Jones v. Macon And Brunswick R.R. Co

• Decision Date: 30 June 1869
• Citation: 39 Ga. 138
• Parties: JOHN E. JONES et al., plaintiffs in error. v. MACON AND BRUNSWICK RAILROAD CO., et al., defendants in error.
• Court: Georgia Supreme Court

39 Ga. 138

JOHN E. JONES et al., plaintiffs in error. v. MACON AND BRUNSWICK RAILROAD CO., et al., defendants in error.

Supreme Court of the State of Georgia

(Atlanta, June Term, 1869.)

Constitutional laws. Injunction. Decided by Judge Cole. Chambers. Bibb county, March, 1869.

William B. Hodgson, John L. Mustain, and John E. Jones, by their bill made this case: They charged that the Macon and Brunswick Railroad Company was an incorporation of this State, having its principal office in said county, that they, complainants, are citizens of the State of Georgia, and tax payers thereof; that the Legislature of said State passed "An Act entitled an Act to extend the aid of the State to the completion of the Macon and Brunswick Railroad, and for other purposes, " approved 3d day of December, 1866, of which the following isa copy:

*"Whereas, the Macon and Brunswick Railroad has been completed to the distance of fifty miles from the city of Macon, and is thoroughly equipped, and daily trains are running thereon, and seventy miles additional are graded and ready for the superstructure; and, whereas, its completion to Brunswick would greatly inure to the benefit of the State in developing its agricultural, commercial and manufacturing interests; and, whereas, by reason of the financial embarrassments resulting from the late war, the stockholders of said railroad are unable to supply the capital necessary to the completion of this great work:

Section 1. Be it enacted, etc., That his Excellency, the Governor be, and he is hereby authorized to place the endorsement of the State of Georgia on the bonds of the Macon and Brunswick Railroad Company, which said Company may issue to the amount of ten thousand dollars per mile for as many miles of said road as are now completed, and the like amount per mile for every additional ten miles, as the same may be completed and placed in running order, on the following terms and conditions, to-wit: Before any such endorsement shall be made, the Governor shall be satisfied that as much of the road as the said endorsement shall be applied for, is really finished and in complete running order, and that the said road is free from all liens and mortgages, or other incumbrances which may, in any manner, endanger the security of the State; and, upon the further condition and express understanding that any endorsement of said bonds when thus made, shall not only vest the title to all property of every kind which may be purchased with said bonds in this State until all the bonds so endorsed shall be paid, but the said endorsement shall be and is hereby understood to operate as a prior lien or mortgage on all the property of the company, to be enforced as hereinafter provided for.

Sec. II. In the event of any bond or bonds endorsed by the State, as provided in the first section of this act, or the interest due therein, shall not be paid by said Railroad Company atmaturity, or when due, it shall be the duty of the Governor, upon information of such default by any holder of *said bond or bonds, to seize and take possession of all the property of said railroad company, and apply the earnings of said road to the extinguishment of said bond or bonds or coupons, and sell the said road and its equipments and other property belonging to said Company, in such manner, and at such time, as in his judgment may best subserve the interest of all concerned." Sec. III. Repeals conflicting laws.

And the Legislature afterwards and before the endorsement by the Governor of any of the said bonds of the Macon and Brunswick Railroad, for the purpose of still further restrict-ing the endorsement of the said bonds, and the use thereof by the said railroad company, and the security of the State on account thereof, passed a resolution, which was approved on the 4th December, 1866, of which the following is a copy:

"Whereas, A bill has been passed at this session of the General Assembly, entitled 'An Act to extend the aid, of the State to the completion of the Macon and Brunswick Railroad, and for other purposes;' and whereas, the said bill authorizes his Excellency, the Governor, to place the endorsement of the State on the bonds of said company; and whereas, no limitations were fixed upon the terms of sale of said bonds; therefore,

"Be it resolved, That said company shall not sell or dispose of the bonds thus endorsed by his Excellency for more than ten per cent, discount, and the endorsement of the State upon the bonds of the said company shall not exceed one million of dollars, until an amount of capital equal to the additional endorsement shall be bona fide subscribed and paid into said company.

