Ragland v. Broadnax
| Decision Date | 29 November 1877 |
| Court | Virginia Supreme Court |
| Parties | RAGLAND v. BROADNAX & als. |
Absent, Moncure, P., and Anderson, J.
I. The circuit court of the city of Richmond has no equity jurisdiction except in certain cases specified in the statute, in which the state is interested or some of the officers and boards representing the state are necessary or proper parties; and in such cases its jurisdiction is exclusive. Sess. Acts 1869-'70, pp. 42, 43.
II. Upon the facts of this case held that the Board of Public Works of the state was a necessary party to a suit brought by parties claiming to be stockholders in the Petersburg Railroad Company, against the Company, the city of Petersburg, Ragland and others, to set aside certain acts of the railroad company done in favor of Ragland as the holder of a large amount of the stock of the company which he purchased from the city of Petersburg. This stock had been pledged by the city to the state as collateral security for the guaranty by the state of a debt of the city.
III. The state having returned the stock to the city of Petersburg, and it being held by the city as collateral security for the debt Ragland owed for the stock, and his note having fallen due, the city sued him upon it, and advertised the stock for sale. Ragland then filed his cross-bill in the first suit to enjoin the suit and sale until the questions in the first suit as to the character of the stock which the state had held, whether preferred or common, should be settled. All the parties to the original bill were made defendants to the cross-bill. The causes were heard together, and the original bill dismissed--HELD:
1. The second bill asking for relief against the City of Petersburg which could not be given on the pleadings and proceedings in the original bill, but which was based upon grounds involved in that case, it was the proper subject of a cross-bill; but the relief sought by it being outside of the original bill the dismissal of the original bill did not involve the dismissal of the cross-bill.
2. If the cross-bill is to be treated as an original bill in the nature of a cross-bill, all the parties being before the court, and the case having been matured, it was proper to proceed to decide it upon the merits. And certainly Ragland is not to be heard to question the jurisdiction of the court after having had the determination of the question brought by him into the case.
In July, 1873, A. J. Broadnax, W. E. Broadnax and E. W. Wilkins instituted a suit in the circuit court of the city of Richmond, against the Petersburg Railroad Company, Reuben Ragland, the Board of Public Works, and several other persons; and the City of Petersburg afterwards became a party defendant in the cause. The plaintiffs, in their bill, say they are the owners of four hundred and forty shares of the capital stock of the Petersburg Railroad Company, and they file the bill not only for themselves, but for all other stockholders of the company, and such holders of the mortgage debt of the company as may become parties to the suit and contribute to the cost of its prosecution. They set out the action of the stockholders of the company by which they directed to be issued to Reuben Ragland and other persons named 4,852 shares of preferred stock, and that the board of directors and treasurer of said company pay to the holders of said stocks three per centum per annum thereon out of the gross receipts of the company, in addition to their dividends out of the net profits of said company; and that they should pay to Reuben Ragland two hundred and forty-nine thousand three hundred and fifty dollars, in satisfaction of all arrears claimed by him to be due upon 4,490 shares of the so-called preferred stock held by him, and that in addition thereto that the said Ragland, as president of the company be paid the sum of $12,000 per annum in monthly instalments. They deny that the stock was preferred stock entitled to the payment of three per cent. out of the gross earnings of the company; or that this stock was, in addition to this three per cent. out of the gross earnings, to be paid equally with the other stock of the company dividends out of the net earnings; or that Ragland was entitled to receive these dividends if they were properly payable, which fell due before he purchased the stock. They charge that Ragland having purchased a majority of the stock of the company, he controlled the action of the stockholders when this action was taken. And they refer to the acts of assembly upon which the claim of Ragland was founded, and the action of the common hall of the city of Petersburg, by which the stock was sold to Ragland. These are given in the opinion of the court delivered by Christian, J. And they ask for the appointment of a receiver for the road.
