Louisville Ry Co v. Louisville Trust Co Same v. Louisville Vanking Co

• Citation: 43 L.Ed. 1081,174 U.S. 552,19 S.Ct. 817
• Decision Date: 15 May 1899
• Docket Number: Nos. 29,30,s. 29
• Parties: LOUISVILLE, N. A. & C. RY. CO. v. LOUISVILLE TRUST CO. SAME v. LOUISVILLE VANKING CO
• Court: U.S. Supreme Court

174 U.S. 552

19 S.Ct. 817

43 L.Ed. 1081

LOUISVILLE, N. A. & C. RY. CO.

v LOUISVILLE TRUST CO.

SAME

v. LOUISVILLE VANKING CO.

Nos. 29, 30.

May 15, 1899.

This was a bill in equity filed April 9, 1890, in the circuit court of the United States for the district of Kentucky, by the Louisville, New Albany & Chicago Railway Company (hereafter called the 'New Albany Company'), described as 'a corporation duly organized and existing under the laws of the state of Indiana,' against the Ohio Valley Improvement & Contract Company (hereafter called the 'Construction Company'), the Richmond, Nicholasville, Irvine & Beattyville Railway Compa y (hereafter called the 'Beattyville Comp- any'), and the Louisville Trust Company, all corporations of the state of Kentucky, and other citizens of Kentucky, of New York, and of Illinois, for the cancellation of a contract between the New Albany Company and the Construction Company, and of a guaranty indorsed by the New Albany Company, in accordance with that contract, upon bonds issued by the Beattyville Company, and held by the other defendants, and for an injunction against suits thereon. The Louisville Banking Company, a corporation of Kentucky, and other bondholders, were afterwards made defendants by a supplemental bill.

The bill alleged that the guaranty was fraudulently placed on the bonds of the Beattyville Company by a minority of the plaintiff's directors, who, as individuals, had secured the option to buy the bonds at a low price, and also averred that the guaranty was void for want of the presence of a quorum of the directors at the meeting which directed it to be executed, as well as for want of a previous petition in writing by a majority of the stockholders, pursuant to a statute of Indiana.

Pleas to the jurisdiction, asserting that the plaintiff was a corporation and a citizen of Kentucky, as well as demurrers to the bill for want of equity, were overruled by the court. 69 Fed. 431, 432; 57 Fed. 42.

The case was afterwards heard upon pleadings and proofs, and, so far as is material to be stated, appeared to be as follows:

The New Albany Company, by articles of incorporation, filed with the secretary of state of Indiana in January, 1873, reciting its purchase at a judicial sale at New Albany of the railroad and franchise, and all the property, real and personal, of another railroad company, whose line of railroad ran from New Albany to Michigan City, in the state of Indiana, and expressed to be made 'for the purpose of carrying out the design of the said purchase, and forming a corporation of Indiana,' became a corporation under the statute of Indiana of March 3, 1865, which contained these provisions:

'The said corporation shall have capacity to hold, enjoy and exercise, within other states, the aforesaid faculties, powers, rights, franchises and immunities, and such others as may be conferred upon it by any law of this state, or of any other state in which any portion of its railroad may be situate, or in which it may transact any part of its business; and to hold meetings of stockholders and of its board of directors, and to do all corporate acts and things, without this state, as validly and to the same extent as it may do the same within the state, on the line of such road.' Laws Ind. 1865, p. 68, c. 20, § 5; Rev. St. § 3949.

'Any railroad company incorporated under the provisions of this act shall have the power and authority to acquire, by purchase or contract, the road, roadbed, real and personal property, rights and franchises, of any other railroad corporation or corporations which may cross or intersect the line of such railroad company, or any part of the same, or the use and enjoyment thereof, in whole or in part; and may also purchase or contract for the use and enjoyment, in whole or in part, of any railroad or railroads lying within adjoining states; and may assume such of the debts and liabilities of such corporations as may be deemed proper.' 'Any railroad company incorporated under the provisions of this act shall also have power to consolidate with other railroad corporations in the continuous line, either within or without this state, upon such terms as may be agreed upon by the corporations owning the same.' Laws Ind. 1865, p. 68, c. 20, § 7; Rev. St. § 3951.

