Irvine v. Chicago, Willmington & Vermillion Coal Co.

• Decision Date: 21 November 1912
• Docket Number: 1,767.
• Citation: 200 F. 953
• Parties: IRVINE v. CHICAGO, WILMINGTON & VERMILLION COAL CO.
• Court: U.S. Court of Appeals — Seventh Circuit

200 F. 953

IRVINE v. CHICAGO, WILMINGTON & VERMILLION COAL CO.

No. 1,767.

United States Court of Appeals, Seventh Circuit.

November 21, 1912

Plaintiff in error, receiver of the Columbus, Sandusky & Hocking Railroad Company by appointment of the court of common pleas of Franklin county, Ohio, brought this action in the Circuit Court of the United States for the Northern District of Illinois to collect from the defendant, an Illinois corporation, an assessment of 25 per cent. of the par value of capital stock in the railroad company held by the defendant. To the declaration defendant filed a plea that it had no authority to hold stock in the railroad company, and that its act in taking the stock was therefore ultra vires and void. To this plea the plaintiff demurred. On the overruling of the demurrer plaintiff elected to stand, and the court entered judgment in favor of the defendant.

The Ohio statutes provide that the debt of corporations shall be secured by the individual liability of the stockholder 'over and above the stock owned by him, and any amount unpaid thereon, to a further sum equal in amount to such stock,' authorize a creditor, seeking to charge the stockholders, to file his complaint in any common pleas court to enforce such liability and to give notice by publication to nonresident stockholders, and empower the court to direct the receiver to prosecute in his own name actions 'in other jurisdictions to collect the amount found due from any stockholder.'

Though the declaration is challenged by defendant, it may be assumed that the declaration states facts sufficient to make a prima facie case under the Ohio statutes, inasmuch as the plea particularly sets forth the facts on which the question of ultra vires is predicated.

These facts are: That defendant is chartered by Illinois to engage only in the coal business; that in 1886, having on hand 268 coal cars which it did not need in its business, it leased the cars to one Pickard, receiver of the Columbus & Eastern Railroad Company under appointment of an Ohio court; that under the contract, Pickard executed to defendant 48 lease warrants payable monthly; that the agreement provided that upon the payment of all of the lease warrants and a further named sum, defendant should execute a bill of sale of the coal cars; that the agreement provided that the legal title to the coal cars should remain in defendant until the bill of sale should be duly executed, and contained all of the conditions respecting defendant's right to retake the cars upon default in any payment, and other conditions usually found in equipment leases; that down to the sale of the property of the Columbus & Eastern Railroad Company the receiver had given to defendant, in exchange for lease warrants due up to that time, receiver's certificates which had been duly...