Carpenter v. Inhabitants of the Town of Lathrop

• Decision Date: 28 February 1873
• Citation: 51 Mo. 483
• Parties: DAVIS CARPENTER, JR., Appellant, v. THE INHABITANTS OF THE TOWN OF LATHROP, Respondent.
• Court: Missouri Supreme Court

51 Mo. 483

DAVIS CARPENTER, JR., Appellant,

v.THE INHABITANTS OF THE TOWN OF LATHROP, Respondent.

Supreme Court of Missouri.

February Term, 1873.

Appeal from Clinton Circuit Court.

Hall and Judson, for Appellant.

I. The evidence introduced by defendant did not tend to make out a valid defense to the suit. The rule is well established that where a municipal corporation has power under any circumstances to issue negotiable securities, a bona fide holder has the right to presume that they were issued under circumstances which gave the requisite authority. (Flagg vs. Palmyra, 33 Mo., 440; Gelpcke vs. City of Dubuque, 1 Wall., 203; 5 Wall., 784; 48 Mo., 392; 48 Mo., 167.)

II. The want of a special registration for the purposes of the election in this case, even if it be admitted that no special registration was made, does not invalidate the instruments sued on. When the law imposes such a condition on the exercise of a power as a submission to a vote of the people, and an attempt has been made in good faith to comply with the condition, and it has been supposed by all parties to have been regularly complied with, the bond upon its face showing a compliance, strangers should not be required to look further. (48 Mo., 392; 24 Ills., 90; 48 Mo., 186; The Commissioners of Knox County vs. Aspinwall, 21 How., 539; The People vs. Kopplekom, 16 Mich., 342; 33 Mo., 450; 13 Wall., 305.)

It may be conceded that the want of a general registration would be fatal to the instruments sued on, for without a general registration, there would be no voters and there could be no election. But it might very well happen, that at a special registration no voters would be registered, and of course the books of registration would not in such a case show a special registration. The purchaser in an eastern market may be satisfied as to the law; that there was a general registration of voters as the law requires; that the matter was submitted to the people, and that the proper authorities acted on that submission; but of the regularity of all the proceedings, he cannot be advised. An examination of the books of registration themselves would not show that a special registration was held, in case no voters were registered at such special registration. The purchaser of municipal bonds has trusted, and he had a right to trust to the decision of the proper authorities, made when the bonds were issued, as to the regularity of the proceedings. Such a decision radically differs from a naked usurpation of authority, and as to strangers who trust to it, ought to bind the municipality. (48 Mo., 393; Id., 186, 187.)

III. The facts set up by defendant might be considered in a direct proceeding to prevent the consummation of the contract. But after the authority has been exercised, the stock subscribed and the bonds issued and in the hands of innocent purchasers, it would be too late, even in a direct proceeding, to call it in question; much less can it be called in question to the prejudice of a bona fide holder of the bonds in this collateral way. (48 Mo., 181; Id., 392; 33 Mo., 450.)

IV. Two-thirds of the qualified voters, actually voting at the election, were sufficient to authorize the subscription in this case. (37 Mo., 270; 38 Mo., 455.)

V. The inhabitants of the town of Lathrop have received all the benefits of their contract with the railroad company. The road has been finished, a depot has been built and is maintained within the corporate limits. The stock subscribed for has been issued to them; and they should not be permitted to avoid their just responsibilities and refuse to perform their part of the contract on any such pretexts as are set up in this case. (State ex rel., K. C., St. J. & C. B. R. R. Co., vs. Alderman, 47 Mo., 349; Johnson vs. County of Stark, 24 Ills., 90; 33 Mo., 450; 21 How., 539; 2 Black, 722; 26 How., 299.)

Everett and Ensworth, for Respondent.

I. Under the law, the Board of Trustees of Lathrop had no authority to subscribe for stock in the St. Louis and St. Joseph Railroad Company and issue bonds of the corporation in payment thereof, unless two-thirds of the qualified voters of the corporation at a legal election held for that purpose, assented thereto, and thus conferred the power. The authority to subscribe for stock and issue bonds, is a statutory power, and is only invested when the conditions of the statute are strictly complied with. (St. Louis vs. Alexander, 23 Mo., 483; Mercer County vs. Pittsburg & Erie R. R., 27 Penn. St., 389; Fowler vs. St. Joseph, 37 Mo., 237; 41 Mo., 230; 42 Mo., 171; State vs. Boon, 44 Mo., 254; State ex rel. L. & St., L. R. R., vs. Saline County Court, 45 Mo., 242; 48 Mo., 167, 392; 10 Wall., 683.)

