# Opposition Brief — Chicago & C. Ry. v. DES MOINES & C. RY

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1920
- **Citation:** 254 U.S. 196

## Text

JAMES ©. caro,
_ :

IN THE

Supreme Court of the United States

OCTOBER TERM, A. D., 1918

CHICAGO, MILWAUKRE & ST. PAUL
RAILWAY COMPANY, awp WABASH

RAILWAY COMPANY,
Petitioners, 66

DES MOINES UNION RAILWAY COM.
PANY, F. M. HUBBELL, F. C. HUBBELL
axp F. M. HUBBELL & SON,

Respondents

BRIEF IN OPPOSITION TO PETITION FOR
CERTIORARL.

F. W. LEHMANN axp
J. L. PARRISH,

Of Counsel or Respondents.

Peres 4 8 FLO PREFTING CO. ST Lou

Organization of the Des Moines Union Railway Company... 4-15
Resolutions for Transfer of Property to Des Moines Union Com.

Py Sherderccorccoscoterooroosoeeooeoeesooooseeenn« 13-17
The Terminal Mortgage ............................... 17-19
Resolutions for Conveyance by How and Dodge 19-20
Assent of Terminal Company............................... 21
The Deeds of Conveyance........ Zi2z
Operating Contract of 1889............... 23-25
Amendment of Articles of incorporation of Des Moines Union

ME evceconscsbdesoecoescedoocesnioes
were desired and proposed by the Wahash ax te the
~urples earnings, and they were spoken of as change~

Mr. FL. Uebhell for the Terminal wrote te Mr.
Raneev of the Wahash, ax follow -

* Referring to the new terminal comtract, 1 have
seen the correspomdk-coe between ven, Mr. Blo
eett and Mr. Cummins. With respeet te the Dex
Meine Union's revenne from rental and «witeh
ix, Week say that this fumed hae alway = been con
tretled by the Terminal Company, amd i”

to the Des Moines & St. Louis Railroad Company,
shall attach to and become the obligations of the
successor of the said) Wabash Company in’ the
operation of the said) Des Moines & St. Louis
Railroad, and any company suceceding the Wa
hash Company in such operation shall be held by
the operation of trains over the said Des Moines
& St. Louis Railroad, and upon the property leased
in the said contract, te assume all the obligations
therein or hereby undertaken by either the said
Dex Moines & St. Louis Company or the said
Wabash Corpany,

And the said Des Moines, Northern & Weetern
Company fer itsclf agrees te assume all the obli
eations of a dessee railroad company as preseribed
in the said eonteatf for the entire term narued
therein, and as though it had been mamed in and
Was a party te the said contract when originals
ninde, awd fo pawto the said Des Moimes Company
at the times and in the manucr therem prescribe d,
fhe sus of monenu which mau become die, com
pole d aecordimg iD thee ley His and fil OUISIOMS ol the
said contract with respect tod tenant company;
pnd the said Des Moines, Northern & Western
Company farther’ agrees that the obligations
therein uated and hereby assumed shall pass with
the railroad it now owns and operates, and shall
heeome the obligations of amy asstenee, grantee,
or sneeessor of the said Des Moines, Northern &
Western Company in the ownership or operation
of the said Des Moines, Northern & Western Rail
rond. and any eompany succeeding the Des Moines,
Northern & Western Company, in such ownership
or operation shall be held by the operation of
trains over the said Des Moines, Northern & West
ern Railroad, and upon the property leased in the
caid contract, fo assume all the obligations therein
expressed and herein undertaken by said Des
Moines, Northern & Western Company,

ee ee ae

23

jut it is expressly provided that so much of the
said contract, a copy of which is hereto attached,
as relates to the issuance and the distribution of
the capital stock of the said Des Moines Com-
pany, is no longer binding, and that the capital
stock of the said Des Moines Company is held as
follows:

The purchasing committee of the Wabash, St.
Louis & Pacifie Railway Company, 500 shares.

The Des Moines, Northern & Western Railroad
Company, 1000 shares.

I. M. Hubbell & Son, 2.500 shares.’ (Reeord,
}). DOG, )

Here is not only a ratifieation or adoption of the
contract by the Wabash Company and the company to
Whieh the Milwaukee is successor, but a reiterated
agreement to pay to the Terminal Company at the
time and in the manner preseribed in the contract the
sums of money “which may become due computed ac-
cording to the terms and provisions of said contract
with respect toa tenant company.’

And added to this is the very express recognition
of the faet that there is a large, a majority interest
in the shares of the Terminal Company which is inde-
pendently and individually held and is interested in
the construction .of the contract according to its ex-
press terms,

And from this time until 1906 the contract was eon-
strued according to its terms, surplus earnings being
ised from time to time for the acquisition of additional
property, without protest from any one and with the
approval of all concerned,

In view of all the facts, preceding, attending and fol-
lowing the execution of the contract of July 31st, 1897,

Ap eubaasy Deon ete

ERE RN Te OE MLE Se ETE NTE IIL BTS

24

there was manifest errer in holding that it **does not
affect this controversy.”

The history of this transaction has im considerable
part been given, but there is much more in the record
of the same nature, and much of that related to the
main controversy which bears direetly and indirectly
upon the question of surplus earnings. The Hubbells,
father and son, gave Liberally ane freely, the son for
mans vears entirely, their time and service to this en
terprise, Thes fostered it during all the thirty vears
of the contract of ISSO. whieh certainly they would net
have «ene if this contract lad been a barren one ined
their stockholdings barren alse. True, for a time thes
were interested in the Northern railroads, but from
the time the Milwaukee acquired its holdings in these
they hid, if the contention of the respondents mow
made is warranted, no interest whatever in the Ter
minal Company, except the holding of stock whieh: was
forever precluded from yielding ams profit, Stull thes
conducted its busines-, managed and directed its at
fairs for years and were permitted te deo this by re
spondents without the pray of a dollar, conduct upon
beth sides inconsistent with any view other than that
they had a substantial heneficial interest as large
stockholders in the Terminal Company,

We submit that the Ctrenit Court of Appeals erred

in holding:

1. That the contention of petitioners that the only
character of ereait: items to which the respondents
sere entitled under the contract “were such as were
paid by seme other railway by virtue of a contract for
the use of the properts * while ‘ta strict construction
of the exact wording ef the contract’ is not a fair

construction of the spirit-of the agreement.”

Hl. That its conclusion as to what was the “spirit

of the agreement was based upon or warranted by the
history of the transaction.

Il. That its construction of the contract giving
the surplus earnings to the respondents was justified
by the reading of the contract in its entirety,

IV. And in its order, judgment and decree direct
ing the District Court of the United States for the
Southern District of lowa to so modify its decree
“that the surplus earnings belong to the railways, and
to appoint a master under instructions to ascertain
the part due each upon a wheelage basis."’

The petitioners therefore pray that a writ of cer.
lierari issue to said Cirenit Court of Appeals to re
nove therefrom the Record in this cause for review
here by this Court of the questions presented and the
errors specified in this petition.

Respectfully submitted,

a. LL. PARRISII and
F. W. LEHMANN,
Of Counsel for the Petitioners.

IN THE

SUPREME COURT OF THE UNITED STATES.

fhovonee Team, A. DD 1918,

— ee —_

No.

THE DES MOINES UNION RAILWAY COMPANY,
FREDERICK M. HUBBELL, FREDERICK C.
HUBBELL and F. M. HUBBELL & SON,

Petitioners.
\«

hk CHICAGO, MILWAUKEE & ST. PAUL
RAILWAY COMPANY awl THE WABASH
RAILROAD COMPANY,

Ie sponds wis.

REPLY TO CROSS-PETITION FOR WRIT OF
CERTIORARI.

Supplementing the reply of respondent, the Chi-
cago, Milwaukee and St. Paul Railway Company, to
the ecross-petition for writ of certiorari, attention is

called to the following additional matters:

—Z—

L

The contract of May 1, 188, en which petitioners
rely (Reeord, p. 1), after deserilnng the terme!
property, including the prepesed wien paeecnwe
depot and additional facilities te be cometraeted, etl
gated the predecesser of feependent= te pan the
maintenance and operitong cost, otetest and tawes,
ete., and then by section 6 (leer, pe Paty the port)
of the first part in comeideration of the pan ment. te
bere sratcde ter it bey ened peerties ef the second poor
herely grants ty sicied secved pourties the Gee of ite ter
minal propertics a= aferesnkd’” « grant tet tends
of a richt te ee, beet ef the mee of n+. entre wee
fulness of usufruct of ‘it~ ternal preqettoe="", and,
of coutse, ineludes the pewte eborpced Doe a teh,
station privileges, ete.

That the language of the grant express the in
fentions of the parties t= cbyeies Prete the fact thet
all parties understeed at the the that the grentees
owned the terminal prepertie: ae sheen by th
dence of Colonel Bladgett on nega te the parece of
the contract (Record, pO) We the neshatien of th
Jes Moines Union Railway Conger thenentafter
called the Dies Moines Cheney), neqeestiog hm te
prepare it to be apqerewed and executed by all lite
now belding an interest in the property’. aud in ot

resolution that ‘*the terme and eornlit pete oom whieh

the sewers! lines new interested of which may bere
after heeene interested shall enjoy the axe of these
torminals be folly «t forth in « supplemental agree
went te be made and executed between the Dee
Veins Union Railway Company and cach of the liges
oon the «wid terminals” (Reeord, p. 478%). The com.
tract could have been supplemental only te the con.
treet of Jaweary Jed, 1882 (Record, p. 12) and ae
cording te the resolution its parpexe wae te define
the terms and conditions on whieh the grantees «hould
eajew the ase of the terminals, net te define or
recognize any right in the Dee Moines Company, and
woordingly ne rent or compensation for the wee of
the terminals was reserved and all the covenant« were
by or for the benefit of the grantees the Dew Moines
Compeny net having the slightest interest in their
peorformance it being merely an umpire or ageney
euploved te unify the operations and beek keeping
and enforce the covenants as between the granters for
whose sele benefit they were made,

(a) The parties at the oateet committed themselves
te o eomstrnetion of the contract whieh entithed the
crantees te the ineemne prodwced by switching, station
privileges, ote, Iw crediting it on their bills, firet,
woder the direction of the jeint ax eepuitabele tenants on commen ther.
wand subject te their joint Gee and coenye’ og wp ow the

10

terms described in the contract of January 2, 1882, with
the result that following the expiration of the Supple.
mental Agreement on May 1, 1918, the St. Paul and
Wabash Companies were, and are, remitted to the rights
and obligations of that contract, as held by Judge Hook
in his dissenting opinion, or whether the title to the ter-
minal property is absolute and complete in the Des
Moines Company, and the St. Paul and Wabash
Companies’ only interest therein is such as flows from
stock ownership, as held by the majority opinion; and

(b) Whether the St. Paul and Wabash Companies are
entitled to the so-called Surplus Earnings, as adjudged
by the Cireuit Court of Appeals—all the judges concur.
ring.

The questions in paragraph (a) are raised by the fol-
lowing specification of error:

Specification oF Error Reviep Upon.

The court below—Circuit Court of Appeals—erred in
holding that the Railway Companies have parted with
the exclusive ownership and control of the terminal prop-
erty which they had reserved to themselves under the
January 2, 1882 contract, and that the complete title to
this property is in the Des Moines Company, and that
the only interest of the St. Paul Company and the Wa-
bash Company in such property, or in the control and
management thereof or of the Des Moines Company, is
such as flows from stock ownership. (Ree., 2114, 2118.)

