County of Carter v. Sinton

This was a suit brought against the county of Carter to recover the amount due on certain bonds and interest coupons issued under the following circumstances:

By an act of the general assembly of Kentucky 'to incorporate the Lexington & Big Sandy Railroad Company,' approved January 9, 1852, and an act amendatory thereof, approved March 1, 1854, the county of Carter was authorized to subscribe $75,000 to the stock of the company, and to issue its bonds to raise the money to pay therefor. Under this authority the subscription was made, and 75 bonds, of $1,000 each, issued by the county. These bonds were in the usual form of negotiable coupon bonds, payable to the order of the railroad company 30 years from date, with interest at the rate of 6 per cent. per annum, semi-annually, at the bank of America, New York. The railroad company indorsed them in blank, and all but one afterwards came into the hands of Joseph C. Butler and L. Worthington, citizens of Ohio, as purchasers for value before maturity.

In 1859, after this subscription was made, and while the bonds issued on that account were outstanding, the county of Boyd was created by the general assembly of Kentucky, which included within its boundaries a part of the original county of Carter. In 1869 the county of Elliott was created, and this took in another part of Carter; but in each of the acts creating the new counties it was provided 'that nothing in this act shall be construed so as to release the citizens and property now subject, or which may hereafter become subject, to taxation, within the boundaries of Carter county,i ncluded in the first section of this act, from being held and made liable for the bonds and interest, issued to the Lexington & Big Sandy Railroad Company, as though this act had never been passed.'

Default having been made in the payment of interest on the bonds, suits were brought by Butler against Carter county for the recovery of the amount due on coupons attached to the bonds he held. The suits resulted in judgments against the county. Afterwards the following act, approved January 30, 1878, was passed by the general assembly of Kentucky:

'An act authorizing the county of Carter, and those parts of     Boyd and Elliott taken from Carter county, to compromise and      settle with the holders of the bonds and coupons of interest      executed by Carter county in its subscription to the capital      stock of the Lexington & Big Sandy Railroad Company, and to      levy and collect a tax for that purpose.

'Be it enacted by the general assembly of the commonwealth of     Kentucky:

'Section 1. That power and authority is hereby given to the     county of Carter, and those parts of the counties of Boyd and Elliott taken from Carter county, to compromise and settle      with the holders of the bonds and coupons of interest      executed by Carter county in its subscription to the capital      stock of the Lexington & Big Sandy Railroad Company. Said     compromise and settlement shall be made by the Carter county      court, composed of the county judge and a majority of the      justices of the peace in commission of Carter county, for and      on behalf of the county of Carter, and those parts of the      counties of Boyd and Elliott taken from Carter county. Said     court may make said compromise through a commission appointed      for that purpose; but before the same shall become binding on      the county of Carter it shall be approved by the Carter      county court, constituted as county levy courts are required      by law to be constituted. Said court may execute to the     holders of said bonds and coupons of interest, severally, the      obligations of the county of Carter, and those parts of the      counties of Boyd and Elliott taken from Carter county in      their formation, which shall be signed by the county judge of      Carter county, and attested by the clerk of said court. Said     obligations shall contain such stipulations as to interest as      may be agreed upon by the court and holders of said bonds and      coupons of interest, or either of them, but not at a greater      rate than six per cent. per annum, payable semi-annually. Said obligations shall be due and payable at such times, and     be for such amounts, as may be agreed for by the court and      holder or holders of said bonds and coupons.'

The next three sections of the act contain provisions for the levy and collection of taxes, to pay the interest and principal of the compromise bonds, upon persons and property within the limits of Carter county as it was when the debt was originally created. The fifth and last section is as follows:

'Sec. 5. This act shall take effect and be in force from and after its passage; but nothing in this act shall be so construed as to affect or make more valid the bonds and coupons of interest given by Carter county in its subscription to the capital stock of the Lexington & Big Sandy Railroad Company than they were before the passage of this act.'

Under the authority of this statute a compromise was made with the holders of the original bonds, by which the county court of Carter county issued 119 new bonds of the county of Carter, and those parts of the counties of Elliott and Boyd taken from Carter county, each for the sum of $1,000, payable to Henry Peachey and Richard O. Butler, executors of Joseph C. Butler, or bearer, with semi-annual interest warrants at the rate of 6 per cent. per annum attached. The principal of the bonds was made payable at different dates.

David Sinton, the defendant in error, purchased 9 of these bonds for value before maturity, and 540 of the coupons, and this suit was brought to recover the amount due thereon. Originally the u it included other bonds and coupons, but, as it was discontinued so far as they were concerned before judgment, no questions arise in this court as to them.

To a petition setting forth the foregoing facts the county demurred (1) because the petition did not state facts sufficient to constitute a cause of action; and (2) because the petition shows a defect of parties plaintiff and defendant. This demurrer was overruled. Sinton v. County of Carter, 23 Fed. Rep. 535. The defendant then filed an answer, some paragraphs of which were stricken out on motion, and others demurred to, and the demurrer sustained. As no point is made on this branch of the case, a further statement of it is not necessary.

The court gave judgment against the county for $29,121.54, and to reverse that judgment this writ of error was brought.

Alvin Duval, for plaintiff in error.

''Geo. Hoadly, E. M. Johnson, Edward Colston, and Geo. Hoadly, Jr.'', for defendant in error.

WAITE, C. J.