case aid is asked of a county, the notice shall be published in all the newspapers published therein. Said election shall be conducted the same as general elections, except no registration of voters is required. A majority vote is required to authorize the issuing of the bonds. If the rail- road company elect to pursue the first method of submitting the proposition, by causing notices to be given of the presenta- tion of this petition as above, then no election shall be held, but the result of such petition shall be final. WISCONSIN ISSUE OF BONDS GENERALLY. 125 23. If the issue of the bonds is authorized under either of the methods above given, the company's proposition shall be deemed accepted, and the proper authorities shall cause the necessary subscription to be made on the company's books as proposed, and shall provide by ordinance or resolution for the executing and issuing of the bonds. But no bonds shall be delivered, or be valid if delivered, until the road aided shall have been completed and in operation by the passage of cars continuously from one terminus to the point proposed. After the vote has been carried, no defects or irregularities in any of the proceedings preliminary to the election shall invali- date the agreement or release the municipality, if the company, relying on such vote, shall have faithfully performed its part of the agreement. (942 ct scq.~) 24. Authority to Issue Bonds Generally Time : No bonds shall in any case be issued by any town, village or city, until a proposition for their issue for the special purpose shall have been submitted to the people of such municipality and adopted by a majority of the voters voting thereon, or if bonds are to be issued to aid the construction of a railroad, until a proposition for the issue thereof shall have been accepted in one of the modes provided therefor under Railroad Aid Bonds, nor shall any bonds be issued payable after a period of twenty years. 25. Tax Municipal Liability : No such bonds shall be issued until an ordinance or resolution shall have been lawfully passed directing an annual levy of a tax, in addition to all other taxes, sufficient to pay the interest as it accrues and the principal at maturity. Such tax, after the issue of the bonds, shall be irrepealable, and the proceeds thereof shall be kept in a separate fund, irrevocably pledged for the payment of the said bonds and interest. The proper authorities shall levy for such purpose a tax not exceeding six mills on the dollar, and may also set apart any money received from licenses or other sources not otherwise disposed of. All territory within a munic- ipality issuing bonds shall remain liable for the payment thereof until the same are fully paid. (943 and 949.) 126 WISCONSIN MUNICIPAL BONDS. 26. Bonds How Executed: County bonds shall be signed by the chairman of the county board and the county clerk, town bonds by the chairman and the town clerk, village bonds by the president and village clerk, city bonds by the mayor and city clerk, or by such officers as may be acting officially in any of such offices respectively. All bonds shall be sealed with the corporate seal of the municipality, if there be any such seal. (956.) 27. Bond Record : The clerk of towns, villages, cities and counties shall keep a cancellation book, containing the record of all bonds issued, number thereof, amount, rate of interest, when and for what purpose issued, when payable, and when paid, exchanged or cancelled. (960 f.) 28. Limitations of Actions on Bonds : Actions upon bonds issued by any town, county, city, village or school district must be commenced within six years after the cause of action has accrued. (4222) 29. Negotiability of Municipal Obligations : No obligation or instrument made by any county, town, village or school district, shall be negotiable, unless expressly author- ized by law. (1675.) CHAPTER XII. MINNESOTA. References are to the Sections in the Statutes of 1878, and Supplements thereto, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. 1. State Indebtedness : For the purpose of defraying extraordinary expenses the state may contract debts in the aggregate not exceeding $250,000, but such debts must be authorized by law, for some special purpose, by a vote of two- thirds of the members of each branch of the legislature, which law shall^also levy a tax sufficient to pay the annual interest and the principal of the debt within ten years from the passage of such law. Such debts shall be by state bonds of not less than $500 each, payable within ten years, of which a correct registry shall be kept by the treasurer. By amendment, adopted November, 15, 1872, additional bonds to an amount not exceeding $250,000, payable in not less than ten years nor more than thirty j^ears, are authorized for the erection or com- pletion of certain public buildings. (Art. 9, Sees. 5, 6, 14 a.) 2. State Credit : The credit of the state shall never be given or loaned in aid of any individual, association or corpor- ation, except certain railroads, under amendment of 1858. (Art. 9, Sec. 9.) 3. Limit of Municipal Aid to Railroads : The legis- lature shall not authorize any county, township, state or other municipal corporation to issue bonds or to become indebted in any manner in the aid of any railroads to an amount exceeding in the aggregate five per cent of the taxable property thereof, as shown by the last assessment made for state and county purposes. (Art. 9, Sec. 15, as amended November 4, 1879.) 128 MINNESOTA COUNTY BONDS. 4. Special Legislation : The legislature is prohibited from enacting any special or private laws (among other things) granting corporate powers or privileges except to cities. (Art. 4, Sec. 33, as amended Nov. 15, 1881.) COUNTIES.' 5. Board of Commissioners : The corporate powers of a county are exercised by commissioners under the name of "The Board of County Commissioners of the County of " In organized counties which poll eight hundred votes or more the board consists of five members, and in all other counties of three members, whose term of office is for four years or until the election and qualification of their successors. Regular meetings of the board are held at the county seat on the first Tuesday of January and on the fourth Monday of July in each year. Extra sessions may be called by a majority of the board, the clerk giving at least ten days' notice of such meeting to the commissioners. A majority of the commissioners constitute a quorum, but no business shall be done unless voted for by a majority of the whole board. The county auditor is ex-officio clerk of the county board. (Chap. 8, Sees. 83 to 102, as amended in 1885, and Sec. 138.) 6. County Bonds : No general law exists authorizing counties to issue bonds except for special purposes, as herein- after indicated. County bonds have usually been issued under special acts, to which reference must be had for the provisions of each particular case. 7. Bonds for Steam Traction Roads : Where a majority of the voters of the county, voting at a special election, called for that purpose by the county commissioners, under a notice as by law required, vote in favor of a road for steam traction transportation, and an agreement is duly entered into between the authorized representative of the road and the county auditor, the board of county commissioners are author- ized to issue the bonds of the county for the amount necessary to maintain or construct such road as authorized, but the aggre- 1 Also see ? 20, et seq. MINNESOTA CITY BONDS. 1 29 gate amount of bonds so issued shall not exceed the amount of the estimated expenses of such road, as set forth in the notice calling the election which authorized said improvement, and in no case to exceed three thousand dollars for any one mile. 8. Form Sale Tax: Said bonds shall be made pay- able in the city of New York, not less than ten nor more than twenty years after date, with coupons providing for interest at ten percent per annum, payable semi-annually, and be disposed of at par, in payment for the construction of said road. A suf- ficient tax to meet the accruing interest and pay the bonds at maturity shall be levied and collected. (Chap. 13, 125 to 135.) CITY AND TOWNS.' 9. Funding Bonds.: The common council of any city has full power to borrow money to pay any city indebtedness, and to issue therefor city bonds bearing interest at a rate not to exceed ten per cent, and redeemable at any time within ten years, at the discretion of such council. All ordinances of the city must be passed by the affirmative vote of a majority of the common council, signed by the mayor, and published in the official paper of the city, before the same shall be in force. 10. Amount of Bonds Authority Tax: At no time shall said indebtedness, bonded or otherwise, exceed the sum of fifteen thousand dollars, unless the same be authorized by a two-thirds vote of the legal votes cast at an election held for that purpose. The council shall levy a tax of one mill on the dollar on the taxable property of the city, for each one thousand dol- lars that may be funded by the said city in bonds, to pay the interest thereon and to create a sinking fund to pay the bonds at maturity. (Chap. 10, Sec. 168.) 11. Tax Limit Bonds: The common council may levy taxes, not exceeding in any one year, one per cent of the assessed valuation of the city, to provide for all current expenses of the city, for the opening, maintaining and improving of public grounds, and the construction of buildings and other public improvements. The council may issue bonds and levy 1 Also see \ 20 et seq. 130 MINNESOTA TOWN AND SCHOOL BONDS. taxes for an amount exceeding that provided above, and in other sections of the act concerning cities, if the same is authorized by a majority of the voters present and voting at an election held for that purpose. The time, place and manner of holding such election to be prescribed by such council, and notice thereof to be given as at other elections. No bonds, for any purpose, shall be issued by the council unless so author- ized. (Chap. io, 169-171.) 12. Town Bonds: The board of supervisors (consist- ing of three supervisors, of whom two constitute a quorum) of the organized townships of this state are authorized to issue the bonds or orders of their respective towns, with coupons attached, in such amounts and for such periods, not exceeding six years, as they may be directed by two-thirds of all the legal voters voting at any legally called town meeting, held for that purpose, notice of such meeting, particularly specifying the object for which it is called, having been posted in at least three public places in such town, for not less than ten days previous to such meeting. 13. Form Tax: Said bonds shall bear interest at not exceeding twelve per cent per annum, payable annually, and the bonds and coupons shall be signed by the chairman of the board of supervisors, and countersigned by the town clerk. The board of supervisors are required to levy, and certify to the county auditor each year, a sufficient tax on the property of the town to provide for the payment of the interest as it accrues, and such further sums in their discretion, not exceed- ing twenty per cent of the amount thereof, towards providing a fund for the payment of said bonds. (Chap, io, Sec. 14, 66; 114 to 166.) SCHOOL BONDS. 14. The trustees or board of education of any school dis- trict in this state are authorized to issue bonds of their respect- ive districts with coupons, in such amount and at such periods, as they may direct by a vote of two-thirds of the legal voters present and voting, at any legally called meeting of the same. 15. Form of Bonds : Said bonds shall be payable in such MINNESOTA SCHOOL BONDS 131 amounts and at such times, not exceeding fifteen years, as the legal voters at such meeting shall determine, with interest not to exceed seven per cent per annum. The bonds and coupons shall be signed by the directors and countersigned by the dis- trict clerk, or by the president and clerk of the board of educa- tion, as the case may be. (Chap. 36, Sees. 26-27, as amended March 5, 1887.) 1 6. How Registered and Certified : It is made the duty of the clerk of the school district to file with the county audi- tor certified copies of all the proceedings had in the district, relating to the issue of the said bonds, and before any sale is made they shall be examined by the auditor in connection with such proceedings, and if satisfied with the legality of the issue, the auditor shall register the bonds in his office and indorse on each bond the following certificate, signed by him unaer his official seal : ' ' I hereby certify that the within bond for dollars issued by school district of Co., Minn., is issued in accordance with law, and by authority of two-thirds of all the legal voters of said school district present and voting at a meeting of the legal voters of said district, duly held for that purpose, on the .... day of , 188 . . , that said bond is duly registered in this office, and that said school district is legally organized." 17. Sale of Bonds Validity: Said bonds shall not be sold for less than par value, nor shall they or the proceeds thereof be used for any purpose other than the purchase of a site for, and in the erection, completion and furnishing of a schoolhouse for such district, or the payment of an indebted- ness incurred for such purpose, or for refunding such district's indebtedness. The validity or obligation of any school district bond or order so registered and certified shall not be questioned in any court or tribunal, but every such bond or order shall be and remain valid and binding upon the district issuing it. (Id. as amended March 5, 1885.) 18. Tax : The proper authorities of the district issuing such bonds shall, on or before the tenth day of October of each 132 MINNESOTA SCHOOL BONDS. year until the payment thereof, levy and certify to the county auditor a sufficient tax on the property of the district to meet the interest and principal maturing next after such levy, and in their discretion such further sum as they shall deem expedi- ent, not exceeding twenty per cent of such maturing bonds and interest, as a sinking fund to provide for the payment of the same. In case of a failure to levy such tax on account of vacancies in the board of trustees, the holder of any bond or indebtedness so maturing, and for the payment of which indebtedness a tax should have been levied as above, may, any time after October tenth, file the same in the office of the county auditor, who shall thereupon, at the cost of such holder, publish a notice of such filing, stating the nature and the amount of the claim, for three weeks in the newspaper in which was published the delinquent tax list for the previous year. Unless within twenty days from the last publication of the above notice, there is served upon the said auditor a written notice, signed by not less than three persons who would be affected by said levy, setting forth that the district has a just and valid defense against said claim; at the time of making the next tax list, the auditor shall levy upon the taxable property of the district liable, a sufficient tax to pay the amount due on such bonds, to be collected as other taxes. When collected, the county treas- urer shall pay the amount due on such bonds or claims to the legal holder thereof on the surrender of the same to him. (Chap. 36, Sec. 28; Laws of 1885, Chap. 173, p. 213.) 19. District School Meetings Officers : The clerk shall give at least ten days' notice of each annual or special meet- ing, by posting three notices, setting forth all the objects for which the same is called, in conspicuous places in the district. Special meetings are called on the order of the board of trustees, or upon the written request of five or more freeholders of the district. The director, treasurer and clerk of any common school district constitute a board of trustees for such district. Inde- pendent school districts have a board of six directors, known as a board of education, four of whom constitute a quorum. Meet- ings of the legal voters of independent school districts, to vote MINNESOTA RAILROAD AID BONDS. 133 on the purchase or erection of any schoolhouse deemed necessary by the board of education, require ten days' notice .of time, place and object, by publication in some newspaper in the district; or in case there is none, by posting in five of the most public places in the district. Such meetings may determine, by a majority vote, as to the erection of schoolhouses and pur- chase of sites, and the amount of money to be raised for such purposes. (Chap. 36, Sees. 23, 94-111.) GENERAL. 20. Railroad Aid Bonds : Any county, town or incor- porated city or village in this state is authorized to issue bonds in amount not exceeding, with outstanding indebtedness, five per cent of the last assessed valuation thereof, for the purpose of aiding in the construction of any authorized railroad. The municipality issuing such bonds shall be entitled to receive an equal amount of the capital stock of the company aided, unless the same is waived by the county board or other proper munic- ipal authorities. 21. Proposition Submitted: Any railroad company desir- ing such aid shall deliver to the auditor of the county, or to the clerk of the city, town or village, as the case may be, to be by him filed and recorded, a proposition, signed by its presi- dent and secretary under the seal of the company, stating the amount of bonds desired, time and manner of payment, rate of interest, when to be delivered to the company, with reference to the construction of the road, an agreement to issue to the municipality the required capital stock of the company, and any other authorized terms proposed. Upon receipt of such proposition the auditor or clerk shall publish a notice, contain- ing a substantial statement of said proposition, for an election to be held in not less than ten nor more than twenty days from the date thereof. The notice shall be posted in three public places in each election precinct, at least seven days before the election, and published at least twice in one newspaper in or nearest to such city, village, or town; and if aid is asked of a county, in one newspaper in each village and city therein, in which one is published. Provided no such election shall be 134 MINNESOTA RAILROAD AID BONDS. called, except upon the filing in the office of the town clerk a written statement in favor thereof, signed by the supervisors, town clerk and justices of the peace, or any two of them, to- gether, with at least twelve other freeholders of said town. The election shall be conducted as general elections, and the result filed with the auditor or village clerk. Only one election under this act shall be held in any one calendar year in the same county, city or village or town. To authorize the issue of the proposed bonds requires a majority vote, and in the case of counties there must be a majority vote in favor of such propo- sition cast at a majority of the election precincts in the county. No such bonds shall be delivered to the company until the completion, ready for the passage of cars, of the road or part thereof as proposed. (Chap. 34, Sees. 92-97; Act of March 5, 1877.) 22. Same, Act of 1879: Whenever any railroad com- pany shall make a proposition in the form above prescribed, ask- ing any such municipality to issue its bonds as a bonus to aid in the construction of such company's road, or offering to ex- change the mortgage bonds of the company for an equal amount of municipal bonds, to be used in the construction of such railroad, it is the duty of the proper authorities to act upon such proposition and to submit the same to the electors in the same manner as provided above under the act of 1877. If on such submission the proposition is approved by a majority of electors voting thereon, the said authorities shall issue bonds to such company, under the conditions contained in such propo- sition. (105 a, Act of 1879.) 23. Registration of Railroad Aid Bonds: Whenever any county, city, village or township shall have incurred or created a debt under the provisions of any law of this state, to aid in the construction of any railway, the clerk or other proper offi- cer of the municipality issuing bonds in payment of said debt shall make a registration thereof in a book kept for that pur- pose, showing the date, amount, number, maturity, and rate of interest of each bond, and to what railroad the same was given, and shall immediately transmit a correct copy of such MINNESOTA RAILROAD AID BONDS. 135 registration to the state auditor, who shall register the same in his office. The holders of bonds previously issued are required to register them in the said auditor's office, such registration to show the same facts, and under what act, and by what municipality the bonds were issued, and the auditor shall under his seal of office certify upon each bond the fact of regis- tration, for \vhich he is entitled to receive a fee of one dollar from the holder. (Chap. n,Secs. 143, 144; Act passed 1871.) 24. Tax to Pay Registered Bonds: When bonds have been registered as above, the state auditor shall annually ascertain the amount of interest due and accrued thereon for the current year, and certify the same to the county auditor with other taxes to be levied for that year, and the county auditor is required to levy on the taxable property of the municipality liable, a sufficient tax to meet such interest and the cost of collecting the same. The tax so collected shall be paid over by the county treasurer to the authorized holder of the coupons for such interest, upon the presentation and surrender thereof. (Id., Sees. 145-147, as amended 1881.) 25. Note : By act of March 7, 1881, the council of any city, borough or village having a population not exceeding ten thousand inhabitants, was given the power, when author- ized by a majority vote of the electors, to issue bonds in amount not exceeding two per cent of the assessed valuation, for a city hall or other municipal buildings. But in the opin- ion of the official editor of the 1883 edition of the Minnesota Statutes, that law has been repealed in effect by the act of March 5, 1883, relating to villages, which only enumerates among the powers of the village council ' ' to authorize bonds of the villages to be issued in the cases provided by law. ' ' CHAPTER XIII. IOWA. References are to section numbers in the Statutes of 1880 and Supple- ments, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution of 1857. 1. State Credit: The state cannot loan its credit in aid of any individual, association, or corporation, or become a stockholder in any such association or corporation, or in any way assume or become responsible for the debts or liabilities of any individual, association or corporation, unless incurred in time of war for the benefit of the state. (Art. 7, Sec. i; Art. 8, Sec. 3.) 2. State Indebtedness : The state may contract debts to supply deficiencies or failures in revenue, to an amount in the aggregate not exceeding two hundred and fifty thousand dollars, except in case of war, or to repel invasion or insurrec- tion, unless authorized by some law for some single work or object, to be distictly specified therein, which law shall provide for a tax to pay the interest on said debt as it accrues and the principal within twenty years, and shall not take effect until submitted to, and approved by a majority vote of all the peo- ple voting thereon at a general election, notice of which must be published in at least one newspaper in each county, if any is published therein, throughout the state for three weeks preceding such election. (Art. 7, Sec. 2 to 5.) 3. Municipal Indebtedness : No county or other political or municipal corporation shall be allowed to become indebted, in any manner or for any purpose, to an amount in the aggregate exceeding five per cent of the value of the taxable (136) IOWA COUNTY LOANS. 137 property within such county or corporation, to be ascertained by the last previous state and county tax list. (Art. 2, Sec. 3.) COUNTIES. 4. County Board : Counties in this state are corporate bodies, whose control and management are vested in a board of three supervisors, which number may be increased to five or seven by a majority vote, at an election called on petition of one- fourth of the electors, of the county. They are elected for three years, and hold their regular meetings at the county seat on the first Mondays of January, April, June, September, and the first Monday after the general election in each year. Special meetings may be called by the county auditor on request of a majority of the board, by giving to each member of the board at least six days' written notice, specifying the object of the meeting, and a public notice, by publication in not to exceed two newspapers in the county. A majority of the board constitute a quorum. The county auditor is ex- officio clerk of the board. (294-320.) 5. Expenditures Limit : It is not competent for the board of supervisors to order the erection of a courthouse, jail, poorhouse, or other building, or bridge, when the probable cost will exceed five thousand dollars, or the purchase of real estate, for county purposes, exceeding two thousand dollars, until a proposition therefor shall have been submitted to and approved by a majority of the legal voters of the county voting thereon at a general or special election, notice of the same to be given for thirty days previously, in a newspaper, if one is published in the county, or if not, by a written notice posted in a public place in each township. Provided, that in counties having a population of more than ten thousand, for the construction of any county bridges within the county, or toward the construc- tion of any bridge across any unnavigable river forming the line of such county, any necessary sum, not exceeding forty dollars a lineal foot for superstructure, but in no case exceeding fifteen thousand dollars, ma)' be appropriated by the board of super- visors. Counties having a population exceeding fifteen thou- 138 IOWA -COUNTY LOANS. sand may thus appropriate, for bridges within the county, a sura not to exceed twenty-five thousand dollars. 1 (303. ) 7. Submission of Question to Borrow Money: The board of supervisors may submit to the people of the county at any regular election, or at any special election called for that pur- pose, the question whether money may be borrowed to aid in the erection of any public buildings. The question submitted must state the amount desired to be raised, and will not be valid unless it includes a provision for the levy of a tax in addition to all other taxes for the payment thereof. The rate of tax shall not be more than one per cent on the county's valuation in one year, and if the object is to borrow money for the erection of public buildings, the rate shall be such as to pay the debt in not exceeding ten years, and if for highways or bridges, the annual rate shall not be less than one mill on the dollar. The question shall be published at least four weeks in some newspaper in the county, or if there be none, publica- tion shall be by posting the same in at least one of the most public places in each township, and in addition in at least five among the most public places in the county, one of them, being the door of the courthouse, for at least thirty days previously. Such notice shall state the time when the same will be voted upon and form of the question, and a copy of such question shall also be posted up in each voting place during the day of election. (310-313.) 8. Result Declared: The supervisors, on being satisfied that the requirements have been substantially complied with and that a majority of the votes cast are in favor of the sub- mitted proposition, shall cause the proposition and result to be entered at large in their record minute book, and a notice 1 The members of a board of supervisors violating these provisions by voting to erect a building or bridge, the probable cost of which exceeds the amount above specified, without having submitted the question to a vote, are guilty of a misdemeanor under Sec. 3966 of the Iowa Statutes. State v. Coulee, 25 Iowa, 237. When the erection of a building, the prob- able cost of which exceeds five thousand dollars, has been thus voted upon, the board are limited to the amount authorized by such vote, and an indebtedness contracted beyond that amount is void. Reichard v. Warren Co., 31 Iowa, 381. IOWA COUNTY FUNDING BONDS. 139 of its adoption to be published in the same manner and for the same time, as provided for the preliminary notices in the previ- ous section, and the proposition to borrow money shall be in effect from the time of the entering of the result of the vote, as above. The record of such adoption shall be presumptive evidence that all the proceedings necessary to give the vote validity have been regularly conducted. (314 to 317.) 9. Funding Bonds 1 : Any county, the outstanding indebtedness of which on the first day of January, i888, 2 exceeded the sum of five thousand dollars, the board of super- visors, by a vote of two-thirds of all the members thereof, are empowered, if they deem it for the public interest, to fund the same, and issue bonds of the county in sums of not less than one hundred dollars, nor more than one thousand dollars each, run- ning not more than ten years and bearing interest at not exceed- ing six per cent per annum, payable semi-annually. 10. Form of Bonds: Said bonds shall be substantially in the following form: No The county of in the state of Iowa, for value received, promises to pay or order, at the office of the treasurer of said county, in on the first day of. ... 1 8 . . . . , or at any time before that date, at the pleasure of the county, the sum of dollars, with interest at the rate of. . .per cent, per annum, payable at the office of said treasurer semi-annually, on the first days of and in each year on presentation and surrender of the interest-coupons hereto attached. This bond is issued by the board of supervis- ors of said county under the provisions of chapter of the Code of Iowa, and in conformity with a resolution of said board dated day of 1 8 .... In testimony whereof, the said county by its board of supervisors, has caused this bond to be signed by the chairman 1 Also see $46 et seq. herein, under "General." - The general Assembly has amended the above section at each of its recent biennial sessions, changing the date in each case to the year in which the amendment was made. The 22nd G. A. changed it from 1886 to 1888. 140 IOWA COUNTY FUNDING BONDS. of the board and attested by the auditor, with the county seal attached, this day of 1 8 .... [SEAL] Chairman of Board of Supervisors. Attest: Auditor Interest Coupon : $ The treasurer of county, Iowa, will pay the holder hereof, on the day of 1 8 .... at his office in dollars, for interest on county bond No issued under the provisions of chapter of the Code of Iowa. County Auditor. (289.) 22. Sale of Bonds: The county treasurer shall sell or exchange said bonds on the best available terms, for any indebtedness so outstanding, but in no case for less than par and accrued interest. He shall keep a record of all bonds sold or exchanged by him, giving the number, date of sale, amount, date of maturity, name and postoffice address of purchasers, and if exchanged, for what indebtedness. In case of the subse- quent sale or transfer of any such bonds, the purchaser shall notify the treasurer thereof with his postoffice address, and every such transfer shall be noted of record. The treasurer is also required to make a full report thereof to the board of super- visors, and said bonds shall not be exchanged for any indebt- edness except by the approval of the board. In counties having not less than four thousand inhabitants, any supervisor voting to issue bonds under this act in excess of the constitu- tional limit, shall be held personally liable for the excess. (290. ) 12. Tax: It is made the duty of the board to cause to be levied each year upon the taxable property of the county, in addition to other taxes, a sufficient sum to pay the interest on such bonds as it becomes due, and such proportion of the principal shall be provided for each year, so that at the end of three years the sum raised from such levies shall equal at least twenty per cent of the amount of bonds issued; at the end of five IOWA COUNTY FUNDING AND DRAINAGE BONDS. 141 years at least forty per cent of the amount; and before the date of maturity of the bonds, shall be equal to the whole amount of principal and interest. The money arising from such levies shall be known as the "Bond Fund," and shall be used for no other purpose than the payment of said bonds and interest. (291.) 13. Redemption of Bonds: Whenever the amount in the hands of the county treasurer belonging to the bond fund, and not required for the payment of interest maturing before the next levy, is sufficient to redeem one or more bonds, he shall notify the owners of such bonds in the order of their issuance, beginning at the lowest, or first number, that he is prepared to pay the same with accrued interest thereon. If not presented for payment or redemption within thirty days after the date of such notice, the interest thereon shall cease, and the amount due thereon shall be set aside for its paymant whenever presented. The required notice shall be directed to the postoffice address of the owner, as shown by the record kept in the treasurer's ofiice. (292.) 14. Default in Payment: If the board of supervisors fail to make the necessary levy to pay such bonds or interest coupons at maturity, and the same shall have been presented to the county treasurer, and the payment thereof refused, the owner may file the same with the state auditor, to be registered in his office. Thereupon the executive council, at their next session as a board of equalization, and annually, at such time thereafter, shall add to the state tax to be levied in the county so delinquent, a sufficient rate to realize the amount of principal and interest so past due, or to become due previous to the next levy, and the same shall be levied and collected as a part of the state tax and paid into the state treasury to the special credit of such county, as a bond tax to be applied to the payment of such registered bonds and coupons, until the same are fully satisfied. (293.) 15. Drainage Bonds : Whenever there shall be filed with the county auditor a petition signed by one hundred legal voters of the county, setting forth that any described body or 142 IOWA DRAINAGE BONDS CITIES AND TOWNS. district of land in said county is subject to overflow, or too wet for cultivation, and that in the opinion of the petitioners the public health, convenience or welfare, will be promoted by draining or leveeing the same, such auditor shall appoint a competent engineer or commissioner to examine such district or lands, and, if necessary, to make a survey of the same, and report the result of such examination, with an estimate of the cost of the proposed improvement, to the board of supervisors. If, in the opinion of the board, the estimated cost is greater than should be levied in any one year on the lands benefited, they may determine how much shall be levied and collected each year, and issue drainage bonds. The lands benefited may be divided into drainage districts by the board of supervisors. 16. Form Amount of Bonds Tax for Payment: Said bonds shall be issued in sums of not less than fifty dollars each ; bear not more than eight per cent interest, and be payable in the proportion and at the times when the taxes so apportioned shall have been collected, but in no case shall they run longer than fifteen years, and at least ten per cent thereof shall be payable annually. The bonds shall be numbered consecu- tively, and issued as other county bonds. They shall specify that they are drainage bonds, and designate the drainage dis- trict on account of which they are issued. In no case shall the amount of bonds exceed fifty per cent of the assessed valuation of the lands in such district, as shown by the last assessment. Each bond so issued shall express on its face that the same shall only be paid by taxes levied on the lands within the dis- trict benefited, and in no case shall any tax be levied for the payment thereof on any property outside of such district. (1217; 120 to 126, as amended in 1888.) CITIES AND TOWNS. 17. Classification : Cities having a population of fifteen thousand and upward, are cities of the first class; those having a population exceeding two thousand but not exceed- ing fifteen thousand, are cities of the second class; and every municipal corporation having a population not exceeding two IOWA CITY AXD TOWN LOANS. ' 143 thousand, is an incorporated town. It is the duty of the gov- ernor, auditor and secretary of state, or any two of them, within six months of the filing with the secretary of state of any cen- sus taken by authority of the state, or any town or city council, to ascertain what cities or towns are entitled to advancement under the above classification, and of the governor to cause a statement thereof to be published in Des Moines, and also in the city or town so advanced. At the next regular annual election of municipal officers, such city or town shall proceed to organize according to its new grade. (507 tc 510.) 18. Incorporated Towns ; The corporate authority of incorporated towns is vested in a council composed of the mayor, recorder, and six trustees elected for such purpose, a majority of whom constitute a quorum for the transaction of business at any of the meetings of such council. (511.) 19. Municipal Loans : Loans may be negotiated by any municipal corporation in anticipation of the revenues thereof, but the aggregate amount of such loans shall not exceed the sum of three per cent upon the taxable property of any city or town; except that in those cities having not less than thirty-five hundred and not over six thousand inhabitants, such loans shall not exceed five per cent upon the taxable property thereof. (500, as amended by the i6th G. A., in 1878; and 2oth G. A., in 1884.) 2p. Funding Act of 1876 : Cities and towns are author- ized to adjust, renew or extend any of their indebtedness, evidenced by bonds or other negotiable instruments hereto- fore issued and outstanding, and issue bonds or other new securities therefor, but not for a greater amount than is due thereon. (500; Sees, i to 4. ) 21. Funding Act of 1886 : Any incorporated city having a population of not less than seven thousand under the census of 1885, an d whose outstanding indebtedness evidenced by warrants exceeded ten thousand dollars at the date of the passage of such act, was authorized to fund that indebtedness with new bonds, in denominations of not less than one hundred dollars, running not more than twenty years, and bearing 144 IOWA CITY FUNDING BONDS. interest at not exceeding seven per cent, payable semi-annu- ally, and signed by the mayor and attested by the auditor or clerk, the coupons being signed by the auditor or clerk. 22. Sale Record: Said bonds may be sold or ex- changed by the city treasurer for such outstanding indebted- ness, at not less than par and accrued interest. The treasurer shall keep a record of all bonds sold or exchanged, giving the number, date of sale, amount, date of maturity, etc., as is provided in the case of county bonds. 23. Tax Redemption Default in Payment : A suffi- cient tax is required to be levied to pay the interest as it becomes due, and to pay at least twenty per cent of the prin- cipal within five years, and all of such bonds at maturity. Said bonds shall be redeemed in the order of issue. As fast as sufficient money accrues to pay one or more bonds, the treas- urer shall notify the owner by a notice mailed to his recorded address, and if not presented within thirty days, the interest thereon shall cease. In case of default in the payment of such bonds or interest thereon, they may be filed with the state audi- tor, and taxes for their payment collected with the state taxes substantially in the same manner as is provided in the case of county bonds. (Chap. 78, 2ist G. A., 1886.) 24. Funding Act of 1888 : Any incorporated city hav- ing a population of five thousand or more, according to the census of 1885, whose indebtedness evidenced by warrants, ex- ceeds the sum of ten thousand dollars, may fund the same with bonds in sums not less than one hundred nor more than one thousand dollars each, running not more than twenty years, and bearing interest at not exceeding six per cent, payable semi-annually. Said cities may also in the same manner refund their indebtedness evidenced by bonds heretofore issued. 25. Sale Limit Tax: The bonds so issued may be sold or exchanged, at not less than their par value, for any indebtedness of such city, evidenced by warrants or bonds thereof outstanding at the passage of this act. Said bonds shall not be issued for any other purpose than to fund such IOWA CITY FUNDING BONDS. 145 indebtedness evidenced by warrants outstanding at the date of the passage of this act, or to refund outstanding bonds at such time, or by contracts existing at such date and to be per- formed within the year 1888. The city council shall cause to be assessed annual!}- in addition to all other taxes, a sum suffi- cient to pay the interest of such bonds, and such proportion of the principal that at the end of five years the sum raised shall equal at least twenty per cent, at the end of ten years fort)- per cent, at the end of fifteen years sixty-five per cent, and at or before maturity the whole amount of said bonds and interest. The bonds are to be redeemed substantially the same as provided under the act of 1886. The act also provides for the filing of defaulted bonds or coupons with the state auditor for collec- tion. 1 (Chap. 17, 22 G. A., approved April 3rd; and in force April yth, 1888.) 26. Refunding Act of 1888, As to Certain Cities: Any city, having a population of two thousand, and organized under a special charter, is authorized by a two-thirds vote of the city council, if deemed to be of interest, to refund its in- debtedness evidenced by bonds outstanding at the passage of this act, with new bonds of the denomination of not less than one hundred nor more than one thousand dollars, running not more than twenty years, and bearing interest at not ex- ceeding six per cent, payable semi-annually. The principal thereof shall be payable at the city treasurer's office, but the interest may be payable in New York, Boston or Chicago. The bonds shall be signed by the mayor, and attested by the clerk, with the city seal attached, in an open session of the council. 1 The bonds shall be sold at not less than par, or may be exchanged for such outstanding bonds, and a tax of not exceeding two mills on the dollar shall be levied annually to meet the payment of the principal and interest of such bonds as they mature. Any defaulted bonds or coupons may be filed with the state auditor for collection. (Chap. 19, 22 G. A., approved March loth, and in force March i3th, 1888.) 1 These acts give forms which are to be substantially followed in the issue of the bonds. Both recite a resolution of the city council, by date, and the act, by chapter, under which they are issued. 146 IOWA TOWN AM) CITS' KOXDS. 27. Funding Town Bonds': Incorporated towns hav- ing outstanding bonded indebtedness of not less than one thousand dollars past due at the passage of this act, are author- ized by a two-thirds vote of the town council to refund the same with new bonds, in sums of not less than one hundred nor more than one thousand dollars, running not more than twenty years, redeemable after five } T ears, and bearing interest at not exceeding seven per cent, payable semi-annually. (Chap. 20, 22 G. A., approved April i3th, and in force April i4th, 1888.) 28. District Improvement Bonds, In Cities of the First Class : Any city of the first class so organized since Janu- ary i, 1 88 1, or any city organized under a special charter/ may create improvement districts for the opening, extending, widen- ing, grading, curbing, paving, guttering, or otherwise improv- ing of any street, highway Or alley therein. So much of the cost of such improvement as is assessed against the property therein, may be made payable, one-fifth in ninety days, one- fifth in two years, one-fifth in four years, one-fifth in six years, and one-fifth in eight years, such deferred installments to bear interest at the rate of six per cent per annum. To pay the costs of any such improvement, the city council may issue bonds of the city, to be called "Improvement Bonds of District No , " and divide the same into four series, each not ex- ceeding one-fifth of the cost of such improvement, and payable in not exceeding 2, 4, 6, and 8 years respectively. Said bonds shall bear not to exceed six per cent interest, payable annu- ally or semi-annually with interest coupons attached, and shall express on their face the name of the street, highway or alley, to defray the cost of which they are issued. They may be issued in sums of from one hundred to one thousand dollars, and sold at not less than par. Special assessments so levied constitute a sinking fund for the payment of the bonds and interest. (466, chap. 60, 20 G. A., 1884 as amended by chaps 160, 21 G. A., 1882, and 14, 22 G. A., 1888.) 1 Also see 46 et. seq. herein. 2 As amended by Chap 14. 22 G. A., 1888 IOWA CITY IMPROVEMENT AND SEWERAGE BONDS. 147 29. City Improvement Bonds: If the payment of any portion of the costs of such improvements is made chargeable against the city generally, the city council may issue bonds of the city, running not to exceed twenty years, and bearing not to exceed six per cent interest, payable semi-annually, to be called "City Improvement Bonds." Such bonds shall not be sold at less than par. 1 (Ibid.) 30. Sewerage Bonds : In case any city of the first class so organized since January ist, 1881, shall assess the whole or a part of the cost of any sewer against the adjacent property liable, such special assessment may be made payable in five in- stallments; one-fifth in sixty days, and one-fifth in two, three, four and five years respectively, the deferred installments to bear interest at seven per cent. Such city may also provide that the cost of such sewer may be paid partly or wholly from the general revenue fund, and for the purpose, may levy a sewerage tax, not to exceed in any one year two mills on the dollar of the taxable property of such city, or of the sewerage district to be organized for the purpose. In case a special tax is levied, payable in installments, as above provided, the city may issue its bonds, to be called ' ' Sewerage Bonds, ' ' and divide the same into four series, becoming due in not exceeding two, three, four and five years respectively, each series being for any amount in the aggregate not exceeding the amount of the special assessment installment due the same year, together with the special tax which the city proposes to levy generally on the taxable property of said city or sewerage district. Said bonds may bear interest at not exceeding six per cent, payable annually or semi-annually as may be provided by the council, with interest coupons attached, and shall express on their face the name of the street, highway, avenue or alley on which the sewer is located, to defray the cost of which they are issued. They shall be sold at not less than par, and the special assess- 1 By chap. 12, 22 G. A. 1888, such cities of the first class are author- ized to levy a five mill tax to create a fund to pay for the improvement of street intersections, or to anticipate such tax by issuing bonds run- ning not more than twenty years, substantially as provided for city sewer bonds, ? 31 herein. 148 IOWA CITY BONDS. raent and taxes so levied as above shall constitute a sinking fund for their payment. 1 (481, chap. 162 of lyth G. A., as amended by chap. 25, 2oth G. A., 1884; chap. 160, 2ist G. A., 1886.) 31. City Sewerage Bonds for Street Intersections, etc.: Such cities of the first class are authorized to levy a tax not exceeding five mills on the dollar, for the purpose of cre- ating a fund to pay the cost of constructing sewers at the inter- sections of streets, alleys or in other places where such expenses are not assessable against adjacent property; or for the purpose of paying any part of the cost of sewers which may be paid or advanced by such city. To anticipate such sewer tax, the city may issue sewerage bonds, running not to exceed twenty years. (Chap. 7, 22 G. A.) 32. Public Improvement Bonds : In any city of the first class containing a population of over thirty thousand, as shown by the last census, for the purpose of providing for the payment of the expenses of paving, curbing or sewering any street, the council may, from time to time as the work pro- gresses, make requisitions upon the mayor for the issue of bonds of the city in such sums as shall be deemed best, and it is made the duty of the mayor to make and execute such bonds, to an amount not exceeding the amount of the contract price of such improvement and the additional expense attending the same. 33. Form of Bonds: Said bonds shall recite the name of the street or streets improved and on account of which they are issued, be signed by the mayor, and countersigned by the city clerk, with the corporate seal of the city affixed. They shall all bear the same date, and be payable seven years there- after, but redeemable at any time at the option of the city, and shall bear interest at not to exceed six per cent payable semi- annually. They shall be registered by the city clerk in a book kept for that purpose, and sold at not less than par. 1 An amendment passed in 1888 (chap. 6) provides that two thirds of the council shall be required to confirm the assessment ; that the as- sessment shall not exceed three dollars per lineal foot ; and other de- tails as to such assessment. IOWA CITY AND TOWX BONDS. 149 34. Special Assessments for their Payment ; Special as- sessments for the payment of such improvements may be made payable in seven equal installments, bearing six per cent in- terest until paid, the first installment being payable at the time of the next succeeding semi-annual payment of taxes, and the others annually thereafter. The proceeds from these assess- ments constitute a fund for the payment of said bonds and interest, but when there is no fund from which to pay such interest as it matures, the council is authorized to make a tem- porary loan for that purpose. The city council shall not have the right to authorize any such improvement unless the owners of two-thirds of the front feet, fronting on the street to be improved, petition therefor, and unless the same is voted for by three-fourths of the members of the council. (Chap. 168, 21 G. A., 1886, as amended by chap. 5, 22 G. A., 1888.) 35. Water-works, Gas-works and Electric Light Plants : Any incorporated city or town may erect water- works, or establish and maintain gas-works, or electric light plants, or authorize the erection of the same, but no such works shall be erected or authorized until a majority of the voters of the city or town, at a general or special election, by a vote, approve the same. 36. Bonds for Gas-works and Electric Light Plants : Any such incorporated city or town, for the purpose of estab- lishing gas-works or an electric light plant, may issue bonds running not more than twenty years, and bearing interest at not to exceed six per cent. The question of the establishment of such gas-works or electric light plant, may be submitted to a vote at any general election, or at any election specially called for that purpose, or the mayor shall submit such ques- tion upon a petition of twenty-five property owners of each ward in the city or town. Notice of said election shall be given in two newspapers, if so many are published in said city or town, if not, then in one, for at least two consecutive weeks. (471 as amended by chaps, n and 26, 22 G. A., 1888.) 37. Bonds for Water-works in Cities of Second Class : Any city of the second class, which has determined I5O IOWA SCHOOL BONDS. or may determine to erect water-works under the above provis- ion, may for such purpose issue bonds bearing interest at a rate not to exceed six per cent, and running not more than twenty years. (Chap. 10, 22 G. A., in force Feb. 23, 1888.) SCHOOL BONDS. 38. Bonds of Independent School Districts : For the purpose of redeeming outstanding bonds, and erecting and completing schoolhouses, independent school districts are authorized to borrow money and issue negotiable bonds of the district. The directors of any such district may submit to the voters thereof, at any annual or special meeting, the question of issuing such bonds, notice being given by the secretary, by posting the same in three public places in said district, and by publication in a newspaper published therein, for two weeks previously. A majority of all the votes cast on the submitted question is required to authorize the issue of such bonds by the board of directors. 39. For?n of Bonds: Said bonds shall be issued in denominations of not less than twenty-five dollars nor more than one thousand dollars, bearing interest not to exceed ten per cent per annum, which may be paid semi-annually. The bonds shall become due in not more than ten years from date, and payable at the pleasure of the district at any time before maturity. They shall be given in the name of the independ- ent district, and shall be signed by the president of the board, attested by the secretary and delivered to the treasurer, who shall negotiate the same at not less than par, and countersign them when negotiated. 40. Limit of Amount Tax: No district shall permit a greater outstanding indebtedness than five per cent of the last assessed valuation of such district. It is made the duty of the electors of any independent school district which has issued bonds, to provide a sufficient tax for the payment of the same as they become due, and in case of the failure of the electors to so provide, the district board may vote a sufficient rate on the taxable property of the district to pay the interest and any por- tion of the principal becoming due. (1821 to 1823.) IOWA SCHOOL BONDS. 15! 41. Refunding School Bonds: Any independent school district or district township having a bonded indebted- ness outstanding, is authorized to issue bonds at any rate of interest not exceeding seven per cent per annum, payable semi-annually, for the purpose of funding said indebtedness. Said bonds shall be issued upon a resolution of the board of directors of such district, which in order to be valid must be adopted by a two-thirds vote of said directors. 