11

STATEMENT OF FACTS.

It is not questioned by any of the parties in interest
to this proceeding that the transactions and events out
of which has grown the present controversy began with
the existence of a trust under which the prede-
cessor Railway Companies of the complainants were
the beneficial owners in the property held by the Des
Moines Company.

The majority opinion of the Cireuit Court of Appeals
assumes as the premise upon which its conclusions are
founded the existence of this trust, and the result reached
by it is based upon the theory that through inadvertent
developments this trust has disappeared. (Ree., 2096,
2102.) This factor of inadvertence in the alleged dissolu-
tion of the trust is stated by that Court in the following
language :

“There is nowhere any indication that the rail-
ways intended any such result and yet such in our
judgment is the result. This unexpected outcome
was the product of several cireumstances.’’ (Ree.,
2113.)

The dissenting judge in the Court of Appeals states
that

“The excerpt quoted above touches the quick of
this controversy.’’ (Ree., 2119.)

And in commenting upon it, he says that the conclusions
of the majority are of this significance:

‘‘In other words the proprietary companies were
not cognizant of the trend of the circumstances and
the result held to follow though unexpected and not
intended by them, is enforced because of legal pre-
sumption of intention of natural consequences of
acts, regardless of intention in fact. The circum-

12

stances relied on do not appear to me to have the sig.
nificance attributed to them, but were it otherwise,
the presumption should not be so broadly applied
to the case of a trust, the destruction of which js
claimed by those subject to the disabilities of trus.
tees dealing for themselves.”’ (Ree., 2119.)

The several tests of the rights of the parties must al!
eventually come to the issue disclosed by the above quo-
tations from the majority and minority opinions of the
Cirenit Court of Appeals.

In such a situation it is believed that the faets of the
ease can be presented most significantly by classifying
them in the following three groups:

I. A statement of those faets which were preliminary
to the establishment of the trust and were the induce.
ment for the same.

II. A statement of the terms of the trust and of its
development in the corporate form which it eventually
took, and in this respect the relation of the defendant
Hubbell as the administrators and fiduciaries of the trust.

II. The independent transactions of the Hubbell:
in respect of the trust property and the several aliquot
interests evidenced and measured by shares of stock of
the corporate trustee.

»

A STATEMENT OF THOSE FACTS WHICH WERE PRELIMINARY
TO THE ESTABLISHMENT OF THE TRUST AND WERE THE IS
DUCEMENT FOR THE SAME.

The defendant FM. Hubbell,

In 1880 the defendant F, M. Hubbell and Jefferson s.
Polk were copartners, practicing law, trading in real
estate and promoting railroad enterprises in and about
the City of Des Moines, Iowa, under the firm name of

f

13

Polk and Hubbell. (Ree., 998.) The defendant Hubbell
was president of and he and his partner Polk and two
associates, J. S. Clarkson and J. S. Runnells, were the
stockholders of the Narrow Gauge Railway Construction
Company, a contracting company which had constructed
certain railroad mileage in the vicinity of Des Moines.
(Rec., 407, 408; 998.)

The radroad situation at Des Moimes in 1880.

At this period the Wabash, St. Louis and Pacifie Rail-
way Company, referred to in the pleadings as the orig-
inal Wabash Company, owned and operated a system of
railways Iving east and west of the Mississippi River,
including a line extending from St. Louis to Albia, a
point in the State of lowa about 67 miles southeast of
the City of Des Moines. (Ree., 998.) Polk and Hubbell
wing interested in a narrow gauge railroad partly con-
structed to the northwest of Des Moines from Waukee
to Adel, a distance of about 7 miles, sought to interest
the Wabash Company in the construction of new rail-
wad mileage in and about the City of Des Moines, in-
duding the completion and development of the partially
constructed road, of which they were the owners. (Rece.,
8, 1001.)

The projected railroad construction in which Polk and
lubbell sought to interest the Wabash Company, may
ve roughly indicated by the letter Y. The stem of the
Y represents a proposed extension of the road of the
Wabash Company from Albia to Des Moines; the left
am of the Y a line extending northwesterly from Des
Moines to Fonda, of which 7 miles of railroad between
Waukee and Adel had already been constructed under
the charter of a corporation controlled by Polk and Hub-
‘ell and known as the Des Moines Northwestern Railway

14

Company, hereafter referred to as the ‘‘Northwestem
Company.’’ The right arm of the Y represents a far.
ther projected line to extend in a general northerly diree.
tion from Des Moines to the Town of Boone.

A blue print of these roads as subsequently constructed
appears in the record at page 197.

As the three projected roads converged at Des Moines,
it was also proposed that proper terminals and termina
facilities in Des Moines be acquired for their joint and
common use. (Ree., 412, 1001.)

The contracts with the defendant Hubbell and his asso.

ciated interests.

On December 8, 1880, the defendant F. M. Hubbell
his partner Jefferson S. Polk and J.S. Clarkson and J.s.
Runnells, being the same parties who owned and con-
trolled the capital stock of the Narrow Gauge Railway
Construction Company, entered into a contract with the
Wabash Company providing for the construction of 3
line in extension of the line of that company along the
stem of the Y from Albia to Des Moines, this line to be
constructed at the cost of the Wabash Company in the
name of the St. Louis Company, a corporatio!
which the defendant Hubbell and his associate
contracted to organize. This contract provided in sub-
stance that the defendant Hubbell and his associate
would incorporate the St. Louis Company with a cap
tal stock of two million dollars and authorized to con
struct a railroad from Des Moines, Iowa, to Abbia in
said state. They were to give their time, personal at:
tention to and act as directors and officers of this enter:
prise, so far as necessary to locate and economically
construct the railroad, but subject to the approval ¢
the Wabash Company. They were personally to exer

15

themselves to procure subsidies in aid of the line and
donations of lands, stations, right of way and other bene-
fits in aid of its construction. They were to receive as
compensation for their services, in all of the above re-
spects from the time of the execution of the contract
made by them to the completion of the railroad, the sum
of $10,000 in money and a further sum of five per cent
of the amount of all subsidies which should be actually
paid, and five per cent of the value of donations in Jands
for right of way or station purposes and five per cent of
the value of all other aid to the construction of the rail-
road accepted by the Wabash Company. (Ree., 396.)

The contract also provided that the defendant Hub-
vell and his three associates should each subscribe for
ue Share of the stock, and that the balance of the stock
should be subscribed for by a nominee of the Wabash
Company, who should undertake to make payment of his
subscription by constructing the proposed railroad.
‘Rec. 398.) James F. How became the nominee of the
Wabash Company, and so subscribed for the balance of
the stock, and the road was constructed by the Wabash
(ompany in his name as contractor. (Rec., 999.)

Qn the same date with that of the above contract,
wumely, December 8, 1880, the line hereinbefore men-
toned as controlled by Hubbell and his associates,
umely, the Northwestern Company and a corporation
med the Narrow Gauge Railway Construction Com-
jay, also owned and controlled by the same parties,
atered into a contract with the Wabash Company, pro-
‘ding for the completion of the line of the Northwest-
«m Company along the left arm of the Y from Des
fines to Fonda. This contract provided that the line
“ould be constructed by the Construction Company in
‘usideration of $7,000 per mile of bonds of the Wabash

7

16

Company, to be secured in part by a mortgage given by
the Northwestern Company upon the proposed road, the
stock of the Northwestern Company to be equally di-
vided between the Construction Company representing
Hubbell and his associates, and the Wabash Company.
(Ree., 400.)

The contract also provided that, in order to. supply
the Construction Company with funds, the Wabash Com.
pany would purchase the mortgage bonds deliverable to
the Construction Company on the basis of 95 per cent
of their par value. (Ree., 406.) This formality was
not followed, but the Wabash Company, instead of acta
ally delivering the bonds to the Construction Company,
provided it with funds direct by selling the bonds in the
market. (Ree. 1001.)

No contract covering the construction of the line north-
wardly from Des Moines to Boone, along the right arm of
the Y, appears in the record, the financing of this road
having been undertaken by Gen. Grenville M. Dodge,
as an independent enterprise. However, the actual con-
struction work was performed by the Narrow Gauge Con-
struction Company, which company operated from the
office of Polk and Hubbell in the City of Des Moines.
(Ree., 1170, 1180.)

panies mentioned abore.

On December 15, 1886, Polk, Clarkson, Runnells and
Hubbell, in pursuance of the contract first mentioned
above, incorporated the St. Louis Company under the
laws of Iowa, for the purpose of constructing the pro-
posed line along the stem of the Y from Albia to Des
Moines. (Ree., 408.) Hubbell was made secretary of

Re CAs alae

17

the company and also a director, and held both positions
until 1891. (Ree., 1297.)

On December 23, 1880, the same four individuals, pur-
suaut to the contract last above mentioned, reincorpo-
rated said Northwestern Company for the purpose of
completing the line along the Jeft arm of the Y from Des
Moines to Fonda (Ree., 725.) Tlubbell was made treas-
urer of the company and also a director of the same, and
served continuously in both capacities until the reorgan-
ization of said company in 1886, except in 1880, when he
served as its assistant treasurer. (Ree., 1279.)

On April 4, 1881, the same four individuals, pursuant
toan arrangement with said Dodge, incorporated the St.
Louis, Des Moines and Northern Railway Company,
hereinafter referred to as the ‘‘Northern Company,”’ for
the purpose of constructing the third line along the right
arm of the Y from Des Moines to Boone. (Ree., 728.)
Hubbell was made a director of the company and served
in this capacity until 1800; he also served as treasurer
of the company until 1883. (Ree., 1297.)

The construction work.

The actual construction work of the three lines, as
well as the assembling the necessary terminal railways
and facilities at Des Moines, proceeded actively during
the year 1881.

The work on the line of the St. Louis Company was
under the direction of James F. low, the subcontractor
above referred to, designated hy and representing the
Wabash Company. (Ree., 419, 1001.)

The work on the lines of the Northwestern Company
and of the Northern Company was under the direction
of the Narrow Gauge Construction Company, and the

,

18

operations were conducted from the office of Polk and
Hubbell. (Ree., 1170.)

The assembling of the terminal railways and facilities
in Des Moines was also conducted from the office of Polk
and Hubbell and was under the personal direction of
Hubbell himself. (Rec., 981, 1181.) Hubbell also nego.
tiated the purchase of all the real estate, and where
condemnation proceedings were necessary these were
conducted by Parsons and Runnells, attorneys for the
Wabash Company at Des Moines. (Rec., 1001, 1002.)

The funds for the purchase and acquisition of real
estate and other property were advanced by the Wabash
Company and Gen. Grenville M. Dodge.

Such of the real estate acquired as was charged to the
St. Louis Company, or to the Northwestern Company,
was paid for by the Wabash Company and title to th
same was taken in the name of James F. How individu.
ally or of James F. How, trustee, or was taken in the
name of other individuals in the first instance and sub-
sequently transferred to How in one of the above capaci-
ties.

Such of the real estate as was charged to the Northern
Company was paid for by Dodge and the titles were
taken in his name.

