Jl()pJ:
o.
BOARD OJ' COU'BS.
769 ec ale
POPE tJ. BOARD OF COU'KS OJ'
LAKE
COUNTY
(Ct'l'C'ldt Court, D. Ind'tana.
September 8,1893.)
:No. '1,681.
L
!It.ILROAD CoMPANIES-MUNICIPAL AID-BU1ISCRJPTJON TO BTOOR:-CoN80LIDATlO··
A general statute authorizing the consolidation of railroad companies must be considered a silent factor in a subsequent contract of subscription made by a township to the stock of a railroad company, and a consolidation of such company with another company will not release the township. but will transfer ita obligation to the new company. In Indiana a mere vote by a township of a given sum in aid of a railroad gives the cOD:lpanr no legal right to or interest in the tax, until the same has been levied and collected and a valid. oontract of subsoription made in behalf of the township.
& BAx_CoNTJU.OT 011 BU1ISORIPTION-WHEN CoIlPLllTBD.
S.
SAME.
U it be conceded that suoh a vote gives a contingent interest which will pass to a new cpmpany by consolidation, such new company cannot assert any claim to the fund when it has not tendered its stock therefor, and has no atook which it may legally tender.
In Equity. Suit by Charles E. Pope, as receiver of the Chicago. & South Atlantic Railroad Company, against the board of county commissioners of Lake County, Ind., the Chicago &.Indianapolis Air Line Railroad Company, the Louisville, New Albany & Chicago Railway Company, and the Indianapolis, Delphi & Chicago Rajlroad Company, praying to be awarded the Bum of $14,000 by way of subrogation. Heard. on demurrer to an intervening petition by Cedar Creek and West Creek townships and William T. Singleton. Demurrer overruled. Charla E. P(Jj}8, in pro. per. A. C. Harri8, for defendant. BAKER, District Judge. This is a suit brought by Pope, as receiver , of the Chicago & South Atlantic Railroad Company, against the abovedefendants, to be awarded, by way of subrogatit:m, the sum of $14,000. The money so sought to be subrogated was raised by 8 tax voted by the legal voters of Cedar Creek and West Creek townships, in Lake county, Ind., to aid the Chicago & Indianapolis Air Line Railroad Company in constructing its line of railway into and through said townships. The fund so sought to be subrogated is in the of the court. On leave granted, Cedar Creek and West Creek townships and William T. Singleton, a -taxpayer of each of said townships, have filed an intervening petition in this suit. Singleton intervenes on behalf of himself and all the other taxpayers of each township, who are too to be made parties. The intervening petition seeks to have the fund awarded to the townships, or the taxpayers thereof. on the ground that neither the railroad in whose aid it was voted, nor the Louisville, New Albany & Chicago Railway Company, acquired the right to have the same paid to it. The receiver and the railroads have severally demurred to the petition. The facts, out of which the controversy arises, are substantially these: In 1874 Cedar Creek and West v.51:F.no.12-49
Creek townships, in Lake county, Ind., voted to aid the Indianapolis, Delphi & CliicAgorRailioad:Cohlpanybytaking $14;O.oo,:ot:J1he stock of said company. After a small amount of the tax so voted had been collected, the rail'road cotHJ}any beca.ril:tdn'SoJvent,and·with its consent the aid so voted was canceled by of commissioners of Lake refunded to the taxpayers. county, Ind., and the taxes P,elphi & Railroaq . con-, thefax,it had transferred all'its franchises, ,Chicago "at,$Quth ,Atlantic .. pany; 'Of whitrlvthe plaintiff! Pope,' is receiver; I? the y.ear v,oted .to aid en,icago: & L.ll1e,R&luoadCompanyby takmg stock:In said comSO voted, sOp,lething over $IS,uOO was colleCted and paid into the county treasuryofLake county, .incon,troversy·.· Atter .the aid' was' voted, ChipagQ Indianapolis Air Line Railroad Company went out of existence by its consolidation with the Albany &Chicago Railroad Company, the two forming If'ilew of the Lonisville; New Albany & Chit There are :three claimants' to the fund: (1) Tlib claim it because, as they allege, they vdtedJjtl, iA'iiid of the & Indianapolis Ait Line 'Railroad Comin said eompapy, which has never been issueq"ot,i:' tendered,iaM (cannot be,' inasmuch as said company has anexishin'ce. (2) The Louisville, New Albany & Chi o'mpany'claimsit as' the successor by consolidation with the Chicago & Indianapolis Air Line Railroad ,Ootrlpany, and it also claims that it may furnish stock of the new consolidated corporati!ln in lieuof stock in the .Chicago & Indianapolis Air Line Railroad'C6ri:ll'afiy; ; (3) 'Pbperhs receivet of the Chicag) & South Atlantic Railroad'Company, that tnet;hicago & Indianapolis Arr Line ltaHl'dadiOordpany wrongf'nlty the original $14;000 tax vaied Incl1ilmapolis;Uelphi&Chicago Railroad Comptmy, to which it entitled:, ' 1;0 ,'be canceled, and ,the 'taxes collected to be returne'c1l,totheta'xpaye'zlstiand that by reason thereof the Chicago & Soutb,.A·tlal:itic Railroad"'\!)()mpany;a'S:;the owner of the'l'i!1:hts of the IildifiMfMlis,Delphi&. Jh'ieago RaHroad Company, through Pope, its tothe tespective ri'ghts of the Chicago & il!ndhu'J'ttpoHa Aii' I"inellItililroad Company, and the Louisville, New Albahy i&;:Ohicago in said fund, to the extent of 8114,000.,'.· ',n .; .' !,' ' Popei aHege thitt'he has any difect and primary clairlitothefnud;/as hnVii'1'g ,been voted to aid the Chicago & South :JRttUroaa otrlpany ,Or the Indianapolis, Delphi & 0hicago the 'fund, if he has 8:ny, gro,,'s a'l1drl:is'ts upo}:tthe right of the Chicago & lndianapolisAir'Litl'eRaihoad Companyand1:he New Albany & Chicago'Railway'Cbmpany' to' the if the in, ',.'
