Pond v. Vermont Val. R.

19 F. Cas. 976, 12 Blatchf. 280, 1874 U.S. App. LEXIS 1937
CourtU.S. Circuit Court for the District of Vermont
DecidedAugust 27, 1874
StatusPublished
Cited by9 cases

This text of 19 F. Cas. 976 (Pond v. Vermont Val. R.) is published on Counsel Stack Legal Research, covering U.S. Circuit Court for the District of Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pond v. Vermont Val. R., 19 F. Cas. 976, 12 Blatchf. 280, 1874 U.S. App. LEXIS 1937 (circtdvt 1874).

Opinion

WOODRUFF, Circuit Judge.

The bill of complaint herein was filed by William P. Burrall (now lately deceased) and the other complainants, citizens and residents of the state of Connecticut, as stockholders in the Vermont Valley Railroad Company, a corporation created and organized by or under the law's of the state of Vermont The bill seeks to restrain the execution of a lease of the railroad of the said corporation for twenty years from the 1st of June, 1875, to the Rutland Railroad Company, (also a defendant), and to cancel such lease, if any have been executed (as is claimed and pretended) by the officers, (Page, as president and Williams, as treasurer,) of the said Vermont Valley Railroad Company, or persons claiming to be such officers, and acting as such in the management thereof. This relief is sought upon various grounds, especially, that such a lease is contrary to the expressed will of a majority of the stockholders; that it is in disregard of the rights and interests of all who are stockholders of. that corporation only, and a fraud upon such rights; that the persons proposing and threatening to make such lease are former directors of the said corporation, claiming to-[978]*978hold over after the expiration of the term of office for which they were elected, and, being in the actual possession of the seal, hooks, papers, and money of the corporation, and so having apparent control and management of its affairs, are,, in fact, largely interested in the said Rutland Railroad Company, and officers thereof, and are thereby induced to sacrifice the interests of the Vermont Valley Railroad Company to those of the Rutland Railroad Company and of the Central Vermont Railroad Company, (another defendant,) with whom they are conspiring, to the prejudice of the stockholders of the Vermont Valley Railroad Company, .to defeat their will and destroy their interests; and that so the acts of these pretended officers and directors are practically the transfer of valuable interests to themselves, in fraud of the stockholders last mentioned, and, so far as they can be deemed to have power to bind the Vermont Valley Railroad Company, in breach of trust. Their breach of trust is further alleged, in refusing to call a meeting of stockholders to elect directors, as by tue charter they are bound to do, and thereby expose the corporation to a forfeiture of the charter under the laws of Vermont. Various other details are given in the bill, tending to show gross misconduct on the part of the defendants who are made such as directors or pretended directors of the said corporation, and whose acts are sought to be restrained. To show still further the illegality of the conduct of these defendants, former directors, and still acting as such, claiming to hold over, as before stated, and proposing and threatening to make the lease aforesaid, the bill also alleges, that, before the period arrived at which the annual meeting of directors of the said corporation should regularly be held, and while they were in office under their prior election, the said defendants, by formal vote, forbade their officers from calling a meeting of the stockholders without their express direction, and further voted, that the next annual meeting for the election of directors, which should regularly be held in June, 1873, should not be called until such day in December, 1873, as should be thereafter designated by them, and they thereafter designated no day for that purpose, thus defeating, or attempting to defeat, the right of stockholders to choose the directors and managers of their property, and perpetuate their own control of the affairs of the corporation, against the will of the stockholder’s, and with design to wrongfully and illegally execute the lease aforesaid of the property of the company, against the will and the interests of the stockholders of the corporation; and that, in an endeavor to defeat such mismanagement, a majority of the stockholders procured the president, notwithstanding the vote •of such directors, to call a meeting of stockholders for an election of directors, which meeting of stockholders was held, and a new board of directors was chosen at such meeting, but the said former directors deny the validity of such election, still retain possession and management of. the affairs of the corporation, and persist in their determination to execute such lease. Other particulars are stated in the bill, but this is probably sufficient to indicate the nature of the subject of complaint and grievance. The bill then alleges, that the new board of directors, whom the complainants aver to be the legal board of directors of the corporation, have been applied to by the complainants, and have been requested by them, by suit or otherwise, to prevent the execution of the said lease, and to procure the cancellation thereof, if any has been executed, and to prevent the transfer or other wrongful disposition of the road and property of the company, as threatened and intended by the said former directors so claiming to hold over as aforesaid, and to take measures, by suit, or otherwise, to recover possession of the said road and property, in accordance with the right of the said Vermont Valley Railroad Com-' pany thereto; but that, although the said newly elected board of directors concur with the complainants in their views, and admit that any such lease which may have been executed is invalid, and ought to bé cancel-, led, and that the execution of a lease, as threatened and attempted, would be wrongful, and in violation of the legal rights of said Vermont Valley Railroad Company, and of the complainants and the other stockholders thereof, yet said board of directors,, in violation of their duty as such, in answer to said requests of the complainants, wholly decline to act in accordance therewith, or with either of them, and say that, in consideration of the many obstacles in the way of obtaining, in the state courts, the relief aforesaid, they decline and refuse to take any further proceedings, by suit or otherwise, to protect the property of said company, or the interests of the stockholders thereof, from the wrongs and threatened wrongs in the said bill of complaint set forth. The prayer of the bill is, that the said pretended lease claimed to have been executed may, if in existence, be decreed to be given up and cancelled; and that the defendants Page, Butler. Chase, Prout, Williams, Slate, and the Vermont Valley Railroad Company be enjoined from executing, or causing to be executed, any lease of the said railroad, unless authorized by a legal vote of the stockholders; that the persons last named be required to surrender the property to the said railroad company or to a receiver, and give up the books, papers, common seal and money of the company, either to the said newly elected board of directors or to a receiver: and that a receiver be appointed, and for such other and further relief as to equity and good conscience may ‘‘obtain.” The defendants to this bill, sought to be en[979]*979joined as last mentioned, are members of' the said former board of directors, alleged to illegally hold over in possession, and claiming and threatening as above stated, and are Peter Butler and George B. Chase, citizens of Massachusetts, and John B. Page, John Prout, James H. Williams and George Slate, citizens of Vermont. Gouverneur Morris, a citizen of New York, is also made a defendant, he being á member of both boards, and alleged to have dissented from the action and proposed action of such former board. The defendants who are alleged to constitute the said newly elected and legal directors, but who refuse to institute proceedings for the protection of the stockholders are Silas M. Waite, William H. Rockwell, Junior, Frederick A.

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Bluebook (online)
19 F. Cas. 976, 12 Blatchf. 280, 1874 U.S. App. LEXIS 1937, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pond-v-vermont-val-r-circtdvt-1874.