McCracken v. Robison
| Decision Date | 01 August 1893 |
| Citation | 57 F. 375 |
| Parties | McCRACKEN et al. v. ROBISON. |
| Court | U.S. Court of Appeals — Second Circuit |
M. I Southard, for plaintiffs in error.
Rush Taggart, for defendant in error.
Before WALLACE and LACOMBE, Circuit Judges.
The plaintiffs in error were defendants in the court below. On the trial the jury rendered a verdict for the plaintiff. The principal assignment of error presents the question whether the promise upon which the action was founded was void because of an unlawful consideration. The suit was brought to recover of defendants a share of the profits made in building a railroad for the Toledo, Saginaw & Muskegon Railway Company. The nominal plaintiff really represented four persons,--Robison, Jr., Ashley, Baker, and Cummings. These four persons were the promoters of the enterprise for building a railroad from Muskegon to Ashley, in the state of Michigan. One Mason was associated with them to some extent and insists that he was to be interested to the extent of one-fifth of any profits they might derive from it. These persons organized the railway company, subscribed for the proportion of stock required as a preliminary by the laws of Michigan, and made themselves and some of their friends directors. They procured rights of way and local aid in the form of donations of land or money to the enterprise, and with such assistance and their own moneys undertook to furnish the roadbed and the cross-ties for the whole road, ready for laying the track and completing the superstructure. They then entered into a contract in the name of the railroad company with the defendants to complete the building of the railroad and equip it ready for business. By this contract the defendants were to have all the capital stock of the corporation and the whole issue of its first mortgage bonds for building the railroad. Contemporaneously the promoters entered into another contract in the name of the plaintiff with the defendants by which the latter agreed that if the provisions of the first contract were carried out of the plaintiff should receive one-half the net profits realized by them from the proceeds of the sale of the stock and bonds after reimbursing themselves for the cost of completing and equipping the railroad. After the road had been built and equipped, but before the bonds had been sold the defendants agreed to pay the plaintiff in notes and money, and the plaintiff agreed to accept $150,000 in full payment and discharge of all claims against the defendants under the second contract. This action is founded upon that promise, and is brought to recover the balance remaining unpaid of the $150,000.
It is insisted for the defendants that, because the promoters were directors of the railroad company at the time the contracts for the building of the road and the division of the profits were made, the latter contract was illegal, and against public policy, and did not afford a good consideration for the subsequent promise upon which the action is brought. They invoke the rule which forbids fiduciaries to make contracts or engage in transactions in which their private interests may conflict with the interests of their principals, and contend that a contract made for a corporation by its directors with a view of obtaining a private advantage for themselves at the expense of the corporation is not only voidable at the...
To continue reading
Request your trial
-
Old Dominion Copper Mining & Smelting Co. v. Bigelow
...capital stock of the corporation, or all that it was contemplated to issue. See Foster v. Seymour (C. C.) 23 Fed, 65; McCracken v. Robison, 57 F. 375, 6 C. C. A. 400; Barr v. New York, Lake Erie & Western R. R., N.Y. 263, 26 N.E. 145; Blum v. Whitney, 185 N.Y. 232, 77 N.E. 1159; In re Ambro......
-
Thum v. Wolstenholme
...The transaction itself operates as a ratification by all the stockholders, and nobody else has a right to complain. See also, Mc Cracker v. Robinson, 6 C.C.A., 400; 57 375-377; Barr v. Railroad Co., 125 N.Y. 263-273; Wood v. Water Works Co., 44 F. 146-151. This court can render a judgment o......
-
G.V.B. Min. Co. v. First Nat. Bank
...had the right to believe that it was not exceeding its powers. The general public are not interested in this suit. In McCracken v. Robison, 6 C.C.A. 400, 57 F. 375, 377, court held that directors who own all the stock of a corporation are not within the rule prohibiting persons in a fiducia......
-
Bucklew v. Pyron
... ... 968; ... Krohn v. Williamson, 62 F. 875; Callanan v ... Windson, 78 Iowa 197, 42 N.W. 653; Barr v ... Railroad, 57 F. 375; McCracken v. Railroad, 57 ... F. 375, 52 F. 726. (3) Independently of the validity of ... plaintiff's stock the benefit and advantage derived by ... Pyron ... ...