THE
BREVIER LEGISLATIVE REPORTS.
FOURTEENTH VOLUME.
INDIANA LEGISLATURE.
Legalizing County aid to Railroads.---Debate in Continuation
IN SENATE.
THURSDAY, January 23, 1873.[Afternoon Session.]
[CONTINUED FROM THE BEGINNING OF PAGE 71.]
The Senate proceeded to the consideration, on the third and final reading, Mr. Harney's bill [S. 122,] to legalize, in certain cases, appropriations made by County Commissioners to aid in building railroads previous to May 12, 1869, declaring such appropriations subscriptions to stock, etc.
Mr. SCOTT. I am opposed to the principle of releasing county officers from liability to the people for acts entirely illegal; and I am opposed to setting a precedent for Legislatures legalizing acts entirely illegal. And I don't believe we can do it. I do not believe that this or any other Legislature can make that legal which was not in itself legal. If the Railroad Company was willing to issue the stock, and the county was willing to take the stock, and it was a fair equivalent for the amount of money paid, I would have no objection to the law,but where the stock is almost worthless it seems to me it is a bad precedent, and to pass this bill would make us look a little wrong some how or other, in my estimation. When these parties took that money they took it as a gift, and now after they have had it six years, and it is found out they are not entitled to it all, we propose by an act of the Legislature to make it a contract requiring stock to be issued for the money received. After a court has decided that money could not be required from the Railroad Company, because the whole proceedings was illegal, I don't see how we can make that thing legal.
Mr. CHAPMAN. Section six of Article X of the State Constitution reads
:SECTION 6. No county shall subscribe for stock in any incorporated company, unless the same be paid for at the time of such subscription; nor shall any county loan its credit to any incorporated company, nor borrow money for the purpose of taking stock in any such company; nor shall the General Assembly ever, on behalf of the State, assume the debts of any county, city, town or township, nor of any corporation whatever.
I take it that the county has got to know how much stock they want to take and must have the money to pay for it at the time.
Mr. O'BRIEN. If this bill would have any affect it would have the affect to legalize the subscription of stock to Railroad Companies, and I do not think the Legislature can do that in view of this provision of the Constitution. With that view I cannot vote for the bill; and on general principles I am opposed to legalizing illegal acts anyhow.
Mr. O'BRIEN said the bill was unconstitutional. The sixth section of article ten of the Constitution provides that no county shall take stock in any incorporated company unless the money is paid at the time of subscription. This money having been paid years page: 364[View Page 364] ago no act of the Legislature can override this section of the Constitution and authorize the county to receive stock in return for the donation.
Mr. DAGGY, with the view of giving the Senate a proper understanding of how this bill came to be introduced, gave the facts as they exist in this case. He said that before the passage of the railroad act of 1869, the Commissioners of Montgomery county made a donation in aid of a railroad and the money was placed in the hands of a trustee. Before it was paid to the railroad company an injunction was granted against such payment, and a case was made up which was carried to the Supreme Court. That Court decided that the Commissioners had no authority to make the donation, and the act of the Com-misssioners in making the appropriation was absolutely null and void. Meantime, however, the trustee died and the money passed into the hands of his representatives by whom it was finally paid to the railroad company, and the road was built. An application was made for an order of court to require the Commissioners to return the money to the county treasury, which application is still pending. This bill, he said, would not relieve those who held the money from liability, but will give the county an additional remedy, enabling it to recover the value of the donation by taking stock in the railroad. By the provisions of this bill it is left discretionary with the county to recover the money or not. If this bill passes they may recover by taking stock, and that becomes a healing of the matter and ratifies arid confirms the appropriation. This is not obligatory on the County Board. The only question is the power to adopt this measure. As to the equity of it there can be no question, and it can do no harm to pass this bill. They have paid the money, cannot they now take the stock? I think they can. I think I have given substantially the force and effect of this bill and I think it is fair. The only objection raised against it is its unconstitutionality; and that is a question for the courts and not for the Senate.
Mr. DWIGGINS thought there was no force in the objection. At all events the end may be accomplished in this way, by agreement between the railroad company and the present County Commissioners. The railroad can return the money to the Commissioners and they can then immediately subscribe for stock to the amount of the donation and pay the money back to the railroad.
