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Brown v. Florida Southern Railway Co.-Statement of Case.
for the incorporation of railroads and canals," approved February 19, 1874, Ch. 1987, Laws of Florida.
Sections 1, 2, 3 and 5, of the act of March 4, 1879, granting lands to The Gainesville, Ocala and Charlotte Harbor Railroad Company (Ch. 3167, Laws of Florida) are as follows:
Sec. I. That the State of Florida hereby grants to the Gainesville, Ocala and Charlotte Harbor Railroad Company the alternate sections of the lands granted to the State of Florida by the United States under act of Congress of September 28th, 1850, lying on each side and within six miles of a line of railroad to be constructed by said company, to commence út Lake City, in Columbia county, and run in a southerly direction through or near Gainesville, in Alachua county, Ocala, in Marion county, Leesburgh, in Sumter county, and Brooksville, in Hernando county, to the waters of Tampa bay, with one branch from some point in Sumter county through or near Bartow, in Polk county to the waters of Charlotte Harbor, in Manatee county, and another branch to Palatka, in Putnam county; Provided, however, The said company shall comply with the provisions of the act entitled “An act to provide for and encourage a liberal system of internal improvements in this State," approved January 6th, 1855, and the amendments thereto, as to the manner of constructing the roads and drainage ; Provided, however, That nothing herein shall prevent such company from adopting such gauge as it may choose.
Sec. 2. That if the said company shall so amend its charter as to authorize it to construct any part of the line mentioned above and not covered by its charter, then the said company shall be entitled to, and the State hereby grants, the alternate sections within the limit of six miles aforesaid of and along the line of such road, branches or extensions, on the terms and conditions aforesaid.
Brown v. Florida Southern Railway Co.-Statement of Case.
Sec. 3. That upon the completion of the grading and laying on the cross-ties of ten miles of said road, its branches cr extensions, the title to the said alternate sections opposite said ten miles of road so graded and furnished with cross-ties shall vest in said company, and a deed therefor shall be issued by the Trustees of the Internal Improvement Fund to the said company; Provided, however, That for every forty miles of road so graded and furnished with cross-ties ten miles shall be completed, ironed and equipped and in operation.
Sec. 5. That the State of Florida hereby grants to said company, in consideration of the greatly improved value which will accrue to the State from the construction of said road, its branches and extensions, ten thousand acres for cach mile of road it may construct of the lands granted to the State under said act of September 28th, 1850, said lands to be of those which may be nearest the line of said road, its branches and extensions: Provided, however, That the grant of lands made by this section is made subject to the rights of all creditors of the Internal Improvement Fund and to the trusts to which said Fund is applicable and subject under the act entitled “An act to provide for and encourage a liberal system of internal improvements in this State," approved January 6th, 1855, and subject to control, management and sale and application of said Fund and the lands constituting the same by the Trustees of the Internal Improvement Fund for the purposes of said trust under said act; Provided, however, That the title to the lands granted under this section is not to vest until they shall be released from the indebtedness existing against said trust fund, it being the purpose of this section to grant the residuary interest of the State in the lands granted by said act of September 28th, 1850, after satisfaction has been made of said indebtedness to the extent or in the quantity
Brown v. Florida Southern Railway Co.-Argument of Counsel.
iridicated hereby to aid said railroad company; Provided further, however, That upon any arrangement being consummiated between said company and the Trustees of the Internal Improvement Fund and the creditors of such Fund for the release of such lands from such indebtedness, then the title to such lands as may be so released shall vest in the said company in the proportion of ten thousand acres for each mile of railroad then graded and furnished with cross-ties, or that may thereafter be graded and furnished with cross-ties; Provided, That for every forty miles of road so graded and furnished with cross-ties tzi: miles shall be fully completed and equipped and in actual operation; Provided further, That all the lands granted by this act or their proceeds shall be applied to the construction, equipment and operation of said railroads.
The other facts are stated in the opinion.
