Town of Red Rock v. Henby

The legislature of the state of Minnesota, on March 6, 1868, passed an act entitled 'An act to authorize the towns in Fillmore, Mower, Freeborn, Faribault, Martin, and Jackson counties to issue bonds to aid in the construction of any railroad running into or through said counties.' The first three sections of this act, which are the only ones material to this case, were as follows:

'Section 1. Each town in the counties of Fillmore, Mower, Freeborn, Faribault, Martin, and Jackson is authorized to issue bonds as hereinafter provided to aid in the construction of any railroad running into, or proposed to be built through, either or all of the counties aforesaid.

'Sec. 2. Said bonds shall be issued in sums of not less than $100 each, may bear interest at a rate not exceeding 10 per cent. per annum, payable annually, and shall run for a period not exceeding 10 years from their respective dates. They shall be signed by the chairman of the board of supervisors, and countersigned by the town clerk of such towns; and the principal and interest as they become due shall be payable to the person or corporation to whom they shall be issued, or bearer, on presentation to the town treasurer.

'Sec. 3. Any town in either of the aforesaid counties may, at any usual or regularly-called special meeting, by vote of a majority of the legal voters of such town present and voting, fix the amount and size of bonds to be issued by such town, the rate of interest, and the date of payment of all and any thereof, and the person or corporation to whom the same shall be issued and made payable, and the time at which and the terms and conditions upon which the same will be issued; and such town may, at such meeting, by vote, delegate all or any of the foregoing powers to the board of supervisors or any committee appointed by the town.'

Afterwards, on February 27, 1869, this act was amended by substituting 30 instead of 10 years as the limit of time at or within which the bonds were to be made payable. While this law, thus amended, was in force, to-wit, on May 9, 1869, the Southern Minnesota Railroad Company, by Clark W. Thompson, its general manager made the following proposition to certain towns in the counties of Mower and Fillmore, among which was the town of Red Rock, the plaintiff in error:

'I propose, in the name of the Southern Minnesota Railroad Company, to build and put in operation the Southern Minnesota Railroad, from its present terminus in Fillmore county to some point on the Innesota Central Railroad, on or before the thirty-first day of December, 1872, on the following conditions, to-wit:

'That the following towns in Fillmore and Mower counties shall vote and certify to the Southern Minnesota Railroad Company the following amount of bonds of their respective towns, payable in 20 years, with 7 per cent. annual interest: Fillmore, $15,000; Spring Valley, $25,000; Frankfort, $15,000; Grand Meadow, $15,000; Red Rock, $25,000; and Walthan, $15,000; the bonds not to be delivered, and the interest not to commence, until said completed road shall reach the town, or some point as far west as the eastern line of the town, voting the aid, if said road shall be done by the time specified.'

On May 15, 1869, a special meeting of the legal voters of the town of Red Rock was held, at which the following resolutions were passed by a majority of the legal voters present and voting at said meeting:

'Resolved, that under the provisions of an act of the legislature of the state of Minnesota, entitled 'An act to authorize the counties of Fillmore, Mower, Freeborn, Faribault, Martin, and Jackson to issue bonds to aid in the construction of any railroad running into or through said counties,' the supervisors of the town of Red Rock, Mower county, Minnesota, and their successors in office, be and are hereby authorized and required to issue and deliver the Southern Minnesota Railroad Company the bonds of said town, with interest coupons attached, to the amount of $25,000, such bonds to bear interest at the rate of 7 per cent. per annum, payable annually; such bonds to be issued in denominations of not less than $1,000 each, and to be payable in 20 years from their date, and to be signed by the chairman of said board of supervisors and attested by the clerk of said town, whenever said railroad company shall have completed its said road from its present termination, Fillmore county, to some point within 100 rods of the S. E. corner of the N. E. 1/4 of section 9, in town ship 103 N., of range 17 W., and shall have established a regular freight and passenger depot and are doing business therefrom.

'Resolved, that the bonds shall not be issued or delivered to said company, and no obligation incurred by said town by voting of this resolution, unless said company shall have completed said road to said point by the thirty-first day of December, 1872.'