Certain property being largely property acquired a
the result of condemnation proceedings, was taken in
the names of either the St. Louis Company or the North
ern Company. (Ree., 1045, 1181.)

At the close of the vear 1881, the road of the Nortb-
western Company was opened for operation, and its
trains were running into the Des Moines terminals, ané
the two other roads were well advanced. (Reec., 1053.)
But no formal contract had yet been made for the per-

ee
19

manent ownership and operation of the terminals, that
is to say, the terminal development was still proceeding
under the parol understanding dating back to the incep-
tion of the enterprise.

Thus, at this point, the following situation had de-
veloped :

The legal title to certain of the properties was in the
Northern Company, which it had acquired by condemna-
tion proceedings ; the legal title to certain other property
was in the St. Louis Company, which it had also ac-
quired hy condemnation proceedings; the remaining
property was in the title of certain individuals, namely,
Dodge and How, without specification of the terms of the
trust, but the beneficiaries of the trust were the three
railway companies, by or on whose behalf all of the above
referred to properties had been acquired and which had
provided the money for the acquisition thereof.

It therefore appears that operation had already be-
gun on the terminal properties before any permanent
plan for the proper holding of such properties for rail-
road purposes had been determined upon by the benefi-
ciaries of the trust enterprise.

I.

A STATEMENT OF THE TERMS OF THE TRUST AND OF ITS DF-
VELOPMENT IN THE CORPORATE FORM WICH IT EVENTY-
ALLY TOUK, ANT) IN THIS RESPECT THE RELATION OF THE
DEFENDANTS HUBBELI. AS THE ADMINISTRATORS AND
FIDUCTIARIES OF THE TRUST.

As a result of the situation summarized at the conclu-
sion of the foregoing subdivision, the parties to the enter-
prise entered into a certain contract which created the
express trust lying at the foundation of this suit.

—

The contract of January 2, W982 (Ree. AV).

Thix contract was made between the St. Lonis Com.
pany, the Northwestern Company and the Northern
Company as the beneficial ow ners of the terminal proper.
ties and G. M. Dodge, James F. Hew and James F. Hew,
trustee, as the holders in trast of the legal tithe te cer.
tain of the terminal properties, The Wahesh Company
also subjoined its consent te the erecution of the agree.
ment by the St. Louis« and Nerthwestern Companies,

This contract tates:

(1) That the three companies —St, Lewis Company,
Northwestern Company awd Netthern Company-—ar
engaged in the construction of railways converging a
Des Moines, and had theretefere agreed apen the par.
chase, construction and maintenance ef terwinal facili
ties at Des Moines, at their joint expense, aad that each
terminal facilities should be held and anced me commm
as provided in said contrat, (Ree. 412.)

(2) That in pursuance of the agreement theretetore
made various purchases had been made of property a
Des Moines in the name of the St. Lenis Company,
James F. How individually and as trustee, and Grenville
M. Dodge, and the constraction of buildings and other
improvements upon the property se purchased had been
commenced, (Ree, 412.)

(3) That the expense incurred by sach purchases and
improvements, and such others as might thereafter he
made, should he borne one-half lw the St. Louis Com
pany, one-quarter by the Northwestern Company, and
one-quarter by the Northern (ompany. (Ree. 412.)

(4) That it was understeed that a Depot Compan”
might be organized to take permanent charge of the

terminal property upon the terms set ferth in the con
tract, and that said “Depot Company” might issae and
deliver to the three railway companies ite mortgage
bends to the amount of their respective portions of the
cost of said purchases and improvements. (Ree. 412.)

(5) That the tith to said terminal property should
be awd remain ina trastee to be named by the three rail-
way companies “het swhjeet to the joint ase and occupa-
tien of all of said Ralwag Companies apon the terms
herein deserted” (Mee, 412)

(6) That How and Dedge declare that their pur-
chases of property were “made in their names upon the
trusts above neferned te, and agree to quitclaim and een-
vey the same te said recetee wpow demand and reim-
barecment.”” (Ree, 413.)

(7) That the St. Louis Company shall be charged with
the police control, supervision and maintenance of the
terminal property, and the expense thereof to he appor-
tioned between it and the Nevthwestern and Nerthern
Companies upon a wheelage hasix, (Bee, 415.)

(§)) That spar tracks shall be built connecting the
terminal property or grounds with factories and other
sources of trade in Des Moines, which tracks shall be
adapted for use for beth broad and narrow gauge
tracks, (Ree. 415.)

(9) That in the event that any company whose rail-
read dees net extend te Des Moines shall effect an ar-
rangement for running its trains inte Des Moines over
the railroad of the St. Louis © y. the Northwest-
em Company or the Northern Company, such company
shall be entitled to the use of all of the terminal facili-
ties upon the payment of a fair sum for rental and its
proportion of maintenance, and that railroad companies

whose roads extend te Des Memes may be admitted to
the use of such terminal facilities bw agreement of all
said companies. (Hee, 415-414.)

(10) That the greands or terminal property to be
held in commen by the St. Lowis Company, Northwest
ern Company and Northern Company ander such con
tract are all cast of Farnam street in the City of Des
Moines. (Rec. 414.)

Speaking of this contract, Jadge Stone, whe wrote the

ma jority opinion in the Court of Appeals, says:
(a) “An analysis of this contract shows a state.

eae onl improvement of the ah,
(Ree. 2001.)

(b) "As to the companies (Railways), the com
ee ee ey eS ee ae ten
rights, bat attempted te define for the future the
rights of tithe and wsage of the terminal ¥.
The title vane ete was a trust, The tithe

wal yur or Wie pce
is necessarily inferred from the combined circum

(ec) “The contract terms aud intent as to owner.
ship were a trust.” (Ree. 2102.)

In connection with the foregemg, particular attention
is directed to the third article of the agreement, provid
ing that a “Depot Company" might be organiard to take
charge of the terminals, the same to be transferred to
the Depot Company in such form of tithe ax would per
mit it to mortgage the property as security for its bonds,
and also to the second and fourth articles of the agree

ment providing that the title to the terminal propertoes
shall be and remaim in a trustee to be designated by the
parties, but subject to the use and occupateen of the
terminals by the three beneficcarg vadway Com pani:

Following the execution of this contract, the parties
in interest continued the work of completeing the three
railway lines, the making of mmprovements of the term
inal property at Des Moines by the construction of nee
exsary buildings and facilities, the purchase of addi
tional property, obtaining franchises, and connecting
the tracks of the St. Louis Company, which were breed
gauge, with the tracks of the Northwestern and North
ern Companies, which were narrow gauge, by laying «
third rail alongside of tin rails of each of the three com
panies through the terminal property.

it is to be farther noted that the cxterprrme wee oh
widized by aid voted by various counters throwgh whet
the lines of the St. Lows, the Northern and the North
western Companies extended, and that of recemred tur
ther valuable subsidies in the form of dowateows of coght
of way, among these being a right of wan granted be
ordinance of the City of Des Moines covering the mam
lime of the terminal vailwag in the City of Dew Mewes
(Rec., 443, 788-816, 1049.)

The completion of the rarroads

During the years 18*2 and 1885, the cometrection of
the two remaining reads was completed. The line of
the Northern Company was put inte operation m Ae
gust, 1882, and on January 4, 18*5, stockholders of the
™. Louis Company adopted a resolution formally ac
epting its road ax completed between Albia and Dee
Moines. (Ree, S82, 1427.)

-

24

The incorperation of the Des Moines Union Railway

v
Company.

On December 9, 1884, the board of directors of the
Northwestern Company adopted a resolution reciting
that. it having been agreed by the parties to the contract
of January 2, 1882 that the property and franchises
theretofore acquired, should he used for terminal facili-
ties at Des Moines, it was desirable that a corporation be
organized for the purpose of taking and holding sueh
property and ‘carrying out the objects of said contract
of January 2, 1882," and that FL M. Hubbell and others
act for this company in the organization of such cor-
poration, (Ree., 4109.)

Accordingly on December 10, 1884, representatives of
the Northwestern Company, of the St. Louis Company
and of the Northern Company met in the City of Des
Moines for the purpose of organizing the Depot Com-
pany, Which the parties had agreed ‘‘might be organ-
ized to take permanent charge of the terminal property

ss
.

upon the terms set forth in the contract

Present at the meeting were:

G. M. Dodge, representing himself and the Northern
Company.

J.S. Polk and F. M. Hubbell, representing the North-
western Company.

John S. Runnells and C. F. Meek, representing the
St. Louis Company, and

James F. How, both as trustee and in his individual
capacity.

The first action of this meeting was the adoption of
the following resolution:

‘Revolved, That for the purpose of carrying out

ar
we: Sat Sead

25

the objects and purposes of the agreement hereto-
fore, to wit, on the second day of January, 1882,
made and entered into by and between the Des
Moines & St. Louis Railroad Company and others
(which is set out in full in the following Artieles of
Incorporation), the following be adopted as the Ar-
ticles of Incorporation of the Des Moines Union
Railway Company, to wit:’’ (Ree., 416.)

Following this resolution, articles of incorporation of

the Des Moines Company were adopted which were pre-
ceded hy the following:

‘*Wuereas, The Des Moines & St. Louis, the Des
Moines Northwestern and the St. Louis, Des Moines
& Northern Railway Companies have heen engaged
in the construction of railways converging at Des
Moines, la., and have seeured certain franchises.
purchased certain realty and made certain improve-
ments thereon—which they have heretofore agreed
should be secured, purchased, made and maintained
upon certain agreed conditions, at their joint ex-
pense—in accordance with a contract made and en-
tered into by and between said companies and Gren-
ville a Dodge and James F. How, trustee, bearing
date January 2nd, A. D, 1882, and which contract is
in words and figures as follows, to wit:

(Ilere follows the contract of January 2, 18s2,
verbatin et literatim.)

‘Whereas, each of said railway companies and
said parties has expended large sums of money in
purchasing and improving the property aforesaid,
and in the construction of suitable buildings for the
use of said companies, and

Wuergas, it was provided in the contract afore-
said that a depot company might be organized to
take permanent charge of the property, and it was
the understanding of the parties that such company
might acquire, operate and maintain said property
in such manner as best to serve the interest of the
parties hereto,

Now, THEREFORE, for the purposes aforesaid, as
well as for those hereinafter expressed, the under-

MIP ME SAT

26

signed hereby associate themselves in a body cor-
porate, and adopt the following:
Articles of Incorporation.’’ (Ree., 416-419.)

These articles, besides stating the name of the cor-
poration, its principal place of business, the names of the
officers and the first board of directors, the manner ot
calling meetings of the board of directors, the method
by which the articles might be amended, and the term of
the corporation, provided :

(1) That the nature of the business to be transacted
by the *‘Depot Company” shall be the construction,
ownership and operation of a railway in, around and
about the City of Des Moines, including the construc-
tion, ownership and use of depots, freight houses, rail-
way shops, and whatever else may be useful and con-
venient for the operation of the railways at the terminal
point in Des Moines, as well as the transfer of cars
from one railway to another, or from factories, ware-
houses and elevators to each other or to any of the rail-
ways in or around Des Moines; the ‘Depot Company”
to possess all the powers conferred upon corporations
for pecuniary profit under Chapter 1 of Title IX of the
Iowa Code and the amendments thereto. (Ree., 420.)

(2) That all the powers exercised by the ‘* Depot
Company” shall be wm accordance with the terms and
spirit of the January 2, 1882, contract. (Ree., 420.)

