The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1900-10-19

NO FRAUD ON RAILROADS PART
THAT PART OF SPECIAL MASTERS
RULING SUSTAINED.


In the suit of the State against the Van
dalia Railroad for the collection of more
than 100000 which was alleged to be due
under certain provisions of the charter
under which the Indianapolis & Terre
Haute Railroad first operated, holding that
the railroad company owes the State s745.-
l5465
The decision was on the exceptions filed
to the report of Noble c. Butler. special
master, who held that the railroad owed
the State nothing. The suit is the out
growth of provisions in the charter granted
the indianapolis & Terre Haute road,
which provided that after the stockholders
had been reimbursed for the full sum in
vested. with 10 per cent per annum. all
over dividend of Is per cent. per annum
should be turned over to the State for
the school fund.
The company operated fourteen years un-
der this charter. and then reorganized
der the general railroad law, which did
not contain the provisions of the charter.
The Legislature of 1887, after twenty-five
years of various attempts to include these
provisions in a law, passed such bill, and
William A ketcham, then attorney gen.
eral. Immediately brought suit to recover
the money the State claimed to be due.
A demurrer to the complaint was over
ruled by the tribunal of the Superior
Court and the matter was placed in the
hands of the special master. His decision
was favorable to the railroad company,
holding that II owed the State nothing,
and exceptions were at once filed in the
superior Court. This was six months ago,
and the decision handed down yesterday
was after these months of elaboration.
THE PROMISE TO PAY.
| AS to the promise to pay the State the
| decision reads:
Il think it wholly immaterial as to
! whether the promise was an irrevocable
| one or not. the mere fact of the granting
| CT a charter at all, and which was accepted
by the defendant, was sufficient consider
alton for any promise on the part of the
corporation contained therein: and. fur
Their, after the State has fully performed
/ It's part or the agreement, although such
performance may have been optionary, the
| obligation on the part of the corporation
becomes fixed and absolute.
Il still adhere to the view expressed in
| the ruling on demurrer that there was a
valid contract between the State and the
| defendant by which, when a sum equal
to the full sum invested and 10 per cent
per annum thereon should be paid to the
| stockholders, the State should thereafter
be entitled TO the surplus profits over Il
! Fer cent per annum to the stockholders.
and such sum as 1t might be necessary to
reserve for future contingencies. In or
| der to determine where the States rights
shall mature, and as the foundation on
which 10 build the computation, il is neces-
| sary to ascertain what was the full sum
| invested within the meaning of the char
| ter"
! Regarding the dividends the Judge held:
| THE term dividends declared means
| dividends to stockholders just as certainly
/ stockholders
actually written in the charter following
the word dividends and the term full
| TO be invested by the persons whose in
| vestment was then under consideration
and this. as have already indicated was
| the amounts to be subscribed by the share
| holders, 1 exclude unreasonable and
| strained the conclusion that the Legislature
| meant to return to the stakeholder his prin-
| cipal with 10 per cent. thereon and also in
| addition to turn over to him a sum equal
| to all of the gifts, donations and requests
| that might have come to the corporation
| from others with 10 per cent per annum
| thereon. think 1t equally unreasonable
and strained to hold that the stockholders
| were TO have In addition equal to
| all earnings that may have been used in
| constructing the road with 10 per cent.
| thereon and that both those donations
| and earnings should become to the stock
! holder a principal or investment on which
he should be entitled to Is per cent. per
annum for all future time"
! FINDING SUSTAINED.
4 Inc special master nelQ tnat there was
/ no fraud as alleged in the complaint, and
In sustaining this finding the decision SAYS:
THE master has found as a fact that
| the evidence does not establish fraud or
bad faith on the part of the directors The
| State, while not contendfng that actual
fraud has been shown, claims that when
earnings are shown to have been made
that unless a necessity be shown for re-
| tanning portion contingent fund that
| Ii became the duty of the directors to ap-
ply the entire net revenues as dividends
and that failure to do so is constructive
fraud. 1 therefore think the mas
ter was warranted in finding that the evil
| dence did not make case of fraud and
| that his conclusion that the dividends de-
| clared only can be used in computing the
sum which shall be equal to the full sum
invested and 10 per cent. per annum
thereon"
In conclusion the decision sets out the
| exceptions overruled and sustained, with a
| table showing the investments made each
year by the company while it operated un-
| der the charter, interest, dividends de-
! clared and the net earnings for the last
| three years, the computation ending with a
balance of SIS. 154.65, which the court holds
is due the State.
The decision does not give the State all
| IL asked, and as IL Is also against the rail-
| road company both sides are willing to see
| the case go TO the Supreme Court. where
| IL will be carried soon as final judg-
| ment is entered. II is understood that IL
| the Supreme Court sustains Judge Carter
| decision the case will be carried to the
| United States Supreme Court
| On nn