Kelly v. Town of Milan

• Decision Date: 22 October 1884
• Parties: KELLY and another v. TOWN OF MILAN.
• Court: U.S. District Court — Western District of Tennessee

21 F. 842

KELLY and another v. TOWN OF MILAN.

United States Circuit Court, W.D. Tennessee.

October 22, 1884

This suit was brought to recover of the defendant an indebtedness evidenced by 144 coupons of $35 each, cut from its certain 12 bonds, together with 7 per cent. interest thereon. The defendant filed a plea of non est factum under oath, and a plea that plaintiffs were not bona fide holders, without notice, etc. The plaintiffs joined issue, and, under the Tennessee practice, by leave of the court, further filed a replication, to which the defendant rejoined, and plaintiffs demurred to the rejoinder. The replication, rejoinder, and demurrer are as follows:

REPLICATION.

And the said plaintiff comes, and for replication to the defendant's plea above, says that heretofore, in the chancery court for the county of Gibson, in Tennessee, at Humboldt, and before one of the chancellors of said state the defendant instituted suit against the payee of said bonds, and certain other persons, holders thereof, by filing its bill in said chancery court against said Mississippi Central Railroad Company, H. S. McComb, and others, alleging that said bonds were invalid, and praying to have same so adjudged, and to be surrendered to the defendant herein and cancelled; and thereafter, to-wit, on the . . . day of January, 1875, in said chancery court, a court of competent jurisdiction, said parties, complainants and defendant, being before the court, a decree final was rendered, adjudging and decreeing that said bonds and coupons were legal, and valid and binding obligations against said complainant therein, the town of Milan, who is the same defendant herein, a full and true copy of which decree is herewith filed as a part and parcel of this replication, as though herein set forth in so many words. Wherefore the plaintiff says that said matters are res adjudicata, and this the plaintiffs reply to defendants' said plea above, and are ready to verify etc.

HOLMES CUMMINS, Attorney for Plaintiff.

REJOINDER.

(1) And now comes the defendant, and, for rejoinder to the plaintiff's replication setting up the defense of res adjudicata, says that the said decree relied upon for said defense, while rendered in the cause mentioned in said replication, is not conclusive on it and ought not to affect its right, and because it avers, sets forth, and pleads that said decree was brought about and procured by imposition combination, and fraud between the said A. M. West, as vice-president of the New Orleans, St. Louis & Chicago Railroad Company, and the agents and attorneys of this defendant, by which a decision and sentence in said cause of the court upon the matters involved for trial were prevented, and that said decree was designed as no honest exposition of the merits of the case, but was brought about, allowed, and consented to for the purpose of giving the same effect as res adjudicata upon points in litigation not honestly contested. (2) And for further rejoinder to said plea of res adjudicata this defendant says it ought not to be concluded or estopped by said decree, because it was not the result of honest litigation or the judgment of the court upon the issues involved in said cause, but was brought about and founded upon the unauthorized consent of certain agents and attorneys of defendant, who had no power to give such consent or bind defendant in the premises. (3) And for further rejoinder to said plea of res adjudicata the defendant says that it ought not to be concluded by said decree, for the reason that the same was not rendered upon the issues involved in the cause in which it was pronounced, and the court rendering the same was without power to bind or conclude this defendant thereby. (4) And for further rejoinder the defendant says it is not concluded by said decree, because it was not rendered in favor of a party to the record, but in the interest and behalf of a stranger thereto, who colluded with the agents and attorneys of this defendant, and thereby prevented and defeated the honest and earnest litigation which said cause was instituted for the purpose of having tried and determined. (5) And for further rejoinder, the defendant says it ought not to be concluded by said decree, because the suit in which it was pronounced was begun by defendant for the purpose of honestly and earnestly contesting and having declared void certain so-called bonds executed in the name of the defendant, but without authority or power to bind defendant by the same, and thereafter certain persons combined with the agents and attorneys of this defendant to defeat the purposes of said litigation and to procure a decree without trial and sentence of the court, but by the unauthorized consent of the agents and attorneys of defendant, and, without the point being, in fact, litigated, to have said bonds declared valid and binding obligations of this defendant, in the manner so stated in said decree, all of which was the result of fraud and collusion, therefore without force and effect as res adjudicata; the said bonds so pretended to be declared valid by said fictitious litigation being the same bonds on which the coupons sued on in this action were attacked.

