Delavan v. York

• Citation: 110 N.E. 763,216 N.Y. 359
• Parties: DELAVAN et al, v. NEW YORK, N.H. & H.R. CO. et al.
• Decision Date: 07 December 1915
• Court: New York Court of Appeals Court of Appeals

216 N.Y. 359

110 N.E. 763

DELAVAN et al,

v.NEW YORK, N.H. & H.R. CO. et al.

Court of Appeals of New York.

Dec. 7, 1915.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Tompkins C. Delavan and others against the New York, New Haven & Hartford Railroad Company and others. From a judgment of the Appellate Division (157 App.Div. 916, 142 N.Y.Supp. 1115), affirming a judgment for defendants, plaintiffs appeal. Appeal dismissed.

Charles M. Sheafe, Jr., of New York City, for the motion.

Louis Marshall, of New York City, opposed.

POUND.

The plaintiffs are minority stockholders in the Rutland Railroad Company. The New York Central & Hudson River Railroad Company owned 66,981 shares in the same corporation, constituting a majority of the capital stock. It sold and transferred 23,033 1/2 shares, being one-half of a controlling interest, to the New York, New Haven & Hartford Railroad Company for about $105 a share; and in November, 1911, it agreed to sell to the New Haven 23,033 1/2 shares more. The complaint attacks this sale and proposed sale as illegal, on the ground that they are in furtherance of a conspiracy in restraint of trade, in violation of the act of Congress known as the Sherman Act (approved July 2, 1890), and prays that the Rutland Railroad Company be enjoined from registering any transfer of stock from the Central to the New Haven, and that the New Haven be restrained from receiving from the Central any Rutland stock or voting thereon, and that the Central be prohibited from transferring any such stock to the New Haven.

The question of whether a private person, suing as a dissenting minority stockholder, may so restrain the acts of majority stockholders. Wilder Mfg. Co. v. Corn Products R. Co., 236 U.S. 165, 174, 175, 35 Sup.Ct. 398, 59 L.Ed. 520;De Koven v. Lake Shore & M.S. Ry. Co. (D.C.) 216 Fed. 955, 957. The sufficiency of the complaint was considered by the Appellate Division on an appeal from an order continuing a preliminary injunction, and it was there held that the plaintiffs had no cause of action; Laughlin and Miller, JJ., dissenting. The judgment which now comes up for review was affirmed upon the opinion then delivered by Ingraham, P.J. (154 App.Div. 8, 139 N.Y.Supp. 17), Laughlin, J., dissenting on his former dissenting opinion (157 App.Div. 916, 142 N.Y.Supp. 1115).

[1] The motion to dismiss the appeal is made on the ground that the question of illegal combination raised in the complaint has been disposed of by a decree entered in the United States District Court for the Southern District of New York on October 17, 1914, in a suit in equity in which the United States of America was petitioner, and the New York, New Haven & Hartford Railroad Company, the New York Central & Hudson River Railroad Company and the Rutland Railroad Company and others were defendants. The purpose of the suit was to dissolve the combination of railroad, steamboat, and trolley lines, which it was alleged existed under the control of the New Have Company in violation of the Sherman Act of July 2, 1890. The petition sets forth in detail, among other alleged acts of illegal combination, the...