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that portion of its railroad located within the county making the subscription, or that portion of its railroad located within tbe county in which is situated the incorporated city or town making the subscription, as the case may be: provided, that any county, incorporated city, or town making the subscription under these provisions, may, in addition to the restrictions imposed by this section, stipulate with the railroad company that its subscription shall not become due and payable until the company shall construct its road to such points, or for such distances, as may be agreed upon.

"Sec. 1570. When such subscriptions shall become due and payable, as provided in section 1569, the county or city or town making the subscription shall make and execute its coupon bonds for the amount of such subscription, payable not more than twenty years after date, and bearing interest at such rate as may be agreed upon, not exceeding 6 per cent. per annum, payable semiannually, and deliver the same to the railroad company: provided, that such county, city, or town may pay such subscription in cash at maturity, if it shall so elect.”

In pursuance of these provisions, the Charleston, Cincinnati & Chicago Railroad Company on December 30, 1889, made an application for aid by way of subscription to its stock to the amount of $75,000 to the mayor and aldermen of Johnson City, the initial part of said application being as follows:

“Johnson City, Tennessee, Dec. 30, 1889. "To the Board of Mayor and Aldermen of Johnson City, Tennessee: The undersigned, Charleston, Cincinnati and Chicago Railroad Company, a body politic and corporate, chartered under the laws of the state of Tennessee, submits the following application for aid from the town of Johnson City, under the Acts of the General Assembly of Tennessee, chapter 3, page 57, and chapter 58, page 129, of the Acts of 1887: The said railroad company proposes to construct a line of railroad, standard gauge, from Charleston, in the state of South Carolina, to Ashland, in the state of Kentucky, and has located and is constructing its line of railroad through the corporate limits of the town of Johnson City, and will complete that portion of its line within said town and county on or before the 30th day of April, 1890. The under. signed Charleston, Cincinnati and Chicago Railroad Company respectfully asks the subscription of seventy-five thousand dollars ($75,000) from the town of Johnson City, Tennessee, to the capital stock of said railroad company,” etc.

The application proceeded to state the matters required by the statute and was signed as follows: “Charleston, Cincinnati & Chicago Railroad Co., by R. A. Johnson, General Manager." It was submitted to the mayor, who in turn submitted it to the board. Together therewith the railroad company made a written proposition to build a station house within the city at a place designated. "Upon due consideration,” as its record states, the board was unanimously of opinion that an election should be held to determine whether the proposed subscription should be made. An election was duly held, and out of a total of 429 votes 422 were in favor of the proposition. Bonds with interest coupons were prepared and signed by the proper city officials, and deposited with a bank to be held in escrow until the railroad company should have performed its part of the agreement. Thereafter, on May 1, 1890, the mayor filed with the bank the following certificate:

"Johnson City, Tenn., May 1, 1890. "To the First National Bank of Johnson City, Tenn.: This certificate certifies that the Charleston, Cincinnati & Chicago Railroad Company has fully complied with its part of the contract or undertaking as embodied in its proposition, dated December 30, 1889, and submitted to the legal voters of said Jolinson City on the 30th day of January, 1890, whereby said citizens voted a subscription of seventy-five thousand ($75,000.00) dollars to the capital stock of said railroad company payable in the bonds of said Johnson City, which said bonds have been placed in escrow with you in accordance with the terms of a certain indenture of trust, dated Feb. 1, 1890, and you are authorized to deliver the said bonds to said railroad company accordingly.

"Ike T. Jobe, Mayor of Jobnson City, Tenn."

The stock subscribed for was delivered to the city, and the bonds were delivered to the railroad company. The bonds and coupons were in the form following, except with regard to their number and dates of maturity: "United States of America, State of Tennessee, County of Washington,

Corporation of Johnson City. “Know all men by these presents, that the corporation of Johnson City, in the county of Washington, state of Tennessee, acknowledges itself indebted and firmly bound to the Charleston, Cincinnati and Chicago Railroad Company, or bearer, in the sum of one thousand dollars, lawful money of the United States of America, and for value received hereby promises to pay to said company, or bearer, said sum of one thousand dollars, at the National Bank of Deposit, in the city of New York, state of New York, in twenty years after date, with interest thereon from date thereof at the rate of 6 per centum per annum, payable semiannually on the first day of May and November in each and every year, on presentation and delivery of coupons hereto annexed and duly signed by the recorder of Johnson City, for the performance of all which the taxable property of said Johnson City is irrevocably pleulged, pursuant to an act of the general assembly of the state of Tennessee, entitled 'An act to enable the counties and incorporated cities and towns to subscribe to the capital stock of any railroad company incorporated under the general laws of this state in the mode prescribed therein, and to provide for the payment of such subscription, approved February 17, 1887, and also an act passed February 28, 1887, approved March 2, 1887, authorizing Johnson City to issue bonds to an amount not exceeding seventy-five thousand dollars. This bond is one of a series of seventy-five bonds of like tenor, date, and amount herewith, issued by virtue of said above named statutes, and in issuing the same all of the provisions and requirements of each of said statutes have been strictly fulfilled and complied with.

