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CLARK, General Treasurer, etc., and another v. BARNARD and others

May 7, 1883

CLARK, GENERAL TREASURER, ETC., AND ANOTHER
v.
BARNARD AND OTHERS, ASSIGNEES, ETC.



The opinion of the court was delivered by: Matthews, J.

Charles Hart and Wm. g. Roelker, for appellants.

Robert R. Bishop and John C. Gray, for appellees.

[Argument of Counsel from pages 437-442 intentionally omitted]

The appellees, who were complainants below, filed their bill in equity, as assignees in bankruptcy of the Boston, Hartford & Erie Railroad Company, against Samuel Clark, general treasurer of the state of Rhode Island, and the city of Boston and Frederick U. Tracey, its treasurer. The bill alleged–

That the Boston, Hartford & Erie Railroad Company was a corporation created by the states of Connecticut and Massachusetts for the purpose of building, acquiring, and operating a railroad from Boston, in Massachusetts, to Willimantic, in Connecticut, and from Providence, in Rhode Island, to Willimantic, and from Willimantic through Waterbury to the state line of Connecticut, and thence to Fishkill, in New York; that the directors of the company, without authority from the corporation or by law, applied to the legislature of Rhode Island in 1869, and obtained the passage of an act entitled 'An act in addition to an act to ratify and confirm the sale of the Hartford, Providence & Fishkill Railroad to the Boston, Hartford & Erie Railroad Company,' by which the company was authorized to locate and construct a railroad in extension of their line of railroad purchased of the Hartford, Providence & Fishkill Railroad Company, commencing at their depot in Providence, thence running to the easterly line of the state in or near the village of Valley Falls, to meet and connect with a Massachusetts railroad extending through North Attleborough from Boston, so as to make a continuous line of railroad in a northerly and southerly direction between Providence and Boston; that this act contained a provision in the following terms: 'This act shall not go into effect unless the said Boston, Hartford & Erie Railroad Company shall, within 90 days from the rising of this general assembly, deposit in the office of the general treasurer their bond, with sureties satisfactory to the governor of this state, in the sum of $100,000, that they will complete their said road before the first day of January, A. D. 1872;' that this condition was not complied with, and that the said act, therefore, never took effect and is wholly null and void; that, after the passage of the act, the directors and officers of the corporation, without authority and in abuse of their trust and duty, filed with one Samuel Parker, then the general treasurer of Rhode Island, a paper, purporting to be the bond of the corporation, but without sureties, and fraudulently took of the funds of the corporation the sum of $100,000, and deposited the same with the city treasurer of Boston in exchange for the obligation of that city, a copy of which is as follows:

'TEMPORARY LOANS, CITY OF BOSTON.

'$100,000.

No. 6.

'This certifies that, for value received, there will be due from the city of Boston, payable at the office of the city treasurer, on demand, after the first day of December next, to the general treasurer of the state of Rhode Island, or order, the sum of $100,000, with interest at the rate of 7 per cent. per annum, in current funds.

'This loan being authorized by an order of the city council passed the ninth day of June, 1869, to anticipate the income of the present financial year.

'Interest will not be allowed after this note is due.

'June 28, 1869.

ALFRED T. TURNER, Auditor.

'FRED. U. TRACEY, Treasurer.

NATH'L B. SHURTLEFF, Mayor.'

– That the directors and officers of the company, without consideration and without authority, deposited this certificate and obligation with the said Parker, who received the same without warrant of law, and thereupon held the same to the use of the railroad company; that the corporation never accepted the act of the legislature recited; that the railroad authorized thereby has never been built, nor any work done thereon, nor has the state of Rhode Island, nor any citizen thereof, suffered any damage or loss by reason thereof; that the general assembly of Rhode Island considered that the filing of the certificate and obligation of the city of Boston was not a compliance with the act, and did not ratify the taking of the same till after the bankruptcy of the railroad company; that said bankruptcy was adjudicated on October 21, 1870, and the complainants became assignees in bankruptcy of said company from that date, and entitled to the money represented by the said certificate; that Samuel Parker having died, the respondent Clark succeeded him as general treasurer of Rhode Island, and came into possession of the said certificate, which, it is alleged, however, he holds wrongfully, and in his individual and not his official capacity, and to the use of the complainants, but which, nevertheless, he thereatens to collect and withhold from them the proceeds thereof.