(3) That the ‘‘ Depot Company”’ shall have the right
to lease or otherwise dispose of the use of any part of
its franchises to any other railway company, provided
the assent in writing of the St. Louis Company, the
Northwestern Company and _ the Northern Company
shall be necessary before such lease or disposition can
be made to any other than the three companies last
named. (Rec., 420.)

pea ao

27

(4) That the affairs of the ‘‘Depot Company’’ shall
be managed by a board of eight directors, four of whom
shall be nominated by the Wabash, St. Louis & Pacific
Railway Company, two of whom by the Northwestern
Company, and two by the Northern Company. This
provision applies to any grantee or assignee of either of
these companies. (Rece., 421.)

(5) That no contract, lease or other agreement
amounting to a permanent charge on the property of the
“Depot Company”’ shall be entered into unless the same
shall have been first approved by the St. Louis Com-
pany, the Northwestern Company and the Northern
Company, or their assignees, and shall have been sub-
mitted to a meeting of the stockholders and approved by
more than three-fourths of all the stockholders, and that
no Jimitation whatsoever upon any of the franchises of
the ‘Depot Company”’ shall be made by its board of
directors except the same shall have been submitted to
and approved by the stockholders. (Rec., 421.)

(6) That the capital stock of the ‘‘ Depot Company’’
shall be $1,000,000, divided into shares of $100 each, to
he paid at such times and in such manner as the board
of directors may determine, and the board is authorized
to receive in payment of such stock the property and
franchises in Des Moines now held by the St. Louis
Company, the Northwestern Company, the Northern
Company, How and Dodge individually and How as
trustee. (Ree., 420.)

The articles bear the signature of F. M. Hubbell, J. S.
Polk and J. S. Runnels. (Ree., 422.

F. M. Hubbell acted as secretary of the meeting which
adopted these articles. (Ree., 423.)

Particular note should be given to that provision of

the articles of incorporation above quoted, whieh reads
that:

All the powers exercised by this company (The
Depot Company), shall be in accordance with the
terms and spirit of the aforesaid contract entered
into on the 2nd day of January, A. I). 1882.7" ( Ree,
420.)

Particular attention is also called to the article giving
a veto power in the management of the affairs of the
** Depot Company” to each of the beneficiaries of the
trust in the following terms:

“No contract, lease or other agreement amount:
ing to a permanent charge upen the property of the
corporation, shall be entered into by the board, un-
less the same shall have been first approved by the
Des Moines and St. Louis Railroad Company, the
Des Moines, Northwestern Railway Company and
the St. Louis, Des Moines and Northern Railway
Company, or their assignees , °° (Rec., 421,

The resolutions of January 1, ISS.

“Following the incorporation of the Des Moines Com-
pany, the stockholders of the St. Louis Company, the
Northwestern Company and the Northern Company, at
meetings held January 1, 1%%9, adopted resolutions re:
citing the execution of the January 2, 1882, contract, and
the incorporation of the Des Moines Company December
10, 1884, and declaring:

(a) That each company accepted and ratified, so far

as its interests were affected thereby, the articles of
incorporation of the Des Moines Company as in substaw
tial accord and compliance with the terms and conditiow
of the January 2, 1882, contract, and undertook to dis:
charge all the obligations imposed upon it by said con
tract in order to make effective the purposes of the Des
Moines Company. (Iee., 424.)

29

(b) That the proper officers of each company be au-
thorized, upon the issuance to it of the share of bonds
and stock of the Des Moines Company to which it might
ie entitled under the contract, to convey, assign and
yansfer to the Des Moines Company all its right, title,
wd interest, of whatever name and nature, in and to
the real estate, franchises, choses in action and right im
pssession or contingent, to all the property in the City
of Des Moines east of Farnum street then held, enjoyed
w claimed by either or all the signatories of said Jan-
ary 2, S82, contract, or any agent or trustee thereof,
purchased, acquired or held in pursuance of that con-

tract. (Ree., 424.)

F. M. Hubbell presented the resolution adopted by

the stockholders of the St. Louis Company and the
Northwestern Company, and voted for their adoption.
Ree., 423, 426.)

(mn the same day, January 1, 1885, the first meeting
{the board of directors of the Des Moines Company
aiter its incorporation, was held. At this meeting, reso-
lations were adopted the preambles to which stated that
the St. Louis Company, the Northwestern Company, the
Northern Company, How both in his individual right
ad as trustee, and Dodge, had by their offieers and by
themselves personally notified the Des Moines Company
that they had each approved of the organization of the
les Moines Company and had direeted their officers and
trustees to surrender and deliver to the Des Moines
(Company the railroad property and franchises men-
tioned in the contract of January 2, 1882, and had re-
wested the Des Moines Company to take possession of,

wd maintain and operate the same for the purposes and
athe terms mentioned in the January 2, 1882 contract,
md that said railway companies and individual signa-

30

tories to that contract had indicated their desire and
purpose to transfer the property to the Des Moines
Company in accordance with the terms of that contract,
and that it was desirable that the Des Moines Company
at once should take possession of such property and
maintain, control and operate it and procure all neces.
sary conveyances and transfers of the same and make
provisions for, and pay for said property so proposed
to be conveyed to it. The resolutions declared:

(a) That the Des Moines Company accepted the
‘transfer and management and operation of such prop.
erty theretofore owned by the St. Louis Company, the
Northwestern Company, the Northern Company and
others, parties to the January 2, 1882 contract, and as
sumed control thereof, and instructed its president to
make such order as might be necessary to render suci
control and management effective as provided in that
contract. (Ree., 433.)

(b) That the officers of the Des Moines Company be
appointed a committee to confer with the parties to the
January 2, 1882 contract, and agree with them sever-
ally upon the terms and price at which they would, re
spectively, assign, transfer and convey such property
and franchises to the Des Moines Company, and fo pro
cure from them, and each of them, such conveyances ani
transfers as might be necessary to fully invest the De:
Moines Company ‘‘with the titte, control and manage
ment of said properties provided for in said contract v
January 2nd, 1882.’’ (Ree., 433.)

(ec) That to enable the Des Moines Company to pay
for the property and to maintain, operate and improve
the same, and purchase other property necessary W
carry out its objects, the president and secretary 0
the company were authorized and directed to issue fully

31

paid capital stock not to exceed $1,000,000, and bonds
not to exceed $500,000, and to secure said bonds were
guthorized and directed to execute in the name of the
Des Moines Company a first mortgage or deed of trust
evering all the property of the Des Moines Company,
and that when the committee had agreed with the par-
ties to the January 2, 1882 contract as to the amount
of bonds and stock of the Des Moines Company neces-
sary to be delivered to them, the president and secre-
tary of the Des Moines Company should deliver said
stock and bonds to the several parties on receipt of
the conveyances and assignments of the property to be
made to the Des Moines Company. (Ree., 434.)

Frederick M. Hubbell as a member of the board of
the Des Moines Company voted in favor of these rese-
lutions, and as secretary of that company acted as sec-
retary of the meeting. (Ree., 435.)

In considering the significance of the foreqgomg reso-
lutions it should be noted that the authority and di-
rection given by them to the officers of the Des Moines
Company to issue its bonds and stock is to be identified
vith the terms of the trust declared by the January 2,
1882, contract.

Respecting the issue of honds authorized by the reso-
lutions, the trust contemplated that the expenses in-
arred by the purchases and improvements representing
the trust property should be borne by the beneficiaries
inthe proportion of one-half by the St. Louis Company
and one-quarter by each of the other two companies
ad that, through a Depot Company, such beneficiaries
night reimburse themselves for this expense by the ac-
eptance of mortgage bonds to be issued to them by such
lepot Company to the amount of their respective por-
tions of the cost of said purchases and improvements.

32

Respecting the issue of stock, the trust authorize
the Depot Company te take charge of the property uper:
the terms of the January 2, 1882 contract and the reso.
lutions in harmony with this idea appointed a committe
te confer with the parties te such contract for the pur
pose of procuring from them such conveyances ap!
transfers as would he necessary to fully invest the Depe
Company “with the tithe, contra and manaagcrn ot @
said properties pro ided fea iw said contract of dav.
wary 2, W382": thes, the stock to be issued by such Depet
Company became an indicia of ow nership of the severs)
proprietors in the trust tithe: te be conveved to the Depe
(Company as contemplated by the resolutions,

Sapplementary ve colutions of November 5 and &, WS.
of the Dex Moines Company and the proprietary com.
pan *, pros idina for the transter of titles of the tree
propertics held ba the individual tructees to the De

Moines Company.

It is to be noted that more than two years intervene!
between the passage of the resolutions of January |
1885, and the date of the above resolutions. This delay.
in providing for the transfer of the trust property, ares
by reasen of the following circumstances:

On May 20, 1884, receivers were appointed of th
railroads and property of the Wabash, St. Louis an
Pacifie Railway Company, (Ree., 229.)

On July 15, 1885, James F. Joy, O. D. Ashley, Thema
H. Hubbard and Edgar T. Wells, representing the hell
ers of the defaulted bonds of the Wabash Conipany,
associated themselves tegether as a purehasing commit
tee for the purpose ef acquiring at foreclosure sale th
properties of the company. (Ree., 540, 1864.)

As already stated, the Wabash Company had advance:

——
33

to the Northwestern Company the fands necessary to
able it to Wuild the extension of its line from Des
Yoines northwesterly, and it had received from the
Northwestern Company as security for these advances
» mortgage upon all the property of the Northwestern
Company. This mortgage secured an issne of bonds
a the rate of $7,900 a mile, which were in default
and had heen acquired by the purchasing committee. It
forther appears that, although under the contract of
je? the Northwestern Company should have contrib-
ged a quarter of the expense of acquiring the terminals
eld in trust for the proprictary companies and was to
meive a quarter share in the trust enterprise, the
Sorthwestern Company had in fact advanced only the
am of $3.000, and was inselwent, (Ree. 478.) This dis-
cepaney, between its obligations under the contract of
82 and the valne of the one-quarter share with which
twas to be vested in the trast enterprise, proved an
dstacle in the consummation of the conveyance of the
must properties to the Des Moines Company as corpo-
mite trustee and the distribution of the trust interest
athe several amounts provided for in the contract of
2. There developed therefrom a negotiation he-
ween Polk and Hubbell, representing a half stock in-
wrest in the Northwestern Company, with the purchas-
ag committee, above described, of the Wabash Com-
any, which resulted in an agreement dated the 10th
ly of September, 1887, by the terms of which the pur-
hasing committee of the Wabash Company, which lat-
wt Company had advanced the moneys which should
ave heen advanced by the Northwestern Company and
wd succeeded temporarily to the equitable interest of
te Northwestern Company, agreed to furnish to Polk
ad Hubbell the general mortgage bonds of the Wabash
‘ompany held by it, seeured by mortgage upon the prop-

erties of the Northwestern Company, to enable Po
and Hubbell to bid in the properties of the Northwestern
Company at foreclosure sale, (Hee, 1573.)

In consideration of the foregoing, the Northwestern
Company was to be reorganized by Polk and Hult
and the reorganized company was te execute and delve
to the purchasing committer its bend for C400,
dorsed by Polk and Hubbell, in sati«faction of the Ws
bash bonds to be delivered, ax above described, te Pol
and Hubbell and also for the one-quarter interest in th
trust properties assigned te the Nerthwrstern Con
pany under the contract of January 2, 1982. (Re
1574.)

