CHAPTER XVIII. RAILROAD-AID BONDS. There are some cases involving the validity of railroad-aid bonds in which the questions determined are peculiar to that class of municipal bonds and legislation on the subject of aid to railroad companies by municipalities. It seems appropriate to insert such cases in a separate chapter. Bonds voted to one company issued to another; held void. 1116. (Ill. 1870.) A statute of Illinois authorized any county in the State to subscribe for stock in any railroad company and pay for the stock in its bonds, when previously sanctioned by a majority of the qualified voters of the county at an election called for that purpose, and required the notices calling the election to specify the company in which the stock was to be subscribed. The voters at an election authorized aid to the M. & W. Railroad Company, with 238 miles of road extending across the entire State. This road was divided by legislative enactment into three independent branches under the management of three distinct corporations, and the bonds were issued to one of the three companies thus formed. Holding the bonds void, the court say: "A subscription to a company whose charter provided for a continuous line of railroad of two hundred and thirty miles, across the entire State, was voted by the electors of Fulton county; not a subscription to a company whose line of road was less than sixty miles in extent, and which, disconnected from the other portions of the original line, would be of comparatively little value." Marsh v. Fulton County, 10 Wall. 676, 19 L. Ed. 1040. Construction of grant of power. include the M. & W. Railroad Company "and any other company duly incorporated and organized,' etc., should be construed to include such companies so incorporated and organized both before and after its enactment. James v. Milwaukee, 16 Wall. 159, 21 L. Ed. 267. Railroad beyond limits of county and state. 1118. (Nebr. 1872.) "One other objection to the constitutionality of the act is urged. It is that it authorized aid to a railroad beyond the limits of the county, and outside the State. There is nothing in this objection. It was for the legislature to determine whether the object to be aided was one in which the people of the State had an interest, and it is very obvious that the interests of the people of Otoe county may have been more involved in the construction of a road giving them a connection with an eastern market than they could be in the construction of any road wholly within the county." Railroad Co. v. County of Otoe, 16 Wall. 667, 21 L. Ed. 375. Consolidation of railroad company after contract of subscription to its stock. 1119. (Ill. 1875.) Though it is a general rule that a subscriber to the stock of a railroad company is released from obligation to pay his subscription by a fundamental alteration of its charter, the consolidation of a company to whose stock a county had subscribed 1117. (Wis. 1872.) Held, that the declaration in an act that the provisions of a prior act are extended and shall 328 with another company will not release "6 This consolidation was effected the parties from the obligations of under a law of Missouri authorizing such contract of subscription when it consolidations, and declaring that the appears that, at the time of such sub- company formed from two companies scription, the laws in force contem- should be entitled to all the powers, plate such consolidation. "In the case rights, privileges, and immunities in hand the county had, under lawful which belong to either; and it is conauthority, undertaken to subscribe for tended that this provision of the law stock before the consolidation was justified the County Court in making made, and the undertaking had been the subscription, without further auaccepted. A liability had been in- thority from the people of the towncurred, and the business agents of the ship. But did not the authority cease county, to whom exclusively the law by the extinction of the company intrusted the management of its af- voted for? No subscription had been fairs, consented to and promoted the made. No vested right had accrued consolidation. And the subscription to the company." State v. Linn was made in full view of the law that County Court, 44 Mo. 510, distin- made with reference to that law. Subscription by county to railroad stock; how may be made. A county may become a subscriber to the capital stock of a railroad company without formally making a subscription upon the books of the company. An order or resolution of the county board having authority to make such subscription, and reciting a subscription by the county for a specified number of shares of stock, and acceptance of such action by the railroad company, held to be sufficient. Nugent v. Supervisors, 19 Wall. 241, 22 L. Ed. 83; County of Moultrie v. Rockingham Ten-Cent Sav. Bank, 92 U. S. 631, 33 L. Ed. 631. Railroad aid voted to one company 1121. (Ill. 1876.) The fact that a corporation authorized to construct and operate a railroad was authorized also to engage in mining coal does not affect its character as a railroad company within the meaning of the Railroad-Aid Law of Illinois. County of Randolph v. Post, 93 U. S. 502, 23 L. Ed. 957. Election held before enabling act passed. ute required a favorable vote to au1122. (Kan. 1876.) An enabling statthorize the issuance of bonds. Held, that such vote taken before the act ments of the act. County of Leavenwas passed complied with the requireworth v. Barnes, 94 U. S. 70, 24 L. Ed. 62. to bonds that the name of the rail1123. (Kan. 1876.) It is no defense road company for whose benefit they were issued was not mentioned in the submission of the question to the voters. Comrs. of Johnson County v. Thayer, 94 U. S. 631, 24 L. Ed. 133. does not authorize subscription to consolidated company. 