New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1884-04-16
OBSERVATION-DISCLOSURES
SUSTAINING RIGHTS OF STOCKHOLDERS

SET ASIDE.
Judge Van Brunt, sitting in the Equity Term
Of the Court OF Common Pleas yesterday handed down
his decision In the suit OF the Metropolitan Elevated
Railway Company against the Manhattan Railway Com
pany, the New-York Elevated Railroad Company and
others to set aside the agreements Of October o. 1884,
by which the guaranteed rental TO the leased companies
reduced from 10 to percent their stocks Tbs
Metropolitan claimed that It's directors had no
power 10 modify the original leases and
tripartito agreement OF May 20. 1879, without
the consent OF the stockhoders that three Of the d.
rectOrs were directors Of anagonsto company when
the October agreements made that tho personal in
terests OF several OF the Metropolitan directors
posed u tho compsnys interests and that actual fraud
entered into the making of the agreement The defend
denied that the consent OF tho stockholders
necessary the validity Of the October contracts ro
pudated the alleged fraud, and ayerred that the con-
tracts presented the only solution OF the dhcutesin
which the elevated system involved at the time
Judge Van Brunt his decision to and handed
it Chief Clerk Nathaniel Jarvis Jr, few minutes
before opening court at ii Mr. Jarvis said; " Well
Judge, how have you decided" The laughing reply
was: Against all parties and In favor OF nome Mr..
Jarvis took the three times 286 pages OF printed matter
to his office Within few minutes Mr. Duer, OF the c0un-
sci for the Manhattan Company. appeared and got ono
copy, the for the Metropolitan Company ootaheh
second copy and the third went at once into the has
OF the reporters have had many inquiries regarding
the decision" said Mr. Jarvis, and many gussses nave
been made on points in IT, but judge Van Brnnt mas
guarded his secret relgousy from his most intl'
mate friends"
RULINGS THE JUDGT.
Tho rulings Of Judge Van Brunt a. follows:
O)-The METROPOLITAN directors had power 70 mo-.
ify the original lease or tripartte agreement Oh
1879, without the consent Of the shSIenoaeh o ~ tho
etropOllan directors were also directors OF in , Sana
the part Of any Metropolitan director in making the 0cto
Der agreements, but they were for the pest Iees Oh
mepts WeTa By the Metropolitan Company
(6lThe bin Of peace was no bar to the suit Gmtae
Company was no esOppc. (8j-The Judgment OF ths
superior Court estoppel (9)-An restitution re-
In his opinion judge Van Brint, taking up the first
preliminary objection Of the defendlnts that tho scon
has no case for court OF equity because the palntlh
had a complete remedy at law, says that even II he
should find there ground for equitable RELIEF
vet the facts proved t tho party was entitled TO loyal
relief the bill would not DISMISSED Another ground
upon which the bill In equity could be sustained was that
could determination "a 10 the validity OF the
October agreements without the presence OF the NOW
York Company, party TO thcrn' which h'a
right TO be heard on tho question. mo
next objection viz that the plaintiff corporation was IT
self party to the fraud II the October agreement was
fraudulent the Judge, who says OF the case
1onis agt Meyer ID Federal Reporter 3I2 and 3l3)
quoted by the defendants to support their objection:
The case cited howeyeE y not coas nor maintain
an action to set aside any fraudulent contract
made by the corporation without alleging refusal or
rood reason to suppose that the corporation would noo
bring any action If this rule is 70 prevail the directors
of cOrporatona raudulenty as they please
and it is impossible redress the wrong when the cor
p0ratOn may received at their hands unless some
tockhoder Is Wiling to undertake the labor and expense
Of an action therefor WIFE tS S9goCo py snfhority
he corporation may repudiate the acts 80 done, Pc
cause the stockholders not only may cia na
through the corporation unless the corporation
refuses assert such rights The directors are te agents
milking for their principal, or fraudulenily.
certainly the principal may repudiae It, mat IL Is inc
same prncp9 made the contract that seeks 10 epu
date IL is no bar to the relief.
Wh regard to tho third objection. which would bar the
plaintiff from relief because alleged that The contracts
Of Nay 90 1879 which 1t sought to renstato were a
nuty Judge Van Blnt says that this claim was aban-
doned upon argument but that in any case the plaintiff
by its complaint doe not seek to rensate anything but
simply asks to have the October u8SD agreements sol
aside as null and void
The defendants for the next objection, alleged that the
october agreements had been disapproved by tho
stockholders or even the directors OF the Metropolitan
Company by any direct vote. The Court holds that tho
directors had authority 20 make these agreements TIN
ont he sOckhOlers consent then expression Of their
dsen %5 on The dronpd Of fraud but what CON
sutes that must depend upon the facts In each case.
The Court fails 20 appreciate the force OF the objection
that because board of directors had been elected
no right was given to mpcach the acts OF previous
board the corporation was the same Judge Van
Brunt says:
Ibaye never heard that man was bound by the
fraudulent contract made by his agent IN his name be-
cause ne the person in whose name the fraudulent
contract was made sought set aside the contract Tho
directors O corporation its agents and executive
their authority recreant to their rustthe prnci
palthat, IS the corporatonImay appoint new set OF
which it mas suffered
PREVIOUS DECISIONS NO BAR TO RELIEF.
Passing on to the affirmative defences urged by the do
PENDANTS Judge Van Brunt holds that the fact that tho
Manhattan Company had, at tho commencement of this
suit against tho lessor
companies and all other persons who had
brought actions to set aside the October
agreements asking that all matters relating to the con-
tracts should determined 10 that action did not affect
what rights the Metropolitan Company might acquire
to the protection of the Court Judge Van Brnt also
holds that the Judgment of the Supreme Court in tho
action of The People against the Manhattan Company
entered on November II, 1881 involved an Issue with
which the Metropolitan and New-York companies had
nothing to do The Court in no way adjudcated upon
the question OF the validity Of these agreements COnsd
crng the defence Of the defendants resting upon
the ud ment Ofthe superior Court of the City Of New
York entered December 3, 1884, in the action by the
New-Yorl Company to recover its property, the Court
says that that Judgment entered upon statement
Of facts TO which all the parties greed aud upon concu
sions Of law based those admissions. Judge Van
Brunt says:
Ifthis Judgment is bar to the right Of this plain
tin maintain this action, he has hssate OF affairs asa
make an agreement which Is absolutely VOID,
and in the making or which there mas Deen
plain violation Of duty, and II their corporation Is
upon it, the Board Of Directors being In Office.
may confess Judgment and then there is no power
i'm any court redress the The mere statement
Of the proposition shows that such cannot
be the law, and II Is not the law.
The last defence OF the defendants that resu
ton could bad by any Judgment because tho receivers
cannot put possession again northe various previous
suits restored to their former condition Judge Van Brunt
says that plaintiff is not deprived OF all rehef because
he cannot the other parties to the same position
hafor pnared into the void
yodabe agreements when the other parties put them
selves in the position in which they find themselves with