Tlie petition shows that in pursuance of the provisions of chapter 123, Acts of the Sixteenth General Assembly, a tax was duly voted on the taxable property of Cedar Falls township, Black Hawk county, Iowa, on November 22, 1883, in aid of the Wisconsin, Iowa & Nebraska Railway. Company. That on June 0, 1884, a like tax was voted, as provided in chapter 159, Laws of the Twentieth General Assembly, upon the taxable property of Waterloo township in said county, in aid of'said company. That said taxes were due and payable one-half on January 1, 1885, and one-half on January 1} 1886, That certain property-owners *389named in tlie petition paid their taxes in the amounts and at the times stated, and received certificates therefor from the county treasurer, which they severally assigned to the plaintiff; and that the railway company received the taxes so paid, the last receipt being on November 7, 1888. That on the dates named the plaintiff duly presented said certificates to George G. McMichael,. secretary, treasurer and general manager of the company, and demanded stock therefor, which was refused. That the defendants were members of the board of directors of said company, and as such did on November 1, 1883, vote to bond and mortgage said road as follows : A first mortgage to the Union Trust Company, dated-January 1, 1883, to the amount of twenty-four thousand dollars per mile; and an income mortgage to Marshal Oren Wilson and Albert Collins, dated January 2, 1883, to secure twenty thousand dollars income bonds per mile, — the first of which mortgages was filed for record in Black Hawk county, January 3, 1884, and the other June 3, 1884. That by said action of the defendants the shares of stock to which the plaintiff is entitled have been rendered of less value and wholly lost; wherefore he asks judgment for double the value thereof estimated at par.
It will be seen that, according to the petition, the defendants’ vote to mortgage the road was prior to the voting of either tax; that the first mortgage was filed for record several months before the second tax was voted, and the second mortgage was filed on the same day the second tax was voted; and that both mortgages were voted by the directors, executed and filed for record long before any of the tax was due or paid.
The first ground of demurrer presents the question whether directors are liable, under the statute, for voting such incumbrances before the tax is voted and received. Section 6, chapter 123, Acts of the Sixteenth General Assembly, under which the first tax was voted, is as follows: “ The board of directors, of any railroad company receiving taxes voted in aid thereof under the provisions of this act, or those members thereof, or either *390of them, who shall vote to bond, mortgage or in any manner incumber said road to an amount, if the same be a railroad of three-feet gauge, to exceed the sum of .eight thousand dollars per mile, and if of the ordinary four feet, eight and one-half inch gauge, to exceed the sum of sixteen thousand dollars per mile, not including in either case any debt for ordinary operating expenses, shall be liable to the stockholders, or either of them, for double the amount, estimated at its par value, of the stock by him or her held, if the same should be rendered of less value or lost thereby.” Section 7, chapter 159, Acts of the Twentieth General Assembly, under which the second tax was voted, is á re-enactment of section 6, with a slight transposition of the words, which does not alter the meaning, nor affect the question under consideration.
It is a matter of common knowledge that the construction of railroads in this state was largely aided by subscriptions to the stock of the companies and by voting taxes, and that, by reason of the extent to which the roads were, incumbered after such aid was given, the people realized but little on the stock to which they were entitled. It was to remedy this wrong, and to secure to stockholders the value of their stock, unimpaired by incumbrances in excess of the amounts named, that the sections under which this action is brought were enacted. The liability created by these sections is extraordinary, and, if not penal, is certainly in the nature of a penal liability. It is to all stockholders, whether they become such by subscribing for or ’ purchasing shares or by the payment of. the tax voted in aid of the company. He who became a stockholder by paying the tax is entitled to no greater rights, under these statutes, than one who subscribed for or purchased shares. It would not be contended that directors would be liable for having voted incumbrances in excess of the amount named, to one who purchased stock with notice that the incumbrances had been voted, executed and. recorded. We have seen that the taxpayers of Waterloo township had record notice of the-first mortgage, which *391is in excess of tlie limit, before the tax was voted on the property in that township; and that the taxpayers of both townships had record notice' of both mortgages before they paid any of the tax, and before any of thG tax was paid to the railroad company. If voting, executing and recording these incumbrances renders the defendants liable in this action, then their acts were a lawful reason for refusing to pay the tax, or, if payment was insisted upon, for enjoining collection, and, if payment had been made, to enjoin payment to the , railroad company. The plaintiff ’ s assignors had record notice of these incumbrances before they paid any part of the tax, and before any part of it was paid to the railroad company. They paid to the county treasurer, and permitted him to pay to the company, without protest and without invoking the ordinary and adequate remedies of the law that were open to them at every step. Surely it is not the purpose of the law to allow those who have thus acquiesced in the placing of the incum-brances to recover against the directors personally, because of their being so placed. Had the directors voted these excessive incumbrances after the company had received the tax, the case would be quite different. In such case taxpayers would be without remedy by the usual process of the law. True, if they had notice of the vote to incumber, they might ask injunction, but there is no requirement nor. record that gives them such notice; and, when the incumbrance is executed, and rights of third persons arise, the stockholder is without remedy, except as it is given in the sections quoted. We are of the opinion that directors are personally liable to stockholders only in cases where, after the company has received taxes voted in its aid, the bonds are issued by their authority in excess of the limits named in the statute, and the stock is thereby rendered of less value.
It follows from these conclusions that the demurrer was properly sustained ; and, as this fully disposes of the case, we need not consider the other questions raised and discussed. Aeeiemed.