Ware v. Galveston City Co

• Decision Date: 31 March 1884
• Citation: 111 U.S. 170,4 S.Ct. 337,28 L.Ed. 393
• Parties: WARE and others v. GALVESTON CITY CO
• Court: U.S. Supreme Court

111 U.S. 170

4 S.Ct. 337

28 L.Ed. 393

WARE and others v. GALVESTON CITY CO.

March 31, 1884.

Walter Gresham, for appellants.

W. H. Goddard, for appellee.

MATTHEWS, J.

This is an appeal from a decree dismissing a bill in chancery, upon general demurrer for want of equity. The complainants, also appellants, are the heirs at law of David White, deceased, citizens, respectively, of Alabama and Florida; the defendant, the appellee, is alleged to be a corporation, incorporated by an act of the congress of the republic of Texas, and a citizen of that state. It is alleged in the bill, which was filed October 11, 1880, that the republic of Texas, on January 25, 1838, issued a patent to Michael B. Menard, in consideration of $50,000, for one league and labor of land on and including the east end of Galveston island; that David White, the ancestor of the complainants, advanced and paid that sum for Menard, to secure repayment of which the latter executed and delivered his mortgage on the land to White. Menard at the time had associates, jointly interested with him in the purchase, and others became so subsequently, and the association was a partnership, with a view of organizing a joint-stock company for the sale of the land, for profit, in lots, and distribution of the net proceeds as dividends to shareholders, Menard being, however, the managing partner, and until April 18, 1837, holding the legal title, the indebtedness to White having been incurred in his own name, and the mortgage executed by him individually for the repayment of the same. About the date last mentioned, Menard released to one Triplett 640 acres of the land to compromise a conflicting claim of title; and afterwards, about June 15, 1837, the whole original tract, including that released to Triplett, was conveyed by all parties in interest, to trustees in trust, for the purpose of carrying into effect the original plan, Triplett and those interested with him becoming co-associates with Menard and his associates. To that end, the trustees were to issue 1,000 shares of stock, of which 400 were set aside to provide for certain certificates previously issued under the Menard interest, and the remaining 600 shares were to be sold and the proceeds applied first to the payment of expenses, and then to be divided, one-third to the Triplett interest and tow-thirds to the Menard interest, but the debt to White was to be provided for out of the Menard shares; and provision was made for issuing trustees' certificates to the individual owners of interests, which was in fact done, and the holders of certificates, which were assignable, became associated as the Galveston City Company. It is alleged, however, that out of the 600 shares, a number deemed sufficient for which no certificates were issued, but part of those which otherwise would belong to the Menard interest were reserved to be sold for the purpose of paying the debt to White, so as to relieve the Triplett interest from any charge on that account, and so as also to indemnify Menard individually against his liability therefor. The precise number of the shares thus set apart and appropriated, it is alleged, is not known; but it is charged that on March 10, 1851, 29 shares of the original number so appropriated still remained in the hands of the company undisposed of. On April 13, 1838, the holders of these certificates seem to have organized, as stockholders of a future corporation, the Galveston City Company, and elected five directors, to whom, as directors of the association, the legal title to the land was conveyed by the trustees....