1. The fourteenth section of article 11 of the Constitution of
Missouri, adopted in 1865, which declares 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,"
prohibits any subsequent legislative grants to any municipal
corporation, of authority to become a stockholder in or to loan its
credit to a company except upon the prescribed conditions, but it
does not purport to take away any authority already granted.
2. The Alexandria & Bloomfield Railroad Company was
incorporated under an Act of the General Assembly of Missouri
approved Feb. 9, 1857, which provided that "it shall be lawful for
the county court of any county in which any part of said road may
be to subscribe to the stock of said company," and issue its bonds
therefor. The laws of the state reserved to the general assembly
the right to amend the charter, and the company was, pursuant to
the authority conferred by the Act of March 2, 1869, consolidated
with a corporation in Iowa having like authority from that state,
but the general direction of the road was not thereby changed. The
road of the company passes through the County of Scotland, and the
county court, in the absence of any election by the qualified
electors of that county, subscribed, in August, 1870, to the
capital stock of said consolidated company and issued the bonds of
the county in payment therefor.
Held, 1. that the power of
the county to subscribe for stock in the Alexandria &
Bloomfield Railroad Company was the right and privilege of the
company, and passed, with its other rights and privileges, into the
new conditions of existence which it assumed under the
consolidation; 2. that the subscription made by the court was the
act of the county, and binding upon it, and that the bonds so
issued are valid.
3.
Harshman v. Bates County, 92 U. S.
569, is not in conflict with the rulings in this
case.
This was a suit brought upon certain coupons attached to bonds,
purporting to have been issued by the County of Scotland, in the
State of Missouri.
The bonds were in the words and figures following, except that
each bond had a separate number:
"$1,000] UNITED STATES OF AMERICA [No. 65"
"
Eight percent Railroad Bond"
"
County of Scotland] [Twenty-five years"
"Know all men by these presents that the County of Scotland in
the State of Missouri acknowledges itself indebted to the
Missouri,
Page 94 U. S. 683
Iowa & Nebraska Railway Company, a corporation existing
under and by virtue of the laws of the States of Missouri and Iowa,
formed by consolidation of the Alexandria & Nebraska City
Railroad Company (formerly Alexandria & Bloomfield Railroad
Company) of the State of Missouri, and the Iowa Southern Railway
Company of the State of Iowa, in the sum of $1,000, which sum the
said county hereby promises to pay to the said Missouri, Iowa &
Nebraska Railway Company or bearer at the Farmers' Loan & Trust
Company in New York on the thirty-first day of December, A.D. 1895,
together with interest thereon from the thirty-first day of
December, 1870, at the rate of eight percent per annum, which
interest shall be payable annually in the City of New York, on the
thirty-first day of December in each year as the same shall become
due, on the presentation of the coupons hereto annexed. This bond
being issued under and pursuant to an order of the County Court of
said Scotland County for subscription to the stock of the Missouri,
Iowa & Nebraska Railway Company as authorized by an act of the
General Assembly of the State of Missouri entitled 'An Act to
incorporate the Alexandria & Bloomfield Railroad Company,'
approved Feb. 9, 1857."
"In testimony whereof, the said County of Scotland has executed
this bond by the presiding justice of the county court of said
county, under the order of said court, signing his name hereto, and
the clerk of said court, under the order thereof, attesting the
same, and affixing thereto the seal of said court. This done at the
Town of Memphis, in the County of Scotland, in the State of
Missouri, this first day of September, A.D. 1870."
"WILLIAM DAWSON"
"
Presiding Justice of the County Court of Scotland County,
Mo."
"Attest:"
"{SCOTLAND COUNTY COURT} STERLING McDONOLD"
"{ MISSOURI, SEAL }
Clerk of the County Court of Scotland
County, Mo."
