Stone v. Winn

• Citation: 165 Ky. 9,176 S.W. 933
• Parties: STONE ET AL. v. WINN ET AL.
• Decision Date: 26 May 1915
• Court: Court of Appeals of Kentucky

176 S.W. 933

165 Ky. 9

STONE ET AL. v. WINN ET AL.

Court of Appeals of Kentucky.

May 26, 1915

Appeal from Circuit Court, Estill County.

Suit for injunction by J. D. Winn and others against J. C. Stone and others. Judgment for plaintiffs, and defendants appeal. Reversed and remanded, with instructions to dismiss the petition.

The city of Louisville is situated in Jefferson county.

Burnam & Burnam, of Richmond, and Willis, Todd & Bond, of Shelbyville, for appellants.

Geo. W Gourley, of Beattyville, and Hazelrigg & Hazelrigg and J. P Hobson & Son, all of Frankfort, for appellees.

MILLER C.J.

This suit was brought by the 15 appellees, as taxpayers of Estill county, to enjoin the fiscal court of that county from levying a tax to pay the principal or the interest on 50 bonds of the aggregate face value of $50,000, issued by Estill county in 1888 to the Richmond, Nicholasville, Irvine & Beattyville Railroad Company, upon the ground that the charter provisions of the railroad company had not been complied with, and that the election which authorized the bonds had been carried by fraud. The action was brought by the appellees in their own behalf and in behalf of the other taxpayers of the county against the appellants, J. C. Stone J. C. Bright, and T. J. Curtis, who own 47 of said bonds. The circuit court granted the relief asked, by enjoining the levy of the tax and directing the surrender and cancellation of the bonds and the interest coupons attached thereto. From that judgment the defendants prosecute this appeal.

The pleadings in the case are quite voluminous, and in order to get a clear understanding of the issues it will be necessary to set out the facts somewhat in detail.

The Richmond, Nicholasville, Irvine & Beattyville Railroad Company, which will hereinafter be called the Railroad Company for brevity, was incorporated by an act of the General Assembly of Kentucky, approved March 10, 1888 (Acts 1887-88, vol. 1, p. 913).

The provisions of the incorporating act, upon which this case turns, are sections 5, 8, 9, and 10. Section 5 of the act authorized the company to construct a railroad from a point on the Jessamine county line adjoining Woodford county, near Keane in Jessamine county, and thence southeastwardly through Nicholasville and Madison county to Richmond; and thence eastwardly through the counties of Madison, Estill, and Lee to a point at or near Beattyville on the forks of the Kentucky river, in Lee county. The company was given the powers usually granted to railroad companies. Section 8 authorized either of said counties to subscribe to the capital stock of the Railroad Company, and to pay therefor in the negotiable, 30 year, 6 per cent. bonds of the county. The bonds could be issued only upon the majority vote of the people of the county, and pursuant to an application made to the county court by a petition of 50 resident taxpayers requesting that the question of subscribing to the capital stock of the Railroad Company be submitted to the voters of the county. Section 9 is largely administrative in its features, and provided for the canvassing of the vote, the entering of an order of subscription in behalf of the county by the county judge to the capital stock of the railroad company, and the execution of the bonds of the county by the county judge and the county clerk. It further provided that the county judge should order the bonds to be deposited with a trustee to be held in escrow; that the Railroad Company might deposit the certificate for capital stock of said company, agreed to be given in exchange for said bonds, with such trustee; and that the said bonds should be delivered to the Railroad Company or to its order, when it should be entitled to the same under the terms and conditions of the subscription submitted to said county. Section 9 contained this further final provision:

"It shall not be lawful for * * * Estill [county] to subscribe a greater amount than $100,000.00; * * * and it shall not be" liable "for any of said bonds to be delivered to" such "railroad company, except as the road is completed, in accordance with the order of submission made by said county court."

