Old Colony Trust Co. v. City of Wichita

• Decision Date: 25 July 1903
• Docket Number: 974.
• Citation: 123 F. 762
• Parties: OLD COLONY TRUST CO. et al. v. CITY OF WICHITA.
• Court: U.S. District Court — District of Kansas

123 F. 762

OLD COLONY TRUST CO. et al. v. CITY OF WICHITA.

No. 974.

United States Circuit Court, D. Kansas, Second Division.

July 25, 1903

R. R Vermilion, C. V. Ferguson, and F. F. Rozzelle (Edward P Gates, Lucien Baker, and Robert P. Clapp, of counsel), for complainants.

A. E Helm, David Smyth, and S. S. Ashbaugh, for defendant.

ROGERS District Judge.

This cause came on to be heard on March 16, 1903, on the complaint, answer, replies, and written briefs, the complainants being represented by R. R. Vermilion, C. V Ferguson, F. F. Rozzelle, Edward P. Gates, Lucien Baker, and Robert P. Clapp, and the defendant by A. E. Helm, David Smyth and S. S. Ashbaugh. The defendant moved the court for leave to file an amendment to its answer, which motion was taken under advisement by the court, to be determined on the final hearing, and thereupon the case was heard upon the pleadings, briefs, and argument of counsel, and taken under advisement, with leave to file briefs, which was done; and the court, being now well and sufficiently advised, doth grant the motion of the defendant to file its amendment to the answer as of March 16, 1903-- the said amendment being found on pages 268, 269 of the printed record, and to which motion replication is made to apply. And, the court being also well and sufficiently advised as to the merits of the suit, argument, both oral and on brief, has taken a wide range, exhaustive and instructive, covering many points which I do not consider essential to a correct solution of the case. Only such parts of the pleadings and proof, and the contentions, will be noticed as seem necessary, although every part of the case has had a careful and painstaking consideration.

The first question to be considered is whether the Old Colony Trust Company and Charles P. Hubbard occupy such a relation to the subject-matter of the litigation as entitles them to maintain a bill under the circumstances disclosed by the pleadings. It will be necessary, in order to determine this question, to narrate as briefly as possible how the trusteeship of complainants came about.

The Merchants' Telephone & Telegraph Company was incorporated on the 21st of March, 1881, under the laws of Kansas, for the purpose, as shown by its charter, 'of building, maintaining, and operating lines of telegraph and telephone between cities, towns, and villages in the state of Kansas, and in places adjacent thereto, and within cities, towns, and villages in Kansas, and, in addition, for the purpose of manufacturing electric and telephonic instruments and their sale or rental'; its main office being at Wyandotte, Kan., its charter to run for a period of 20 years. Another corporation of exactly the same name was, on the 25th of August, 1881, under article 5, c. 21, of the Revised Statutes of Missouri of 1879, incorporated. Nothing is stated as to the purpose for which it was organized, or as to where it was to engage in business; but its principal office was at Kansas City, Mo. It does not appear from the statutes of Missouri that these statements are required to be made in the articles of association. Another corporation, known as the Merchants' Telephone & Telegraph Company of Kansas and Missouri, was incorporated on the 1st day of November, 1881, under the laws of the state of Kansas; it being a consolidation of the two last-named companies hereinbefore described. The purpose for which said corporation was formed, as recited in its articles of incorporation, was 'to construct, maintain, and operate telegraph lines, telephone lines, and lines for the communication of messages from place to place by any means; to purchase or lease, and operate purchased or leased, telegraph lines, telephone lines, and lines for the communication of messages; to receive and transmit messages; to build and maintain lines of telegraph and telephone; to manufacture and use instruments and apparatus for use in connection with such lines, and rent, lease, sell, or otherwise dispose of the same; also to rent or lease telephonic apparatus furnished us as licensees of the American Bell Telephone Company; to acquire, by purchase, lease, or otherwise, the right to use instruments, apparatus, and all inventions or means devised or used for the communication of messages from place to place, and to use the same, and to sell, lease, or otherwise dispose of such rights to others; and to carry on a general telegraph and telephone business within the states of Kansas and Missouri.' The term of its life was 20 years, and its principal office Kansas City, Mo. Its business was to be carried on in the states of Kansas and Missouri. Another corporation, of exactly the same name as the last, was formed on the 8th of November, 1881, under the laws of the state of Missouri-- it being a consolidated company, also, of the same companies which were consolidated under the laws of Kansas, as before stated; and the purposes for which this last corporation was formed, as recited in its articles of association, were exactly the same as the purposes for which the company consolidated under the laws of Kansas was formed. Its term of existence was 20 years, and its principal office Kansas City, Mo. These last two corporations were what are known as 'consolidated corporations' under the laws of the respective states under which they were organized. These consolidated corporations began the construction of a telephone system in Wichita, Kan., on the 9th of November, 1881, and completed the same, and continued to construct, maintain, and operate the same from that day until about the 24th of May, 1883, and in the construction, maintenance, and operation of said exchange it placed and maintained its poles and wires along and across and upon certain streets, alleys, and ways of the said city of Wichita; and said company, in the operation of said exchange, furnished telephone service to its subscribers in said city, and during this time constructed, maintained, and operated telephone exchanges and lines in the cities of Ft. Scott, Emporia, and Leaven-worth, and other towns and cities in the state of Kansas.

