Court Opinion

ID: 9299893
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:06:24.588919+00
Date Added: 2024-06-11T17:13:38.599720
License: Public Domain

DILLON, Circuit Judge.
On the argument at the bar, the learned counsel for the plaintiff township conceded that this bill was brought upon the theory that no legal consolidation of the two companies had been effected; that therefore the Carbondale Company (in which the plaintiff originally took stock and with which it made its contract in respect to building and operating its road) is still in esse, and the plaintiff still a stockholder therein; that the mortgage executed by the consolidated company, so far as it embraced the line or property of the Carbon-dale Company, was void, and the decrees of foreclosure and the sales thereunder to the defendants conferred no title to the property of the Carbondale Company. Therefore, the plaintiff claims, the Carbondale Company is and always has been a distinct corporation; that consequently the plaintiff is an existing stockholder therein; that the defendants have no title or right to the property they purchased at the foreclosure sales, and hence the plaintiff as a stockholder, and by virtue of the company’s agreement when obtaining the subscription, has a right to have the defendants restrained from interfering with the property of the Carbondale Company or removing the ties, iron, etc., belonging to that company, since the company (as alleged) refuses to act or to bring this suit. I have carefully examined all the record evidence in the-case, and it has convinced me that the plaintiff is mistaken in supposing that no consolidation was effected, or that the mortgages were void, or that nothing passed by the foreclosure decrees and sales; and therefore the basis of the bill, as framed, as well as the theory on which it was attempted to be supported in argument, has wholly failed.
The supreme court of the United States has-*773decided what is the effect of consolidation of two railway companies. It extinguishes, unless otherwise provided, the two constituent companies and makes of them one new company. Clearwater v. Meredith, 1 Wall. [68 U. S.] 25; Tomlinson v. Branch, 15 Wall. [82 U. S.] 460. The plaintiff township, upon such consolidation being perfected, would become a stockholder in the new company, and the new •company would, unless otherwise provided, succeed to the duties as well as the rights of the constituent companies. The plaintiff’s bill, brought upon the theory that it is a stockholder in the old company, is, as it stands, wholly defective. And as a stockholder’s bill it is also fatally defective in not making the railroad company in which the plaintiff alleges itself a stockholder, a party defendant. Davenport v. Dows, 18 Wall. [85 U. S.] 626. If the plaintiff township claims that the defendants, as the purchasers of the property at the foreclosure sale,- are bound to operate the railroad; or if not, that they have no right to remove the property they purchased, even If they acquired a title thereto by virtue of the foreclosure proceedings, the bill as it stands is not adapted to present these questions even if a court of equity is the proper tribunal in which mainly to litigate them or ■either of them. As the statute of Kansas authorized the making of the mortgages on the property of the company; as the mortgages did not embrace the “franchises;” as it appears that the defendants do not intend to organize a new company and acquire the right to operate the road, and that the road if operated cannot be made to pay the expenses of operating it, I confess I do not see how the state or the plaintiff can compel the defendants to operate it; and if they cannot thus be compelled, I do not now see why they should be restrained from removing the iron rails and ties, if they are worth more to them if removed, than if left to rust and rot in the road-bed. But these questions have not been ■deliberately considered by me, and they will be left open in case the present bill is amend-ed or a new bill or a new proceeding be brought. In any view, the plaintiff’s rights are so doubtful, especially on the bill as it stands, that my opinion is that the injunction should be dissolved. It seems to be a hard case for the township; but probably it is no more so than it has proved to the other stockholders; and it would appear that the bondholders, whose money mainly built the road, have suffered from an enterprise, which, if not misconceived, has wholly collapsed.
If Judge FOSTER, who sat at the argument, concurs in the foregoing, let an order be made dissolving the injunction. If he does not concur, the motion may stand for further argument at the next term.