Flagg v. Mayor of Palmyra

• Citation: 33 Mo. 440
• Parties: NEWTON FLAGG et al., Respondents, v. THE MAYOR, &c., OF THE CITY OF PALMYRA, Appellants.
• Decision Date: 31 March 1863
• Court: United States State Supreme Court of Missouri

33 Mo. 440

NEWTON FLAGG et al., Respondents,

v.THE MAYOR, &c., OF THE CITY OF PALMYRA, Appellants.

Supreme Court of Missouri.

March Term, 1863.

Appeal from Marion Circuit Court.

Glover and Anderson & Davies, for appellants.

I. The 43d section of the 6th article of “An act to incorporate the City of Palmyra,” approved November 23, 1855, (Acts Adj'd Session, 1855, p. 186,) provides that “all ordinances passed by the city council shall, within one month after they shall have been passed, be published in some newspaper published in the city, and shall not be in force till so published.”

The defendants denied that any valid ordinance or law of the city authorized the subscription. The burthen was on plaintiffs to show some law or ordinance in force to sustain the subscription. But an ordinance was shown which had not been published when the subscription was made under it. (23 Mo. 484.)

By section 4 of article 11 of “An act to incorporate the City of Palmyra,” approved November 23, 1855, (Adj'd Sess. Acts, p. 191), it is declared that all ordinances and resolutions of the board of trustees of the Town of Palmyra shall remain in force until the same shall be repealed by the city council hereby created.

By one of these ordinances of the old town, three weeks' public notice was to be given of the time and place of holding elections. But no notice was given of the election held on the proposition to subscribe fifty thousand dollars of stock to the Quincy and Palmyra Railroad until the 9th day of April, 1857, the election having come off on the 13th of the same month.

The officers of corporations are special agents. They are under such limited authority as law and evidence give. In so far they may bind the corporation, no further. (2 Cranch, 167; 19 Peck, 511; 13 B. Monroe, 563; 16 Shepley, 29; 1 Hill, 551; 14 Verm. 311; 3 Day, 495; 18 Mo. 227; 25 Mo. 503; St. Louis City v. Gorman, 29 Mo. 593.)

II. The bonds and coupons are void because they were antedated, in violation of the spirit and letter of the “Act to amend an act entitled ‘An act to incorporate the City of Palmyra,” approved November 23, 1855. (Sess. Acts, 1857, p. 431.)

It is plain that until the 20th day of July, 1857, no liability was in any event imposed on the city in this matter.

If the election was valid, no rights accrued to the Quincy and Palmyra Railroad until a subscription was made; until then no obligation existed to be paid. The city was not bound to subscribe even after an election; they might or they might not. Yet bonds were issued dated July 1, 1857, drawing eight per cent. per annum from that day. This was not passing the bonds at par -- this was not passing twenty-year bonds.

III. The finding of the court was insufficient to sustain the judgment. The defendants denied the existence of any authority for the execution of the bonds and coupons. The plaintiffs were to show this authority -- how the court finds an ordinance was passed by the city council submitting to vote the proposition to subscribe $50,000 to the Quincy and Palmyra Railroad; also appointing April 13, 1857, as the day of election. The court then finds “no notice was given by publication in the Palmyra Whig, a newspaper published weekly in said city.” But was the ordinance in force when action was taken under it?

If the mayor and councilmen had no power to issue any but bonds running twenty years, and coupons attached to such bonds; if this was, as we insist, a statutory condition, and the bonds were not so issued, nothing that the mayor and city council could do afterwards would ever validate the instruments; for he who has no power to do an act, can never ratify or confirm it.

No subscription could be lawfully made by virtue of the act of November 23, 1855. (Adj'd Sess. Acts, 1855, p. 431.)

There was no proof of plaintiffs' ownership in the bonds. The attempt which has been made to sustain the bonds and coupons under the general railroad act-- being “An act to authorize the formation of railroad associations and to regulate the same,” approved December 13, 1855, (1 R. C. 1855, p. 404)--has totally failed, for these reasons, among others:

The act of 1857 is a repeal of the general law as to Palmyra, section three making an election a precedent condition. The whole proceedings show that they were in pursuance to the power granted by the act approved February 9, 1857, and not in pursuance to powers granted by general railroad act.

