History of Dakota Territory, volume I, Part 110

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920
Publication date: 1915
Publisher: Chicago, Ill. : S.J. Clarke Publishing Company
Number of Pages: 1198

USA > South Dakota > History of Dakota Territory, volume I > Part 110

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Returning to the story of the differences between the railroad company and county, the court proceedings which followed are amply set forth in the following review of the case made by Associate Justice Barnes at the October term, 1873, of the District Court. The question before the court was a new motion on behalf of the railroad company for a change of venue. The attorneys were: Phil K. Faulk, district attorney, Moody & Cramer, and S. L. Spink, for the county ; and John Currier. William Tripp, W. L. Joy, and H. A. Copeland, for the com- pany. The case was ably presented. At the conclusion of the arguments, the judge reviewed the case, animadverting with some severity upon the conduct of the executive of the territory, and closed by granting the application. In review- ing the case, Judge Barnes said :

This case, although but recently commenced, has a history-a history geographically considered extending from the national capital to the northern international boundary line; a review of which I regard as proper on the disposition of this motion.

In June last. a bill in chancery was filed in this court by the County of Yankton, against the Dakota Southern Railroad Company, Wicker, Meckling & Co., the parties who built the railroad.

The bill alleges the formation of the railroad company with a capital stock of $1,000,000. It alleges the making of a contract by the railroad company with Wicker, Meckling & Co. for the building of the railroad. The bill further charges that Wicker, Meckling & Co. are subscribers to the capital stock of the railroad to the amount of $750,000; that Governor Burbank, Major Stone and W. W. Brookings are subscribers to a large amount-I believe something less than three hundred thousand dollars. in nearly equal amounts, or a little less than one hundred thousand dollars each ; that the County of Yankton has subscribed, paid for, and owns $200,000 ; that the Town of Elk Point has subscribed and paid for some fifteen thousand dollars. The bill further charges that C. G. Wicker, J. II. Meckling, John A. Bur-

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bank, W. W. Brookings, J. M. Stone and J. R. Hanson are the directors of said railroad company ; that a contract was made by the railroad company with Wicker, Meckling & Co., to build the road; that no fixed price was agreed upon by the terms of the contract ; and allege that upon the contract Wicker, Meckling & Co. have been paid, I think, something like one million dollars, and more than the cost of constructing the road. The bill further charges that in fraud of the plaintiffs' rights, the directors of the railroad company, except one of them (Hoffman), who is one of the county commissioners, and Wicker, Meckling & Co., both Wicker and Meckling being directors of the railroad company, and Wicker being its president, in fraud of the plaintiff's rights and intending to defraud the plaintiff, have caused to be issued $1,000,000 of mortgage bonds upon the railroad, and by a resolution have placed them in the hands of C. G. Wicker to be disposed of as he sees fit. The bill further charges that Wicker, Meckling & Co. have paid nothing for their stock. That Governor Burbank, Judge Brookings and Major Stone, with some others whose names do not now occur to me, have paid nothing for their stock; and in short. that the $200,000 paid by Yankton County, the $15,000 by Elk Point, and some other small amounts, are all that have been paid.

The bill then charges that the $1,200,000 of mortgage bonds are now in the hands of C. G. Wicker, with power to dispose of the same, charging the intent on the part of the said C. G. Wicker and his associates to dispose of them and thus encumber the road for more than its entire cost, and rendering the entire stock of the plaintiffs worthless.

The bill then asks for an injunction order, restraining the defendants, pending the suit, from disposing of the $1,000,000 of bonds and demands that the amount due from Wicker, Meckling & Co. be applied in payment for building the road; that the subscription of Stone, Burbank and Brookings, directors of the road, be paid and in like manner applied, and that the mortgage bonds be surrendered and canceled.

Upon the hearing of this application for a restraining order, the defendants appear and do not deny the main allegations in the bill; or rather, the defendants admit receiving the stock; but Wicker, Meckling & Co. allege that their $750,000 of stock was a donation, gift, or honus, and that it was so understood, and that they were to pay nothing for it. I think no answer or explanation is given by the other defendants, or any pretense that they have paid for the large amount of stock held by them.

