Norton v. Dyersburg/Opinion of the Court

by Samuel Blatchford

United States Supreme Court

127 U.S. 160

Norton  v.  Dyersburg

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 authority to issue the bonds in question was granted by section 20 of an act passed February 26, 1869, (chapter 59, Acts 1868-69,) which section is as follows: 'Sec. 20. Be it further enacted, that it shall be lawful for the town of Dyersburg to make a corporate subscription to the capital stock of the Mississippi River Railroad Company, not to exceed fifty thousand dollars in amount, payable, in not exceeding four years, by annual assessments levied by the board of trustees of said town, and collected as other moneys are, and bonds of the town may be issued in anticipation of such collections, collected for town purposes: provided, however, that, before the board of trustees or aldermen of said town shall make any such subscription, the question shall have been first submitted to the qualified voters of said town, and shall have received a majority of the votes cast therefor after twenty days' notice of the time and place of holding said election, and of the amount proposed to be subscribed.' Reliance is also placed upon section 18 of an act passed February 8, 1870, (chapter 55, Acts 1869-70,) which section is as follows: 'Sec. 18. Be it further enacted, that stock which has been subscribed, or may hereafter be subscribed, by any county, city, or incorporation, to said railroad companies may be payable in six annual payments; and it shall be lawful for county courts, and the corporate authorities of any city or town making such subscription, to issue short bonds, bearing interest at the rate of six per cent. per annum, to said railroad companies, in anticipation of the collection of annual levies, if thereby the construction of the roads can be facilitated.' As to the act of 1869, the subscription to the stock, not to exceed $50,000, was made payable, by section 20, in not exceeding four years, by annual assessments of taxes. The express limitation was to the four years, but authority was given to issue the bonds of the town in anticipation of the collection of taxes. Of course, under this provision the bonds were to be paid by the four annual collections of the taxes levied by the four annual assessments. That was the fund provided for their payment. No authority was given for the issue of bonds other than such as were to be paid, one-fourth in one year, one-fourth in two years, one-fourth in three years, and one-fourth in four years; and no authority was given for the issue of any bond payable in ten years. As to section 18 of the act of 1870, it gave no power to the town of Dyersburg, beyond that conferrd by the act of 1869, to subscribe for stock or to issue bonds. The only possible effect it could have as to that town was to modify section 20 of the act of 1869 so as to make the subscription to stock payable in six annual payments, instead of four annual payments, and to authorize the issue of bonds in anticipation of the collection of the annual tax levies, the bonds to be payable in not exceeding six annual installments, instead of four; but each set of bonds to be still payable by an annual tax levy, and to fall due annually for six years, at the time of the maturity of the levy for each year. That these statutory provisions did not authorize the issue of bonds payable in 10 years is entirely clear. Pulaski v. Gilmore, decided by the supreme court of Tennessee, and published in 21 Fed. Rep. 870; Milan v. Railroad Co., 11 Lea, 329. The cases of Railroad Co. v. County Court, 1 Sneed, 683, and State v. Anderson Co., 8 Baxt. 249, do not sustain the position of the plaintiff in error. While, in each of those cases, the statute provided that not more than one-third of the amount of the subscription should be collected in any one year, it did not prohibit its distribution into more numerous installments, each of less amount. Here the acts in question prohibited any extension of time beyond four or six years, and the vote of the town distinctly varied the terms fixed by the statute.

It is also contended by the plaintiff in error that the grant of power to subscribe for the stock carried with it the implied authority to issue negotiable bonds therefor. None of the cases cited by the plaintiff in error, decided outside of the state of Tennessee, establish such doctrine. The cases cited in Tennessee, Bank v. Jacobs, 6 Humph. 515; Nichol v. Mayor, 9 Humph. 252; Adams v. Railroad Co., 2 Cold. 645; Moss v. Academy, 7 Heisk. 283; State v. Anderson Co., 8 Baxt. 249; and Williams v. Railroad Co., 9 Baxt. 488,-do not maintain the doctrine contended for. In the case in 6 Humph. it was held that a railroad company, a private corporation, could contract a debt for a corporate purpose, and give a negotiable promissory note therefor. In the case in 9 Humph. there was express legislative authority to subscribe for stock and issue bonds; and the point decided was that a subscription by a municipality to railroad stock was a county or corporation purpose, within the provision of the constitution empowering the legislature to authorize counties and towns to impose taxes for county and corporation purposes. The case in 2 Cold. was considered by this court in Nashville v. Ray, 19 Wall. 468, 479, and it was there said that the doctrines propounded in the opinion in 2 Cold., with reference to the implied powers of municipal corporations, were not necessary to the decision of that case. In the case in 7 Heisk. the question was as to the power of a private corporation to borrow money. In the case in 8 Baxt. there was express authority to issue the bonds, and the question of implied power did not arise, as was said by this court in Claiborne Co. v. Brooks, 111 U.S. 400, 411, 4 Sup. Ct. Rep. 489. In the case in 9 Baxt. the question now under consideration does not appear to have been raised or discussed; the only question involved being whether the original subscription to the stock of the railroad company was valid. On the contrary the decision of the supreme court of Tennessee, in the cases of Pulaski v. Gilmore, and Milan v. Railroad Co., above cited, was distinctly that express legislative authority to issue bonds like those involved in the present suit was necessary. In harmony with this view is the fact of the numerous instances in which the legislature of Tennessee, after granting authority to municipalities to subscribe for stock in railroad companies, has also expressly granted the power to issue bonds therefor. The views of this court on the subject of the implied power to isu e municipal bonds were fully expressed in the cases of Wells v. Supervisors, 102 U.S. 625, and Claiborne Co. v. Brooks, 111 U.S. 400, 4 Sup. Ct. Rep. 489. In the first of those cases it was held that the mere authority given to a municipality to subscribe for stock in a railroad company did not carry with it the implied power to issue bonds therefor, especially where, as in the present case, special provisions were made for paying the subscription by taxation. Our views as to the proper construction of the general laws of Tennessee (Code Tenn. §§ 1142-1161) have been fully expressed in the case of Kelley v. Town of Milan, ante, 1101, (just decided.)

It is further contended, for the plaintiff in error, that this court should, in any event, hold the town liable as upon non-negotiable bonds or notes, treating the issue of the negotiable bonds as an excess of authority only, and not invalidating the loan, with interest, as agreed upon. It is a sufficient answer to this proposition to say that this suit is brought solely for a recovery upon the bonds and coupons, and no question growing out of the liability of the town for the subscription to the stock can be inquired into in this suit. The judgment of the circuit court is affirmed.

Notes