SP'L HILL, and GANTT & PATTERSON, Attorneys.

DEMURRER.

In this cause said plaintiffs demur to the several rejoinders filed herein by the defendant to the replication of the plaintiff herein, and for causes of demurrer say: First. Neither of said rejoinders, nor the matters therein set up and pleaded, constitute any defense in law, and are not sufficient in law for answer or defense to plaintiffs' said replication of res adjudicata or estoppel by judicial decree. Second. That defendant, having been a party to said cause and decree set up and pleaded in plaintiffs' said replication, cannot be heard in this collateral proceeding to aver or plead that said decree final, etc., was procured by fraud or collusion or imposition. Said defendant being a party to that cause and that decree, can only avail itself of such matter against it by a direct proceeding to annul the said decree for such fraud, etc. Third. That defendant in this collateral proceeding cannot avail itself of the matter that the action of its agents, in consenting to said decree set up by plaintiffs in their said replication, was unauthorized, etc., because defendant can only act through its mayor, its chief executive, and to impeach said decree for that account must so do in a direct proceeding for that end, defendant having been a party thereto. Fourth. That said chancery court being a court of general jurisdiction, and in said cause that jurisdiction having been invoked by defendant as complainant therein, it is concluded by said final decree as to all questions involved in the subject-matter therein, and said decree adjudges the same issue against defendant that it now sets up anew. Fifth. And that defendant, being a party to said cause and said decree, is bound thereby until same has been set aside in a direct proceeding for that end, and cannot in this collateral proceeding plead that either a stranger or a party thereto colluded with defendants' agents to prevent and defeat honest and earnest litigation therein.

Wherefore, etc.

HOLMES CUMMINS, Attorneys for Plaintiffs.

The following stipulation of the parties was thereupon entered into and filed as a part of the record in the suit:

STIPULATION.

In this cause it is agreed between the parties that the statements herein are true, and the same may be used and relied on by either or both parties, as evidence on any hearing or trial of this cause, or on any motion for a new trial, same being the facts connected with matters in controversy, viz.:

First. That the coupons sued on were issued with and represent interest upon bonds issued by defendant in payment of a stock subscription made by defendant on the . . . day of . . ., 187 . . ., to the Mississippi Central Railroad Company. Said subscription was for the sum of $12,000, and in payment thereof (12) twelve bonds, each for the sum of $1,000, were issued, bearing date the . . . day of . . ., 187 . . ., and payable 20 years thereafter, with said coupons and others of like amounts thereto attached, representing the interest on said bonds.

Second. That at the time of making such subscription said railroad company was about to extend its line from Jackson, Tennessee, to Cairo, Illinois, and said subscription was to aid in making such extension, and to secure its location through defendant's town.

Third. That said railroad extension was completed on the . . . day of . . ., 1873, the same running through defendant's town limits as it stipulated for; and the same has been operated ever since that date.

Fourth. The following is a copy of one of said bonds, the others being the same except as to numbers:

'No. 1.

$1,000.

'State of Tennessee, Town of Milan:

'Be it known, that the town of Milan, by its mayor and aldermen, in consideration of the location of the Mississippi Central Railroad by said town, the citizens thereof, in pursuance of the laws of Tennessee authorizing the same, have agreed to issue bonds payable on twenty years' time, to the amount of twelve thousand dollars, with annual interest at seven per cent., with coupons attached, in bonds of one thousand dollars each.

'And whereas, the people of Milan voted the same by a majority, and in the form required by law, the vote being in pursuance of due notice, and in all respects according to the laws of Tennessee, said bonds to be payable to the Mississippi Central Railroad, under lease and control of the Southern Railroad Association.

'Now, be it known, that the town of Milan, by its mayor and aldermen, in pursuance of the authority given by the people

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