Case Name: The Board of Commissioners of Hamilton County et al. v. The State, ex rel. Cottingham et al.
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1886-01-30
Citations: 115 Ind. 64
Docket Number: No. 12,624
Parties: The Board of Commissioners of Hamilton County et al. v. The State, ex rel. Cottingham et al.
Judges: 
Reporter: Indiana Reports
Volume: 115
Pages: 64–92

Head Matter:
No. 12,624.
The Board of Commissioners of Hamilton County et al. v. The State, ex rel. Cottingham et al.
Bailroad. — Township Aid,. — Taking Stock. — Mandate to Compel Collection of Special Tax. — Mortgage.—Foreclosure and, Sale. — Under the act of 1869 (Acts 1869, Spec. Sess., p. 92) a township, upon a proper petition, voted to aid a named railroad company in constructing a railroad by taking the stock of such company to a certain amount. A special tax was levied in 1872 for one-half of the amount appropriated, and the money thus raised was paid to the company, it having done work to that amount in the township. The next year a levy was made to raise the balance of the appropriation, but it has never been placed upon the tax duplicate for collection. In 1875, and before the completion of the road, the company mortgaged all its property and franchises, became insolvent, and ceased work upon the road. At a sale under a foreclosure of the mortgage, all the property and franchises covered by the mortgage were conveyed to a new and independent corporation, sustaining no relation 'to the old company. The new company has completed the road through the township. It has neither issued nor offered to issue any capital stock to the township, but seeks by mandate to compel the collection of the second half of the taxes levied in behalf of the old company.
Held, that no right to the appropriation passed to the new company by the mortgage and foreclosure proceedings, and it is not entitled to the money voted to the old company, and can not enforce the collection of the taxes, as it can neither demand the appropriation as a donation nor in return for stock other than that of the company to aid which the appropriation was made.
.Same. — Aid by Way of Donations and Taking Stock. — Statutory Distinction.— The statutes of this State create a distinction between appropriations by townships, by way of donations to railroad companies, and by way of taking stock therein; and the people to be taxed have a right to determine in advance, and to impose a condition', that the amount appropriated shall be by way of taking stock; when this has been done, the money can not be demanded by the railroad company as a donation. Same. — Appropriation a Contract. — An appropriation by a township by way of taking stock in a railroad company, when within the authority given by the statutes and when the subscription is made, will be considered as a contract, just as a subscription for stock in such company by an individual is a contract, and the township is entitled to the same protection as a private subscriber.
Same. —Subscription to Stock. — Sow Made. — Under the act of 1869, concerning aid to railroads, the simple voting of aid by a township is not a sub■scription to the stock of the railroad company, but the subscription is ■to be made by the board of county commissioners, which, for that purpose, acts as the agent of the township, and until the board exercises such power there is no perfected or enforceable subscription.
Same.- — ■ When Appropriation Becomes a Chose in Action. — Until the railroad company to which aid has been voted occupies a position which will enable it to enforce whatever right or interest it may have in the appropriation, such appropriation is not a chose in action- in its favor which it can assign or mortgage.
Same. — Sale of Railroad Under Foreclosure. — Release of Subscribers to Stock.— Under the act of 1865 (Acts 1865, Beg. Sess., p. 66; B. S. 1881, section 3947; et seq.), relating to the sale of railroads and the formation of new corporations, all subscriptions to the stock of a railroad company whose property has been sold under foreclosure proceedings are discharged, unless there has been a previous adjustment, and such act of 1865 is applicable to subscribers who have become such under subsequent statutes.
From the Hamilton Circuit Court.
A. F. Shirts, G. Shirts, W. R. Fertig, W. S. Christian, I. W. Christian, J. Stafford, T. E. Boyd, T. E. Ballard, E. E. Ballard, P. S. Kennedy, S. C. Kennedy, J. H. Burford and W. T. Whittington, for appellants.
