U.S. Supreme Court
Doggett v. Railroad Company, 99 U.S. 72 (1878)
Doggett v. Railroad Company, 99 U.S. 72 (1878)
99 U.S. 72
1. Where, under the Act of the State of Florida entitled "An Act to provide for and encourage a liberal system of internal improvements in this State," passed Jan. 6, 1855, a railroad was sold by the trustees of the Internal Improvement Fund, who applied the proceeds of the sale to the purchase and cancellation of a part of the outstanding bonds of the company, held that the purchaser of the road is thereafter required to pay, on account of the sinking fund for which that act provides, one-half of one percent semiannually upon the remaining bonds, and not upon the entire amount originally issued by the company.
2. Where the receiver of the Internal Improvement Fund who was appointed by the court filed a bill in equity to determine upon what amount of said bonds the purchaser was bound to make such semiannual payment, held that the holders of them were not proper parties complainant.
This is a bill in equity filed by Francis Vose, a citizen of New York, William H. Wagner, a citizen of South Carolina, and Aristides Doggett, who was appointed a receiver of the Internal Improvement Fund of Florida by the court below, against the Florida Land Company to compel the company, in accordance with the provisions of an Act of the State of Florida entitled "An Act to provide for and encourage a liberal system of internal improvements in this State," passed Jan. 6, 1855, to pay said Doggett, as such receiver, one-half of one percent on the entire amount of bonds issued by the company.
Certain lands and the proceeds thereof were set apart by said act, and constituted said fund. It was irrevocably vested in certain state officers and their successors in office, to hold the same in trust for the uses and purposes in said act mentioned, with power to sell and transfer the lands, receive payment therefor, to invest surplus moneys arising therefrom in stocks of the United States or of the several states or in the internal improvement bonds issued under the provisions of the act, and also to so invest the surplus interest arising from said investments, and to pay out of said fund the interest from time to time as it might become due on the bonds issued by the different railroad companies under the authority of the act, and with further power to receive and demand semiannually, chanroblesvirtualawlibrary
after each separate line of railroad should be completed, the sum of one-half of one percent on the entire amount of bonds issued by such company as a sinking fund for the payment of said bonds as they should become due.
The Florida Railroad Company was chartered by the Legislature of Florida. It accepted the provisions of the act and issued its bonds.
The third section of the act is as follows:
"SEC. 3. Be it further enacted that all bonds issued by any railroad company under the provisions of this act shall be recorded in the comptroller's office, and so certified by the comptroller, and shall be countersigned by the state treasurer, and shall contain a certificate on the part of the trustees of the Internal Improvement Fund that said bonds are issued agreeably to the provisions of this act and that the Internal Improvement Fund, for which they are trustees, is pledged to pay the interest as it may become due on said bonds. All bonds issued by any railroad company under the provisions of this act shall be a first lien or mortgage on the roadbed, iron, equipment, workshops, depots, and franchise, and upon a failure on the part of any railroad company accepting the provisions of this act to provide the interest as herein provided on the bonds issued by said company and the sum of one percent per annum as a sinking fund, as herein provided, it shall be the duty of the trustees, after the expiration of thirty days from said default or refusal, to take possession of said railroad and all its property of every kind, and advertise the same for sale at public auction to the highest bidder either for cash or additional approved security, as they may think most advantageous for the interest of the Internal Improvement Fund and the bondholders. The proceeds arising from such sale shall be applied by said trustees to the purchase and cancelling of the outstanding bonds issued by said defaulting company, or incorporated with the sinking fund, provided that in making such sale, it shall be conditioned that the purchasers shall be bound to continue the payment of one-half of one percent semiannually to the sinking fund until all the outstanding bonds are discharged, under the penalty of an annulment of the contract of purchase, and the forfeiture of the purchase money paid in."
The remaining sections of the act bearing upon the questions involved are set out in the opinion of the Court.
The bill of complaint charges that on Nov. 3, 1870, said Vose chanroblesvirtualawlibrary
filed his bill in that court against Reed and others, trustees of said fund, alleging that he was the owner of first mortgage bonds of the company issued under the provisions of said act; that the company having failed to provide the interest and the sum of one-half of one percent per annum on the entire amount of its bonds, and been so in default for about three years, the trustees took the road into their possession and sold it for $323,400 to one Dickerson and his associates, subject to all the provisions of the act and, among others, to those of its second and third sections; that the trustees, in accordance with sec. 3, determined to apply the amount received from the sale to the purchase and cancellation of outstanding bonds of the company, and not to incorporate the same with the sinking fund provided by the act for the full discharge of the bonds and interest, and by said application all of the outstanding bonds of the company were purchased and cancelled, except two hundred and twenty-eight, of which said Vose owned one hundred and ninety-five, and said Wagner twelve.
It then states that said bill of complaint filed by said Vose charges the trustees with acts of nonfeasance and malfeasance, among others, in failing to demand from the present owners of the railroad the sum of one-half of one percent on the entire amount of bonds issued by said railroad company; that the change in the corporate name of the company in no wise affected its title or removed its liabilities, and that the property is held subject to the conditions and terms of sale, and to the payment of said sum of one-half of one percent.
The bill then sets up the decree appointing said Doggett receiver of all the moneys and securities belonging to said trust fund, in the hands of the trustees, and giving him power to sue for and collect the same, and alleges that at a final hearing, a decree was rendered directing that he be continued as receiver and conferring power upon him to sue for and receive all moneys now due or which might thereafter become due to said Internal Improvement Fund; that he has demanded from the trustees all the money due to said fund from the purchasers of said road; that the trustees have wholly failed to pay it, at times claiming that the purchasers have paid all that can be justly claimed of them under the sale, and at other times that the purchasers should only be called upon to pay one-half of chanroblesvirtualawlibrary
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