42. Form of Bonds: Said bonds shall be in denomina- tions of not less than one hundred dollars, nor more than one thousand dollars, and shall be signed by the president, and countersigned by the secretary of such district or township. The principal and interest may be made payable wherever the board of directors may, by resolution, determine. The bonds shall run not more than ten years and be payable at the pleasure of the district after five years from the date of their issue. 43. Sale of Bonds: The treasurer of the district may sell said bonds at not less than par, and apply the proceeds to the payment of such outstanding bonded indebtedness, or he may exchange such new bonds for the outstanding bonds at par. He is required to keep a record of the parties to whom he sells the bonds, with their postoffice address. 44. Tax Redemption of Bonds: A tax for the payment of the principal and interest of said bonds shall be raised by tfie district electors, or if they fail so to do, by the board of such district. If the district shall fail or neglect to levy said tax, the board of supervisors of the county shall, upon applica- tion of the owner of said bonds, levy said tax. Whenever said bonds become payable at the pleasure of the district, in order to stop the interest thereon, the treasurer shall give the owner ninety days' written notice of the readiness of the district to pay, and the amount it desires to pay, by a notice directed to the postoffice address of such owner, as shown by the record of the treasurer. (1824; chap. 132, i8th G. A.) 45. Bonds to Pay Judgment Indebtedness : School districts and township districts are authorized to issue bonds, upon a resolution of the board of directors, to pay any judg- 152 IOWA REFUNDING BONDS. ments obtained against such district or township prior to the passage of the act of 1880. Said bonds shall run not more than ten years, bear interest at not to exceed eight per cent, pay- able semi-annually, be signed by the president, and counter- signed by the secretary of the district, payable at the pleasure of the district, or township issuing the same, and registered by the county auditor. (1824; chap. 51, i8th G. A.) GENERAL. 46. Refunding Bonds : If it is deemed for the public interest, by a vote of two-thirds of the board of supervisors, or city or town council, as the case may be, any county, city or town is authorized to refund its bonded indebtedness outstand- ing, and to issue bonds of such corporation in sums of not less than one hundred nor more than one thousand dollars, having not more than twenty years to run, redeemable at the pleasure of the corporation after five years from date, and bearing interest, payable semi-annually, at a rate not exceeding six per cent. 47. Form of Bonds: Said bonds shall be substantially of the following form: The of , in the state of Iowa, for value received, promises to pay or order, on the first day of or at any time before that date, after the expiration of five years, at the pleasure of the said the sum of dollars, with interest at the rate of per cent per annum, payable semi-annually, on the first days of and in each year, on presentation and surrender of the interest coupons hereto attached. This bond is issued by the of said under the provisions of chapter of the session laws of the seventeenth general assembly of Iowa, and in conformity with a resolution of said da.ted day of , 18 In testimony whereof the said has caused this bond to be signed by L. S. the and attested by the seal attached this day of 18 (Coupon.} The treasurer of , Iowa, will pay to the holder hereof on the day of , 18 , . . dollars for interest on bond No , issued IOWA REFUNDING BONDS. 153 under provisions of chapter of the sessions laws of the seventeenth general assembly. 48. Sale of Bonds: The treasurer of such corporation may sell said bonds at not less than par, and apply the pro- ceeds to the redemption of the outstanding bonded debt, or he may exchange such bonds for outstanding bonds at par. The new bonds authorized by this act shall be issued for no other purpose than the refunding of such outstanding bonds, except that the corporation may appropriate not to exceed two per cent thereof to pay the expenses of their issue and sale. 49. Tax: The board of supervisors or common council of any city or town issuing such bonds shall cause to be assessed and levied upon the taxable property thereof in addi- tion to other taxes, a sufficient sum to pay the interest on such bonds as it becomes due, and such proportion of the principal that at the end of eight years the sum raised will equal at least fifteen per cent of the amount of bonds issued; at the end of ten years, at least thirty per cent bf such amount; and at or before maturity of the bonds, shall be equal to the whole amount of principal and interest. The money arising from such tax shall be known as the " Bond Fund," and shall be kept as a special account, and used only for the payment of such bonds and interest. 50. Redemption of Bonds : The redemption of bonds is- sued under the provisions of this act, after the expiration of five years may be made in substantially the same manner as provided in the case of county funding bonds. 1 51. Default in Payment: In case of a failure of the proper municipal authorities to make the necessary tax levies to meet the payment of such bonds as they become due, they may be filed with the state auditor and taxes levied for their payment by the state authorities in the same manner as is pro- vided in the case of county funding bonds. 2 (293, chap. 58, 17 G. A., as amended by chap. 21, 20 G. A., 1884, and chap. 14, 21 G. A., 1886.) 1 See \ 13 herein. 2 See \ 14 herein. 154 IO\VA PROHIBITED MUNICIPAL AID. 52. Certain Municipal Indebtedness Forbidden : No county, city or incorporated town shall directly or indirectly subscribe for capital stock or become interested in any bank, plank-road, turnpike, or railway, or in any work of internal im- provement, nor shall they be allowed to issue any bonds or other evidences of indebtedness for such purpose; but this provision shall not be construed as to prevent such municipalities from erecting their necessary public buildings, bridges, or laying out highways, streets, alleys, public grounds or other local works in which they may be respectively interested. Municipal cor- porations are prohibited from appropriating or loaning public money to or in favor of any school, association, or object, which is under ecclesiastical or sectarian management or control. (552-553-) 53. Railroad Aid Bonds Void : All bonds or other evidences of debt hereafter issued by any municipal corpora- tion to any railway company's capital stock shall be null and void, and no assignment of the same shall give them any validity. A former recovery on any part of such bonds or coupons shall not bar, estop, or affect any defense the corpora- tion has made or can make to such bonds or coupons. (554- 555-) CHAPTER XIV. NEBRASKA. References are to the Compiled Statutes of 1887, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution in force November ist, 1875. 1. State Indebtedness: To meet casual deficits or failures in the revenues, the state may contract debts, not exceeding in the aggregate one hundred thousand dollars, except in case of invasion, insurrection or war, and provision shall be made, by an irrepealable law, for the payment of the interest on such debt, annually, as it shall accrue, by a tax levied for the purpose, or from other sources of revenue. The credit of the state shall never be given or loaned in aid of any individual, association or corporation. (Art. 12, sees, i and 3.) 2. County and Municipal Indebtedness : No city, county, town, precinct, municipality, or other subdivision of the state, shall ever make donations to any railroad or other works of internal improvement, unless a proposition so to do shall have been first submitted to the qualified electors thereof; and such donations of a county with the donations of such subdivisions in the aggregate shall not exceed ten per cent of the assessed valuation of such county, but any city or county may, by a two-thirds vote, increase such indebtedness five per cent in addition to such ten per cent, and no bonds or evidences of indebtedness so issued shall be valid unless the same shall have indorsed thereon a certificate signed by the secretary and auditor of state, showing that the same is issued pursuant to law. (Art. 12, sec. 2.) (155) 156 NEBRASKA CONSTITUTIONAL PROVISIONS COUNTIES. 3. Municipal Subscriptions : No city, county, town, precinct, municipality, or other subdivision of the state, shall ever become a subscriber to the capital stock, or owner of such stock, or any portion or interest therein, of any railroad or private corporation, or association. (Art. n, Municipal Cor- porations, sec. i.) 4. Limit on Taxation : County authorities shall never assess taxes the aggregate of which shall exceed one and a half dollars per one hundred dollars valuation, unless author- ized by a vote of the people of the county. (Art. 9, sec. 5.) 5. Special Legislation : The legislature is prohibited from passing local or special laws : (among other things) granting to any corporation, association, or individual, any special or exclusive privileges, immunity, or franchise whatever, and in all other cases where a general law can be made appli- cable, no special law shall be enacted. (Art. 3, sec. 15.) COUNTIES. 1 6. County Board of Supervisors : In counties hav- ing a township organization, the county board is composed of the supervisors of the organized townships, and of the cities and villages of the county. They are required to hold two regular meetings at the county seat each year, on the second Tuesday in January, and the first Tuesday in June. Special meetings shall be held only on the written request of at least one- third of the members, specifying the time and object of the meeting, by the clerk sending a written notice to each member of the board, of the time and object of the meeting, and also publishing a notice in some newspaper of the county, if any is published therein, and no business shall be transacted at any special meeting except such as is specified in the call. Two- thirds of the supervisors elected in any county constitute a quorum. 7. County Board of Commissioners : In counties without township organization, having not more than seventy 1 Also see " Internal Improvement Bonds," 60; " Compromise Bonds," $76; "Registration," 80. NEBRASKA COUNTY BONDS. 157 thousand inhabitants, the county board consists of three com- missioners, and in counties having more than seventy thousand inhabitants, of five commissioners. Regular sessions of said board shall be held on the second Tuesday in January, the third Monday in June, and the first Tuesday in October of each year. Special sessions may be called by the county clerk when demanded by the interests of the county, upon giving five days' notice of the time and object of such meeting, by posting up notices in three public places in the county, or by publication in a newspaper published therein. The county clerk is ex-officio clerk of the county board. (Chap. 18, sees. 20-74, as amended by chap. 29, L,aws of 1887.) 8. Bonds for County Buildings : It is made the duty of the count}' commissioners to erect or otherwise provide a suitable courthouse and other county buildings, and for that purpose borrow money and issue bonds of the county there- for, but no appropriation exceeding fifteen hundred dollars shall be made for the erection of any county buildings, without first submitting the proposition to a vote of the people at a general election, or at a special election called by the board for that purpose, and the same is ordered by three-fifths of the legal voters voting thereon. (Chap. 18, sec. 25, as amended by chap. 28, Laws of 1887.) 9. Funding Bonds : Counties are authorized to issue funding bonds to an amount not exceeding ten per cent of the assessed valuation of the county, to pay outstanding and un- paid bonds, warrants and other county indebtedness. Such bonds may be of such denomination as the county board may deem best, payable at the office of the county treasurer, run- ning not more than twenty nor less than five years, and bear- ing not to exceed seven per cent semi-annual interest. The bonds and coupons shall be signed by the chairman of the board, and countersigned by the county clerk. 10. Question Submitted: The county board shall first submit the question of issuing such bonds to a vote of the quali- fied electors of the county. The proposition submitted shall include the minimum price, not less than par, at which said 158 NEBRASKA COUNTY BONDS. bonds shall be sold. Where the rate of interest on the indebt- edness will be reduced by the new issue, and the amount of the indebtedness will not be increased, a majority of the votes cast shall be sufficient to adopt the proposition. The county treasurer shall keep a detailed record of all bonds is- sued, giving the number, amount, date and to whom issued. 11. Tax: The county board is required to levy a tax annually, sufficient to pay the interest on said bonds, as it be- comes due, and also an additional amount to pay the principal at maturity, but not more than twenty per cent of such princi- pal shall be levied and collected in any one year. (Chap. 18, sees. 132-141.) 12. Refunding Bonds : Any county in this state is authorized to issue its coupon bonds, bearing not to exceed six per cent interest, payable semi-annually, the principal pa)-able in not exceeding twenty years from date, for the purpose of refunding its bonded indebtedness, said bonds to be substitu- ted in place of, and exchanged for, bonds heretofore issued whenever the same can be effected. Such bonds may be is- sued even if said indebtedness exceeds ten per cent of the county's assessed valuation, and without submitting the ques- tion to a vote of the electors. 13. Redemption : In all cases where county bonds are past due, and by their terms payable at the option of the county board, the board shall notify the holders to present the same for redemption or exchange and substitution, and in case of the holders failing to so present them at the place of payment, the county shall not be liable to pay interest on such bonds, commencing with the next due coupon, in excess of the inter- est provided for in the refunding bonds. 14. Sale : In case an exchange of such bonds cannot be effected, the county commissioners are authorized to sell said refunding bonds, at not less than par, in such sums as may be necessary to create a fund for the redemption of the said out- standing bonds. 15. Registration : The county clerk shall certify to the NEBRASKA COUNTY BONDS. 159 auditor of state the number, amount and description of each bond cancelled, or to be cancelled and refunded, and the amount due thereon for principal or unpaid interest. It is the duty of such auditor to register all such substituted bonds, but in no case in excess of the amount so certified to him by the county clerk, and the secretary of state and said auditor shall certify such bonds, and a tax to pay the principal and interest thereon shall be levied in the same manner as in case of other county bonds. The bonds shall be entitled to registration in the order that they are presented to the auditor. These pro- visions as to registration shall apply to all refunding bonds already or hereafter issued. (Chap. 18, sees. 141 a, to 141 h, in force Feb. 28, 1883.) 16. Coal Prospecting : On presentation of a petition of twenty resident freeholders of the county, the board of com- missioners of any county in this state are authorized and required to submit to the legal voters a proposition to issue bonds, not exceeding twenty thousand dollars, to defray the expenses of boring and prospecting for coal in such county, under the direction of the commissioners; and are authorized to issue said bonds for that purpose in case the vote shall be favorable to the proposition. The proceedings relating to the issue of such bonds are governed by the act relating to internal improvement bonds (See sec. 60 herein). The counties of Burt, Washington and Sarpy are excepted from the application of this act. (Chap. 18, art. 3, sees, i and 2, in effect March 3, 1873.) 17. Submission of Questions : The mode of submit- ting questions to the people for any authorized purpose shall be as follows: The whole question, including the sum to be raised, or the amount of tax to be levied, or the rate per annum, with the time of its taking effect, if of a* nature to be set forth, is to be published for four weeks in some newspaper in the county, or if there is no such newspaper, to be posted up in at least one of the most public places in each election precinct. The notice shall name the time when such vote shall be taken, and the form of the question submitted; and a copy of the question 160 NEBRASKA COUNTY AND CITY BONDS. shall be posted up at each voting place during the day of election. 18. When the submitted question involves the borrowing or expenditure of money or issuance of bonds, the proposition must be accompanied by a provision to levy a tax annually for the payment of the interest thereon, and no vote adopting the question proposed shall be valid, unless it adopt the amount of tax to be levied to meet the liability incurred. If it appears that two-thirds of the votes cast are in favor of the proposition, and the requirements of the law have been fully complied with, the same shall be entered at large by the county board upon their records. Propositions thus acted upon cannot be rescinded by the county board. (Chap. 18, sees. 27-30.) CITIES.' 19. Cities Classified : All cities having a population of sixty thousand or more, are known as cities of the metro- politan class; all those having a population of less than sixty thousand and more than twenty-five thousand, are known as cities of the first class having less than sixty thousand inhabit- ants; and all cities, towns and villages containing more than one thousand and less than twenty-five thousand inhabitants are known as cities of the second class. Cities of the second class having more than five thousand inhabitants are governed by special statutory provisions. (Chap. 14, arts, i and 2; L,aws 1887, chaps. 10 and u.) 20. Bonds of Metropolitan Cities : The mayor and council are authorized to issue the coupon bonds of the city for such amounts and length of time as they may deem proper, bearing not to exceed six per cent interest, for the construction and maintenance of sewers, the renewal of outstanding city bonds bearing a higher rate of interest, the funding and pay- ment of the city's floating indebtedness, the construction of a city hall or other needful city buildings, or for the appropria- tion of gas-works, water-works or land for public parks. All such bonds shall express upon their face the purpose for which they are issued. Such cities are authorized to provide for the 1 Also see \\ 60, 75, 77, 85. NEBRASKA METROPOLITAN CITIES. l6l erection of market-houses and other city buildings and the establishing and maintaining of public libraries; and to estab- lish and change the channels of streams and water-courses within the city, and bridge the same, but the ordinance providing for any such improvement, costing in the aggregate more than twenty thousand dollars shall be first submitted to and ratified by a majority of the legal voters in such city voting thereon. 21. Limit of Amount Vote Sale: The city's bonded indebtedness, exclusive of district paving bonds, and curbing and guttering bonds, shall not at any time exceed in the aggre- gate ten per cent of the assessed valuation of such city. No bonds shall be issued, except for renewal bonds, bonds for paving, gas-works, water-works, land for public parks, or for curbing and guttering purposes, in excess of two hundred thousand dollars in any one year, nor until the legal electors of said city shall have authorized the same by a two-thirds vote at a general annual or special election of said city, called after twenty days' public notice, stating distinctly the amount and purpose for which they are to be issued. Such bonds shall in no case be sold at less than par. 22. District Paving Bonds: The mayor and council of any city of this class are authorized to pave, repave or macad- amize any street or alley, and for that purpose to create suit- able paving districts. Such paving shall be done upon the petition of the owners representing a majority of the frontage of the lots or lands abutting on the street or alley to be improved, and shall be done with the material determined upon by such majority of owners, when so designated. The cost of paving shall be assessed upon the lots and lands abutting on such street or allej', and payable in installments of one-tenth each, the last nine of which being payable annually in from one to nine years, and bearing interest at the rate of seven per cent. For the purpose of paving, macadamizing or repaving the streets and alleys in any paving district, exclusive of inter- sections of streets and spaces opposite alleys therein, the mayor and council may, by ordinance, issue bonds called " District Paving Bonds of District No , " payable within ten years 1 62 NEBRASKA METROPOLITAN CITIES. from date, and bearing not to exceed ten per cent interest, payable annually; and in such case shall also provide that the special assessments shall constitute a sinking fund for the pay- ment of the bonds and interest. 23. Paving Bonds: The mayor and council, for the pur- pose of paying the cost of paving the intersections of streets and spaces opposite alleys, may issue city bonds, running not more than twenty years, and bearing not to exceed six per cent interest, payable semi-annually, to be called " Paving Bonds." The issue of said bonds shall first be authorized by a two- thirds vote of the electors of such city voting on the question at a general or a special election. The aggregate amount of such bonds issued in any one year shall not exceed one hun- dred thousand dollars. 24. Bonds for Curbing and Guttering: For the purpose of paying the cost of curbing and guttering any street or avenue in which paving has been ordered, city bonds may be issued, to be called " Curbing and Guttering Bonds of Paving District No. . . .," payable in the same manner, for the same time and rate of interest as " District Paving Bonds " as above, the assessment for such curbing and guttering being made in the same manner as for paving. Such curbing and guttering shall not be ordered upon any street not ordered to be paved, except on the petition of a majority of the abutting property holders. 25. Injunction Prohibited: No court or judge shall grant an injunction to restrain the levy, enforcement or collection of any special tax or assessment to pay the cost of any of the improvements above specified; and no such special tax shall be declared void, nor any such assessment be set aside on account of any error or irregularity in the proceedings relating thereto, but parties may pay such assessment under protest, with a right to bring an action against the city for the repay- ment of the same. 26. Sale Taxes: No bonds of cities of this class must be sold at less than par. The mayor and council are required to make provision for a sinking fund to redeem, at maturity. NEBRASKA CITIES OF THE FIRST CLASS. 163 the bonded indebtedness of such cities, and also to provide for the payment of the interest thereon, as it accrues, and for that purpose, to levy and collect a tax, not exceeding one per cent in any one year, upon the taxable property of such city. (Chap. ID, Laws of 1887, pp. 103-201.) 27. Bonds of Cities of the First Class: Any city of the first class may provide for the erection of market-houses or places, and all other useful and necessary city buildings, and may establish, change and bridge channels, streams and water-courses within the city. But the order providing for any such improvement requiring an outlay in the aggregate of more than $5,000, shall first be submitted to and ratified by a majority of the legal voters of the city voting thereon. Such city may also establish and maintain public libraries, and hold and improve public grounds and parks within or without the limits of the city, and purchase and hold not to exceed eighty acres of land in one body outside of the city limits for city purposes. 28. Funding and Refunding Bonds : Cities of this class are authorized by ordinance to provide for issuing bonds for the purpose of funding their outstanding indebtedness. Float- ing indebtedness can only be funded by authority of a vote of the people, but the maj^or and council may by a two-thirds vote issue bonds to pay off any bonded debt at a not higher rate than the debt, without a vote of the people. 29. Bonds for Paving and for Curbing and Guttering : " District Paving Bonds," " Paving Bonds " and " Curbing and Guttering Bonds," may be issued substantially in the same manner, under the same conditions, restrictions and limitations as similar bonds may be issued by cities of the metropolitan class. ' ' Paving Bonds ' ' are required to be authorized by only a majorit)" of the electors voting thereon, instead of by a two- thirds vote, as in the case of metropolitan cities. 30. Bonds for Sewers and Water-works : The mayor and council are authorized to issue the bonds of the city, in the aggregate not exceeding $100,000, for the purpose of construct- ing, or aiding in the construction of, a system of sewerage, or 164 NEBRASKA CITIES OP THE FIRST CLASS. with the same limitation, for the purpose of constructing, maintaining and operating a system of water-works for such city. The issue of bonds in either case must first be author- ized by a majority vote of the people at an election upon the proposition, submitted in the manner provided for by law for the submission of propositions to aid in the construction of railroads or other works of internal improvement. 31. Before submitting such proposition, the mayor and council shall adopt a system of sewerage or water-works, and procure from the city engineer an estimate of the cost thereof, and of the cost of so much thereof as they propose to construct, and such estimate with the amount proposed to be borrowed, and the plans of such system shall remain in the hands of the city clerk, subject to public inspection during the pending of such proposition. After the adoption of a system, no other system shall be adopted unless authorized by a vote of the people. When authorized by a vote, bonds, not to exceed ten thousand dollars in any one year, may be issued to construct extensions of water- works. 32. Taxes : When any such sewer or water- works bonds have been issued, there shall thereafter be levied annu- ally on all the taxable property of the city, a tax of not exceed- ing one mill for every $20,000 of such bonds issued. This tax with the income from the water- works, shall first be ap- plied to the maintenance of such works and the payment of the interest on the bonds, and the surplus used for the ex- tension of such system, or retained as a sinking fund for the payment of the bonds at maturity. 33. Sale and Interest . "No bonds issued by the city for any purpose except paving, district bonds, shall draw interest at a greater rate than six 1 per cent per annum, nor sold for less than par or face value, and shall be redeemable at the option of the city at any time after five years from their date. ' ' (Chap, ii, I/aws of 1887, pp. 201 to 290.) 34. Bonds of Cities of the Second Class Funding 1 But by the same act it is provided that "District Paving'' and " Curbing and Guttering Bonds" may bear seven per cent. NEBRASKA CITIES OF THE SECOND CLASS. 165 Bonds : Cities of this class are authorized to enact ordinances for the issue of bonds in place of, or to supply means to meet its maturing' bonds, or for the consolidation or funding of the same. (Chap. 14, sec. 9.) 35. Same: Any such city, for the purpose of funding its indebtedness, may issue bonds payable in not less than ten nor more than twenty years, and bearing interest at a rate not to exceed seven per cent, payable annually or semi-annually. 36. Authority: The city council shall authorize the issue of such bonds by ordinance when so instructed by two- thirds of all the votes cast at an election held therein for that purpose. Notice of said election shall be given in four issues of some weekly paper published in such city. (Chap. 14, sec. 119, in force Feb. 28, 1881.) 37. Refunding Bonds: Any city of the second class, for the purpose of refunding outstanding bonds bearing ten per cent interest, heretofore issued to aid in the construction of any railroad or other work of internal improvement, is authorized to issue coupon bonds bearing not to exceed seven per cent, to be substituted in place of, and exchanged for such bonds here- tofore issued, whenever the same can be effected at not to exceed dollar for dollar. Such substitution and exchange shall first be authorized by a majority vote of the people, as in the case of funding bonds. 38. Form of Bonds: Said refunding bonds shall have recited therein the object of their issue, the section of the act under which the issue was made, stating the issue to be in pursuance thereof, and shall also state the number, date and amount of the bonds for which substituted, and such new bonds shall not be delivered until the surrender of the bond or bonds so designated. (Chap. 14, sees. 120121, in force Feb. 28, 1881.) 39. Bonds for Water-works : Cities of the second class, and villages, are authorized to provide for the purchase of steam engines, and for a water supply for the use of such city or village, by the purchase, erection or construction of a system of water-works, and to borrow money and to issue 1 66 NEBRASKA CITIES OF THE SECOND CLASS. bonds therefor. Contracts for the erection or coiibtruction of any such works shall be let to the lowest responsible bidder, upon not less than twenty days' publication of the terms and conditions thereof. 40. Authority Form Amount: No such money shall be borrowed, or bonds issued, unless the same has been author- ized by a vote of a majority of the electors of the city or village to that effect. Said bonds shall be called "Water Bonds," and shall become due in twenty years from date, but payable at any time after five years, bearing seven per cent interest, payable annually, and shall not be issued to a greater amount than one hundred thousand dollars. 41. Tax: Such cities and villages are authorized for general revenue purposes to levy a tax not to exceed ten mills on the dollar in any one year on all of the taxable property thereof, and in addition thereto to levy a tax of not to exceed seven mills on the dollar, to be retained in a fund known as the "Water Fund." (Sec. 69, chap. 14, as amended by chap. 12, Laws of 1887.) 42. Cities of the Second Class Having Over 5,000 Inhabitants Funding Bonds: Cities of this class, when authorized by a vote, may provide for issuing bonds for the pur- pose of funding any city indebtedness. (Chap. 14, art. 2, sec. 52, subn. 53.) 43. Bonds for Sewers and Water-works: Cities of this class are authorized to issue bonds for sewers and water-works substantially in the same manner and under the same condi- tions as cities of the first class. 1 After the adoption of a sys- tem no change shall be made therein involving an expense of more than five hundred dollars, nor shall any other system be adopted, unless authorized by a vote of the people. (Chap. 14, art. 2, sees. 66-68. ) 44. Bonds for Paving and for Curbing and Guttering: "Paving Bonds," " District Paving Bonds," and "Curbing and Guttering Bonds, ' ' may be issued by cities of this class. The provisions relating to the issue of such bonds, special 1 See \ 30 herein. NKBH ASK A SCHOOL BONDS. 167 assessment, etc., are substantially the same as those under cities of the first class. 1 (Laws of 1887, chap. 14.) 45. Interest Sale Redemption: No bonds issued by cities of this class for any purpose shall draw interest at a greater rate than six per cent per annum, nor sold for less than par, and shall be redeemable at the option of the city at any time after five years from their date." (Chap. 14, art. 2, sees. 70 and 71.) SCHOOL BONDS. 46. School District Bonds: School districts, through their proper officers, are authorized to issue bonds for the pur- pose of purchasing school sites, and the building and furnish- ing of schoolhouses. No such bonds shall be issued unless the question has been submitted to and authorized by two-thirds of all the qualified electors voting thereon at an election for that purpose, upon a notice given by the officers at least twenty days prior thereto. Such vote shall not be ordered unless a petition signed by at least one-third of the qualified voters of the district is presented to the district board, suggesting that a vote be taken. 47. Limitation of Amount: No district shall issue bonds unless there are at least twelve children of school age residing therein, and, except in districts having two hundred such school children, the aggregate amount of bonds shall not exceed five per cent of the taxable property of the district, as shown by the last assessment thereof. Also in districts having less than twenty-five scholars, such bonds shall not exceed five hun- dred dollars; in those having twenty-five and less than fifty, one thousand dollars; those having fifty and less than one hundred, two thousand dollars; and those having one hundred, but less than two hundred, five thousand dollars, and in districts hav- ing two hundred or more such school children, any amount not to exceed ten per cent of the assessed valuation thereof. 1 See $ 29 herein. 2 But this limitation, at least as to interest, appears to have been modified in the case of bonds for sewerage and water-works, and for paving, and curbing and guttering under amendments in 1887, herein- before shown. 1 68 NEBRASKA SCHOOL BONDS. 48. Form of Bonds : Such bonds shall specif}- on their face the date, amount, for what purpose issued, the time to run, and rate of interest, not exceeding seven per cent. The bonds and the interest coupons thereto attached shall be signed by the director, moderator and treasurer of the district board. 49. Registration : The proper officers of the school dis- trict in which any bonds may be voted, under any law of this state, are required before the issuance of such bonds, to make a written statement under oath of all the proceedings relative to the vote, notice of election, how made, questions of submis- sion, and result of the vote, together with a full statement of assessed valuation, number of children of school age, and the total bonded indebtedness of such district, and transmit such statement, with the bonds, to the auditor of public accounts. The auditor, upon examination of such statement and bonds, if he is satisfied that said bonds have been voted in conformity to law and are in all respects in due form, shall record the statement and register the bonds in his office. No bonds shall be issued or be valid unless they shall be so registered and have indorsed thereon a certificate by the said auditor and sec- retary of state, showing that they are issued pursuant to law. 50. Tax: Upon the registration of such bonds, the auditor shall certify that fact to the clerk of the county in which the district is located, and also to the officers of the district, who are required to enter the same upon the records of such district, and taxes for the payment thereof and the interest thereon shall be levied by the board of county commis- sioners, upon all of the taxable property of such school dis- trict. (Chap. 79, subn. 16, as amended by chaps. 75 and 76, Laws of 1887. 51. School District Refunding Bonds: School dis- tricts which have heretofore issued bonds bearing ten per cent interest, are authorized to issue coupon bonds bearing not to exceed seven per cent interest, to be substituted in the place of and exchanged for such outstanding bonds, when the same can be effected, at a. rate not to exceed dollar for dollar. The NEBRASKA SCHOOL BONDS. 169 ne\v bonds shall recite therein the object of the issue, the title of the act under which the same was made, stating the issue to be in pursuance thereof, and also the number, date and amount of the bond or bonds for which substituted, and shall not be delivered until the surrender of said old bonds. The issue of such new r bonds shall not require a vote to authorize the same. 52. High School Redemption Bonds : School dis- tricts in cities of the first class, may, without a vote of the people, issue coupon bonds to an amount equal to the out- standing and unpaid bonds, bearing ten per cent interest, here- tofore issued for the purpose of erecting a high school build- ing. Said bonds shall be payable in the city of New York in not more than twenty nor less than five years, with interest not to exceed seven per cent, payable semi-annually, and signed by the president of the board of education, and countersigned by the secretary. (Chap, 79, subn. 15, in effect Feb. 26, 1879.) 53. City School District : Each incorporated city hav- ing a population of more than 1,500 inhabitants, including such adjacent territory as may be attached for school purposes, constitutes a school district, and is a body corporate, and gov- erned by a board of education consisting of six elected mem- bers, except in cities of the first class, such board shall consist of nine members. The majority of members constitute a quo- rum for the transaction of business at board meetings. 54. Expenditures : In case the purchase of school sites and the erection of buildings require an expenditure exceeding five thousand dollars for any one year, the question shall be submitted to a vote of the electors at the time and place of any city, county or state election. The board of education previous to such election shall designate, in at least one daily paper published in the district, the locality of the site and cost of building to be erected. 55. Funding School Bonds : Upon the surrender of any bonds issued by school districts or other school organi- zations superseded by such city districts, at the request of the holders thereof, the board of education is required to issue other IJO NEBRASKA SCHOOL BONDS. bonds of like amount, and of the same tenor and effect, as to payment of principal and interest, as the surrendered bonds. In case the new district embraces only a part of the former dis- trict, such new district shall assume and pay only such pro- portion of the former district's debt as the assessed valuation of the new district bears to the remaining part of the old district. 56. Limitation of Taxation : The aggregate school tax shall in no one year exceed two per cent upon all of the taxable property of the district. The board of education are required to provide for the interest on all bonds issued for the district, and shall also immediately after the expiration of one- half of the time for which said bonds are issued, set apart each year for a sinking fund an amount sufficient to pay the principal thereof as the same matures. (Chap. 79, subn. 14.) 57. School Bonds in Metropolitan Cities : Each met- ropolitan city constitutes a school district with a board of education of fifteen elected members. This board may borrow money and issue bonds, running not to exceed thirty years, bearing not to exceed six per cent interest, payable annually or semi-annually , and payable at such places as may be designated therein; said bonds shall not be issued in sums of less than fifty dollars, and shall express on their face the act under the provisions of which they are issued, shall be signed by the president and secretary of the board, and shall be of- fered in open market, and shall be sold to the highest bidder for not less than par. 58. Authority Tax : No bonds shall be issued nor the question be submitted without the consent of two-thirds of the board of education, and such issue must be authorized by a majority of the electors voting thereon, at a regular election or a special election called for that purpose, after at least ten days' notice, stating the amount, published in one or more daily papers in such district. The board is required to provide by taxation for the payment of the interest and principal of such bonds, substantially in the same manner and with the same limitation as in other cities. NEBRASKA INTERNAL IMPROVEMENT BONDS. IJl 59. Metropolitan City School Refunding Bonds : Metropolitan city school districts are authorized to issue bonds in exchange for bonds of former districts, or parts thereof, in the same manner as provided above for other cities. ( Chap. 77, I^aws of 1887, in force March 31, 1887.) INTERNAL IMPROVEMENT BONDS 60. County or City Bonds for Internal Improve- ments : Any county or city, when authorized as hereinafter provided, may issue bonds to aid in the construction of any railroad or other work of internal improvement, to an amount to be determined by the county commissioners or city council, not exceeding ten per cent of the assessed valuation of all the taxable property thereof. 61. Proposition Submitted: The question of issuing such bonds must first be submitted to the legal voters of said county or city, in the manner provided for submitting questions of borrowing money to the voters of the county. The proposi- tion must include the rate of interest the bonds are to draw, when the principal and interest shall be made payable, and shall be accompanied by a provision to levy a tax annually for the payment of the interest on the bonds as it becomes due; and also an additional amount shall be levied and collected to pay the principal of such bonds as they mature. 62. Result: If two-thirds of the votes cast at such elec- tion are in favor of the proposition submitted, the county commissioners, or city council, as the case may be, shall cause the proposition and result to be entered upon their records, and a notice of its adoption to be published for two successive weeks in any newspaper published therein, if there be one, and shall thereupon issue said bonds, as proposed. 63. Tax: It is made the duty of the proper officers of such county or city to cause to be annually levied, collected and paid to the holders of such bonds, a special tax on all the taxable property thereof, sufficient to pay the interest as it accrues, and the principal of said bonds as they become due, iy2 NEBRASKA INTERNAL IMPROVEMENT BONDS. but not more than ten per cent of such principal shall be col- lected in any one year. 64. Municipal Obligation Estoppel: The bonds so issued shall constitute a subsisting debt against such county or city, until they are paid and discharged. Any county or city issu- ing its bonds in pursuance of this act shall be estopped from pleading want of consideration therefor, and the proper officers thereof may be compelled by mandamus, or otherwise, to levy the tax as provided to pay the same. (Chap. 45, sees, i to 6.) 65. Railroad Aid Bogus Surveys: No proposition shall be submitted to the electors of any county for donation of bonds or other valuables to any railroad corporation, unless said corporation, through its authorized and responsible agent, files for record in the office of the county clerk of such county, a plat of the survey, showing their exact line of route through said county, within at least two weeks previous to such elec- tion; and no bonds, etc., shall be valid, in case they are voted, unless said railroad corporation build their line of road within forty rods of such survey, as filed. (Chap. 72, art. 3, sec. i, passed in 1879.) 66. Refunding Internal Improvement Bonds : Any county, city or precinct which has heretofore voted and issued bonds to aid in the construction of any railroad or other work of internal improvement, which bonds are a legal outstanding liability, and bear interest at a greater rate than seven per cent, are authorized to issue coupon bonds, bearing interest not to exceed seven per cent, to be substituted or exchanged for such outstanding bonds, when the same can be effected dollar for dollar. 67. No Vote Necessary Notice Published : The issue of such new bonds shall not require a vote of the people, but they shall not be issued except after four publications of a notice thereof in at least two weekly papers in the county; which notice shall recite the date, number, and denomination of the bonds sought to be refunded, and also of the bonds sought to be issued. NEBRASKA INTERNAL IMPROVEMENT BONDS. 173 68. Form of New Bonds : Each one of the new bonds so issued shall recite the object of the issue, the whole of the act under which the issue is made, stating the issue to be in pur- suance thereof, and shall also state the number, date and amount of the bond or bonds for which the same are issued, and such new bonds shall not be delivered until the surrender of the bond or bonds so designated. (Chap. 45, sees, n to 13.) PRECINCT, TOWNSHIP AND VILLAGE BONDS.' 69. Purposes for which may be Issued: Any precinct 2 , city or village (less than a city of the second class), organized according to law, is authorized to issue bonds in aid of works of internal improvement, highways, bridges, railroads, court- houses, jails in any part of the county, and the drainage of swamp and wet lands, to an extent not exceeding ten per cent of the assessed value of the taxable property thereof, as shown by the last assessment. 70. Petition Required : A petition, signed by not less than fifty freeholders of the precinct, township or village, shall be presented to the county commissioners, or other authorized board having charge of the business of the county within which the precinct, township, or village is located, setting forth the nature of the work contemplated, the amount of bonds sought to be voted, the rate of interest, not exceeding eight per cent, the date when the principal and interest shall become due 3 . The petitioners are required to furnish a satisfactory bond to the county commissioners for the payment of the ex- penses of an election, in case the submitted proposition should not be adopted. 71. Question Submitted: Thereupon the county com- 1 See \\ 86, 85, 89, 90, etc., for registration, also see \\ 75, ,87; etc. 2 Where bonds are executed and issued by county commissioners in behalf of a precinct, a suit thereon is properly brought against the coun- ty. The bonds are obligations of the county, although they are to be paid by taxes against the precinct. Davenport v. Dodge Co., 105 U. S., 237 (1882); Blair v. Cuming, in U. S., 237 (1884); Co. of Nemaha, 120 U. S., 41 ( 1887). 3 An election held without the required petition is of no validity. The petition is a necessary condition. State v. Babcock, 21 Neb., 187 (1887). 174 NEBRASKA INTERNAL IMPROVEMENT BONDS. raissioners shall give notice of an election in the precinct, town- ship or village, as the case may be, in the manner provided for elections for voting on county bonds. If two-thirds of the votes cast at such election shall be in favor of the proposition, the county commissioners are required forthwith to cause to be prepared and issue bonds in accordance with the petition and notice of election. 1 72. Form and Execution of Bonds : Said bond shall be signed by the chairman of the board, or person authorized to sign county bonds, and attested by the clerk of the county under the county seal, and shall state for what purpose they are issued, the amount and when payable, interest, and when payable, and the number of each bond. 73. Registry by Clerk : The county clerk shall enter upon the records of the board, the petition, bond, notice and call for the election, canvass of vote, the number, amount, interest and date at which each bond issued shall become pay- able, and he shall also cause such bonds to be registered in the office of the secretary of state and state auditor, as required by law. 74. Tax: The county commissioners or other proper authorities shall each year, until the bonds so issued are fully paid, levy upon the taxable property of such precinct, town- ship or village, a tax sufficient to pay the interest, and five per cent of the principal of said bonds, and at the tax levy preceding the maturity of any such bonds, an amount suf- ficient to pay the principal and interest thus becoming due. (Chap. 45, sees. 14 to 17.) 75. Compromise Bonds : Whenever the county com- missioners of any county, the city council of any city, the board of trustees of any village, or the school board of any school district, shall be satisfied by petition or otherwise that any such county, precinct, township, or town, city, village or school district is unable to pay in full its indebtedness, and two-thirds 1 A provision providing for the levy of the necessary amount of tax to meet the liability incurred must be included in the proposition adopted in order to make the bonds valid. 21 Neb., 599. NEBRASKA COMPROMISE BONDS FISCAL AGENCY. 175 of the resident tax-payers thereof shall, by petition, so ask, the proper authorities are authorized to negotiate with the holders of such indebtedness for the compromise thereof, and upon petition of two-thirds of the resident tax-payers, as above, to issue the bonds of their respective municipalities to the holders of such outstanding indebtedness for an amount agreed upon, not exceeding the original indebtedness, upon the surrender of such original indebtedness. 76. Record and Form of Bonds : Before issuing said bonds, the board or other authorities issuing the same shall enter upon its records a resolution reciting the number and denomination of the bonds to be issued, the rate of interest, and to whom and when payable. Said bonds shall be payable in not more than twenty years, or at any time before maturity, at the option of the municipality, and shall bear interest at a rate not exceeding seven per cent, nor the rate of the bond sur- rendered, with interest coupons attached payable annually or semi-annually. The authorities issuing such bonds shall keep a complete record of all transactions connected therewith, and may levy a tax to pay the interest and principal thereof as the same shall mature. (Chap. 9, Laws of 1887, in force March 30, 1887.) 77. State Fiscal Agency : The governor is authorized to designate some bank in the state of New York as the state agency for the payment of bonds and coupons issued by the state, or any county, township, precinct, city or school district, which are by their terms made payable in said city. All bonds and coupons, and all such bonds which are by their terms pay- able at any particular bank in said city, shall be paid at such agency. (Chap. 9, sees, i to 5. ) 78. Payment of Bonds : The state treasurer, or other officers, are required to remit to the state agency at least ten days before the maturity of any bonds or coupons payable in New York, sufficient moneys out of the taxes collected for the purpose, for the redemption of such bonds and coupons, and in addition, a commission not exceeding one-eighth of one per cent allowed for charges and expenses, and on the payment of 176 NEBRASKA REGISTRATION OK BONDS. any bonds or coupons, such agency is required to return the same cancelled to the officer from whom the funds for such payment were received. (Chap. 9, sees, i to 5.) REGISTRATION OP BONDS. 79. Registration of County Bonds : The officers of any county issuing bonds shall make registration in a book kept for that purpose, of the notice of election, manner and time of publication, questions of submission and adoption of the proposition on account of which such bonds were issued, also of the date, amount, number, maturity, when payable and where payable, and the rate of interest, and when and where payable, of such bonds; and shall, at the time of issuing the same, make out and transmit to the auditor of the state a cer- tified statement of such registry, which shall be attested by the county clerk under his official seal. Then the auditor of state, upon receipt of such statement, shall, in a book kept by him for that purpose, make a faithful record of the same. (Chap. 9, sec. 10.) 80. Statement of Bonded Indebtedness : It shall be the duty of the clerk of each county in this state, at such times as the auditor of state may request, to make out, certify, and transmit to such auditor a full and complete statement of the bonded indebtedness of every description of such county, at the date of such statement, particularly setting forth the nature of such bonds, and for what the same were issued, which shall be entered of record by the auditor of state in the same manner. (Id., sec. n.) 81 . Registration on Presentation of Holder : Whenever the holder of county bonds shall present the same to the auditor of state for registration, the auditor, upon being satis- fied that such bonds have been issued according to law, shall register the same in his office in a book to be kept for that pur- pose, in the same manner that such bonds are registered by the officers issuing the same, and shall, under his seal of office, certify upon such bonds the fact that they have been regularly and legally issued, and that such bonds have been registered in NEBRASKA REGISTRATION AND PAYMENT OF BONDS. 177 his office in accordance with the provisions of this act, the data filed in his office being the basis of such certificate. (Id., sec. 12, as amended April 4, 1887.) 82. Auditor's Certificate of Tax Levy : The auditor of state shall annually, on or before the second Monday of June in each year, ascertain the amount of sinking fund, and interest accrued, and to accrue, before the tax for the next year shall be levied, upon all bonds so registered in his office, and shall certify the same to the proper county clerk, setting forth the amount thus due, and to become due, for such year. There- upon the county clerk and recorder are required to levy a sufficient tax upon the taxable property of the county to meet the amounts so becoming due. (Id., sees. 13, 14.) 83. Payment, When and How Made : Upon the collec- tion of taxes so levied, and the receipt of the same by the county treasurer, he is required to apply the proceeds thereof to the purposes for which the same were collected and to pay the accrued interest upon such registered bonds at the place where the same may be payable. When the interest or principal is payable in New York city or elsewhere out of the state, payments shall be made at the place designated, or at the finan- cial agency of the state for such purposes. The funds shall be transmitted by the treasurer by check or draft so indorsed as to show upon what bond or bonds the funds are to be applied. At the request of the holder of the bonds, payment may be made at the office of said treasurer. 