The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-06-20


a reasonable sum for contingencies should
ne paid over to the State. That this is
the true relation assumed by the parties by
Inc terms of the charter we think cannot
De successfully cOntroverted. and viewed
from this standpoint 1t becomes perfectly
clear that the States right to surnIlls
profits does not depend upon the taking of
anrmative action by the State to regulate
SSolls out rather in consideration that the
state Will not take such action, or at least
not below certain limits.
Inc corporation has not granted to the
state a right to regulate the tolls because
IL possessed no such right to grant. Such
right already belonged to the State.
WHEN STATES SHARE ACCRUED.
Instead of the State being recipient Of
grant of power from it's creature the cor
poration, it is in the attitude of having for
consideration surrendered to the corpora
ton portion of it's sovereign power and
right We, therefore think that the true
construction of Section % is that the States
rights to surplus profits over Is per cent
accrued as soon as the stockholders had
received from earnings their capital with
III per cent. per annum thereon, whenever
that might be, and that from and after
that date all surplus profits over said 10
per cent. and reserve fund belonged to
the State, and must be accounted for to it,
ana TINS without any regard as to whether
the state mad assumed TO regulate tolls or
not
II - also cOntended that the states right
10 snare in the profits would not accrue un-
III dividends were actually declared suffi-
clent to return to the stockholders their
capital invested and 10 per cent. per annum
thereon, and that as the bill shows that the
requisite amount of dividends has not been
declared therefore the States right has
not ripened. If the bill contained no other
aIegatlon than that the requisite amount Of
dividends had not been declared, then the
State would have no cause of action. But
where IT is shown, as in this bill, that the
earnings have been sufficient to pay back
the capital invested, the 10 per cent per
annum, the Is per cent. dividend and still
leave surplus of 81 100000 we think a right
is shown in the State to demand that said
dividends be declared or be treated as de-
clared, and that the State be admitted to
It's rights in the surplus profits.
Section "a requires that dividends shall be
declared semi-annually out of the profits
also that the expenses shall be paid and a
reasonable contingent fund reserved out of
the same fund The only other use direct
ed to be made of the profits is the payment
of dividends, and when we take into consid-
GRAFTON the manifest intention of the Legis-
lature, that as soon as the stockholders
shaL nave received return of the capital
invested by them and 20 per cent thereon,
that the State should have an interest in,
the profits, we think there is cast upon the
company the duty of applying the entire
profits over expenses and a contingent re-
serve in payment of dividends to stockhold-
erS until they have received their capital
and 10 per cent. per annum thereon.
The company is given a very large dis
erection as to the amount of the contingent
reserve and the dividends to stockholders
until they are made whole for the capital
invested there could be no abuse of this
discretion so far as the largeneSS of the
dividends are concerned, for the larger the
dividends the sooner the stockholders capt.
tai would be returned to him But to
the contingent reserve, the amount reserved
might be unreasonably large as to amount
TO an abuse of such discretion, and for
which a court of equity would interfere.
The fact that the company had willfully
refused to apply the earnings on dividends,
although ample, had made large invest
1@f,, l,oI
ulently concealed from the State the
amount of the earnings, all with the pur-
pose of preventing the State from demand
ing its rights in the surplus earnings, could
not in any way affect the States rights in
the matter. The company could not hide
behind it's own fraud. or thereby In any
way change or lessen it's obligations to the
State.
THE RICHMOND BRANCH.
1t is also contended when the Legislature
in 1857 released the defendant from it's OBJ
legation to build that part of the road be-
tween the city of Indianapolis and the city
of Richmond, and granted the franchise to
a new corporation, that this was such
change in the contract as would operate
to release the defendant from it's obliga-
ton to account for surplus profits to the
State, and the case of Covington Turnpike
Company VS.. Sandford 164 U. S., SIS, is
cited as an authority in support Of this
proposition.
Upon reading of the opinion in that
case it will appear that the facts there
are in many particulars different from the
facts in the case at bar. In the turnpike
company case the Legislature created two
new and entirely distinct corporations. The
stockholders of the old becoming stockhold=
ers in one or the other of the new corpor-
atoms, the old corporations conserving
thereto and going out of existence; While
in the case at bar the old company con-
tinued in existence and in possession of all
re privileges. with bare X
ception that it surrendered it's right and
was released from its obligation TO build
oils and Richmond. The release from its
obligation to construct that portion of the
road would be a good consideratl99n ior IT'S
such portion of it's original line
1t further appears from the act of 1851
that the defendant consented to the change
made in its charter by said act. 1t then
comes to this. that the parties to a con-
tract have mutually agreed to cancel or
viding in their contract of modification that
the contract as to all other provisions shall
or authority and none has been brought
to our attention by which mobilization
of a contract by the mutual consent OF
the parties thereto shall operate to wholly
annul the other provisions or the contract.
just why the cancellation Of that portion
of the charter contract as relates to the
line between Indianapolis and Richmond
makes it utterly impossible for the de-
PENDANT to account for and pay over surplus
earnings 10 tie SSllOOA ANiAN' w N-N NN-
able to - -
How it can make any possible difference
to the stockholder as to whether his capt.
tai is restored to him out of the earnings
of the road west of Indianapolis, or out
of the whole line, is not apparent, when
il must be considered that If the eastern
end of the road be built that there must
be added to the amount of capital to be
returned the full amount of the cost or That
portion of the road and that the stockhold-
ers' profits are limited within fixed sum.
But however this may be, the fact that
the change in the line of road TO be putt
was made by the mutual consent or poth
parties is complete answer TO the claim
asserted and especially when by the orig
inal terms of the charter 1T is provided that
in case the entire line of roads shaH not
be built then all the rights, privileges ana
benefits shall be extended 10 Sucn part VI
said road as shall be completed
The fact that in 1873 the defendant &C
cepted the provisions of the general law
and surrendered its charter had only the
effect of releasing the defendant right 10
operate under the special charter there
after but it in way affected the de-
PENDANTS obligations to the state or other
narties. previously incurred, and as 20 all
such objects said charter would remain
i'm full force until such obligations were
discharged. I'm 30
The allegations contained in the bill OF
efforts to corrupt legislators and commit
tees amount to nothing more than a charge
Of concealment of the facts from the state
In constituting the provisions OF the ue-
fendant's charter so far we have given no
consideration to the legislation enacted In