Case Name: Mercer County versus The Pittsburgh and Erie Railroad Company
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1856
Citations: 27 Pa. 389
Docket Number: 
Parties: Mercer County versus The Pittsburgh and Erie Railroad Company.
Judges: Knox, J., dissented, and Black, J., was absent at the argument.
Reporter: Pennsylvania State Reports
Volume: 27
Pages: 389–412

Head Matter:
Mercer County versus The Pittsburgh and Erie Railroad Company.
Where an. act of assembly authorized certain counties to subscribe to the capital stock of a railroad company, subject to the restrictions, limitations, and conditions therein expressed, and in no other way or manner whatever, and also enacted that such subscription should be made after and not before the same shall have been designated, advised, and recommended by a grand jury, and the amount of the subscription ordered and designated by the same grand jury, payable either in money or the bonds of the county; and the grand jury made a presentment recommending the commissioners of the county to subscribe to such stock, under such restrictions as may be required by the Act of Assembly authorizing the subscription, to an amount not exceeding §150,000; under authority of which two of the county commissioners subscribed §150,000 of stock, and executed and delivered bonds for the amount to the company; and the same act also provided that the acceptance of the same act by the railroad company should be deemed an acceptance by them of the provisions of an act passed on the 11th day of March, 1851, fixing the gauges of railroads in the county of Erie. Heldf—
1. That all discretionary power, touching the subscription, was given exclusively to the grand jury, and they could not transfer any part of it to the county commissioners or any other persons.
2. That it was imperative on the commissioners to make the subscription when the same should be advised and recommended, and the amount of it designated by the grand jury, in the manner required by the act.
3. That a recommendation by the grand jury, to the commissioners, to subscribe to such stock to an amount not exceeding a specific sum named, was not a compliance with the provisions of the act, and conferred no authority upon the commissioners to make any subscription whatever.
4. That such a subscription, made without any designation by the grand jury of the amount to be subscribed, was without any competent authority, and therefore void.
5. The law in force, when a proposal for a contract is made, forms a part of it, and if such proposal be not accepted until the law under which it is made is essentially changed, such acceptance comes too late, and the proposal falls with the repeal of the law which induced it.
6. Where the act authorizing the subscription provided that the acceptance of its provisions by the company should also be deemed an acceptance of another act imposing certain restrictions on the corporation, and the latter act was repealed after the recommendation of the grand jury, and before the acceptance of the subscription by the company, the right to subscribe under the recommendation ceased, and no subsequent acceptance by the company, or subscription by the commissioners, was binding on the county.
7. Where the transaction is between individuals, subsequent assent and acquiescence would validate the contract, but where the grand jury were constituted the organ or agent of the county for the purpose, the acts of no other officers would be available to ratify the contract, or make it binding on the county.
8. The commissioners of the county, having no authority to make any subscription, would be equally incompetent to ratify an unauthorized one.
9. The inhabitants of a county, although entitled to great indulgence, may bo affected by delay and acquiescence in the unauthorized acts of the public officers. Per Lewis, C. J.
10. A party who has a contract with the company to receive the bonds in payment for work to be done in the construction of the road, and which party had full notice of the facts which rendered the subscription invalid, has no such equity as would prevent a decree for the cancellation of the bonds, and an injunction against negotiating them.
This was a bill in equity, at the suit of the County of Mercer against The Pittsburgh and Erie Railroad Company, and the officers and directors of the same company. The bill of the complainants charges that the railroad company was incorporated by virtue of an Act of Assembly approved the 21st April, 1846, with the powers and privileges therein contained, and those conferred by the several supplements thereto. And that on the 4th day of May, 1852, an Act of Assembly was passed, which, among other things, authorized the commissioners of the county of Mercer to subscribe for shares in the capital stock of the Pittsburgh and Erie Railroad Company. The certificates of loan, or bonds, that might be issued in payment of the stock subscribed, to bear an interest of 6 per cent, per annum, payable half-yearly. The subscriptions to be subject to the restrictions, limitations, and conditions contained in the act. Such subscription to be made after, and not before the amount thereof should have been designated, advised, and recommended by a grand jury of said county.
The grand jury of Mercer county at May Sessions, 1852, made the following presentment:—
“ The grand inquest of the Commonwealth of Pennsylvania, inquiring in and for the body of the county of Mercer, at May Sessions, 1852, having taken into consideration the importance of the construction of the Pittsburgh and Erie Railroad, to the several counties, and the country through which it will pass: also, the tendency to advance the value of property, and develop the various resources of the county, would recommend that the commissioners of Mercer county subscribe to the capital stock of the Pittsburgh and Erie Railroad, to such amount, and under such restrictions as may be required by the Act of Assembly, authorizing them to subscribe stock to said road, to an amount not exceeding $150,000.
