�Harshman v. Bates County
�
92 U.S.
569
ERROR TO THE CIRCUIT COURT OF THE UNITED
STATES FOR THE WESTERN DISTRICT OF MISSOURI
Syllabus
1. Sec. 14 of art. 11 of the Constitution of Missouri, adopted
in 1865, declaring that
"The general assembly shall not authorize any county, city, or
town, to become a stockholder in, or to loan its credit to, any
company, association, or corporation unless two-thirds of the
qualified voters of such county, city, or town, at a regular or
special election to be held therein, shall assent thereto,"
extends as well to townships as to counties, cities, and
towns.
2. Although a subscription for stock of a railroad company be
duly authorized by the requisite number of the qualified voters of
a township, if the company, before the subscription he actually
made, becomes consolidated with another, thereby forming a third,
the county court is not empowered to subscribe, on behalf of the
township, for stock of the new company, and issue bonds in payment
therefor.
3. The holder of coupons attached to the bonds in question in
this suit is not entitled to recover thereon, as sufficient notice
of the objection to the validity of the bonds is contained in their
recitals.
Page 92 U. S. 570
This is an action against the County of Bates, upon a large
number of coupons originally attached to bonds issued by the county
court of that county.
The following is a copy of one of the bonds and coupons:
"[No. 90 UNITED STATES OF AMERICA [$1,000"
"STATE OF MISSOURI,
County of Bates:"
"Issued pursuant to articles of consolidation in payment of
stock due the Lexington, Lake & Gulf Railroad Company,
consolidated Oct. 4, A.D. 1870."
"Know all men by these presents, that the County of Bates, in
the State of Missouri, acknowledges itself indebted and firmly
bound to the Lexington, Lake & Gulf Railroad Company in the sum
of $1,000, which sum the said County of Bates, for and in behalf of
Mount Pleasant Township, therein promises to pay to the said
Lexington, Lake & Gulf Railroad Company, or bearer, at the Bank
of America, in the City and State of New York, on the eighteenth
day of January, A.D. 1886, together with the interest thereon from
the eighteenth day of January, 1871, at the rate of ten percentum
per annum, which interest shall be payable annually on the
presentation and delivery at said Bank of America of the coupons of
interest hereto attached."
"This bond being issued under and pursuant to an order of the
County Court of Bates County, by virtue of an act of the General
Assembly of the State of Missouri, approved March 23, 1868,
entitled 'An Act to facilitate the construction of railroads in the
State of Missouri,' and authorized by a vote of the people taken
May 3, 1870, as required by law, upon the proposition to subscribe
$90,000 to the capital stock of the Lexington, Chillicothe &
Gulf Railroad Company, and which said railroad company last
aforesaid and the former Pleasant Hill Division of the Lexington,
Chillicothe & Gulf Railroad Company were, on the fourth day of
October, 1870, consolidated, as required by law, into one company,
under the name of the Lexington, Lake & Gulf Railroad Company;
and which said last-named railroad company, as provided by law, and
under the terms of said consolidation thereof, possesses all the
powers, rights, and privileges, and owns and controls all the
assets, subscriptions, bonds, moneys, and properties whatever, of
the two said several companies forming said consolidation, or
either one of them. "
Page 92 U. S. 571
"In testimony whereof, the said County of Bates has executed
this bond, by the presiding justice of the county court of said
county, under the order thereof, signing his name hereto, and the
clerk of said court, under the order thereof, attesting the same,
and affixing the seal of said court."
"This done at the city of Butler, County of Bates, this
eighteenth day of January, A.D. 1871."
"{COUNTY COURT OF"
"[SEAL]"
"BATES CO., MO.}"
"B. H. THORNTON"
"
Presiding Justice of the County Court of Bates County,
Mo."
"Attest:"
"W. J. SMITH"
"
Clerk of the County Court of Bates County, Mo."
