Norton v. Town of Dyersburg

• Decision Date: 23 April 1888
• Parties: NORTON v. TOWN OF DYERSBURG
• Court: U.S. Supreme Court

8 S.Ct. 1111

127 U.S. 160

32 L.Ed. 85

NORTON v. TOWN OF DYERSBURG.

April 23, 1888.

This is an action at law, brought in the circuit court of the United States for the Western district of Tennessee, by Extein Norton, a citizen of New York, against the mayor and aldermen of the town of Dyersburg, a municipal corporation created by the state of Tennessee, to recover sundry sums of money as due for the principal of 36b onds, for $500 each, and 58 bonds for $250 each, and 62 bonds for $100 each, all due May 10, 1883, and on sundry coupons cut from such bonds, due at various times between the date of the bonds and their maturity. The bonds and coupons were in the following form:

'Bond No. ___.

$250.

'The mayor and aldermen of the town of Dyersburg, in the state of Tennessee, a corporation duly chartered by act of the general assembly of the state of Tennessee, by the qualified voters of said town, under the provisions of an act of legislature empowering them so to do, by this bond promise to pay to the bearer hereof, ten years after the date hereof, the sum of two hundred and fifty dollars, with interest at seven per centum per annum from this date, payable semi-annually, at the city hall in Dyersburg, on presentation of the coupons hereto attached, to aid in the construction of the Paducah & Memphis Railroad; upon the express condition, however, that the said railroad shall be constructed to the town of Dyersburg, Tenn., and have a depot of said railroad located within half a mile of the court-house in said town.

'In testimony whereof the mayor and aldermen of the town of Dyersburg, Tenn., have caused this bond and the coupons attached to be signed by the mayor of said town, and countersigned by the recorder, on this 10th day of May, 1873.

'[Seal, Mayor and Aldermen, Dyersburg, Tenn.]

'C. P. CLARK, Mayor.

'Countersigned: W. C. DOYLE, Recorder.'-

'$8.75.

$8.75.

'The mayor and aldermen of Dyersburg, Tenn., will pay the bearer on the ___ day of _____, 18__, eight dollars and seventy-five cents, being the semi-annual interest due on Paducah & Memphis Railroad bond No. ___.

'C. P. CLARK, Mayor.

'W. C. DOYLE, Recorder.'

The defendant pleaded nil debet and non est factum. The cause was tried by the court on the written waiver of a jury, and it found the issues of law and fact with the defendant, and rendered a judgment for it, to review which the plaintiff has brought a writ of error. There was an agreed statement of facts, which is embodied in a bill of exceptions, and there is a finding of facts and of conclusions of law also contained therein. From this the following facts appear: The plaintiff bought the bonds and coupons before maturity, for full value, and without any knowledge or notice of any defect, infirmity, equity, or condition against the liability of the town therefor, unless, as matter of law, the face of the bonds charges him with notice. The bonds and coupons were signed, sealed, and delivered by the properly authorized municipal officers of the defendant, but the want of authority so to do is controverted; the defendant insisting that no proper legislative or other authority existed for making the subscription and issuing the bonds that were made and issued, the plea of non est factum only going to that extent. The Mississippi River Railroad Company, to which, it is claimed, the subscription was originally authorized to be made by the defendant, was afterwards consolidated with and became a part of the Paducah & Memphis Railroad Company. That company mortgaged its properties and franchises, the mortgage was foreclosed, and the purchaser at the sale recorganized, under the statute of Tennessee, as the Chesapeake, Ohio & Southwestern Railroad Company, by which the road was built and finally completed on January 1, 1882, and is now operated as a railroad its entire length. The bed and track are now, and were at the date of the bringing of the suit, fully built and equipped and operated through the county of Dyer, in which county the town of Dyersburg is situated, and the last-named company had built a depot building within half a mile of the court-house in the town of Dyersburg before this action was brought. The proceedings of the board of mayor and aldermen of the town, relative to the subscription in controversy, are contained in a paper, Exhibit B to the stipulation, which is set forth in the margin.¹

