Court Opinion

ID: 6604081
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:10:32.711369+00
Date Added: 2024-06-11T15:58:07.499441
License: Public Domain

. OjitoN, J.
I most respectfully dissent from the majority opinion of the court in this case.
The company (and only one company need be mentioned) for whose benefit these bonds of the town of G-ratiot were voted to aid in the construction of its railway, in exchange *469for its stock, in 1871, bad located the only line deemed feasible, and procured some right of wayj and nothing further was done, and the scheme for the time was abandoned. In 1880, by certain contracts sanctioned by the supervisors of said town, the bonds voted, together with the stock of that old company, were placed in the hands of the secretary of state, and the bonds were to be delivered to the Chicago, Milwaukee & St. Paul Railway Company upon the completion of said road, and the old company sold for a mere nominal consideration to said company all the property and franchises it had, which consisted of this small portion of the right of way, and the inchoate right to these and the bonds of other towns on the line of the road, and thereafter said company completed the road, and now owns and operates it in connection with, or as an extension of, its main lines of road, and demands in this proceeding the delivery of these bonds, and offers in exchange for them the stock of that old company. That old company was virtually dissolved by the sale of all its property and franchises, and long since became funcbus officio. It never really issued any stock, because none has ever been delivered, and the right to issue any ceased with its dissolution. It never constructed a foot of road and owns none, and the only road contemplated by the original proposition and the subscription was built and is owned by another company.
This is substantially the case. It is not claimed that these contracts in relation to the bonds have any binding force upon the town, and that there was any authority in the supervisors to make such contracts cannot be lawfully asserted. That the stock of the old company (if it ever issued any) is perfectly worthless, and does not represent anything of value whatever in the road or franchises, is not disputed. It has long since been the settled law by the decisions of this court that towns cannot donate their bonds for such a private purpose. The only ground upon which *470town aid to a railway can be sustained, is that the town receives an adequate pecuniary consideration for it beyond the general benefits of the road to the people of the town. The stock of the corporation may be such a consideration, but it is only such when it is based upon and represents the railway itself passing through such town, and to build which the aid has been voted by the taxable inhabitants. The only principle upon which a town can thus aid in the construction of the road in consideration of stock representing so much interest in the road itself, is that a town might itself build such a railroad and own the same, and tax the inhabitants therefor. It is idle and childish to claim that this stock is of any value whatever, or represents anything of value. Courts deal with substance and not with shadows. But it is sufficient that it does not represent any part of this railway to aid in the building of which the bonds were voted. If this town is compelled in this case to deliver its bonds as claimed, and to receive in exchange for them this stock of the old defunct corporation, which has no interest at all in the road and never had, the case of Whiting v. S. & F. du L. R. R. Co., 25 Wis., 167, and the numerous cases following it in this court, will be substantially overruled, and the many cases to the same effect in other courts disapproved. The following sentence from the able opinion of Chief Justice Dixon expresses in few words the only principle upon which such town aid can be sustained and justified: 11 The city, town, or county becomes a fart owner of the road to the extent of the stock taken! At the time when the bonds are exchanged for the stock of the company, such stock must represent an equal interest in the road, and the town become a part owner of the road to that extent, the same as if it had directly constructed it or had been a party in doing so. After that, if by the fortunes of its management such stock becomes worthless, the town cannot complain, for it has had a voice in that management. Itiois a very poor argument *471that because such may be and often is the result of such an enterprise, the stock need not represent anything when received. The company may afterwards lose the road; it must, however, own the road when the stock is to be delivered. If this town can now be forced to part with its bonds to a company which built and owns the road, in exchange for the stock of a company which no t only has no interest in the road, but owns no property or even franchises, and, in connection with the road contemplated, cannot be said to exist as a corporation, then the language of the opinion in. Sweet v. Hulbert, 51 Barb., 316, adopted by the chief justice in the above case as.applicable to a town donation to a private corporation of its bonds, has even more force than when there used: “ If this can be done, it is legal robbery; less respectable than highway robbery.” It is said that the old company had a right to sell or assign the enterprise or construct the road by itself or by its assigns, but it does not follow that the bonds can be claimed without the consideration of stock which represents and is based upon the road. If the work can be assigned, together with these bonds, as the property of the old company, the assignee must succeed to the liabilities as well as to the rights of that company.
The unworthy suggestion to justify such an outrageous departure from the principle established in the above case, that the town has got the road and its benefits, is answered in the above opinion. “ The two things must unquestionably concur, in order to sustain the tax, [an interest in the road itself represented by the stock, and the general benefits to the town from the road within it], but the last alone, which may be termed the benefit incidentally arising to the .public, is dearly insufficient for that purpose.” If the Chicago, Milwaukee & St. Paul Railway Company is entitled to these bonds under any circumstances, which is doubted, it must give the town in some way, as a consideration, an *472equal interest in this road either by its stock or otherwise. It makes no difference in principle that the bonds and stock were prepared in this form, before the road was constructed. They have never been delivered, and the case is as if. this company having now, either by a nominal purchase from the old company or without it, constructed this road, should demand that the town issue bonds to'the amount named, and tender in exchange for them the newly issued stock of this old defunct company. I will not say that this would be “robbery,” but it most certainly appears like the worst kind of a fraud, and a cheat unworthy of this great company.
The word “ equity,” at least, ought not to be used in connection with such a consummation.
By the Gou/rt.— The order of the circuit court is affirmed, with costs, and the cause remanded for further proceedings.