Kelsey v. New England St. Ry. Co.

• Decision Date: 03 August 1900
• Citation: 46 A. 1059,60 N.J.E. 230
• Parties: KELSEY v. NEW ENGLAND ST. RY. CO. et al.
• Court: New Jersey Court of Chancery

46 A. 1059

60 N.J.E. 230

KELSEY

v. NEW ENGLAND ST. RY. CO. et al.

Court of Chancery of New Jersey.

Aug. 3, 1900.

Action by Israel Kelsey against the New England Street-Railway Company and others. Plaintiff asks an interlocutory injunction. Denied.

Flavel McGee and Mr. Morgan, for complainant.' William Corbin, for defendant.

STEVENS, V. C.The New England Street-Railway Company, a corporation organized under the act concerning corporations, was formed, inter alia, to purchase, hold, sell, invest, trade, and deal in stocks. In October,

1899, it owned 17,954 shares of stock of the Winchester Avenue Railroad Company. On October 9th of that year the board of directors of the New England Company passed a resolution appointing a committee, consisting of the president and two other directors, "to receive any offers that might be made for the property." The committee opened negotiations with the complainant. On March 26,

1900, the board of directors passed another resolution, as follows: "On motion, duly recorded, it was unanimously voted that the committee appointed at the meeting of directors Oct. 9, 1899, be, and are hereby, authorized and empowered to accept any offers that may be made for the stock in the Winchester Avenue R. R. Co. owned by this company, which in their judgment are for the best interests of all concerned, and to make such agreements with reference thereto as they may be advised are necessary for the delivery of the stock and payment therefor; all such agreements to be subject to ratification by the stockholders of the company." On March 29th a written agreement to give complainant an option to buy the 17,954 shares was made and signed by the committee. It begins thus: "Acting on behalf and by the written consent of the directors of the New England Street-Railway Co., and appointed by the directors for the express purpose, we do hereby give" complainant the option to buy, etc. In this agreement nothing is said about ratification by the stockholders. On April 7th the option was accepted in writing. On April 9th the directors held a meeting, at which, according to the minutes, "a discussion followed upon a proposition to sell to Israel A. Kelsey the stock of the Winchester Avenue Railroad Co. owned by this company, but no formal proposition was submitted and no action was taken." After this meeting three of the directors went to the office of Mr. Denison, a lawyer, and requested him to prepare a call for a meeting of the stockholders to be held on April 23d. He first prepared one which read as follows: "To see if the stockholders will vote to ratify, confirm, and make valid a certain agreement between the directors of the company and Israel A. Kelsey," etc.; but, learning that the stock was in the Boston Safe-Deposit & Trust Company, and that it required a two-thirds vote of the stockholders to get it out, he prepared a second call, in which the foregoing purpose was stated, and the further purpose of seeing whether the stockholders would vote to withdraw the stock from the Boston Company, to carry out the proposed sale. The call was issued, and the...