People v. Union Elevated R. Co.

• Citation: 269 Ill. 212,110 N.E. 1
• Decision Date: 27 October 1915
• Docket Number: No. 9691.,9691.
• Parties: PEOPLE v. UNION ELEVATED R. CO.
• Court: Supreme Court of Illinois

269 Ill. 212

110 N.E. 1

PEOPLE

v.UNION ELEVATED R. CO.

No. 9691.

Supreme Court of Illinois.

Oct. 27, 1915.

Appeal from Circuit Court, Cook County; Thomas G. Windes, Judge.

Petition by the People, for leave to file an information in the nature of a quo warranto against the Union Elevated Railroad Company. From an order, vacating and setting aside the original order granting such leave, and dismissing the petition, petitioners appeal. Reversed and remanded.P. J. Lucey, Atty. Gen., and Maclay Hoyne, State's Atty., of Chicago (Glenn E. Plumb and Donald R. Richberg, both of Chicago, of counsel), for appellant.

Isham, Lincoln & Beale and Herrick, Allen & Martin, all of Chicago (John J. Herrick and Gilbert E. Porter, both of Chicago, of counsel), for appellee.

This was a petition for leave to file an information in the nature of quo warranto by the state's attorney of Cook county against the Union Elevated Railway Company (hereinafter called the Union Elevated Company), to procure a forfeiture of its corporate franchise and privileges for alleged violations of its charter rights and the Constitution and laws of this state. At the time the petitionin question was filed a similar petition was presented against the Union Consolidated Elevated Railroad Company (hereinafter called the Consolidated Company), and like proceedings were had on both petitions, so that it has been stipulated that but one brief should be filed for both cases. The court granted the prayer of the petition and allowed the informations to be filed, but subsequently, on the motion of respondents, vacated and set aside the order granting such leave and dismissed the petition. This appeal followed.

As both cases involve the same questions they will be considered together and disposed of in one opinion, but a separate order will be entered in each case.

It appears from the record and proceedings in this case that in July, 1913, the state's attorney of Cook county presented his petition for leave to file informations in the nature of quo warranto against these two corporations, which was allowed and the informations filed, and that the order granting leave was subsequently vacated and set aside, and the petition dismissed without prejudice to the right of the state's attorney, at any time thereafter, to present another petition against the respondents. From this order the people prosecuted an appeal to this court, which affirmed the judgment of the lower court in People v. Union Consolidated Elevated Railway Co., 263 Ill. 32, 105 N. E. 12, Ann. Cas. 1915C, 388, where the reasons for our decision and our views as to the principles of law involved on the questions then before the court are fully set forth and need not be restated here, in so far as this case involves similar questions of law. After the decision was rendered in the former case, and on May 27, 1914, the state's attorney of Cook county presented the petitions in this case to one of the judges of the circuit court of that county, in one of which petitions the Union Consolidated Company and in the other the Union Elevated Company were made sole defendants. Upon the presentation of the petitions leave was granted, the informations were filed, and process ordered issued. On June 2, 1914, and at the same term at which the leave was granted, the respondents entered special and limited appearances in each case, and moved the court to vacate the orders granting leave to file the informations and to dismiss the petitions, supporting the motions in each case by affidavits. A hearing was had on these motions on June 26, 1914, and the court announced the motions would be allowed, but no order was entered at the time as the state's attorney requested 10 days' time in which to file counter affidavits and to apply for a rehearing. On July 6, 1914, counter affidavits were filed in each case, and a final hearing was had, at the conclusion of which the court entered the orders vacating the orders formerly entered, granting leave to file the informations and for process, abated the proceedings, and dismissed the petitions in each case. As the petitions and affidavits in each case are similar and the questions involved in each case are the same, the substance of those filed in but one of the cases (the Union Elevated case) will be stated.