The prayer of the bill is––

'That the said respondent Clark may be decreed to have no right, title, or interest in or to the said paper writing A, or in or to the said money so deposited with the said respondent Tracey, or to any part thereof, and that he may be decreed to assign and deliver over the said paper A to your orators, and may be enjoined and restrained from presenting the same to the said respondent Tracey, or to the said city of Boston, or from receiving any money or payment whatsoever thereon or therefor, or any part thereof, or from receiving or holding the said sum of $100,000, or any part thereof, from the said respondent Tracey, or the said city of Boston, and that the said respondent Tracey and the said city of Boston may be decreed to pay over to your orators, as assignees as aforesaid, the said sum of $100,000, with interest thereon, and may be enjoined and restrained from paying the same, or any part thereof, or any money on account thereof, to the said respondent Samuel Clark, the general treasurer of the state of Rhode Island, and that your orators may have such other and further relief as to your honors shall seem meet, and as the nature and circumstances of the case shall require.'

To this bill a demurrer was filed by Clark for want of jurisdiction, on the ground that it was, in substance, a suit by citizens of one state against the state of Rhode Island. This demurrer was overruled. Clark then filed his answer, denying the material allegations of the bill, asserting that the transaction was with the state of Rhode Island, through the treasurer in his official capacity, and insisting upon the immunity of the state from suit by citizens of other states as a defense. The cause came on for hearing upon the pleadings and proofs, when an interlocutory decree was passed, April 15, 1878, ordering the payment of the money due from the city of Boston upon the loan certificate into the registry of the court, with liberty to the defendant Clark to take and file evidence in support of any claim for damages by reason of the breach of the bond of the Boston, Hartford & Erie Railroad Company to the state of Rhode Island; and further ordering that on final hearing, and upon filing in court the certificate of indebtedness, the general treasurer of the state of Rhode Island should have and recover of the said sum in the registry such portion, or the whole thereof, as should amount to the sum, if any, for which any surety might or for which the principal obligor in said bond would be liable, upon the evidence, either for any penalty or damages by reason of the non-performance and breach of the conditions of said bond.

On May 3, 1878, the city of Boston paid into court the sum of $100,000, and, in addition, the interest accrued to December 1, 1869, and subsequently, on February 25, 1880, an additional amount for interest in full. On March 17, 1880, the following claim of the state of Rhode Island was filed by the allowance of the court as of April 15, 1878, after the entry of the interlocutory decree of that date: 'And now comes the state of Rhode Island, by the undersigned, the same counsel who have appeared for the defendant Clark, general treasurer of said state, and, without prejudice to the demurrer of said general treasurer, claims the fund in the registry of the court.' This was signed by counsel. On final hearing the fund was awarded to the appellees; and from that decree Clark, general treasurer of the state of Rhode Island, and the state of Rhode Island appealed. The state itself is a party to the appeal bond, which recites that the state of Rhode Island was an intervenor and claimant of the fund in court, and that a decree was rendered against it as such.

The bond executed and delivered by the Boston, Hartford & Erie Railroad Company to the state of Rhode Island is as follows:

'Know all men by these presents that the Boston, Hartford & Erie Railroad Company, a corporation created by the general assembly of the state or Connecticut, is held and firmly bound to the state of Rhode Island and Providence Plantations in the sum of one hundred thousand dollars, to be paid to said state of Rhode Island and Providence Plantations; to which payment, well and truly to be made, the said corporation doth bind itself and its successors firmly by these presents.

'The condition of the aforewritten obligation is such that whereas, by an act of the general assembly of said state of Rhode Island, entitled 'An act in addition to an act entitled an act to ratify and confirm the sale of the Hartford, Providence & Fishkill Railroad to the Boston, Hartford & Erie Railroad Company,' passed at the January session, 1869, said Boston, Hart-ford & Erie Railroad Company are authorized and empowered to locate, lay out, and construct a railroad in extension of their line of railroad purchased of the Hartford, Providence & Fishkill Railroad Company, commencing at a point in their said purchased railroad at or near their freight depot in the city of Providence; thence running westerly and northerly by a line westerly of the state's prison, a little easterly of the Rhode Island Locomotive Works; and thence by nearly a straight line and crossing or running near to Leonard's Pond; and ...


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