Parkhurst v. Mexican Southeastern R. R. Co. (102 Ill. App. 507, 1902)

Opinion per Curiam.

This is a proceeding in chancery, whereby the several appellants, as judgment creditors of the Mexican Southeastern B-ailroad Company, under an ordinary creditor’s bill, seek to compel payment of their claims by the appellee Samuel W. Allerton, as one of the several stockholders in said company. None of the other stockholders in the corporation, except Allerton, were made parties to the proceeding, and the bill was not filed on behalf of other creditors.

The cause, after being put at issue, was referred to Charles T. Farson, Esq., one of the masters in chancery in said court, to take proofs and report his conclusion upon the law and the facts, and he duly made his report.

The main contention, both before the master and before the court, was the extent of Alierton’s liability. The master reported, on the question of jurisdiction, that the court was without jurisdiction, or at least that the court would refuse, for reasons of policy, or otherwise, to entertain jurisdiction of the case, but the court overruled the report in that respect and held it had jurisdiction, and decreed Allerton was liable for the face value of one share of s'tock, held by him; the appellants insisting before the court, and now, that Allerton was liable for the face value of 7,649 other shares of stock issued to him, but of which, as the court held, he had divested himself.

Both parties complain of the decree that was entered, and errors and cross-errors have been assigned upon the record in this court.

The master has ably discussed and considered the whole case, both as to the facts and the law, and for a thorough understanding of the case we incorporate the whole of his report herein. After reciting the recovery at law, in. the Circuit Court of Cook County, by default, of four several judgments against the Mexican Southeastern Railroad Company and in favor of the appellants, severally, aggregating over $25,000, besides costs, and the issuance and return unsatisfied, of executions thereon, after demand, the master proceeds as follows :

“ I further find that the Mexican Southeastern Railroad Company, defendant .in the said judgments, had prior to the filing of the bill of complaint in this cause, wholly ceased to transact business, leaving the aforesaid debts due and unpaid, and that the said company had wholly abandoned its project of constructing the said lines of railway in the Republic of Mexico, and had closed its offices.

I further find that the said defendant corporation is and was at the time of filing the bill of complaint in this cause, wholly insolvent; that it never had any money in its treasury, and that it has not, and did not have at the time of the commencement of this suit, any other assets than the amount due to said corporation from the stockholders of the said company, on their stock liability.

I further find that on the 19 th day of December, A. D. 1895, Emily B. Bary and George E. Detwiler entered into a memorandum agreement, purporting to be made with the Federal Government of the Republic of Mexico, but which was signed by the said Bary and Detwiler on the one part, and one Emilio Rabassa, of the other part, who states as follows: ‘ I am authorized bv the Hon. Secretary of the Treasury to state to you that under the terms of this memorandum, the government will issue to you the respective concession.’

This memorandum agreement provides for the building of a railroad, by the said Bary and Detwiler, in the States of Oaxaca and Chiapas, in the Republic of Mexico, upon certain conditions and between certain points, and provides that the Government of Mexico will give to 1 The Company,’ a subsidy of six thousand ($6,000) dollars per kilometer, on all the lines, except the section from La Aurora to Tuxtla and Chiapas, on which the subsidy is to be eight thousand ($8,000) dollars per kilometer, the subsidy to be paid on completion of sections of one hundred (100) kilometers, in fiwe per cent redeemable silver bonds, of the public department, xvhich ‘The Company’ shall receive at par.

I further find that on the 10th day of January, A. D. 1896, an agreement was entered into between Emil B. Bary and George E. Detxviler of one part, and Samuel W. Allerton, Robert P. Porter, H. M. B. Bary and Charles Bary, of the other part. Said agreement recites that the party of the first part are the concessionaires of a railroad, to be constructed in the Republic of Mexico, under the aforesaid agreement of December 19,1895, and that they are desirous of associating with themselves the parties of the second part in the organization of a company for the construction of said railroad. Thereupon, in consideration of the services and the respective positions that the parties of the second part will occupy in said corporation, such as Robert P. Porter as president, S. W. Allerton as treasurer, H. M. B. Bary as general manager, and Charles Bary as counsel, the parties of the first part bargain, sell and transfer to the parties of the second part an equal and joint interest with the parties of the first part in fifty-one per cent of the said concession, each of the parties to the agreement to be entitled to eight and one-half per cent of the whole concession, or one-sixth of fifty-one per cent of the concession. The said fifty-one per cent is to be an undivided interest, and is to be held in trust for all of the parties by S. W. Allerton, trustee, and in case of the formation of the company as aforesaid, shall be issued to the said S. W. Allerton, as trustee, xvho shall vote the same under the direction and instruction of the majority of said parties.