C. Gr. Carver, Foreman.”
Sometime in May or June, 1852, on application of the railroad company, Benjamin W. Pennock and John Loutzenhiser, 'Wo of the commissioners of Mercer county, subscribed on behalf of and in the name of the county of Mercer, to the capital stock of the company, 3000 shares of $50 each, aunounting to $150,000, -with a condition annexed that no part of said sum, or of the interest on it, should be paid by the county until the railroad of the company should be completed and the cars running upon the same.. On the 5th September, 1853, James J. Duncan and Benjamin W. Pennock, two of the commissioners of the county, executed and delivered to the railroad company three bonds of $50,000 each, payable in twenty years, at 6 per cent, per annum interest, payable semi-annually. And on the 8th October, 1853, these bonds were exchanged for one hundred bonds of $1000 each, fifty of $500 each, and two hundred and fifty bonds of $100 each, payable at the same time as the former bonds of $50,000 each.
The bill further charges that by the act of incorporation, and before the charter of the company could be obtained and the corporation be organized, at least 15,000 shares of capital were to be subscribed, with $2.50 paid in on each share. And that at the time that the subscription of Mercer county was made by the commissioners, and at the time the bonds were executed and delivered as before stated, the company had upon its books certain shares of capital stock, subscribed by Charles M. Reed and others, of the city of Erie, amounting to $750,000 ; but the bill alleged that the $2.50 per share, required to be paid by the said act, were not paid, but that a note or obligation of Charles M. Reed was given for the same, which was never paid. And that the shares of stock subscribed by Reed and others, were subsequently, by a secret agreement among the stockholders of the company, in fraud of the county of Mercer, suppressed, and no assessments made upon them; and that after the issue and delivery of the bonds of Mercer county, these shares of stock were treated as fictitious and unreal, and as forming no part of the capital stock of said company, but were transferred to unknown parties, to be held subject to the order of the board of directors, and to be transferred to such persons as could be induced to purchase them as new subscriptions to the stock of the company.
And the bill further alleged, that by the transfer and suppression of such stock prior, as the complainants believe, to the subscription of the county and the delivery of its bonds, the company had become insolvent and unable to build the road, and that in consequence the county was disappointed and deceived by the company in the prospect of the advantage to be derived from the road, by which it was induced to subscribe and issue the bonds.
The complainants further alleged that they had been informed and believed that a large amount of the bonds of the county had been used for other purposes than the building of the road, and that a large portion of them were sold by the company for less than the par value of them, contrary to the act authorizing the subscription.
The complainants further charged that the subscription “ was not recommended, designated, and ordered by the grand jury of said county, as required by law, and that the issuing of the bonds as aforesaid was contrary to the conditions of the subscription as made upon the books of the said company, and that the subscription of the said 3000 shares of stock of said company by said B. W. Pennock and Loutzenhiser, and the execution and delivery of the bonds as aforesaid, were procured by said company by promises of personal gain and advantage to the said commissioners of said county, making and delivering the same, to be bestowed and conferred upon them, the said county commissioners, by the said company, or by some of the directors and officers thereof, out of the funds of the said company.” And alleged that in consequence of these facts a grievous fraud had been perpetrated upon the county, by which an onerous debt will be created and the taxes greatly augmented.
The bill then propounded numerous interrogatories to the officers, agents, and directors of the company, in reference to the matters charged, and concluded by a prayer for an order or injunction on the defendants, restraining them from issuing and paying out any of the bonds, and that it might be decreed that the subscription and the execution and delivery of the bonds were-void acts, and the bonds were not obligatory on the county or the citizens thereof, and for such other and further relief as the nature and circumstances of the case should require, and for a writ of subpoena to the officers and directors therein named, to appear on a day certain, and full and true answers to make, and abide such further orders and decrees as to the court shall seem meet.
The bill was filed on the 13th May, 1856, and the motion for a preliminary injunction was heard on the 4th June, 1856, on the bill and affidavits, and was argued by
Stephenson, for complainants.
Kunkel, for respondents.
The motion for a preliminary injunction was denied, a rule granted on the defendants to answer by the first day of September, 1856, and a commissioner appointed to take the testimony.
