Harris Trust & Savings Bank v. Chicago Rys. Co., 6839.
| Decision Date | 03 November 1927 |
| Docket Number | No. 6839.,6839. |
| Citation | 23 F.2d 192 |
| Parties | HARRIS TRUST & SAVINGS BANK v. CHICAGO RYS. CO. et al. |
| Court | U.S. District Court — Northern District of Illinois |
Henry S. Robbins, of Chicago, Ill., for Orville E. Babcock et al.
Tenney, Harding, Sherman & Rogers, of Chicago, Ill. (Horace Kent Tenney, of ChiCago, Ill., of counsel), for Harris Trust & Savings Bank.
Harold Smith, of New York City, and Sidney C. Murray, of Chicago, Ill., for Westinghouse Electric & Mfg. Co.
Charles S. Babcock, of Chicago, Ill., for Chicago Rys. Co.
Weymouth Kirkland and James M. Sheean, both of Chicago, Ill., for receivers of Chicago Rys. Co.
David O. Dunbar and Daniel J. Schuyler, both of Chicago, Ill., for trustee under consolidated mortgage.
Edwin H. Cassels and David O. Dunbar, both of Chicago, Ill., for trustee under purchase-money mortgage.
Pam & Hurd, of Chicago, Ill., for trustee under income adjustment mortgage.
Samuel A. Ettelson, Corp. Counsel, of Chicago, Ill., for city of Chicago.
Orville E. Babcock et al., apply for leave to file an intervening petition. They are holders of participation certificates of series No. 1, which are subject to the deposit agreement considered in Thatcher v. Chicago Railways Co. (C. C. A. 7) 4 F. (2d) 63, and Babcock v. Chicago Railways Co., 325 Ill. 16, 155 N. E. 773.
When a stockholder attempts to intervene in litigation to which the corporation is a party, the first requisite is that he shall disclose his efforts to secure such action as he desires on the part of the managing directors or trustees of the corporation and the causes of his failure to obtain such action. Continental & Commercial Trust & Savings Bank v. Allis-Chalmers (D. C.) 200 F. 600, 611; Guaranty Trust Co. v. Chicago, M. & St. P. Ry. Co. (D. C.) 15 F. (2d) 434, 435, 436, 440.
Petitioners here are not even stockholders. Their status is defined in Babcock v. Chicago Railways Co., supra. The deposit agreement gives them an interest in what may be received as dividends, etc., by the depositaries who have the legal title to the stock. The certificate holders also have the privilege of direction to the stockholders, and this is the method provided for controlling the acts of the stockholders. The participation certificates were not issued as evidence of stock ownership, and the holders of such certificates are not entitled to elect the directors of the Railways Company and control its affairs, except by the method provided.
The petition does not show that request has been made of the trustees to secure the action desired by the applicants. Nor are facts stated which show that the trustees, by fraudulent conduct or otherwise, have disabled themselves from performing the duties which they alone may perform under the deposit agreement. Complaint is made that about four years ago the trustees refused to furnish a list of certificate holders to the applicants. It was held in the Babcock Case, supra, that the trustees were not obliged to furnish such list. The rulings of the Supreme Court in the Babcock Case as to the construction of the deposit agreement are in harmony with the rulings of the Circuit Court of Appeals of this circuit in the Thatcher Case.
The trustees under the deposit agreement are not parties to this proceeding. Notice has not been given to them of this application. Demand has not been made upon them to take the...
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