Upon the statement of facts, on the 28th of June last, I granted the temporary injunc- tion and stated that as against stockholders who, like the plaintiffs, had subscribed and paid for their stock, the directors had no power or authority to give away any portion of the capital stock, and that a transaction of this kind could not be upheld. That it was the duty of the directors to husband the resources of the company, and protect the interests of the stockholders, and that the directors, having themselves subscribed for large amounts of stock, and with the stock thus subscribed electing themselves directors, paying nothing for the stock thus held by them, and then mortgaging the road for its entire value, placing the bonds in the hands of one of their own number with unlimited power to dispose of them as he sees fit, could not be allowed, and hence the injunction order was granted. Remarking further, that inasmuch as Wicker, Meckling & Co. had built the road, and inasmuch as they had a large interest in the road as stockholders, or builders, or both, and inasmuch as their interest could not be well made aavilable except by mortgaging the road, on condition that they would deposit $200,000 of the bonds in the National Bank of Yankton, subject to the order of this court on final hearing, they should not be further adjoined from disposing of the remainder of the bonds, being $1,000,000, and about what they claimed was the cost of the building of the road. No appeal has been taken from this order, but two unsuccessful attempts were made before my associate, Judge Kidder, of the First District, to vacate it, he deciding not to entertain the motion.

Then commenced a systematic raid on the part of some of the defendants, by threats and intimidations, to compel this court to change its views, or at least its ruling; and among other things it was publicly asserted that unless the injunction was vacated the executive of this territory, and one of the defendants, would. by proclamation, depose or remove the offending judge, and bring to the district a judge more acceptable to the said defendants. A somewhat bold proposition, 1 confess, in a free government, and where any interference with the judiciary by the executive is viewed with just alarm and jealousy.

These threats not having the desired effect, on the ttth day of August, at a special term, a motion was made for a change of venue on the ground of prejudice on the part of the people of the county and the judge. On that occasion I held that I could not grant the order, as this was not necessarily a jury trial, and as there was no demand that the issues of fact be tried by a jury ; but at the same time I requested the plaintiff's counsel, as a special favor to me, to make a stipulation that this case be tried by one of the other judges, which they agreed to call ; but on consultation it is claimed that my associate judges declined to try the case, whether because of the wicked and unwarranted statements of the defendants, or some of them, that they were committed to their interests in advance, or for what reason I do not know ; but immediately after the refusal of this court to grant a change of venue in August, an individual, employed as defendant's counsel, and residing in Chicago, and not now appearing in this case, made a most wanton attack on this court, in the columns of the Chicago Tribune, a statement so absolutely false that even the parties in whose interest it was made, are said to have denounced the writer with some bitterness.

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It is hardly necessary for me to say that if there is at this time, on this renewed applica- tion for a change of venue, a sufficient showing to authorize this court to grant the order for the change of venue, and that granting the order will confer jurisdiction upon the court to which it might be sent, and would not have the effect to turn the plaintiff out of court, then clearly it is the duty of this court to grant the motion; and inasmuch as by the pleadings there is a question of fraud to be tried, as well as other issues of fact, I think the order for change of venue can now with safety be made. and it would be very inconsistent for this court, after requesting parties to stipulate to try the case before some other judge. now to decline to allow a change of place of trial to another court. That being so, it is my duty as well as pleasure to grant the motion, here remarking as I did on the former hearing, that where a defendant is willing to make affidavit of prejudice on the part of the court, 1 think, as a matter of right, he should have the change; but the Legislature not having clothed the court with the power to grant the change of venue upon such a showing, I could not grant the order on that ground alone.

The order will then be made to change the place of trial to Clay County.

BOND CASE SETTLED OUT OF COURT

Following this order of the court transferring the venue to Judge Kidder's court, the defendants appear to have looked upon the change as undesirable, which was followed by a consultation that brought about an amicable adjustment.

A serious grievance urged by the county authorities was the failure of the railroad company to make the improvements and establish the industries at Yankton which had been promised. At the conference between the parties it was agreed and settled that the railway company should forthwith proceed to carry out its agreements in these particulars, which included the erection of machine shops, depot and other improvements aggregating in cost about fifty thousand dollars. The county on its part agreed to withdraw its suit.

Another appearance was made before Judge Barnes on the last day of October, 1873, when the following decree was sanctioned and ordered by the court :

County of Yankton, D. T., vs. Wicker, Meckling & Co.

