New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1883-02-13
THE COURTS.
Elevated RAILWAY LITIGATION.
JUSTICE BARRErT's OPINION OF THE MERGbi
AGREEMENT.

AGREEMENT.
Justice Barrett yesterday, in the supreme
Court Chambers rendered decision grahtiit 'no ~
ton for injunction pe,sdente tte IN tne Sui'
by the Metropolitan Elevated Railway company anu
s. II. Kneeland against the Manhattan and New" iorA
Elevated Railway Companies TO have the so-o"i
merger agreement set aside Illegal and void' anu !"
prevent the defendants from doing anything W oaiy
the agreement into effect The validity Oh INC n'' e
agreement depends Justice Barrett holds upon ho o
struction to be given to the expression III 'ne a
1879 or ON such other terms and conditions as may DC
agreed on between the two corporatiohS' ine
merger agreement was made. by the anec
tors of the companies without consulting the
stockholders There can be doubt that the law az
settled by gives to the directors tue eAoo
power manage the concerns OF the corporation
ia, lawful business under its charter. but no
authority Is known for the proposition that inc
may make organic fundamental chauEo7
looking TO the practical obliteraton of the corpo
ration as a distinct and independent legal ehu'y'
II il thing TO say that 'he S'o'A
holders do no corporate ac'' eau
make no valid contract for the company cannot even
compel the Board Of Directors to do an act contrary 10
their Judgment But It is quite another matter TO say
that they shall have voice with regard 10 organic an"
fundamental changes This doctrine Lad beea lad down
by the Supreme Court Of the United States IL was e''
tfat 1t was never the intention OF the Leg
islature 20 permit far-reachng measure
10 be set in motion without tho "S""'
stockholders consultation II so wide d parture from
first principles had been contemplated, The language
comforting tais extraordinary power upon the directors
could not have been specific ald u9ml taxable LOT
the grau OF such power IL not 20 tho p'
lev of the law but contrary also the legislative policy
as expressed ia numerous other enacimehtS
Justice Barrett cites in support OF th's
view the laws Of 1875, 1850 and ISL
IL Is said however. that this agreement i
only an intiaory step IN the merger process AID Thai
the subsequent surrender ~ taeir stock by the stock
holder, IL necessary t. complete t. ono difficulty u
that the moment single earc j. surrender" l-c
ger agreement l. conWei' d PRO lo'sD, ~ c,
dissenting lind them elves win an lqpaIeI col.
sttuency and a reduced cap tH ,'.h 30. o a.
have they .o't the a7.grting stock odciN' uul tu
latter have become mru' rs 0l the 'cssDt fop" 49,
with all the adNc,sc rtrrait lncl 'ch,ri 'N'
And when majority ~ thr fhiie' oi i-' c - ~
ton have tnua been wiped our o. r'i' .h 'l u'I"
chosen by the ro'icfs o. l'e ii-'" &C. ''' t
eacct OF these various lracE+ ana 81 oil,I' "Hici
h" Ike 70 acc The scouting shn-clo I.r, iur.ou ~
is not 10 be considered Tor Uuui l"!trilA 'uHa
sler,d ~ detail. in "A general uc nyoyin- a- 70
does n "a ica change M the independent pnrp1s' an
existence aud which alone the stOckhp dcrs subH'r ped
II would nc grossly UNJUST 70 set TIE machinery IN mo-
10 DC n Tht b 7 meant 70 Sylri, lrrn
injustice by iepsiy ing The stocHhoocsoi all pFc"hi!
me terms AID conditions" upon which ,uch scheme
cussion by The siocRholicr' ~ a regular meeting
Wha Is said to Implied from III" -ub.cq!eni
surrender N udiydua never intcadrd TO
be substitute for th' rcquis O. or - al as
a as4' of 1s ~ G foa' ao auae1 the familiar
rule that fundamental chnl-ce 30 the purpose or
objects OF u corporation can ouly be effected by the
consent ~ the corporate obfainciat 'gular meeting
II follows that the agreement IN qlcsuoni- VOID Ii'
view OF the Axes unnecessary to consider the
other questions which nave been rlircd TIE
agreement on ia face Is certainly open
whet or the ,recmcut not void on account ot The
manner In wn'cn the respective Boards ~ Dir'ciori
were constituted e h" tlE.it "is made. Oi cou.c
together because some person hlpp,s TO DE- director
both II tue boar1s are - Constituted met cach may
and does act with cnure ihicpohdehce' thc
contracts would be valid. ii,rc however. somewhat
| majority OF the Manhattan aud metropolitan 10 ar r
was composed ~ nc -al.c persons Al, ne Slf,e"Is
of the metropolitan Coml'y va" spcu 700 ,"'
meut were also directors 90 tue Manhattan to"ltuy
aud two Of then were directors OK the N'~
president Tho personal interests Of some of tncfe
pany. Justice Barrett c0uc.u1c- h- opinion W.T. t.o
dcciaration Ny iu preston g. very strong mat nc
adycrse intoresi- per.onal ana ocn' direct aud mai
rect OF those WHO voted Tor u IN the McrIp ta Com
| paa,'s board" tie saws that lac will near counsel
upon the question whether some provision cannot D.
made Tor distribution o. me rents pay 1n' 10 o NSN
York and METROPOLITAN Comp. MES under tie modified
! lease (which not az al Ghcct"d bl ms d'-
! c,.iou, "a the sharehol. ers oil those companies
| are ultimately entitled 10 those rents Ia come
fhcm oni 81 their fiyicndS even tcmporari,y
Jusce Barrett also dccldet thai the motion made ~
{ q MnmLet Railway Company Ia thf sui brought iy
micaily called The peace ,ut" to con1cl the NclrOpol-
an ompauy disconilnIe the @u!t begun by u IN tne
Court % tomnOD Pleas 10 nave tho modhel I,h-" u'-
clarcd VI, "a and VOID mast De- dcucd lie dciel TIE
motion to punish the Mc.rIp'l,a an COMPANY Tor con
tempt IN bringing INC sun IN INC Nuihi1h I"l'. iio
holds that the decisnn OF the Gcncrh Tenn thht the
Manhattan Company ma. no right g maintain Tue peaec
snt dispO-es OF the motion arErd bcorc MN. IL tIo
peace sut could not be maintained 81 course ihe Mrt-
ropoian Company bad reht To bring Tue ri. IN Tue
Common peas aud could not be punished Tor contempt
Ia having done So