State ex rel. Baker v. Greene County

Wagner, Judge,

delivered the opinion of the court.

Whether this suit was properly brought, or whether an Injunction would lie under the circumstances disclosed in the bill, I will not stop to inquire into, as both parties have expressed *544 a desire to have the ease determined on the merits. The simple question is,whether the County Court of Greene county-had the power to make the subscription, that it did in the railroad hereinafter referred to, without first being authorized by the vote of the people ? The court below decided against the power, and awarded a perpetual injunction against making any collections for the purpose of paying the county indebtedness in consequence of the subscriptions.

The facts set up in the answer, and admitted by the demurrer, are: That the General Assembly of the State of Missouri incorporated the Kansas City, Galveston & Lake Superior Eailroad Company, by an act approved February 9th, 1857; that in pursuance of said act of incorporation, the corporators named in the act duly organized themselves on the 11th day of May, 1857, under the name and style aforesaid ; that, by the. provisions of the said act, the said railroad company was authorized to construct a branch railroad, commencing at or near the city of Kansas, to any point on the southern boundary of the State, which the directors thereof should select, to connect with any road or roads leading to or in the direction of Memphis, Tennessee, or Napoleon, in the State of Arkansas; and that the County Courts of any county, through which any part of said railroad or its branches may be, or of any county adjoining thereto, were authorized to subscribe to the stock of the said railroad company, and to issue bonds of such county to raise funds to pay the same; and, for the purpose of said act, to ’appoint an agent to subscribe for stock to said railroad in the name of and on behalf of said county or counties; and that on the 13th day of February 1861, the legislature, by an act entitled an act to amend an act to incorporate the Kansas City, Galveston & Lake Superior Eailroad Company, authorized the Board of Directors thereof to at any time change the name of the said company; and that the board of directors of the company did afterwards in the year 1861 change the name of said company to the Kansas City & Cameron Eailroad Company, and that, by-the terms and provisions of said last act, the Kansas City and Cameron Eail *545 road company acquired, possessed and retained ail tlie rights, privileges and franchises, which existed under .and by virtue of the charter of the Kansas City, Galveston & Labe Superior Railroad Company; that by another amendatory act, which was approved March 11th, 1867, it was provided, that it should be competent for the said Kansas City & Cameron Railroad company to consolidate their said railroad company with any other railroad company, on such terms as should be deemed just and proper, and that afterwards in the year 1870 the said Kansas City & Cameron Railroad company did consolidate with the Hannibal & St. Joseph Railroad company, by virtue of which consolidation .the Hanuibal & St. -Joseph Railroad company became the owners of, and possessed of, all the rights, property, privileges, immunities and franchises,which the said Kansas City, Galveston & Lake Superior railroad had and possessed by virtue of its charter and of the said acts of the Legislature amendatory thereto, ór which the Kansas City &.Cameron Railroad Company had by virtue of the charter of the Kansas 'City, Galveston & Lake Superior Railroad company, and the amendatory acts to its charter; that on the 3d day of October, 1869, the Kansas City & Cameron Railroad Company, by,a resolution adopted by the Board of Directors of said company, at a meeting held in Kansas City in pursuance of its by-laws, resolved, that the Kansas City & Cameron Railroad Company was desirous of availing itself of the provision of the general laws of the State authorizing railroad companies to construct branch railroads, approved March 21st, 1868, and of the provisions of the Kansas City & Galveston R. R. Co. in relation to the construction of a branch railroad as specified in section 13 in said act, approved February 9th, 1857, as also by the acts of the Legislature amendatory thereto; ■ and provided, that the name of the said branch railroad should be the Kansas City & Memphis railroad, and that the same should commence at the city of Kansas, in Jackson county, Missouri, to intersect with the main line thereat; thence to be built through the counties of Jackson and Cass in a generally southern direction to the southern boundary of the State, in the direction of Mem *546 phis, Tennessee, as prescribed in section 13 of the charter of the Kansas City, Galveston & Lake Superior E. E. Co.; that certain persons, naming, them, were appointed a Board of Directors of said Kansas City & Memphis K. E., with full power to take all needful steps to complete their own organization, to procure subscriptions of stock to said railroad, and for that purpose to open books for subscriptions, and to do all other acts which the Kansas City & Cameron E. E. Co. might or could lawfully do in relation to the building, construction and operation of said branch railroad; that a duly certified copy of the proceeding of said Board of Directors oí the Kansas City & Cameron E. E. Co. were filed and duly recorded in the office of the Secretary of State.

