U.S. Supreme Court
Hill v. Memphis, 134 U.S. 198 (1890)
Hill v. Memphis
Argued November 6, 1889
Decided March 10, 1890
134 U.S. 198
A power conferred by statute on a municipal corporation to subscribe for stock in a railway corporation does not include the power to create a debt, and to issue negotiable bonds representing it, in order to pay for that subscription, and this doctrine prevails in Missouri.
All grants of power to a municipal corporation to subscribe for stock in railways are to be construed strictly, and not to be extended beyond the term of the statute.
The provisions in the general railroad law of Missouri which went into effect June 1, 1866, respecting the loan of municipal credit to a railroad company, and of the act of the March 24, 1868, respecting the funding of the debts of municipalities, are to be construed in subordination to the provision of the constitution of the state then in force prohibiting the legislature from authorizing any town to loan its credit to any corporation except with the assent of two-thirds of the qualified voters at a regular or special election.
This is an action against the City of Memphis, a municipal corporation of Missouri, alleged to have been known and designated on the 1st day of March, 1871, as the "Town of Memphis," and styled the "Inhabitants of the Town of Memphis." It is brought to recover the amount of one hundred thirty coupons, each for eighty dollars, detached from certain railroad bonds purporting to have been issued by that town. These bonds, except in their number, are in the following form: chanroblesvirtualawlibrary
"Number 4 United States of America Dollars 1,000"
"Eight percent railroad bond Town of Memphis"
"County of Scotland Twenty years"
"Know all men by these presents that the Town of Memphis, in the County of Scotland, in the State of Missouri, acknowledges itself indebted to the Missouri, Iowa, and Nebraska Railway Company, a corporation existing under and by virtue of the laws of the States of Missouri and Iowa, formed by a consolidation of the Alexandria and Nebraska City Railroad Company (formerly Alexandria and Bloomfield Railroad Company), of the State of Missouri, and the Iowa Southern Railway Company, of the State of Iowa, in the sum of one thousand dollars, which sum the said town hereby promises to pay to the said Missouri, Iowa and Nebraska Railway Company, or bearer at the Farmers' Loan and Trust Company, in New York, on the first day of March, A.D. 1891, with interest thereon from the first day of March, 1871, at the rate of eight percent per annum, which interest shall be payable annually in the City of New York, on the first day of March in each year, as the same shall become due, on the presentation of the coupons hereto annexed. This bond being issued under and pursuant to an order of the Board of Trustees of the Town of Memphis, for subscription to the stock of the Missouri, Iowa and Nebraska Railway Company, as authorized by an act of the General Assembly of the State of Missouri entitled 'An act to incorporate the Alexandria and Bloomfield Railroad Company, approved February 9, 1857.' In testimony whereof the said Town of Memphis has executed this bond by the chairman of the board of trustees signing his name hereto, and the clerk of said board of trustees under the order thereof attesting the same and affixing thereto the seal of said board. Thus done at the Town of Memphis, in the County of Scotland, in the State of Missouri, this first day of March, A.D. 1871."
"[Seal Town of Memphis, Scotland County, Missouri.]"
"H. H. BYRNE,"
"Chairman of the Board of Trustees of the Town of Memphis"
"Attest: WILLIAM L. KAYS, Clerk "
The coupons, excepting in their number and dates, are in the following form:
"Railroad Bond Coupon 80"
"Memphis, Mo. March 1, 1871"
"The Town of Memphis, State of Missouri, will pay to the bearer on March 1, 1885 at the Farmers' Loan & Trust Company, in New York, eighty dollars, being one year's interest on bond No. 4, for $1,000."
"H. H. BYRNE, Chairman"
The bond, on its face, purports to have been issued on the 1st day of March, 1871, by order of the board of trustees of the Town of Memphis, for subscription to the stock of the Missouri, Iowa and Nebraska Railway Company, as authorized by an act of the General Assembly of the State of Missouri entitled "An act to incorporate the Alexandria and Bloomfield Railroad Company," approved February 9, 1857. That act provided that the company should in all things be subject to the same restrictions, and be entitled to all the privileges, rights, and immunities, which were granted to the North Missouri Railroad Company by its act of incorporation, (March 3, 1851), so far as the same were applicable, as fully and completely as if they were thereby reenacted. The fourteenth section of this latter act is as follows:
"SEC. 14. It shall be lawful for the county court of any county in which any part of the route of said railroad may be to subscribe to the stock of said company, and it may invest its funds in the stock of said company, and issue the bonds of such county to raise funds to pay the stock thus subscribed, and to take proper steps to protect the interests and credit of the county. Such county court may appoint an agent to represent the county, vote for it, and receive its dividends, and [any] incorporated city, town, or incorporated company may subscribe to the stock to said railroad company, and appoint an agent to represent its interests, give its vote, and receive its demands [dividends], and may take proper steps
to guard and protect the interests in [of] such city, town, or corporation."
The plaintiff also relied as authority for issuing the bonds, though not recited in them, upon section 17 of the General Railroad Law of Missouri, which went into effect August 1, 1866. That section is as follows:
"SEC. 17. It shall be lawful for the county court of any county, the city council of any city, or the trustees of any incorporated town to take stock for such county, city, or town in, or loan the credit thereof to, any railroad company duly organized under this or any other law of the state, provided that two-thirds of the qualified voters of such county, city, or town at a regular or special election to be held therein, shall assent to such subscription."
Gen.Stat.Missouri (1866) 338. He also relied upon the Act of March 24, 1868, entitled "An act to enable counties, cities, and incorporated towns to fund their respective debts," which is as follows:
"Be it enacted by the General Assembly of the State of Missouri as follows: Section 1. That the various counties of this state be, and they are hereby, authorized to fund any and all debts they may owe, and for that purpose may issue bonds bearing interest at not more than ten percentum per annum, payable semiannually, with interest coupons attached, and all counties, cities, or towns in this state which have or shall hereafter subscribe for the capital stock of any railroad company may, in payment of such subscriptions, issue bonds bearing interest at not more than ten percentum per annum, payable semiannually, with interest