139 Ky. 81 | Ky. Ct. App. | 1910
Opinion op the Court by
Reversing.
The facts out of which this litigation grows may be stated as follows: In 1879 the Cumberland & Ohio Railroad Company leased to the Louisville, Cincinnati & Lexington Railway Company for a period of 30 years its roadbed and other appurtenances, and at the same time executed to the lessee a mortgage on all its property and franchises to secure the payment of 250 bonds of $1,000 each. The lessee as a part of the arrangement agreed to apply the net earnings derived from the leased road to the payment of the interest on these bonds and for the creation of a sinking fund for their redemption; and, if the net earnings did not prove sufficient for this purpose, the lessee was to supply the deficiency by appropriating the net earnings, or so much as might be needed on its own lines which accrued by reason of business coming
In this action, which was filed in September, 1908, the holders of the bonds issued by the Cumberland & Ohio Railroad Company seek to recover from the Louisville & Nashville Railroad Company $25,000; the petition alleging: That the Louisville, Cincinnati & Lexington Railway Company, after the sale of its line of road to the Louisville & Nashville, Railroad Company, owned no property of any kind or charactér, and did not attempt to carry on any business under
In its answer, among other defenses, the Louisville & Nashville Railroad Company relied upon the 5-year statute of limitations as a bar to any recovery against it by the bondholders. This defense is rested upon the ground that its assumption of the obligations
In answer to this the appellant bondholders insist that the contract, by which the Louisville & Nashville Railroad' Company assumed the obligations entered into by the Louisville, Cincinnati & Lexington Railway Company with the Cumberland & Ohio Railroad Company is either an express contract in writing or in effect a written contract, and consequently the 15-year and not the 5-year statute applies to it.
The lower court held that the 5-year' statute of limitations barred a recovery, and dismissed'the petition. The ruling on this point is the .only question that was argued and the only one we will consider.
In one form or another, litigation growing out of these various leases, contracts, and conveyances has been before this court in several cases. The first case (Schmidt v. L. &.N. R. R. Co., 95 Ky. 289, 25 S. W. 494, 26 S. W. 547, 15 Ky. Law Rep., 785) was an action by the bondholders to compel the Louisville & Nashville Railroad Company to account for the net earnings alleged to have accrued after the conveyance to. it by the Louisville, Cincinnati & Lexington Railway
It will thus be seen that it has been definitely settled that the Louisville & Nashville Eailroad Company, as the assignee of the Louisville, Cincinnati & Lexington Eailway Company, assumed the obligations undertaken by the Louisville, Cincinnati & Lexington Eailway Company in its contract with the Cumberland & Ohio Eailroad Company, and so became liable to the bondholders for the net earnings they would have received if the Louisville, Cincinnati. & Lexington Hailway Company had continued to operate the Cumberland & Ohio Eailroad under its contract with it. The question therefore narrows down to a single proposition whether or not the Louisville & Nashville Eailroad assumed these obligations in such a manner as to make its undertaking either actually or in effect a written one. If it did, the 15-year statute, and not the 5-year statute, applies.
But there can be no doubt that the Louisville & Nashville Railroad Company, as a part of its purchase of the Louisville, Cincinnati & Lexington Railway Company, took over the Cumberland & Ohio Railroad Company as the assignee and successor of the Louisville, Cincinnati & Lexington Railway Company. And when it did this, as we have heretofore held, it assumed all of the obligations imposed upon the Louisville, Cincinnati & Lexington Railway Company by the lease. We have then this state of case: The Louisville, Cincinnati & Lexington Railway Company as the lessee, expressly bound itself in a writing signed by it, to perform the conditions of the lease, and of course as between it and the lessor no ques-
Wherefore the judgment is reversed, with directions to proceed in conformity with this opinion.