Chicago, Kansas & Western Railroad v. Ozark Township

46 Kan. 415

• Court: Supreme Court of Kansas
• Decided: January 15, 1891
• Status: Published

Opinion

The opinion of the court was delivered by

Valentine, J.:

The court below, in rendering judgment in this case, delivered the following opinion, to wit:

“This is an action to restrain the issuance of bonds claimed to have been voted by Ozark township to pay for stock in the Colony, Neosho Falls & Western Railroad Company. It is conceded that a proper petition was presented, the order made, notice given and the election held according to law. It appeared, however, that, three days before the day named for the election, the voters of the township and the railroad company alike became convinced that the proposition, which was for a subscription for stock to the amount of $18,000, and the issuance of bonds- therefor, would be lost, but it was believed that a less sum could be voted. Thereupon, as the result of a meeting of the board of directors with some 50 citizens of the township, the company offered, if the proposition was carried, to, and did, relinquish its claim to all but $10,000 of the bonds, reserving the right to issue only that amount of stock. Such offer and relinquishment, duly executed by the proper officers of the company, were thereupon published, posted, and mailed to the voters, who were thereby induced to and did vote for the bonds, so that the proposition was carried. But for such action, it would have been defeated. The company filed its relinquishment to such excess with the county clerk. The board duly canvassed the vote, declared the proposition carried, and ordered the clerk to subscribe for $10,000 only of said stock, upon the, terms and conditions stated in the petition, order, and notice, which was done. The company, having built its road as provided in the proposition, offered to deliver the proper certificates for $10,000 of said stock, and demanded the issuance and delivery of the bonds. No claim is made to the $8,000 excess, but the relinquishment thereof is treated as valid and effectual by both parties.

“The exact question then is, whether upon a petition, order, notice, and election, under the act in question, (Comp. Laws of 1885, pp. 783-4,) authorizing a subscription for a certain amount of stock, a township can be legally compelled to accept and pay for a less amount, under the circumstances appearing in this ease. The sole authority for such subscription is the statute, and §69 provides: ‘Before such subscription . . . shall be made, the question shall first be submitted to the qualified electors of the township at a special or general election, as . specified in the petition, which petition shall also designate the railroad company, and the amount of stock proposed to be taken.’ The next section requires that such petition shall be presented, the board convened, and the order made, ‘embracing the terms and conditions set forth in the petition.’ Manifestly,- the presentation of such a petition, signed by two-fifths of the resident tax-payers, is a condition precedent to the order of the board, and the order for and the affirmative vote upon the proposition so submitted are conditions precedent to the subscription. The commissioners are the agents of the township. (U. P. Rly. Co. v. Comm’rs of Davis Co., 6 Kas. 256; L. L. & G. Rld. Co. v. Comm’rs of Douglas Co., 18 id. 169; Turner v. Comm’rs of Woodson Co., 27 id. 314.) But such agency is special and limited, and rests upon the express assent of the voters. (Lewis v. Comm’rs of Bourbon Co., 12 Kas. 186.) The preliminary steps constitute the authority of the commissioners to make the subscription, which is the contract. (U. P. Rly. Co. v. Comm’rs of Davis Co., supra.) The vital question is, whether the subscription is valid, and this must depend upon the power of the commissioners to make it under the existing facts. That power, we have seen, ‘rests upon the express assent of the voters,’ and that assent must be shown in the manner provided by law. There must, of course, be a valid election authorizing, not a subscription, but the subscription actually made. (Gulf Rld. Co. v. Comm’rs of Miami Co., 12 Kas. 230; Lewis v. Comm’rs of Bourbon Co., 12 id. 186.) And before the election there must be a petition, not for a proposition to subscribe generally, but designating ‘the amount of stock proposed to be taken;’ and then thirty days’ notice must be given. A less time invalidates the bonds that may be voted. (George v. Oxford Township, 16 Kas. 72.) A special election, as the court says in the case last cited, ‘depends for its validity upon being legally called, and upon legal and proper notice thereof being given.’ Now, if we attempt to uphold this subscription upon the argument that the reduction of the amount by the company, accepted and acted upon in good faith by the voters, was equivalent to a change in the proposition, we are met by the difficulty already indicated by the citation of authorities, viz., that there was no petition, order or notice for an election upon such a modified proposition, all of which steps are jurisdictional. Besides, the people had only two days’ notice upon which to consider and discuss the grave matter of placing a lien upon all the taxable property of the township. They had already discussed, and, it appears, condemned the pending proposition. Who shall say that they might not have repudiated this new and modified one, had time for deliberation and discussion been given? But, passing over all questions as to the petition and notice, the election itself, when canvassed in any manuér known to the law, did not authorize the subscription made. The will of the voter must be determined from the ballot; its language must govern when the terms used are such as to make known his will beyond a reasonable doubt. (Clark v. Comm’rs of Montgomery Co., 33 Kas. 202.) It cannot be that the terms used, taken in connection with the proposition submitted, plain and certain as they were in the case, can be varied or contradicted by any prior understanding of the voters, however general, that their ballots should be held to mean something different. If elections are to depend upon such loose and uncertain considerations, then a government resting upon the ballot is indeed precarious.

