Hazlehurst v. The Savannah

• Decision Date: 31 January 1871
• Citation: 43 Ga. 14
• Parties: GEORGE H. HAZLEHURST et al., plaintiffs in error. v. THE SAVANNAH, GRIFFIN AND NORTH ALABAMA RAILROAD COMPANY et al.,defendants in error.
• Court: Georgia Supreme Court

43 Ga. 14

GEORGE H. HAZLEHURST et al., plaintiffs in error. v. THE SAVANNAH, GRIFFIN AND NORTH ALABAMA RAILROAD COMPANY et al., defendants in error.

Supreme Court of the State of Georgia

(Atlanta, January Term, 1871.)

Equity. Injunction. Corporations. Ultra Vires, etc. Before Judge Cole. Chambers. Bibb County. March, 1871.

This cause was begun in Bibb county by a bill, the principal averments of which were as follows: The Savannah, Griffin and North Alabama Railroad Company, incorporated by the Legislature of the State of Georgia, for the purpose of constructing, building, equipping and running a railroad from the city of Griffin, in the county of Spalding, to some point on the line of the State of Alabama, in the county of Carroll; and which road is now in actual course of construction, with a roadway fully equipped, and regular trains running from the city of Griffin to the city of Newnan, a distance of thirty-six miles, and with a board of directors and other officers to manage and control its business operations, all appointed in compliance with its Act of incorporation, in order to fully carry out the purposes of its organization, and build and equip said road, accepted from the city of Macon, in the county of Bibb, (a body corporate and politic under the laws of the State of Georgia,) a subscription, bona fide, to the capital stock of the said Savannah, Griffin and North Alabama Railroad of $50,000 00, and then and there agreed to the condition upon which said subscription was made, to-wit: To receive in payment therefor fifteen hundred shares *of the capital stock of the Macon and Brunswick Railroad, a corporation also chartered by the Legislature of Georgia for the purpose of building, equipping and running a railroad from said city of Macon to the city of Brunswick, in the county of Glynn, and whose principal office is located in the city of Macon, in said county of Bibb, which said capital stock of the said Macon and Brunswick Railroad Company had been before that time duly issued to the said city of Macon, for so much money, viz: $100 00 per share, before that time actually paid in and contributed by the* said city of Macon, and used by the said Macon and Brunswick Railroad Company in the building and equipping of said road, in payment of said subscription of $50,000 00 so made, and then and there received said fifteen hundred shares of stock in payment of said $50,000 00 subscription of the city of Macon to the capital stock of the said Savannah, Griffin and North Alabama Railroad Company; and then and there issued to the said city of Macon certificates of stock to that amount, and took a transfer from the said city of Macon to complainants of the fifteen hundred shares of stock in the said Macon and Brunswick Railroad Company in payment therefor. By means whereof complainant became, and was, and still is, the legal holder and owner of the said fifteen hundred shares of stock, and entitled to all the rights, privileges and immunities of a stockholder in said Macon and Brunswick Railroad Company.

And Andrew J. White, of the county of Pike, in said State, the owner and holder of two hundred and thirty-seven, or other large number of shares of stock in the said Macon and Brunswick Railroad Company which had bona fide been subscribed for and paid in to the treasurer of the said Macon and Brunswick Railroad Company, and afterwards duly transferred to him by the owners and holders of the certificates thereof; and Alexander M. Speer, of the county of Spalding, in said State, an original subscriber, holder and ownerof seven shares of the capital stock of said Macon and *Brunswick Railroad company, paid in to the treasurer of said company at the rate of $100 00 per share, good and lawful money of the United States, also complain.

And thereupon, in behalf of themselves and all others of the original stockholders in said railroad, who may come in, and on proper terms be made parties complainant, they say, that all of said stock owned and controlled by them, as aforesaid, was subscribed and paid into the said Macon and Brunswick Railroad Company, by them, or those from whom they purchased, for the purpose of building and equipping a railroad from the city of Macon to the city of Brunswick, in the county of Glynn, and was used and employed by said Macon and Brunswick Railroad Company, in building and equipping said road to the city of Hawkinsville, in the county of Pulaski, a distance of fifty miles; and in grading the said railroad from Cochran\'s Station, in the county of Pulaski, a distance of seventy miles from thence, in the direction of Brunswick.

