Union Bank of Richmond v. Board of Commissioners , 116 N.C. 339 ( 1895 )

Avery, J.

(after stating the facts): If an action had been brought by a tax-payer of the town of Oxford to enjoin the issue of bonds in payment of its subscription to The Oxford & Coast Line Railroad Company, any final judgment upon the merits would have operated as an estoppel, both upon other tax-payers of the town and the municipality itself. 2 Black on Judgments, Sec. 584. In two actions brought by that company against the mayor and commissioners of Oxford, asking for mandamus to compel the issuing of a subscription of forty thousand dollars in bonds to the capital stock of the company, in -which a controversy arose, among other matters, as to the authority to make such subscription, a compromise decree, drawn in pursuance of a previous agreement between the parties, was entered in the two suits, consolidated by order of the Court into one, whereby ’the town was released from further liability upon the issue of twenty thousand dollars instead of forty thousand dollars in its bonds, payable to the company, and upon surrendering its right to call for certificates of stock in the company to the amount of forty thousand dollars. If the decree concluded the town from questioning the validity of the bonds, the estoppel would be as effectual in favor of the plaintiff, who sues upon past due coupons of which it is the owner, as if the action were brought by the railroad company. Thompson v. Lee County, 3 Wallace, 327. Prior to the passage of the Act 1874-’75, Ch. 178 (Code, Sec. 574) an agreement to receive a part in lien of the whole of a debt due was held to be a nudum pactum as to all in excess of the sum actually paid. Currie v. Canady, 78 N. C., 91; Hayes v. Davidson, 70 N. C., 573; Mitchell v. Sawyer, 71 N. C., 70; Love v. Johnston, 72 N. C., 415. But where such agreements have been made since the act was passed, they are deemed to have been entered into in as full contemplation of its provisions as though it had been, incorporated into the contract. Koonce v. Russell, 103 N. C., 179. Indeed, independent of statutes, where disputed claims have been preferred against it, “a town may make a contract with a creditor whereby the latter agrees to discount or throw off a portion, and such an agreement (says Judge DilloN) is founded upon a sufficient consideration, and will be enforced.” 1 Dillon on Mun. Corp., Sec. 477; Baskerville v. Tweed, 20 Me., 178; Amy v. Shelby County, &c., 114 U. S., 387. In our case there were mutual considerations which, it would seem, would have given vitality to the contract and made it enforcible even at common law. The town surrendered its claim to forty thousand in certificates of capital stock, in consideration of being released from its obligation to issue forty, instead of twenty, one thousand dollar bonds to the railroad company. We can see no force in the contention that the failure to deliver a release in accordance with the decree in any way affects its validity, when it does not appear that the railroad company ever refused or neglected on demand to execute it. The town cannot take advantage of the laches of its authorities in failing to demand its execution, in order to repudiate their debt, if it is valid. The plaintiff was warranted in assuming that the town had demanded its execution and was not bound to look behind the decree to ascertain whether it had exercised common prudence in protecting itself. These twenty bonds recite that they are issued in pursuance of the power and authority granted in Chapter 49 of The Code, chapter 315, Acts 1891, and section 30, chapter 21, Acts 1885 (being the charter of the town) and also by virtue of an election held as provided for in the Acts referred to, and in accordance writh the compromise decree in the cases to which we have referred. It is conceded without question that no municipal corporation is authorized to issue bonds unless the power to do so is granted either in express terms or by necessary implication by the legislature. The unavoidable implication arising from section 10, chapter 315, Laws 1891 (the charter of the company) is that it was the intention of the legislature to empower “counties, cities, towns and townships” to issue bonds to aid in building the road and to compel either corporate body that might lend its credit in that way, to pay all such tax as it might collect on the franchise and. property of the completed road, in payment of the interest accruing thereon. But, it is insisted that the power can not be exercised in the face of the prohibitory provision of the Constitution (Art. YII, Sec. 7) unless the authority to loan its credit received the sanction of a majority of the qualified voters of the municipality, and that it is as essential to the validity of the bonds that the Legislature should in express terms authorize the election, and require specifically a vote of a majority of the qualified voters, as that it should empower the town to aid. It is admitted to be an essential prerequisite to the validity of such bonds that the Legislature should grant the power to aid, and that' the majority of the qualified voters should signify their approyal by their ballots cast. The machinery for ascertaining the will of the electors is a secondary consideration. The main purpose was to prohibit the imposition of a tax for certain objects without the assent of a majority of the qualified voters. The Act of 1891 in assuming that counties, towns and townships may subscribe, impliedly manifests a purpose on the part of the Legislature to allow municipalities “to issue bonds to aid in building” this railroad, and leaves them at liberty to aid as may seem to them best, and by implication to do what they were expressly allowed to do in the charter of the Oxford & Clarksville Road, either make donations or subscriptions. The statute puts no restriction upon the town as to the manner of issuing its bonds in aid of the construction, leaving them to donate or subscribe at their option with the approval of the requisite number of voters. In the case of Wood v. Oxford, 97 N. C., 227, Justice Merkimon, speaking of the contention that the provision in the railroad charter that if a majority of the votes cast were favorable the town would be authorized to issue the bonds was unconstitutional, said : “It may be that the statute contemplated that if a simple majority of the qualified voters, voting, shall be in favor of such donation, this shall be sufficient to authorize it to be made. This is questionable, but we need not decide whether it so provides or not, because the purpose to allow such donation to be made is manifest, and it appears in the case before us that a clear majority of all the qualified voters of the town of Oxford voted in favor of the proposed donation of forty thousand dollars in question, thus certainly meeting the essential prerequisites provided by the statute, and observing the provisions of the Constitution (Art. YJI, Sec. 7) forbidding towns and other municipal corporations to make a debt, except, etc., unless by a vote of a majority of the qualified voters therein, and likewise observing the requirements of the charter of the town.” It is now well settled that, under the Constitutional provision, a majority of the qt^alified voters is necessary and, in the absence of proof to the contrary, a majority of the registered voters will be deemed a majority of the qualified voters. Rigsbee v. Durham, supra.