Thrasher & Hampton for J. B. Brown.
ist. The pleadings admit for the purpose of this hearing the proper incorporation of the company.
2d. The act of the Legislature 4th of March, 1879 granted lands only on the condition that certain parties named in the act (among whom is appellant) should become incorporators of the railroad. The terms of the act give to each incorporator equal rights and benefits. Acts 1879, page 121.
3d. The capital stock of the road represented the rights and interests of the stockholders to the land granted, fran. chises and all property of the corporation; and by the terms of the articles of incorporation each incorporator had equal shares of the capital stock.
4th. The allotment of stock at the meeting in Boston on the 12th day of August, 1880, was a designed and premeditated fraud, as charged in bill, as shown by exhibit of Brown v. Florida Southern Railway Co.-Argument of Counsel.
allotment and their act of advertising lands for sale based lipon this gift of lands.
5th. The mode or manner in which fraud is effected is not a matter of much consequence. It is the effect prociuced to which the court must look in order to see if the result is the consequence of the act complained of. 2 Fla., 508.
6th. Fraud is never presumed, but it may be inferred from facts and circumstances. 10 Fla., 258.
7th. Where a party in a confidential relation to another, as by voluntarily undertaking to aid the other in obtaining possession of his property in the hands of others, takes advantage of this relation and by deception and improper inHluences induces him to part with it without adequate consideration, a court of equity may lend its aid to obtain redress. 12 Fla., 336; 1 Red. on Railway. 72-3-8; 34 Texas, 125; 40 Cal., 20, 25.
8th. The relations of Brown as an original incorporator, when taken in connection with the legislative provision, are such as to require good faith and fair dealing in every movement between him and the corporation, of which he is part owner and contractor. The corporation is a trustee to protect the rights of the individual members. By reposing this trust in the corporation it is bound to execute the trust with proper diligence and care. 10 Amer. L. R., 9; 21 Wall., 616; 50 I11., 138; 2 Story's Eq. Jr., par. 954-5, 7th Ed. ; 2 Daniels' Chan. Prac., 1650-1-2, 1661-4-5.
9th. Appellant alleges as a basis for this fraud, one Whitney. defendant, arrogated to himself the right to sell out the franchise and rights of the corporation, and did so through the fraudulent movement of a transfer from himself to himself and others, to-wit: Isaac Taylor, C. A. Boardman, still they, after this, fearing this monstrous assumption would fail in law, sought out and obtained appellant's power of
Brown v. Florida Southern Railway Co. Argument of Counsel.
attorney to act for him in this distribution of stock 12th of August, 1880. The sale of Whitney to himself and others cccurring the latter part of year 1879. One partner cannot sell to himself. 57 Barbour, (N. Y.) 127.
Ioth. When equities are sworn off it is not of course to dissolve injunction. In this case the equities were not sworn off. 6 Fla., 533; High on Injunctions, 450, 771, 767.
mith. A person holding power of attorney can act within due bounds of his authority only, any act beyond the power expressed is null and void, and not binding upon the principal, and an act violative of an express prohibition is fraudulent and void. And the charge is made in the bill that all these defendants knew the full extent of Francis' powers as appellant's agent, and that all the others confederated with Francis on the 12th of August, 1880, to consummate the fraud on appellant. 12 Amer. L. R., 441; 1 Amer. L. K., 164; 6 Amer. Law. R., 207.
12th. When two or more persons have a common interest in property equity will not allow one to appropriate exclusively to himself. 21 Wall., 616.
13th. The grant or gift of the stock (capital) to Candler, Boardman, Whitney and Taylor was without consideration even if they had been equal owners with other incorporators at time of alleged fraudulent allotment. The capital stock was representative of the value of the lands, franchises and other property of the road, and this gift or grant of stock was fraudulent of appellant's interests or rights in and to his share of the capital stock because of want of considera
14th. The fraud in this railroad corporation will be treated by equity just as though it were a private copartnership enterprise.
15th. If appellant had no interest in the stock to be