This is an action at law. It comes before the court on defendant’s demurrer to plaintiff’s declaration. The declaration contains five counts. After properly setting fortli the jurisdictional facts, the first count alleges that the defendant has converted to his own use io negotiable certificates of deposit of the American Waterworks Company, issued by the Farmers’ Loan & Trust Company, for a thousand dollars each, bearing 6 per cent, interest, the'same being the property of the plaintiff. .Exhibit A shows the form of the certificates, and that they were issued by the Farmers’ Loan & Trust Company' for bonds of the American Waterworks Company of Illinois, deposited in accordance with agreement dated August 16, 1893; and that by receiving the certificates the holder thereof was bound by the provisions of said agreement. Copy of the agreement of August 16, 1893, is made a part of the declaration, and marked “Exhibit B.” It purports to be an agreement between the holders of bonds of the American Waterworks Company of Illinois for the purpose of protecting their interests through the agency of the committee named therein. It will be seen that this, first count is a formal count in trover in the statutory form provided for by the Revised Laws of Massachusetts.
The second count contains a full statement of the cause of action. After setting forth the facts from which the court derives jurisdic
“And the plaintiff further says that, notwithstanding the substantial and material difference between the two plans, and notwithstanding his knowledge that the plaintiff had then pending in the Supreme Court of New York against the Farmers’ Loan & Trust Company and others, a suit to enjoin the carrying out of and to declare invalid the plan of reorganization described-in Exhibit D, the defendant, on or about the 26th day of December, A. D. 1886, surrendered to the Farmers’ Loan & Trust Company the said 10 certificates of deposit issued by said trust company for the §10,000 of American Waterworks Company bonds without the knowledge, consent, or authority of the plaintiff, and contrary to its wishes, as the defendant then and there well knew, not-in accordance with the terms of said agreement dated August 16, 1893, and said circular letter dated August 30, 1893, but in accordance with a different plan of reorganization, being the plan more fully set forth in Exhibit D annexed to this declaration, which this plaintiff had refused to accept, as this defendant well knew, to the plaintiff’s great loss, injury, and damage.”
The other counts set forth the cause of action to substantially the same effect as the second count.
The third count contains a similar statement of the matters in which the detailed plan of 1896 differed from the bondholders’ agreement of 1893, and of the particulars in which said plan of 1896 was unauthorized, and not binding on the plaintiff. It further alleges that on receipt of the copy of the plan of 1896 by the plaintiff he gave notice to the trust company and the bondholders’ committee to return the bonds, and notified the committee that its issue of the $10,000 represented by the certificates of deposit in the hands of the defendant was forbidden, and that, being unable to obtain the return of the bonds, the plaintiff began legal proceedings in the courts of Maine and New York for the purpose of restraining, the plan of reorganization of June, 1896, and for further relief; that in those legal proceedings in the state of New York in the Supreme Court and in the Court of Appeals it was determined by the ■ court that depositing bondholders who had not assented to the plan of reorganization of June, 1896, were not bound by its provisions, and,that such
The fourth and fifth counts contain briefer, but substantially similar, statements of the cause of action.
The demurrer sets forth five assignments of causes, as follows:
(1) That no legal cause of action is set forth in said amended declaration, or in any count thereof.
(2) That the matters contained in said amended declaration, and in each count thereof, in manner and form as therein stated and set forth, are not sufficient in law for the- said plaintiff to maintain his said action against the defendant.
(3) That it is not alleged in said amended declaration, or in any of the counts thereof, that the holders of the majority in interest of the outstanding certificates did within 30 days file with the trust company their dissents from the detailed plan of reorganization submitted to them by the committee, as provided in paragraph numbered 12 in the agreement of bondholders dated August 16, 1893, a copy whereof is annexed to said amended declaration, and marked “Exhibit B.”
(4) That it is not alleged in said amended declaration, or in any of the counts thereof, that the price at which it was proposed in the. detailed plan of reorganization to' offer the beneficial certificates pertaining to the common stock of the new company to the holders of preferred stock of the American Waterworks Company of New Jersey was less than full value of said certificates, a copy of said detailed plan of reorganization being annexed to the plaintiff’s declaration, and marked “Exhibit E
(5) That it is not alleged in said amended declaration, or in any of the counts thereof, that the action provided for in the detailed plan of reorganization, copy whereof is annexed to the plaintiff’s amended declaration, and marked “Exhibit D,” was not approved of and consented to by the holders of a majority in interest of the outstanding certificates, as provided in section numbered 14 of the bondholders’ agreement, dated August 16, 1893, copy whereof is annexed to the plaintiff’s amended declaration, and marked “Exhibit B.”