Ragland answered the bill. He charged that the plaintiffs were not the owners of any stock in the Petersburg railroad company; that though they had at one time owned the shares they claimed, they had disposed of them, and that the suit was in fact carried on in their names by John M. Robinson, a citizen of Baltimore, who was president of the Seaboard and Roanoke railroad company and several other companies he named, and that the object was to defeat the efforts the defendant was making to attract freight to his road, which would interfere with the interests of the companies managed by said Robinson. He denies that the meeting of the stockholders was packed, and says one of the plaintiffs was present at the meeting, acting for himself and as proxy for one other of the plaintiffs, and voted for everything that was done. And he insists that the action of the stockholders was proper; that the stock was preferred stock, and that the holders thereof were entitled to three per cent. per annum out of the gross earnings of the company, and an equal dividend out of the net earnings; and that these net earnings, unpaid when he purchased the stock, passed with the stock to him.
In September, 1875, Reuben Ragland filed what is called a cross-bill in the cause. He made the City of Petersburg, the Seaboard and Roanoke Railroad Company, the Petersburg Railroad Company, the Board of Public Works of Virginia, the plaintiffs in the first bill, and the other defendants thereto, defendants. The object of this bill is to enjoin the city of Petersburg from proceeding in an action which had been commenced by said city of Petersburg against himself and others upon a note for $249,982, with interest, which had been given by them for 3,500 shares of the stock of the Petersburg railroad company, and to enjoin the sale of said stock by the city of Petersburg for the payment of said debt, the said stock having been left with the city of Petersburg as collateral security for the payment of said debt. After setting out the nature of the stock, 3,235 shares of which he claims to be preferred stock, and its purchase by Ragland, and the circumstances of that purchase, and the objections made in the original suit to Ragland's claims, he states the points he asks to have settled:
First. Are the 3,235 shares of stock, common stock, or preferred and guaranteed stock, in the hands of the present owners thereof?
Second. If the said 3,235 share be preferred and guaranteed stock, what is the measure of the preference and guaranty? Is it, first, a preferred and guaranteed dividend of one and a half per centum for every six months, out of the gross receipts of the road, without participation in the full amount of dividends declared out of net profits, or is it a preferred and guaranteed dividend out of gross receipts as aforesaid, with participation in the full amount of dividends declared out of net profits in addition thereto?
The City of Petersburg answered the bill contesting the claims of the plaintiff as to the character of the stocks and the dividends to be paid upon it, and insisting that there was nothing in their agreement with Ragland, as he had insisted in his bill, which forbade the city to sue upon the note and to sell the stock.
The two causes came on to be heard on the 19th of April, 1876, when the court being of opinion that the plaintiffs in the first suit had so disposed of their stock that they had no appreciable interest in the subject in controversy, dismissed their bill with costs. In the second case the judge-- Wellford -- delivered the following opinion:
The dismissal of the original bill does not, however, relieve the court from the duty of passing upon some of the matters set out therein, for they are necessarily involved in the action which must be had upon the cross-bill. That bill must be regarded in many respects as an original bill, and the court having assumed jurisdiction and awarded an injunction to the complainant therein, cannot content itself with a simple dissolution of the injunction and dismissal of the bill.
It appears from the cross-bill that a considerable portion of the purchase money of the stock of the Petersburg railroad company sold to Ragland by the city of Petersburg, is unpaid and that as a security therefor the city of Petersburg holds the note of Ragland and other parties for the sum of $249,982, due upon its face August 1st, 1875, with the pledge of 3,500 shares of the stock now in the possession of the city as collateral security; that suit has been instituted by the city on the note, and that a sale of the stock has been ordered by the city. The prosecution of the suit and the sale of the stock has been enjoined by the court, not upon any hearing of the parties or any judicial determination of the matters at issue, but upon the ex parte application of the complainant. I am of opinion now, as I was when the preliminary injunction was issued, that it was...
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