On the 30th of October, 1856, the answer of defendants, by Thomas J. Power, the president, was filed. In this it was alleged that the subscription made by Charles M. Reed and others, of Erie, and standing upon the books of the company at the time the county of Mercer subscribed, was a bona fide subscription, and that five per eenturn thereof was duly paid as required by law into the treasury of the company by the subscribers, and all legal requirements complied with by them: and that no illegal or fraudulent transfer was ever made of it by them. That the whole transaction was entered upon the books of the company, which have been open at all times to the inspection of all parties interested. That the ability of the company to construct its road has not been diminished or impaired by such alleged suppression or transfer of stock, nor from any other cause; and that the company, so far from being insolvent, is in a more prosperous condition than at any former period of its existence, and especially at the time of the subscription by the county of Mercer. That, at their session of 1856 the legislature granted to the Erie and North-East Railroad Company certain powers and immunities, upon condition that such company would subscribe $400,000 to the capital stock of the defendants’ corporation, or construct as much of the road as would require an outlay of that sum, and which act has been accepted by the Erie and North-East Railroad Company, which would make that sum an available subscription to the defendants. That in addition thereto the company has available subscription to its stock by corporations and individuals equal to more than $800,000, making its available resources more than $1,200,000, a sum believed to be sufficient to complete the road, and which, if not embarrassed by applications like the present, suggested by hostile railroad interests, would secure its completion in two years, or less time.
The respondents denied that any part of the bonds of the county of Mercer were expended for any other purpose than the construction of the road, and in no instance for less than the par value. That about $65,000 of the bonds, have been paid out to contractors for work done on the road in Mercer county, and the residue, about $85,000, remain in the hands of B. F. Baskin, the treasurer of the company, and can only be paid out for the work done on the road as it progresses, being specially pledged for the construction of the road in Mercer county.
They further answered that the sum of two dollars and fifty cents on each share subscribed by Charles M. Reed and others, was paid in cash, as appears by the certificate of the Secretary of the Commonwealth, appended to the answer, to which reference was craved.
That the subscription of the county of Mercer was regularly made in pursuance of the Act of Assembly authorizing it. A regular and lawful presentment recommending it was made by the grand jury of the county, and directing a subscription not exceeding one hundred and fifty thousand dollars, and that the subscrip tion was made in pursuance of and in accordance with the directions of the grand jury to the amount of one hundred and fifty thousand dollars, and the county commissioners appointed William S. Garvin, Joseph Kerr,, and William G. Brown as managers or directors to represent the county of Mercer in the hoard of directors of the Pittsburgh and Erie Railroad Company in September, 1853. That these persons continued in office and. performed the duties of directors of the company until superseded by the appointment of William Stewart and William Maxwell, to succeed them on the 6th of February, 1855. And that no promises or inducements of any kind were offered by the company, or by any person on its behalf, to the commissioners or any other person- to procure the subscription or the delivery of the bonds. But that the making of the subscription and the delivery of the bonds by the commissioners of Mercer county was strictly in the performance of their official duty under the Act of Assembly of the 4th May, 1852, the subscription having been recommended and directed by a grand jury, designating the amount as fully as was required of them by the said act.
The answer concluded in the usual manner, and prayed to be hence dismissed, with the costs and charges in that behalf expended.
The Act of the 4th of May, 1852, authorizing the subscriptions by the county of Beaver, Lawrence, Mercer, Crawford, and Erie, or either of them, contained the following:—
“ Provided, That the subscriptions to be made by all or either of the counties of Beaver, Lawrence, Mercer, Crawford, and Erie, shall be made subject to the following restrictions, limitations, and conditions, and in no other manner or way whatever, viz.: all such subscriptions shall be made by the county commissioners of the county subscribing, and shall be made by them after and not before the amount of such subscription shall have been designated, advised, and recommended by a grand jury of said county or counties; and the amount of such subscription shall not, in any case, exceed six per cent, on the assessed valuation of said county or counties so subscribing; and the amount of such subscription ordered and designated as aforesaid, may be made payable, either in money or in the bonds duly executed and authenticated of the said county or counties so subscribing in sums of not less than one hundred dollars; and such bonds shall in no case, or under any pretence, be sold, assigned, or transferred by the said Pittsburgh and Erie Railroad Company, at less than the par value thereof; and the bonds so issued shall not be subject to taxation for any purposes, till after the clear annual profits of the said road shall amount to six per cent, on the cost thereof; and provided further, that the acceptance of this act by the company shall be deemed also an acceptance of the provisions of the act passed the 11th day of March, 1851, entitled An Act fixing the gauges of railroads in the county of Erie.”
The Act of 11th March, 1851, provided that the tracks of railroads running westwardly from the city of Erie to the Ohio state line, should he of the gauge of four feet ten inches, and those east and south, of the gauge of either six feet, or four feet eight and one-half inches.
