the corporate body, have no power to assent to an alteration of its charter. The Commonwealth v. Cullen, 13 Penn. State 133. Persons acting in a fiduciary capacity, cannot purchase at sales made by themselves. Wickliff v. Robinson, 18 Ill. 289. In the case of Koehler v. Black River Falls Iron Co., 2 Black 721, Judge DAVIS said, quoting a number of authorities, that "the directors are the trustees or managing partners, and the stockholders are the cestuis qui trust, and have a joint interest in all the property and effects of the corporation, and no injury that the stockholders may sustain by a fraudulent breach of trust can, upon the general principles of equity, be suffered to pass without a remedy." They (the directors) hold a place of trust, and by accepting the trust are obliged to excute it with fidelity, not for their own benefit, but for the common benefit of the stockholders of the corporation. 2 Atkyns, 404. 3 Paige 220. 1 Rhode Island 321. 19 Eng. L. & Eq. 361. The directors of a moneyed institution are responsibible, in an action upon the case, for improperly obtaining and disposing of its funds or other property. Franklin Fire Insurance Co. v. Jenkins, 3 Wend. 130. Where the directors of a railway assume to do an act exceeding their power they will be personally liable. Redfield on R. 405. Owen v. Van Uster, 10 C. B. 318. Roberts v. Button, 14 Vt. 195. A member of a corporation has a right of action against the corporate body for any injury he sustains from the misconduct of its agents or officers. See, also Grag v. Portland Bank, 3 Mass. 385. Waring v. Catawba Co. 2 Bay. 109. Courts of equity will scrupulously examine the conduct of persons acting in fiduciary or trust capacities, and protect the trust property from waste, whether it arise from the actual or constructive fraud of the trustees acting with the party obtaining the undue advantage, or from the fraud of the latter alone. Moore v. School Trustees of Term Three, 19 Ill. 87. Thomas v. Sloo, 15 Ill. 67. Morris v. Thomas, 17 Ill. 113. If the managers of a corporation are about to engage in an enterprise not contemplated by the charter, or apply the corporate funds or credit to any other than the purposes therein specified, a court of equity will interfere, by injunction, at the instance of stockholders. Smith v. Bangs, 15 Ill. 401–2. Bagshaw v. Co. R. R. Co., 7 Hare 114. We allege that the Chicago & North Western Railway Co. were very much in want of money to carry on their schemes and that they formed a conspiracy to get control of the G. & C. U. R. R. Co. and appropriate it to their own use-and that the persons who were elected directors of the G. & C. U. R. R. Co., knew this, -but as was said by Judge Davis, in the case of Koehler v. Black River Falls Iron Co., 2 Black, 720-1, "Instead of honestly endeavoring to effect a loan of money advantageously, for the benefit of the corporation, these directors, in violation of their duty, and in betrayal of their trust, secured their own debts, to the injury of the stockholders and creditors. Directors cannot thus deal with the important interests intrusted to their management. They hold a place of trust; and by accepting the trust are obliged to execute it with fidelity, and not for their own benefit, but for the common benefit of the stockholders of the corporation. XIII. The "consolidation" in question was a sale—the vendor being the G. & C. U. R. R. Co., and the vendee being the C. & N. W. R. Co.—and as the directors of the G. &. C. U. R. R. Co. who made the sale, were also directors of the C. & N. W. R. Co., or a large number of them were, it became a sale by THEMSELVES to THEMSELVES or if the directors of the G. & C. U. R. R. Co. were merely AGENTS of the stockholders, it presents a case of where the agents acted AS AGENTS for BOTH PARTIES, and is, therefore, if not absolutely void-voidable by a dissenting stockholder WHO IS THE PRINCIPAL. 1. To prove that it was a sale you have only to look at article 12 of the consolidation agreement, (see p. 10 of this brief), which is as follows-" And the second party of the second part (the G. & C. U. R. R. Co.) in consideration of the premises, and of the sum of one dollar to it paid by the party of the first part, (the C. & N. W. R. Co.) the receipt whereof is hereby acknowledged, doth hereby grant, convey, assign, set over to and vest in the said consolidated company, for the purpose of such consolidation, all the railroads of the said party of the second part, and all the equipments, implements and materials used or acquired therefor, and the rights, privileges, immunities, franchises, powers, and all the lands and property, money and effects, real and personal, and mixed, and all the rights of action and things of every name or nature now held or owned by the said party of the second part, or in or to which the said party of the second part hath any right, title, interest or claim, either in law or equity." 