The morning news. [volume] (Savannah, Ga.) 1887-1900, 1893-06-28

7 certain Terminus ana Tor no Otnef pufiNs
whatever.
EvEN THE STOCKHOLDERS HAp No SAT- so.
"rhe resolution could not have COM
mittcd the company % this transaction
even though 10 had been authorized bN a
large malority of the stockholders. That
Is the point of law a material change
ia the business Of a corporation which
subjects the company 10 hazards, is one
which. not only the directors have no
right TO submit the company 20, but not
even the ma lOrity OF the stockholders, or
800 out Of 600 could do il. This point OF
law is clearly established beyond doubt
Mr. Turner: DO you mean that com
pany cannot mortgage its property with
out an act Of the legislature
Mr.. Bacon: "NO ] do not mean that,
bv auy means They can do nothing how
ever, not authorized by their charter 1t
plainly appears that the Southwestern
was TO receive no benefit from these
| bonds. and unless ii was so, it had no
right to share in the debt. The contract
was for the benefit of the Central and not
! the Southwestern. Neither the directors
nor the stockholders can commit the com
panV to an operation which is not within
! the original scope or contemplation of the
charter One single stakeholder could
say no and defeat the enterprise"
! Mai. Bacon quoted at length from
]
| legislature did not have the right to au-
! thorize a company to embark in new en-
! terprise not authorized in its charter.
THE ACTION WAS ULTRA WIRES.
If the Southwestern had issued plain
! bond" said Major Bacon and received
! the benefit from it, that would have been
intra wires. But if the issue was made
jointly, and for the benefit of the South
western that would be intra wires the
company but ultra wires the directors, as
they had no right to issue bonds for the
benefit of the central.
''The rule of law laid down by the two
highest courts in the world, says that an
act which is ultra wires the corporation,
is absolutely null and regardless every
thing, and that no court will sustain it,
THE court recognizes the sOundness of
that proposition and you need not take
any time on that, "said Justice Jackson.
Mr.. Bacon then went on to read the
statutes on ultra wires.
There is no question, said the court,
chat an act which is ultra wires the
corporation, is null and void The court
is with You and don't understand that
the court is unwilling to be instructed by
counsel, but you needn't waste your
time in instructing this court on that
point.
Mr. Bacon said he did not intend to in
struct the court, but that he merely
wanted to show the well defined rules
under which his case came.
"The COURT said Justice Jackson,
''asked for authority on the point that a
corporation had no right to make con
tract of this kind simply because one or
more of the stockholders did not assent
to it. Your citations have been from
cases where stockholders objected to any
fundamental change in the corporation
The question the court puts to you is
whether the company in the exercise of
that power does make the change. Have
you any authority on that lihelh 7
The authorities l have read bear upon
this case" said Mai Bacon, although
they contain other points, too. II that
were not so, companies could take unto
themselves powers which had never
been granted by their charters"
DEFENDED FOR THE ENTIRE COMPANY.
"The defense in this case" said Mai.
Bacon, lis not made by dissenting stock
holder, but by the corporation. The
Southwestern had no debts before this
transaction. 1t had none to incur as it
was in the control of the Central rail
road and they had it in their power
When the Central presented these papers
to the directors and said, you sign them,
they had no other course.
we represent each and every stock
holder, and we do not represent one but
we are here as the embodied personality
Of all. The case involves large interests
and there is no doubt, Us your honor has
said, that this property is going to wreck
and ruin"
Maj, Bacon went ahead to say some
thing about the act being ultra wires the
corporation.
Major" said Justice jackson, "the
court has called your attention twice to
the fact that 1t understood the question.
If 1t was ultra wires the corporation the
act was void. You needn't waste time on
that point. Under the rulings you can't
deny the right of the majority of the
stockholders to join the new enterprise. "
The Justice said that a stakeholder could
merely enjoin the majority from carrying
out new enterprise. But if this act was
not ultra wires, " said the justice, 'and the
legislature conferred the power upon the
company the directory has the right to
exercise it."
Major Bacon thought If the act of 1892
was foreign TO the original enterprise the
act was ultra wires the corporation and
could not be exercised by the directory.
DOMINATED BY THE CENTRAL.
"The court should not lose sight of
the domination of the Southwestern rail-
road by the Central" sale Mai Bacon.
IL ndu COnUfOl over III ana was able to
make it take this step not within the or
iginal contemplation of the charter and
here is the proposition: Here is rail
road that owes nothing and which had no
need of money, as shown by a recorded
lease; and yet to say that a road in that
position, when it undertook to SIGN bonds
TO the amount Of its entire STOCK simply to
give credit to the Central and not for its
own benefit shows most material
change.
"There is no one who will claim that
this was done with the consent Of the
Southwestern railroad In no single
stockholders meeting had these bonds
been signed and executed and there are
no stockholders outside of this directory
who ever knew that this resolution was
passed by the directors until this suit
was brought. There are over 1000 stock
holders in the Southwestern, made up of all
classes, minors, women, churches, trus-
tees, etc, and it is not right to say they
should have presumed such an action.
They had right to suppose that their
directory would act properly and protect
their interests in their transactions, and
they should not be estopped If the act
was ultra wires, according to the rule of
law laid down by this court, there could
have been no carrying out of the act w it'll
out the consent Of all the stockholders.
The burden of proof is with those who
claim otherwise. I ask the learned
Il -. Il.