Baltimore & Eastern Shore Railroad v. Spring

Page, J., delivered the opinion of the Court. This is an appeal from an order of the Circuit Court for Talbot County, directing a writ of injunction to be issued restraining the County Commissioners of that county from issuing the bonds mentioned in chapter 295 of the Acts of ⁵¹⁴ the General Assembly of 1892, and in chapter 152 of the Acts of 1894. The bill was filed by a taxpayer and citizen of Talbot County, on behalf of himself and other citizens and taxpayers of that county. It is alleged that these “Acts are unconstitutional, and for other reasons invalid, null and void.” Such of the facts appearing by the record, as are requisite to be stated for the purposes of this opinion, may be thus briefly set forth.

The Baltimore and Eastern Shore Railroad Co. was incorporated by the General Assembly in the year 1886, for the purpose of constructing and operating a railroad through Talbot and other counties of the State of Maryland. At the same session, by chapter 509, the Com-' missioners of Talbot County were authorized to endorse the bonds of the Railroad Company to an amount not exceeding $50,000, after it had been sanctioned by the voters of Talbot County; such bonds were to be secured by a mortgage which should be second to a mortgage to the city of Baltimore. This Act, which authorized only an endorsement of bonds, and not a subscription to the stock of the railroad, though voted upon favorably by the voters of Talbot County at the general election of 1887, it is conceded became inoperative for the purpose of authorizing the proposed endorsement, for reasons not necessary to be now stated. By the Act of 1890, ch. 150, the County Commissioners of Talbot County were authorized to subscribe to the capital stock of the company to the amount of $25,000.

This Act, however, was not'published as required b.y Article 3, sec. 54 of the Constitution, and for that reason became invalid. Soon after its incorporation in 1886, the railroad company proceeded to construct its road, and having fully completed it, operated it until the 21st of April, 1891, when, having become totally insolvent, its property rights and franchises passed into the hands of a receiver, appointed by the Circuit Court óf the United States for the District of Maryland; and since that date, under the decree of that Court, all of its property and franchises have been sold to other parties. So ⁵¹⁵ that in 1892, when the Act of 1892, ch. 295, which will be subject of our examination, was passed, the road was entirely-constructed, and after having been operated for a short time, had experienced all the results of insolvency, up to .the point of having its affairs administered by a receiver for the benefit of its creditors. From this recital it is clear that, prior to 1892, there had never been any valid power conferred upon the County Commissioners either to endorse the bonds of the company or subscribe to its stock; nor is it pretended that they ever undertook to exercise such power.

In the agreement of parties, found in the record, it is stated that the Commissioners “ never passed any resolution to endorse the bonds * * or to subscribe to the stock.” The statement, therefore, contained in the preamble of the Act of 1892, ch. 295, also in the body of the Act (and also in the Act of 1894, ch. 152), to the effect that the authority to issue bonds was conferred for the purpose of raising money to “pay the county’s subscription” to th^ capital stock of. the railroad company, was wholly unfounded in fact. The County Commissioners never did (and never had the power to) make such subscription. There is no question in this case, therefore, of good faith on the part of the county, no contractual element to embarrass the Court in determining the strictly legal effect of the Act of 1892, ch. 295, and the confirmatory Act of 1894, ch. 152. What, then, are the provisions of these Acts ?

By the first section of the Act of 1892, the Commissioners are authorized to issue the bonds of the county to the amount of $2¡,000; by the second, it is provided that they “shall sell said bonds,” and with the proceeds thereof pay said subscription of said county to said railroad company; provided, however, that before any bonds shall be issued under this Act, the said railroad company “ shall file, in the office of the County Commissioners of Talbot County, an agreement, in writing, authorizing the said County Commissioners of Talbot County to first pay and satisfy all proper and legal ⁵¹⁶ claims and demands held by bona fide residents of Talbot County, on the twentieth day of April, in the year 1891, against said railroad company, out of the proceeds arising from the sale of said bonds, and the balance, if any, to apply under the order and direction of Joseph B. Seth, the president