Town of Lexington v. Union National Bank

75 Miss. 1 | Miss. | 1897

Calhoon, Special J.,

delivered the opinion of the court.

Under an act approved April 15, 1878, incorporating the West & East Railroad Company (Acts 1873, p. 479, secs. 19-21), Lexington, by authority of the legal number of her qualified. voters at an election, issued bonds to aid building the road, with coupons bearing 7 per cent, per annum, interest payable semiannually. The bonds were payable in five years, one-fifth each year on May 1, and were in denominations of $50, and were payable to bearer, and were delivered to the West & East Railroad Company. The railroad was built, but Lexington found it inconvenient to pay, and so a legislative act was procured, approved March 4, 1884, entitled “An act to provide for the renewal and payment of the bonds of the city of Lexington, Mississippi” (Acts, p. 745), which act authorized the city of Lexington to issue twenty-year bonds in renewal of the old, of “like tenor,” except they should bear date May 1, 1884, and that the coupons should be payable annually on May 1, and this act required “the board of mayor and aldermen of said city to levy an annual tax to pay the interest, and, the last ten years, one-tenth the principal of the bonds.

Under this act, Lexington issued bonds to exchange for the old outstanding unpaid bonds, but issued them in denominations of $1,000 instead of $50, which was doné by her municipal council without a new election, and with them she took tip her old bonds, which were canceled and destroyed. She paid the interest on those new bonds for ten years or so, when she ceased to further liquidate, and appellee, a holder of some of the bonds, filed a petition for mandamus to compel her council to levy a tax to pay coupons, and an 'annual tax to pay one-tenth the bonds. To this petition Lexington filed an answer, paragraphed into nearly a score of pleas, and there were demurrers, replications, amendments, and so forth, which need not be followed seriatim but will be disposed of by the principles to be announced. The town council lost below, and appeals to this tribunal.

For reversal, it is urged that the town charter gives no authority to issue bonds, which is true in fact, and, then, it is argued that their issiiance is unauthorized, as made by legislation. This is to be investigated, because, if true, and if there appears no estoppel, it settles this case for appellant.

The original act of 1873, before referred to, sec. 21, directs the old bonds and coupons to be signed by the mayor and attested by the clerk. In fact, the mayor did sign the old bonds, 'and the clerk did attest, but the coupons, while signed by the mayor, were not attested by the clerk. This is one contention.

Another contention is that the act of 1873 contemplated that these old bonds were to be made payable, not to bearer, as they are, but to the railroad company, because sec. 21 requires them to be “executed to ’ ’ the railroad company, and signed as just mentioned, and “delivered to the president or treasurer ” of the railroad company.

Another contention as to the old bonds arises out of aver-ments of certain delusive promises unfulfilled about a depot and a bridge, etc., made to get votes for the donation.

We dispose of all these contentions about the old bonds with no sort of difficulty. They were not only recognized and treated as perfectly valid by the town, but by the legislature in the act of 1884, which authorized the substitution of new bonds for them. The town did substitute, got the old bonds and destroyed them, and is now endeavoring to repudiate the new.

But the contentions are baseless. The bonds, signed by the mayor and attested by the clerk, were issued with the coupons signed by the clerk, went into commercial exchange, and were annually recognized by the payment of coupons.

The authority to execute and deliver to the railroad company carried authority to issue negotiable bonds payable to bearer, as all such bonds are and ever have been, and the legislature must be presumed, without an express negative, to proceed on the uniform conduct of mankind in public enterprises of railroad construction. It is not supposable the legislative purpose was to nullify the object of aiding the railroad.

If flattering promises and demagogical arts and misrepresentations to voters vitiated elections, there would, perhaps, have never been a valid election under our government. But the eleotion in this case occurred fifteen years ago and more, during fourteen years of which time there has been no objection made to either bonds or coupons, old or new, and in the meantime the old bonds have been recognized as valid by the town and the legislature, and they have been redeemed by the new issue and canceled, in order that the town might extend time of payment from five to twenty years.

It is urged that the charter of Lexington creates two distinct corporations — one the town of Lexington and the other the town council — the first being the people and the other mayor and councilmen, and that there must be a vote for new bonds, in renewal of old, for railroad donations. This is a mistake. There is but one corporate town, Lexington, provided with a municipal head. Certainly the town — that is, the people, voted the donation. It could not print and issue bonds except by its officers. After contracting the debt, by a vote authorizing it, the people did not have to vote over again to pay it. If its authorities were not provided with funds to pay, the courts could compel a tax to pay, or the legislature might, as it did, authorize the substitution of new bonds, and thus- give more time to pay, if the bondholders were willing.

It is insisted that the new bonds are void because the act of 1884 provides them to be of “like tenor ” with the old ones. This is untenable. The words, of “like tenor, ’ ’ are to be taken in the sense that they are popularly understood, and not in the strict technical sense, as used in reference to the crimes of counterfeiting, forgery, libel, etc. They mean of the same nature or character. The statute was dealing with a financial transaction, and intended the word ‘ ‘ tenor ’ ’ in the popular, dictionary sense, not the precise sense of the criminal law.

The bonds — new and old — were a donation to the railroad company, given in lieu of cash, and to be used as cash. The new bonds did not add one cent to the liability imposed by the old, either of principal or interest. They were of the same tenor — that is, of the same nature and character of the old, varying only in their denominational figures, and this to suit the convenience of the parties to the contract, as must be assumed. Even if there was any merit in this position, and there is not, it is not to be tolerated that the town should set up the defense, after exchanging the new for the old bonds, and destroying the old, and after recognizing the validity of the new for fourteen years by paying the coupons as they matured. It would be strange, indeed, if the municipal authorities of a city, its fiscal agency, could not provide for the renewal and extension of an old debt.

The bonds were lithographed as of date May 1, 1884, according to the terms of the act, but, not being delivered until November 7, 1884, the officers issuing them inserted the true date, which in no way affected the obligation of Lexington, the rights of any party, nor in any way violated the spirit or direction of the act, and so we declare the defense on this ground as of no avail, especially as the bonds recite that they are issued in pursuance of the act of 1884.

We repudiate as unsound the position that the unpaid coupons bore no interest after their maturity. The town being-authorized to issue interest-bearing obligations maturing for payment at fixed dates, cannot avoid the continuance of interest without paying. Equally untenable is the position that the coupons have the signature of the clerk of the municipal council lithographed. This is not only a custom nearly, if not quite, universal, but they were issued by the town with that signature; and it would be a travesty of justice to permit a defeat of recovery on such a pretext. A lithographic signature to coupons has been often held to be sufficient, and it has been held that, as against a bona fide holder, the person whose name appears as officer will bo presumed to have signed, during his term of office. 15 Am. & Eng. Enc. L., 1226, 1227.

But, as to all such matters, and, in fact, as to nearly all the defenses set up by the town, long recognition of the validity of the bonds and coupons amount to a ratification and estop it from repudiation, and waive such defenses. The facts pleaded show the very acts of the town to be an estoppel, and to amount to a full waiver of any failure of the conditions of the subscription.

The fact that a national bank holds the bonds, even if by purchase, which is not the case, is of no use to appellant. The United States only could ’complain.

We have not cumbered this opinion with the citation of authorities. It would be mere affectation to do so. The arguments of counsel on both sides are quite full, lucid, and strong, and our conclusion is reached from examining the authorities they produce and a few others. We refer the bar to these briefs.

After careful and patient investigation this case is

Affirmed.