BOND-Continued.

4. Measure of Township Aid to Railroad Corporation. Where the proposition
submitted under the law of 1876, and the amendments thereof, to the electors of
a township for the subscription of stock and the issuance of bonds to aid a rail-
road corporation to construct its road from the east line of the township west to
and into the city of K. (a place equidistant between the east and west lines
respectively of the township), the terms of the proposition embrace aid to the
corporation for all the main line and side-tracks built from the east line to and
within the city of K. necessary for the efficient running and operating of the
railroad; provided, however, in no case shall the total amount of the aid to the
corporation exceed four thousand dollars per mile for each mile constructed in
the township. Id.

5. A statute authorizing the guarantee by the state of certain bonds of a rail-
road company to be secured by a statutory lien, was passed in 1861, and the
bouds issued and guaranteed under the authority of this act bore the caption
"Confederate States of America." In 1866, another act was passed which ex-
tended the operation of the act of 1861, and authorized the issue of new bonds
in exchange for the C. S. A. bonds, also certificates of indebtedness to pay
interest past due on the C. S. A. bonds, and bonds for other indebtedness, all of
which were to be in like manner guaranteed. Held, that the C. S. A. bonds,
not surrendered, were of superior rank to the bonds issued under the act of
1866, but those issued under act of 1866, in exchange for bonds surrendered,
could claim a lien only under the latter act, and stood upon the same footing
with all other bonds issued under the act of 1866. Gibbes v. Greenville, etc.,
R. R. Co., 460.

6. Under an act of the legislature passed in 1869, certificates of indebtedness
were authorized to be issued by a railroad company for funding interest due
upon its bonds which were secured by a lien under an act of 1866, and which
lien was extended by the later act to cover these certificates of indebtedness.
Held, that this was a mere substitution, and not a payment, and that the lien of
these certificates was superior to that of a mortgage executed between 1866
and 1869. Id.

See CORPORATION, 8-16, 17, 29. MORTGAGE, 1-3, 17, 20. MUNICIPAL COR-
PORATION, RECEIVER, 7.

1. Certain cattle while in transportation were unloaded from the cars of the
company, and were then illegally seized under a writ for an alleged violation of
the statute of the state prohibiting the introduction of Texas, Mexican, or Indian
cattle into the state, and subsequently were sold to satisfy the fine, the costs of
the proceedings, and the forage and care of the cattle. Held, that the company
was not liable for the loss of the cattle, upon the allegation of a wrongful un-
loading, the damages being too remote. McAllister v. Chicago, etc., R. R. Co.,

210.

See NEGLIGENCE, 38-41. RECEIVER, 2, 3

CERTIFICATE OF INDEBTEDNESS, 460.

CHARTER, 191, 161, 202.

CHILD.

See BOND, 4. RECEIVER, 7.

See EMINENT DOMAIN, 1, 2. STREET RAILWAY, 11, 16.

See MINOR, NEGLIGENCE, 2–5, 7–9, 12–14, 20–23. 26–31, 38–41, 43-52. PLEAD-
ING AND PRACTICE, 33.

CITY LIABILITY AS STOCKHOLDER, 345.

See STOCK, 27.

CONFEDERATE BONDS, 460.

See BOND, 3.

CONSOLIDATION OF COMPANIES.

See CORPORATION, 19-24, 27. MORTGAGE, 16, 18.

CONTRACT, 212, 443, 408.

See CORPORATION, MORTGAGE, PLEADING AND PRACTICE, 9, 16.
-CONSTRUCTION OF, 100.

CORPORATE POWERS, 132.

See DEPOT, 1.

See STREET RAILWAY, 8-10.

CONSTITUTIONAL LAW, 5.

1. Where the legislature have enacted a law, which has not been judicially
declared to be unconstitutional, a private person is not bound at his peril in
damages to know that the law is unconstitutional and void. McAllister v.
Chicago, etc., R. R. Co., 210.

2. Private rights vesting during the war between the states are protected by
the constitution of the United States, and cannot be impaired by an ordinance
of the South Carolina state constitutional convention of 1868. Gibbes v. Green-
ville, etc., R. R. Co., 459.
See CORPORATION, 28.