Simultaneously with the conveyance above mention
of such one-quarter interest to the reorganized Nort
western Company, the same was te be mortgaged har.
to the purchasing committee as further security of th
bond for $450,000; and, if in the meantime &
terminal property should be merged inte « termine
company, the bonds and stock received from the ter
minal company in exchange for this one quarter interes
were to he transferred, in lien of the property, ©
Messrs. Polk and Hubbell and retransferred by them »
the purchasing committee, te be held by each connmntte
as further security for the payments of the 150)"
above mentioned. (Ree., 1575-1576.)

It thus appears that the abewe transaction was &
signed merely to re-establieh the Northwestern Compan
to its original status under the terms of the trust.

When the above arrangement had been agreed ape
the proprietary companies were for the firet time ine
position to cause conveyance of their trust prope
‘ties from the individual trustees te the Depot Compan
under the directions contained in the resolution of Jan

gry 1, 185. The resolutions of November 5 and §,
janT, were addressed to the same objects as the reso-
jstion of January 1, 1885, namely, the transfer of the
trast properties to the Des Moines Company as corporate
truster, bat were more specifie and comprehensive in
heir terms by farther providing, in detail, for the dis-
tribution of the bonds and steck of the Des Moines Com-

pens

At a board meeting of the Northern Company beld
Sovember 5, 1887, a resolution was passed requesting
ow to transfer to the Dex Moines Company certam
yroperty, which resolution was preceded by « recital
dat How had purchased such property with funds of
te Wabash Company, bat hed taken the tithe in hie
ame with the understanding that it should be trans
ferred to the Dies Moines Company “under certain con-
ditions.” (Mee. 435.) At the «ame meeting, another
neclution was passed requesting Dodge to transfer to
te Dee Moines Company certain property, which reso
lation was preceded by a recital that such property was
quired by him under an agreement with the Wabash
Company that it should be transferred to the Des Moines
Company “wader cortarm conditions.” (Rec., 436.)

At a board meeting of the St. Louis Company brebel
Sovember & I887, a reselution was passed requesting
flow to transfer to the Des Moines Company certam
woperty, which resolution was preceeded by a recital
tut he had purchased such property with fonds far-
sished by the Wahach Company, taking the tith in bie
ume with the understanding that he should transfer
ach property to the Des Meines Company “under cer.
tein comditions.”” (Rec, 437.) At the same meeting.
mother resolution was passed requesting Dodge te
transfer to the Des Moines Company certain property,
vhich resolution was preceded by a recital that such

; rFf-T* s&s =

Se: ewvranevzrarrry * &

aFr

— a a

property eas aejaired bn him ander an agreement ey
the Waheekh Company that it should be transferred »
the Des Moines Company “wader certain condition”
(Ree, 48.)

At the same bewrd meeting of the St. Logis Conan
Newenler §, 1°87, the following reeation was wren
tremely adopted:

“Reedved, that the president and seeretary
this company te and they are hereby authorized an:
directed te execute to the Des Meimes Union Rail
wav Company, a deed conveving te if all ite rea
estate, right« of way, franchiee, roadbed and othe

of «aid company being and being in t

City of Dew Moines, cnet of Parwam etreet, whether

the same was acquired be crant from Cite of Dee

Moines or bw ignmer
or mortgage by any of the second parties to another rm:
road company, of all its rights onder the agreement, be
prohibited a mortgage or assignment of a portion of i
rights and privileges thereim, (Ree. 456.)

Section Twenty-six: This should alev be capecially
wted. Vt recites that the second parties are entitled to
dure in the stock of the first party in the following pro-

te wit: The St. Louis Company, one-half; the
Sorthwestern Company, one-quarter; and the Northern
Company, one-quarter. It recites further that ne shares
ave been issued, and provides that as the autherized cap:
ial of the Des Moines Company is two millions of det.
rs, or twenty thousand shares, one certifieate of ten
housed shates shall be issued to the St. Lois Company,
one certificate of five thousand shares shall be issaed to
de Northern Company and one certificate of five then-
aed shares shall be ixewed to the Northwestern Com-
sony, “avd all of said certiicates shall crpress apow
thew face that they ave wot transferable in whole ov wm
port, withewt the consent tw writing of all the parties
d the second part to this agreement,” except qualifying
dares ixxned to a member of the board of directors,
vhich shall be retransferable to the company on whose
mquest such shares shall be issued without the consent
d the other companies. (Ree, 486-487.)

Section Twenty-seven: This recites that the second
jartics having obligated themselves te pay as part com-
pensation for the use of the premises, a sum sufficient
pay interest on bonds of the first party, issued or
tereafter issued, and provides that the first party will
ut dispose of such bonds except for the purpose of
purchasing with them, or their proceeds, additional ter-
ninal property, (Ree. 487.)

Section Twenty-cight: This ix an arbitration clause.
Ree., 487.)

The follow ing features of the supplemental agreement
should he noted to show its significant relationship as a
applement to the contract of January 2, 18*2, creating the

trust interests, and as further identifying the propric
tary compames with the trust properties.

First (Section 4): The Dex Moines Company was
net intended to acquire revenue over and above its cow
of operation, as anounts derived from other railroad
companies were to be deducted from expenses apportion
able among the proprmetary companies.

Second (Sections 11, 12, 13,15): The proprictary com
panies were to control the management and operations
of the Des Moines Company through an executive com.
mittee of three, each of the three propricteors te have one
representative. The executive committee Was to appoint
the superintendent of the properties and make and ev.
foree the rules and regulations fer the use, management
and operation of the terminals.

Third (Section 26): (A provision wholly foreign t
the ordinary operating agreement made between roi
reads cecupsing co-ordinate positions.) The respective
interests of the proprietary companies im the trast prop.
erties, as provided for im the contract of January 2
1882, are recited and it is then provided that the auther-
ized capital eteck of two million dollars, shall be distrib
uted in the relative amounts se origmally assigned,
namely .

One-half te the St. Louis Company and one quarter
each to the Northwestern and the Northern Companies,
m single certificates, nontransferable except by waam
mous consent of the second parties to the agreement.

Fourth (Section 24): The one exception to the above
rule was that the St. Louis Company might transfer one
half of its interest, or one-quarter of the whole stock of
the Des Moines Company, to such railroad company #
might be acceptable to a majority of the parties of the
second part. Only as aforesaid were other railroad com

panies to be admitted to the use of the terminals without
manimons consem of the parties of the second part.

Fifth: That with the transfer of an aliquot portion
df cock to another railroad company within the lama
tions of Section TA, went always a concomitant of weer
on a parity with the original proprietors, Thus the
prerogatires of a tevant im common would be vested om
cach smcressie radsoad stockholder acquirind its stack
with enanimous consent (except in the one mnatant noted)
of the other stockholders.

Sixth (Nection 5): If any outsider se admitted de
iaulted im its obligations, the second parties were to re
imburse the first party on a wheelage basis for the
amount of such default, thus showing the responsibility
of proprietors to protect their own interests.

Seventh (Sections 3 and 27): The second parties were
to pay the interest on the mortgage bonds and the Des
Moines Company had no right to dispose of bonds, except
for the purpose of purchasing with them, or their pre
coeds, additional terminal property or for improving oF
equipping that now owned by the Des Moines Company
(Rec., 479-48".)

There was no provision for the payment by the pro
prietary companies of any rental or compensation for
the use of the terminal properties, or for the service thet
the Des Moines Company obligated itself to render to
the proprietary companies.

Finally it should be noted that it is the stockholders of
the Des Moines Company, in their resolution of March
31, 1888, who are resolving alone that the Northwestern,
the Northern and the St. Louis Companies shall assume
the expenses, taxes and interest on bonds of the Des
Moines Company, as subsequently set ont in the agree
ment of May 10, 1889, and who are providing thet sand

52

agreement shall ‘‘he approved and executed by all the
lines now holding an interest in the property.”” (Ree.
476.) This resolution was unanimously adopted by the
stockholders, including F. M. Hubbell. (Ree., 479.)

From the foregoing it seems proper to assert, as q
ultimate fact, that the supplemental agreement is, in g
court of equity, nothing more than a written agreement
betiween the equitable owners of the terminal property
and their own trustee in possession settling the details
of operation and ace ounting until May 1, 1918,

On May 18, 1889, the directors of the Northwestery
Company approved and authorized the execution of the
same, and on May 25, 1889, a similar resolution Was
adopted by the direetors of the St. Louis Company.
(Ree., 1474, 1433.) The agreement was duly executed by
the parties thereto on May 25, 1889. (Ree., 1597.)

The amended articles of the Des Moines Compan.
(Ree., 488.)

In 1886 John S. Runnells, who for many vears had been
the local attorney of the Wabash Company at Des Moines,
resigned to take up work at Chicago. (Ree., 359.) He
was succeeded by A. B. Cummins, who was the personal
counsel of the defendant Hubbell, and of all the Hub.
bell interests. At the same time Mr. Cummins was ap-
pointed general counsel of the Des Moines Company.
(Rec., 1204, 1211, 1223, 1236.) Although General Dodge
was at this time nominally the president of the Des
Moines Company, he resided at New York and the whole
management of the Des Moines Company was left to the
defendant F. M. Hubbell, who, in addition to being an
officer and a director of the same, Was regarded as a con-

d .

fdential agent of the Wabash Company at Des Moines.
(Rec., 132-136, 233.)

In January, 1890, Mr. Cummins, acting ostensibly on
his own initiative and independently of the defendant
Hubbell, set about to procure amendments to the articles
of incorporation of the Des Moines Company.

At a meeting of the stockholders of the Des Moines
Company held January 3, 1890, at the suggestion of Mr.
Cummins

** James F. How moved that the question of amend-
ing the articles of incorporation of this company,
as well as the question concerning the issue of stock
for the purchase price of the property, be referred
to Attornevs W. H. Blodgett and A. B. Cummins for
their investigation and reecommendation.’’ (Rece.,
1307.)

No report was ever made by this committee, and it ap-
pears from the correspondence that no conference took
place between Blodgett and Cummins, but that Cum-
wins alone redrafted the proposed amendments to the
articles of incorporation. In a letter by Cummins to
Dodge, dated January 27, 1890, Cummins explains that
the amendments were directed to two purposes.

First, to clear up the ambiguity and uncertainty with
respect to the amount of stock to be issued on account
of the original purchase of the property.

Second, to enable the Des Moines Company to act in
all matters, without the previous authority of three
corporations. (Ree., 1212.)

In respect to this latter subject matter, he explained
in the letter to Dodge:

‘*T have endeavored to protect the interest of the
minority as fully as it is protected in the present
articles, that is to say, under the amendments as now
proposed the company cannot do anything of im-

54

portance without the affirmative vote of the one quar.
ter of the stock which your road will represent or
the vote of one of the directors which you will always
be able to control. By this arrangement, you will
have as effective a negative upon the conduct of the
company exerted directly by your stock, as you nox
have by requiring the previous formal action of the
Des Moines & Northern Railway Company. I have
given the matter the most careful attention, and
while Mr. Hubbell was at first disposed to oppose
the amendments which I have prepared, after a ful)
explanation with him, I believe that he will support
them. If this reaches vou before he leaves New York,
it will be well te talk the matter over with him. Ip
any event give me your ideas as fully as you can,
and particularly if you do not expect to be here.”
(Ree., 1212.)