“Nor can this subscription be upheld upon the proposition that the greater includes the less. ' Possibly, that might be urged if this was a donation or gift, merely, but it is not. This was an attempt to subscribe for stock in a railroad company, and to pay therefor, as any other subscriber, dollar for dollar. It was a business venture which, however hazardous, the township might engage in, provided lawful methods were observed. If A offers to take stock in a corporation to a given amount, which offer is accepted, can he be legally compelled to take and pay for a less amount? Every man has a right to determine the quantity of any commodity he will buy, and the seller may not be allowed to coerce him into taking less. And a township contracting for stock in a railroad company is after all only a contracting party, and, being charged with the liabilities, it must have the corresponding rights of any other. So, here, this township had the right to determine what amount of stock it would take, and it could only determine it in the way provided by law. Solemn legal formalities, carefully designed to protect the tax-payer against the improvident assumption of grievous burdens by the voters, are not to be lightly set aside by the resolutions of a casual meeting of citizens. This is a government of laws. It is free because it rests on the consent of the governed; but that consent must be given by certain well-defined methods sanctioned by law. The vast volume of municipal debt incurred in aid of railroad building is a sufficient reminder that the legal barriers against the hasty assumption of such burdens are none too strong, and certainly should not be weakened by judicial interpretation. The conclusion is that the subscription in question was made without lawful authority, and is void.

“It is urged, however, with great earnestness, and with reference to the numerous authorities, that the township is estopped from dénying the validity of the subscription, the road having been built in reliance upon it. The law of equitable estoppel, however, cannot be invoked, for two reasons: First, the subscription, which is the contract, being void, no legal rights in favor of a party to it can be founded upon it; (Sheldon v. Donohoe, 40 Kas. 346;) and second, because the railroad company had full knowledge that the preliminary steps did not warrant the commissioners in making the subscription. The company did not build its road rightfully relying upon the validity of the subscription, for it initiated and carried out the very proceedings that made the subscription void. (Bigelow, Estop., pp. 466, 467; Bernstein v. Smith, 10 Kas. 60; People v. Cline, 63 Ill. 394.)

“After all, it seems that the simple inquiry is whether the forms of law have been complied with so far as to make a valid contract. If they have, it should be sustained; if they have not, it must fall. The court cannot make and then enforce a contract. Certain solemn forms of procedure have been prescribed to protect the tax-payers, that nothing be done without their consent. These are all the protection the tax-payer has, and should not be frittered away by judicial construction. So says our supreme court in substance in Lewis v. Comm’rs of Bourbon Co., 12 Kas. 186. It must be remembered that this is not a case where the municipality has received the fruit of another’s labor or expenditure, and refuses to pay therefor, although retaining and enjoying such fruits, as in Sleeper v. Bullen, 6 Kas. 300. Nor is it the case of part performance by one, and acceptance by another. The company owns its road; it has parted with nothing which the township has received; the township has accepted and appropriated none of its materials or labor. The road was not built for the township, but for the company. It was built presumably for profit, as a legitimate business enterprise, and now the township declines to accept and pay for the stock offered, for the reason that it never'contracted to do so. (M. K. & C. Rly. Co. v. Parsons, 24 Kas. 170.)

“The injunction against the issuance of the bonds should be made perpetual.”

