34 F. 278 | U.S. Circuit Court for the District of Southern New York | 1888
This is an action at law, in which, by written stipulation signed by the parties, a jury was waived, and the cause was tried by the court. Upon such trial the following facts were found to have been proved, and to be true: The averments of the first, second, third, fourth, fifth, sixth, seventh, and ninth paragraphs of the complaint are true, except that the guaranty described in the seventh paragraph was not indorsed upon the bonds by resolution of the stockholders of the defendant, and with the omission of the words “for good and valuable consideration” in said paragraph. The facts in regard to the consideration for the said guaranty are hereinafter specially stated. The Mississippi Central Railroad Company, hereinafter called the “Mississippi Company,” had become indebted to the defendant before January 26,1874, in a large amount, for advances which were made to said company for the purpose of completing its road. In settlement of that debt the said Mississippi Company delivered to the defendants its coupon bonds, for the sum of $1,000 each, known as “Income and Equipment Bonds,” to the amount of $5,000,000.- These bonds include the 447 bonds which are particularly described in the complaint. At a meeting of the directors of the defendant, held on January 26, 1874, the following resolutions were unanimously adopted:
“Resolved, that when the said bonds are delivered to this company by the said the Mississippi Central Railroad Company, the corporate seal of this company, attested by the signatures of the president and secretary, be affixed to a*279 guaranty to be indorsed on each of the said five thousand bonds in the following form: * For valuable consideration the Southern Railroad Association guaranties to the holder of the within bond the punctual payment of the principal and interest thereof when and as the same shall fall due, according to tlie terms and promises of the said bond. Witness the corporate seal of the said company, this 26th day of January, A. .1). 1874.’
"Resolved, that the treasurer of this company be authorized to appropriate such number'as may be required of the said bonds which shall have been taken by this company on account of advances made to the Mississippi Contra! Railroad Company, to the purchase of from twenty-eight to thirty thousand (28,-000 to 80,000) shares of tlie capital stock of the New Orleans, Jackson & Groat Northern Railroad Company; provided, that in making tlie said purchase the bonds, with tlie coupon oí Í874 detached, be taken at par, and the price of the shares not to exceed seventy-five dollars per share for the full-paid shares of: one hundred dollars each. ”
rfaid guaranty was thereupon indorsed upon each of said $5,000 bonds.
At a meeting of the stockholders of the defendant, on June 22, 1874, at which meeting 18,798 of the 20,000 shares into which the capital stock of the defendant ivas divided was represented, the proposed consolidation of the Mississippi Company with the New Orleans Company under the name of the New Orleans, St. Louis & Chicago Railroad Company, hereinafter called the “Si. Louis Company,” was approved, and it was voted that the executive officers of the defendant soil to said last-mentioned railroad company their interest in the lease of the Mississippi Company, upon such terms and on such conditions as may bo agreed upon. The following preamble and resolutions wore adopted:
“ Whereas, it is advisable to raise the sum of eight hundred thousand dollars to pay the floating indebtedness of this company, and it is believed that the object can be attained most advantageously for the interests of the stockholders of this company by offering to each one the optionor privilege of purchasing certain of the assets of this company at a price sufficient to secure the required sum: Therefore, bo it resolved — First. That each .stockholder of this company who shall, before the 1st day of July next, pay to the treasurer of this company, either in cash or in the notes or obligations of this company, a sum equal to forty per cent, of tlie par value of the stock of this company standing in the name of such stockholder on the first day of July, 1874, shall be entitled to receive mortgage bonds of tlie Mississippi Central Railroad Company of the jssuc known as the ‘Consolidated Mortgage Gold Ronds,’ to an amount equal at the par thereof to the said payment, and also mortgage bonds of the said Mississippi Central Railroad Company of the late issue, known as ‘ Income and Equipment Ronds,’ to amount equal at tlie par thereof to the amount at par of the stock of this company standing m the name of such stockholder on the books of this company at the closing of the books on the first day of July, A. D. 1874. Second. That the secretary be directed to forward a copy of the above resolution to each of the stockholders of this company.”
The plaintiff ivas the owner of 2,767 shares of the capital stock of the defendant, which stood in the name of Jacob S. Rogers, and Jacob S. Rogers, trustee. Mr. Rogers was president of the plaintiff, and was one of the directors of the defendant, and was present at the directors’ meeting of January 26, 1874, and at the stockholders’ meeting of June 22, 1874. After June 22, 1874, the defendant, for value, transferred and
The conclusions of fact and of law upon the foregoing findings of fact are as follows: The defendant corporation, which has power by its charter to issue its own bonds, has the power to guaranty the bonds of an
The defendant was in pecuniary straits, and owed a floating debt of §800,000. It had as or among its assets consolidated bonds of the Mississippi Company, which had a ’substantial value, and were worth, perhaps, 50 cents on the dollar; and had also the income bonds of said company, which were worth very little without the guaranty of the defendant. To its stockholders, who would advance a sum equal to 40 per cent, of the par of their stock, it offered to transfer consolidated bonds equal in amount to the cash payment, and income bonds equal to the par of the stock. Thus, in addition to the consolidated bonds, the stockholders would receive income bonds of twice and one-half the amount of his cash payment, and, if "the guaranty passed with the bonds, the defendant obliged itself, in order to pay a floating debt of §800,000, to pay §2,000,000 at 7 per cent, interest. Instead of owing §800,000, it owed §2,000,000, and had parted also with a valuable portion of its assets. The idea that the transfer of the guarantied bonds was a gift to the stockholders is unworthy of credit. The transaction was a sale,
Judgment is ordered to be entered for the plaintiff for the amount duo upon the 220 bonds numbered from 4,361 to 4,580, inclusive, and upon the unpaid coupons attached thereto, and the interest thereon, and the interest upon the principal sum after the maturity of said bonds.