To each of which bonds were annexed twenty-five interest
coupons, each for the sum of $80, maturing annually for the
interest thereon. These bonds were delivered, before the 21st of
December, 1871, to the "Missouri, Iowa & Nebraska Railway
Company," with the interest coupons attached, in payment of the
subscription to the capital stock of the company; and such of them
as had attached to them the coupons sued on were, before the
maturity of the second maturing coupons, together with all the
coupons except the ones first maturing,
Page 94 U. S. 684
sold for value, and transferred by delivery to the plaintiff,
who is the holder and owner thereof. The plaintiff caused the
coupons sued on to be presented for payment at maturity, and
payment was not made.
The petition alleged, in addition to the foregoing facts, that
by an act of the General Assembly of Missouri, entitled "An Act to
incorporate the Alexandria & Bloomfield Railroad Company,"
approved Feb. 9, 1857, the said company was incorporated, and
thereafter was duly organized under said act of incorporation; that
the tenth section of said act of incorporation provides as
follows:
"The said company shall in all things be subject to the same
restrictions, and entitled to all the privileges, rights, and
immunities which were granted to the North Missouri Railroad
Company, by an act entitled 'An Act to incorporate the North
Missouri Railroad Company,' approved March 3, 1851, so far as the
same are applicable to the company hereby created, as fully and
completely as if the same were herein reenacted."
The fourteenth section of the said Act of March 3, 1851,
contains the following provision, to-wit:
"It shall be lawful for the county court of any county, in which
any part of the route of said railroad may be, to subscribe to the
stock of said company (North Missouri Railroad Company), and it may
invest its funds in the stock of said company, and issue the bonds
of such county to raise funds to pay the stock thus subscribed, and
to take proper steps to protect the interest and credit of the
county."
That a part of the route of the road of the "Alexandria &
Bloomfield Railroad Company" was within the County of Scotland, as
designated in the act of incorporation.
That in pursuance of an act of the general assembly of Missouri,
entitled "An Act to amend an act entitled "An Act to incorporate
the Alexandria & Bloomfield Railroad Company, approved Feb. 9,
1857," approved Feb. 19, 1866," authorizing the Alexandria &
Bloomfield Railroad Company to change its name, and to extend its
road from Luray, in Clark County, Mo., to Nebraska City, in
Nebraska Territory, the said company did change its corporate name
to that of the "Alexandria & Nebraska City Railroad
Company."
Page 94 U. S. 685
The defendant demurred, but before the demurrer was submitted it
was stipulated between the parties that the question of subscribing
to the stock of the "Missouri, Iowa & Nebraska Railway Company"
had never been submitted to a vote of the qualified voters of
Scotland County and that in determining the questions raised by the
demurrer, the court might consider this fact as if it had been
averred in the complaint.
It was further agreed that the articles of consolidation between
the Iowa Southern Railway Company and the Alexandria & Nebraska
City Railroad Company, entered into March 26, 1870, and the orders
of the County Court of Scotland County, should be taken and
considered by the court as facts admitted in determining the
questions raised by the demurrer.
By those articles it was provided that the consolidated company
should bear the name of the Missouri, Iowa & Nebraska Railway
Company; that its capital stock should be $13,000,000, to be
divided into one hundred and thirty thousand shares of $100 each;
that the directors might increase it when necessary, upon the
approval of a majority of the stockholders; that the line of the
railway should extend from the City of Alexandria, in Missouri, on
the Mississippi River, to Centreville, Iowa, thence west to the
Missouri River; and that the company should assume and pay all
debts owing, and all contracts or agreements entered into, by
either of the companies. The company was also authorized to borrow
money to an amount not exceeding two-thirds of its capital stock,
issue bonds, and secure their payment by mortgage on all the
property of both companies.
The material parts of the Act of March 2, 1869, under which the
"Alexandria & Nebraska City Railroad Company" and the "Iowa
Southern Railway Company," a corporation created under the laws of
Iowa, entered into articles of consolidation are as follows:
"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 or special laws of any
adjoining state, is hereby authorized to make and enter into any
agreement with
Page 94 U. S. 686
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 between then in accordance with the laws of the adjoining
state in which the road is located with which connection is thus
formed."
Sec. 2 requires that the consolidation shall be approved by the
holders of a majority of the stock in each of the old
companies.