The first two assignments of causes of demurrer bring before the court the question whether the declaration, aside from all questions of
It is necessary for the court now to consider precisely what that agreement as pleaded was. The first section, naming the committee, gives them power to add to their number and fill vacancies. It provides for meetings, and that the action of the committee shall be taken by a majority, and it limits the personal liability of the members of the committee.
The second section provides for the transfer of bonds and coupons to the committee, and for the issue of receipts for the same.
The third section empowers the committee to take any action under the mortgage which the depositors could have taken, and to foreclose the mortgage as soon as possible.
The fourth section authorizes' the committee, in case a majority of the bonds shall be deposited, to purchase the property covered by mortgage at foreclosure at a limited maximum price, and to apply the bonds and coupons in payment for the property.
The fifth section gives the committee the power to acquire by deed any of the bonds, to the amount of $400,000, secured by an underlying mortgage, and to buy the property on any foreclosure of said underlying mortgage, and to transfer the property so brought to a new company, to be provided for in the agreement.
The sixth section gives the committee power to convey the property so purchased to a new company, or to otherwise dispose of it at minimum prices stated in the section.
The seventh section authorizes the committee to sell the bonds and coupons for not less than the principal and interest and all expenses and charges of the trustee and of the committee.
The eighth section authorizes the committee for certain purposes to assess the certificate holders, or to borrow money, and pledge any other assets in their hands for repayment, for the purpose of carrying out the provisions of the plan.
The ninth section provides for the compensation of the committee.
The tenth section provides that each bondholder, on depositing his bonds, shall pay on account of expenses $10, and authorizes the committee to make further assessments on the certificate holders. The letter accompanying this agreement provides as follows:
“That any assessment which the committee may make for legal and other expenses, on holders of certificates issued for deposited bonds, in addition to the payment at the time of deposit, will not exceed ten dollars per bond.”
“The committee shall, after payment of the expenses of foreclosure and all expenses incurred by the committee and its compensation, allot to the certificate holders their proportionate interests in the new company, or their proportionate share in the proceeds of any-sale by the committee.”
The twelfth section provides as follows:
“The committee shall, prior to the conveyance of any purchased property to a new company, submit to the certificate holders a detailed plan of reorganization, which shall be binding upon all said holders, unless the holders of a majority tn interest of the outstanding certificates shall, within thirty days, file with the trust company their written dissent from said plan.”
The thirteenth section provides the mode by which notices shall be given by the committee to the holders .of certificates.
The fourteenth section is as follows:
“The committee may supply any defects or omissions in this plan, which it shall .deem necessary to tie supplied, to enable the committee to carry out the. general purposes of the plan, and with the consent of the holders of a majority in interest of the outstanding certificates may take any action other than provided for in this plan which the committee shall' unanimously determine to be for the benefit, ratably, of all the certificate holders.”
■ The fifteenth-section, authorizes the -committee to fix the time within which bonds and coupons will be deposited and to grant extensions.
The sixteenth section' authorizes the committee to return deposited bonds and coupons, and to cease from its undertaking in case a majority of the bonds shall not have been deposited within a certain limited time. It also gives the’privilege of depositing the bonds before November- I, 1893.