The purpose of the Legislature to authorize the issue in our case in order to aid in any way they might deem best, "is apparent. . The fact that a majority of the qualified voters have cast their ballots in favor of extending aid by subscription, is undisputed. If it is not admitted, the records of the town showing that a proposition to allow the municipality to lend its aid by the issue of bonds was submitted after thirty days’ notice, and a majority of the qualified registered electors signified their assent by voting “ approved,” and it is settled that such a record is conclusive evidence that the will of the majority was so expressed. Norment v. Charlotte, 85 N. C., 387; Cain v. Commissioners, 86 N. C., 8; Southerland v. Goldsboro, 96 N. C., 49 ; Duke v. Brown, Ibid, 127; McDowell v. Construction Co., 96 N. C., 514; Rigsbee v. Durham, 98 N. C., 81. In some of the cases which we have cited it is declared by the Court to be immaterial that the act providing the machinery for ascertaining the wishes of the qualified voters had provided, in direct conflict with the constitution as construed by the Court, that a majority of the votes cast should be sufficient. These decisions rest upon the ground that the two evils intended to be guarded against were the using of the credit of municipal corporations, first, without the assent of the legislature clearly given, and, second, without the approval of a majority of the qualified voters fairly ascertained. It was this broad view which inspired the intimation that either section 30 of the charter of Oxford, a section of a railroad charter which was declared in part unconstitutional, or the constitutional provision itself in connection with the general election law, would be sufficient to authorize an election to ascertain the will of the voters, where the assent of the Legislature that the municipality might create a debt had been clearly given. In Wood v. Oxford, the Court said (after what has already been quoted from the opinion), “ as the purpose of the Legislature to allow such donations to be made is clear and express, it is sufficient if the condition upon which it might be made has certainly, in the most adverse view of the proposition as to the vote, happened.” In any .aspect, it is beyond question that the requisite constitutional majority has approved of what the Legislature first clearly assented to — lending the aid of the town by issuing its bonds to the building of the railroad. With the legislative permission to so use its credit, we see no reason why the necessary implication should not follow that the town might ascertain the wishes of the voters in a way provided in the charter for the purpose of borrowing money in compliance with the same section of the organic law, or, in the absence of such special provision, under the general law governing elections held for municipalities, the natural inference being when an election is authorized, that it is to be held in the usual, if some unusual mode is not provided. Where Legislative sanction is given and the will of the majority of qualified voters is actually ascertained, it is certain that the danger-line has not been crossed so as to wrongfully subject municipalities to the burden of a debt for any purpose except necessary expenses. The imperative requirement of the Constitution is that there shall be a concurrence of the legislative and the popular will, the former evidenced by a grant of authority to vote, the latter by the record that a majority of the qualified voters have cast the ballots in favor of creating the debt. Whether the legislative purpose is expressed or may be fairly implied from tbe language of the statiite, is immaterial (1 Dillon, supra, section 89 (55); Clark v. City of DesMoines, 87 Am. Dec., 423) as is the question whether the election is conducted under statutes passed for the particular purpose, or, in the absence of such special provision, under the general election law enacted for the town or for counties generally, so that the sense of the voters is unquestionably and fairly ascertained. The power to subscribe being given, the fair implication was that the legislature intended that the use of the machinery provided generally for taking a vote to authorize the borrowing of money might be used. The principle of strict construction is never “ carried to such an unreasonable extent as to defeat the legislative purpose fairly appearing upon the entire charter or enactment.” If the special provision for holding an election in a town or county fails to provide in detail the mode or what is in common parlance called the machinery for conducting it, it must be inferred that the legislature intended that general election laws might be resorted to, to fill in the Matus, and not that the legislative will should be thwarted or defeated by any such omission.

