Finlayson v. Vaughn

Vanderburgh, J. The township of Hinckley, in the county of Pine, in the year 1886 issued certain bonds in aid of the Kettle River Railroad Company. These bonds, $12,000 in amount, were issued in pursuance of Laws 1877, ch. 106, as amended in Laws 1878, chs. 45, 46; and all the proceedings leading to the issuance thereof are found by the court to have been regular, and in conformity with the statute. It is, however, insisted by the plaintiff that the amount issued, together with the coupons, was in excess of five per cent, of the assessed valuation of the property of the town. Conceding that the plaintiff is right in this, it does not follow, as respondent suggests, that the entire indebtedness is void, but the invalidity would attach only to the excess over the statutory limit. But it does not appear that the entire indebtedness exceeds such limit. The amount of the bonds voted is $12,000, issued October 1, 1886. These bonds bear' interest at the rate of seven per cent, per annum, and run thirty years, each bond having corresponding interest coupons attached, payable on October 1st each year, the first being due and payable October 1, 1887. It is also admitted that the total assessed valuation of the taxable property of the town for that year was $251,359. If the principal alone is considered, it is obvious that the total amount of the bonds was within.the five per cent, limit. But the plaintiff claims that the interest, which, by the terms of the bonds, was to accrue from 3rear to 3rear after the date thereof, must be included in the [335] amount allowed to be issued under the statute. This is clearly erroneous, as the court below held. These interest coupons form no part of the principal debt, and the bonds when issued represented at that date an indebtedness for the principal sum only. The statute contemplates nothing more. Durant v. Iowa Co., Woolw. 71. (Opinion published 56 N. W. Rep. 49.) 2. The proposition for the issuance of the bonds was in the form required by the statute, and contained a statement that “said railroad company would, in consideration of said bonds, at the election of said town, issue to said town one hundred and twenty shares of its capital stock of the par value of $100 per share, and would deposit the certificates of such shares to be delivered to the proper authorities of said town upon the delivery of said bonds to said company.” It is also found that the board of supervisors of the town, after the election authorizing the issuance of the bonds, deeming it for the interest of said town to'do so, at a meeting duly held on September 29, 1886, waived the issuance by said railroad company of any stock to said town. On October 1, 1886, the bonds were issued and deposited in escrow to be delivered to the railroad company, which was done prior to January 1st following, but no stock was issued to the town. The plaintiff’s contention is that the town supervisors had no authority to waive the issue of the stock, but the statute is a complete answer to this objection. Section 4 provides that the proposition to be voted on shall contain a statement that the railroad company will, at the election of such municipality, issue to it such number of the shares of the capital stock as will at par value correspond with the principal sum of such bonds; and the last proviso in section 5 authorizes the board of supervisors of any such town, in case they shall deem it best for the interest of such town to do so, to waive the issuance of any such stock. It is evident that in some cases the stock would not be of sufficient value to compensate for the risk of the liability of stockholders. In any event, it is left with the supervisors to determine, and their waiver in this instance in no way affects the validity of the bonds. Judgment affirmed.