Under this agreérnerit, as set out in the declaration, the bondholders deposited with the trust company their bonds and accepted the certificates of deposit, those certificates remaining in the hands of the defendant. It will be remembered that under this agreement, in section 12,-there was a provision that the committee should, prior to the conveyaricé of any property to a new company, submit to the certificate holders a detailed plan of reorganization. In June, 1896, the committee "did prepare a paper headed “Detailed Plan of Reorganization,” which they issuéd 'and distributed among the depositing bondholders. The plaintiff alleges in the third count-that this plan of reorganization'of June, 1896, differed in substantial and material respects from the original agreement under which the bonds were deposited. The count sets forth various particulars in which it is 'alleged to have'differed. It may be that it would have been sufficient 'if the plaintiff had contented himself with this statement that the plan of reorganization differed from the bondholders’ agreement, setting forth wherein it was different, and claiming that by the departures from that agreement the plaintiff wa's damaged. But the plaintiff has gone further, and has pleaded- the plan of reorganization, and made it a part of 'his declaration, and has thus made it- incumbent on the court to examine the terms o‘f the agreement and of the plan as a part of the - pleadings. Was the detailed plan" of June, 1896, as pleaded,, in .accordance with the bondholders’ .agreement? Did it merely provide! 'details for that agreement, or was it inconsistent with and contrary.'to the provisions of that -agreement? -It seems clear
But do the pleadings show that the defendant recognized the committee’s plan in the surrender of the certificates ? The learned counsel for the defendant urges that the reqital in the plaintiff’s declaration that, in consequence of the surrender of the certificates the plaintiff’s suit in New York was necessarily terminated, and its rights concluded, is merely an averment of a matter of law, and is not correct. The learned counsel may be right in this contention, but the court cannot orí demurrer pass upon the correctness in point of fact of any
The third'cause of demurrer'sets out that it is not alleged in the declaration that the holders of a majority in interest of the outstanding certificates did, within 30 days, file with the trust company their dissents from the detailed plán of reorganization submitted to them by the committee, as provided in the twelfth paragraph of the bondholders’ agreement. We have already held that the plan of reorganization was not in substantial accord with the bondholders’ agreement. It cannot, then, be possible that by this provision which is invoked in the third cause of demurrer it can be made incumbent upon the holders of the certificates to dissent from the detailed plan so far. as that plan is inconsistent with the agreement, and it cannot be that their failure to dissent from that plan can preclude them from the advantages of the agreement, or can conclude them in opposing a plan which is repugnant to the agreement. The clause as to dissent was placed in the agreement as a consistent part of the theory that the committee’s plan was to provide merely the details for the bondholders’ agreement; and that the holders of the certificates should properly file their writ-, ten dissents from any of the details of the plan in case they should not agree to any of the particulars presented by it. So far, then, as the committee’s plan was a detailed plan under the agreement, and provided merely minor particulars necessary to complete the reorganization, so far the holders of the majority of the outstanding certificates were properly bound to file their dissents from any objectionable detail of the plan. But we have found that the committee’s plan was in excess of the powers of the committee and was repugnant to the agree-’ ment and beyond the authority given- to the committee by that agreement. The failure, then, to dissent from a plan which was not in accord with the agreement, cannot put it into accord with the agreement; and we must hold that this provision as to the 30 days’ dissent has no effect upon the plan, and is immaterial. This cause of demurrer cannot be sustained.
The fourth cause of demurrer alleges that the declaration does not set out that the price at which it was proposed in the detailed plan of reorganization to offer the beneficial certificates pertaining to the common stock of the new company to the holders of preferred stock of the American Waterworks Company was less than the ftill value of the certificates. We have already found that the committee’s plan, as pleaded, was intended to be for the protection of bondholders only. The declaration sets out injuries to the plaintiff as a bondholder. The
The fifth ground of demurrer states that it is not alleged,in the amended declaration that the action provided for in the detailed plan of reorganization was not approved of and consented to by a majority of the holders in interest of the outstanding certificates, as provided in section 14 of the bondholders’ agreement. A fair construction of the pleadings shows that the scope of the committee’s work was supplemental to the plan and agreement of August 16, 1893, and that the committee itself so recognized that such was the scope of its work. The meaning of the latter part of section 14 seems to be that if the committee, instead of attempting to proceed in pursuance of the agreement of 1893, had determined upon an absolute change in their plan of foreclosure and reorganization; if they had determined, for instance, as the counsel for plaintiff suggests, to loan money to the old company to carry on its business without attempting a foreclosure— then it would have been incumbent upon the committee to have obtained from the majority in interest of the outstanding certificates a consent to such action “other than is provided in the plan” of 1893. It is not clear that this state of facts did not arise. Under the attitude of the pleadings it is not consistent for the defendant to set up that such other action was taken which required the consent of the outstanding certificates. An allegation in the plaintiff’s declaration that a majority of the holders of outstanding certificates did not assent to the plan of the committee would have been an immaterial allegation. This ground of demurrer must be overruled.
Many considerations which have been urged with great force and ability by learned and eminent counsel seem to the court to pertain to a discussion of the case which is not competent on demurrer. Some of these considerations appear to be important, and may be vital and controlling when the case is tried upon the evidence; but the court upon demurrer can consider only the allegations of the declaration. Those allegations appear sufficient to state a cause of action. It is unnecessary to decide whether the first count does not in itself constitute a sufficient declaration under the doctrine of the Supreme Court in McAllister v. Kuhn, 96 U. S. 87, 24 L. Ed. 615, a “conversion having been pleaded, and the ultimate fact to be proven having been stated in that count. All the contention has, however, been directed to the other counts of the declaration, and so the court has addressed itself to them.
The decision must be that the declaration is sufficient to set forth a cause of action. The result must be that the demurrer is overruled; defendant to answer further.