84. When any bond or coupon is paid, the treasurer .shall cause the same to be cancelled and filed with the county clerk, who shall make an entry thereof in his record where said bonds are registered. The county treasurer is liable on his official bond for the faithful disbursement of all moneys collected or received by him for such purposes. Upon an order of the county commissioners, the county treasurer and clerk shall publish a detailed statement of business transacted by them under the provisions of this act. (Id., sees. 15 to 19.) 85. Registration of Village and City Bonds : All bonds hereafter issued by any village or city of the second class, 178 NEBRASKA REGISTRATION OF BONDS. shall, before sale, be presented to the state auditor and he shall examine the same and all proceedings relating to their issue, and if he shall be satisfied that such bonds have been legally issued for a lawful purpose, he shall register the same in his office, and under his official seal certify en such bonds the fact that they have been regularly and legally issued and have been registered in his office. Upon the presentation by holders of any such bonds heretofore issued, the auditor is required to examine and certify them in the same manner. It is made the duty of the clerk of any village or city of the second class in which any bonds may be issued, to transmit with such bonds to the state auditor a duly certified transcript of all proceedings had previous to their issue relating thereto, and also to furnish the holder of any bond of such village or city, on demand, a similar transcript. (Id., sees. 29 to 31; passed 1885.) 86. Registration of Precinct Bridge Bonds : When- ever the holder of any precinct bonds issued for the purpose of the erection of bridges within the limits of the county, shall present the same to the auditor and secretary of state with duplicate statements of the question of submission, notice and proof of publication, and return of votes thereon, duly certified by the county clerk, it is the duty of said officers, in case they are satisfied, upon examination of said bonds and statements, that such bonds are, in all respects, in due form, and have been properly issued, to enter that fact upon their records, together with the submitted statements, and thereupon to place their joint certificate upon said bonds that they have been issued pursuant to law, and the auditor shall register the same in his office. The auditor is required to certify to the proper county board the amount of tax required to be levied to meet the pay- ment of such bonds or interest as the same ma)^ accrue, sub- stantially the same as in the case of county bonds. (Id. , sees. 23, 24; passed in 1885.) 87. Precinct Refunding Bonds : When the county commissioners of any county issuing bonds to refund the bonded indebtedness of any precinct, and in case an exchange of said refunding bonds cannot be effected, the said commis- NEBRASKA PRECINCT BONDS REGISTRATION. 179 sioaers are authorized to sell said refunding bonds, at not less than their face value, in such sums as may be necessary to create a fund for the redemption of such outstanding bonds, the proceeds thereof to be used only for the purpose of such refunding. (Id., sees. 23, 24; passed in 1885.) 88. Registration : It is the duty of the state auditor to register such substituted bonds, and of the secretary of state and auditor to certify the same, and a tax to pay the interest and principal shall be levied in the same manner as provided in the case of other precinct bonds. The county clerk is required to certify to the state auditor the number, amount and description of each bond cancelled or to be cancelled and refunded, and the amount due thereon for principal and interest, and there- upon the auditor is authorized to register a similar amount of refunding bonds, but in no case shall the auditor register any refunding bonds in excess of the amount so certified to him. Said bonds shall be entitled to registration in the order that they are presented to the auditor. 89. Registration of Other Precinct Bonds : The reg- istration herein provided for shall apply to all refunding bonds issued, and to all other precinct bonds that are or have been legally issued and are not now in litigation. (Id., sees. 25 to 28; passed in 1885.) 90. Registry of Precinct Bonds with County Clerk : It is the duty of precinct and township officers to file for record with the county clerk the question of submission, notice and proof of publication, and the return of votes, and to register with such clerk all precinct or township bonds voted and issued as herein- before provided. It is the duty of the county clerk on presenta- tion of any precinct or township bonds for registry, to register the same in a book prepared for that purpose, showing the number or name of the precinct or township,, number and date of the bond, to whom and where payable, when the interest and prin- cipal becomes due, amount of bond, and a reference to the registration of the proceedings relating to the issue thereof. (Id., sees. 6 to 9; passed in 1873.) CHAPTER XV. MISSOURI. References are to the sections in the Statutes of 1879, except as other- wise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Present Constitution adopted November 30, 1875. 1. State Credit : The general assembly has no power to give or lend the credit of the state in aid of or to any person, association or corporation, municipal or otherwise, or to sub- scribe for stock in any corporation or association, except to secure loans heretofore extended to certain railroads. (Art. 4, sees. 45, 49.) 2. State Indebtedness : The general assembly has no power to contract any debt or liability in behalf of the state, or to issue bonds or other evidences of indebtedness, except in certain specified cases, among which are: to renew existing bonds, when they cannot be paid at maturity; to incur a debt of not to exceed twenty-five thousand for any one year, pay- able in not more than two years, in case of an emergency, the governor recommending; and when in an emergency the tem- porary liability of the state shall exceed two hundred and fifty thousand dollars for any one year, the general assembly may submit an act providing for a loan, accompanied by a provis- ion for a tax sufficient to pay the interest as it accrues, and the principal within thirteen years, to the qualified voters of the state, at an election called for that purpose by a notice published for three months prior thereto. A two-thirds ma- jority of the voters voting at such election is required to ratify such act, and when thus ratified, the said act shall be irre- pealable until the debt is fully paid. (Art. 4, sec. 44. ) (180) MISSOURI CONSTITUTIONAL PROVISIONS. l8l 3. Municipal Credit : The general assembly has no power to authorize any count}', city, town, township, or other political corporation or subdivision to lend its credit or to grant any aid to any individual, association or corporation, or to become a stockholder in such corporation, association or com- pany. No such municipality shall hereafter become a sub- scriber to the capital stock of any railroad or other corporation or association, or make any appropriation, or lend its credit to or in aid thereof, or in aid of any college or other institution, whether created for, or to be controlled by the state or others. All authority heretofore conferred for any of the said purposes, by the general assembly or by the charter of any corporation, is repealed, but this section shall not affect the right of any such municipality to make a subscription already authorized or to prevent the issue of renewal bonds, or to make other legal pro- vision for the payment of such subscription, or of any existing indebtedness. 1 (Art. 4, sec. 47; art. 9, sec. 6.) 4. Municipal Indebtedness : No county, city, town, township, school district or other political corporation or sub- division of this state, shall become indebted in any manner or for any purpose, to an amount exceeding in any year the in- come and revenue provided for such year, without the assent of two-thirds of the voters thereof, voting at a regular election held for that purpose, nor in any case shall the indebtedness of any such municipality, except for the erection of a court- house and jail, exceed in the aggregate, five per cent of the 1 Under the constitution of 1865 the general assembly could authorize a municipality to become a stockholder in, or loan its credit to any company or corporation, when two-thirds of the qualified voters of the municipality, at a regular or special election, assent there- to. Concerning this provision there has been a great amount of discus- sion and various judicial decisions, as to whether an act providing for the assent of two-thirds of the voters voting, was in conflict with this provision. The supreme court at first decided that such an act was un- constitutional, but subsequently, in other cases, on the ground that the state court had decided otherwise, reversed that decision and refused to follow a later decision of the Missouri court, holding such an act uncon- stitutional, at least as to rights accruing while a former judicial construc- tion by the state courts existed. This was based on the settled principle that purchasers of municipal bonds have a right to rely on the existing decisions of the highest courts of the state. See Cass v. Johnston, 95 U. S., 360 (1877). 1 82 MISSOURI CONSTITUTIONAL STATE BONDS. value of the taxable property therein, to be ascertained by the assessment next before the last previous assessment for state and count\ T purposes. Any such municipality incurring any indebtedness under the authority of such vote, shall before, or at the time of doing so, provide for the collection of an annual tax sufficient to pay the interest thereon as it accrues, and also constitute a sinking fund to pay the principal thereof with- in twenty years. Any municipality having more than two- hundred thousand inhabitants, which has exceeded the limit herein prescribed, cannot issue bonds except in renewal of outstanding bonds. (Art. 10, sec. 12; art. 9, sec. 19.) 5. Special Legislation : The general assembly shall not pass an}^ local or special laws (among other things) incor- porating cities, towns or villages or changing their charters; granting to any corporation, association or individual any special or exclusive right, privilege or immunity; legalizing the unauthorized acts of any officer or agent of any county or municipality; nor in any other case where a general law can be made applicable, which question shall be determined solely as a judicial question, without regard to any legislative action or assertion. (Art. 4, sec. 54.) 6. State Funding Bonds : To meet the bonds of the state, maturing in 1886, 1887 and 1888, the Fund Commissioners are authorized to issue bonds of the state to an amount not exceeding seven million dollars, to be called ' ' State of Missouri Funding Bonds. ' ' Not exceeding twenty per cent of the whole amount issued in any one year, may be in denominations of five hundred dollars each and the balance of one thousand dollars each. Said bonds shall be signed by the governor, counter- signed by the secretary of state and registered with the state auditor and attested by his official seal. They shall be paya- ble to the bearer, at the National Bank of Commerce, New York, in twenty years, but redeemable any time after five years, and bear interest at a rate not to exceed four per cent, payable semi-annually, and evidenced by coupons attached having a fac-simile of the state treasurer's signature. Each bond shall have printed on its back a copy of section 7 of the MISSOURI COUNTY BONDS. 183 act under which they are issued: "The bonds issued under the provisions of this act shall have all the guarantees of the several statutory and constitutional provisions now in force, guaranteeing any of the state bonds at maturity and the prompt payment of the interest thereon." The bonds shall be sold after twenty days' advertising in one daily newspaper in New York and one in St. Louis that sealed proposals will be received therefor at a certain time specified. (Laws of 1885, P- 39J COUNTIES.' 7. County Government : The county court, of which there are three judges, has the control and management of all of the property of the county, the appropriation of the pro- ceeds thereof, the loaning of the county funds and the auditing and settling of all demands against the county. (1193-1199.) 8. County Bonds-': For the purpose of building a courthouse, the county court may order the issue of bonds to an amount not exceeding ten thousand dollars, of such form and for such time as may be deemed expedient. When necessary for any county to incur indebtedness for building a courthouse or jail in excess of the said amount and the total income for one year, on petition of not less than one hundred qualified tax-paying electors, setting forth the object and pur- poses of the proposed debt, whether it is desired to issue bonds or pay the same by a direct levy of taxes during a stated number of years, and praying an election on said question; the county court, at a regular term thereof, shall order a special election to be called for the purpose of voting upon such ques- tion. Notice thereof shall be given by publication in a news- paper, or if there be none, by written or printed handbills posted in three public places in each precinct, twenty days before such election. The notice shall specify the object and purposes of the proposed debt, time to run, rate of interest, and the rate of increase of the tax levy, and the day the election is to be held. Such vote may be taken at any general election. The result shall be certified by the county clerk to the county court at its 1 Also see under " General," ? 31, et. seq. 2 Also see \ 36. 1 84 MISSOURI COUNTY BONDS. next regular session. If it appears that a two- thirds vote was given in favor of creating such bonded indebtedness, the county court shall make an order reciting the election and result, and directing the issue of bonds to the amount proposed, and also the levy of an annual tax to pay the interest within twenty years. 9. Form Execution : Said bonds shall be in denomina- tions of not less than one hundred dollars, nor more than five hundred dollars, payable in not more than twenty years, at the office of the county treasurer, and bearing interest at a rate not to exceed six per cent per annum, payable semi-annually to be evidenced by coupons. The bonds shall be signed by the president of the count} 7 court and countersigned by the county clerk, and shall have printed on the reverse side thereof a cop) r of the order of court under \vhich they are issued. 10. Sale of Bonds : The county treasurer, under the direction of the county court, shall publish in at least two daily newspapers in the state, and one weekly paper in the county, notice that sealed proposals for all or a part of such bonds will be received at his office, and opened by him in court, at a certain stated time. The treasurer, by direction of said court, is authorized to refuse any and all bids, and re-advertise said bonds, or he may sell at private sale, at not less than par, and report such sale to the next term of said court. 11. Limit of Amount Issued : Bonds shall not be issued to an amount, including existing indebtedness, to exceed in the aggregate five per cent of the value of the taxable property of the county, to be ascertained by the assessment next before the last previous assessment, provided that for the purpose of building .a courthouse or county jail, an amount may be issued not to exceed ten per cent of such valuation. 12. Registration : Bonds so issued shall be registered with the county clerk in a book kept by him for that purpose, showing the number, date, amount, date of sale, name of pur- chaser, and the amount for which the said bonds were sold. (6808-6816, as amended in 1883.) MISSOURI COUNTY BONDS. 185 13. Refunding Bonds: Counties having issued bonds for courthouses or jails may refund said bonds at a lower rate of interest, not exceeding eight per cent, payable semi-annu- ally, and running not longer than ten years, but payable after three years, at the option of the county court. Said bonds may be exchanged for such outstanding bonds, or in case the holders of the old bonds refuse to exchange, the new issue may be sold at not less than par, but the amount of the debt of the county or rate of interest cannot be increased. 14. Form of Bonds : Said bonds shall be numbered in regular order, and issued in denominations of not less than one hundred dollars nor more than five hundred dollars, with semi- annual interest coupons attached and payable to bearer at the office of the county treasurer. 15. Sale of Bonds : These bonds shall be advertised by the county treasurer and sold substantially in the same manner as provided in the case of courthouse and jail bonds above. (Laws of 1881, p. 92.) 16. Funding Bonds For County Warrants 1 : In coun- ties where the records have been destroyed, persons holding warrants prior to January i, 1886, are required to present the same to the county clerk within four weeks from notice, such notice to be given by the county court by publication four times in a weekly newspaper published in such county, notify- ing all such warrant holders to thus present them for regis- tration, the last publication to be two months prior to the date named for such presentation. For the purpose of paying said registered warrants, the county court is authorized to issue bonds of the county to an amount not exceeding ten thousand dollars. 17. Form Sale : They shall be issued in denominations of not less than one hundred dollars nor more than five hundred dollars, bearing interest at a rate not exceeding six per cent per annum, and running from five to twenty years. The bonds shall be sold under the direction of the county court at not less than par. (Laws of 1887, p. 136.) 1 Also see \\ 32, 34, 37. 1 86 MISSOURI CITY BONDS. CITIES AND VILLAGES.' 18. Classification : All cities and towns having a popu- lation of one hundred thousand inhabitants or over are known as cities of the first class; those having twenty thousand and less than one hundred thousand are known as cities of the second class; those having five thousand and less than twenty thousand as cities of the third class; those having five hundred and less than five thousand as cities of the fourth class, and those having less than five hundred as villages. (4380-4385. ) 19. Bonds of Cities of the First Class : The mayor and municipal assembly (composed of a city council of thir- teen members, and a house of delegates, consisting of one mem- ber from each ward) may issue bonds of the city in such amounts and for such time and purpose as may be required for current expenses and the payment of maturing bonds, such authority, however, to be exercised within the provisions of the state constitution, laws and city charter relating thereto. (4417.) 20. Bonds of Cities of the Second Class : The mayor and common council of cities of this class are authorized to issue, by ordinance, the bonds of the city in cases within the provisions of the state constitution, statutes, and city charter, for such amounts, time, and purposes, as may be required for the current expenses of such city, for the payment of maturing bonds or for the purpose of renewing outstanding bonds, for the payment of which, the current funds of the city are in- sufficient. (4644.) 21. Same, under Act of 1885 : By an ordinance, the common council, with the approval of the mayor, may issue bonds to pay the whole or any part of any authorized public work or improvement. The ordinance shall specify the work or improvement; the amount of bonds; the date of issue, not later than ninety days from approval by the mayor; the rate of interest, not exceeding six per cent, payable semi-annually ; shall provide for an annual tax to pay the interest on such bonds as it accrues, and provide a sinking fund to pay the 1 Also see \\ 30, 31, et. seq. MISSOURI CITY BONDS. 187 principal thereof within twenty years; and also provide that the bonds may be paid before the expiration of such twenty years, in whole or in part. 22. How Authorized : After the passage and approval of the above ordinance the city counselor and comptroller shall present the same to the judge of the circuit court of the county in which such city is situated, together with a sworn state- ment by the comptroller showing the existing city indebted- ness at the date of the proposed issue; and also proof as to the value of the taxable property of such city, as shown by the assessment next before the last, for city and county purposes; with such other proof as may be required by the court, who upon examination thereof, if he finds that the bonds can be legally issued, shall so certify on the back of the ordinance. There- upon a notice of an election, with a copy of the ordinance and said certificate shall be published for at least thirty days in two or more newspapers within such city. If two-thirds of the votes cast at such election shall be in favor of the proposed issue, application shall be made to the judge of the circuit court for a certificate, that at the date of the proposed issue, the city can legally become indebted to the amount proposed to be issued, and that such city's debt, including such issue, will not exceed five per cent of the value of the taxable property therein, as required. This certificate must also be indorsed on the original ordinance, and therewith recorded, and a copy thereof must be printed on the back of each bond. No such bonds shall be issued without the said certificate. 23. Form of Bond : Each bond shall recite that it is issued by the city, pursuant to an ordinance, giving the title and date of approval; with the authority of two- thirds of the voters at a special election held for that purpose on the date named in such ordinance; and that the said city's indebtedness, including such bonds, does not exceed the five per cent limit; and shall also recite the city's option to pay said bonds before maturity. They shall be issued in denominations of one thou- sand dollars each, payable to some person or order or to bearer, with coupons attached for each six months' interest. They shall 1 88 MISSOURI CITY BONDS. be signed by the mayor and countersigned by the comptroller, with the seal of the city affixed. The coupons shall be signed by the comptroller or contain his signature lithographed or engraved thereon. 24. Sale Tax Redemption: The bonds shall be sold at not less than par, and any coupons matured at the date of sale shall be cancelled. The city must provide an annual tax sufficient to pay the interest as it becomes due, and constitute a sinking fund to pay the bonds in twenty years. The city comptroller may determine by lot what bonds shall be called in under the option contained therein; the holder of such called bonds to be notified by letter, if his address is known, other- wise by ten days' publication in a newspaper published in such city and one published in the city of New York. If not presented the interest on such bonds so called shall cease with the next maturing coupon after such notice. (Laws of 1885, PP- 53-56.) 25. Bonds of Cities of the Third Class : The mayor and council of cities of this class may, by ordinance, provide for the issue of bonds payable in one year, for an amount not exceeding one-half the current revenues of such city, and also to issue bonds in renewal of maturing bonds, which the city is unable to pay. Said renewal bonds shall not bear interest at a rate greater than the bonds so renewed, nor run longer than ten years. Cities of this class may also issue bonds for the purpose of funding the floating indebtedness thereof, existing at the time of its incorporation as a city of the third class. Said funding bonds to bear not to exceed seven per cent inter- est, payable semi-annually, and running not longer than ten years. (Laws of 1885, p. 67.) 26. Same Under Act of i88j : The mayor and council may issue bonds for the purpose of purchasing or improving land for hospitals in such city or within ten miles thereof; for water- works; sewer carriage and outfall; workhouses; poor- houses; land not exceeding eighty acres outside of the city limits for cemetery purposes; for public parks in or within three miles of the limits of such city; and for public works. MISSOURI CITY, VILLAGE AND SCHOOL BONDS. 189 27. Limit Tax : Any city of this class cannot become indebted to an amount exceeding the yearly revenues and in- come thereof, without the assent of two-thirds of the voters voting at an election called for that purpose, nor in any case to an amount exceeding in the aggregate five per cent of the tax- able property thereof, as provided in the constitution. \Vlien a debt is incurred by such vote, provision must be made at the same time for an annual tax sufficient to pay the interest as it becomes due, and provide a sinking fund to pay the principal thereof within twenty years. (L/aws of 1887, p. 84.) 28. Bonds of Cities of the Fourth Class : The mayor and board of aldermen of cities of this class may issue bonds payable in one year, to an amount not exceeding half the cur- rent revenues of such year. They are also authorized to issue bonds for the purpose of funding any floating indebtedness ex- isting at the time of such city's incorporation as a city of the fourth class, or for the purpose of renewing any other bonds of the city maturing, and for the payment of which said city has not the required funds. (4939, I/aws of 1883, p. 35.) 29. Village Organization Loans : Incorporated vil- lages are managed by a board of five trustees, except in the case of villages containing twenty-five hundred inhabitants, when said board consists of nine trustees. A majority con- stitute a quorum. The board of trustees are authorized to borrow money for necessary village improvements, or for the purpose of supplying the village with water or gas. (5005 and 5010.) SCHOOL BONDS. 30. For the purpose of building schoolhouses in cities, towns and school districts, the board of directors may issue bonds, when authorized by two thirds of the votes cast at an election held for that purpose. A notice of such election, signed by the clerk and specifying the purposes and the amount of the loan required, shall be posted by him in at least six public places in the said school district twenty days before the elec- tion. The bonds shall not run more than twenty years, and 190 MISSOURI FUNDING AND COMPROMISE BONDS. bear interest at a rate not exceeding the highest legal contract rate. The directors shall provide an annual tax sufficient to pay the interest and principal as they become due. (L,aws of 1881, p. 200.) GENERAL. 31. Funding Bonds of Cities and Towns: When authorized by a majority vote at an election held for that pur- pose, cities and incorporated towns may fund any part or all of their bonded indebtedness at a lower rate of interest, and issue therefor renewal bonds, payable within twenty years and bearing interest at a rate not exceeding seven per cent, payable annually or semi-annually. At least ten days' notice of such election shall be given by publication in a local newspaper setting forth the object for which the same is called. At the time of such issue an annual tax shall be provided, sufficient to pay the interest and principal as they become due. (4302 and 4303. ) 32. Compromise Bonds ; Counties, cities and incor- porated towns may compromise outstanding bonds, unpaid subscriptions to railroad stock or judgments thereon, and issue bonds therefor, when authorized by a majority of the qualified voters voting at an election called for that purpose, by the proper municipal authorities, upon petition of fifty resident tax- payers. The submitted proposition must be spread on the records of the municipality, and must contain the amount of principal and accruing interest, number of original issue, rate of interest and time of maturity of the outstanding bonds or indebtedness; the amount on the dollar for which the same are to be funded or compromised, the time the new bonds are to run, the rate of interest which they are to bear and the object and general nature of the funding proposition. This proposi- tion must be signed by the county clerk or proper municipal authority, and published for thirty days in a daily newspaper, or for four successive weeks in a weekly newspaper, prior to such election, the last publication of which shall be at least ten days before such election. If there are no such newspaper in the municipality, said notice shall be given by posting at least MISSOURI FUNDING BONDS. IQI twenty-five printed copies of the notice in the most public places therein, at least four weeks before the election. 33. Form Sale: The new bonds shall run not more than thirty years nor less than five years, nor be in denomina- tions of more than one thousand dollars nor less than one hundred dollars, and bear interest at not exceeding six per cent per annum, payable annuall}'. Both bonds and coupons shall be made payable to bearer. If the holders of the old bonds or indebtedness refuse to exchange them, the county court or proper municipal authorities may sell the new issue at not less than par, and pay off such outstanding indebtedness, provided the amount of the corporation's debt shall not be increased. (4290-4293.) 34. Funding Bonds by Counties and Townships : Any county, township, or part of a township, may -by their respective county courts, fund their existing bonded indebted- ness at a lower rate of interest, and issue new bonds therefor, on the surrender and cancellation of the old bonds. If the holders refuse to exchange, the issue of such bonds must be submitted to and authorized by a majority vote of the qualified electors voting at an election, held pursuant to an order of the county court, thirty days' notice being given by publication for four consecutive weeks in a w r eekly paper published within the county, stating the object and general nature of the propo- sition submitted. Counties having heretofore funded their indebtedness may refund the same without an election. 35. Form Sale: Said bonds shall be payable in not less than five nor more than thirty years, and be issued in de- nominations of not less than one hundred dollars nor more than one thousand dollars, and bear interest at not exceeding five per cent per annum, payable annually, as evidenced by coupons attached, both bonds and coupons being payable to bearer. If the holders of the old bonds refuse to exchange, the court is authorized to sell the new issue at not less than par, and redeem the old bonds as they mature, providing the debt of the county or the interest thereon shall not be increased. (Laws of 1887, p. 27.) 192 MISSOURI JOINT BONDS REGISTRATION. 36. Joint Courthouse and Jail Bonds ; Any incor- porated city being the county-seat is authorized, upon such terms as may be agreed upon, in conjunction with the county, to erect and maintain a courthouse and jail in such county- seat for the joint use of such city and county, and all authority now or hereafter existing, by which counties may provide revenue for erecting such building, may be exercised jointly with such county-seat, providing such county-seat shall not issue bonds for such purpose to an amount, including existing indebtedness, exceeding five per cent of the value of the tax- able property of such county-seat. The issue of said bonds must be authorized by a two-thirds vote of the qualified voters at an election held for that purpose. Said bonds shall bear interest at a rate not to exceed eight per cent per annum. (Laws of 1887, p. 133.) 37. Registration of Bonds : The clerk, auditor, or comptroller of the town, county or city, is required to furnish the state auditor a sworn statement of all bonds and coupons out- standing, with the date of their issue and maturity, the rate of interest, place of redemption, purposes of issue, and such other details as may be required by such state auditor, and annually on January first, a statement of the bonds and coupons re- tired since his last report, all of which shall be duly entered by the said state auditor. All county, city or incorporated town bonds, before they shall be valid, must first be presented to the state auditor for registration. He shall certify thereon that all the requirements of the law, and of the contract or conditions under which said bonds are issued, have been com- plied with, if he finds upon examination that such is the case; and the evidence in proof of such facts shall be filed and pre- served by the auditor. His said certificate shall constitute prima facie evidence of the matters therein contained. (4305- 4306.) 38. Certain Bonds Exempt from Registration : Bonds issued for gas and water-works, and all bonds of counties and cities of over three hundred thousand population, as MISSOURI CANCELLATION OF PAID BONDS. 193 shown by the last United States census, are not required to be registered. (4310.) 39. Cancellation of Paid Bonds : County, city and town bonds, or the interest coupons belonging thereto, when paid or taken up by such municipality shall have the fact indorsed thereon, holes punched through them, and deposited in the treasurer's office to be there kept until all of such bonds are paid or taken up, when they shall be publicly burned and destroyed in the presence of the county court, clerk, treasurer, sheriff, and at least three other spectators. (4295.) CHAPTER XVI. KANSAS. References are to the compiled Laws of 1885, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution Adopted July 29, 1859. 1. State Indebtedness : For the purpose of defraying extraordinary expenses and making public improvements, the state may contract public debts not exceeding in the aggregate one million dollars. Such debt must be authorized by law for some specified purpose, with a provision for the levy of an annual tax to pay the interest and principal as they become due and approved by a majority of all the members elected to each house. Additional indebtedness may be contracted, providing the law creating such debt has been submitted to and ratified by a majority of the electors voting at some general election. (Art. n, sees. 5 and 6.) 2. Municipal Indebtedness : Provision shall be made by general law for the organization of cities, towns and villages, and their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit, shall be so restricted as to prevent its abuse. (Art. 13, sec. 5.) 3. Special Legislation 1 : The legislature shall pass no special act conferring corporate powers. (Art. 12, sec. i.) COUNTIES. 2 4. County Board : The corporate powers of the county are exercised by a board of county commissioners. In counties having more than three thousand inhabitants, the board con- 1 See pp. 40-42. 2 Also see under " General," | 58-91. (194) KANSAS COUNTY BONDS. 195 sists of one commissioner from each representative district. In other counties the board consists of three commissioners. The regular sessions of the county board are held at the county seat on the first Mondays of January, July and October, and the first Monday after the first Tuesdaj' in April. Special sessions may be held on call of the chairman at the request of two members of the board. The county clerk is the clerk of the county board. (Chap. 25, arts, i to 3.) 5. Loans and Expenditures : The board of county commissioners are authorized 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 county revenue. 6. Vote Required to Authorize : They shall not borrow money for such purposes, or proceed to build any permanent county building, or assess any taxes for that purpose, without first having submitted the question to a vote of the electors of the county at some general or special election. 7. How Question Submitted : A written or printed notice, stating the sum desired to be raised, and the time when the question will be submitted, must be posted in five of the most public places in each township for at least thirty days pre- viously. The vote shall be taken by ballot, and a majority of the votes cast at such election shall be required to authorize the loan. (Chap. 25, art. 2.) 8. Bonds for Fairgrounds : When authorized by a majority vote of the electors of the county voting thereon, the board of commissioners of any county are authorized to issue bonds or to appropriate from the county treasury a sum not exceeding in amount one and three-fourths mills on the dollar of the taxable property of the county, to be expended under the direction of the agricultural society of such county, with the consent of the said board, for the purchase and improvement of a fairground for the use of such society. All property thus purchased shall be held in trust by the board of county com- missioners for the use of such society. (Chap. 2.) 196 KANSAS BONDS CITIES OF FIRST CLASS. CITIES. ' g. Cities Classified : All cities of more than fifteen thousand inhabitants are known as cities of the first class; all those having a population of over two thousand, and not exceeding fifteen thousand, as cities of the second class; and those organized as cities, towns or villages, and containing not more than two thousand inhabitants, are cities of the third class. (Chap. 18, art. i; chap. 19, art. i; chap. 19 a, art. i.) CITIES OF THE FIRST CLASS. 10. Bonds to Pay for Bridges, Sewer Indebtedness, etc.: In case any city of the first class has heretofore con- structed any bridges or culverts, or any sewers under contracts duly authorized, and the same shall not have been fully paid for, the mayor and council of such city in either case may pro- vide for the payment of such unpaid indebtedness by issuing bonds or other evidences of indebtedness of the city, to an amount not exceeding the amount of such principal indebted- ness and interest at a rate not to exceed seven per cent from the time when the same should have been paid; or they may refund or re-issue any bonds or other evidences of indebtedness which may have been previously issued on account of any such improvement and then remaining unpaid. (Chap. 95, I^aws of 1885; approved March 2, and in force March 3, 1885.) 11. Bonds for Paving Indebtedness: In case any such city of the first class has caused to be done any guttering, paving, or macadamizing under a duly authorized contract, and the same shall not have been fully paid for, the mayor and council are authorized to make provision for such payment by the levy of taxes or assessments therefor, or the issue of improvement or special bonds, or other evidences of indebted- ness against the property liable; or they may re-issue any improvement or special bonds, or other evidences of indebted- ness, previously issued on account of any such improvement and remaining unpaid. (Id.) 12. Bonds for Public Parks : For the purpose of pro- 1 Also see under " General," \\ 58-91. KANSAS BONDS CITIES OF FIRST CLASS 197 viding parks or public grounds within or adjacent to cities of the first class, such cities may issue bonds bearing a rate of interest not exceeding six per cent, payable semi-annually, with coupons attached, and running not longer than ten years from date, to be issued in such sums and amounts as may be prescribed by ordinance. 13. Limit of Amount Tax : No one city shall issue such bonds to an amount exceeding one hundred and twenty thousand dollars. Any city issuing bonds under this act is required annually to levy a tax sufficient to pay the interest thereon, and after five years an amount sufficient to create a sinking fund, to pay the principal at maturity. (Chap. 94, Laws of 1885, in force Feb. 24, 1885.) 14. General Improvement Bonds : For the purpose of paying for any improvements of a general nature, not other- wise provided for, and for the construction of water-works and water-power, the mayor and council of any city of the first class may from time to time borrow money and issue bonds therefor, when so authorized or instructed by two thirds of all the votes cast at an election held in such city for that purpose. 15. How Issued: Said bonds shall be payable in not less than ten nor more than twenty years, and bear interest at not to exceed six per cent per annum, payable annually or semi-annualty. They must be sold at not less than par. The council shall levy the necessary taxes to meet the payment of the bonds as they become due, but when they are issued for improvements chargeable to any particular property, the tax to pay the same shall be levied only against such property. (Chap. 37, Laws of 1881.) 16. Internal Improvement Bonds : Whenever the mayor and council of any city of the first class under any authority vested in them by law, shall cause any street, avenue or alley to be graded, curbed, guttered, paved, or macadamized; any sewer to be constructed, the expense of which is charge- able to the abutting property; any bridge over a water- course to be erected; or areas of street intersections to be 198 KANSAS CITIES FIRST CLASS SECOND CLASS. paved or improved, they may in their discretion, provide for the payment of the cost thereof in installments, and issue im- provement bonds of the city therefor. Such installments shall bear interest at eight per cent from the date of the issue of said bonds. 17. Form Disposition : Said bonds shall run not longer than ten years and bear interest at not to exceed seven per cent, and the credit of the city shall be pledged for the pay- ment thereof. They may be issued directly to the contractor, or sold and the proceeds applied to the purpose for which they were issued. The fund raised by such special assessments shall be applied towards the redemption of such bonds or to the reimbursement of the city, when said bonds, or any part thereof, have been redeemed from the general taxes of the city. 18. City Improvement Bonds : For the cost of any such improvements as are made payable out of the general improvement fund of the city, the mayor and council may also issue bonds of the same tenor and effect, and such bonds and the interest thereon, shall be paid by a levy of a general tax on all of the property of the city. (Chap. 101, L,aws of 1887, in force Feb. 23, 1887; also see chap. 99 Ibid.) CITIES OF THE SECOND CLASS. 19. General Improvement Bonds The council of any city of this class, for the purpose of paying for any improve- ments of a general nature, may from time to time borrow money and issue bonds therefor, and street bonds to contractors and others on account of such improvements, but the issue of such bonds must first be authorized by a majority of all the votes cast at an election held for that purpose. Said bonds shall be payable in not less than ten nor more than twenty years, and bear interest at not to exceed ten per cent. Street bonds, not exceeding in amount the taxes levied for the current year applicable to that purpose, shall be payable in not more than one year, and bear interest at not exceeding ten per cent. The necessary taxes to pay said bonds and interest must be levied, but where any bonds are issued for any improvements charge- KANSAS BONDS CITIES OF SECOND CLASS. 199 able to any particular or local property, the taxes to pay the same shall be levied only on such property. (Chap. 19, art. 3.) 20. Special Assessment Bonds : The mayor and council of any city of the second class may issue the bonds of the city for the cost of draining, paving, macadamizing, curbing and guttering streets and avenues, payable one third in one year, one third in two years, and one third in three years, or one fifth annually in one to five years respectively, with inter- est at a rate not exceeding eight per cent per annum, payable annually; and to pay the principal and interest maturing during any year, assessments shall be made upon the taxable property liable. (Chap. 99, sec. 4, Laws 1885.) 21. Improvement Bonds : When the city council shall deem it necessary to pave, macadamize, curb, gutter, or otherwise improve any street, avenue, alley or lane within the limits of the city, for which a special tax is to be levied, such council may, by resolution, declare such work or improvement necessary to be done. This resolution shall be published for four weeks, or ten days daily, in the city's official paper, and if a majority of the resident owners of the property liable to taxation therefor shall not within twenty days thereafter file with the city clerk their protest, the council may cause such improvement to be made and levy the tax therefor. When- ever three fourths of the resident owners fronting on a street in two or more adjacent blocks shall petition the council for the improvement of the same, the council may proceed to make such improvement, and levy taxes therefor. The council may provide for the cost of any such improvement to be paid by installments, and for such installments may issue improvement bonds, payable in installments of an equal amount in each year. 22. Form, Limit and Disposition of Bonds : Said bonds shall run not longer than ten years and bear interest at a rate not exceeding seven per cent, and be issued in such denomi- nations as the mayor and council may deem proper. They shall be made payable from the assessments to be made each year, 200 KANSAS CITIKS OF SECOND CLASS. so far as the same are chargeable upon the abutting lands. Such bonds shall not be issued in excess of the contract price of the work or improvement on account of which they are issued. They may be issued to the contractor, or may be sold at not less than par, and the proceeds applied to the payment of such improvements. (Id. sec. 6. as amended by chap. 104, Laws 1887.) 23. City Improvement Bonds : For the costs of such improvements as are by law made payable out of the general improvement fund of the city, the mayor and council may also issue bonds of the same tenor and effect, and such bonds shall be paid by the levy of a general tax on all property in the city. (Id.) 24. Funding Bonds . The council of a city of the second class, when necessary, may provide for issuing bonds for the purpose of paying any and all indebtedness of such city at dollar for dollar. Said bonds shall be payable in not less than ten years nor more than twenty years, and bear interest at a rate not exceeding ten per cent per annum, with coupons attached, payable annually or semi-annually. 25. Tax for Payment : The council, in addition to other taxes, shall lev}' a sufficient tax to provide for the payment of the interest and principal of such bonds as they become due, and to make provision for a sinking fund to redeem the bonded indebtedness of the city at maturity. (Chap. 19, art. 3.) 26. Bonds for Funding Railroad Indebtedness: Any city of the second class may issue funding bonds for the pur- pose of cancelling or satisfying any bonded indebtedness issued on account of any subscription to the capital stock of any railroad company "to such an amount as may be necessary, not more than seventy -five per cent of the indebtedness pro- posed to be satisfied thereby. ' ' Before any such bond shall be issued an ordinance shall be duly passed providing for such issuance, exchange or sale. 27. Form of Bonds : Said bonds shall be issued in sums of not less than one hundred nor more than one thousand KANSAS FUNDING AND REFUNDING BONDS. 2OI dollars each, payable in not more than twenty years, with interest at a rate not to exceed eight per cent per annum, pay- able semi-annually, with coupons attached, both principal and interest being payable at the fiscal agency of the state in the city of New York. The bonds and coupons shall be signed by the mayor and city clerk and shall have the seal of the city attached. 28. How Exchanged or Sold : Said bonds may be exchanged at their par value for outstanding railroad bonds at a rate not to exceed seventy cents on the dollar, or may be sold for cash at not less than ninety-five cents on the dollar, the proceeds to be expended only for the purchase of such out- standing bonds at a rate not to exceed seventy-five cents on the dollar. 29. Tax for Payment : It is made the duty of the mayor and council to annually levy and collect, in addition to other taxes, a sufficient sum to pay the interest and principal of such bonds as they fall due; and if such bonds are not made payable by annual installments, to provide a sinking fund sufficient for their redemption at maturity. Any of such bonds or coupons shall be receivable for taxes. (Chap. 19, art. 7; act of 1876.) 30. Refunding Bonds of Cities of the Second and Third Classes : Every city of the second or third class is authorized to refund its maturing bonds issued on account of any railroad subscription or other purpose, at a rate not exceed- ing sixty cents on the dollar of said indebtedness. 31. How Issued : When the mayor and council have determined at what per cent they will refund said indebtedness, it is made the duty of the mayor and clerk to issue bonds at that rate to the holder of such indebtedness, upon request of such holder. Said bonds shall be payable in twenty years, and bear interest at the rate of seven per cent per annum, payable semi-annually on the first days of January and July, with coupons attached signed by the clerk. The bonds shall be signed by the mayor and clerk and attested with the city seal. They may be issued in denominations of fifty dollars, one 2O2 KANSAS CITIES OF SECOND AND THIRD Ci.ASS. hundred dollars, two hundred dollars, five hundred dollars and one thousand dollars, and payable, both principal and interest, at the office of the city treasurer. 32. Record Tax: It is the duty of the city clerk to keep a record of all bonds so issued, showing the date, number, and amount, to whom and on what account issued; and a record of every bond refunded. It is the duty of the mayor and council to provide by levy a sufficient tax to pay the interest and prin- cipal as they become due, and in case of failure so to do, those so neglecting or refusing shall be individually liable for any bond or coupon falling due during the year for which such tax should have been levied. After five years an annual tax not exceed- two mills on the dollar shall be levied to provide a sinking fund for the payment of such bonds at maturity. (Id., act of 1877.) 33. Limit of Indebtedness of Cities of the Second Class : At no time shall all the bonded indebtedness of any city of the second class exceed ten per cent of the assessed value of all the taxable property therein, as shown by the last previous assessment. Bonds issued for improvements, for which a special tax is levied upon the property improved, shall not be included in estimating the bonded indebtedness, nor shall this limitation be construed to prevent the issue of bonds to refund existing bonded indebtedness. (Chap. 99, sec. 5, Laws of I885.) 1 CITIES OF THE THIRD CLASS. 34. Funding Bonds : The council of any city of the third class may provide for issuing bonds for the purpose of funding any indebtedness. Said bonds shall be payable in not less than ten nor more than twenty years, and bear interest at a rate not exceeding ten per cent per annum, with interest coupons payable annually or semi-annually. Said bonds shall 1 We omit the law authorizing cities of the second class to issue bonds to encourage the establishment of manufactories and other enter- prises tending to develop and improve the city. (Sec. 76, chap. 100, L,aws of 1872.) Such bonds have been decided to be invalid, the pur- pose not being public. See chap. 3, herein. KANSAS CITY AND TOWNSHIP BONDS. 203 not be issued for the purpose of funding said indebtedness, unless for every dollar of outstanding indebtedness the city shall issue in exchange such bonds at not less than ninety cents on the dollar. Said bonds shall not be issued until the council shall be instructed so to do by a majority of all the votes cast at an election held for that purpose.' (Chap. 19 a, art. 3.) 35. General Improvement Bonds : The council of any city of the third class may, for the purpose of paying for improvements of a general nature in the city, from time to time borrow money and issue bonds therefor, when instructed by a majority of all the votes cast at an election held for that pur- pose. Said bonds shall be payable in not less than ten nor more than twenty years, with interest at a rate not exceeding ten per cent, with coupons attached, payable annually or semi-annually. The council shall levy the necessary taxes to pay such bonds and interest as they become due. (Id. ) 36. Sinking Fund Limit of Debt : The council of cities of the third class are required to make provision for a sinking fund to redeem at maturity the bonded indebtedness of such city. At no time shall all the bonded indebtedness of a city of this class exceed one fourth of the assessed value of all the taxable property thereof as shown by the last previous assessment. (Id.) TOWNSHIP BONDS. 37. Township Bonds for Bridges : Upon presentation of a petition signed by not less than twenty-five voters, the township trustee, clerk and treasurer of any municipal town- ship, are authorized to submit the question of issuing bonds for the purpose of building bridges. Within five days after the receipt of said petition such officers shall give notice by publication in a newspaper of general circulation in the town- ship, of the time and place of holding such election, and des- ignating the point at which the bridge is proposed to be built. A majority vote of the qualified electors voting at such election 1 Also see ? 30. 204 KANSAS TOWNSHIP BONDS. is required to authorize the issue of such bonds. Two or more adjacent townships may unite in the erection of a bridge over a stream separating such townships. 38. How Issued Limit of Amount : Said bonds shall be issued in sums of not less than fifty dollars each, pay- able in the discretion of the officers issuing the same, in not less than five nor more than thirty years, with interest not ex- ceeding ten per cent per annum, payable semi-annually, and shall be signed by the to\vnship trustee, and attested by the township clerk, who is required to keep a registry thereof, showing their dates, number, amount, to \vhom payable and rate of interest. The amount of bonds so issued shall not be greater than ten per cent of the taxable property of the town- ship. 39. Bridge Bonds by Unorganized County Town- ships : In case an unorganized is attached to an organized county for judicial purposes, it constitutes one of the municipal townships thereof, and as such may issue township bonds to the amount of ten thousand dollars, to be used solely for the construction of bridges therein; said bonds to be issued by a vote of the people in the manner prescribed by the laws regu- lating the sale of bonds, and construction of works of internal improvement. (Chap. 72, sec. 31, of L,aws of 1887.) 