County of Ray v. Vansycle, 96 U.S. 675

The main facts connected with the issue of t e on p. 677a period of more than ten years, commencing with the year 1859.

By an act approved March 30, 1860, amendatory to that of ec. 5, 1859, and for other purposes, the county courts of Ray j coun^es specifically named were authorized to issue ‘ e iver the bonds of their respective counties in payment any subscription to or purchase of the capital stock of the ■ i Un lver Valley Railroad Company which such counties mght respectively make; the bonds to be in the sum of not p. 678exceeding 81,000 each bond, having not exceeding ten years to run before maturity, bearing interest at the rate of eight per cent per annum, payable annually at the county seat of the county issuing them, or in the city of St. Louis, as the county court might prefer.

n the 13th of December, 1866, a written agreement was made between the North Missouri Railroad Company and the county court; which provided, among other things, that the company, for the consideration of 8150,000 to be paid in e onds of Ray County, should build, run, and operate its west ranc to the city of Richmond, in that county, by a spur of ai west branch, and complete the connection within ninety ays after the main or straight line of the west branch should tn a P°^n^ opposite Richmond. It is not necessary , , Ou^ agreement. It is sufficient to say that it secured r. 6 railroad facilities which it would have in™ J• x a • main line of the west branch passed in the tion V1Cln^ c^y Richmond; and, in considerarun • 11 consenting to accept the building, operating, and go sai west branch, as thereby provided, and releasing p. 680the North Missouri Railroad from its former obligations, the latter agreed to release the county from the sum of $50,000 of the stock theretofore subscribed for the construction of the said west branch of the North Missouri Railroad. The company agreed to build and construct the spur branch or connection from the main line “ to the said city of Richmond aforesaid, so far as the grading is concerned, when said county of Ray issues its bonds for the said sum of $150,000 to said North Missouri Railroad Company, so that it may be ready for the iron by the time the said west branch of said North Missouri reaches a point opposite the said city of Richmond.” This agreement was promptly ratified of record, and signed by the justices of said court, with the seal of the county affixed. An order was at the same time made upon the records of the court, directing that bonds of the county amounting to $150,000 be issued “ according to the orders of the county court of said county of Ray heretofore made and the stipulations of this contract.”

On the 15th of April, 1868, the North Missouri Railroad Company authorized its president and executive committee make such contracts with the St. Louis and St. Josep, road Company, to aid in building the latter road, as mig consistent with the interest of the former company, ane “ to release the county of Ray from its subscription o. ’ to aid in building the west branch of the North Missouri road, upon the condition that this (the North Missoui pany is released from constructing a spur from the we® to Richmond; and also upon the further condition, County will subscribe $250,000 stock, and secure t e p. 681be paid towards the building of the St. Louis and St. Joseph Railroad.”

It appears that, at the election held in the year 1860, more p. 684than two-thirds of the votes cast in the county were in favor of a subscription of $200,000 to the capital stock of the Missouri River Valley Railroad Company, which proposed to construct a railroad through the county. The only condition which the voters imposed was, that the stock subscribed under the authority of that election “ should be expended on that part of the railroad in the county of Ray.” In obedience to the popular will, the subscription was made in that year. When, however, in 1864, that company transferred all its effects, assets, rights, and privileges to the North Missouri Railroad Company, the latter became entitled to the benefit of that subscription, and, in satisfaction thereof, to the bonds of the county, to the amount of $200,000. Of the validity of that transfer we have no doubt. It was authorized by an act of the General Assembly of Missouri, and made with the sanction of the stockholders of the companies interested, including the county. At the meeting of stockholders called to consider the question of transfer, the county was represented by an agent, designated by the county court, with specific instructions to vote the stock of the county in favor of such transfer. In appointing that agent, with such instructions, the court did not exceed its powers; since, by the terms of the act of Dec. 5,1859, under the provisions of which the original subscription was made, the court was authorized ‘ to take proper steps to protect the interests ” of the county, and also “to appoint an agent to represent the county, to vote fori, and to receive its dividends.” It seems, therefore, entirely clear that the North Missouri Railroad Company acquired, prior to the adoption of the State constitution of 1865, a vested right to demand and receive the bonds of the county in payment o its original subscription. This right was not destroyed or impaired by that constitution. It has been decided by t e Supreme Court of Missouri, that the section of the constitution of that State relating to municipal subscriptions was a tation upon the future power of the legislature, and was n intended to retroact so as to have any controlling apphca i „ to laws in existence when the constitution was a^°Pe State, ^c. n. Macon County Court, 41 Mo. 453; State, & G-reene County, 54 id. 540; The State, ex rel. n .T o Court of Sullivan County, 51 id. 522; County of Cal away p. 685Foster, 93 U. S. 570; County of Scotland v. Thomas, 94 id. 688; County of Henry n. Nicolay, 95 id. 619.