On the 18th January, 1853, at a meeting of the stockholders of the company, it was resolved that it was inexpedient to accept at that time the subscriptions of the several counties, on account of the proviso which made the acceptance of the benefits of the Act of 4th May, 1852, an acceptance of the “ Gauge Law.” But that the ultimate acceptance or rejection of the subscriptions be postponed for further consideration at some subsequent meeting.
On the 11th April, 1853, the Act of 11th March, 1851, known as the “ Gauge Law,” was repealed. And, on the 25th of the same month, the board of directors, at a meeting held, caused notice to be given to the counties which had subscribed, that the subscriptions had been accepted by the company; and a committee of three members was appointed to secure the bonds of Mercer county at the earliest possible day.
The bonds were accordingly issued and delivered, as stated in the bill of complaint.
The evidence returned, together with the answers of the respondents showed, that on the 19th November, 1849, Charles M. Reed, and nineteen others, subscribed to the capital stock of the company 15,110 shares of $50 each, amounting to $755,500, of which Reed subscribed 14,500. On this stock 5 per cent, was required to be paid, in order to lift the charter. Charles M. Reed was constituted receiving commissioner, and upon his receipt and certificate of the payment of the same, the charter was obtained.
On the 14th August, 1851, Reed and the other original subscribers were authorized by the board of directors to transfer the stock held by them respectively to David McAllister, the secretary of the Company, and they to be released from further liability on it.
On the 24th December, 1851, this same stock was reassigned to the same parties who had previously held it, and on the same day they transferred it to J. B. Curtis and others. Reed and his co-subscribers were thereupon released from all further calls or liability on the stock. The board of directors also authorized the treasurer to receive the notes of the parties to whom the stock was transferred, amounting in the aggregate to the sum of $37,775, being the amount in the hands of Reed as receipting commissioner for the 5 per cent, paid on the original subscription, and a receipt for the amount was given to Reed.
The larger part of this stock was afterwards transferred, by the persons holding it, to trustees, who were to hold it and transfer it to such persons as should be designated by the board of directors, or to such parties as should subscribe to the stock.
On the 25th August, 1853, the company entered into a contract with S. P. Johnston & Co. for the construction of that part of their road lying in Mercer county, at stipulated prices for the various kinds of work. The estimated amount of the work was $400,000. This work was, by the terms of the contract, to be paid for in the bonds of Mercer county and the stock of the company at their par value. On this contract there had been paid to the contractors $65,100 in Mercer county bonds and a proportionate amount of stock, and $84,900 of the bonds remained in the hands of the treasurer of the company.
The evidence taken and returned by the commissioner was very voluminous, but a further statement of it is not deemed material to the understanding of the points decided by this court.
The plaintiffs contended that the bonds of the county were issued and delivered without any authority:—
1. Because no subscription was made by the board of commissioners of the county of Mercer, acting as such, in any book of the company, or by any resolution entered upon the minutes of the county commissioners.
2. That no amount of subscription was designated, advised, and ordered by a grand jury of Mercer county, but only an indirect recommendation of such an amount as the commissioners should see proper, not exceeding $150,000; which was not a compliance with the Act of 4th May, 1852.
3. That the provision in the act, preventing a sale or disposition of the bonds at less than their par value, had been evaded by the company, by paying a higher rate for work to the contractors, who took the bonds in payment for the same.
4. That no subscription by the county could be legally made until after the acceptance of the Act of 4th May, 1852, by the railroad company, and which their proceedings show were rejected after the alleged subscription was made.
5. Because the bonds were not issued in payment of any subscription made by the county, but as an absorption, pro tanto, of the original stock subscribed by individuals, which is contrary to the letter and spirit of the Act of 4th May, 1852; and that the transfer and suppression of the original subscriptions was a fraud on the county.
The defendants on their part maintained that the subscription was made in substantial conformity with the Act of 4th May, Í852, and was valid and binding on the county; and that nothing had. been shown on the part of the complainants to invalidate the subscription or bonds in the hands of the company.
Stephenson, for complainants.
1. There is no subscription to the stock of the company, either on its books or on the record of the commissioners’ office. No resolution to subscribe is made by a board of county commissioners legally constituted. The Act of 15th April, 1834, §§ 19 and 20, defines the manner in which the duties of the commissioners are to be performed. They are to keep a record of their proceedings; and copies of these are made evidence of their official acts, and we think the only evidence that can be given of them. In the case of the Commissioners of Allegheny v. Lecky, 6 S. & R. 170, it is held when the legislature gives certain powers to the county commissioners by the general official designation as commissioners, it must be supposed that those powers are to be exercised by the board.
