The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1868-07-03

y T7's,, n the Court, decided the three
e ,r.7''tS ,o,,.cs That Of Ward as. Churn
q a.'.A same roin,s of snccial interest to
q ''r,'.',, rrofrssion, and al are Of general
Fl ..,,;c interest.
& ...r. is the wc')-known case Of the WASH
Il . Alexandria and Georgetown Rail
"'-i %,rnranv. The capital stock Of this
'.. .,,, was $500. 900, and spurious stock
B ';.,,,cj and sold to the amount of $780,
.~l this is the fraudulent transaction
l.--oj 10 in the decision of the Court:
.-.vy>s AND PHELPS vs.. DAWSON AND
OTHERS.
] -t;s j. g suit in equity instituted hv Jo-
~ raviSon. n stakeholder in the Wash
.,.,, Alexandria and Georgetown Rail-
-Ij Comlanv, on behalf of himself and
II the other stockholders, except the Di-
-...a-s. to set aside lease Of said road for
~ years made in May, 1866, by the Board
q: Directors Of said Company to Stevens
.,i Phelps. Judge Thomas, Of the Circul,
...a-. Of Alexandria. made an order de-
.,.~snr the lease illegal and void, cnloining
1os.ors from further working the said
...,r,,d under the lease, enioining the Pre-
.3o,, and Directors of the Company from
,.,;rr ~ such. and appointing William ii.
yornurv receiver to take charge Of and
,'or7rc the said road, subject TO the order
~; tho Court. This order was affirmed by
IL, Instruct Court ut Fredericksburg, and
..,s also affirmed by the Court of Appeals,
-.,b tho execution Of so much of it rs en-
,,,ns the President and Directors from act
mos such The following is the opinion
and decree of the Court Of Appeals:
The rourt. without deciding whether or
vi il would have been competent to the
.,,rkI,oldcrs Of the Washington, Alexandria
.,l Georgetown Railroad Company to make
...N q lease Of their railroad as that in the
,rrncoliugs mentioned. which is a ques-
,a, that does not arise in this cause, is of
r.sg;ga tl,tt Il was not competent for the
= ,r) nf Directors Of the said company,
v;,gout the sanction of q lawful meeting of
ua stockholders, to make the lease in the
,r.erciinrs mentioned /. Because q
i.crl Of Directors Of railroad company
,,yc no authority to make such lease
,u.jcr the powers vested in such Board by
.w. And .. because the said lease was
+. r0utraycntion o. the sixth article OF the
fr-'aw. Of tn. said company, which pro-
,.ic, that no contract shall be made " in
,a'yiur the franchise Of said road, ex-
cert the same be approved by q general
a"ctinc representing a majority OF the
,tak. after being recommended by a ma
.r.,v o. the stockholders" the Court being
II g:u:on that while the said lease does
rrt involve the essential franchise of the
aa+ r.mranv to be a corporation, il does
Involve tie franchise to take tolls upon the
- @, a!;l company, which comes within
tra~caulr- us the franchise Of said road"
a- n,lrc-soi in the said bylaw. And the
nn. /. further Of opinion, that although
Estar eighteenth article Of the bylaws Of
ttM company authority is given 10 the
Board Of Directors to alter or amend any
nt the said hv-laws, the said Board had no
authority; under the snid bylaw or other
sis. 10 disregard or 10 alter the said pro
e...on # tho sixth bylaw, which was in
@nlsj t. ;rur5-c o limitation upon the
t.w.rs # the Board Of Directors.
The Court is further Of opinion that the
.il lease having been made by the Board
J q. directors, two or whom had been con-
I rarncl in the fraudulent issue Of very
large amount Of spurious stock, greatly ex-
reeiug in amount the lawful stock Of the
company, having been made on the very
q Dag on which the regular term Of office of
AT Directors was to expire, and on which
TIE annual meeting Of the stockholders Of
s.1l company should regularly have been
1rt AMI when the said Board Of Directors
1j failed to issue the call which it was
lr fIft..- thn i'll
'r1g made TO two persons in the employ
me2i @! said company, one Of whom had
I '3'A M agent TO some extent in the issue OF
4 |rgc amount Of such epnrious stock, and
."aNng 10 the said lessons clear profit,
except the amount payable for taxes, to the
.,'.Gt Of cne-half the gross earnings Of
,.'compaGy during the tern Of the said
lease, besides the sum Of seven thousand
.N.ars per annum to be paid by the Adams
LAF"ss Company under a previous con-
u"t with the said railroad company, and
'.+rr'nl all the debts and expenses of the
'a'i company, except the taxes upon the
#'rh % the gross earnings reserved to the
! 'i' coi,pGr-the sumo must be regarded
e iraai ZION the rights OF the stGcihold-
e's, and that this conclusion IS not repealed
ny Tie statement that the said lease was
'oal" after consultation with a majority Of
me -,5cknoders aud With their approval
ecause, lst, it does not appear whether
,'s stockholders thus consulted were the
A'.lers Of genGiI2 st"rk or of spurious
SOCK and ID, the approval of stocKnoid
", mus informally obtained could have no
legal force or effect
me Court is therefore of opinion that the
.'I ease Il null and void, and should be
declared upon the final hearing Of this
I4eloort is fur her of opinion that while,
IVY ~" reasons assigned in the case of
l'''.Aer u.s. The London. Chatham and
'y''F hallway Company Law Reports
@"Hcery appcals), 20l--a court Of chan.
- VII! te reluctant to appoint receiver
'aHe charge Of and manage railroad, it
,o.2t"t"ut 70 do 50 when such course is
Indispensable 10 secure the rights of the
e1i'imG'c stockholders and to prevent &
azure OF justice. And the Court Is of
] ''Nl9A that under the circumstances of this
= use II was proper for the court to appoint
!"ei'er 10 take charge Of and manage
49, 9aia railroad until !; ear be as6ertained
w. proper Inquiry to be made in this cause
s, .' are The legitimate stock holders Of said
-s'ny, 10 whom the custody ard manage
-@s1' OF said railroad should be committed.
,. 'he Court is Of opinion that it is not
;.''e 70 appear that ths Circuit Court erred
- A'' appointing the lessons the receivers
manage the said railroad during the
!'a1lency of this cause.
-i DIX the Court is of opinion that it was not
tp''ieF 10 enloin Robert w. Latham, Joseph
Ne"art, Samuel NJ. Shoemaker, Oscar
49, 49,, Stephens, and J. Dean Smith, from act