West-End Narrow-Gauge R.R. Co. v. Dameron

• Decision Date: 30 October 1877
• Citation: 4 Mo.App. 414
• Parties: WEST-END NARROW-GAUGE RAILROAD COMPANY, Respondent, v. LOGAN D. DAMERON, Appellant.
• Court: Missouri Court of Appeals

4 Mo.App. 414

WEST-END NARROW-GAUGE RAILROAD COMPANY, Respondent,

v.LOGAN D. DAMERON, Appellant.

St. Louis Court of Appeals, Missouri.

Oct. 30, 1877.

A railroad corporation cannot, under the statute, purchase the subscription notes or obligations given by stockholders to another railroad corporation, and enforce them against the subscribers; and the fact that one railroad corporation has bought the road-bed of another railroad corporation, intending to complete the road, gives the purchaser no right to purchase the vendor's stock subscriptions and enforce them against the subscribers.

APPEAL from St. Louis Circuit Court.

Reversed and remanded.

JOHNSON & CAUSEY, for appellant: Ultra vires.-- Daniels v. St. Louis, Kansas City & Northern R. Co., 62 Mo. 43; Matthews v. Skinker, 63 Mo. 329; 23 How. 381; 24 Conn. 159; 34 Vt. 144. Powers of corporations to purchase or assign subscription stock.-- Hallowell et al. v. Hamlin, 14 Mass. 180; Bank of Hartford v. Barry, 17 Mass. 97; White v. Syracuse, etc., R. Co., 14 Barb. 559.

CHANDLER & YOUNG, for respondent.

HAYDEN, J., delivered the opinion of the court.

This is an action founded upon a subscription made by the appellant to the capital stock of the Central Railroad Company. That company was organized under the general laws of this State, and by the terms of the subscription the appellant bound himself to pay five per cent of the amount subscribed in cash, and the remainder upon such terms as the board of directors might from time to time prescribe by ordinance, by-law, or resolution. The name of this company was afterwards changed to the “St. Louis and Florissant Railroad Company.” Instalments were called for by resolutions of the board of directors, but the company never had any by-laws. After constructing its roadbed the company became largely indebted, and, under authority of a vote of its stockholders, the directors, by resolution and a deed made accordingly, conveyed to trustees its road, right of way, and all its other property, to secure its indebtedness. Among other property described were the choses in action of the company, among which were the subscription obligations. Under a power of sale in the deed, all the property of the company was sold by auction and bought by an individual. In the deed to him were named, as part of the property conveyed, “the choses in action and debts owing to said company,” and among these was classed the obligation of the appellant to pay the assessments which are sued for here. The purchaser at the trustee's sale conveyed all the property to the respondent which is a corporation organized under the general laws of this State. The court below gave judgment for the respondent in the amount of the assessments, and the case is here by appeal.

The first question which arises is as to the right of the respondent to sue, and this depends on the question whether it was within the corporate power of the respondent, by virtue of its purchase, to acquire title to and hold the chose in action sued on; if not, it is unnecessary to discuss the other questions which have been raised. For the purposes of this case, it may be admitted that it was within the power of the respondent to acquire, by purchase, the road, right of way, and track of the Florissant Company, and whatever land and tangible personal property of the latter were necessary for the purpose of carrying out the objects of the respondent's charter. It is said the respondent is a corporation which was formed for substantially the same purposes, and has substantially the same powers, as the Florissant Company, and could as well purchase as construct a road-bed and railroad. But, apart from any statutory or express authority, does the fact that these subscriptions were subscriptions to the stock of the one company authorize the other company, the present plaintiff, to purchase and enforce these obligations? It seems to be assumed that the fact that the subscriptions were originally made to the stock of a company which was organized for the purpose of building and running the railroad which is now the property of the respondent is a fact of legal significance in this case; and that the respondent here, having bought other property, which was the property of the Florissant Company, has peculiar rights in the premises. But it is difficult to see the legal grounds of such an assumption. The respondent did not become in law the successor of the Florissant Company so as to make stockholders in the latter company stockholders in the respondent. The point of connection between the two companies, if it can be called such, is that the respondent purchased from a third person, who had purchased from the trustees of the Florissant Company. The power of the respondent to purchase the chose in action here in question depends on the nature of the property, not on its physical surroundings. We are not now concerned with the consideration moving from the Florissant Company which formed the inducement to its subscribers to make...