Chi., M. & St. P. Ry. Co. v. Hoyt

• Decision Date: 05 February 1895
• Citation: 62 N.W. 189,89 Wis. 314
• Court: Wisconsin Supreme Court
• Parties: CHICAGO, M. & ST. P. RY. CO. v. HOYT ET AL.

89 Wis. 314

62 N.W. 189

CHICAGO, M. & ST. P. RY. CO.

v.HOYT ET AL.

Supreme Court of Wisconsin.

Feb. 5, 1895.

Appeal from circuit court, Milwaukee county; D. H. Johnson, Judge.

Action by the Chicago, Milwaukee & St. Paul Railway Company against Alfred M. Hoyt and Charles Ray, trustees, and others, to recover $123,340, back interest on railroad bonds exchanged for, from the date when interest was last paid to the date of transfer to plaintiff, and $17,000 as the excess of liabilities incurred in the operation of the road over the amount of cash receivables and operating supplies, which was stipulated against in the contract for the transfer of the stock. There was a judgment for plaintiff for the recovery of the said $17,000, but against it for the recovery of the said $123,340, and from that portion denying recovery of back interest plaintiff appeals. Reversed, and judgment ordered for plaintiff.

It appears from the record: That in 1880 the Milwaukee & Northern Railroad Company duly made, executed, and delivered a first mortgage on that part of its line of railway from Schwartzburg to Green Bay, with a branch to Neenah, Menasha, and Appleton, at the rate of $17,000 per mile, and the same was duly recorded. That February 11, 1884, it duly made and executed a second consolidated mortgage on the line extending from Schwartzburg to Green Bay, Menasha, and Appleton, and the same was also a first mortgage on all the rest of the road, extending (with a break in the Ontonagon line) to Lake Superior, and which mortgage was duly recorded, and in which that railroad company covenanted with the trustees that they would, by construction or consolidation or purchase, construct and acquire a railroad from Schwartzburg to Lake Superior, and bring it under the lien of that mortgage; that under that mortgage bonds might be issued, numbered from 1 to 2,155, respectively, to take up the mortgage of 1880, mentioned, and which bonds could only be issued for retiring the bonds issued under the mortgage executed in 1880. That it also provided for an issue of 500 bonds, numbered from 2,156 to 2,655, inclusive, for acquiring right of way and depot grounds in the city of Milwaukee (not in any way involved in this litigation). That it also provided for an issue of bonds numbered consecutively from 2,656 to 2,855, to be used for the construction of ore docks (not in any way involved in this litigation). That it also provided for an issue of bonds to be numbered consecutively 2,856, and so on, to be issued at the rate of $17,000 per mile of completed road,--main line and branches,--as fast as the road should be completed, and the completion thereof certified as required. That August 8, 1890, the several defendants, as trustees, executors, or as individuals, as parties of the first part, entered into a written agreement with Roswell Miller, of Chicago, as party of the second part, wherein it was recited and agreed, in effect, that the defendants were the owners of 50,000 shares, more or less, of the capital stock of the Milwaukee & Northern Railroad Company, and 7,905 shares of the capital stock of the Ontonagon & Brule River Railroad Company, and of 2,125 shares of the capital stock of the Oconto & Southwestern Railroad Company; that the total capital stock of the said company was 51,552 1/2 shares, and that the total capital stock of the Ontonagon & Brule River Railroad Company was 7,905 shares; that the total capital stock of the Oconto & Southwestern Railroad Company was 2,125 shares,--all of the par value of $100 each; that the capital stock of the two last-named railroad companies was convertible into the capital stock, share for share, of the Milwaukee & Northern Railroad Company; that the defendants were willing to give to said Miller the right to buy said shares of railroad stock owned by them as aforesaid, upon the terms and conditions therein set forth. That in consideration of the terms therein contained, and of the sum of one dollar in hand paid by said Miller, the receipt of which was therein duly acknowledged, it was mutually agreed that the defendants agreed, for themselves, their executors, administrators, and assigns, to give, grant, and they did thereby give and grant, unto the said Miller or his assigns, the right to purchase all of said capital stock of the above-named railroad companies, which was then owned by them as above, provided the said Miller should on or before September 30, 1890, by written notice addressed to Alfred M. Hoyt, and delivered at his office, No. 1 Broadway, in the city of New York, or addressed to Angus Smith, and delivered at his office, in Milwaukee, agree to accept and pay for the same according to the terms and conditions therein contained. That the defendants agreed, upon the delivery of such written notice at the places above named, or at either of them, within the times specified, that they would at once deliver to the said Miller, or his duly-authorized agent or assigns, the total amount of capital stock of the Milwaukee & Northern Railroad Company then owned by them, said amount being about 50,000 shares, more or less, and that they would within a reasonable time, unless previously done, lawfully convert, or procure to be converted, the 7,905 shares of the capital stock of the Ontonagon & Brule River Railroad Company, and the 2,125 shares of the capital stock of the Oconto & Southwestern Railroad Company, into an equal number of shares of the capital stock of the Milwaukee & Northern Railroad Company, and would deliver to said Miller the 10,030 shares of the capital stock of the Milwaukee & Northern Railroad Company thus obtained. That the delivery of all of said capital stock by the defendants to said Miller was to be made at the office of the plaintiff, in the city of New York. That the following is a complete copy of the third paragraph: “(3) The parties of the first part [the defendants] further agree that the capital stock of said railroad companies is subject only to a first mortgage at the rate of $17,000 dollars per mile, issued or to be issued, upon an aggregate mileage for the three railroads named of three hundred and sixty-two and one-fourth (362 1/4) miles of main-line completed railway, and subject further to an equipment mortgage of $400,000 issued or to be issued (and to the liabilities incurred in the operation of the road, which shall not exceed the amount of cash receivables and operating supplies then belonging to the company), and that, with the exception of the above indebtedness, said railroad companies shall have, in case this option is exercised by the party of the second part (Miller), no other indebtedness, and that all the tracks, depots, real estate, and equipment, except the equipment represented by the equipment mortgage aforesaid, shall likewise be free from any debt or incumbrances except as above specified.” The said agreement further provided, in effect, that the defendants thereby guarantied that, if the said Miller elected to purchase the capital stock of the three railroad companies as therein provided, he should have the privilege of taking the aforesaid equipment bonds, amounting to $400,000, upon prepayment to the party or parties who might have advanced money thereon, together with 6 per cent. interest from the date of such advances until the date of payment. That the defendants further agreed that, in case said Miller should exercise the right of purchase therein contained, the said defendants should, immediately upon the delivery of the purchased stock, procure the substitution in the board of directors of the Milwaukee & Northern Railroad Company of such persons as the said Miller might designate. That he agreed that if he should elect on or before September 30, 1890, to exercise the option therein contained, and to purchase the said shares of the capital stock of the Milwaukee & Northern Railroad Company as above provided, and if the defendants should, according to the terms thereof, make good delivery of not less than 59,000 shares of the capital stock of the Milwaukee & Northern Railroad Company, then he agreed to pay for the same on or before September 30, 1890, upon the following terms viz.: One share of the capital stock, known as the “common stock,” of the Chicago, Milwaukee & St. Paul Railway Company, for each share of the capital stock of the Milwaukee & Northern Railroad Company so delivered,--or the said...