Louisville & N.R. Co. v. Wright

• Decision Date: 07 October 1916
• Citation: 236 F. 148
• Parties: LOUISVILLE & N.R. CO. et al. v. WRIGHT, Comptroller General.
• Court: U.S. District Court — Northern District of Georgia

236 F. 148

LOUISVILLE & N.R. CO. et al. v. WRIGHT, Comptroller General.

United States District Court, N.D. Georgia.

October 7, 1916

Jos. B Cumming and Cumming & Hull, all of Augusta, Ga., and Alex. C. King, and King & Spalding, all of Atlanta, Ga., for complainants.

Clifford Walker, Atty. Gen., Pierce Bros., of Augusta, Ga., and George Westmoreland, of Atlanta, Ga., for defendant.

NEWMAN District Judge.

This is a bill in equity filed by the Louisville & Nashville Railroad Company, a corporation created, organized, and existing under the laws of the state of Kentucky, and the Atlantic Coast Line Railroad Company, a corporation created, organized, and existing under the laws of the state of South Carolina against William A. Wright, comptroller general of the state of Georgia, seeking to restrain the said comptroller general from seeking further to collect certain taxes from the two complainant corporations.

In 1881 the Georgia Railroad & Banking Company, a Georgia corporation, executed a lease to William M. Wadley, in which it leased for a term of 99 years all of its property. This lease contained the following provisions:

'In order to guarantee the performance of the agreements and covenants hereinbefore made by the party of the second part, said party of the second part further covenants for himself and assigns to deposit, in such place and such manner as the president of the party of the first part may designate, one million dollars in bonds of the United States or in other bonds of equal value, said deposit to be kept up to the clear market value of one million dollars. Provided, the said party of the second part, and his assigns, shall have the privilege of collecting for his or their own benefit the income of said bonds and of changing the kind of bonds from time to time and substituting for bonds other and different security, provided such other and different security be first approved by the party of the first part; also covenants for himself and assigns that his and their legal rights and privileges under this indenture shall be so preserved by him that the deposit of one million dollars as security for the due and faithful performance of the terms and conditions of this indenture shall remain and continue so subject during the entire term of said lease, without impediment or embarrassment growing out of the distribution or want of representation of the estate of the party of the second part, or any of his assigns; and that it is the true meaning of these presents that said deposits of security shall at all times remain as a guaranty for the covenants of this indenture, and liable to any proceeding at law or in equity to enforce the rights of the party of the first part, without let, hindrance or delay on account of the death of the party of the first part, or any of his assigns, testate or intestate, and that the death of the party of the first part, or any of his assigns, testate or intestate, or the failure of any of the legal representatives of his or their estate, shall be no excuse whatever for the performance or nonperformance of any of the covenants or agreements of the party of the second part.'

Shortly after the execution of this lease William M. Wadley transferred the same to the Louisville & Nashville Railroad Company, and it in turn, in 1899, transferred a half interest to the Atlantic Coast Line Railroad Company. Thereupon the Atlantic Coast Line Railroad Company and the Louisville & Nashville Railroad Company deposited bonds amounting to $1,075,000 with the Farmers' Loan & Trust Company of New York, a corporation of that state. These bonds were so deposited in compliance with the provision of the contract which has been quoted above; that is, for the purpose of guaranteeing the faithful performance on the part of the lessees of the agreements and covenants made in the contracts.

The comptroller general of the state of Georgia, in November 1915, demanded of...