40. Township Bonds for Parks and Cemeteries : Any municipal township, for the purpose of paying for the ex- penses of purchasing land within such township for parks and cemeteries, may issue bonds of the township. Said land shall not be purchased until at least two thirds of the resident tax- payers of such township shall petition in writing the board of county commissioners to submit to the qualified voters thereof the question of such purchase and issue of bonds. The petition must describe the land proposed to be purchased, its cost, and the amount of bonds to be issued, with the time, manner and place where payable. Thereupon the county commissioners shall enter an order reciting the terms and con- ditions set forth in the petition, and fix the time for an election, KANSAS SCHOOL BONDS. 205 within sixty days. Thirty days' notice of such election shall be given by publication in some newspaper published and hav- ing a general circulation in such township. 41. How Issued : If a majority of the qualified electors voting favor such purchase and issue, the county board shall issue the bonds as proposed, in the name of such township. They shall be signed by the chairman of the board, and attested by the county clerk under the seal of the county. They must be issued in sums of one hundred dollars each, be made payable at the Kansas fiscal agency in New York, run not longer than twenty years, and bear interest at a rate not to exceed six per cent, payable semi-annually. 42. Limit of Amount Tax: Said bonds may be issued to an amount not to exceed two per cent of the assessed valuation of the tow r nship, but in no case shall such issue exceed twenty thousand dollars. There shall be levied annually a tax suf- ficient to pay the interest on such bonds and after five years an amount sufficient to provide a sinking fund to pay the principal at maturity. (Chap. 235, L,aws of 1887.) SCHOOL BONDS. 43. School District Officers : The officers of each school district in this state are director, clerk and treasurer, who constitute the district board. The management of schools in cities is vested in boards of education. (Chap. 92, art. 4.) 44. School District Bonds : For the purpose of erect- ing or purchasing schoolhouses the board of directors are authorized to issue the bonds of the district in an amount not to exceed six per cent of its taxable property as shown by the last assessment. Also for the purpose of extending the time of payment of the bonded indebtedness of any such district, the directors may issue bonds in a sum not to exceed such indebt- edness. It is unlawful for any school district to create any bonded indebtedness unless there are at least fifteen persons between the ages of five and twenty-one actually residing within the limits thereof, as shown by a sworn census taken by direction of the board of directors. 2O6 KANSAS DISTRICT SCHOOL BONDS. 45. Petition and Vote Required: No such bonds shall be issued until the question shall have been submitted to the qual- ified electors of the district, at an election called for that pur- pose, and a majority of such electors shall have voted in favor of such question; and no such election shall be ordered unless a petition, stating the purpose for which the bonds are to be issued, and signed by at least one-third, and in no case less than ten of the qualified electors of the district, shall have been presented to the district board, praying for a vote to be taken for the issue of an amount of bonds stated in such petition. Upon presentation of such petition the district board is required to order an election and give notice thereof by posting up written or printed notices, signed by the clerk, in five of the most public places in the district, at least ten days before such election. The notices shall state the object for which the elec- tion is called and the manner in which the question shall be voted upon. 46. How Issued : Said bonds shall be issued in denomi- nations of not less than one hundred nor more than five hun- dred dollars each, and bear interest at a rate not to exceed seven per cent per annum, payable semi-annually on the first days of January and July, at such places as shall be designated therein, the principal being payable within fifteen years from their date. The bonds shall specify on their face the date of issue, amount, for what purpose, to whom issued, time to run, rate and times of payment of interest, with interest coupons attached, the last of which shall fall due at the maturity of the bond. The bonds and coupons shall be signed by the director and countersigned by the clerk, and after registration by the clerk shall be negotiable and transferable by delivery. 47. Registration: The board of directors shall cause said bonds to be registered with the county clerk, such registration to show the number of the district, amount, number and date of the bond, to whom and where and when payable, and when the principal and interest are due. The county clerk shall furnish one copy of his register to the county treasurer and forward one copy to the state superintendent, together with a KANSAS DISTRICT AND CITY SCHOOL BONDS. 207 statement showing the number of sections of land and the acres of land assessed and subject to taxation, the assessed valua- tion of taxable lands, and the assessed valuation of all personal property in the district issuing the bonds, which statement shall be signed by each member of the school board, and the county clerk shall certify to the correctness thereof, and the genuineness of the signature thereto attached. 48. Sale Tax : The bonds may be disposed of by the district board at not less than ninety-five cents on the dollar, and the proceeds applied to the purposes stated in the petition. It is the duty of the board of county commissioners to provide by an annual levy upon all the taxable property in such district, a tax sufficient to pay the interest accruing upon any bonds so issued, and to provide a sinking fund for their final redemption. 49. Wrongful Issue : It is provided that if any school district officer assists in any manner to issue the bonds of any school district before the same have been authorized as above, such officer shall be guilty of a felony, and upon conviction, fined not less than five hundred nor more than five thousand dollars or be imprisoned in the penitentiary from one to five years, or both. The wrongful disposition of any such bonds or the proceeds thereof by the district board or any mem- ber, is punishable by a fine of not less than one thousand dollars or by imprisonment not more than six months, or both. (Chap. 92, art. 13.) 50. School Bonds in Cities of the First Class : The board of education of any city of the first class may issue bonds to raise funds to purchase school sites or erect or furnish suit- able buildings thereon, or to provide for the payment of any indebtedness incurred for such purposes, but no bonds shall be issued except by a vote of two-thirds of the members of the board of education at a regular meeting thereof. 51. How Issued : The bonds shall bear date on the day they are issued and negotiated, and draw interest at a rate not exceeding ten per cent per annum, payable semi-annually, and the principal shall be payable in twenty years from date. The 208 KANSAS CITY SCHOOL BONDS. bonds shall be signed by the president and clerk of the board of education, countersigned by the treasurer, and shall specify the rate of interest and the time when the principal and interest shall be paid, and shall not be for a less sum than fifty dollars each. 52. Limit of Amount Sale: There shall not be out- standing at any one time more than one hundred and sixty thousand dollars in the aggregate amount, of bonds issued by the board of education of any such city. Said bonds may be sold by the board of education at not less than ninety cents on the dollar. 53. Registration Tax : It is the duty of the clerk of the board of education to register in a book provided for that purpose all bonds issued, showing the number, date, amount, and to whom payable. The board shall include in its annual estimate an amount sufficient to pay the interest on all bonds outstanding and to create a sinking fund for the redemp- tion of the same at maturity. (Chap. 92, art. 10. ) 54. School Refunding Bonds of Cities of the First Class : The board of education of any city of the first class may refund its outstanding bonds heretofore issued with new bonds issued to the holders of such outstanding bonds, but the amount shall not be increased. Such refunding bonds shall state for what purpose issued, be payable to the person to whom issued or bearer within thirty years after date, in installments as hereinafter provided, and bear interest at a rate not to exceed six per cent, payable semi-annually on the first days of January and July. Each bond shall have attached sixty coupons, the first ten being the amount of the interest only, the next twenty shall each include one and seven-tenths per cent of the principal, and the last thirty shall each include one-thirtieth of the principal remaining unpaid at the end of fifteen years from date, and when all such coupons shall be paid said bonds shall be cancelled as fully paid. 55. How Issued: Said bonds shall be signed by the president and clerk of said board, under the seal of said board, KANSAS CITY SCHOOL BONDS GENERAL. 209 and countersigned by the city treasurer. For failure to levy the necessary taxes to pay the said bonds or the interest thereon, the members of the board are liable personally for the amount due, and in addition such officers so at fault are subject to fine and imprisonment. (Ibid., act of 1879.) 56. School Bonds in Cities of the Second Class : In cities of the second class, for the purchase of school sites or the erection of school buildings, or the funding of the bonded indebtedness, the board of education may issue bonds when authorized by a majority of the qualified electors voting there- on at an election called for that purpose. It is the duty of the mayor of such city, upon the request of the board of education to call an election for the submission of such question, by a proclamation made at least ten days previous to such election, stating the amount of bonds desired, and the purpose for which they are to be issued. 57. How Issued: Said bonds shall be payable in not more than twenty years, at such place as may be named therein, and bear interest at not to exceed ten per cent, payable annually or semi-annually. They shall be signed by the presi- dent, attested by the clerk, and countersigned by the treasurer of the board of education and issued in sums of not less than fifty dollars. The bonds shall be registered by the clerk of the board and may be sold by the board of education at not less than ninety cents on the dollar. The board are required to levy a sufficient tax to provide for the payment of the bonds and interest, and the school fund and property of such city are pledged for their payment. (Chap. 92, art. n.) GENERAL. 58. Bonds for Bridges, and Buildings for the Poor : The proper authorities of any county, city, or town- ship in this state may issue bonds for the purpose of building or purchasing bridges, and for the purpose of purchasing land and erecting buildings for the poor, when ordered by a vote of the qualified electors of such county, city, or township. Whenever two counties, cities or townships are separated by a 210 KANSAS BRIDGE AND POOR HOUSE BONDS. stream of water, such municipalities ma}^ join in the construc- tion of any required bridge, and issue bonds for their respect- ive proportions of the expenses thereof. 59. Submission of Question: -When a petition, signed by at least two-fifths of the voters thereof, as determined by the returns of the last preceding general election, shall be presented to the municipal authorities asking that a vote be taken upon the question of , building or purchasing such bridge, or for the purpose of erecting buildings for the poor, such officers, within ten days thereafter, shall call an election to be held within forty days thereafter. Notice of such election shall be given by publication for at least three consecutive weeks in some newspaper published therein, and if none be so published, by posting notices in at least five public places in each voting precinct for at least twenty days previous to such election. The notice shall set forth the time and place of holding such election; the bridge proposed to be built or purchased or the purchase of land and erection of buildings, as proposed, for which bonds are to be voted. These notices, in case of a county election, shall be signed by the sheriff; in case of a city election, by the mayor; and of a township election, by the trustee, clerk and treasurer, or any two of them. No second election upon any submitted proposition shall be held except upon the petition of three-fifths of the legal voters. 60. How Issued : If three-fifths of the votes cast at any such election are in favor of the submitted proposition, the authorities may issue the bonds thereof, in denominations of not less than one hundred dollars, payable at such place in the city of New York as the officers may direct, in not less than one nor more than thirty years from date, with interest not to exceed ten per cent, payable semi-annually. The bonds, if issued by a county, shall be signed by the chairman of the board of county commissioners and attested by the county clerk; if issued by a city, shall be signed by the mayor and attested by the city clerk; and if issued by a township, shall be signed by the township trustee, and attested by the town- ship clerk. KANSAS BRIDGE AND POOR HOUSE BONDS. 211 61. Limit of Amount: The amount of bonds issued under the provisions of the above act shall not exceed a sum which inclusive of all other bonded indebtedness is greater than five per cent of the taxable property of such county, city or township. 62. Registration : The officers of any county, city or township shall cause a registry to be made of said bonds, showing the date, amount, number, maturity, rate of interest, and where payable; and if issued for the building or purchase of a bridge, what bridge, or if for the purchase of a poor-farm and erection of buildings thereon, the same shall be so stated. At the time of issuing the bonds the officers shall transmit to the auditor of state a statement of the number, amount and character of such bonds, to whom and when issued, when and where payable, and for what purpose issued. It is also the duty of the officers issuing such bonds to publish, at least three consecutive weeks in some newspaper of general circulation in the county, township or city, and by posting in six public places therein, the intention of such officer to issue said bonds at a time stated in the notice. It is the duty of the clerk of such municipalities on the first days of January and July of each year to transmit to the state auditor a certified statement of the total bonded indebtedness thereof. 63. Registration by State Auditor : Within thirty days after the delivery of any such bonds the holder shall present the same for registration to the state auditor, who, upon being so satisfied of the facts required to be stated in his certificate as herein provided, shall register the same in his office in the same manner that such bonds are registered by the officers issuing the same, and shall, under the seal of his office, certify thereon that they have been regularly and legally issued, that the signatures are genuine, and that the bonds have been regis- tered in his office according to law. It is also the duty of the auditor to keep a full record of the bonded indebtedness of the counties, cities and townships in this state, and he shall note therein all bonds issued, paid or cancelled, as the same may be reported to him. 212 KANSAS INTERNAL IMPROVEMENT BONDS. 64. Fraudulent Issue : If any person or officer whose duty it is to issue or assist in the issuance of such bonds, shall issue, or assist therein, any such bonds before they have been authorized and prepared as above provided, he shall be guilty of a felony punishable as in the case of a wrongful issue of school bonds. (Chap. 12 a.) 65. Internal Improvement Bonds: The board of county commissioners and authorities of incorporated cities are authorized to issue bonds of the county or city, as the case may be, for any sum necessary for the purpose of building bridges, erecting buildings for public purposes, and for the purpose of purchasing any bridge, or the stock and property of any bridge company, when ordered by a majority of all the voters of such county or city voting thereon at a general elec- tion held for the purpose. 66. Question, How Submitted . A petition shall be pre- sented to such authorities, signed by not less than fifty voters, asking for a vote on the proposed question. Within five days thereafter the proper authorities shall give notice by publica- tion in a newspaper of general circulation in the county or city of the time and place of an election for such purpose. Such election shall be had as under the general election laws, and the voting shall be by ballot ' ' For the bonds " or " Against the bonds." 67. How Issued : Such bonds shall be issued in sums of not less than one hundred dollars, payable at the discretion of the authorities issuing the same, in not less than five nor more than twenty years, with interest at not to exceed ten per cent, payable annually or semi-annually, with coupons attached. 68. Tax Registry : The proper authorities are required each year to cause to be levied and collected a sufficient tax to pay the interest as it becomes due, and provide for a sinking fund to pay the principal at maturity. It is the duty of the clerk to register such bonds, showing their dates, numbers, amount, to whom payable and rate of interest. (Chap. 52.) 69. Funding Bonds Act of 1875 : In all cases where KANSAS FUNDING BONDS. 213 any county, city or township has issued bonds or other evidences of indebtedness on account of 'any subscription to the capital stock of any railroad company or for the purpose of building bridges or for other internal improvements, such municipality may issue bonds for the purpose of cancelling or satisfying such indebtedness when authorized by two-thirds of all the votes cast at an election called for that purpose. Notice of such election shall be given by publication for three weeks previously, stating the time and place of the election, the par- ticular indebtedness proposed to be satisfied, and the amount necessary, the time when the bonds are payable, and the rate of interest. 70. Amount How Issued: The amount of such bonds so issued shall not exceed fifty per cent of the indebtedness proposed to be satisfied. Said bonds shall be sold at not less than ninety cents on the dollar. Said bonds shall be payable in not more than thirty years from date, in equal annual install- ments, on the first day of July each year, with annual interest at ten per cent, and shall recite the Act under which they are issued. They shall be payable at the office of the state treas- urer, and registered in the office of the state auditor, who is required to certify to the county clerk the amount of tax required to meet accruing interest and principal. Such tax shall be collected and paid over to the state treasurer, whose duty it is to pay such bonds and the interest thereon from the fund so collected. (Chap. 12 a; Laws of 1875, chap. 39.) 71. Funding Bonds Act of 1879: Counties, cities, boards of education of cities, townships and school districts are authorized to compromise and refund their maturing indebted- ness of every description upon such terms as may be agreed upon, and issue therefor new bonds to an amount not exceed- ing such outstanding indebtedness. No compromise by any township or school district shall be of any validity unless assented to by the legal voters thereof at an election or school meeting called for that purpose upon at least ten days' notice. 72. Bonds How Isstied : Said bonds shall be issued for a 214 KANSAS FUNDING BONDS. period not longer than thirty years and shall bear interest at a rate not to exceed six per cent with semi-annual coupons attached. County bonds shall be signed by the chairman of the county board and attested by the county clerk under the seal of the county; city bonds by the mayor, and attested by the city clerk under the city seal; township bonds by the trustee, attested by the township clerk and countersigned by the township treasurer; board of education bonds by the pres- ident, and attested by the clerk under the seal of the board; school district bonds by the director, attested by the clerk, and countersigned by the treasurer of the board; and the coupons shall be signed by the chairman of the board of county commis- sioners, mayor, trustee, president of the board, director and the clerk respectively, as the case may be. The bonds may be in denominations from one hundred to one thousand dollars, pay- able at such places as may be designated therein, and they shall recite the act under which they are issued. 73. Registry J^ax: It is the duty of the county clerk to keep a record of all such bonds issued within his county, showing the date, number, amount, to whom and on what account issued, and when due. Said bonds shall be issued at not less than par,and may be issued to the holders of such out- standing indebtedness upon the receipt of the same for cancel- lation. It is the duty of the proper officers, or of the county clerk, should they fail so to do, to levy the necessary taxes to provide for the payment of such bonds, and the interest thereon as they become due, and in case of the failure of any such officers, they are made individually liable to the holders of such bonds, and also guilty of a misdemeanor. It is further pro- vided that in case the proper officers fail to make such levy that it is the duty of the state auditor to ascertain and certify the required amount to the county treasurer, who is required to see that the same is collected. The interest coupons on such bonds, as they become due, are receivable in payment of taxes due to the municipality issuing the same. 74. Sinking- Fund : The proper officers are required to provide a sinking fund by the levy of a tax therefor for the KANSAS BONDS FOR CITY WATER WORKS. 215 redemption of such bonds at maturity. In case the bonds are issued for twenty years or less, there shall be levied a sufficient tax to equal the amount of such bonds divided by the number of years which they are to run. If they are issued for more than twenty years, it shall not be necessary to levy a tax for such sinking fund until the twenty years prior to maturity, after which there shall be levied one-twentieth of the principal amount of such bonds each year to provide such sinking fund. The officers of any such municipality are authorized to issue installment bonds running thirty years, with coupons attached, for semi-annual interest, and each such coupon shall, after five years from date, represent one-fiftieth of the principal, the amount to be shown separately thereon, and the bond to show upon its face that its principal is included in such coupons. (Id.; lyaws 1879, chap. 50.) 75. Water-works in Cities: Cities of the first, second and third classes in this state are authorized to contract for and procure water- works to be - constructed for the purpose of supplying the inhabitants of such cities with water for do- mestic use, the extinguishing of fires, and for manufacturing and other purposes. 76. Bonds may be issued: To defray the cost of such water- works, the council may issue the bonds of the city, the interest on the amount not to exceed one per cent of the tax- able valuation thereof, as shown by the last preceding assess- ment. The bonds shall bear interest at not exceeding eight per cent per annum, be payable at such time and place as the council may direct, be signed by the mayor of the city, and countersigned by the clerk thereof, and have interest coupons attached. 77. Question must be submitted: Before any of such bonds shall be issued the council shall submit the question of such issue to the electors of the city at any general, or a special election to be called for that purpose by the council, of which election at least twenty days' notice shall be given by publica- tion in at least one newspaper published in said city. 2l6 KANSAS RAILROAD AID BONDS. If authorized by such election, the council may issue the bonds as it may deem advisable to secure the erection and opera- tion of said water-works. (Chap. 115 b; Act of 1872.) 78. Railroad Aid Bonds; Whenever two-fifths of the resident tax-payers of any county or municipal township, shall petition in writing to the board of county commissioners; or whenever two-fifths of the resident tax-payers of any incorpor- ated city shall petition the mayor and council thereof, to sub- mit to the qualified electors of such county, township or city, a proposition to subscribe to the capital stock of, or loan the credit of any such county, township or city, to any railroad company proposing to construct a railroad through or into such county, township or city, the county commissioners for such county, or township, or the mayor and council for such city, shall cause an election to be held to determine whether such subscription or loan shall be made. The petition shall specify the railroad company, amount of stock proposed to be taken, the amount for which it is proposed to loan the credit of such county, township or city, the terms of payment, the conditions of the proposed subscription or loan, and the form of the ballots to be used at such election. 79. Company to deposit expenses Election How called and held: Before an election shall be called in any such coun- ty, township or city, under the provisions of this or any similar law of this state, to vote aid, or to subscribe to the capital stock of, or issue bonds to any railroad company, a sum suffi- cient to secure and pay the expenses of such election shall be deposited with, or secured to such county commissioners by such company. The county commissioners for such county or township, or the mayor and council for such city, upon presentation of the foregoing petition with any conditions deemed advisable by such authorities, shall convene, and make an order embracing the terms and conditions set forth in the peti- tion, and fix a time for holding such election within sixty days from the date on which the commissioners or council shall convene. Thirty days' notice of such election shall be KANSAS RAILROAD AID BONDS. 217 given in some newspaper published or having a general cir- culation in such county, township or city. A second election for such purpose shall not be held unless upon the petition of a majority of the qualified voters of such county, township or city. 80. Limit of Amount How Issued: No county shall issue of such bonds more than one hundred thousand, and no township more than fifteen thousand dollars, with, in each case, five per cent additional of the assessed valuation of such county or township. In no case shall the total amount of county, township and city aid to any railroad company exceed two thousand dollars per mile for each mile of railroad con- structed in such county. If authorized by such election, the board of county commissioners in behalf of such county or township, or the mayor and council in behalf of such city, shall issue the bonds, and the county or city clerk shall make such subscription or loan in the name of the county, town- ship or city. The bonds may be issued in denominations of not less than one hundred nor more than one thousand dol- lars, and when issued for a county or township shall be signed by the chairman of the county board, and attested by the county clerk under the county seal, and when issued for a city, shall be signed by the mayor and attested by the city clerk under the city seal. No such bonds shall be issued until such railroad shall be completed and in operation through the county, township or city voting such bonds, or to such point as may be specified in the proposition. 81. Stock or First Mortgage Bonds to be given by Company: Before any company shall receive any bonds so issued for such stock said company shall deliver to the treasurer of such county, township or city, stock in said road equal in amount with the bonds issued. Before any such bonds in the nature of a loan shall be delivered to it, the company shall execute and deliver to the proper treasurer first mortgage bond on such portions of its road-bed and property as may be specified in the proposition voted upon, which mortgage bond 2l8 KANSAS RAILROAD AID AND OTHER BONDS. shall be for the same time and rate as, and equal in amount, less twenty per cent, with the bonds of such county, township or city. 82. Time and Place of Payment Registration Tax: All such bonds shall be made payable at any time fixed in the sub- mitted proposition, not exceeding thirty years, at the fiscal agency of the city in New York, and shall be registered in the office of the state auditor. It is made the duty of the proper officers to levy and collect the necessary taxes to pay the in- terest and principal of such bonds as they mature. The cou- pons for the annual installments of the principal and interest shall be receivable when due by the county for taxes levied to pay the same. (Laws of 1876, chap. 107; as amended by chap. 183, Laws of 1887.) 83. Bonds to Aid Narrow-Gauge Railroads : Any county, township or city may issue bonds to aid in the con- struction of a narrow-gauge road to the extent of four thousand dollars per mile. Such bonds to run not exceeding twenty- five years, and bear interest at 7 per cent. They may be exchanged for an equal amount of the second mortgage bonds of such company running into or through (or within five miles of) such municipality. The issue of such bonds must be au- thorized by a majority of the votes cast at a general or special election held for the purpose. (Chap. 141, Laws of 1877). 84. Bonds to Encourage Natural Resources: 1 Any county or incorporated city of the second or third class, for the purpose of encouraging the natural resources of their respective localities, may subscribe to the capital stock of companies organized for the purpose of mining, boring for coal or natural gas, developing or using the same, or boring for artesian wells upon such conditions as may be deemed best for the interest of the county or city, by the county board, or the mayor and council, as the case may be, and issue bonds therefor. 1 There would seem to be some question as to whether the purposes named in this act are sufficiently public to authorize the issue of munic- ipal bonds, but we are not aware that the validity of the act has, as yet, been judicially passed upon. (See Chap. 3 herein.) KANSAS SUNDRY MUNICIPAL BONDS. 2IQ 85. Amount How Authorized: No such subscription shall exceed fifteen thousand dollars for counties, five thousand dollars for cities of the second class, and three thousand dol- lars for cities of the third class. Such subscription shall not be made until a majority of the voters of the county or city at a regular or special election shall have voted in favor thereof. The proposition voted upon shall state the amount of stock desired, the amount of bonds to be issued, and for what purpose. 86. How Issued: The bonds shall be issued in sums of not less than one hundred dollars each, payable in not less than one nor more than fifteen years and bear interest at a rate not to exceed seven per cent, payable semi-annually. They shall be signed by the chairman of the board of county commission- ers, and attested by the county clerk, or signed by the mayor and attested by the city clerk, as the case may be, with the seal of the proper board or city attached, and the coupons shall be signed and attested in like manner. The bonds shall be deliv- ered to the corporation entitled to the same, as authorized, upon receipt of the stock of such corporation. The county or city issuing said bonds are required to levy a sufficient tax to pay the interest and provide a sinking fund to pay the principal as they become due. (Chap. 114, L,aws of 1887.) 87. Redemption of Railroad Aid Bonds : All bonds hereafter issued by boards of county commissioners or by incorporated cities to railroad corporations shall be redeemable at the pleasure of the authorities issuing them any time after ten years from the date of their issue. It is the duty of such authorities to redeem outstanding bonds whenever there is sufficient funds on hand in the sinking fund for the redemption of any bonds. Six weeks' notice shall be given by publication in the official state paper of the proposed redemption, and thirty days after the last publication, interest on the bonds called shall cease. Funds for the payment of such bonds shall be remitted to the place of payment within fifteen days of said last publication. (Chap. 77, Laws of 1887; passed March 16, 1887.) 220 KANSAS I,OST BONDS FISCAL AGENCY. 88. Bonds to be Offered to School Fund Commis- sioners : In the case of the issue of any bonds which the board of commissioners of the state permanent school fund are authorized to purchase, it is the duty of the municipal author- ities issuing such bonds to sell the same to such commissioners unless a better price is obtainable from other persons, and it is unlawful for any municipal officers to sell such bonds at par or less without having first offered the same to such board of com- missioners. Any municipal officer who shall sell such bonds at par or less, with the interest accrued at the date of deliv- ery, without giving the said board of commissioners an oppor- tunity to purchase the same, shall be guilty of a misdemeanor. (Chap. 58, Laws of 1887; passed March 5, 1887.) 89. Duplicates of Bonds Lost or Destroyed : When- ever any bond or a warrant shall be lost, destroyed or so muti- lated as to be unfit for circulation, a duplicate thereof may be issued by the proper authorities, upon the filing of a satisfac- tory indemnifying bond with an affidavit of the facts, and the new bond so issued must be indorsed on its face as a duplicate and a record of such issue made, showing the purposes, dates, amounts of such replaced bonds, together with the date of issuing the duplicate and the names of the persons to whom issued. 90. State Fiscal Agency : The governor, secretary and auditor of state are authorized to designate some bank in the city of New York as a state agency for the payment of bonds and coupons issued by the state of Kansas or any county, township, city or school district therein, which are by their terms made payable in such city of New York. Upon the establishment of such agency it is the duty of the state auditor to publish a notice of the same in some newspaper of general circulation in such city of New York, and thereafter such bonds and coupons, by their terms payable at any bank in said city, shall be paid at the state agency. Such agency may be changed at any time by the governor, secretary and auditor of state, publication of such change to be made in the same way. 91. Payments, How Made .-It is the duty of the treas- KANSAS STATE FISCAL AGENCY. 221 urer of any municipality having bonds payable in such city to remit to the said state agency, at least fifteen days before the maturity of any such bonds or coupons, sufficient moneys for their redemption, together with a commission not to exceed one-fourth of one per cent for the disbursement of such funds. Immediately on the payment of any such bonds or coupons, they shall be cancelled and returned to the proper officers of the municipality entitled to the same. Any treasurer neglect- ing or refusing to perform the duties imposed upon him by this act, is made liable to the holder of any such bonds or coupons in double the amount thereof, in case the same shall be dis- honored on account of such treasurer's default. (Chap. 42 a; passed in 1874.) CHAPTER XVII. ARKANSAS. References are to Mansfield's Statutes of 1884, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution adopted in 1874.^ 1. State and Municipal Indebtedness: Neither the state nor any city, county, town or other municipality therein,, shall ever loan its credit for any purpose whatever, nor shall any county, city, town or other municipality ever issue any interest-bearing evidences of indebtedness, except such bonds as may be authorized by law to provide for and secure the pay- ment of the present existing indebtedness, and the state shall never issue any interest bearing treasury warrant or scrip. (Art. 1 6, sec. i.) 2. State Credit: The state is prohibited from assuming or paying the debts or other liabilities of any county, town, city or other corporation, unless such debt was created to repel invasion, suppress insurrection, or to provide for the public welfare. (Art. 12, sec. 12.) 3. Municipal Aid or Credit : No county, city, town or other municipal corporation shall be a stockholder in any company, association or corporation, or obtain or appropriate money for, or loan its credit to, any corporation, association, institution or individual. (Id., sec. 5.) 4. Special Acts: The general assembly shall pass no special act conferring corporate powers, except for charitable, 1 An act was passed April 4, 1887 (No. 141), providing for the sub- mission at the next general election of the question of holding a con- vention to frame a new constitution. (222) ARKANSAS COUNTY BONDS. 223 educational, penal or reformatory purposes, where the corpor- ations created are to be, and remain, under the patronage and control of the state. : The general assembly shall provide by general laws for the organization of cities (which may be classified) and incorporated towns, and restrict their powers of taxation, assessment, borrowing money, and contracting debts, so as to prevent the abuse of such power. (Id., sees. 2 and 3.) 5. Tax Limit : No municipal corporation shall be authorized to pass any laws contrary to the general laws of the state, nor levy any taxes exceeding in one year five mills on the dollar, provided, to pay indebtedness existing at the time of the adoption of the constitution, an additional tax of not more than five mills can be levied. Taxation for state purposes is limited to one per cent, and for county purposes to one- half per cent for any one year. (Art. 12, sec. 4; and art. 16, sees. 8 and 9.) COUNTIES. 6. County Court : The county court is invested with the control and management of all county property, funds and business, including all matters relating to county taxes, roads, bridges, ferries and the disbursements of money for county purposes, or that may be necessary for the internal improve- ment and local concerns of the county. In levying taxes and making appropriations for county purposes, the justices of the peace of the county sit with the county judge. Their regular annual session for this purpose is held the first Monday of July. (Art. 7 Const., sec. 28 to 30; and sees. 1407, 1443 et. seq., of Statutes.) 7. County Funding Bonds: The county court of any county is authorized to issue county bonds in lieu of any out- standing bonds or coupons, on such terms as may be agreed upon with the holders thereof. Similar bonds may be issued by any county for the purpose of acquiring and extinguishing said county's portion of the indebtedness of the county or 1 See City of Uttle Rock v. Parish, 36 Ark., 166 (1880), and pp. 40- 42, herein. 224 ARKANSAS COUNTY BONDS CITIES. counties out of whose territory said county may have been formed. The county court shall decide as to the issue of such bonds and may make an order to that effect, providing for the presentation of such outstanding bonds for funding. 8. How Issued Taxes: Said bonds shall be payable in not less than five, nor more than thirty years, and bear interest from date at six per cent per annum, payable annually, on the first day of July in each year, to be evidenced by coupons attached. They shall be issued in denominations of not less than twenty-five dollars. It is made the duty of the county court to levy a special tax for the payment of such bonds and interest thereon. Reference is made to the statute for further particulars relating to the issue of these bonds. (Sees. 1078, to 1088, as amended by Act 153 in 1887.) 9. Compromise Bonds : Counties are authorized to issue bonds to compromise and in lieu of indebtedness existing at the adoption of the present constitution, evidenced by bonds, judgments or otherwise. Said bonds may be issued upon such terms as may be agreed upon with the holders of such indebt- edness, and be payable in not less than twenty years nor more than thirty years, and not exceeding in amount sixty per cent of such indebtedness. They shall have interest coupons attached for the annual interest, and be payable at such place in the city of New York as may be agreed upon. They shall be signed by the county judge and countersigned by the county clerk, with the seal of the county court affixed. The coupons may be attested by the signature of the county clerk. The county court is required to levy a special tax for the payment of these bonds. (Act 151, 1887.) CITIES. 10. Classification : All municipal corporations having over five thousand inhabitants are cities of the first class; all cities having over two thousand five hundred and less than five thousand inhabitants are cities of the second class, and all other municipal corporations are known as incorporated towns. (Sees. 722 to 730.) ARKANSAS CITY AXD TOWN BONDS. 225 ii. City and Town Funding Bonds: Any city or town council, for the purpose of extending the time of payment of any indebtedness existing at the time of the present consti- tution, and which, from the limit of taxation such city or town is unable to pay at maturity, may issue bonds of such city or town to fund said debt, or borrow money so as to change, but not to increase the indebtedness; in such amounts, not less than fifty dollars; for such time, not less than ten nor more than twenty years; and at such rate of interest, not exceeding ten per cent per annum, as the council may deem proper. A special tax is required to be levied to meet the payment of the bonds so issued. (Sees. 897 to 899.) CHAPTER XVIII. TEXAS. References are to the sections in the Statutes of /?<?, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Present Constitution adopted in 1876. 1. State Credit: The legislature is prohibited from giving or lending the credit of the state in aid of any person, association or corporation, municipal or otherwise. (Art. 3, sec. 50.) 2. State Indebtedness : An indebtedness may be cre- ated in behalf of the state, not exceeding in the aggregate two hundred thousand dollars at any one time, to supply casual deficiencies in the revenue. (Art. 3, sec. 49.) 3. Municipal Credit : The legislature cannot authorize any county, city, town or other political corporation or sub-di- vision of the state to loan its credit to or to grant any public money or other thing of value to any individual association or corporation, or to become a stockholder in any such corpor- ation, association or company. No county, city or other municipal corporation shall become a subscriber to the capital stock of any private corporation or association or make any appropriation or donation or otherwise loan its credit to the same. (Art. 3, sec. 52.) 4. Municipal Indebtedness : Counties and cities bordering on the coast of the Gulf of Mexico may, by a vote of two-thirds of the tax-payers, issue bonds for the construc- tion of sea-walls, breakwaters, and for sanitary purposes authorized by law. But no debt for any purpose shall be incurred in any manner by any city or county unless provision (226) TEXAS COUNTY BONDS. 22y is made at the same time for an annual tax sufficient to pay the interest thereon and create a sinking fund of at least two per cent. (Art. u, sees. 5 and 7.) 5. Limit of Taxation ; The state tax on property shall never exceed fifty cents on the one hundred dollars valuation, and no county, town or city (except cities having over ten thousand inhabitants) shall levy more than one half of said state tax. 1 (Art. 9, sec. 9.) COUNTIES.- ^ 6. County Government : The management and control of county affairs are vested in the commissioners' court, com- posed of four elected commissioners, acting with the county judge. Sessions of this court are held on the first Mondays in February, May, August and November in each year. Special meetings may be called by the judge or any three commission- ers. The clerk of the count}- court is exofficio clerk of the commissioners' court. (1509-1530.) 7. Bonds for tourthouse and Jail: For the purpose of erecting a suitable courthouse or jail, or both, the county commissioners' court may issue county bonds, bearing not to exceed eight per cent interest, and running not more than fif- teen years, redeemable at the pleasure of the county; but in counties having outstanding railroad aid bonds, said court- house and jail bonds may run not to exceed twenty-five years. (Laws 1885, page 56-57, 986 a.) 8. Bonds for Bridges: For the purpose of purchasing or constructing bridges for the public use within a county, the county commissioners' court are authorized to issue bonds of the county, running not exceeding twenty years, and bearing not exceeding eight per cent interest. They are required to levy sufficient tax to pay accruing interest and to create a sinking 1 Any act authorizing the issue of bonds is limited by the above provision as to taxation, and in a case where the legislature had already levied a tax of one-fourth of one per cent for current expenses, the city council had no power to levy a tax for the payment of bonds, and a con- tract for the issue of such bonds to be paid for by taxation was declared void, and the city not liable for the payment of s'uch bonds and coupons. Gould vs. The City of Paris, 43 S. W. Rep., 650 (1887 ). 2 Also see under " General," \\ 17-20. 228 TEXAS COUNTY BONDS CITY BONDS. fund of not less than four per cent thereof annually to redeem such bonds at maturity. The bonds shall not be sold at less than par and shall be registered by the county treasurer, and the interest thereon shall be paid annually on the tenth of April. g. Limitation Form: Counties already in debt shall not issue bonds exceeding the amount which a tax of ten cents on the one hundred dollars valuation will not liquidate in ten years, and counties not in debt to an amount exceeding which the same tax will not liquidate in twenty years. The said bonds shall be signed by the county judge and countersigned by the county clerk. (Laws 1887, page 135; in force April 4, 1887, 986 d.) 10. Funding Bonds: In counties with courthouse and jail bonds or other bonded indebtedness outstanding prior to the constitution of 1876, the commissioners' court, with the consent of the holders of such outstanding bonds, may issue in exchange therefor new bonds with interest and principal pay- able at such times and places as may be agreed upon with the holders of the majority of the outstanding bonds. Such new bonds shall be redeemable after two years at the option of the county, and the interest on the indebtedness must not be increased. An annual ad valorem tax of twenty-five cents on the hundred dollars shall be levied to pay the interest on such bonds and to provide a sinking fund for the payment thereof. (Laws of 1879, chap. 46, 986 e.) 11. Same : Any county may fund its bonded indebted- ness, incurred prior to April 18, 1876, with new bonds in denom- inations of not less than five hundred dollars, payable in twenty years from date, and bearing interest at a rate not to exceed six per cent. Said bonds shall not be sold or exchanged at less than par and accrued interest. (Laws 1881, page 117.) CITY AND TOWN BONDS.' 12. Funding Bonds: The council of any city may fund its outstanding indebtedness by issuing bonds therefor, bearing not to exceed ten per cent interest, and shall provide by 1 Also see under "General" \\ 16-20, and note p. 231. TEXAS CITY BOXDS. 22Q ordinance for issuing bonds in such sums as have been or may be agreed upon for any authorized railroad subsidies. Any city may issue city bonds to improve public markets and streets, erect and conduct hospitals, city halls, water-works and other authorized municipal purposes. The bonds shall be issued in such sums as may be determined by the council, and bear interest at a rate not to exceed ten per cent, payable semi- annually, at such place as may be named in the ordinance. (419-420.) 13. Limitation Form: The aggregate amount issued by the council of any city shall not at any time exceed six per cent of the value of the property of such city subject to ad valorem tax. All bonds shall specify for what purpose they are issued, and shall be signed by the mayor and counter- signed by the secretary, and payable at such times and places as may be fixed by the ordinance, in not less than ten nor more than fifty year from date. (420 to 422. ) 14. Registration : The mayor shall forward the bonds to the state comptroller, who is required to register them in a book kept for the purpose, and indorse on each bond his cer- tificate of registration, and at the request of the rc^or, the comptroller shall furnish a certificate stating the amount of bonds of such municipality so registered in his office to date. The mayor is required, at the time of forwarding such bonds, to furnish the comptroller with a statement of the city's taxa- ble property and the amount of tax levied to meet the interest and create a sinking fund for the payment of said bonds. It is made the comptroller's duty to see that a tax is levied suffi- cient to pay the interest semi-annually as it accrues, and to pro- vide a sinking fund to pay the principal thereof at maturity, and also to see that such sinking fund is invested in good secu- rities. (423-424.) 15. Bonds for Harbors : The municipal authorities of Gulf cities may issue bonds in such amount as may be neces- sary, not exceeding the limit in the city's charter, to improve harbors or remove bars at the entrance thereof. Said bonds shall bear interest not exceeding five per cent, payable semi- 230 TEXAS FUNDING BONDS. annually, and be sold at not lest than par. (Laws of 1883, page 48, 425 d.) 16. Funding Bonds : The mayor and board of aldermen of any city or town may, by ordinance or resolution adopting this act, compromise and fund existing indebtedness by issuing new bonds in denominations of not less than fifty nor more than one thousand dollars, running not longer than thirty years, bearing interest at a rate not exceeding six per cent, as evidenced by coupons, payable semi-annually. No debt barred by the statute of limitation shall be funded. City bonds shall be signed by the mayor and attested by the secretary, or if there is none, by the recorder, under the corporate seal, and shall be registered with the state comptroller and sold at not less than par. No defense to the new bonds shall be made, except such as originated subsequent to issue. (Laws 1887, PP- 50-53. 986 h.) GENERAL. 17. Funding Bonds : Counties, incorporated cities and towns having outstanding indebtedness (other than railroad aid or internal improvement bonds issued under laws of 1871) incurred prior to April 18, 1876, may compromise, adjust or scale the same, and issue therefor new bonds bearing inter- est at a rate not to exceed six per cent, but cities shall not issue bonds to exceed their chartered limitation. (Laws of 1879, chap. 54, 986 g.) 18. Compromise Bonds 1 : Counties, cities and towns may compromise and adjust an)^ outstanding bonds issued to aid railroads or other internal improvements and issue new bonds therefor, providing the amount of debt and the rate of interest shall not be increased, nor shall any debt barred by the statute of limitations be revived. Said bonds shall be in denomination of not less than one hundred dollars nor more than one thousand dollars, and may be sold or exchanged for such outstanding bonds at not more than par. They shall not 1 Chap. 105 of the Laws of 1879 provides for the issue of compro- mise bonds to fund the "existing bonded indebtedness" of counties, cities and towns. TEXAS FUNDING BONDS. 23! be sold until a contract for the settlement or payment of the old bonds has been made, nor at a price less than the amount required to take up such old bonds. 19. How Issued: When arrangements have been made, the commissioner's court, or the city or town council, as the case may be, shall enter an order, or adopt an ordinance author- izing such issue and prescribing the amount, and cause the bonds to be prepared, payable to bearer, at such time as may be agreed upon, not exceeding fifty years, and such a rate of interest not exceeding the rate of the old bonds, payable annu- ally or semi-annually, as may be agreed, to be evidenced by coupons attached. County bonds shall be signed by the county judge and attested by the county clerk, with the seal of the county attached, and the coupons shall be signed by the county judge. City or town bonds shall be signed by the mayor and attested by the secretary or recorder of the city or town with the corporate seal attached, and the coupons shall be signed by the mayor. 20. Tax Registration: An irrepealable tax shall be levied sufficient to meet the accruing interest and to create a sinking fund of not less than two per cent. The bonds must be registered with the state comptroller who shall indorse on each bond a certificate showing the date of registration. Said bonds shall not thereafter be open to any defense existing prior to delivery, and they shall contain a statement to that effect on their face. (Laws of 1887, pp. 77 to 79, 986k.) NOTE. Cities and towns incorporated under general laws may also, under acts of 1887, page 37, in anticipation of taxes to be levied for pub- lic buildings, water-works, sewers, street and other permanent improve- ments, issue bonds bearing not to exceed six per cent, to an amount which a tax of one-fourth per cent will pay interest and principal at maturity. (425 c.) CHAPTER XIX. COLORADO. References are to the sections in the General Statutes of 1883, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution adopted July /, 1876. 1. State and Municipal Credit : Neither the state nor any county, city, township or school district shall lend or pledge its credit in any manner to, or in aid of any person, company or corporation, nor make any donation or grant to, or in aid of, or become a subscriber to, or a shareholder in, any such corporation or company, or a joint owner with any person, company or corporation, except such interest as may result from any donation or devise for public use or by escheat or forfeiture by operation or provision of law. (Art. n, sees, i and 2.) 