Salt Lake evening Democrat. [volume] (Salt Lake City, Utah) 1885-1887, 1885-07-24
THE RAILROAD BATTLE.
Judge Zane Delivers His Opinion in the
Great Case To-Day.
The Thirty Years. Lease to the ID. 4 X
q, Western is Valid One.
ID. r, G.. Stockholders Ratified and
Recognized 1t BY Silent
Acquiesence.


Third Judicial District.
The Denver & Rio Grande Western Rail-
road Company and d. c. Dodge VS..
the Denver & Rio Grande Railway
Company, ct. al.
1t appears from the evidence in this
case that the defendant company was the
owner of certain railway lines fin the
State of Colorado which it was operating /;
one of which extended from Denver by
the way of Pueblo and other points to the
boundary line between that State and
Utah Territory; that the plaintiff COM
pany owned the charter for railway
from the point last mentioned, through
Provo, Salt Lake City, and Ogden,
Utah, portion of which had
been built and was in opera
ton, and it was expected the remaining
pant would be completed within short
time. The plaintiff company also owned
three other lines connecting with this
one, one extending to Bingham, another
to Alta, and a third to the Pleasant
Valley coal mines. The Colorado COM
pany had connections east, but none west
of the Utah line, and the Utah company
could connect west to the Pacific coast by
arrangement With the Central Pacific.
1t is apparent that the interest of both
companies required them to enter into a
traffic contract, lease, or to consolidate.
1t was necessary that their roads should
connect across the continent in order to
compete with the Union Pacific To have
paralleled their lines for hundreds of
miles would have been ruinous to both
companies Under these circumstances
they first entered into traffic contract,
and subsequently the lease in question,
which the plaintiffs insist is valid and the
defendants pray may be declared void.
By this instrument the Utah company
undertook to lease its lines to the defend
ant company, with its rolling stock, for
the term of thirty years, from the first
day of August, 1882.
This lease contains numerous provis-
ions, some of which the defendants allege
are so favorable to the plaintiff company
and contrary to the interests of the de-
PENDANT company as to afford inference of
intentional unfairness and actual fraud /;
a number of men of great experience in
operating and managing railroads testified
as experts, and the preponderance of
their evidence appears to establish the
lease as reasonable and fair to both parties
in view of the circumstances and con-
ditions under which it was made. The
Court is unable to find actual fraudin this
transaction. 1t is claimed by defendants
counsel that the d. & X. G. w.
Company was a corporation under the
laws of the State of Colorado and had
no rights to lease the Utah road other
wise than in pursuance of a statute of
that State, entitled "an act to amend
chapter 10 of the general law to provide
for the formation of corporations, APP
proved February 18th, 1881" Conceding
this view, the court will consider that act
and the evidence with respect to it. The
first section in terms authorizes any rail-
road company organized and existing
under its laws to lease any part or all OF
a railroad of any other company in or
without the State, if the lines are contigu-
GUS and connected and not competing OF
parallel Section 2 of the same law is as
follows:
"No such lease shall be perfected until a
meeting of the stockholders of each of the
companies has been called for that purpose
on thirty days notice to each stakeholder
and in such manner as is provided for the
annual stockholders meeting, and the hold.
ers of at least two-thirds of the stock of each
company, in person or by proxy, at such
meeting assent thereto"
1t appears in evidence that the stock.
holders of the Colorado company at this
annual meeting, held April 3rd, 1882, by
unanimous vote in person or by proxy
of more than two-thirds of all the stock
holders, adopted a resolution which in
terms authorized the lease in question
The purpose of the meeting stated in the
notice was to elect directors and transact
other business. Ifinstead of these words
the language had been to elect directors
and transact such other business as may
be brought before the meeting, it would
have included all purposes-all business
which the stockholders possessed the
power to transact for the corporation
The court is of the opinion that the Ian
guage used in the notice was too indefinite
and uncertain.
In view of the want OF notice, the ques-
ton arises, could the alleged lease be
ratified? An act which man can law
fully do may be ratified by him when
done by another. An unauthorized act
by protested agent may be ratified by
the principal when the latter has the
right to do the act The directors could
take lease by the authority of the
stockholders, and the stockholders could
authorize it first and approve it after
wards. The lease was not ultra wires OF
the directors but intra wires of the corpo-
ration, because through its stockholders
and officers the corporation had the
power to take it.
Is there any evidence of ratification ?
and if so, what is its effect? The meeting
of the stockholders held upon the INSULT
cient notice, at which the resolution was
adopted protesting to authorize the direct
ors to take the lease, was held on April
Sd, 1882, and on the same day The direct
ors by resolution in terms, authorized
and requested the executive officers of
the defendant company to negotiate the
lease in accordance with the resolution of
the stockholders. On the tenth dav of
the following July the lease was executed
and delivered; and at a special meeting
of the directors held on the 2lst of the
same month, George Bernard, of New
York, was authorized and directed to
attach the corporate seal of the defendant
company to its guarantee of the bonds of
the Utah company as provided by the
lease, express mention being made of the
lease. At meeting OF the board of
trustees of the Colorado company held
August 9TH, 1882, the lease was read and
in all respects approved and confirmed.
And at the meeting of the board of d.
rectors of the defendant company held on
August 18th of the same year, and May
Goth and October 18th, 1888, and March
Goth, 1884, the lease was also referred to
and recognized as valid, and on August
10Th, 1882, at meeting of the Board of
Trustees, similar reference to the lease
was made. And at meeting of
the stockholders of the same COM
pany on October Sth, 1888, a
mortgage to secure bonds to a large
amount was authorized on its own road
and its interest under the lease in the