In this case, bonds issued by Livingston County in Missouri, on
behalf of Chillicothe Township in payment of a subscription to the
stock of the Saint Louis, Council Bluffs & Omaha Railroad
Company were held valid.
The vote of the township, given in May, 1870, was in favor of
the issue of the bonds to the Chillicothe & Omaha Railroad
Company, a Missouri corporation, afterwards, under a statute
existing at the time of the vote, that company was consolidated
with an Iowa corporation under the name of the corporation to which
the bonds were subsequently issued.
Held that the
consolidation was authorized, and that the privilege of receiving
the subscription passed to the consolidated company.
The vote having contemplated the construction of the railroad
which the consolidated company built, there was no diversion from
the purpose contemplated by the vote in the fact that the stock was
subscribed, and the bonds issued, to the consolidated company.
The doctrine of
Harshman v. Bates County, 92 U. S.
569, and
County of Bates v. Winters,
97 U. S. 83, that a
county court in Missouri could not, on a vote by a township to
issue bonds to a corporation named, issue the bonds to a
corporation formed by the consolidation of that corporation with
another corporation, would not be, if applied here, a sound
doctrine.
On the recitals in the bonds and the other facts in this case,
the county was estopped from urging, as against a
bona
fide holder of the bonds, the existence of any mere
irregularity in the making of the subscription or the issuing of
the bonds.
Page 128 U. S. 103
This is a suit commenced on the 4th of September, 1882, by the
First National Bank of Portsmouth, New Hampshire, against the
County of Livingston, in the State of Missouri, to recover the
amount of 312 coupons, for $20 each, being 13 coupons, due from
July 1, 1876, to July 1, 1882, both inclusive, on each one of 24
bonds for $500 each, each of the bonds, except as to number, being
in the following form:
"
Fifteen-Year Bond"
"COUNTY OF LIVINGSTON,
State of Missouri:"
"Livingston County bond issued in behalf of the Municipal
Township of Chillicothe. Interest eight percent per annum, payable
on the first days of January and July. Fifteen years. No. 18."
"Know all men by these presents that the County of Livingston,
in the State of Missouri, acknowledges itself indebted and firmly
bound to the St. Louis, Council Bluffs & Omaha Railroad Company
in the sum of five hundred dollars ($500), which sum the said
county hereby promises to pay to the said St. Louis, Council Bluffs
& Omaha Railroad Company, or bearer at the National Bank of
Commerce, in the City of New York, State of New York, on the first
day of July, 1885, together with interest thereon from the first
day of July, 1870, at the rate of eight (8) percent per annum,
which interest shall be payable semiannually on the first days of
January and July of each year, on the presentation or delivery at
said bank of the coupons of interest hereto attached. This bond
being issued under and pursuant to an order of the County Court of
Livingston County, authorized by a two-thirds vote of the people of
Chillicothe Municipal Township."
"In testimony whereof the said County of Livingston has executed
this bond by the presiding justice of the county court of said
county under an order of said court, signing his name hereto, and
by the clerk of said court, under the order thereof, attesting the
same and affixing thereto the seal of said court. "
Page 128 U. S. 104
"This done at the City of Chillicothe, County of Livingston
aforesaid, this 10th day of April, A.D. 1871."
"G. W. McDOWELL"
"
Presiding Justice of the County Court"
"
of Livingston County, Missouri"
"Attest:"
"[Seal of the County Court of Livingston County]"
"W. H. GAUNT"
"
Clerk of the County Court of Livingston County,
Missouri"
Attached to each of the bonds were coupons for the interest,
each, except as to number and date when due, being in the following
form:
"$20. CHILLICOTHE, LIVINGSTON COUNTY, Mo., January 1, 1871."
"The County of Livingston acknowledges to owe the sum of twenty
dollars on the 1st day of July, 1871, being interest on bond number
one for five hundred dollars. This coupon payable at the National
Bank of Commerce in the City of New York, State of New York."
"W. H. GAUNT"
"
Clerk of the County Court of Livingston County,
Missouri"
Successive coupons for each installment of interest were
attached to each bond.
The petition by which the suit was commenced alleged that the
defendant made and delivered the bonds in behalf of the Municipal
Township of Chillicothe; that the bonds were issued under and
pursuant to an order of the County Court of Livingston County,
authorized by a two-third vote of the people of that township, as
is recited in the bonds, and in aid of the St. Louis, Council
Bluffs, and Omaha Railroad, under authority of an act of the
Legislature of the State of Missouri entitled "An act to facilitate
the construction of railroads in the State of Missouri," approved
March 23, 1868, and of the Constitution of the State of Missouri;
that as each coupon for the semiannual interest had, prior to July
1, 1876, matured, the same was paid by the officers of the county,
on behalf of said township,
Page 128 U. S. 105
with the proceeds of a tax levied and collected each year by the
county from the taxpayers of the township, for that purpose; that
before the coupons sued on became due and payable, the bonds and
coupons were sold to, and for value became the property of, the
plaintiff, which had ever since been the legal holder, owner, and
bearer thereof, and that the defendant, on and after July 1, 1876,
had refused to pay any of the coupons then or since becoming due,
or to levy any tax for their payment.
The provisions of the Act of March 23, 1868, in regard to the
issuing of bonds in the name of a county in behalf of a municipal
township therein, which apply to the present case, are as follows
(1 Wagner's Statutes of Missouri of 1870, 313):
"Section 51. Whenever twenty-five persons, taxpayers and
residents in any municipal township, for election purposes, in any
county in this state, shall petition the county court of such
county, setting forth their desire as a township to subscribe to
the capital stock of any railroad company in this state building or
proposing to build a railroad into, through, or near such township,
and stating the amount of such subscription, and the terms and
conditions on which they desire such subscription shall be made, it
shall be the duty of the county court, as soon as may be
thereafter, to order an election to be held in such township to
determine if such subscription shall be made, which election shall
be conducted and returns made in accordance with the laws
controlling general and special elections, and if it shall appear
from the returns of such election that not less than two-thirds of
the qualified voters of such township voting at such election are
in favor of such subscription, it shall be the duty of the county
court to make such subscription in behalf of such township
according to the terms and conditions thereof, and if such
conditions provide for the issue of bonds in payment of such
subscription, the county court shall issue such bonds in the name
of the county, with coupons for interest attached; but the rate of
interest shall not exceed ten percent per annum, and the same shall
be delivered to the railroad company."
