US SUPREME COURT DECISIONS

In 1851, the Legislature of Ohio passed a general law relating to railway companies which empowered them at any time, by means of their subscription to the capital stock of any other company or otherwise, to aid such other railroad company, provided no such aid shall be furnished until, at a called meeting of the stockholders, two-thirds of the stock represented shall have assented thereto.

In 1852, another act was passed for the creation and regulation of incorporated companies in Ohio, reenacting the above section and providing further, that any existing company might accept any of its provisions, and when so accepted, and a certified copy of their acceptance filed with the Secretary of state, that portion of their charters inconsistent with the provisions of this act shall be repealed.

The Cleveland, Columbus & Cincinnati Railroad Company, when they endorsed the bonds hereafter mentioned, had not formally complied with either of these requirements -- had neither convoked a meeting of the stockholders nor signified their acceptance to the secretary of state.

In April, 1854, the Cleveland, Columbus & Cincinnati Railroad Company endorsed a guaranty upon four hundred bonds of one thousand dollars each, with interest coupons at seven percent interest, issued by the Columbus, Piqua & Indiana Railroad Company.

A stockholder in the Cleveland &c. company filed a bill to enjoin the directors from paying the interest upon the bonds which they had thus guaranteed, upon the ground that these directors had exceeded their legal authority in making the guaranty. Some of the bondholders came in as defendants with the corporation.

As between the parties to this suit, the acceptance of the acts of 1851 and 1852 may be inferred from the conduct of the corporators themselves. The corporation has executed the powers and claimed the privileges conferred by it, and it cannot exonerate itself from the responsibility by asserting that it has not filed the evidence required by the statute to evince its decision.

Amongst the acts of the corporators was this -- that at a meeting of the stockholders of the Cleveland company in July, 1854, the endorsement of the bonds was approved, adopted, and sanctioned, and this resolution has never been rescinded at any subsequent annual meetings, of which there have been several, at which the complainant was represented. His proxy was also present at the meeting of July, 1854, but declined to vote when his vote would have controlled the action of the meeting.

These negotiable securities have been placed on sale in the community, accompanied by these resolutions and votes, inviting public confidence, and a corporation chanrobles.com-red

Page 64 U. S. 382

cannot, by their representations or silence, involve others in onerous engagements and then defeat the calculations and claims their own conduct has superinduced.

Zabriskie was a citizen of the State of New York and a stockholder in the Cleveland, Columbus & Cincinnati Railroad Company. He filed a bill against the company and obtained an injunction to restrain them from paying any money in discharge of the interest to become due on four hundred bonds of the Columbus, Piqua & Indiana Railroad Company, which said bonds had been endorsed by the former company conjointly with the Bellefontaine & Indiana Railroad Company, and the Indianapolis, Cleveland, and Pittsburgh Railroad Company. Butler, Belknap, and Callender, citizens of Connecticut, obtained leave to become parties to the suit as defendants upon the allegation that each of them was the holder of a bond or bonds which had been thus endorsed.

After much testimony was taken and other proceedings had, the circuit court, in March, 1858, dissolved the injunction and dismissed the bill. The complainant appealed to this Court. chanrobles.com-red

Page 64 U. S. 390