At the time this letter was written, the defendant Hub.
bell was in New York, endeavoring to purchase an in-
terest in the Des Moines Company. (Ree., 1013.)

(m February 5, 1890, as will be set forth mop
in detail in the next subdivision of facts, Hubbell ae.
quired from the purchasing committee of the Wabas!
Company one-half of its interest in the capital stock o
the Des Moines Company, being one-quarter of the total
interest in such stock. (Ree., 1599.)

On February 11th, the purchasing committee made ¢
memorandum of agreement between it and Hubbell,
wherein it was provided that the ownership of one-eighti
of the stock in the Des Moines Company would permit
one director to be nominated by any person or corpore-
tion holding one-eighth of the stock in such company.
(Ree., 1601.)

The amendments to the articles of the Des Moines Com-
pany were passed at a so-called stockholders’ meeting
held at Des Moines, April 8, 1890. (Ree., 488.) No stock
certificates of interest in the company had been issued

a

i this time. (Ree., 711.) The record of the meeting
hows as present in person: How, Hays, F. M. Hubbell,
Yartin, F. C. Hubbell and Cummins, representing each
me share, and present by proxy: Dodge and Blodgett,
ach representing one share. It is then recited that the
Sorthwestern Company was present by Hubbell, its presi-
jent, the Northern Company by ¢ ‘ummins, its vice presi-
jent, and the St. Louis Company by How, its president.

It is, however, conceded that no one of these individuals
eld a proxy authorizing him to represent the interest
{the company and that the directors of none of the three
ompanies authorized any action to be taken amending
‘he articles of the Des Moines Company. (Rec., 1165-
1169.)

Atthis meet) t! lowing amendments were adopted
spon the vot. of the eight individuals above named re-
orded as owning one share each of the Des Moines Com-
pany 's stock (Ree., 48%):

Article 1: This was not substantially changed. (For
original articles see Record, 416.)

Article 2: The principal change in this article was the
Jimination of the provision that all powers exercised
iy the company should be in accordance with the terms
and spirit of the January 2, 1882, contract, and the right
of the company to lease or dispose of the use of any part
of its franchise to any other railway company with the
assent of the three Railway Companies.

Article 3: This was changed so as to provide, (a) for
the increase formerly made by resolutions of March 31,
1888, of the authorized capital stock from $1,000,000 to
$2,000,000; (b) the amount of stock to be paid for and
actually issued; and (¢) that all previous resolutions and
issue of such capital stock be set aside.

Article 4: This was changed so as to provide that at
all future elections of directors, more than seven-cighths
of the votes of all the stock theretofore issued should be
required to elect any director, and that as to all matters
rrcept the ordinary operation of the property of the com.
pany the beard of directors could act only upon the
wnaniinous vole of the eight members of the board,

Article 5: There was no substantial change made jn
this article excepting to provide for the annual election
of the officers of the company, and that such officers
might exercise such powers and be charged with such
duties as usually pertain to their respective offices,

Articles 6, 7 and & were not changed.

Article 9: This was changed so that the articles could
be amended ovly by a vote of more than seven-eighths
of all the stock instead of by three-fourths,

Article 10: This was not changed.

There were added to the articles five new articles, to
wit: Article 11, Article 12, Artiele 13, Article 14 and
Article 15,

Article 11 related to the calling of special meetings of
the stockholders,

Article 12 provided that each stockholder should have
one vote for each share of stock owned, such vote to be
east either in person or by proxy.

Article 15 provided that it was not necessary in order
to enable the company to carry on its business that all
its authorized stock be issued.

Article 14 approves, ratifies and confirms the purchase
of the property theretofore conveyed to the Des Moines
Company, and the conveyances made in pursuance thereof
to that company, as well as the execution of the trust
mortgage of that company.

/j 57

Article 15 purports to repeal, strike out and expunge
the procecdings of the first meeting of the incorporators
of the company held December 10, 1884, with certain
preambles, which include the January 2, 1882, contract.
(Rec., 416.)

Briefly stated, the effect of these amendments, if valid,

was:

(a) To expunge from Article 2 of the original art icles
the provision that all powers exercised by the company
should be in accordance with the terms and spirit of the
January 2, 1882 contract, and that the right of that
company to lease or otherwise dispose of the use of any
part of its franchise to any other railway company could
P be exercised only on the assent of the three Railway
Companies. With these exceptions, there remains no sub-
stantial difference between Article 2 of the original
articles and Article 2 of the amended articles.

(b) To provide that 4,000 shares, aggregating $400,-
000), of capital stock together with the first mortgage
bonds theretofore issued for that purpose constitute the
fair value of the terminal properties acquired by the
Des Moines Company. That of such total number of
shares 2,000 be issued to the purchasing committee, 1,000
to the Northwestern Company and 1,000 to the Northern
Company, and that the remaining capital stock, to wit,
16,00 shares or any part thereof, shall be issued only
by authority of a resolution of the stockholders adopted
by vote of more than seven-cighths of all the stock there-
tofore issued,

(¢) To provide that more than seven-cighths of the
votes of all the stock issued should be required to elect
any director of the company, and that the board of di-
rectors could act only wpen the unanimous vote of the
eight members thereof,

(d) To require the vote of more than seven-eighths
of all the steck to amend the articles of the company.

(e) To approve, ratify and confirm all purchases of
property theretofore conveyed to the Des Moines Com.
pany and the conveyances made in pursuance thereof to
such company, as well as the execution of the mortgage
of that company.

(f) To attempt to repeal, strike out and expunge from
the company’s records the proceedings of the first meet.
ing of the incorporators of the company, held December
10, 1884.

Particular attention is called to the limitations in the
foregoing amendments that more than seren-cighths of
the votes of all the stock issued shall be required to elect
any director and to amend the articles of the company,
and that the board of directors could act only upon the
unanimous vote of the eight members thereof. These
limitations should be read in the light of the transactions
and correspondence hereafter set forth in the third sub-
division of faets which establish a definite agreement
among the representatives of the three proprietary com-
panies that a one-eighth stock interest in the Des Moines
Company shall be sufficient to represent ‘‘a proprietor.
ship’’ in the Des Moines Company.

Annual Reports made by the Des Moines Company to
the Evrecutive Council of the State of Towa for the
purpose of the assessment of its properties for taxa

fiom ha said Council. (Ree., 721.)

fim December 31, 1888, 1889, and 1890, and on January
1, Is¥2 and 1893, the Des Moines Company made an
annual report to the executive council of the State of

au m

lowa for the purpose of taxation. In each of these re-
ports appears the following :

“The Des Moines Union Railway Company is sim-
ply a ‘Representative Company’ acting as an agency
at Des Moines for the Wabash Railroad Company,
the Des Moines and Northwestern Ry. Company,
and the Des Moines and Northern Railway Com-
pany, performing all the necessary work for them
and charging each road at actual cost, its due
portion of the expense, thereby incurred. (Ree.,
(21.)”"

These reports were under oath and the report for the

year IS88 was verified by James F. How, vice president

of the Des Moines Company and J. B. Van Dyne, gen-
eral superintendent.

The report for 1889 was verified by Horace Seeley,
general superintendent of the Des Moines Company.

The report for 1890 was verified by A. B. Cummins,
vice president of the Des Moines Company, and Horace
Seeley, general superintendent.

The report for 1891 was verified by F. C. Hubbell,
president of the Des Moines Company, and Horace
Seeley, general superintendent.

The report for 1892 was verified by A. B. Cummins,
vice president of the Des Moines Company, and J. A.
Wagner, superintendent. (Ree., 721-723.)

The fiduciary relations of F. M. Hubbell to the constituent
companies in the trust and to the Des Moines Company.

F. M. Hubbell held in such companies positions as fot-

| lows :

1. The St. Louis Company.
Director—1880-1891.
Secretary—1880-1891. (Rec., 1296.)

2. The Northwestern Company:
Director — 1881-1886.
Treasurer—1851- 1883, 1885-1886,
Asst. Treasurer— 1884,

ed

Reorganized Northwestern Company :
Director— 1887-1802.
President —1887- 182.
4. The Northern Company:
Director— 1881-18),
Treasurer—1S8S1-1885.
Seereciary and Asst. Treasurer—1S884,
Vice President — 1885-1888.
Asst. Secretary and Treasurer— 1889.
Secretary —15).
5. The consolidated corporation formed by the merger
of the reorganized Northwestern and Northern Cop
panies:

Director— 1801-185.
President —1891-18%,
6. The Reorganized Consolidate! Company :
Director— 1885-18,
President —1885-1809.

7. The Des Moines Company:

Director—1884, to the time of the institution
the suit.

Secretary—18"4, to the time of the institution
of the suit. (Ree, 1296.)

At the date of the reorganization of the Northwestem
Company, the firm of Polk and Hubbell, through their
ownership of the Narrow Gage Railway Constraction
Company, had acquired and held one-half of the stock
of the Northwestern Company. (Ree., 400, 1104.) Under
the reorganization of the Northwestern Company #®

yereinbefore set forth, Polk and Hubbell acquired a ma-
jority of the capital stock of the reorganized company
and held the same up to the time of the merger of that
company with the reorganized Northern Company. (Ree.,
621.)

The controlling interest in the Northern Company at
all times was held by General Dodge, although the firm
of Polk and Hubbell had acquired a minority interest in
the stock through the Narrow Gage Railway Construe-
tion Company. (Ree., 1163.)

Upon the merger and consolidation of the reorganized
Northern and Northwestern Companies, a majority of
the capital stock was acquired by the firm of Polk and
Hubbell and was held continuously by the Hubbell in-
wrests until the same was sold to the St. Paul Company
on 1898.

It thus appears that, at the time of the important
transactions invelved in this litigation, the defendant
P.M. hiwhhell was an officer and director of the Des
Moines Company and of its three proprietary companies
ad was the dominating stockholder of the Northwestern
Company and of its successor the Consolidated Company.

F. M. Hubbell presented the resolutions adopted by
the stockholders of the St. Louis Company and the North-
western Company and voted for their adoption at the
meeting held January 1, 1885, authorizing, among other
things, the conveyance to the Des Moines Company of
the real extate and franchises of said two Railway Com-
panies in the City of Des Moines. (Ree., 424, 425.)

F. M. Hubbell, as a member of the board of directors
d the Des Moines Company, voted in favor of the reso-
ations adopted by that company at a meeting held Jana-
wy 1, 1885, accepting the transfer, management and
eration of the property theretofore held by the several

ome -

parties acquiring the same in the interests of the thre
Railway Companies ind instrocting its president to tai
such action as should be necessary to render such trans
fer, management and operation effective as provided i
the January 2, 1882 contract. (Ree., 432.)

F. M. toubbell signed the deed of the St. Louis Com
pany, conveying its tithe to the properties to be held
the commen interest, to the Des Moines Company, «

appears that shares ef steck are net intended te evidens
a thing of value separate and distinct from an ahaque
interest or estate in the properties themeeclves of 9 ce
poration, a court of equity te protect such interests »
corporate propertics otherwise created and intended »
be preserved will not hesitate te ignere the convention
status of such shares,

Judge Hook of the Court of Appeals has stated §
principle clearly in his dissenting opinion in this ex
He says:

**But the doctrine of a corportte entity i

proprietary companies theretofore issued under the
agreement of May 10, 1889, an appearance of being fully
paid and of being issued as a substitute for the proper-
ties conveyed to the Des Moines Company.

