Norton v. Dyersburg

by Samuel Blatchford

United States Supreme Court

127 U.S. 160

Norton  v.  Dyersburg

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.

Notes

1. MEMPHIS, TENN., July 13, '72.

At a meeting of the board of directors of the Paducah & Memphis Railroad Company held this day,-present, L. S. Trimble, vice-president, John Overton, Jr., W. F. Norton, D. M. Henning, and A. T. Lacy, L. S. Trimble, vice-president, in the chair,-the minutes of the meeting of May 1st were read and approved. John Overton, Jr., offered a resolution as follows:

'Whereas, C. P. Clark, mayor of the town of Dyersburg, in the county of Dyer, in the state of Tennessee, by his subscription in writing, has subscribed in behalf of the town of Dyersburg the sum of fifty thousand dollars to the capital stock of the Paducah & Memphis Railroad Company, which said subscription is in the words and figures following, to-wit:

'MAYOR'S OFFICE, DYERSBURG, July 8, 1872.

"DEAR SIR: I beg leave to submit herewith a copy of the proceedings of the board of mayor and aldermen of the town of Dyersburg, authorizing me to subscribe $50,000 (fifty thousand dollars) to the capital stock of the Paducah & Memphis Railroad Company on certain terms and conditions minutely set forth in said proceedings, payable in bonds of the town of Dyersburg, hearing seven per cent. interest, payable semi-annually. In pursuance of the authority thus conferred upon me, I herewith tender and propose to subscribe said sum to the capital stock of your company on the terms proposed, and will promptly issue the bonds of said town, if accepted, as soon as the terms and stipulations allow it.

"I have the honor to be, sir, very respectfully, etc.,

"C. P. CLARK, Mayor of Dyersburg.

"To the President of the Paducah & Memphis Railroad Company.'

'Now, therefore, be it resolved, that this board does hereby, in behalf of the Paducah & Memphis Railroad Company, accept said subscription, made by said town of Dyersburg, through said C. P. Clark, upon the terms therein expressed.

'Resolved, 2d, that the record of the proceedings of the board of mayor and aldermen of said town of Dyersburg, accompanying said sub-

scription, be entered upon the minutes of this meeting, and the same is accordingly done, as follows:

"State of Tennessee, Town of Dyersburg:

"Be it remembered that, at a meeting of the board of mayor and aldermen of the town of Dyersburg held at the court-house, (within said town,) on the 5th day of June,-present his honor, Mayor Clark, and every one of the aldermen of said town,-in the year 1872, the following ordinances were adopted by unanimous vote of said board, to-wit: The president of the Paducah & Memphis Railroad Company, by attorney, has presented a memorial to the board of mayor and aldermen, praying the board to order an election to be held to allow the qualified voters of the corporation of Dyersburg to determine by ballot whether thy are willing to authorize the mayor and aldermen to make a subscription of $50,000 to the capital stock of said company, to be paid in the bonds of said corporation, said bonds to be due and payable in ten years from the date thereof, the interest thereon to be paid semiannually at the rate of seven per cent. per annum, for the purpose of assisting in preparing the road-bed of said railroad company through the county of Dyer, and said memorial was accompanied by a statement of the cost of the work through Dyer county;

And whereas, heretofore, to-wit, on the 9th day of August, 1871, upon application of the president of the Mississippi River Railway Company to the board, under and by virtue of which there was submitted to the qualified voters of said corporation, on the 12th day of September, 1871, the question as to their willingness to vote a subscription of $50,000 to the capital stock of said Mississippi River Railway Company; and, whereas, in accordance with said ordinance, said election was heid on said 12th day of September, 1871, and resulted in favor of said subscription by a legal majority; and whereas, said subscription so made, was held to be illegal on account of its exceeding the amount allowed by the existing laws to be voted, and was never accepted by said railway company;

And whereas, afterwards, to-wit, on the 14th day of December, 1871, by the legislature of the state of Tennessee (see chapter 122, § 1, Acts 1871,) said action of the corporation of Dyersburg was ratified, and said town authorized to revote a like amount of subscription;

And whereas, under and by virtue of provisions of their respective charters, and under and by virtue of the laws of the states of Tennessee and Keutucky, the Paducah & Gulf Railroad Company and said Mississippi River Railway Company have been consolidated into one company, under the name and style of the Paducah & Memphis Railroad Company:

Therefore, on motion, the following ordinance was unanimously adopted, to-wit:

