The Leavenworth weekly times. [volume], January 23, 1879, Image 1

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THE LEAVENWORTH WEEKLY TIMES
LEAVENWORTH KANSAS,, THURSDAY JANUARY 23, 1879.
NUMBER 1251.
Con.tnrati.tr FstabI-b I
0 R. Anthony January 1B6t i
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THUESDAY. JANUARY 23. 1879.
AN ml'OBIAMT CASE.
The case of Ryan vs. The Leavenworth,
Atchison & Northwestern Railroad Compa
ny, is one of very great importance, not on
ly locally but generally, for the principle
involved is one that directly affects the in
terests of stockholder, in hundreds of other
corporations, whose interests have been se
questered by the controlling power of the
corporation. It baa become an universal
rule amors corporation in thia country,
that "the big fish eat the little ones," and
the tendency of this decision is in the di
rection cf giving the little fish a chance to
recover their right.
We publish in full this morning the
Plaintiffs brief, in the Supreme Court, be
cause it rata forth fully and distinctly the
prhole ground of action, and all the impor
tant circumstances of the case. It is a clear
and concise statement, and will give the
reader a correct idea of the questions in
volved. It sets forth that the defendants,
who owned a controlling interest in the
company, made certain contracts with cer
tain of their own number, whereby the in
terests of otherstockholders were sacrificed.
The opinion of the Supreme Court of the
Srate, as will be seen by the syllabus pub
lished a few days ago, is to the effect that
euch contracts are fraudulent and void, and
that the stockholders who weie
thus ''frozen out" have a right to sne for
the recovery of their proportionate share
of the profits of all such contracts. Suits
may now be instituted by Ryan, and all
other stock holder of the minority who
feel to disposed, for the recovery of their in
terests sacrificed under the contracts above
referred to. If the city and county of
Leavenworth had not piven away the half
million of stock they held in the Missouri
River Boad, they might now come in for an
equitable share of the profits under these
contracts; they would become the sole
owners of the Diminished Delaware Be
serve, and would come in for the
larger share of all other profits
growing out of the contracts for
building the road. This sustains tht posi
tion we have always held on this question
The positions we have always taken, in all
the speeches and articles wo have ever
made or written on this subject, are dis
tinctly and positively affirmed by the opin
ion of the Supremo Court delivered by the
Chief Justice, with the concurrence of all
the oilier justices and if, as we have said
above, the interests of the city and county
had not been bartered away, we might now
recover enough to pay nearly all our pub
lic debt
the nniTH raniLY ni'iiraB.'
Our Legislature is not blessed with the
usual number of Smiths. There are thtee
Andersons, three Martina and three Waites
and only two Smiths, two Clarkes, two
Lowes, two Hameltons, two Wilsons and
our two Gables in the House. The Smiths
will now be compelled to take back seats.
TaPLOFTlCAL.
Ot course Governor St. John has a right to
dispense his official favors aa sal's bis fancy,
but he will probably realize sooner or later
that It don't pay to reward enemies and pun
ish friends. Kansas Ctty vaL
There seems to be no question of the fact
that the sudden altitude attained by Gov.
St. John has afiected his brain and his eye
right to that extent that he'sees double.
While in this toploftical condition he is in
constant danger of breaking hi neck.
There is only one hope for him time.
Two years hence, he will descend to his
natural level.
XVTON VS. ANNO!.
The interview on the local page of The
Times yesterday mo ting between Col.
Isaac E. Eaton and Mr John Hannon was
published without our ;owkdge or con
sent. It was slipped in after the editorial
force had gone home. It reads as though
Mr. Hannon had written it If such is the
case we are verv sorry. We would much
rather see peace and harmony among our
Democratic friend'", and regret to see any
ill feeling exist between Col. Eaton and Mr.
Hannon. The latter is the younger of the
two in age and experience, and should no
have any opinion of his own when the
friend ot Bill Allen and George Pendleton
speaks.
BL'LLDOZIAG SUCCESSFCI-.
The facts regarding the delivery of the
Governor's message to the Kansas City
Times show that the first copy was given to
their agent Pangborn. Other papers had
hour after hour asked for a copy but failed
to get one. The Leavenworth Times never
secured one from him. These facts seem
to warrant the conclnsisn that the Governor
did not have sufficient confidence in his own
integrity to withstand the dreaded assaults
of Pangborn and his paper. The attempts
of the Kansas City Timet heretofore in its
bulldozing have uniformly been successful.
They can now reckon the Governor as an
additional victim. Assenting to their de
mands and begging to be let alone. Should
we want aBy favors from the Governor
during the next two years, we will make
the application through Pangborn and our
Kansas City namesake, as that now seems
to be the quickest way to obtain the Gov
ernor's car.
A SUCCESSFUL RAILROAD ATIt
REV. George T. Anthony is now out of office
-, for the first time in over twelve years, and
there is some'little curiosity aa to what he
will da for a livelihood. He needn't
be long out of employment He is a TfJu
ahle man to any railroad company that has
a questionable job on hand, and there are a
number of them that ought to be willing to
give him work. The opinion of the Su
preme Court of the State in the case of
Ryan vs. The Leavenworth, Atchison A
Northwestern Kailroad Company, shows
that if Leavenworth city and county had
not given away their interests in the Mis.
souri River Bailroad, they might now re
cover enough to pay their debts, thus end
ing at once the troublesome bond question
and relieving our people of the burden of
taxation under which they are struggling.
George T. was the active agent of the rail
road company in working through the
scheme by which the city and county were
made to barter away their rights in the
premises, and thus rendered service that
" every railroad company would be willing
to reward very liberally.
In the case ot the L. L. 4 G. road, also,
he, as Governor of the State,- by sacrificing
the interests of the people rendered ser
vices to the company which saved it hun-
, dreds of thousands of dollars, at the ex-
"'' v pens of the public interest, and enabled it
to violate its contract with the State, tad
the conditions of its charter, with impunity.
Such service ought to command a liberal
reward, wherever there is questionable
work to be done. No wonder be "got mad"
when John Martin said La waa going to
Chicago. He doesn't seed to more away.
There's always a deasaad for each talent
a his, "out watt,"
E3URKS I-ROn A DEM OCKVT.
Editor Times: I notice by dispatches
in the Chicago Tribune and St Louis Gfeos
Democrai that the Leavenworth county del
egation are divided between Mr. Anthony
and Mr. Ingalls. This may be true aa far
as it goes, but the writer should have men
tioned that four of them 'will vote for some
Democrat either Mr. Fenlon, Mr. Goodin
or Mr. Blair. When it orcei to the selec
ion of a United States Senator thre can bj
no compromise. It is not a matter of lo
cality, not a matter of iersonal like or dis
like, but it is a matter of principle, and
where principle is involved the people de
mand and expect a fair, straight square
vote for the representatives of that idea.
There can be nothing more edifying than
the spectacle of a little minority
standing up bravely, in the face of an over
whelming majority and voting for the rep
resentative of thefrparty. To class either
of the Gables from this county aa voting
for either Mr. Anthony or Mr. Ingalls is to
assail the character of the sons of one of
the staun'-- i and noblest Democrats who
ever live a Kansas. Fio-n their pledge,
from their character and from their antece
dents, I should say, Mr. Editor, that Mr.
Beven, Mr. Frank Gable, Mr. Tom Gable
and Mr. Henderson will vote for a man
who is an exponent of true, honest Dem
ocracy, and not for a man who has publicly
declared that had he the power he would
sink every Democrat in hell.
Democrat.
C. K. w.pTitiTrKon-THE I'KO.
M.E TALKI.Mi.
Beloit, Kak., Jan , 1S79.
My Dear Times:
Being of the opinion that the time-table
on the Central Branch road hareen changed
for the benefit of Atchison storekeepers and
hotel proprietors, I send you the accompa
nying communication with a view of calling
public attention to it.
I am persuaded that' the little one horse
railroad corporation and the town of Atchi
son cannot stand fair and honorable coaape
tion. The sooner the first is dissolved and
the latter deserted, the better. Northern
and northwestern Kansas cannot be com
pelled to pay tribute to either.
ery Kespecttully, -V.
CHANGES OF TIME OX THE CETRA1. BRANCH.