The case of Brenan v. Bank, 144 U. S., 173, which was relied upon by the defendant is clearly distinguishable from that at bar. If the only authority for issuing the bonds, that gave rise to this controversy, were the provisions in the charter empowering the town to borrow money, it would be a case in point. But we have already adverted to the fact that the charter of the railroad company (Section 9, Ch. 315, Laws 1891) expressly contemplates and by implication authorizes the issuing of bonds by the town to aid in the building of the road (not simply the borrowing of money by such towns for corporate purposes) and, that in accordance with a familiar rule of construction, all statutes bearing upon the subject must be construed in pari materia. Every doubt must be resolved in favor of the constitutionality of any act passed by the Legislature (State v. Moore, 104 N. C., 473) and upon the same principle where the assent of the Legislature to the creation of a municipal debt has been given by fair implication, it would be “sticking in the bark” to render such expression of its will nugatory by insisting that special election machinery should have been provided for ascertaining the popular feeling, when “general laws can be made to subserve the purpose. It must be conceded that the result of the election cannot be drawn in question in this collateral proceeding, if the law authorized the holding of it. McDowell v. Construction Co., supra.

Pretermitting the question whether the Court could look beyond the compromise judgment for the purpose of determining whether the statute authorized the holding of the election, we have preferred to declare that the town was in fact authorized by fair implication of law to hold it. The purchaser of such coupons as those sued upon, must so far act upon the notice contained in the recitals, as a general rule, as to examine the statutes referred to, and ascertain at his peril whether the essential prerequisites to the validity of the bonds have been met both by Legislative and popular action. "W"e hold that upon a fair construction of the organic law and pertinent statutes and their application to the facts of this case, there has been a sufficient compliance with the essential requirements of'the law to render the election valid. We think, therefore,'that the Court erred in holding that the plaintiff was not entitled to recover, and the judgment of non-suit must be set aside and a new trial granted.

DEFENDANT’S APPEAL IN SAME CASE.

The facts are stated in the foregoing appeal. The defendant objected to tlie judgment of non-suit and insisted upon the right of the town to demand a verdict and judgment thereon, and appealed from the judgment on that ground. The further answer of defendants was as follows:

The defendants, further answering by way of defense to said action, say :