Pratt, McCabe and Lipscomb, for respondents.

I. It is submitted that the Quincy and Palmyra Railroad Company, being incorporated under the law of this State, the City Council of the City of Palmyra had power and authority to subscribe to the capital stock thereof in any sum not exceeding $100,000, and to issue the bonds of the city in payment therefor. (Acts, 1856-7, p. 431-2.)

II. The city council had this power under the general railroad law of the State without ordering an election. (Acts, 1853, § 29, p. 135-6.)

III. If it should be contended by the appellants, that because the ordinance directing the mayor to subscribe to the capital stock of the company was not published until after the subscription was made in the stock book of the company, the subscription was therefore void, it is insisted that previous publication was not essential to the validity of the subscription. The provision of the city charter on which this idea is based can have no application to a case like this. A corporation such as the City of Palmyra is not only clothed with the power to pass laws and ordinances not inconsistent with its charter or the laws of the land, but it can also contract like natural persons, and the same laws governing contracts apply to the one as well as to the other. By the vote of the city the city council was authorized to subscribe, and in virtue of the ordinance passed on the 18th of July the mayor did subscribe.

The order on the records of the city subscribing the stock was the real subscription by the city council, and imposed the obligation on the city, and, if accepted by the company, it was obligatory upon the city, and the formal act of placing it on the books of the company conferred no additional obligation, and owed all its efficiency to the order of record. (On this point, see case of the Justices of Clark County v. Paris, Winchester & Ky. R. Turnpike Co. 11 B. Mon. 143.)

The essentials in the whole case are the call for the election, the vote under the call and direction, the canvass and inspection of the vote as pointed out by the act of the Legislature; the subscription by the mayor being a ministerial act, and the acquisition of stock being the object of it.

These bonds were made negotiable and payable to the company or bearer. The city and the citizens were aware of this. The order for the issue of these bonds was well known, their character and terms were matter of publication and notoriety, and it is placed in plain letters on the back of each bond that the faith of the city is irrevocably pledged to the company for their payment.

Under such a state of facts, if the charter has not been strictly complied with in every particular, can this be set up with effect against these bona fide holders?

By their negotiation an equity has arisen in behalf of the holders which ought to outweigh any formal objection arising from a departure from the charter.

The doctrine is not maintainable, that all who deal with a corporation must look into its charter, not only to be assured that corporate powers have been conferred upon it, but to see that everything in the exercise of a given power has been done in exact accordance with the mode provided, especially when its acts are set forth in general terms showing a compliance with the law. (On this point, see Zabriskie v. Cleveland, Columbus & Cincinnati R. R. Co. and others, and the cases there cited.)

As to the point raised below, and which may be insisted on here, viz., that the bonds were antedated, this is not deemed a point of importance. The law under which the bonds were issued required them to be made payable twenty years after their date. The bonds are dated July 1st, 1857, and are payable July 1st, 1877.

The authority to issue the bonds is derived from the vote of the citizens, and this authority existed from the 14th of April previous. At all events, the date of the bonds is evidence against the city until the contrary is shown, and there is nothing in the record showing that the bonds were not issued on the day of their date.

After the vote was taken and ascertained to be in favor of the subscription, it became the duty of the city council to subscribe the stock. The Legislature made it mandatory on the city council to subscribe, (see § 3, p. 432, of Laws of Mo. 1856-7,) and it thus became a mere ministerial duty as to the council, admitting of no hesitation or exercise of discretion. If the act of taking thus became ministerial, so it were done, though not in the exact mode pointed out by the charter,--as the end and purpose of the law has been accomplished, there can be no objection.

It is submitted that this is no contest between equities; but that this is a case of decided equity on one side, and of decided obligation on the other. The appellees have purchased these bonds for a valuable consideration; they are entirely disconnected with the railroad company; they have made every inquiry which as prudent men they ought to have made, and as it is not doubted but that they have sought the proper remedy, their claims should prevail.

BATES, Judge, delivered the opinion of the court.

A number of questions are presented in this case, some of which are both important and difficult. Only such of them will be noticed as we think necessary for the decision of the case.

On the 9th day of February, 1857, there was approved an act passed by the General Assembly entitled “An act to amend an act entitled ‘An act to incorporate the City of Palmyra,” approved November 23, 1855, as follows:

“ Be it...