Atchison Champion: A new time table went
Into effect on lue (.'antral Uracil Railroad yes
terday. The express and mall tra n now
leaves tbeclty al 11:23 a in., and arrives Ht
Brloll at S:K p. m Iteturnlng.lt leaves Be
loIlat&2ua in., and arrive- ut Atchison at
2:2) p. ra. The night lreizlit leave at 5:19 i.
m. The freight express leave this city at iiH
p m. The local freight leave at 11:25 a. in
This Is five trains nun iiavencer jm.l four
freight neh day. The pixienger train ar
rives at Washington at -V) p. m and leaves
that place al 415 a. m. The Republican Val
ley accommodation leaves Concoidla for
candla.it 8:00 a. m ano arrlvexRt S:5 a.
m.. Returning, leaves tc3ndK at 3:15 I. m.
Beloit, Januaryl", 1S79.
Editor Times : The above iiem was
clipped from your edition of the loth insL
received th"a morning, but which had it
not been for the change of time chronicled
above, would have been at hand yesterday
morning. The change of time to which the
article refer, you will observe, delays the
delivering of your paper to the subscribers
just twenty four hours, and hence so far as
world's news is concerned, Beloit by reason
of the judicious change of time made by
the superior wisdom of the managers of a
small periodical railroad, is thrust one day
farther from communcation with the "rest
of mankind." News now a days is indis
pensible, and it is a necessity which
the people, it is hoped, will not
suffer to be withheld simply to gratify the
whims of the paid officers of a corporation.
Not only are we deprived of your valuable
paper for twenty-four hours, but all the
mail matter from the east, b way of Kan
sas City is delaved; travel is interrupted
and consequently the entire business of
northern Kansas is thrown into confusion.
Why should a traveler fromthe east be com
pelled to lay over an entire day at Atchi
son? Why should the reading public who
are so interested in such enterprising pa
pers as yours, be deprived of their news,
and be compelled to subscribe to Atchison
journals? The change was not rendered
necessary in order to mane con
nection with through lines east, and
ii surely could not have been made
to meet the demands of the people west of
this place, for their mails are distributed
at lhs point and they therefore sufler the
same deprivation that we do. The tax
payers along the line of this little road were
induced to assume a burden of taxation to
pay at least one half the expense of build
ing it under the assurance that the accom
modations they would enjoy would more
than compensate them for the outlay.
Where does the recompence show itself?
If five cents per mile fare and more than
double the freight rates charged by eastern
roads, and twenty-four hours delay in their
mail and travel is a comensation, then
their liberality has been fully appreciated.
Beloit.
AOENERATIOX OF VIPER.
EDrroE Times: I noticed in the issues
of your papers of last week a lady brings
to task one of our respected and distinguish
ed divines. And in your Sunday morning's
issue a review of the sermon of another
divine no less respected than the
former
and perhaps more distinguished for fear
lessly declaring the truths of God's word.
Now, allow me to say that the difference
betwixt these divines, or rather the points
they are attacked, are these : One lays him
self open by following after the husks of the
world and "turning aside by the flocks of
the companions." The other by fearlessly
declaring the truths contained in God's
immutable word and in the defense of Hi,
holy Sabbath. I am reminded of the story
of a shepherd boy who gave battle to a proud
Philistine who defied the armies of the
living God. He went forth with his eling
in hand and under the direction and by
the aid of the eternal Jahova, the stone
directed by an unerring hand, hits the proud
Goliah and he is made to bite the dust
and the sword that he prided himself in
and depended upon, was the instrument
used by David to sever the bead from the
proud Goliah, who, a lew minutes before,
breathed out his vile threatenings against
the people of God. Now, Mr. Editor, I do
not wish to intrude upon thecolumna of your
paper by a lengthy discussion, but will
quote a few passages from God's word
which are much more potent than a. y ar
gument that I could produce. We are
plainly told in his word that connot lie:
"If the world hate you ; you know that it
hated me before it hated you." "If you
were of the world the world would love its
osm." "Know you not that the friendship
of the world is enmity with God ; whoso
ever therefore will be a friend of the world
! the enemy of God." "Marvel not my
brethren If the world hale you." He who
waa holy, harmless, and undehled says
"they hated me without a cause." You
charge MrSpenrer with holding narrow and
contracted views and make light of his
denomination because they are not as nu
merous aa some others who conform more
to the world and the follies of the present
age; this is not a good argument Scrip
ture teaches that strait is the gate and nar
row is the way which leadeth unto life and
few there be that find it. "Many are cal.ed
hut few are chosen." 1 believe it was Fred
Douglass that said one with God is a ma
jority, I say to Mr. Spencer you should
feel encouraged in the defense of Gods holy
Kihhath and in the truths you uttered.
There is no better evidence that your dis
course has not been as water spilt upon the
rmnnd that cannot be cathered than for it
tr. call forth the denunciations of the
Mtilar ureas whose interest and aim is to
minister to the taste of the people
A greater than Mr. Spencer siood upon
Mars Hill in the midst of a gay and frivol
ous city and boldly entreated the proud
ana naugniy cioics 10 rciwuh ul wwi nxi..
edneas and foretold of the comine of a ter
rible retribution. The learned philosophers
derided his doctrine, and afterwards he was
heard to say his preaching "was to the Jew
a stumbling block and unto the Greek fool
ishness." Fear not the reproaches of men, Mr.
Spencer. Lovejoy lost his friends and his
life in the cause of freedom. You may lose
the friendship and gain the hatred of the
world by declaring truths that others neg
lect to proclaim. But remember you are a
minister of GoJ, an embassador of Christ;
go on in thia good work and "fear not the
reproaches of men, neither be afraid of their
revilinga." Yon have the promise "lo, I
am with you, even unto the end of the
world." "Your road through life may be
roogh, aad your preaching distasteful to
tba bbsb of the woild Let your motto be.
"Jete live the life of the Christian, that
my last end may be as his." And if at the
end ot your.ministry you can say as your
brother who'etood on Mars Hill. "I have
fought a good fight, I have finished my
course, I have kept the faith: henceforth
there is laid ud for me a crown of right
eousnesa which the Lord, the righteous
Jndce, fhillgivems at that day," you
will have no caufe to fear a wicked and un
friendly eeneration nor regiet the sermon
referred to in The Times. C.
GOTOTIIEHOOTOFTIIK JIATTER.
Editor Times : The pastors of our city
in their various sermons upon (he duty of
Sabbath observance, do not teem to under'
stand that the indirect beginning of this gen
eral want of respect for the sacredcess of that
day, was made by the Christians themselves
when they changed the day from the one
which " God blessed and sanctified" as a
day of rest, to one of the days which God
had declared by direct command should be
a working day, (The duty of working six
days in the week being as vital as that of
resting on the Sabbath or the seventh,) by
this change losing its significance of lest.
We look vainly through the Old and New
testament, for any authority to sustain this
innovation. We have simply a custom
against the direct command of Jehi ah.
Paul, while in Antioch, lone after the
resurrection, held services upon the Hebrew
Sabbath. At Corinth he labored at tent
making through the week, probably the
first day included, and reasoned in the
synagogue every Sabbath persuading the
Jews and ureeks. it was on the baDDam
that Lvdia and her household were con
verted; we might just as well change
Christmas to the 14th of February, and the
Fourth of July to Jhe 1st ot April, and
then complain that our days are cot re'
spected, as to do as these gentlemen have
done. Christmas and Fourth of July are
but human institution, but the Sabbath
the day blest of Hetven mad.! memorable
by divine rest, after the fiat of creative
power, given with the authority ot the di
vine signature on tables of stone, that it
might be as enduring a? the rock-ribbed
earth itself, is changed to another day. In
fact, asking God to let us encore our own
time and denouncing those who do not
scree with us, when we have no record of
His consenting to change, is ibis consis:
ency. S.
A Small Attack on "tr. Iag-nlls.
K.Y. Tribune
Washinoton, Januiry 13. Senator In
galls, of Kansa, whose term of office will
expire next March, is just now the subject
of asomewhat bitter personal attack from
his political oponects, the object of which
is to defeat his re-election to the Senate.
A letter written by him in 1S76 to Major
Gale, late Postmaster of Atchison, has
been unearthed and sent to Washington,
whence it has been telegraphed back to
Kansas for publication. In it the Seuator,
after referring to certain financial trans
actions, which are not explained in the let
ter, says :
From what you last told me, I supposed
everything had been arranged. I cannot
be annoyed in this way any longer, and if
you don't settle with Mr. Martin by March
1st to his entire satisfaction, and monthly
thereafter as stipulated, I shall be com
pelled to try and find eomtbody in your
place who will.
The worst possible construction is, of
course, placed upon these words, but, as
explained by the Senator, the transaction
turns, out to have been innocent enough.
When Senator Ingalls was elected, Col.