Section 1. Be it ordained by the board of mayor and aldermen of the town of Dyersburg, state of Tennessee, that there shall be submitted to

the qualified voters of the town of Dyersburg the proposition to subscribe fifty (50) thousand dollars, in the bonds of said town, to the capital stock of the Paducah & Memphis Railroad Company, on the following terms and conditions, viz.: When the said railroad company has 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 Dyer county, then the mayor shall issue to said railway company coupon bonds of the town of Dyersburg, to the amount of said subscription, which is fifty thousand dollars. The whole of said bonds shall be known as the 'Dyersburg, Paducah & Memphis Rallroad Bonds,' and shall be due and payable in ten years from date of issuance, bearing interest at the rate of seven per cent. per annum, payable semi-annually; the bonds shall be issued in the sume of $100, $250, and $500, with the necessary interest coupons attached.

Sec. 2. To pay the interest accruing upon said bonds, and, if deemed advisable, to create a sinking fund for their redemption, it shall be the duty of the board of mayor and aldermen of said town, at their first regular meeting after the 1st day of December of each year, to levy a specific tax upon such subjects of taxation as they may deem best, to meet the interest coupons falling due within the year succeeding said levy; and, if the board of mayor and aldermen, for any cause, fail at the said meeting so to levy said tax, then the same may by said board be levied at any subsequent regular or called meeting, and the coupons of said bonds shall be receivable in the payment of said railroad tax.

Sec. 3. This subscription shall not become binding until ratified by a majority of three-fourths of the votes of the legally qualified voters of said town voting in an election held to test their sense on the question. The mayor shall make publication in both the Dyer County Progress and Neale's State Gazette, by prc lamation, of an election to be held for that purpose, with thirty days' notice, and shall also make publication of this ordinance in connection with said election notice. Those who favor said subscription at said election shall place on their ballot, 'For subscription,' and those who oppose shall place on their ballots the words, 'No subscription.'

Sec. 4. The above subscription is made on the condition that the Paducah & Memphis Railway is to be located and built to Dyersburg, and a depot of said road, to be located within one-half mile of the court-house, without which condition accepted by said railroad company this subscription to be void, and no bonds shall be issued, (and this condition shall be written or printed, if deemed necessary by the mayor, on the face of said bonds.)

Sec. 5. The acceptance by the officers of said railroad company of any portion of the bonds herein authorized to be issued shall bind said company to the terms and conditions of said subscription, as set forth in all the sections of this ordinance.

"I certify that the foregoing is a full, true, and perfect copy of the proceedings of the mayor and aldermen in the matter of the subscription to the Paducah & Menphis Railroad Company, as the same appears on the minutes of the board on the 5th day of June, 1872, now in my custody.

F. G. SAMPSON, Recorder.

"Dyersburg, July 8th, 1872.'

"SATURDAY, July 6, 1872.

"The board of mayor and aldermen met at the court-house this evening at candle-light. Present: Mayor Clark, Aldermen De Berry, McAllister, Miller, Painer, and Sampson. The mayor reported to the board of aldermen that the people of the town of Dyersburg, by a vote of 126 votes 'for subscription,' to 2 votes for 'no subscription,' have authorized the mayor and aldermen to subscribe $50,000 to the capital stock of the Paducah & Memphis Railroad Company, on the terms and conditions of the ordinance of June 5, 1872. In pursuance of the ordinance passed by this board on the 5th day of June, 1872, which has been duly ratifed by the legal majority of the qualified voters of the town of Dyersburg at the election to-day, on motion, it is ordered, by unanimous consent, that the mayor be authorized to subscribe $50,000 at once to the capital stock of the Paducah & Memphis Railroad Company, on the terms and conditions of said ordinance.

"A true copy from the minutes.

"Attest:

F. G. SAMPSON, Recorder."

Which said resolution, having been duly seconded, was, upon motion, adopted. It was ordered that the power of attorney from C. P. Clark, mayor of Dyersburg, to Isaac F. Child, of Dyersburg, Tenn., be spread upon the records of the company. Said power of attorney is in words and figures as follows, to-wit:

'Whereas, I am fully authorized and empowered, by the action of the board of mayor and aldermen of the town of Dyersburg, Dyer county, Tenn., as well as by the vote of the people of the town ratifying that action, to subscribe fifty thousand dollars in the bonds of the town of Dyersburg (payable in ten years from date of issuance, and bearing seven per cent. interest, payable semi-annually from date of issuance) to the capital stock of the Paducah & Memphis Railroad Company; and whereas, it is not convenient for me to go to Memphis now and attend to said business in person: I have therefore nominated, and do hereby appoint and constitute, Isaac F. Child, of Dyersburg, Tenn., my true and lawful agent, proxy, and attorney in fact to do and perform whatever acts and things it may be proper and necessary for me to do to effect and perfect said subscription, on the terms contained in my proclamation dated June 5, 1872,

hereby ratifying and confirming whatever my said attorney shall lawfully do in the premises as if I did the same myself.

