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books cannot testify to facts appearing from them, without laying the same foundation as in the case of private books, and showing that the entries are of the character that can be given in evidence by the party

making them. 3. MUNICIPAL CORPORATIONS-RAILROAD AID BONDS-SOUTH CAROLINA CONSTI

TUTIOX.

The legislature of South Carolina has power, under article y, 88, of the constitution of the state, providing that it may permit municipal corporations to assess and collect taxes for corporate purposes only, to authorize

such corporations to issue bonds to aid in the construction of railroads. 4. SAME-LIMUT OF INDEBTEDNESS.

The charter of a town, permitting it to issue bonds. in aid of the construction of railroads to any amount, is not in conflict with article 9, § 17, of the constitution of South (Carolina, limiting the indebtedness of municipal corporations to 8 per cent. of their taxable property, since the provision of the charter will be held to operate only within the constitutional

limit. 5. TAXATION-REFUND OF TAXES.

A statute providing that a large part of the taxes paid by a certain class of persons shall be refunded to them does not have the effect of exempting the property of such persons from taxation, so as to reduce the amount of

taxable property upon which a limit of indebtedness is to be computed. 6. SAME-FAILURE TO MAKE ASSESSMENT IN TIME

A municipal corporation cannot dispute the validity of an assessinent made by its oficers, on the ground that it was not completed and filed within the statutory time, so as to invalidate an indebtedness based upon such assessment.

In Error to the Circuit Court of the United States for the District of South Carolina.

This was an action by the Atlantic Trust Company against the town of Darlington, S. C., to recover the amount of certain coupons cut from bonds of the town. The circuit court, upon a trial by the court without a jury (63 Fed. 76), gave judgment for the plaintiff. Defendant brings error. Affirmed.

J. E. Burke (Henry A. M. Smith, on the brief), for plaintiff in error.

Augustine T. Smythe (Sullivan & Cromwell, on the brief), for defendant in error. .

Before FULLER, Circuit Justice, GOFF, Circuit Judge, and SEY. MOUR, District Judge.

GOFF, Circuit Judge. The town of Darlington, in the state of South Carolina, acting by its mayor and board of aldermen, who had been duly authorized so to do, on the 22d day of April, 1890, made an agreement with the Central Carolina Land & Improvement Company, by which that company bound itself to construct and equip a railroad that should be acceptable to the railroad commissioners of the state of South Carolina, from Sumpter, via Darling ton, to Bennettsville; and in consideration thereof the town of Darlington agreed to turn over to the said land and improvement company, upon the completion of the milroad, the bonds of said town (due 30 years after date, bearing 5 per cent. interest per annum) at the rate of $2,000 per mile (not including sidings and side tracks), and also to convey to that company a certain tract of land located in Darlington, containing 24 acres, for the use of said railroad, and, in addition, to exempt the railroad company from all taxes to be assessed for the period of five years from its completion, and also to pay the one-half of all expenses incurred in obtaining the right of way for said railroad to the town of Bennettsville. On the 23a of April, 1890, an additional agreement between the same parties relative to the same matter was entered into, by which 80 of the bonds described in the first contract, of $1,000 each, with certain other securities amounting to $5,000, were deposited in escrow with the American Loan & Trust Company of New York, which bonds and securities, or so much of the same as should be proper, were to be delivered to the Central Carolina Land & Improvement Company upon the performance by it of the first-mentioned agreement, which was to be evidenced by the certificate of the railroad commissioners of the state of South Carolina; it also being provided that, should any of said bonds and securities so deposited remain in the hands of such loan and trust company, after the land and improvement company has been paid the full sum due it, such excess should be returned to the town of Darlington. The bonds were duly executed by the town, and deposited with the loan and trust company according to the terms of the agreement referred to; and afterwards, by an agreement between the same parties, dated April 1, 1891, the Atlantic Trust Company was substituted in the place of the American Loan & Trust Company, the bonds and securities being turned over to it.

The charter of the town of Darlington contains the following provisions:

Sec. 17. That the said mayor and aldermen shall annually appoint three citizens of said town to assess the value of real estate for taxation; and said assessors, before entering upon their work, shall take an oath to fairly and impartially assess each parcel of real estate in said town, and a report in writing of the assessment as made by them shall be signed by said assessors, and the same filed in the office of the clerk of said town within a period of ten days next ensuing upon the date of their appointment to assess the real estate of said town.