Martin was Postmaster at Atchison with
something more than a year to elapse before
the expiration of bis term of cilice. He
was al.-o editor of a Republican paper, and
his father performed the duties of Post
master. Senator Ingalls was favorable to
the renomination of Col. Martin to another
term of PoMciaster, and was about to use
bis influence to this end, but was informed
by the latter that he did not wish to hold
the office longer lhan till the end of his
term. Thereupon the iffluonce of Senator
Ingalls was sought and ol't lined in favor of
Maj. Gale. When Col. Manin's term was
near its end, and after Senator Ingalls had
pledged his efforts to Maj Gale, he receiv
ed a petition signed by many of the oldest
and most respectable citizens of Atchison,
in behalf of the appoin.ment of Mr. Mar
tin, the elder, to the position of Postmaster.
The Senators position was somewhat em
barrassing, and on his firt virit to Atchi
son he brought all parlies together and had
a talk about the matter. At this meeting
it was agreed that the Senator should exert
himself, as he had already eureed to, to se
cure the appointment of Maj. Gale, and the
latter promised to appoint Mr. Mar
tin the eMer, to a clerkship
in the cilice. Maj. Gale also
agreed lo purchase from Mr. Martin, the
Yale lock boxes and other necessary fix
tures of the Post Cffice, and to give his
note, payable in monthly installments with
interest. This programme was carried out
as far as the appointments were concerned;
but after a few months of the new regime
some trouble arose in the office, and Major
Gale declared that he could not work har
moniously with Mr. Martin. The note had
not and has not yet been paid. Mr. Mar
tin's friends appealed in his behalf to Sen
tor Ingalls, and the result was the letter
that now comes to light
Senator Ingalls says ro that payment of
money to himself or to Col. Martin or to
any one else waa involved, except to Mr.
Martin the elder, and lo him only for value
received. He says that was there nothing in
the matter which, so far as he is concerned,
might not have been known to the world at
the time; but he admits that in the light of
subsequent events it was injudicious to have
written a letter on the subject which could
have been misinterpreted in this way.
lie u a. Skunk, stare.
Holton Recorder. Jan. 1S-1
The Leavenworth Times and Public its
are at it again. For some time the Times
has been treating the P.aa with silent con
tempt. The PrtM, a few days ago, contain
ed an article charging Col. Anthony with
paying Senator Ingalls $2,000. for his ap
pointment as postmaster of Leavenworth.
The Col. indicnantlr denied the outrage
ous and infamous charge, and proceeds to
deliver such a broadside into the editor of
the JVJ that, unless he is really the
"skunk" that Anthony ssyB hi is, he will
probably sell out his paper and retire to
obscurity.
Tun nanghther, the Wile and Tloibar
71 ore Tnau tbe Princes.
New York Ledger.l
Even in places humanity rises above
rank. We have seldom read a more touch
ing piiIopv than that at once so brief and
so comprehensive pronounced i by Dean
Stanley on the Princess Alice : "She first
ncvam known to the public" he said,
"through her noble conduct by the death
bed of her father: and she has now fallen
a sacrifice to the devoted care with which
she nursed her husband and her children."
Most commendable, most sublime, of all
thimga in her life to be spoken of after her
death, the Dean of Wesitninster holds to
be the faithful performance of such duties
.. WnlveH nnon the Princess in common
with the humblest woman in the land.
Every right-thinking man will agree with
him.
Doca't Dear the Alliance.
I Kansas City Tl mi s 1
But what surprises us is that the Leaven
worth Times should get so frustrated over
this biennial "scoop."- Not content with
abusing the jTtme,ournamesake vindictive
ly reads Governor St. John out of -the Re
publican party for preferring a Democratic
tJ a Republican newspaper. He (the Leav
enworth editor) detects a montrous politi
cal conspiracy between Governor St. John,
ex-Governor Anthony and the Kansas
Oty Times, and mercilessly shows up the
"tripartite alliance," and tries to ruin the
whole thing by exposure. The Times has
no apology to oiler lor this misalliance.
If ths accusation is true, Jit ex
hibits the good sense of Anthony and St.
John in pledging their political -fealty
where it will do them the most good. If
Governor St. John is to be driven out of
his own party for doing what nearly all of
his predecessors have done, and what all of
his successors will inevitably do, we shall
welcome him to the ranks of the Democra
cy and support him as long as he is true to
the rjartv standard. It is with no common
pride that we point to the capture of a Kan
sas Governor before be haa been a week in
office, and that, according to the Leaven
worth Tntzs, we shall soon be able to re-
nnl ti faiihfnl TWmnrnlie service of bis
predecessor by Bending him to the TJonited
6tat8 Senate.
IX THE SCPBEXECOCMT OF KANSAS.
Matthew Byan, et a!., Plaintiffs in error vs.
The f:avenworth, Atchison & North
western Railway Company, t al., De
fecdants in error.
statement oe the case.
The plaintiffs in error, brought their ac
tion against defendants in error, in the Dis
trict Court of Leavenworth County. In
this action the defendants in error, appear
ed and filed demurrers to the petition,
which were sustained by the Court below.
From the order sustaining the demurrers
the plaintiffs bring the case to this Court.
Tbe several demurrers raise the same
poinur and are expressed in the same
language. They are on the grounds:
That plaintiff have not capacity to sue.
That there is defect of parties, plaintiff
and defendant.
That tt-e several causes of action are im
properly joined.
That the petition does not state facts suf
ficient to constitute a cause of action.
It will be necessary, in order to discuss
the points raised by this demurrer, to ex
amine the petition critically and carefully
and it will probably facilitate such exami
nation to make in briefer form, an analysis
of its statements and allegation.
It is said in the petition.
That a company called the Missouri Riv
er Railroad Co., was incorporated under
the general laws of . the State, February
17th, 1SG4, to build and operate a road
from the terminus of the Missouri Pacific
road, at the State Line in Wy andottee coun
ty, to Leaven or th and thence to Fort
Leavenworth. The capital Stock was fixed
at 5200.000.
On April 6th, 1805, a subscription to the
stock ol the Company was opened and $45,'
000 was subscribed. Of this sum $970 was
paid at the time and nothing haa ever been
paid thereon since.
The list of subscribers and amounts sub
scribed and paid, a annexed aa an exhibit
to the petition. (Ex. No. 1
May 8, 16C5, Leonard T. Smith, Thomas
U. Stevens, Emanuel il. umber, John r.
Richard, C. B. Brace, J. C. Stone, A Mc
Cauley, C. S. Stettauer, C Blake, Lucien
Scott and E. II. Marsh, were chosen direc
tors of tbe Company. Record p 4.
The same day Leonard T. Smith, was
elected President, Thoa. C. Stevens, Vice
President, J. F. Richards, Secretary and E.
H. Gruber, Treasurer.
On May 7tb, 1SC5, the City of Leaven
worth, under authority of the statute au
thorizing such subscription and an election
held in imrsurance of the statue, subscrib
ed 250,000 to the stock of this company.
il.iy 13th. 1S65 the authorized stock of
the Company was increased to 51.000,000.
June 20th, 1S55, the city issaed $250,000
in bonds, paid its subscription and receiv
ed its sink certificate. Record page 5.
In July 1S0-5, the county of Leavenworth,
under authority of the same statute and a
like election, subscribed ?250,C00 more to
the Mock of the company, issued its bonds,
paid the subscription and received iU
stock certificates.
Soon after all the individual subscribers.
except A. Caldwell, L. T. h-'inith, Lucien
Scott, Thos. Carney, Thos. C. Stevens and
E. 11. uruoer. released to the Uunpany
their right to stock which waa accepted by
the Company and their connection with it
ceaed. Record p G.
No further or other payments on account
of stock subscription were ever made.
Alter the city and county had paid lor
their stock the road waa built to far as it
ever waa built, at all,by an association,
composed of the following persons, defen
dants in this action viz : .
Lf-onard T. Smith. Thomas A. Scott, John
D. Perry, George R Taylor, E. IL Gruber,
Thomas Carney, Thomas L. Price, D. R.
Garrison, Charles It. Peck, Oliver A. Hart,
James Puffy, A. Caldwell, Lucien Scott,
Levi Wilson and -Merritt ll. insley. liecord
p. 7.
They first screed among themselves, to
build the road on these terms. They were
to receive :
The bonds issued by the city and those
issued by the county $500,000 in all.
Of these bonds 300,000 must be cashed
at par by c'tizers of Leavenworth,
They must receive $700,000 in st
?700.000instockof the
Railroad Co.