The same doctrine is maintained in Cooper & Grove v. Lampeter Township, 8 W. 127, and counties are regarded as bodies corporate of a public nature, their powers to be exercised by the commissioners who are constituted their organs or agents. Like natural persons, they would only be bound by the acts of their agents within the scope of their authority.
In the case of Lehigh County v. Kleckner, Justice Rogers says: “ It must be remembered the commissioners are public agents, with authority well defined, and the extent of it well known.” And the execution of those powers should, to protect the public, be confined strictly within the limitations, restrictions, conditions, and modes prescribed.
Applying these rules to the case in hand, we find no execution of the power to subscribe, by the board of commissioners acting as such.
But if there even had been an offer to subscribe, that was rejected by the company, on the 18th January, 1853. It is not pretended there was any made after that. By the rejection of it, by the company, even if it would have been good as a subscription, it became void, and to make it binding on the county there must have been a new subscription made. The act of the board of directors in accepting that which had become defunct by their previous rejection, could not revive it as against the county.
2. But if a subscription was made by the commissioners, it was void for want of authority. The language of the act is peremptory and direct: “All such subscriptions shall be made after and not before the amount shall have been designated, advised, and recommended by a grand jury of the county.” This direction admits of no evasion; the designation of the amount was exclusively intrusted to the grand jury; had they designated the amount, and advised a subscription of it, the commissioners could not have changed it or bound the county for a different amount. It was still discretionary with them as a board, whether they would make the subscription even after the grand jury had designated, advised, and recommended its amount; but they were prohibited from acting till after the grand jury had exercised the authority committed to them; and that was not merely to fix a limit, beyond which the commissioners should not go — the legislature had already done that themselves — but to designate the sum to be subscribed. The grand jury failing to act as required by the statute, the subscription must fail. No authority was conferred elsewhere to supply the omission. Neither did the commissioners, as a board, designate the amount to be subscribed, or authorize the subscription of any designated amount; no record of any such action exists. If any amount was subscribed, it must have been designated by the railroad company, or by the commissioner or commissioners making the subscription; but whether acting in or out of the board, officially or unofficially, does not appear; but by whomsoever the amount to be subscribed was designated, it is certain it was not done by the authority created by the legislature for that purpose.
3. Another condition or restriction to which the subscription was to be made subject, was that it might be made payable in money, or bonds of the county, which could not be disposed of for less than their par value. It was contended, also, that this latter provision had been evaded by allowing the contractors exorbitant rates for the work, in consequence of taking the bonds in payment.
4. No subscription could be legally made by the county until after an acceptance by the company of the supplement of 4th May, 1852, authorizing it to be made. That was rejected as late as 18th January, 1853, and the bonds are claimed to have been issued in pursuance of a resolution of the county commissioners, 23d June, 1852. These acts were void, because the law authorizing them, being a supplement to defendant’s charter, had not been accepted. It imposed burdens, as well as conferred benefits, and the one could not be enjoyed without submitting to the other. How could it be held that the county was liable, while the company claimed and enjoyed immunity from the disabilities of the act ? It was not binding till accepted, and not being binding on the company, all acts done under it were void.
5. It was argued that the transfer of the stock to trustees, and the release from all liability of the original stockholders, was a fraud upon the county. That this exhibition of stock, supposed to be real and bona fide, was held out as an inducement to the county and her officers to subscribe. It was not a transfer of stock already taken and subscribed that the county was entitled to. She was not authorized to purchase stock, but to subscribe to the original capital stock. It was also a fraud, because it placed the money, or bonds of the county, under the control of aboard of thirteen directors elected upon a stock of $37,755, which had all-been absorbed in salaries and expenses, while the county, with $300,000 actually subscribed and paid in, had but three directors. The release of the subscribers to the original stock was also a fraud upon the county, by leaving her alone to bear the hazards of the enterprise.
A. W. Loomis, for respondents.
Conceding the truth of the allegations in the bill, the remedies sought cannot be attained in this proceeding.
The company was duly organized, and its act of incorporation and letters patent are full evidence that the prerequisites were complied with: Pamph. L. 1850, p. 812; Act 4th May, 1852: Pamph. L. p. 605; 7 Wheat. 522; 6 J. R. 558; 7 How. 159; 1 Cow. 734; 9 Pet. 503; 10 Id. 209; 7 Id. 274; 13 How. 361; Sto. Eg. Pl. § 257.