CORPORATION, 6.

PLEADING AND PRACTICE, 1.
STOCK, 14.

STREET RAILWAY, 10.

1. By the Ohio Revised Statutes, Sec. 3248, the powers, business and property
of the corporation having a capital stock must be exercised, conducted and con-
trolled by its board of directors, who are duly elected and qualified; and a court
of equity will not, on the application of a stockholder, interfere with its
management and control of the corporate business, while acting within the
scope of its authority, unless they are guilty of a breach of trust to the injury
of such stockholder. Sims v. Brooklyn, etc., R. R. Co., 132.

2. This principle is applicable to the action of the board of directors in re-
ceiving subscriptions for that portion of the authorized capital not taken before
the corporation was organized, where it will promote the objects of the cor-
poration. A subscription for such stock made by one member of the board,
with the consent of the others, and payment of the par value thereof, when the
transaction is free from fraud, and is beneficial to the corporation, will not be
set aside, at the instance of a stockholder, when no action has been taken to
withhold such stock from subscription or sale. Id.

3. An agreement between two corporations, whereby one guarantees the other
a certain specified annual dividend on its capital stock, is not a guarantee to its
stockholders severally, but to the corporation, and the power to modify the
terms of such guarantee is in the directors of such corporations, not in the
stockholders. Where such power is fairly exercised by the directors, in view of
all the circumstances, and in good faith, a court will not interfere, even though,
on the same facts, it might have arrived at a different conclusion. Flagg v.
Manhattan Ry. Co., 141.

4. The directors of a corporation occupies a fiduciary position, and so is within
the rule disenabling one entrusted with powers to be exercised for the benefit of
others, from dealing in his own behalf in respect to matters involving the trust.
Duncomb, v. N. Y., etc., R. R. Co., 293.

5. The right of the corporation, or those claiming through it, to avoid any
such dealings does not depend upon the question whether the director was acting
fraudulently or in good faith. Id.

6. But an act of a director, claimed to be in hostility to this rule, in the absence
of bad faith on his part, cannot be avoided without a restoration to him of what
the corporation received. Id.

7. Where a director receives the property of the corporation as collateral
security for a debt honestly due him, or a liability justly incurred, the rule has
no application, as the payment of the debt or the discharge of the obligation is
an essential prerequisite of an avoidance of the transaction; and this is so
whether the pledge be taken for a present or a precedent debt.

Id.

8. The director of a railroad corporation cannot purchase its bonds below par

CORPORATION—Continued.

except on peril of avoidance by the courts upon application of the corporation.
Id.

9. But as he may be the lawful holder of such bonds, knowledge upon the
part of a purchaser from him for value and in good faith of bonds so bought
that he is a director, does not put such purchaser upon inquiry, or charge him
with constructive notice of the defect in the title. Id.

10. Where, however, bonds are taken from a director in pledge for a pre-
cedent debt, the pledgee takes no better title than his pledgor, and they are sub-
ject in his hands to any defect in the title of the latter. Id.

11. Under the provision of the General Railroad Act (sub. 10, § 28, chap. 140,
Laws of 1850) authorizing a corporation organized under it to borrow moneys
necessary for completing, finishing or operating its road, to issue and dispose of
its bonds and to mortgage its property and franchises "to secure the payment
of any debt contracted for the purposes aforesaid," a railroad corporation may
pledge its bonds for moneys loaned, and also as security for a precedent debt
incurred for moneys borrowed for the purposes specified. Id.

12. Upon foreclosure of a mortgage given to secure its bonds, a holder of
bonds so pledged as collateral is not limited to proof of an amount simply equal
to the amount of his debt, but is entitled to prove the whole amount of his
bonds, and to share in the distribution accordingly up to the amount of his debt.
Id.

13. The L. and I. Co. by its charter (§ 5, chap. 730, Laws of 1871) is author-
ized to " advance moneys
upon any property, real or personal." It
discounted a note secured by pledge of the bonds of a railroad corporation.
Held, that conceding the discount was in violation of the provision of the statute
against unauthorized banking, and so the note was void, the loan and its
security were valid and could be enforced. Id.