BOARb'OF
cOM'iUl.
1
tervening petition exhibits facts entitling the townships or the ta:xpayc ers thereof to the whole fund in the registry of the. court, as l'lgainstthe Chicago & Indianapolis Air Line%iilroad Company, and the Louisville, New Albany & Chicago Railway Company, the demurrer of all the defendants to the intervening petition must be overruled. The sufficiency of the intervening petition hing(>s upon the E'trect of the following facts alleged therein: In the year 1880 the Chicago & Indianapolis Air Line Railroad Compa.ny was organized under the laws of this state to construct a railroadfrmn Indianapolis to the west line of Lake county, Ind., and running into alid through the townships of Cedar Creek and West Creek, in said Lake county. In the same yea,r the taxpayers of said townships voted aid to the Chi('ago & Indianapolis Air Line Railroad Company in the sUln of $25,000, that is to say, Cedar Creek township voted aid in the sum of $12,000, and West Creek town..; ship voted aid in the sum of $13,000, and the board of county commissionersplaced upon the tax duplicate a tax to raise said sums of money. The board of county commissioners' elected and determined, in accordance with the express wish of the taxpayers of said townships, to take stock in said Chicago & Indianapolis Air Line Railroad Company for and on behalf of said'townships, and the taxpayers 'thereof, to the'ftlll a.mount of the tax paid to the company. No stock was ever issued or tendered by said railroad company; nor has said company to this day ever issued or tendered any shares of said stock, and the railroad company has put it beyond its power to so issue or tender any of said stock. In August, 1881, the Chicago & Indianapolis Air Line RnilroadColnpanyand the Louisville, New Albany & Chicago Railroad Company were duly consolidated into a new corporation under the name of the Louisville,New Albany & Chicago Railway Company, and from that time forward the said Chicago & Indianapolis Air Line Railroad Company became merged into said new company, and its rights, franchises, and property were merged in said new company, and it wholly abdicated its trust, and thereby became and was extinct, and ceased to exist as a lawful sepa.ra.te corporation; and thereby it became and was unable to carry out the condition on which said aid was voted, and it could not and did not issue any of its said stock to said townships or otherwise. The full amount of the capital stock of the Louisville, New Albany & Chicago Railway Company authorized to be issued by it has been issued, and is now owned and held by various persons; and no part of its said capital stock was set aside for the petitioners or otherwise, nor has said Louisville, New Albany & Chicago Railway Company ever issued or tendered, nor can it lawfully issue or tender, any of its stock for the sum voted in aid of said Chicago & Indianapolis Air Line Railroad Company. The consolidation which took place in August, 1881, was made' without the knowledge or consent of the petitioners, or taxpayers of said townships, and was made before the money, or any part of it, now in controversy been paid by the taxpayers to the county treasurer. The l,oard of commissioners of Lake county always refused to donate sa.id sums so voted to aid either said Chicago & Indianapolis AirLine Rail-
FEDERAL REPORTER,
vol. 51.