Said Macon and Brunswick Railroad was fully completed and equipped from the city of Macon to the town or place called Hartford, on the Ocmulgee river, opposite to the city of Hawkinsville, in November, 1865, and fully supplied with cars and motive power and all other conveniences necessary to its successful operation.

And, up to the period of time when said Macon and Brunswick Railroad was completed and equipped, as aforesaid, so as to run its trains through to Hartford, they have no reason to doubt or question that the expenditures for said road, and cost of its equipment, were made by its directors and officers in good faith to the stockholders, and with a view to their best interests. Said road as thus completed was as to its roadbed a first-class road and of fair equipment, sufficient for the business which it commanded. Said company, up to and during the war and at its close, was but very little in debt, and that debt being on the basis of Confederate money, and which has long since been paid off at a rate of from *twenty to thirty cents on the dollar in United States currency, leaving said company in the latter part of the year 1865, almost wholly free from debt of any kind. The President of said Macon and Brunswick Railroad Company, at the annual meeting of the stockholders thereof, held in the city of Macon, on the 6th of February, 1868, reported to said stockholders, that the entire indebtedness of said company, at that time, only amounted to the sum of $280,000 00; one half of that sum being a funded debt bearing only seven per cent. per annum interest, and the other half thereof being a floating debt, which he hoped speedily to extinguish with assets on hand, leaving only the funded debt of $140,000 00 existing as a lien upon said road. In a previous report made to the stockholders in annual meeting, on the 1st of February, 1866, the president had made an exhibit of the financial condition of said Macon and Brunswick Railroad Company, by which it appeared that the stock listamounted to not quite $800,000 00, in round numbers, and then added, in words, as follows, to-wit: "We have, then, for this sum of $800,000 00, a first-class road, fifty miles long, equipped and running, together with seventy miles additional ready for the iron rails, clear of debt or incumbrance of any description. Deducting $200,000 00 as cost of grading seventy miles, we have $12,000 00 per mile as the average cost of the fifty miles of running road; an extremely low figure for this description of road." The subsequent completion of the road from Hartford over into the city of Hawkinsville, together with its equipment, to meet increase of business, and the necessity of building a bridge across the Ocmulgee river at that point, three hundred and thirty feet in length, on substantial stone masonry, costing, for the entire extension from the point fifty miles from Macon, in road numbers, $100,00000, accounts reasonably and properly for the amount of said company\'s indebtedness, as made known in said report of the president to the stockholders, on the 6th of February, 1868. At which time, also, the president congratulated the stockholders *upon the great improvement in the condition and prospects of said railroad company since the war had closed. Contrasting its condition then, with its condition at the time of making said report, he said:

"At that time, (meaning the close of the war,) there remained near twenty miles of iron and the first engine on the road, unpaid for. This engine and two inferior ones, with half a dozen cars, constituted the sole rolling stock of the road; an ordinary blacksmith shop furnished all the repairs for the same. The track and bridging was sadly out of repair, accidents being frequent from this cause, with few section houses, freight houses, side tracks, or other requirements of a road. Since then, the old debts have been paid; twelve miles of new rails have been purchased, the grading finished, the heavy bridge and trestle work across the Ocmulgee river and swamp finished, and the road extended into the town of Hawkinsville; good repair shops for engines and cars have been built in Macon; section and warehouses put up on the line, the track almost entirely relaid with new timber, chairs and spikes supplied, the bridging renewed, five new engines and forty new cars have been added to the outfit. In fine, the road is complete, as to construction and equipment, no expenditure on these accounts being needed for the coming year, nor yet for some years to come, unless the road be extended."

Previous to this, 6th of February, 1868, to-wit: On the 3d of December, 1866, there was an Act, approved by the Governor of the State of Georgia, which had been previously passed by the Legislature thereof, "entitled an Act to extend the aid of the State to the completion of the Macon and Brunswick Railroad, and for other purposes, " of which the following is a copy, viz:

"Whereas, The Macon and Brunswick Railroad has been completed to the distance of fifty miles from the city of Macon, and thoroughly equipped, and daily trains are runningthereon, and seventy miles additional are graded and *ready for the superstructure; and whereas, its completion to Brunswick would greatly inure to the benefit of the State in developing its agricultural, commercial and...