Rolston v. Crittenden Crittenden v. Rolston

• Decision Date: 07 March 1887
• Citation: 30 L.Ed. 721,7 S.Ct. 599,120 U.S. 390
• Parties: ROLSTON and others, Trustees, etc., v. CRITTENDEN, Governor, etc., and others. CRITTENDEN, Governer, etc., and others v. ROLSTON and others, Trustees, etc. 1
• Court: U.S. Supreme Court

120 U.S. 390

7 S.Ct. 599

30 L.Ed. 721

ROLSTON and others, Trustees, etc., v. CRITTENDEN, Governor, etc., and others.

CRITTENDEN, Governer, etc., and others

v. ROLSTON and others, Trustees, etc.¹

March 7, 1887.

[Syllabus from pages 390-391 intentionally omitted] Elihu Root, John F. Dillon, and Sidney Bartlett, for Rolston and others.

John B. Henderson, Geo. H. Shields, D. A. De Armond, and B. G. Boone, Atty. Gen. Mo., for Crittenden and others.

WAITE, C. J.

This was a suit in equity, brought by Rosewell G. Rolston, Heman Dowd, and Oren Root, Jr., trustees in a mortgage made by the Hannibal & St. Joseph Railroad Company, a Missouri corporation, to restrain the executive officers of Missouri from selling the mortgaged property under prior statutory mortgages in favor of the state, on the ground that the liability for which the earlier liens were created had been satisfied, and that they, as trustees, were entitled to an assignment of those liens. The material facts are these: The Hannibal & St. Joseph Railroad Company was incorporated by the state of Missouri, under a statute for that purpose, approved February 16, 1847, to build and operate a railroad from Hannibal, on the Mississippi river, to St. Joseph, on the Missouri. To expedite the construction of the road, the state passed an act, which was approved February 22, 1851, to issue to the company its own bonds as a loan of credit, redeemable at the pleasure of the legislature at any time after the expiration of 20 years from the date of their issue, with interest, payable semi-annually, at the rate of 6 per cent. per annum, in the city of New York, on the first days of January and July in each and every year. The acceptance of these bonds by the company was to operate as a mortgage on its road 'for securing the payment of the principal and interest of the sums of money for which such bonds shall * * * be issued and accepted, * * *' The company also became bound to 'make provision for punctual redemption of the said bonds so issued * * * to them, * * * and for the punctual payment of the interest which shall accrue thereon in such manner as to exonerate the treasury of' the 'state from any advances of money for that purpose.' If default should be made by the company in the payment of either the principal or the interest, the governor was authorized to sell the road at auction, first giving a required notice. Under the authority of this statute bonds were issued by the state to the company at different times between December 28, 1853, and September 24, 1856, to the amount of $1,500,000, for which the company and its railroad became bound in the manner specified. On the tenth of December, 1855, the company, not having then completed its road, another act was passed by the generala ssembly, authorizing a further loan of the credit of the state, in bonds, to the amount of $1,500,000. These were to be 30-years bonds. Section 2 of this act was as follows:

'Section 2. The loan of the state's credit under this act shall be, and it is hereby declared to be, upon the condition of a first lien or mortgage, as contained and reserved in the act of February 22, 1851, hereinbefore recited, and the same shall in all respects be held to be an extention of the loan of state credit, under the said mortgage provisions, securing the state in this as in the former loan, upon the same equal and unrestricted basis, as to each and every bond of the state so issued, under said acts or either of them.'

Under this authority, other state bonds were issued to the company to the prescribed amount, maturing as follows:

November 10, 1886,............... $ 500,000

February 28, 1887,............... 1,000,000

On the twentieth of February, 1865, the following act of the general assembly of Missouri was approved: 'An act to provide for reducing the indebtedness of the state.

'Be it enacted by the general assembly of the state of Missouri, as follows:

'Section 1. The Hannibal & St. Joseph Railroad Company is hereby authorized to issue its bonds, signed by the president and countersigned by the secretary of the company, in sums of one thousand dollars each, with coupons attached, bearing interest, payable semi-annually, at the rate of six per cent. per annum, and having not less than ten years to run, and to the amount of three millions of dollars, the payment of the same, with the accruing interest, to be secured by a mortgage or deed of trust conveying to three trustees, to be named therein, by and with appropriate forms of expression, and for the purpose of securing the payment of said bonds and interest, and for no other purpose, on the road of said company, with all its franchises, rolling stock, and appurtenances, subject, however, to all the liens and liabilities existing in favor of the state by virtue of any law of the state at the time said bonds may be issued and delivered.

