Court Opinion

ID: 8124393
Source: CourtListenerOpinion
Date Created: 2022-09-09 15:04:17.69464+00
Date Added: 2024-06-11T16:39:09.800877
License: Public Domain

Matthews, Justice,
concurred fully in the reasoning and conclusion of the foregoing opinion.
*870[ÍTote. The manuscript opinion of the supreme court of Tennessee, cited in the foregoing opinion, and printed in the briefs of counsel, is herewith appended, as it is not elsewhere accessible in print:]
OPINION.
Mayor and Aldermen of Pulaski vs. Gilmore & Cherry O'Connor & Co. (Nashville.)
In 1874 the directors and commissioners of the Memphis & Knoxville Railroad Company petitioned the board of mayor and aldermen of the town of Pulaska for a subscription of $40,000 to their capital stock, on such terms and limitations as the board might see proper. The question was submitted to a vote of the people and approved by the requisite majority. The proposition involved the idea of issuing bonds having twenty years to run, each of the denomination of $500, bearing eight per cent, interest; stock to be issued to the corporation equivalent in amount to the bonds thus proposed to be issued. As part of the proposition it was agreed that these bonds of $500 each were to be issued to pay for the .expenses incident to a survey of the line of the road through'Giles county. These bonds were issued and came into the hands of the parties plaintiffs in this ease before due, and are the basis of the present suit.
We may assume, for the purposes of this opinion, that the proceedings, if not perfectly regular, have nothing in them that can fix any right to urge it against the present holders. They stand as innocent purchasers for value. The only defense that can be made availacle against the liability sought to be enforced, is a want of authority in the corporation to issue the bonds in question. This is a defense at all times available in such a case, unless it may be the doctrine of estoppel in pais may be an exception allowed in certain cases.
The question then is, did the corporation, under the constitution and laws of the state, have the power to issue these bonds? If so, plaintiff was entitied to his recovery on the coupons; if not, defendant should have had a verdict. It is the case of a subscription to ¡lie stock of a contemplated railroad. The fact that these particular bonds Vv ere to be applied to pay for a specific part of the work necessary in the construction of the road, cannot alter the character of the bond, nor aid in arriving at a solution of the question of power. Whether to be used for this, or any other purpose connected with the construction of the road, the case would be the same. The proposition submitted to the people, and the contract attempted to be made, was simply a subscription for $40,000 of stock in the corporation, which was expected to build the road, and the bonds of the corporation (thesethree included) were to be issued in paying for said stock. By our present constitution, which in this respect is the same as that of 1834, § 2, art. 29, the general assembly shall have power to authorize counties and incorporated towns in this state to impose taxes for county and corporation purposes, respectively, in such manner as shall be prescribed by law, and all property shall be taxed according to its value upon the principles established in regard to state taxation. By the constitution of 1870 there is added: “But the credit of no county, city or town, shall be given or loaned to or in aid of any person, company, association, or corporation, except upon an election to be first held by the qualified voters of such county, city, or town, and the assent of three-fourths of the votes cast at such election.”
We need not examine, discuss, or decide the question whether the addenda gives any additional or different power to the legislature from that conferred in the first clause of the section quoted; that is, to levy taxes for county and corporation purposes, respectively. It suffices that it was decided many years since that a railroad was a county and corporation purpose, and taxes might *871bo levied under authority from the legislature, to be used in aid of such enterprises. It is not improper to say that while this is all now settled in our state as an original question, the writer oí this opinion did not and does not now concur in its correctness. The question, however, is whether, under the statutes existent at this time these bonds were authorized, the power to issue them is given. We need not, as we have said, go into the question of the constitutional power to authorize them. We need scarcely say that in order to the issuance of such bonds there must be an express authority given the city or town, either by a general law of the land, or by a special law for this purpose. No such power can be implied or can bo inferred from any of the ordinary powers of such corporations. “No argument,” says Judge McKinney, in the caso of Cook v. Sumner Spinning & Manuf’g Co. 1 Sneed, 714, “can be necessary to show that the authority to purchase stock in a manufacturing company, or to issue bonds for the payment thereof, cannot be derived simply 'from the power of taxation conferred in a charter.” See, also, 9 Heisk. 584.
Taxation and payment of all liabilities directly from this moans is the normal work of action by such bodies. .Bonds on time are not incident to this, and can only be issued when authority is conferred by law. The old act of .1852, (’■ode, § 1142, and other provisions of that article, is the basis in our general law for such action as may be taken by counties and corporations in subscribing for stock in railroads running to or contiguous to such towns. It is too clear for argument that no such authority is found in these sections. The act of January, 1871, intended to regulate elections, under the constitution, in first, section, simply embodies the authority contained in the constitution as to counties and towns levying taxes for county and corporation purposes, prescribing in the subscriptions the conditions and regulations by which the power shall be executed. But there is nothing in this act that can possibly be construed on any fair principle of construction to authorize the issuance of these bonds in payment of a subscription of stock in a railroad company. What was intended by the reference to “execution of all necessary order's, bonds, and payments, in order to carry out” a loan or credit, we need not now determine. See section 2; Code, § 491a. It suffices that there is no authority in this act to issue such bonds as are the basis of this suit; the same having been issued without authority of law, are simply void, whether in the hands of innocent .purchasers or others.
Reversed, etc. [Signed] "Freeman, J.