Sec. 3 provides, that when the terms of consolidation shall have
been agreed upon, &c.,
"It shall be competent for the boards of directors in each of
said connecting companies to carry the same into effect and adopt
by a resolution a new corporate name for the company, which shall
be formed by the consolidation, and to call in the certificates of
stock then outstanding in each company and exchange them for stock
in the new company as may have been agreed by the terms of the
consolidation, and a copy of the said consolidation agreement and
the resolutions of consolidation and the name adopted for the new
company shall be filed with the secretary of state"
&c.
"SEC. 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
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."
The demurrer was overruled and judgment rendered for the
plaintiff, whereupon the county sued out this writ of error.
Page 94 U. S. 687
MR. JUSTICE BRADLEY delivered the opinion of the Court.
This action was brought by plaintiff below (the defendant in
error) to recover the amount of certain interest coupons attached
to certain bonds issued by order of the County Court of Scotland
County, Mo. (the defendant below), on behalf of the county, to pay
for a subscription of stock of the Missouri, Iowa,
Page 94 U. S. 688
and Nebraska Railway Company. The county contests the validity
of the bonds, on the ground that the question of subscribing to the
stock was never submitted to a vote of the qualified voters of the
county, as required by the Constitution of the state adopted in
1865, the subscription being voted and the bonds being issued in
1870. The plaintiff answers this objection by showing that the
power to make the subscription was conferred in 1857, in the
charter of a company called the Alexandria & Bloomfield
Railroad Company, before the Constitution was adopted, and that
this company, by consolidation with other companies, formed the
Missouri, Iowa & Nebraska Railway Company, and brought to it
all its own privileges and powers -- and, amongst others, that of
receiving county subscriptions to its capital stock. The county
replies to this argument, that however valid it may be to sustain
subscriptions made to the Alexandria & Bloomfield Railroad
Company itself, had that company remained distinct, as originally
chartered, it cannot avail to support a subscription to the stock
of a new and different company, having a much greater amount of
capital stock, and a much longer and different route of railroad,
running into another state. The question was raised in the court
below by demurrer to the petition, and judgment was given for the
plaintiff.
The clause of the constitution on which the defendant relies is
the fourteenth section of art. 11, and is as follows:
"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."
This prohibition, it will be observed, is against the
legislature's authorizing municipal subscriptions or aid to private
corporations; it does not purport to take away any authority
already granted. It only limits the power of the legislature in
granting such authority for the time to come. This has been settled
by the Supreme Court of Missouri in several well considered
decisions.
See State v. Sullivan County, 51 Mo. 522;
State v. Greene County, 54
id. 540. In the former
case, the court said:
"Power conferred on counties to take and subscribe stock
Page 94 U. S. 689
without a submission to a vote of the people, before the
constitution went into operation, remained unaffected by that
instrument."
The same view was taken by this Court in the recent case of
County of Callaway v. Foster, 93 U. S.
567.
See also state v. Maysville & Lexington
Railroad Co., 13 B.Mon. (Ky.) 1.
The specific question in the present case, therefore, is whether
the authority given to counties and towns in 1857 to subscribe to
the capital stock of the Alexandria & Bloomfield Railroad
Company has become extinguished by the subsequent consolidation of
that company with other companies, irrespective of the
constitutional provision referred to. The constitution does not
itself, as we have seen, interfere with authority given previous to
its adoption.
That simple consolidation with another company does not
extinguish the power of the counties to subscribe, or the privilege
of the company to receive subscriptions, was decided in the case of
State v. Greene County, 54 Mo. 540. In that case, the
Kansas City, Galveston & Lake Superior Railroad Company was
chartered in 1857, with power to construct a branch road from
Kansas City to the southern boundary of the state, and power was
given to the county courts of any county through which the road or
any of its branches might run, to subscribe to the stock of the
company and issue its bonds therefor. The company afterwards
changed its name, and, in 1870, consolidated with the Hannibal
& St. Joseph Railroad Company, and the latter company continued
the work of constructing the branch road referred to, which had
been begun by the Kansas City company. The branch was built under a
separate organization created by the parent company, called the
Kansas City & Memphis Railroad Company, but under the control
and with the aid of the parent company. The County Court of Greene
County, in 1870, subscribed to the capital stock of the Hannibal
& St. Joseph Railroad Company, issued to aid in building and
equipping the branch road, which ran through the county. The
Supreme Court of Missouri decided that the subscription was valid,
and that the power to subscribe, originally given, still subsisted,
unaffected by the consolidation. The cases decided by this Court
of
Page 94 U. S. 690
Philadelphia & Wilmington
Railroad Co. v. Maryland, 10 How. 376, and
Tomlinson v.
