113 Ala. 420 | Ala. | 1896
The appellees, Browning and others, filed their bill in the chancery court, and upon a de
In its present condition the bill shows that in and prior to the year 1886 the East & West Railroad Company, a corporation, incorporated under the laws of Alabama, had issued seventeen hundred and fifty first mortgage bonds, of one thousand dollars each, secured by a first mortgage on all the property of said corporation, and of these, complainants were the owners of nine hundred and sixty-six, and that the respondents, or Eugene Kelly, owned a large proportion of the remainder of said bonds. The bill shows that complainants* were the owners of 6,000 shares of the stock of said railroad corporation. In 1888 one James W. Schley, a judgment creditor of said railroad corporation, .filed a bill in equity in the United States Circuit Court for the Southern Division of the Northern District of Alabama, in which he sought to set aside and annul the said mortgage bonds, and to subject the railroad property to the satisfaction of his judgment. A receiver was appointed, who took charge of said railroad pending this controversy. Under these circumstances, the complainants and respondents entered into the following agreement:
“This agreement made the 11th day of May, one thousand, eight hundred and eighty-eight, by and between Edward F. Browning and J. Hull Browning, of the City of New York, and Amos G-. W.est, of Cedar-town, in the State of Georgia, parties of the first part, and John Byrne and Eugene Kelly, of the said City of New York, parties of the second part,
“Witnesseth whereas, the parties of the first part are the owners and holders of $966,000 at par value of the consolidated bonds of the East & West Bailroad Com-isan}'' of Alabama, and a majority of the shares of the capital stock of said railroad company.
“Now, therefore, in consideration of the mutual covenants and agreements hereinafter stated and the payments to be made upon the conditions hereinafter speci*437 fied, the said parties have agreed and do hereby agree each with the other as follows, that is to say :
‘•'First. The parties of the first part hereby agree to sell, alien and release, and do hereby sell, alien and release unto the parties of the second part all their right, title and interest in and to the said $966,000 at par value of said consolidated bonds and the coupons thereto attached, and all of said shares of said capital stock held by them, being not less than six thousand shares, and hereby agree to deliver the same to the parties of the second part upon the terms, in accordance with the provisions, and in the manner hereinafter specified.
‘ ‘Second. The parties of the second part hereby agree to endeavor to. obtain the reorganization of said railroad company, and to cause said railroad corn pan y, or its bonds to he known as first mortgage bonds in lieu of said consolidated bonds, upon such plan of reorganization as may be in their opinion most expedient and proper, and to save harmless the parties of the first part from all assessments, costs, charges and expenses whatever in connection with such reorganization, or any proceedings, actions or suits at law or in equity with reference to the said bonds or stock, or any portion thereof, except as hereinafter provided; and upon the completion of said reorganization, and as soon as the said railroad, its property and franchises, are in the full possession and control of said, railroad company which may be formed under and for tire purpose of carrying out such plan of reorganization, and upon the discontinuance of any and all proceedings, actions or suits at law or in equity which may be now pending, or which may be hereafter instituted, with reference to said property or said bonds or stock, or any portion thereof, and as soon as the securities and stock to be issued under such plan of reorganization shall be_ ready for delivery, the parties of the second, part sbñTT pav and deliver, or .cause to be paid and delivered, jo the parties of the first part for the said — con soli dated “bonds and stofik" hereby sold securities to-bo-issued under such plan of reorganization as follows :
“1. In case the total amounts of said new bonds to be issued under such plan of reorganization shall be one million, five hundred thousand dollars five per cent, first mortgage bonds, then the parties of the first part are to*438 receive and tlie parties of the second part are to pay and deliver, or cause to be paid and delivered, to the parties of the first part $416,000 at par value of said new bonds, and $600,000 at par value of preferred stock out of $700,000 at par value of preferred stock to be issued under such plan of reorganization.
