Ware v. Galveston City Co

• Decision Date: 14 November 1892
• Docket Number: No. 28,28
• Citation: 13 S.Ct. 33,36 L.Ed. 904,146 U.S. 102
• Parties: WARE et al. v. GALVESTON CITY CO
• Court: U.S. Supreme Court

146 U.S. 102

13 S.Ct. 33

36 L.Ed. 904

WARE et al.

v GALVESTON CITY CO.

No. 28.

November 14, 1892.

Walter Gresham, for appellants.

A. H. Willie, for appellee.

Mr. Justice BLATCHFORD delivered the opinion of the court.

This is a suit in equity, brought in the circuit court of the United States for the eastern district of Texas on March 18, 1881, by Asenath A. Ware, the widow of Robert J. Ware, and the daughter of David White; David P. Lumpkin, the son of Lucy S. Lumpkin, a deceased daughter of said David White; Mary A. Holtzclaw, daughter of Mary A. Cowles, a deceased daughter of said David White, and James T. Holtzclaw, husband of the said Mary A. Holtzclaw; Thomas W. Cowles, son of said Mary A. Cowles; and Daniel O. White and Clement B. White, sons of J. Osborne White, a deceased son of the said David White,—the plaintiffs being citizens of Alabama and Florida,—against the Galveston City Company, a Texas corporation. The plaintiffs filed the bill as heirs at law of the said David White.

The bill set forth that on June 15, 1837, one Michael B. Menard, of the first part, Robert Triplett, Sterling Neblett, and William F. Gray, of the second part, and Thomas Green, Levi Jones, and William R. Johnson, of the third part, entered into a written agreement, which recited that Menard claimed title to a league and labor of land, consisting of 4,605 acres, situated on the east end of Galveston island, in the territory of the republic of Texas; that, Triplett claiming on behalf of himself and Neblett and Gray 640 acres of land, part of said league and labor, articles of agreement were entered into by Menard and Triplett, bearing date April 11, 1837, by which Menard agreed to relinquish to Triplett 640 acres out of said league and labor; that Menard, by deed or act bearing date April 18, 1837, conveyed the residue of said league and labor, after deducting the said 640 acres, to Jones, to be sold and disposed of by him in the manner and for the purposes prescribed in the said act or deed; that Jones, intending to execute the trust created by said deed, had proposed to divide the premises into 1,000 shares, for which certificates were to be issued to the purchasers, and in pursuance thereof had actually issued certificates for 400 shares, of which it was believed many shares had been sold; that Triplett, together with Menard, by deed duly executed by them, had conveyed the 640 acres to Green, Jones, and Johnson, to be sold and disposed of in the manner therein prescribed; that, after further reciting that, it being the intention of all the parties to lay off the league and labor of land into lots for the purpose of building a town thereon, it had been found most beneficial to the parties concerned that the whole of said league and labor should be held on joint account in the proportions thereinafter specified, and should be under the control and at the disposition of the same set of trustees, acting upon one common plan in regard to the whole, instead of being held partly by Jones and partly by Green, Jones, and Johnson, under different titles and plans, it was witnessed that the parties thereto covenanted and agreed with each other, among other things, that the said league and labor of land should be conveyed to Green, Jones, and Johnson, as trustees and commissioners, to carry into effect the purposes of the agreement; that the said league and labor of land should be divided by the trustees into 1,000 shares, of which the 400 shares for which certificates had been issued by Jones should be regarded as 400 shares, and the lawful holders of the said certificates should be on the same footing and entitled to the same rights with the holders of certificates issued under said agreement of June 15, 1837, and upon surrendering their said certificates new certificates in lieu thereof should be issued by said trustees; that the remaining 600 shares should be sold by said trustees in such manner as they should think expedient, no share to be sold for a less sum than $1,500, unless a majority of said trustees should be of opinion that it would be expedient to reduce the price; that a certificate, signed by at least two of the trustees, should be issued to every purchaser, who should have a right to demand a separate certificate for each share; that the certificates should be transferable by assignment in writing thereon, signed and sealed by the holder, and acknowledged in the presence of two witnesses before any justice of the peace or notary public; that the trustees, as soon as, in their opinion, a sufficient number of shares had been sold, should call a meeting of the shareholders at such time and place as should be designated by them, of which they should give sufficient and convenient notice to shareholders; that the trustees should hold the title to the said league and labor of land, subject to the orders of the shareholders, as adopted at their general meetings, and the rules and regulations prescribed by them, and make all conveyances which the shareholders might require them to make, any two of them being authorized to make conveyances and perform all other acts; and that it was thereby further witnessed that the parties thereto of the first and second parts, in consideration of the premises thereto, and the further consideration of $10 to them in hand paid by the parties of the third part, did thereby sell and convey unto Green, Jones, and Johnson, their heirs and assigns, the said league and labor, in trust to execute the agreements thereinbefore set forth.