It is further alleged, that after the said railroad had been built from Kansas City in Jackson county to Cameron in Clinton county, and after the said Kansas City & Cameron E. E. Co. had consolidated with the Han. & St. Jo. E. E. Co., that the latter company, at a meeting of the Board of Directors thereof regularly held, notified, confirmed and approved the resolutions passed by the Board of Direetox-s of the Kansas City & Cameron E. E. Co., and then resolved, that the said Han. & St. Jo. E. E. was desirous of continuing the work already begun on the said branch railroad, and was desirous of availing itself of the laws authorizing the building of bx-anch railroads, and especially the branch railroad known as the Kansas City & Memphis Eailroad, and then and there authorized and empowered the Boai’d of Directors of the Kansas City & Memphis E. E. to build said branch, and to aid them in so doing, and to .authorize and empower them to do so, vested in and conferred on the Board of Directors of the Kansas City & Memphis E. E. all the powers and rights, which the Han. & St. Jo. E. E. had under the laws aforesaid, and a coxnmittee was appointed as an executive, construction and managing committee on behalf of the Han. & St. Jo. E. E. Co. with full power to construct, maintain, manage and operate said branch railx-oad, and for that pui-pose to receive subscriptions aixd do all things needful,which the Han. & St. Jo. *547 R. R. Co. might lawfully do under the laws of the State, in the construction, maintaining and operating said branch railroad ; that a certified copy of the proceedings of the Board of Directors of the Han. & St. Joe. R. R. Co. was filed and duly recorded in the office of the secretary of State on the 5th day of July, 1870; that the committee thus appointed did open boohs for the subscription of stock to the Han. & St. Joe. R. R. Co., to aid in building and equipping the branch road of the Han. & St. Joe. R. R., known as the Kansas City & Memphis R. R., and that the County Court of Greene county subscribed the stock now in controversy, and appointed a commissioner to make the same. It is also averred, that the bonds of the county for said subscription have been sold to innocent purchasers, and that the road-bed has been graded through the county. *

The fact, that the bonds have been negotiated and sold, is a question that need not be considered, as the bond-holders are not before the court, and the only question now is, did the law authorize the county to make the subscriptions ?

Essentially the same question as here raised was presented in the case of the State vs. Sullivan County Court, 51 Mo., 522, and it was there held that the power existed. But the matter has again been pressed on the attention of the court, especially with reference to the act of 1868, which, it is contended, is unconstitutional, and, as the act was not particularly mentioned in the above case, it may be deserving of further consideration.

By the thirteenth section of the act to iueorporate the Kansas City, Galveston & Lake Superior R. R. Co., (Sess. Acts of 1856-7, p. 166,) it is provided, that “said company shall have full power to construct a branch railroad, commencing at or near the city of Kansas, to any point on the southern boundary of the State, the directors may select, to connect with any road or roads leading to or in the direction of the city oí Memphis, in Tennessee, or Napoleon, in the State of Arkansas, and shall be governed in all respects by the provisions of this act in the construction and operation of said branch road.”

*548 The fifteenth section 'declares, “ it shall be lawful for the County Court of any county, in which any part of the route of the said railroad or branches may be, or any comity adjacent thereto,' to subscribe to the stock of the company, or invest its three per cent, fund, or other internal improvement fund belonging to the county, as stock in said road, and, for the stock subscribed in behalf of the county, may issue the bonds of the county to raise the funds to pay the same, and to take proper steps to protect the interest and credit of the County Court; may appoint an agent to represent the county, vote for it, and receive the dividends. ' Any incorporated city, town or incorporated company, may subscribe to the stock in said railroad company, and appoint an agent to represent its interests, give its votes, and receive its dividends, and may take proper steps to guard and protect the interests of said city, town or corporation.”