1120. (Mo. 1875.) A statute author- Consolidation of railroad companies. ized subscriptions to the stock of rail1124. (Mo. 1876.) The consolidation road companies and the issuing of of one railroad company with another bonds in payment therefor by town- does not extinguish the power of counships. A township in Bates county ties to subscribe or the privilege of voted a subscription to one company, the company to receive subscriptions of but the county commissioners, on be- stock authorized before the consolidahalf of the township, subscribed to tion when the general laws of the the stock of a company formed by State provide for such consolidation. the consolidation of the first-named Harshman v. Bates County, 92 U. S. company with another, and issued 569, distinguished. County of Scotbonds therefor to the consolidated land v. Thomas, 94 U. S. 682, 24 L. company. Held to be unauthorized. Ed. 219. Stock subscription; construction of * town * * An election was held, resulting in favor of the subscription, and bonds were issued reciting that they were Issued in pursuance of the authority given at the election by the voters of the town and in pursuance of the authority of the statute which was referred to. Held, to be no defense to the bonds that there had been no formal subscription to the stock on the books of the company. "We think the statute intended to make a majority vote of the legal voters of the town who voted at such an election an equivalent to and substitute for a subscription upon the books of the company." Town of East Lincoln v. Davenport, 94 U. S. 801, 24 L. Ed. 322. Railroad incorporated on day of election. 1126. (Mo. 1877.) It is not a defense to the validity of bonds that the railroad company to which they were issued was not incorporated until the day of the election, held on the proposition to issue the bonds, as the company had been incorporated when the subscription was made. County of Cass v. Johnson, 95 U. S. 360, 24 L. Ed. 419. Rights of succeeding company. Actual subscription, when necessary. 1128. (Mo. 1877.) Referring to and distinguishing the case of County of Moultrie v. Sav. Bank, 92 U. S. 631, held, that, in the case before the court, an actual subscription was required. "The present case is quite a different one. The order of the County Court was not intended, as in the cases referred to, to be final and self-executing. While it recited that the sum named should be, and was thereby, subscribed, it ' authorized and directed' the agent to make said subscription on the stock-books of the said company,' upon the conditions specified, and to report to the court thereon. Having failed, for the reasons given by him, to make the subscription, the agent reported to the County Court his doings, and that the bonds of the township are not, therefore, subscribed; ' and the County Court approved his report." County of Bates v. Winters, 97 U. S. 83, 24 L. Ed. 933. Rights of consolidated company. 1129. (Mo. 1878.) "It is also established by the same authority that the consolidation of one railroad company with another company does not extinguish the power of a county to subscribe, or the privilege of the company to receive subscriptions; and this although the consolidation be made by authority given after the Constitution took effect, and although the subscription be made to the stock of such newly-organized company, and the bonds be issued after the same period. These are held to be features constituting alterations merely of the charter, and not affecting the rights or powers of the companies to receive subscriptions or of counties to issue their bonds." County of Schuyler v. Thomas, 98 U. S. 169, 25 L. Ed. 88. Actual subscription not necessary. 1127. (Mo. 1877.) After a subscrip- 1130. (Mo. 1879.) "An actual manual tion to one railroad company had been subscription on the books of the commade by a county pursuant to a legal pany was not necessary to entitle the vote of the electors, that company county to the stock, or to bind it as transferred all its effects, assets, rights, a subscriber thereto." County of Cass and privileges to another company v. Gillett, 100 U. S. 585, 25 L. Ed. with the acquiescence of the county 585. authorities. Held, that the latter company thereby acquired a vested right to demand and receive the bonds of the county in payment of such subscription. County of Ray v. Vansycle, 96 U. S. 675, 24 L. Ed. 800. Bonds issued to consolidated company. 1131. (II. 1879.) Held, that, as the general statute of Illinois gave authority to railroad companies to consolidate, the consolidated company succeeded to the right to the aid voted by the township. Empire v. Darlington, 101 U. S. 87, 25 L. Ed. 878. Designation of the railroad company. Which assessment-roll. The statute required, "That the written assent of two-thirds of the resident persons taxed in said town, as appearing on the assessment-roll made next previous to the time such money may be borrowed, shall be obtained, verified, and filed in the clerk's office." Consolidation of railroad companies after donation voted to one of the constituent companies. 