Mr. HOUGH. It occurs to me that there is no necessity of passing this bill for the purpose of releiving the people that may be similarly circumstanced. If the facts are as I understand them from the Senator for Putnam [Mr. Daggy,] it seems to me the county has a right to institute suit against the Railroad Company to recover the amount of money it has been instrumental in abstracting unlawfully from the county. And they may have a lien fastened upon the railroad.
Mr. DWIGGINS [interposing.] Would that lien take precedence as a mortgage?
Mr. HOUGH. I suppose it would - being for money used in the construction of the road. It was given to them unlawfully, and the creation of a trust did not make it lawful. It was as unlawful for the trustee to pay it over, as if he had not been a trustee. They had no right to appoint a trustee; but they were men conspiring to abstract money from the county treasury, and that money the Railroad Company subsequently invested in building their road. I think there is no legislative aid needed, and suit may be instituted now; because money has been unlawfully taken from that county and used in the construction of this road. I understand the object of the introduction of this bill is to aid the county.
Mr. DWIGGINS. I desire to ask the Senator: Does all contracts for labor in building railroads take precedence of a first mortgage?
Mr. HOUGH. That is a different question.
Mr. DWIGGINS. Does it?
Mr. HOUGH. I presume not.
Mr. H. thought there was no occasion for this additional remedy. The county now had its right of action against the railroad and that was sufficient.
Mr. HARNEY explained that this bill was drawn up and introduced with reference to cases where County Commissioners had made appropriations to aid in building railroads previous to the passage of the law authorizing counties and townships to vote a tax to build railroads, approved May 12, 1869. The Supreme Court has decided that all appropriations made as donations by the officers of a county for any such purpose previous to such enabling act was absolutely void being without the authority of law. The Constitution authorizes counties to take stock in a railroad company where the stock is paid for at the time. From this premise we conclude that where an appropriation was made and the money paid to aid in the construction of a railroad, it must have been in payment of a stock subscription before the transaction can be clothed with the form of legality.
But it is suggested that legistation is not necessary - let the courts determine the question! The necessity of legislation originates from the fact that there is no means provided by law to enforce a contract for payment of stock. The county has a right without the adequate means of enforcing it.
page: 365[View Page 365]Besides that, should the county attempt to collect from the raidroad company the money thus wrongfully taken, in most of cases the road is so covered up with transfers, leases and mortgages that recovery is out of their power, and thus the company continues to enjoy this benefit of their own wrong. The bill is not mandatory; it only authorizes a settlement by payment of stock if the county should choose to accept it. Again the law is necessary in order to name and characterize a class of transactions hitherto not known nor defined in legal proceedings. The transaction is not a theft or felony because the officers were presumed to have acted under a misapprehension of law in good faith. The party receiving the benefit claim they received it as a donation and have placed it out of reach of the proper owner, and, therefore, are exempt from liability except on the terms on which they received it, while the injured public are virtually plead out of court because the injury complained of is not defined by statute. Really the money paid was converted by the company into capital stock, and formed part of the basis on which it conducted its transactions, and therefore it is right and competent for the Legislature to declare all such transactions where the money had not been returned "a subscription to the capital stock," and provide the means for enforcing the payment of the same to the county which made the appropriation. The motion is of some importance to the people of our county, and perhaps others. The constitutional objection raised has been answered successfully, and I suggest this further that under the Constitution while County Commissioners may take stock, they have no right to make a donation.
Mr. H. said the railroad was covered up with mortgages, and had passed by lease and otherwise to other railroads, so that it would be almost impossible to identify it or get at it on execution. The bill is not mandatory. It only authorizes a settlement if the county chooses to accept it.
The bill passed the Senate by yeas 32, nays 12 - as follows :
YEAS - Messrs. Armstrong, Beeson, Bird, Bowman, Brown, Bunyan, Carnahan, Cave, Daggy, Daugherty, Dwiggins, Fuller, Francisco, Friedley, of Lawrence, Gooding, Gregg, Hall, Harney, Haworth, Howard, Hubbard, Miller, Oliver, Rhodes, Ringo, Sarnighausen, Scott, Slater, Stroud, Taylor, Thompson, and Williams - 32.
NAYS - Messrs. Beardsley, Boone, Chapman, Collett, Friedley, of Scott, Hough, Neff, O'Brien, Orr, Sleeth, Smith, and Steele - 12.
