TREATISE ON THE LAW OF CONSOLIDATION OF RAILROAD COMPANIES; BEING AN ARGUMENT IN THE CASE OF JULIUS WADSWORTH, OF NEW YORK, ET AL. versus CHICAGO & NORTHWESTERN RAILWAY COMPANY, WILLIAM B. OGDEN, ET AL. IN THE UNITED STATES CIRCUIT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, HON. DAVID DAVIS, OF THE U. S. SUPREME COURT, PRESIDING. BY ELLIOTT ANTHONY, Esq. OF THE CHICAGO BAR. CHICAGO: BEACH & BARNARD, PRINTERS, 14 SOUTH CLARK STREET. 1865. PREFACE. Aside from their bearing on the present controversy, the questions, which are here discussed, are of the greatest practical importance. They are as applicable to one species of corporation as another. "A vast amount of the business of this country has come to be carried on under corporate forms of organization. Besides innumerable special charters, we have general laws which impart corporate attributes to associations formed according to articles of agreement, for a great variety of purposes; and these corporations are no longer confined to the exercise of public or political franchises." They are brought into relation with almost every member of the community, and may, in the exercise of their franchises, prove of the greatest benefit, or the greatest injury, according as they are well or illy managed. If To reap their full benefit, requires a combination of qualities and the concurrence of circumstances as favorable as any commercial adventure. To insure their success, honesty is indispensable. The directors and managers are trustees for the stockholders, and should be held to the sternest and most rigid accountability. The greater the amount of capital invested, the greater care and vigilance should be exercised and required. scheming and designing men obtain control of them, they may be rendered the greatest scourges, and instruments of oppression, of anything in modern times. The position of a director is one of great responsibility. It places in the power of him in whom you confide, your property, and, it may be, your reputation. "His virtues and his skill may raise you to the pinnacle of prosperity. His folly or his crimes may strip you of every flourishing branch and leaf, and leave you a naked, withered and dishonored trunk." The capital stock of corporations is a trust fund-the directors and managers are, we repeat, nothing but trustees for the stockholders, and the whole theory of the management of corporations is nothing but a succession of trusts. "The stockholders confide in the integrity, the faithfulness and watchfulness of directors, the protection of all of their interests. This duty they assume when they are elected; this the law imposes on them, and this, those for whom they act, have a right to expect. The principals are not present to watch over their interests they cannot speak in their own behalf-they must trust to the fidelity of their agents. If they discharge these important duties faithfully, the law interposes its shield for their protection and defence; if they depart from the line of their duty, and waste or take themselves, instead of protecting the property and interests confided to them, the law, on the application of those thus wronged or despoiled, promptly steps in to apply the corrective, and restores to the injured what has been lost by the unfaithfulness of the agent." The amount of capital which is invested in railroads in this country, has been estimated to be over One Thousand Millions of Dollars. The pecuniary interests at stake cannot, however, outweigh the principles involved; and if it be the law of this country, that the majority in interest in corporations can transfer the minority from one corporation to another, and can, in defiance of their wishes and against their will, make them liable for all of the debts and liabilities of such corporations, however great and however incurred, then every vestige of security in corporate property is at an end, and every inducement for the aggregation of capital ceases. The term "consolidation" is of recent origin, and implies aggrandizement much more than it does legitimate enterprise, or the public good. To merge the capital stock of two distinct corporations into one, and to blend together all the rights, privileges and franchises of each, can only be done except by the consent of the legislature and all of the stockholders who represent that capital stock, and who are invested with the rights, privileges and fran |