On the 24th of May, 1883, the said Merchants' Telephone & Telegraph Company (Consolidated) by bill of sale conveyed to E. T. Gilliland 'all its right, title, and interest in and to the property of the said Merchants' Telephone & Telegraph Company (Consolidated), including its capital stock, office furniture in its several exchanges and in its Kansas City offices, all telephonic apparatus and supplies, in use and not in use, and everything whatsoever belonging to said company, whether in actual service, in storeroom at Kansas City, or en route-- the consideration being the sum of $65,000'; and on the 24th of May, 1883, the said E. T. Gilliland assigned in writing said bill of sale, thereby conveying all his right, title, and interest to and in the properties described therein to the United Telephone Company, which was a corporation organized on the 4th of April, 1883, under article 5, c. 1, of the Revised Statutes of Missouri of 1879; the articles of association being in the usual form under the laws of that state, and its principal office being in Kansas City, Mo. The United Telephone Company, immediately after said purchase, took possession of, and continued to operate, maintain, and extend, said telephone exchanges hereinbefore mentioned, including the exchange in the city of Wichita, Kan., until the 25th of February, 1887. On that day the Missouri & Kansas Telephone Company, which was a corporation organized under the laws of the state of Missouri on the 24th of August, 1882, exchanged its stock with the stockholders of the said United Telephone Company, and by such exchange acquired all the stock of said United Telephone Company, and on said day said United Telephone Company executed to the said Missouri & Kansas Telephone Company a deed whereby it conveyed to the said Missouri & Kansas Telephone Company, in consideration of $210,769 of stock in the Missouri & Kansas Telephone Company, which was then paid, its telephone lines, embracing a large number of exchanges and lines covering the states of Missouri and Kansas, and, among others, the telephone properties at Wichita, Kan., the effect of which deed was, to all intents and purposes, to absorb the United Telephone Company by the said Missouri & Kansas Telephone Company.

On the 25th of February, 1887, and after this deal was had, the said Missouri & Kansas Telephone Company took possession of all of said telephone exchanges in said state of Kansas, including the telephone exchange in the city of Wichita, and continued to extend, maintain, and operate the same until the 21st day of June, 1887, when the said Missouri & Kansas Telephone Company, hereafter called the 'Missouri corporation,' executed to another corporation of the same name incorporated under the laws of the state of Kansas on the 20th of May, 1887, hereafter called the 'Kansas corporation,' a deed of conveyance to all the properties which it owned in the state of Kansas, whether acquired from the United Telephone Company or otherwise. The effect of this transaction was to leave all the properties which had originally belonged to the Missouri corporation, situate in the state of Missouri, still vested in the Missouri corporation, and to vest all of the Properties situate, in the state of Kansas, which had previously belonged to the Missouri corporation, in the Kansas corporation, including the telephone exchange and properties in the city of Wichita. The consideration paid by the Kansas corporation to the Missouri corporation was the transfer to the Missouri corporation of $249,500 of the $250,000 for which said Kansas corporation was capitalized. On the 1st day of June, and immediately...