Sec. 29. That the said mayor and aldermen, may, for the purpose of internal improvements, borrow money, issue bonds or scrip therefor, bearing not a greater interest than 7 per cent., payable at such times as they may think advisable, and payable out of the taxes and incomes of said town, provided. said principal of bonds and scrip shall at no time exceed $5,000, except for the purpose of aiding in the construction of railroads; and for that purpose the said mayor and aldermen may issue bonds or scrip in any amount; provided, further, that the right to issue said bonds or scrip shall exist only in the majority vote of the town, as hereinafter provided. That no one shall be entitled to vote on said question, unless he or she is the owner of property within the corporate limits of said town, and has returned and paid taxes on $100 worth of property the year immediately previous to said voting, and on each $100 worth of property so returned or paid for, the person or persons shall be entitled to one vote. The manner of holding said election shall be provided for by the town council of said town; it is also further provided that the time, manner and form, of payment of said bonds or scrip, shall be provided for by the town council of said town, and that no bond shall be sold for less than its par value.

The constitution of the state of South Carolina contains the following provision:

Article 9, § 17. No bonded debt hereafter incurred by any county, municipal corporation or political division of this state shall ever exceed eight per centum of the assessed value of all the taxable property therein.

The town council of Darlington, on January 31, 1890, appointed the board of assessors, as authorized by section 17 of the charter. The board so appointed, made the assessment for the year 1890, but made no return and filed no report of assessment within 10 days after its appointment, but did file the same on the 28th of February, 1890. The assessment so made included the property of the Darlington Manufacturing Company, a corporation doing business in said town, and entitled to the benefits of the provisions of section 169, subd. 23, Gen. St. S. C., which reads as follows:

Any person who, since the 1st of January, 1872, has invested, or may invest capital in the manufacture of cotton, woolen or paper fabrics, iron from iron ores, and agricultural implements, within this state, shall, for the period of ten years from the date of his investment, be entitled to receive from the treasury of the state, a sum equal to the aggregate amount of state, and, from the county treasurer, the aggregate amount of county taxes, less the two mills for school purposes; and from the treasurers of all the municipal corporations, a sum equal to the aggregate amount of municipal taxes, which shall be levied and collected upon the property or capital employed or invested directly in such manufactures or enterprises; not including herein the tax levied upon the land upon which the factories may be erected. The sum of money so to be repaid, to be fixed and determined by the comptroller general in accordance with the tax returns, the state tax to be paid by the state treasurer on his warrant, and the county tax by the county treasurer, under the order of the comptroller general.

By virtue of section 18 of the charter of the town of Darlington, the personal property within the same is assessed for taxation by the clerk of the town upon the returns as made by the property owners. The aggregate assessment of the real and personal property located in said town made in February, 1890, was $1,119,685. Included in this aggregate was the property of said manufacturing company, its real estate being valued at $70,000, and its personalty at $125,000, on which it was entitled to receive the refund of taxes provided for in said section 169. Excluding the property of such manufacturing company from the assessment roll, the total of taxable property in the town for the year 1890 was $824,685.

In April, 1890, an election was held under said section 29, and the result was in favor of issuing the bonds now in controversy, which were then duly executed and deposited, as before mentioned. Thereafter, upon the certificate of the railroad commissioners of the state of South Carolina that the railroad had been completed as contracted for, bonds to the amount of $73,000 were turned over to the order of the Central Carolina Land & Improvement Company, for which that company delivered to the town of Darlington stock of the Charleston, Sumpter & Northern Railroad Company of the par value of $73,000, as shown by that company's certificate of stock for 730 shares. Said bonds were received by the Atlantic Trust Company, and held by it to secure the payment of a loan to the Central Carolina Land & Improvement Company amounting to $75,000, which said loan had been used by the last-named company in constructing said railroad. The town authorities afterwards surrendered the certificate for 730 shares of stock, and received in lieu thereof another for 680 shares, and other certificates for the residue, made out in the names of various parties who had subscribed for the same, and who paid the town cash for the same, at the par value of the stock. This suit was brought by the Atlantic Trust Company to recover from the town of Darlington the sum due by it for the overdue and unpaid coupons of the bonds so issued and outstanding. The case was, by agreement of the parties, tried by the court without a jury, and judgment was rendered in favor of the plaintiff below for the sum of $6,873.60 and costs. The defendant below brings the case here on writ of error.