"Section 52. In order to meet the payments on account of the
Page 128 U. S. 106
subscription to the stock, according to its terms, or to pay the
interest and principal on any bond which may be issued on account
of such subscription, the county court shall from time to time levy
and cause to be collected, in the same manner as county taxes, a
special tax, which shall be levied on all real estate lying within
the township making the subscription, in accordance with the
valuation then last made by the county assessor for county
purposes."
"Section 53. The county treasurer shall be authorized and
required to receive and collect of the sheriff of the county the
income from the tax provided in the previous section and to apply
the same to the payment of the stock subscription, according to its
terms, or to the payments or interest and principal on the bonds,
should any be issued in payment of such subscription. He shall pay
all interest on such bonds out of any money in the treasury
collected for this purpose by the tax so levied, as the same
becomes due, and also the bonds as they mature, which shall be
cancelled by the county court, and this service shall be considered
a part of his duty as county treasurer."
The answer of the defendant to the petition contains a general
denial and also sets forth that no petition was ever presented to
the County Court of Livingston County by the taxpayers of the
Municipal Township of Chillicothe, as required by the act of 1868,
praying for the election named in the act; nor did that court ever
order any election to be held in the township as to whether it
would subscribe any amount to the capital stock of the St. Louis,
Council Bluffs, and Omaha Railroad Company; nor did the county
court ever order, direct, or authorize the bonds or the coupons in
question to be issued; nor was any election ever held in the
township to determine whether it, or the voters therein, would
consent to any subscription on its account to the capital stock of
the said railroad company, or to the issuing of the bonds and
coupons, and that the issuing and delivery of them were without
authority of the county court, and in violation of the Constitution
and laws of Missouri. The answer also denied that the plaintiff was
the owner and holder in good faith and for value of the bonds and
coupons in question.
Page 128 U. S. 107
The plaintiff put in a replication to the answer, denying each
and every allegation of new matter therein contained. The cause was
in due form heard by the court without the intervention of a jury,
and it made a finding of facts and of conclusions of law in favor
of the plaintiff, upon which a judgment for it was rendered on the
6th of January, 1885, for $8,476.60, with costs, against the County
of Livingston,
"to be collected, if necessary, by mandamus against the county
court of said county, commanding it to levy and collect from
Chillicothe Municipal Township, in said county, a special tax
according to law for the payment of said judgment, interest, and
costs, and to pay the same."
To review this judgment, the defendant has brought a writ of
error.
The facts found by the circuit court, other than those which are
merely formal, are as follows:
The defendant issued twenty-four bonds on the 10th of April,
1871, numbered consecutively from 1 to 24, inclusive, signed by the
presiding justice of the county court, attested by its clerk, and
with the seal thereof, each in the form before set forth, and with
coupons in the form before given. The plaintiff, in April, 1871,
bought all of the bonds and the coupons thereto attached and not
then matured, in the open market for cash and without notice of any
defect or infirmity therein or in the action of the county court in
issuing the same, and has ever since been and still is the holder
of the bonds and the unpaid coupons thereon, and at the time of the
institution of this suit was the holder of the coupons then matured
and described in the petition. The bonds were issued under the
following circumstances:
By articles of association entered into on the 18th of June,
1867, and filed in the office of the Secretary of State of the
State of Missouri on the 14th of July, 1868, a corporation was
created by the name of the St. Louis, Chillicothe and Omaha
Railroad Company. The articles declared that the object of the
association was to construct, maintain, and operate a railroad for
public use in the conveyance of persons and property from the City
of Chillicothe, in the County of Livingston and State of Missouri,
to such point on the boundary line between Missouri and Iowa as
should be
Page 128 U. S. 108
deemed, after actual survey,
"to be on the most direct and feasible route for constructing,
maintaining, and operating a railroad between the said City of
Chillicothe and the City of Omaha in the State of Nebraska;"
that the length of the railroad should be about ninety miles,
and it should be made into or through the Counties of Livingston,
Daviess, and Gentry, and into or through one or more of the
Counties of Nodoway, Harrison, and Worth. The articles also
declared that the association was
"organized under and subject to the laws of the State of
Missouri contained in chapters sixty-two and sixty-three of Title
XXIV of the General Statutes of Missouri of 1865, possessing all
and singular the powers therein contained."
General Statutes of Missouri of 1865, 326-344.
At a meeting of the stockholders of the St. Louis, Chillicothe
and Omaha Railroad Company held on the 4th of June, 1869, its name
was changed by their vote to that of the Chillicothe and Omaha
Railroad Company, and evidence thereof was filed in the office of
the Secretary of State of the State of Missouri on the 25th of
June, 1869.
On the 3d of May, 1870, a petition signed by more than 25
taxpayers and residents of the Municipal Township of Chillicothe
was filed in the County Court of Livingston County setting forth
that the petitioners, as a township, desired to subscribe $15,000
to the capital stock of the Chillicothe and Omaha Railroad Company,
subject to the following conditions:
"1st. Payment of said subscription to be made in bonds of
Livingston County, [issued in accordance with the law regulating
subscriptions by municipal townships to railroad companies] at par,
said bonds to be payable fifteen years from the 1st day of July,
1870, and bearing interest at the rate of eight percent per annum,
payable semiannually."
"2d. The bonds to be issued to said company when it shall have
continuously graded its roadbed on or near its present located
survey from the City of Chillicothe to the western boundary of
Livingston County."
The county court, on the 3d of May, 1870, made an order reciting
the contents of the petition and directing that an election be held
at the usual place of voting in the township, Chillicothe election
district, on the 27th of
Page 128 U. S. 109
May, 1870, to determine if such subscription should be made. The
order prescribed the forms of the respective ballots, for and
against the subscription. On the 25th of May, 1870, the county
court made an order that the question to be voted upon at the
election so to be held should be whether the township should
subscribe $12,000 to the capital stock of the said railroad
company, upon the same conditions as before mentioned, the ballots
to be in like form.