2. And to show that the agents who effected this sale were the agents of both parties, and acted as such, you have only to look at the lists of directors of both corporations. The directors of the Galena and Chicago Union Rail Road Company who made and entered into the agreement for a sale and consolidation of the road to and with the Chicago & North Western Railway Company were 1. John B. Turner; 2. William II. Ferry; 3. James D. Fish; 4. Thomas D. Robertson; 5. William B. Scott; 6. William R. Sands; 7. James W. Elwell; Alexander C. Coventry, Mahlon D. Ogden, Francis B. Peabody, Edwin H. Shelden and Ira Y. Munn. And the Directors of the Chicago & North Western Railway Co. were 1. John B. Turner; 2. William H. Ferry; 3. James D. Fish; 4. Thomas D. Robertson; 5. William B. Scott; 6. William R. Sands; 7. James W. Elwell; William B. Ogden, Perry H. Smith, J. J. R. Pease, A. L. Pritchard, M. C. Darling, George M. Bartholomew, Samuel J. Tilden, William A. Booth, A. H. Boody and Lowell Holbrook. 1. The qualifications of these persons to perform the duties required, will readily appear, when it is known, that John B. Turner, the former president of the company, who resigned when the issue was raised by the stockholders, that no mere branch roads should ever be built, or aid given to any wayside projects-assisted the Chicago & N. W. R. Co. to procure the proxies of stockholders for the very purpose of effecting a coup d'etat-and he heads the list of proxy-holders and voted a proxy for 452 shares which did not authorize any such thing and was never designed to be so used by the party who gave it. Furthermore, he was elected president of the G. & C. U. R. R. Co., although it does not appear that he owned any stock in the company himself at the time; at least his name does not appear on the poll-book except as a proxy-holder. 2. Alexander C. Coventry was the confidential attorney of William B. Ogden, a member of his family and was chiefly instrumental in arranging with the bankers of New York in borrowing proxies and is now one of the attorneys of the consolidated compapany. 3. Mahlon D. Ogden is a brother of William B. Ogden. 4. Edwin H. Sheldon is a brother-in-law. 5. Francis B. Peabody is a brother of A. S. Peabody of New York-a Wall street broker, who was in the consolidated ring, and helped consolidate things in New York-and he is, also, a near relative of one of the consolidated directors. 6. Ira Y. Munn is, and was, at the time of the consolidation, the lessee of the Chicago and North Western Railroad Company elevator, and, as we believe, for the very best of reasons, had five shares of stock transferred to him the day before the election of directors, in order to qualify him to become a director-but was not a bona fide holder of stock at all. 7. William H. Ferry and Thomas D. Robertson, once directors of the Galena & C. U. R. R. Co., were, as soon as they had betrayed their trust, immediately appointed to office in the consolidated company, and hold it now. 8. The peculiarities of the other persons, who were clected directors of the G. & C. U. R. R. Co. consist in just this, that they were each directors in the C. & N. W. R. Co., and were largely interested in its welfare, and anxious for its preservation, but were very zealous in blotting out the G. & C. U. R. R. Co., and having its earnings poured into the consolidated coffers of the C. & N. W. R. Co., whose name and fame they were bound to protect and forever uphold. Now, we contend, 1st, that this sale was not bona fide at all; but was a sale made for the sole benefit of the C. & N. W. R. Co.-indeed it was first proposed by that company-and they elected a board of directors to accomplish that purpose. The whole proceeding, from beginning to end, was presided over by that company— and lobbied through by their agents. The resolutions passed at the stockholders meeting were drawn by them-proposed by them and voted by them. The bill of sale and articles of consolidation were drawn up by their attorney in New York, and presented to the Board of Directors of the G. & C. U. R. R. Co. by another of their attorneys, and the whole thing hurried through in the most undue haste. |