Hale v. Cheshire Railroad

37 N.E. 307, 161 Mass. 443, 1894 Mass. LEXIS 217

• Court: Massachusetts Supreme Judicial Court
• Decided: May 21, 1894
• Status: Published

Opinion

Allen, J.

By virtue of Pub. Sts. c. 105, § 3, and earlier statutes, the charter of the Cheshire Railroad Company was subject to amendment, alteration, or repeal at the pleasure of the General Court. Each of the two plaintiffs became the owner of a single share of the common stock subject to this liability of alteration. By St. 1887, c. 389, § 2, the railroad company was authorized to unite and consolidate with the Fitchburg Railroad Company on such terms and conditions as should be approved by a majority in interest of the stockholders of each corporation. Each corporation had common stock and preferred stock. A consolidation was made on the terms, in part, that each holder of four preferred shares in the Cheshire Railroad Company should receive five preferred shares in the new company, and each holder of two shares of common stock should receive one preferred share in the new company. This consolidation was duly voted, and approved by a majority in interest of the stockholders of each corporation.

The plaintiffs now contend that they are not bound by these terms, and that they are entitled to receive the same as preferred shareholders receive, or, if the agreement of consolidation does not allow this, then that they are entitled to go behind the agreement and have their share of the assets of the Cheshire Railroad Company as upon an ordinary liquidation of its affairs, and to have an accounting accordingly.

We do not take this view of the rights of the plaintiffs. Dissenting stockholders are bound by the vote of the majority, acting in good faith and within legislative sanction. It was within the constitutional power of the Legislature to authorize the consolidation. If the plaintiffs had any ground for complaint as to the terms of the plan of consolidation, they should have tried to prevent its going into effect. They virtually concede, however, that the Legislature might sanction a consolidation which should go into effect against their protest. Since the consolidation has gone into effect, they cannot now maintain a claim for better terms to themselves than have been voted. Durfee v. Old Colony & Fall River Railroad, 5 Allen, 230. Agricultural Branch Railroad v. Winchester, 13 Allen, 29. Nugent v. The Supervisors, 19 Wall. 241. Pennsylvania Railroad v. Miller, 132 U. S. 75, 83. Bishop v. Brainerd, 28 Conn. 289. Sparrow v. Evansville & Crawfordsville Railroad, 7 Ind. 369. Bish v. Johnson, 21 Ind. 299.

The plaintiffs contend that, under Pub. Sts. c. 105, §§ 41, 42, common and preferred stockholders should stand on the same footing. That is true in case of an ordinary liquidation or winding up of the affairs of a • corporation, if there is nothing in its charter or articles to show otherwise; but the rule is not applicable to a case of consolidation like the present.

Decree sustaining demurrer affirmed.