East Tennessee v. Grayson
| Decision Date | 29 November 1886 |
| Citation | 30 L.Ed. 382,119 U.S. 240,7 S.Ct. 190 |
| Parties | EAST TENNESSEE, V. & G. R. Co. v. GRAYSON |
| Court | U.S. Supreme Court |
W. M. Baxter, for appellant, East Tennessee, V. & G. R. Co.
H. E. Davis, F. P. Ward, and R. W. Walker, for appellee, Grayson.
This is an appeal from an order remanding a suit in equity which had been removed from the chancery court of the Eastern division of the state of Alabama. The bill was filed by John W. Grayson, a citizen of Alabama, and a stockholder of the Memphis & Charleston Railroad Company, 'in his own behalf, and in behalf of all other stockholders * * * who may come in and contribute to the expenses,' against the Memphis & Charleston Railroad Company, a corporation existing under the laws of the states of Tennessee, Alabama, and Mississippi, and the East Tennessee, Virginia & Georgia Railroad Company, a corporation existing under the laws of Tennessee and Georgia. The bill was filed August 31, 1882, and alleged that on the second of June, 1877, the Memphis & Charleston Company executed what purported to be a lease of its railroad and appurtenances to the East Tennessee, Virginia & Georgia Company for a period of 20 years from July 1, 1877; that this lease was modified in some particulars December 2, 1879; that neither the lease nor the modification were within the corporate power or authority of either of the parties thereto; that, notwithstanding this, the East Tennessee, Virginia & Georgia Company had taken possession of and was operating the leased railroad; that Grayson, the complainant, was not present, either in person or by proxy, at any meeting of the stockholders of the Memphis & Charleston Company, if any there ever had been, when the lease was authorized or approved; that he had never consented thereto, and his rights as a stockholder 'are in nowise affected by any such action of a stockholders' meeting at which he was not present, in which he did not participate, and in which his stock was not represented,—such action being ultra vires, and without legal authority;' that at a meeting of the stockholders of the Memphis & Charleston Company on the twenty-second of August, 1882, a resolution was adopted authorizing the directors to appoint a committee to meet the East Tennessee, Virginia & Georgia Company, and arrange for a cancellation of the lease, it being understood that the last-named company would surrender its rights as lessee on payment of $400,000; that the resolution was adopted under the influence of the belief that upon the payment of this amount the lease would be abrogated; that at the same meeting a further resolution was adopted authorizing the issue of $5,000,000 of additional stock, to be sold at eight cents on the dollar, to raise the amount to be paid the East Tennessee, Virginia & Georgia Company, in case the proposed arrangement was carried out; that Grayson, the complainant, voted against both these resolutions; that, on a fair settlement of the accounts between the two companies for the operations of the East Tennessee, Virginia & Georgia Company during the time it had been in possession under the lease, a large sum would be found due to the Memphis & Charleston Company...
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