New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1883-01-09
THE COURTS.
is THE MERGER AGREEMENT voIDi

The argument on the motion to continue the
temporary injunction granted days ago by Justice
Noah Davis in the suit brought by the Metropolitan
Elevated Railway Company against the Manhattan
Company and the Newly rk Elevated Railway Com
pany have the merger agreement declared null and
void and restrain the defendants from doing any act
under the agreement had yesterday before Justice
Barrett in the Supreme Court Chambers David Dudley
Field appeared counsel for the defendants He said
the agreement entered into under the stat
ute which provided that any railway corporation, being
the lessee OF the road Of any oher corporation. might
take transfer OF the capital stock Of that corporation
and issue its stock in exchange for It. Previously
TO the merger there had been five agreements
between the companies the last Of which exactly
Ike that which Is sought to be set aside. The merger
agreement had been substantially carried into execution.
There really only questions In the present case
about which there could be any dispute First Had the
Boards Of Directors of the companies the to make
the agreement Second Was there anything in the terms
and conditions which rendered the whole agreement
void or vollablei Tho Supreme Court had already de-
cded that the five agreements previous to the merger
agreement were valid Notwithstanding they had been
made by the directors OF the companies and had not
been ratified by the shareholders There was nothing
to distinguish the merger agreement from the Others
hence that agreement made by persons having full
power to make It. Was the agreement then void void
able on account OF Its terms voidable
agreement be by distinct act OF
disarmance. The right to rescind contract must be
enforced iu suitable action, and the party seeking the
rcscision must due diligence; he must have been
the victim fraud and must be able to restore the
other party to the condition In which he was before the
agreement In the present of these con-
ditons wanting. The plaintiff had not used due dill
igence it had not been the victim Of any fraud ana ~
could not restore the defendants to tue condition In
which they were before the agreement The
present suit was not proper action for
the rescsiOn OF tho even II no other parties
than the defendants were concerned IN ts RESULT but
the shareholders OF the Metropolitan Company were In
terc5ted In the result OF the SUIT ana were necessary
parties TO 1t. The objection to the merg agreement
that the statute did n1 allow tho consolidation OF com
Peng roads was obviously untenabe because me Man
haitian and Metropolitan Companies were not competing
roads Two roads could not DC Competing roaus uni T
Doih OF them could De operated at the same nm inG
objection that the terms Of the agreement are unequal
S'' oo @Pi~'rS So i @s%s IN the pr ya
suit. The objection that the persons were
directors IN both computes u sound would myallnate
lhe transactions OF haf the railways In THIS country anu
Europe.
tended that the merger agreement void because II
had not been made with the consent Of the shareho der
It's ordinary business but not vote existence.
Mr. Barlow reviewed the eases bearing on this point
Court and Of Judge BIlIchford in regard to
the modified lease, he said, were founded upon msap
directors OF company have power 70 manage only Is
ordinary business In extraordinary matters the assent
the shareholders II essential 20 any valid corporate
action Bu II the directors had The power 10 IN IKE
the merger agreementi' was void because nJory OF
the Metropolitan COmpauy's directors also cons tinted
maj 'r!ty OF the Manhattan Company Mr. Barrow con
sdered no great length authorities on TINS point
The acluai interest Of many vi the directors OF
the Metropolitan Company ia tne other
sufficient invaIidate the agreement. The agreement
void because the law contemplated only tue
merger OF two and not o three conpaeH. II ms IN
June ION had not been granted the Manhattan Company
wou have paid dividends The nrs and second pre-
dissenting stockholders OF the Metropolitan Company.
II thus appeared that the Manhattan Company proposed
10 make discrimination against norasaenting stock.
Decision was reserved.