All $500,000 in Iwnda of the Company to
be secured by first mortgage on all its prop
erty. Dip road when completed to De leased to
the Missouri Pacific Company, most of
whose officers and directors, with other of
ficers of prominent railroads were engaged
in the association.
These men formed a co-partnership to
engage in tbe work of building this railraod
on the terms stated above and to control
and manage it aftei- it was built. Record
p. 8.
In persuance of the agreement, Thomas
A. Scott and A. Caldwell appeared before
the board of directors and offered, on be
half of themselves and their associates,
whose names were concealed, to build tbe
road on the terms agreed on among the co
partners. At tbe meetinc a bare quorum was present
and two of the quorum, Smith and Gruber,
the President and Treasurer ol tne com
pany, were at the same time members of
the" co-partnership and among tbe un
named "asociates," for whom Scott made
the proposal.
The Itoard of Directors at said meeting,
referred the matter to Smith the President,
who waa a member of the firm, and author
ized him to make a contract for building
the road.
He made the contract.
To conceal the nature of the transaction
it was agreed that the contract should be
in tl e name of A. Caldwell and that the
others should be secret partners with him
and their interest concealed lrom public
knowledge.
The name "A. Caldwell-' was maue me
firm name and by that name the contract,
between the firm and Smith, one of its
members, acting as President and agent,
appointed by the directors to contract for
the corporations, was executed.
Tbe terms were those before agreed on
by the partners and proposed to the direc
tors by Scott. Record pp. 6 and 10.
The plaintiff's charge that this partner
ship was formed and this contract made,
with intent by aid ot the members o: ine
firm who were directors, and of such as
should become directors and officers of tbe
company, to render the city and county
stock valueless, to fraudulently acquire its
value for the members of the firm and to
acquire for the members of the firm all the
property cf the Railroad Co., and to place
the railroad when built, under the control
of the Missouri Pacific Company, a foreign
corporation. Record p. 10.
After the partnership wss formed and be
fore the contract aforesaid, was made, cer
tain persona who were responsible and able
to give good security for the performance of
their contract made an offer in writing to
do the clearing, grubbing, grading, mason
ry, and track-laying of the entire road and
to furnish materials therefor for $300,000.
They were willing to enter into such con
tract and would have done it it the same
had been awarded to them.
Had this been done, the whole c"t of
the road would cot have exceeded $13,000
per mile.
This was well-known to Smith and Gru
ber, the President and Treasurer, to
whom tbe oner was made, but they in
tending to make the fraudulent con
tract with their partners, before stated
refused to accept the bid, or lay it before
the Board of Directors. Record p. il.
After the information of tbe partnership
and before the land was acquired, hereinaf
ter referred to Levi Wilson, D. K. Hoots
and George Partridge, were by agreement
with the partners taken into tbe firm. They
had full knowledge of all the facts charged
against the firm and are made co-defendants.
Lucien Scott holds his share in the firm
nartlv in trust for Thos. Carney, who is al
so made a defendant. Record page 12.
To conceal the character of the transac
tion, Caldwell transferred the contract made
bv him. to D. R. Garrison & Co., and un-
dr the latter name, the work was done.
This transfer was merely colorable; the
work was done, expenses borne and profits
divided by Caldwell and his associates and
the name D. R. Garrison & Co., waa only
another name for the original firm.
Before anvthing had been done in per
formance of the contract on tbe part of the
firm. $700,000 in stock of the Company was
issued to Caldwell and his associates, with
out consideration. Record p. 13.
This stock was issued before tbe January
election in 1866 and at that election waa
voted on. and Caldwell aad six of hiaco-
I partners making a majority, ol toe rJoard
I were thus chosen directors aad a amajority
' of th. board have ever since beem ismimi 1 1
of the film and the firm have ever since
controlled the corporation; and Smith was
reelected President and haa ever since held
that office. Record p. 14.
At the last election held before the peti
tion waa filed, eight of the eleven directors,
were chosen from members of the firm and
the three others are not stockholders in tbe
company.
About January 1st, 1S66, before any part
of the contract bad been performed by
Caldwell and bis associates, the bonds of
the Company to the amount of $500,000
were issued to them and secured by a first
mortgage on the road and all the property
of the company, on hand or to be acquired.
Caldwell being trustee in the mortgage.
Record pp. 15 and 16.
A copy of the mortgage is made an ex
hibit and attached to the petition. Exhibit
So. 2.
After Caldwell and his associates had
thus obtained control of the Company and
become its directors, obtained the stock and
mortgage bonds, they proceeded to build a
railroad from Wyandotte to the junction of
the Kansas Pacific railroad, south of Leav
enworth, about nineteen miles in length.
From Wyandotte to the State Lice2i
miles and from the Kansas Pacific junction
to Leavenworth about 4 miles a third rail
was put on the track of the Kansas Pacific
road to accommodate the Missouri Pacific
gauge. Plaintiffs do not know who paid
for it, but the work waa done by Garrison,
who waa building the western end of the
Missouri Pacific road.
The firm also built a mile of road from
the freight depot in Leavenworth, up to the
city and built a round house on land not
belonging to the Missouri River R. R. Co.,
which has been since used by tba Kansas
Pacific and Missouri Pacific companies
jointly.
The third rail baa been since removed,
the Missouri Pacific company having
changed its gauge in 1863.
Caldwell and his associates did not build
the road of the Missouri River Company
to either terminus, they stopped 21 miles
north of the southern andeeven miles south
of the northern termiaus.
Th whole cost of the road did not ex
ceed $500,000. Record pp. 10, 17, 18.
Since July 1, 1866, the road of this Com
pany, haa been leased to the Missouri Pa
cific Company.
The rental was at first fixed at 45 per
cent, of the gross earnings, hut in Septem
ber, 1870, it was increased by more than 40
per cent of the original amount of the rent.
Record p, 18.
During 1SGC, negotations were
pending, for the purchase of
a tract of land, 'known as the Delaware
Diminished Reserve, containing over 92,
000 acres of land.
These negotations terminated in a treaty,
by which the Indians agreed to cell these
lands at a minimum price of $2 50 per acre
and the R. R. Co. to have the pre-emption
right to purchase The treaty waa ratified
Aug. 10th, 1866.
By its terms the Secretary of the Inte
rior waa authorizedto sell the lands; required
to give noticeto the Missouri River R. R.
Co., of the fact that they were for sale,
within 30 days after the ratification and
tbe Railroad Company waa to have tbo ex
clusive right to purchase the same on giv
ing notice to the Secretary within 20 days
receiving notice, that it elected to do so.
The notice was riven and the Company
elected to make the purchase and gave the J
return notice within tbe time required by
the treaty. The sale was made at $2,50
per acre and improvements to be. appraised
and paid for and contract for sale and pur
chase executed by the Secretary and Rail
road Company and security given by tbe
latter for performance of the contract. Rec
ord pp 18, 19, 20.
The contract is set out in full in the pe
tition and vesta an equitable right to the
land in tbe Kailroad Company. Record
pp, 21 to 21.
Smith with intent to deprive the com
pany of their purchase and obtain the same
for the partnership, made a conveyance of
these lands to Caldwell in the name of the
Company and under its seal, without au
thority from tbe Company and without
consideration, and aa president, requested
the Secretary of the Interiosato issue the
patent to Caldwell. RecorAsge 85.
Caldwell and his partners then bad on
hand $433,000 at least, of funds belong in
equity to the Railroad Company as follows:
Proceeds of city and county
bonds cashed in Leavenworth
by citizen at par $360,000
$140,000, same worth 80c.... $112,000
$500,000 first mortgage bonds,
worth 80c $400,000
Rent from July 1865 to July
ISoo to July 1867, at $33,000
$06,000
$938,000
Expended in construction, not
more than $500,000
$433,000
Coldwell paid for these lands out of these
funds, the amount paid being not more than
$250,000 and on this payment tho Secre
tary mado the patent to Caldwell. Record
pp. 27, 41.
The lands are described in full in the pe
tition. They amount to 93,593 33-100
acres snd were then worth $14 per sere.
Record pp. 27.31.
Plaintiffs charge thatCaldwell took the
lands as trustee in equity, for the Railroad
Company and that all of them held by him
and his associates have been since and now
are so held. P. 32.
Caldwell conveyed 8,023 acres of these
lands to Shoemaker,SMiller & Cowho were
parters in hia original firm for $165,065.40,
and divided the money among the partners
to the original firm. "P. 32.
The remainder of the lands were divided
into thirteen shares and the shares drawn
out and a division made among tbe mem
bers of the original firm. Caldwell and
wife executing conveyances to tbe several
partners of their respective shares. P. 32.
