Foster v. Chesapeake & N. Ry. Co.

47 F. 369, 1891 U.S. App. LEXIS 1442

This text of 47 F. 369 (Foster v. Chesapeake & N. Ry. Co.) is published on Counsel Stack Legal Research, covering U.S. Circuit Court for the District of Middle Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Foster v. Chesapeake & N. Ry. Co., 47 F. 369, 1891 U.S. App. LEXIS 1442 (circtmdtn 1891).

Opinion

Jackson, J.

Pending on motions of the Mississippi Valley Construction Company and other defendants to docket the cause, and of the complainant to remand the same to the chancery court of Sumner county, Teim.

A brief outline of the material facts and history of the above-entitled suit will serve to present the questions involved in the pending motion. The Cumberland & Ohio Railroad Company was chartered in 1869 or 1870, under the laws of Tennessee and Kentucky, to construct a line of railroad from a point in Kentucky to Nashville, Tenn. Sumner county, under authority of law, subscribed $300,000 to the capital stock of the [370]*370Tennessee corporation, which was duly consolidated with the Kentucky corporation, and then became one company. After acquiring rights of way, completing portions of its line, and grading other portions, said company became insolvent, was unable to complete the enterprise, and ceased operations about 1875. Thereafter the Chesapeake & Nashville Railway Company was chartered under the laws of Kentucky and Tennessee as separate and distinct companies to construct and operate lines from a point on the Chesapeake & Ohio Railroad system in Kentucky to Nashville, Tenn., upon the most practicable route to connect said points. These two corporations were duly consolidated in December, 1884, under the same name, of the Chesapeake & Nashville Railway Company. Previous to the consolidation, the county of Sumner had appointed commissioners to negotiate a sale of the properties, franchises, etc., of the old Cumberland & Ohio Railroad Company, whose organization had been kept up by the election of directors chosen by its two principal stockholders, — Sumner county, Tenn., and Allen county, Ky. These negotiations resulted in the acquisition by the Chesapeake & Nashville Railway Company of all the rights, properties, and franchises of the Cumberland & Ohio Railroad Company, which were transferred and conveyed by the latter company to the former, by written contract, under date of May 30,1885, Sumner and Allen counties, by their duly-authorized agents, joining in the execution of the same. By the terms of the contract and.conveyance the Chesapeake & Nashville Railway Company succeeded to all the rights, properties, and franchises of the old Cumberland & Ohio Ráilroad Company, and was authorized to enter into the possession and take charge thereof as owner, and for the purpose of constructing a railroad from Gallatin to Scottsville, and making a continuous line of railway from Stanford, Ky., or from some suitable point on the Chesapeake & Ohio Railway system or road, connecting with said system, by a continuous line from said point above, through Scottsville .and Gallatin, to Nashville, Tenn., and to be completed and running between Scottsville and Gallatin in 18 months from December 31, 1884. The Chesapeake & Nashville Railway Company, in consideration of the premises, contract, and conveyance, was to issue to Allen county, or whoever was entitled to receive thesame, $53,297.90 of its capital stock, and to Sumner county it was to issue $76,359.93 of its capital stock. Said stock was to be issued to said counties “when all liens or incumbrances on the property and rights conveyed * * * are delivered, relieved, or discharged; but such liens or incumbrances referred to do not embrace any property not embraced in the warranty.” The parties making the conveyance covenanted that they would warrant and defend the title to the properties and rights transferred “against all legal claims; rights, or equities; but this warranty does not extend beyond the.amount or value of the stock issued to us, as above set out, or the property estimated by said engineers.” The stock to be issued by the Chesapeake & Nashville Railway Company to said counties was based upon estimates of engineers as to the value of the properties, etc., transferred and conveyed. Under this conveyance the Chesapeake & Nashville Railway Com[371]*371pany went into possession, and completed tlie line of road between Gallatin and Scottsville in 1886, but not within the 18 months from December 31, 1884, as stipulated in the contract. On the 15th of June, 1885, the Chesapeake & Nashville Railway Company executed a mortgage or trust-deed upon all its rights, properties, and franchises, including those acquired from the Cumberland & Ohio Railroad under the aforesaid conveyance, to R. T. Wilson, for the purpose of securing certain first mortgage bonds issued and to be issued by it. Said mortgage or trust-deed was duly recorded in Sumner county; The Chesapeake & Nashville Railway Company entered into a contract with the Mississippi Valley Construction Company to build its road, and to pay therefor in said bonds, secured by the mortgage to said Wilson, at $20,000 per mile. Under said contract the construction company proceeded with the building of the road so far as the same has been completed. On the 28th day of July, 1887, a supplemental agreement was made between said construction company and the Chesapeake & Nashville Railway Company, under and by virtue of which the rate of interest on said first mortgage bonds earned and to be earned by said Mississippi Valley Construction Company was changed from 6 per cent, to 5 per cent., and said construction company was to receive 825,000 per mile in bonds, bearing the reduced rate of interest, together with a certain portion of the Chesapeake & Nashville Railway Company’s capital stock, and to secure these 5 per cent, bonds the railway company, on or about July 28, 1887, executed a new or additional mortgage upon its aforesaid properties, rights, etc., to the Metropolitan Trust Company of New York, which has also been recorded in the register’s office of Sumner county.

On the 29th of September, 1887, the county of Sumner, by the chairman of its comity court, filed its bill of complaint in the chancery court for said county against the Chesapeake & Nashville Railway Company alone, alleging that the Chesapeake & Nashville Railway Company had failed and refused to issue to said county the $76,359.93 of its capital stock, as provided in the contract and conveyance of May 30,1885; that it had failed to complete the line of road between Gallatin and Seottsville within the 18 months stipulated; that the county of Sumner had no authority to transfer to the Chesapeake & Nashville Railway Company its stock in the old Cumberland & Ohio Railroad Company without the previous vote of the people of the county directing the same, and that said contract of May 30,1885, was null and void as to said county; that, if mistaken in this, inasmuch as the Chesapeake & Nashville Railway Company had failed to build an independent road from Nashville to the connection designated in Kentucky, the comity “was entitled to have paid to it the actual cash value of the property turned over to the Chesapeake & Nashville Railway Company, and to have the same declared a fixed and first lien upon the road, its franchises, etc., in this county,” which cash value, as ascertained by the engineers selected to estimate the same, was stated to be 8152,719.86. The prayer of the bill was “that a decree might be entered declaring the contract made by the county court of Sumner county with this defendant, (the Chesapeake & Nash[372]*372ville Railway Company,) under which the defendant was permitted to enter upon and take charge of the old Cumberland & Ohio road-bed and work, null and void, ousting the defendant from the same in this county, as if this was an action of ejectment.

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Bluebook (online)
47 F. 369, 1891 U.S. App. LEXIS 1442, Counsel Stack Legal Research, https://law.counselstack.com/opinion/foster-v-chesapeake-n-ry-co-circtmdtn-1891.