Clark v. Town of Rosedale

• Decision Date: 13 March 1893
• Citation: 70 Miss. 542,12 So. 600
• Court: Mississippi Supreme Court
• Parties: FRED CLARK v. TOWN OF ROSEDALE ET AL

12 So. 600

70 Miss. 542

FRED CLARK v. TOWN OF ROSEDALE ET AL

Supreme Court of Mississippi

March 13, 1893

FROM the chancery court of Bolivar county, HON. W. R. TRIGG Chancellor.

The Rosedale & Mississippi Central Valley. Railroad Company presented an application to the municipal authorities of Rosedale, asking that the town subscribe to the capital stock of said railroad company to the amount of $ 12,500, to be paid for by the issue of interest-bearing bonds. It was prayed that the proposition should be spread on the minutes and that an election should be held, at which there should be submitted to the legal voters of the town the question to subscribe for said capital stock, and issue thirty-year bonds in payment therefor, to bear six per cent. interest from October 1, 1890, said bonds and interest to be payable at the Hanover Bank, in the city of New York. The petition set forth certain benefits to the town to be derived from the building and completion of said railroad as proposed, and, among other things, contained the following stipulation: "Upon the delivery of said bonds, as aforesaid, to said president, he the said president, and the vice-president and general manager of said company to enter into bond in the sum of fifteen thousand dollars to cancel and return all said bonds and coupons, or, if interest has been paid on any of said bonds, to refund and repay such interest, unless said railroad shall be completed and running to the said Bogue Phalia, from the said town of Rosedale, on or before the first day of October, 1891."

Accompanying the above was another petition, signed by a number of resident freeholders of the town of Rosedale, praying for an election and for the submission of the question of subscription and the issuance of the bonds as above stated. This petition of freeholders did not mention any limit of time for the completion of said road.

Upon the presentation of the petition, the municipal authorities passed an ordinance providing for the election, and in the ordinance set forth the form of a notice of the election to be published, and which was published.

In both the ordinance and the notice the terms of the proposed subscription and the details as to the issuance of the bonds as above, were set forth. There was a preamble to the ordinance, reciting the fact that the railroad company had submitted to the council the proposition for subscription but in neither the ordinance nor the notice of election was any mention made of the limit of time for the completion of the road. The ordinance was passed July 14, 1890.

The election was held, and on August 11, 1890, an ordinance was passed, reciting the fact of the election and its result in favor of subscription. By it the mayor was authorized and directed to subscribe for the town to the capital stock of the company in the sum of $ 12,500, "to be paid in the bonds of said town as proposed by said railroad company and accepted by this council, subject to the voting of said subscription." The ordinance directed the preparation of the bonds, and, further, that "the said bonds so prepared shall be delivered to the president of said railroad company by the said mayor, upon the receipt by the said mayor from said president of one hundred and twenty-five shares of the capital stock of said company, issued to the town of Rosedale, and the guaranty of said president as provided in his application. Said bonds and coupons shall be made payable to bearer, but at the time and place before ordained." There was no express allusion in this ordinance to the limit of time for the completion of the road. The subscription to the stock was made, the railroad company gave bond as required, and the interest-bearing bonds of the town, payable to bearer, were delivered to the company October 1, 1890.

On September 4, 1891, after the constitution of 1890 had gone into effect, the railroad company addressed a communication to the municipal authorities to the effect that, because of unexpected stringency in financial circles, it had been unable to negotiate the bonds or to realize on other securities, and that, while work on the railroad had begun within the time agreed upon, still it could not be completed within that time. It prayed for an extension of the time until January 1, 1893, on such terms as the authorities should deem just. Thereupon, on the same day, the municipal authorities passed an ordinance granting such additional time, on condition of the surrender of certain interest coupons by the railroad company, and of the execution of a new bond conditioned for compliance with the contract on the part of the railroad company. These conditions were complied with, and a new bond was given and approved.

On April 2, 1892, was approved an act of the legislature providing that the said railroad company should, within eighteen months therefrom, commence the work of construction on said road, and should complete the same within ten years from March 1, 1892, and, failing so to do, that it should forfeit its charter and franchises as to so much of said road as should not be completed under the requirements of the act, and that all bonds voted by the people, or issued by the board of supervisors, for the portion of the road not built, should be void.

On April 3, 1892, nine months before the time for the completion of the road under the agreement for the extension of time, the appellant, Fred Clark, a citizen of Rosedale, on behalf of himself and other tax-payers of said town who might choose to join in the suit, filed the bill in this case against the town of Rosedale and said railroad company, averring that said bonds were void, because the railroad had not been completed within the time stipulated, and praying that the bonds should be canceled. The defendant answered, and a decree was entered dismissing the bill, from which complainant appeals.

Section 19 of the act of 1890, under which the subscription was made authorizes the municipal authorities, upon the petition of twenty freeholders who are voters, stating the amount and terms of the subscription, to order the election and provide for holding the same, and that the result of the election shall be entered...