Bonner v. Terre Haute & I.R. Co.

• Decision Date: 01 January 1907
• Docket Number: 1,278.
• Citation: 151 F. 985
• Parties: BONNER v. TERRE HAUTE & I.R. CO.
• Court: U.S. Court of Appeals — Seventh Circuit

151 F. 985

BONNER v. TERRE HAUTE & I.R. CO.

No. 1,278.

United States Court of Appeals, Seventh Circuit.

January 1, 1907

Thomas Thatcher and John T. Beasley, for appellant.

John G Williams, for appellee.

Before GROSSCUP, SEAMAN, and KOHLSAAT, Circuit Judges.

GROSSCUP Circuit Judge.

This appeal is from a decree dismissing, for want of equity, the bill of appellant; the sole purpose of the bill (the appellant being the owner of six hundred and six shares of the capital stock of appellee) being to enjoin appellee from consolidating with four other railroad companies.

The bill shows that on the day following the filing of the bill there was to be held a regularly called meeting of the stockholders of appellee, to take action upon the proposed consolidation; the stockholders having been furnished a statement of the financial condition of the respective companies to be consolidated, the proposed new issue of stock and bonds, and the apportionment thereof to the stockholders of the respective companies.

There is nothing in the bill showing fraud or unfairness in the proposed consolidation, unless it be in the following averments: That the Pennsylvania Railroad Company owns more than seventy per cent. of the stock of the appellee, as also a majority of the stock of the St. L.V. & T.H. Co., a majority of the stock of T.H. & L. Co. and all of the stock of the L. & T.H. Co. and the I. & V. Co.-- these being the other companies to the consolidation; that the directors of these respective companies are officers and directors, and likewise interested, in the Pennsylvania Company; that for three years last past, the stock of appellee company had earned, over and above interest on mortgage indebtedness and other charges, more than seventeen per cent. per annum; that the amount of the stock in the consolidated company offered was based upon estimates only, and not upon demonstrated earnings; and that 'the stock so offered, in exchange for their present stock, will have a far less value than the stock now held by them, and the basis of such exchange will be inequitable to them. ' The bill also avers that the proposed consolidation is unauthorized by the laws of Indiana, and, is therefore ultra vires.

Upon the filing of the bill a restraining order was entered, and the motion for a preliminary injunction set down for a day subsequent; upon which day, upon full hearing, the motion was overruled, and the restraining order dissolved. Six months subsequently-- nothing in the meantime having been done-- the appellee filed a plea to the bill to the effect, that since the filing of the bill (during the intervening six months) appellee had executed and delivered an agreement of consolidation, whereby it became consolidated with the several companies therein named, under the name and style of the Vandalia Railroad Company, upon the terms, and in the manner set forth in the bill of complainant; and this plea having been set down for argument, and adjudged by the court to be good and sufficient, the appellant in open court, declined to amend his bill, or file a supplemental bill; whereupon the decree appealed from was entered.

Section one, of an act of the Indiana Legislature passed Feb. 23, 1853 (Burns' Ann. St. 1894, Sec. 5257), reads as follows:

'Any railroad company heretofore organized under the general or special laws of this state shall have the power to intersect, join and unite its railroad with any other railroad constructed or in progress of construction in this state or in any adjoining state at such point on the state line or at any other point as may be mutually agreed upon by said companies; and such railroad companies are authorized to merge and consolidate the stock of the respective companies, making one joint stock company of the two railroads thus connected, upon such terms as may be by them mutually agreed upon in accordance with the laws of the adjoining state with whose road or roads connections are thus formed: Provided, their charters

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