A map of these lands is annexed as an
exhibit to the petition. Exhibit No. 4.
Some of these lands have been sold by
the partners to other persons, part for cash,
part with security for deferred payments
divided. Plaintiffs cannot state how much
haa been sold, how much realized, what se
curities are held, or what portion cf the
land is still unsold. P. 33.
Although large sums have been realized
in the business of the Comuany from rents
and other sourer, including the amounts
realized from the proceedings above stated,
no dividends have been declared or piofit
among the stockholders, but all have been
siezed and converted by the Directors, who
are members ot tbe hrm, to the use ol tbe
firm. P. 34.
On March 28. 186S, the Leavenworth,
Atchison & Northwest, rn Railroad Compa
ny was incorporated, to build a road from
Leavenworth to Atchison and thence north
west. The capital stock was fixed at $500,
000 and afterward increased to $600,000.
P.S4.
Aid was sought for this Company from
the city and county of Leavenworth and it
was proposed to assign to thia Company the
stock held by the city and county in the
Missouri River R. R. Co.
Caldwell and his asstciates, ascertaining
that it was probable that this would be
done, for the purpose of controlling the
stock, so to be assigned and preventing in
vestigation into their management of the
Missouri River Company and to avoid
being called to account therefor, they pro
posed to the corporators that they would
take the stock and build the road, and pro
posed to the plaintiffs to join with them in
subscribing to the stock and building the
road. Thia offer wss made by Caldwell,
Smith, Wilson and Garrison for themselves
and five unnamed, and to plaintiffs un
known, associates. P. 35.
Pending these investigation., Garrison
came to Leavenworth and on behalf of tbe
firm, represented that be and the other co
partners would be able to cause the mort
gage bonds to be issued by tbe L. A. A N
W. R. R. Company to furnish enough
funds to build tbe road. That they would
make the stock of the Missouri River Com-
Kny worth at least fifty cents on the dot
r and that it would not be necessary for
the Leavenworth, Atchison aad Northwes
tern stockholders to pay their stock in full
in order to get the road built. These rep
resentations were made to induce the incor
porators to let the firm take tbe stock aad
to induce tbe plain tiff to join with tbe firm
in taking it. These promises were never
kept. P. 36.
The plaintiffs had bo reason to disbe
lieve these statements or to oppose Cald
well, Garrison and their associates bad
been guilty of, or contemplated any fraud
or cooeealmeot They relied on these
tatemeats asd in coax q peace joiaed with
Caldwell. CHrriaoa aad taatr aaaocut'e la
mtiactbessbscriptioe. Tha stock
divided into tnaeteca warts a
is that roporUoa by the differ
who catered into the agreement. The five
parts to be taken by the unnamed associ
ates of Caldwell and Garrison were taken
by pertcBi who subscribed for and after
wards transferred their stock to defendants
Peck, Hart, Harrison, Garrison and Rhea,
except that the subscription of E A. Rich
ardson, which was made for the benefit of
Harrison, waa never transferred, but he
holds it in trust for Harrison. P. 37.
After the subscription and before the
election of Directors, Caldwell and his as
sociates thus got possession of a majority
of the stock for the purpose of carrying out
their intended fraud and concealment, they
elected the Directors, a majority of whom
were members of the firm, made Caldwell
President ai.d have ever since controlled
the Company, and the plaintiffs hare been
powerless in the Company. P. 23.
Eleven ninteenths (11-19) of the stock is
held by Caldwell and his associates. Fight
nineteenths (8-19) by others in the follow
ing proportions :
Plaintiff Ryan 1-19 par value $25,600.
Flaiutiff Eaves 2-19 par value $51,000.
Plaintiff Kuhn of 1-19 par Talue $12,
750. D. Shire of 1-19 or 1571 shares ; C. B.
Brace of 1-19 or 157J shares; Rhea 1-19
or 315 shares ; Harriaon 1-19 or 315 shares.
Harrison is dead and defendant Harrison
ia hia executor. These parties have refused
to join plaintiffs in this suit and are there
fore made defendants. P. 40.
On December 26th, 1SC3, the city of
Leavenworth pursuant to a vote, authoriz
ing the transfer, disposed of its stock in the
Missouri River Company to the Leaven
worth, Atchison & Northwestern Company
and on the same day and by like authority
the county of Leavenworth mde a similar
disposition of its stxk. The Leave i worth,
Atchison & Northwestern Railroad Com
pany tbua became the holder of stock in
the Missouri River Company, of the par
value of $500,000. P. 40, 41.
Caldwell and hia associates had already
obtained control of the L., A. & N. W
Company; they at once fraudulently sur
rendered thia stock to Smith and the
Directors of the Missouri River Company.
The certificates were canceled and new
certificates issued in place thereof, for
$250,000 to Lucien Scott and $250,000 to
II. L. Newman as trustees.
Newman and Scott paid no considerations
fir theses certificates and they were issued
in lieu of the city and county shares which
had been transferred as above stated.
Newman claims that he holds" hia shires
iutiuat, for the nineteen stockholders of
the L., A. & N. W. Railway Company and
Scott claims to hold hia in trust for that
Company itself. Both refuse to bring suit
or allow the plaintius to bring suit in their
names, to compel Caldwell and his asso
ciates to account.
Scott refuses to allow the plaintiffs to
see or take a copy of the certificates Lisued
to him. Newman haa furnished a copy of
the certificates issued to him, which is an
nexed to the petition aa an exhibit. P. 42
and see exhibit No 3.
Ever since the L., A. & N. W. R. R.
Company wss organized, Caldwell and hia
partners have managed it in their own in
terests, and to prevent themselves from be
ing called upon to account to the Missouri
River Company or to the L., A. & N. W.
Company aa a stobkholder therein, for the
money and property they had obtained by
means of the proceed inga and practices be
fore detailed, and the L, A. & N. W. Co.
aa a corporation ; though requested by the
plaintiffs, haa refused to call them to an
account by suit or otherwise. This refusal
being the result of the control of the part
ners over the latter corporation.
Of the Board of Dircctora in the office
when the bill was filed, seven out of eleven
are members of the firm and one of the
others Martin has a mere nominal in
terest in the concern. He hasbeen kept in
office by the firm, because he ia dependant
upon them. Holds his office in this Com
pany and an office in the Missouri River
Company, by their appointment, and ia
wholly "under their control and will do
whatever they want him to do. P. 43.
During the construction of the L., A. &
2. W., road assessments were made on its
stock to the amount of 80 per cent- of its
par value. On this Ryan haa paid $23,
500, Eavea $47,000, and Kuhn $1,750, and
they hive received cert ifica tea of their etock
aa paid in full.
The L., A. &N. W. road was completed
to Atchison in September 1SC9. It was
operated under that lease until Sept 23,
1S70, Then tho lease waa canceled and a
new one made at $42,500 a year or 45 per
cent, of the gross earnings if exceedinz
that sum. Of this rent $35,000 haa been
applied to pay the interest on the first
mortgage bonds of the Company. The
balance has been paid over to the Directors
who belong to said firm, and kept by them.
P.4L
No dividends have been declared and
profita divided among the stockholders of
the L., A. & '. W. R. R. Co , aa such, nor
have any such profita ever been received by
the plaintiffs.
The plaintiffs charge that if Caldwell
and his partners were compelled to account
for and pay over to the Missouri River IL
R. Company the money and property they
have frauduently acquired and the same
could be equitably distributed, the L-, A.&
'. W. Co., aa stockholders in it and the
plaintiffs as stockholders in the L. A. &
N.W. Co. would receive a large amount of
property equitably belonging to them
and their -.lock would become of par value,
or more, b-t by the fraudulent practices of
Caldwell and his associates, they are una
ble to obtam what is justly due them as
such stockholders, or any dividend on ac
count of such stock, and theirstock is great
ly depreciated below its actual value and
they are unable to dispose of the same at a
tair value and they are unable to realize
any thing like what it h worth, either on it,
or from its sale.
The plaintiffs have sought to obtain
their rights through tbe Company, but
have failed to do so, because Caldwell and
hia associates have control of it and for the
same reason, the Company haa not brought
and will not bring any action against these
parties, which mil be effectual in making
them disgorge. Page 45, 46.
Tbe Miffouii River Company re
fuses to allow these plaintiffs any inspection
of its hooka or papers and the L. A. N.
Wi Co , refuses to allow the attorneys of the
plaintiffs to inspect iU books or to allow
the plaintiffs to make copies therefrom.
Page 48.
