Loan Association v. Topeka

87 U.S. 655 (1874)

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Nature of the Case

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Facts

Loan (P) brought their action in the court below, against the city of Topeka (D), on coupons for interest attached to bonds of the city of Topeka. The bonds were to be payable to the King Wrought-Iron Bridge Manufacturing and Iron-Works Company, of Topeka. They were issued for the purpose of building bridges, aiding railroads, water-power, or other works of internal improvement,' approved March 2d, 1872. The interest coupons first due were paid out of a fund raised by taxation for that purpose, and that after this payment P became the purchaser of the bonds and the coupons on which suit was brought, for value. There were 100 bonds with a face value of $1,000 each. D demurred. The bonds were issued under statutory authority of the State of Kansas for municipalities to raise monies to fund local businesses. The court below sustained the demurrer, gave judgment in favor of D. P appealed. The court held that the act of the State legislature was unconstitutional. The money raised to assist the bridge manufacturing company was not for a public purpose. The court noted that there could be no lawful tax which was not laid for a public purpose and held that the statute was void. P appealed.