“2. In case the total amount of said new bonds to be issued under such plan of reorganization, shall be one million, two hundred thousand dollars five per cent, first mortgage bonds, then the parties of the first part are to receive and the parties of the second part are to pay and deliver, or cause to be paid and delivered, to said parties of the first part $333,000 at par value of said new bonds, and $683,200 at par value of preferred stock to be issued under such plan of reorganization. It being generally understood that the several aggregate amounts of issues of new bonds hereinafter mentioned are upon the basis of a narrow-gauge railroad, as the said railroad is now operated ; that said new bonds shall not exceed the rate of $12,500 per mile of narrow-gauge road, and that in case the gauge shall be widened to the standard gauge, the aggregate amount of said new bonds to be issued may be increased not to exceed the rate of $2,500 per mile.
‘ ‘It is also further mutually understood that in case that said preferred stock cannot be legally issued, or shall not be issued under said plan of reorganization, then the parties of the second part shall pay to the parties of the first part in lieu of said preferred stock so to be paid to them, as hereinafter provided, such securities other than first mortgage bonds as may be issued under such plan of reorganization, to be paid in such amounts as may be determined by arbitration in the manner hereinafter provided.
“Third. In case any portion of said $966,000 at par value of said consolidated bonds hereby sold to the parties of the second part by the parties of the first part, not exceeding $550,000 at par value, shall be adjudged invalid by any court of last resort- having jurisdiction thereof, then-the parties of the first part shall be entitled to receive only such proportion of said preferred stock, to be paid and delivered to them as hereinbefore provided, as the proportion of said amount of $550,000 at par value of said bonds adjudged by such court to be*439 valid shall bear to tlie total amount of such preferred stock so to be paid and delivered to said parties of the first part. And in case any portion of the remainder of said $966,000 at par value of said consolidated bonds, being $416,000 at par value, shall be adjudged invalid by such court, then the parties of the first part shall be entitled to receive only such proportion of such new bonds, to be received by them as hereinbefore provided, as the proportion of such consolidated bonds adjudged by such court to be valid shall bear to the total amount of new bonds so to be received by the parties of the first part.
“Fourth. It is mutually agreed by and between the parties hereto that all costs, expenses or counsel fees incurred in or by reason of any litigation that might arise with reference to the subject matter of this agreement, other than or in addition to the costs, expenses and counsel fees which the court may direct to be paid, or which may be paid out of the proceeds of the sale of said railroad, in case a sale thereof be had, or which may be paid by said railroad company, shall be divided between the parties hereto in proportion to the value of their holdings, respectively, upon the payment and delivery of their securities to be paid and delivered by the said parties of the second part to said parties of the first part as hereinbefore provided.
“Fifth. It is mutually agreed by and between the said parties, that immediately upon the execution of this agreement the parties of the first part shall deliver to the American Loan & Trust Company, of New York City, the securities and stock hereinbefore mentioned, and hereby sold by them, to be held by said trust company as trustee, for the purposes of this agreement.
“Sixth. That the parties of the first part hereby agree that whenever the parties of the second part shall so request they will place the parties of the second part in control of the Board of Directors of said railroad company, by causing the resignation of the several directors controlled by them and the election to such vacancies, as they severally occur, of persons to be designated by the parties of the first part.
“Seventh. In case any dispute shall arise between the parties hereto, in ■ reference to the construction or effect of any portion of this agreement, or anything con*440 nected witli the subject matter thereof, the same shall be settled and adjusted by arbitration, of whom each of the parties hereto shall select one, and in case of any disagreement of said arbitrators so chosen, the arbitrators shall have the power to select a third, and the decision of any two of' said arbitrators shall be final, conclusive and binding upon the said parties.
‘ ‘In witness whereof the parties hereto have set their hands and seals the day and year first above written. .
“B. F. Browning, (L. S.)
“J. Hull Browning, (L. S.)
“Amos West, (L. S.)
“By J. Hull Browning, his Attorney in fact.
“John Byrne, (L. S.)
“Eugene Kelly, (L. S.)”
“Witness :
Frank Sullivan Smith.”
