Court Opinion

ID: 7041127
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:50:24.02639+00
Date Added: 2024-06-11T16:11:21.411610
License: Public Domain

On petition for a rehearing.
Biddle, J.
The appellee presents his petition with marked ability and earnestness, and mainly relies for its support on the case of Harshman v. Bates County, recently decided by the Supreme Court of the United States. See 3 Dillon C. C. 150, and St. Louis Central Law Journal, June 9th, 1876, p. 367. The case may be briefly stated as follows:
The voters of Mount Pleasant township, Bates county, Missouri, in May, 1870, authorized the county court to subscribe ninety thousand dollars to the capital stock of “ The Lexington, Chillicothe and Gulf Railroad Company.”
In July, 1870, another corporation was formed, known, as “The Pleasant Hill Division of the Lexington, Chillicothe and Gulf Railroad Company.”
In October, 1870, the two companies were consolidated, and became a corporation by the name of “ The Lexington, • Lake and Gulf Railroad.”
In January, 1871, the county court, upon the supposed authority of the vote to “The Lexington, Chillicothe and Gulf Railroad Company,” subscribed the ninety thousand dollars directly to “ The Lexington, Lake and Gulf Railroad.”
It will be plainly perceived that the two cases differ in their premises, in this: In the case cited, the citizens of Mount Pleasant township voted to authorize the county court of Bates county to subscribe stock to “ The Lexington, ChiL lico'the and Gulf Railroad Company.” This authority wa§ never exercised, but after the consolidation of the road to *573which the stock was voted with “ The Pleasant Hill Division of the Lexington, Chillicothe and Gulf Railroad Company,” the two roads constituting “The Lexington, Lake and Gulf Railroad,” the county court subscribed the stock, on the supposed authority of the original vote, directly to “ The Lexington, Lake-and Gulf Railroad,” the new corporation. Here, there being no subscription to “The Lexington, Chillicothe and. Gulf-Railroad Company,” hence that corporation could carry no obligation against the subscribers into the new consolidated company. In the case we are deciding, the citizens of Mount Vernon petitioned the common council to subscribe in their bonds to aid “The Mount Vernon and Grayville Railroad Company,” and the order subscribing the bonds was accordingly made, before the roacl was consolidated with “The Grayville and Mattoon Railroad Company,” the two roads thus becoming “The ChL cago and Illinois Southern Railroad Cofnpany.” “The Mount Vernon and Grayville Railroad” corporation therefore carried the obligation into the new consolidated com-i pany. True, the bonds were not issued until after the consolidation, but this is immaterial.. They may be issued at any time the obligation requires, as the instalments may become due. A portion of them in this case, indeed, still remain to be issued. The-obligation to issue the bonds tq the new corporation, after the consolidation, is the same as it was to issue them to the company to which the aid was given before the consolidation.
It is not the bond that gives validity to the subscription, but the subscription that gives validity to the bond. And this difference runs throughout the decision cited, distinguishing it from a line of decisions which fully support the opinion pronounced in'this case. The first sentence of the learned judge’s opinion delivered on circuit, after stating the premises of the case, is as follows:
“This case contains an element not in the Cass county township bond cases decided at this term on demurrer, grow*574ing out of the fact that here the subscription was made after the vote was taken, to a new or consolidated company.”
He also points out a further distinction—that in the case he was deciding, the substantial facts were recited on the face of the bonds, and thus gave notice to all persons who dealt in them. And near the close of his opinion he distinctly states, that if the subscription had been made to the road to which'it was voted before the consolidation, the bonds would have been valid. His language is as follows:
“ But the ease in hand is one where no subscription was ever made to the company to which it was voted; and it might be conceded, that if it had been actually made, the right to it would pass by operation of the statute to the new company, without the concession involving the consequence of a liability upon a subscription made for the first time after the new corporation was formed. ”
This view of the case was approved by the Supreme Court of the United States.
The distinction taken in the case cited between a subscription to a railroad company made before consolidation, and a subscription to the new company after consolidation, by the same authority, proves the principle upon which the case before us is decided.
The petition for a rehearing is overruled.