"2d. Be it further resolved, That in order more fully to secure the payment of the bonds of said railroad company, it shall be the duty of said company to set apart annually two per cent. of the amount endorsed for, as a sinking fund, which shall be invested in State bonds and deposited with the Governor, to be held in trust for said company, and *which shall be applied exclusively to the payment of the bonds of said company.

"3d. Be it further resolved, That his Excellency, the Governor, be authorized to withhold his endorsement upon the bonds of said company until the President and Directors of said company give him written acceptance of the terms of these resolutions, and that these resolutions are received as explanatory of the bill extending the aid of the State to said Macon and Brunswick Railroad Company, and equally binding with said Act."

The credit of the State thus given to the Macon and Brunswick Railroad Company was extended upon the faith of the facts stated in the preamble to the Act, that the road was fully finished to the distance of fifty miles from the city of Macon, fully equipped and in complete running order for and with daily trains, and for the sole purpose of enabling said company to continue, extend and complete said road, from the point at which it was then finished and in good running order, by the purchase, with the aid thus extended to said company, of new iron, machinery, material and labor for that purpose.

Afterwards, to-wit, on the day of, in the year eighteen hundred and sixty —, the then Governor of the State of Georgia, in execution of the powers conferred on him by the foregoing Act of the Legislature, endorsed and delivered to said company five hundred thousand dollars, upon the terms, conditions and limitations imposed by the aforesaid Act and Resolutions of the Legislature, and for the purposes and uses therein specified, and for no other purpose, and so the same were taken and accepted by the said Macon and Brunswick Railroad Company.

Said company, after receiving said bonds, so endorsed by the State for the purposes aforesaid, being unable, after the most diligent efforts, to negotiate said bonds within the limits imposed by the Resolutions of the Legislature as aforesaid for cash, or material at cash prices, to continue the work on saidrailroad towards its completion, according to the letter, *as well as the plain intent and meaning of said Act and Resolution—fraudulently, and in violation of the terms and conditions upon which the State gave the endorsement—borrowed money, and hypothecated some of said bonds for securing the payment thereof, receiving much less than ninety cents in cash on the dollar of the amount of bonds thus hypothecated. The said company, also in violation of the intent of the said Act and Resolutions, transferred a large portion of said bonds in payment of debts contracted and incurred by said company and for the building and equipping and running of said road from the city of Macon to the point fifty miles distant therefrom, to which it was represented to be finished and in complete running order; that the whole of the first bonds so endorsed by the State, to the amount of five hundred thousand dollars, was disposed of by the said company, by borrowing money upon them, at a greater discount than ten cents on the dollar, as above stated, in paying off its debts and other like purposes, contrary to the true intent of the said Act and Resolutions, and in express violation thereof. None of the said bonds, or money received therefrom by hypothecation or otherwise, was applied by said company to the continuation, extension and completion of the balance of the line of said railroad, or in the purchase of iron, machinery, material, or payment of additional labor, as contemplated by the Legislature in granting said aid, so as to secure the State from the payment of said bonds, or any part thereof.

Although years have elapsed since the issuing and endorsement of said bonds, the said railroad company has failed to set apart two per cent. annually on said sum so endorsed, and deposit the same with the Governor of the State, to provide a sinking fund for the payment of said bonds, as provided for by the Resolutions aforesaid, and in utter violation thereof, and of the terms and conditions on which said endorsements were made; nor did the said railroad in the disposition of any of said bonds, so endorsed by the State as aforesaid, whether by hypothecation, in payment of the old debts of said company, or otherwise, realize as much as *ninety cents on the dollar, or on any part thereof, but a much less sum. The same were hawked about the various markets by the said railroadcompany and the holders thereof, after such transfer, at a much less sum, and at prices ranging from sixty to eighty-five cents on the dollar, and in no instance was as much as ninety cents on the dollar in cash or its equivalent realized; all of which was in violation of the terms and conditions of which said aid was given, and on which the bonds so endorsed were received by the said company, and to the injury of the State of Georgia and of all the citizens and tax payers thereof.

To further protect and secure the State and the citizens and tax payers thereof, against loss or injury on account of...