Mayor & City of Baltimore v. Baltimore & O. Railroad Co.

• Decision Date: 24 February 1864
• Citation: 21 Md. 50
• Parties: THE MAYOR & CITY COUNCIL OF BALTIMORE, v. THE BALTIMORE & OHIO RAIL ROAD COMPANY.
• Court: Maryland Court of Appeals

21 Md. 50

THE MAYOR & CITY COUNCIL OF BALTIMORE, v. THE BALTIMORE & OHIO RAIL ROAD COMPANY.

Court of Appeals of Maryland.

February 24, 1864

[Copyrighted Material Omitted]

APPEAL from the Circuit Court of Baltimore City:

The bill of complaint in this cause was filed by the appellants to obtain an injunction against the appellees, enjoining them from making a loan to the Central Ohio Rail Road Company, or from purchasing certain mortgages outstanding against said company, or from divesting their (the appellees') funds for either of said purposes. The principal allegations of the bill were as follows:

" That your orator is the owner of forty-five thousand and fifty shares of the capital stock of the Baltimore and Ohio Rail Road Company, a corporation chartered by the State for which said Acts of Assembly and the several supplements thereto, and for other Acts hereafter referred to, your orator prays leave to refer to the statute book of Maryland and prays that so far as is necessary they may be deemed as part of this bill of complaint. That the said Baltimore and Ohio Rail Road Company came duly into existence, and is now engaged in carrying on the business for which it was chartered. Your orator further shows, that the Northwestern Virginia Rail Road Company a corporation chartered by the State of Virginia, has completed its work, which is now fully equipped and in successful operation, and by its connection with the Baltimore and Ohio Rail Road at Grafton, in the State of Virginia, and with the Ohio Rail Roads beyond Parkersburg, forms the most direct, the shortest and most reliable avenue for trade and travel between Baltimore and the city of Cincinnati, the heart and centre of the great west. That to aid the said Northwestern Virginia Rail Road company in the construction, completion and equipment of its work, the city of Baltimore, with the assent of the State of Maryland, endorsed the bonds of said Northwestern Virginia Rail Road Company to the amount of one million five hundred thousand dollars, taking a mortgage from the latter company to secure said debt, which is now the first mortgage or lien upon the property and franchises of said road; and the Baltimore and Ohio Rail Road Company with the assent of the State, the city of Baltimore and the stockholders of said company, also endorsed the bonds of said Northwestern Virginia Rail Road Company at different and sundry times, to the sum of one million five hundred dollars, and holds the second mortgage on said Northwestern Virginia Rail Road, to secure the payment of said endorsed bonds. Your orator further shows, that the Baltimore and Ohio Rail Boad Company heretofore loaned to the Central Ohio Rail Road Company the sum of four hundred thousand dollars, and took a mortgage from the said latter company, which is now the fourth mortgage upon the said latter work, a mortgage for twelve hundred and fifty thousand, with interest now amounting to one hundred and fifty thousand dollars, standing before and having priority over it, and also a second mortgage for eight hundred thousand dollars; and a third mortgage for nine hundred and fifty thousand dollars with interest thereon for six years, besides other bonds called income bonds, and various other indebtedness, amounting in all, as your orator is credibly informed, to nearly seven millions of dollars. Your orator is advised and therefore charges, that the said debt of four hundred thousand dollars has been long regarded as lost and hopeless.

Your orator further shows, that the Baltimore and Ohio Rail Road Company since the commencement and during the continuance of our national troubles, has been frequently taken possession of by those in rebellion against the government, (at least that portion of it lying in Virginia, between Harper's Ferry and Cumberland, Md.,) and its bridges have been destroyed, the tract and rails torn up and removed, and the cars and engines burnt or otherwise destroyed; insomuch that the cost of reinstating and repairing the same will amount to a very large sum of money, and will tax the ability of the company severely to meet and defray the said necessary expense. That your orator has heard with astonishment, that the Baltimore and Ohio Rail Road Company have determined to grant a loan to the said Central Ohio Rail Road Company, either by advancing the money or by the purchase of the said first mortgage on the property and works of the said company, the sum so to be advanced being twelve hundred thousand dollars.