The subscription was made, in pursuance of the recommendation of the grand jury of Mercer county, not to exceed $150,000. It could not be for more — it might be for less. This is a substantial compliance with the act. The commissioners did not exceed the amount fixed as the limit. It was at most a mere irregularity, and was waived and cured by the execution and delivery of the bonds. The act authorized the constituted authorities of the county of Mercer subscribing to issue bonds in payment of the whole or any portion of the subscription, and the company were to receive these as cash. This was done, and when delivered the bonds became the property of the company — the county entitled to the stock. They were only subject to the control of the company. The county had no right to direct their use, only as a stockholder, and in common with the others. The county has shown no such right or interest in the bonds as justifies the interposition of a court of equity. If the subscription and bonds are void, the complainant has an adequate remedy at law.
The allegation in the bill in reference to the several transfers of stock, discloses nothing illegal or prejudicial to the interests of the county. It was done to promote the interests of the company and secure the completion of the road. It is not charged that the commissioners were ignorant of this matter, or that they would not have subscribed if they had possessed full knowledge of it. Neither the subscription nor the delivery of the bonds is alleged or proved to have been procured by fraud or falsehood. The allegation is only one of surmise and apprehension, which is insufficient to found a decree upon divesting the title of the company to such a large amount of property.
The next allegation is that the complainants have been informed and believe that the company wore using the bonds for other purposes than the construction of the road, and had disposed of a large amount at less than their par value. Were this allegation, so vaguely made, even true, the bonds could not be declared null and void without making the holders of them parties, and would not justify an injunction against using the residue at all, because a part had been used improperly. The true remedy would be, to restrain the company from making an illegal use of them.
It was further contended that the allegations of the bill were not supported by the proofs, and that the answer meets all the material charges, and is fully sustained by the testimony returned.
The complainants are barred of all equitable claim to relief by laches and acquiescence. Conscience, good faith, and diligence are necessary to call a court of equity into action: Bright. Eq. § 306. The subscription was made in June, 1852, the bonds issued in October, 1853, and directors then appointed by the county. They had access to the books of the company, and all the means of knowing fully its affairs, had a voice in its deliberations, and votes in its determinations. It is to be presumed that their agents discharged their duty faithfully. And now, after the lapse of years, after participating in the measures of the company, and after it has, without objection or remonstrance, pledged the whole amount of the bonds to the construction of the road, and thereby secured the sale of a large amount of stock; after the payment of the interest on the bonds sold by the company ; the county seeks to repudiate its contract and annul its obligations. Will such relief be granted at this late day, when it will work irreparable injury to the company and suspend its operations, and thereby throw upon the county of Mercer the payment of the interest upon the bonds sold, and their ultimate payment, without any corresponding benefit ?
The interests of the complainants, as well as respondents, require that the prayer of the bill should be refused.

Opinion:
The opinion of the court was delivered by
Lewis, C. J.
This bill prays for an injunction to restrain the railroad company from paying out any of the bonds which have been issued by the county in payment of a subscription to the stock of the company. The Act of Assembly of 4th May, 1852, authorizing the constituted authorities of the county to subscribe to the stock, declares that the subscription to be made " shall be made subject to the following restrictions, limitations, and conditions, and in no other manner or way whatever, viz., all such subscriptions shall be made by the county commissioners of the county subscribing, and shall be made by them, after and not before, the amount of such subscription shall have been designated, advised, and recommended by a grand jury," and " the amount of such subscription ordered and designated as aforesaid may be made payable either in money or in the bonds" of the county so subscribing. At the May Sessions of the Court of Quarter Sessions of Mercer county, 1852, the grand jury signed a paper in which they state that they "would recommend the commissioners of Mercer county to subscribe to the capital stock" of the company " to such amount and under such restrictions as may be required by the Act of Assembly authorizing them to subscribe stock to said road, to an amount not exceeding 150,000 dollars." Under this authority two of the commissioners subscribed toK the stock of the road to the amount of $150,000, and bonds have been issued and delivered to the railroad company, in payment of the subscription. $65,100 of these bonds have been paid to S. P. Johnson & Company, on account of work under their contract. The residue of the bonds, to the amount of $84,900, remain in possession of the railroad company.
