County of Henry v. Nicolay/Opinion of the Court

Since the decision of this court in County of Scotland v. Thomas, 94 U.S. 682, little remains to be considered in this case. It is conceded that the charter of the Tebo and Neosho Railroad Company, passed Jan. 16, 1860, gave the power to establish a railroad through Henry County, and to extend branch railroads into and through any counties that the directors might deem advisable; and it was made lawful for the county court of any county in which any part of the route of said railroad or branches might be, or any county adjacent thereto, to subscribe to the stock of the company, and for such stock to issue bonds of the county to raise funds to pay for the same. This charter being granted prior to the Constitution of Missouri, adopted in 1865, according to the settled law of the State did not become subject to the provision in that Constitution, which requires the assent of two-thirds of the lawful voters of a county to a subscription of stock in aid of the railroad.

But it is objected that the pr ject of the branch road, in aid of which the stock was subscribed in this case, was undertaken as an independent enterprise under the act of March 21, 1868, and, consequently, that the constitutional provision applies to it. It is true that the branch in question was projected, and the organization for its construction was made, under the provisions of that act. It is necessary, therefore, to inquire whether branches of railroads thus projected are thereby made subject to the constitutional provision relied on; for the bonds sued on in this case show on their face that they were issued in pursuance of that act as well as under the authority of the original charter, and being made 'to the use and in the name of the Clinton and Memphis Branch of the Tebo and Neosho Railroad,. . . to aid in building said branch railroad.' The Supreme Court of Missouri has decided this question, holding that the constitutional provision does not apply to branch roads built under the act of 1868. ''The State ex rel. the Attorney-General v. Green County'', 54 Mo. 540, is precisely in point. That was the case of a branch road authorized by the original charter of the Kansas City, &c. Railroad Company, but constructed as an independent interest under the act of 1868; and in that case, also, the original company had consolidated with the Hannibal and St. Joseph Railroad Company, before the subscription to the stock for the branch was made. The court said: '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. I think the power existed when the subscription was made, the same as it did when the act of incorporation of 1857 was passed.'

It is true, in that case, that the board of directors of the parent company, before it consolidated with the Hannibal and St. Joseph Railroad Company, and the latter company afterwards, passed resolutions authorizing the construction of the branch, and that this was not done in the present case; the branch in the present case being organized and undertaken only with the consent of the directors of the parent company. But, under the decisions of this court, the purchasers of the bonds were not bound to know whether or not the proceedings of the company were regular. The charter of the Tebo and Neosho company contained the power to construct the branch, and gave the county court power to subscribe stock for it; and the act of 1868 authorized such branch and stock to be an independent interest; and the bonds on their face simply showed that they were made to the parent company, 'to the use and in the name of the Clinton and Memphis branch,' 'to aid in building said branch.' The purchaser, therefore, was apprised by the law that power existed in the county court to issue such bonds, without any election of the people; and there was nothing on their face to show that they were not regularly issued. It was not incumbent on him to inquire whether the railroad company had pursued all the regular steps necessary to entitle it to receive the bonds. Its agents, that is, the agents of the branch road, had them for sale, and he had a right to presume that they were lawfully entitled to them.

The fact that before bonds were issued, but not before the subscription was made, the parent company sold and assigned a portion of its route, and all franchises connected therewith, to the Missouri, Kansas, and Texas Railroad Company, does not alter the case. So far as appears, the Tebo and Neosho company did not cease to exist. In the deed of sale it expressly reserves a very material portion of its franchises; namely, all those belonging to 'the extension of the Tebo and Neosho line north fro Sedalia, via Booneville, Fayette, and Moberly, to the railroad bridge at West Quincy, declared July 2, 1869, certificate of which, dated July 3, 1869, was filed in the office of the secretary of state.' But had the company ceased to exist, it would make no difference. Its franchises were not extinguished, but only transferred, and the subscription had been ordered before the sale took place. It is unnecessary to discuss this point further, as the grounds on which it rests were sufficiently considered in the case of Scotland County, already referred to.

In our judgment, the defence set up by the county was properly overruled, it not being shown that the plaintiff, when he purchased the bonds, had any knowledge or notice of the facts relied on.

Judgment affirmed.