road Company or any other railroad COmpany, and refused, to order said be paid over for capital stock of the Chicago & Air :Railroad'Cqm (und in controversy was collected from the taxpll.yers of Cedar Creek and West Creek to":Qships, and belongs to themotJo the town. the railroad,qompaniesqave acquired a legal right to the same. .·.It is claimed bycoqnsel for the intervening petition,ers that the to aid thep.Qicago & IndiaQapolis Air Line Railroad Comof,repeiving aneqllivalent amount of its capital stock, apd,because the company has become merged in a new consoli· dated q(jlfporation tha.t it has ceased tobe able to furnish its stock, and nor the.;consolidated, company has any right to the fUl)d., ,QIl' other hand,it is claimed that, iriasmuch as there was a the was voted authorizing the consolidatiQn,·,thEl cWllloljdllted com,pany takes.theplace of tIle constituent com· pan,y ill, whJph,theaid was. voted, with:.ull its rights and subject to all its liabilities.,., It is true, that there Wlj.Sa statute in force in this state at the in questiO.Qwas the conl'iolidation of raihoad, ,wmpanies, proyiding thlilt the consolidated comand possess all tl;ie rjghts, property, aD;d franchises panY of and, besQbject to their liabilitiE¥!' . Rev. St. v.Railroad 00.,31 Ind. 28,3j Mt; Vernon lioV{jJl,,@Ind. 563. , My person .or corporation subscriqipgfor stock i.n a raig9&dcQmpany iJilll-idof iill cOJlstruction does so compaqy may become merged into a qew, ponsolidated railfpEloQ.,<;lRrpomtion. It. ,J;Jeldto have been in the con:templation ofsuqp thatsuc},IJM::onsolidation might occur. The law enters assilept: faytpr into The subscriber, ,P.Y .his contract, i,ll1 plie.dJy,::Ii, J1.th,,ori,zes. theI:,anro.ad " whose he has sUb, scribed tq,,Qonsolidate. WHQaXlyother, railroad company. He is not thereby,releaaed from Ha,bility, put"with his implied C9nsent, he is broJ,lghtint0 the sumc99pfT;ljtctual relations with, pany whh:h,he occupied with ,the cOlJlpanyfor whose st9c:k subscribed. JIa:nna ,v .JWilroad Oo.,2Q ·lnc:1. 30; Railroad Co. v.. ,Hunt,; Bish v. Ind. 299;, v. Jones, 29 ,Ind.. 465; Paine v. ,Rauroad-Go", 31 Il,ld.283;J1ailway 00. v. PoweU, 40 Ind. 37; Railroad 00. v, Hendri£kB, 41 Ind. 48; Nugent v. Supervisors, 19 Wan. 241. It muat be conceded, as jtgeneralrule, that a subscriber to the stock of a railroad 'company isrele:ased from to pay for the stock by a.fundamentalchange of its charter. A radical change in the organiUltion. or purposes of take !tway: the motive which iQduced the su.bscriptiori, ,alld may.also work a material change in the ·. ·lforthis reason, it is held to .release a suhscljber, from liabil· ityfor his J'his principle, however, cannot be invoked to exonerate, ,a aUbscriber from ,liability for his subscription where the change in, the organization or purpo13es of the company has been made with the eX preas or implied consent oLthe subscriber. The maxim, volerl,ti.'JWn.;At injuria, applies and ruleS i[j. such Il case.
POPE
v.
BOARD .OF COM'RS.
The case of Board Com'1's Hamilton Co. v. State, 115 Ind. 64, 4 N. E. Rep. 589, and 17 N. E. Rep. 855, is earnestly pressed upon the court as holding a contrary doctrine. In this I think counsel are mistaken. In this case aid had been voted to a railroad company in consideration of a like amount of its capital stock to be issued to the township voting the aid. Before the tax was collected or the stock issued, a mortgage upon the property, rights, and franchises of the railroad company was foreclosed by decree of this court, and a sale was made by virtue of slich decree toone Thomas C. Platt as the purchaser. The Midland Railway Company was organized, and became by purchase invested with. the property, rights, and franchises so .purchased by Platt. The Midlaild Railway COmP9,ny claimed· the aid so voted to the company. to property, rights, and franchises it had succeeded. The court held that the Midland Railway Company had acquired no right to the aid, because the company to which the aid had been voted had become practically extinct, and could not issue the stock in payment for the aitl voted, and because the tqwnship had not either expressly or impliedly agreed to accept the stock in the Midland Railway Company. As we have seen, when one subscribes for the stock of a railmad company, he thereby impliedly consents to its consolidation with another railroad company, and also impliedly agrees to accept the stock of the consolidated company in lieu of that of the constituent These principles, however, are by no means decisive of presented by the intervening petition. It is expressly alleged that no part of the aid voted had been collected, and that .pad been made at the time of the consolidation. It has heen repeatedb' ,de-cided by the supreme court of this state that, until the tax wag1eyied and I and a legalllnd valid subscription had been nlade ou', behalf of the township, the-railroad company did not have, antI coul,dnot acquite, any legal right to' or interest in the tax. Board Com:rs, iJJ;,nilton Co. v. State, 115 Ind. 64, and cases cited on page 84,1 4 N. 589, and 17 N.E. Rep. 855. Until the tax is leviedand a legal and valid subscription has been made on behalf of the'to1l'nship, no contract relation exists between the township and the railroad. ''It nothing more thaI) a proposition ,on the part of the public, and can only be made binding and effectual bysuch mutual acceptance as gives 'rise to a contract, At the time of the consolidation the constiiuent comp1any had no right to the aid. At most, it had a mere contingent possibility It is not necessary to decide whether it was such a possibility, coupled with an interest, as could pass to the consolidated company. If it did pass, still under the facts averred it seems clear that the consolidated company has not put itself in a position to assert any legal or equitable right to the fund. It has not tendered its stock, nor done, so far as the petition discloses, any act entitling it to claim the money in controversy. The reasoning of the court in the case of Board Com'rs Hamilton Co.v. State, would seem conclusive of the proposition in hand.