The question of the subscription referred to in the foregoing proceedings was left, under proper notices, to the decision of the qualified voters of the town of Dyersburg, and the subscription was carried by a vote largely in excess of the* requisite constitutional majority. At the date of the subscription the town was without railroad facilities, and the object of the subscription was to aid the building of the proposed line near the town. The railroad has been built, but no part of the subscription has been paid except the first installment of interest, which was paid. The bill of exceptions states as follows: 'The court found as facts (1) that an ordinance was regularly and legally adopted June 5, 1872, by the board of mayor and aldermen of the town of Dyersburg, ordering an election to be held by the qualified voters of said town, to determine whether the said town should subscribe for $50,000 of the capital stock of the Paducah & Memphis Railroad Company, to be paid for by said town by issuing to said railroad company its negotiable bonds to that amount, bearing interest at 7 per cent., and payable at 10 years from date; that on July 6, 1872, said proposition was voted on by the qualified voters of said town after 30 days' notice of such election had been duly published in the newspapers of said town, when said proposition was carried by a vote of 126 for the subscription to two against it; that, at a meeting of the board of mayor and aldermen of said town held on July 6, 1872, the returns of said election were duly and properly canvassed by said board, which, by ordinance then duly passed, declared the subscription on the terms of the ordinance of June 5, 1872, was properly and legally carried, in said election, by the vote as before stated, and instructed the mayor to subscribe said sum of $50,000 to the stock of the said railroad company, upon the terms and conditions of said ordinance; that, acting pursuant to that authority, the mayor of said town, on May 10, 1873, subscribed for and in the name of said town said sum to the capital stock of said company, received certificate of stock therefor, issued and delivered the coupon bonds of said town for said amount to said railroad company, including those here in this suit; that, when said coupon bonds were so executed, issued, and delivered by said mayor to said railroad company, the said company had laid the track of said road to the northern and southern line of Dyer county, and commenced work on said railway within the limits of said county of Dyer; that plaintiff bought the bonds and coupons sued on herein in due course of trade, for full value, before maturity, and without any knowledge or notice of any defect, infirmity, equity, or condition against the liability of said town, except so far as appears on the face of said bonds; that, before the bringing of this suit, the said railroad had been constructed and was being operated its entire length from Paducah, Ky., to Memphis, Tenn., and was constructed to said town of Dyersburg, Tenn., and had a depot located within half a mile of the court-house in said town,—the same having been done by the Chesapeake, Ohio & Southwestern R. R. Co. on or about the ___ day of _____, as set forth in the agreed statement of facts filed herein. The court ruled that no legislative authority whatever existed for the issuance by said defendant of the bonds and coupons sued on in this case; to which finding and ruling plaintiff then and there duly excepted. The plaintiff requested the court to rule that, under the facts found, the defendant was authorized to execute, issue, and deliver to said railroad company the said bonds, which request was refused by the court, to which plaintiff then and there duly excepted. The court thereupon rendered judgment in favor of defendant, supporting its judgment by reading the same opinion filed in the case of Green v. Town o Dyersburg, 2 Flip. 477, and directing, by consent of counsel, that the said opinion be filed as its opinion in this case, and sent up with the transcript of the record, as required by the rules of the supreme court.'

D. H. & W. K. Poston, for plaintiff in error.

[Argument of Counsel from pages 170-172 intentionally omitted] Sparrel Hill and T. B. Turley, for defendants in error.

BLATCHFORD, J.

It is insisted by the plaintiff in error that there was express legislative authority for the issue of these bonds. The first statute relied on is the act of the legislature of Tennessee approved January 23, 1871, (chapter 50, Acts 1870-71,) entitled 'An act to enforce article 2, § 29, of the constitution, to authorize the several counties and incorporated towns in this state to impose taxes for county and corporation purposes.' This statute has been fully considered by us in the case of Kelley v. Town of Milan, ante, 1101, (just dedecided,) and shown to have conferred no such authority. The act approved December 16, 1871, (chapter 122, Acts 1871,) entitled 'An act to legalize and authorize subscription by incorporated cities and towns for the benefit of railroad companies created by law,' applies only to cases where an incorporated town or city had subscribed to the capital stock of a railroad company prior to the passage of that act. The subscription in the present case was not made until May 10, 1873, the election having been held on July 6, 1872; and the entire act relates only to the validity and the legality of the subscription to stock, and in no manner touches the question of the issue of bonds.

It is also contended that express...