"
$100] Coupon [$100"
"BUTLER, BATES COUNTY, MO."
"Jan. 18, A.D. 1871"
"The County of Bates acknowledges to owe the sum of $100,
payable to bearer on the eighteenth day of January, 1872, at the
Bank of America, in the City of New York, for one year's interest
on bond No. 90."
"W. J. SMITH"
"
Clerk County Court Bates County, Mo."
The plaintiff alleges that on the eighteenth day of January,
1871, the defendant issued its several bonds by which it bound
itself to pay to the Lexington, Lake & Gulf Railroad Company,
and for and on behalf of Mount Pleasant Township in said county,
$1,000 payable to said company at the Bank of America &c., and
that he is the holder of certain coupons of said bonds.
That, prior to the fifth day of April, 1870, certain taxpayers
of Mount Pleasant Township petitioned the County Court of Bates
County setting forth their desire to subscribe $90,000 to the stock
of the Lexington, Chillicothe & Gulf Railroad Company, and
thereupon the court ordered an election in said township for the 3d
of May, 1870, which was held, and two-thirds of the qualified
voters of said township voting thereat voted for it.
That on the eighteenth day of July, 1870, another corporation
was formed by the name of the Pleasant Hill Division of the
Page 92 U. S. 572
Lexington, Chillicothe & Gulf Railroad Company, and that
these two corporations, one being the Lexington, Chillicothe &
Gulf Railroad Company and the other being the Pleasant Hill
Division of the Lexington, Chillicothe & Gulf Railroad Company,
were, on the fourth day of October, 1870, consolidated under the
name of the Lexington, Lake & Gulf Railroad Company.
That thereafter -- to-wit on the 18th of January, 1871 -- the
County Court of Bates County, in pursuance of the authority
conferred upon it by the vote of the people of said township,
subscribed the said sum of $90,000, in behalf of said township to
said Lexington, Lake & Gulf Railroad Company (the consolidated
company), and that said bonds (to which the coupons in suit were
annexed) were, among others, issued by the said court in payment
for said subscription.
The defendant demurred to the petition on the ground that it
shows that the county court had no authority in law to make the
subscription recited in the bonds or to issue the bonds in payment
therefor, and because it also shows that the question of making the
subscription to the new or consolidated company was never submitted
to a vote of the people of Mount Pleasant Township nor assented to
by them as required by the constitution and laws of the state. The
court sustained the demurrer and gave judgment accordingly,
whereupon the case was brought here.
MR. JUSTICE BRADLEY delivered the opinion of the Court.
This is an action brought to recover the amount due on certain
coupons attached to bonds of Bates County, Mo., issued at the
request and on account of Mount Pleasant Township in said county in
payment of a subscription on behalf of the township to the capital
stock of the Lexington, Lake & Gulf Railroad Company. The
subscription was made under a law of Missouri, called the "Township
Aid Act," passed in 1868, by which, on the application of
twenty-five taxpayers and residents of any township, for election
purposes, in any
Page 92 U. S. 573
county, the county court may order an election to be held in
such township to determine whether and on what terms a subscription
to any railroad to be built in or near the township shall be made,
and if two-thirds of the qualified voters of the township, voting
at such election, are in favor of the subscription, the county
court shall make it in behalf of the township, and, if bonds are
proposed to pay the subscription, the court shall issue such bonds
in the name of the county, but to be provided for by the township.
It is contended that this law is repugnant to the fourteenth
section of article 11 of the Constitution of Missouri, adopted in
1865; by which it is declared that
"The general assembly shall not authorize any
county, city,
or town to become a stockholder in or to loan its credit to
any company, association, or corporation unless two-thirds of the
qualified voters of such county, city, or town, at a regular or
special election to be held therein, shall assent thereto."
Now the law of 1868 only requires the assent of two-thirds of
the qualified voters who vote at such election. This is certainly a
broad difference, and if the constitutional restriction extends by
implication to townships as well as to counties, cities, and towns,
an election not conforming to the requirements of the constitution
would be invalid and confer no authority to make a subscription.