H. Crawford, T. J. Kane and T. P. Davis, for appellees.

Opinion:
Zollars, J.
The Midland Railway Company, an appellee in this action, claims to be the successor of the Anderson, Lebanon and St. Louis Railroad Company, and as such en titled to an appropriation voted in aid of the latter company by Noblesville township, in Hamilton county. The whole of the amount so voted has not been placed upon the tax duplicate for collection. Appellee Cottingham, and the Midland Railway Company, as relators, filed a complaint in the court below against the board of commissioners of Hamilton county, and James W. Crooks, as the. auditor of that county,, in which they asked that, by a writ of mandate, Crooks-should be compelled to place the amount upon the tax duplicate for collection, and that the county board should be compelled to make an order for its collection. An alternative writ of mandate was issued and served, and to that writ appellants made return. A demurrer was sustained to the return, and a peremptory writ ordered.
Passing over the question as to whether or not-, in a case like this, the railway company may be a relator, and other questions which do not go to the merits of the real controversy, we direct our attention to the return by appellants, as that does present the controlling question in issue.
The following summary embodies such portion of the facts averred in the return as needs to be here set out: In 1871, a proper petition was presented to the board of commissioners of Hamilton county, asking that Noblesville township should appropriate $28,500 to aid the Anderson, Lebanon and St.. Louis Railroad Company in constructing a railroad through, the township, by taking stock in that company. In accordance with the petition, an election was ordered and held, and the amount voted for the purpose of taking stock in the-railroad company. At its June session, 1872, the county board granted the prayer of the petition, and levied a special tax upon the property m the township to raise one-half of the amount appropriated. At its June session, 1873, the county board levied a special tax to raise the balance of the amount appropriated. The tax was ordered for the purpose-of aiding the railroad company by taking stock therein.
The amount of the first levy was collected, and the rail road company having done work equal to that amount upon its line in the township, the money was paid over to it, and the township received stock in return.
The second levy has' not been placed upon the tax duplicate for collection.
In 1875, and before the company had completed the construction of its road through the township, it executed a mortgage upon its franchises, rights, titles, privileges afid immunities, and upon all of its property real and personal, and choses in action of every description, to two persons, as trustees for its bondholders. In 1878, suit was commenced in the circuit court of the United States for the District of Indiana, to foreclose the mortgage. A decree of foreclosure was rendered by that court in 1883. In 1885, W. P. Fish-back, master in chancery, by order of the court, sold all of the property covered by the mortgage. It was purchased by Thomas C. Platt, as trustee of the bondholders. The sale was confirmed by the court, and the master in chancery was ordered to, and did, convey the property to appellee, the Midland Railway Company, a corporation organized by the purchaser and his associates for the express purpose of taking, in its own name, the title to the property so sold and purchased.
Immediately after executing the mortgage, the Anderson, Lebanon and St. Louis Railroad Company became and remains insolvent, and ceased work upon its road. After the purchase the Midland Railway Company took possession of the property, and, at the time this action was commenced,, had so far completed the construction of the road through the township that construction trains might pass over it, but it is not in a condition for passenger and freight traffic.
The Midland Railway Company is a new and independent corporation, sustaining no relation to the old company. It has not issued nor provided for the issuing of any capital stock to Noblesville'township on account of the taxes sought to be collected, nor has it made, or offered to make, any adjustment in relation to stock.
Upon the facts so set up in the return, we think it clear that the Midland Railway Company is not entitled to the money voted to the old company, and hence has no interest in the collection of the taxes. There is a clear distinction between appropriations by townships, by way of donations, and by way of taking stock in the company. The appropriation in controversy was voted under the act of 1869 (Acts 1869, Spec. Sess., p. 92, et seq.). That act, as all subsequent acts and amendments, recognizes the distinction. The first section of that act provided that, when a petition was presented to the county board, asking that a township should make an appropriation by " taking stock in or donating money to a railroad company," etc., it should be the duty of the board, etc. See, also, section 14 of the same act; also, Acts 1873, p. 185, section 2; Acts 1875, Reg. Sess., p. 121; Acts 1877, Reg. Sess., p. 111; Acts 1879, p. 46; R. S. 1881, sections 4045, 4058, 4069, 4070.