The election was held on the 27th of May, 1870. On the 30th of
May, 1870, the votes cast were duly canvassed, and an abstract
thereof was made and entered of record in the county court, signed
by the president of that court and a justice of the peace, and
attested by the signature of the county clerk, showing that 320
votes had been cast for and 50 votes against the subscription of
$12,000 to the capital stock of said company.
On the 23d of September, 1870, there were filed in the office of
the secretary of State of the State of Iowa articles of
association, in conformity to chapter 52 of Title X and other laws
of Iowa, of the Revision of 1860, incorporating the St. Louis,
Council Bluffs, and Omaha Railroad Company in Iowa, to construct
and operate a railroad. The articles contained the following
clause:
"The main line of said railroad City of Council Bluffs, in the
State of Iowa, City of Council Bluffs, in the State of Iowa, and
from such other point adjacent to the eastern terminus of the union
Pacific Railroad, on the banks of the Missouri River, as the board
of directors may hereafter designate; thence in a southwesterly
direction to the state line between the States of Iowa and Missouri
at a point where the Chillicothe and Omaha Railroad shall reach
said state line, and in the event of the consolidation of this
company and corporation with the said Chillicothe and Omaha
Railroad Company, a company incorporated under the general laws of
the State of Missouri, then, in connection with the last-mentioned
railroad, to form a continuous line of railroad from the City of
Omaha, in the State of Nebraska, and the City of Council Bluffs, in
the State of Iowa, to the City of St. Louis, in the State of
Missouri, and the board of directors of the corporation
Page 128 U. S. 110
hereby created shall have the power at any time, when the same
can be lawfully done, to consolidate this corporation with the
Chillicothe and Omaha Railroad, in Missouri, aforesaid, and this
corporation shall have, hold, and by its board of directors
exercise all the powers, rights, privileges, and franchises granted
and conferred by the laws of the State of Iowa, Revision of A.D.
1860, and of all laws amendatory thereof and supplemental
thereto."
These articles had, on the 13th of September, 1880, been filed
for record in the office of the recorder of Pottawatomie county, in
the State of Iowa.
At a meeting of the stockholders of the Chillicothe and Omaha
Railroad Company held on the 20th of September, 1870, "all the
stock of the company being present thereat," a resolution was
passed by the stockholders unanimously directing the board of
directors of the company to effect a consolidation of it with the
St. Louis, Council Bluffs, and Omaha Railroad Company of the State
of Iowa. Articles of consolidation were on the same day entered
into between the two corporations consolidating the two into
one
"for the purpose of constructing, owning, maintaining, using,
and operating a continuous line of railroad from the City of Omaha,
in Nebraska, and the City of Council Bluffs, in Iowa, to the City
of Chillicothe, in Missouri, under the name of the St. Louis,
Council Bluffs, and Omaha Railroad Company."
These articles of consolidation were executed by the president
of the Chillicothe and Omaha Railroad Company on behalf of that
company under a resolution of its board of directors to that effect
which was approved by more than three-fourths of all the stock in
the company. The articles of consolidation and the proceedings
thereon on the part of the Chillicothe and Omaha Railroad Company
were filed in the office of the Secretary of State of the State of
Missouri on the 7th of October, 1870, and the same articles of
consolidation and the proceedings of the meeting of stockholders of
the Chillicothe and Omaha Railroad Company, authorizing the
consolidation, were filed in the office of the Secretary of State
of the State of Iowa on the 19th of December, 1870.
In the year 1871, a railroad was constructed by the
corporation
Page 128 U. S. 111
acting under the name of the St. Louis, Council Bluffs, and
Omaha Railroad Company, from the City of Chillicothe, in Livingston
County, Missouri, upon and over the line set forth and described in
the articles of association filed in the office of the Secretary of
State of the State of Missouri on the 14th of July, 1868, to a
point on the boundary line between the States of Missouri and Iowa,
and has been continued thence to the City of Omaha, Nebraska, and
has ever since been operated on that line.
The County of Livingston paid all the interest coupons on the 24
bonds as they respectively matured, to and including those falling
due July 1, 1876, from the proceeds of taxes levied in each year
upon the taxable property of Chillicothe township in that
county.
On the 21st of February, 1877, the County Court of Livingston
County entered an order on its records, as follows:
"Whereas, by a decision of the Supreme Court of the United
States in a case wherein Bates county, of this state, was a party,
it was held that all township bonds issued under and by virtue of
an act of the State of Missouri entitled"
"An act to facilitate the construction of railroads in the State
of Missouri, approved March 23, 1868, are mull and void, owing to
the unconstitutionality of said act, which decision, as we are
informed, has since been reaffirmed by U.S. Circuit Judge Dillon,
and whereas, under and by virtue of said act above recited, the
County of Livingston, for the use and in behalf of the Municipal
Township of Chillicothe, did, in A.D. 1870, issue and deliver,
under said act above recited, to the St. Louis, Council Bluffs, and
Omaha Railroad Company, a series of bonds in amount twelve thousand
dollars, to run for fifteen years, and each for the sum of five
hundred dollars, now therefore, it appearing that all of said bonds
are null and void, it is hereby ordered that, from and after this
date, the treasurer of the county be commanded and directed to
refuse payment of said bonds or any of them, together with all
coupons for interest thereto attached, in whosoever hands they may
be found or by whomsoever they may be presented, until otherwise
directed by this Court or by some competent superior authority.
"
Page 128 U. S. 112
The conclusion of law of the circuit court upon the foregoing
facts was in these words:
"Upon consideration of the foregoing facts, which constitute all
the facts and evidence produced in the cause, the court finds that
the County of Livingston, in the State of Missouri, is indebted to
the plaintiff, the First National Bank of Portsmouth, New
Hampshire, by reason of the nonpayment of the coupons described in
the petition and the facts aforesaid, in the sum of eight thousand
four hundred and seventy-six dollars and sixty cents
($8,476.60)."