1. That section 5 of Acts of the General Assembly of North Carolina, entitled “An Act to Incorporate the Oxford and Coast Line Railroad Company,” and ratified the 5th day of March, A. I). 1891, which is in complaint mentioned and referred to, provided, amongst other things, that apon the subscription of five thousand dollars of the stock and the election of directors as therein is mentioned, said company should be deemed and held fully organized for all purposes, and might proceed to carry out the objects of their charter; and the defendants further say, upon information and belief, that while it is true that prior to the pretended organization of said company hereinafter mentioned, to-wit: on or about the 12th day of March, 1891, the amount of fifty-four hundred dollars or thereabout, was in form and appearance subscribed (all by private individuals) to the capital stock of said company, yet that said subscriptions or nearly all of them, were not in good faith, but were made with an agreement or understanding between said subscribers, generally, that each should pay in on account of his said subscription the sum of ten dollars only, for the purpose of meeting expenses preliminary to the commencement of the construction of said railroad, and should never be called on or required to pay .anything more on account of said subscriptions, it being the intention of said subscribers in making such subscriptions to merely enable them to effect a pretended organization of said company with an appearance of legality and of a compliance with the provisions of said charter; and that notwithstanding there had not been tona fide subscribed and so not really subscribed to the capital stock of the said company the sum of five thousand dollars, as required by said charter before said company could be legally organized, yet the said subscribers, or some of them, proceeded to. make and did make a pretended organization of said company by an election of directors, and that after-wards all said subscribers, with two exceptions, refused and failed to pay anything further on their said subscriptions, upon the ground of the agreement and understanding aforesaid, and indeed were not called on to pay anything in addition to the ten dollars aforesaid, until after the Board of Commissioners of Oxford refused to issue the said bonds of forty thousand dollars, which said company claimed they were bound to do, in pursuance of said election mentioned in the complaint, and that said subscribers were then called on to pay their said subscriptions and refused and failed to pay the same, although they were threatened with a suit or suits to compel them to do so; and the defendants further say they deny that the Oxford and Coast Line Railroad Company mentioned in the complaint, and which is the same that was so pretended to be organized as aforesaid, was ever duly or legally organized under said act of the fifth of March, 1891, or was at the time of the issuing of bonds, so-called, mentioned in the complaint., or is a legally constituted and valid corporation, .and was not nor is entitled to receive payment of subscriptions to the capital stock of said Oxford and Coast Line Company, chartered by said act.

2. The defendants further say they deny that chapter 49 ■of The Oode of North Carolina or the election mentioned in the complaint, authorizes any subscription to the capital stock of said Oxford and Coast Line Railroad Company, or the issue of any bonds for such purpose by the Board of Commissioners of Oxford, or that said chapter 49 of The Code of North Carolina or any of said acts of the General Assembly of North Carolina authorized or provided for the holding of said election or that the same was ordered or held by any authority of law; and the defendants .further say that however the said bonds, so-called, may purport to have been issued, the defendants deny that in point of fact they were issued in pursuance of any powers or authority granted by said chapter 49 of The Code of North Carolina or in pursuance of any authority granted by any of the Acts of the General Assembly of North Carolina in said complaint mentioned and referred to, or in pursuance of said election, but that they were really and truly issued in pursuance of said agreement of compromise and consent, judgment or decree only. And the defendants further say that the only election authorized and provided for in said charter of said town of Oxford, is an election for the election of officers as therein is set forth and that even if the provisions of said charter of said town of Oxford could be considered as including such an election as that mentioned in said complaint (which the defendants deny) yet they deny that said election was regularly or legally held in the manner prescribed in said charter for the election therein authorized — that said charter of said town of Oxford in the 12th section provides amongst other things, that for the purpose of the election, therein authorized and provided for, the Commissioners shall appoint in manner as therein set forth, three inspectors, and chapter 62 of the 2nd volume of The Code of North Carolina, Section 3788, (which applies ■ when not inconsistent with the charter) .provides that such election -as is mentioned in the complaint, shall be held under the inspection of such persons, not exceeding three, as the Board of Town Commissioners may appoint, and the defendants further say that the inspectors who held and conducted the election in the complaint mentioned were four in number and were appointed not by Commissioners, but by the Mayor who had no authority to appoint the same; and the defendants further say that said election mentioned in said complaint was utterly null and void and gave the Board of Commissioners of Oxford no power or authority to subscribe to the capital stock- of said Oxford and Coast Line Railroad Company (and they have never done so) or to issue bonds for any amount as a subscription to the same or for any other purpose.