1. Railraoadbonds — vana election. The paramount question presented in this case is substantially as follows: Where an election has been held in a township authorizing a subscription to the capital stock of a railroad company to the amount of $18,000, and authorizing the issuing of a like amount of township bonds to the railroad company in payment for such stock, but three days prior to the election it was agreed between a portion of the electors of the township and certain agents of the railroad company that, if the election should be in the affirmative, the amount of the subscription and of the bonds to be issued should be only $10,000, and the election resulted in an affirmative vote authorizing a subscription to be made and bonds to be issued in the amount of $18,000, but immediately afterward, in a proceeding instituted by a tax-payer and an elector of the township, the officers and the railroad company were enjoined from making a subscription or issuing or receiving an amount of bonds exceeding $10,000, and the subscription was then made for $10,000, and the railroad company accepted the subscription and relinquished all claim to an amount of bonds aboye that amount, and afterward the railroad was built and all the other conditions imposed upon the railroad company by the proposition voted upon were complied with and fulfilled by the railroad company in pursuance of such election and oí such subscription, is the railroad . A ' company entitled to the bonds of the township to the amount of $10,000? We think this question must be answered in the affirmative.

2. Not a bribe to voters. It is contended, however, by the township that the aforesaid agreement between a portion of the electors of the township and the agents of the railroad company, that, if the election should result favorably to the subscription and the issuing of the bonds, the amount of the subscription and the bonds should be only $10,000 instead of $18,000, was in effect or tantamount to a bribe to the voters, which rendered the elec£jon absolutely and wholly invalid. There certainly cannot be anything in this. And it does not appear that the court below so held.

It is also claimed that the election was not an election at all for any purpose, for the following reasons: First, it is claimed that it was not an election for a subscription and bonds to the amount of $18,000, for the reason that a portion of the electors and the agents of the railroad company agreed otherwise; and, second, it is claimed that it was not an election for a subscription and bonds in the amount of $10,000, or any other amount less'than $18,000, for the reason that no valid election was ever called, ordered or provided for, for any less amount than $18,000. Now we think the election was in fact an election, and that prima fade, and upon the records of the county and township, it was an election for a subscription and bonds to the amount of $18,000, but in all fairness and justice it was an election for a subscription and bonds in a sum not exceeding $10,000. We think the election was valid to the extent at least of authorizing a subscription and the issuing'of bonds to the amount of $10,000; or, in other words, it was not wholly void.

3.POWER of township officers. It is also claimed that there cannot in any case be a subscription made or bonds issued for any less amount than that actually voted for by the electors of the township. This certainly cannot be true, as has already been held by this court in the case of Turner v. Comm’rs of Woodson Co., 27 Kas. 314. This question has also been virtually decided in the same way by the supreme court of Alabama. (Winter v. City Council of Montgomery, 65 Ala. 403; same case, 7 Am. & Eng. Rld. Cases, 307.) This last case cited is as nearly in point, as nearly applicable, as nearly analogous, to the present case as it could well be, and we know of no authority to the contrary; and the principle enunciated in the cases cited is substantially, that when authority is given to the officers of a public corporation, by an election or otherwise, to issue a certain amount of the bonds of the corporation, the officers will have the power and the right, whenever there is a sufficient reason therefor, to issue a less amount of the bonds of the corporation. This we think is good law; and we think there was and is ample reason for the issuing of Ozark township bonds to the amount of $10,000 instead of $18,000. Besides, it is evidently greatly more to the interest of Ozark township that only $10,000 in amount of its bonds should, be issued than that the whole amount of $18,000 of its bonds should be issued. The township has by the election and subscription procured the railroad to be built, and has obtained all that it expected to obtain from the railroad company. The railroad has been built and equipped in accordance with the election and subscription, and it is now to the interest of the township that as small an amount of its bonds should be issued as is possible. The stock of the railroad company is probably worth but little, and the issuing of the bonds for such stock is virtually a donation. This is nearly always the case in similar transactions, and all well-informed persons know it. Undoubtedly the railroad company would be perfectly willing to issue to the township $18,000 of its stock if it could thereby procure a like amount of the township bonds. Such a thing would be very much like giving nothing for something. The object of the law in permitting public corporations to subscribe for stock in railroad companies, and to issue their bonds in payment therefor, is not intended as a business transaction like that consummated by an individual when he purchases stock and pays therefor in money or in something else. It is merely for the purpose of procuring greater facilities for travel and transportation for the general public, which is always considered as a public purpose, and not merely as a private purpose, enterprise, or business transaction. The act itself authorizing counties, townships and municipal corporations to subscribe for stock in and to issue bonds to railroad companies is entitled “An act to enable counties, townships and cities to aid in the construction of railroads,” etc. (Laws of 1876, chapter 107.) This shows that the main object of the act was to enable counties, townships and cities “to aid in the construction of railroads,” and was not to permit such corporations to engage in such transactions as a mere business venture, or as an investment in stocks, or a speculation in bonds and stocks. Twenty years ago it was said by this court, in the case of Comm’rs of Leavenworth Co. v. Miller, 7 Kas. 528, 529, 532, among other things, as follows:

“If a railroad company is purely a private corporation, and if the construction and operation thereof is purely a private purpose, neither the government nor any municipal corporation has any right to become a stockholder therein. Governments were not organized for the purpose of engaging in private enterprises or private business, but only for the transaction and promotion of public aifairs. Even if the purchase of stock in a railroad company should be a paying transaction as an investment, (which, unfortunately for counties and municipal corporations, it is not,) still a governmental organization would have no right, for that reason alone, to engage in it, for governmental organizations are not created for purposes of specu lation, nor are they created for the purpose of enriching' the organization as such, but only for the purpose of promoting the general welfare of the individual members thereof as citizens. The increased facility for travel and transportation is the main object in the creation of railroads, and this it is which constitutes a railroad a public purpose. All other benefits, though belonging of right to the public, are simply incidental.” (Pages 528 and 529.)

“The opening of hotels, the running of stage-coaches, hacks, drays, etc., have never been considered as incumbent upon governments. Governments have never undertaken to keep hotel, run stage-coaches, etc., and it has never been considered that there was any moral or legal obligation resting upon them to do so. But the duty of opening highways, canals, and other like improvements for the accommodation of travel and commerce, has always been considered most binding upon all governments.” (Page 532.)

In the ease of Winter v. City Coimcil of Montgomery, above cited, the supreme court of Alabama used the following, among other language:

“We do not discover that the city council varied the propositions which were submitted to and approved by the voters at the election. The proposition was, when fairly construed, that the city should extend aid to the railroad company by the issue of its bonds to an amount not exceeding one million of dollars, which were to be employed in building and equipping the road. It was not pecuniary gain, nor any of the advantages which would accrue to an individual from membership in the railroad company, that formed a motive or inducement tor clothing the city with the power to aid in the construction of the road. The benefits which would result to the commerce and industry of the city, the increased facilities of access to it, were the purposes for which the power was conferred. If these could be secured without involving the city in a debt of one million of dollars, it was not only within the power, but it was the duty of the city council to secure them for the least practicable sum. The power to create the larger included the power to create the lesser debt. Oinne magus continet in se minus.” (Page 319.)

The sovereign power of eminent domain is always exercised in favor of railroads, because they are considered as public purposes, as instruments of commerce and of travel and transportation, and not because of any stock which might be held in them by any public corporation.

We do not think that the agreement between a portion of the electors of Ozark township and the agents of the railroad company prior to the election, or anything else that occurred prior or subsequent to the election, will so invalidate the election or so destroy the rights or claims of the railroad company that it may not demand and receive the bonds of Ozark township up to the amount of $10,000, and we so decide without reference to any question of estoppel or of res adjudicata; and we might here say that the railroad company claims under both. It claims that as the township permitted the railroad company to construct and equip its railroad upon the faith of the aforesaid election and subscription, the township is now estopped from claiming that either the election or the subscription is void; and that, as the injunction suit between the aforesaid tax-payer and elector of Ozark township and the railroad company and the officers whose duty it might be to make the subscription and to issue the bonds of the township resulted in the granting of an injunction restraining the subscription and the issuing of the bonds only to the extent of the excess over and above $10,000, and permitting the officers to make the subscription and to issue the bonds to the amount of $10,000, and permitting the railroad company to accept and receive such an amount of the township bonds, all the substantial questions presented in this case were virtually adjudicated in and by that case, and have become res adjudicaba.

The judgment of the court below will be reversed, and the cause remanded with the order that judgment be rendered in favor of the defendants below and against the plaintiff below.

All the Justices concurring.