There is also found in the record a bill of exceptions. When the
plaintiff offered in evidence the 24 bonds, the defendant objected
on the ground that the bonds were void on their faces and showed no
authority for their issue. The court overruled the objection and
permitted the bonds to be read in evidence, to which ruling the
defendant excepted. A like objection and exception were taken by
the defendant to the reading in evidence of the coupons sued on.
When the plaintiff offered in evidence the tax levies for the years
1872, 1873, 1874, 1875, and 1876 for the purpose of showing that in
each of those years the County Court of Livingston County made a
levy upon the property in the Township of Chillicothe of taxes for
the payment of the interest on the bonds in question, the defendant
objected to the evidence on the ground that there could be no
ratification of the issuing of the bonds if the issue was unlawful.
The objection was overruled, and the defendant excepted. No other
exceptions appear by the bill of exceptions.
MR. JUSTICE BLATCHFORD delivered the opinion of the Court.
The grounds urged for reversing the judgment are (1) that the
statutes of Missouri did not authorize the consolidation of
Page 128 U. S. 113
a railroad company organized under the laws of Missouri with a
railroad company organized under the laws of another state, (2)
that an authority to subscribe to stock in and issue bonds to the
Chillicothe and Omaha Railroad Company was not an authority to
subscribe to stock in and issue bonds to the St. Louis, Council
Bluffs, and Omaha Railroad Company, and (3) that it does not appear
by the face of the bonds or by the findings of the court that the
county court ordered any subscription for stock in either the
Chillicothe and Omaha Railroad Company or the St. Louis, Council
Bluffs, and Omaha Railroad Company to be made, or that any
subscription to the stock of either of those companies was in fact
made, or that any stock of either company was ever issued to the
county or to the township.
(1) As to the authority for consolidation. It was enacted as
follows by the Act of the Legislature of Missouri, approved March
2, 1869, entitled "An act to authorize the consolidation of
railroad companies in this state with companies owning connecting
railroads in adjoining states," Laws of 1869, p. 75, and 1 Wagner's
Missouri Stats. of 1872, p. 314, ยง 56:
"Section 1. That any railroad company organized under the
general or special laws of this state whose track shall at the line
of the state connect with the track of the railroad of any company
organized under the general of special laws of any adjoining state
is hereby authorized to make and enter into any agreement with such
connecting company for the consolidation of the stock of the
respective companies whose tracks shall be so connected, making one
company of the two, whose stock shall be so consolidated, upon such
terms and conditions and stipulations as may be mutually agreed
upon between them, in accordance with the laws of the adjoining
state in which the road is located with which connection is thus
formed."
The statute then went on to enact details in regard to the
consolidation. The fourth section of the act provided as
follows:
"Section 4. Any such consolidated company shall be subject to
all the liabilities, and bound by all the obligations, of the
company within this state, which may be thus consolidated with one
in the
Page 128 U. S. 114
adjacent state, as fully as if such consolidation had not taken
place, and shall be subject to the same duties and obligations to
the state, and be entitled to the same franchises and privileges
under the laws of this state, as if the consolidation had not taken
place."
This statute applied to the consolidation in question, although
no road had yet been constructed.
It is not contended that the provisions of this statute were not
complied with in making the consolidation in question. The
consolidated company was, by the statute, to be entitled to the
same privileges under the laws of the State of Missouri as if the
consolidation had not taken place. This can only mean that it was
to be entitled to the same privileges under the laws of Missouri
that the Missouri corporation was entitled to under the laws of
that state at the time the consolidation took place. One of those
privileges was the privilege of a subscription to stock by the
Township of Chillicothe.
(2) As to the authority to subscribe to stock in and issue bonds
to the St. Louis, Council Bluffs, and Omaha Railroad Company, under
the vote of the people of the township to subscribe to stock in and
issue bonds to the Chillicothe and Omaha Railroad Company. The case
of
Harshman v. Bates County, 92 U. S.
569, decided by this Court at October term, 1875, is
relied upon by the plaintiff in error as a decision against the
validity of the bonds in that respect. It arose under the same
statute of Missouri, of March 23, 1868. The bonds were issued by
the County of Bates, in behalf of Mount Pleasant township in that
county, to the Lexington, Lake, and Gulf Railroad Company in
January, 1871. The taxpayers of the township had, in May, 1870, at
an election, voted in favor of a subscription to the stock of and
the issue of bonds to the Lexington, Chillicothe, and Gulf Railroad
Company. In October, 1870, that corporation was consolidated with
another corporation under the name of the Lexington, Lake, and Gulf
Railroad Company. Thereafter, in January, 1871, the county court,
in pursuance only of the authority conferred by such vote,
subscribed the specified amount, in behalf of the township, to the
consolidated company, and issued the bonds to it in payment of the
subscription. The objection was taken
Page 128 U. S. 115
that the question of subscribing to stock in and issuing bonds
to the consolidated company was never submitted to a vote of the
people of the township. This Court held that as at the time of the
consolidation no subscription to stock had been made, and thus no
vested right had accrued to the company named in the vote, the
extinction of that company worked a revocation in law of the
authority to subscribe to stock and to issue bonds. In that case it
appeared by the face of the bonds that the vote of the people was
to subscribe to the stock of the Lexington, Chillicothe, and Gulf
Railroad Company, and that that company and another had been
consolidated under the name of the Lexington, Lake, and Gulf
Railroad Company. This Court held that this recital in the bonds
was sufficient to put the holder on inquiry, and that the bonds
were invalid. The suit was brought by a holder of coupons attached
to the bonds against the county to recover the amount of the
coupons.
In
County of Scotland v. Thomas, 94 U. S.
682 at October term, 1876, the suit was brought on
coupons attached to bonds issued by the County of Scotland, in the
State of Missouri, on its own behalf, to the Missouri, Iowa, and
Nebraska Railway Company for a subscription on behalf of the county
to the stock of that corporation, which was a corporation formed by
the consolidation, in March, 1870 (under the above-mentioned Act of
March 2, 1869), of the Alexandria and Nebraska City Railroad
Company, of Missouri (formerly the Alexandria and Bloomfield
Railroad Company), with the Iowa Southern Railway Company of Iowa.
