Louisville & N.R. Co. v. Neal

• Decision Date: 08 December 1900
• Citation: 29 So. 865,128 Ala. 149
• Court: Alabama Supreme Court
• Parties: LOUISVILLE & N. R. CO. ET AL. v. NEAL v. LOUISVILLE & N. R. CO. ET AL.

29 So. 865

128 Ala. 149

LOUISVILLE & N. R. CO. ET AL. v. NEAL v. LOUISVILLE & N. R. CO. ET AL.

Supreme Court of Alabama

December 8, 1900

Appeal from city court of Birmingham; William W. Wilkerson, Judge.

Action by Martha A. Neal, administratrix, against the Louisville &amp Nashville Railroad Company and the South & North Alabama Railroad Company. From the decree, defendants appeal, and complainant prosecutes a cross appeal. Decree assigned as error on direct appeal reversed, and decree as to cross appeal affirmed.

It was averred in the bill that the complainant, Martha A. Neal, the administratrix, was the owner of 20 shares of stock, of the par value of $100 each, of the South & North Alabama Railroad Company, and that she was the owner of the same during the time all the matters and things complained of in the bill occurred. It was then averred that the Louisville & Nashville Railroad Company operates and controls an extensive system of railroads, embracing, among others, a continuous line from Louisville, Ky., to New Orleans, La., of which line the South & North Alabama Railroad forms one of the connecting links extending from Montgomery, Ala., to Decatur, Ala.; that while the South & North Alabama was nominally operated as as independent road under the management of the officers and directors of its own company, it is in fact operated and managed by the Louisville & Nashville Railroad Company. The bill then avers at great length that during the years 1871 and 1872 the Louisville & Nashville Railroad Company, by wrongful, fraudulent, and illegal methods, acquired control of the majority of the stock of the South & North Alabama Railroad Company; that, while so in control of the South &amp North Alabama Railroad Company, it procured preferred stock to be issued to it, and had said South & North Alabama Railroad Company to issue bonds to a large amount, exceeding the value in amount of the stock of the corporation, and said bonds were acquired by the Louisville & Nashville Railroad Company. The facts relating to the many alleged wrongful transactions between the Louisville & Nashville Railroad Company and the South & North Alabama Railroad Company were averred in detail and set forth at length in the bill. It was further averred that the result of the transactions had between the Louisville & Nashville Railroad Company and the South & North Alabama Railroad Company were to practically destroy the value of the stock of the latter railroad company, and thereby work great injury upon the complainant and other stockholders; that all of the transactions and corporate wrongs complained of were had under the control and direction and for the benefit of the Louisville & Nashville Railroad Company; "that the Louisville & Nashville Railroad Company pretended to own a majority of the stock of the said South & North Alabama Railroad Company, and appear on the books of said company to own a majority of the stock thereof, and by means thereof elect a president and directors of said company, a majority of whom are mere servants and creatures of the said Louisville & Nashville Railroad Company, and have done so ever since 1871; and the said board of directors so elected make, and have made, under control of the majority, all such orders, resolutions, by-laws, etc., as they are directed to make by the said Louisville & Nashville Railroad Company, and do whatever is required in the interest of the said Louisville & Nashville Railroad Company regardless of the interest of the South & North Alabama Railroad Company, and of the real stockholders thereof." The fourteenth and fifteenth paragraphs of the bill, relating to the government of the South & North Alabama Railroad Company, were in words and figures as follows: "14th. That, during the long period of wrongdoing recited above, the Louisville & Nashville Railroad Company has been careful to put into office as directors of the South and North Alabama Railroad company only men of high character and standing in the city of Montgomery and other parts of Alabama (besides such of its own directory and officers or friends as it made officers and directors of the South and North Alabama Railroad Company), and they were generally men who had so much business of their own that they did not have time to look into the affairs of the South and North Alabama Railroad Company, and would have been unable to do it, and could not in fact examine said dealings and accounts if they were so inclined, without going to Louisville, Kentucky, where all the books, papers, and vouchers, and other evidence of the actual business of the South and North Alabama Railroad Company have been kept since 1872; and these men of high character, whose statements had weight with the community and with orator, either because they were honestly mistaken, and overreached by fair and plausible statements of the managers of the Louisville & Nashville Railroad Company, or for some other reason unknown to orator, have repressed inquiry on the part of the stockholders of the South and North Alabama Railroad Company by...