Wilkes County v. Coler

Background

This dispute involves Wilkes County, North Carolina, and holders of county bonds who bought them as payment for the county’s subscription to stock in the Northwestern North Carolina Railroad Company. The bonds recited that they were issued under an act of February 20, 1879, and after a voter election and county order in 1888–1889. The state Supreme Court later held the 1879 act void under the State Constitution, and the federal courts considered whether other law gave the county authority to make the subscription and issue the bonds.

Reasoning

The key question was whether Wilkes County had lawful power to subscribe to railroad stock and issue bonds despite the 1879 act being invalid. The Court examined an 1868 Ordinance that had incorporated the railroad company and found it remained in force and authorized counties to subscribe and pay by bonds for parts of the road that reasonably ran toward the State’s northwestern boundary. The Court concluded the part of the road serving Wilkes County fit that description, that the county’s voters approved the subscription, and that the bonds were properly issued under the 1868 Ordinance. The Court therefore affirmed the judgment allowing the bondholders to recover.

Real world impact

The decision upholds the rights of good-faith purchasers of these bonds to collect payment and confirms that municipal subscriptions under the 1868 charter could create binding county debt. The ruling rests on North Carolina law as declared when the bonds were issued, and the Court did not decide broader questions about later code provisions.