The Indianapolis journal., 1884-05-06
A BACKsEr FOR JAY GOULD.
Important Decision by the Supreme COurt
in the Missouri Pacific Case.


Important Decision by the Supreme Court
in the Missouri Pacific Case.
WASHINGTON, May 5-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, appellant,
against the Missouri Pacific Railway Company,
c. K Garrison, Jay Gould and Others appeal
from the Circuit Court of the United States for
the Eastern district of Missouri
This suit arises out of an alleged fraudulent
foreclosure, in 1876 of mortgage on the Pacific
Railroad of Missouri, the sale of that road under
decree of foreclosure, and its reorganization
in the hands of Garrison, Gould and others,
under the title of the Missouri Pacific Railway
Company. The suit, therefore, is virtually one
brought by former holders of railroad property
against present holders to recover legal title to
it, on the ground that they were deprived of it
by gross fraud. 1t was alleged by the appellant
in the court below that the default in
payment of interest on its bonds, which
was made the pretext for the foreclosure
and sale of its road was fraudulently caused and
procured by means of dishonest collusion between
its unfaithful board of directors and the present
appellees, and that therefore it is entitled to
have the decree of foreclosure and sale set aside
and its property restored to it. Appeliees de-
INJURED in the court below upon various grounds,
which this court, in elaborate opinion by JUS
tic Blatchford, declares to be insufficient. This
court holds:
First-That the charges of fraud in the bill were
sufficient to warrant an action for discovery and
relief based on these charges.
Second-That the case set forth in the bill was
one showing that no real defense was made in the
foreclosure suit in 1876, because of the unfaith-
full conduct of the solicitors and directors of
the defendant in that suit, and was therefore a
case OF which court of equity would take
co enhance.
Third-That there as no laches in filing the
bill
Fourth-That the bill showed hostile control of
the corporate affairs of plaintiff by its directors
during the period covered by the foreclosure
suit. Mere knowledge by or notice to the plain
tiff or its directors, officers or stockholders of
the facts alleged in the bill during that period
was unimportant-a case of acquiesence consent
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 interes ted in the plain
tiff corporation, with knowledge of the matters
set forth in the bill, were entitled to the same
standing as to relief with those who were inter
ested in the corporation when the transaction
complained of occurred
Sixth-That the Circuit Court had jurisdiction
of the bill, Notwithstanding the fact that the
plaintiff and some of the defendants were citi-
zens Of Missouri
The decree of the Circuit Court is, therefore re-
versed, and the case remanded, with directions
to overrule the demurrers with costs, and take
further proceedings 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. r.
Garrison, Russell Sage, and others, and a
controlling interest in it afterwards sold by
the latter to Jay Gould, and it has, since that
time, formed an important link in the Gould
system. The present case came to this court on
a legal technicality in 1880, and was decided
against the plaintiffs, the original owners of the
road. The decision rendered to-day will enable
the plaintiffs to bring the case here on its merits
and get final decision from this court upon
the charges of unfathfulness and fraud which
it is alleged, were the means by which the road
was wrecked.