Hazlehurst v. Savannah, Grippin & North Alabama Railroad

Lochrane, Chief Justice,

concurred from the Bench as follows:

It appears from the record in this case, that defendants in error filed their bill charging several acts done by the Macon and Brunswick Railroad Company; to be ultra vires, and others as fraudulent, and injurious to the rights of the minority stockholders, who are the complainants. Their grounds of complaint are: 1st. In relation to a contract made with Hull and Miller for the completion of the road to Brunswick. 2d. That preferred stock had been issued to them in payment. 3d. That such stock it had been agreed should form the qualification for directorship in the company. 4th. That the contract has not been fulfilled. 5th. That the directors have issued $200,000 00 in bonds as a bonus for the purchase of *60certain shares in the Macon and Western Railroad Company.

To this bill there was a demurrer, which was overruled, and the answer of the president of the company was then filed, upon which the hearing took place, and the Judge below, in Chambers, March 20, 1871, ordered that the defendants, George Hazlehurst and the Macon and Brunswick Railroad Company, be restrained and enjoined from delivering the $600,000 00 in indorsed bonds, etc., also from transferring the preferred stock upon the books, etc.; also he enjoined and restrained the parties (non-residents) who hold the preferred stock from disposing of it, and also the $200,-000 00 bonds which they hold, and this judgment (1st) in overruling the demurrer, and (2d) in granting the injunction as stated, is now before us and forms the basis of this writ of error.

We do not propose to go through this record in giving the reasons of our concurrence in the opinion delivered by the Court. Nor.is it necessary in the view we entertain of the only question of importance in the case. The demurrer was, we think, overruled properly by the Court below upon the ground that the use of the two hundred thousand bonds, to buy the stock of the Macon and Western Railroad Company was ultra vires, and the proper subject matter of equity interposition and jurisdiction by the Court. The other charges of the bill give no right to the complainants, as minority stockholders, to invoke the jurisdiction of equity without reference to the answer, which is complete, conclusive and overwhelming in its effect, responsive to the allegations. We feel satisfied, that the corporation in making this contract did not exceed its duty, that the right to issue preferred stock or income bonds, or mortgage bonds, with which to pay for the construction of a railroad, is a clear and unquestionable right under the corporate powers incident to all corporations. And in view of the great benefit to the public, by permanent investments in railroads in this State, we lay down the proposition broadly that such right may not fur*61ther be made a question of judicial controversy. In the wisdom of the legislative power grants of charter privileges have been conferred for the purpose of building additional roads throughout the limits of this State, and State indorsement superadded to induce the consummation of such enterprises. "When such roads are built they contribute largely to advance the public interests, and while this Court will hold the strict accountability of the use of such State indorsement by such corporators, we will recognize the right of such companies to enter into such contracts as will secure the construction of these respective roads within the proper exercise of these corporate powers either express or implied, as essential to consummate the purposes of their creation. We therefore hold that, neither in the making of the contract or issuing preferred stock to the contractors, was there anything done which would not be legally done within the legimate scope and power of their charters. Nor do we see any equity in the allegations that this road was not completed according to contract, under the facts. This question was settled finally and firmly by the acts of the officers of the company and the approval of the stockholders. Nor is there anything ultra vires in the twelfth section of the contract relating to the qualifications of directors. These directors had the power to make the by-laws and to make the contract, and the approval of both ends the question as to these complainants. But we think that the use of the $200,000 00 in bonds as a fund to purchase the stock of another road was ultra vires, and not authorized by the charter. And the injunction as to this was properly granted. But as to all other things ordered therein it was improperly granted. Remarking that injunctions against non-residents can bear no extra territorial force, and should not be granted by Courts, we reiterate the opinion of this Court at the present term. It is only in a strong case and when the majority are clearly violating the chartered rights of the minority and putting their interests in imminent danger, that a Court of equity will,- at the in*62stance of a minority of the stockholders in a corporation, interfere with the management of its affairs.