Board of Sup Rs of Grenada Co v. Brown

• Decision Date: 17 November 1884
• Citation: 112 U.S. 261,5 S.Ct. 125,28 L.Ed. 704
• Parties: BOARD OF SUP'RS OF GRENADA CO. and others v. BROWN and others
• Court: U.S. Supreme Court

112 U.S. 261

5 S.Ct. 125

28 L.Ed. 704

BOARD OF SUP'RS OF GRENADA CO. and others v. BROWN and others.

November 17, 1884.

H. P. Branham, for plaintiffs in error.

R. O. Reynolds, for defendants in error.

HARLAN, J.

This action was brought to recover the amount of certain bonds and interest coupons issued under date of May 1, 1872, in the name of Grenada county, Mississippi, by its board of supervisors, and made payable to the Vicksburg & Nashville Railroad Company or bearer, at its agency in the city of New York. Each bond, signed by the president of the board and countersigned by its clerk with his official seal affixed, recites that it is one of a series issued and delivered to the Vicksburg & Nashville Railroad Company by Grenada county, to meet and pay off the amount subscribed by the county to the capital stock of the railroad company aforesaid, 'in pursuance of an act of the legislature of the state of Mississippi, entitled 'An act to aid in the construction of the Grenada, Houston & Eastern Railroad,' now Vicksburg & Nashville Railroad, approved February 10, 1860, and of an act amendatory thereof, passed March 25, 1871, and in obedience to a vote of the people of said county at an election held in accordance with the provisions of said acts.' The county disputes its liability on the bonds or coupons, although the plaintiffs, who are defendants in error, became holders for value without notice of any defense except such as the law implies. The defense rests mainly on the ground that the subscription was made and the bonds issued without previous legislative authority conferred in conformity with the constitution of Mississippi.

The history of the issue of these securities, as disclosed by legislative enactments, the proceedings of the board of supervisors of Grenada county, and the bill of exceptions, is substantially as will be now stated. The Grenada, Houston & Eastern Railroad Company was incorporated by an act approved February 6, 1860, with power to construct a railroad from Grenada, in Yallobusha county, to Houston, in the county of Chickasaw, thence eastwardly to the Alabama line, and with authority to connect or consolidate with any other company upon such terms as might be mutually agreed upon, not inconsistent with the laws of the state. Laws Miss. 1859, 1860, pp. 394, 402. By the act approved February 10, 1860, the boards of police of Yallobusha, Calhoun, Chickasaw, and Monroe counties were authorized for their respective counties to subscribe, upon such terms as they saw proper, to the capital stock of the company in an amount not exceeding $200,000 for any one county, to be paid by taxation; provided a majority of the qualified electors voting at an election held for that purpose, upon due notice, should first assent thereto, in which event it was made the duty of the board to make the subscription. Id. 412. On the first day of December, 1869, a new constitution for Mississippi went into operation, article 12, § 14, of which declares that 'the legislature shall not authorize any county, city, or town to become a stockholder in or lend its credit to any company, association, or corporation, unless two-thirds of the qualified voters of such county, city, or town, at a special election or regular election to be held therein, shall assent thereto.' On the ninth of May, 1870, the county of Grenada was created out of parts of Yallobusha, Tallahatchie, Carroll, and Choctaw counties. Laws Miss. 1870, p. 124.

By an act approved March 25, 1871, amending the preceding statutes, it was declared, among other things, that the act of February 10, 1860, should apply, in all its provisions, to Grenada county and its officers; and it was made the duty of the board of supervisors of that and other counties along the line of the Grenada, Houston & Eastern Railroad, upon the petition of 25 or more citizens, to cause an election to be held in their respective counties to take the sense of the legal voters, whether a sum not exceeding $200,000 to each county shall be subscribed to the capital stock of said railroad company, to be paid by taxation; also, that whenever, in the act of February 10, 1860, any duty is required of, or authorized to be performed by, the boards of police, or the president thereof, of any of the counties therein named, the same should apply to the board of supervisors of the different counties and to the president thereof; further, that 'all such elections when held shall be conducted in all things as required in the act of which this is amendatory, and of the constitution and laws of this state in force at the time so held.' Section 1. The fourth section authorizes the board of supervisors of any county voting the tax to issue bonds, maturing at such times, not beyond 10 years, and for such sums, as the board deemed necessary, to pay off the subscriptions of said counties, respectively, for capital stock in the Grenada, Houston & Eastern Railroad, the bonds to be signed by the president of the board of supervisors issuing the same, and made payable to the company and their successors and assigns. The sixth section provides that bonds may be issued with interest coupons attached, and, when issued, paid over and delivered to the railroad company in satisfaction of the subscription to the extent of the principal of the bonds; the board taking from the company certificates of stock for the shares paid for, and the stock to be deemed the property of the municipality paying for it.

