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GREEN COUNTY v. QUINLAN.

decided: January 4, 1909.

GREEN COUNTY, KENTUCKY
v.
QUINLAN.



CERTIORARI TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE SIXTH CIRCUIT.

Author: Moody

[ 211 U.S. Page 583]

 MR. JUSTICE MOODY delivered the opinion of the court.

The record and proceedings in this cause are in this court by virtue of a writ of certiorari issued to the Circuit Court of Appeals for the Sixth Circuit. The action was brought in the Circuit Court of the United States by Quinlan against Green County on certain bonds and coupons attached thereto, purporting to have been issued by Green County. The jurisdiction was based upon diversity of citizenship.

The petition alleged that the plaintiff was "the holder and owner" of the bonds named; that the bonds and coupons were duly executed and issued, were due and unpaid, and prayed judgment for their face value with interest.

The defendant filed a plea in abatement to the jurisdiction, alleging, in substance, that the plaintiff was not the real holder and owner of the bonds, and that the jurisdiction of the court was invoked fraudulently. Certain allegations contained in this plea were, on motion, stricken therefrom, and no exception was taken to the order. A reply to the plea was filed, denying its allegations. Thereupon it was agreed that the issues of law and fact should be tried by the court without a jury, and that the plea should be deemed a part of the answer, which was that day filed. In addition to the facts alleged in the plea the answer set up in defense (1) a denial of all the allegations of the petition; (2) that there was no consideration for the bonds; (3) that they were obtained by fraud; (4) that recovery upon some of the coupons was barred by the statute of limitations; (5) that the bonds were issued in payment of a subscription to the stock of the Cumberland & Ohio Railroad upon two conditions, namely, that the railroad should be constructed in a certain designated manner and that the county first should be exonerated from a prior subscription to the bonds of another railroad company, neither of which conditions had been performed. The plaintiff filed a reply, denying the allegations of the answer. There were further pleadings, which are unimportant here. After trial, the court rendered the following judgment:

[ 211 U.S. Page 584]

     "This action, by a stipulation in writing, having been heretofore submitted to the judgment of the court without the intervention of a jury, and the court having heard the evidence and the arguments of counsel, and being now sufficiently advised, makes part of this judgment the following: 'Finding of Fact.'

"1. The court finds that the plaintiff is a citizen of the State of New York, and was so when this action was instituted on March 28, 1899, and that the plaintiff was then the bona fide holder for value of the bonds and coupons sued on, and fully entitled to sue the defendant thereon in this court.

"2. That the Cumberland & Ohio Railroad Company was a corporation organized and existing under the laws of the State of Kentucky, with power to receive a subscription to its capital stock from the defendant, Green County, and said county was authorized conformably to law to make a subscription to said capital stock and to pay for the same in bonds of said county.

"3. That June 17, 1869, there was, as appears from the records thereof, presented to the Green County Court by commissioners of said railroad company the following request:

"'We, the undersigned, commissioners of the Cumberland & Ohio Railroad Company, hereby request that the County Court of Green County submit to a vote of the qualified voters of said county the question, "Whether said Court shall subscribe for and on behalf of said county, and in pursuance of the provisions of the charter of said railroad company, two hundred and fifty thousand dollars to the capital stock of said company, payable in the bonds of said county, having twenty years to run and bearing six per cent interest from date, upon the condition that said company shall locate and construct said railroad through Green County and within one mile of the town of Greensburg in said county and shall expend the amount so subscribed within the limits of Green County; and also upon the further conditions that said bonds shall not be issued or said county pay any part of either principal or interest

[ 211 U.S. Page 585]

     on said amount subscribed as aforesaid until said county of Green shall be fully and completely exonerated from the payment of the capital stock subscribed for by the County Court of said county for and on behalf of said county to the Elizabethtown & Tennessee Railroad Company.'"

"4. That on the same day, namely, on June 17th, 1869, the County Judge of Green County, acting alone and as the County Court, entered an order in said Court in the following language:

"'Present: Thos. R. Barnett, Judge.

"'Whereas the Commissioners of the Cumberland & Ohio Railroad Company by virtue of the authority delegated to them by the charter of said company, have requested the County Court of Green County to order an election in the said county of Green, and to submit to the qualified voters of said county the question whether said county court shall subscribe for and on behalf on said county, two hundred and fifty thousand dollars to the capital stock of the Cumberland & Ohio Railroad Company and payable in the bonds, of said county, having twenty years to run and bearing six per cent interest from date, and upon condition that said company shall locate and construct said railroad through the said county of Green, and within one mile of the town of Greensburg, in said county, and shall expend the amount so subscribed within the limits of Green County; and also upon the further condition that said bonds shall not be issued or said county pay any part of the principal or interest on said amount subscribed to said Cumberland & Ohio Railroad Company, until said county of Green is fully and completely exonerated from the payment of the capital stock voted by said county, and authorized to be subscribed by said Green County Court to the Elizabethtown & Tennessee Railroad or any part of the interest thereon. It is therefore, ordered by the court that an election by the qualified voters of Green County, at the voting places in said county, be held and conducted by the several officers as prescribed by law for holding elections; on the third

[ 211 U.S. Page 586]

     day of July, 1869, to vote on the question as to whether or not the said County Court shall, for and on behalf of said county subscribe two hundred and fifty thousand dollars to the capital stock of the said Cumberland & Ohio Railroad conditioned and to be paid, as above stated.'

"5. That at the election held pursuant to said order there were cast in favor of said proposition and subscription a majority of the votes of the qualified voters of said county, and this fact, upon being duly ascertained, was certified by the proper officers as required by law.

"6. That on the third day of June, 1870, the County Judge of said county, acting alone and as the county court of said county, entered an order in said court as follows:

"'Present: Thomas R. Barnett, Judge.

"'Whereas, in pursuance of an order of this Court made on the 17th day of June, 1869, an election was held in the said County of Green, on the third day of July 1869, at the several precincts of said county, and it appearing that a majority of the qualified voters at said election decided that the county of Green should subscribe for two hundred and fifty thousand dollars of the capital stock of the Cumberland & Ohio Railroad Company; now it further appearing that said election was held in conformity with the law, and in accordance with the provisions of the charter of said company, now, therefore, I, Thomas R. Barnett, the presiding judge of the Green County Court, by virtue of the authority in me vested by law, and to carry out the wishes of said voters, do hereby subscribe for two hundred and fifty thousand dollars of the capital stock of said Cumberland & Ohio Railroad Company, for and on behalf of said county of Green, which subscription is to be paid in the bonds of said county as prescribed in said order of submission, and this subscription is made with the conditions set out in the order of this Court, ordering said election and now of record in the office of this county.'

"7. That on the 12th day of October, 1871, the said county Judge of said county, acting alone and as the county court of

[ 211 U.S. Page 587]

     said county, entered an order in said court in the following language:

"'Present: Thomas R. Barnett, Judge.

"'On motion of E.H. Hobson, director of the Cumberland & Ohio Railroad, it is ordered that Z.F. Smith, president of the Cumberland & Ohio Railroad, be, and he is hereby authorized to have printed for the county of Green the bonds to the amount of two hundred and fifty thousand dollars, the amount of the subscription of Green County to the said railroad, in the following denominations, to wit, the same to be conditioned as specified in the order submitting the vote to the said county:

125 bonds at $1,000 $125,000 000

200 bonds at 500 100,000 00

250 bonds at 100 ...


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