2. County Indebtedness : No county shall contract any debt by loan except for the purpose of erecting necessary public buildings and making or repairing public roads and bridges; and such indebtedness contracted in any one year shall not exceed, in counties having an assessed valuation of taxable property exceeding five millions of dollars, one dollar and fifty cents on each one thousand dollars thereof; in counties having an assessed valuation of less than five millions of dollars, three dollars on each one thousand dollars thereof; and the aggre- gate amount of indebtedness of any county for all purposes, exclusive of debts contracted before the adoption of the present constitution, shall not at any time exceed twice the amount above limited, unless, in manner provided by law, at a general election, the question of incurring such debt shall be submitted (232) COLORADO CONSTITUTIONAL LIMITATIONS. 233 to and approved by a majority vote of such of the qualified electors as shall have paid a property tax in the year last preceding such election. Such bonds, if issued, shall run not less than ten years, and the aggregate amount of debt so contracted shall not at any time exceed twice the rate upon the valuation last herein mentioned, provided that this section shall not apply to counties having a valuation of less than one million dollars. 1 (Art. n, sec. 6.) 3. School District Indebtedness : No debt by loan, in any form, shall be contracted by any school district for the purpose of erecting and furnishing school buildings or pur- chasing grounds, unless a proposition to create such debt shall first be submitted to and approved by a majority vote of the qualified electors of such district as shall have paid a school tax therein in the year next preceding such election. (Art. 1 1, sec. 7.) 4. City and Town Indebtedness : No city or town shall contract any debt by loan, except by means of an ordi- nance, which shall be irrepealable until the full payment of the indebtedness therein provided, specifying the purpose of the loan and providing for the levy of a tax, not exceeding twelve mills on each dollar of taxable property valuation, sufficient to pay the annual interest and the principal of such debt within fifteen, but not less than ten years, from the creation thereof; and such tax, when collected, shall be applied only for the purposes specified. The question of incurring said debt must be submitted at a regular election for councilmen, aldermen, or officers of such city or town, to a vote of such qualified electors thereof as shall in the year next preceding have paid a property tax therein, and a majority vote of those voting thereon is required to authorize such indebtedness. The aggregate of debt so created, together with the debt existing 1 That is, the limitation of such, county indebtedness in counties having not less than one million nor more than five millions of assessed valuation is, for each one thousand dollars of such valuation, three dollars for any one year without a vote, six dollars for any one year when authorized by a vote as provided, and twelve dollars in the aggre- gate at any one time ; and in counties having more than five millions of assessed valuation, one half of such sums in each case, respectively. 234 COLORADO COUNTY BONDS. at the time of such election, shall not at any time exceed three per cent of the valuation as shown by the last previous assessment in such city or town. Debts contracted for supply- ing water to such city or town are excepted from the operation of this section. (Art. n, sec. 8.) COUNTIES. 5. County Commissioners : There shall be elected in each county, for a term of three years, three county commis- sioners, two of whom shall constitute a quorum, except in counties with more than ten thousand population, five commis- sioners shall be elected, three of whom shall constitute a quorum. (Art. 14, sec. 6.) 6. Bonds for Public Buildings, Roads and Bridges: County commissioners by an order entered of record, specifying the amount and object, may submit to a vote of the qualified tax-paying electors, at a general election, the question of incur- ring a debt for necessary public buildings, or making or repair- ing roads or bridges. Notice of said election must be posted in each precinct for at least thirty days previously, and a majority vote is necessary to adopt the question. 7. Limitation of Amount Form: The limitation is the same as the constitutional limitation on county indebted- ness. The bonds issued for the above purpose shall be payable at the pleasure of the county any time after ten years from date of issue, and due absolutely in twenty years from date, and shall bear interest at a rate not to exceed ten per cent per annum, payable April first of each year. They shall be signed by the chairman and attested by the county clerk under the county seal, and be issued in denominations of fifty dollars, or some multiple of fifty, and both principal and interest shall be payable at the office of the county treasurer. 8. Sale Tax: Said bonds shall be sold at not less than fifteen per cent discount. It is made the duty of the proper authorities to levy a sufficient tax to pay the interest on said bonds, and after ten years to create a sinking fund to discharge the principal thereof at maturity. (67 1 . ) 9. Funding Bonds: In counties with a floating indebt- COLORADO COUNTY FUNDING BONDS. 235 ness exceeding five thousand dollars, on petition of fifty tax- paying electors, the county commissioners shall publish for thirty days in a newspaper within the county, or if there are none so published, in one at Denver, a notice requesting hold- ers of county warrants to submit, within sixty days from the first publication of such notice, a proposition to exchange said warrants at par and accrued interest, for bonds at par. There- upon at the next general election, on petition of fifty tax-paying electors, the county commissioners shall submit to a vote of the tax-paying electors of the count}-, the question of funding such indebtedness, notice of the submission of the question shall be given by publication in some newspaper in the county, or if there be no such newspaper, by posting in two public places in each precinct, thirty days before such election, a notice of the proposition, including a statement of the rate of interest on the proposed bonds. If a majority of tax-paying electors voting at such election, vote in favor of the proposi- tion, the county commissioners may issue bonds in exchange for such warrants or may sell the said bonds and apply the proceeds to the payment of such warrants. 10. Limitation Form Execution: The amount of bonds so issued shall not exceed the county indebtedness at the time of the first publication above mentioned. The bonds shall be issued in denomination of fifty dollars, or some multiple thereof, bear interest at a rate not to exceed seven per cent, payable at the pleasure of the county any time after ten years, or abso- lutely in twenty years, and payable in New York, or at the office of the county treasurer, at the option of the holders thereof. Each bond shall state on its face the amount, to whom issued, and date of issuance; shall be signed by the chairman, countersigned by the county treasurer and attested by the county clerk under the seal of the county. All bonds so issued shall be registered at the office of the state auditor. A sufficient tax shall be levied to meet the half yearly interest as it accrues, and after nine years to create a sinking fund of ten per cent per annum to discharge the principal at maturity. (671 to 682, as amended by Laws 1885, p. 232.) 236 COLORADO COUNTY, CITY AND TOWN BONDS. 11. Refunding Bonds : In counties having legal out- standing railroad aid bonds due, maturing, or redeemable at the pleasure of the county, the county commissioners, with the consent of the holders of such bonds, may issue new bonds in exchange therefor at par, to an amount not exceeding the amount of such outstanding bonds, or the commissioners may sell at not less than par, such new bonds, and with the proceeds of such sale, pay the outstanding bonds. The issue of the new bonds must first be authorized by a majority vote of the tax-paying electors voting thereon at a regular or special elec- tion, as provided in the case of funding bonds above. 12. Form Execution: Said bonds shall be known as "refunding bonds," shall bear interest at a rate not to exceed eight per cent per annum, be redeemable at the option of the county after ten years, and due in twenty years, and payable at the office of the county treasurer. They shall be signed by the chairman, countersigned by the treasurer, and attested by the clerk under the seal of the county, and shall state on their face the amount, to whom issued, and date of issuance. They must be registered with the state auditor, who shall indorse thereon his certificate under his official seal. A tax must be levied as in the case of funding bonds. (124-128.) CITIES AND TOWNS. 13. City and Town Bonds : The city council or the board of trustees in towns are authorized by ordinance to issue bonds of their respective municipalities for the purpose of erecting public buildings, constructing sewers, water-works, canals for irrigating purposes, and gas-works. But the issue of such bonds (except for water supply) must first be author- ized by a majority vote of the tax-paying electors voting thereon at a regular election. The amount is limited, as pro- vided by constitution. (3312.) 14. Funding Bonds : Any city or town is authorized to issue funding bonds, as provided in the case of similar bonds by counties, but such bonds shall be made payable at the pleasure of the city or town issuing the same, any time after COLORADO CITY, TOWN AND SCHOOL BONDS. 237 five years, and due in fifteen years; shall be signed by the mayor, countersigned by the treasurer, and attested by the clerk or recorder under the city or town seal and registered by the treasurer of the city or town. (3365 and 3785.) 15. "Water Refunding Bonds : Any city or town with outstanding bonds issued for water, or for funding such bonds, may, when authorized by a majority vote of the tax-paying electors, refund such outstanding bonds with new bonds, run- ning not to exceed fifty years. The amount of the new bonds must not exceed the amount of the debt refunded. The ordi- nance providing for the issue of such new bonds must provide for a tax to meet the interest as it accrues and to pay the prin- cipal at maturity, and shall be irrepealable. The purchaser of such bonds shall not be bound by any misapplication of the proceeds thereof by the city or town. (Laws of 1887, p. 436; approved March 30, 1887.) SCHOOL BONDS. 16. School District Bonds : The board of directors of any school district may issue bonds for the purpose of erecting school buildings or funding the floating debts of such district, when on the petition of twenty legal voters, the question of bonding the district has been submitted by the secretary of the district giving twenty days' notice before any regular or special meeting of such submission, and the same has been authorized by a majority vote of all the tax-paying electors voting thereon at such meeting. The aggregate amount of indebtedness so contracted in behalf of any district shall not exceed three and a half per cent of the assessed valuation thereof. 17. Form Execution Tax : Said bonds shall bear interest at a rate not exceeding eight per cent per annum, payable semi-annually, and shall be redeemable at the pleasure of the district any time after five years, and payable in fifteen years from date of issue at the office of the county treasurer. The interest may be made payable in the city of New York. The bonds shall be signed by the president of the board of directors, countersigned by the county treasurer, and have the seal of the district affixed, and shall be registered by the county 238 COLORADO SCHOOL BONDS. recorder. They must state the act under which they are issued. The county board of commissioners shall levy a tax on the property of the district to pay the interest on such bonds, and after five years to provide ten per cent per annum as a sinking fund to discharge the principal at maturity. (3085 to 3092, as amended by L,aws of 1887, p. 404.) 18. Refunding School Bonds : The board of directors of any district may refund its bonded indebtedness, with the consent of the holders thereof, by issuing new bonds, bearing a less rate of interest, and running a longer time; but when said outstanding bonds are due, the said board may issue and sell new bonds to pay such maturing bonds. The issue of the new bonds must be authorized by a vote, as in the case of school district bonds. 19. Form Sale: The bonds issued for this purpose shall bear interest at a rate not to exceed eight per cent, be redeemable at the pleasure of the board of directors in not to exceed ten years, and payable in not to exceed twenty years, and the date after which they are made redeemable must be plainly written or printed on the face of the bonds. Said bonds can not be sold at less than ninety-eight per cent of their par value. (Laws of 1887, P- 377-) CHAPTER XX. PACIFIC STATES. CALIFORNIA. References are to the Code of 1885, and supplements thereto, except as otherwise indicated. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Present Constitution adopted in i8jg. 1. State and Municipal Credit: The legislature has no power to give, or to loan, or to authorize the giving or lending the credit of the state, or of any county, city, town- ship, or other political corporation or subdivision of the state, in aid of, or to any person, association or corporation, munici- pal or otherwise, nor to authorize the state, or any political subdivision thereof, to subscribe for stock, or to become a stockholder in any corporation whatever. (Art. 4, sec. 31.) 2. Municipal Indebtedness : No county, city, town, board of education, or school district, shall incur any indebt- edness or liability in any manner, for any purpose, exceeding in any year the income and revenue provided for it for such year, without the assent of two-thirds of the qualified voters thereof, voting at an election to be held for that purpose, and before, or at the time of incurring such indebtedness, provision shall be made for the collection of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the prin- cipal thereof within twenty years. Any indebtedness or liabil- ity incurred contrary to this provision shall be void. (Art. 1 1, sec. 18.) 3. Special Legislation : Corporations for municipal (239) 240 CALIFORNIA COUNTY BONDS. purposes shall not be created by special laws, and the legisla- ture, by general laws, is required to provide for the incorpora- tion, organization, and classification, in proportion to population of cities and towns. (Art. n,sec. 36. ) COUNTIES.' 4. Board of Supervisors : The powers of a county are exercised by a board of five supervisors, of which board the county clerk is ex officio clerk. Three members of the board constitute a quorum, and no act of the board shall be valid or binding unles three of the members concur therein. (County Govt. Act of 1883; sees. 2, 13 and in.) 5. Limitation on County Indebtedness : No county shall in any manner give or loan its credit to, or in aid of any person or corporation. No county shall incur any indebted- ness or liability for any purpose exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the qualified electors thereof voting at an election to be held for that purpose, nor unless upon, or at the time, of incurring such indebtedness, provision shall be made for the collection of an annual tax sufficient to pay the interest as it falls due, and also to constitute a sinking fund for the payment of the principal thereof, within twenty years. Indebtedness or liability incurred contrary to this provision shall be void. (Co. Govt. Act of 1885 ; sec. 5.) 6. County Bonds ; The board may contract a bonded indebtedness, by making an order specifying the particular purpose for which the indebtedness is to be created, and the amount of bonds which they propose to issue. They shall provide for the submission of the question to the qualified electors of the county at the next general election, or at a special election to be called by the board. Notice of such election shall be given by publication in some newspaper published therein for four weeks previously. If there is no such newspaper, the notice shall be posted for the same time in each election precinct, and at the courthouse door. The issue 1 Also see 25. CALIFORNIA CITY BOXDS. 2 4 I of the bonds requires a majority of two-thirds of the electors voting thereon. The bonds are to be issued substantially as provided under a previous act for funding county indebted- ness, 1 in sums of not less than one hundred nor more than one thousand dollars each, having not more than twenty years to run, redeemable at the pleasure of the county, bearing interest not exceeding seven per cent, payable semi-annually, and signed by the chairman of the board, the coupons being signed by the auditor. (Id., sec. 37.) CITIES. 7. Classification : Any municipal corporation having a population of more than one hundred thousand constitutes a city of the first class; those having more than thirty thousand and not exceeding one hundred thousand, constitute cities of the second class; those having more than fifteen thousand and not exceeding thirty thousand, are cities of the third class; those having more than ten thousand and not exceeding fifteen thousand, are cities of the fourth class; those having more than three thousand and not exceeding ten thousand, are cities of the fifth class; and those which have not exceeding three thousand population are cities of the sixth class. 8. City Bonds: In cities of the second and third classes, when it is desired to incur an indebtedness in excess of the amount in the municipal treasury, or of that which may be otherwise authorized, the council is required to submit the question at a special election called for the purpose by three weeks' published notice. The notice must state the purpose and amount of the proposed indebtedness, and no other ques- tion must be submitted with the proposition. If two-thirds of the qualified electors voting thereon are in favor of the propo- sition, the council may create such indebtedness. Provision must be made by ordinance for the repayment thereof within twenty years. In cities of the fifth and sixth classes, munici- pal indebtedness may be created for corporate purposes when 1 The funding act referred to in this section and not given herein, provides for the refunding of county indebtedness outstanding January ist, 1880. The act includes a form to be substantially followed in the issue of the bonds. (Sec. 25, Co. Govt. Act.) 242 CALIFORNIA CITY BONDS. authorized in the same manner at a special election called after two weeks' published notice. (Mun. Corp. Act of 1883; sees. 329, 528, 768, and 866.) g. Funding Bonds : The board of trustees or municipal council of any city, except a city of the first class, having out- standing indebtedness January ist, 1880, evidenced by bonds or warrants, may, by a vote of two-thirds of all the members, fund the same with city bonds issued in sums of not less than one hundred dollars, nor more than one thousand dollars, run- ning not more than twenty years, and bearing interest at not to exceed seven per cent, payable semi-annually. The new bonds may be sold at public sale, after three weeks' published notice, at not less than par, or exchanged for such outstanding indebtedness. The form is given in the act, providing for their payment to a payee or order, and making them payable at the pleasure of the said board any time before maturity. A rec- ord of the purchasers must be kept, and all transfers of the bonds noted therein. (Sees. 44 and 45; Act of 1883.) 10. Sewer Bonds; If any city council deem it neces- sary to incur an indebtedness for the construction of sewers in excess of the money applicable therefor, they shall give notice of a special election to determine whether such indebtedness shall be incurred. The notice shall be published at least three weeks, and shall specify the amount of the proposed indebted- ness, with the route and general character of the proposed sewer, and the amount of money necessary to be raised annu- ally by taxation for the necessary interest and sinking fund. If not less than two-thirds of those voting are in favor of the question, the council may provide for such indebtedness by ordinance, which must include a provision for its payment by taxation, within twenty years. n. How Issued Sale: Any bonds issued under these provisions shall be in sums of not less than one hundred nor more than one thousand dollars, be signed by the mayor and treasurer of the city, and have the city seal attached. The coupons shall be signed by the mayor and treasurer. The bonds shall bear interest at a rate to be fixed by the city CALIFORNIA SCHOOL BONDS. 243 council, but not exceeding five per cent. They shall be sold under an order of the council, at public sale, on sealed bids, after fifteen days' published notice, or the council may sell them, at not less than par, without such notice. (Act of March i8th, 1885; sees. 27 to 31.) 12. Water- works, in Cities of the First Class: Any city of this class may submit a proposition to supply the city with public water-works. If two-thirds of those voting vote there- for, the council may issue bonds payable on the first day of July, 1905, unless previously redeemed, to an amount not exceeding one hundred thousand dollars. The bonds shall bear interest at not to exceed six per cent, payable semi- annually, on the first days of January and July. They shall be payable at the office of the treasurer, signed by the presid- ing officer of the council, or board of trustees, and counter- signed by the city clerk. The coupons shall be signed by the city treasurer. (Laws of 1885, p. 42.) SCHOOL BONDS. 13. The board of trustees (numbering three, except in certain city boards,) of any school district may submit to the electors of the district the question of issuing bonds for the purpose of raising money to provide and furnish schoolhouses, or liquidate any indebtedness incurred for such purposes. A notice stating the time, place and hours of the proposed elec- tion, the amount, denomination, rate of interest, and time to run, not to exceed ten years, of the proposed bonds, must be signed by the board, and posted in three of the most public places in the district for not less than twenty days previous to the election. If there is a newspaper in the district, the notice must be published therein not less than once a week for three consecutive weeks previously. 14. How Issued Amount Tax: The issue of the bonds requires a majority of two : thirds of those voting thereon. The trustees are required to certify the result to the board of super- visors, whose duty it is to issue the bonds, and prescribe the form thereof. The interest thereon shall not exceed eight per cent per annum, payable annually. The bonds shall be sold 244 CALIFORNIA OREGON. as prescribed by the board of supervisors at not less than par. The tax for the payment of the interest and principal thereof must be levied, and if the proper county officers fail so to do, the necessary taxes may be collected through the state officers. (1880-1888.) GENERAL. 15. Funding Bonds: When any county, or any sub- division thereof, has an existing bonded debt which it is pos- sible to fund at a lower rate of interest, the supervisors may refund such indebtedness, or any part thereof, with new bonds of the same denomination and form. The board shall notify the holders of the outstanding bonds by personal service, or by publication for one month in the official county news- paper, that, unless they shall within thirty days present the bonds to the board, and consent to a reduction of the interest thereon to as low a rate as is offered by anj>- other person, the board will proceed to cancel said bonds by payment. (Sec. 4048, Act of March 18, 1885.) OREGON. References are to Hill's Annotated Statutes of 1887. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution in effect on admission of State in 1859. 16. State Indebtedness: The legislative assembly shall not loan the credit of the state, nor in any manner create any debts or liabilities exceeding, in the aggregate, fifty thou- sand dollars (except in case of war, etc.), and all excess shall be void. (Act. ii, sec. 7.) 17. State Credit : The state shall not subscribe to or be interested in the stock of any company, association or cor- poration. The state shall never Assume the debts of any county, town or other corporation, unless such debts have been created to repel invasion, suppress insurrection or defend the state in war. (Id., sec. 6 to 8.) 18. Municipal Credit : No county, city, town, or other OREGON COUNTY BONDS NEVADA. 245 municipal corporation, by vote of its citizens or otherwise, shall become a stockholder in any joint stock company, corporation, or association, or raise money for, or loan its credit to, or in aid of any such company, corporation or association. (Id., sec. 9.) ig. County Indebtedness : No county shall create any debt or liability which shall singly or in the aggregate exceed the sum of five thousand dollars, except to suppress insurrec- tion or repel invasion. (Id., sec. 10.) 20. Incorporating Towns and Cities : Acts of the legislative assembly, incorporating towns and cities, shall restrict their powers of taxation, borrowing money, contracting debts, and loaning their credit. (Id., sec. 5.) COUNTIES. 21. County Management: The county court has the authority and powers pertaining to county commissioners in the transaction of county business. Under the provisions of the constitution authorizing the legislature to provide for the elec- tion of two county commissioners to sit with the county judge while transacting county business, an act was passed in 1887 making provisions for such election. (Const. 7, sec. 12; Stats, sees. 896, 2456.) 22. Issue of Bonds : This state has no general pro- visions relating to the issue of municipal bonds. They are issued, when necessary, under the charter provision of the vari- ous cities, or under special acts. NEVADA. References are to the General Statutes of 1885. CONSTITUTIONAL LIMITATIONS AND PROVISIONS. Constitution adopted in 1864. 23. State Credit : The state shall not donate or loan money, or its credit, or subscribe to, or be interested in the stock of any company, association or corporation, except cor- porations formed for educational or charitable purposes. (Art. 246 NEVADA MUNICIPAL INDEBTEDNESS. 8, sec. 9.) The state shall never assume the debts of any county, town or other corporation whatever, unless such debts have been contracted to repel invasion, suppress insurrection or provide for the public defense. (Art. 9, sec. 4.) 24. Municipal Credit : No county, city, town or other municipal corporation shall be a stockholder in any joint stock company or association whatever, or loan its credit in aid of any such company, corporation or association, except railroad corporations, companies or associations. (Art. 8, sec. 10.) 25. Special Legislation and Municipal Indebtedness: The legislature shall pass no special act in any manner rela- ting to corporate powers, except for municipal corporations. (Art. 8, sec. i.) The legislature shall provide for the organ- ization of cities and towns by general laws, and restrict their powers of taxation, assessment, borrowing money, contracting debts, and loaning their credit, except for providing supplies for water. (Art. 8, sec.- 8.) COUNTIES. 26. County Board : The board of county commission- ers consists of three members. In counties of four thousand or more voters, such board may consist of five members. Reg- ular meetings are held on the first Mondays of January, April, July and October. Special meetings may be called by any member by entering an order of record, and giving notice thereof to the other members. (1942-1973.) 27. Issue of Municipal Bonds : This state has no general laws of any importance relating to the issue of munic- ipal bonds. Such bonds are usually issued under special acts, applicable only to a particular municipality. CHAPTER XXI. DAKOTA. For the Federal limitations and provisions relating to all the territories, see Chapter XX I I. following. References are to the sections of the Compiled Laws of iS8j. COUNTIES. 1 1. County Commissioners : The board of county com- missioners of each organized county consists of three elected commissioners, which number may be increased to five on the petition of two-thirds of the legal voters of any such county, in the manner provided by law. Regular meetings of the board of county commissioners are held on the first Mondays in Janu- ary, April, July and October of each year. Special sessions may be called by the county clerk (or county auditor, in coun- ties having such an officer), who is exofficio clerk of the board, upon giving five days' notice of the time and object by posting up notices in three public places in the county, or by publica- tion in one newspaper therein. (574 to 579.) 2. Extraordinary Outlays Must be Submitted : The county board are required to submit to the people of the county at some regular or special election any question involving an extraordinary outlay of money by the county, or any expendi- ture greater in amount than can be provided for by an annual tax, or whether the county will construct any courthouse, jail or other public building, or aid or construct any road or bridge. They may aid any enterprise devised for the benefit of the county whenever a majority of the people thereof shall author- ize the same, as hereinafter provided. (597.) 3. Mode of Submitting Propositions : "The whole ques- 1 Also see \\ 46-48. (247) 248 DAKOTA COUNTY BONDS. tion, including the sura desired to be raised, or the amount of tax desired to be levied, or the rate per annum, and the whole regulation, including the time of its taking effect, " where prac- ticable, the time when such question shall be voted upon, and the form thereof, shall be published at least four weeks in some newspaper published in the county; or if there be no such paper, the question shall be posted in at least one of the most public places in each election precinct, and a copy of the ques- tion submitted shall be posted at each voting place during the day of election. (599.) 4. Proposition to Tax Must be Included Record of Result Required : When the question submitted involves the borrow- ing or expenditure of money, the proposition must include a tax for the payment thereof, and no vote adopting the question proposed shall be valid unless it adopts the amount of tax to be levied to meet the liability incurred. Such tax shall in no case exceed three mills on the dollar of the county valuation in one year. When the object is to borrow money for the erection of public buildings, the rate shall be such as to pay the debt in ten years. When the object is to aid or construct any road or bridge, the annual rate shall not exceed one mill on the dollar. On being satisfied that the above requirements have been substantially complied with, and a majority of the votes cast are in favor of the submitted proposition, the commissioners shall cause the same to be entered at large upon their records. Propositions thus acted upon can not be rescinded by the board of county commissioners. (602.) 5. Funding Bonds : The county commissioners of any organized county are authorized, when they shall deem it to be to the best interest of the county, to issue bonds for the sole purpose of funding outstanding indebtednesss existing July i, 1887, represented by the legally issued county warrants or orders of such county issued since July i, 1880, but no bonds shall be issued to provide money to pay or fund any indebted- ness created since July 29, 1886, which in the aggregate, including the then existing indebtedness, exceeded four per cent of the assessed valuation of such county. No bonds in DAKOTA COUNTY BOXDS. 249 excess of twenty thousand dollars shall be issued by any one county under this act, unless authorized by a majority vote of the qualified voters at a special election called for the purpose by the commissioners under a notice, stating the amount of bonds to be issued, when payable and the rate of interest proposed. 6. Form and Execution : Said bonds shall be in denom- inations of not less than one hundred dollars, nor more than one thousand dollars, bearing the date of their issue, payable to the purchaser or bearer anywhere in the United States as may be agreed, in not less than five nor more than fifteen years, with interest at a rate not to exceed seven per cent, payable semi-annually, to be evidenced by coupons attached. The bonds and coupons shall be signed by the chairman of the board of county commissioners, and attested by the county clerk or auditor, as the case may be. Each bond shall bear the county seal and shall state on its face that it is issued in accordance and in strict compliance w y ith the act of the legis- lative assembly of the territory of Dakota, entitled "An Act authorizing and empowering organized counties of Dakota territory to issue and dispose of bonds to provide funds to pay outstanding indebtedness, and to provide for the payment of the principal and interest thereof," approved. . . ., 1887,' and a copy of the said act shall be printed on the back of each bond. 7. Sale Registration Tax: The county treasurer is required to register said bonds before delivery thereof to the purchaser, giving the number, date of maturity, amount, rate of interest, and to whom and where payable. They shall be sold or exchanged at not less than par. A sufficient tax must be provided to pay the interest and principal as they become due. (696, 703.) 8. Liquidating Bonds: In case of the division of a county, as by law provided, the county commissioners of any new county organized, for the purpose of providing for the pay- ment of such new county's proportion of the old county's 1 This act was not approved, but became a law March 7, 1887. 250 DAKOTA COUNTY AND CITY BONDS. indebtedness, may issue bonds of the county. Said bonds shall be dated on the first days of January and July, from which the outstanding indebtedness of the original county is calcu- lated, for a period corresponding to, payable at the same time and place, and bear the same interest as the original obligations on account of which they are issued. Said bonds may be issued in denomination of not to exceed one thousand dollars as may be required by the original county, and delivered to the county clerk thereof, who shall make a record of such new bonds upon his bond register. Said original county may exchange these new bonds for its old outstanding bonds of the same class and amount. The commissioners of the new county shall levy a tax sufficient to pay the bonds so issued and the interest thereon as it becomes due. (545 to 560; passed in 1887.) CITIES AND TOWNS. ' 9. Loans By Cities: Among the powers possessed by councils of incorporated cities is that of borrowing money on the credit of the corporation for corporate purposes and issuing bonds therefor in such amounts, of such form and on such con- ditions as may be prescribed by such council; to an amount in the aggregate, including existing indebtedness, not to exceed four per cent of the valuation of the taxable property, as shown by the last general assessment. 10. Issue Must be Authorized: No bonds shall be issued by the council, either for general or special purposes, unless the same has been authorized by a majority of the legal voters voting at an election called for that purpose, notice of which election, stating the purposes for which said bonds are to be issued and the amount thereof, shall be given by publication in a newspaper, published in such city, twenty days previous to such election. 1 1 . Tax: Before or at the time of incurring any indebt- edness, the council shall provide for the collection of a direct annual tax, sufficient to pay the interest as it becomes due, 1 Also see 46-48. DAKOTA CITY BONDS. 25! and to pa\- the principal of the bonds within twenty years. (835, div. 5.) 12. Funding Bonds : The city council of incorporated cities also has the power to issue bonds in place of, or to sup- ply money to meet maturing bonds, or for the consolidation or funding of the same. (835, div. 6.) 13. Internal Improvement Bonds : For the purpose of meeting the expenses of any local improvement, as the opening, paving, curbing, or otherwise improving any street, alley, highway, or other public grounds, for which special assessments have been, or may be levied, the city council may issue bonds of the city to an amount not exceeding one-half of one per cent of the taxable property thereof. Such issue of bonds shall not be increased until the valuation of the city shall have increased at least one hundred thousand dollars over and above the valuation upon which the next preceding issue shall have been based. 14. Form Sale Tax: Said bonds shall be known as "Internal Improvement Bonds" and shall be issued in amounts of not less than five hundred dollars each, bear interest at a rate not exceeding seven per cent, payable annually or semi- annually, with interest coupons attached, and payable in New York city, or the city issuing the same, in not less than twenty years. They shall be signed by the mayor and countersigned by the auditor, who shall fix the official seal of the city thereto, and keep an accurate record of all bonds issued, in a book pro- vided for that purpose. The bonds shall be sold at not less than ninety-five per cent of their face value. All moneys arising from assessments levied in the matter of any such improve- ments shall constitute a fund for the payment of said bonds. (996 to 999 ; passed in 1887.) 15. Sewerage Bonds : The city council of any incor- porated city, for the purpose of raising funds for the establish- ment, construction and maintenance of a system of sewerage, is authorized to issue bonds of the city to an amount not exceeding the sum of one hundred thousand dollars, payable in 252 DAKOTA TOWN BONDS. not to exceed twenty years, in the city of New York, and bear- ing interest at the rate of seven per cent per annum, payable semi-annually. Said bonds shall be signed and executed as provided in the case of internal improvement bonds. At no time shall there be more than one hundred thousand dollars of such bonds outstanding and unpaid. They shall not be sold at less than their par value. The city is required to provide by special assessment, and also to levy a sufficient special tax for the payment of the interest on such bonds as it accrues and to create a general sinking fund to pay the bonds as they become due. (1000, 1007; passed in 1887.) 16. Loans by Incorporated Towns : No incorporated town shall have power to borrow money or incur any debt or liability, unless citizen-owners of five-eighths of the taxable property thereof, as shown by the assessment roll of the pre- ceding year, petition the board of trustees to contract such debt or loan, the genuineness of the signatures to such petition being verified by affidavit. For any debt thus created the trustees shall provide, by lev}*, a sufficient tax to pay the annual interest thereon, with an addition of not less than five cents on the one hundred dollars to create a sinking fund for the liquidation of the principal. (1048.) 17. Limit of Township Debt: No town has power to contract debts or to make expenditures for any one year, without having been authorized by a majority of the voters of such township, and no town shall assess for township purposes more than ten mills on the dollar of taxable property for any one year. (829.) 18. Town Bonds : When so directed by two-thirds of the legal voters present and voting at any legally called town meeting held for the purpose, the board of supervisors of any organized township are authorized to issue the bonds of their respective towns, bearing not to exceed eight per cent interest, payable annually. The amounts thereof, how payable, and the time to run, not exceeding six years, shall be determined by the same vote. Such town meeting must have been called for that purpose by a notice particularly specifying the object DAKOTA TOWN BONDS. 253 thereof, and posted in at least three public places in said town, for not less than ten days previously. (830.) 19. Sale Tax: Said bonds shall not be negotiated for less than their par value. It is made the duty of the board of supervisors to levy and certify to the county clerk or auditor each year therefor a sufficient tax upon the taxable property of the town to pay the interest and principal of such bonds as the}' become due. (831-832.) 20. Town Bonds for Roads and Bridges : Upon pres- entation to the board of supervisors of any organized town of a petition, signed by two-thirds of the legal voters thereof, as shown by the last registered poll-list, praying that a certain amount of money, not to exceed five per cent of the assessed valuation of such town, and not in any case exceeding five thousand dollars, may be raised for the construction of any public road or bridge, embankment, levee or similar work within such township, said supervisors shall issue and sell bonds of the town for the amount prayed. 21. Form Sale Tax : Said bonds shall run not longer than twenty years, bear interest at a rate not exceeding ten per cent, payable annually, and shall be signed by the chairman of the board of supervisors and countersigned by the town clerk. The town clerk shall file and record the petition upon which the bonds were issued, and shall keep a record showing the action of the board of supervisors, and also a record of said bonds showing the amount, date of issue, to whom issued, rate of interest, and date of maturity. The bonds shall not be sold or disposed of for less than their par value. Said town shall provide for the payment of said bonds and the interest thereon by sufficient taxation to meet the same. (833 to 836. ) 22. Township Drainage Bonds : Whenever ten or more actual residents of any organized town present a written petition to the board of supervisors praying for the ditching, draining, grading or surveying of such township or any major portion thereof, the said board shall cause to be made an esti- mate of the proposed work or improvement, and if the cost of 254 DAKOTA TOWNSHIP BONDS. the same shall exceed one thousand dollars, the board may submit the question of issuing bonds of the town to the voters thereof at a regular or special election, giving at least twenty days' notice thereof by posting in at least five public places therein, specifying the specific purposes for which the same is called and the amount of bonds to be issued. If a majority of the legal voters voting at such election are in favor of the ques- tion submitted, the bonds may be issued as proposed. 23. Form Tax Record -Limit: Said bonds shall be known as "Town Improvement Bonds," and shall be signed by the chairman of the board of supervisors and town clerk, and countersigned by the township treasurer. They shall run for a time not exceeding ten years and draw interest at a rate not exceeding eight per cent, payable annually with coupons attached, and shall be disposed of at not less than par. The board of supervisors are required to provide for the levy of sufficient taxes to meet the interest thereon as it becomes due, and for a sinking fund to pay the principal at maturity. Both the treasurer and clerk shall keep a record showing the date of issue, to whom issued, amount, number of each bond, date of maturity, rate of interest, and amount realized from the sale thereof. The amount of such bonds, including outstanding indebtedness, shall not exceed four per cent of the assessed valuation of said township. (2080 to 2089.) SCHOOL BONDS. 24. Township School Bonds : Any organized school township is authorized to issue bonds, the proceeds thereof to be used exclusively in building and furnishing schoolhouses for such township. No township shall issue such school bonds to an amount greater than fifteen hundred dollars for each separate schoolhouse required, and twenty-five hundred dollars for each two-room graded school, which the school board is authorized to erect. For regular graded schoolhouses, each township may issue bonds to the amount of five thousand dollars, and where two or more school townships join in erect- ing a graded school building and establishing a graded school, DAKOTA TOWNSHIP SCHOOL BONDS. 255 each township joining may issue bonds to the amount of three thousand dollars for such purpose. 1 25. Question Submitted : All such propositions must be submitted specifically to a vote of the township, but the ques- tion of issuing bonds for the erection of two or more separate ordinary schoolhouses, and furnishing the same, may be sub- mitted at the same time and voted upon as one question. The question of issuing bonds for graded schools ma}- be submitted at the same or at different elections, but must be separate and so stated as to permit a separate vote upon every such proposi- tion. Notice of any such election, signed by the clerk of the township, shall be posted in not less than six of the most public places therein, not less than twenty days previously. The notices shall state the date, object and place of the election, and the precise amount of bonds proposed to be issued, the number, and as near as may be, the location of the schoolhouses proposed to be erected from the proceeds of the bonds. The election shall be held as provided for other township elections, and the ballots shall have written or printed thereon the words, ' ' For schoolhouse bonds, " or " Against schoolhouse bonds. ' ' The majority of the votes cast shall be required to authorize the issue of such bonds. A return of the result of such elec- tion shall be made by the judges and clerks, and transmitted to the county clerk. 26. Form and Execution of Bonds : The bonds so issued shall be in denominations of one hundred dollars or five hundred dollars, redeemable after eight years, and payable in fifteen years from the date of their issue, and bear interest at a rate not exceeding eight per cent per annum, payable semi-annually, with proper coupons attached. Each bond and coupon shall be signed by the clerk of the school township and counter- signed by the director, and shall distinctly state at the close of the bond proper that it is issued for school purposes only, and 1 The above limitations are under the Act of 1883, but the amend- ment of 1885 to one section of this act provides that said bonds shall not be issued to an amount exceeding seven hundred dollars for each one- room schoolhouse thereafter built. 256 DAKOTA TOWNSHIP SCHOOL BONDS. upon the margin shall have printed, " Issued in accordance with the provisions of an act of the legislative assembly of Dakota territory, approved March 9, 1883." Said bonds shall be made payable at some financial agency in either the city of New York or the city of Boston, and such agency may be inserted in the bonds after their negotiation and sale. 1 27. Registration of Bonds: Before the sale of said bonds, they shall be presented to the county clerk, who shall carefully examine the result of the election, filed in his office, together with the other submitted proofs relating to the issue of said bonds, and if satisfied that the bonds have been legally voted, he shall, in a book kept for that purpose, preserve a registry of each bond, showing the name of the township issuing, the number and denomination of the bond, the date of issue, and other facts; and upon each bond shall indorse the following certificate : "I hereby certify that the within bond for hundred dollars, of school township, county, Dakota territory, is issued in accordance with law, and by authority of a majority of the legal voters of said township, voting at an election duly held , 188 . . , for that purpose, and is duly registered in this office, ' ' which certificate shall be officially signed by such county clerk, and attested by the seal of the county. The validity or obligation of any such school bond so registered and certified, shall not be questioned in any court or tribunal, but every such bond shall be and remain valid and binding. The township treasurer is also required to enter and keep in his books the number and amount of all bonds sold, and the time and place for all payments. 28. Bond Tax: The township school board is required to levy each year upon the taxable property of the township, a sufficient tax to pay the semi-annual interest as it becomes due, and after seven years, a sufficient tax to provide a sinking fund for the payment of the principal of the bonds when due. In case of the non-payment of any bond or coupon when due, 1 The place of payment was added by the amendment of 1885, which also changed the maximum rate of interest from seven to eight per cent. DAKOTA TOWNSHIP SCHOOL BONDS. 257 and for a period of six months thereafter, the holder may pre- sent the same to the county clerk, together with an affidavit of such non-payment. The county clerk shall make a record of the fact, and the amount due, and unless a proper tax is already levied by the board, he shall levy against all the taxable prop- erty of the township liable, a tax sufficient to produce the amount required to meet such payment, to be collected as other taxes, but such tax shall not exceed two per cent in any one year. The proceeds of such tax, when collected, shall be applied, by the county treasurer to the payment of such bonds or coupons in default, as above. 29. Redemption of Bonds: In school townships wishing to redeem any bonds subject to redemption, the order of redemption shall be determined by the treasurer by lot. Notice of such redemption shall be given by the financial agency at which the bonds are made payable, by one publication in a paper selected by it, and if payable by the treasurer in the township, notice may be given by one publication in a news- paper of general circulation published in the county, and in either case, the interest shall cease at the end of two weeks from the date of said publication. 30. Redemption and Funding of Old Bonds: Any school district may issue bonds, as provided above, in exchange at par for and in redemption of school district bonds and war- rants, issued prior to its organization, for which it is responsi- ble. This exchange may be made by the school board without the submission of the question to a vote, if they are previously advised, in writing, by the county attorney, that such school district bonds are valid and binding upon the township, which opinion must be filed with the county clerk. Such redemption bonds must be registered and certified by the county clerk, who shall state that they are issued in accordance with law in redemption of lawful school district bonds or warrants. 31. Lien of Township School Bonds: School bonds issued under any of the above provisions shall be a lien on the taxa- ble property of the school township issuing them; and if other provisions of law fail or seriously delay the payment of interest 258 DAKOTA DISTRICT SCHOOL BONDS. or principal by the neglect or refusal of officers to perform their duty, the district court of the county may, upon application of the holder thereof, and notice to such township, cause such taxes to be levied as will meet the obligations due, and when collected to apply them to the payment of such coupons and bonds. (1902 and 1916.) 32. District School Bonds : In those counties having the school district system, school bonds may be issued by the school board for the purpose of building or furnishing school- houses or purchasing grounds on which to locate the same, or to pay any indebtedness incurred therefor, whenever author- ized by a majority vote of all the qualified electors present and voting at a regular school district meeting, or at a special meeting held for that purpose. 33. Qiiestion Submitted: Notice of the meeting at which such vote is to be taken, shall be posted in at least three public and conspicuous places in said district at least twenty days previously. The notice must state the time and place of the meeting, amount of bonds required, and the time in which they shall be made payable. The vote shall be taken by written or printed ballots, "For issuing bonds, " or, "Against issuing bonds, ' ' and a majority vote shall be required to author- ize the issue. In case a majority shall vote against such issue, the question shall not be again submitted for one year there- after. Said meeting shall not be called nor such questions submitted in the first place, until the district school board shall have been so petitioned, in writing, by a majority of the resident electors of such school district. 34. Limit of Amount: No greater amount than fifteen hundred dollars can be issued by any district, except in towns and cities of more than one thousand inhabitants, and in such districts the amount shall not exceed five per cent of the assessed valuation thereof. 35. Form of Bonds: Such bonds shall be issued in denominations of fifty dollars, or some multiple of fifty, not exceeding five hundred dollars, shall bear interest at a rate not DAKOTA DISTRICT AND CITY SCHOOL BONDS. 259 exceeding eight per cent per annum, payable annually, and may be payable in not less than ten nor more than twenty years. Thej- shall state upon their face the date of issue, amount of the bond, to whom, and for what purpose issued, time and place of payment, and rate of interest. On the margin shall be printed, " Authorized by act of legislative assembly, A. D. 1 88 1," and upon the back thereof a certificate signed by the district clerk, substantially in the following form: "I certify that the within bond is issued in accordance \vith a vote of school district No , at a regular (or special, as the case may be) meeting on the day of , A. D. 188. ., to issue bonds to the amount of dollars. ' ' They shall be signed by the director and clerk of the school district, or by the president and secretary of the school board in the case of an independent district, and shall be numbered and registered in a book to be kept by the secretary, giving the number, date and name of the person to whom issued, with the date of maturity. 