Court Opinion

ID: 6234503
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:29:22.183162+00
Date Added: 2024-06-11T08:58:00.030775
License: Public Domain

The opinion of the court was delivered, by
Ágnew, J.
George W. Cass, T. D. Messier and John P. Henderson, the president, auditor and treasurer of the Pittsburg, Fort Wayne and Chicago Railroad! Company, and afterwards the president, comptroller and treasurer of the Pittsburg, Fort Wayne and Chicago Rail wag Company, were in no "way liable to the plaintiffs as attaching creditors. The attachment was not- served on them and no judgment was had against them as garnishees. Nor were they trustees of or for the debts attached or the securities representing these debts. So far as they were connected with these' debts, or in possession of the securities, they were acting as officers and agents of the rail road company and not of the railway company, and all they did was in their official capacity and in subordination to the railroad company. Their *305position and acts were those of the railroad company, and were not individual either in their own right or their own wrong. No negligence is charged to make them individually responsible ; and if any were, the liability would be to their own principal, and not to the plaintiffs, with whom they were in no privity, and who have not charged them by attachment. The liability for the debts and securities attached was, therefore, wholly upon the rail road company. It is not denied that the railroad company is liable. The liability was fixed by the judgment in the attachment, and the return to the execution which followed the judgment.
The liability of the other defendant, the rail way company, is attempted to he founded upon its alleged privity with its predecessor, the railroad company; and its possession of the assets of the railroad company as trustees for the stockholders of the latter. Neither position is sustained. The Pittsburg, Fort Wayne and Chicago Rail way Company is a new, original and distinct corporation, deriving its existence and franchises under and pursuant to the Act of the 31st March 1860, Pamph. L. 498, and was by the terms of the act dependent for its existence upon the sale in law or equity of the railroad of the Pittsburg, Fort Wayne and Chicago Railroad Company. It was upon this contingency involving the extinction of the railroad company that the law itself placed the incorporation of the rail way company. The term “reorganization” in the title of the act, which was passed before the adoption of the constitutional amendment of 1864, cannot overcome the very facts of the case, and the language and intent of the law. Nor could the organization of the company precede the contingency of sale, made by the act the basis of the organization of the new company. Nor is the position sustained by the facts in evidence that the new company is the trustee for the stockholders of the old company of any of its assets, and consequently it is not trustee for the creditors, whose equity, in case of assets, would be superior to that of the stockholders. It is not proved as charged in the bill that the re-organization, as it is termed, was in pursuance of certain private agreements between the mortgage bondholders and the stockholders whereby the new company became possessed of assets or property belonging to the old company. On the contrary the proof is that the road, property and franchises of the old company were sold under judicial proceedings to every appearance' adversary; and the sum bid, two millions, paid to a receiver before the sale was confirmed, and the deed ordered to be made, vesting the title and franchises of the old company in the individual purchasers, through whom the new company derives its title. In this connection it is to be noticed that there is no charge of collusion or fraud alleged in the bill to subvert the judicial proceedings under which the property and franchises of the old company passed to the purchasers and from *306them to the new company. The whole case of the plaintiffs, in this branch of it, is rested on the fact that the new company came into possession of the assets and property of the old company under such a voluntary arrangement with the stockholders of the old company as would leave the property liable to the creditors of the old company. This liability is expressly denied in the seventh paragraph of the answer, while in the sixth paragraph, not only is it alleged that the sale and foreclosure under the mortgages passed a free and unencumbered title to the new company, but it also alleged that the rights of the old stockholders were acquired under an arrangement subsequently made ; and this accords with the power conferred upon the new company by the third section of the Act of March 31st 1860. Taking all the facts and evidence found properly in the record, we discover no proof of a preliminary agreement, or such an arrangement with the stockholders of the old company, or such admissions of liability, as would charge the new company with a trust of any of the assets for the creditors of the old company. This is the difference between the present case and that cited from 7 Wallace 392: Railroad Company v. Howard. There not only was there a preliminary agreement to sell the property of the Mississippi and Missouri Railroad Company to the Chicago and Rock Island Company, and to make the proceeding to foreclose the mortgage and sell the roads of the former, ancillary to the agreement; but after all this had been done, and the property vested in the latter company, the latter admitted the possession of sixteen per cent, of the fund in hand to belong to the stockholders of the former company, and the real question was whether the stockholders or the creditors of the Mississippi and Missouri Railroad Company should be entitled to this surplus fund ? It was held of course that the equity of the creditors was superior to that of the stockholders. Finding no error in the decree dismissing the bill with costs, it is affirmed, and the appellants are ordered to pay the costs of this appeal.