C. P. CLARK, Mayor of Dyersburg, Tennessee.

'July 8, 1872.

'State of Tennessee, Dyer County: Personally appeared before me, W. M. Watkins, clerk of the county court of said county, C. P. Clark, mayor of the town of Dyersburg, Tenn., who acknowledged the execution of the i thin instrument for the purposes therein contained. I further certify that I am personally acquainted with said C. P. Clark.

'Witness my hand and seal of the Dyer county court, affixed at Dyersburg, July 10, 1872.

W. M. WATKINS, Clerk.

'By ZACK. WATKINS, D. C.'

[Seal.]

On motion of D. M. Henning, a resolution in words and figures as follows was adopted: 'Resolved, that the president of this company be authorized and instructed to call upon the town of Dyersburg for the bonds subscribed to the capital stock of the Paducah & Memphis Railroad Company, amounting to $50,000, as soon as the conditions of said subscription upon the part of the county are complied with.'

John Overton, Jr., offered the following resolution, viz.:

'Whereas, an obligation in the words and figures following has been executed and delivered to this company, to-wit:

"We, the undersigned, citizens of the county of Dyer and state of Tennessee, for and in consideration that the president and directors of the Paducah & Memphis Railroad Company have and do agree to build and locate their said road to and by the town of Dyersburg, Dyer county, Tenn., and to locate and build a depot thereon within one-half mile of the court-house in said town, hereby guaranty a subscription to the capital stock of said company of one hundred thousand dollars in the following manner, that is to say: We guaranty that there will be voted, by the citizens of the corporation of Dyersburg, the sum of fifty thousand dollars as a subscription to the capital stock of said company, and that said subscription will be paid in ten-year coupon bonds of said corporation, bearing interest at the rate of 7 per centum per annum, payable semi-annually, and that said bonds will be issued in accordance with the terms of a proclamation made by the mayor of said town, dated June 5, 1872, and published in the Dyer County Progress and Neal's State Gazette, newspapers published in the town of Dyers-burg, and that said bonds will be prepared as soon as practicable after being voted, and will be delivered to said company in accordance with the terms of said proclamation.

"We further agree that there will be subscribed to the capital stock of said Paducah & Memphis Railroad Company the sum of fifty thousand dollars of private individual subscription, by good and solvent subscribers, upon condition that said road is built and has a depot located within one-half mile of the court-house at Dyersburg, and payable as follows: Twenty-five per cent. of the amounts of said private subscription payable when the said road is constructed to the northern or southern line of said county, and work thereon is commenced in Dyer county, the balance subject to calls of ten per cent. every thirty days. This latter amount of fifty thousand dollars we guaranty will be subscribed and delivered to said company on or before the 10th day of July, 1872.

"Witness our hands this June 20, 1872.

"T. E. Richardson, Tom W. Neal, Jno. S. Kiffington, H. L. Fowlky, F. G. Sampson, C. I. Coker, W. M. Watkins, W. E. De Berry, P. E. Wilson, B. C. Burgis, W. C. Doyle, Wat. Sampson, S. R. Latta, I. F. Child, A. M. Stevens, C. P. Clark, W. P. Sugg, E. G. Sugg, J. E. Roberts, E. S. Thurmond, R. R. Watson, John L. Webb, Alf. Stevens, Jno. Sawyer.'

'Therefore resolved, that this company accepts the said obligation and its stipulations as the consideration for building and locating the road to and by the town of Dyersburg, and for building a depot thereon within half a mile of the court-house in Dyersburg; and, in reliance of said obligation, the board agrees to so build and locate the road and so to locate the depot.

'2. That the $52,525 of private subscriptions this day tendered and received in pursuance of that portion of the above obligation which provides for the same is accepted upon the guaranty of its solvency by the above-named obligees.'

Which said resolution, having been seconded, was upon motion, adopted.