"In witness whereof, the mayor and the recorder of the corporation of Johnson City, Tennessee, have hereunto signed their names, and the same has been countersigned by the board of trustees of the sinking fund of said town, at said Johnson City, on the first day of May, A. D. 1890.

"Ike T. Jobe, Mayor.

"George P. Crouch, Recorder. "G. Kirkpatrick, “J. W. Hunter, "J. E. Crandall, "Board of Trustees of the Sinking Fund.”

(Form of Coupon.) "$30. State of Tennessee.

$30. “County of Washington, Johnson City. "The corporation of Johnson City will pay to the Charleston, Cincinnati and Chicago Railroad Company, or bearer, thirty dollars, at the National Bank of Deposit, in the city of New York, in the state of New York, on the first day of May, 1910, the same being the semiannual interest then falling due on bond. “George P. Crouch, Recorder.

No. 64." It was stipulated by the attorneys for defendant that before the coupons sued upon in the above-entitled action became due and payable, or before the bonds of which they formed a part became due and payable, the plaintiff became the owner and holder of said coupons and bonds for value without notice of any infirmity in said bonds or coupons, except such notice, if any, as it was chargeable with from the face of the bonds. To a declaration counting upon a large number of the coupons taken from the bonds above mentioned the defendant set up two defenses: First, that the railroad company for whose stock the defendant's subscription was made was not a company incorporated under the laws of Tennessee, but was a corporation incorporated under the laws of North Carolina and of South Carolina, and therefore that the bonds and coupons were executed without authority; and, second, that the value of the taxable property in the city was less than $750,000 at the time when the subscription of $75,000 was voted, and therefore the latter was in excess of the 10 per cent. statutory limitation, and that the bonds and coupons were for that reason void. The plaintiff contended that in the face of the recitals of the bonds neither of these defenses was open to the defendant. In support of them the defendant was allowed, against the objection of the plaintiff, to go into evidence. From the record it appears that the facts upon which the first ground of defense rested were in substance these: For some time previous to the transaction in question there had existed a consolidated corporation of the name of the “Charleston, Cincinnati & Chicago Railroad Company," made up of constituents organized under the laws of North Carolina and South Carolina, respectively, and consolidated by the sanction of the legislatures of those states; and the faculty was expressly granted by the acts confirming the consolidation to extend its line northward through the states of Tennessee, Virginia, and Kentucky to the Ohio river. In Tennessee, also, there had been granted some years before a special charter to another company bearing the same name, but which was admittedly void by reason of a constitutional inhibition of the state against special acts of incorporation. About the time when the first-mentioned consolidated company was preparing to extend its line into Tennessee, another railroad corporation having the same name was organized in Tennessee under the general laws of that state, with a charter containing the usual powers, having for its professed object the building and operation of a railroad from a point on the state line of North Carolina through or across the state of Tennessee, by or near Johnson City, to some point on the state line of Virginia in Sullivan county. The incorporation of this company was completed by the acknowledgment of the incorporators and the filing for registration of its articles in tlie register's office of Washington county and in the office of the secretary of state. The certificate of registration in the register's office bears date November 9, 1889, and the certificate of registration in the office of the secretary of state, November 13, 1889. On November 19, 1889, articles of agreement for the consolidation of this last-named Tennessee company and the consolidated company of the Carolinas were entered into by their respective boards of directors, and these articles were duly approved by the stockholders of the Tennessee company on the same day, and by the stockholders of the consolidated company of the Carolinas on December 2, 1889. The articles of consolidation were filed in the office of the secretary of state for Tennessee May 15, 1890. From these articles it appears that at the date thereof R. A. Johnson, who as general manager subsequently signed the application to the mayor and aldermen of Johnson City for its aid by stock subscription, was the general manager of the Carolina company. The evidence tends to show that, after the consolidation agreement had been ratified by the stockholders of both the constituent companies, the new company proceeded with the construction of its line in Tennessee, and built it through Johnson City, and otherwise fulfilled the conditions on which the subscription of the city to the stock became effectual, and the payment therefor became due. Relative to the question whether the issue of bonds exceeded the limitation of the statute, it was shown that from a copy of the assessment roll of the taxable property in the city, and from a copy of the assessment of railroad and telegraph property in the city from the state comptroller's office, the total for the year 1889 was somewhat less than $750,000, but just how much less does not very clearly appear. There was no evidence of the assessment made in 1890. The trial judge, upon the conclusion of the evidence, declined a request to instruct the jury to render a verdict for the plaintiff, and instructed that a verdict should be rendered for the defendant, upon the ground that, as he thought, the evidence clearly showed that the stock subscribed for by the city was that of the consolidated corporation of North Carolina and of South Carolina, and was not that of a corporation organized under the laws of Tennessee. That view being deemed fatal to the plaintiff's right of recovery, no opinion was expressed upon the subject of the other ground of defense, namely, that the issue of bonds was in excess of the limitation prescribed by the statute. The verdict and judgment having been entered for the defendant, the plaintiff sued out a writ of error.