suPra,
1 Bee
17 N. E.Rep. 861.
774 I£'istsilltledtiy:the ease of Oehtr6 "ij? v. 70 Iud. 562, where tlJ.\l l'igpt ofthe l'ailrond company to the aid voted never existed orna'Ceasedtoexist;that them!()ney belongs to'the township or the ta'ltpnyers; In either case, the petitioners, if the facts alleged· in their petitionBball be fol1nd to be true o:hihetrial, ought tI})prevail. The murrerto the intervening petition presents no question of estoppel by decree. If by counsel 'in argument on that subject is good law, about which I the court expresses' no opinion; still the petition discloses no mcts preaenting any such question. The suffi. ciency of the petitionm.nst be dettlrmined'upon its allegations, and not upon matters deh.ors 'petition;:llFrom these considerations it follows that the demurrer to the intervening :petition ought to be overruled, and it is so ordered.
:CCWoutt:Oo'Urt, D.lniJtdna. August 19, 1892.)
8,706. 1. REHOVAL 0'1' CAUIll!i8-Looi&."L PREJUDIOE'-'-NoTlClil 0'1' MOTION.
Under tile local iul'luen\le "clause of the act of Maroh 8, 1887, § 2, notice to the 'adverse party of a lDotlonfor the removal of a cause is not tional,andsuch motion maybe made upeD.ex parte hearing. though it is the better to give College v. Toledo, etc., Ry. 00., 47 Fed. Rep. 886, appl'Ovoo; , "
.. SAMB- MOTION TO· RBMANB-COUNTEB :AUrDA VIT8.
a;
Where a petition supported for the removal of a cause from a state to a federal court has been legally granted under the "prejudice and local infiuence" clause of Act March 8, 1887,52, cl. 4,'plalntitT will not be allowed to file counter affidavits denying the of localprejudice in \Iuppor,t ofa motion to remand, when it not shown that the court was misled or imposed upon in granting the order of removal. ' Where .one of the defentiants is a, mere stakeholder or .Interested on the side of plaintitT, the fact that Is a citizen of the same state with plaintitT will not de· feat the right of his codefendant, with whom the real controversy exists, to remove the cause,under the provisiolls of ,Act § 2.
S4HE-(jITIZENSHrP-ARRANGEMENT O'l'PARTIBS.
.. PATENTS FORbVllNTIONS":':AsSIGNMENT:-RBsCISSION.
The purchaser of a patent right oannot rescind the sale 'on the ground of false representations that the patent w8l\ ,valid, and did not interfere with any prior patent, where.the contract of sale itself contains an express warranty to the same , 'elf.ect, and.an engage.ment On the partof·the grantor to defend at his own expeuse . all suits for ,
Representations .by the soller of a patent right, that the same is valiC! and does not interfere,with .any:prlor patent, must be regarded· as matters of opinion, and not as statemeuts of tact, lJnless it appearlltllat there was a prior patent covering the identicsl invention, and that the seller was aware thereof· .. .SAME-RltscISSION-S'l'ATU· Quo, ' :'.. ., Where a contract fOr the sale .ofcert.ain patent ri&"hts is sought to be rescinded, plaintiff must first show 'that he hlis .dOne all in hlS power to place defendantin . lItatu quo by returning the .. f., S$E-AsSIGNMENT....STA'fiB RE(lULATIQN-OONSTITUTIONALLi.w. :Rev. St. Ind. 1881, § 600*,- requiring. a p\lrson w:ho sells.qr oifers. for sale patents to 1I1e with the clerk6ttbe!propercoubtS" 8'duly authenticated copy of the letters patent, and an affidavit that the letters are genuine and have not been revoked or annUlled, and that he has a to sell the same, is a legitimate ell;orcise of the police power of the state, and lS not in conflict either with Const. U. S. art. I, § 8,
... SAHE-:-F'ALSB R)l:PRIlSBNTATIoNS-MATTBRS OF OPINION·
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