3. The defendants further say that at the time of the ordering of said election in the coihplaint mentioned, and before and at the same time of holding the same as aforesaid, it was represented to the citizens and taxpayers of the town of Oxford by the organizers of said Oxford and Coast Line Railroad Company as aforesaid and the promoters of their plans, that their plan and purpose was to build (as they were authorized bv their charter to do) a railroad from Oxford, passing through Franklin county, to Springhope in the county of Nash, North Carolina, which had and has a connection by railroad with the Wilmington and Weldon Railroad at Rocky Mount, in Nash county, North Carolina, so as to bring Oxford in direct and convenient communication with the Eastern part of the State — that the said representations were assiduously made and circulated with the view of inducing the voters of Oxford to favor the proposition submitted to them in said election, and a great majority of those who voted in favor of said proposition in said election were induced to do so by such representations; that after said election the said Oxford and Coast Line Railroad Company, so-called, laid out and commenced the construction of a railroad only from Oxford aforesaid to a point on the Durham and Northern Railroad, at Jack Dickerson’s, in said county of Granville, a distance of not more than four and a balf miles from Oxford, if that. And the defendants further say, upon information and belief, that there was and is no purpose on the part of said Oxford and Coast Line Eailroad Company, so-called, to extend said railroad beyond said point on said Durham and Northern Eailroad, and that it never had nor has it been able to obtain the means to do so; that it never had and never has been able to obtain the means to complete said railroad between Oxford and said point on said Durham and Northern Eail-road ; that the voters of Oxford did not have in view when voting in said election or anticipate the building of a railroad from Oxford to said point on said Durham and Northern Eailroad merely; that the same, if completed and operated, would be of little or no benefit or advantage to Oxford in comparison with such a railroad as they understood and believed was to be built as aforesaid and that a large majority of the voters of Oxford never would have voted in favor of the proposition submitted to them, as aforesaid, or in favor of any other proposition to subscribe to the capital stock of said Oxford and Coast Line Eail-road Company or to incur any obligations of any kind in respect to the same, but for their belief, induced and caused by the representations before mentioned, that said railroad was to be what the name of said company imports and was to be built from Oxford to Springhope aforesaid, so as to place Oxford in direct and convenient communication with Eastern North Carolina as aforesaid.

4. The defendants further say that said decree directed and required that co-temporaneously with the issuing and delivery to said Oxford and Coast Line Eailroad Company of the bonds to the amount of twenty thousand dollars in the said decree directed to be issued and delivered to said Company, the said Company at its own charges should deliver to the Board of Commissioners of Oxford, a release such as in said decree specified, and that no such release has ever been executed and delivered to the Board of Commissioners of Oxford and the defendants insist that if the Board of Commissioners had any legal right or power to issue and deliver said bonds at al'l (winch the defendants deny as aforesaid) yet it had no right or power to issue and deliver said bonds without at the same time receiving from the said Oxford and Coast Line Railroad Company such release, and that the delivery of said bonds in the complaint mentioned to said Company was illegal, null and void.

5. The defendants further say that at the time of the making of said judgment or decree and the giving of said order for $600.00 to said A. W. Graham, as aforesaid, the only work that had been done towards the construction of said railroad was the grading of the same nearly to Oxford from said point on said Durham and Northern Railroad, and in order to the completion of said railroad, the grading was to be finished and culverts and bridges were to be built and other things to be done; that said decree requires said company to complete the said railroad, then in course of construction from Oxford to said point on said Durhanrand Northern Railroad, and put the same in operation within a reasonable time from and after the isssuing of the bonds therein directed to be issued, and that at the time of the making of said decree and the giving of said order for $600 to A. W. Graham aforesaid, and before, the officers and agents of said Oxford and Coast Line Railroad Company repeatedly stated and assured the then Commissioners of Oxford that said railroad would be completed and put in operation within sixty or ninetj7' days and although the coilr-pletion of said railroad was not more difficult or costly than ordinary, and the same could, with the use of reasonable diligence, have been completed and put in operation within the time which it was stated it would be as aforesaid, yet not only has nothing been done .towards the completion of said railroad, since the issuing of said bonds, so-called, but the work that had already been done as aforesaid was let go to decay by the action of the elements, and has been much impaired and damaged and would require considerable expense to put it in its former condition. And the defendants say, upon information and belief, that said Oxford and Coast Line Railroad Company has no intention or expectation of completing and putting in operation the said railroad and has no means nor any expectation of being able to obtain the means of doing so, and has discontinued and abandoned the work on the same.

