100 Kan. 83 | Kan. | 1917
The opinion of the court was delivered by
The Wichita Union Terminal Railway Company was organized- under the laws of Kansas for the purpose of acquiring and maintaining at Wichita joint'terminal facilities for four railroads, including that of the Kansas City, Mexico & Orient Railway Company. Subscriptions to its stock were made in behalf of the four- companies in equal shares, and the stock was issued accordingly. Oh April 18, 1911, a call was made for a payment of ten per cent of the par value of the stock, to which all the holders responded. On October 27, 1911, a further assessment of $40 a share was made, amounting to $10,000 for each company, which was paid by all excepting the Orient Railway Company. A union station was built, which was used by the four companies referred to under an operating agreement by which they contributed equally to the expenses and shared equally in the revenue. These four companies united in a stock trust agreement by which they pledged the stock as collateral security to the trustee of the mortgage securing the bonds of the terminal company. On July 16, 1914, all the assets of the Orient Railway Company were sold under a decree of the federal district court to a new corporation, known as the Kansas City, Mexico & Orient Railroad Company. On October 29, 1914, a letter was written to the treasurer of the terminal company by a committee representing the Orient Railroad Company, offering to turn over some two-year gold notes of the latter company at par in payment of the overdue stock subscription. Negotiations followed which the terminal company regards as having culminated in an acceptance of the proposition. The Orient Railroad Company contends that - the offer was withdrawn before its
The case turns chiefly upon the effect of the negotations referred to, which were wholly in writing. On October 23, 1914, the board of directors of the Orient Railroad Company adopted a resolution which was recorded in these words:
“Thereupon a resolution was offered, and on motion, duly seconded and unanimously carried, by which the president of the company and Mr. Moore were authorized to negotiate with The Wichita Union Terminal Railway Company for settlement of the claim .of the company for unpaid balance of ten thousand dollars ($10,000) due it on subscription of The Kansas City, Mexico & Orient Railway Company, said settlement to be made in two-year six-per-cent gold notes of this company, if possible; or if. not, then in cash to be paid in installments from time to time, upon the best possible terms.”
On October 29, 1914, this committee wrote to the treasurer of the terminal company, saying:
“With regard to the unpaid balance on Orient subscriptions: We would like very much to get this matter closed up and out of the way, but, as you know, our earnings are very small — barely sufficient to meet operating expenses and other charges, consequently we are unable to make the payment out of earnings. We have, however, some Two Year 6% Gold Notes, dated April 30th, 1914, and we would be pleased to turn over to your company enough of these notes at par, with indorsement of interest paid to date of settlement, to pay the face value of the claim.
"For your information will say, these notes are a part of the $6,000,000 Two Year Gold Notes issue of''» the reorganized Railroad Company and are secured by a pledge of all of the outstanding stock (except qualifying shares) and of all of the issued and outstanding bonds of the Railroad Company.
“We would be pleased to have you consider this proposition and advise.”
In a reply written on November 5, 1914, the treasurer of the terminal company said:
“I do not know anything about the market value of the notes referred to, and, as the other three owning lines have paid their stock assessment in full, it hardly seems proper for me to accept anything but the cash in this case. ... I shall be glad to submit your proposition to the various Directors at the next meeting, if it is the best offer you can make.”
“Acknowledging receipt of your letter of the 5th instant, file C-570, have to say, the settlement proposed in my letter of the 29th ultimo is really the only one which we can make at this time, and I trust that the Directors may see their way clear to accept the same.”
On January 13, 1915, the directors of the terminal company voted to accept the offer of the Orient Railroad Company to deliver the gold notes in settlement of the unpaid assessment, and notice thereof was at once given. In the meantime, however, on January 2, 1915, this letter had been sent by the Orient Railroad Company to the terminal company:
“The Kansas City, Mexico & Orient Railroad Company acquired all of the property of its predecessor, The Kansas City, Mexico & Orient Railway Company, under a decree of foreclosure in the District Court of the United States for the District of Kansas, First Division, in the suit therein pending of the United States & Mexican Trust Company et al., Complainants, vs. The Kansas City, Mexico & Orient Railway Company et al., Defendants, being Equity Consolidated Cause No. 1262. In subdivision 18 of said decree it was provided:
“ ‘That the purchaser shall have the option to be exercised within six months from and after the sale of adopting or repudiating any or all executory contracts of the railway company.’
“You are further advised that The Kansas City, Mexico & Orient Railway [road] Company was the purchaser under said decree and ac-acquired the said property subject to and governed by the said provision in said decree as well as each and all of the other provisions in said decree contained.
“Within the provisions of said decree and within the time therein specified The Kansas City, Mexico & Orient Railroad Company hereby gives notice of its intention to cancel, and the cancellation or repudiation of the certain operating agreement between the above-named Companies and The Kansas City, Mexico & Orient Railway Company covering the Union Station and properties of the Wichita Union Terminal Railway Company at Wichita, Kansas, as well as all other contracts undertaking promises or agreements in connection with said Union Station or the operation thereof, the said cancellation to take effect upon the service of this notice or under and pursuant to such arrangements as the parties may mutually agree upon.
“This notice is served pursuant to the action of the proper officers and authorities of The Kansas City, Mexico & Orient Railroad Company heretofore duly taken.”
On December 18, 1914, a draft made upon the Orient Rail- - road Company by the treasurer of the terminal company for.
The judgment is affirmed.