On April 8, 1880, the legislature of Kentucky passed a statute entitled 'An act to incorporate the New Albany & Chicago Railway Company,' which took effect upon its passage, and the first two sections of which were as follows:

'Section 1. The Louisville, New Albany & Chicago Railway Company, a corporation organized under the laws of the state of Indiana, is hereby constituted a corporation, with power to sue and be sued, contract and be contracted with, to have and use a common seal, with the power incident to corporations, and authority to operate a railroad.

'Sec. 2. The Louisville, New Albany & Chicago Railway Company is hereby authorized to purchase or lease, for depot purposes in the city of Louisville or county of Jefferson, such real estate as may be deemed by it to be necessary for passenger and freight depots and transfer, machine shops, and for all switches or turnouts necessary to reach the same; and is also ahthorized to connect with any railroad or bridge now operated or used, or which may be hereafter operated or used, in said county of Jefferson, and may build any such connecting lines, or lease or operate the same; and for all said purposes shall have the right to condemn all property required for the carrying out of the objects herein named; and may bond the same, and secure the payment of any such bonds by a mortgage of its property, rights and franchises.'

The third section of that statute directed how proceedings for the condemnation of such real estate should be conducted in the courts of the state of Kentucky. Laws Ky. 1879, p. 233, c. 858.

On May 5, 1881, the New Albany Company, describing itself as 'a corporation existing under the laws of the state of Indiana,' and as owning and operating a line of railroad from New Albany to Michigan City, in the same state, and the Chicago & Indianapolis Air-Line Railway Company, describing itself as 'a consolidated corporation organized and existing under the laws of the states of Indiana and Illinois,' and as having in process of construction a line of railway extending from Indianapolis, in Indiana, to a connection with a railroad at or near Glenwood, in Illinois, so as to secure a connection with Chicago in that state, consolidated their stock and property, under the laws of Indiana and of Illinois, 'so as to create and form a consolidated corporation, to be called and known as the Louisville, New Albany & Chicago Railway Company,' by articles of consolidation, the third of which provided, in accordance with the statutes of Indiana, that 'the said consolidated corporation hereby created shall be vested with all the rights, privileges, immunities and franchises which usually pertain to railroad corporations under the laws of the respective states of Illinois and Indiana, wherein the lines of its railroad are situate, and shall also be vested with all and singular the rights, powers, privileges, immunities, capacities and franchises which before the execution of these articles were lawfully possessed or exercised by either of the parties hereto;' and the ninth of which provided that 'the principal place of business and the general office of the consolidated corporation shall be established in the city of Louisville, Kentucky.'

On April 7, 1882, the legislature of Kentucky, by a statute entitled 'An act to amend an act entitled 'An act to incorporate the Louisville, New Albany & Chicago Railway,' approved April 8, 1880,' enacted that 'the Louisville, New Albany & Chicago Railway Company is hereby authorized and empowered to indorse or guarantee the principal and interest of the bonds of any railway company now constructed, or to be hereafter constructed, within the limits of the state of Kentucky; and may consolidate its rights, franchises and privileges with any railway company authorized to construct a railroad from the city of Louisville to any point on the Virginia line; such indorsement, guarantee or consolidation to be made upon such terms and conditions as may be agreed upon between said companies; or it may lease and operate any railway chartered under the laws of the state of Kentucky: provided, it shall not lease or consolidate with any two lines of railway parallel to each other.' Laws Ky. 1881, p. 251, c. 870.

The New Albany Company was not shown to have formally accepted the statutes of Kentucky of 1880 and 1882, or to have ever organized as a corporation under those statutes. But the defendants, as evidence that it had accepted a charter of incorporation from the state of Kentucky, relief on the following documents:

(1) Two deeds to it of lands in Jefferson county, made and recorded in 1881, in which it was described as 'of the city of Louisville, Kentucky.'

(2) Two mortgages executed by it to trustees in 1884 and 1886, including its railway in Indiana and in Jefferson county, in each of which it was described as 'a corporation duly created and existing under the laws of Indiana and Kentucky.'

(3) A lease to it from the Louisville Southern Railway Company, in 1888 (more fully stated below), in which it was similarly described.

(4) A petition (the date of which did not appear in the transcript) that an action brought against it in a court of the state of Indiana might be removed into the circuit court of the United States, upon the ground that it was a corporation of Kentucky.

(5) Proceedings in 1887, in a court of Jefferson county, for the condemnation of lands in that county upon a petition in which 'the Louisville, New Albany & Chicago Railway Company states that it is a corporation, and that it is duly empowered by its charter by an act of the general assembly of the commonwealth of...