Your orator states, that on the 11th of February last past, a proposition was made to the board of directors of said Baltimore and Ohio Rail Road Company by the President thereof, recommending the said loan. That the said proposition was not only favorably entertained by said board, but the same was referred to the Committee of Finance, which committee will unanimously report favorably thereon with the exception of one member, this day, and within a few hours of this time, if not prevented from so doing by the interposition of this honorable court. That your orator has good reason to fear and believe, and does actually fear and believe, that the said loan will be consummated unless prevented by the injunction of this court. Your orator distinctly charges, that the said loan is ‘ beyond the corporate powers of the said company, and will be’ a fraud upon the rights of your orator and the other stockholders of the same. That if the said Baltimore and Ohio Rail Road Company have funds in hand, for which it has no use within its legitimate powers, it is in duty bound to hand the same over to the stockholders, to whom the same belong, or the same may be applied to repair the ruin and destruction on the said road as aforesaid.

Your orator further charges, that the consummation of the said loan, if the same is not prevented, will lead to a policy on the part of the said company favoring the business and trade of the said Central Ohio Rail Road, and injurious, if not destructive, to the great interest which the said Baltimore and Ohio Rail Road Company already possesses in the Northwestern Virginia Rail Road, and injurious to the city of Baltimore as a stockholder in the Baltimore and Ohio Rail Road Co., and as a creditor of the Northwestern Virginia Rail Road Company. All which said actings and doings of the said Baltimore and Ohio Rail Road Company, are contrary to equity and good conscience, and unjust, illegal and injurious towards your orator." The bill then prayed for a writ of injunction against the said Baltimore and Ohio Rail Road Company, " commanding and enjoining the said company from making the said loan to the said Central Ohio Rail Road Company or from purchasing the said first or any other mortgage now existing against the said company, or from divesting the funds of the said Baltimore and Ohio Rail Road Company for any such purpose"

The injunction was granted as prayed for, after which the defendant filed the following answer.

" These respondents--without prejudice to their right to maintain that the said bill, filed at the instance of the Mayor of Baltimore, ex mero motu, during the session of the coordinate branches of the city government, and without their joint action, is not the bill of the corporation known as the Mayor and City Council of Baltimore--to so much of said bill as they are advised it is material for them to answer, answer and say: That they admit the allegations of said bill touching their charter, organization and present working, as well as what is alleged in regard to the incorporation of the Mayor and City Council of Baltimore.

They admit also, that the Northwestern Virginia Rail Road Company chartered by the State of Virginia, has a road in operation from Grafton, on the line of the Baltimore and Ohio Rail Road, to Parkersburg, on the Ohio River; but they deny that the said road is fully equipped as alleged in the said bill, if by that it is meant to say, that the Northwestern Virginia Rail Road Company possesses rolling stock adequate to its purposes, or an organization to use it, if it possesses such. On the contrary, as these respondents allege, the said road is worked with the rolling stock of the Baltimore and Ohio Rail Road, and by the agents and employees of these respondents exclusively. These respondents further admit, that the Northwestern Virginia Road, in connection with the Baltimore and Ohio Rail Road on the east, and certain railroads in the State of Ohio on the west, forms a direct line of railway communication between Baltimore and Cincinnati. But these respondents deny the inference which may be drawn from the allegation of the bill, that Cincinnati is ‘ the heart and centre of the great West,’ if it is meant that when Cincinnati is reached by a line of railway from Baltimore, the trade of the west is thereby secured to the latter city. On the contrary, these respondents say, that while Cincinnati is a western city of great importance, and a connection with which is most desirable, yet that the trade of the socalled west is by no means centred there. Looking to the country east of the Mississippi, this trade comes from a vast and fertile region, embracing the States of Ohio, Indiana and Illinois, and lying between and adjacent to the roads from Parkersburg to Cincinnati on the one side, and from Pittsburg to Chicago on the other; and through the heart of which passes the Central Ohio Rail Road, and its prolongation by other roads as far as St. Louis, on the Mississippi. In other words, the Baltimore and Ohio Rail Road should be regarded as the trunk of three great branches, ramifying themselves over the west, one diverging at Grafton, one from Wheeling, and one from Cumberland; --all of these branches are important,...