Sweeney v. Tennessee Cent. R. Co.

• Decision Date: 23 February 1907
• Parties: SWEENEY ET AL. v. TENNESSEE CENT. R. CO. ET AL.
• Court: Tennessee Supreme Court

100 S.W. 732

118 Tenn. 297

SWEENEY ET AL. v. TENNESSEE CENT. R. CO. ET AL.

Supreme Court of Tennessee.

February 23, 1907

Appeal from Chancery Court, Davidson County; John Allison Chancellor.

Suit by George W. W. Sweeney and others against the Tennessee Central Railroad Company and others. The bill was dismissed on demurrer, and complainants appeal. Affirmed.

W. H Cooper and Thomas J. Tyne, for appellants.

Pitts & McConnico, John M. Dickinson, and Alex P. Humphreys, for appellees.

BEARD C.J.

The complainants are citizens and taxpayers of the city of Nashville, and they file the present bill, on their own behalf and on behalf of other taxpayers of that city, the purpose of which is to have declared void a subscription made by the mayor and city council of Nashville for $1,000,000 of the capital stock of the Nashville & Clarksville Railroad Company, one of the constituents of the consolidated railway companies now known as the "Tennessee Central Railway Company," and for a decree inhibiting the city's use of its bonds or cash in payment of this subscription. The bill was dismissed on demurrer, and now, on appeal, the complainants are urging the same contentions decided against them in the court below.

The first of these contentions, and the one most earnestly pressed, is that as a condition precedent to the city's contract of subscription for this stock it was agreed that the Nashville & Clarksville Railroad Company should not issue more than $25,000 of bonds per mile for roads constructed or to be constructed, and that in violation of this condition the corporation had placed upon its property secured bonds amounting to $37,000 per mile.

Taking the bill and exhibit thereto, we find that on the 21st of June, 1901, the Nashville & Clarksville Railroad Company, by its president, Mr. Jere Baxter, submitted an application in writing to Mr. J. M. Head, the then mayor of Nashville asking for a subscription to the capital stock of that corporation by the mayor and city council of Nashville in the sum of $1,000,000. This application as originally filed with the mayor was as follows:

"Nashville, Tennessee, June 21, 1901.

Hon. Jas. M. Head, Mayor of the City of Nashville:

The Nashville & Clarksville Railroad Company, a corporation organized and existing under the laws of Tennessee, proposes to construct a standard-gauge steam railroad from a point within the corporate limits of the city of Nashville, Tenn., connecting with the tracks of the Tennessee Central Railroad Company, or those of the Nashville Terminal Company, and crossing the Cumberland river by a bridge, to be constructed either by the Nashville & Clarksville Railroad Company or by the said terminal company, to a point within the limits of the city of Clarksville, Tenn., and beyond the latter point in a northwestern direction to a point in the county of Montgomery, Tenn., at the state line between the states of Tennessee and Kentucky, the same to be authorized to issue stock at the rate of $25,000 per mile of completed and acquired road, and 5 per cent. first-mortgage bonds at the rate of not exceeding $25,000 per mile of completed and acquired road, and respectfully asks a subscription to its capital stock by the mayor and city council of Nashville in the sum of $1,000,000 upon the following terms and conditions:

First. Construction of said line of railroad to be commenced at Nashville within 6 months from the date of subscription, and completed from that point through the county of Davidson within 12 months, and to the city of Clarksville within 24 months, from date of subscription. Delays caused by injunction or bona fide litigation are not to be counted as part of any said periods.

Second. No part of the subscription to become due and payable unless and until the said railroad company shall have constructed and put in operation, within the time fixed in this application and substantially in the direction and on the lines as shown on the plan or map which is attached hereto, that portion of its railroad located within the county of Davidson, and upon the completion and operation of that portion of the road one-half of the said subscription shall become due and payable, and upon its payment the said railroad company shall issue and deliver to the said mayor and city council of Nashville an equal amount of certificates of its capital stock.

