Public ledger. [volume] (Memphis, Tenn.) 1865-1893, 1883-11-01

Nashua, the Presidents Of the two
Northern roads, with other persons
whom they secured in their interests,
bought majority Of the stock Of the
Concord road audi got themselves elect
ed on its Board Of Directors, which
they hereafter controlled. They
were then in position to make their
own terms with the connecting road,
as they were in effect contracting with
themselves. They not only sacrificed
the interest OF the other stockholders
In the Concord road, by making ar
raugements altogether favorable TO the
Northern roads, but presented certain
heavy claims against that corporation,
and had them paid by their own action
as controlling Directors Of the latter
Suit was brought by one Of the
minority stock holders Of the Concord
road to have the contracts made by its
Board Of Directors set aside, to have
the Directors whose interests we're
adverse to these Of the company by
reason Of their connection with the
other companies removed or sus.
pended, aud to have a suitable person
or persons appointed to act in behalf
Of the Concord road 10 all matters
where those Directors were disqual.
lied. 1t said that q Director of a
railroad corporation stands in iiduei.
airy relation to the corporation
and is under the disability,
Of Trustee. He cannot
buy Of himself, sell to himself, con.
tract with himself, or secure advan-
tsges to himself not common to other
stockholders. Many authorities are
quoted in support oil this position, and
it is shown to apply to Directors Of one
corporation who are also Directors Of
another and acting 10 its interest. 1t
made no difference whether the con
tracts made between the Concord road
aud the Northern roads were Just and
mutually advantageous or not, the
same men acting as Directors for both
parties had no right to make them at
all. Their interests as Directors Of
the Northern roads we're hostile to
those Of the Concord road, and that
fact disqualified them from acting.
Referring to the case decided by the
United States Circuit Court in this
city in which it was held that the
agreement between the Manhattan
Railway Company aud the Metropoli
tan Elevated Railway Company re.
linquishing the right to guarantee Of
dividends should not be enjoined on
the ground that the same men acted
Tor both companies, the New Hamp-
shire Court says that the decision
Stands alone, unsupported by a sin
gle authority in this country or in
England"
The wide application of the princi-
pie Of the New Hampshire decision is
very evident. Under it the Directors
OF a railroad or telegraph company
cannot lawfully act as Directors in an
other company 10 making contracts or
traffic arrangements between the two,
or 10 any way subordinate the interests
Of one company TO those OF the other.
The principle thus clearly set forth and
firmly established by judicial author
ity would prevent all such operations
as are calculated TO sacrifice one cor
poration to promote the schemes Of
another where the same set Of men arc
acting for both II unquestionably
stamps as unlawful many Of tn. agree.
ments which have been made for the
establishment OF consolidated lines
and Of practical monopolies. 1t applies
directly to the agreements between the
elevated railroad companies Of thi,
city, in which the contracting parties
on both sides consisted in part Of the
same men This decision, il followed,
is calculated to have wholesome eff
feet in protecting the rights Of stocks
holders whose interests are sacrificed
by Directors having other interests TO
serve adverse to theirs. 1t is worthy
Of study by Judges in States where
corporations have become more pow.
eriul than they are in New Hamp.
shire.