An act was duly passed and approved February 13th, 1864, amending the charter of the Kansas City, Galveston & Lake Superior R. R. Co., which authorized the said company to change its name (Acts 1863-4, p. 481, § 2); and by an act approved March 11th, 1867, it was enacted, that it should be lawful and competent for the said company, to make such arrangements with any other railroad company to furnish equipments and to run and manage its railroad, as it may deem expedient and find necessary, or to lease the same, or to consolidate it with any other company upon such terms as may be deemed just and proper. (Acts 1867, p. 143, .§ 2.)

The above are all the provisions of law bearing upon the questions presented, up to the passage of the law of March 21, 1868. (Sess. Acts 1868, p. 90-91.)

The first section of this last act provides, that any railroad company in this State authorized by law to build branches, and wishing, to avail themselves of the provisions of the act, shall by its Board of Director's pass, and cause to be entered upon its records, a resolution setting forth such desire, and designating the name under which such branch shall be built, its point of intersection with its mainline, and general course, *549 a certified copy of wliicli resolutions shall be filed with the secretary of State, after which they shall be governed by the provisions of the act.

Section two provides, that whenever any such railroad company shall undertake the construction of a branch designated as provided in the first section, they shall receive donations and subscriptions to stock to aid in its construction, in the name of such branch, which shall be expressed iri the certificate of stock issued; the cost and expenses of constructing and operating such branch shall be kept separate and distinct from expenses on the said main line.

They may borrow money, and issue bonds secured by mortgage on such branch road, to aid in its construction, and in general may operate, lease, sell or consolidate with any connecting road distinct and separate from their main line; and in any other way may manage or dispose of such branch as by law they may be authorized with reference to their main line, and separate therefrom.

The third section declares, that any branch road so constructed shall not be holden for any debt, lien or liability of the main line, nor shall the main line be holden for any debt, lien or liability of such branch; and that any dividends of profits arising out of the business of such branch road shall be divided among the stockholders in such branch, and in all respects the interest of the stockholders in the branch shall be kept separate and distinct from -the interests of the stockholders in the main line.

By section four it is declared, that the holders of stock in any railroad company,which was subscribed-in aid of the construction of a branch road according to the provisions of the act, shall have the same rights as other stockholders in the company in the choice of officers; birt in all matters directly and specifically affecting the interests of such branch road, the stockholders in such branch shall control; and for such purpose the directors under their by-laws may, or on the petition of parties representing one-tenth of such stock shall, call a meeting of the stockholders in such branch, setting forth the object *550 of such meeting; and at any such meeting such stockholders may instruct the Board of Directors in all matters relating especially to their interests; and they shall be governed by such instructions, if not inconsistent with the laws of the State and the powers of the company.

The legislative enactments, above cited,, show, that the original charter of the Kansas City, Galveston & Lake Superior R. R. Co. gave the power in direct terms to construct the branch road out of which this suit sprang; that it described its beginning point and terminus, namely: at or near Kansas City to the southern boundary of the State, in the direction of Memphis, Tennessee, or Napoleon, in the State, of Arkansas. Authority was given to any County Court of any county, through which the branch road ran, to subscribe stock to the company, and to issue its bonds to raise funds for the purposes of construction. It was afterwards authorized to change its name, which it did, and then power was granted to the company to make arrangements with any other railroad company to furnish equipments and run and manage it, or to effect a consolidation.

As the charter was granted, and the power given to subscribe stock without taking a vote of the people, long anterior to the adoption of the present constitution, by a special enactment, the settled law of this State is, that it was not impaired or taken away by any of the subsequent general laws or the constitutional prohibition. This question was recently reviewed in this court, and the cases cited, in Smith vs. Clark County, ante, p. 58, and need not be further referred to. The proposition is undoubted, that under the original charter and the amendment thereto, prior to the act of 1868, it was lawful for the County Court to make subscriptions. And if it can be shown, that this proceeding is independent of that act, and does no1 depend upon it in any manner for its exercise, then I think its validity must be upheld.