6. The defendants .further say that if said Oxford and Coast Line Railroad Company were a legal corporation and said bonds and coupons, so-called, and mentioned in the complaint, were legally issued and delivered to said company and were valid, which the defendants deny as aforesaid, yet said company held said bonds or their proceeds under and by virtue of said decree in special trust and exclusively for the special purpose specified in said decree, and none other, and that said trust attached to said bonds in the hands of all persons or parties to whom the same might come and that the plaintiff when and before becoming owner of said bonds (if plaintiff is owner of the same) was put upon inquiry and had notice by matter appearing upon the face of said bonds and by said decree and other proceedings in said actions in which said decree was rendered as aforesaid (and which were notice to the plaintiff' and all other persons or parties) of the matter contained therein, and the plaintiff ought to be considered and adjudged as a trustee of said bonds and coupons and holding the same in trust for the purposes stated and set forth in said decree and bound for the application of the same or their proceeds to said purposes exclusively, and none other, and is not entitled to recover at all in this .action, or at all events without giving sufficient security for the complete performance of all things which said decree directed and required said company to do and perform, and which are yet unperformed. And the defendants further say, upon information and belief, that the plaintiff at the time of becoming holder of said bonds, so-called, in the complaint mentioned (if the plaintiff is holder of the same as alleged in said complaint, or any of them) had notice not only of.said false representations made as aforesaid to induce the voters of Oxford to vote in favor of the proposition voted on in said election, and of the illegality of said election and of the want of legal authority to order or hold the same, and of the want of sufficient .power and authority, in law, on the part of the Board of Commissioners issuing said bonds, so-called, to issue the same, and of the then condition of said railroad, but also of the inability of the so-called Oxford and Coast Line Railroad Company to complete the said railroad and put it in operation. And the defendants further say, upon information and belief, that said so-called bonds or their proceeds were not used, applied and disposed of exclusively to and for the purpose specified and directed in said decree, but that a large part of the same was otherwise used, applied and disposed of, contrary to the directions and requirements of said decree.

7. The defendants further say that said election being without any authority of law and null and void and the Board of Commissioners of Oxford issuing said bonds, so-called, having no sufficient legal power or authority to issue the same, as aforesaid, neither in the agreement of compromise is said decree mentioned nor the said decree (the same being a consent decree) did or could confer upon said Board of Commissioners any power or authority to issue said so-called bonds so as to conclude or affect any subsequent Board of Commissioners, and least of all the-citizens and taxpayers of said town of Oxford, even if the same bad been issued in accordance with said decree, and that to compel the citizens and taxpayers of Oxford under the circumstances to pay said so-called bonds or coupons of interest on the same, or any part thereof (for which neither they nor the Board of Commissioners of Oxford have ever received any advantage or valuable consideration) would be a great wrong and injustice to them ; and that the said so-called bonds and coupons ought to be required to be sur-rendred and canceled.

8. And for a still further defence in this action, the defendants say they are advised and believe that the alleged bonds and coupons by reason of the recitals therein and matters appearing upon their face are not what the law denominates negotiable instruments and that all holders of the same, as well the plaintiff in said two actions in which said decree was made, the said Oxford and Coast Line Railroad Company et ail, referred to in said bonds, as all other persons or parties hereafter receiving the same from said plaintiff in said two actions, the Oxford and Coast Line Railroad Company et col, took the same upon notice and inquiry as to all matters disclosed by the record, compromise, agreement and decree in the suit referred to, and subject to all the stipulations, covenants, agreements and conditions and disabilities disclosed by said record compromise, agreement and decree, and amongst other things, to the following : 1st. That while said bonds purported on their face to be issued by virtue of the Acts of the General Assembly of North Carolina, therein referred to and in paymént of a subscription for stock in the Oxford and Coast Line Railroad Company, such was really and in truth not the fact at all, as the plaintiff well knew or could have ascertained by inquiry, and said compromise agreement, which was and is the basis of said decree, expressly superseded and canceled (as it was intended to do when said Oxford and Coast Line Railroad Company executed the release therein provided for) the subscription of stock in said Oxford and Coast Line Railroad Company theretofore contemplated by the voters, and which was attempted as aforesaid to be authorized by the voters of the town of Oxford as aforesaid,'and the said bonds while purporting to be issued for the subscription aforesaid, were in fact issued for the settlement of a pretended claim on the part of the plaintiff in said two actions and without compliance with the former vote of the voters of Oxford and without ever being submitted to a vote of the people of Oxford at all. 2nd. That by the terms of the said agreement, said so-called bonds and coupons were not issued to raise a fund for the expenses of the government of the town of Oxford and to meet its obligations or to borrow money for sucii purposes, but were issued as a gift or bonus to said Oxford and Coast Line Railroad Company to pay off the debts of said railroad company and aid in the completion of the railroad theretofore commenced as aforesaid, and that too with the express stipulation and agreement on the part of the plaintiffs in the actions in which said decree was made* as aforesaid and to whom said bonds were delivered, that said bonds or their proceeds were to be exclusively used, applied and disposed of as directed in said decree and including the completion and putting into operation of said railroad in a reasonable time, as directed and required by said decree, which strictly prohibited and enjoined said Oxford and Coast Line Railroad Company, its officers and agents from using, applying and disposing of said bonds therein directed to be issued or their proceeds for any other purpose than in said decree is specified. And so the defendants aver that if the plaintiff is the owner and holder of the bonds and coupons mentioned in the complaint, the plaintiff took them with notice as aforesaid of their invalidity and of the equities and incumbrances attached thereto, and also of the failure of said Oxford and Coast Line Railroad Company to comply with its covenants and agreements, and the terms of said decree under which the same was issued.

