1. Pursuant to the provisions of an Act of the General Assembly
of Illinois approved Feb. 28, 1867, and to the result of a popular
election duly called, and held June 3, 1867, a township subscribed
$50,000 to the capital stock of a railroad company, created under
the laws of that state, and it issued its bonds in payment
therefor. On Aug. 20, 1869, that company was consolidated with
another in Indiana, the new company assuming another name, and, in
harmony with the object of said act, providing for the construction
of a continuous line of road from a point in Indiana to the initial
point of the road in Illinois. An election held in the township,
Oct. 12, 1869, for the purpose of ascertaining the sense of its
people upon the proposition to subscribe, upon certain conditions,
$25,000, for additional stock in aid of the construction and
completion of the road of the consolidated company, resulted in
favor of the subscription, which being made, bonds to that amount
in the customary form, bearing date March 20, 1870, and signed by
the supervisor and clerk, were issued in the name of the township
and delivered to the company. Each contains a recital that it is
issued under and by virtue of a law of the State of Illinois
approved Feb. 28, 1867, and in accordance with the vote of the
electors of said township, at the special election held Oct. 12,
1869, in accordance with said act, and it pledges the faith of the
township for the payment of the said principal sum and interest as
aforesaid. The twelfth section of the Act of Feb. 28, 1867,
declares that
"To further aid in the construction of said road by said
company, any incorporated town or townships in counties acting
under the township organization law, along the route of said road
may subscribe to the capital stock of said company in any sum, not
exceeding $250,000."
Held: 1. That the power of the township to subscribe to
the capital stock of the company was not exhausted by the
subscription first made after the election held
Page 101 U. S. 88
June 3, 1887. 2. That under said section the power of the
township to subscribe was limited in amount only. 3. That the
consolidation of the company was authorized by the general statute
of Illinois of Feb. 28, 1854. 4. That the power of the township to
make the additional subscription was, in its essence, a right and
privilege conferred upon the company chartered by the act of 1867
which, under the act of 1854, passed to the consolidated
company.
2. The court affirms its ruling in
Brooklyn v. Insurance
Company, 99 U. S. 382, that
a decree rendered in a county court in a suit against a railroad
company and others declaring that municipal bonds and coupons
issued to the company are null and void does not affect the holders
of them who did not appear and had only constructive notice of the
suit.
Under the provisions of an Act of the Legislature of Illinois,
approved Feb. 28, 1867, and in conformity to the result of a
popular election duly called and held on the 3d of June, 1867, the
Township of Empire in McLean County in that state made a
subscription of $50,000 to the capital stock of the Danville,
Urbana, Bloomington, and Pekin Railroad Company, a corporation
created under the laws of Illinois. That company had by its charter
power to locate, construct, and complete a railroad from Pekin
through or as near as practicable to certain designated towns to
the eastern boundary of the state.
In payment of the subscription, bonds of the township of like
amount were issued and delivered to the company.
On the twentieth day of August, 1869, that company consolidated
with the Indianapolis, Crawfordsville, and Danville Railroad
Company, an Indiana corporation, the consolidated company assuming
the name of the Indianapolis, Bloomington, and Western Railway
Company. The consolidated railroad formed a continuous line of road
from Indianapolis, Ind., to Pekin, Ill.
On the 12th of October, 1869, an election was held in the
Township of Empire for the purpose of ascertaining the sense of its
people upon the proposition to subscribe, upon certain conditions,
the sum of $25,000, as additional stock in aid of the construction
and completion of the Indianapolis, Bloomington, and Western
Railroad. The election resulted in favor of the subscription, which
being made, bonds to that amount
Page 101 U. S. 89
were issued in the name of the township and delivered to the
company.
The bonds were in the customary form, dated March 20, 1870, and
signed by the township supervisor and clerk. Each one contained a
recital that it was issued
"under and by virtue of a law of the State of Illinois
entitled"
"An Act to amend the articles of association of the Danville,
Urbana, Bloomington, and Pekin Railroad Company, and to extend the
powers of and confer a charter upon the same,"
"approved Feb. 28, 1867, and in accordance with the vote of the
electors of said township, at the special election held Oct. 12,
1869, in accordance with said act. And the faith of the Township of
Empire is hereby pledged for the payment of the said principal sum
and interest as aforesaid."
Darlington, who is the holder of some of the bonds and coupons
issued March 20, 1870, brought this action against the township to
recover thereon. It was admitted in the court below that on April
29, 1878, the Circuit Court of McLean County, Illinois, upon the
application of certain taxpayers of the said township, enjoined the
further payment of the principal or interest, or any part of the
bonds or coupons issued in payment of the said subscription of
$25,000; that the bondholders were made parties to that suit by the
name of unknown owners and holders; that they were notified of its
pendency by publication only; and that subsequently a decree was
rendered declaring said bonds and coupons void and perpetually
enjoining the assessment and collection of taxes for the purpose of
paying them.
The defenses set up by the township are stated in the opinion of
the court.
A jury having been waived, the court below rendered a judgment
in favor of the plaintiff for $8,178.05 and costs, whereupon the
township sued out this writ of error.
MR. JUSTICE HARLAN, after stating the facts, delivered the
opinion of the Court.
