Carson v. Iowa City Gas-Light Co.

• Decision Date: 23 May 1890
• Citation: 45 N.W. 1068,80 Iowa 638
• Parties: CARSON v. IOWA CITY GAS-LIGHT CO. ET AL. BLOOM v. IOWA CITY GAS-LIGHT CO. ET AL.
• Court: Iowa Supreme Court

80 Iowa 638

45 N.W. 1068

CARSON

v.IOWA CITY GAS-LIGHT CO. ET AL.

BLOOM

v.IOWA CITY GAS-LIGHT CO. ET AL.

Supreme Court of Iowa.

May 23, 1890.

Appeal from district court, Johnson county; S. H. FAIRALL, Judge.

These cases were submitted upon the same abstracts and arguments, and involve the same questions, and they will be determined in one opinion. They are actions in chancery, and involve the ownership of $50,000 of stock in the Iowa City Gas-Light Company, a corporation organized under the laws of this state, and other questions pertaining to certain acts of the incorporation and its officers. There were decrees for the plaintiffs, and defendants appeal.A. E. Swisher and Baker & Ball, for appellant.

Ranck & Wade and Jos. A. Edwards, for appellees.

ROTHROCK, C. J.

1. Before proceeding with a statement of the matters in controversy in the case, we deem it proper to say that the abstract of appellants as presented in this court is not really an abstract, but appears to be a mere copy of the transcript. It contains 175 pages of closely-printed matter. Our first thought, upon examining the abstract, was to set aside the submission, and order that a proper abstract be filed; but, as it appeared to us that the decrees of the district court must be affirmed, and appellants would be required to pay the necessary costs made in any event, it would not abridge our labor to be required to take up and consider the case at a future time. It is further to be said that the case is important in the amount involved, and we suppose that counsel for appellants were desirous that all the facts should be duly presented to the court.

It appears from the record that on the 2d day of January, 1888, the defendant J. K. Graves, with one R. E. Graves, executed and delivered to the First National Bank of Chicago an instrument in writing, of which the following is a copy: “$15,000. Chicago, Jan'y 2, 1888. Four months after date, we promise to pay to the order of the First National Bank of Chicago, at their office, fifteen thousand dollars, for value received, with interest at the rate of 7 per cent. per annum after date, having deposited with said bank as collateral security for payment of this liability of ours to said bank, due or to become due, or that may be hereafter contracted, the following property, viz.:

+-----------------------------------------+
                ¦250 shares American Coal Co      ¦$25,000¦
                +---------------------------------+-------¦
                ¦264 shares Western Union Fuel Co ¦26,400 ¦
                +---------------------------------+-------¦
                ¦500 shares Iowa City Gas-Light Co¦50,000 ¦
                +-----------------------------------------+
                

--The market value of which is now $_____, with the right to call for additional security should the same decline; and on failureto respond this obligation shall be deemed to be due and payable on demand, with full power and authority to sell and assign and deliver the whole of said property, or any part thereof, or any additions thereto, at any brokers' board or at public or private sale, at the option of said bank or its assigns, and with the right to be purchasers themselves at such brokers' board or public sale, on the non-performance of this promise, or the non-payment of any of the liabilities above mentioned, or at any time or times thereafter, without advertisement or notice, and after deducting all legal or other costs and expenses for collection, sale, and delivery, to apply the residue of the proceeds of such sale or sales so to be made to pay any, either, or all of said liabilities, as said bank or its president or cashier shall deem proper, returning the overplus to the undersigned. J. K. GRAVES. R. E. GRAVES.” On the 4th day of February, 1888, a note in like amount was given by said parties to said bank. It was in the same form as the instrument above set out, and the same stocks were pledged for its payment. These notes represented a loan of $30,000 made by said bank to said J. K. Graves. It was an ordinary bank loan, made on the 8th day of January, 1885; and the notes above described were the ninth renewals of the loan. No part of the principal sum was paid at any renewal. The notes were all made on four-months time, and the said stocks were originally pledged as security for the loan, and they remained as security through all the renewals. It will be observed that the note above set out became due on the 5th day of May, 1888. The other note, for $15,000, became due one month later.

The Iowa City Gas Company, by its articles of incorporation, is empowered to manufacture “gas, coke, and coal-tar,” and sell the same, in Iowa City. It has no authority to carry on any other business or engage in any other enterprise. On the 15th day of December, 1888, it entered into a contract with the city of Iowa City by which it agreed to establish an electric light system, and light the streets of the city with electricity. The contract set out in full the agreement of the parties, including all details as to the number and kinds of electric lights to be furnished, and the price to be paid therefor. The defendant Graves was the president, principal stockholder, and manager of the gas company. It was organized in 1882 upon a stock basis of $100,000. There was $50,000 of preferred stock, and the $50,000 of common stock, which was afterwards pledged to secure the said loan of $30,000 from the First National Bank of Chicago. When the company was organized, it bought a gas plant at Iowa City, for which it paid $40,000 in the preferred stock of the new company. This absorbed all of the preferred stock but $10,000. Some repairs and betterments were made to the old plant, but not to any considerable extent, so that the $50,000 of common stock did not represent anything of real value. It was issued without the payment of anything therefor, either by Graves or any one else. It had no value founded upon any consideration paid therefor. Its value depended...