Under an order made by the board of supervisors of Grenada, in conformity with the petition of more than 25 of its citizens, the question was submitted to the qualified voters, at a general election held November 7, 1871, whether the board, by its president, should subscribe, in behalf of that county, $50,000 to the capital stock of the Grenada, Houston & Eastern Railroad Company, and a like sum to the capital stock of the 'Vicksburg & Grenada Railroad Company,'—each subscription to be met and paid off in eight annual installments, with 8 per cent. interest upon the amount due January 1, 1873, or from the date of the county bonds, if any should be issued, payable annually by taxation upon the property of the tax-payers. The board, at its December term, 1871, caused it to be entered upon its records that the election had been duly advertised and regularly held according to law; that 'a constitutional majority of two-thirds of the legal and registered voters of said county were cast' for each subscription; and that the board, by its president, 'subscribe for $50,000 each of the capital stock of the Grenada, Houston & Eastern Railroad Company and of the Vicksburg & Grenada Railroad Company for and on behalf of Grenada county, to be met and paid by taxation as aforesaid,' etc. When the election was held, there was no such corporation as the Vicksburg & Grenada Railroad Company; but the bill of exceptions—setting out what the parties agree are the facts established by the evidence—states that, 'for a long time previous to said vote, a scheme had been agitated in said county for such a railroad, with its termini at Vicksburg and Grenada, as well as for the construction of the Grenada, Houston & Eastern Railroad; * * * and on the third day of January, 1872, the projectors and managers of the railroad, so designated and intended in said vote, were incorporated by an act of the legislature entitled 'An act to incorporate the Vicksburg, Yazoo Valley & Grenada Railroad Company."

By an act approved January 27, 1872, the Grenada, Houston & Eastern Railroad Company was authorized to extend their road from Grenada via Yazoo City to Vicksburg, thus enabling it to cover the route proposed to be occupied by the so-called Vicksburg & Grenada Railroad, or the Vicksburg, Yazoo Valley & Grenada Railroad. By the same act the name of the Grenada, Houston & Eastern Railroad Company was changed to that of the Vicksburg & Nashville Railroad Company, giving the company all the rights by the latter name which it had under its old name. Its fourth section is as follows: 'Sec. 4. Be it further enacted, that, inasmuch as the question of subscription or no subscription for fifty thousand dollars to aid in the construction of a railroad from Vicksburg to Grenada, in this state, was, by the board of supervisors of Grenada county, submitted to the qualified voters of Grenada county, and the same was sustained by a majority of two-thirds of the qualified voters of said county at a general election held therein on the seventh day of November, 1871, it shall and may be lawful for the board of directors of the Vicksburg & Nashville Railroad Company, by resolution made and entered in the minutes of said board at a regular meeting thereof, sanctioned by a majority of said board of directors, to accept all the provisions of this act, and adopt, as a part and portion of the Vicksburg & Nashville Railroad, the extension specified in this act from Grenada to Vicksburg; and when, after such acceptance and adoption, the said so-called Vicksburg & Grenada Railroad shall form and constitute a part and portion of the Vicksburg & Nashville Railroad, and shall be constructed, owned, and held by the Vicksburg & Nashville Railroad Company; and it shall be lawful for, and it is hereby made the duty of, the board of supervisors of Grenada county, through the president of said board, upon the application of the president or other authorized agent of the Vicksburg & Nashville Railroad Company, to subscribe for fifty thousand dollars of the capital stock of the Vicksburg & Nashville Railroad Company, based upon the submission to and the approval of the vote of two-thirds of the qualified voters of said county, which is hereby ratified and confirmed to the Vicksburg & Nashville Railroad Company so heretofore had on behalf of the Vicksburg & Grenada Railroad as aforesaid, and bonds of said county to secure the payment of said subscription for the stock and interest...