Railway Company v. Stewart

• Decision Date: 01 October 1877
• Citation: 95 U.S. 279,24 L.Ed. 431
• Parties: RAILWAY COMPANY v. STEWART
• Court: U.S. Supreme Court

95 U.S. 279

24 L.Ed. 431

RAILWAY COMPANY v. STEWART.

October Term, 1877

APPEAL from the Circuit Court of the United States for the District of Kansas.

The case was argued by Mr. John P. Usher for the appellant, and submi ted on printed arguments by Mr. Matt. H. Carpenter and Mr. Joseph B. Stewart for the appellee.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

This is a bill in equity filed by Stewart as complainant, Aug. 20, 1868, against the Union Pacific Railroad Company, Eastern Division (now known as the Kansas Pacific Railway Company), the National Mechanics' Bank of Baltimore, the National Union Bank of Maryland, and the National Exchange Bank of Baltimore, but dismissed by the complainant as against the several banks made defendants, Nov. 28, 1871. The case, as stated in the bill, is substantially as follows:——

On the 6th of January, 1866, there were outstanding four hundred and fifty land-grant bonds and six hundred and forty construction bonds of the railroad company, upon which it claimed that it was not liable. All the land-grant bonds and three hundred and ninety of the construction bonds were owned or controlled by Thomas C. Durant. Stewart owned or represented the remaining two hundred and fifty construction bonds. A suit had been commenced by the company, and was then pending, in one of the State courts of Kansas, against Durant, Stewart, and others, the object of which was to obtain a cancellation of the construction bonds, and the mortgage executed to secure their payment. There were also other matters in dispute between Durant and the company, and between him and John D. Perry, its president. In this state of affairs, Stewart, on the 6th of January, 1866, proposed in writing to the company, through its attorney, to surrender all the land-grant and the construction bonds held or represented by Durant or himself, and procure a release by Durant of all actions and rights of action which he had or might have against John D. Perry or the company, or any of its officers, so that its mortgages might be cancelled, if it would in exchange therefor execute and deliver to him, for the parties interested, five hundred of its bonds of $1,000 each, secured by a first lien on the first one hundred and fifty miles of the lands west of Fort Riley, granted by Congress to aid in the construction of its road. It is then alleged that, in the early part of February following, this proposition was accepted, with some slight modifications, and that the company agreed to take up the old bonds and deliver the proposed new ones in exchange; that Durant, in pursuance of this agreement, executed the proper release, surrendered his bonds, and received in exchange his stipulated portion of the new securities; that certain persons owning some of the bonds represented by Stewart at the time of the contract accepted the terms of the settlement, and made the contemplated exchange; that he, Stewart, was the owner of one hundred and fifty-four of the construction bonds, for which there still remained in the hands of the company one hundred and twenty-six of the new issue, to be exchanged upon surrender in accordance with the terms of the settlement, but that he was unable to produce his bonds, as they were in the possession of the banks that were made defendants, and they refused to give them up. He insisted, however, that the bonds were his, and that they were no longer binding upon the company. He accordingly prayed that the company might be required to deliver to him the bonds which were held for exchange under the terms of the agreement of settlement.

The company answered, denying substantially all the material allegations in the bill.

From the testimony, it appears that Stewart made the proposition set forth in his bill, and that it led to an interview between Durant and the officers of the company, at Philadelphia, early in February, 1866, at which Stewart was present, representing his own interests. Durant objected to the terms proposed by Stewart; and, after some negotiation, a settlement was finally agreed upon, by which the bonds held by all the parties were to be surrendered, and in consideration thereof the company was to pay Durant $100,000 in each and notes, and execu e and deliver four hundred new bonds of $1,000 each, secured by mortgage on the lands of the company lying on the first one hundred miles of its road west of Fort Riley. As part of the settlement, also, the company was authorized to enter in the suit pending in the State court of Kansas a decree directing the cancellation of the construction bonds and the discharge of the mortgage securing them.

Pursuant to this arrangement, the company executed its new bonds and mortgage; and, during the latter part of April, 1866, Durant surrendered his old bonds, and received the part of the new issue which, as between him and the holders of the other construction bonds, it was stipulated he should have. Alexander Hay, also, who owned seventy-six of the bonds represented by Stewart in the settlement, made his exchanges; and since the commencement of this suit twenty more have been taken up by the company. This leaves outstanding one hundred and fifty-four bonds, claimed by Stewart, which were not...