And now at this time, to-wit, the 31st day of October. 1873, it being the 16th day of the October term of the District Court of the Second Judicial District in and for Yankton County. D. T., this cause came on to be heard upon the pleadings heretofore filed, and by agreement of the parties to said action. the decree is hereby made and entered by the court, to-wit :

It is ordered, adjudged and decreed, that the action and bill of the plaintiff be dismissed, and that in consideration of a certain bond of even date herewith, executed by said defend- ants, the Dakota Southern Railroad Company and Wicker, Meckling & Co., which bond the plaintiff hereby accepts in full accord and satisfaction of any and all actions and causes of action stated and set out in plaintiff's bill of complaint in this case. also for all relief prayed for and demanded in said bills of complaint.

That the injunction or restraining order heretofore granted in said case be and the same is hereby vacated and dissolved. and that the defendants and each and every one of them be absolved from any and all obligation to obey said injunction or restraining order.

That the said Dakota Southern Railroad Company, defendant herein, be allowed. ordered and adjudged to make, execute and deliver to its co-defendants, Wicker. Meckling & Co., said last named company being composed of Joel H. Wicker. Charles G. Wicker and Jonas S. Meckling, first mortgage bonds to the amount of $1.200,000, said bonds to be secured by a mortgage on the said railroad and on all the property, real and personal, of said railroad company.

It is further ordered, adjudged and decreed that the said Wicker, Meckling & Co. may negotiate, sell, hypothecate, or in any manner dispose of such mortgage bonds in any amount, or in any manner as to them shall seem best. for their own use and benefit ; but it is expressly decreed that no more than the above named amount of said bonds shall be delivered to or received by Wicker, Meckling & Co.

That the said Wicker, Meckling & Co. are hereby expressly allowed and permitted to surrender and return any or all of the bonds heretofore issued to them by said railroad company, and that in the event the said Wicker, Meckling & Co. surrender and return any or all of such bonds, then and in such case it shall be the duty of, and the said railroad company shall make, execute and deliver to the said Wicker. Meckling & Co., other bonds equal in amount to those surrendered, in conformity with, and as provided for in the reso- lution of the board of directors of said railroad company, adopted at a meeting of said board held June 7, 1872, a copy of which resolution is set ont in full in plaintiff's bill of complaint.

That none of said bonds provided for as aforesaid shall draw a greater rate of interest than 8 per cent per annum, payable semi-annually, nor shall any of said bonds issued or

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which may be issued to Wicker, Meckling & Co. by said railroad company run or fall due in any less time than twenty years, and that upon the surrender of any bonds as heretofore provided and the executing of the bonds in place of those surrendered, such bonds so given up and surrendered shall be canceled and destroyed.

And be it further ordered that each of said parties pay their own costs in said case. And it is further ordered and decreed by consent of parties aforesaid that the injunction bond of said plaintiff heretofore given in said case upon the preliminary injunction herein be and same is hereby canceled and annulled, and no claim or demand for damages by reason of a dissolution, or otherwise, shall be made by said defendant. By the court. A. H. BARNES, Judge

This case closed the litigation between the county and the Dakota Southern Railroad Company, and the courts had no further occasion to adjudicate between these parties. Wieker, Meckling & Co., had disposed of their Yankton County bonds prior to this time. But two years later a suit was begun by a taxpayer of Yankton County to enjoin the county treasurer from collecting the railroad tax, which lingered in the courts for several years, and traversed the journey to the Supreme Court of the United States before it was finally terminated, and it was claimed that it finally kept the Dakotas out of the Union for several years.

