Hamilton v. Savannah, F. & W. Ry. Co.

• Citation: 49 F. 412
• Parties: HAMILTON et al. v. SAVANNAH, F. & W. RY. CO. et al.
• Decision Date: 04 January 1892
• Court: U.S. District Court — Southern District of Georgia

49 F. 412

HAMILTON et al. v. SAVANNAH, F. & W. RY. CO. et al.

United States Circuit Court, S.D. Georgia, Eastern Division.

January 4, 1892

Charlton & Mackall, for plaintiffs.

Erwin Du Bignon & Chisholm, for defendants.

SPEER District Judge.

Charles H. Hamilton, a citizen of New York, and William F. Bishop, a citizen of Connecticut, filed this bill against the Savannah Florida & Western Railway Company, a corporation created under the laws of Georgia, and a citizen thereof, the East Georgia & Florida Railroad Company, also a corporation created under the laws of Georgia, and a citizen thereof 'and against William V. McCracken, George A. Evans, and Neil McDonald, who orators aver are citizens of the state of New York, and residents of the city of New York, in said state, copartners under the firm name and style of W. V McCracken & Co.' The complainants by their bill make the following case: They are copartners under the firm name of Hamilton & Bishop. The East Georgia & Florida Railroad Company was incorporated under the general laws of Georgia for the purpose of constructing and operating a railroad from Buffalo to or near St. Mary's. The certificate of incorporation is attached to the bill, and it shows that L. M. Lawson, Samuel Thomas, an and H. S. Terrell, of New York, and C. D. Willard, of Washington, D.C., were the incorporators. Afterwards the route was changed from the southern terminus northwardly, by the most direct and practicable line, through the counties of Camden and Wayne, to Jessup, connecting at that point with the East Tennessee, Virginia & Georgia Railroad Company. The object of this company was to connect at St. Mary's with a system of railroads running to Jacksonville, and thence through Florida, and thus to supply railway facilities to a considerable portion of the state as yet without them. The Savannah, Florida & Western Railway Company owns and operates a line of railway from Savannah to Jacksonville by way of Waycross, which passes through Jessup. The East Georgia & Florida Railroad Company, when constructed, would become and be a competing line for business between Jessup and Jacksonville and other points. On December 22, 1885, by resolution of the directors of the East Georgia & Florida Railroad Company, its capital stock was fixed at $400,000, divided into 4,000 shares, of $100 each, such stock to be non-assessable and non-preferred, and the same remained so fixed during all the times hereinafter mentioned. By the same resolution it was declared that 51 per cent. of the stock should be issued to W. V. McCracken & Co., 30 per cent. to C. H. Hamilton, and 19 per cent. divided into seven equal parts, one each to Goodyear, Kay, Hamilton, Dill, Morse, and Cox, and half of a share each to J. T. Collins and M. M. Welch. By the same resolution it was declared that the various interests in lands, etc., of the incorporators at St. Mary's and elsewhere, should be distributed in substantially the same manner. Hamilton in all these matters was in fact acting as the representative of the firm of Hamilton & Bishop, who still are the real parties in interest. By virtue of said resolution, the complainants became the owners of, and entitled to, 1,200 shares of stock, and an individual one-seventh of a right of way for a railroad occupying a portion of the territory to be covered by the railroad of the East Georgia & Florida Railroad Company, and all the improvements and work made and performed thereon, and an undivided one-seventh of the rights and franchises formerly belonging to the Great Southern Railway Company of Georgia, all of which were of great value. Complainants were promoters of the incorporation and organization of the East Georgia & Florida Railroad Company. They expended much time, money, and influence in the enterprise, with a view to realize a profit from the construction of the road. The Great Southern Railway Company was incorporated by act of the legislature of Georgia approved October 17, 1870, and was authorized to construct and operate a road from Millen, in as near a straight line as the topography of the country would permit, to the St. Mary's river, there to connect with the Great Southern Railway Company of Florida. On July 3, 1877, by decree of Wayne superior court, rendered in the case of Goodyear and Harris, for the use of the Southern Atlantic Telegraph Company, against the Great Southern Railway Company, the Great Southern Railway was sold by John F. King, receiver, to Willis Clary, property and franchises, who subsequently died, leaving Lucinda Clary, his widow and heir at law, as the owner of the assets of the Great Southern Railway Company. Lucinda Clary pooled her interests with the interests of complainants and their associates, as promoters of the East