The morning news. [volume] (Savannah, Ga.) 1887-1900, 1892-05-15
THOSE $4,000 SHARES.
THE CENTRAL TRUST CANNOT VOTE
THEM TOMORROW.


Law Clearly Stated-DoubtfJ1l II the
Trust Company's Charter Gives it
Any Power to Do What it Asks the
Privilege OF DoiuR-Other Points of
Importance.
MACON. Ga. May 14.-In an elaborate
opinion Judge Speer to-day denied the
motion of the Central Trust Company OF
New York. which sought the privilege of
voting the 42,200 shares OF Central railroad
stock at the election to be held May l6 for
directors for the Central Railroad and Bank
ing Com pany. The decision is Of so much
Importance, goes 30 fully into the history
OF the AZ, 200 shares. aud states so clearly the
facts and the law that it is given entire.
Rowena NJ. Clarke vs. the Central Railroad and
Banking Company of Georgia ct al, and the
Y 'ntral Trust Company of New York VS.. II.
M Conner and Others receivers, ct al. Mo-
tion to modify an interlocutory decree
Butler. Stilwell & Hubbard and II. b. Tomp-
kins for the motion; Lawton q Cunningham,
Denmark Adams & Adams, Daniel w. Roun-
tree, Marion Erwin and A. o. Bacon, contra.
Decided May IL. 1899.
SPEER, JUDGE: 1t is essential to a clear I'M
derstandin2 OF the questions involved in this
motion, that n brief statement be made of the
proceedings heretofore had in the equity cause
In which the motion is presented
IL is also essential TO direct attention In the
outset to paragraph of section 2 OF the con-
stitution of the state of Georgia This clause
or the constitution is as follows: 1.-THE general
assembly Of this state shall have no power TO
authorize any corporation to buy shares or
STOCK IN any other corporation in this state or
elsewhere, or TO make any contract or agree
ment whatever with any such corporation which
may have the effect, or be intended to have the
effect, to defeat or lessen competition in their
respective businesses or to encourage monopoly:
ana all such contracts and agreements shall be-
illegal and void"
was adopted In the year 1877. It was evident at
that time. and has become more plainly evi-
dent since then, that 10 was Indispensable by
comprehensive and imperative enactments OF
fundamental law, to arrest the tendencies of
corporate bodies toward abnormal and de-
strucUive agreRatons OF Observation-Disclosures
which could not have been foreseen, and which
therefore had not been restricted and limited
by the legislation OF the past-tendencies which
endanger the snlutarY purposes for which such
corporations were created by the state, and
which threaten to infiict upon vast muIttudes
OF the people the most destructive injustice and
inJury-inJustice and injury against which it
is obviously the duty Of the government to
afford them protection.
1t would be- perhaps, difficult to express in
such narrow compass restriction Of corporate
power more conclusive in tts inhiDitory effect.
or more difficult to evade by those who, for any
motive, would seek 10 avoid its legal force.
Vide Langdon vs.. Branch, 81 Federal Reporter,
149
In a more recent case that OF Hamilton vs.
II
construlng this clause. used this language:
81 Inc original bill and interventtons filed IN
this cause seek to apply TO the facts OF the case
the legal effect OF this constitutional provision,
and further TO invoke the doctrine following an
nounced with great force and clearness by MIR
Justice Gray IN the supreme court of the United
States in the case of the Central Transporta-
ton Company VS.. the Pullman Car Company,
lo9 United States, 24-6l, a contract Of a
corporation which is ultra yires in the
proper sense, that Is TO say, outside of the OBJ
1ect or its creation as defined In the law Of its
organization, and therefore beyond the mowers
conferred upon it by the leg islature, is not
voldable only, but wholly void and of no legal
effect. The objection to the contract is, not
merely that the corporation ought not to have
made It, but that it could not make it. Fur
ther, That the lease by one corporation of its
property and franchises to another corporation
is unlawful and void because beyond the cor
porate powers OF the lessor, and involving an
abandonment Of its duty to the public -
IL appears from the record before the court
that on or before May S0 1887, certain persons
formed design to obtain control Of ma
JorltY or the capital stock OF the Central Rail-
road and Banking Company of Georgia. While
this company has assets amounting in value
to many millions Of dollars, its capital stock is
only S7.50O.000 For the purpose of retaining
an exemption from state taxation granted by
the original charter, the capitalization OF the
stock had been preserved at that
fact it became relatively an easy
matter to obtain majority OF the stock bear
ing the voting franchise. To accomplish this
Thomas B. Keogh organized, attempted TO
organize, at High Point, in North Carolina, a
corporation bearing the significant name OF
"The Georgia Company" The charter was
granted by the clerk of the superior court OF
Guilford county; aud the business of the conn
pany was as therein stated, ito purchase, ac-
quire and to hold, or guarantee, TO indorse the
bonds or stocks OF any railroad company in
this or any adjoining state, to lease any
railroad 10 this or any adjoining
tation, and to operate railroads In this and
adjoining states; to aid any railroad company
In this or any other adjoining state, except
said statute" The charter does not appear to
have any validity. See Statutes of North Caro-
Ina, vol page
This appears to be both q banking and rail-
road corporation, and such corporations can bo
created by the legislature only.
IL appears, however that the persons mem
toned In the original bill. who had bought
about 20 900 shares of the stock of the Central
Railroad and Banking Company of Georgia.
turned over their entire holding TO said Georgia
Company; and 1t was further stipulated and
agreed that this stock should be held in block
with view to permanently control the man
agement Of the Central raj road and its proper
ties. Thereafter it appears that the Georgia
Company deposited with the Central Trust Com
pany OF New York its entire holding of this
stock, and had issued thereon and sold to the
public four millions of the bonds of the said
Georgia Company. In the meantime by
virtue OF its majority contpol 1t bad taken
charge through a president and board of
ulEeCLOIb 0lFcleQ III Ln6 Dy LDlS OlOck or
stock, of the Central Railroad and Banking
Company; thereafter the Georgia Company,
transferred all OF its capital stock to the Rich
mond and West Point Terminal Railway and
Warehouse Company. This latter company
thus came into control Of the Central Railroad
and Banking Company. lt also had control OF
the Richmond ana Danvle Railroad Company,
and OF the East Tennessee, Virginia and Georgia
Railway Company, both OF which are directly
competitive lines Of the Central Railroad and
Banking Company. The Terminal company
las we shall call it for the sake of brevity) now
procured from the Central Trust Company
large issue Of its bonds secured by mortgage
upon all the properties under its control.
With reference to the 40 coo shares OF stock Of
the Central railroad, deposited with it as col
lateral TO secure the bonds Of the Georgia Com
pany, it was stipulated in the mortgage that
whenever the Terminal company presented q
bond of the Georgia Company the Central Trust
Company should issue in leu the eof bond OF
the Terminal company. Two millions of the
bonds of the Terminal company were left on
deposit with the Central Trust Company with
the avowed purpose Of procuring by the use OF
said bonds the $1,000 shares of stock of ths
Central railroad which had not yet been Sc
cured by the Terminal company or the pro-
moters OF the scheme to possess and control the
Ceatral Railroad and Banking Company of
Georgia.
The Central Trust Company thus became the
trustee for this mortgage, a salient feature of
which was the design to secure the absolute and
undivided ownership of the Central railroad by
a company controlling rival lines largely by
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