The arbitrary firing of the purchase price of the prop-
erty ‘as of the date of the conveyance thereof,’’ at $861.-
57.21, instead of $461,257.21, flies in the face of the
cettlement made between the proprietary companies and
the Des Moines Company, pursuant to the resolution of
March 31, 1888 (Ree., 476), in which it appeared that
the cost of the properties aggregated $461,257.21, and
wherein it was resolved, as provided for by the contract
of January 2, 1882, that the temporary trustees should
be reimbursed for this amount in the proportion of their
several advances by the mortgage bonds of the Des
Moines Company. The reimbursement thus provided for
had taken place, and the transactions identified with the
transfer of title to the trustee company were a concluded
subject matter.

The fixing of such purchase price at four hundred
thousand dollars in excess of the amount for which the
temporary trustees were reimbursed in the bonds of the
Des Moines Company, and the identification of the eap-
ital stock of such company as a consideration paid to
the proprietary companies to represent the values of such
excess, is also directly contrary to the resolutions adopted
on November Sth and on November 8, 1887, by the pro-
prietary companies, providing that the stock of the Des
Moines Company should be transferred together with
its bonds ‘‘in lieu for the money advanced,’’ to pur-
chase the terminal properties and the consummation of
this proviso by the issuing of stock pursuant thereto un-
der the agreement of May 10, 1889.

The recitals therefore, above summarized from the

140

resolution adopted April 8, 1890, are disingenuous and
contrary to fact. Whatever their intent be, they mas
have been ineffectual, for they could not recall a cop.
cluded transaction and manufacture corporate assets
for stock where none had theretofore existed,

Moreover, that the scheme was disingenuous, and that
the purchase price of the property was artificially fixed
for the purpose of giving the capital stock to he issued,
an appearanee of being fully paid, Mr. Cummins him.
self expressly states. He found that there were 461 honds
outstanding and he added $400,000 to the actual cost of
the terminal properties as of the date of the conveyance
thereof, because he ‘thought it would stand $400,00)
without creating any liability upon the part of those who
held it to make good for unpaid stock, if the company
should get into trouble and fall into the hands of a re-
ceiver.” (Ree, 1241.) Referring to the eqnity above
actual cost, he said:

“Of course T understand it couldn't have sold for
$400,000 at that time.’? (Ree., 1240-1.)

The ineffectuality of the resolution, however, upon the
theory upon which it was based, is exposed in the dis-
tribution of stock in the original proportions contem-
plated by the trust instrument, namely, in one-half and
one-quarters and not on what could have been the only
theory of adding stock to bonds to make up an increased
purchase price, namely, by prorating stock in the same
ratio that bonds were distributed on the assumption that
cach party, conveying property to the Des Moines Com-
pany, should receive his pro rata share of the increased
valne, representing the purchase price to the Des Moines
Company, of such property over and above the actual
cost of the same, paid for by the bonds already delivered
to him for purposes of reimbursement.

The foregoing amendments could not affect the cou

—

141

wvance to the Des Moines Company of the equitable
estates of the proprietary companies, which had thereto-
fore continued to be vested in them, for the Des Moines
Company as a trustee could not by its own corporate
process repudiate or destroy the trust estates. Inde-
pendent corporate action on the part of the proprietary
companies could alone produce such a result. And as
hitherto stated, after the conveyances made by the tem-
porary trustees to the Des Moines Company @s the per-
panent trustee of the trust properties, in the fall of
1887 and the winter of 1888, no deeds, conveyances Or
gssigqnments of any character were ever made by the
proprietary companics, or any of them, to the Des Moines
Company of any of their interests in the trust proper-
ties and no corporate action for this purpose was ever
thereafter had by any of them,

It is difficult to appreciate how these several companies
could be legally present at a stockholders’ meeting
through the agencies of the above individuals, but, with-
out respect to this query, it is heyond question that any
action taken by these persons at such stockholders’ meet-
ing of the Des Moines Company must be regarded as
identified alone with ifs corporate activities.

Whatever their intent and in whatever capacity each
of them may have appeared at such stockholders’ meet-
ing, it was not within their power, either by individual
or concurrent action, to convey away, release or alter
the status of the respective equitable estates in the ter-
uinal properties then existing in the proprietary com-
panies.

It is fitting to conclude this subdivision with the state-
ment that Hubbell testified repeatedly to the fact that
he never regarded the amendments, supposed to have been
made at the stockholders’ meeting of April 8, 1890, as
having any effect on the title to property or on the value

142

of the stock. (Ree. 1081.) He relied upon the deed
made by the temporary trustees to the Des Moines Com.
pany, the original articles of incorporation, and the
agreement of May 10, 1889, which he construed as 4
lease, as establishing in the Des Moines Company the
beneficial interests which gave his stock holdings value.
(Ree., 1075, 1083.)

(5) The amendments to the articles were not pub-
lished so as effectively to eliminate the contract of Janw
ary 2, 1882, from the original articles of incorporation.

Finally and wholly apart from all other infirmities in
the alleged proceedings for the amendment of the articles
of incorporation, we insist that the proceedings taken
were wholly ineffectual to discharge the Des Moines Con-
pany from its charter obligations to observe the trust
created by the contract of January 2, 1882, by virtue of
the incorporation of said contract in its articles asa
part of its organic law.

By Chapter 88 of the acts of assembly of Lowa of 158s,
in force April 8, 1890, it is provided:

“That any of the provisions of the Articles of
Incorporation may be changed at any annual meet-
ing of the stockholders or special meeting called for
that purpose; but said changes shall not be valid un-
less recorded and published as the original articles
are required to be; and said changes in the articles
need only be signed and acknowledged by the officers
of said corporation.”’

Pursuant to the above provision, the Des Moines Com-
pany published notice of the amendments to its articles,
and this published notice, which appears in the record as
Exhibit 614 (Kec., 2010), contains no reference whatever
to the new article 2, supposed to be substituted in place
of the original article 2, which contained the provision

that

—

143

“All the powers exercised by this company shall
be in accordance with the terms and spirit of the
aforesaid contract (recited in the preamble of the
articles), entered into on the 2nd day of January,
A. D. 1882.”

We submit, therefore, that the above provision of the
original articles is in full foree and effect, and has been
jn no manner or to no extent impaired by the supposed
amendments of April 8, 1890.
The above conclusion is fortified by what the Supreme
, Court of Iowa has said respecting the effect of these
amended articles. In Morgan v. Des Moines Union Rai-
way Company (the Des Moines Company here), 113 Ia.,
361, the question of the powers of that company was in
issue. The court, after quoting article 2 of the original
articles, states:
| “These articles were afterwards amended, but in
; no way was the language set out qualified in the
| amendment.”’
It is also to be noted that Judge Wade of the District
? Court, in referring to the amendment to the articles of
incorporation, Says:
“It does not appear that it was intended to affect
any right then existing, and even if such intention

’ existed on the part of anyone, it was not manifest,
and I find nothing which would give it effect.’’ (Ree.,
2047.)

ad

The independent transactions of F. M. Hubbell wm_re-
spect of the trust properties.

That it was farthest from the intent of the purchasing
committee or of the defendants to repudiate or destroy
4 the trust estates, is demonstrated by the contemporaneous
* transactions taking place between Hubbell and the pur-
chasing committee, set out in full in the third subdivision

_ of the statement of facts, and now to be commented upon.

i44

The above transactions resulted in two successive pa
chases by Hubbell from the purchasing committer of ty
Wabash Company of first, a quarter interest in the she
of the Des Moines Company, of which General Dodp
took one-half, thus vesting in each of these portics »
eighth interest in such steck, and second, a farther pw
chase by Hubbell from the purchasing commutier of »
cighth of the total amount of stock of the Dex Moin
Company, thus leaving the purchasing committer of t
Wabash Company with only an eighth interest mt
Des Moines Company, instead of its original onetal

In considering the significance of these transaction
which thus resulted in the transfer of steck ownenhy
it ix very important to nete that Dodge and Uubbell b>
came but the channel by which the one-eighth titers,
acquired by Dodge, and the two-vighths interes! acquire:
by Hubbell, were transterred at the inception of i»
existence, to the consolidated corporation composed «
the union of the Northern and Northwestern Compatie
and controlled by Hubbell and Dodge, Hubbell owning
approximately six thousand out of ten thousand shares '
of this company. Thus, these transactions Were net thr
souree of the five-cighths stock holding interest whict i
Hubbell now has in the Des Moines Company and ape |
which he bases his claim to control the corporation,

The foregoing is important in a determination of whi’ 9
both Hubbell and Ashley, in their negotiations, unde.
stood to be the nature of the property interests evidentes
by the capital stock of the Des Moines Company. Th ‘
correspondence and transactions of the parties, relating
to these stock transfers, is set out in full in subdivision
II] of the statement of tacts and particular attention
called to the same. :

On June 12, 1888, Hubbell wrote Ashley, asking per
mission to offer for sale a quarter interest in the Des

——
145

sines Company to parties making inquiry of him. (Ree,
rm) Om June 16, 1888, Ashley replied stating that he
theaght the purchasing committee would be glad to sell
» mequarter interest, but that he had always supposed
‘tat it woukd be necessary to confine the sale to such
railway companies ax could be interested in the station.”
He mentioned the Chicage and Nerth Western Ry. Com.
gory avr further said:

eae there net an understanding pee as to
th sale of the stock when the termi company Was
formed aud would it net be prejudicial to the in-
1 tepest of the whele te part with the stock te out-

(On June 1S, TSS, Hubbell replied:

j “| agree with you that the sale of a quarter
interest in the stock of the terminal y should
he made only to a railway company, will =
sith the Wabash in making a contract with the
Moines Union, guaranteeing the interest the
homds and operating expenses, ete, ~ :-* T ender.
stand it, as you de, that the stock cannot be sold
without consent of the different railroad companies
she new form the Terminal Company.” (Ree.,
1060.)

AM this juncture it is at least clear that Hubbell was

. working in harmony with the conception that stock could

— atily be sold in one

of the Wal f

nating on t

provides for '

Moines Con

to Des M

t) ;
1
i? lh '
| ' '
,? ; : :
, 7
S|
’
i i

company owl the Wabash Company, or
lee under the arbitration eleewhere provided for

it i# farther agreed on the part of the Wabach
Company that if it shall eeyaire control of the Des
Moines & Fort Dodew Road. then the Wahack
Company will permit the Dee Moines Cowpany to
lay down a third reil on the track of the Dee
Moines & St. Lawie Read, from the terminus of

side of the City of Des Moines, and are reached
by the tracks of the Des Moines & St. Lowis Read.”

On page 989 of volome TIT appears an entry on the
hooks of the Wahach Company made in April, 1981,
ay follows:

“For the following payments for a/e of real
estate im the City of Des Moines, lows, chareed
to Des Moines & St. Lowe 1. IR ip the month: of
Feb'y, March and April, 1981, pow teaneferred te
real estate Dee Moines, the premerty being beled
for joint account of the Dex Moines & St. Lovie
ond Dex Moines & North Weetern Ree. o« ner he
ter of James S. Clarkeon, M. fled bee «ihe

ry

Aud then fellow various thems of expenditare © hock
had theretefere been marke fora termenal property m
the City of Dee Momes and charged to the Des Mot -
& St. Lowi Railroad Company.