I further find that on the 17th day of January, A. D. 1896, in pursuance of said agreement, a corporation xvas organized under the laws of the Territory of Hew Mexico in evidence in this case, under the name and style of the Mexican & Guatemala Colonization & Railroad Company, xvith a capital stock of ten million (10,000,000) shares, of one hundred ($100) dollars each. At the date of the organization of said corporation, it does not appear from the evidence that any of its capital stock had been subscribed for by any person.

I further find that at the time of the organization of said company certain statutes of Hexv Mexico, as set out in the second amended bill of complaint in this cause, and the answer of defendant Allerton thereto, were in force, and xvere sections of the general act of the said Territory of New Mexico under which the defendant company was organized.

I further find that in pursuance of the requirements of the said statutes of New Mexico, the first board of directors of the said corporation was organized by selecting and naming therefor, A. L. Morrison, George A. Johnson and E. A. Bartlett of the city of Sante Fe, in the Territory of New Mexico, together with the said Samuel W. Allerton, Robert P. Porter, George E. Detwiler, Charles Bary, H. M. B. Ba.ry and Emil B. Bary.

I further find that all of the meetings of the board of directors of said corporation were held in the city of Chicago, and as far as the evidence in this case discloses, no meetings of the said directors were ever held in the Terri-tonr of New Mexico, and the said Morrison, Johnson and Bartlett, citizens of New Mexico as aforesaid, did not attend any of the meetings of the said board of directors.

Í further find that by the charter of said corporation its principal place of business was to be located at Santa Fe, m the Territory of New Mexico, but that as a matter of fact its principal office was located and maintained in the city of Chicago, in said Cook county, and that the business of said corporation was mainly transacted in said city, and that from about the 1st day of May, A. D. 1897, said corporation maintained a suite of offices in said city of Chicago, in which all of its executive officers were located, and that they continued to occupy such offices until the corporation ceased to do business as aforesaid; and that from the said last mentioned date all meetings of the directors and stockholders of said corporation were held in said city of Chicago; that the various agents, servants and attorneys of the said corporation, employed in and about its business, were employed in the said city of Chicago; that an issue of bonds, intended to be sold for the use of said company, was printed, signed and made ready for use at the said city of Chicago, and that said company was up to the date of its ceasing to do business as aforesaid, performing and transacting all of the business of the corporation of any importance, except the work of the actual construction of the road, in the city of Chicago, in said Cook county. It does not appear from the evidence that any business whatever has been transacted in the Territory of New Mexico. .

I further find that the first officers of said corporation were, Robert P. Porter, president; Samuel W. Allerton, treasurer; H. M. B. Bary, secretary; and that the said Samuel W. Allerton has been treasurer and director of said corporation from January 17, 1896, the date of its organization, up to the time of his resignation as hereinafter set forth, and that during said time he participated in the transaction of all of its affairs and business, and that the indebtedness of each of the complainants was created while the said Samuel W. Allerton was treasurer and a director of said corporation, and while he was the owner and holder of stock therein as hereinafter set forth.

I further find that on the 11th day of August, A. D. 1896, by the authority of the board of. directors and stockholders of said corporation, the name of said corporation was changed to the Mexican Southeastern Railroad Company. That it was provided and ordered that the certificates of stock of the Mexican & Guatemala Colonization & Railroad Company should be surrendered and canceled, and that stock of an equal amount should be issued to all of the stockholders in the new corporation to be known as the Mexican Southeastern Railroad Company.

I further find that on the 14th day of February, A. D. 1896, a meeting was held of the charter board of directors of the Mexican & Guatemala Colonization & Railroad Company, at the office of Samuel W. Allerton, in the city of.Chicago, in said Cook county, and that there -were present at said meeting Samuel W. Allerton, Robert P. Porter, H. M. B. Bary, Charles Bary, George E. Detwiler and Emil B. Bary, by Charles Bary, his attorney in fact. The minutes of this meeting recite that there was a proposition received from the owners of the concession from the Mexican Government, as evidenced by the memorandum agreement of December 19, 1895, to subscribe for nine million ($9,000,000) dollars of the stock of the company, and pay for the same by a transfer of said concession to the company. The owners of the concession at this time were Emil B. Bary, George E. Detwiler, Samuel W. Allerton, Robert P. Porter, H. M. B. Bary and Charles Barv. Thereupon the said proposition was accepted by the board of directors of the corporation, and a resolution adopted, which recites the entering into the memorandum agreement of December 19, 1895, by E. M. Bary and Detwiler, the making of the agreement of January 10, 1896, between Bary & Detwiler of the one part, and S. W. Allerton, Robert P. Porter, H. M. B. Bary and Charles Bary of the other part, by the terms of which the said E. B. Bary and Detwiler sold and assigned to the said Allerton et al., an interest in the said concession. Said resolutions further recite that the said S. W. Allerton, Robert P. Porter, H. M. B. Bary, George E. Detwiler, E. B. Bary and Charles Bary have bargained, sold, i el eased and transferred to the Mexican & Guatemala Colonization