The present action involves the validity of the bonds and
Page 101 U. S. 90
the coupons thereto attached of the $25,000 issue, some of which
are held by the defendant in error.
Their validity is assailed upon several grounds, each of which
will be briefly examined.
It is contended that the election held on the 3d of June, 1867,
under the charter of the Danville, Urbana, Bloomington, and Pekin
Railroad Company, whereby the subscription of $50,000 was made and
bonds issued in payment thereof, exhausted the power of the
township under that charter, and that any additional subscription
was without authority of law.
This position is clearly untenable. The twelfth section of the
charter of the railroad company furnishes a conclusive answer to
this proposition. That section declares that
"To further aid in the construction of said road by said
company, any incorporated town or townships in counties acting
under the township organization law, along the route of said road,
may subscribe to the capital stock of said company in any sum, not
exceeding $250,000."
That the plaintiff in error belongs to the class of townships
described in that section is not disputed. Its right, consequently,
to make subscriptions from time to time until they reached the
prescribed limit seems to be too clear to require argument in its
support. The charter contains no word, clause, or section
indicating that the authority of the township to make subscriptions
ceased after the first subscription. The legislature fixed a limit
beyond which the township could not go in its subscriptions to the
company in question, but left it free -- the people consenting by
popular vote -- to make subscriptions in such sums and at such
times as it deemed necessary or proper, within the aggregate amount
named in the section which has been quoted.
People v. Town of
Waynesville, 88 Ill. 469.
The next proposition urged upon our attention is that by the
consolidation to which we have referred, a new corporation was
created by the name of the Indianapolis, Bloomington, and Western
Railway Company, and the original companies dissolved; that there
was no power vested in the electors, the corporate authority of the
Township of Empire, under the charter of the Danville, Urbana,
Bloomington, and Pekin Railroad
Page 101 U. S. 91
Company, to hold an election, to subscribe stock and issue bonds
to that new company. This proposition is equally untenable with the
first.
By a general statute of Illinois passed Feb. 28, 1854, and in
force as well at the date of the charter of the Danville, Urbana,
Bloomington, and Pekin Railroad Company, as when it was
consolidated with the Indianapolis, Crawfordsville, and Danville
Railroad Company, express authority was conferred upon all railroad
companies then organized or thereafter to be organized, which then
had or might thereafter have their termini fixed by law, whenever
their road or roads intersected by continuous lines, to
"consolidate their property and stock with each other, and to
consolidate with companies out of this [that] state, whenever their
lines connect with the lines of such companies out of this [that]
state."
That statute further provided that the consolidated company, by
the name agreed upon, should be a body corporate and politic,
and
"shall have all the powers, franchises, and immunities which the
said respective companies shall have by virtue of their respective
charters, before such consolidation passed, within the State of
Illinois."
Ill.Rev.Stat.Gross (3d ed.), pp. 537, 538.
It thus appears that whatever powers, franchises, and immunities
were enjoyed by the Danville, Urbana, Bloomington, and Pekin
Railroad Company, under its charter, passed, upon the
consolidation, to the consolidated company. The power of the
Township of Empire to make, as we have held it could, an additional
subscription beyond the original of $50,000 was in its essence a
right and privilege of the railroad company which, under the
general law of the state, passed to the consolidated company.
County of Scotland v. Thomas, 94 U. S.
682;
County of Henry v. Nicolay, 95 U. S.
619. It was evidently so understood by the parties
concerned, for while the bonds very properly refer to the act of
Feb. 28, 1867 (which is the charter of the Danville, Urbana,
Bloomington, and Pekin Railroad Company), as the statute which
specifically authorized their issue, the petition of citizens
asking an election, and the notice of the election of Oct. 12,
1869, distinctly show that the additional subscription of $25,000
to be voted on was for additional stock in aid of the construction
and completion, not
Page 101 U. S. 92
of the Danville, Urbana, Bloomington, and Pekin Railroad, but
"of the Indianapolis, Bloomington, and Western Railroad." If the
popular vote had been, in terms, in favor of a subscription to the
capital stock of the Danville, Urbana, Bloomington, and Pekin
Railroad Company, and the subscription had been made in that form,
there would be some reason to contend that the subscription would
have been a nullity, since no such company then had a distinct
separate existence. But when, as here, the vote was taken, and the
subscription made, with direct reference to the construction and
completion of the original line by the consolidated company, which
had previously succeeded to all the powers, franchises, and
immunities of the Danville, Urbana, Bloomington, and Pekin Railroad
Company, there would seem to be no ground whatever to question the
validity of the bonds issued and delivered to the company in
payment of the subscription.
It is scarcely necessary to say that the decree in the Circuit
Court of McLean County, Illinois, rendered in 1878, perpetually
enjoining the assessment and collection of taxes for the purpose of
paying the bonds and coupons in question and declaring said bonds
and coupons to be void, did not conclude the rights of the
defendant in error. The bondholders were proceeded against by
constructive service, as "unknown owners and holders." The
defendant in error was not served with process, nor did he appear.
If the decree was binding upon the citizens and courts of Illinois,
as to which we express no opinion, it was ineffectual as to
bondholders residing in other states, who were proceeded against
only by constructive service.
Brooklyn v. Insurance
Company, 99 U. S. 362.
Judgment affirmed.
