119 Ky. 287 | Ky. Ct. App. | 1904
Opinion op the court by
Reversing.
On the 2d day of July, 1879, the Northern Division of the Cumberland & Ohio Railroad Company executed and delivered to Joshua F. Speed, as trustee, its deed of mortgage, by which it conveyed to him, all and singular, its property, franchises, etc., to secure the payment of 350 of its bonds,
None of the coupons which fell due subsequent to December 31, 1883, having been paid, the appellants on October 12, 1.885, brought this action in equity to recover on the coupons and to enforce the lien. The foregoing matters were substantially set forth, and the various writings filed as exhibits. The; petition, in substance, avers that the coupons were unpaid; that the defendant denied all responsibility for the payment of any of them, and had so informed plaintiffs; and that sufficient earnings had accrued to pay same. It further avers that defendant, though requested,' had wholly failed to make any of the quarterly returns as provided for; that plaintiffs were ignorant of the exact amount of the net earnings, and that this information was exclusively within the knowledge of defendant; and that defendant “claims that, beside the net earnings of its own lines coming to it over the line of the Northern Division, all other sources of raising
Treating the proceeding as one for an accounting for the purpose of raising a fund not only to meet the coupons then due, and such as might become due during the litigation, but also to create a fund to retire the bonds at maturity, the chancellor on the 21st of July, 1899 (the cause, having remained on the docket pending certain appeals), referred it to the commissioner, with directions “to ascertain and report the net earnings of the defendant coming to it from or over the said Northern Division since the time of the last earnings reported herein, in report R. E. S. No'. 2. . . . Said net earnings to be ascertained in the same way as in said report.” The report of the commissioner, without reporting any finding as absolute, submitted for the consideration of the court four aspects of the proof: First, on the basis of excluding from operating expenses construction, rents, and taxes, the amount which plaintiffs ought to recover would be $139,961.90; second, upon the basis of construction, rents, and taxes, but deducting at the end of each six months period losses incurred in that period, it should be $128,431.76; third, on the basis of including rents and taxes, but excluding construction, it should be $54,637.21; fourth, including in operating expenses, construction, rents, and taxes, the finding should be for defendant. The chancellor, adopting the last view, dismissed the petition, from which judgment the plaintiffs appealed, and the case is now before us for review.
There is no difference of opinion as to the meaning of the contract. That a fund was to be raised from the net earnings of the appellee road to pay off the coupons, and the bond's themselves, if there was a sufficiency for the purpose,
. The appellee concedes that the pleadings up to 1891 were sufficient, but its contention now is that additional pleadings should have been -filed, covering the time now in controversy; that appellants are in the position of a plaintiff without written pleading in a court where written pleadings are required. In this wc do not concur. The allegations and the prayer for relief contained in the petition and in the amended petition of January 28, 1891, seek to recover on not only the coupons then due, but to compel the paying into court of the net earnings as they might thereafter accrue, to meet subsequent coupons, and to provide a fund to meet the bonds at maturity. The action is one for an accounting,
The claim that the matters in issue are res acljudicata is not tenable. The case was heard below as to a different set of coupons from these in controversy when the* decision in 95 Ky., supra, was rendered. The United States Supreme Court, in Nesbit v. Riverside Independent District, 144 U. S., 610, 12 Sup. Ct., 746, 36 L. Ed., 562, held that: “Each coupon is a separate promise, and gives rise to a separate cause of action. ... So, while the pi’omise on the bond and the coupons in the first instance are upon the same paper, and the coupons are for the interest on the bonds, yet the promise to pay the coupons is as distinct from that to pay the bonds as if the two promises were placed in different in
Full weight has. been given in the consideration of this appeal to the able and exhaustive briefs of the learned attorneys for appellee; but the vice, as it seems to us, in the argument on this particular phase, is the assumption that we held in 95 Ky., supra, as a matter of law, that “taxes, rents, and cost of construction” were operating expenses. In that case, construing the opinion most favorably to appellee, this court only held that, on what was then before it, Report R. E. S. No. 2 most nearly approximated correct results. The court did not mean to be understood as holding that, under all and every state of case, these items were charge
As to the point that no'pleading is filed against the Louisville & Nashville, it is sufficient to say that no judgment is sought against it. That it is not a party, is due to its own successful resistance. If to be held responsible at all, it must be in the capacity of dominus litis. It has no ground of complaint that it has not been made a party.
That there have been sufficient earnings coming to appellee by reason of business coining to it from and over the said Northern Division to satisfy at least a piortion of the coupons in suit admits of no doubt. The contract provides that appellee should make quarterly returns as to this', and would appropriate the net earnings for +he purpose of meeting the interest as it fell due. In eqir' A will be considered as
The appellants have not been guilty of laches, as claimed by appellee. The original action was instituted in 1885, and the amendment of 1891 in the prayer asked that the net earnings should be paid in as they might accrue or be found to exist at ihe termination of each arid every six months. The proof shows that there were net earnings up to June 30, 1895, and from July 1, 1896, up to February 5, 1898. From July 1, 1895, to June 30, 1896, there were no net earnings; the proof in that respect showing that, even excluding construction, rents, and taxes from operating expenses, there had been no earnings. We not only hold that the earnings iap to June 30, 1895, can not be swallowed up and absorbed by losses, if any, in the year above mentioned, but that such losses can not be set off against subsequent earnings.
On the subject as to whether “rents, taxes, and construction,” as claimed by appellee, should be charged to capital or to operating expenses, the depositions- of five witnesses were taken — four for appellants and one for appellee-. Baird, Krebs, O’Brien, and Dunbar, for plaintiffs, swear that taxes [(with a few exceptions) should be charged against capital;
Entertaining these views, we are constrained to reverse the action of the lower court, with directions to set aside the judgment dismissing the petition, and to render a judgment for plaintiffs for the sum of $128,431.75, as of date February 21, 1903. A mandate will issue in accordance with this opinion.