14. Where the president of a railroad corporation received the notes of the
corporation secured by its bonds delivered as collateral for a sum due him upon
his salary, held, that such a debt fairly and honestly incurred could be so
secured; and that he was entitled to prove such bonds. Id.

15. Also held, that one to whom bonds were pledged as security for an indebt-
edness for rent of offices was entitled to prove them; that a business office was
essential and necessary and was embraced within the authority to issue bonds.
Id.

16. A pledgee of certain of the bonds claimed that the pledge had been fore-
closed by sale at auction and that through such sale he became the owner; the
terms of the sale, or whether before sale there was a demand of payment or
notice to redeem, did not appear. Held, that as no right to sell was shown, the
holder of the bonds must still be treated as pledgee. Id.

17. Where a question arises under a Federal law and respects a corporation
created by its authority, the rulings of the Federal courts must be followed. Id.
18. Accordingly held, that the decision of the United States Supreme Court,
in G. M. Co. v. Nat. Bank (96 U. S. 64), was conclusive here, holding that a
contract of loan made by a National bank was valid and could be enforced
although violative of the provision of the National Banking Act (U. S. R. S.,
§ 5200) prohibiting a loan to one individual exceeding one tenth part of the
capital of the bank. Id.

19. The consolidation of the Houston and Great Northern, and the Inter-
national Railway companies, was unauthorized and wrongful as to a stockholder
of the former company objecting thereto, and the same having been consum-
mated by a wrongful appropriation of the stockholder's equitable interest, the
consolidated company was equitably bound to him therefor. International,
etc., R. R. Co. v. Bremond, 309.

20. The two railway enterprises differed so widely in their starting-points,
and the region of country to be traversed, that an original subscriber to the
Houston and Great Northern Company might well object that he had not agreed
to or authorized such a union, nor did he, by failing to object to a subsequent
enlargement of the charter, which, whether it actually gave such power or not,
did not, on its face, purport to give any power to consolidate, preclude himself

CORPORATION-Continued.

from objecting to a consolidation making so fundamental a change in the objects
of the corporation. Id.

21. A stockholder in a railway company which, against his protest, has been
consolidated without authority of law with another company, by the action of
other stockholders, and whose equitable interest has been wrongfully appro-
priated by the consolidated company, cannot maintain an action for the injury
against the directors of the company, as such; nor are the directors responsible
to the corporation for a consolidation effected by act of the stockholders. Id.
22. A stockholder in a railway company, against whose protest a consolidation
was illegally effected by the company with another railway company, delayed
for more than two years the institution of proceedings against the consolidated
company for the appropriation of his equitable interests: held, that while the
delay might preclude him from enjoying the further prosecution of the con-
solidated enterprise, it did not prevent him from following up his equitable
interest in the hands of a corporation, which, by appropriating it without
authority, became equitably bound to compensate him therefor. Id.

23. A railway company, in an action against it by a stockholder for wrongful
conversion of his interests, is not precluded by the erroneous estimates of its
officials, embodied in a published report, from showing the true value of its
assets. Id.

24. The act of January 12th, 1853 (Arkansas), creating the Little Rock and
Napoleon R. R. Co., is a public act, of which the courts will take judicial
notice; and by it the company was immediately created a corporation; and
having, in good faith, commenced the construction of its road before the
adoption of the constitution of 1874, its charter was not revoked by section 1,
Article XII., of that constitution. Little Rock, etc., R. R. Co. v. Little Rock,
etc., R. R. Co., 392.

25. Pending a suit began by appellee against the Waco and N. W. Ry. Co.,
July 16, 1870, the Houston and Texas C. R. R. Co. entered into a contract with
the former road to aid in its construction. For a debt thus contracted the Waco
and N. W. R. R. Co. was sold under a deed of trust given to the Houston and
T. C. R. R., and the latter road, at the sale in February, 1873, became the pur-
chaser of the property and franchises of the Waco and N. W. R. R. After-
wards, in May, 1873, an act of the legislature was passed for the merger of the
two roads, making the sold-out road a part of the purchasing road. After-
wards, in January, 1877, the Houston and T. C. R. R. was made a party
defendant, charging that the contract between the roads was illegal, fraudulent
and ultra vires, and seeking to make the purchasing road liable for the debts of
the Waco and N. W. R. R. Held-

1. Ordinarily, a consolidated corporation, for the purpose of answering for
the liabilities of the old corporations, is deemed the same as each of its con-
stituents, and may be sued under its new name for their debts as if no change
had been made in the name or organization of the original corporation; but this
rule is restricted to voluntary consolidations.