It was claimed that the power to subscribe to the stock had been
given by the charter granted in 1857 by Missouri to the Alexandria
and Bloomfield Railroad Company, before the adoption of the state
constitution of 1865, which required that the question of
subscribing to stock should be submitted to a vote of the qualified
voters of the county. No vote had been taken in the case. It was
contended on behalf of the plaintiff that the consolidated
corporation acquired by the consolidation all the privileges of the
Alexandria and Nebraska City Railroad Company, and, among others,
the privilege of receiving county
Page 128 U. S. 116
subscriptions to its capital stock. This Court held that the
prohibition of the Constitution of 1865 only extended to
restraining the legislature from authorizing in the future
municipal subscriptions or aid to private corporations without a
vote of the people of the municipality, but did not take away any
authority previously granted to subscribe to stock without a vote
of the people. It also held that the simple consolidation with
another company did not extinguish the power of the county to
subscribe or the privilege of the company to receive a
subscription. As authority for this view, it cited the case of
State v. Greene County, 54 Mo. 540. In the case of
County of Scotland v. Thomas, the power to consolidate was
given in 1869, after the original charter of 1857 was granted and
after the Constitution of 1865 went into effect; but it was held
that that fact did not affect the power. In its opinion, the court
said (p.
94 U. S. 691),
that the railroad authorized by the charter of 1857
"was"
"a railroad from the City of Alexandria, in the County of Clark,
in the direction of Bloomfield, in the State of Iowa, to such point
on the northern boundary line of the State of Missouri as shall be
agreed upon by said company, and a company authorized on the part
of the State of Iowa, to construct a railroad to intersect the road
authorized to be constructed by the provisions of this act at the
most practicable point on said state line."
"Bloomfield was a small town in Iowa, evidently not intended as
the final objective point of the proposed line, which is only
required to be 'in the direction of Bloomfield.' A connection with
a continuous road in Iowa was the declared object of the road
proposed. It was evidently the purpose to bring Alexandria, a port
of Missouri on the Mississippi River, in connection with the rich
region of southern and western Iowa by means of the road then being
chartered and a road to connect therewith running into the State of
Iowa. This purpose will be most effectually attained by the
construction of the continuous line contemplated by the
consolidated companies. The general direction of the road is not
changed. It does not pass through Bloomfield, it is true, but it
does not pass it by so far as to be a substantial departure
from
Page 128 U. S. 117
the route originally indicated. The amending act, therefore,
which authorized a consolidation with the Iowa Southern Railway
Company, and thereby constituted the Missouri, Iowa, and Nebraska
Railway Company, was in perfect accord with the general purpose of
the original charter of the Alexandria and Bloomfield Railroad
Company, and if the other rights and privileges of the latter
company passed over to the consolidated company, we do not see why
the privilege in question should not do so, nor why the power given
to the county to subscribe to the stock should not continue in
force."
The Court distinguished the case from that of
Harshman v.
Bates County, 92 U. S. 569, on
the ground that in that case the subscription to stock was made by
the county court in behalf of a township, and that the county court
was regarded as being the mere agent of the township, and as having
no discretion to go beyond the precise terms of the power given to
it, to subscribe to the stock of the company named in the vote,
while in the case of
Scotland County, the county court
acted as the representative authority of the county itself, and was
officially invested with all the discretion necessary to be
exercised under the change of circumstances brought about by the
consolidation.
The Court further proceeded to say in the
Scotland
County case, p.
94 U. S.
693:
"If we look at the subject in a broad and general view, it will
be still more manifest that the power in question was intended to
exist notwithstanding the consolidation. The project of the
railroad promised a great public improvement, conducive to the
interests of Alexandria and the counties through which it would
pass. Its construction, however, would greatly depend upon the
local aid and encouragement it might receive. The interests of its
projectors and of the country it was to traverse were regarded as
mutual. The power of the adjacent counties and towns to subscribe
to its stock as a means of securing its construction was desired
not only by the company, but by the inhabitants. Whether the policy
was a wise one or not is not now the question. It was in accordance
with the public sentiment of that period. The power was sought at
the hands of the legislature, and was
Page 128 U. S. 118
given. It was relied on by those who subscribed their private
funds to the enterprise. It was involved in the general scheme as
an integral part of it, and as much contributory and necessary to
its success as the prospective right to take tolls. Why it should
not still attach to this portion of the road, as one of the rights
and privileges belonging to it, into whose hands soever it comes,
by consolidation or otherwise, it is difficult to see."
The conclusion of the Court was that the power of the County of
Scotland to subscribe, being a right and privilege of the
Alexandria and Nebraska City Railroad Company, passed with its
other rights and privileges into the new conditions of existence
which that company assumed under the consolidation, and this
although the company with which the consolidation was effected
belonged to the State of Iowa.
In
Town of East Lincoln v. Davenport, 94 U. S.
801, at October term, 1876, which was a suit on coupons
attached to bonds issued by a town in Illinois, provision had been
made by statute, prior to the time when a subscription was made by
that town to the stock of a railroad company, that the company
might consolidate with other companies in order to carry out the
object of its charter, and that its franchises, rights,
subscriptions, and credits might be transferred, and such
consolidation was effected, and a subsequent transfer by the
consolidated company was lawfully made to a new company engaged in
constructing a connecting road, thus forming a continuous line, the
stockholders in the former companies becoming stockholders in the
new company. It was held that a delivery by the town to such new
company of bonds for the payment of the original subscription, and
a receipt of a certificate of stock in the new company, were
warranted by law. In the opinion of the Court, the doctrine of the
case of
County of Scotland v. Thomas, 94 U. S.
682, was confirmed, and the distinction drawn in that
case between it and the case of
Harshman v. Bates County,
92 U. S. 569, was
adverted to.
In
County of Bates v. Winters, 97 U. S.
83 at October term, 1877, the suit was brought to
recover the amount of bonds and coupons issued by the County of
Bates in the state
Page 128 U. S. 119
of Missouri in behalf of Mount Pleasant Township in that county.