Prior to the issue of the bonds mentioned in these resolutions the railroad company never formally agreed in writing to the terms and conditions on which the bonds were voted, but in the fall of 1869 it located its road between the points and upon the line mentioned in the resolution of the town of Red Rock above set forth; and in December of that year let the contract for constructing that portion of its line so located, and the work of construction was at once begun and was carried on during the winter, spring, and summer of the year 1870. Before the close of the summer, and more than two years before the time fixed in the resolution of the town of Red Rock, the railroad company had complied with all the terms and conditions of that resolution, and had completed its road between the points and upon the line prescribed in the resolution and had built the depot, and was 'doing business thereupon.' Whereupon, in pursuance of the proposition made to the railroad company in said resolution of May 15, 1869, the town of Red Rock, on March 9, 1871, issued to the Southern Minnesota Railroad Company 25 bonds of $1,000 each, falling due in 20 years. The bonds referred on their face to the law of the state and the vote of the legal voters of the town of Red Rock by which it was supposed the issue of the bonds was authorized, and they recited that the railroad company had fully performed the conditions upon which the town had promised to issue the bonds. After the issue of the said bonds, and before the maturity of the first coupons thereunto attached, the Southern Minnesota Railroad Company, which was then the holder of said bonds and coupons, sold, transferred, and delivered the bonds, with all the coupons appertaining thereto attached to the same, to the plaintiff, for the consideration of $900 in money for each of said bonds, such price then being the full market value of the same, which money was forthwith paid by the plaintiff to the said company. At the time of such purchase and payment of such money, the plaintiff had no knowledge of any of the special acts of the legislature hereinafter mentioned, and no knowledge of the proceedings of the electors or other authorities of said town of Red Rock, except what he derived from the recitals contained in the said bonds.

This suit was brought upon coupons which had fallen due since the defendant in error became the holder of the bonds. The defense set up on the trial in the circuit court was this: That before the railroad company had fully complied with the conditions upon which the town of Red Rock had proposed to issue its bonds, to-wit, on March 5, 1870, the legislature of Minnesota passed an act, the sections of which pertinent to this case are as follows:

'Section 1. Each township and village, town and incorporated city in the counties of Mower, Dodge, Goodhue, and Dakota, by a vote of a majority of the supervisors of any township, or of the majority of the city council of any such village, town, or city, as hereinafter provided, may create and issue its bonds, with interest coupons attached, to aid in the construction of any railroad running into or proposed to be built through either or all of the counties aforesaid.

'Sec. 2. The majority of the supervisors of any township, or the majority of the village, town, or city council of any such village, town, or city in the aforesaid counties, may fix the amount and size of the bonds to be issued by said township, village, town, or city, the rate of interest and the date of payment of all or any part thereof, and the person or corporation to whom the same shall be issued and made payable, and the time at which, and the terms and conditions upon which, the same shall be issued to such corporation.

'Sec. 3. Before the bonds are issued in any township or incorporated village, town, or city, the question of issuing them shall be submitted to the legal voters thereof by the supervisors of said township, or by the council of said village, town, or city. And the supervisors of townships and common councils of said villages, towns, and cities are hereby authorized to appoint and call special elections for such purposes, which elections shall be called and conducted in such form and manner as elections are usually conducted in such townships, villages, towns, or cities.'

The act further provided that if the majority of the voters at such election voted for the issue of the bonds, the said supervisors or the said common council should cause the bonds to be delivered to the railroad company whenever it should have complied with the terms and conditions upon which the bonds were to be issued. Afterwards, to-wit, on March 2, 1871, and before the bonds in controversy were issued, the legislature amended the first section of the act, so as to make it read as follows:

'Section 1. Each township, village, town, and incorporated city in the counties of Mower, Dodge, and Goodhue, by a vote of a majority of the supervisors of any township or of the majority of the city council of any such village, town, or city, subject to the approval and ratification of the legal voters of said township, village, town, or city, as hereinafter provided, may create and issue its bonds, with interest coupons attached, to aid in the construction of any railroad running into or proposed to be built through either or all the counties aforesaid.'

This was followed by a repealing section, as follows:

'Sec. 2. All acts and parts of acts inconsistent with this act are hereby repealed.'

The contention of the town of Red Rock in the circuit court was that the act of 1868, under which it was claimed that the bonds had been issued, had been repealed by the above-mentioned acts of 1870 and 1871. Upon this question the judges of the circuit court were divided in opinion. In accordance with the opinion of the presiding judge, judgment was rendered in favor of the plaintiff, and the question upon which the judges differed was certified to this court for its decision.

Gordon E. Cole, for plaintiff in error.

W. P. Clough and E. G. Rogers, for defendant in error.

WOODS, J.