The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1888-04-23
AFFAIRS OF THE RAILWAYS.
The End of = Long Contest.


The ATTORNEYS Of the Cleveland Columbus,
Cincinnati 8 Indianapolis Railroad Company on
Saturday received the decision OF the Supreme
Court Of the United States affirming the judy
ment OF the court below in the case Of the st.
Louis. Alton a. Terre Haute Railroad Company
va the G., c.. G. & L Railroad Company and
Others. thus ending q long legal contest. The
case has attracted so much attention for some
years past that the leading features of the con-
test. which given below, will be read with
interest The St. L., A. 81 T. H. Railroad
Company leased its road, in 1867. from Terre
Haute so East ST. Louis to the /.
6 St L. Railroad Company for. q
minimum rental of S450,000 year,
and the presidents of the c.. c., G. & I. Railway
Company, the L. S. & N. S. Railway Company
aud the l., c. & l. Railroad Company and the
Pittsbure, Fort Wayne & Chicago Railway
Company entered into contract by which they
guaranteed this rent. The payment of this
rental consumed the entire net earnings of the
1 s. ST l.. Railroad Company, and in 1878 it
was unable to continue these payments. The
lessor, the St. L.. A & L. Fl. Railroad Company,
brought suit in 1878, to enforce the provisions
of the contract, and compel the payment OF the
minimum rental By the guaranteeing companies.
The court below required the payment of 30 per
cent of the gross earnings monthly oy the IN
SQUIRT for the benefit of tho Lessor, and at the
end of the long litigation, In 1884, the court
dered Judgment against the guarantcre for the
difference between the amount paid into court
under this order and the minimum rent fixed by
the lease for the sum Of 1864 000 The case was
appealed 20 the Supreme Court. and reversed on
the ground that the directors OF the guarantee
ing companies had no power 90 divert the capital
of their respective corporations from the pur-
poses for which it was held by them under the
charters Of such companies to enterprises wholly
without and beyond their corporate authority.
in the meantime the bondholers of the |. Il ST.
l.. r. r. forclosed the mortRage securing their
bonds. and as these bonds belonged mostly to
some of the guaranteeing companies. the St. L.,
A. & T. II. r. r. Company filed its intervening
petition seeking to subject the proceeds of the
sale of the road to the payment Of its claim for
rental render the lease prior to the payment Of
the bondholders. This petition was overruled
BY Judge Drummond, and appeal was taken
the St L., A. 81 T H. r.. r. Company. and the
decision of Judge Drummond was affirmed. The
case is an important in limiting
the power OF the directors of corpora
tions to use the capital intrusted to them
for the purposes prescribed in their charters.
The decision relieves the G., c. e. & Railway
Company Of its last serious controversy and is a
matter of copgratulation to the management
Since the case has been appealed to the SUI
the c. g., o. g Railway Company. Vice
president Hendricks. and his entire firm, who
were of counsel 10 the case, have died, and
Judge Drummond has retired from the bench.
The case was argued before the Supreme Court
by j. NJ. Butler, of Mcdonald e. Butler for the
appellants and Judge Burke. of Cleveland o.,
and John f. Dye, for the appellees.