The bonds were issued in January, 1871, to the Lexington, Lake, and
Gulf Railroad Company, a corporation formed by the consolidation of
the Lexington, Chillicothe, and Gulf Railroad Company with another
corporation. The township had voted in April, 1870, in favor of a
subscription to the stock of, and the issue of bonds to, the
Lexington, Chillicothe, and Gulf Railroad Company. No subscription
to the stock of that company was shown to have been made, but the
subscription was made on the books of the new company formed by the
consolidation. This Court held that as in fact no subscription had
been made to the stock of the Lexington, Chillicothe, and Gulf
Railroad Company, the bonds were void under the ruling in
Harshman v. Bates County because the popular vote gave
authority to subscribe to the stock of one company, while the
subscription was made and the bonds were issued to a different
company, and that the recitals in the bonds were such that there
could be no
bona fide holders of them. The bonds recited
on their face that the vote had been on the proposition to
subscribe to the capital stock of the Lexington, Chillicothe, and
Gulf Railroad Company, and that that company and another company
had been consolidated into one company, under the name of the
Lexington, Lake, and Gulf Railroad Company, to which latter company
the bonds were, on their face, issued. This Court reversed the
judgment below, which had been in favor of the plaintiff, and
remanded the case for a new trial.
In
Wilson v. Salamanca, 99 U. S.
499, at October term, 1878, the suit was against the
township of Salamanca, in Cherokee County, Kansas, to recover the
amount of coupons detached from bonds issued by that township to
the Memphis, Carthage, and Northwestern Railroad Company. The bonds
were issued in September, 1872, in pursuance of an election held in
November, 1871, at which it was voted to subscribe to stock in and
issue bonds to the State Line, Oswego, and Southern Kansas Railroad
Company. After the vote was had, the latter company was
consolidated with another railroad company into a new corporation,
to which the bonds were
Page 128 U. S. 120
issued. The subscription was made to the stock of the new
corporation, and no other vote was had than the one above
mentioned. The case came up on questions certified, one of which
was as follows:
"Whether or not it is a defense to this action by a
bona
fide holder for value of the interest coupons sued on, without
actual notice, that after the order of the board of county
commissioners for an election, and after a favorable vote by a
three-fifths majority of the qualified electors of Salamanca
Township, according to law, to subscribe stock in the state Line,
Oswego, and Southern Kansas Railroad Company, payable in negotiable
bonds, to aid in the construction of its railroad, the subscription
of stock and the issue of bonds without any further election were
made to the Memphis, Carthage, and Northwestern Railroad Company
with which said prior company, in whose favor the vote was had, had
become merged and consolidated under a law existing at the time of
said election, to form a continuous line."
The judgment of the circuit court was in favor of the township,
but this Court reversed the judgment and answered the above
question in the negative on the authority of the case of
County
of Scotland v. Thomas, 94 U. S. 682. The
Court said:
"The power of the State Line, Oswego, and Southern Kansas
Railroad Company to consolidate with other companies existed when
the vote for subscription was taken in the township. When the
consolidation took place, there was a perfected power in the
township to subscribe to the stock of that company, and there was
also an existing privilege in the company to receive the
subscription. That privilege, as we held in the
Scotland
County case, passed by the consolidation to the consolidated
company."
The Court distinguished the case from that of
Harshman v.
Bates County, 92 U. S. 569, on
the ground that the township trustee and the township clerk, who
made the subscription and issued the bonds in the
Salamanca
Township case, acted in their official capacity as the
constituted authorities of the township and its legal
representatives, and not as mere agents, and occupied the position
of the county court in the
Scotland County case.
In
Menasha v. Hazard, 102 U. S. 81, at
October term, 1880,
Page 128 U. S. 121
the suit was against the Town of Menasha, in the County of
Winnebago and State of Wisconsin, to recover the amount of coupons
detached from bonds issued by that town to the Wisconsin Central
Railroad Company in October, 1871. It had been voted by the town in
June, 1870, to issue bonds to the Portage, Winnebago, and Superior
Railroad Company. After the vote was had, and in November, 1870,
the Portage, Winnebago, and Superior Railroad Company was
consolidated with another company, and its name was changed in
February, 1871, to that of the Wisconsin Central Railroad Company,
and a further consolidation took place with a company to which the
bonds were afterwards issued. It appeared that before the
subscription and bonds were voted, the Portage, Winnebago, and
Superior Railroad Company was authorized by statute to consolidate
with other companies constructing connecting lines, and that the
consolidation was effected in pursuance of the statute. This Court
held that under these circumstances, the issuing of the bonds to
the consolidated company was lawful.
In
Harter v. Kernochan, 103 U.
S. 562, at October term, 1880, bonds had been voted by
the township of Harter, in Clay County, Illinois, as a donation to
the Illinois Southeastern Railway Company, and were issued to the
Springfield and Illinois Southeastern Railway Company, the latter
company having been formed subsequently to the vote by a
consolidation between the former company and another company. This
Court held that the statutes of Illinois existing when the vote was
taken authorized the consolidation, and that upon such
consolidation, the new company succeeded to all the rights,
franchises, and powers of the constituent companies. The Court said
(p.
103 U. S.
574):
"The power in the township to make a donation to aid in the
construction of the Illinois Southeastern Railway was also a
privilege of the latter corporation, and that privilege, upon the
consolidation, passed to the new company. The donation was voted
before the consolidation took effect, and since the consolidated or
new company did not propose to apply such donation to purposes
materially different from those for which the people voted it in
1868, its right to
Page 128 U. S. 122
receive the donation at least when the township assented, cannot
be doubted."
The validity of the bonds was upheld.
In
New Buffalo v. Iron Company, 105 U. S.
73, at October term, 1881, the suit was brought on bonds
and coupons issued by the Township of New Buffalo, in the County of
Berrien and State of Michigan. The bonds had been voted by the
township in May, 1869, as a donation in favor of the Chicago and
Michigan Lake Shore Railroad Company. When the bonds were voted,
there was in force a general statute under which any railroad
company of the state, forming a continuous or connected line with
any other railroad company in or out of the state, could
consolidate with the latter. The statute provided that the new
corporation should possess all the powers, rights, and franchises
conferred upon its constituent corporations, and that they should
be deemed to be transferred to and vested in it. After the vote was
had, the company to which the bonds were voted was consolidated
with another company into a new corporation having the name of the
Chicago and Michigan Lake Shore Railroad Company. The point was
taken in this Court that the bonds were void because they were
delivered to a company to which they were not voted. This Court
said:
"The only remaining objection to the judgment is that the bonds
were delivered to the consolidated company, when they were not
voted to that company. We concur with the court below in holding
that the aid voted must be deemed to have been given in view of the
then existing statute, authorizing two or more railroad companies
forming a continuous or connected line to consolidate and form one
corporation and investing the consolidated company with the powers,
rights, property, and franchises of the constituent companies.