W. H. Rossington, Charles Blood Smith, and Clifford Histed (Horace B. Hord, of counsel), for plaintiff in error.

Burrow Bros. and Isaac Harr, for defendant in error.
Before LURTON, DAY, and SEVERENS, Circuit Judges.

SEVERENS, Circuit Judge, having stated the case as above, delivered the opinion of the court.

A preliminary question in respect to the transcript is raised by the defendant in error, which should be first disposed of. It is urged that so much of the transcript as sets forth the consolidation of the Tennessee corporation with the consolidated company of the Carolinas is no part of the bill of exceptions, and was copied into it by mistake of the clerk, and a letter from him to the clerk of this court so states. But we think that the letter is founded on a misapprehension, and that the bill of exceptions fairly shows that the consolidation papers were put in evidence on the trial. In the body of the bill of exceptions there appears a stipulation relative to this subject, which reads as follows:

"It is hereby stipulated and agreed by and between the parties hereto that the certified copies of charters, admitted in evidence of the suit of Municipal Trust Company, Limited, v. Unicoi county, are admissible in evidence in this suit in so far as they are pertinent thereto.

“Horace B. Hord, for Plaintiff. "Robt. Burrow.

"Isaac Harr. "Sept. 13, 1901."

And it is further stated that “the plaintiff introduced the following papers,” among which were “stipulations as to the introduction of charters of the C., C. & C. R. R. Co.," and there is the further direction, “(Here copy all of said papers in the order named).” The copy of the articles of consolidation in question bear the filing of the clerk of the United States court under the title of “Mercantile Trust Company v. Unicoi County,” and there is no doubt that it is one of the papers called "charters" in the above-mentioned stipulation. We think the fair inference is that the papers in question were understood to be in evidence, and that the construction of the bill of exceptions by counsel is over nice. Other documents appear in the bill of exceptions with no better warrant, about which no question is made.

We are of opinion that there was error in the ruling of the circuit court that it was clearly apparent that the railroad company for whose stock the defendant subscribed was the foreign company, existing solely by virtue of the laws of the states of North Carolina and of South Carolina, and that therefore the plaintiff could not recover. Assuming, for the present, that this question was not concluded by the recitals in the bonds, we think the evidence tended strongly to show, not that it was the foreign corporation with which the city was dealing, but that it was either the Tennessee constituent of the newly consolidated company or the consolidated company itself, most probably the latter. The principal difficulty arises from the identity of the names of the corporations. The reasons for thinking that it

was

no

a Tennessee company, rather than a foreign one, are many. To begin with, there is a legal presumption that the officials of the city did not intend to violate their duty by disregarding the statutory condition,-a condition to which their attention was expressly invited by the language of the application made to them; and this presumption ought to prevail if the language, read in the light of the circumstances, is susceptible of that construction. There was object to be gained by transgressing the law. They were doubtless aware that the Tennessee company had been organized; for it had been recently done, and its articles filed in the register's office in their own city, and its declared purpose was to build a railway "by or near Johnson City.” It would seem more than probable that they were also aware of the proceedings for the consolidation of the companies ; for the stockholders' meeting at which the consolidation was confirmed was held there, and the directors of the Tennessee constituent were all residents of that place. Moreover, Johnson City seems to have been the center of the enterprise in that locality. The applicant describes itself in the application as a corporation organized "under the laws of Tennessee," and asks for aid “under the acts of the general assembly of the state of Tennessee"; referring to the act of 1887, which contained the provisions above quoted and limited the right to obtain aid to corporations organized under the laws of Tennessee.

The principal reasons urged in support of the theory that the application was made by and granted to the foreign company consist of these circumstances: The application states that the “said railroad company proposes to construct a line of railroad, standard gauge, from Charleston, in the state of South Carolina, to Ashland, in the state of Kentucky," whereas the line of the Tennessee company was by its charter defined as extending across the state of Tennessee, with certain named termini on its borders. But the acts of the Carolinas, ratifying the organization of that company by consolidation, plainly import that the extension of the line through the other states might be done by consolidating with other railroad companies in those states; and it is perfectly clear that this was the program, and that the very purpose of the organization of the Tennessee company was that it should be consolidated with the Carolina company, to the end that there should be a corporation organized under the laws of Tennessee and having the status of a domestic corporation in that state for building and operating the road through its domain. It was, therefore, quite as appropriate that, if the applicant was the Tennessee company, having already practically effected a consolidation with the Carolina company, and thereby acquired a common object and purpose with it, it should have thus described its purpose in its application, as that the other constituent should have done so. Again, it is urged as a decisive fact that R. A. Johnson, who as general manager signed the application, was not at any time the manager of the Tennessee company (meaning the company which consolidated with the Carolina company), but was the general manager of the Carolina company. It appears that at the date of the consolidation he was acting in the latter capacity. It is consistent

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