Kreiger v. Shelby Railroad Company

by Horace Gray

United States Supreme Court

125 U.S. 39

Kreiger  v.  Shelby Railroad Company

• These were three suits in equity, one brought by the Shelby Railroad Company, another by the Shelby Railroad District of Shelby County, in the state of Kentucky, and the third by Kreiger and other individual stockholders in that railroad company. The plaintiffs in each suit were made defendants in each of the other suits. All the cases were argued together in the courts of the state of Kentucky and in this court, and presented the question whether the Shelby Railroad District had the right of voting at stockholders' meetings upon stock held by it in the Shelby Railroad Company, under the following circumstances: By an act of the legislature of Kentucky of March 15, 1851, the Shelby Railroad Company was incorporated; its capital stock was fixed at $600,000, in shares of $50 each, to be subscribed for by any individual or corporation; at any meeting of the stockholders, each stockholder was to be 'allowed one vote for every share owned by him, her, or it;' on every share subscribed, one dollar was to be paid at the time of the subscription, and the residue in installments and at times to be fixed by the president and directors; all payments made on the stock were to bear interest until a dividend made, certificates of stock were to be issued to the persons entitled, in addition to the shares subscribed or held by them, and no certificates of stock were to be issued until they were paid for; the county court of Shelby county was empowered to subscribe for stock in behalf of the county, its subscription was to be made payable at such times and places and upon such terms as might be agreed on between it and the commissioners or directors taking its subscription, and, for the purpose of paying that subscription, it was authorized to levy and collect a tax on all the property subject to taxation within the county; and every person paying any part of the tax was to be entitled to his pro rata share of stock, and to receive a certificate thereof on paying, or producing transfers from those who had paid, for a full, half or quarter share.

An act of February 3, 1869, amending the original charter, authorized a certain portion of Shelby county, included in a boundary defined in this act, to subscribe for any amount of the stock not exceeding $300,000, and also authorized other counties to subscribe for certain amounts of stock, and further enacted as follows:

'Sec. 3. Upon the written application of the president and directors of said company, and of ten tax-payers of any of si d counties, the county judge of such county shall, within thirty days thereafter, cause a vote of the legal voters residing in the county, or portion of county, to be taxed, to be taken at the several places of voting therein, to ascertain whether the voters of said counties, or portion of Shelby county, are in favor of said subscription.'

'Sec. 5. If a majority of the votes cast shall be in favor of said subscription, it shall be the duty of the county judge forth with to cause the subscription to be made in the name of said county, or portion of Shelby county, as the case may be.

'Sec. 6. Where any such subscription to the capital stock of said company shall have been ordered, and the conditions aforesaid complied with, bonds shall be executed in the name of and under the seal of or scroll of said portion of Shelby county, or said counties, as the case may be, in such form and in such amounts, the entire amount of said bonds not to exceed the sum subscribed, and payable at such places, and bearing interest payable semi-annually, at such rates, not exceeding eight per centum per annum, as the president and directors may elect. The bonds shall be due and payable twenty years from their date, with the privilege reserved to the said counties to pay them after three years from date. The bonds shall be signed by the judge of the county court and countersigned by the county clerk. When so executed, said bonds shall be delivered to the president and directors of said company in payment of said subscription, and they may be by them negotiated, hypothecated, or sold, upon such terms and at such times as may by said president and directors be deemed expedient, and may be transferred by indorsement.

'Sec. 7. When any such subscription shall have been made, it shall be the duty of the county judge and the justices of the peace of the precincts or the counties in which the vote is taken to levy annually a direct tax upon all the property in such county, or portion of county, subject to taxation for state revenue, to pay the interest when due, and the principal at maturity; and they may levy a tax to pay any portion of said bonds at any time after three years: provided, that no greater tax than one per cent. shall be levied in any one year, except to pay the bonds at maturity.' 'The collecting officer shall execute to each person a receipt for the amount of taxes paid by him, which shall be assignable, and, when they amount to fifty dollars or more, shall entitle the holder, upon presentation to the proper officers of the company, to certificates of stock at the rate of one share for fifty dollars, and every multiple of fifty.'

'Sec. 9. The several counties and portion of counties shall not vote the stock for which certificates may be issued to the tax-payers, but the same shall be voted by the individual stockholders.'

An act of March 11, 1870, further amending the charter of the railroad company, contained the following section:

'Sec. 3. When any county, or part of a county, city, town, or precinct, shall have delivered its bonds in payment for stock subscribed, it shall be entitled to representation, and to vote the amount of such stock in any meeting of the stockholders of said company. The stock owned by a county shall be represented by the county judge and all the justices of the peace of the county; stock owned by a part of a county, or a precinct, by the county judge and by the justices of the peace residing in the district or precinct taxed; stock owned by a city or town, by its general council or board of trustees; and these several bodies may designate a suitable person or persons as their proxies to represent them in any meeting of the stockholders of said company. It shall be the duty of the county judge to call together at the county-seat the justices entitled to vote, and to cause their action to be spread upon the records of the county court.'

Another act, passed February 26, 1873, enacted that 'the part of Shelby county embracedi n the boundary given' in the act of 1869 should 'have the corporate name of the Shelby Railroad District of Shelby County,' and by that name might sue and be sued. In accordance with the provisions of the act of 1869, that portion of Shelby county therein defined forth with subscribed $300,000 to the stock of the railroad company, and its bonds for that amount were issued and delivered to the railroad company on June 1, 1869, and were sold by the company and the proceeds applied to the construction of its road; and a tax was annually levied and collected, amounting in all to more than $300,000, which was applied to the payment of interest becoming due on the bonds, and of part of the principal, leaving such bonds, or others given in renewal thereof, now remaining unpaid to the amount of $248,000; and the district holds certificates of stock to that amount; and always voted upon its stock until these suits were brought. Certificates of stock to a large amount have also been issued to tax-payers and are held by Kreiger and others. The first dividend on the stock was declared in December, 1881, and was paid to all the stockholders, including the district. The court of appeals of Kentucky, affirming the judgments of a lower court of the state, adjudged that the Shelby Railroad District of Shelby County was a stockholder in the Shelby Railroad Company to the extent of the principal of the bonds of the district, issued and delivered to the railroad company, and still outstanding and unpaid, and was entitled to vote and to receive dividends accordingly. Kreiger and others sued out these writs of error, which the railroad company and the district now moved to dismiss for want of jurisdiction.

B. F. Buckner, for plaintiffs in error.

J. C. Beckham and P. J. Foree, for defendants in error.

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

Notes