Huntington v. Little Rock & Ft. S.R. Co.

• Decision Date: 01 April 1882
• Citation: 16 F. 906
• Parties: HUNTINGTON and others, Trustees, v. LITTLE ROCK & FT. S.R. CO. and others. [1]) (No. 138.) SAME v. SAME. (No. 139.)
• Court: U.S. District Court — Eastern District of Arkansas

16 F. 906

HUNTINGTON and others, Trustees, v. LITTLE ROCK & FT. S.R. CO. and others. ^[1]) (No. 138.)

SAME v. SAME. (No. 139.)

United States Circuit Court, E.D. Arkansas.

April, 1882

B. C Brown and Moorfield & Story, for complainants.

C. W Huntington, for respondents.

McCRARY J.

These cases are before the court upon demurrer to the petitions of Frank Shaw and David S. Greenough, filed therein after final decrees, and praying certain relief.The facts, so far as we deem it necessary to state them, are as follows:

(1) These suits were severally brought in 1874 to foreclose the railroad and land-grant mortgages, which had been previously executed by the defendant railroad company, and they were instituted by the trustees named in the mortgages for the use and benefit of the holders of the bonds secured by the mortgages.The present petitioners were bondholders.

(2) On the sixth of November, 1874, decrees were rendered foreclosing the mortgages and ordering the sale of the mortgaged property for the purpose of paying the mortgage debt, with interest and costs.

(3) On the tenth of December, 1874, the properties described in the mortgages were separately sold by the master, for $50,000 each, to George O. Shattuck, Francis M. Weld, and George Ripley, who purchased on behalf of an in trust for the bondholders.These sales were duly reported to and confirmed by the court on the nineteenth day of December, 1874.The decree of confirmation in the suit upon the railroad mortgage, No. 138, recites that--

'George O. Shattuck, Francis M. Weld, and George Ripley, the purchasers of the property sold under said decree, being severally personally present, declare and state in open court, and desire the same to be entered of record, that it is their intention, immediately upon the confirmation by this court of the aforesaid sale, to organize a corporation under an act of the general assembly of the state of Arkansas approved December 9, 1874, entitled 'An act supplementary to an act entitled an act to provide for a general system of railroad incorporation, approved July 23, 1868;' which corporation shall own, hold, and manage the property conveyed under the aforesaid sale, as well as the lands and property conveyed, or to be conveyed, under the sale held by virtue of the decree rendered on the sixth day of November last past in the suit of Charles W. Huntington, Samuel H. Gookin, and Elisha Atkins, Trustees, v. Little Rock & Fort Smith R. Co etal.,-- No. 139 upon the docket of this court; and that any holder of the bonds secured by the mortgage foreclosed by this suit, as well as of the bonds secured by the mortgage foreclosed by the aforesaid suit numbered 139, shall, upon the transfer of his bonds and his right to any of the proceeds of the sales of the railroad or land grant, under the aforesaid decrees in said suits numbered 138 and 139, within sixty days from the date of such organization, unless further time shall be given by the court, be entitled to his proportional interest in the stock of said new corporation, upon the same terms and stipulations as any other holder of said bonds; but this shall not prevent such new corporation from requiring from any and all holders of said bonds the payment of his proportion of the expenses attending said sales and purchases, and such other sums, not exceeding five per cent. on the principal of said bonds, as said corporation may deem it for its interest to require as a condition upon which said stock shall be delivered; provided, that the same requirement be made of all the other holders of said bonds: and provided further, that this stipulation shall not limit the power of the aforesaid Shattuck, Weld, and Ripley to organize said corporation without notice, or of the corporation so organized to mortgage its property, or to reserve for its own use an amount of its capital stock not exceeding ten per cent. thereof.'

And the decree in the suit u on the land-grant mortgage, No. 139, contained substantially the same recitals.

(4) The following order was also made a part of said decree of confirmation in No. 139:

'That said corporation shall, as part of the consideration of such conveyance, compromise or pay such claims against the Little Rock & Fort Smith Railroad Company as C. W. Huntington, George Ripley, and Henry A. Whitney may within one year from the date hereof approve, and on such terms and in such manner as they may prescribe.'

(5) On the twenty-second day of February, 1875, the above-named petitioners, Shaw and Greenough, and one Richardson, filed their petition in the land-grant suit, praying that the provision of the decree of confirmation last above quoted be stricken out, and for an extension of the time within which bondholders might elect to take stock in the new corporation until the question whether such modification should be ordered could be decided.Issue was joined upon this petition, a hearing had, and at the April...