At the October term of court the Grand Jury of Yankton County had returned an indictment against Wintermute for killing McCook, charging the crime of manslaughter, which was received by MeCook's relatives and friends with much dissatisfaction. In the chapters reviewing the Wintermute case which follow, we have endeavored to give the legal proceedings fully, and to that account the reader is referred. Suffice it here to state that the father-in-law of MeCook, Mr. Whitney, who had become secretary in his stead, took occasion, after the indict- ment of Wintermute, and during the temporary absence of Governor Burbank (who had already threatened Judge Barnes with a re-assignment ), to issue his proclamation as acting governor, assigning Judge Barnes to the northern or Third District, and Judge Shannon to the Yankton or Second District. No trial of the Wintermute case had been entered upon at this time. A little later the Washing- ton authorities directed the governor of Dakota Territory to cancel that proclama- tion, which had been productive of much comment, some of it of a scandalous character, and restore the judges to their former positions. This was done. Here the matter rested until December. hi the meantime the effort to give Judge Shannon, the chief justice, the Yankton District, was taken up by Senator Quay, of Pennsylvania, a friend of Shannon's, who was able to convince the authorities at Washington that the Chief Justice of Dakota Territory had been assigned to the Second District in which the capital was located. from the organization of the territory, interrupted only by an agreement between the judges and sanctioned by the governor, in 1869, to transfer the chief justice to the Northern District for the benefit of his wife's health, and it appearing after considering the question on its merits that the proper seat for the chief justice was at the capital where the Supreme Court held its sessions, the authorities at Washington directed the issuance of a third proclamation in accordance with this view assigning the chief justice to the Second District and Associate Justice Barnes to the Northern District. Therefore the further proceedings in the Second Judicial District were under Chief Justice Shannon.

At the session of the legislature held in 1875. a bill was passed repealing the railroad aid law enacted at the extra session of 1871 ; but met the veto of Governor Pennington. The purpose of this bill was to deprive the county treasurer of Yankton County of authority to collect the railroad hond tax, which had been collected for the past two years, and the funds applied to paying the semi-annual interest on the railroad bonds.

CHAPTER LII RAILROAD MATTERS SUBJECT OF LONG LAWSUIT

1875

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LEGAL PROCEEDINGS TO RESTRAIN COLLECTION OF THE RAILROAD BOND TAX-JOHN TREADWAY, COMPLAINANT-YANKTON COUNTY DEMURS-COURT REFUSES RE- STRAINING ORDER-YANKTON COUNTY THEN APPEALS TO UNITED STATES SU- PREME COURT WHICH REVERSES THE LATTER DECISION ISSI, AND SUSTAINS TIIE DISTRICT COURT-YANKTON COUNTY MUST PAY THE BONDS-TERRITORIAL LEGIS- LATURE OF 188I ENACTS A SETTLEMENT LAW THAT PROVIDES FOR PARTIAL PAY- MENT AND IN 1883 ANOTHER LAW IS ENACTED THAT RESULTS IN AN EQUI- TABLE ARRANGEMENT WITH BONDHOLDERS.

The next step in legal proceedings, growing out of the railroad matter, was the commencement of an action before Chief Justice Shannon, in the District Court of Yankton County, to permanently restrain and enjoin the treasurer of said county from collecting the railroad tax levied for the purpose of paying the interest on the bonds given or subscribed by the County of Yankton to aid in building the road. This action was begun in January, 1876, Judge P. C. Shan- non then being the presiding judge of the Second District, and the complaint fully set forth the ground for such action, and was filed in the clerk's office on the 20th of September, 1875.

Yankton County was frequently accused of trying to repudiate its bonded debt in connection with this railway project. The accusation is not justly founded as will be seen by an unprejudiced reading of the legal proceedings which was initiated independent of any public sentiment, by a citizen and property holder who had from the beginning been earnestly hostile to bonding the county. Mr. John Treadway was the complainant. His complaint recites that he is the owner of certain land in Yankton County upon which the tax for paying the interest on the railroad bonds has been assessed. That he has refused to pay the railroad bond tax but is willing to, and desirous of paying all his other taxes. The county treasurer, however, has refused to receive a partial payment of his tax, and has advertised, or is about to advertise his property for sale at tax sale, and he asks the court for an order restraining the treasurer from such procedure. Moody and Cramer were his attorneys. The complaint was verified and filed January 19, 1876.

Mr. Treadway, the complainant, was in many respects an eccentric and self- willed man. He was exceptionally resolute, determined, independent, and would not yield his position or opinion though opposed by every man in the county. He had stood out against the railroad bonds from the beginning, and was acting con- sistently with his course by initiating this suit. He was a heavy taxpayer for that day, and was willing to pay all his tax except the railroad tax, and tendered such payment to the treasurer who had no authority to isstie a receipt in the form de- manded by the taxpayer.

