Appeal
from Circuit Court, Montgomery County; Walter B. Jones
Judge.
Alabama
State Bridge Corporation, created by Act of August 31st, 1927
(Gen.Acts 1927, p. 278), filed a bill in equity in the
circuit court of Montgomery county, seeking relief by way of
a declaratory
decree under the Uniform Declaratory Judgment Act. Gen.Acts
1935, p. 777.
The
substantive averments of the bill are as follows:
"3.
That pursuant to authority of law, and specifically the
Acts of 1927, page 278, complainant did heretofore on,
to-wit: December 1, 1928, issue and sell to various and
sundry purchasers and holders, its negotiable bonds in the
aggregate principal sum of $5,000,000.00, and to secure
payment thereof, as well as its covenants or contract
relating thereto, complainant did make, execute and deliver
its first mortgage or trust indenture to respondent The
First National Bank of Montgomery, as Trustee thereunder,
which said first mortgage or trust indenture bears date of
December 1, 1928, a copy of which is hereto attached marked
Exhibit 'A' and made a part hereof, with leave of
reference thereto the same in all respects as if
incorporated herein. That with the proceeds realized from
the sale of said bonds, complainant erected or constructed,
or caused to be erected or constructed, 15 toll bridges
located in various and different parts of Alabama, and
forming a part of the highway system of Alabama, which said
bridges have been used and are now being used by the
public, who are required to pay a toll or tolls for such
user. That there are now outstanding of said bonds so
issued and sold by complainant in the market generally,
bonds aggregating the principal sum of approximately
$3,780,000.00, together with the unpaid interest coupons
thereon since and including December 1, 1935, which said
interest coupons have not been paid since and including
said time. Complainant further avers that of said bonds
outstanding and unpaid, approximately $1,000,000.00 thereof
in principal have matured, and were payable in serial
installments prior to the filing of this its bill of
complaint, and in addition to default having been made by
complainant in the payment of the interest on all
outstanding bonds, complainant has defaulted in the payment
of the principal of said bonds in the sum of $1,000,000.00,
said principal payments having matured prior to the filing
of this its bill of complaint. ***
"5.
Complainant avers that in and by the terms of its first
mortgage or trust indenture referred to as Exhibit
'A', as well as the Acts of 1927, page 278, it was
contemplated and provided that tolls collected by
complainant from the users of said toll bridges would be
used to retire, and would be sufficient to retire the
principal indebtedness evidenced by said bonds when
supplemented by the payment of interest on said bonds by
the State of Alabama from certain funds designated and
authorized by law, and particularly the Acts of 1927, page
278; but on account of the economic depression and other
factors over which complainant had no control, the income
realized by complainant on the collection of tolls from the
users of said bridges even when supplemented by the payment
of interest by the State of Alabama from the funds
hereinabove designated and referred to, have not been
sufficient to pay and retire its principal indebtedness
evidenced by said bonds as and when the same matured.
Consequently, there are now unpaid as to principal a large
number of its bonds, and as to interest, all of its bonds
in the amounts and manner hereinabove set out.
"6.
Complainant avers that under the Acts of Alabama approved
July 10, 1935, Acts of Alabama 1935, p. 602, the State
Highway Department or Commission was authorized to lease
from complainant all of its toll bridges for an annual
rental or toll in gross, if it may be so termed, of not to
exceed $300,000.00 annually, for a period of not exceeding
30 years, and for the further considerations specified in
said Act. Complainant further avers that if authorized by
law so to do, it can and will be able to work out a plan
whereby in lieu of separate tolls now and heretofore
charged to each user of said bridges, annual rental or toll
in gross may be collected by it from State Highway
Commission or Department of not to exceed $300,000.00
annually, thereby relieving the users of said bridges from
paying separate tolls, and at the same time affording
complainant sufficient revenue to pay the principal and
interest on its outstanding bonds in the manner and form
hereinafter set forth. Complainant avers that under the
tentative plan which it has been endeavoring to work out
and effectuate, and believes it will be able to accomplish
if authorized by law so to do, it will lease all of its
toll bridges to State Highway Department or Commission for
annual rental or toll in gross of not to exceed
$300,000.00. In addition thereto, the State Highway
Department or Commission will assume, as additional
consideration, the repairs, maintenance
and upkeep of all of said toll bridges without expense to
complainant, and will also be obligated in case of
destruction of any or all of said bridges or property, to
reconstruct or rebuild such bridges and property as may be
destroyed, thereby relieving complainant of this financial
burden, as well as the additional financial burden of
carrying insurance against such contingencies Complainant
will propose and offer to its bondholders to pay interest
at the rate of 4% per annum, payable semi-annually, in lieu
of present rate of 6% per annum, payable semi-annually; and
in lieu of the serial maturity dates of the principal of
its bonds, as shown in the mortgage indenture referred to
as Exhibit 'A,' will extend the serial dates of
such principal maturities until approximately 1952, so that
with its income derived from the collection of a rental or
toll in gross, and being relieved of the additional
financial expense and burdens to be assumed by the State
Highway Department or Commission, and further relieved to
the extent of the reduction in interest hereinabove
specified, it will be able to meet and pay its principal
and interest obligations as and when they mature. The
tentative plan to be proposed by complainant will also
include a provision making said bonds callable at a certain
price upon a given notice, thereby enabling complainant
possibly to retire some, if not all, of its bonds prior to
their respective maturities. The tentative plan proposed by
complainant provides that other than these proposed
modifications, the original mortgage indenture referred to
as Exhibit 'A' shall remain intact, and that the
security thereof shall not be impaired; and further, that
the proposed modification shall only bind such bondholders
as assent thereto, and that even they will be bound only so
long as said plan is carried out pursuant to the proposed
agreement, to the end that if there be any default therein,
or failure to perform, then, in that event, even the
assenting bondholders will no longer be bound, but will
have recourse in all respects to the original security
contained in the instrument referred to as Exhibit
'A.'
"7.
Complainant alleges that its right to enter into such
contractual agreement outlined in its proposal has been and
is challenged or denied by the respondents upon the ground,
among other things, that it is not authorized by law, and
without waiving such general objection, they have further
objected or challenged complainant's legal right upon
the grounds more specifically hereinafter set out and
inquired about. Accordingly, complainant is advised that
certain legal questions have arisen, involving the
construction of certain statutes, as well as the
Constitution of Alabama, and involving the rights, status
and other legal relations of the parties under the laws and
Constitution of Alabama, as well as under the proposed
contract, to the end that complainant is compelled to
invoke the aid of this Court in construing and declaring
the respective rights of the parties concerning and
relating to the matters herein involved."
The
prayer of the bill invoked the jurisdiction of the court to
adjudicate and declare the law on specific points which are
sufficiently set forth in the decree hereinafter set out.
The
state highway commission, its individual members, and the
First National Bank of Montgomery, trustee in the mortgage
indenture, Exhibit A, were made parties respondent. The
holders of original bonds are brought in by representatives
of the class, on the following averments: "4.
Complainant avers that its said bonds so issued by it are
negotiable, and were payable to bearer, and that respondents
Ray Rushton, Stanhope Elmore, and Myron C. Lobman are the
holders of certain of said bonds, and that the remainder of
said bonds are held and owned by various and sundry persons
throughout the United States and maybe in foreign countries
and that complainant does not know the names and whereabouts
of all the holders of said bonds; that such persons so
holding its said bonds are very numerous, and cannot without
manifest inconvenience and oppressive delays be all brought
before ...