36. Sale Tax: Said bonds may be negotiated and sold by the school board for not less than ninety per cent of their par value. The proceeds shall be paid to the school district treasurer, to be used only for the purpose for which they were issued. In addition to other taxes, there shall be levied upon the taxable property of the district issuing the bonds, a sum not exceeding five mills on the dollar to pay the interest thereon as it becomes due, and after five years, a further tax of two mills on the dollar, for a sinking fund to be used in the payment of such bonds when due. (1892 to 1901.) 37. City School Bonds: Any organized board of edu- cation, for the purpose of purchasing school sites or buildings, or to fund any bonded indebtedness, may issue bonds when authorized by a majority vote of the qualified electors voting thereon at an election held for the purpose. It is made the duty of the mayor of any city in which such board of education may be, to call such election upon the request of the board of education. 38. Limit Form: The amount of such bonds issued 260 DAKOTA REFUNDING SCHOOL BONDS. under this act shall not exceed three per cent of the last assessed valuation. The bonds shall be signed by the presi- dent, attested by the clerk, and countersigned by the treasurer of the board of education, and shall specify the rate of interest, the time when principal and interest are payable, and shall be issued in denominations of not less than fifty dollars. 39. Registration Sale Tax: The clerk is required to keep a registry of all such bonds, giving the number, date, amount, and to whom payable. They may be sold at not less than ninety-eight cents on the dollar. A sufficient tax must be levied to meet the interest as it accrues, and create a sinking fund for the payment of the principal. (1830 to 1837; Act of 1887.) 40. Refunding School Bonds : Any bond heretofore issued by any city, or by or under the authority of any, board of education of any city, for school purposes, may be refunded in the discretion of said board whenever there is not sufficient money available to pay such bonds. They shall be issued under a resolution of the board of education, specifying the number and amount of each bond. 41. Form of Bonds: Said bonds shall be issued in denominations of not less than one hundred dollars nor more than one thousand dollars; shall be numbered from one upwards; shall bear the date of their issue, and shall be made payable to the purchaser or bearer ten years from date, with interest at not to exceed seven per cent per annum, payable annually. Both principal and interest shall be payable at such place as may be designated by the board. The bonds and coupons shall be signed by the mayor and attested by the city clerk under the seal of the city. There shall be printed on the back of each bond a copy of the act under which they are issued, and a duly certified copy of the resolution of the board of education authorizing and directing the execution of such bonds by the mayor and city clerk. 42. Registration Tax Sale : The city clerk shall keep a registry of all bonds so executed, showing the number, date, amount, interest, name of payee, when and where payable. DAKOTA SCHOOL FUNDING BONDS. 26 1 The bonds shall not be sold at less than par. The board of education is required to levy each year upon the taxable prop- erty of the city or district issuing such bonds, a sufficient tax to pay the interest as it becomes due, and after five years a sufficient sinking fund tax to meet the payment of the bonds at maturity. (1151 to 1154; Act of 1887.) 43. School Funding Bonds, for Debts Prior to Jutyjo, 1886 : All bonds, warrants or other evidences of indebtedness issued by any incorporated board of education or school district prior to July 30, 1886, may be refunded in the discretion of the proper officers, if there are not funds available to pay the same. Such issue must be authorized by a two-thirds vote of all the qualified electors voting at an election called for that pur- pose, after twenty days' notice, given by posting written notices in three of the most conspicuous places in such city or district and by publication in a newspaper in the county. The notice must give the time and place at which the election is to be held, the amount of bonds to be issued, the rate of interest they are to bear, and the time which they are to run. If one- third of the votes cast are against such question, no further vote can be taken thereon for one year thereafter. When so author- ized, the board of education shall provide by resolution for the issue of the bonds. No school district in which less than twenty-five legal votes were cast at such election shall issue such bonds. 44. Form of Bond : Said bonds shall be issued in denominations of not less than one hundred dollars nor more than one thousand dollars, running not less than ten nor more than twenty years, and bear interest at a rate not exceeding seven per cent, payable annually or semi-annually, at such places as may be agreed. A copy of the act under which they are issued shall be printed on the back of each bond, and they shall recite that they are issued under and by authority of such act, naming it by its title and giving the date of its approval. (March n, 1887.) They shall be executed by the president under the seal of the board, or in school districts by the presi- dent or director, and attested by the clerk. 262 DAKOTA MUNICIPAL BONDS. 45. Registration Sale Tax : The clerk shall keep a record of all bonds so issued, giving the number, date, amount, rate of interest, whether payable annually or semi-annually, and the time and place of payment. Said bonds shall be sold or exchanged at not less than par. There shall be a sufficient tax levied to pay the interest, and alter seven years to provide a sinking fund for the payment of the principal. (1879-1888; Act of 1887.) GENERAL. 46. Municipal Bonds Generally: Any organized city or municipal corporation may incur a bonded indebtedness for the purpose of erecting public school buildings and other build- ings for city purposes, bridges or fire apparatus, putting in water-works, sinking public wells or cisterns, putting in sew T ers, and improving streets, to an amount with existing indebted- ness not exceeding four per cent of the assessed valuation of such city or municipal corporation, as shown by the last assessment therein. 47. How Authorized and Issued: Said bonds shall not be issued by the common council or board of trustees of any city or municipal corporation, unless authorized by a majority vote of the qualified electors at an election regularly called for that purpose in accordance with the charter of such city or municipal corporation relating thereto. The question may be submitted at any annual election. In those cities where no provisions exist in the charter as to calling such elections, the city council or board of trustees, at any regular meeting thereof, may provide for the calling of a special election to vote for any of the above purposes. They shall give notice of such election by at least two publications in a weekly newspaper published in such city, or if there is no such paper, by posting in five public places therein. The notice shall state the amount and denom- inations of the bonds to be voted for, rate of interest, purpose for which they are to be issued, form of the ballot to be used, and the time and place of holding such election. Said bonds shall be sold at not less than par. It is provided that this act DAKOTA CALLING BONDS FOR PAYMENT. 263 shall not be construed to limit or restrict any powers conferred by any special charter. (1149-1150; Act of 1887.) 48. Calling Bonds for Payment: Whenever any terri- torial, county, township, city, school or other public bonds shall become payable under any option or provision contained therein or relating thereto, it shall be allowable for the treas- urer of such municipal corporation to call said bonds by publication, giving a description of the same, including the date, number, amount, by whom issued, to whom and where payable, and announcing that after a specified date, not less than thirty nor more than sixty days after the date of the call, the interest on such bonds will cease. Such call shall be pub- lished for fifteen consecutive days in some daily newspaper, or for four consecutive weeks in some weekly newspaper of gen- eral circulation in the county in which said bonds are payable. But personal service of such a notice, upon the holder of the bonds so called, is declared to be equivalent to such publication. (1681 to 1683; Act of 1887.) CHAPTER XXII. TERRITORIES. FEDERAL LIMITATIONS AND PROVISIONS. References are to the sections of the Revised Statutes of the United States and Supplements. 1. Territorial and Municipal Credit: No territory of the United States or any political or municipal corporation or subdivision of any such territory shall hereafter make any subscription to the capital stock of any incorporated company, or company or association having corporate powers, or in any manner loan its credit to, or use it for the benefit of, or borrow any money for the use of any such corporation or company. 2. Indebtedness of Territories : The legislature of any territory is authorized to contract debts on behalf of such territory, only to meet a casual deficit in the revenue, to pay the interest on the territorial debt, to suppress insurrections or to provide for the public defense, except that in addition to any indebtedness created for such purposes, a loan may be authorized for the erection of penal, charitable or educational institutions for such territory, if the total indebtedness of the territory is not thereby made to exceed one per cent upon the assessed value of the taxable property thereof, as shown by the last general assessment. Nothing in this act shall be construed to prohibit the refunding of any existing indebted- ness of such territory, or of any political or municipal corpora- tion, county or subdivision therein. 3. Indebtedness of Municipalities in Territories : No political or municipal corporations, county or other subdi- visions in any of the territories, shall ever become indebted in any manner or for any purpose to an amount in the aggre- (264) FEDERAL LIMITATIONS NEW MEXICO. 265 gate, including existing indebtedness, exceeding four per cent of the value of the taxable property thereof, to be ascertained by the last previous general assessment, and all bonds and obligations in excess of such amount given by any such cor- poration shall be void. Nothing in this act shall be con- strued so as to affect the validity of any act of any territorial legislature heretofore enacted, or of any obligations existing or contracted thereunder, nor to preclude the issue of bonds already contracted for in pursuance of law; nor to prevent any territorial legislature from legalizing the acts of any county or other municipal corporation as to any bonds heretofore issued or contracted to be issued. 4. Special Legislation : The legislatures of the terri- tories are prohibited from passing local or special laws (among other things) incorporating cities, towns or villages, or chang- ing or amending the charter of any town, city or village; for the assessment and collection of taxes for territorial, county, township, or road purposes; granting to any corporation, association, or individual, any special or exclusive privileges, immunity or franchise whatever; or granting private charters or special privileges. (1889. All of the above provisions were included in an Act of Congress, approved July 30, 1886.) 5. Laws to be Submitted to Congress : All laws passed by the legislative assembly and governor of any terri- tory, except in the territories of Dakota, Idaho, Montana and Wyoming, shall be submitted to Congress, and if disapproved shall be null and of no effect. (1850.) NEW MEXICO. References are to sections of the Compiled Laws of 1884., COUNTIES. 6. County Board: The corporate powers of a county are exercised by a board of three county commissioners. Reg- ular meetings are held on the first Mondays of January, April, July, and October; and special meetings at such other times as the public interest requires. The clerk of the probate court 266 NEW MEXICO COUNTY BONDS. is ex officio clerk of the board of count}- commissioners. (332, 343, 350-) 7. County Funding Bonds : The county commission- ers are authorized to issue bonds of the county in exchange for the outstanding warrants thereof. Such bonds shall be issued in denominations of one hundred dollars and multiples thereof; shall bear interest at the rate of eight per cent per annum, and be payable in not less than five nor more than twenty years, at the option of the county commissioners. The interest shall be evidenced by coupons payable on the first day of July in each year, which shall be receivable for taxes due the county. It is the duty of the county commissioners to lev} 7 a sufficient tax to pay the interest and principal of such bonds as they become due. (163 to 167; Acts of 1882.) 8. Railroad Aid Bonds : Any county in this territory for the purpose of aiding in the construction of any railroad passing through any portion of such county, may borrow money and issue bonds or other evidences of indebtedness for such amounts, not exceeding for any such road, five per cent of the assessed valuation of the property of the county, as the electors of the county may determine. The amount of bonds or other evidences of indebtedness that may become due in any one year shall not exceed two per cent of such assessed valuation at the time of the issue. (See sec. 3 herein. ) 9. How Aiithorized : On presentation of a written re- quest, signed by fifteen tax-paying electors, being property owners, specifying the amount to be raised, and the manner in which the same is proposed to be raised, the rate of interest, and other particulars, it is made the duty of the county com- missioners to call a meeting or election of the electors to vote upon the question of such aid. Four notices of such election or meeting, printed in both Spanish and English, shall be pub- lished at least fifteen days previously in some conspicuous place in each precinct, and in some periodical within the county. The notice shall include a copy of the request and of the ques- tion submitted. 10. How Issued and Sold : The bonds shall be executed NEW MEXICO CITY AND TOWN BONDS. 267 by the county commissioners or other officers authorized to execute such bonds, under their proper seal of office, and shall be attested by the clerk of the probate court. Such bonds shall not be sold at less than par, nor shall they be delivered or allowed to pass from the possession of such commissioners unless upon the certificate of the governor that the railroad aided has been entirely completed in such county, or in such proportion as the amount of bonds delivered shall bear to the whole sum voted. (2709, 2712.) CITIES AND TOWNS. 11. Municipal Corporations Classified: Every munic- ipal corporation having a population of three thousand or upwards is a city, and every municipal corporation having a population of fifteen hundred and less than three thousand is deemed an incorporated town. Provision is made by statute for incorporating or disincorporating such cities and towns. The incorporated powers of a city are exercised by a mayor and council, and of an incorporated town by a board of trustees, consisting of the mayor, recorder and four other trustees. (1670 to 1673, 1686.) 12. City and Town Bonds : Any city or incorporated town may contract indebtedness, borrow money or issue bonds for the purpose of erecting public buildings; constructing sewers; purchasing or constructing water- works for fire or domestic purposes; for the construction or purchase of canals or some system for supplying water for irrigation in the city or town; for the construction or purchase of gas-works, or the purchase of gas; or in order to supply temporary deficits in the revenue for defraying the current expenses of such city or town. 13. Question Submitted Limit of Amount: Before any such debt shall be created, except where the same is for a water supply, the question must be submitted to and approved by a majority of the qualified electors who have paid taxes the preceding year, at a regular election of officers of such city or town. The total amount of indebtedness for all purposes at any time shall not exceed five per cent of the taxable property 268 NEW MEXICO CITY AND TOWN BONDS. of the city or town issuing such bonds, but this limitation does not include an indebtedness incurred for water-works or pro- viding water supply. (But see sec. 3 herein.) 14. How Issued Tax : No such loan shall be made except by an ordinance, irrepealable until the debt is fully paid, specifying the purpose for which the money is borrowed, and providing for the levy of a tax to meet the payment of the bonds, but the taxes so levied shall not in the aggregate (water debts excepted) exceed eight mills on the dollar. The indebtedness thus created shall run not less than ten nor more than thirty years. (1622, div. 6, Act of 1884.) 15. Water- works : Any city or incorporated town may erect or authorize the erection of water-works, but no such works shall be erected until a majority of the voters of the city or town voting on the question, at a general or special election, approve the same. (1622, div. 6 to 7.) 16. Funding Bonds: It is made the duty of any city or incorporated town having a floating indebtedness exceeding ten thousand dollars to provide for the funding of the same as follows : Upon the petition of fifty tax-paying electors, a notice shall be published for thirty days in a newspaper within such city or town, requesting the holders to submit a statement of the amount of the warrants which they will exchange for bonds at par. After such thirty days, upon petition of fifty such electors, the question of issuing bonds shall be submitted to the tax-paying electors at the next general election or at some special election. At least thirty days' notice of such election shall be given by publication in some newspaper. A majority vote is required to authorize the issue of the bonds. 17. How Issued : When so authorized the bonds may be issued in exchange for any warrants which were outstanding at the time of the said first publication. They may be issued in denominations of one hundred dollars or some multiple thereof, and bear interest at a rate not to exceed seven per cent, paya- ble semi-annually at the office of the city or town treasurer or in the city of New York, at the option of the holders. The bonds shall be payable at the pleasure of the municipality after NE\V MEXICO FUNDING BONDS ARIZONA. 269 five years, and shall be due in fifteen years. They shall be signed b} r the mayor and countersigned by the city or town treasurer, and attested by the clerk or recorder, and bear the seal of the city or town. The form may be prescribed by the council or board of trustees. 18. Amount Registration Tax Redemption : The amount of bonds so issued is limited to the amount of indebt- edness at the date of the said first publication, \vhich amount shall be determined by the council or board of trustees, and made a part of the public records. A registry of the bonds thus issued shall be kept by the treasurer of the city or town. The bonds shall also be registered in the office of the territorial auditor. There shall be levied a sufficient tax to meet the interest, and after four years an additional amount sufficient to create an annual fund equal to ten per cent of the bonds issued. However, taxation for all purposes is limited to one per cent, and no indebtedness shall be incurred which will require any greater annual expenditure than said one per cent will fully pay. The bonds shall be redeemed and paid in the order of their numbers after thirty days' notice by publication. (1718 to 1724, Act of 1884.) ARIZONA. References are to the sections in the Statutes of 1887. 19. Territorial Funding Bonds : For the purpose of liquidating outstanding debts of the territory the governor, auditor and secretary are a board of commissioners, styled the "Loan Commissioners of the Territory of Arizona," and as such are authorized from time to time to issue bonds of the territory, at a lower rate of interest than such outstanding obli- gations bear, in denominations of one thousand dollars as nearly as practicable, but in no case less than two hundred and fifty dollars, bearing interest at not to exceed six and one-half per cent, payable on the fifteenth day of January of each year. Such bonds shall be payable within twenty-five years, signed by the loan commissioners under the territorial seal and coun- 2JO ARIZONA COUNTY BONDS. tersigned by the treasurer with his seal attached, and may be payable at some bank in New York or San Francisco or at the office of the territorial treasurer. They shall be registered by the state auditor and sold at not less than their face value, with accrued interest. These bonds are exempt from taxation within Arizona. (2039-2052.) COUNTIES. 20. County Board : The corporate management of counties in this territory is vested in a board of supervisors composed of three members, a majority of whom constitute a quorum for the transaction of business. The regular meetings of such board are held on the first Mondays of January, April, July and October, of each year. Special meetings may be called by a majority of the board. The board may elect a clerk or appoint the county recorder as such clerk. (381-393. ) 21. County Bonds for Public Buildings: For the purpose of building a courthouse, jail, or other public build- ings, the board of supervisors may issue bonds as follows: In counties with an assessed valuation of at least three millions, such bonds may be issued to an amount not exceeding twenty thousand dollars; in counties with not less than two nor more than three millions, to an amount not exceeding fifteen thou- sand; and in counties of less than two millions, to an amount not exceeding ten thousand dollars. 22. How Issued: Said bonds shall recite the act author- izing the issue, and shall be signed by the chairman of the board of supervisors and attested by the county clerk with the county seal attached. They shall be redeemable at the pleas- ure of the county, and bear interest at not to exceed eight per cent, payable semi-annually, and be issued in denominations of not less than one hundred dollars. 23. Sale Tax: Said bonds shall be sold by the county treasurer under the direction of the board of supervisors, but for not less than ninety-five per cent of their face value. A suf- ficient tax is required to be levied to meet the interest as it becomes due, and to provide a sinking fund that will in five ARIZONA COUNTY BONDS. 271 years amount to at least twenty per cent of such bonds; in nine years to forty per cent thereof, and that will be sufficient to pay the principal at maturity. 24. Record : The treasurer shall keep a record of all bonds sold by him, showing the number, date of sale, amount, when due, name and postoffice address of purchaser, and in case of a transfer of such bonds the holders shall notify the treasurer of the person's name to whom transferred with his postoffice address. (437 to 445; adopted in 1887.) 25. County Funding Bonds: The board of supervisors may issue bonds of the county to redeem or refund any out- standing indebtedness at a lower rate of interest. Such bonds shall be issued in denominations of one thousand dollars as near as practicable, but of not less than five hundred dollars, and bear interest at a rate not to exceed eight per cent, payable on the fifteenth of January. The bonds may be made payable at any designated bank in New York or San Francisco, or at the office of the county treasurer, at the option of the purchaser. The place of payment to be stated therein. Ten per cent of the bonds so issued shall be made payable in ten years; and ten per cent thereof shall be made payable annually thereafter, the last being payable in twenty years, but the board may make such bonds redeemable at any earlier date, after five years from the time of issue. 26. Execution Sale: They shall be signed by the chairman of the board under the county seal, and counter- signed by the county treasurer with his seal attached. Each bond shall state the time and place of payment, be payable to bearer, and recite that it is issued in conformity with the act authorizing the same, a copy of which shall be printed on the back of such bond. They may be sold by the county treas- urer w exchanged for old indebtedness at not less than par. The treasurer must keep a bond register showing all bonds disposed of by him with the number, rate of interest, amount, when, where and to whom sold, and if exchanged, for what. The tax required to pay the interest and principal of such bonds must be levied by the proper authorities. The bonds 272 MONTANA COUNTY BONDS. are exempt from taxation within the territory. (2053 to 2067; adopted March 2, 1887.) MONTANA. References are to tht sections in the Compiled Statutes of 1887. COUNTIES. 27. County Board : The powers of a county as a body corporate are exercised by a board of county commissioners, consisting of three qualified electors, elected for a term of four years. The county clerk is the clerk of the board of county commissioners. (746, 752, 830; 5th div.) 28. Bonds for Public Buildings : The county com- missioners are authorized to borrow money upon the credit of the county sufficient for the erection of county buildings, or to meet the current expenses of the county in case of a deficit in county revenues, but must first submit the question of such loan to a vote of the electors of the county. After having determined the sum necessary to be raised, the board shall cause notice of such determination and of the time when the question shall be submitted, to be given by handbills posted in five of the most public places in each township for at least thirty days previous to such vote. 29. County Bonds to Fund County Orders : The county commissioners of the counties in this territory are authorized at any time when they shall deem it expedient to call in all outstanding county orders, and issue therefor bonds with interest-bearing coupons, payable semi-annually. 30. How Issued: Said bonds shall be issued in sums of not less than fifty dollars, and shall be signed by the chairman of the board, and attested by the county clerk, and shall spec- ify the purpose for which they were issued. They shall be redeemable at the pleasure of the county any time after three years, and payable within seven years from the date of their issue. (786 to 790, Id.) 31. County Funding Bonds: The county commis- MONTANA COUNTY FUNDING BONDS. 273 sioners of any county may issue on the credit of the county, bonds to an amount sufficient to enable them to redeem all legal outstanding bonds, warrants or orders, not exceeding in the aggregate, including outstanding bonded indebtedness, four per cent of the value of the taxable property of the county. 32. How Issued: Said bonds shall be redeemable and pay- able at such times, not longer than twenty years from date, as the county commissioners shall determine, and may bear inter- est at a rate not to exceed seven per cent per annum, to be evidenced by coupons, payable semi-annually, on the first days of January and July of each year. The commissioners may fix the denominations and prescribe the form of such bonds, and each bond shall be signed by the chairman of the board and county treasurer, sealed and countersigned by the county clerk, and the coupons shall be signed by such chairman and county clerk. Each bond shall be registered by the county treasurer in a book, showing the number and amount, and when and to whom issued. 33. Sale: The county commissioners are required to give notice, stating the amount of bonds for sale, by advertis- ing in some newspaper in the county, or if there is none, in the adjoining county, and also in one or more newspapers published in the city of New York for a period of not less than thirty days prior to the time said bonds will be sold, asking for sealed proposals. The bonds shall be sold to the highest bid- der for cash but for not less than par. The county board at any regular meeting may exchange such bonds for any out- standing bonds then due, or for any legal county warrants or orders issued prior to the day fixed by the board, and entered of record in their journal. Such exchange to be made at par with accrued interest. 34. Tax Payment: The county board are required annually to levy upon the taxable property of the county a sum sufficient to pay the interest on such bonds as it becomes due, and also to provide for the redemption of the bonds at maturity. To redeem any bonds subject to redemption, the board shall cause a notice to be published in the newspapers, 274 MONTANA CITY AND TOWN BONDS. as provided in advertising the sale of such bonds, that they will within thirty days from the date of such notice redeem or pay such indebtedness, and shall also mail such notice to the owner or holder of such indebtedness, if his address is known, and if such bonds are not presented within such thirty days, interest thereon shall cease. (808 to 816, 5th div., as amended in 1887.) CITIES AND TOWNS. 35. Classification : Incorporated cities having a popu- lation of five thousand or upwards, are cities of the first class; those having a population of one thousand five hundred and less than five thousand, are cities of the second class; and those having a population of over three hundred and less than one thousand five hundred, are towns. (384; 5th div.) 36. City and Town Bonds : The council of any incor- porated city or town may borrow money upon the credit thereof and issue bonds for the purpose of erecting public buildings, constructing sewers or water-works, purchasing fire apparatus, or the constructing or purchasing of canals or ditches for sup- plying water to such city or town. 37. Limit of Indebtedness : The total amount of indebt- edness thus contracted shall not at any time exceed four per cent of the taxable property of cities of the first class, or two per cent for cities of the second class and towns, as shown by the last assessment thereof. (325, Id.) 38. City Funding Bonds : It is the duty of the council of any city or town, having a floating indebtedness exceeding ten thousand dollars, upon the petition of one hundred tax- paying electors, to publish for thirty days a notice requesting the holders of the warrants of such city or town to submit in writing, within thirty days from the date of the first publica- tion of such notice, a statement of the amount of such war- rants with accrued interest, which they will exchange at par for the bonds of such city or town. At the first general election, or some special election, after the expiration of such thirty days, the council shall submit to a vote of the qualified MONTANA CITY AND SCHOOL BONDS. 275 tax-paying electors, the question of issuing such bonds. Notice of such election shall be given by publication, for at least thirty days immediately preceding the same, in some nev/spaper in such city or town. Only those electors who are shown to have paid taxes upon property assessed to them in the preceding year shall vote upon such question. 39. How Issued : If authorized by a majority vote at such election, the council or board of aldermen may issue bonds in denominations of not less than one hundred dollars or some multiple of that sum, bearing interest at a rate not excee'ding seven per cent per annum, payable semi-annually at the office of the city or town treasurer. Such bonds shall be payable not later than ten years and at the pleasure of the city or town after two years from date. They shall be signed by the mayor and countersigned by the city clerk or recorder, bear the seal of the city or town, and shall be numbered and registered by the clerk and treasurer. 40. Amount Redemption: The whole amount of bonds so issued shall not exceed the indebtedness of such city or town at the date of the first publication of the above notice. A tax is required to be levied to provide for the payment of such bonds. When it is desired to redeem any such bonds, the treasurer shall cause to be published for thirty days in some newspaper in such city or town, a notice that certain described bonds will be paid on presentation, and after thirty days such bonds shall cease to bear interest. (410, 414, Id.) SCHOOL BONDS. 41. School District Bonds : The board of trustees of school districts, for the purpose of building or providing one or more schoolhouses therein, and purchasing land necessary for the same, whenever a majority of such trustees so decide, shall submit to the electors of the district the question of issuing coupon bonds. Such election shall be called by posting notices in three of the most public places in the district, for at least twenty days, stating the time and place of such election, the amount proposed, and the purposes for which such bonds are 276 MONTANA SCHOOL BONDS. to be issued. A majority of the votes cast are required to authorize the issue of the bonds. 42. How Issued: The board of trustees shall issue the bonds in such form as they may direct, to be signed by the chairman of the board and countersigned by the clerk of the district; coupons to be signed in the same manner. The bonds shall bear interest at not to exceed seven per cent, and be payable and redeemable at a certain specified time. Each bond issued shall be registered by the county treasurer, showing the number and amount, and the person to whom the same is issued. 43. Limit of Amount: The amount of such bonds shall not exceed two per cent of the taxable property of the district, nor shall the board of trustees submit such question of issuing bonds to the electors more than once, nor shall the entire levy for such purpose exceed two per cent of the taxable prop- erty in the district, and when the bonds of such district have been issued to the above amount, the question shall not be again submitted, nor shall any additional bonds be issued until the entire outstanding bonds are paid. For the above purposes each school district is a body corporate under the name of the school trustees of such district. 44. Sale Tax: Said bonds shall be sold by the trustees at not less than par after advertisement in some newspaper published in the territory for not less than four weeks, describ- ing the bonds to be sold and stating the time and place of such sale. The trustees are required to provide by an annual levy a tax to pay the interest on such bonds, and to provide a sinking fund to redeem the principal at maturity. The interest is pay- able by the county treasurer at his office. 45. Redemption of Bonds: Any such bonds subject to redemption may be called by the county treasurer by posting in his office a notice that he will within thirty days from date redeem the bonds then payable, giving the numbers thereof, and if such bonds are not presented, interest thereon shall cease after the expiration of such thirty days. (1950 to 1958; Ibid., Act of 1883.) WYOMING COUNTY BONDS. 277 WYOMING. References are to sections of the Statutes of 1887, except as otherwise indicated. COUNTIES. 1 46. County Board : The corporate powers of a county are exercised by a board of three county commissioners. Meet- ings are held on the first Mondays of January , May, July and October, and at such other times as, in the opinion of the board, the public interests require. The county clerk is clerk of the board of commissioners. (1791 to 1800, 1842.) 47. County Funding Bonds : The board of commis- sioners may issue negotiable county coupon bonds for the purpose of paying, redeeming, funding or refunding any county indebtedness when it can be done at a lower rate of interest and to the profit and benefit of the county. The bonds shall be issued as near as practicable in denominations of one thousand dollars each, but bonds of fifty and of one hundred dollars may be issued when necessary. They shall bear interest at not to exceed eight per cent, payable on the first days of January and July, at the office of the county treasurer, or at some bank in New York city, designated by the commissioners, at the option of the holder. 48. Limit How Issued Redemption: The aggregate of bonds so issued at any one time, together with existing bonded indebtedness, shall not exceed three per cent of the assessed valuation of the county. The bonds shall be signed by the chairman of the board, attested by the clerk, under the seal of the board, and countersigned by the county treasurer. The coupons shall be signed by the county treasurer. Each bond shall state to whom it is issued, date of issue, amount, and that it is issued in conformity with the provisions of this act, a copy of which shall be printed on the back of each bond. Ten per cent of the bonds shall be redeemable in ten years, 1 County bonds have usually been issued under special acts. 278 WYOMING COUNTY BONDS. and ten per cent annually thereafter, but they may be redeem- able in the order of their numbers, at the option of the county, any time after five years, provided they so state on their face. 49. Sale Redemption Tax: The board are required to give notice by publication, or if there is no newspaper pub- lished in the county, by posting such notice at the courthouse door and at two other places in the county, of their intention to issue such bonds, and invite bidders therefor. The notice must also be published in newspapers of general circulation in Denver, Chicago and New York. The bonds shall be negoti- ated on the best terms, at the lowest rate of interest obtainable. The county clerk shall keep a full register of all such bonds issued. The county board are required to cause to be levied the necessary tax to provide for the payment of the principal and interest thereof at maturity. The faith and credit of the county and all taxable property within its limits are specially pledged for such payment. The neglect or failure of the proper officers to levy the required tax is a misdemeanor, and the officers guilty may be fined a sum equal to the sum that should have been levied. (Laws of 1888, chap. 29.) 50. Railroad Aid Bonds : The board of county com- missioners may issue county bonds in any sum not greater than five per cent of the taxable property of the county, to aid in the construction of any railroad, whose proposed line shall be generally a north and south line, but in no case to an amount exceeding five thousand dollars per mile. The issue must first be ordered by a vote of the qualified electors of the county. An election for such purpose is called upon a peti- tion signed by the railway company asking the aid, and by fifty qualified voters. The commissioners shall give twenty days' notice, by publication for two weeks, of such proposed election. 51. How Issued: The bonds shall be issued in denomina- tions of not less than five hundred nor more than one thousand dollars, and payable at any place desired by the company, in not less than fifteen nor more than thirty years, and bear interest at not to exceed six per cent, payable annually. The WYOMING CITY, TOWN AND SCHOOL BONDS. 279 bonds and coupons shall be signed by the chairman of the county commissioners, and attested by the county clerk under the seal of the county. The interest coupons may be signed with the engraved signatures of the chairman and clerk. The county clerk shall certify on each bond the date of its delivery, from which time it shall draw interest. The bonds shall be registered by the county treasurer and shall be redeemable in the order of their numbers, after fifteen years, on thirty days' public notice. Johnson, Crook, Carbon, Fremont, Sweetwater and Albany counties are excepted from the provisions of the above act. (Sees. 555-564, Act of 1886.) CITIES AND TOWNS. 52. City and Town Bonds : Cheyenne, Laramie, and the other larger cities of this territory are incorporated under special charters, in many of which there are provisions author- izing the issue of bonds for water- works, funding and other purposes (142-444). Towns incorporated under the provisions of the general law may borrow money on the credit of the corporation for providing a water supply and for other corporate purposes, and issue coupon bonds therefor, to an amount not exceeding the four per cent limitation, in such amounts and form, and on such conditions as may be prescribed by ordi- nance. The necessary tax to pay the interest as it falls due, and the principal within twenty years, must be levied. Such towns may also issue bonds in place of, or to supply means to meet maturing bonds, or for the consolidation, or funding of the same. (468, as amended by chap. 43, Laws of 1888.) SCHOOL BONDS. 53. School Districts: School districts are corporate bodies managed by a board of directors consisting of three elected trustees, who choose from their number a director, treasurer and clerk. In districts containing over two thousand population the number of trustees has been increased to six. The regular annual meeting of the board is on the first Monday in May. V 280 WYOMING SCHOOL BONDS UTAH. 54. School Bonds 1 : The board of school trustees, whenever a majority so decide, may submit to the electors of the district the question of issuing bonds, at a rate of interest not exceeding eight per cent, to an amount not exceeding three per cent of the taxable property of the district, and payable within fifteen years, for the purposes of building and furnish- ing schoolhouses. If a majority of the votes cast are in favor of the question, the bonds may be issued. 55. How Issued Sale Tax: They shall be signed by "the president of the board of trustees" (director?), counter- signed by the county clerk under the district seal, and counter- signed by the county treasurer. The bonds must be registered by the county treasurer. The interest is payable at his office January first to tenth of each year. Said bonds shall be sold at not less than par, after four weeks' published notice in a news- paper published in the county, and in another published in the territorial capital. All bids may be rejected and the bonds sold at private sale, if for the best interests of the district. The law provides for the levy of a special tax for the payment of such bonds and interest. (Laws of 1888, chap. 72.) UTAH. References are to the sections of the Compiled Statutes of 1888. COUNTIES. 56. County Court : The corporate powers of counties in this territory are exercised by or through the county court, which is composed of the probate judge, who is chairman, and three selectmen. The clerk of the probate court is the clerk of the county court. Regular meetings are held on the first Mondays in March, June, September and December, and at other times when deemed necessary. (170-181.) 57. Limitation on County Indebtedness : No county shall in any manner give or loan its credit to, or in aid of, any 1 There are also a number of special acts authorizing the issue of school bonds applicable only to certain designated districts. (3983 to 4066.) UTAH CITY BONDS IDAHO. 28 1 person or corporation, or incur any indebtedness or liability in any manner or for any purpose, to an amount exceeding in any one year the total amount of its income and revenue for the two preceding fiscal years. Any indebtedness or liability incurred contrary to this provision shall be void. (173 and I95-) CITIES. 58. Borrowing Money and Issuing Bonds : The council of any incorporated city may borrow money for corpo- rate purposes, and issue bonds therefor, in such amounts and form, and on such conditions as it shall prescribe. The amount of such issue shall not exceed in the aggregate four per cent of the last assessed valuation of such city. The council shall provide for the payment of the interest as it becomes due, and the principal thereof within twenty years. The council of any such city is also authorized to issue bonds in place of, or to supply means to meet maturing bonds, or for the consoli- dation or funding of the same. Among the express powers of such councils is the maintaining of water-works, gas-works, electric-light works, street railways, bath-houses, etc. (1755.) 59. Salt Lake City: The council of this city may borrow money to an amount, on which the interest on the aggregate shall not exceed one-fourth of the city revenues aris- ing from taxes assessed within the corporation during the pre- ceding year. (363. ) IDAHO. References are to Sections in the Revised Statutes of 1887. COUNTIES. 60. County Government: Each county in this territory is governed by a board of three commissioners, who hold regu- lar meetings on the second Mondays in January, April, July and October. Special meetings may be called when required by a majority of the board, by an order entered of record spec- 282 IDAHO COUNTY FUNDING BONDS. ifying the business to be transacted at such, meeting. The clerk must give five days' public notice thereof by posting three notices in conspicuous places, one of which shall be at the court- house door. The county auditor is ex officio clerk of the board. (1745 to 1748.) 61. County Funding Bonds: The board of county com- missioners may issue negotiable coupon bonds of the county for the purpose of paying or funding any county indebtedness, when the same can be done at a lower rate of interest and to the profit and benefit of the county. The bonds issued shall show on their face whether they are issued for debts contracted prior or subsequent to July 3oth, 1886, and shall be as nearly as practicable in denomination of one thousand dollars each, but bonds of five hundred and one hundred dollars may be issued when necessary. All bonds so issued shall bear interest at not to exceed eight per cent per annum, payable semi-annu- ally on January ist and July ist, to be evidenced by coupons, and shall be payable at the county treasurer's office or in New York, as may be designated by the commissioners. Ten per cent of the bonds so issued shall be paid in ten years, and ten per cent annually thereafter; but such bonds may at the option of the county, if so stated therein, be redeemed at any time after five years, in the order of their issue. 62. How executed Sale Registry: The bonds shall be signed by the chairman of the board, attested by the clerk, under the seal of the board, and countersigned by the county treasurer. Each bond must show the amount, and to whom issued, and re- cite that it is issued in conformity with the provisions of this chapter, a copy of which must be printed on the back of each bond. The bonds shall be sold, after a duly published notice, at not less than par; and before delivery, shall be registered by the county auditor. A record of all bonds sold shall be kept by the county treasurer. The necessary tax for the payment of both principal and interest is required to be levied by the said board. (3602-3607.) IDAHO TOWN, VILLAGE AND SCHOOL BONDS. 283 TOWNS AND VILLAGES. 63. Town and Village Government Loans: The cor- porate powers of towns and villages are vested in a board of five trustees. This board may borrow money on the credit of the town or village, but no sum exceeding one thousand dollars shall be borrowed until the board is instructed so to do by a majority of the votes cast at an election held therein for that purpose. (2225-2234.) 64. Funding Bonds: Any town or village board of trustees, for the purpose of funding indebtedness, may issue bonds payable in not less than five nor more than twenty years, and bearing not to exceed ten per cent interest, with coupons therefor attached, payable annually or semi-annually. The bonded indebtedness of any such town or village must not at any one time exceed ten per cent of the assessed valuation of the real estate in said town or village for the previous year. Said bonds may be sold at not less than par. (2235.) 65. Bonds for Public Improvements: Any town or village board may make any improvements of a general nature, and to pay for the same, may borrow money and issue bonds for the time and at the rate provided in the previous section for funding bonds. (2237.) SCHOOL BONDS. 66. The board of school trustees of any school district, whenever the majority so decide, may submit to a vote of such of the electors of the district, as are freeholders or heads of families, the question of issuing bonds for the purpose of pro- viding or furnishing schoolhouses in the district. Ten days' written notice of such election shall be posted in three con- spicuous places in the district. If so authorized by a ma- jority of the votes cast at such election, the bonds may be issued of such form as the board of trustees may direct, bear- ing not to exceed eight per cent interest, and signed by the chairman of the board of trustees, and countersigned by the clerk of the school district. Each bond must be registered by 284 WASHINGTON TERRITORY COUNTIES ISSUE OF BONDS. the county treasurer, and sold at not less than par, after a pub- lished notice of such sale for not less than four weeks. The trustees must provide the necessary tax for the payment of the interest and bonds as the same become due. (720-723.) WASHINGTON TERRITORY. 67. County Government: Counties organized under the general laws of this territory are managed by a board of three county commissioners, who hold their regular sessions on the first Mondays of February, May, August and Novem- ber, and extra sessions when required and ordered as by law provided. The county clerk is the ex officio clerk of the board of county commissioners. (Statutes of 1881, sees. 2655-2669.) 68. Cities Issue of Municipal Bonds: Seattle, Ta- coma, Olympia and the other larger cities are incorporated and acting under special charters. The issue of municipal bonds by counties, cities, school districts, and other municipal corpor- ations in this territory has usually been made under the provis- ions of special acts or of the special charters under which the cities are incorporated. DIGEST OF THE STATUTORY LAWS GOVERNING THE INVESTMENT OF TRUST AND CORPORATE FUNDS. The following three chapters contain a digest of the stat- utory laws of the states of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Ohio, Indiana, Illinois, Michigan and Wisconsin, governing or relating to the investment of the funds of Savings Banks (Chapter XXIII); Insurance Companies (Chapter XXIV); Trust Companies, Guardians, Executors, Administrators, and other Corporate and Trust Funds (Chapter XXV). The compilation is made with special reference to the provisions relating to the investment of any such funds in the bonds and other obligations of municipal corporations. CHAPTER XXIII. INVESTMENTS BY SAVINGS BANKS. MAINE. Savings Banks: Savings Banks and Institutions for Savings in this state may invest their deposits only as follows: 1 . Municipal Bonds: In the public funds of any of the New England states, including bonds of the counties, cities and towns of the same; in the public funds of the United States and District of Columbia; in the public funds of the states of New York, Pennsylvania, Maryland, Ohio, Indiana, Kentucky, Michigan, Wisconsin, Minnesota, Iowa, Illinois, Missouri, Kansas and Nebraska; in the municipal bonds of cities of ten thousand inhabitants or more, and in the bonds (not issued in aid of railroads) of counties having twenty thousand inhabitants or more, in"any of the above-named states; provided that no investment shall be made in city or county bonds of any of the above-named states where the municipal indebtedness of such city or county exceeds five per cent of its valuation, except the city of St. I^ouis, Mo. 2 . Other Bonds: In the first mortgage bonds of any com- pleted railroad of the states above mentioned or of New Jersey. In the first mortgage bonds of the Central Pacific, Union Paci- fic, and Northern Pacific railroads, and the bonds of any rail- road of this state. In the first mortgage bonds of any water company in Maine, actually engaged in supplying any city, town, village or other municipal corporation having not less than twenty-five hundred inhabitants, water for domestic use and fire protection. In the bonds of any corporation incorpo- rated under the authority of the laws of Maine, which earns (286) MAINE INVESTMENTS BY SAVINGS BANKS. 287 and is paying a regular dividend of not less than five per cent a year. 3. Stocks: In the stock of any bank or banking associ- ation incorporated under authority of this state or of the United States. In the stock of any dividend paying railroad in New England; in the stock of any railroad in this state unencumbered by mortgage; in the stock of any corporation incorporated under the laws of this state, which earns and pays regular dividends of not less than five per cent a year. No Savings Bank or Institution for Savings shall hold by way of investment, or as security for loans, or both, more than one-fifth of the capital stock of any corporation, nor invest more than ten per cent of its deposits, and not to exceed sixty thousand dollars, in the capital stock of any corporation. These limita- tions do not apply to securities taken under judgments or in the settlement of debts. 4. Mortgages: In loans on first mortgages on real estate in this state and New Hampshire, but such loans shall not ex- ceed sixty per cent of the value of the property mortgaged. Not exceeding fifty per cent of the deposits shall be invested in mortgages. This limitation does not apply to property taken under foreclosure. All expenses incurred in taking mortgages shall be paid by the borrower. 5. Loans: In loans to any county, city or town in this state and New Hampshire. In loans with a pledge as collat- eral of any of the securities above mentioned, of savings bank deposit books of any savings bank in this state, or of the stock of any of said railroad companies, but not exceeding seventy- five per cent of the market value of such stock. In loans to corporations having real estate and doing business in this state. In loans on a pledge or mortgage of such other per- sonal property as the trustees may consider safe. No loan shall be made directly or indirectly to any of the trustees. 6. Real Estate: In real estate to an amount not exceed- ing five per cent of the deposits, but no part of said amount shall be invested in real estate, except in a suitable building for 288 NEW HAMPSHIRE VERMONT SAVINGS BANKS. banking purposes; provided that the amount so invested shall not exceed one hundred thousand dollars. 7. Deposits: Deposits may be made on call in banks incorporated under the laws of Maine or of the United States and interest may be received on the same. (Statutes of 1883, Chap. 47, Sees. 100-105, as amended by Chap. 142, Laws of 1887.) NEW HAMPSHIRE. 