Union Trust v. Southern Inland Nav Imp Co

• Decision Date: 22 April 1889
• Citation: 32 L.Ed. 1043,130 U.S. 565,9 S.Ct. 606
• Parties: UNION TRUST Co. v. SOUTHERN INLAND NAV. & IMP. CO. et al
• Court: U.S. Supreme Court

130 U.S. 565

9 S.Ct. 606

32 L.Ed. 1043

UNION TRUST Co. v. SOUTHERN INLAND NAV. & IMP. CO. et al.

April 22, 1889.

Wm. Fullerton and J. C. Cooper, for appellants.

Wayne MacVeagh, for appellee.

Mr. Justice HARLAN, after stating the facts as above, delivered the opinion of the court.

This suit arises out of certain transactions connected with the execution of the act of the general assembly of Florida approved January 6, 1855, providing for and encouraging a liberal system of internal improvements in that state. Laws Fla. 1855, c. 610. By that act, so much of the 500,000 acres of land granted to Florida by the act of congress of March 3, 1845, as remained unsold; the proceeds of the sale of such as were on hand and unappropriated; all proceeds thereafter accruing from similar sales; and all the swamp lands or lands subject to overflow, granted to Florida by the act of congress approved September 28, 1850, with all the proceeds accrued and to accrue from their sale, were set apart and declared a distinct and separate fund, to be called the 'Internal Improvement Fund of the State of Florida.' The general object and scope of the act are stated in State v. Anderson, 91 U. S. 667, 670, 676, where it was said that these lands and their proceeds 'were vested in the gov- ernor, the comptroller, treasurer, attorney general, and register of state lands, and their successors in office, in trust, to dispose of the same, and invest their proceeds, with power to pledge the fund for the payment of the interest on the bonds (to the extent of $10,000 per mile) which might be issued by any railroad companies constructing roads on certain lines indicated by the act. The companies, after completing their roads, were to pay, besides interest on their bonds, 1 per cent. per annum on the amount thereof, to form a sinking fund for the ultimate payment of the principal. The act declared that the bonds should constitute a first lien or mortgage on the roads, their equipment and franchises; and, upon a failure on the part of any railroad company accepting the act to provide the interest and the payments to the sinking fund as required thereby, it was made the duty of the trustees to take possession of the railroad and all its property, and advertise the same for sale at public auction.' In the same case it was said that the trustees are merely agents of the state, invested with the legal title of the lands for their more convenient administration, and that the state remains in every respect the beneficial proprietor, subject to the guaranties which have been made to the holders of railroad bonds secured thereby. See, also, Railroad Cos. v. Schutte, 103 U. S. 118; Littlefield v. Trustees, 117 U. S. 419, 6 Sup. Ct. Rep. 793; Vose v. Reed, 1 Woods, 647; Vose v. Trustees, 2 Woods, 647.

On the 3d of November, 1870, Francis Vose brought a suit in equity in the circuit court of the United States for the Northern district of Florida, against said trustees and others. Among the defendants were the Florida Canal & Inland Transportation Company, the Southern Inland Navigation Company, (described in some parts of the bill and in some of the interrogatories annexed as the Southern Inland Navigation & Improvement Company,) the New York & Florida Lumber, Land & Improvement Company, and M. S. Mickles, agent of the last-named company. The object of that suit was to obtain an injunction and decree protecting the internal improvement fund against waste and misappropriation by the trustees, to the injury of Vose and others, who held unpaid bonds issued by the Florida Railroad Company in comformity with the act of 1855. The bill charged that the trustees had violated the law of their trust by misappropriating money received by them, leaving unpaid past-due coupons, by neglecting to collect the amount due the sinking fund created by the act of 1855, and by illegally conveying millions of acres of land to corporations that had no right to receive them, and that unless restrained they would continue to waste and misapply, to the irreparable injury of the plaintiff, Vose, and others, the fund intrusted to them for the use and purposes indicated in the act. Among other allegations in the bill was one to the effect that 'on the 28th day of July, 1868, the said trustees, by resolution of that date, attempted to secure to the said Southern Inland Navigation & Improvement Company forty thousand acres, or thereabouts, of the said trust lands; and that about the 1st of March, 1870, they entered into an agreement with the said New York & Florida Lumber, Land & Inprovement Company, by which they undertook to convey one million one hundred thousand acres of the same for the nominal price of 10 cents an acre; and that this vast domain was and is to be selected from the most valuable of the said trust lands.' On the 6th of December, 1870, the circuit court issued an injunction to the trustees and their successors, commanding them, among other things, to desist 'from selling or donating or disposing of the land belonging to said trust otherwise than in strict accordance with the provisions of said act of 1855,' and 'from selling said lands for scrip or state warrants of any kind, or for aught other than current money of the United States.' This injunction was duly served upon the trustees within a few days after it was issued.

On the 6th of February, 1871, an order was made reciting the service of subpoena in chancery upon the 'defendants' in conformity with the rules and practice of the court, and the bill was taken for confessed ...