If the act of 1868 substantially changes the character of the company, or attempts to confer upon County Courts the power to make subscriptions without first submitting the question *551 to the qualified voters,, then as to such matters I have no hesitation in pronouncing it void. In other words, the act could not organize a new company giving it such power, nor confer any additional power in relation to making subscriptions without the vote of the people where it did not previously exist. It may be said, that the consolidation with the Han. & St. Joe. E. E. Co. merged the existence of the branch in an entirely new • company, and therefoi’e it was no longer the company to which the legislature had granted the original powers, and that the company being extinct,, the powers were extinguished, and that although the power to take the stock was formerly given, it was. a mere privilege delegated to the counties, and was not a franchise which adhered to the company in its new organization.

The difficulty in sustaining this construction is, that the branch road remains still the same as it was before the consolidation took place. And the decisions of this court have 'been, that the power conceded to the courts or other municipal bodies, to take and subscribe stock in railroads, was in-, tended as a privilege to the corporations. (Smith vs. Clark County, supra.)

Now, what was the effect of the consolidations? In the case of Philadelphia & Wilmington R. R. Co. vs. Maryland, (10 How., 376,) it appeared, that the railroad line between Baltimore and Philadelphia, before it was consolidated, originally belonged to several distinct organizations. One of these companies was exempt from certain taxation, and it was claimed by the consolidated company, that this exemption was transferred to it, and affected all parts of the line. The act authorizing ' the union of the several companies provided, that the said body corporate so formed should be entitled * * * to all the powers and privileges and advantages then belonging to the former corporations,” and the new company claimed the exemption from taxes as one of the privileges and exemptions acquired, but the court held that the exemption did not extend to a portion of the line to which it had not extended before the union. It considered *552 the evident meaning of the law to be, that, whatever privileges and advantages either of the former companies possessed, should, in like manner be held and possessed by the new company to the extent of the road which the said former companies had respectively occupied before the union; that it should stand in their place, and possess the power, rights and privileges they had severally enjoyed in the portions of the road which had previously belonged to them.

The case of Tomlinson vs. Branch, (15 Wall., 460) was a case, where a railroad company by its charter was granted an exemption for a limited period, and was afterwards merged in another railroad company, which became invested with all its property, rights and privileges; the latter company, in which the former was merged, possessed by its charter a perpetual exemption, but it was held, that the charter of the latter company did not extend to the property of the former so as to exempt it.

These cases show what former rights and privileges adhere to companies after consolidation, and they declare the law iu conformity with the regulations provided for in the act of 1868.

Iu the present case none of the property, or the rights and privileges, of the branch railroad, is extended to, or possessed by, the road with which it is consolidated. For all practical purposes it is really and essentially a distinct and independent branch.- The union exists simply in name, but not in substance.

An analysis of the act of 1868 abundantly shows this. The 2d section provides, that any railroad company desiring to construct a branch road may receive subscriptions, etc., for the construction of the branch railroad.

The costs and expenses of constructing and operating said branch railroad shall be kept separate from the business of the main line; they may borrow money, lease, sell or consolidate with any other railroad, distinct and separate from the main line. Section 8 provides, that any brauch road so constructed shall not be holden for any debt, lien, or liability of the main *553 line, nor shall the main line be holden for any debt, lien, or liability of the branch; and the 4th section provides, that the Stockholders in the branch have the same rights, as stockholders in the main line, in the choice of officers, but in all matters affecting the interests of the branch road the stockholders in the branch road shall control.

The branch road shall control the whole management, and is the only party interested. The Han. & St. Joe. R. R. Co., at the date of the act, was possessed of all the rights, privileges, immunities and franchises granted to the Kansas City, Galveston & Lake Superior R. R. Co. by the act of the 9th of February, 1857. This branch road commences and ends in the same places designated for the branch road in the original charter. It proposes nothing but what was intended to be accomplished by the act creating it, and its union with another company is in name only; no new powers are granted to either the branch or the company with which it is consolidated, and no original powers are taken away.

I see nothing that alters, affects or Changes the power of the County Court to subscribe the stock. T think the power existed when the subscription was made, the same as it did when the act of incorporation of 1857 was passed.

In my opinion, therefore, the judgment should be reversed, and the petition dismissed.

Judges Napton and Adams concur; Judge Vories dissents, and Judge Sherwood did not sit.