The fundamental proposition underlying the defence is, that, after the adoption of the Constitution of 1865, no subscription of stock could be lawfully made by the county until after an election; and that, no election having been held at which the people voted specifically in favor of a subscription to the stock of the St. Louis and St. Joseph Railroad Company, the action of the court was a nullity, creating no liability whatever upon the bonds issued in pursuance of the agreement of 1868. Whatever weight that proposition might have in some cases, it does not meet the precise issues here presented. It ignores altogether the direct connection which existed between the agreement of 1868 and the action taken by the county and its court prior to the year 1865, whereby the county assumed the obligation to issue its bonds to the amount of $200,000, in discharge of a completed subscription to the stock of a corporation which came into existence and was fully organized before that constitution went into operation, and which could, notwithstanding the adoption of that instrument, compel the county to comply with its contract. It is the case of a transfer of such stock by exchange, in order that the county might obtain the desired road, and be discharged from legal obligations from which it could not justly or rightfully escape. It is not the case of an entirely new subscription, made under the Constitution o 1865, in disregard of its provisions and of the general statutes passed in pursuance thereof. When the arrangement of 1868 was first suggested, the court saw that the desire of its con stituents for the construction of a railroad through the county was not likely to be fulfilled through the agency of, or under the contracts previously made with, the North Missouri Railroa Company. Its members became convinced that the only effect ual or practicable mode to accomplish that end was to make sue an arrangement or combination as that made with the new company. The court was given by the statute, under w ic the original subscription was made, the power to “ take prop steps to protect the interests of the county; to which en was authorized to appoint an agent “ to represent the coun » to vote for it,” &c.; and, in exercising this power, it was nec^ sarily invested with very broad discretion. It is not an un sonable construction of the statute to say that, in determ p. 687what steps were proper for the protection of the interests of the tax-payers, the court had authority to adopt such measures as prudent men managing the affairs of others ought to have adopted. It evidently regarded the arrangement made in 1868 as essential to the protection of the county’s interests, so far as they were involved in the subscription of stock previously made, and in the obligations thereby assumed. There is nothing in the record upon which to base any imputation of collusion or bad faith. The action was taken under such circumstances of publicity as to notify the tax-payers generally of all that was doing; and we are not prepared to say that the court had not the power to transfer the subscription from the North Missouri Railroad Company to the St. Louis and St. Joseph Railroad Company, and deliver the county bonds to the latter, upon its agreement to build substantially the same road for the construction of which the original subscription had been made.

But whatever doubt exists upon this point should be resolved in favor of the bona fide holders of the bonds. The tax-payers of the county should not, under the peculiar circumstances of this case, be now heard to allege that their agents, invested by statute with the authority and charged with the duty of protecting their interests, had exceeded their powers. Ihe court levied and collected a tax to pay interest due on the bonds delivered to the St. Louis and St. Joseph Railroad Company for the years 1869, 1870, 1871, 1872, and 1873. The coupons were annually paid for the first four years named. It is true that, at a term of the court held in August, 1871, an order was entered of record, stating that the bonds had been issue illegally and were void, and upon that ground the order recite that neither the bonds nor the coupons would be paid \ ® counV’ But in March, 1872, that order was rescinded, and the county treasurer directed to proceed with the paycoL fl n 1,nterest Xt was not unbil August, 1873, that the bond .na J to repudiate all obligations to pay the been^f ’ °rderS the interest collected for 1873 has th? V 6 ^^Ber appears from the special finding that branch * ls®ouri Railroad Company constructed its western rom Moberly to Kansas City, running through the p. 688county for a distance of between twenty-six and twenty-eight miles; that the St. Louis and St. Joseph Railroad Company constructed its road from opposite Lexington through Richmond, locating a depot in Richmond, and continuing to the northwest boundary of said county, a distance of twenty-eight miles; that said road is completed and operated to the city of St. Joseph, Missouri; that on the first-named road there are four depots located in Ray County, and on the latter five depots; that the money realized from the sale of the bonds issued was expended in the construction of the St. Louis and St. Joseph Railroad, in the county of Ray, and, in consequence of this arrangement, the county secured the construction and operation, within its limits, of about twenty-four miles of railroad more than would have been built under the previous contract or arrangement with the North Missouri Railroad Company.