2. The foundation of the liability of a consolidated corporation for the debts
and liabilities of the constituent corporations must rest on agreement, either
express or implied.

3. The act of merger was not passed by the legislature, or accepted in con-
templation of an agreement between the companies, but because the trust
sale had divested the Waco and N. W. R. R. Co. of all its property and fran-
chises, and that the purchaser, being a corporation, needed, for that reason only,
legislative sanction to authorize it to operate the road.

4. If the Houston and T. C. R. R. Co. exceeded its powers in acquiring the
property, it was a consummated transaction and could be impeached, if at all,
for that reason, by the state alone.

5. The purchasing road by its contract assumed only the liabilities created by
the Waco and N. W. R. R. in the construction of its road after its first contract
was made with the Houston and T. C. R. R. Co.

6. That the act of merger did not affect the rights of either stockholders or
creditors.

CORPORATION—Continued.

7. That by accepting the conditions of the act of consolidation, the Houston
and T. C. R. R. Co. did not subject itself to pay the liabilities of the sold-out
road. Houston v. T. C. R. R. Co., 441.

26. The Texas constitution of 1866 did not prevent the franchise of a railway
company from being mortgaged and sold under a decree of foreclosure, or by a
trustee empowered to sell. Id.

27. "An act to promote the consolidation of the Greenville and Columbia
R. R. Co." provided in its 4th section for a waiver of the lien of the state on the
Blue Ridge R. R. property, and in its 5th section for a like waiver of lien upon
the property of the Greenville and Columbia R. R. property, and in its 7th
section for the endorsement by the consolidated companies of the bonds of the
two companies consolidating. The two companies not having consolidated,
held, that the act never took effect. Gibbes v. Greenville, etc., R. R. Co., 460.
28. Where an act of the general assembly provided that all the property of a
railroad company should stand pledged and mortgaged to the state for the pay-
ment of certain bonds issued by such company, and guaranteed by the state,
such provision constituted a statuory lien for the benefit of the bondholders as
well as the state, which no subsequent statute could postpone. Id.

29. Where the state guaranteed the bonds of the company, issued in exchange
for outstanding mortgage bonds, under a statute which provided that the state
should take and retain possession of the bonds so surrendered in exchange as
security to the state, and thereby give the state the lien under the first mort-
gage until all the bonds now secured by mortgage shall be retired; all of the
mortgage bonds not having been surrendered or exchanged, held, that the state
could assert the lien of the mortgage bonds so held by her, together with the
coupons thereto attached, as of equal rank with the mortgage bonds not ex-
changed. Id.

30. A railroad company having filed a survey of a route over which another
company also had filed a survey, having held such other company out as the
builder of the track over such route, and having taken the benefit of a contract
incident to the laying of such route, made in the name of such other company,
cannot repudiate such contract, on the ground that itself is the builder of such
road. Coe v. Delaware, etc., R. R. Co., 513.

DEFINITION, POWERS OF AGENT AND TRUSTEE, 212.

DEPOT.

See PLEADING AND PRACTICE, 19.

A railway company obligated itself to locate its depot at the nearest prac-
ticable point within one mile of the court-house. Held-

1. The word practicable was not used in the contract as synonymous with
possible. Wooters v. International, etc., R. R. Co., 100.

2. The road was only bound to locate its depot at the nearest point within one
mile of the court-house, at which it could be done at a reasonable and ordinary
cost, with reference to all the circumstances under which it was to be done, and
in view of the objects and purposes inducing the contract. Id.

DIRECTOR, 140.

See PLEADING AND PRACTICE, 2-4..

See CORPORATION, 1-3. PLEADING AND PRACTICE, 9.