Alsop v. Riker Riker v. Alsop

Citation39 L.Ed. 218,155 U.S. 448,15 S.Ct. 162
Decision Date10 December 1894
Docket Number63,Nos. 59,s. 59
PartiesALSOP et al. v. RIKER. RIKER v. ALSOP et al
CourtUnited States Supreme Court

Geo. W. Wingate and John M. Bowers, for Alsop and others.

Andrew J. Riker, in pro. per.

Mr. Justice HARLAN delivered the opinion of the court.

William H. Aspinwall, Joseph W. Alsop, Edwin Bartlett, David Leavitt, Edward Learned, Samuel W. Comstock, and William A. Booth, holders of construction bonds of the Ohio & Mississippi Railway Company, Eastern Division, issued to the stockholders and creditors of that corporation, on the 15th day of December, 1858, a circular inviting them to unite in adopting an agreement such as was transmitted with the circular. In that circular they expressed the opinion that by the adoption of the proposed agreement the company would be enabled to place its road and property in a condition to command the entire business to which, from its location, it would be fairly entitled; 'to meet promptly all future demands upon it for interest on its remaining indebtedness; from its net earnings to pay fair dividends upon its stock within a reasonable time; and that all causes for litigation will be removed, and the interests of all parties be thereby placed in a safe and reliable position.'

With the circular was submitted a statement showing that the estimated liabilities of the company, with interest to July 1, 1859, aggregated $18,393,768, of which $2,050,000 were first mortgage bonds, $258,000 were second mortgage bonds, $4,242,000 were construction or third mortgage bonds, part of which were to be used in redeeming and retiring the second mortgage bonds, and $3,320,000 were income bonds, including scrip certificates.

The appellant Andrew J. Riker was at that time the holder and owner of nine of the company's construction bonds.

The agreement recited that the subscribers were 'desirous that concessions shall be made by all parties in interest which shall discharge a portion of the indebtedness of said company, and thereby assure the prompt payment of all sums which shall become due on the residue thereof, and without prejudice to the proper improvement and maintenance of the road and its appurtenances.'

By the first paragraph of the proposed agreement it was provided that subscribers who were owners or legal representatives of legal demands against the company would discharge the same on payment therefor by the company, as follows: For the three coupons that were then or that should become due on its first mortgage bonds next prior to and including those due July 1, 1859, one-half thereof in money, and one-half thereof in shares of the capital stock of the company at par; for the coupons that were then or that should become due on second mortgage bonds, up to and including those due April 1, 1859, one-half thereof in money, and one-half in shares at par; for the principal of second mortgage bonds, one-third in shares at par, and the remaining two-thirds in construction bonds at par; for the coupons that were then due, or that might become due, on its income bonds, up to and including those due May 1, 1859, together with the principal of such income bonds, in shares at par; for the scrip (certificates convertible into income bonds) issued by the company, in shares at par; for other evidences of indebtedness against the company, as the same were admitted or allowed by its directors, in shares at par,—the interest on the above demands (excepting coupons), so to be paid, to be made up to the 1st day of July, 1859, and to be paid in the same manner as the demands to which it related.

By the second paragraph it was provided that subscribers being owners or legal representatives of shares of the capital stock of the company would transfer all their shares to its directors, or to such person or persons as the directors should designate and appoint, to be reissued or retransferred to make the above payments, and to return to the subscribers or their legal representatives who transferred their shares such portion as they would be entitled to under the agreement, the residue, if any, to belong to the company.