It appears from the bill of exceptions that during the trial the defendant below offered to prove by the official custodian of its records that it was shown by the assessment roll book of the town of Darlington that there was written thereon, below the total aggregate of the property subject to taxation in said town, a statement that the property of the Darlington Manufacturing Company, which was included in such aggregate, was “exempt from taxation,” and that the court refused to permit such testimony to be given. The plaintiff in error insists that the court below erred in so doing. It is claimed that it is the duty of a party entering into a contract with a municipal corporation, relative to its bonds, to examine the official records of such municipality, in order to ascertain if the several requirements of the constitution and the laws have been respected. Hence the insistence that, in this case, it was shown by the rolls that the indebtedness to be incurred by the issuing of the bonds in suit would have exceeded 8 per cent. of the property of the town as assessed for taxation,-excluding the property of said manufacturing company,—and that the parties receiving such bonds are presumed to have made such examination, and to have acted on the information so obtained. We will concede that in such cases great caution should be exercised, and that all proper efforts should be resorted to by those dealing with municipal corporations to see that they act within constitutional and statutory limitations. Still, does it follow in this case that the situation claimed by plaintiff in error would have been shown to exist by the testimony so excluded? Will a statement of the character indicated—will an indorsement made by the town clerk on the official assessment rolls to that effect-serve to release the property so referred to from taxation? Can the provision of the constitution of South Carolina, by which only property used for municipal, literary, scientific, or charitable purposes is exempt from taxation, be rendered inoperative by such action on the part of the custodian of the records of the towns in that state? Certainly not, and the mere statement of such a proposition should be its own refutation. It follows that the court below did not err in excluding such testimony.

It further appears that, pending the trial, the defendant below, during the examination of a witness who had testified that he was the custodian and bookkeeper of the town of Darlington, and who then had its official account books before him, asked said witness to state from such books the amount of the outstanding bonded indebtedness of said town during the month of April, 1890, and that on objection of the plaintiff below the court refused to permit such question to be answered; that defendant below then offered to prove by the same witness that the books before him were the official account books of the town of Darlington, in his custody as the clerk of said town, and that the same were either in his handwriting or in the handwriting of his predecessor in office, and then to show from the same the amount of such indebtedness of said town in January and in April, 1890, which testimony so offered was also refused by the court, and the refusal is now assigned as error. The books so offered were not public records in any such sense as to make their contents evidence. There was no effort made to verify the entries, nor to lay the foundation required to authorize the witness to testify as to the entries not made by him. The party making part of the record was not produced, nor was his absence accounted for. It does not appear what part of the entries in the books were made by the witness, nor when they were made, whether before or after the institution of this suit, nor whether they were made with direct reference to the defense of the same. Again, so far as the record discloses, the entries offered and excluded may have been entirely of the character that cannot be given in evidence by the party in whose behalf they were made. It is well established that a private entry in the books of a municipal corporation will fall within the rule applicable to private books, and cannot be given in evidence by the party by whose direction it was made. Dill. Mun. Corp. (4th Ed.) § 304, note; 15 Am. & Eng. Enc. Law, 1076. It will be observed that the court below did not refuse to hear evidence tending to show what the actual bonded indebtedness of the town of Darlington was at the time mentioned, but declined only to let certain books be used for that purpose. We are of the opinion that the plaintiff in error has not been prejudiced as to the merits of the case by the action of the court now complained of. The circumstances under which the evidence excluded was offered, and the record objected to was made, were, to say the least, unusual. The town was so situated that it was to its interest to show, not that it was free from debt, but that it was largely in debt; and therefore the rule relied on as to admissions against interest, generally applicable, is out of place in this instance. But, independent of this, as we see this case, the bonded indebtedness of Darlington in January and in April, 1890, was immaterial, so far as the issue to be determined by the court was concerned. The bonds were not issued in 1890, and in fact they did not become part of the indebtedness of the town until in August, 1891, when they were delivered, when the debt was in fact incurred, and from which time it bore interest. The constitutional inhibition may have existed in April, 1890, and not have applied in August, 1891. The indebtedness of the town as it existed in August, 1891, might have been important and material, but that could not have been shown by entries made in books relating to its debts existing in January and April, 1890.

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