Georgia & Florida Railroad Company, in the proportions hereinafter set out. Under a resolution of the directors of the East Georgia & Florida Railroad Company, said company made a contract with W. V. McCracken & Co. for building a line from Jessup to Hart's Road. This contract bears date December 22, 1885, and is attached to the bill as Exhibit B. On or about April 20, 1886, the promoters of the East Georgia & Florida Railroad Company, looking to the construction of said road, entered into a written contract with and conveyance to W. V. McCracken & Co., wherein it is recited that McCracken & Co. have entered into a contract with the East Georgia & Florida Railroad Company, a corporation duly organized under the laws of Georgia and Florida, and authorized to construct and operate a railroad to extend from Millen, Ga., to Hart's Road, Fla., by which McCracken & Co. have undertaken, in consideration of the compensation in said contract provided, to furnish the right of way, and all material necessary for, and to construct and build, the said railroad; that the parties of the first part thereto (the promoters) are severally the owners of certain interests in a right of way for a railroad occupying a portion of the territory to be covered by the railroad of the East Georgia & Florida Railroad Company, and certain grading and other work done and materials furnished for a railroad over said right of way, and also of certain grants of land and concessions, and also are, or claim to be, the owners of certain rights and franchises formerly belonging to the Great Southern Railroad Company of Georgia, which were sold and conveyed to Willis Clary; and under and by said contract and conveyance the said parties of the first part thereto sold, granted, and assigned unto McCracken & Co., and their assigns, all the right, title, and interest of the said parties of the first part, and each of them, in and to the right of way aforesaid, and all the improvements and work made and performed thereon, and of, in, and to all the aforesaid franchises, rights, and privileges, and also an equal, undivided half part of, in, and to all the aforesaid grants and concessions; and the said parties of the first part did thereby covenant and agree, at their own cost and expense, to secure for and transfer to said McCracken & Co. a full and complete right of way for the said railroad over the whole of the proposed route between Hart's Road and Jessup. The consideration moving to the parties of the first part for this contract and conveyance is therein stated to be certain stock and first mortgage bonds of the East Georgia & Florida Railroad Company, and certain sums of money payable in the manner set out in the said contract and conveyance. The consideration moving to Hamilton is stated to be 100 shares of stock of the East Georgia & Florida Railroad Company, and $3,000 in cash, payable October 1, 1886. The bill further avers that the complainants' interests in said properties, on April 20, 1886, were 1,200 shares of the stock of the East Georgia & Florida Railroad Company, one-seventh part of the said right of way and improvements, and of said rights and franchises, and one-fourteenth of the grants and concessions. That Hamilton, acting for the complainants, was to get from McCracken & Co., as a consideration for signing this contract and conveyance, $3,000 in cash, payable on October 1, 1886, and 1,100 shares of stock upon completion of the road, and as soon as said shares should be delivered to McCracken & Co., or as soon as their right to receive such shares should accrue; and that in the mean time the said McCracken & Co. would hold the same as trustees for said Hamilton. A copy of the aforesaid contract and conveyance is attached to the bill as Exhibit C. At the time said contract and conveyance were made, McCracken & Co. did not mean to build the road, but intended to sell out to the Savannah, Florida & Western Railroad Company, or other parties, at a profit, without regard to complainants' rights. That, by means of said sale and conveyance, McCracken & Co. obtained control of all the capital stock and property aforesaid, and elected a board of directors composed of themselves or persons representing their interests, to the exclusion of all other interests, and continued in sole control of the corporation, through all the transactions hereinafter set out. That without completing the road or their contract with Hamilton, and without his authority, McCracken & Co. sold and transferred the East Georgia & Florida Railroad, with all of its property and franchises, or attempted so to do, to the Savannah, Florida & Western Railway Company. At the time of said sale the Savannah, Florida & Western Railway Company not only had full notice and knowledge of the contract between McCracken & Co. and the East Georgia & Florida Railroad Company, but also of complainants' rights and interests therein. Before the Savannah, Florida & Western Railway Company paid the...