21 Kan. 365 | Ark. | 1879
The opinion of the court was delivered by
The first and most important inquiry in this case is, whether upon the allegations of the amended petition the contract made by Len. T. Smith, in the name of the Missouri River railroad company, with A. Caldwell, for the construction of the railroad of that company from Wyandotte to Leavenworth, was fraudulent and void? If fraud- . ulent and void, the next inquiry is, are the plaintiffs, who are stockholders in the Leavenworth, Atchison & Northwestern railroad company, in a position to maintain this suit? In answering and passing upon these inquiries, and matters incident thereto, we will consider whether the petition states facts sufficient to authorize the plaintiffs to maintain their action, and, also, all the material points presented in the arguments of counsel.
It is further alleged in the petition, that after the said partnership was formed, and before the execution of the contract for the construction of 'the road, certain persons, who were responsible, and able to give good security for the performance of their contract, made an offer in writing to the president and treasurer of the corporation to do the clearing, grubbing, grading, masonry and track-laying of the entire road, and furnish materials therefor, for $300,000; (had'this been done, the whole cost of the road would not have exceeded $18,000 per mile;) .that the said partnership was formed and the construction contract made with the intent, of the members of the firm, who were officers and directors of the corporation, and of such as. immediately afterward became directors and officers of the corporation, and of those jointly interested with them in the contract, to depreciate and render valueless the stock owned by Leavenworth county and city, .to defraud said stockholders of their property, and to acquire for the partners so associated together the. control of the corporation and all its effects; that the more favorable proposals from other parties were rejected, and the terms of the contract so unfavorable to the corporation, agreed upon to defraud the latter, and carry out the purposes and plans of the conspirators.
“The corporation was represented by an agent who controlled both sides of the contract, and whose interest was in every way against his principal and in his own favor. While? the glaring evil of this thing may be obscured by using the name of the corporation as one party and that of individuals-having no connection with the corporation as the other party, the danger that selfish greed will make for the agents of the-corporation a contract of which they will reap the advantage, and in which the corporation will suffer all the losses, is only -increased by the fact that the names of the parties really interested do not appear in the transaction.”
We come next to the inquiry, whether the plaintiffs are in-position to maintain this suit? Counsel contend that the Leavenworth, Atchison & Northwestern railroad company was not competent or authorized to purchase and become the holder of the stock of the county and city of Leavenworth, and that the county and city are still the owners of the stock . originally issued by the Missouri River railroad company for the bonds of said county and city. The amended petition shows that the Leavenworth, Atchison & Northwestern railroad company was incorporated in 1868 to build a railroad from Leavenworth to Atchison, and thence northwest. The capital stock was first fixed at $500,000, and afterward increased to $600,000. On December 26th, 1868, Leaven- ‘ worth county, pursuant to a vote authorizing the transfer, sold and transferred its $250,000 of stock' in the Missouri River railroad company to the Leavenworth, Atchison- & Northwestern railroad company, and on the same day, and by like authority, the -city of Leavenworth made a similar disposition of its $250,000 in the Missouri River railroad company. There had been an act passed by the legislature of the state, in the previous March, authorizing the sale or disposition of this stock. The statute under which the Leavenworth, Atchison A Northwestern railroad company organized, authorized the corporation to hold and purchase . . . such real and personal estate as the purposes of the company required. (Ch. 23, Gen. Stat.) And section 47, subdivision 2 of the same chapter, further empowered the corporation to take and hold such voluntary grants of real estate and other personal property as should be made to it to aid the construction, maintenance and accommodation of its railway.
The order and judgment of the district court sustaining the several demurrers will be reversed, and the cause remanded with direction to the court below to overrule the said demurrers, and each of them.