II. The Board of Trustees of an incorporated town are required by law to keep a record of their official acts. In this case the records show no official acts, such as are requisite under the statute to an investure of power to subscribe for stock and issue bonds.

The record shows no order for a registration of voters of the corporation preceding the election; it shows no appointment of judges to hold said election; it shows no notice of the proposition which should have been published for the information and assent of the people; it shows no act of canvassing the votes cast at said election and determining the result of said election. The records are the evidence of the official acts of the trustees, and all material matters not entered on record are null and void, and do not confer power. (Medlin vs. Platte County, 8 Mo., 235; Dennison vs. County of St. Louis, 33 Mo., 169; Strouse vs. Drennan, 41 Mo., 289; Baltimore vs. Eschbach, 18 Md., 276.)

A special registration of the voters of a municipal corporation is necessary to confer power upon the officers thereof, preceding a special election called for the purpose of investing power to subscribe for stock and issue bonds. (Art. 2, § 4, Constitution of Missouri; W. S., Ch. 117, § 18; State ex rel., Ensworth vs. Albin, 44 Mo., 349.)

The proposition to subscribe for stock and issue bonds must be submitted to the people for their information and their assent. (23 Mo., 510; 42 Mo., 175; W. S., 305, § 17.)

III. The want of power and defect of record are presumed by law to be known by every person--the corporation not being held liable for that which does not appear upon record; therefore there can be no such character as a bona fide innocent holder of municipal bonds, when the records show a non-fulfillment of the conditions upon which the authority of the Trustees to act depended. (48 Mo., 167-391.)

IV. Municipal officers are agents, and must, like other agents, pursue their authority strictly, and act within the scope of their power, (26 Mo., 272; 43 Mo., 353; 48 Mo., 167-392; Marsh vs. Fulton County, 10 Wall., 676.)

V. The Trustees of Lathrop had no authority under the statute to order a special election to ascertain whether the voters of the town were in favor of subscription for stock and issuing bonds. (W. S., 305, § 17; 7 Mass., 525.) The Legislature has made no provision for any such election. Unauthorized elections are simply nullities. (Cooley Const., Lim. 603.)

VORIES, Judge, delivered the opinion of the court.

This was a suit commenced before a justice of the peace in Clinton county. The action was founded on thirty interest coupons, for five dollars each, and purporting to be for six months interest due on the first day of January, 1871, on bonds issued or made by the town of Lathrop. The appellant recovered a judgment before the justice, from which an appeal was taken to the Clinton Circuit Court, when the plaintiff took a non-suit, and afterwards moved to set the same aside. The court overruled the motion and gave final judgment for the defendant, to which rulings of the court the plaintiff at the time excepted, and appealed to this court.

The action having been brought before a justice of the peace, there were no formal pleadings on either side.

Upon the trial in the Circuit Court, the plaintiff read in evidence, without objection, thirty coupons upon which the action was brought, and closed his case. The coupons were all of similar form and read as follows:

$5.00. The town of Lathrop, in the county of Clinton, State of Missouri, will pay the bearer five dollars on the first day of January, A. D. 1871, at the bank of America, in the city of New York, being six months interest due on that day on bond No 236.

The coupons represented bonds numbered consecutively from No. 221 to No. 249, the remaining one being numbered 290.

It is agreed by the parties in this court that the bonds claimed to have been issued by the defendant are in the following form:

“Know all men by these presents that the town of Lathrop, in the county of Clinton, in the state of Missouri, acknowledges itself indebted and firmly bound to the St. Louis & St. Joseph Railroad Company or bearer in the sum of one hundred dollars, payable on the first day of January, A. D. 1880, together with interest thereon from the first day of January, A. D. 1870, at the rate of ten per centum per annum, payable semiannually upon presentation and delivery of the coupons hereto attached, as they shall severally become due and payable, at the bank of America, in the city of New York. This bond is redeemable by said town at its option any time after five years from the date hereof, and is issued under and pursuant to an order of the board of trustees of the town of Lathrop, aforesaid, made under authority of the constitution of the state of Missouri, and the laws of the general assembly of the state of Missouri, and authorized by a vote of the people of said town at a special election held for that purpose. In testimony whereof,” &c., and signed by what purport to be the signatures of the president and clerk of the board of trustees with the seal of the town.

After the plaintiff's evidence was closed the defendant proved by one of the trustees of the defendant that he had in court the...