Gibson v. American Railway Express Co.
| Decision Date | 08 May 1923 |
| Docket Number | 34814 |
| Parties | SAM R. GIBSON, Appellee, v. AMERICAN RAILWAY EXPRESS COMPANY, Appellant |
| Court | Iowa Supreme Court |
Appeal from Shenandoah Superior Court.--FREDERICK FISCHER, Judge.
PLAINTIFF seeks by an action in equity to subject the property of the defendant to the payment of a judgment obtained by the plaintiff against the Adams Express Company which corporation was subsequently merged in the defendant by agreement of the parties pursuant to the provisions of Federal statutes. Judgment and decree entered in favor of the plaintiff. Defendant appeals.
Affirmed.
Wilson & Keenan, for appellant.
Ferguson Barnes & Ferguson, for appellee.
DE GRAFF, J.
This action is in equity and was commenced by the plaintiff to subject the property of the defendant corporation to the payment of a judgment entered in favor of the plaintiff for $ 1,233.40 against the Adams Express Company. The original action was predicated on the negligence of the Adams Express Company in handling a shipment of mules from Shenandoah, Iowa to Buffalo, New York. A judgment was obtained in the Superior Court of the city of Shenandoah on December 20, 1917, and an appeal was taken to this court. The judgment was affirmed. Gibson v. Adams Exp. Co. 187 Iowa 1259, 175 N.W 331. An execution issued, but no property belonging to the Adams Express Company being found within the jurisdiction of the state of Iowa, it was returned nulla bona. This was the provocation for the instant suit.
At the threshold it is necessary to understand the relation and privity between the Adams Express Company as defendant in the original suit, and the American Railway Express Company defendant in the case at bar. This relationship and the alleged liability sought to be imposed is predicated on a contract to which specific reference is necessary. This contract had its origin during the World's War and was one of its results during the progress thereof. This fact, however, is not material to the determination of the issues presented except that it would be futile to claim actual fraud in the inception and consummation of the contract.
It will be remembered that on December 28, 1917 the president of these United States acting under the powers conferred on him by the Constitution and statutes took possession and assumed control of certain railroads and systems of transportation in the United States, and on March 29, 1918 the president authorized the then director general of the railroads to make any and all contracts or agreements which in any way were necessary or expedient in connection with the Federal control of systems of transportation.
Many of the railroads were previously operated by companies which had by written contracts agreed to furnish to certain express companies privileges, facilities, and transportation for the carrying on of the express transportation business in the United States. By reason of this fact the railroad companies were unable, except through the director general, to perform these contracts, and it was determined in view of public interests and the necessities of the government in time of war that the conduct of the express transportation should also be placed under Federal control. The express companies welcomed the invitation of the director general, and it was agreed that the express transportation business of the country could be more efficiently carried on through the agency of a single corporation which should act as the sole agent of the government and of the companies.
On the 21st day of June 1918 a memorandum of agreement was entered into between the director general acting on behalf of the United States and certain express companies, to wit: The Adams Express Company, The American Express Company, The Southern Express Company, and Wells Fargo & Company.
The contract provided that the express companies should "as soon as possible after the date hereof, cause to be organized a corporation, for the purpose of carrying on for the director general the express transportation business upon the railroads and systems of transportation under Federal control, and elsewhere as may be determined by the director general, in connection with the express transportation business thereupon," with a capital stock not exceeding $ 40,000,000 of which "the shares shall be subscribed and purchased at par by the express companies before named."
They further agreed to transfer to the "new corporation all property owned and used by them, respectively, in carrying on their express transportation in the United States, including supplies and material on hand," but not "cash or treasury assets." The value as of November 30, 1917 was estimated at $ 30,000,000, and property purchased during the intervening period was to be taken by the new corporation at "cost, less accrued depreciation."
In payment the new corporation was to issue its stock to the express companies, "sufficient to pay at par for the property so transferred to it, and to provide the cash necessary for working capital," and "from time to time thereafter, as additional funds may be necessary to purchase additional property or reimburse the company for additional property purchased or for working capital, additional stock may be issued by said new corporation," with the approval of the director general.
The new corporation was to handle all express business with the railroads under Federal control and the express companies were to cancel all contracts with Federal controlled railroads and to assign to the new corporation "as far as possible, all contracts with any railroad, water, or electric lines not taken over by the government, and shall not engage in the express transportation business during the period of contract between the director general and said new corporation, except upon the approval of the director general, or when necessary to carry out a contract with a line not taken over by the government, and which they are unable to assign or cancel."
The express companies also agreed to promote the "employment of said new corporation of such of their officers, agents, and employees as may be necessary to the carrying on by it of said transportation business aforesaid." They also retained the right to "employ the said new corporation as the agent of said express companies in their foreign business, and for the handling of money orders and other financial paper, and for such other purposes as may be desired," subject to the approval of the director general.
The contract further provided: "It is the intention that the provision herein made for carrying on the express transportation business through the agency of a single corporation shall continue in effect only during the period of Federal control, and nothing herein contained shall be construed as sanctioning any combination or merger of the properties or business of the express companies to last beyond that period."
It was also agreed that upon the termination of Federal control the properties agreed to be conveyed to the new corporation, or the equivalent of such property, should be reconveyed by the new corporation to the companies at a valuation to be agreed upon or in the event of disagreement to be fixed by the interstate commerce commission.
The new corporation was organized and approved by the...
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Gibson v. Am. Ry. Express Co.
...195 Iowa 1126193 N.W. 274GIBSONv.AMERICAN RY. EXPRESS CO.No. 34814.Supreme Court of Iowa.May 8, 1923 ... Appeal from Superior Court, Shenandoah County; Frederick Fischer, Judge.Plaintiff ... it is necessary to understand the relation and privity between the Adams Express Company, as defendant in the original suit, and the American Railway Express Company, defendant in the case at bar. This relationship and the alleged liability sought to be imposed is predicated on a contract to which ... ...