The petition in this case only alleges that two-thirds of the
qualified voters voting at the election voted in favor of the
subscription, which does not satisfy the demands of the
constitution. The question therefore arises whether townships are
within the restriction of the constitutional provision. A township
is a different thing from a town in the organic law of Missouri,
the latter being an incorporated municipality, the former only a
geographical subdivision of a county. As said in
State v. Linn
County Court, 44 Mo. 510,
"It has no power by itself to make independent contracts, or to
become bound in its separate capacity. The law has not invested it
with that power. It forms an integral part of the county, and the
county to a certain extent controls and acts for it."
That the framers of the constitution intended to require the
assent of two-thirds of all the qualified voters of a "county,
city, or town" as a prerequisite to a subscription to a railroad or
other company and did not intend the same thing with
Page 92 U. S. 574
regard to townships seems almost absurd. It was undoubtedly
supposed that every case was provided for. The thirteenth section
of article 11 declared that the credit of the state should not be
given or used in aid of corporations; the fourteenth section then
imposes the restriction referred to with regard to counties,
cities, and towns. This specification embraced every political
organization which could be supposed capable of making a
subscription. To contend that the mere subdivision of counties into
townships enabled the legislature to defeat the constitutional
provision is to ignore the manifest intention and spirit of that
instrument. It cannot be possible that it was intended to restrict
the legislature as to counties and not to restrict it as to mere
sectional portions of counties. Had counties alone been mentioned,
there might have been no restriction as to cities and towns,
because they are separate and distinct organizations, corporate in
character and often clothed with legislative functions. But in
Missouri in 1865, when the constitution was adopted, a township had
no corporate character, but, as before stated, was a mere
geographical section of a county, partitioned off for purposes of
local convenience in the matter of elections and a few other
things. They had no power to act as corporate bodies. If the
legislature could clothe these geographical portions of a county
with power to subscribe to stock companies at all, it certainly
could not set at nought the constitutional requirement of the
people's consent thereto.
The court below did not decide the case on this ground, probably
in consequence of certain decisions of the state courts which were
deemed inconsistent with it. But we are not aware of any decisions
of those courts which hold that the constitutional restriction in
question could be ignored with regard to townships any more than
with regard to counties, cities, or towns.
Another objection to the validity of the subscription for which
the bonds were give in this case is that the township voted a
subscription to one company and the county court subscribed to
another. This is sought to be justified on the ground that the
former company became consolidated with another, thereby forming a
third, to whose stock the subscription was made. This consolidation
was effected under a law of Missouri
Page 92 U. S. 575
authorizing consolidations and declaring that the company formed
from two companies should be entitled to all the powers, rights,
privileges, and immunities which belong to either, and it is
contended that this provision of the law justified the county court
in making the subscription without further authority from the
people of the township. But did not the authority cases by the
extinction of the company voted for? No subscription had been made.
No vested right had accrued to the company. The case of
State
v. Linn County Court, supra, only decides that if the county
court refuses to issue bonds after making a subscription, a
mandamus will lie to compel it to issue them. There the authority
had been executed and a right had become vested. But so long as it
remains unexecuted, the occurrence of any event which creates a
revocation in law will extinguish the power. The extinction of the
company in whose favor the subscription was authorized worked such
a revocation. The law authorizing the consolidation of railroad
companies does not change the law of attorney and constituent. It
may transfer the vested rights of one railroad company to another,
upon a consolidation being effected; but it does not continue in
existence powers to subscribe for stock given by one person to
another, which, by the general law, are extinguished by such a
change. It does not profess to do so, and we think that it does not
do so by implication.
As sufficient notice of these objections is contained in the
recitals of the bonds themselves to put the holder on inquiry, we
think that there was no error in the judgment of the circuit
court.
Judgment affirmed.
