Quinlan v. Green County, Ky.

• Decision Date: 19 December 1907
• Docket Number: 1,440.
• Citation: 157 F. 33
• Parties: QUINLAN v. GREEN COUNTY, KY.
• Court: U.S. Court of Appeals — Sixth Circuit

157 F. 33

QUINLAN v. GREEN COUNTY, KY.

No. 1,440.

United States Court of Appeals, Sixth Circuit.

December 19, 1907

This is an action brought by the plaintiff in error to recover the contents of certain bonds and coupons alleged to have been issued by the defendant in error in 1872, in payment, with other like bonds, for shares of stock of the Cumberland &amp Ohio Railroad Company. The plaintiff claims to be the holder for value and owner of the bonds and coupons which are the subject of the controversy. By stipulation, the case was tried by the court without a jury. The court made a finding of facts, and declared its conclusion of law thereon.

The result of its conclusion was that the plaintiff was not entitled to recover, and judgment was entered accordingly. The plaintiff thereupon sued out this writ of error.

By an act of the Legislature of Kentucky, passed February 24, 1869 the above-named railroad company was incorporated and authorized to construct a railroad from a point on the Ohio river to a point on the boundary line between Kentucky and Tennessee. Acts of Kentucky 1869, vol. 1, p. 463, c. 1578. In the course of its authorized route was Green county, the defendant in this suit. With a view, apparently, to enable the counties along its route to aid the railroad company in the construction of its road, authority for that purpose was conferred by the act as follows: 'Sec. 15. That any city town or county through which said proposed road shall pass is hereby authorized to subscribe stock in said railroad company in any amount any such city, town, or county may desire; and that the county court of any such county is authorized to issue the bonds of their respective counties in such amount as the county court may direct; and the chairman and board of trustees, or mayor and aldermen of any town, and the mayor and aldermen or council of any city, are hereby authorized to issue the bonds of their respective towns or cities in like manner. All said bonds shall be payable to bearer, with coupons attached, bearing any rate of interest not exceeding six per cent. per annum, payable semi-annually in the city of New York, payable at such times as they may designate, not exceeding thirty years from date; but before any such subscription on the part of the city, town or county shall be valid or binding on the same, the mayor and aldermen, or chairman and board of trustees of any town, the mayor and aldermen or council of any city, and the county court of any county having jurisdiction, shall submit the question of any such subscription to the qualified voters of such city, town or county in which the proposed subscription is made, at such time or times as said chairman and board of trustees, or mayor and aldermen of any town, mayor and aldermen or council of any city, or the county court of any county, as aforesaid may, by order, direct; and should a majority of the qualified voters voting at any such election vote in favor of subscribing said stock in said railroad company, it shall be the duty of such county court, trustees, or other authorities aforesaid, to make the subscription in the name of their respective cities, towns or counties, as the case may be, and proceed to have issued the bonds to the amount of such subscription as hereinbefore directed. ' And it was further provided that the application for such proceedings might be made to the judge of the county court instead of the court; whereupon he was vested with the same power. And the railroad company was authorized to 'receive subscriptions of stock to their company by individuals, towns, cities, counties, or other corporations, whether payable in money or other things, with such terms and times of payment, conditions annexed, and kind of payment that may be set forth in the subscription.'

On June 17, 1869, upon the request of the commissioners of the railroad company, above named, the judge of the county court entered the order following:

'Present, Thos. R. Barnett, Judge.