The people to be taxed have a right to determine in advance, and, by their petition to the county board and by their vote, to impose a condition, that the amount appropriated shall be by way of taking stock in the railway company. And when they have thus imposed the condition the money voted can not be bestowed upon, nor successfully demanded by, the railway company as a donation. Faris v. Reynolds, 70 Ind. 359; Bittinger v. Bell, 65 Ind. 445; Irwin v. Lowe, 89 Ind. 540; Brocaw v. Board, etc., 73 Ind. 543; 1 Rorer Railroads, 125; 1 Wood Railway Law, 306, section 119.
The people of the township might be willing to vote money to be invested in the stock of the railroad company,and entirely unwilling to vote it as a donation. The stock represents the property of the corporation. The township, as a holder of it, would be entitled to vote in the meetings of the stockholders, and would thus, to some extent, have a voice in the government of the corporation and in the management of its property. In the case in hearing the amount was not only voted to be invested in stock, but it was voted to be invested in the stock of the Anderson, Lebanon and St. Louis Railroad Company. No one has a right to demand the money without giving the stock of that company in return. The Midland Railway Company has no right to demand the money as a donation. It can not demand the money in return for stock, because it has no power to issue the stock of the Anderson, Ledanon and St. Louis Railroad Company; and it can not give its own stock in return, because neither the township nor the taxpayers thereof have agreed to receive its stock in lieu of the stock of the old company. They can not be coerced into such an agreement. To hold otherwise would be to hold that, although the township voted the money for one purpose, it may be taken and appropriated to an entirely different purpose. It may be observed, too, that the Midland Railway Company does not offer, nor has it proposed to offer, its own stock in return for the money.
For the reasons above stated, it must be held that the right to the money voted by the township did not and could not so pass to the Midland Railway Company, by the mortgage and foreclosure proceedings, as that it can recover it from the county or township, or demand that the tax shall be placed upon the duplicate and collected. The Midland company has no right in or to the appropriation that it can in any way enforce, because to accord it any such right would be to impose an obligation upon the township that it never in any way assumed, and to take its money without returning that for which it was voted.
This case is altogether different from the cases of Scott v. Hansheer, 94 Ind. 1, Jussen v. Board, etc., 95 Ind. 567, and Board, etc., v. Center Township, 105 Ind. 422. In those cases the appropriations were in the way of money donations! In such cases, the purpose of, and the consideration for, • the donation is the building of the railroad through the township. In such cases, neither the township nor the taxpayer has any interest in the corporation or its property; nor do they, by the donation, directly or indirectly contract for any such interest. When the railroad is built through the township, whether by the original company, or by another company that has succeeded to its rights, the whole purpose of the donation is accomplished. Not so here. Had the original company continued to be the owner of the road, and completed its construction, the township, by the payment of the amount voted and yet unpaid, -would have been entitled to the amount in the stock of the company, and thus, as we have said, would have been a part owner of the corporate property, interested in the corporation, and entitled to a voice in the management of its affairs. Having reached the conclusion we have, it is not necessary for us to examine, critically, as to whether or not the mortgage was so specific in description as to cover the uncollected appropriation. As it does not appear, by anything shown in this case, that there is any person or railway company entitled to demand and receive the money, should it be collected, the court'will not lend its aid to accomplish a useless ceremony and impose a useless and unjust burden upon the taxpayers of the township by ordering the tax to be placed upon the duplicate and collected.
Filed Jan. 30,1886.
The judgment is reversed, at the costs of appellees,and the cause remanded, with instructions to the court below to ovérrule the demurrer to appellant's return to the alternative writ.