The third paragraph provided that the covenants contained in the above paragraphs were upon the following conditions: (1) That the owners or legal representatives of all demands or stock paid or transferred should subscribe to and comply with the agreement, or that equivalent concessions be made, so that the entire payments contemplated should be made,—the company to purchase with any balance of shares remaining after the payments above named, or with other means, $50,000 of the first mortgage or construction bonds, and to cancel all the bonds and coupons so paid or purchased, except those necessary for exchange for second mortgage bonds as aforesaid,—so that on the 1st day of July, 1859, the indebtedness should not exceed $5,000,000, of which not more than $2,050,000 should be represented by first mortgage bonds, and the residue by construction bonds, with interest running from March 1, 1859. (2) That the owners of income bonds should have loaned to the company the money required to make the cash part of the above payments; such loan, with interest, to be repaid at the earliest practicable time consistent with the proper maintenance of the road. (3) That the city of Cincinnati should grant such modifications and releases of its demands, contracts, and claims against the company as its directors and the trustees named in the agreement should deem satisfactory. (4) That the capital stock of the company should not exceed $7,500,000, unless increased by a further reduction of its bonded debt.

It was further provided that the subscribers should transfer and deliver to the persons named as trustees, their survivors and successors in trust, their several demands, and all evidences thereof, that were contemplated to be discharged or paid for in shares of stock, and all their shares of said capital stock, with power to transfer, to be managed by such trustees for the benefit of the subscribers and their legal representatives in the proportions and upon the terms and conditions specified in the agreement, and should comply with any requirements which the trustees, pursuant to authority, should make

The persons who sent out the above circular, their survivors and successors, were named as trustees under the agreement, a majority of them to have authority to do such acts and things on behalf of the subscribers as they deemed necessary or expedient to carry out the purposes of the agreement, which did not impose liability upon a subscriber to pay any money except at his option.

The other paragraphs of the agreement prescribed in detail the mode in which the proposed scheme should be executed, and the authority which the designated trustees might exercise.

Among other things, it was provided in the proposed agreement that the trustees should issue and deliver certificates equal to the amount of demands admitted or allowed, properly equalizing any differences occasioned by priorities of time in such transfers or deliveries; that the trustees, in their discretion, might purchase, for the benefit of the trust, bonds of the company not contemplated to be delivered to them, also other evidences of indebtedness and shares of stock deemed essential or beneficial to the trust and to parties interested therein, and issue certificates in payment therefor; that said certificates should be the only evidence of the interest of subscribers in the property of the trust, which interest was to be such proportion thereof as the amount of any certificate or certificates bore to the amount of all the certificates issued by the trustees; and that when the parties necessary to carry out the provisions of the first three paragraphs of the agree- ment had subscribed and complied with the same, and the trustees were furnished with evidences of the demands to be paid only in part, the trustees should cancel and surrender to the company all evidences of its indebtedness then belonging to the trust.

In view of the contingency of a foreclosure of some of the mortgages upon the road and property, it was provided that the trustees might make such arrangements with the trustees named therein, or with the owners of the bonds secured thereby, as, in their opinion, would enable them to protect the interests of the trust without making calls upon subscribers; but failing in this, and if they deemed the trust property insufficient or unavailable for the purchase of the road and property at any sale thereof, then they might, on 60 days' notice, make calls on owners of certificates for their just proportion of the means necessary for the purpose, provided that any party so called on could, at his option, omit or refuse to pay any portion of any or of all such calls in the proportion of money or bonds called, in which case the trustees could procure the deficiency from other persons, and issue and deliver certificates for such amounts as they might agree upon.

It was further provided that in the event of the purchase of the road and property by the trustees, and the procurement of title and possession, the trustees should transfer the same to the owners or legal representatives of the certificates issued in pursuance of the proposed agreement, according to and on the surrender of their several certificates, and distribute to them severally any other trust property, or the proceeds therefrom, remaining in their hands, such transfer and distribution to be made to each certificate holder in the proportion that the amounts of his certificates should bear to the whole amount of the certificates outstanding; and that if any subscriber to the agreement should, directly or indirectly, purchase the whole or any part of the road or property, then every other subscriber, or his legal representative, could at any time thereafter, until 60 days shall have elapsed from service of notice upon him, pay or legally tender to...

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    ...the delay of less than two years, and the statute of limitations was expressly held to be inapplicable.” In the case of Alsop v. Riker, 15 Sup. Ct. 162, 39 L. Ed. 218, the court says: “The case is none peculiarly for the application of the rule that equity, in the exercise of its inherent p......
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