This action was brought to recover the amount of certain bonds and interest coupons issued under date of May 1, 1872, in the name of Grenada county, Mississippi, by its board of supervisors, and made payable to the Vicksburg & Nashville Railroad Company or bearer, at its agency in the city of New York. Each bond, signed by the president of the board and countersigned by its clerk with his official seal affixed, recites that it is one of a series issued and delivered to the Vicksburg & Nashville Railroad Company by Grenada county, to meet and pay off the amount subscribed by the county to the capital stock of the railroad company aforesaid, 'in pursuance of an act of the legislature of the state of Mississippi, entitled 'An act to aid in the construction of the Grenada, Houston & Eastern Railroad,' now Vicksburg & Nashville Railroad, approved February 10, 1860, and of an act amendatory thereof, passed March 25, 1871, and in obedience to a vote of the people of said county at an election held in accordance with the provisions of said acts.' The county disputes its liability on the bonds or coupons, although the plaintiffs, who are defendants in error, became holders for value without notice of any defense except such as the law implies. The defense rests mainly on the ground that the subscription was made and the bonds issued without previous legislative authority conferred in conformity with the constitution of Mississippi.
The history of the issue of these securities, as disclosed by legislative enactments, the proceedings of the board of supervisors of Grenada county, and the bill of exceptions, is substantially as will be now stated. The Grenada, Houston & Eastern Railroad Company was incorporated by an act approved February 6, 1860, with power to construct a railroad from Grenada, in Yallobusha county, to Houston, in the county of Chickasaw, thence eastwardly to the Alabama line, and with authority to connect or consolidate with any other company upon such terms as might be mutually agreed upon, not inconsistent with the laws of the state. Laws Miss. 1859, 1860, pp. 394, 402. By the act approved February 10, 1860, the boards of police of Yallobusha, Calhoun, Chickasaw, and Monroe counties were authorized for their respective counties to subscribe, upon such terms as they saw proper, to the capital stock of the company in an amount not exceeding $200,000 for any one county, to be paid by taxation; provided a majority of the qualified electors voting at an election held for that purpose, upon due notice, should first assent thereto, in which event it was made the duty of the board to make the subscription. Id. 412. On the first day of December, 1869, a new constitution for Mississippi went into operation, article 12, § 14, of which declares that 'the legislature shall not authorize any county, city, or town to become a stockholder in or lend its credit to any company, association, or corporation, unless two-thirds of the qualified voters of such county, city, or town, at a special election or regular election to be held therein, shall assent thereto.' On the ninth of May, 1870, the county of Grenada was created out of parts of Yallobusha, Tallahatchie, Carroll, and Choctaw counties. Laws Miss. 1870, p. 124.