Opinion of the Court.

of Tennessee, That the Mayor and City Council or the Board of Mayor and Aldermen of any incorporated city or town in the State of Tennessee, having a population of from one thousand to twenty thousand, are hereby authorized in their corporate capacity to issue the bonds of the said city or town, signed by the Mayor and countersigned by the Recorder of said city or town, with coupons for interest attached, to an amount not exceeding Fifteen Thousand Dollars. The Bonds herein provided for may be executed of denominations from Twenty-five to Five Hundred Dollars, at discretion of said Mayor and City Council or Mayor and Aldermen, and to mature at such times as may be fixed by said Mayor and City Council or Mayor and Aldermen, from one to twenty years after date, and bearing interest at the rate of eight per cent per annum, payable semi-annually; the past-due coupons on which bonds shall be receivable for taxes, and all other dues to the corporation issuing the same: Provided, That the bonds issued under the provisions of this Act shall be alone for the purpose of paying outstanding liabilities against the city or corporation issuing them, and shall not in any case exceed the unsettled and matured liabilities or debts of such city or corporation at the time of issuance thereof; but in no event shall the bonds be issued without the consent of threefourths of the qualified voters voting at an election to be held for that purpose under the supervision of said Mayor and City Council or Board of Aldermen.

"SEC. 2. Be it further enacted, That the said Mayor and City Council or Mayor and Aldermen of said city or town are hereby authorized to issue at par such coupon bonds as are provided for in this Act, to the holders of bona fide claims against said city or town, in liquidation and discharge of such claims and interest thereon, and to such others as are willing to take them at par, not to exceed in amount said sum of fifteen thousand dollars: Provided, That in no case shall said Mayor and City Council or Mayor and Aldermen of said city or town, as the agent for that purpose, sell under their par value any of the bonds the issuance of which is authorized by this act: Provided further, That the proposed rate of interest

Opinion of the Court.

the bonds are to bear shall be specified and submitted to the vote of the inhabitants of such corporations, at the time the election is held in regard to the issuance of the bonds."

By the express provision of section 1 of this act, the bonds to be issued under it are to "be alone for the purpose of paying outstanding liabilities against the city or corporation issuing them;" and it is provided that they "shall not in any case exceed the unsettled and matured liabilities or debts of such city or corporation at the time of issuance thereof; and, by section 2, they are to be issued "to the holders of bona fide claims against said city or town, in liquidation and discharge of such claims and interest thereon, and to such others as are willing to take them at par."

We are of opinion that this statute has no application to the present case. Its object was manifestly to enable certain incorporated cities and towns to fund their matured debts, by issuing bonds of the character specified in the act. The debts for which they were to be issued were not only to be unsettled debts, but matured debts, and the bonds were not to be issued in any event without the consent of three-fourths of the qualified voters voting at an election to be held for the purpose. When the election in the present case was held, no debt created by any subscription to any stock had yet been incurred; and it is expressly stipulated, in the agreed statement of facts, that the question of subscribing $12,000 to the stock of the company, and the question of paying such subscription in bonds, were submitted to the voters as a single question, at one and the same time, and were approved by the same vote. Indeed, from the record of the proceedings of the board of mayor and aldermen of the town, there does not appear to have been any submission to the voters of the question of subscribing to the stock of the railroad company, or of issuing the bonds in payment for any such subscription, but only the question of whether the bonds should be issued by the town. to the company as a donation or subscription of bonds; and the bonds themselves, on their face, carry out only the same idea. Still, it is agreed that the bonds were issued in payment of a "stock subscription" made by the town to the railroad

Gpinion of the Court.

company. But, even in that view, the liability on the subscription to the stock was not such a matured liability or debt of the town, at the time the election was held, as the act of 1872 refers to. The vote of the people was, at most, a vote to subscribe for the stock. The terms of the vote appear to have been "For subscription," or " No subscription." The vote to subscribe for the stock and the vote to issue the bonds were one and the same vote, comprehended in the words "For subscription." In order to make the liability for the subscription a "matured" liability of the town, it was necessary that the subscription should be actually made, in pursuance of the vote, and that the terms for paying the money in discharge of it should be determined, and that an election should be thereafter held to vote in regard to issuing bonds for the liability, as a matured liability, and in view of all the terms and circumstances of such liability. No such election was held after any liability for the subscription became a matured liability.