Nugent
v. Supervisors, 19 Wall. 241;
County of
Scotland v. Thomas, 94 U. S. 682;
Town of East
Lincoln v. Davenport, 94 U. S. 801;
Wilson v.
Salamanca, 99 U. S. 504;
Empire v.
Darlington, 101 U. S. 87;
Menasha v.
Hazard, 102 U. S. 81;
Harter v.
Kernochan, 103 U. S. 562;
County of
Tipton v. Locomotive Works, 103 U. S. 523. The bonds were
therefore rightfully delivered to the new or consolidated
corporation."
This Court affirmed the judgment against the township.
Page 128 U. S. 123
The new trial which was directed by this Court in
County of
Bates v. Winters, 97 U. S. 83, took
place, and resulted in another judgment against Bates County, which
was brought before this Court in
Bates County v. Winters,
112 U. S. 325, at
October term, 1884. The bonds were issued by the county court on
behalf of the township. This Court held that at the second trial,
an acceptance by the Lexington, Chillicothe, and Gulf Railroad
Company of the subscription to its stock had been shown, which made
the subscription complete and binding as a subscription to the
stock prior to the consolidation, the judgment in
County of
Bates v. Winters, 97 U. S. 83, having
been reversed because it did not appear that the county court had
actually subscribed to the capital stock of the Lexington,
Chillicothe, and Gulf Railroad Company before the consolidation.
This Court held in the case in 112 U.S. that the valid subscription
made prior to the consolidation rendered unnecessary a subscription
to the stock of the consolidated company, which latter subscription
it had held, in
Harshman v. Bates County, 92 U. S.
569, and
County of Bates v. Winters,
97 U. S. 83, to have
been invalid. In the case in 112 U.S., this Court went on to
say:
"As the Lexington, Chillicothe, and Gulf Company was organized
under the general railroad law of Missouri, which authorized
consolidations, the subsequent consolidation of that company with
another organized under the same law did not avoid the subscription
which was made to its stock on the 17th of June, and the bonds in
payment of the subscription were properly delivered to the
consolidated company. This has been many times decided.
New
Buffalo v. Iron Company, 105 U. S. 73, and the cases there
cited."
This Court held the bonds to be valid.
We do not think that the rigid rule laid down in the case of
Harshman v. Bates County, 92 U. S.
569, ought to be applied to the present case, although
it is a case of bonds issued by a county court in the State of
Missouri on behalf of a township of the county. In the articles of
association of the St. Louis, Chillicothe, and Omaha Railroad
Company, it was declared that the object of the association was to
construct, maintain, and operate a railroad for public use from
Chillicothe to such
Page 128 U. S. 124
point on the boundary line between Missouri and Iowa as should
be deemed, after actual survey, to be on the most direct and
feasible route for constructing, maintaining, and operating a
railroad between Chillicothe and Omaha, in Nebraska, and by the
same articles it was provided that the association was organized
under and subject to the laws of the State of Missouri contained in
chapters 62 and 63 of Title XXIV of the General Statute of Missouri
of 1865, possessing all and singular the powers therein contained.
The St. Louis, Council Bluffs, and Omaha Railroad Company, in Iowa,
was formed in September, 1870, to construct a railroad from Council
Bluffs, in Iowa, to the state line between Iowa and Missouri at a
point where the Chillicothe and Omaha Railroad should reach such
state line, and, in the event of the consolidation of the Iowa
corporation with the Chillicothe and Omaha Railroad Company (which
was the new and changed name of the St. Louis, Chillicothe and
Omaha Railroad Company), then, in connection with that company,
"to form a continuous line of railroad from the City of Omaha,
in the State of Nebraska, and the City of Council Bluffs, in the
State of Iowa, to the City of St. Louis, in the State of
Missouri."
The consolidation thus contemplated took place. The new company
was called the St. Louis, Council Bluffs, and Omaha Railroad
Company, and the bonds were issued to it. They were issued as
negotiable securities to pay for the subscription voted to the
stock of the Missouri corporation. The vote was that they should be
issued in accordance with the law regulating subscriptions by
municipal townships to railroad companies, in payment of a
subscription to be made on behalf of the Township of Chillicothe to
the stock of the Missouri company. The object of the consolidation
was stated in the articles of consolidation to be to consolidate
the two companies into one
"for the purpose of constructing, owning, maintaining, using,
and operating a continuous line of railroad from the City of Omaha,
in Nebraska, and the City of Council Bluffs, in Iowa, to the City
of Chillicothe, in Missouri, under the name of the St. Louis,
Council Bluffs, and Omaha Railroad Company."
The vote of the people to subscribe to the stock, followed by
the issue of the
Page 128 U. S. 125
bonds, was an adoption of the articles of association of the
Missouri company not only with the powers and purposes expressed in
those articles and conferred by then existing statutes, but with
all powers which had prior to the vote been conferred upon it by
statute. The intention and purpose of the voters of the township in
voting, and of the county court of the county in issuing, the bonds
were fully carried out in what was done. The vote of the people
contemplated and authorized the very thing that was done. The bonds
were voted for the express purpose of constructing a road from
Chillicothe to the boundary line between Missouri and Iowa, with a
view to continuing the road from such boundary line to Omaha, in
Nebraska. This object was attained by means of the consolidation.