The facta charged in this petition aa to
the existence of the partnership between
Caldwell and hia associates, the manner in
which their contract for the Missouri River
R. R. waa obtained ; the issuing to them of
the $700,000 in stock, without the consider
ation in that company or the manner in
which they obtained the Delaware Dimin
ished reserve, nor the manner, purpose or
object with which they became stockhold
ers in the L. A. & N. W. Railroad, nor any
of the facts charged in thebill aa constitu
ting the fraudulent practices of Caldwell
and hia associates, against which relief ia
sought, by any of the plaintiffs before the
year 1872, when they werebrought out, in
Dart by the published testimony of Cald
well in a suit between Shoemaker, Miller
& Co., and Wm. A. fcimpson.nor were they
known to, or discovered by the city and
county of Leavenworth or by anyone inter
ested in compelling an account to be taken,
or obtaining any reltel against these prac
tices before that year. Pare 46. 47.
That all parties ia these fraudulent trans
actions have been non-residents of Kansas
and absent therefrom, during all the time
since the organization of the co-partnerrhip
except Smith, Caldwell, Scott, Wilson, Ins
ley and Martin and each of the last named
have during that time departed from thia
State and been absent therefrom for more
than one year of that time. Page 47, 43.
That the L.A-& N. W. R. R. Co.,
about November 7th, 1870, conveyed all its
property, by mortgaze, to secure its first
mortgage bonds to McPherson, Scott and
Jno. A. Stewart trmtees. McPherson is
dead and the defendants Scott and Stewart
are the sun iving trustees. Page 43.
That Thomas L. Price one of tbe associ
ates of said Caldwell, in the co-partnership
aforesaid is dead. Caroline V. Price is hia
widow, Thomas B. Price his only child,
these are also hia executors.
Plaintiffs pray for a decree, declaring the
contract for the Missouri River JR. R. void.
Declaring the $700,000 worth of stock is
sued to Caldwell and his associates void.
Appointing a Receiver in this action, de
creeing that the co-partners account for the
lands conveyed to Caldwell, for the firm
aforesaid aad for the city and county bonds
and proceeds tbereof,reoeived bv them, and
for the $500,000 first mortgage bonds re
ceived by them; that they be allowed cred
it for their actual and necessary expendi
tures in buildine the road or otherwise:
charged with all the property' and
Bsoaey received from tne above
tourow and from the aale of lands. That
they convey all the lands remaining unsold j
to the Receiver lor the use and benefit ot
the Company and its stockholders, turn
over all securities received on the sale of
such landa and all monies and securities
held by them, and equitably belonging to
the Company, to the Receiver; that he col
lect all unpaid securities and obligations to
turned over to him and whatever may bs
found due from them on such accounting.
That the L. A. & N. V,'. R. R. Co . be de
creed to be the owners of the 500,000
stock in the Missouri River R. R.
Co., subscribed by the city
and county. That an account be! taken
between the two companies on that basis ;
that the proportion of lands, monc7 and
property recovered from Caldwell and his
associates and belonging to the L. A. & N,
W. R.R. Co., ba decreed to the latter,
and tbe shares ol'ihe same belonging to the
latter Company be vetted in them. Plain
tiffs also pray for general relief. P. 40, 51.
Upon these statements of facts, we make
the following points:
rOl.tls.
1.
The ground of demurrer that tho plain
tiffs have not capacity to sue, merely raises
the question whether the plaintiffs are per
sons competent in law to be plaintiffs in an
action, and they are to ba regarded as such
till some disqualification appears and none
appears on this record.
The cause of demurrer that there is a de
fect of parties plaintiff and defendant is not
good.
1st. If any snch defect can be found in
the petition it was the duly of the defen
dants to point out in their demurrer, show
ing what necessary parties vera omitted,
and having failed to do to, the demurrer
must be overruled
Storys eq., pleading, Sec. 513.
2d. If it should appear by the petition,
that other parties defendant, might have
been properly! added, the plaintiffs were
under no obligations to do so, aa the
wrong-doers are jointly and severally lia
dle. See Heath v. the Erie Railroad Compa
ny. 8 B!atch,."17, in opinion on page 410.
3d.
The ground that several caui-es of action
are improperly joined is not true. Only
one cause of action is stated. A Feriea of
fraudulent breaches of tru't is stated, all
culminating in one cause of action for tbe
recovery of properly, held by Defendants
in trust and in part for Plaintiff..
4th.
The ground that the petition does not
state facta sufficient to constitute a cause of
action, is not good, aa appears by the fol
lowing propositions of law :
1st The contract for. the construction of
the Missouri River Railroad was void.
The action of the Board of Directors,
purporting to authorize the making of the
contract, having taken place at a meeting
of Directors, amounting in number only to
a quorum of the Board, and two of that
number, Smith and Gruber, being members
of the co-partnership who took the contract
(See record page 8) and Smith afterward as
President of the railroad Co., having "ex
ecuted the C0Dtr.ct to Caldwell, in the firm
name of the co-partnersliip and for tho
benefit of its members, pursuant to such
authority, that could only have been grant
ed only by the votes of Smith and Gruber.
They, Smith aul Gruber, S3 di
rectors, made the contract with them
selvea3 members of the co-partnership,
and the directors being trustees for the
stockholders, the contract is for that reason,
void. A contract by an agent for his
principal with himself or by a trustee for
hia eeitique trust ia void, and the directors
of a corporation, agents and trustees for
the stockholders.
See ex parte Bennett, 13 Beav. 339.
Butts vs. Wood, 3S Barb. 1S1 2 J. Ch.
235.
Perry on trusts, page 100, Sec. 123, page
3S9, Sec. 430.
Again the consideration for the con
struction provided for in tbe contract was
so grossly extravagant as to raise the pre
sumption of fraud.
It was $500 000 in bonds of the city and
county, $300,000 of them to be cash'ed at
par,'
$600,000 first mortgage bosds,
$700,000 stock of R. R, Co ,
See page 8 of record. All lo build a
railroad which the petition how3 would
not cost more than $600,000.
Snch a contract between individuals
would be presumptive evidence of the ira
bicility of the promiesor or of fraucd upon
him, and the terms of such a contract
made by an agent of the promissor, would
be abundant'evidence of a conspiracy be
tween the agent and the party he contracted
with, to defraud the principal.
And the petition alleges that the contract
was made by the co-partners, with intent
fraudulently to render the stock of the cor
poration valueless and to acquire all the
property of the company for the co-partners.
We say, that for the reasons above given,
the contract for construction was void.
2. If the contract for construction be de
clared void, it follows that Caldwell and
hia associates will be .required to account
for all they have received under color of
that contract, being credited with their ex
penditures for the benefit of the corpora
tion, bo far aa the tame accrued to ita bene
fit. Sfe Robinson vs. Smith 3d, page 222, and
caea above cited.
3. The S700.000 of stock of the R. Ii.
Co., issued to Caldwell and received by
him for the co-partnership, ehould be de
clared void, because it was issued ."pursuant
to said fraudulent contract, and to defraud
the bona fide stockholders and without
valid consideration.
See Mechanics Bank vs. N. Y. & New
Haven R. R. Co., 13th N. Y., 539. Ssme
plaintiff vs. Schuvler, 7 Abb , Pr. 41, 17 N
Y.502
Fauquier & Alexandria Turnpike Co.,
oil i;rnncn (J. it. -i'o, a mil. 5i
4. Caldwell took the land described in
the petition as trustee for the Mo. R. R. R.
Co. The Railroad Company having pur
chased tbe land by contract and secured
the payment ot the purchase money, and
Smith having assigned tbe contract to
Caldwell, without authority from the cor
poration (his office of President giviug him
no such authority, fee Hart vs. Stone, 30
Conn. 94), and it being an assignment by
bimselt as .President to himel! and part
ner, and Caldwell paying for it out of funds
equitably belonging to the Rail Road Com
pany (See record pp. 2G and 27) and be
ing a director of tbe Company at the time,
he took the title in trust for the corpora
tion. 5. Caldwell having taken the title in
trust, conveyed to his co-partner-, confed
rate?, subject to tbe same trust. They are
therefore, each and all, bound to re-convey
such lands as they or anv of them still have
and to account and to pay for all such aa
they have conveyed to other parties.
Bluscorne vs. lleathorn, 1 Youngs A Col
yer 326, Gaskil vs. Chamber. 25 Btvan
360, 43 N. Y. 293. 1 Stockton 507.