Branch, 15 Wall. 460, were cited and relied on, for
the purpose of showing that where a consolidation is effected
between two railroad companies, and nothing to the contrary is
indicated, the rights and privileges, as well as the duties and
liabilities, of each continue to exist as before in the hands of
the new organization. It seems to us that this decision in the
Greene County case governs the present case. It is true the court
laid considerable stress on the fact that the branch road in that
case was a distinct interest from that of the main line, and was
not liable for its obligations or liabilities, and the holders of
the stock in the branch road had the right to control its affairs;
and this feature was not changed by the consolidation. This fact
undoubtedly prevents the case from being an exact precedent for the
present one. But the close and intimate relations which in other
respects connected the branch with the main line in that case give
to the decision a good deal of importance. The principles adopted
were substantially the same as those involved in the present case.
The facts are not very fully stated in the report, but it would
appear from the statement of the dissenting judge, p. 557, that the
stock subscribed for in that case was the stock of the Hannibal
& St. Joseph Railroad Company. As such, though it may have been
special stock applicable to the branch road, it made the holder a
member of the parent company, entitled to vote for its directors,
and no doubt in other ways connected with its fortunes.
In that case, as in this, the power to consolidate was given
after the original charter was granted, and after the constitution
went into effect. But that was no regarded as affecting the power.
By general laws of the state, in force when the original charter
was granted, the legislature had reserved the power to alter,
suspend, and repeal all charters of incorporation, and had
specially reserved this power in the general railroad act.
See Rev.Stat. of Mo., 1855, pp. 371, 438. It would seem
clear, therefore, that alterations of the charter were admissible,
and would not affect rights of the company untouched thereby, nor a
power to subscribe to its stock previously existing.
See County
of Callaway v. Foster, 93 U. S. 567.
Page 94 U. S. 691
The power to amend thus existing, the amending acts in this case
do not subvert the original purposes of the charter, but rather
carry them out and perfect them. The railroad authorized by it
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
the route originally indicated. The amending act, therefore, which
authorized a consolidation with the Iowa Southern Railway Company,
and thereby constituted the Missouri, Iowa & Nebraska Railway
Company, was in perfect accord with the general purpose of the
original charter of the Alexandria & 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 decision of this Court in the case of
Harshman v. Bates
County, 92 U. S. 569, is
urged against this view of the case, but we do not think it
applicable. In that case, the question was, whether authority given
to the county court by the electors of a township to subscribe in
its behalf for stock in a certain
Page 94 U. S. 692
railroad company, continued to exist after the company had
ceased to exist, by being absorbed in another company by
consolidation? We held that it did not. The county court was
regarded as being the mere agent of the township, having no
discretion to act beyond the precise terms of the power given. The
powers of an agent or attorney, authorized to act for another, are
very different from those possessed by a person acting in his own
behalf. Had the charter of the Alexandria & Bloomfield Railroad
Company authorized foreign corporations to subscribe to its stock
(supposing that by the general law of Missouri they had no such
power), they would undoubtedly have retained that power after the
consolidation; it being in their discretion to exercise it or not.
