Redwood v. Rogers

• Decision Date: 01 March 1906
• Citation: 105 Va. 165,53 S.E. 6
• Court: Virginia Supreme Court
• Parties: REDWOOD et al. v. ROGERS et al.

53 S.E. 6

(105 Va. 165)

REDWOOD et al.

v.ROGERS et al.

Supreme Court of Appeals of Virginia.

March 1, 1906.

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1.Fraud—Evidence—Character of Proof.

Fraud, while provable either by positive and direct evidence or by facts and circumstances affording a conclusion of fraud, must be affirmatively proved by clear and satisfactory evidence.

[Ed. Note.—For cases in point, see vol. 23, Cent. Dig. Fraud, §§ 55-59.]

2.Corporations—Contracts—Ultra Vires.

Where a corporation was authorized by its charter to borrow money and to issue bonds secured by mortgage therefor, and it accordingly executed a mortgage deed of trust to secure an authorized issue of bonds of the value of $1,000, 000, but it was stipulated in the resolution authorizing the mortgage and bonds that not more than $500,000 worth of bonds should be issued except on the written consent of two-thirds of the stockholders and of the trustee, and more than $500,000 worth of bonds were issued without any objection being made, a subsequent issue of bonds within the $1,000, 000 limit, upon the written request of two-thirds of the stockholders and of the substituted trustee in the mortgage, for the purpose of paying debts of the company and otherwise promoting its interests, was not ultra vires.

Appeal from Hustings Court of City of Petersburg.

Bill in equity by Philip Rogers and others against John Redwood and others.From a decree in favor of complainants, respondents appeal.Affirmed.

Rehearing denied.

Munford, Hunton, Williams & Anderson, and A. B. Guigon, for appellants.

Alexander Hamilton and Leake & Carter, for appellees.

HARRISON, J.This litigation involves the right of the appellants to have canceled by a court of equity certain bonds issued by the Southside Railway & Development Company, and now held by the appellees.

The Southside Railway & Development Company was incorporated by an act of the General Assembly of Virginia in 1898, with power to establish and maintain the business of a general electric and railway company.By its charter the company was authorized to borrow money and to issue bonds therefor, secured by mortgage upon any or all of its property; to dispose of its property by sale, lease, or otherwise; and to consolidate with any other company or companies incorporated for the purpose of manufacturing or purchasing electricity, or having the power so to do.

For the purpose of raising money with which to pay for certain property acquired by it, and for other purposes of the corporation, as therein set forth, the Southside Railway & Development Company, on July 1, 1899, executed to the Richmond Trust & Safe Deposit Company, as trustee, a mortgage deed of trust, conveying all of its property and franchises then owned or thereafter acquired during the existence of such mortgage, to secure an authorized issue of $1,000, 000 face value of its first mortgage coupon bonds, bearing interest at the rate of 5 per cent, per annum; the principal being payable 50 years after date.By the terms of the resolution authorizing this mortgage and the bonds issued thereunder, it was provided that not more than $500,000 of these bonds should be issued, except on the vote or assent In writing therefor of two-thirds of the stockholders of the company, and also upon the written assent of the Richmond Trust & Safe Deposit Company, trustee.

It appears that $500,000 face value of these bonds were immediately issued, and that thereafter additional bonds were issued to the amount of $140,000, making the total outstanding bonds, as of August 1, 1901, of the aggregate face value of $640,000.These bonds, thus issued, are held by the appellants, and their validity is not questioned.

Subsequently the company made a further issue of $360,000, face value, of bonds, thus completing the $1,000, 000 of bonds authorized by the...