6. The stock of the city and county in
the Mo. R. R. R. Co.. having been sold to
the L. A.& N. W.R. R. Co- that Company
thereby became entitled to, and in equity,
the owner of an aliquot thare in all the
property and asset ot the Mo. River R. R.
Co., whether held in trust or otherwise.
The stock represents all the property and
rights of the corporation whether legal or
equitable.
See 8th Kas. 90. 43 N. H. 520, 531, 533
And being transferable, its transfer of
course passes the right of action, necessary
to maintain the rights of the assignee in
the property held in trust, and neither the
case of Gray vs. Ulrich, 8 Kansas 112, nor
dicker !vs. Bellanger, 6 Wis. 645, nor any
ot. their kindred cases are against ua on this
proposition.
They were cases where there waa a com
plete contract, between parties capable to
contract, but liable to be avoided by extrin
sic proof of fraud, but in this case .there
was no contract whatever between the R.
R. Co. and the co-partner-hip, but an agree
ment by the directors of the Company with
themselves which ia nothing.
The action does not undertake to avoid
a contract, but to enforce a trust arising out
of fraud by the trustee, committed in ac
quiring the property, and that such a cause
of action is assignable,
Bee Leading Cases in Equity, vol. 3,
pages 337, Baker vs. Whiting, 3 Snmner
475 Opinion of Story, page 432, 4S3, 434,
2 Story q. jur. Sec 1050 and note at end
of section.
7. The plaintiffs being stockholders in
the L. A. & N. W. Co., are entitled to have
the rights of that Company maintainedior
their benefit. They have a clear prefftty
right, aad one having a clear right to prop
erty, whether legal or equitable, most bare
a right of action, either at law or in equity,
to maintain it and no remedy exists in this
case but a euit in equity.
Thatfin action by a stockholder to en
force the rights of the corporation, when
the corporation refuses to do so. or the cor
poration ia in the control of the persons
guilty of the wrong to be redressed, will
lie. "jee .March va Kailroad. 43 . H. 659
Iu that cise the Eastern Railroad Com
pany, in New Hampshire, had leased its
railroad to the Eastern Railroad Company,
a Massachusetts Company, 'for 99 years, on
tho term, that the Massachusetts Com
pany should complete tbe Aov Hampshire
road, charging the expenses to the New
Hampshire Co.. and build certain branches
of its own road, and when it paid dividends
to its own stockholders, it should pay to
the New Hampshire Company aa rent a
sum proportionally equal to the amount
paid asdividenda to its own stockholders, ac
cording to the coat of each of said roads,
so that each company should receive the
same percentage on its outlay and if it with
held the femi-annual dividends to its own
stockholders, it should, nevertheless pay
semi-annual dividends to the New Hamp
shire Company, proportioned as above pro
vided, to the amount so withheld,
The Massachusetts Co. completed tbe
New Hampshire road and tlie branches to
its own road, as contemplated by the con
tract, and continued to build other boanch-
ea of its own load to increase its traffic and
failed to make dividends to its stockhold
ers or to pay rent to the New Hampshire
Co. The directors of the New Hampshire
Cj., refused to call the Masiachusetts Com
pany to account, and certain ol the stock
holders of. tbe New Hampshire Company
filed their bill, making the two R. R. com
panies defendants. The plaintiff had
bought their stock after' the rents were due,
but the Court said that the plaintiffs had a
right to their proportionate share of all
profits not paid out when they acquired the
stock, and ordered an accounting, 'for the
purpose of paying the plaintiffs their share
of the divsdends due to the New Hampshire
Company.
Sears et al vs Hotchkisa ct al, 25 Conn.,
171.
Kean vs Johnson et al, 1 Stockton. 401.
In Robinson et al vs Smith et al, 3 Paige
222, the some doctrine was held, ".Chancel
lor Walworth saying that ''generally where
there haa been wasteor mis-application of
the co-operate funds, by the officers or
agents of the company, a suit to compel
them to account for sui h waste or misap
plication, should be in the name of the cor
poration, but as this Gnat ncter permits a
vtoni lo no tmrcdrrsffd mtrdy far the sale cf
foam, if it appeared that the directors of tbe
corporation refused to prosecute by collu
sion with those who had made themselves
answerable by their negligence or fraud, or
if the corporation was still under the con
trol of those who must be made the defend
ants in the suit, the stockholders, who are
the real parties in interest, would be permit
ted to hie a bill in their own names, mak
ing the corporation a party defendant."
See also Alwood, va Merriwether. Law
Rep. 5th En. cases, 464, note holds the same
doctrine : sec also Soloman vs Laing, 12
Bevan;43N. II. 515, C Eng. R. W. cases.
page'iiO, "J t-o4-j;tJ01man vs taston b
Jing. II. W. cases, 573; 13 Barb. 312;
Heath et al. vs the Erie Railway Co. et al.
Sth Blatchford, 247 and casea there cited ;
for prayer of bill see pige 333 ; for decision
of case see page 413; Dodge va Woolsy 18
IJow. 331.
Samuels va nolliday, 1 AVoodworth 402,
will be relied upon as authority against us,
but it is not authority for the doctrine
maintained by the defendants.
In that case a corporation had made a
deed of trust in the nature of a mortgage
to two trustees, conveying a large amount
of personal property, to secure Holliday for
moceya advanced and liabilities incurred,
and the trustee had sold the property to
Holliday.
Samuels et hi, had commenced suit in
Chancery, after refusal ol the corporation
to commence it against Holliday, to enjoin
him from disposing of the property and to
declare the dted of trust and sale void.
The corporation was not a party, because,
though named in the bill, it had not been
summoned.
The bill did not show that the plain
tiffs had ever paid anything for their
stocr.
The learned Justice then proceeds to
show that "the plaintiffs are without real
pecuniary interest in the matter and have
acquiesced in the commission of the acts of
which they now complain, and being in
this situation have stirred up a serious and
bitter litigation, which the real party in in
terest decline, when called upon to com
mence or participate in, when commenced
by others, and then draws the inevitable
inference that "they are not entitled to the
favor of having the cause stand over in or
der to compel the appearance of the corpor
ation." Having thna disposed of the cae, the
learned Justice proceed, to discuss the
question, whether a suit by a stockholder
will lie in such a case, by making the cor
poration a party. The opinion he advan
ces upon thia question ia really but a dic
tum, for the case waa completely and final
Iy disposed of before this question'was men
tioned, lie discusses the question solely
upon the authority of Dodge va Woolsfy,
the only case cited to him by the plaintiff,
(so far as appears by the rejwrted case) and
comes to the conclusion, upon that author
ity, that tho action will not lie, and sajs
"In the case before U3 we have no attempt
to transcend the powers of the corporation,
Cor any breach of trust on the part of the
directors, but simply a neglect to bring a
suit, which one of the stockholders thinks
should be brought."
These remarks distinguish the cae then
under consideration, broadly from the one
at the bar, in which the action is founded
solely en fraudulent breaches cf trust by
the directors, and excess of the corporate
power in the issuance of stock.
The learned Justice takes the case of
Dodge va WooWy to be an affirmative au
thority, to tbe effect that a stockholder can
bring no suit in equity to procure the en
forcement of the rights of the corporation,
but only to prevent the violation of them
by injunction, and in speaking of that case
says: "Again, the Court says that the ju
risdiction at the instance of a shareholder is
to apply preventive remedies by injunction,
Cc " But this is clearly a mis-reading of
Dodge va Woolsey; the case contains no
such language, nor any intimation
that the jurisdiction is confined to
preventive remedies, unless the de
cision that preventive remedies would be
granted in such cases, is to be taken
aa proving that no remedy can be had for
breach of trust already perpetrated by the
directors, when the corporation refuses to
prosecute, which seems to ua to be a name
quilcr. Again the case of Dodge vs. Woolsey,
not only does not assert such a doctrine,
but the opinion of the court asserts the
contrary in the following language, com
mencing on p. 312. near the bottom :
"But farther, it is cot only illegal for a
corporation to apply ita capital to objects
not contemplated by ita charter, but also to
apply its profits, and therefore a share
holder may maintain a bill in equity
against the directors and compel the com
pany to refnnd any of the profits thus im
properly applied."
The learned justice in closing his opinion
says :
"If a stockholder is aggrieved by the re
fusal of the board of directors to accept his
views, hTs remedy ia to unite with other
stockholders and change the directors
btt if irreparable mischief to his interest
may ense in the meantime, equity will
administer preventive justice, until such
a time as the will of the body of stockhold
ers can be ascertained."