The bill avers that in pursuance of said agreement, and to be used in conformity thereto, complainants delivered to The American Loan & Trust Company the said nine hundred and sixty-six consolidated mortgage bonds and six thousand shares of stock, subject to the control of said respondents and which were availed of by them and subsequently, by Eugene Kelly, one of the respondents, with the acquiescence of his co-respondent Byrne, for his individual and separate benefit “as hereinafter set forth.” The bill shows that The American Loan & Trust Company, at the direction of the respondents, filed a bill in equity for the foreclosure of the mortgage made to secure said consolidated bonds, and that the suit of Schley, said judgment creditor, and also a suit of Grant Brothers, were consolidated with the foreclosure suit, and that at the hearing, the bills of complaint of said Schley and of Grant Brothers were dismissed, that the mortgage bonds were declared and held-to be valid, and a decree of foreclosure and sale of the property rendered.
The bill shows that at the reference held in the foreclosure suit, the respondents claimed and proved up their ownership of said bonds, which_ had been transferred to The American Loan & Trust Company as provided in said agreement.
The bill further shows that pending the foreclosure
The pleader concludes from the facts stated, that Kelly by reason of his holding and control of said 966 consolidated bonds, and the framing of the order for receiver’s certificates, and the decree of foreclosure, which gave to the bondholders an advantage over all competition, was enabled to purchase, and avers as a fact that he did purchase, the railroad property at much less than its real value, and after having acquired the property at much less than its value by using the consolidated bonds transferred by complainants, refuses to carry out the agreement and repudiares and refuses to recognize complain
We have not undertaken at present to state in detail all the averments of the bill, but only so much as we deem necessary for the consideration of those grounds of, demurrer directed against the maintenance of the suit. Other averments will be considered hereafter in connection with the causes of demurrer assigned against certain features of the bill.
Appellants contend, that as the bill shows that all the parties are non-residents, there are no averments of fact, which give jurisdiction. Section 3414, subdiv. 2 of the Code of 1886, reads as follows : “Against non-residents, when the object of the suit concerns an estate of, lien or charge upon lands, or the disposition thereof, or any interest in, title to or incumbrance on personal property within this State, or where the cause of action arose, or the act on which the suit is founded, was to have been performed in this State.” Section 3421 of the Code provides that “in case of non-residents [the bill must be filed] in the district where the subject of the suit, or any portion of the same, is, when the cause of action arose, or the act on which the suit is founded was to be performed ; or if the real estate be the subject matter of the suit, whether it be the exclusive subject matter of the suit or not, then in the district where the same or a material portion thereof, is situated.” If the other averments of the bill are such as to show that complainant is entitled to equitable relief, those relative to the jurisdictional facts required by the statute, in cases of non-residents, are sufficiently pleaded.
■Appellants further contend that the agreement of the parties of May 11th, 1888, did not impose any absolute obligation to effect a reorganization as therein provided, but that they only obligated themselves ‘ ‘to endeavor to obtain the reorganization of said railroad company,”
In one aspect of the bill, complainants show the purchase of the railroad by Eugene Kelly in pursuance of the agreement and their right to a proportionate share, and ask that they be decreed such interest in the property. In the other aspect, complainants show, that respondents appropriated the trust property with a fraudulent purpose, in this, that instead of using it as provided in the trust for the benefit of complainants, respondents purchased the railroad property for themselves, or Kelly did for himself, Byrne consenting thereto, us
We are of the opinion that under the averments of the bill, the respondent Byrne is a proper party to the complaint. He was a party to the agreement, and became a trustee or agent for complainant under its provisions. It is averred that the proceeding for the foreclosure of the mortgage was instituted by the respondents, that they proved up their ownership of the bonds, and that Kelly purchased the property with the acquiescence'of Byrne. If after answer filed., or the taking of the evidence, it appears that he has no interest in the litigation, the hill can be amended by striking out the name at the proper time. On the demurrer we are of opinion, under the averments, he was properly made a party respondent.
We are of the opinion that the averments of the bill are insufficient to deprive the receiver’s certificates of the priority given to them by the order and decree of the court, and hold that Kelly, who became the purchaser,
The amended bill was filed as a substitute for the original bill. As to subsequent amendments, the amended bill was the only bill, and was referred to as the original bill. It is evident that this was the intention of the pleader, and so understood by the court. The criticisms in this respect are not tenable. There may be some inapt expressions employed in the frame of the bill, but taking it as a whole, and considering its purpose and
Affirmed.