In regard to the effect of the decree of the Chancery Court, of January 9, 1875, it is to be said, that it was made in a suit by the town authorities to enjoin perpetually the collection of the bonds, on the ground that they were issued without authority of law. By the decree it was ordered, by consent of the parties, that the preliminary injunction should be dissolved and the demurrer be overruled. This left the bill to stand as it was originally filed. The decree sets forth that the suit had been settled by an agreement, a copy of which is embodied in the decree. That agreement refers to the bonds as having been issued by the town "to aid in the construction of said road," that is, the road of the Mississippi Central Railroad Company. It does not refer to the bonds as having been issued in payment of a subscription to the stock of the company. It then sets forth that it has been agreed by the town and the New Orleans, St. Louis and Chicago Railroad Company, (into which the Mississippi Central Railroad Company had been merged, by contract of consolidation between the last-named company and the New Orleans, Jackson and Great Northern Railroad Company,) that the suit

Opinion of the Court.

should be compromised by the issue, by the New Orleans, St. Louis and Chicago Railroad Company, to the town, of certificates of stock, in the sum of $500 each, dollar for dollar, for the $12,000 of bonds, the town agreeing, on the receipt of the stock, to let a decree be entered in the cause in favor of the validity of the bonds, which were to be redelivered, with the seal of the town affixed, and the costs of the suit were to be paid by the New Orleans, St. Louis and Chicago Railroad Company.

The substance of this is that, on the bill, it standing good, with the demurrer to be overruled, the plaintiffs agree, notwithstanding the averments of the bill, that the bonds are valid. The decree then states, that, in pursuance of that agreement and by consent of the parties, it is decreed, that the New Orleans, St. Louis and Chicago Railroad Company shall issue to the town the certificates of stock in the company referred to in the agreement; that, on the presentation of those certificates, the town shall have its corporate seal affixed to each of the twelve bonds; and that the bonds and their coupons are declared to be valid and binding on the town and its authorities.

This was no adjudication by the court of the validity of the bonds, on the submission to it, as a judicial tribunal, of the question of such validity. The declaration of the validity of the bonds, contained in the decree, was made solely in pursuance of the consent to that effect contained in the agreement signed by the mayor of the town and the officer of the New Orleans, St. Louis and Chicago Railroad Company. The act of the mayor, in signing that agreement, could give no validity to the bonds, if they had none at the time the agreement was made. The want of authority to issue them extended to a want of authority to declare them valid. The mayor had no such authority. The decree of the court was based solely upon the declaration of the mayor, in the agreement, that the bonds were valid; and that declaration was of no more effect than the declaration of the mayor, in the bill in chancery, that the bonds were invalid.

The adjudication in the decree cannot, under the circum

Statement of the Case.

stances, be set up as a judicial determination of the validity of the bonds. (Russell v. Place, 94 U. S. 606; Manhattan Life Ins. Co. v. Broughton, 109 U. S. 121, 125.) This was not the case of a submission to the court of a question for its decision on the merits, but it was a consent in advance to a particular decision, by a person who had no right to bind the town by such a consent, because it gave life to invalid bonds; and the authorities of the town had no more power to do so than they had to issue the bonds originally.

There is nothing inconsistent with this view in Nashville &c. Railway Co. v. United States, (113 U. S. 261,) where it was held, that a decree in equity, by consent of parties, and upon a compromise between them, was a bar to a subsequent suit upon a claim therein set forth as among the matters compromised and settled, although not in fact litigated in the suit in which the decree was rendered. In that case both parties had full power to make the compromise involved.

The judgment of the Circuit Court is affirmed.

NORTON v. DYERSBURG.

ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF TENNESSEE.

No. 207. Argued April 5, 1888. Decided April 23, 1888.

In this case, certain negotiable bonds issued by the town of Dyersburg, Tennessee, were held to have been issued without lawful authority. Certain provisions of the statutes of Tennessee considered and held not to confer power on the town of Dyersburg to issue the bonds in question. The grant to a municipal corporation of the power to subscribe for stock in a railroad company does not carry with it the implied authority to issue negotiable bonds therefor; and such is the view of the Supreme Court of Tennessee.

In a suit at law against the town to recover on the bonds, no question growing out of the liability of the town for the subscription to the stock can be inquired into.

THE Court stated the case as follows: