« ΠροηγούμενηΣυνέχεια »
(114 U. S. 663)
THE TENNESSEE BOND CASES.*
STEVENS and others v. MEMPHIS & C. R. Co. and others.1
SAME v. MEMPHIS, C. & L. R. Co. and others.1
SAME. LOUISVILLE, N. & G. S. R. Co.i
SAME. CHICAGO, ST. L. & N. O. R. Co. and others.1
SAME v. MISSISSIPPI & T. R. Co.1
SAME v. MOBILE & O. R. Co. and others.1
Appeals from the Circuit Court of the United States for the Western District of
STEVENS and others v. LOUISVILLE, N. & G. S. R. Co.1
SAME V. NASHVILLE & N. W. R. Co. and others.1
SAME O. NASHVILLE & D. R. Co. and others. (Two Cases.)1
Appeals from the Circuit Court of the United States for the Middle District of Tennessee..
SAME v. KNOXVILLE & K. R. Co. and others.1
SAME 0. EAST TENNESSEE, V. & G. R. Co. (Two Cases.)1 Appeals from the Circuit Court of the United States for the Eastern District of Tennessee.
(May 4, 1885.)
STATE BONDS IN AID OF RAILROAD COMPANIES-ACT OF TENNESSEE LEGISLATURE, FEBRUARY 11, 1852-LIABILITY OF RAILROAD COMPANY FOR SUCH BONDS.
The statutory lien with which the state of Tennessee was invested upon the issueof its bonds to railroad companies under the internal improvement act of February 11, 1852, and the several acts amendatory thereof, bound the property of the company, to which the issue was made, for the payment of the bonds so issued, and the interest thereon, not to the several holders thereof, but only to the state.
HARLAN, J., dissenting.
Argued by George Hoadly and Wager Swayne; and submitted by E. L. Andrews, J. C. F. Gayner, E. M. Johnson, and Edward Colston, for appellants.
Argued by C. F. Southmayd, Ed. Baxter, Wm. M. Ramsey, E. H. East, P. Hamilton, and John A. Campbell; and submitted by Wm. M. Baxter, L. W. Humes, D. H. Poston, W. K. Poston, J. B. Heiskell, Geo. Brown, and James Fentress, for appellees.
*WAITE, C. J. These are suits brought by the holders of unpaid bonds of the state of Tennessee, issued to various railroad companies under the act of February 11, 1852, "to establish a system of internal improvements," to enforce the lien which was vested in the state by that act on the property of the companies respectively as security for the payment of the bonds, and the accruing interest thereon. The sections of the act on which the rights of the parties depend are 1, 2, 3, 4, 5, 6, 7, 10, 12, 13, and 14. These are as follows: "Section 1. Be it enacted by the general assembly of the state of Tennessee
18. C. 3 Fed. Rep. 673, and
that whenever the East Tennessee & Virginia Railroad Company shall have procured bona fide subscriptions for the capital stock in said company to an amount sufficient to grade, bridge, and prepare for the iron rails the whole, extent of the main trunk line proposed to be constructed by said company, and it shall be shown by said company to the governor of the state that said subscriptions are good and solvent, and whenever said company shall have graded, bridged, and shall have ready to put down the necessary timbers for the reception of rails, and fully prepared a section of thirty miles of said road at either terminus, in a good and substantial manner, with good materials, for putting on the iron rails and equipments, and the governor shall be noti fied of these facts, and that said section, or any part thereof, is not subject to any lien whatever, other than those created in favor of the state by the acts of 1851-52, by the written affidavit of the chief engineers and president of said company, together with the written affidavit of a competent engineer by him appointed, at the cost of the company, to examine said section, then said gov ernor shall issue to said company coupon bonds of the state of Tennessee, to an amount not exceeding eight thousand dollars per mile on said section, and on no other condition, which bonds shall be payable at such place in the United States as the president of the company may designate, bearing an interest of six per centum per annum, payable semi-annually, and not having more than forty nor less than thirty years to mature.
"Sec. 2. Be it enacted, that the bonds before specified shall not be used by said company for any other purpose than for procuring the iron rails, chairs, spikes, and equipments for said section of said road, and for putting down said iron rails, and the governor shall not issue the same unless upon the affidavit of said president, and a resolution of a majority of the board of directors, for the time being, that said bonds shall not be used for any other purpose than for procuring the said iron rails, chairs, spikes, and equipments for said section, and for putting down said iron rails; and the governor shall have power to appoint a commissioner to act, under oath, in conjunction with said president, in negotiating said bonds for the purposes aforesaid, and to act in any other matters pertaining to said company where the interest of the state, in the opinion of the governor, may require it.
"Sec. 3. Be it enacted, that so soon as the bonds of the state shall have been issued for the first section of the road as aforesaid, they shall constitute a lien upon said section so prepared as aforesaid, including the road-bed, right of way, grading, bridges, and masonry, upon all the stock subscribed for in said company, and upon said iron rails, chairs, spikes, and equipments when purchased and delivered; and the state of Tennessee, upon the issuance of said bonds, and by virtue of the same, shall be invested with said lien or mortgage without a deed from the company for the payment by said company of said bonds, with the interest thereon as the same becomes due.
"Sec. 4. Be it enacted, that when said company shall have prepared, as aforesaid, a second section, or any additional number of sections, of twenty miles each of said road, connecting with a section already completed for the iron rails, chairs, spikes, and equipments, as provided in the first section of this act, and the governor shall be notified of the facts, as before provided, he shall, in like manner, issue to said company like bonds of the state of Tennessee, to an equal amount with that before issued under the first section of this act, for each and every section of twenty miles of said road so prepared, as aforesaid, but upon the terms and conditions hereinbefore provided: and upon the issuance of the said bonds the state of Tennessee shall be invested with a like mortgage or lien, without a deed from said company, upon said stock, and upon said first and additional section or sections of said road so prepared, upon the rails and equipments put, or to be put, upon the same, for the paynient of said bonds and the accruing interest thereon: provided, that if the last section of said road shall be less than twenty miles, or if the railroad pro
posed to be constructed by any company hereinafter specified shall be less than thirty miles in extent, bonds of the state shall be issued for such section, or such railroad, as may be less than thirty miles in extent for an amount in proportion to the distance, as provided in this act, but upon the same terms and conditions in all respects, as required in regard to the bonds to be issued for the other sections of said road. And when the whole of said road shall be completed, the state of Tennessee shall be invested with a lien, without a deed from the company, upon the entire road, including the stock, right of way, grading, bridging, masonry, iron rails, spikes, chairs, and the whole superstructure and equipments, and all the property owned by the company as incident to or necessary for its business, and all depots and depot stations, for the payment of all of said bonds issued to the company as provided in this act, and for the interest accruing on said bonds. And after the governor shall have issued bonds for the first section of the road, it shall not be lawful for the said company to give, create, or convey to any person or persons, or body corporate whatever, any lien, incumbrance, or mortgage of any kind, which shall have priority over, or come in conflict with, the lien of the state herein secured; and any such lien, incumbrance, or mortgage shall be null and void as against said lien or mortgage of the state, and the said lien cr mortgage of the state shall have priority over all other claims existing or to exist against said company.
"Sec. 5. Be it enacted, that it shall be the duty of said company to deposit in the bank of Tennessee, at Nashville, at least fifteen days before the interest becomes due, from time to time, upon said bonds issued as aforesaid, an amount sufficient to pay such interest, including exchange and necessary commissions, or satisfactory evidence that said interest has been paid or provided for; and if said company fail to deposit said interest as aforesaid, or furnish the evidence aforesaid, it shall be the duty of the comptroller to report that fact to the governor, and the governor shall immediately appoint some suitable person or persons, at the expense of the company, to take possession and control of said railroad, and all the assets thereof, and manage the same and receive the rents, issues, profits, and dividends thereof, whose duty it shall be to give bond and security to the state of Tennessee, in such penalty as the governor may require, for the faithful discharge of his or their duty as receiver or receivers, to receive said rents, issues, profits, and dividends, and pay over the same, under the direction of the governor, towards the liquidation of such unpaid interest. And if said company fail or refuse to deliver up said road to the person or persons so appointed by the governor, the person so appointed shall report that fact to the governor, who shall forthwith issue is warrant, directed to the sheriffs of the counties through which said road shall run, commanding them to take possession of said road, fixtures, and equipments, and everything pertaining thereto, and place the said receiver in full and complete possession of the same, and said receiver so appointed shall continue in the possession of said road, fixtures, and equipments, and run the same, and manage the entire road, until a sufficient sum shall be realized, exclusive of the costs and expenses incident to said proceedings, to pay off and discharge the interest as aforesaid due on said bonds, which being done, the receiver shall surrender said road and fixtures and equipments to said company. The comptroller shall from time to time settle the accounts with the receiver, and the balance shall be deposited in the treasury of the state. The comptroller is authorized, and it is made his duty, upon his warrant to draw from the treasury any sum of money necessary to meet the interest on such bonds, as may not be provided for by the company, as provided for in this act, and the comptroller shall report thereof to the general assembly from time to time.
"Sec. 6. Be it enacted, that if said company shall fail or refuse to pay any of said bonds when they fall due, it shall be the duty of the governor to notify the attorney general of the district in which is situated the place of business
of said company of the fact; and thereupon said attorney general shall forthwith file a bill against said company, in the name of the state of Tennessee, in the chancery or circuit court of the county in which is situated said place of business, setting forth the facts, and thereupon said court shall make all such orders and decrees in said cause as may be deemed necessary by the court to secure the payment of said bonds, with the interest thereon, and to indemnify the state of Tennessee against any loss on account of the issuance of said bonds, by ordering the said railroad to be placed in the hands of a receiver, ordering the sale of said road and all the property and assets attached thereto or belonging to said company, or in such other manner as the court may deem best for the interest of the state.
"Sec. 7. Be it enacted, that at the end of five years after the completion of said road, said company shall set apart one per centum per annum upon the amount of bonds issued to the company, and shall use the same in the purchase of bonds of the state of Tennessee, which bonds the company shall pay into the treasury of the state, after assigning them to the governor, and for which the governor shall give said company a receipt; and, as between the state and said company, the bonds so paid in shall be a credit on the bonds issued to the company; and bonds so paid in, and the interest accruing thereon from time to time, shall be held and used by the state as a sinking fund for the payment of the bonds issued to the company, and should said company repurchase any of the bonds issued to it under the provisions of this act, they shall be a credit as aforesaid, and canceled. And should said company fail to comply with the provisions of this section, it shall be proceeded against, as provided in the fifth section of this act."
"Sec. 10. Be it enacted, that the provisions of this act shall extend to and embrace the Chattanooga, Harrison, Georgetown & Charlestown Railroad Company, the Nashville & Northwestern Railroad Company, the Louisville & Nashville Railroad Company, the Southwestern Railroad Company, the McMinnville & Manchester Railroad Company, the Memphis & Charleston Railroad Company, the Nashville & Southern Railroad Company, the Mobile & Ohio Railroad Company, the Nashville & Memphis Railroad Company, the Nashville & Cincinnati Railroad Company, the East Tennessee & Georgia Railroad Company, the Memphis, Clarksville & Louisville Railroad Company, and the Winchester & Alabama Railroad Company, so far as the main trunk roads to be constructed by said companies lie with the limits of this state, and not otherwise, and said companies shall have all the powers and privileges and be subject to all the restrictions and liabilities contained in this act. *
"Sec. 12. Be it enacted, that the state of Tennessee expressly reserves the right to enact by the legislature thereof, hereafter, all such laws as may be deemed necessary to protect the interest of the state, and to secure the state, against any loss in consequence of the issuance of bonds under the provisions of this act; but in such manner as not to impair the vested rights of the stockholders of the companies.
"Sec. 13. Be it enacted, that it shall be the duty of the governor, from time to time, when there shall be reliable information given to him that any railroad company shall have fraudulently obtained the issuance of bonds of the state, or shall have obtained any of said bonds contrary to the provisions of this act, he shall notify the attorney general of this state, whose duty it shall be forthwith to institute, in the name of the state, a suit in the circuit or chancery court of the county of the place of business of the company, setting forth the facts. And when the fact shall satisfactorily appear to the court that any of said bonds shall have been fraudulently obtained, or obtained contrary to the true intent, meaning, and provisions of this act, then, and in such case, the court shall order, adjudge, and decree that said road, lying in the state, with all the property and assets of said company, or a sufficiency thereof, shall be sold, and the proceeds shall be paid into the treasury, and it shall be the
duty of the comptroller immediately to vest the same in stocks, creating a sinking fund, as provided for in the seventh section of this act. And said company shall forfeit all rights and privileges under the provisions of this act, and the stockholders thereof shall be individually liable for the payment of the bonds so fraudulently obtained by such company, and for all other losses that may fall upon the state in consequence of the commission of any other fraud by such company, excepting such stockholders as may show to the said court that they were ignorant of or opposed to the perpetration of such frauds by the company.
"Sec. 14. Be it enacted, that in the event any of the roads, fixtures, or property belonging to any of said roads shall be sold under the provisions of this act, it shall be the duty of the governor to appoint an agent for the state, who shall attend said sale and protect the interest of the state, and shall, if necessary to protect said interest, buy in said road or property in the name of the state; and in case said agent shall purchase said road for the state, the governor shall appoint a receiver, who shall take possession of said road and property, and use the same as provided for in the fifth section of this act; and said receiver shall settle with the comptroller semi-annually until the next meeting of the general assembly."
On the twenty-first of February, 1852, an act was passed providing for the identification of the bonds to be issued to the several companies under the act of February 11, the material parts of which are sections 7, 8, and 9, as follows:
"Sec. 7. Be it further enacted, that the different internal improvement companies to whom the bonds of the state may be lent under the different acts of the present legislature shall pay the expenses of engraving and preparing the same.
"Sec. 8. Be it enacted, that the governor of the state shall cause to be engraved and printed the bonds which may be issued under the acts of the present general assembly, as a loan made to internal improvement companies; and the said bonds shall bear date on the first day of January prior to their issuance, and the coupons thereto shall be payable on the first days of January and July of each year.
"Sec. 9. Be it enacted, that the coupons shall be signed and numbered by the comptroller, and the bonds shall be countersigned, sealed, and numbered by the secretary of state; and upon delivering said bonds to the company authorized to receive the same, the secretary of state shall take a receipt, reciting the number, date, and amount of said bonds, in a well-bound book to be deposited in his office, and the comptroller and secretary of state shall each be entitled to receive twenty-five cents for each bond so prepared, to be paid by the party receiving the said bond."
By sections 5 and 6 of an act of February 21, 1856, the sinking fund provisions of the act of 1852 were changed as follows:
“Sec. 5. Be it further enacted, that it shall be the duty of the several railroad companies in this state, who have received, or may hereafter receive, bonds of the state, or the indorsement of their bonds by the state, to aid in the construction of their said several roads, under the provisions of the act of 1851-52, and the acts amendatory thereto, at the expiration of five years from the issuance or indorsement of their several bonds, annually to set apart and pay over to the treasurer of the state two per cent. per annum upon all bonds which have been or may hereafter be issued or indorsed as aforesaid, as a sinking fund for the ultimate redemption of the bonds issued or indorsed as aforesaid; which sinking fund, when paid over, the governor, comptroller of the treasury, and president of the Bank of Tennessee shall invest in the bonds of the state, and reinvest all accruing interest in like securities; and they are hereby constituted a board of commissioners for the management, government, and control of said sinking fund.