Section 10, in full, reads as follows:

"An annual tax sufficient to pay the interest of said bonds, and the principal when it shall become due, shall be levied and collected and paid out by the officers of said county as provided in the case of other county taxes: Provided, that by no future act of consolidation with any railroad company shall this company acquire the power or right to submit any proposition of taxation to any county other than those named in this act: And provided further, that said company shall make a preliminary survey of its route within one year after the passage of this act, and shall commence work in good faith upon its roadbed within the next year, and shall each year thereafter perform one-fifth of the work necessary to complete said road: And provided further, that it shall not be lawful for said railroad company to receive any of said bonds from Jessamine county until the road is completed to Nicholasville, when it shall be entitled to one-half thereof, and to the remaining one-half when the road is completed to Richmond, Kentucky. And it shall be unlawful for said railroad to receive any of said bonds from Madison county until the road is completed to Richmond, when it shall be entitled to one-half thereof, and to the remaining one-half when the road is completed to a point on the Kentucky river at or near Beattyville. And it shall be unlawful for said railroad to receive any of said bonds from Estill county, except proportionally, as the road has been completed through said county. And it shall be unlawful for said railroad to receive any of said bonds from Lee county until the road is completed to a point on the Kentucky river, at or near Beattyville; and if said corporation shall acquire any lands by subscription or otherwise, not necessary for the operation of its railroad, it shall dispose of the same within five years * * * after the date of the deed through which it has derived title."

By an order entered July 19, 1888, the Estill county court submitted to the people of the county the question of subscribing $100,000 to the capital stock of the Railroad Company and the issual of bonds in that amount to pay for the stock; said order of submission further providing, as follows:

"Said trustee or trust company shall deliver fifty thousand dollars of said bonds to the said railroad company or to its order when it shall have completed its independent line of road of standard gauge through the counties of Jessamine, Madison and Estill to the town of Irvine or a point within 600 yards of said town limits crossing the Kentucky river somewhere between the mouth of White Oak creek and a point above Irvine within 600 yards of the town limits and shall have caused a train of passenger cars drawn by a steam engine to be run from said point at or near Irvine across the Kentucky river, thence through the counties of Estill, Madison and Jessamine into the county of Woodford over its own road and thence over the Louisville Southern Railroad and its connections into the city of Louisville; but the aforesaid fifty thousand dollars of bonds are not to commence bearing interest until six months after the company is entitled to have them delivered as aforesaid. Said trustee or trust company shall deliver to said railroad company or its order the remaining fifty thousand dollars of said bonds when said railroad company shall have completed its independent line of road from said point at or near Irvine across the county of Estill and into the county of Lee to a point on the Kentucky river within one-half mile of Beattyville or Proctor, and shall have caused a train of passenger cars drawn by a steam engine to be run from its said terminus near Beattyville or Proctor through the counties of Lee, Estill, Madison and Jessamine, into the county of Woodford over its own road and then over the Louisville Southern and its connections into the city of Louisville. Before said trustee or trust company shall deliver any of said bonds to said railroad company the interest coupons that have then matured shall be cut off and destroyed and if any of said coupons have partially matured, said trustee or trust company, shall enter credit thereon for the part that has matured before delivering the same.

The said company shall place the construction of its whole line under contract at the same time and shall commence work upon its roadbed in Estill county within six months after its subscription, and shall complete its road from its Woodford county terminus to the point at or near Irvine within three years after said period of six months and shall complete its road to its Lee county terminus within one year after the expiration of said last-named period. If either of these conditions as to time is not complied with, said railroad company shall not be entitled to any of said bonds."

The election was held on August 11, 1888, and resulted in favor of the subscription. Bonds of the par value of $100,000 were executed, and, pursuant to section 8 of the charter, they were placed in the hands of Edward Conroy, as trustee, who executed a bond as required by section 9 of the charter. The Railroad Company, through the instrumentality of the Ohio Valley Contract & Improvement Company, began the construction of the road within six months after the subscription; and, by the terms of the order of submission it had 3 years and 6 months, from August 28, 1888, that is, until February 28 1892, in which to complete the road to a point within 600 yards of the limits of the town of Irvine, the county seat of Estill county. ...