It is impossible to read the Act of 4th May, 1852, without perceiving that all discretionary power touching the subscription to the stock was given exclusively to the grand jury. They were directed to " designate the amount of the subscription to be made, and when they did so designate the amount, and " advise and recommend" the subscription, it was imperative upon the commissioners to obey. The language of the act is that the subscription "shall be made" by the county commissioners. The mandate is repeated in the clause declaring that the subscription shall be made after "the grand jury have designated, advised, and recommended" the amount. It is indicated in the express prohibition of any subscription before the amount is so designated by the grand jury. It is plainly proclaimed in the preliminary clause declaring that the subscription shall be made subject to the " restrictions, limitations, and conditions" specified in the act, " and in no other manner or way whatever." That the action of the grand jury was intended to be mandatory — a command and not merely an authority — is manifest from what has already been said. The "advice and recommendation" of the grand jury was to be regarded as an order, which the commissioners were not at liberty to disobey. This is the plain meaning of the act. It breathes through every word, and speaks out in every line. As if to leave not a particle of doubt on this question, the legislature, in a subsequent part of the act, speak of the amount of such subscription as " ordered and designated as aforesaid." It follows that the commissioners had no discretionary authority whatever in the matter; they were merely permitted to hold the pen, and to write precisely what they were directed by the grand jury to write. Nothing more — nothing less. We can readily see many good reasons for this. The commissioners are selected so long in advance of the decision to be made, that all persons who may be disposed to apply improper influences have abundant opportunities of doing so. They are but three in number, and two of these might decide the fate of the county. These two might lack the wisdom necessary for such an important measure. They might also lack the integrity required for such a high trust. It is not necessary to deal in ambiguous language when discussing such a subject. From the beginning of the world to the present time, history has been teaching her lessons of human frailty, beguiled and corrupted by human wickedness. It. is fair to presume that these lessons were not lost on the legislature. Although they could not distinctly see the wily serpent of corruption, the waving of the grass often indicated his stealthy course. It is therefore not improbable that one of the objects of the restrictions in the Act of 1852 was to guard against bribery. Whatever may have been the motive, the legislature were unwilling to place the fortunes of a whole county at the disposal of two county commissioners. I do not regard the declarations of Pennock, one of the county commissioners who issued these bonds, as legal evidence to convict the railroad company of bribery. But his declaration, after the subscription had been made, and after the work had been allotted to the contractors, that he " had not got work — that he had not yet signed the county bonds, and would not unless he got work on the road," and the two events which followed this unblushing admission, viz.: his signing the bonds and getting work on the road, are certainly high evidence of his unfitness for the trust, and of the wisdom of the legislature in refusing to trust him with any discretion whatever on the subject. The grand jury are not so readily influenced by improper suggestions. They are selected for their judgment and integrity, and come from all parts of the county, without respect to party politics. They are exposed to temptation for too brief a period to be safely approached — they are too numerous to be easily led away from their duty by " vfork" on a railroad, or by any other improper considerations. In the multitude of their counsel there is comparative safety. They are the usual agents of the county, when the question of erecting county buildings or county bridges is to be decided. These are some of the reasons which may have influenced the legislature in insisting that the amount of the subscription in this case should be " designated" by the grand jury. But it is sufficient for the court to know that the law is so written and must be obeyed. It is a special authority, and must be strictly pursued. There is not a word in it which authorizes the grand jury to transfer from their own shoulders any part of the responsibility which the legislature plaeed there. An attorney without power of substitution eannot appoint an attorney in his place. Discretionary powers given to trustees will not pass to heirs, nor personal representatives, nor assignees, nor devisees, nor survivors: Hill on Trustees 488; 16 Ves. 44; 16 Ves. 45; 1 B. & Ald. 608; 2 Ves. 643; 2 Sim. 264; 2 Hare 200 ; 16 Ves. 22; 13 Sim. 91. They will not pass even to a new trustee appointed by a court of equity: Amb. 309. When the grand jury authorized the commissioners to subscribe any " amount not exceeding $150,000," they failed to execute the power conferred upon them. Such a proceeding was no designation of the amount — it was a plain transfer of that duty to the commissioners, giving them the discretion to subscribe $50 or $150,000, or any intermediate sum. This was precisely what was prohibited by the statute. As the legislature neither intrusted the commissioners with any such authority, nor authorized the grand jury to trust them with it, the conclusion follows that the subscription to the stock of the Pittsburgh and Erie Railroad Company has not been made by competent authority.
