St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1884-05-06
RAILROAD WRECKING.
A Supreme Court Decision Which
Opens an Important Case.
The Original Owners May Sue for Recovery
of the Missouri Pacific.

WASHINGTON, May "a decision was rem
dered by the supreme court of the United
States to-day in the important case of the
Pacific Railroad Company of Missouri, ap-
pellant, against the Missouri Pacific Railroad,
G. K. Garrison, Jay Gould and others. The
appeal is from the circuit court of the United
States for the Eastern district of Missouri.
The suit arises out of the alleged fraudulent
foreclosure of mortgage in 1876 on the
property of the Pacific railroad in Missouri,
and the sale of that road, and that the decree
of foreclosure and its reorganization in the
hands of Garrison, Gould and others under
the title of the Missouri Pacific Railway. The
suit, therefore, is virtually one brought by the
former holders of the railroad property
against the present holders, to recover the
legal title to it, on the ground that they were
deprived OF it by gross fraud. 1t was al
legged by the appellant in the court below,
that owing to default in the payment of inter
est on its bonds, which was made the pre-
OF its road, was fraudulently
caused, and procured by means of
OF dishonest collusion between its unfaithful
board of directors and the present appellees,
and that therefore it is entitled to have the
decree offoreclosure and sale set aside and its
property restored to it. The appellees de-
INJURED in the court below, upon various
opinion by Justice Blatchford, declares to be
insufficient. This court holds:
First-That the charges of fraud in the bill
were sufficient to warrant the discovery and
relief based on those charges.
Second-That the case set forth in the bill
was one knowing that no real defense was
made in the foreclosure suit is in 1876, be-
cause of the unfaithful conduct of the solici-
tor and directors of the defendants in that
suit, and it was therefor a case of which
court in equity would take cognizance.
Third-That there was no laches in fling
the bill, during which the appeal to this
court was pending could not be counted
against the plaintiff.
Fourth-That as the bill showed hostile
control of the corporate affairs
Of the plaintiff by it's directors during
the period covered by the foreclosure suit,
mere knowledge by, or notice to plaintiff, or
its directors, officers or stockholders Of the
facts alleged in the bill during that period
was unimportant, or case of acquiescences,
assent, or ratification, not having been
shown, and the corporation having acted
promptly when freed from the control of such
directors.
Fifth-That it did not, however, follow
that the parties who became interested in
the plaintiffs corporation with knowl-
edge of the matters set forth
in the bill were entitled to the same standing
as to relief with those who were interested in
the corporation when the transaction COM
planned of occurred.
SiXth-That the circuit court had jurisdic-
ton of the bill, notwithstanding the fact that
the plaintiff and some of the defendants were
citizens of Missouri.
The decree of the circuit court is therefore
reversed, and the case remanded with di-
rections to overrule the demurrers
with costs, and take further proceeding, not
inconsistent with this courts opinion.
The railroad property in controversy in
this case was bought in at foreclosure sale
in 1876, by James Baker, for c. K. Garrison,
Russell Sage and others, and the controlling
interestin it afterward sold by the latter to
Jay Gould, and it has since that time formed
an important link in Jay Gould's system
The present case came to this court on
legal technicality in 1880 and was decided
against the plaintiffs or original owners of
the road. The decision rendered to-day will
enable plaintiffs to bring the case here upon
its merits and get the final decision of this
court upon the charges of unfaithfulness and
fraud which it is alleged were the means by
which the road was wrecked