Bradford v. Frankfort, St. Louis & Toledo Railroad Company
| Decision Date | 17 May 1895 |
| Docket Number | 16,759 |
| Citation | 40 N.E. 741,142 Ind. 383 |
| Parties | Bradford v. The Frankfort, St. Louis and Toledo Railroad Company et al |
| Court | Indiana Supreme Court |
Reported at: 142 Ind. 383 at 395.
From the Grant Circuit Court.
The judgment is affirmed.
Woollen & Woollen and G. A. Henry, for appellant.
J. M Butler, C. G. Guenther and S. O. Bayless, for appellees.
The appellant, Moses Bradford, sued the Frankfort, St. Louis and Toledo Railroad Company, Sylvester H. Kneeland, The Bluffton Kokomo and South Western Railroad Company, and the Toledo St. Louis and Kansas City Railroad Company, on the 14th day of April, 1886. By cross-complaint the Frankfort, St. Louis and Toledo Railroad Company alleged, against her co-defendants, substantially the same facts pleaded in the complaint. The relief sought in each, said complaint and cross-complaint, was to declare the invalidity of a consolidation of the Frankfort, St. Louis and Toledo Railroad Company, the Toledo, Delphos and Burlington Railroad Company, and the Toledo, Cincinnati and St. Louis Railroad Company, to adjudge the invalidity of certain stock and bonds of the first named company and for the appointment of a receiver for said company. The alleged interest of Bradford was as a stockholder of the Frankfort, St. Louis and Toledo Railroad Company whose stock had been depreciated by the alleged consolidation and the interest of the cross-complainant was in establishing her franchises and property rights, of which she alleged she had been deprived by said alleged consolidation. The theory of each, the complaint and cross-complaint, was that said consolidation was invalid, first, because of the reduction, on May 11, 1880, of the number of directors of the Frankfort, St. Louis and Toledo Railroad Company from thirteen to five, said reduction having been made at an annual meeting of the stockholders convened pursuant to notice, but not of notice that such change was contemplated, and because a reduction of directors to five in number was authorized only by an act of the Legislature, approved June 17, 1852 (R. S. 1881, section 3891), which was unconstitutional by reason of the failure of the title to state the object of the act, the board so elected having negotiated and participated in the consolidation; second, that the three lines attempting consolidation were parallel and competing lines and did not cross or intersect, the constitution and laws of Illinois, in which State one of such lines was organized, forbidding the consolidation of competing lines; third, that the Frankfort, St. Louis and Toledo Railroad Company was represented in said attempted consolidation by less than a majority of its board of directors, considered either as thirteen or five, and by directors who had conspired with the other constituent companies to fraudulently deprive said company of its franchises, right of way and property; fourth, that the articles of consolidation did not comply with the laws of Ohio, Indiana and Illinois, the respective States of the incorporation of said companies, in the requirements of fifteen directors and as to notice to stockholders and proceedings following the agreement of consolidation; fifth, that a notice, not signed by the secretary or a majority of the directors was given of a meeting of the stockholders of said Frankfort, St. Louis and Toledo Railroad Company on February 21, 1882, to ratify and confirm the articles of consolidation of said companies; that of the 13,214 shares, entitled to vote at such meeting, but 12,867 shares were represented and voted, and that said meeting was held at an office different from that named in the notice; and, sixth, that the corporate seal of the cross-complainant was not affixed to said articles, and they were not signed by its legal president and secretary, and no certificate was endorsed by the several secretaries of the companies upon said articles, nor affidavits made by the presidents, that the articles were adopted by a two-thirds vote, and such certificate filed in the offices of the secretary of State and the several recorders.
The principal question before this court arises upon the ruling of the circuit court in overruling the demurrers of the appellants, Bradford and the Frankfort, St. Louis and Toledo Railway Company, to the affirmative answers of the appellees to the complaint and cross-complaint. The answer to the complaint alleged the presence, active participancy, and concurrence of Bradford in the meetings of the stockholders of May 11, 1881, and February 21, 1882, that he voted to change the number of directors, voted for the five chosen, voted for the consolidation and voted to confirm the consolidation agreed upon. It was alleged in both the answer to the complaint and that to the cross-complaint, that the companies consolidating had not constructed parallel lines but merely had them in contemplation; that notice of the stockholders' meeting of February 21, 1882, was duly published for more than thirty days previous to such meeting, in newspapers of general circulation in the counties through which the Frankfort, St. Louis and Toledo Railroad was constructed and contemplated, that said notice specified, as one of the objects of the meeting, the purpose to take action upon the proposed consolidation, and that said notice was signed by the secretary of said company; that said meeting was held at the time and place designated in the notice; that 13,214 shares of stock were authorized to be voted at said meeting and that 12,867 shares were represented and voted; that the shares so represented were voted unanimously in favor of such consolidation and in favor of directions to the president and secretary of the company to execute the articles of consolidation reported and considered by the meeting; that said articles of consolidation were executed as directed, and were acquiesced in by all parties for six years before this suit was instituted.
It is further alleged, in each of said answers, that H. R. Low & Co., a railway construction company, by contract with the Frankfort, St. Louis and Toledo Railroad Company, had agreed to construct a line of railway from Warren, Huntington county, to Kokomo, Howard county, for a stated sum per mile, for all of the stock in said company, excepting the stock to issue to localities voting aid to such construction, and for certain first mortgage bonds of said railway company; that pending such contract, and while said railway was under construction, the construction company contracted with the Toledo, Delphos and Burlington Railway Company, to construct, for said latter company, a railway over the same line, which railway had theretofore been in contemplation as a part of that company's railway, to transfer to said railway company all of the capital stock and mortgage bonds of the Frankfort, St. Louis and Toledo Railway Company, all to be paid for by said Toledo, Delphos & Burlington Railroad Company, as agreed; that in and for the subsequent construction of said line the last named company paid large sums of money, and became the owner of said stock and bonds, and upon the completion of the railway, the possession thereof was delivered to said last named company; that the money, so expended by the Toledo, Delphos and Burlington Railroad Company, was raised by a mortgage, on January 17, 1880, of its line of railway, so theretofore constructed, and as contemplated, including the said line from Warren to Kokomo; that upon default in the interest upon said latter mortgage, and during the months of November and December, 1885, and March, 1886, there were foreclosures, sale and deeds rendered and executed for the Toledo, Delphos and Burlington Railway, from Toledo, Ohio, to Kokomo, Indiana, covering and including the line claimed to have been owned by the cross-complainant; that the said Kneeland purchased and became the owner of said lines of railway, and sold the same to the appellee corporation, the Bluffton, Kokomo and Southwestern Railroad Company; that the Bluffton, Kokomo and Southwestern Railroad Company was thereafter legally consolidated with certain other railroad corporations, and thereby formed the Toledo, St. Louis and Kansas City Railroad Company, appellee, and that said Kneeland and said last named company have expended large sums of money upon said railway, between Warren and Kokomo, in extending it from a narrow to a broad gauge line, and for such purpose have issued mortgage bonds thereon, all with the knowledge and entire acquiescence of the complainant and the cross-complainant, until this suit was instituted.
The sufficiency of the notice of the stockholders' meeting of May 11, 1881, and whether the...
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Bradford v. Frankfort, ST. L.&T.R. Co.
... ... Louis & Toledo Railroad Company and others. The defendant named filed a cross ... ...