The bill further showed that Green, Jones, and Johnson accepted the trust created by said written instrument, and took upon themselves its discharge, and in June, 1837, having supplied themselves with 1,000 printed certificates, as the representatives of a like number of shares, which certificates were bound into five books of 200 certificates each, designated as books 'A,' 'B,' 'C,' 'D,' and 'E,' solicited subscriptions for shares; that many persons became purchasers for value and owners of shares therein, to whom said trustees issued a certificate of ownership for each share so purchased; that on April 13, 1838, on due notice given by said trustees, the shareholders held a meeting in Galveston, Tex., and formally organized themselves into a joint-stock company, under the name of the Galveston City Company, by the election of a president and four directors, who were to constitute the board of directors of the company, and to whom was confided the care and control of its property, with power to pass ordinances and by-laws for its government, appoint an agent, apply for a charter of incorporation, require from said trustees a deed for said league and labor of land, so as to vest the legal title in the said board of directors and their successors, lay off the land into blocks and lots, make sales thereof and convey title to the purchasers, declare dividends of the proceeds of sales among the stockholders, and otherwise manage and control the property as they might deem best for the interest of the company; but the bill alleged that said trustees, with the approval and consent of the company, continued to make sales of shares in its stock, and as many as 1,000—the number designated in said written articles—eventually were disposed of, and certificates of ownership thereof issued by said trustees to persons entitled thereto.

The bill further showed that David White, late of Mobile, Ala., in his lifetime, on November 7, 1838, subscribed for and became the owner and proprietor of 67 shares in the capital stock of said company, in evidence of which the said trustees appointed under the instrument of June 15, 1837, issued and delivered to him 67 certificates of ownership, duly signed by two of them, to wit, 17 out of Book A, numbered from 108 to 124, inclusive, and 50 out of Book C, numbered from 1 to 50, inclusive, each certificate being in the form set forth in the margin.¹

The bill further showed that on December 31, 1838, at a regular meeting of the board of directors of the company, an ordinance was passed by it requiring its agent, as soon as a charter could be procured, to open a book for the registration and transfer of stock, and to give due notice of such opening, and conferring the right on stockholders, after such notice, to file and register the certificates issued to them by the said trustees, and receive in lieu thereof certificates under the seal of the company, stating the number of shares to which the party was entitled, which last certificate should not be transferred, except on the regular books of transfer of the company, and should be necessary in every case to entitle the shareholder to receive the dividends due him; that another ordinance was passed requiring the trustees to convey said league and labor to the five persons who were then the directors of the company, and their successors in office; that on April 12, 1839, the said trustees, by deed duly executed and recorded, conveyed the said league and labor in fee to the said directors, by virtue whereof the latter became seised and possessed of it in trust for the stockholders of the company; that afterwards the said Galveston City Company was incorporated under the same name by an act of the congress of the republic of Texas, approved February 5, 1841, and that said David White was one of the original corporators thereof.

The bill further showed that the directors of the company laid off the said land into blocks and lots, and offered the same for sale, and from time to time made sales and conveyances of numerous parcels of it to different persons, receiving in part consideration therefor $1,000,000 and upwards; that there remains a large portion yet unsold, of the value of $500,000 and upwards; that the company adopted the policy of accepting from its stockholders shares of stock in exchange for its lands, and the directors, in a large majority of the sales of lots by them, accepted...