New-York tribune., 1908-01-11
BLOW TO MELLEN ROADS
4ppelIate Division Blocks Port Ches-
ter and Westchester Merger.

The proposed merger of the New York, West
chester & Boston Railway Company and the
New York & Port Chester Railroad Company
received a blow yesterday at the hands OF the
Appellate Division which, by divided opinion.
sustained injunction granted in the Supreme
Court restraining until the trial of the action
proposed contract between the two companies.
Under the proposed agreement the route or the
Port Chester railroad was to be altered between
177th street and the city line so as to colncIas
with the road already LAID out and partly con-
structed by the Westchester company The
Port Chester company was to reap the benent
of the work already done, while on the eventual
completion Of the two roads the two companies
were to have equal rights over the coincicing
lines
President MeIIen of the New York, New
Haven & Hartford Railroad. through the Mil
brook company controls all the stock in the
Port Chester railroad and a majority of that IN
the Westchester. Robert E. Robinson, repre-
senting the minority stockholders of the west
chester road made application for the injunc-
tion on the ground that they would be injured
by the merger
Justice Scott wrote the opinion handed down
yesterday He says that while he agrees with
the opinion of Justice Ingraham that the court
should not interpose in a dispute between the
majority and the minority stockholders in rela-
ton to the ordinary control of corporate AFFAIRS
it is the duty of the court to Interfere when the
proposed action is detrimental to the inter
ests of the corporation itself as to lead TO the
necessary inference that the interests of the
majority Of the stockholders lie wholly outside
of and in opposition to the interests of the cor
poration and to minority of the stockholders.
One of the important facts in the case. the
justice says, is that the Westchester company
h0ld oh xhfc while the Validitv of It
has been questioned, has never been authori-
tatively adjudged invalid. TT is not unreason-
able" says the justice, that those who control
both companies and own all the stock OF one
and a majority Of the stock of the other and
who contemplate building only one road should
desire to so merge the interests of the two
companies as to build under the impeached
charter and at the same time reap all the
benefit of what has already been done by the
company whose charter rests under a cloud
The justice then goes to say that the
Westchester company has expended more than
81, 100000 in constructing a part of its line
and acquiring rights of way. for which it has
delivered bonds to the par value of S15,OOO,Goo
and stock to the par value of S19oOO6o and
that the contract is secured by an underwriting
syndicate which has agreed to provide funds for
the construction of the road between 1IIth
street and Port Chester village. Under the terms
of the proposed agreement the Port Chester
company would reap the benefit of all OF the
work that has been done south of the city
line and all the right, title and interest that
the Westchester company has in the contract
for the construction Of the road, as well as all
its title to real estate south of the city line
Speaking of the Westchester company, the JUS
tice continues
1T would therefore stand deuuded of every
thing OF value that 1t possesses. except a
charter Of questioned validity In return the
Port Chester company agrees to complete the
construction of much of the lines as shall
after the relocation Of itS route, be common
to both companies. It is quite apparent that
1he Westchester company can derive no benefit
from the privilege to use the concident route
until it shall be able to complete the whole
route
In dissenting, Justice Ingraham writes: The
only effect in permitting the contract to be
formally executed will be to allow the Port
Chester company to eXpend its money in the
construction of the road upon the route claimed
by the Westchester company: and the court can
say at the trial whether not the contract fully
protects the Westchester company"