ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF MISSOURI.
MR. JUSTICE BLATCHFORD, after stating the case as above reported, delivered the opinion of the court.
The grounds urged for reversing the judgment are (1) that the statutes of Missouri did not authorize the consolidation of
a railroad company organized under the laws of Missouri with a railroad company organized under the laws of another State; (2) that an authority to subscribe to stock in, and issue bonds to, the Chillicothe and Omaha Railroad Company was not an authority to subscribe to stock in, and issue bonds to, the St. Louis, Council Bluffs and Omaha Railroad Company; and (3) that it does not appear by the face of the bonds, or by the findings of the court, that the County Court ordered any subscription for stock in either the Chillicothe and Omaha Railroad Company or the St. Louis, Council Bluffs and Omaha Railroad Company to be made, or that any subscription for stock of either of those companies was in fact made, or that any stock of either company was ever issued to the county or to the township.
(1) As to the authority for consolidation. It was enacted as follows by the act of the legislature of Missouri, approved March 2d, 1869 entitled "An Act to authorize the Consolidation of Railroad Companies in this State with Companies owning Connecting Railroads in Adjoining States," (Laws of 1869, p. 75, and 1 Wagner's Missouri Stats. of 1870, p. 314, § 56): "Section 1. That any railroad company organized under the general or special laws of this State, whose tracks shall at the line of the State connect with the track of the railroad of any company organized under the general or special laws of any adjoining State, is hereby authorized to make and enter into any agreement with such connecting company, for the consolidation of the stock of the respective companies whose tracks shall be so connected, making one company of the two, whose stock shall be so consolidated, upon such terms and conditions and stipulations, as may be mutually agreed upon between them, in accordance with the laws of the adjoining State in which the road is located, with which connection is thus formed." The statute then went on to enact details in regard to the consolidation. The fourth section of the act provided as follows: "Section 4. Any such consolidated company shall be subject to all the liabilities, and bound by all the obligations of the company within this State, which may be thus consolidated with one in the
adjacent State, as fully as if such consolidation had not taken place, and shall be subject to the same duties and obligations to the State, and be entitled to the same franchises and privileges under the laws of this State, as if the consolidation had not taken place." This statute applied to the consolidation in question although no road had yet been constructed.
It is not contended that the provisions of this statute were not complied with in making the consolidation in question. The consolidated company was, by the statute, to be entitled to the same privileges under the laws of the State of Missouri as if the consolidation had not taken place. This can only mean that it was to be entitled to the same privileges under the laws of Missouri, that the Missouri corporation was entitled to under the laws of that State at the time the consolidation took place. One of those privileges was the privilege of a subscription to stock by the township of Chillicothe.
(2) As to the authority to subscribe to stock in, and issue bonds to, the St. Louis, Council Bluffs and Omaha Railroad Company, under the vote of the people of the township to subscribe to stock in, and issue bonds to, the Chillicothe and Omaha Railroad Company. The case of Harshman v. Bates County, 92 U.S. 569, decided by this court at October term, 1875, is relied upon by the plaintiff in error as a decision against the validity of the bonds in that respect. It arose under the same statute of Missouri, of March 23d, 1868. The bonds were issued by the county of Bates, in behalf of Mount Pleasant township, in that county, to the Lexington, Lake and Gulf Railroad Company, in January, 1871. The taxpayers of the township had, in May, 1870, at an election, voted in favor of a subscription to the stock of, and the issue of bonds to, the Lexington, Chillicothe and Gulf Railroad Company. In October, 1870, that corporation was consolidated with another corporation, under the name of the Lexington, Lake and Gulf Railroad Company. Thereafter, in January, 1871, the County Court, in pursuance only of the authority conferred by such vote, subscribed the specified amount, in behalf of the township, to the consolidated company, and issued the bonds to it in payment of the subscription. The objection was taken.
that the question of subscribing to stock in, and issuing bonds to, the consolidated company was never submitted to a vote of the people of the township. This court held, that as, at the time of the consolidation, no subscription to stock had been made, and thus no vested right had accrued to the company named in the vote, the extinction of that company worked a revocation in law of the authority to subscribe to stock and to issue bonds. In that case, it appeared by the face of the bonds that the vote of the people was to subscribe to the stock of the Lexington, Chillicothe and Gulf Railroad Company, and that that company and another had been consolidated under the name of the Lexington, Lake and Gulf Railroad Company. This court held, that this recital in the bonds was sufficient to put the holder on inquiry, and that the bonds were invalid. The suit was brought by a holder of coupons attached to the bonds, against the county, to recover the amount of the coupons.
In County of Scotland v. Thomas, 94 U.S. 682, at October term, 1876, the suit was brought on coupons attached to bonds issued by the county of Scotland, in the State of Missouri, on its own behalf, to the Missouri, Iowa and Nebraska Railway Company, for a subscription on behalf of the county to the stock of that corporation, which was a corporation formed by the consolidation, in March, 1870, (under the above mentioned act of March 2d, 1869,) of the Alexandria and Nebraska City Railroad Company, of Missouri, (formerly the Alexandria and Bloomfield Railroad Company,) with the Iowa Southern Railway Company, of Iowa. It was claimed that the power to subscribe to the stock had been given by the charter granted in 1857 by Missouri to the Alexandria and Bloomfield Railroad Company, before the adoption of the state constitution of 1865, which required that the question of subscribing to stock should be submitted to a vote of the qualified voters of the county. No vote had been taken in the case. It was contended on behalf of the plaintiff, that the consolidated corporation acquired, by the consolidation, all the privileges of the Alexandria and Nebraska City Railroad Company, and, among others, the privilege of receiving county
subscriptions to its capital stock. This court held, that the prohibition of the constitution of 1865 only extended to restraining the legislature from authorizing in the future municipal subscriptions, or aid to private corporations, without a vote of the people of the municipality, but did not take away any authority previously granted to subscribe to stock without a vote of the people. It also held, that the simple consolidation with another company did not extinguish the power of the county to subscribe, or the privilege of the company to receive a subscription.As authority for this view it cited the case of The State v. Greene County, 54 Missouri, 540.
In the case of County of Scotland v. Thomas, the power to consolidate was given in 1869, after the original charter of 1857 was granted, and after the Constitution of 1865 went into effect; but it was held that that fact did not affect the power. In its opinion, the court said (p. 691): that the railroad authorized by the charter of 1857 "was 'a railroad from the city of Alexandria, in the county of Clark, in the direction of Bloomfield, in the State of Iowa, to such point on the northern boundary line of the State of Missouri as shall be agreed upon by said company, and a company, authorized on the part of the State of Iowa, to construct a railroad to intersect the road authorized to be constructed by the provisions of this act, at the most practicable point on said state line.' Bloomfield was a small town in Iowa, evidently not intended as the final objective point of the proposed line, which is only required to be 'in the direction of Bloomfield.' A connection with a continuous road in Iowa was the declared object of the road proposed. It was evidently the purpose to bring Alexandria, a port of Missouri on the Mississippi River, in connection with the rich region of southern and western Iowa, by means of the road then being chartered, and a road to connect therewith, running ...