Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1882-05-13
RAILROAD MUSS.
A Decision Rendered by Special Chan
eellOr Morgan in the Bar
rett-Davis War.
A Sort Of Mixed Case, in Which Each
Party Claims to be the
Victor.

Yesterday Special Chancellor Morgan rem
dered his decision in the celebrated City
Railway Iliad, in which Messrs. Davis and
Barrett have been the warning parties. The
opinion is lucid and plain enough for all to
read. Both sides of course claim the victory,
and the APPEAL simply presents the opinion
as it is, without making any comment what
ever. The following is the opinion:
Bills vs.. Davis, ct al.
Opinion of r. J. Morgan, Special Chancellor.
have heard this case with much interest,
as 1t involves many interesting and i'm
portant questions of law and facts, and has
been argued with ability on both sides, man
ifestiDg on the part of the attorneys engaged
much care in the preparation of the case,
much research and forensic display in the
presentation of the law and the facts to the
chancellor. / do not/propose to write an
elaborate opinion, but merely to give my
conclusions to the facts and the law in
yolved in this cause, 30 as to enable the
counsel to prepare such decree as L wish
entered in this case.
THE INJUNCTION.
/ have heretofore dissolved the injunction
against the defendants restraining them from
disposing of their stock in the Memphis City
Railroad Company. The injunction restrain
ing the officers from collecting their salaries
Is now dissolved, and dissolution of the in
junction now Will be entered so as not TO be
affected by the appeal. The result of the
dissolution will be such as to allow said Off
GERS the right to draw their unpaid salaries
from the time of the issuance of said iniunc-
ton. 1 deem it unnecessary to give any rea-
son for this action, as l think my conclu-
sions supported by authority and fully
sustained by the proof in the case.
INJUNCTION AS TO ISSUANCE OF $780, 900 OF
STOCK TO BRING THE MINIMUM AMOUNT
OF STOCK TO THE SUM OF 100000.
The INJUNCTION as to the issuance of this
stock will be dissolved. But this question af-
fects materially the merits of the contro-
versy. The dissolution in effect will abide
the final controversy should appeal be
taken. l am of opinion that the minimum
limit of the stock in the company is $780,
600, and that the amendment to the charter,
as claimed, could not reduce it below this
amount. The purpose of the amendment
was to enlarge the powers and increase the
facilities of the company, and that
a reduction of its capital stock would
be inconsistent with the intention of the act.
If, however, a reduction has been made by
mistake, accident, or a misconception of the
rights of the corporation, uDmixed with
fraud, it ought not to work an injury either
to the corporation or the stockholders; and
that court of chancery will allow or sane
ton restoration when proper case is pre-
sented. This a proper case. No possible
harm can be done any one. No creditor can
be affected. The public and future creditors
will be benefited. The stock that was cancelled,
50 as to reduce from $500 900 to S250,000,was
purchased and retired by the company. The
mode in which it is to be reissued is fair and
equitable, and gives 10 the only parties in in
terest-the stockholders-that which was
purchased by their own money.
do not see that this suit is obnoxious to
the charge of champerty and maintenance.
1t is not fictitious suit, but suit of merit
in which all the stockholders have an inter
est and may have benefit. And, standing
in that attitude, they may meet its expenses
as they may agree among themselves with
out reference to their attitude as complain
ants or defendants. l have the same views
as 10 the stock bought by Frost from Speed;
and that, SO far as this case ia concerned, he
stands IS an ordinary shareholder, receiving
such benefits from the result Of the suit as
other shareholders.
THE REDUCTION OF THE CAPITAL STOCK BY
PURCHASE OF THE CORPORATION.
After an elaborate argument of counsel
upon this question, and a reasonable inves-
LEGATION OF the authorities, L am satisfied
that a corporation may reduce its capital
stock SO as not TO reduce it below the mimi
mum amount fixed in the charter. This
must be done in good faith, and not 10 the
injury either of the creditors or the public.
The mere fact of the Legislature fixing a
minimum and maximum amount, of itself
leaves a discretion with the corporation
and necessities, both of the
and the public, will frequently
call for change of the amount of the cap
ital stock. 1t seems to me that the policy
pursued by corporation in this direction has
been acknowledgements least to the present |
and none others have or can |
complain. 1t is purely a question of good |
faith if the right exist. In this case, from |
the proof, think it W $ eminently proper. |
This corporation was shown, at the time the |
policy was inaugurated, to have represented |
in its stock more than twice much in |
pmount as its property of all kinds war
ranted. Its value originally was 6ctious and |
so remained for years. 1t was prudent and
discreet that if no harm was done either the |
creditor, the public or the shareholder, that
he stock should be made to represent its
rue value. None of these have been in
ured; upon the contrary, the shareholder
mas been benefited by increasing the relative
value of his stock. .r,.5,