The Savannah morning news. (Savannah, Ga.) 1900-current, 1903-06-18
AGAINST THE GEORGIA
Was the Decision Rendered in the
Gainesville RailrOnd Case.

was the Decision Rendered in the
Gainesville Railroad Case.
Gainesville. Ga, June 17.-Judge J.
7 Kimsey to-day rendered a decision
in the litigation that has been pending
for the last six years between the city
of Gainesville, the Gainesville, Jeffer-
son and Southern Railroad Company
and the Georgia Railroad Company
over the validity of S16l,500 of first
mortgage bonds issued by the Gaines
VILE Jefferson and Southern Railroad
Company to the Georgia Railroad Com
pany twenty years ago. Judge sim
sey decided in favor of the city Of
Gainesville and the Gainesville, JET
ferson and Southern Railroad Company
and against the Georgia Railroad Com
pany. holding 80 per cent. of the bonds
void for usury, together with the tWen-
~ years interest thereon.
The case is renta rkable in some feat
ures and has been pending since March,
1887. when the road was placed in the
hands of a receiver
The history of the case is as follows;
The Gainesville. Jefferson and South
ern Railroad Company was organized
with a capital stock of $3.50, 600, and
soon after organizing and while only
small portion of the stock had been
subscribed, authorized the issuance OF
a mortgage and sale of bonds to the
amount of $245, 900. The city of Gaines
VILE subscribed for $50 600 of the stock
and paid par for the same, and the peo-
pie along the line of the road between
Gainesville and Social Circle subscrib-
ed for about $4,000 more and paid par
for the same. During this time $685.
of the bonds were sold at about 50 or
80 cents on the dollar. and the con-
struction of the road was begun.
At this time negotiations We're begun
with the Georgia Railroad Company,
which resulted in it's subscribing for
$4,000 of the stock of the Gainesville,
Jefferson and Southern Railroad Com
pany and thereby becoming a majority
stakeholder. At the same time, and
as a part of the same contract, the
Georgia Railroad Company took the re-
manning 1851 800 of the first mortgage
bonds, paying for both stock and
bonds $145.350, and the two companies
went into written contract, in which
it was stipulated that of this $l45,350
$4,000 should be applied first to the
payment in full of the $3.50 600 worth of
stock so as to make said stock fully
paid up and the remaining Sl5,95O
should be in full payment for the $751;
500 worth of bonds.
These bonds bore per cent. interest
from date. and were Endorsed and sold
by the Georgia Railroad Company for
about 1O5 cents on the dollar, thus net
ting the Georgia Railroad about $780,
coo, a profit of over 1854. 900.
The road was placed in the hands OF
a receiver and trustees for the bond
holders filed a petition to foreclose the
mortgage and collect said bonds, and
the city of Gainesville, as a stockhOld-
er, filed an Intervention. attacking the
bonds sold to the Georgia Railroad
Company for less than 10 cents on the
dollar as usurious. Later the Gaines
Vile, Jefferson and Southern Railroad
Company also filed plea of usury,
and the mater has been stubbornly
litigated on both sides.
Judge Kimsey holds that the trus-
tee for the bondholders can only re-
cover the sum advanced on the bonds,
to. wit, S15,350, with legal interest, and
that the remaining $l46, $50 of bonds,
with interest for twenty years, max
Ing in all $3.50, 900, are void and uncol-
1ectable because of the usury in the
transaction.
The Georgia Railroad also claimed
an open account against the Gaines
willie, Jefferson and Southern Railroad
Company for advances made from year
TO year for operating expenses from
the time the road was constructed un-
til it was put in the hands of a re-
ceiyer, the account amounting to $780,
000 and the court held that all of this
account except for the four years pre-
Gliding the filing of the suit, is barred
by the statute of limitations.
The court also decided that the road
should be sold as a whole. and the Wal
tor mortgage paid off first.
The case will likely go to the SUI
prene Court If Judge Kimsey's de-
cision stands, the larger part of the
Indebtedness claimed against the
Gainesville. Jefferson and Southern
Railroad will be defeated. and the road
viii probably bring enough to pay off
the valid bonds and the interest there
on as we'll as the open account of the
Georgia Railroad not barred by the
statute of limitations
While the road is ordered sold by
the decree the sale win likely be post
poned until the Supreme Court passes
on the case