9. The defendants further answering, say that all and singular the allegations of said complaint which are not hereinbefore admitted or denied, they deny.

. 10. That defendants further answering, say that said Oxford and Coast Line Railroad Company is a necessary party and ought to be made a party to this action, and yet the plaintiff has not made said railroad company a party to the same.

11. The defendants further say, answering by way of counter claim, here refer to and reaffirm all and singular the matters and things hereinbefore stated and set forth in manner and form as the same are so stated and set forth and as particularly as if the same were here set down and repeated, say that the said bonds and coupons which the plaintiff in said complaint claims to be the holder and owner of, or ought to be, and they demand that the same shall be required to be, surrendered and canceled.

Whereupon, the defendants demand judgment :

First — That said bonds and coupons of which plaintiff claims to be holder and owner as aforesaid, be required to be surrendered and canceled.

Second — For such further and other relief in the premises as the nature of the case may appear to require and to the Court shall seem meet. And the defendants having fully answered said complaint in so far as they are advised, it is necessary or material to answer the same pray, etc.

Avery, J.:

The plaintiff had a right to insist upon a judgment of non-suit at the close of the evidence in deference to the intimation of the Court, unless the defendant had set up in its answer a counter claim which, if made good by the proof, would entitle the town to affirmative relief. Manufacturing Co. v. Buxton, 105 N. C., 74; Pass v. Pass, 109 N. C., 484. The defendant might have made the subscription to the capital stock of the company dependent upon the completion of its road to a certain point before a given time, and the failure to do so was an oversight for which the plaintiff here, who was at most not bound to look further than to see whether those things that were essentially pre-requisite as to the issuing of a valid municipal bond had been done, cannot be made to suffer. It was competent for the State to authorize the institution of a suit to dissolve the corporation for non-user of its powers (Bass v. Navigation Co., 111 N. C., 439) but the validity of the coupons sued upon cannot be drawn in question in any such indirect way as that relied upon in the answer. The mere prayer, at the conclusion of the answer, that the bonds and coupons, of which the plaintiff claimed to be the owner, should be surrendered up to be canceled, is not of itself such a demand for affirmative relief as would entitle the defendant to insist upon a verdict and judgment thereon instead of judgment of non-suit. It is not the formal demand but the preceding averments that constitute the independant cause of action, which the defendant has elected to set up as a counter claim, when sued for any matter growing out of the same transaction, or to make the ground of a new suit. The defendant has failed to make any allegations which would entitle it to affirmative relief. The mere denials, which put at issue the allegations upon which the plaintiff bases its claim to relief, are plainly insufficient; and, for the reasons given, the averment of facts upon which the State might proceed for a forfeiture of the Company’s franchise, would not constitute an independent cause of action in favor of the defendant.

We see no sufficient reason to take this case out of the general rule that the plaintiff may submit to judgment of non-suit and appeal, when the Court makes an intimation adverse to him, at the conclusion of the evidence. ■

The ruling of the Court, in so far as it allowed the judgment of non-suit to be entered, was not erroneous.

No Error..