'Sec. 2. Whenever the trustees provided for in the first section of this act shall pay into the treasury of the state a sum of money equal in amount to all indebtedness due or owing by said company to the state, and all liabilities incurred by the state by reason of having issued her bonds and loaned the same to said company as a loan of the credit of the state, together with all interest that has and may, at the time when such payment shall be made, have accrued and remain unpaid by said company, and such fact shall have been certified to the governor of the state by the treasurer, who is hereby directed to make such certificate, then the governor of the state is hereby authorized and required to make over, assign, and convey to the trustees aforesaid all the first liens and mortgages now held by the state under the provisions of an act of the legislature of the state, approved February 22, 1851, to secure the payment of a loan of the credit of the state to said railroad company in the sum of one million five hundred thousand dollars; and also of an act of the legislature, approved December 10, 1855, to secure the payment of a like loan of the credit of the state in the sum of one million five hundred thousand dollars; and such conveyance shall, by appropriate expressions, convey to said trustees all and singular the rights, titles, and interests held by the state under the several acts of the legislature, as aforesaid, in and to said railroad, its rolling stock, franchises, and appurtenances, to hold the same as security for the payment of the bonds of the road authorized by the first section of this act, and the interest thereon, with full power to sell and dispose of the same, in case of the failure of said company to meet and pay, at maturity, the interest or principal of said bonds, or any of them, and to have and exercise all the rights and powes which belong to the people of the state of Missouri, and which, by the provisions of the acts of the legislature as aforesaid, they might have exercised by and through the governor of the state: provided, that nothing in this act shall be construed so as to render the state of Missouri liable in any case for the payment of the bonds or interest thereon, authorized to be issued by the first section of this act.

'Sec. 3. The treasurer of the state is hereby authorized and directed to receive of the trustees aforesaid, in payment of three millions of dollars, and interest, as provided in the second section of this act, any of the outstanding bonds of the state, bearing no less than six per cent. interest, or of the unpaid coupons thereof, at their par value.

'Sec. 4. The trueintent and meaning of this act is to place the persons and parties who may hold the bonds of the road authorized to be issued by the first section of this act, through the trustees herein provided, in the same legal position which the people of the state of Missouri now hold, with full powers to act in the premises as the said state, by its governor, might have done; and it shall be the duty of such trustees to proceed to advertise and sell the road, with its appurtenances, as aforesaid, and in the manner provided for the sale of the same by the governor of the state in the acts of the legislature aforesaid, whenever they shall receive a request so to do in writing, signed by persons and parties representing not less than one-third of the bonds authorized to be issued by the first section of this act, and which may be still outstanding, but only in case the said railroad company shall have made default in the payment of the principal or interest on said bonds when the same has become due; and all needed authority to do the same shall be maintained, and all needed decrees shall be issued, by and in any court of competent jurisdiction in this state, either in law or equity, and such sale, so made as herein provided, shall be deemed and held in all respects good and valid in law.

'Sec. 5. The provisions of this act shall not be construed to modify, release, exonerate, discharge, or relieve said railroad company from any duty, liability, obligation, penalty, or forfeiture to which, under former laws, said company may be liable to the people of the state of Missouri, on any account whatever, except from the payment of the several sums of money as is in this act provided.

'Sec. 6. This act to take effect from and after its passage.'

When this act was passed, it is said, in the brief of the attorney general, 'the bonds of the state were worth in the market from 65 to 69 cents on the dollar, and there were outstanding on January 1, 1865, state aid bonds loaned to different railroad companies to the amount of many millions of dollars, besides $833,000 of other state bonds, and over $5,000,000 of past due coupons on state aid bonds loaned to the railroads.' The testimony shows conclusively that no interest had been paid on any of the aid bonds except those of this company since January 1, 1861. On the twenty-first of March, 1874, an act of the general assembly of Missouri, 'to authorize...