Answering the complaint, the defendants demur to the complaint herein for the ground that it appears upon the face of the complaint that the complaint does not state facts suf- ficient to constitute a cause of action. J. R. GAMBLE, District Attorney.

Dated at Yankton, D. T., October 18, 1875.

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Treadway v. Sebnauber et al. Demurrer sustained.

And now, the 20th day of January, 1876, the issue of law in this action having duly come on for hearing and trial, and the same having been argued by the counsel of the parties, and on consideration thereof, it is ordered, adjudged and deereed that the demurrer herein of the said defendants to the said complaint be and the same is sustained; and the said com- plaint is dismissed at the costs of the plaintiff; and that judgment be entered accordingly. By the court, P. C. SHANNON, Judge.

To which judgment of the court the plaintiff excepts.

STIPULATION .- It is hereby stipulated and agreed by and between the parties herein that the above entitled action may be and is hereby allowed to be appealed to the Supreme Court of the Territory of Dakota, the same as though notice of appeal was served upon the defend- ants' attorneys, as required by law, and the undertaking and deposit as required by law are hereby waived; the appeal is by consent to be taken into, and such case heard, at the adjourned term of said Supreme Court to be held on the Ist of February, 1870, or at the day to which said adjourned term shall be continued by the said Supreme Court. The intention being to prosecute this appeal to effeet at the earliest time.

Signed by attorneys January 20, 1876.

MOODY & CRAMER, for Plaintiff. J. R. GAMBLE, County Attorney, for Defendant.

The majority opinion of the Territorial Supreme Court dealt in great part with the titter invalidity of the entire proceedings under which the bonds were issued. The special session of the Legislature being held without warrant or authority, there could be no legal life in any of its pretended enactments-hence there was no lawful warrant for holding the railroad bond election ; no legal method for pre- venting or punishing fraud at such election ; no authority for canvassing or declar- ing the vote. All this being without the sanction of law, there was no validity to the bonds isstied, and therefore nothing whatever to form a basis for Con- gress to act upon ; hence it went beyond its constitutional authority in declaring, in effect, that a portion of the law should be considered valid and the remainder ignored. It was even denied by the majority opinion that Congress was invested with any authority to pass a law granting to the counties of the territory the right to vote bonds to aid railroads-that the constitutional powers of Congress did not cover this class of legislation.

Judge Shannon dissented from the majority of the court, and filed a written opinion of some length, quoting numerous authorities and constructing a strong argument. In concluding the judge takes occasion to strengthen his opinion by bringing into the record the sentiment of Yankton county taxpayers, as follows :

From the issuing of these bonds in 1872 until the bringing of this action in 1875 the county commissioners have annually levied a tax, designated as a railroad tax, for the purpose of paying the interest, and in none of these years has the levy exceeded 2 per cent of the assessed valuation of the property. It would seem, therefore, that there has been acquiescence until this suit, which is one brought by a single taxpayer.

The plaintiff asks that the railroad tax levied on his property to pay the interest may be declared illegal and void, and that the county and its agents may be perpetually enjoined from proceeding to collect such tax. The defendants, namely, the county itself and its treasurer, demurred to the complaint, for that the complaint does not state facts sufficient to constitute a cause of action. In other words, the county resists, by its pleading, the prayer of the plaintiff, and thereby, on this record, impliedly admits that the tax is lawful and valid. and consequently opposes the granting of the injunction. I fully coneur with the county and its financial agent in their view thus presented in their demurrer, and ] hold, in accordance therewith, that the complaint does not state facts sufficient to give the plaintiff a cause of action.

An important change had occurred in the judiciary of the territory about the first of January, 1875, when Judge Kidder, of the First District, residing at Vermillion, having been elected delegate to Congress, resigned his judgeship, and was succeeded by Granville G. Bennett, of Washington, Iowa.

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History of Dakota Territory, volume I, Part 110

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920 Publication date: 1915 Publisher: Chicago, Ill. : S.J. Clarke Publishing Company Number of Pages: 1198

Author: Kingsbury, George Washington, 1837-; Smith, George Martin, 1847-1920
Publication date: 1915
Publisher: Chicago, Ill. : S.J. Clarke Publishing Company
Number of Pages: 1198