It is alleged in the petition filed in the Union Elevated Company Case that the latter company was organized in November, 1894, under the law of this state known as the Railroad Incorporation Law, with a capital stock of $5,000,000, divided into 50,000 shares of the par value of $100 each; that the company issued and now has outstanding all of its capital stock, of the par value of $5,000,000, and that it also issued and now has outstanding bonds of the par value of $5,000,000, and that its entire capital stock of $5,000,000 and bonds of the amount of $4,387,000 were issued to the Loop Construction Company (hereinafter called the Loop Company) for the purpose of procuring the right of way and constructing and equipping the elevated railways of the Union Elevated Company; that the actual cost of procuring such right of way and constructingand equipping the said railways did not exceed $2,277,551.

The petition further alleges that during the years 1911 and 1912 the city council of the city of Chicago, at the request of the Union Elevated Company and other elevated railways in the city of Chicago, appointed a committee for the purpose of making a report on the valuation of the elevated railroad properties in the city of Chicago, including those of respondent, and that on May 8, 1913, the committee made its report, based upon what it would cost to reproduce the same as of January 1, 1912, and that the cost of reproducing such properties, including the equipment and right of way of the Union Elevated Company as of that date, did not exceed $2,277,551; that the actual cost of procuring the right of way and constructing and equipping the Union Elevated Company did not exceed the estimated cost of reproducing the same as of January 1, 1912, as found by said valuation committee, and that in an official report made by the Union Elevated Company to the New York Stock Exchange, made for the purpose of having its bonds listed on that Exchange, its officials stated:

‘The cost of the road equipment, right of way and construction, including power house equipment, was $3,925,000’

an amount greatly in excess of the true cost of the right of way, power house, construction, and equipment of such railway.

The petition further alleges that Charles T. Yerkes was president of the Union Elected Company at the time of its construction and in 1898 and 1899, and that the Loop Company was organized by him, and his associates acting under his control, to build the Union Elevated Railroad; that at that time there was in existence a company known as the Columbia Construction Company, created and controlled by Yerkes and his associates for the purpose of constructing and equipping the Northwestern Elevated Railroad, and another company, known as the West Side Construction Company, created for the purpose of constructing and equipping the railways of the Metropolitan West Side Elevated Railroad Company and of the Union Consolidated Company; that $5,000,000 of the par value capital stock of the Union Elevated Company was issued and delivered to the Loop Company without any actual consideration whatever or receiving any money, labor, or property in payment of the same, and that the entire cost of building and equipping the railroad, including reasonable profits, overhead expenses, legal expenses, cost of right of way, construction, and equipment, and other reasonable costs and charges, was paid by the Loop Company out of the proceeds of the sale of the bonds of the Union Elevated Company, and that, in fact, neither the Union Elevated Company nor the Loop Company received any money, labor, or property as consideration for the issuance of the $5,000,000 capital stock given the Loop Company, but that $2,000,000 of the par value of said stock was given by the Loop Company to the West Side Construction Company, and by it distributed to its stockholders as a bonus and that $450,000 of the capital stock of the Union Elevated Company, of the par value of $450,000, was given by the Loop Company to the Columbia Construction Company, and by it distributed as a bonus to its stockholders, and that $2,550,000 of the par value of the capital stock of the Union Elevated Company was delivered by the Loop Company to Yerkes and his associates, who were stockholders in the Loop Company; that in December, 1895, the Columbia Construction Company, in floating an issue of its stock, offered a bonus of 15 per cent., and subsequently of 40 per cent. in stock of the Union Elevated Company, and that the president of the Columbia Construction Company, who subsequently became general manager of the Union Elevated Company and was one of Yerkes' associates and accomplices in financing these properties, issued a public statement to the stockholders of the ColumbiaConstruction Company, stating that the offering of the Union Loop stock was--

‘a pure gratuity; that the Columbia Construction Company stockholders had taken no risk whatsoever, and were in no wise involved in the Union Loop enterprise.’

The petition further alleges that the Union Elevated Company claims the $5,000,000 of its capital stock and the $4,387,000 of bonds were issued to the Loop Company in payment for the property received, and charges that the entire payment for the property received was made out of the proceeds of the bonds issued, and that the delivery to the said construction company of stock and bonds in the amount of $9,387,000, par value, in payment for property received, which actually cost not to exceed $2,277,551, was a mere trick or device conceived with the fraudulent intent to evade the constitutional and statutory requirements that no...