'Whereas the Commissioners of the Cumberland & Ohio Railroad Company, by virtue of the authority delegated to them by the charter of said company, have requested the county court of Green county to order an election in the said county of Green, and to submit to the qualified voters of said county the question whether said county court shall subscribe for and on behalf of said county, two hundred and fifty thousand dollars to the capital stock of the Cumberland & Ohio Railroad Company and payable in the bonds of said county, having twenty years to run, and bearing six per cent. interest from date, and upon condition that said company shall locate and construct said railroad through the said county of Green, and within one mile of the town of Greensburg, in said county, and shall expend the amount so subscribed within the limits of Green county; and also upon the further condition that said bonds shall not be issued or said county pay any part of the principal or interest on said amount subscribed to said Cumberland & Ohio Railroad Company, until said county of Green is fully and completely exonerated from the payment of the capital stock voted by said county, and authorized to be subscribed by said Green county court to the Elizabethtown & Tennessee Railroad or any part of the interest thereon. It is therefore ordered by the court that an election by the qualified votes of Green county, at the voting places in said county, be held and conducted by the several officers as prescribed by law for holding elections on the third day of July, 1869, to vote on the question as to whether or not the said county court shall, for, and on behalf of said county subscribe two hundred and fifty thousand dollars to the capital stock of the said Cumberland & Ohio Railroad conditioned and to be paid, as above stated.'

The election was held. The vote was in favor of the proposition and was so properly certified. Thereafterwards, and on June 3, 1870, the county judge made an order, wherein after reciting the proceedings above recited, he says: 'I * * * do hereby subscribe for two hundred and fifty thousand dollars of the capital stock of the said Cumberland & Ohio Railroad Company for and on behalf of said county of Green, which subscription is to be paid in the bonds of said county as prescribed in said order of submission, and this subscription is made with the conditions set out in the order of this court ordering said election and now of record in the office of this county. ' On October 12, 1871, the county judge ordered the bonds to be printed. The bonds, of which these in suit were a part, were issued and delivered to the railroad company during the succeeding year, 1872, the bulk of them on or about August 15th, on which day the county judge made the following order:

'Present, Thos. R. Barnett, Judge.

'Application was this day made to the presiding judge of the county court of Green county, by the president and board of directors of the Cumberland & Ohio Railroad Company to issue the balance of the bonds of said county to the amount of the subscription of said county of Green to said Cumberland & Ohio Railroad Company, and the court being sufficiently advised, it is ordered by the court that the balance of said bonds be and they are hereby ordered to be issued, the same to be signed by the judge of said county court of Green county, and countersigned by the clerk of said court, as required by the charter of said company.'

Thereupon the $250,000.00 of the capital stock of the railroad company was delivered to the county, which has since been retained and owned by it. For a time the county raised by tax and paid the interest accruing on the bonds, but thereafter it refused to recognize their validity, and refused to make further payment. The plaintiff is the bona fide holder for value of the bonds and coupons in suit, but had notice that the railroad had not been built further than from the north line of said county to Greensburg, which is about one-quarter of the way through the county. As to this latter fact, it may be noted in this connection that only $150,000 of the proceeds of the bonds had been expended by the Cumberland & Ohio Railroad Company in the construction of the road, and this was on that part of the road north of Greensburg. This expenditure did not complete that portion of the road, but it was completed by the Louisville & Nashville Railroad Company under the stipulation in a lease to it of its road by the Cumberland & Ohio Railroad Company, but at what cost does not appear. In respect to the conditions of the subscription for stock to pay which these bonds were voted, the facts were these: In 1868 at an election in Green county it had been voted to subscribe for $300,000 of the stock of the Elizabethtown & Tennessee Railroad Company, to be paid for in the bonds of the county. Upon making a record of this election the county court made the following order: 'It is now therefore ordered that the clerk of this court, for and on behalf of the county of Green, make said subscription on the terms specified in the order submitting the question to a vote as aforesaid. ' But nothing further was ever done in regard to such a subscription either by the county or the Elizabethtown & Tennessee Railroad Company. No stock was issued to the county or bonds issued to the railroad company. Some further incidental facts will be hereafter mentioned in the opinion in the discussion of the questions involved in the controversy. The bonds in suit, except the numbers given to each bond and the amount therein specified, were in the form following:

'United States of America, county of Green, $500.00. State of Kentucky. For the Cumberland & Ohio Railroad.

'Twenty years after date, the county of Green, in

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