Luxora v. Jonesboro, Lake City & Eastern Railroad Co.

• Decision Date: 17 June 1907
• Parties: LUXORA v. JONESBORO, LAKE CITY & EASTERN RAILROAD COMPANY
• Court: Arkansas Supreme Court

103 S.W. 605

83 Ark. 275

LUXORA v. JONESBORO, LAKE CITY & EASTERN RAILROAD COMPANY

Supreme Court of Arkansas

June 17, 1907

Appeal from Mississippi Chancery Court; E. D. Robertson, Chancellor reversed.

Reversed and remanded.

W. J Lamb, for appellant.

The town council of appellant were without authority to appropriate the money to be paid to the appellee. Art. 12 § 5, Const. 1874. It is no defense that it is an executed contract. The town is not estopped to deny its invalidity by having received the benefit of the building of the road into the town under the ordinance, and it may recover the money paid 58 Ark. 270; 52 Ark. 541.

E. F. Brown and W. J. Driver, for appellee.

The contract was fully executed long before this action was brought, and at an expenditure of a much greater sum by the appellee than the money paid by appellant as an inducement thereto. Appellant ought not now to be heard to say that it was an illegal contract and be permitted to recover the money. 47 Ark. 269; 53 Ark. 147; 67 Ark. 408; 74 Ark. 190; 76 Ark. 48.

OPINION

MCCULLOCH, J.

The town council of the incorporated town of Luxora, as an inducement to the Jonesboro, Lake City & Eastern Railroad Company to build its road into the town and establish a depot therein, by ordinance appropriated the sum of $ 1,000 to be paid to said company on condition that it should execute a bond as a guaranty that it would perform the conditions of said ordinance.

A warrant was drawn on the treasurer of the town for said amount payable to the railroad company, the indemnity bond was executed and the money paid over to the company on the warrant, and the railroad company complied with the terms of the ordinance by building its road into the town.

The town instituted this action at law to recover the money paid to the railroad company.

It must be conceded that the appropriation of money by the town council for the purpose named was in direct conflict with the Constitution of the State which provides that "no county, city or town or other municipal corporation shall become a stockholder in any company, association or corporation or appropriate money for or loan its credit to any corporation, association, institution or individual." Section 5, art. 12, Const. 1874; Russell v. Tate, 52 Ark. 541, 13 S.W. 130; Newport v. Railway Company, 58 Ark. 270.

The ordinance was absolutely void, and could not be ratified by acceptance of benefit thereunder by the town, as it was concerning a matter entirely beyond the scope of corporate power. Newport v. Railway Company, supra. It is only where the power is exceeded in the method of its exercise, or where the power has been exercised by some unauthorized officer or agent, that a public, corporation can ratify the unauthorized act. Book v. Polk, 81 Ark. 244, 98 S.W. 1049; Texarkana v. Friedell, 82 Ark. 531, 102 S.W. 374; Hitchcock v. Galveston, 96 U.S. 341, 24 L.Ed. 659; Dillon on Mun. Corp. (4th Ed.) § 463; 20 Am. & Eng. Enc. Law, p. 1181.

The only remaining question is whether the municipal corporation can recover back the money unlawfully paid out.

As we have already said, the appropriation of the money by the officers of the town was unauthorized and unlawful, and the municipality could not and did not, by acceptance of whatever benefit accrued by building the railroad into the town, ratify the act. It is not estopped to deny the validity of the...