Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1868-07-06

al ErA n
An communications be accompanied by the names oi
h, authors aud rejected cannot %
Railroad Casc---Decision of the Court
's"sa or AppeaEs of Virginia.
Stevens and Phelps vs. Davidson and others
;s.the welEknown case of the Washington, Al
orandria and Georgetown Railroad Company.
The capital stock of this company was POW,
600, and spurious stock was issued and SOLD TO
the amount of $SO0,000; and this IS the fraud
ulent transaction referred to In the decision OF
the Court: ..s-s,,xr-g--
STEVENS AND PHELPS VS.. DAVIDSON AND
/tGC<l OTHERS.
This is a suit in equity instituted by Joseph
Dawson, stockholder in the Washington, Al
evandria and Georgetown Railroad Company,
on behalf of himself and all the other stock
holders, except the Directors, to set ASIDE
lease of said road for ten years mace 10 way
1866, by the Board of Directors OF SAID Com
papy to Stevens and Phelps. Judge Thomas
of the Circuit Court OF Alexandria, mace an
order declaring the lease illegal and Vold, en-
Joining the lessons from further working the
said railroad under the lease, enjoln'ng the
President and Directors of the Company from
acting as such, and appointing w m; H. MAR
bury. receiver, to take charge OF and manage
the said road, subject to the order Of the Court.
This order was affirmed by the District Court
at fredericksburg, and was also affirmed BY. the
Court of Appeals, with the exception OF So
much of it as enioins the President and Direc-
tors from acting as such. The following is the
oninion and decree of the Court of Appeals
The Court, without deciding whether or not
it would have been competent to the stock
holders OF the NV ashington, Alexandria and
Georgetown Railroad Company to make such
asl3ase OF their railroad as that in the proceed
incs mentioned, which is question thst does
not arise in this cause, is Of opinion that it was
not competent for the Board Of Directors OF
the said company, without the sanction OF a
lawful meeting of the stockholders, to make
the lease 10 the proceedings mentioned l;
Because Board of Directors OF railroad
company have no authority to make such a
lease under the powers vested in such Board
by law. And 2. Because the said lease was In
contravention of the sixth article OF the bylaws
Of the said company, which provides that no
contract shall be made ''involving the franchise
of said road, except the same be approved by
general meeting representing majority OF the
stock, after being recommended by majority
of the stockholders, the Court being Of opln-
ion that while the said lease does not involve
the essential franchise of the said company to
be corporation, it does involve the franchise
to take tolls upon the work of said company,
which comes within the meaning OF the iran
chise of said road, as expressed in the said
bylaw. And the Court is further OF opinion,
that although by the eighteenth article OF the
bylaws of said company authority Is gwen to
the Board OF Directors to alter or amend any OF
the said bylaws, the said Board had no au-
thority under the said bylaw or otherwise to
disregard or to alter the said provision OF the
sixth by law, which was intended to impose
limitation upon the powers OF the Board OF
Directors
The Court is further of opinion that the said
lease having been made by the Board OF Dl-
rectors, two Of whom had been concerned IN
the fraudulent issue of very large amount OF
spurious stock, greatly exceeding IN amount the
lawful stock of the company, having been made
on the very day on which the regular term OF
Office Of said Directors was to expire, and on
which the annual meeting of the stockholders
of said company should regularly have been
held, and when the said Board of Directors
had failed to issue the call, which it was their
duty to issue for the said meeting made
to two persons 10 the employment OF SAID COM
pany,. one of whom had been an agent to some
extent in the issue Of a large amount OF such
spurious stock, and securing to the said lessons
clear profit, except the amount payable Tor
taxes, to the extent OF one-half the gross earn
ingS of said company during the term OF the
said lease, besides the sum of seven thous-
and dollars per annum to be paid by the
Adams Express Company under previous
contract with the said railroad company, and
expenses of said company, except the taxes,
upon the share OF the gross earnings reserved
to the said company-the same must be re-
garded as a fraud upon the rights of the stock
holders, and that this conclusonis is not repellcd
by the statement that the said lease was made
after consultation with majority of the stock
holders and with their approval; because, lst,
it does not appear whether the stockholders
thus consulted were the holders of the genuine
stock or spurious stock; and I'd, the approval
of stockholders thus informally obtained could
have no legal force or effect.
The Court is therefore of opinion that the said
lease is null and void, and should be so declar-
ed upon the final hearing of this cause.
The Court is further of opinion that while
for the reasons assigned in the case Of Gardi
ner vs.. The London, Chatham and Dover
hallway Company Law Reports (chancery
appeals) cola court Of chancerv will be re.
luctantto appoint receiver to take charge of
and manage railroad, it is competent to do
so when such course is indispensable to Sc
cure the rights Of the legitimate stockholders
and to prevent failure of justice. And the
oourtls OF opinion that under the circumstan-
ees 9. tais case it was proper for the court to
appoies receiver to take charge OF and man
age tne said railroad until it can be ascertained
Dy proper inquiry to be made in this cause
VINO are the legitimate stockholders of said
company, 10 whom the custody and manage
ment or e SAD railroad should be committed.
And tee I9artls OF opinion that it isnet made
toaPpearG at tnat the Circuit Court erred in not
the said railroad during the pendency Of tbs
cause. gsqiI !loJ .s.a... 'r-.I,
But the Court is of opinion that it was not
proper to eDjoin Robert W Latham. Joseph
:: Stewart ssnpei q Y; shos maker, Oscar A
S5feysa aha Dean n smith from acting as
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