8. Savings Banks: Deposits Loans: Savings banks may deposit their funds in national banks of good credit and unimpaired capital, the same as any other depositor. No sav- ings bank shall loan to any person, corporation, or firm (including its individual members) an amount in excess of ten per cent of the deposits and accumulations of such savings bank; nor purchase or hold both by way of investment and security for loans, the stock and bonds of any corporation to an amount in excess of such ten per cent. No loan can be made to any officer, nor can any officer become a surety on any loan without the written consent of all the trustees. (Statutes of 1878, chap. 170, as amended by chap. 7, Laws of 1881.) VERMONT. Savings Banks and Trust Companies 1 : Savings Banks, Savings Institutions and Trust Companies in this state shall invest their funds as follows: 9. Municipal Obligations: In the public funds of the United States, or public funds for which the faith of the United States is pledged to provide for the payment of interest and principal. In the public funds of any of the New England states, including the bonds or notes of the counties, cities, 1 By act of 1886, p. 68, it is provided that every moneyed institution in this state, soliciting or receiving money in a trust capacity and paying interest thereon, shall be amenable to the laws regulating savings banks and trust companies. VERMONT SAVINGS BANKS AND TRUST COMPANIES. 289 towns, villages and school districts of the same. In the mu- nicipal bonds, not issued in aid of railroads, of cities of five thou- sand inhabitants or more whose municipal indebtedness is not allowed by law to exceed and does not exceed five per cent of its assessed valuation, in the states of California, Illinois, Indi- ana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New York, Ohio, Pennsylvania and Wisconsin, and in the public funds of each of the above-named states, also in the county bonds of the same states, when not issued in aid of railroads, where the municipal indebtedness of such county is not allowed by law to exceed and does not exceed five per cent of its assessed valuation. In the school bonds and inde- pendent school district bonds in the states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New Jersej T , New York, Ohio, Pennsylvania and Wisconsin, when the amount of such bonds issued is not allowed by law to exceed and does not exceed five per cent of the assessed valu- ation of the respective school districts, towns or cities issuing the same. 10. Real Estate Mortgages: Not more than seventy per cent of the assets may be loaned upon first mortgages on unen- cumbered real estate to an amount not exceeding three-fifths of the cash value thereof, and in case such real estate is unim- proved or unproductive, not exceeding forty per cent thereof. Not less than one sixth of the amount so loaned shall be upon property within the state. When buildings are included in the valuations, they shall be insured and the policies assigned to mortgagee. No mortgage investment shall be made except upon the report of a committee of the trustees or their board of investment. 11. Stocks: Such funds may be invested in the stock of any bank, banking association or trust company incorporated under the authority of the United States, or of any of the New England states or of New York. 12. Personal Security: No loans or investments on per- sonal security shall be made except upon at least two approved VERMONT SAVINGS BANKS AND TRUST COMPANIES. names, not less than two of whom reside in this state, or within fifty miles of the institution making such investment; and such personal loans or investments shall not be for a longer time than one year, and not more than one-third of the assets of a savings bank, savings institution or trust company, shall be invested in personal securities. Officers and trustees are not allowed to borrow funds directly or indirectly or become sure- ties for loans, to exceed five per cent of the paid in capital stock, nor without the written consent of a majority of the directors. No loan shall be made to any one person, corpora- tion, firm or company, or the individual members of such corn- pan}-, to exceed five per cent of the net amount of deposits, nor more than thirty thousand dollars, nor shall such loan on personal security exceed ten thousand dollars. 13. Loans: L,oans may be made with a pledge as collat- eral of any securities which can be legally purchased, or on deposit books or deposit receipts, issued by any savings bank, trust company or banking association located in Vermont, such notes not to exceed the par value nor the market value of such collateral security. No savings institution shall hold by way of investment and as security for loans, more than ten per cent of the capital stock of any one bank, banking association, or trust company, nor invest more than ten per cent of its deposits, nor more than thirty-five thousand dollars, in the capital stock of any such bank, banking association or trust company, and no investments shall be made in the capital stock of such banks, banking associations or trust companies, owned or loaned upon, to exceed in the aggregate, one- fourth of the deposits of such savings bank or trust com- pany. No loan can be made by such corporation upon the pledge of its own stock. 14. Real Estate: Three per cent of the deposits may be invested in a suitable lot of land and building for the conven- ient transaction of its business. Such other real estate only may be held as may be acquired by the foreclosure of mort- gages thereon, pledged to such corporation; or taken in settle- MASSACHUSETTS INVESTMENTS BY SAVINGS BANKS. 29 1 ments effected to secure debts. All such real estate shall be sold by such corporation as soon as a reasonable price can be obtained therefore, and within five years after title is vested in such corporation. 15. Deposits: Deposits may be made by savings banks, savings institutions or trust companies on call, with or without interest in banks or trust companies, in the cities of New York, Boston or Chicago, in sums not exceeding in the aggregate twenty per cent of the assets of such savings bank, savings institution or trust company. (I,aws of 1884, pp. 33-44.) MASSACHUSETTS. {From Chap. //6, Statutes of 1882, with amendments as noted.) Savings Banks: Deposits and the income derived there- from shall be invested only as follows: 1 6. Mortgages: In first mortgages on real estate situated in Massachusetts, as by law provided, to an amount not to exceed sixty per cent of the valuation of such real estate; but not exceeding seventy per cent of the whole amount of deposits shall be so invested. 17. Municipal Obligations: In the public funds of the United States, or any of the New England states, or of the state of New York; in the bonds or in notes of any city, county or town of this state, or of any city of the states of Maine, New Hampshire, Vermont, Rhode Island, or Connecticut, whose net indebtedness does not exceed five per cent of the last preceding valuation of the property therein for the assessment of taxes; or of any county or town thereof whose net indebt- edness does not exceed three per cent of such valuation; or in the notes of any citizen of this state with a pledge as collateral of any of the aforesaid securities at no more than the par value thereof. In the bonds and notes of any incorporated district in Massachusetts whose net indebtedness does not exceed five per cent of the last preceding valuation of the property therein for the assessment of taxes. (Acts of 1885, chap, in.) In 292 MASSACHUSETTS INVESTMENTS BY SAVINGS BANKS. the legally authorized bonds of the states of Pennsylvania, Ohio, Michigan, Indiana, Illinois, Wisconsin and Iowa, and of the District of Columbia; and in the legally authorized bonds for municipal purposes of any city of the aforesaid states, and in the state of New York, which has at the date of such invest- ment more than thirty thousand inhabitants, as established by the last national or state census, or city census (certified to by the city clerk or treasurer and taken in the same manner as a national or state census) preceding such investment, and whose net indebtedness does not exceed five per cent of the taxable property therein, to be ascertained by the last assessment for taxes; and in the notes of any citizen of this state, with a pledge as collateral of any of the aforesaid securities, the amount loaned not to exceed eighty per cent of the market value of the securities pledged. (Acts of 1888, chap. 90.) 18. Railroad Bonds, Stocks and Notes: In the first mort- gage bonds of any railroad company incorporated under the authority of any of the New Bngland states, and whose road is located wholly or in part in the same, and which is in pos- session of and operating its own road, and has earned and paid regular dividends for the two years next preceding such invest- ment; or in the first mortgage bonds, guaranteed by any such railroad company, of any railroad company so incorporated whose road is thus located; or in the bonds or notes of any railroad company incorporated under the laws of this state, and whose road is located wholly or in part therein, and is unen- cumbered by mortgage, and which has paid a dividend of not less than five per cent per annum for the preceding two years; or in the notes of any citizen of this state, with a pledge as collateral of any of the aforesaid securities at not more than the par value thereof; or in the notes of any citizen of Massachusetts, with a pledge as collateral, of the shares of the capital stock of any railroad company incorporated under the authority of any of the New England states, and whose road is located wholly or in part therein and which is in possession of and operating its own road, and has earned and paid regular dividends of not MASSACHUSETTS INVESTMENTS BY SAVINGS BANKS. 293 less than five per cent per annum on all its issues of capital stock for five years next preceding the date of such notes or any renewal thereof, and at no more than seventy-five per cent of the market value thereof, such notes to be made payable on demand and to be paid or renewed within one year of the date thereof; but street railway companies shall not be considered railroad companies within the meaning of this section (Acts of 1887, chap. 196, as amended by chap. 213, Acts of 1888). In the bonds and notes of the old Colony Railroad Company issued according to law, notwithstanding the mortgages on that part of its railroad formerly belonging to the Boston, Clinton, Fitch- burgh & New Bedford Railroad Company (Acts of 1883, chap. 134). In the bonds and notes of the Fitchburgh Rail- road Company issued according to law (Acts of 1887, chap. 113). In the legally issued bonds and notes of the Worcester, Nashua & Rochester Railroad Company, notwithstanding the said railroad is leased to the Boston & Maine Railroad Com- pany. (Acts of 1886, chap. 176). In the bonds and notes of the Boston & L,owell Railroad Company, notwithstanding the mortgage on those portions of its railroad formerly belonging to the Salem & I,owell Company. 19. Bank Stock: In the stock of any bank incorporated under the authority of Massachusetts or of the United States when located in the New England states, or on the notes of any citizen of Massachusetts with any of the aforesaid securi- ties as collateral at no more than eighty per cent of the market value and not exceeding the par value thereof; provided, that such corporation shall not hold, both by way of investment and as security for loans, more than one quarter of the capital stock of any one bank or banking association, nor invest more than three per cent of its deposits nor more than one hundred thousand dollars in the capital stock of any one such bank or association; provided also that such corporation shall not hold as collateral or invest in stocks or bonds, as above described, more than thirty-five per cent of its deposits. (As amended by chap. 224, Acts of 1882; and chap. 202, Acts of 1883.) 294 MASSACHUSETTS INVESTMENTS BY SAVINGS BANKS. 20. Personal Loans: In loans upon the personal notes of any depositor of the corporation, not exceeding one-half of the amount of his deposit, the deposit and the book of the depos- itor to be held by the corporation as collateral security. If such deposits and income cannot be conveniently invested in the modes hereinbefore prescribed, not exceeding one-third part thereof may be invested in bonds or other personal secur- ities, payable and to be paid in not exceeding one year, with at least two sureties, the principal and sureties to be resident citizens. Provided the aggregate loans to any person, partner- ship, company or corporation (the members of any partnership or unincorporated company to be included in estimating the loans thereto ) upon personal security, shall at no time exceed five per cent of such deposits and income. No officer or member of the investing committee can borrow from, or be surety on any loan made by any such bank. (Acts of 1884, chap. 1 68, as amended by chap. 69, Acts of 1886.) 2 1 . Real Estate: Ten per cent of the deposits of any such corporation, but not exceeding two hundred thousand dollars, may be invested in the purchase of a suitable site and the erection or preparation of a suitable building for the con- venient transaction of its business. Such further real estate only may be held as may be taken in settlement of contracted debts and the same must be sold within five years from time of acquiring title, unless by special permission of the commis- sioners. 22. Deposits: Savings Banks may deposit not to exceed twenty per cent of the amount of their deposits, on call, in such banks or banking associations, or in any trust company, incorporated under the laws of Massachusetts,which provide the same security as banking associations incorporated under the authority of the United States, and may receive interest for the same. Savings banks or institutions shall not deposit more than five per cent of their total deposits in any one national bank or trust company, nor an amount exceeding twenty -five per cent of the capital stock and surplus of such RHODE ISLAND CONNECTICUT SAVINGS BANKS. 295 national bank or trust company. (As amended by chap. 95, Acts of 1886.) RHODE ISLAND. Savings Banks : Institutions for savings in this state may invest their funds: 23. Bonds, Stocks, Etc.: In the public stocks or bonds of any state, or of the United States; in any bank stock; in notes or bonds of any town or city; in notes of any school district or fire district in any New England state; or in such corporate stocks or bonds as they may deem safe and secure. 24. Loans: They may discount notes, bonds or drafts of individuals or corporations, with two other responsible indors- ers or sureties, or secured by public stocks or bonds of any state, town or city, or of any school district or fire district in any New England state; by any corporate stocks or bonds deemed safe; or by mortgage on real estate. 25. Restrictions: No institution for savings shall have an amount exceeding one half of its receipts invested in dis- counts on notes, bonds or drafts of individuals or corporations unless secured by some public notes, bonds or stocks as afore- said, or by real estate mortgages. No loan shall be made to any officer, director or trustee. (Statutes of 1882, p. 379.) CONNECTICUT. Savings Banks: In this state such banks may invest not exceeding one-half of their deposits: 26. Municipal Obligations: In the public stock or bonds of the United States, of any of the New England states, of the states of New York, New Jersey, Pennsylvania, Ohio, Ken- tucky, Michigan, Indiana, Illinois, Wisconsin, Iowa, Missouri, Kansas, Nebraska, or of the District of Columbia; in the au- thorized bonds of any incorporated city in the New England states, of the cities of New York, Brooklyn, Albany, Syra- 296 CONNECTICUT INVESTMENTS BY SAVINGS BANKS. cuse, Utica, Troy, Rochester, and Buffalo, in the state of New York, Philadelphia, in the state of Pennsylvania, Detroit, in the state of Michigan, Cleveland, Columbus, Dayton and Cin- cinnati, in the state of Ohio, Chicago, in the state of Illinois, Milwaukee, in the state of Wisconsin, and St. Louis, in the state of Missouri, or of any town or borough in this state, or in the purchase of the authorized promissory notes of towns, cities, boroughs and school districts of this state. 27. Railroad Bonds: In the first mortgage bonds of any railroad company located in any of the states aforesaid, which has paid dividends of not less than five per cent per annum regularly on its entire capital stock for a period of not less than five years next previous to the purchase of such bonds, or in the consolidated bonds of any railroad company incor- porated by this state, authorized to be issued to retire the entire bonded debt of said company, provided said company has paid dividends as aforesaid. 28. Bank Stock: In the stock of any bank in this state, New York city, or Boston, or in the stock of any trust com- pany in the cities of Hartford or New Haven. 29. Real Estate Mortgages: All other loans shall be se- cured by mortgages on unencumbered real estate in this state, worth double the amount of the loan secured thereby. No loan shall be made by any savings bank to a manufacturing corporation or ecclesiastical society, secured by mortgage upon its property, unless the same shall be accompanied by the indi- vidual guaranty of some responsible party or parties, or by other collateral security of equal value to the amount of the sum loaned. Loans and investments in authorized municipal bonds and obligations may be classed with loans upon real estate for the purpose of determining the proportion of loans required upon such estate. 30. Personal Loans: In making loans on personal security, no savings bank having more than twenty-five thousand dol- lars deposits shall loan on personal security to any person, company, or interest, more than three per cent of its deposits, NEW YORK INVESTMENTS BY SAVINGS BANKS. 297 at the time of making such loan. No such bank shall buy or lend any money upon any obligation on which only one person or firm shall be holden, without taking additional security, equivalent to the guaranty or indorsement of some responsible person. No officer of such bank can be a borrower or security on any loan. (Statutes of 1888, sees. 1800-1811.) NEW YORK. Savings Banks: The trustees of any savings bank or institution for savings in this state shall invest the moneys deposited therein only as follows: 31. Municipal Bonds: In the stocks or bonds, or interest bearing notes or obligations of the United States, or those for which the faith of the United States is pledged to provide for the payment of principal and interest, including the bonds of the District of Columbia, commonly known as three sixty-five bonds; in the stocks or bonds or interest bearing obligations of this state, issued pursuant to any law of this state; in the stocks or bonds, or interest bearing obli- gations of any other state that has not within ten years previously defaulted in the payment of any part of either principal or interest of any debt authorized by the legislature of such state; or in the stocks or bonds of any city, county, town or village, or in the interest bearing obligations of any city or county of this state, issued under the authority of any law of this state. Not to exceed ten per cent of such deposits may be invested in municipal railroads aid bonds, issued as provided by chapter 907 of the Laws of 1869 as amended in 1871. 32. Real Estate Mortgages: In bonds and mortgages on unencumbered real estate situated in this state, and worth at least twice the amount loaned thereon, but not to exceed sixty per centum of the whole amount of deposits shall be so loaned, and in case the loan is on unimproved and unpro- 298 NEW YORK INVESTMENTS BY SAVINGS BANKS. ductive real estate, the amount loaned thereon shall not be more than forty per centum of its actual value; and no invest- ment in bond and mortgage shall be made except on report of the proper committee of trustees. (As amended by Laws of 1887, chap. 524.) 33. Restrictions on Loans: No loans can be made upon notes, bills of exchange, drafts, or any other personal securities whatever. No officer or trustee can directly or indirectly bor- row from or be a surety for any loan made by any such savings bank. 34. Real Estate: Such real estate may be held as may be necessary for the convenient transaction of its business, and from portions of which, not required for its own use, a revenue may be derived, the cost of such property not to exceed fifty per centum of the net surplus of such corporation, except by written permission of the superintendent of the banking department; and such as may betaken in settlement or foreclos- ure of debts previously contracted, to be disposed of within five years after acquiring title, except by special permission. (L,aws of 1882, chap. 409, sees. 255, 263, 264.) 35. Deposits: It shall be the duty of the trustees, as soon as practicable, to invest moneys deposited with them in the securities above provided, except, that to meet current expenses, a sum not exceeding ten per cent of the whole amount of deposits may be kept on hand or with any bank or banking association organized under the laws of this state, or of the United States, or with any trust company incorporated under the laws of this state, but the sum so deposited with any one bank or trust company shall not exceed twenty-five per cent of the paid up capital and surplus of such bank or trust company; or such available fund may be loaned upon a pledge of the said municipal stocks or bonds, but not in excess of ninety per cent of their market value. (As amended by I/aws of 1886, chap. 569.) NEW JERSEY INVESTMENTS BY SAVINGS BANKS. 299 NEW JERSEY. (From Statutes of 1877, pp. 1061-1063, with amendments as indicated.) Savings Banks : Funds deposited with savings banks, or savings institutions, whether incorporated under a general or a special act, can be invested only as follows: 36. Municipal Obligations: In the stocks, bonds or inter- est bearing notes or obligations of the United States, or for which the faith of the United States is distinctly pledged for the payment of principal and interest; in the interest bearing bonds of this state; in the bonds of any state that has not within ten years previously defaulted in the payment of prin- cipal or interest of any debt authorized by the legislature thereof; in the stocks or bonds of any city, town, county or village of this state, or of the cities of New York, Brooklyn, or Philadelphia; in the interest bearing obligations, other than those commonly known as improvement certificates, issued by the city, town or borough in which such bank is situated (Laws 1881, chap. 218). In the legally authorized bonds of any city or county of any state of the United States, provided such city or county has not within ten years previously defaulted in the payment of principal or interest of any debt authorized by law, and provided that the total debt of such city or county is limited by law to ten per cent of its assessed valuation. (L/aws 1886, chap. 126.) 37. Real Estate Mortgages: Not exceeding eighty per cent of the deposits of such a bank may be loaned on mort- gages which are a first lien on real estate within this state, worth at least double the amount loaned thereon, but loans on unproductive or unimproved real estate shall not exceed thirty per cent of the actual value thereof. (Laws of 1881, chap. 218.) 38. Collateral Loans: No loans shall be made upon notes, bills of exchange, or drafts, except upon the additional pledge of collateral security, which shall be of the same nature and character as those in which investments may be made, or the 300 NEW JERSEY INVESTMENTS BY SAVINGS BANKS. stock of national or state banks or other corporations of this state, which have not defaulted in the payment of interest dividends within two years previously. No loan shall exceed ninety per cent of the par value of the collateral pledged, and the total amount of such loans shall not exceed fifteen per cent of the deposits. A violation of any of the provisions of this act by trustees, directors, managers or officers is made a mis- demeanor. No loan shall be made to any officer of the bank. (Laws 1878, chap. 254.) 39. Real Estate: Only such real estate may be held as may be requisite for the convenient transaction of its business, and from such portion of which a revenue may be derived. The cost of such property shall not exceed fifty per cent of the net surplus of the corporation. They may hold such further real estate as may be taken upon judgments, foreclos- ures, or in the settlement of debts, to be disposed of within five years, except by special permission from the state board of supervison. (Laws of 1881, chap. 218.) 40. Deposits: It is made the duty of the managers to invest their funds as above as soon as practicable. To meet current expenses they may keep not to exceed ten per cent of their deposits on hand, or on deposit in any bank or banking association in this state, organized under the laws of this state or of the United States; or deposited, on call, at interest, in such solvent trust company or safe deposit company, incorpor- ated under the laws of this state, or of the states of New York or Pennsylvania, as a majority of the managers may direct by a resolution duly passed. Such funds may be loaned upon the pledge of any of the said municipal obligations mentioned under section 36 above, but not to exceed seventy-five per cent of their market value, and not exceeding the par value thereof. (Laws of 1883, chap. 116.) PENNSYLVANIA. 41. Savings Banks: In 1885 an act was passed provid- ing for the renewal of the charters of provident institutions, PENNSYLVANIA OHIO SAVINGS BANKS. 30 1 savings institutions, and savings banks, to remove a doubt arising under the Constitution, as to charters thereof running over twenty years, in which act it is provided that an}- such provident institution or savings bank having no capital stock, renewing or extending its charter under such act, shall not thereafter be allowed the privilege of a bank of discount, nor be allowed to loan any of its deposits, except upon first mort- gages or liens upon real estate within this state, upon the bonds or securities of the United States, or of this state, or upon the county, city, borough, township or school bonds of any such municipality within this state, or upon any other good and valid security. (L,a\vs of 1885, p. 201.) OHIO. Savings and Loan Associations : They may invest their funds: 42. Stocks and Bonds: In the purchase of stocks, bonds or other evidences of the indebtedness of the United States; stocks and bonds of the state of Ohio; bonds of any municipal corporation of this state, or school bonds of any municipal corporation, special school district or body politic in this state, issued pursuant to law, or of bonds so issued by county com- missioners within this state, to such an amount as may be deemed proper; or of the stocks or bonds of any state that has for five years immediately preceding such investment, paid the interest on its bonded debt; to the extent often per cent of their paid in capital and deposits. 43. Real Estate Loans: In bonds or notes secured by mortgages on unencumbered real estate situate in the county where the association is located, or any adjoining county in this state, worth, exclusive of buildings, at least double the amount loaned thereon, unless accompanied with insurance upon the buildings thereon that will make the value of the real estate and insurance at least double such loan, but not more than fifty per cent of the amount of the paid in capital 302 OHIO INDIANA SAVINGS BANKS. and deposits of any such association shall at any time be invested in such real estate securities. 44. Personal Loans: Such associations may discount notes and bills of exchange, and charge upon any loan or dis- count made any legal interest. The total liabilities of any person, company, corporation or firm, directly or as indorser, to such association for money borrowed, including in the liabil- ities of a company or firm, the liabilities of the members thereof, shall at no time exceed one-fifth part of the paid up capital stock of such association, but the discount of bills of exchange drawn against existing values, and of commercial or business paper, owned by the person, company, corporation or firm negotiating the same, shall not be construed as money borrowed. No director or other officer shall borrow or use the funds of the corporation, except to pay necessary current expenses, to an amount greater than one-half of the stock by him owned or held; nor shall any officer or director be surety for any loan made by such corporation. (Statutes of 1880, sees. 3802-3812, as amended by Laws of 1888, p. 288.) INDIANA. Savings Banks : The trustees of any savings bank in this state may invest the deposits thereof only: 45. Municipal Obligations: In the stocks, bonds or treasury notes of the United States, in the stocks or bonds of this state; in the legally issued orders or bonds of any county, city or town in this state; or in the stocks or bonds of any state that has for ten years previously regularly paid the interest on its legal bonded debt. 46. Mortgages: In bonds or notes secured by mortgage on unencumbered real estate in the county where the bank is located, or in an adjoining county, worth, exclusive of improve- ments, at least double the amount loaned thereon, but not to exceed sixty per cent of the whole amount of deposits shall be so loaned. INDIANA ILLINOIS SAVINGS BANKS. 303 47. Notes, Bills and Drafts: In promissory notes, bills of exchange before maturity, payable at some chartered bank in this state, and having not to exceed twelve months to run, made or indorsed by two or more freeholders of the county in which such bank is located, or of the adjoining county, but no such note or bill shall exceed the sum of five thousand dollars, and not more than five thousand dollars shall be loaned upon the same security. In dealing in exchange by purchasing and selling sight or time drafts, payable out of the state, and indorsed by two freeholders as above. No such draft shall be for a larger sum than five thousand dollars, nor shall any time draft pay- able out of the state have more than sixty days to run, and not more than one draft shall be held by any such bank at any one time, which is secured by the same indorsers, or by any of the same indorsers. Loans of the funds of such bank, while wait- ing investment, may be made upon the security of the stocks and other securities above mentioned, to an amount not exceed- ing ninety per cent of the cash market value thereof. 48. Real Estate: In a banking house requisite for the transaction of its business, and for an income from such por- tion of the same not required for its own use, the cost of such building not to exceed five per cent of its deposits; and in other real estate acquired under mortgages or judicial sales arising out of claims in favor of such bank. 49. Limitation: No loan shall be made upon real estate security, or bonds, notes, or bills, as above provided, without the consent of a majority of the trustees, or of all the committee of investment. (Statutes of 1888, sees. 2721-2727.) ILLINOIS. 50. Savings Banks: The legislature of this state passed an act in 1887 providing for the organization of savings societies or institutions for savings, which included a list of municipal bonds and other securities in which the funds of such institu- tions should be invested; but the Illinois Supreme Court has decided this act to be unconstitutional, on the ground that its 304 MICHIGAN INVESTMENTS BY SAVINGS BANKS. adoption required a vote of the people under the provisions of the state Constitution. (Reedv. People, 18 N. E. Rep., p. 295, decided Sept. 2yth, 1888.) The act may be found on page 77, Laws of 1887. MICHIGAN. 51. Savings Banks: All savings banks in this state are required to keep at least fifteen per cent of their total deposits on hand, in approved banks, payable on demand; or invested in United States bonds. Two-thirds of the remainder of such deposits shall be invested by the board of directors in bonds of the United States, of this state, or of any other state, which has not for ten years previously repudiated its debt or failed to pay the principal or interest thereof; in the authorized public debt or bonds of any city, county, township, village or school district of any state, provided the total indebtedness of such municipality does not exceed five per cent of its assessed valuation, except by a vote of two-thirds of the board of directors, such bonds may be purchased, if the total liabilities do not exceed ten per cent of such assessed valuation; in loans upon negotiable paper secured by any of the said securi- ties; or upon bonds or notes secured by mortgage loans upon unencumbered real estate worth at least double the amount loaned. 52. The remainder of such deposits may be invested in notes, bills, or other evidences of debt, or secured collaterally upon personal property of known marketable value, worth ten per cent more than the amount loaned and the interest for the time loaned; or may be deposited in any national bank, trust company, or bank in cities in this or any other state approved by the commissioners of the banking department as reserve cities. A part of such remainder not exceeding the capital and additional stockholders' liability, may be invested in negotiable paper approved by the board of directors, but the deposits in any one bank shall not exceed ten per cent of WISCONSIN INVESTMENTS BY SAVINGS BANKS. 305 the total deposits, capital and surplus of the depositing bank. (Laws of 1887, chap. 205, sec. 27, adopted by popular vote Nov. 6, 1888; in force Jan. i, 1889.) WISCONSIN. 53. Savings Banks: Savings banks organized under the laws of this state may employ not exceeding one-half of their deposits in making loans on personal security; and in the pur- chase of the public stocks and bonds of the United States; of the states of Ohio, Indiana, Michigan, Illinois, Iowa, Wiscon- sin and Minnesota; or of the authorized bonds of any incor- porated city, village, town, or county in the said states. All other loans shall be secured by mortgage on unencumbered real estate within the said states. 54. Restrictions: No such savings bank shall invest any part of its deposits in the stock of any railroad company, nor loan on, or invest in, any mortgage on real estate, except within the states named. No trustee, director, or manager of any savings bank shall borrow, or be a surety for a borrower of any of the funds thereof. (Laws of 1876, chap. 384.) CHAPTER XXIV. INVESTMENTS BY INSURANCE COMPANIES. MAINE. i. Insurance Companies: The capital and other assets of stock insurance companies in this state, when not needed for use, shall be invested in the funded debt or bonds of the United States, or any of the New England states; in the bonds or securities of any county, town or other municipal corpora- tion of said New England states ; in the purchase of real estate in fee; in loans on mortgages on real estate, or deposits in sav- ings banks in said states; in bonds or stocks of incorporated companies in said states, of undoubted character for credit, insurance company bonds or stocks excepted; but in no case shall any such funds be loaned on the security of names alone. (Statutes of 1883, chap. 49, sec. 8.) MASSACHUSETTS. Insurance Companies: ' Their capital shall only be invested: 2. Mortgages and Municipal Obligations: (i.) In first mortgages on real estate in this commonwealth. (2.) In the public funds of the United States, of any of the New Eng- land states, of New York, Pennsylvania, Ohio, Michigan, Indiana, Illinois, Wisconsin and Iowa, and of the District of Columbia. (3.) In the bonds or notes of any city, county, town, or incorporated district of this commonwealth, or of any city of any other of the New England states, whose net indebt- edness does not exceed five per cent of the last preceding val- 1 These provisions do not apply to life and casualty insurance com- panies organized under chap. 183, Acts of 1885. 306 MASSACHUSETTS INVESTMENTS BY INS. COMPANIES. 307 uation of the property therein for purposes of taxation; or of any county or town of Maine, New Hampshire, Vermont, Rhode Island or Connecticut, whose net indebtedness does not exceed three per cent of such valuation of its taxable property. (4.) In the legally authorized bonds for municipal pur- poses of any city of more than thirty thousand inhabitants in the states of New York, Pennsylvania, Ohio, Michigan, Indiana, Illinois, Wisconsin and Iowa, whose net indebtedness at the date of such investment does not exceed five per cent of the valuation of its property for assessment of taxes. The term 1 ' net indebtedness ' ' to exclude any debt created to provide a supply of water for general domestic use, and to allow credit for the sinking funds of a county, city, town or district, avail- able for the payment of its indebtedness. 3. Railroad Bonds, Notes and Stocks: (5.) In the first mortgage bonds of any railroad company incorporated under the authority of any of the New England states, and whose road is located wholly or in part in the same, and which is in possession of and operating its own road, and has earned and paid regular dividends for the two years next preceding such investment; in the first mortgage bonds, guaranteed by any such railroad company, of any railroad so incorporated whose road is thus located; in the bonds, stocks or notes of any railroad company incorporated under the laws of this common- wealth, whose road is located wholly or in part therein, is unencumbered by mortgage, and which has paid a divi- dend of not less than five per cent per annum for two years next preceding such investment; or in bonds, stocks and notes issued, according to law, of either the Old Colony Railroad Company, the Fitchburgh Railroad Company, or the Wor- cester, Nashua and Rochester Railroad Company. The term railroad companies shall not be construed to include street railway companies. 4. Bank Stock: (6.) In the stock of any bank incor- porated under the authority of this commonwealth, or of any 308 MASSACHUSETTS INVESTMENTS BY INS. COMPANIES. banking association located in the New England states, and incorporated under the authority of the United States. 5. Personal Loans: In loans upon the note or notes of any citizen of this commonwealth secured by pledge as collat- eral of any of the above named securities. Where the pledged securities are of those specified in the first, second, third or fourth clauses, as above, the loan thereon may be of an amount not more than their par value. Where the pledged securities are of those specified in the fifth and sixth clauses the loan thereon shall not exceed their par value, nor be more than four-fifths of their market value. 6. Limitation: No insurance company shall together own or hold in pledge more than one-fourth of the capital stock of any bank, nor invest in or lend upon the stock and bonds together of any railroad company, more than one-tenth of its own capital; nor shall its entire investment in and loans upon all railroad property and securities exceed one-third of its capital; nor shall it loan more than sixty per cent of its capital on mortgages of real estate, nor more than one-fifth of its capi- tal on one mortgage. No officer or member of any committet charged with investing its funds shall ever borrow from or be directly or indirectly liable on any loans made by such bank. 7. Real Estate: Only such real estate may be held as convenient for the accommodation of its business, and costing not exceeding twenty -five per cent of its cash assets; and such real estate as ma}- be acquired under any mortgage owned by or taken upon judgments for debts due such company. (Acts of 1887, chap. 214, sees. 25 and 34.) 8. Foreign Insurance Companies: The capital of foreign insurance companies, and the deposits required of them to be made with the state department, may be in the same class of securities as provided for companies organized under the laws of this state. (Id., sec. 79.) INVESTMENTS BY INSURANCE COMPANIES. 309 RHODE ISLAND. g. Insurance Companies: There are no general laws restricting or limiting the investments of insurance companies organized under the laws of this state. Foreign insurance companies are required to have a capital of at least one hun- dred thousand dollars invested in stocks created by the laws of the United States, or of the state in which any such company is organized, or in any other stocks or securities, the market value of which shall be at or above par. Such securities to the amount named must be deposited with the proper state offi- cer of the state in which the company is organized, and a cer- tificate to that effect must be furnished to the state treasurer of this state. (Statutes 1882, chap. 157, sec. 6.) CONNECTICUT. 10. Life Insurance Companies: Bonds and Stocks Re- strictions: No portion of the capital, assets or income of any life insurance company incorporated or organized under the laws of this state shall be used in the purchase of any stocks or bonds of any mining or manufacturing company in any event; or in the purchase of any stocks or bonds of any other private corporation, upon which last mentioned stocks a regular dividend shall have been passed, or upon which a regular interest shall have been defaulted at any time within three years prior to such invest- ment, and no investments shall be made in any of the stocks or bonds last above referred to, which have not been issued for the space of three years prior to such investment, or which have not a market value equal to the par value thereof, unless the written approval of the insurance commissioner as to such investments shall have first been obtained. 11. Loans: No loans shall hereafter be made of the capi- tal, or funds of any life insurance company organized under the laws of this state, unless secured by mortgage on unin- cumbered real estate worth at least double the amount loaned thereon; or by pledge as collateral, of stocks or b'onds having 3IO INVESTMENTS BY INSURANCE COMPANIES. a market value of at least twenty-five per cent in excess of the amount loaned thereon. Provided, however, that such com- pany may make such loan upon pledge of United States gov- ernment bonds, and bonds of the state of Connecticut at par; but no loan shall be made upon the security of the stock of any mining company or of the stock of any manufacturing company unless the same shall be accompanied by some respon- sible individual guarantee or by other collateral securities of equal value to the amount loaned. 12. Restrictions: No loan or investment shall be made by any such company without the unanimous approval of its finance or executive committee; or the approval of the majority of directors present at any meeting of such directors. Offi- cers are personally liable for any loss sustained by an invest- ment or loan made in violation of the provisions of this act. (Statutes of 1888, sees. 2885-2890.) NEW YORK 13. Insurance Companies :' Any life, fire or marine in- surance company, organized under any of the laws of this state, and transacting business in other states, or foreign countries, may invest the funds required to meet its obligations incurred in such other states or foreign countries, and to conform to the laws thereof respectively, in the same class of securities, that such corporations are allowed to invest in this state; but such corporation shall not loan its moneys on mortgages on real estate, without the limits of this state and states adjacent thereto, except for the said purposes. (Laws of 1886, chap. 394.) 14. Life Insurance and Trust Companies : ' 2 Any life insurance company, or any trust or loan company may by the direction and consent of two-thirds of their respective boards of directors, managers, or proper committees, purchase or invest by loan or otherwise any of their funds in the legally issued bonds of any county, town or village of this 1 For New York corporations general!}", see \ 6, p. 323 herein. 2 Also for New York trust companies see ? 7, p. 323 herein. NKW YORK INVESTMENTS BY INS. COMPANIES. 311 state, anything in the charter of such company to the contrary, notwithstanding. (Laws of 1868, chap. 482.) 15. Life, Health and Casualty Insurance Com- panies: Investment of Capital Stock: The capital stock of such companies shall be invested in stocks or treasury notes of the United States; in bonds and mortgages on improved, unincumbered real estate within this state, worth seventy-five per cent more than the amount loaned thereon, exclusive of farm buildings; or in such stocks or securities as may be re- ceivable by the banking department of this state. 16. Investment of Surplus Funds: The funds and accu- mulations of such companies may be invested in bonds or mortgages on improved unincumbered real estate within this state, or outside of this state within fifty miles of New York city, worth fifty per cent more than the amount loaned thereon; or in the stocks of the United States, of this state, or of any incorporated city in this state, if at or above par; or any stocks created under the laws of this state that shall be at or above par in New York city. Casualty insurance companies may also invest any of their funds, except the amount to be depos- ited with the insurance department, in the same manner as fire insurance companies. (Statutes of 1881, pp. 1493-1494.) 17. Fire and Inland Insurance Companies: Bonds and Stocks: The capital and funds of any such companies organized under the laws of this state may be invested in or loaned on the stocks or treasury notes of the United States; the stocks of this state; or the stocks or bonds of any county or incorporated city in this state, the issue of which is authorized by the legislature. The surplus above the capital stock may be invested in or loaned on the stocks or bonds of any one of the states; or the stocks, bonds or other evidence of indebted- ness of any solvent dividend-paying institution incorporated under the laws of this state, or of the United States, except their own stock. The surplus over the capital and liabilities may be invested, subject of the approval of the insurance de- partment, in the stocks or bonds of any foreign country, to the 312 INVESTMENTS BY INSURANCE COMPANIES. extent which may be provided under the laws thereof, as the condition of such company doing business therein. 18. Real Estate Mortgages: The capital and surplus may be invested in or loaned on bonds and mortgages secured on unincutnbered improved real estate within this state, worth fifty per cent more than the amount loaned thereon, exclusive of buildings, unless such buildings are insured and the policy transferred to the mortgagee. In addition, any amount of such surplus, not exceeding one-half of the annual premium receipts of the company upon its outstanding policies in any other state, may be invested upon bond and mortgage security upon real estate in such state, which shall be duly certified to be unincumbered, improved, and worth double the sum loaned. (Laws of 1871, chap. 608.) 19. Guarantee Sicrplus and Special Reserve Funds: The guarantee surplus fund required of such companies under the act of 1878, shall be invested in the same manner as capital stock and surplus accumulations. The special reserve fund required by the same act shall be invested in the same manner as capi- tal stock, but any amount of such funds in excess of an amount equal to one-half of its capital stock, may be invested in the same manner as surplus accumulations. (Laws of 1878, chap. 282.) 20. Marine Insurance Companies: Investment of Capital Stock: The capital and accumulated funds of any marine insurance company, organized under the laws of this state, may be invested in the stocks of the United States, or of this state; in the stocks or bonds of any incorporated city of this state, which are at or above par at the time of such in- vestment; in the public stocks of any other state; in bonds and mortgages on unincumbered real estate within this state, worth fifty per cent more than the amount loaned. Such funds may also be loaned on any of the said securities as collateral. 21. Investment of Surphis: In addition to the above, the surplus accumulations above the capital stock may be invested in or loaned upon the stocks, bonds or other evidence of NEW YORK INSURANCE COMPANIES NEW JERSEY. 313 indebtedness of any institution incorporated under the laws of this state, except their own stock, provided that the market value of such securities shall be worth at least ten per cent more than the amount loaned. Any special or reserve fund must be invested in the same manner as capital stock, except that the restrictions as to securities being at par shall not a Pply- (Statutes 1881, p. 1462.) 22. Deposits with the State Insurance Depart- ment: The deposits required to be made with the state insurance department by insurance companies organized or doing business in this state, may be in the stocks or bonds of the United States; of this state; or of any incorporated city of this state, all of which must be at or above par; or in bonds and mortgages on unincumbered improved real estate within this state, worth at least fifty per cent more than the amount loaned thereon. 23. Foreign Fire Insurance Companies: Such companies may deposit bonds and mortgages as above, or stocks of the United States or of this state; but such stocks and bonds shall not be received by the department above their par value. Such foreign corporation may also deposit such stocks or secur- ities as may be received by the banking department of this state as security for circulating notes. (Id., pp. 1449, 1480 and 1503.) NEW JERSEY. 24. Insurance Companies : Insurance companies or- ganized under the laws of this state may invest their capital or accumulations in bonds or mortgages on unincumbered real estate within this state, worth double the amount so invested, in the stocks or bonds of this state, or of the United States, or of the states of New York, Ohio, Massachusetts or Pennsyl- vania; or such funds and accumulations may be loaned on the security of any such stocks or bonds. Any company organ- ized for the purpose of marine insurance may also loan their 314 NEW JERSEY INS. COMPANIES PENNSYLVANIA. funds on bottomry and respondentia. (Statutes of 1877, p. 511, sec. 32.) 25. Fire Insurance Companies : Any fire insurance company organized under the laws of this state, and doing business out of this state, may invest a part of its surplus funds in bonds and mortgages on unincumbered real estate situated where it may be doing such business, and worth double the amount so invested; also in such good regular interest paying bonds of states and the municipal corporations thereof as have not within ten years previously defaulted in the payment of either principal or interest of any debt. (Laws of 1883, p. 83.) 26. Deposits with State Comptroller : Insurance companies organized under the laws of this state are required to deposit with the state comptroller twenty thousand dollars (or such additional amount, not exceeding one hundred thou- sand dollars, as may berequired by such comptroller) in stocks or bonds of this state or of the United States, or of the states of New York, Ohio, Massachusetts or Pennsylvania, or of the incorporated cities of this state, bearing at least six per cent interest, or in mortgages on unincumbered real estate within this state worth double the amount invested. (Statutes of *%77, P- 5". sec - 2 4-) PENNSYLVANIA. 27. Life Insurance Companies : The capital of a joint stock life insurance company must be invested in bonds of the United States, or of this state, in the legally issued bonds of any city or county of this state, upon which there has been no default in interest, or in real estate, mortgages or ground rents as hereinafter provided. Such companies must at all times maintain such investments equal to the entire legal valuation of its outstanding policies and other liabilities. 28. Fire and Marine Insurance Companies : Fire and fire and marine companies may, in addition to the invest- PENNSYLVANIA INVESTMENTS BY INS. COMPANIES. 315 raents allowed for life companies, invest their capital in the bonds of any state, that may be at par at the time of the pur- chase; in the first mortgage bonds of solvent railroad cor- porations upon which no default in interest has been made; or may lend the same on the pledge of any of said securities. 29. Mortgages Limitation: All mortgages on real estate must be on improved and unincumbered property within this state, worth fifty per cent more than the sum loaned thereon, ex- clusive of buildings, unless such buildings are insured and the policy transferred to said company. Not more than one-half of the capital of any company shall be -loaned on mortgages of real estate, and not more than one-tenth of its capital shall be invested in a single mortgage. No loan shall be made on personal security. The directors are personally liable for losses resulting from unauthorized loans. 30. Real Estate: Companies may hold only such real estate as may be requisite for the convenient transaction of their business, such fis may have been mortgaged to it, con- veyed to it in satisfaction of debts, or such as may have been purchased under foreclosure in collecting previously contracted debts. All real estate not requisite for use of companies shall be sold within five years after acquiring title. 31. Investment of Surplus: Any money over and above the capital stock of any fire or fire and marine insurance com- panies, or any surplus above the capital and other liabilities of a life insurance company, may be invested in the securities above enumerated, or in the stock or other evidences of indebt- edness of any solvent, dividend-paying corporation created under the laws of this state, or the United States, or loaned upon the pledge of the same, except their own stock; provided that the current market value of such securities shall be at least twenty per cent more than the sum loaned thereon. 32. Mutual Insurance Companies : Mutual compan- ies organized under the laws of this state to make insurance upon lives, to grant and purchase annuities, to make insur- ance upon the health of individuals, or against personal 316 OHIO INVESTMENTS BY INS. COMPANIES. injury or accidents, shall have fifty per cent of their guar- anty capital paid in and invested, less necessary expenses of organization, as provided for other life insurance companies. (Brightly 's Purdon's Digest, p. 913.) 