There is another objection equally fatal to the subscription by the commissioners. The laiv in existence at the time a contract is made, enters into and necessarily forms a part of it. In like manner, the law in force, when a proposal for a contract is made, always forms a part of it, and is the essential and true exponent of the intention of the party in making it. If the proposal be not accepted until the law under which it is made undergoes such a change that a subsequent acceptance would constitute a contract materially different from that intended when the proposal was made, it is manifest that the acceptance comes too late to bind the party. In such a case, the proposal falls with the repeal of the law which induced it. No contract can be made on the basis of it. The negotiations must commence de novo. The Act of 4th May, 1852, authorizing the county of Mercer to subscribe to the stock of the company, contained a proviso, which declared that the acceptance of that act by the company shall be deemed also an acceptance of the provisions of the Act of 11th March, 1851, entitled "An Act fixing the gauges of railroads in Erie county." When the grand jury recommended the commissioners to subscribe, it was expressly required by them that the subscriptions should be made " under such restrictions as may be required by the act of Assembly authorizing them to subscribe stock to said road." So that the grand jury, not tacitly but expressly, required that the subscription should be made under the restriction that the Act of 11th March, 1851, fixing the gauges of railroads in Erie county, should be accepted by the Pittsburgh and Erie Railroad Company. This recommendation was made in May, 1852. Were the terms accepted by the railroad company ? Far from it. On the 18th January, 1853, the stockholders of the corporation, at a meeting called to take action relative to the county subscriptions "and the gauge law, unanimously repudiated the provision in the Act of 4th May, 1852, relative to the gauge law, and determined that "it was inexpedient" at that time "to accept the county subscriptions under this provision of said recited act." The question of ultimate unconditional acceptance or rejection of the subscription was postponed for further consideration at some subsequent meeting. On the 11th April, 1853, the Act of 11th March, 1851 — called the Gauge Law — was repealed. On the 26th April, 1853, being fifteen days after the repeal, the railroad company passed a resolution, directing notice to be given to the commissioners that their subscription had been accepted. On the 5th July, 1853, Messrs. Waugh, Goodwin, and Hubbard were appointed a committee " to secure the bonds of Mercer county at the earliest possible day." They were accordingly secured before Mr. Pennock went out of office. If this constitutes a valid contract, the county is bound up to terms entirely different from those expressed and intended by her constituted authorities. If the transaction were between individuals, the subsequent assent to the acceptance, and the delivery of bonds in pursuance of it, would, of course, constitute a valid contract. But in this case, the grand jury alone possessed the power to hind the county; they made the original proposal, and they alone had authority to vary its terms and enter into a new contract binding on the county. It is not pretended that they have, directly or indirectly, done any act whatever tending to sanction or ratify the illegal proceedings of the commissioners and the railroad company. As the commissioners had no original authority to make the subscription, it is scarcely necessary to say that they possessed no power, by any subsequent action, to ratify their own unauthorized proceedings.
It is true that where an agent transcends his authority, it is the duty of the principal to disavow it as soon as it comes to his knowledge; otherwise he may be precluded from making objections afterwards, to the injury of persons who may have innocently invested their money on the faith of the acts of such agent. Where a class of persons, such as the citizens of a county, are interested, they cannot be expected to bring actions at law in the name of the county so long as the munipical rights are under the control of faithless agents, or until they have had an opportunity to remove them. But as every taxable inhabitant is interested in all measures which increase the taxes, he may apply for an injunction against abuses of that character. The taxable inhabitants of a county, although entitled to great indulgence on account of the limited interest which each one has in the question, may, nevertheless, be affected by delay and acquiescence. How far this principle may protect innocent holders of the county bonds already negotiated, will be a matter for consideration when the proper parties are before us. But, in regard to the bonds still in possession of the railroad company, the delay in making this application has worked no injury which the company have a right to complain of. They knew, or, what is the same thing, they were bound to know, that the subscription was not made by competent authority; and they also knew that the offer of the grand jury had not been accepted with any intention to comply with the terms upon which it was made. They are parties to the wrong, and have no right to profit by it. The allegation that the bonds have been pledged for work done, or to be done, on the railroad, is not sustained. It is not necessary to enter into the merits of the contract with what is called the firm of " S. P. Johnson & Co." Messrs. Waugh, Goodwin, and Gibson, were partners in that firm, and directors in the railroad company when the contract was made. Two of them were on the committee appointed to "secure" the bonds from the county, "at the earliest possible day." That firm had, therefore, full notice of the manner in which the bonds were obtained. The contract to receive payment in county bonds, is neither an assignment nor a pledge of the bonds. They are still under the control of the corporation. The injunction may, therefore, operate on them without inconvenience to any one except the parties to the wrong.
For these reasons I am in favour of declaring that the bonds signed by two of the commissioners of the county of Mercer on the 8th October, 1853, still remaining in the possession of the Pittsburgh and Erie Railroad Company, amounting to the sum of $84,900, are null and void, and not binding on the said county of Mercer. I am also in favour of granting an injunction against issuing and paying out any of the said bonds; and directing that the same be delivered up and cancelled.
Mr. Justice Woodward concurs in the foregoing views, and Mr. Justice Lowrie unites in what is said in regard to the effect of the refusal to accept the offer to subscribe upon the terms under which it was made.
Injunction granted.