But if any such foreign corporation had, before the consolidation,
sent an order to a firm in St. Louis to subscribe stock for it in
the original company, the firm could not have made the subscription
after the consolidation, without consulting their principals. Such
a material change of circumstances would have rendered the
subscription an excess of the power given to them. Authority given
to a person, to be exercised for his own benefit and at his own
discretion, may be exercised by him under changes of circumstances
that would amount to a revocation of a power given to an attorney,
unless it expressly conferred discretion. A recurrence to the
opinion in the
Harshman case will show that this
distinction underlies the reasons given for the judgment in that
case. The County Court of Scotland County, in the present case,
acted as the representative authority of the county itself,
officially invested with all the discretion necessary to be
exercised under the change of circumstances brought about by the
consolidation in question. For, as before remarked, the county
courts, in reference to the subscription in question, represented
the counties themselves, as their officially constituted
authorities. This is distinctly stated by the Supreme Court of
Missouri in the case of
Hannibal & St. Jo. Railroad Co. v.
Marion County, 36 Mo. 303. The power given to the county
courts intersected by the Alexandria & Bloomfield Railroad to
subscribe to its stock, was given to them as representing the
counties. When they subscribed for the stock, it was the county
that subscribed. It was discretionary with them whether
Page 94 U. S. 693
to subscribe or not, and (within the limits imposed by the act)
how much they should subscribe.
But the case has other aspects, which it is necessary to take
into consideration. 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,
conductive 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 county 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 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 principles laid down in the case of the
Philadelphia, Wilmington,
& Baltimore Railroad Co. v. Maryland, 10 How.
376, and
Tomlinson v.
Branch, 15 Wall. 460, and recently reaffirmed in
Branch v. City of Charleston, 92 U. S.
677, seem to us directly applicable. Subscription to the
stock was not only a power of the county, but a privilege of the
company, being a portion of the rights and privileges which it
obtained by translation from the charter of the North Missouri
Railroad Company. It was expressly so held by the Supreme Court of
Missouri in the case of
Smith v. County of Clark, 54 Mo.
58; and the same principle had been adopted in the earlier case of
Hannibal & St. Jo. Railroad Co. v. Marion County, 36
id. 294, 304. The latter company was by its charter
"entitled to all the privileges, rights, and immunities which were
granted to the Louisiana
Page 94 U. S. 694
and Columbia Railroad Company, so far as applicable," &c.
The right to receive county subscriptions was held to be one of
these privileges, rights, and immunities. The court said:
"It was under this section that the [county] court proceeded
when the stock was first taken and the notes issued. The
legislature gives the company all the rights, privileges, and
immunities contained therein, the same as if it had been reenacted.
The language seems broad enough, by reasonable construction, to
fully sustain the acts of the county court."
36
id. 304.
In
Smith v. County of Clark, the same views were held
with regard to the charter now in question. The court said:
"The power thus conceded to the courts or other municipal bodies
may well be termed a privilege to the corporations, and we see no
substantial objection to a transfer of such a privilege by simply,
in general terms, embodying the section of the original act which
granted it into the new law. That such was the intention of the
legislature and of the railroad company is clear, and if the word
'privilege' admits of the narrow construction claimed, the
practical construction it has received in this state, as may be
seen by reference to the decisions of our courts, would preclude
any inquiry into the subject now. These provisions were the
principal means by which this and other roads were built, and
without them the charters would have been of no value."
54
id. 67.
The power of the counties to subscribe being thus held to be a
right and privilege of the company, in our opinion, passed with its
other rights and privileges into the new conditions of existence
which the company assumed under the consolidation.
The argument sought to be drawn from the distinction, that the
company with which the consolidation was effected belonged to
another state, we fail to appreciate. If the Legislature of
Missouri authorized it, what difference can it make whether the
connecting company belongs to Missouri or to Iowa? There is no
difference in principle. The Philadelphia, Wilmington &
Baltimore Railroad Company, in its consolidated form, combined the
roads and charters of three different states, and yet it was held
to be invested with the rights and privileges of each, as
applicable to the several parts of the line.
See also, to
the same purport, the case of
Hanna v. The Cincinnati, Fort
Wayne & Chicago Railroad Co., 20 Ind. 30.
Page 94 U. S. 695
Other points were raised on the argument, which it is
unnecessary to discuss, as this was the principal one relied on,
and presented the only serious difficulty in the case.
Judgment affirmed.
MR. JUSTICE MILLER dissented.
MR. JUSTICE FIELD did not sit in this case, nor take any part in
the decision.