1135. (Ill. 1880.) We are of opinion that there is nothing of substance in this objection. The act incorporating the Illinois Southeastern Railway Company, the act amendatory thereof, and the act in relation to the Pana, Springfield and Northwestern Railway Company (even if the general statutes of the State were not sufficient for the purpose), fully authorized the consolidaA written assent based on the assess- tion between those two companies and ment-roll of 1852 was filed on January upon such consolidation the new com11, 1853. On objection that the assess- pany succeeded to all the rights. franment-roll of 1852 did not apply, held, chises, and powers of the constituent "Then (January 11, 1853) the author- companies. The power in the township ity to issue the bonds, borrow the to make a donation to aid in the conmoney, subscribe for the stock, and struction of the Illinois Southeastern elect railroad commissioners became railway was also a privilege of the perfect. The town did elect railroad latter corporation, and that privilege, commissioners on the 1st of March, upon the consolidation, passed to the 1853, the subscription for the stock of the company was made, a debt of $25,000 therefor was incurred, and the bonds or notes for an equal amount were executed, and at least some of them were sold at par and the proceeds of the sale were paid on account of the subscription, all before any new assessment-roll could be completed and before the law required any to be made." Scipio v. Wright, 101 U. S. 665, 25 L. Ed. 1037. Consolidation of railroad companies as affecting validity of bonds. 1133. (Wis. 1880.) On this point the court reaffirms Scotland County v. Thomas, 94 U. S. 682; Wilson v. Salamanca, 99 U. S. 499. Menasha v. Hazard, 102 U. S. 81, 26 L. Ed. 83. new company. was The donation 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 receive the donation, at least when the township assented, cannot be doubted. The records of the township show that the bonds were directed to be issued and delivered to the new company, and it will not, under the circumstances, be allowed to say, as against a bona fide purchaser for value, that the bonds are invalid. There is, consequently, no pretext for saying that a burden was imposed upon the people to which they had never given their consent in the mode prescribed by law." Harter v. Kernochan, 103 company by guaranteeing the bonds of U. S. 562, 26 L. Ed. 411. such company. Donating property to railroad company instead of issuing bonds to aid it. 1136. (Mo. 1880.) In this case it was held that the inhibition of the Constitution of Missouri against authorizing any county, city, or town to be come a stockholder in, or to loan its credit to any company, association, or corporation unless two-thirds of the qualified voters thereof assent thereto applies to the purchase of property to be given to such company, association, etc., for which its obligations would be given to others as well as to the issue of obligations directly to such company, corporation, or association. Jarrolt v. Moberly, 103 U. S. 580, 26 L. Ed. 492. Aid voted to one company and issued to a consolidated company. 1137. (Mich. 1881.) "We concur with the court below in holding that the aid voted must be deemed to have been given in view of the then exist ing statute, authorizing two or more railroad companies forming a continuor connected line to consolidate and form one corporation, and investing the consolidated company with the powers, rights, property, and franchises of the constituent companies." New Buffalo v. Iron Co., 105 U. S. 73, ous 26 L. Ed. 1024. "The money paid for the guaranteed bonds was obtained on loan and upon the faith and credit of the city, and it was for the purpose of contributing to works of internal improvement. The fact that it was not advanced directly to the city, but, upon its assurance of repayment, to the railroad company, is not a departure even from the letter of the law, much less its meaning; nor does the fact that the money was advanced partly on the credit of the railroad company diminish the presumed reliance of the purchaser upon that of the city with which it was joined." City of Savannah v. Kelly, 108 U. S. 184, 2 Sup. Ct. Rep. 468, 27 L. Ed. 696. Rights of consolidated company. 1140. (Mo. 1883.) "If only a sale of the road to another company had been authorized and made, then it might very plausibly have been contended that the purchasing company took and held it under its own charter only, without the franchises and privileges connected with it in the hands of the vendor company; but consolidation' is not sale, and when two companies are authorized to consolidate their roads, it is to be presumed that the franchises and privileges of each continue to exist in respect to the sev eral roads Green so consolidated." County v. Conness, 109 U. S. 104, 3 Sup. Ct. Rep. 69, 27 L. Ed. 872. Manner of making subscription. 1141. (Mo. 1884.) The entry of subscription to the stock of a railroad not necessary to consummate the concompany on its subscription-books is tract of subscription. 'Undoubtedly, if there had been at that time any book prepared in which subscriptions were to be made, Betz would have entered the subscription of the County Court in that book in proper form. But what he did was in its legal effect the same. He presented the action of the County Court in respect to the subscription for acceptance. That action was in the form of a present subscription upon certain conditions, and in his presence it was, when presented, formally accepted by a resolution of the directors as and for a subscription to the capital stock of the company." |