But that remedy could not well be ap
plied to this case, aa it ia hardly practica
ble to change the directors, when such di
rectors constitute a majority of the stock
holders and all are united in the same in
terest and the same purpose to defraud the
minority.
In making that dictum the learned Jus
tice seems to hare overlooked the doctrine
laid down by Justice Story (1st Story, Eq.
Sec 1S6) that courts of equity "have very
wisely never laid down, as a general prop
osition, what shall constitute fraud, or any
general rule beyond which they will not
go upon the ground of fraud, lest other
meins of avoiding the equity of the courts
should be found out."
Thia case is a moat forcible illustration
cf the wisdom of the rule laid down by
Story.
Thia opinion of Justice Miller, then, be
ing, so far as it can be claimed to affect
this case, but a dictum at Si i Prim, and not
supported by, but opposed to the author
ity, upon which it purports to be based,
and being, when applied to a case like this,
utterly subversive of iustice. is. it seems to
Ins, of little weight in companion with the
case we have cited, holding the opposiie
doctrine.
We think we have shown that the defen
dants were liable to account to the M itwjuri
River Company, for the property in
their hands. That it waa the duty, to it.
stockholders, of that company to compel
that account, but they were prevented by
tho defendants who controlled that com
pany. 'lhat when the L. A. & N. W. Co. became
the owners of stock in the before mentioned
company, it became the right of that com
pany, and its duty to its stockholders, to
enforce that accoutring, but the defendants
having control of that company, prevented
snch action.
S0TE OF AKGCMEST.
Tbe defendants confess by their demurrer
that they bare entered in;o a combination
to take the property of this corporation at
the expense of the stockholder ; arc guilty
of fraud; are trustees, or buld the trust
property of the corporation in their names.
and appropriated it to their uc ; that by
their fraudulent acta the cor; orations are
in their band, and can only act wii-n thry
are willing; and that they will
not let either corporation come into
court to assert the just demands of its stock
holders. In short, they have swallowed
the corporations, bv Letting into power
through vo.es of spurious stock, for which
not one cent was paid. That they have
formed themselves into a syndicate, tied
the bands of the minority of the itcckholl
em, taken the principal, and modest'y
claia to be the mouthpiece of (his enf.cb
led minority, both in the election of direc
tors and division of profit, and when thn
stripped and ruined the ccituiipic trust can
find no redress at the hands of tbe tm.-ters,
and 'when they come into court they are
told "ire are the Ujcl rrpres-ntatiies of .he
corporations, and you must be heard in
court by ua tbe legal representative, "tho
carta qui trust cannot speak ip court."
Ibis cannot be law.
In Jackson vs. Ludeling, 21 Wallace, pr
616, 621 and 625 Justice Strong says :
"The managers and officers of a Company,
where capital is contributed in shares, are,
in a very legitimate tense, trustees ; alike
for its stockholders and iu creditors," etc
"They, accordingly, have no right to enter
into or participate in any combination, the
object of which is to divest the Company of
ita property or obtain it for themselves at a
sacrifice ; they have no rightjo seek their
own profit at the expecfeof the Company,
its ttoelholders or even its cieditois."
The principle of law on which the plain
tiffs rely to cill the defendants to attount,
is not new in courts of tqniiy, and the re
form procedure, under the cede, is turely -no
lei-s remedial than the ancient equity
power,
lomerovon uemedie, sees. J, to, .o
and S3
Equity haa decsctd an account at tho
suit of an heir at law against the executor,
also at tho suit of a distributee of an es
tate against the elector and tho surviving
partner of the testator.
Bowsher vs. Watkin?, 1 Ruell & My!e,
page 277.
A creditor may maintain a bill sgaint
the executor and other persons who are in
partnership with the executor, and obtain
an accounting.
Gredgeva. Traill, 1 Russell A Mylo
page 231, note.
A creditor of an estate of a deceaped per
son, may maintain an action to collect his
debt from a debtor of the estate, in casea
of collusion between the debtor and per
sonal representative of the estate, the in
solvency of the administrator, in au indebt
ed firm or refusal to sue.
Fisher vs. Hubble, 7 Lansing, N. Y.,
4nl.
The defendants in this suit, who are trus
tees and legal representative, should havn
long since brought suit. They have a legit
duty to perform, and like executors and
administrstors. are trustees, and if they en
ter into collusion with the debtors of the
corporation, or become partners with other?
who have the property of the corporation,
or form syndicates to eat out the sub-tance
of the stockholders, thry are liable to b-t
sued, and the court should feel as much
bound to sustain a bill again-t such per
sons aa it has in favor of heirs, residuary
legatees and creditors against defaulting
executors, administrators and collusive,
debtors who are being shelflied under tho
ningpftheltgnl rtp'oentatitex.
Some of these defendants sre not direc
tors or officers of the corporation, but they
have united with thoe who were trust e,
and have received corporate and ln;t pro
perty, knowing it waa being diverted, and
become parties to the breach of trust.
In Wileon vs. Moare, 1 Myle A Keen, th-"
Court in holding a pen-on liable, who had
any part in a breach of trust, al pp. 127
and 146, says : "there ia no primory lia
bility in respect to breach of trust, all p-ir-ties
to a breach of trust being equally lia
ble." That case also holds that perrons who
act under power of attorney from trust es,
and knowing that the trust estate is beirg
wasted, shall account to the estate, teem
ing to treat any participation in the wast
ing of a trust estate aa an offense in equity,
which that Court will surely punish ami
cruse all the parties who have ic any man
ner participated to account and male good
that which haa been wrongfully applied or
diverted.
2 The defendants may insist that there is
no privity of contract between the plain
tiffs and some of the defendants. This can
be no answer in a Court of Equity ; tho
same has been said where a creditor of de
ceased estate haa sued the debtor of the de
ceased estate; the Court baa said that col
lusion or refusal of the legl representa
tive to sue, forma the exception to the gen
eral rule, and that privity of contract is
not necessary to maintin the action.
The defendants insist that the accounting
will be too difficult and complicated for a
court or referee to undertake, so as to as
certain what interest the plaintiffs have in
the property diverted from the trut estate.
Here it will require a clear head and some
labor, but courage and honesty are only
wanting to make up thia account.
The defendants know, and can tell, how
much it cost to build the road from Leav
enworth to Kansas City and to pay for
the land; thia the road owes. They aro
chargable and know, 1st : how much money
they received, before they commenced,
from the bonds of the County and City of
Leavenworth, and from subfcriptions. They
know they received 93,000 acres of land
which in equity belongs to that road ; 2d,
how much of the land ther have -ohl,
and at what price, and what remains un
sold in their hands ; 3d, how much they
received from the sale of $500,000 of First
Mortgage Bonds : 4th, how much they re
ceived on the sale of the $700,000 of stock,
if anything, if not sold, it should be can
celed ; 5th, how much the roatl rented fcr
in excess of incidental expense'.
These sums added will yield, say Two
Millions of Dollars. Deduct the cost and
expense of constructing the road, say one
half million, and there ia on hand belong
ing to the stockholders of the Mo. It. K.
R., ooe and one-half millions which
should be declared a dividend, unlnea need
ed to pay debts.
The demurrer admits that the only stock
in the Mo. R. R. R. is held in tru-t for the
13 persons who built the L, A. Jt X. W.
R. R., or the corporation, and it ia imma
terial which, as it ia a trust fund, and the
legal representatives in collusion against
the eatuiijue trust, are relu-ingto sue.
The foregoing accounting brings in to th
L, A. & X W R. R. Company one and
one-half millions ol dollars, aa the tcck as
signed by the City and County of Leaven
worth carried with it all dividends not de
clared and paid prior to the trant-fer.
Here again it may or may not be neces
sary for an accounting to be had. If the
capital and assets on hand, of this road, are
sufficient to meet all liabilities, then th
one and one-half millions are surplus, and
should be divided among the thirteen "bare
holders who built the road. Tbe plaintiff-
share being three and one half thirteenths
ot the capital stock.
Should this not be the exact basis on
which the accounting should be bail, the
defendant, who have been so sharp as to
take everything belonging to two railroad,
and then pocket tbe corporations, will
point out to the Master a better and more
equitable rule. The respective interest of
every party to this bill can be ascertained.
and it is a rule of Equity, that, "that hich
can be made certain, is certain."
And that the plaintiffs, being stockhold
ers in the last name Co, have a right to in
sist on such accountisg and having no
other remedy, have a clear right to a suit
in ennhv to enforce it. and do submit tb .
aneation to the Court. Z?2Z
GREEN & FOSTERaoMOM.Tb.ti.
COBB & COOK MracHEajisja
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