'SECTION 9. The holders of the bonds of the State of Missouri, heretofore issued to the North Missouri Railroad Company, are hereby authorized to convert the same, which interest accrued thereon, into preferred stock of the North Missouri Railroad Company, and the holders thereof shall be entitled to receive a special dividend thereon, not exceeding the rate of six per cent. per annum, in the manner and in the order of priority above herein provided.'
The thirteenth section provided for an acceptance of this act by the stockholders, and enacted that in the event of its being so accepted,
'It shall be and become of full force and binding effect upon the said corporation and the State of Missouri.'
The act was accepted in due form by the stockholders.
On the 8th of April, 1865, a convention of the people of Missouri adopted 'An ordinance for the payment of State and railroad indebtedness.' This ordinance levied on the railroad company an annual tax of ten per centum of all its gross receipts for the transportation of freight and passengers, and directed that it should be appropriated by the General Assembly to the payment of the principal and interest now due, or hereafter to become due, upon the bonds of the State, and the bonds guaranteed by the State, issued to the company.
The provisions of the ordinance will be seen more fully on pages 39-40, supra, beginning near the bottom of the former page, at the place marked with a *.
Under this ordinance, the assessor of St. Louis County assessed $68,257 (being ten per cent.) upon the gross receipts of the company from October 1st, 1866, to October 1st, 1867, and delivered the same to one Maguire, collector of taxes, who, on the company's refusal to pay the bill, levied upon its engines, cars, &c. The company thereupon sued him in trespass in one of the State courts, where a case was stated for the judgment of the court, and by which it was agreed that if the court should be of opinion that the ordinance referred to was unconstitutional, there should be judgment for the company for costs and nominal damages; and if of the opinion that it was constitutional, judgment for Maguire for costs.
The Supreme Court of Missouri, where the case finally got referring among other clauses of the act of 1865, to that which provided for the payment in the first place of the 'amounts required from day to day, for the actual current expenditures for carrying on the ordinary business of the corporation'-within which it considered the payment of taxes to fall-rendered judgment for Maguire, and the company brought the case here.
One Jessup, who claimed the whole road under a sale, also stood in some way on the record as a plaintiff in error.
Mr. J. C. Orrick, for the plaintiff in error:
I. The act of February 16th, 1865, is a contract between the company and the State.
The act itself declares that if accepted by the stockholders it shall become of full force and binding effect upon the said corporation and the State of Missouri. The act was accepted by the stockholders.
In addition, its provisions contain all the elements of a contract. The railroad company was a corporation, vested with certain franchises under a charter from the State, and the act of 1865 gives certain other franchises, and imposes certain restrictions, which required the assent of the corporation to make them valid, and the contract was: That the State would release its lien to a certain extent; authorize the company to issue $6,000,000 of first mortgage bonds, and grant other privileges to the company, in consideration that the State, through an officer of its own, should be permitted to take charge of all the funds and earnings of the company, coming from whatever source, and disburse them in a particular way, and for certain objects specified in the act, amongst which was the payment of these very bonds for which the State was liable, and the accrued interest thereon which the State had paid, and which had thus become a debt due by the company to the State.
An important provision of the contract was that the interest on the $6,000,000 of bonds and the dividends on the preferred stock should be paid before the interest or principal of the State bonds. The ordinance is a violation of this contract.