Louisville & Nashville R. v. Keyer

Opinion by Judge Pryor: After a careful consideration of the pleadings and proof in this cause we must adjudge that the appellees are not entitled to a judgment. The evidences of their right to demand certificates of stock from the company consisted in the receipts for taxes paid by the appellees and their assignors in discharge of the subscription of stock taken by the city under the ordinance approved June 17, 1871, and other ordinances of later date. These receipts, when endorsed by the city, entitled the holders and owners upon their presentation to' the company or its secretary to certificates of stock. It [51] is clearly established by the evidence that the railroad company as early as the year 1854 and continuously from that time until the institution of this action in March, 1870, or a short time prior thereto, declined to allow any interest upon these receipts for taxes from the time of payment up to the 1st of April, 1862, when the first dividend was declared. There is no proof, it is true, of any public announcement made by the company that this interest would not be paid or of any demand and refusal to allow the interest when the receipts were presented and the stock issued. The only evidence apart from the statements contained in the petition of the appellees in regard to this refusal to pay the interest is to be found in the .constant practice of the company running through a period of fifteen years or more and up to the bringing of this action in not allowing any interest on these tax receipts, and in its issuing stock only for the amount of money called for in the receipt presented. This sale was adopted by the company in accordance with its construction of the fifth section of the amended charter of the company and the ordinances under which the subscriptions of stock were made. This construction seems to have been acquiesced in by the many thousand taxpayers of the city of Louisville without any objection whatever until the year 1870, and in the production of their receipts to the secretary of the company all of them so far as this record shows, including these appellees, only required a certificate of stock for the amount actually paid, or at least failed to demand any interest thereon. It may be that this acquiescence on the part of the taxpayers was caused by the ignorance on their part of the existence of this right to demand interest by reason of the fifth section of the amended charter of the company, and if at the time this stock was issued and the receipts delivered up', the holders were ignorant of their legal rights, and labored under a mistake as to the amount of stock they were entitled to, we would not hesitate to concur in the views expressed by the chancellor that a court of equity upon the presentation of such, a case would grant the relief asked for. It is hardly to be presumed, however, that in the midst of such a population as that of the city of Louisville that all the taxpayers would rest so long upon their rights, without even investigating the questions out of which originated this claim upon a court of equity for relief. The delivery of these receipts and the acceptance of the certificate of stock certainly evidences a set [52] tlement between these parties. There was no reservation of the question as to their right to interest made at the time, but the stock taken, impliedly at least, was in full discharge of all their claims upon the company. The receipts would not have been surrendered if it was only a partial settlement of the rights of the parties. If the appellees had held the notes of the company having interest and surrendered them in the same way without demanding the interest, at least when the right to interest is doubtful, such a transaction would be regarded as final by the chancellor and no recovery could be afterwards had of the interest without some allegation and proof of either fraud or mistake. When an instrument has been cancelled or delivered up' under a mistake of the party and in ignorance of the facts material to the rights claimed under it, a court of equity will grant relief upon the ground that the party is conscientiously entitled to enforce such rights. 1 Story Equity 167. Whenever there has been a palpable mistake of law or fact, and by reason of such mistake one has surrendered something of value, for which he has received no consideration, a court of equity will relieve. Underwood v. Brockman, 4 Dana 309; Covington v. Powell, 2 Met. 226. It becomes material, therefore, tO' inquire into this case, whether the chancellor has been called on to grant relief upon the ground that the appellees have been deprived of what they were legally and justly entitled to, by reason of their ignorance of either the law or facts upon which they acted, when they surrendered their claim to this interest. It is alleged in the petition that the company “has refused in every instance to issue stock for said interest which has accrued prior to April, 1862. That when said certificates were demanded, the company, instead of calculating the interest on said tax receipts, from the time of payment until the 1st of April, 1862, when the first dividend was declared, and issuing stock therefor, refused to do so and only issued stock for the face of the receipts.” The appellees here allege a knowledge on their part of their right to this interest and the refusal of the company to> pay it; with this knowledge of these rights they voluntarily surrendered to the company their receipts, and accepted only so much stock as the face of the receipts entitled them to. If they, saw proper when fully apprised of these rights to accept less than they had the right to demand, or adopted the construction placed upon the company’s char [53] ter, that the company itself had, it is now too late to call on the chancellor for aid. The conclusion is inevitable from the appellees’ own showing that they either adopted this construction of the charter or surrendered their rights to demand interest by delivering up the receipts when they settled with the company, knowing that they were entitled to more than they received. It is nowhere alleged that there was any mistake of law or fact in any of the transactions between these parties, and the chancellor is not called upon to give the relief on any such ground. The views here taken render it unnecessary to determine the other questions presented.