The road was constructed by the consolidated company from
Chillicothe to the boundary line between Missouri and Iowa, through
the counties of Missouri named in the articles of association of
the Missouri company, and was continued thence to Omaha, in
Nebraska, and has ever since been operated upon that line. The
object expressed in the articles of association of the Missouri
company of having a continuous road from Chillicothe to Omaha was
not only effectually accomplished by the consolidation, but could
not have been accomplished without it. The Missouri corporation
could not have built the road in Iowa, from the state line to
Council Bluffs, and a railroad extending only from Chillicothe to
the state line would not have answered the purpose contemplated. To
say, therefore, that there has been any substantial diversion in
the use of the bonds from the purpose contemplated by the vote of
the people of the township because of the consolidation and of the
issuing of the bonds to the consolidated company, which has made
the very road intended, because the authority conferred by the vote
was nominally one only to issue the bonds to the Missouri
corporation, is not a sound proposition in view of the fact that
the statute of Missouri expressly authorized the consolidation
which took place. Under the facts of the case, the provision for
consolidation became a part of the contract between the township
and the railroad company, and the vote to issue the bonds to
Page 128 U. S. 126
the company was an assent to the exercise by it of all the
corporate powers, including that of consolidation, with which it
was invested at the time of the vote. So true is this that if the
Missouri company had never been consolidated with the Iowa company
and the road had only been built to the state line, and no
extension to it through Iowa to Council Bluffs and Omaha had been
made, it might well have been urged that the citizens of the
township had been defrauded and that the purpose in issuing the
bonds had not been carried out.
We think that in the present case the rule applied in the cases
before cited of
County of Scotland v. Thomas, 94 U. S.
682;
Town of East Lincoln v. Davenport,
94 U. S. 801;
Wilson v. Salamanca, 99 U. S. 499;
Menasha v. Hazard, 102 U. S. 81;
Harter v. Kernochan, 103 U. S. 562;
New Buffalo v. Iron Company, 105 U. S.
73, and
Bates County v. Winters, 112 U.
S. 325, is the more proper and salutary one, and that
the doctrine laid down in
Harshman v. Bates County,
92 U. S. 569, and
in
County of Bates v. Winters, 97 U. S.
83, that a county court in Missouri could not, on a vote
by a township to issue bonds to a corporation named, issue the
bonds to a company formed by the consolidation of that corporation
with another corporation, would not be, if applied here, a sound
doctrine.
3. As to the objection that it does not appear by the findings
of the circuit court that there was any formal order made by the
county court for the issue of the bonds. By ยง 51 of the statute
before cited it was provided that if it should appear from the
returns of the election that not less than two-thirds of the
qualified voters voting at the election were in favor of the
subscription to the stock of the railroad company, it should be the
duty of the county court to make the subscription in behalf of the
township according to the terms and conditions thereof, and that if
those conditions provided for the issuing of bonds in payment of
such subscription, the county court should issue such bonds in the
name of the county and deliver them to the railroad company. This
imposed a plain duty in the present case upon the county court,
because the statute and the vote, taken together, authorized
Page 128 U. S. 127
the subscription and the issue of the bonds, and no formal order
by the county court to do those acts was necessary. The acts were
ministerial. The statute left no discretion in the county court,
but made it the duty of the court to make the subscription and
issue the bonds. The sole duty of the court was to ascertain that
the proper vote had been had. The bonds state on their face that
they are
"issued under and pursuant to an order of the County Court of
Livingston County, authorized by a two-thirds vote of the people of
Chillicothe Municipal Township,"
and each bond also states that the county has executed it by the
presiding justice of the county court of the county, under an order
of the court, signing his name to the bond, and by the clerk of the
court, under the order thereof, attesting the same and affixing
thereto the seal of the court, and it is so signed and attested and
the seal is affixed. Moreover, the finding of the circuit court is
that the records of the county court show that that court made an
order on the 21st of February, 1877, stating that, under and by
virtue of the statute of the state, approved March 23, 1868, the
County of Livingston, for the use and in behalf of the Municipal
Township of Chillicothe, had issued and delivered the bonds in
question to the St. Louis, Council Bluffs, and Omaha Railroad
Company. It is also found as a fact by the circuit court that the
County of Livingston had made eleven semiannual payments of
interest on the bonds from the proceeds of taxes levied in each
year on the taxable property of the township.
The county court having been designated by the statute as the
proper authority to determine that the conditions existed which
authorized the making of the subscription, to be followed by the
issuing of the bonds, the fact of the issue of the bonds by the
county court, under its seal, with the recitals contained in the
bonds, and the other facts above stated, estop the county from
urging, as against a
bona fide holder of the bonds and
coupons, the existence of any mere irregularity in the making of
the subscription or the issuing of the bonds. On the foregoing
facts, it must be presumed that the subscription to the stock was
made by the county court in behalf of
Page 128 U. S. 128
the township, and the county is estopped from asserting the
contrary.
We are referred by the counsel for the plaintiff in error to the
cases of
State v. Garroutte, 67 Mo. 445, and
Weil v.
Greene Co., 69 Mo. 281, as holding to the contrary of the
views we have here announced. Independently of the fact that these
decisions were made in 1878, many years after the bonds in the
present case were issued, no such facts existed in those cases as
exist in the present case. In the case in 67 Missouri, the bonds
were issued to the Hannibal and St. Joseph Railroad Company to aid
in building the Kansas City and Memphis Railroad, alleged to be a
branch of the former road. The main line had never been built. The
court said that a branch road necessarily presupposed a main trunk
line, and that the Kansas City and Memphis Railroad was, for all
practical purposes, really a distinct and independent branch of the
Hannibal and St. Joseph Railroad, the union existing merely in
name, but not in substance, and the branch road having separate
stock and stockholders, president, directors, and liabilities from
the main road, so as to require, under the Constitution of Missouri
of 1865, a vote of the people in favor of the issue of the bonds.
There was no vote of the people in that case. In the case in 69
Missouri, the bonds had been issued by Greene County to the
Hannibal and St. Joseph Railroad Company to aid in building the
road through that county. The case did not show that there was any
connection between the Hannibal and St. Joseph Railroad Company and
the railroad to be built, nor what railroad it was, nor that Greene
county had ever subscribed to the stock of any railroad
company.
The exceptions taken on the trial, as above set forth, do not
present any question different from those which have been
discussed. The bonds and coupons were properly read in evidence,
and so were the certified copies of the tax levies.
We find no error in the record, and the judgment of the circuit
court is
Affirmed.