Third. The balance of the subscription shall be due and payable when the entire line of railroad from Nashville to Clarksville shall have been constructed and put in operation, and upon said payment certificates for an equal amount of the capital stock of said railroad company shall be issued and delivered to said mayor and city council of Nashville.

Fourth. Payments for said stock may be made by said mayor and city council of Nashville, either in cash or its 20-year coupon bonds, bearing interest at 4 per cent. per annum, payable semiannually, as the said mayor and city council of Nashville may elect.

Fifth. The expenses of the election to be held under this application to be paid by the Nashville & Clarksville Railroad Company, and the amount thereof will be deposited with the city treasurer within five days after the election is ordered.

Attached to and made a part of this application is a plan or map, certified by the chief engineer of the Nashville & Clarksville Railroad Company, showing the general direction of the line of its roads; and it declares that it will locate and construct its said railroad substantially in accordance with said plans or map between the said cities of Nashville and Clarksville, and substantially as stated in this application.

You are respectfully asked to call a special meeting of the board of mayor and city council of the city of Nashville and submit this application to it for its consideration as provided by law, to the end that it may determine whether an election by the qualified voters of the city of Nashville shall be held to determine whether or not the subscription shall be made.

This application is made under and in accordance with the provisions of Acts 1887, p. 57, c. 3, of the General Assembly of the state of Tennessee. Respectfully,

Nashville & Clarksville Railroad Company,

[Seal.]

By Jere Baxter, President.

Attest: W. B. Eastman, Secretary."

A number of communications thereafter were exchanged between Mr. Baxter, as president of this company, and Mr. Head, the mayor of the city, one purpose of which, on the part of Mr. Baxter, was to disclose for the full information of the citizens of Nashville the plans of himself and associates in regard to the building of the new road and its consolidation with other lines of railways, controlled by the same parties, which ran east of Nashville. It is unnecessary to set out these communications, as they in no degree reflect light on the particular point now being considered. It is sufficient to say that this correspondence led in some degree to a change in or an amendment of the original application. This amended application was in the same language as was the original, except that paragraphs 2 and 3 were so amended as to read as follows:

"Second. No part of the subscription to become due and payable unless and until the said railroad company shall have constructed and put in operation within the time fixed in this application, and substantially in the direction and on the line as shown by the map which is attached hereto, that portion of the railroad located within the county of Davidson, and shall have provided for and accepted upon its board of directors, upon the request of the mayor and city council of Nashville, at any time after it shall have made said subscription, two members named for directors by resolution of said mayor and city council, and upon the completion and operation of that portion of the railroad, and compliance with above condition as to representation of the mayor and city council upon its board of directors, one-half of said subscription shall become due and payable, provided the bridge across Cumberland river shall have been completed; otherwise, when said bridge is completed, and upon its payment, the said railroad company shall issue to said mayor and city council of Nashville an equal amount of certificates of its capital stock.

Third. The balance of the subscription shall be due and payable only when the following conditions precedent shall have been complied with: (1) When the entire line of railroad from Nashville to Clarksville shall have been constructed and put in operation as proposed; and

(2) When the said Nashville & Clarksville Railroad Company shall have made and filed with the mayor of the city of Nashville a bond in the sum of $500,000, payable to the mayor and city council of Nashville, with good security, to be approved by the mayor, conditioned that said Nashville & Clarksville Railroad Company, or a consolidated company of which it may form a part, shall within three years from the subscription (delays caused by injunction or bona fide litigation excepted) extend its line of railroad from Clarksville to a connection with the Illinois Central Railroad, either by construction or acquiring by purchase or lease a line of railroad to such connection; and

(3) When the syndicate, composed of Jere Baxter and his associates, shall have deposited with the Union Bank & Trust Company, of Nashville, Tenn., or with some other responsible depository of Nashville, to be approved by the mayor of Nashville, first mortgage bonds of either the Nashville & Clarksville Railroad Company, or the consolidated company of which it may form a part, belonging to said syndicate jointly or severally, of the aggregate sum of $500,000, accompanied with an agreement, duly executed by them,...