33. Note : A large majority of Pennsylvania compan- ies were organized under special charters, to which this act does apply. The constitution of 1874 prohibits the creating of corporations by special laws in the future, but does not annul those in force. (Art. 3, sec. 7.) OHIO. 34. Life Insurance Companies : Joint stock insurance companies organized under the laws of this state are required to have a paid in capital of at least one hundred thousand dollars, which must be invested in treasury notes, stocks or bonds of the United States, or state of Qhio, or in mortgages on unincumbered real estate within the state of Ohio, worth double the amount of the loan thereon, exclusive of buildings. Such companies ma)- invest their accumulations in United States, state, county or city bonds, if the market value thereof is at least eighty per cent of their par value; in bonds and mortgages upon unincumbered real estate, the market value of which is at least double the amount of the loan thereon, ex- clusive of buildings; in loans upon the pledge of such bonds or mortgages, if the market value thereof is at least twenty- five per cent more than the amount loaned thereon; or on loans upon its own policies, not exceeding the reserve or pres- ent value thereof. (Statutes of 1880, sees. 3591 and 3593.) 35. Foreign Life Insurance Companies : No foreign insurance company is allowed to transact business in this state- unless at least one hundred thousand dollars of its assets are invested in interest bearing bonds or stocks of the United States, or of some state, of the market value of one hundred thousand dollars in the city of New York; or in bonds or mortgages on unincumbered real estate in this state; or in the OHIO INVESTMENTS BY INS. COMPANIES. 317 state under the laws of which such company is organized, worth at least double the amount loaned thereon, and such bonds or mortgages are deposited with the superintendent of insurance of this state, or the proper officer of the state under the laws of whichsuch company isorganized. (Id., sec. 3605.) 36. Insurance Companies Other than Life: Invest- ment of Capital: The capital of insurance companies other than life in this state can only be invested in United States bonds; Ohio state bonds; bonds of a county, town or munici- pal corporation in this state; bonds and mortgages on unin- cumbered real estate in this state worth fifty per cent more than the amount loaned thereon, exclusive of buildings; the stock of any national bank in this state; or first mortgage bonds of railroads in this state, upon which no default has been made in the payment of interest within three years previously. 37. Investment of Other Funds: Other funds of such companies may be loaned on or invested in the above named securities; in bonds' and mortgages on unincumbered real estate in this state, worth fifty per cent more than the amount loaned thereon, exclusive of buildings, unless such buildings are insured in some authorized company, and the policy trans- ferred to the investing company; bonds of any state; stocks, bonds or other evidences of indebtedness of any solvent divi- dend paying institution incorporated under the laws of this state, or of the United States, except its own stock; or nego- tiable promissory notes running not more than six months, secured collaterally by any of the above described securities, with absolute power to sell within twenty days after default in payment at maturity. 38. Limitation: No such company shall own more than one-fourth of the capital stock of any national bank, nor invest in, or loan on the stocks and bonds of any railroad company to an extent exceeding one- tenth of its own capital; nor, in the aggregate, in or on all railroad property, to exceed one- fourth of its own capital. Not more than one-half of its cap- ital shall be loaned on mortgages on real estate, and not more 3l8 ILLINOIS INVESTMENTS BY INS. COMPANIES. than one-tenth of the actual capital of any company shall be invested in a single mortgage. The current market value of any such bonds, stocks or other evidences of indebtedness in which such investment of funds are made, shall be at all times during the continuance of such loan, at least twenty per cent more than the amount loaned thereon. (Statutes of 1880, sees. 3637-3639-) ILLINOIS. 39. Fire, Marine and Inland Navigation Insurance Companies: Any such company may invest its capital and accumulated funds in bonds and mortgages on improved unin- cumbered real estate within this state, worth fifty per cent more than the sum loaned thereon, exclusive of buildings, unless the same be insured and the policy transferred to said company ; in the stocks of this state; in the stocks or treasury notes of the United States; in the stocks of national banks; in the stocks and bonds of any county or incorporated city in this state, authorized to be issued by the legislature; or such capital and funds may be loaned on the security of such stocks, bonds, treasury notes or mortgages. The surplus money accumulated above the capital stock of such companies may also be loaned upon the pledge of the stocks, bonds, or other evidences of indebtedness of any solvent dividend paying institution incor- porated under the laws of this state, or of the United States, except their own stock, provided the current market value of such securities during such loans be at least ten per cent more than the sum loaned thereon. (Laws of 1869, p. 209, sec. 8.) 40. Life Insurance Companies: Such companies may invest their funds in the stocks of the United States, of this state, of any city or town in this state, or of any national bank; in such other stocks and securities as may be approved by the state auditor, or in first lien mortgages on real estate worth at least twice the amount loaned thereon. When any such company shall transact business in any other state, it may invest its surplus funds in such state, in like security, and MICHIGAN INVESTMENTS BY INS. COMPANIES. 319 under the same restrictions as in this state. Before any life insurance company can go into operation under the laws of this state, a guarantee capital of at least one hundred thou- sand dollars must be paid in and invested as above provided. This requirement also applies to foreign companies doing busi- ness in this state. (Laws of 1869, p. 229, sees, i, 3, n and 12.) MICHIGAN. 41. Life Insurance Companies: Such companies are required to have a capital stock of at least one hundred thou- sand dollars, and before doing business they must deposit with the state treasurer, as security for parties insured by them, stocks or bonds of the United States, of this state, or of any city or county in this state, authorized by the legislature, whose indebtedness does not exceed five per cent of the last assessed valuation thereof, such securities to be taken at their par value, exclusive of interest. First mortgages on real estate in this state worth, exclusive of buildings at least double the amount loaned, and bearing interest at not less than five per cent, may be received by the state treasurer on account of such deposit. (Laws of 1887, p. 33.) 42. Fire Insurance Companies: Fire Insurance com- panies incorporated under the laws of this state may invest their capital and funds in bonds or mortgages on unincumbered improved real estate in this state worth double the sum loaned thereon, exclusive of buildings, unless such buildings are insured and the policy transferred to such company; in the bonds of this state; in the bonds or treasury notes of the United States; in the authorized bonds of any county, municipality or school district in this state; or they may loan the same on the security of such bonds, notes or mortgages. (Statutes of 1882, sec. 4275.) 320 INVESTMENTS BY INSURANCE COMPANIES. WISCONSIN. 43. Life and Accident Insurance Companies: Any such corporation, organized under the laws of this state, may invest its funds and accumulations in the stocks or bonds of the United States; of this state; or of any county, incorporated city or town in this state; or in first lien mortgages on real estate worth at least double the amount loaned thereon. Such a corporation may also loan to its policy-holders sums not exceeding one-half of the annual premiums on their policies, upon notes secured thereby. When any such corporation shall transact business in any other state, it may invest its surplus funds in such state on like securities and under the same restrictions as in this state. (Statutes of 1878, sec. 1951, as amended by Laws of 1882, chap. 204.) 44. Fire or Inland Navigation or Transportation Companies: Any such company may invest its capital and accumulated funds in bonds and mortgages on improved unin- cumbered real estate worth at least fifty per cent more than the sum loaned thereon, exclusive of buildings, except such buildings are insured and the policies held by the loaning com- pany; in the authorized stocks of the United States; of this state; or of any city, county, town or village in this state; or loan the same on the security thereof. Any surplus above the cap- ital stock may be invested or loaned upon the pledge of such stocks or bonds of any one of the states; or in the stocks, bonds or other evidences of indebtedness of any solvent divi- dend paying corporation, incorporated under the laws of this state, or of the United States, except their own stock, pro- vided the market value of such securities during the existence of such loan, shall be at least ten per cent more than the sum loaned thereon. (Id., sees. 1903-1911.) CHAPTER XXV. INVESTMENT OF OTHER TRUST AND CORPORATE FUNDS BY TRUST COMPANIES, GUARDIANS, EXECUTORS, ETC. NEW HAMPSHIRE. i. Guardians : Every guardian of a minor after July 7th, 1866, shall invest, in the name of his ward, or in his own name as guardian, any money, or the proceeds of any real estate or personal property of his ward, except when other- wise provided, in notes secured by mortgages on real estate of at least double the value of the notes; in some incorporated sav- ings bank in this state; in the bonds or loans of this state; or of some town, city or county of this state, or of the United States, and in no other way whatever. (Statutes of 1878, chap. 185.) VERMONT. ' 2. Trust Estates : The probate court has jurisdiction of all trust estates, and after notice to interested parties may authorize or require the trustee to sell all or any part of such estate, and invest the proceeds, with any other moneys in the trustees' hands, in real estate, or in any other manner as the court judges most beneficial, and may make any orders as to managing, selling, or investing the same, not inconsistent with the terms of the trust. (Statutes 1880, chap. 119.) MASSACHUSETTS. 3. Mortgage, Loan and Investment Companies : Any such company organized under the laws of this state is 1 For investments by Trust companies in this state, see pp. 288-291, undersavings Banks. (321) 322 INVESTMENTS BY GUARDIANS, EXECUTORS, ETC. required to accumulate a guarantee fund of not less than twenty-five per cent of its paid capital. This fund may be invested in United States bonds; English consols; first mort- gage bonds of any railroad corporation which has paid a divi- dend on its stock for at least three years previously; in the legally authorized bonds for municipal purposes of any city of the United States of not less than thirty thousand inhabitants, whose whole indebtedness shall not exceed five per cent of its last assessed valuation; or in any securities in which savings banks in this state are allowed to invest. (Laws of 1888, chap. 387, sec. 12.) RHODE ISLAND. 4. Guardians: Any guardian may invest any money in his hands, not otherwise required, in notes secured by mort- gage upon real estate in this state; in the bonds of the United States, or of this state; in the bonds or notes of any city or town in this state; or he may deposit the same in any savings bank or trust company in this state, as he shall deem for the best interests of his ward. He may also, under the direction of probate, invest such money in real estate or bank stock in this state. (Statutes of 1882, chap. 169, sec. 38.) CONNECTICUT. 5. Executors, Trustees, Guardians and Conserva- tors : Testamentary and other trustees acting under the pro- bate court, unless otherwise provided, may loan their trust funds on the security of mortgages on unincumbered real estate in this state, double in value the amount loaned; or such funds may be invested in such mortgages; or in the bonds of this state, or of any town, city or borough thereof; or in any bonds, stocks or other securities, which the savings banks in this state may be authorized to invest in; or they may be deposited in such savings banks. Trust funds received by executors, trus- tees, guardians or conservators may be kept invested in the INVESTMENT OF CORPORATE AND TRUST FUNDS. 323 securities received by them, unless otherwise ordered by the probate court, or the instrument creating the trust. (Statutes 1888, sees. 495-496.) NEW YORK. 6. Investments by Corporations : Any corporation, except savings banks, organized under the laws of New York, and transacting business in it and other states or foreign countries, may hold such real estate as shall be requisite for the convenient transaction of its business, and invest its funds in the stocks, bonds and securities of other corporations owning lands situated in this state or such states; provided that loans shall not be made on any stocks upon which dividends shall not have been declared continuously for three years previously ; and provided such stock shall be continuously of a market value of twenty per cent greater than the amount loaned or continued thereon. (Laws of 1883, chap. 361.) 7. Trust Companies: 'The capital of any trust com- pany organized under the laws of this state shall be invested in bonds and mortgages on unincumbered real estate in this state, worth at least double the amount loaned thereon; in the stocks of the United States, or of this state; or in the authorized stocks or bonds of any incorporated city or county in this state. The trustees of any such company may invest trust moneys received by them in the public stocks of the United States, or of any state; or in the authorized bonds or stocks of any incor- porated city or county of this state; or in such real or personal security as they may deem proper. No trust company shall hold stock in any private incorporated company beyond twenty thousand dollars. No loans shall be made directly or indirectly to any trustee or officer of such company. These provisions relating to trust companies, include all trust, loan, mortgage, security guarantee and indemnity companies or associations which receive money on deposit, except banks. (Laws of 1887, chap. 546, sees. 2027-2028.) 1 Also see \ 14, p. 310 herein. 324 INVESTMENT OF CORPORATE AND TRUST FUNDS. 8. Credit Guarantee and Indemnity Companies : Such companies may invest their capital stock and funds in bonds and mortgages on unincumbered real estate, within this state, worth fifty per cent more than the amount loaned, exclu- sive of farm buildings; in the stocks of the United States, or of this state; in the stocks or bonds of any incorporated city in this state, which shall be above par. Loans may be made on the security of such stocks, bonds or mortgages. (Laws of 1886, chap, in, sec. 7.) 9. Title and Bond and Mortgage Guarantee Com- panies : Such companies may invest their capital and funds in mortgages on unincumbered improved real estate in this state, of double the value of the loan, exclusive of buildings, unless the same are fully insured; in the stocks of this state; in the stocks or treasury notes of the United States; or in the authorized stocks or bonds of any county or incorporated city in this state; or such funds may be loaned on any of said securities. The surplus above the capital stock may be in- vested in or loaned upon the public stocks or bonds of the United States, or of any state, provided the market value thereof shall be at least ten per cent more than the amount loaned thereon. (Laws of 1885, chap. 538.) 10. Banks : It is lawful for any bank or banking asso- ciation incorporated under the laws of this state, or for any individual banker, to purchase any of the stocks, bonds or interest bearing obligations of the United States, or of any city, county, town or village in this state. (Laws of 1882, chap. 409, sec. 37.) NEW JERSEY. ii. Guardians, Executors, Etc.: Any executor, admin- istrator, guardian or trustee, whose duty it may be to loan the money intrusted to him, unless otherwise directed by the will, terms of the trust, or the court having the jurisdiction thereof, may invest the same in bonds secured by first mortgage upon real estate estimated to be worth at least twice the amount INVESTMENTS BY GUARDIANS, EXECUTORS, ETC. 325 loaned, at a rate of interest not less than five per cent nor greater than six per cent per annum. (Laws 1881, p. 130.) 12. Deposits to Secure Bank Circulation: Deposits by banks organized under the laws of this state to secure their circulation, may be made in the public stocks (equal to a stock producing not less than four per cent) of this state, of the United States, or of the states of Massachusetts, New York Pennsylvania or Ohio. One-third of such deposits may be in real estate mortgages of the kind and quality provided by law. (Statutes of 1877, pp. 62-63, as amended by chap. 10, Laws of 1884.) PENNSYLVANIA. 13. Guardians, Executors, Etc.: Executors, adminis- trators, guardians and trustees, under an order from the proper court, may invest the trust funds in their hands in the stock or public debt of this commonwealth, or of the city of Philadel- phia; in the bonds or certificates of debt created or issued according to law by any of the counties, cities, school districts or municipal corporations of this commonwealth. (Brightly's Purdon's Digest 1883, P- 5 2 7-) 14. Constitutional Limitation: No act of the general assembly shall authorize the investment of trust funds by executors, administrators, guardians or other trustees in the bonds or stock of any private corporation. (Const. 1874, art. 3, sec. 22.) OHIO. 15. Guardians: It is made the duty of guardians in this state to invest the money of their wards, within a reason- able time after the same is received, in notes or bonds secured by first mortgages on real estate, of at least double the value of the amount loaned or invested, exclusive of improvements, timber or minerals subject to destruction or exhaustion; in bonds of the United States, or of any state, on which default 326 OHIO INVESTMENT OF TRUST FUNDS ILLINOIS. has never been made in the payment of interest; or in the legally issued bonds of any county or city in this state; or, with the approval of the probate court, in productive real estate in this state, the title to be taken in the name of the guardian, as such. If any such guardian fail to loan or invest the money of his ward within such reasonable time, he shall account for such money, with interest thereon. (Statutes of 1886, sec. 2669.) 16. Safe Deposit and Trust Companies: All moneys or properties received in trust by such companies, unless by the terms of the trust some other of investment is pre- scribed, together with the capital of such company, shall be loaned on or invested only in the authorized loans of the United States; of this state; of cities, counties or towns of this state; in the stocks or bonds of any state in the Union that has for five years previously regularly paid the interest on its legal bonded debt; or of the cities, counties or towns of such states which shall have so paid the interest on their legal bonded debt; stocks of national banks organized within this state; "the first mortgage bonds of any railroad company within the states above named," which has earned and paid regular dividends on its stock for five years previously: or first mortgages on real estate in this state; or loaned to individuals, with a sufficient pledge of any of the aforesaid securities, or to this state, or any county, city or town therein. 17. Limitation: No loan shall ever be made, directly or indirectly to any officer, employe or trustee of such company, and not more than ten per cent of its capital shall be invested in any one security or loan, except for a building and vaults. (Laws of 1882, pp. 101-102.) ILLINOIS. 18. Guardians: Every guardian in this state is required to put and keep his ward's money at interest upon security to be approved by the court, or by investing the same, on approval of the court, in United States bonds, or in the bonds of IU.1NOIS INVESTMENT OF TRUST FUNDS WISCONSIN. 327 any county or city, not issued in aid of railroads, and the in- debtedness of which by law is not allowed to exceed five per cent of the assessed valuation thereof. Personal security may be taken for loans not exceeding one hundred dollars. Loans upon real estate shall be secured by first mortgage thereon, not to exceed one half the value thereof. No mortgage loans shall be made for longer than three years, nor be3/ond the minority of the ward, but such mortgages may be extended from year to year without the approval of the court. The guardian is chargeable with interest upon any money which he shall wrongfully or negligently allow to remain in his hands unin- vested. (Laws of 1887, p. 193.) 19. Trust Companies: Under the provisions of the Act of 1887 authorizing certain corporations to accept and exe- cute trusts, as receivers, assignees, executors and trustees, such trust company is required to deposit with the state auditor the sum of two hundred thousand dollars in registered stocks of the United States, or of this state ; or in first lien mortgages on improved, productive real estate in this state, worth at least twice the amount loaned thereon. (Id., p. 144.) WISCONSIN. 20. Trust Companies : Trust companies organized under the laws of this state are required to have a paid in capital stock of at least one hundred thousand dollars, which shall be invested in bonds and mortgages on unincumbered real estate within this state, worth double the amount loaned thereon; in the bonds of the United States or of this state; or in the author- ized bonds of incorporated cities of this state. (Laws of 1883, chap. 294.) SUGGESTIONS TO MUNICIPALITIES ISSUING BONDS. Authority Meetings Elections: The first thing neces- sary is to ascertain that the authority or power to issue bonds exists. 2 All the proceedings or conditions of the act or law under which the issue is made should be followed in detail with substantial strictness. Any action required to be taken, or proceedings had by any county board, city council, or other municipal body, should be had or taken at regular or legally convened meetings, at which a legal quorum is present. The record should show all these facts, and also that the proceed- ings were approved, or the question adopted by the proper number or majority voting therefor. When an election is required, it must be called by a legal notice being given, and held at the time, during the hours, and in the manner provided by law. Record Issue of Bonds: A complete record should be kept by the proper officer of all required proceedings relating to the issue of the bonds, including copies of all calls for meet- ings, election notices, etc., with the proof of service, posting or publication, as the case ma}' require. If the law provides a form for the bonds, that form should be followed, otherwise any appropriate form may be used. It is well to have the bonds contain some recital of the performance of the required facts necessary to a valid issue. A general recital that they are issued under and in accordance, and in all respects in strict conformity with, the laws of the state in which they are issued, as we have seen, protects the holder against irregularities, and will frequently aid in negotiating the bonds. If the issuing municipality has a corporate seal, it should always be attached. 3 1 See chap. 5 herein on The Issue of Municipal Bonds, pp. 43-52. 2 See chap. 2 herein on Power to Issue Bonds, pp. 5-18. 3 As to the Form and Execution of Municipal Bonds, see pp. 45-50; aud as to recitals and their legal effect, see pp. 53-57. (328) SUGGESTIONS AS TO ISSUE OF BONDS. 329 Statement for Purchasers: In offering bonds for sale, that purchasers may act intelligently, it is well to furnish a general statement showing the purpose for which the bonds are issued, amount, denomination, when to be dated, rate of interest, when, where and how payable; when, and how to be sold; under what law the issue is made; the name and character of the municipality or corporation making the issue; the assessed valuation of the taxable property thereof; its population, and total indebtedness, bonded or otherwise; together with any other facts affecting the obligations offered. ' Transcript and Proofs for Examination: Where the pur- chaser requires for a legal examination, papers showing the validity of the issue, the municipality should furnish a duly certified transcript of so much of their record as will show affirmatively the performance of all facts and conditions neces- sary to the legal issue of the bonds, with copies of election notices, proof of publication, etc., in detail, substantially as we have indicated as to the record to be kept. If the bonds are issued under a special act, a copy, or so much thereof as relates to the issue of the bonds, should accompany the papers. This is not so important where the bonds are issued under a general law, as the general statutes are usually more accessible to the examiner; but, even in such cases, where practicable, and especially where the law is a recent one, or subsequent to the general statutes, it frequently expedites the work of examination to furnish such a copy. If the municipality is organized or acting under a special charter, a certified copy of the same or so much thereof as relates to or affects the issue of the bonds, or any proceedings connected therewith, should be furnished. If there is a constitutional or statutory provision limiting the amount of indebtedness which the municipality may incur, or of bonds which may be issued, to a certain per cent of the taxable property therein, a certificate should be furnished from the county clerk or other officer having the 1 Appropriate printed blanks for such statements will be furnished on application to S. A. Kean & Co., at Chicago or New York. 33 SUGGESTIONS AS TO ISSUE OF BONDS. legal charge of the assessment records, showing the amount of such taxable property. In all cases certificates and other proofs should be made by the officer having the legal custody of the records or proofs concerning which he certifies. It is also well, especially in the case of school districts and other similar municipal corporations, to have the bonds accompanied with proofs as to the identity of the officers acting or executing the bonds. AMENDMENTS (pages 288 and 289). Vermont Savings Bank : Since the text was prepared, the following amendments have been made : In section 9, last line of page 288, insert " New York and Ohio " after " New England States. ' ' Beginning with the next sentence on page 289, the section as amended should read "In the municipal bonds, not issued in aid of railroads, of the cities and counties of 10,000 or more inhabitants in Illinois, Indiana, Iowa, Min- nesota, Missouri, New Jersey, Pennsylvania, Wisconsin, and of the cities, counties and towns of 5,000 or more, lying south of the 44th parallel, in Michigan and in the school bonds and independent school district bonds of the same states, provided the indebtedness of such city, county, town or school district (except cities of 75,000 or more) does not exceed five per cent of the assessed valuation thereof ; in the bonds (other than railroad and) of cities of 5,000 or more in the same states, where the municipal indebtedness of such city is not allowed by law to, and does not exceed five per cent of its valuation. In such bonds of counties 'and cities of 15,000 or more in Nebraska and Kansas, the indebtedness of which does not exceed five per cent of its assessed valuation ; or in the public funds of any of the states above named." Section n on page 289 as amended, should read "Such funds may be invested in the stock of any national bank in the New Eng- land States and New York, or of any banking association, or trust company located in and incorporated under the authority of this state." (Above amendments approved Nov. 28, 1888.) GENERAL INDEX. (References are to pages, unless otherwise indicated.) ARIZONA, County board bonds for public buildings 270 County funding bonds 271 Federal limitations on municipal indebtedness, etc 264-265 Laws of, must be submitted to Congress 265 Territorial funding bonds 269 ARKANSAS cities, classification of 224 City and town funding bonds 225 Constitutional limitations, and provisions 222-223 County court, county affairs, managed by 223 County funding and compromise bonds 223-224 Municipal and state bonds, limited to funding existing debts . . 222 Special acts prohibited, except for certain purposes 222 Tax for municipal and state purposes limited 223 Auditor of state, registration of bonds by 50-51 i>ona fide holder defined, rights of 3, 56-57 Bonds (see municipal bonds). CALIFORNIA Cities, classification of 241 City indebtedness, how authorized and incurred 241 City funding and sewer bonds 242 Constitutional limitations and provisions 239 County board of supervisors 240 County bonds, how issued 240 County indebtedness, limitation on 239-240 Funding bonds by counties and their subdivisions 244 School bonds, how authorized and issued 243 Water-works, bonds for, in cities of first class 243 Charter limitations on municipal indebtedness 36-37 COLORADO City and town bonds 236 City and town funding and refunding bonds 236-237 Constitutional limitations and provisions 232-234 County bonds for public buildings, bridges, roads, etc 234 County commissioners 234 331 332 GENERAL IXDEX. County funding and refunding bonds 234-236 Limitation on loans by counties, cities, and school districts, 232-233 School district bonds, for what and how issued 237-238 Collection of municipal bonds by legal proceedings 58 Conditions preceding issue of bonds 43 CONNECTICUT Executors, guardians, trustees, etc., invest- ments by 322 Life insurance companies, investments by 309 Savings banks, investments by 295-297 Constitutional limitations on the issue of bonds 28-42 Constitutional limitations on municipal indebtedness 28-37 Constitutional limitations, indebtedness in excess of, void .... 29-37 Corporations, municipal or public, powers of 5-6 County warrants, certificates, orders, etc 15 County board, less than full number may execute bonds 49 Curative acts to validate irregular bond issue 52 .DAKOTA Calling bonds for payment - 263 City loans and bonds 250, 262 City school bonds 259-261 City funding bonds 251 City internal improvement bonds 251, 262 City sewerage bonds 251, 262 County commissioners, organization and meetings 247 County board required to submit extraordinary outlays to vote . 247 County funding bonds 248-249 District school bonds 258 Limitation on territorial and municipal indebtedness 264 Municipal bonds for bridges, water-works, fire apparatus, etc. . 262 School bonds, for what, and how issued 254-262 School funding and refunding bonds 260-261 Special legislation, federal limitation on 265 Submission of questions to vote of county, how made . . . 247-248 Town bonds, how authorized and issued 252-253 Township debts, must be authorized 252 Township drainage bonds 253 Township school bonds 256-258 Water-works, etc., bonds for 262 Decisions of highest state courts usually control 58-59 Jtimforcement of the payment of bonds 58 Execution of municipal bonds 45 Execution by less than a full board 49 Equitable estoppel, as a protection to bondholders 53~57 GENERAL INDEX. 333 _T onu of municipal bonds 45-46 ijrrist mills, bonds in aid of, in Kansas valid 24 Grist mills, steam, bonds in aid of, in Nebraska invalid 24 Guardians, executors, trustees, etc., investments by 321-327 ADAHO County government county funding bonds .... 281-282 Federal limitations on municipal indebtedness, etc 264-265 School bonds, for what and how issued 283 Town and village government loans bonds 283 ILLINOIS Auditor to register funding and drainage bonds . 101, 108 Bridges, county and town bonds for 104 Constitutional limitations and provisions 9i~9 2 County board of commissioners 92 County bonds 93, 98, 102, 104 City and village bonds 94, 95, 98, 102 City bonds, record of to be kept 95 City and village refunding bonds 94, 98, 102 Drainage bonds 105 108 Funding bonds, provisions of general act 98-102 Funding bonds, act of 1872 102-103 Guardians, ward's money how invested 326-327 Improvement districts in cities and villages bonds 95-96 Insurance companies, investments by 318 Limitation on municipal indebtedness, etc 9 I- 93 Park bond acts 109 Registration of bonds 95~97> 101, 108 Roads and bridges, county bonds for 104 Savings banks, act of 1887, unconstitutional 303 School bonds, in city of Chicago 98 School bonds of school districts, how issued 97 School bonds of townships, for high school buildings 98 Sinking fund to pay registered bonds 103 Special legislation prohibited 92 Tax limit for county purposes, additional authorized how ... 93 Water supply pipes, city, town and village, bonds for 95 Water-works 94~95 Trust companies, deposit with state auditor, in what 327 Implied power to issue bonds 5, 18, 24 Implied power in counties, townships, etc., none 6-7 Implied power in cities, review of decisions 7-18 Indebtedness, in excess of constitutional limitation, void .... 29, 37 Indebtedness, municipal, what constitutes 29-36 334 GENERAL INDEX. INDIANA Bonds should be payable at some bank 89 City aid to bridge, road, railroad and water companies 87 City bonds, in cities of over 15,000 population 84 City funding bonds in cities of over 16,000 voters 85 City funding bonds in cities of under 16,000 voters 85-86 City bonds for water-works 86 Constitutional limitations and provisions 76-77 County bonds for public buildings, and funding 77~79 County bonds for public roads 34~36, 80-82 County bonds to purchase toll roads 82-84 County commissioners 77 County funding bonds in counties of over 20,000 79 County, temporary loans by, limitation 79 Gas-works, city may construct 87 Limitation on municipal debts and subscriptions 76 Railroad aid bonds, by cities, etc 87-89 Savings banks, investments by 302-303 School bonds and school corporations 88-89 Tax, limit of, for county and township purposes 79 Tax, limit of, for city and school purposes 85 Town bonds for public roads 81-82 Town loans, limitation on 87 Township debts, how contracted 86 Water-works, city and town bonds for 86 Insurance companies, investment by 306-320 IOWA Cities and towns, classification of 142 City bonds, in anticipation of revenues ..." * 143 City bonds for street improvements 146-148 City bonds for sewers, gas-works, and electric light plant . 147-149 City bonds, funding acts of 1876 '86 '88 143-145, 152 City bonds for water-works, in cities of second class 149 Constitutional limitations and provisions 136 County board, limit of expenditures by 136-137 County loans, funding bonds 138, 139-141, 152 Defaulted bonds collected through state officers . 141, 144, 145, 153 Drainage bonds, by counties 141-142 Gas-works and electric light bonds 149 Limitation on municipal indebtedness 136 Municipal aid to private corporations, etc., prohibited 154 Municipal loans 136, 143 Railroad aid bonds illegal 154 Refunding bonds of counties, cities and towns 152-155 School bonds 150-151 GENERAL INDEX. 335 Sectarian schools, aid to forbidden 154 Sewerage bonds in cities 147-148 Towns, corporate management funding bonds 143, 146 Water-works, city bonds for 149 IvANSAS Auditor of State, registration of certain bonds by . . 211 Bridges, city bonds for 196, 197, 203, 204, 209, 212 Cemeteries, township bonds for 204 Cities classified 196 Cities of first class, bonds for what and how issued .... 196-198 Cities of second class, bonds for street and other improve- ments 198-200, 218 Cities of second class, funding and refunding bonds .... 200-201 Cities of second class, limit of indebtedness 202 Cities of the third class, refunding and funding bonds . . . 201, 202 Cities of the third class, bonds for general improvements . 203, 218 Cities of the third class, limit of debt, sinking fund 203 Constitutional limitations and provisions 194 County commissioners loans, how made 194-195, 218 County bonds, for fair grounds 195 Duplicate of lost bonds, how obtained 220 Fiscal agency of state in New York, payment of bonds . . 220-221 Funding bonds, general acts 212-213 I/imitations on municipal indebtedness 194, 202, 203 Manufactories, bonds to aid 21-22, and 202, note Natural resources, bonds to encourage 218 Parks, city and township bonds for 196, 204 Poor, bonds to provide buildings for 209 Railroad aid bonds, redemption of 216-218, 219 Railroad aid bonds, funding 200, 201, 212 Sale of bonds, to be first offered school fund commissioners . . 220 School district officers and bonds 205-207 School bonds in cities 207-209 Special legislation 39, 194 Special acts for issue of bonds by cities, etc., void 39 Special acts for issue of bonds by school districts, valid .... 39 Township bonds 203, 204, 209, 212, 213, 216, 218 Water-works, bonds for in cities 197, 215 Wrongful issue of certain bonds, felony 207, 212 Jjagrange manufacturing aid bond case 22 Law of municipal bonds, development and importance 1-2 Legislative control, as to issue of bonds 51 336 GKNERAI, INDEX. Limitations on the issue of municipal bonds (also see under the various states and territories) '.... 28-42 Limitations on municipal indebtedness 28-37 Limitations on state indebtedness 36 Lis pendens, doctrine of, not applicable to bondholders 57 Lost or stolen bonds, purchaser of, usually takes good title .... 57 _M_AINE Insurance companies, investments by 306 Mortgage Loan and Investment companies 321 Savings banks, investments by 286-288 Majority, rule as to determining 44 Mandamus, the usual remedy to enforce payment of bonds .... 58 Manufacturing, bonds to aid, invalid 21-22 MASSACHUSETTS Insurance companies, investments by . 306-308 Savings banks, investments by 291-294 MICHIGAN City bonds for public buildings and improve- ments 111-113 City funding bonds 113 City loans to anticipate special assessments 112 Constitutional limitations and provisions no County board, organization and meetings iio-in County loans, how and for what made limitation iio-in Insurance companies, investments by 319 Savings banks, investments by 304 School bonds, for what and how issued 116-117 Tax limit in cities and counties 110-112 Township bonds, how and for what issued 114 Village government and loans 113-114 Water- works, bonds for by cities and villages 114-115 MINNESOTA Bonds for pviblic buildings in cities, villages, etc. . 135 City funding bonds 129 Constitutional limitations and provisions 127 County board county bonds, for what and how issued 128, 133, 134 Limit of municipal aid to railroads 127 Railroad aid bonds 128-129, I 33~ I 34 School bonds and school districts 130-133 Steam traction road bonds by counties 128-129 Town bonds, how issued 130 MISSOURI Cancellation of paid bonds 193 Cities, classification of 186 Cities of the first class (St. Louis), bonds, how issued 186 Cities of the first class, bonds not required to be registered . . 192 Cities of the second class, bonds for city improvements, etc., 186-188 Cities of the third class, bonds of, for what, and how issued, 188-186 GENERAL INDEX. 337 Cities of the fourth class, bonds of, for what, and how issued . . 189 City funding and refunding bonds 1 86, 1 88, 189, 190 Compromise bonds for railroad aid debts 190 Constitutional limitations and provisions 180-182 County bonds, for what and how issued 183-185 County funding and refunding bonds 185, 190, 195 County government vested in county court 183 Court house bonds issued by counties 183, 192 Funding bonds 190-191 Limitation on state and municipal debts, etc 180-182 Registration of bonds by the state auditor 192 School bonds, for what and how issued 189 State funding bonds 182 Town bonds for funding and compromising debts 190 Village government and loans 189 Water-works, city and village bonds for 188-189 MONTANA Cities and towns classified 274 City and town bonds 274-275 County board bonds for public buildings and funding . . 272-274 I/imitation on municipal indebtedness four per cent 265, 274 School district bonds, how issued 275-276 Municipal bonds defined amount I execution of 45, 49 form of 45-47 " " in excess of constitutional limit, void 29, 37 issued to pay judgments, effect of 37 ' ' number of, not a material part 47 place of payment 48 power to issue 5-18 purposes for which may be issued 19-27 purpose must be public 19 registration by state auditor 50-51 signature to 48 the issue of 40-52 the law of 1-4 Municipal corporations purpose of 5 Municipal classification in Ohio and other states 40-41 Municipal decision by authorized officers in the issue of bonds ... 54 Municipal estoppel by recitals in bonds 53-56 Municipal officers, who must act in the issue of bonds 45 Municipal subscriptions and donations, limitations on 41 Municipal warrants, orders, drafts, etc 14-15 338 GEN KRAI, INDEX. IVEBRASKA Bridges, highways, etc., bonds for 173 Cities classified 160 Cities of first class, bonds for funding 163, 174 Cities of first class, bonds for public buildings, bridges, etc. . 163 Cities of first class, bonds for street improvements, sewers and . water-works 163-164 Cities of second class, bonds for funding 164, 165, 174 Cities of second class, bonds of, must be registered 177 Cities of second class, of over 5,000, funding bonds .... 166, 174 Cities of second class, bonds for street improvements, sewers, water-works, etc 165-166 Cities of metropolitan class, bonds for street improvements, etc 160-162 Coal prospecting bonds by counties 159 Constitutional limitations and provisions 155-156 County board, how composed, meetings 156-157 County bonds for buildings, funding and refunding . . 157-158, 174 Courthouse, jail, etc., bonds for 173 Fiscal agency of state in New York 173 Internal improvement bonds of counties and cities 171 Internal improvement bonds of precincts, villages, etc 173 Internal improvement bonds, refunding 172 Limit on county and municipal aid to railroads 155-156 Limit on taxation for county purposes 156 Railroad aid bonds 155, 171-173 Registration of county bonds 158, 176 Registration of city and village bonds 174, 177 Registration of precinct bonds 174, 178, 179 Registration of school bonds 168 School district bonds 167-169 School bonds in cities 169-171 Special legislation 38-39, 156 Submission of questions to vote of county 159 Village bonds 165, 173, 174 Water-works bonds 163, 165, 166 Negotiability of municipal bonds 53 NEVADA Constitutional limitations and provisions 245 County board, organization and meetings 246 Municipal bonds, usually issued under special acts 246 NEW HAMPSHIRE Guardians, investments by 321 Savings banks, investments by 288 NEW JERSEY Banks, deposits to secure circulation, in what . 325 Guardians, executors, etc., investments by 324 GENERAL INDEX. 339 Insurance companies, investments by 313-314 Savings banks, investments by ' . . . . 299-300 NEW MEXICO Cities and towns classified 267 City and town bonds, for what and how issued 267-268 Federal limitations as to municipal indebtedness, etc. . . . 264-265 Laws of, must be submitted to Congress 265 Railroad aid bonds by counties 266 Water-works in cities and towns 268 NEW YORK Banks may purchase certain municipal obligations . 324 Corporations (except savings banks), investments by 323 Credit guarantee and indemnity companies, investments by . . 324 Deposits with state insurance department, in what made . ... 313 Fire insurance companies, investments by 310-311 Insurance companies, investments by 310-313 Life insurance companies, investments by 310-311 Marine insurance companies, investments by 312 Savings banks, investments by 297-298 Title and bond and mortgage guarantee companies 324 Trust companies, investments by 310, 323 Number of bond not a material part 47 Officers, execution of municipal bonds by 45 OHIO Bonds, how advertised and sold 74 Cities and villages, classification of 4i ( 67 City bonds, for what and how issued 68-7 1 City bonds, exchange of coupon for registered 69 City bonds for turnpike roads 66-67 City bonds refunding by fund commmissioners 70 Constitutional limitations and provisions 62 County board and bonds for public buildings, relief of poor, etc. 63 County bonds for children's home, joint workhouse, and ditches. 64 County bonds to purchase toll bridges and toll roads .... 64-65 County bonds for turnpike roads 66-67 Guardians, investments by 325 Insurance companies, investments by 316-318 Safe deposit and trust companies, investments by 326 Sale of bonds, how made 74 Savings and loan associations, investments by 301-302 School bonds, how issued 72-74 Special acts for the issue of bonds 40, 62, 74-75 Township bonds 71-72 Village bonds 66, 68-71,72 OREGON Bonds usually issued under special acts or charters . . 245 34 GENERAL INDEX. Constitutional limitations and provisions 244-245 Ottawa bond cases 22-24 Over issue of bonds, effect of j PACIFIC STATES, bond laws of, see Chapter XX .... 239-246 Payee in blank, payable to bearer 47 Payment, place of 48 Payment of bonds, enforcement of ^8 PENNSYLVANIA Guardians, executors, etc., investments by . 325 Insurance companies, investments by 314-316 Savings banks, investments by 300 Power of public or municipal corporations to issue bonds .... 5-18 Private purposes, bonds cannot be issued for 19 Private purposes, decisions illustrating 21-25 Public purposes illustrated 19,27 Purposes for which municipal bonds may be issued 19-27 Purpose, how determined, a question for judicial decision . . . 26-27 JXailroad aid bonds 2, 19-21 Regularity of proceedings in issue of bonds record to be kept . 43, 328 Recitals in bonds, effect of as against the municipality .... 53-57 Recitals in bonds, as to what facts conclusive 53~55 Recitals in bonds, as to amount which may be issiied 55 Recitals in bonds, will not cure want of power 56-57 Registration of bonds by state auditor, efiect of 50-51 Remedies of bondholders cannot be repealed 59~6o RHODE ISLAND Guardians, investments by 322 Insurance companies, iuvestments by 309 Savings banks, investments by 295 Rights and remedies of municipal bondholders 53~6o Savings banks, investments by 286-305 Seal, should be affixed to munipipal bonds 49 Seal not essential to validity of municipal obligations 49 Signatures to bonds, what constitutes 48 Signatures to coupons may be engraved, stamped, etc 48 Special acts, issue of bonds under, in Nebraska, Kansas, etc. . . . 38-41 Special assessment bonds 32-36 Special assessment bonds, municipality issuing usually liable . . 32-36 Special assessment bonds, Ohio and Kansas cases 32-34 Special assessment bonds, Indiana cases, contra 34~36 Special legislation, constitutional provisions considered . . . 38, 41, 42 Special legislation, Nebraska, Kansas and Ohio cases .... 38, 41, 42 GENERAL INDEX. 341 State indebtedness, limitation on 36 Suggestions to municipalities as to issue of bonds 328-330 _L axes to pay bonds, right to levy accompanies power to issue ... 59 Taxation can only be exercised for a public purpose 19, 26 Tax laws irrepealable as to outstanding bonds 59~6o TERRITORIES for bond laws see chapters XXI XXII . . 247-284 Federal limitation as to municipal indebtedness, etc. . . . 264-265 Federal limitation as to special legislation 265 Laws of, except Dakota, Idaho, Montana and Wyoming, must be submitted to Congress 265 TEXA City bonds, for what issued 228, 229, 230, 231 Compromise bonds of counties, cities and towns 230-231 Constitutional limitations and provisions 226-227 County government under commissioners' court .... . . 227 County bonds for bridges, courthouse and jail 227 County funding bonds 228, 230 Town bonds for funding, etc 230-231 Trust companies, investments by 321-327 U S. Supreme court, in law of municipal bonds 3 As to implied power of counties, etc., to issue bonds 6-7 As to implied power of cities to issue bonds 14-17 UTAH County affairs managed by county court 280 County indebtedness, limit on 264, 280 Federal limitations on municipal indebtedness, etc .... 264-265 Laws of, must be submitted to Congress 265 VERMONT Savings bank and trust company investments . 288-291 (But see amendments page 330.} Investment of trust estates 321 \\arrants, municipal, legal characteristics of 14-15 WASHINGTON TERRITORY Cities under special charters . 284 County government issue of bonds 284 Water- works, contract to pay for in annual installments 30-3 1 WISCONSIN Bonds, how authorized and issued 125-126 Bonds for bridges 122-123 City and village bonds 119-120 Constitutional limitations and provisions 118 County board of supervisors 118 County bonds, for what; and how issued 120, 122, 123 Insurance companies, investments by 320 Limitation on municipal indebtedness 118 Limitation of actions on bonds 126 342 GENERAL INDEX. Railroad aid bonds 123-125 Refunding bonds generally 122 Savings banks, investments by 305 School districts, loans by 121 Town board, issue of bonds 120 Trust companies, capital stock of, how invested 327 WYOMING City and town bonds 279 County board, funding bonds 277-278 Federal limitation on municipal indebtedness 264-265 Railroad aid bonds by counties 278 School districts, and school district bonds 279-280 S. A. KEAN & CO.'S TABLES. COOJ>CST-i-*fOX>GSOOaOQ i-i C5 J> L- * Ot O X I- O CO T- O tn *? cc -* t-ocos' es}-Tt<c t- oc? co it-ci ~- ai-i co L~ oo o cj LC t- r^o>c-oTO^O5(X)^o5oooJ>ocoT^oi>o^e<joaoi^oo3THOoo35M< * ?o ao os4 -^ o ao o OT LO r O^O-^iN-rHCJt ICCCCJOQO I!! j OO O tO -I-H OS t- xfi CJ osaoL--co-<*cocT-( CJ O 00 CO l OS Z> W CO " * <? 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So M* OOtOOiOCO-CO^T'O x 88 ss & ~J~ UU C- iJ f\) ^7 : ^^ TO ci cot - ^- i~ i^J x i - ?> o co p -^ i;? ic SStSi^iS^ 111 ^ 1 o r- 7? ^^ p ^r x 7>5 ^r opppppppp '^S:E*P5*$? ^fjSi-jiiStCi-xS QO-r ^olco-^iotoi^ap ;; T-I j": x CO CO -^ f 5 ?> i - ec c-. -T o o r" o -r i_- j- ^r a. ^ o p o o ?* .c t- B5 i- " " 1-1 > 5888838S t- o co t" o i ^ * 'ss'5 MS ;j oj 8 a 8 -j; rf 8 !*, asciP'ScOP--- f^j, OCCP^ C4 ro sissiSSSsl o ac 1- P SO 1- P CO t- -^ p CC p CO ^ COOCOOo 04- s. A. KEAN & co.'s L/WV OFJVIUjMICIPy\L BO^DS, INCLUDING A DIGEST OF LAWS RELATING TO THEIR ISSUE, To which is added a Digest of Statutory Laws goverqiqg INVESTMENTS by Savings Baqks, Iqsuraqce Conqpanies, Guardiaqs, Executors, aqd other Corporations and Trustees. J. A. BURHANS, OF THE CHICAGO BAR. S. A. KEAN & CO.'S Bond Values and Interest Tables. Our Bond Tables were prepared expressly for us by JOSKl'H DKGHUEE, of New York, and we believe that they are the most comprehensive and practical tables now extant. The Interest Tables were prepared for us by Mr. H. C. CHADWICK, of this city, after a method devised by himself, who claims for them brevity, accuracy and conven- ience, and we believe our friends will find them valuable and more comprehensive than any other in existence. PRICES: Law of Municipal Bonds, Leather, $3.00; Cloth, $2.50 Bond Values and Interest Tables " 2.00 ; " 1.50 Both above books bound together " 4.00; " 3.00 S. A. KEAN. JOHN PARSON Banking ^ouse of S. H. Ikean & Company, 100 ftkstyngton Strwt, ESTABLISHED 186O. NEW YORK: BOREEL BUILDING, IIS BROADWAY. Q0an8in<j Qfccounte, CAREFUL attention given to the accounts of out of town Banks and Bankers, to whom we allow interest on daily balances. We credit time and sight items on Chicago and other points, discount business paper, and make telegraphic and cable transfers. We also receive the accounts of merchants, individuals and others, Collections. Our extensive connections enable us to make collec- tions, including dividends and coupons, on exceptionally favorable terms, Send for par list, .foreign tetyange on the larger cities of Europe bought and sold. Letters of Credit for travelers, WE BUY, SELL AND EXCHANGE unicipaf AND ALSO LEADING R R Bonfo? AND OTHER CONSERVATIVE SECURITIES. SEND FOR LIST. WE DEAL IN Banb TUarrante anb Which[ caq be applied iq the locatioq of Government land, Iq additioq to regular discounts for those keeping ac- counts wit^ us, we also deal iq made for actual transactions iq the purchase and sale of goods. Double and single name paper, and paper secured by collaterals. Ask for weekly offerings, if desired. CAPITAL $150.OOO C. C. CHENEY, President. C. A. CHAPMAN, Treasurer. Incorporated 1864. C. HKINEMAN, Secretary. WESTERN BANK NOTE COMPANY NEW LOCATION, 298-306 DEARBORN STREET, CHICAGO. ENGRAVERS AND PRINTERS OF ALL CLASSES OF COMMERCIAL WORK. STEEL PLATE # LITH9GRAPHY DRAFTS, CHECKS, LETTERS. ONDS /^ CERTIFICATES OF STOCK, DIPLOMAS. GEO. E. COLE. W. D. COOPER. GEO. E. COLE & CO., Stationers and Printers, Solicit an opportunity to quote you prices on anything you need in our line. 86 AND 88 DEARBORN ST., CHICAGO. A. C. M'CLURG & CO., Stationers and Engravers. LETTER-HEADS, CHECKS, NOTES, BUSINESS CARDS, DRAFTS, BONDS, MENUS, INVITATIONS, Etc., for Reunions and Receptions, ele- gantly engraved or lithographed. ORIGINAL DESIGNS WITH ESTIMATES WILL BE FURNISHED ON APPLICATION. WABASH AVENUE and MADISON STREET, Chicago. B. F. JACOBS, REAL ESTATE AND LOANS, 99 Washington St., CHICAGO. Attention is invited to the following subdivisions : THE HON. L. P. MORTON'S DOUGLAS PARK SUBDIVISION Lots on Douglas Park, California-av., and Twenty-second-st. CHICAGO UNIVERSITY SUBDIVISION Ashland av., Paulina-st., Wood-st., Lincoln St., Robey-st, and Forty-seventh to Fifty-first-t. SCOBEY & SHONTS' SUBDIVISION Sixty-second, Sixty third, Loomis and Laflin-sts. B. F. JACOBS' EVERGREEN PARK SUBDIVISION Ninety-first to Ninety-fifth-st. and Johnson-av. REYNOLDS' SUBDIVISION Morgan Park, io 5 th to loyth-st. and Western-av. OUR SUBDIVISIONS South Park, Calumet, Michigan and Wabash-avs. and 82d and Ssth-sts. ACRE TRACTS Containing from five to one hundred and sixty acres, in and near the city, ready for subdividing. ou wish to sell or buy properly in Chicago or Cook County, or make inquiries concerning property, loans or taxes, I shall be pleased to hear from you, A small map of the city and suburbs mailed free if requested. ^' *-lIJ/"' 1/ '\ r*.**** f i " V ** / --y J T^T""X. * V*" *"*S 'sii/ ^*- "*f*^s f 'V.*=A; ~*^:> " ^-'CW ; -''v^) --4 *: v l'-^ \\^l' J^K 1 T^ ' ^f^'^ ^ ! ^R^t^ * \ f ^ /: ;> -\ 'X^^-fr^ ^ z a^\ \ cr ^' V '-sr^i.T^s < \ c ^y J '^^-^ T'^i x <o ^' ^ Jf^^ ^4i^ ;t ^'"% V^^St?^ 4 D ^"'Sva% 4%^ ^%j^'^*H5 c $y^3^fe^^ s^^^^ss^iis^ ' f -- fl ZJT . " si^r^nNMr sil^^H < '.wL -^ \SL?>. 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