The foregommg contracts and this entry show that it
Bas originally comt-mplated that the terminal property
m the City of Des Mounes showld be ow ned by the lex
Moines & St. Lewis Roailroad Company and net by a
terminal company and net jointly by that read ane the
Des Memes Northwestern Railway Company.

The entry on the books of the Wohach above re
ferred to shows that this plan ax erimally evtem
Plated was changed in April, 1881, to a plan whorl,
comtetmplated thet the termenal property sbewwh) be
owned jointly by the Dee Moines & St. Logie aud th
Des Moines Northwest: ih evtupanies, became at that
time the charge wpon th Wahach books was eh: tured
from a charge against the thee Moines & St, Looks
te a charge against Real F-tate Dies Moines, to be hedd
for the joint account of the two coomponies named

In April, 1881, there were odepted ander the lew « of
the State of lows articles of ine wperation of the »*
Lewis, Dex Moines & Northern Railw ay Company (Vel
1, p. 729), for the porpee of contracting a line of
railway from the City of Dee Moines through Boone.
lows, toward the north line of the «tate.

This company proceeded toward the eon ruction of
this line of reed, and alee a brane fron Tis ©, 8 station
ahenat five miles weet of The Moines, te Weaker, and o
January Zh, 1982, it mode 9 contract with the MMe
Memes Northwestern Railbeos Company te whieh a
eld to the latter company the branch from Clive te
Waukee, and 2 one holf interest in the line from Wen
kee te Pornhom street in Dee Moines (the weetern

oxfam

lait of the terminal property), giving the Des Moines
Northwestern entrance inte the City of Des Moines.

This shows that the plan of the Wabash Company to
acquire a control of the Dee Moines & Fort Dodge line
failed, and the entrance of the [hs Moines Northwest.
ern Company inte Dee Moines was secured through
this contract with the St. Logix, Dex Moines & North-
ern Railway Company.

(m Janaary 2, 1882, a contract was entered into be-
tween the Des Moines & St. Lowix Railroad Company,
the Des Moines Northwestern Railway Company and
the St. Lawie, Dee Moines & Northern Railway Com-
pony, G. M. Dodew, Janes F. New and James F. How,
trustee (Vol. 11, p. 411). which ohows that another
change war made in the plan for 9 terminal in the City
of Des Moines and by whieh it was contemplated that
the terminal property cherld be ewrmed and operated
jeontly by the three railway companies—the Dex
Moines & St. Louie Railroad Company, the St. Logi«,
Des Moines & Northern Railway Company, and the Des
Vormes Northwestern Railway Company.

This contract recited the fort that the three eom-
wenies devite’? te awn owl onerste jeinth terminal
foritities in the Cite of Tew Moines ond mee the same
m commen; that certain purchases had heen made of
real property in the eaid city in the name of James
FP. Now, individually, ond James F. Hew, trustee, and
Creaville M. Deedee, and eortein additions propen-
hed heen anprenriated by the Dee Moines & St. Tanie
Reilrond Company. and the eanetrnetion of bnildines
end other imrrevement« thereon bod heen It wee
erreed thet the expenee theron? sheukd be bocne ame-
half by the Dee Moines & St. Lowie Commons and one.
fourth each by the other componies, and that a depot

ES Ge ER ey ae re

nein

i

— oe

company might be organized to take permanent charge
of the property upon the terms set forth in the con-
tract. It specifically provided that the title to said
property should be and remain in a trustee to be named
by agreement of the said companies, and subject to
the joint use and occupation of all the railway coi-
panies upon the terms therein contained; that the Des
Moines & St. Louis Company should be charged with
the police control and supervision and maintenance of
the preperty, and that the expense thereof should he
apportioned among the companies upon a wh «lage
basis. Other provisions were made in the contract not
necessary to be here mentioned.

It will be seen from the foregoing that up to this
time three different schemes had been adopted for this
terminal property:

First. that it should be owned exclusively by the
Des Moines & St. Louis Railroad Company.

Second. That it should be owned jointly by the Des
Moines & St. Louis and the Des Moines Northwestern
Railway Company.

Third. That it should be owned jointly by the three
companies parties to the contract last above mentioned.

A short time prior to this date, on December 1, 158!,
the Des Moines & St. Louis Railroad Coinpany mort
gaged its property to the Central Trust Company of
New York (Vol. [, p. 509). This mortgage specifically
excepted the terminal property in the City of Des
Moines, the exception being in the following language
(p. 511):

— .

‘‘exeept the real estate, buildings and improve-
ments thereon lying and being within the corpo-
rate limits of the City of Des Moines.”
thus showing that the terminal property was to be
handled as a proposition separate from the main line
of the Des Moines & St. Louis Road.

Counsel for petitioners devote much time and space
to a discussion and an analysis of this contract and the
rights of the railway companics thereunder. To our
mind the rights aequired by the railway companies by
this contract are simple and easily stated. By its terms
the three railway companies became the beneficial own-
ers of the property.

Here it is proper to note that the ownership of the
three railway companies was not equal. but one-half
by one and one-fourth by each of the others. The usual
and ordinary rights sand incidents of ownership were
recognized by the parties. They contemplated use of
the property by other reihvay eompanices, for which
those other companies were to poy. And what was to
he done with the money reeeived from such sources?
Was it to g@'to the three in equal measure? By no
means. It was distributed among them in the ratio of
ownership. Section 10 of the contract of January 2nd,
ISS2 expressly provides ‘*the rental to enure to the
companies hereto in the same proportion as the origi-
nal ontlay.’? Vol. IT, p. 413.

Kach Company owned an widivided interest in the
property, with the right to use the whole property for
railway purposes. Whether, as between the three rail-
way companies, we term the right of one camneny to
use the whole property for railway purposes an ease-
ment, or what not, is entirely immaterial. Consider-
ing the three railways together, they not only owned

—

the property, but had the right to direct the trustees,
How and Dodge to transfer the legal title to them or
to any one whom they might select. As a ye-
sult, they had absolute dominion over the property,
with the right to continue to use it in accordance with
the strict terms of the contract, or to make any other
disposition of it to which the three railway companies
could agree. They might by agreement have placed
the legal title in a trustee, reserving to themselves the
beneficial ownership; they might have transferred the
property to a third person, reserving in themselves an
easement; or they might have made any other dispos
tion of it upon which they could neree. In other words.
their power of disposition of this property was
limited because they were its owners. The questio:
we have for solution is what disposition they in fact
did make of it, and for this purpose we must examin
their subsequent aets and from them and the surround
ing circumstances ascertain the true intent of their
acts.

In this connection, however, it nmst be noted th
looking forward to possible changes in their termine!
plans, as the future might develop the necessity ther
for, the parties had carefully segregated the termine]
property from their main lines, es see the provisior
in the Des Moines & St. Louis mortgage above noted,
eliminating the terminal property therefrom, the deod
and contract above noted between the St. Louis. Deo:
Moines & Northern Company and the Des Moine
Northwestern Company, which limited the transfer to
property west of the terminal, and to the morteac:
civen by the St. Louis, Des Moines & Northern to
the Mereantile Trust Company (Vol. TI, p. 552), whieh
only covered property extending ‘‘from the western

a on

boundary line of the City of Des Moines,”’ ete. (p. 554).

The signilicance of these changes in the plan for the
ierminal property, and its careful segregation from the
main lines, lies in the fact that they indicate that the
terminal plan was in a formative stage, and the parties
wished to so manage it that any desired change might
be made in the future. It is for us to determine ii
such changes were made.

Subsequent to the making of this contract of Jan-
uary 2, 1882, additional property was acquired, im-
provements nade thereon, and the property for some
years was used jointly by the St. Louis, Des Moines
& Northern Railway Company and by the Wabash
Company, lessee of the other two companies,

Among the things which were contemplated by these
railway companies with respect to this terminal prop-
erty, as shown by these contracts already referred to,
was that other companies should be induced to use it
to the end that the expense of operating it might be
lessened. The impracticability of thus operating the
terminal property and having two or more railway
companies operating over it indiscriminately is appar-
ent upon reflection, and it is apparent that its imprac-
ticability became impressed upon the persons engaged
in operating it, for we find that in 1884 steps were
taken to change the method of operation and to provide
for its operation by a terminal company, and in this
step we have the first evidence of a change of the plan
as outlined in the contract of January 2, 1882.

At this point we are aided by a concession made by
counsel for the Chicago, Milwaukee & St. Paul Railway
Company on page 13 of their argument in the Court of
Appeals, as follows:

seis de cies en dae ee din eed Ge a? . - “?-’

a

“itneeds no railroad man to know that such use
Jn common by three different companies, without
any central head or management, would lead to
confusion and to danger. It was quite natural, iy
lact necessary, that the control and management
and in fact the operation of this property should
be put in charge of some one individual, or some
natural or artificial person.”’

In ascertaining the changes that were made in the
terminal plans as outlined in the contract of January
2, ISS2, we may therefore start with the concession that
those plans had proved impracticable and the necessity
for a change had become apparent.

At the instance of the three railway companies
parties to the contract of ISS2 a meeting of the ines:
porators of the defendant, the Des Moines Union Rail
way Company, was held in Des Moines, lowa, at which
were adopted the original articles of incorporation of
the defendant company (Vol. ti, pp. 4146-22). 7
articles adopted set out by reciting the faet of th
execution of the contract of January 2, 1882, and in
corporate the contract as a presiuble to the articles.

Counsel for petitioners have attempted to make
much of the recitations contained in these articles of
incorporation and in the minutes of the meeting at
which they were adopted, but 2n examination of tly
will, we think, demonstrate that thes support our vi
of this case. The first recitation is as follows (p. 410):

**At a meeting held in Des Moines, lowa. on the
10th day of December, 1884, for the purpose of
organizing 2 Union Denot & Railroed Compam
to be run and operated in and around the City of
Des Moines, lowa, in pursuance of a contract ber
tofore, to wit: on the 2nd day of January, A. DP.
ISS2, entered into * * *°,’’

-

It will be noted that the purpose of this meeting is
stated to be the organization of a ‘‘Union Depet &
Railroad Company to be run and operated in, around
and about the City of Des Moines, lowa.’’ The con-
tract of January 2, 1882, did not by its terms provide
for a railroad company which should operate a rail-
road in and around the City of Des Moines, but only
for a depot company which would simply have perma-
nent charge of the property, without the power of own-
ership or operation. This demonstrates a change in
the plans of the parties.

After setting out the contract the articles provide:
“Whereas each of said railway companies and
suid parties has expended large sums of money
in purchasing and improving the property afore-
said, and in the construction of suitable buildings
for the use of said company, and (p. 419).

This recitation did not accurately state the facts.
As a matter of fact, neither one df the three railway
companies had contributed a dollar directly toward the
purchase or construction of this terminal property.
The money used for its purchase and construction had
all been furnished by the Wabash Company and by
Gieneral Dedge. No one else had put a dollar into it.
The only way in which the three railway companies,
parties to the contract of January 2, 1882, put any
money into it was that the Wabash Company had
charged the money advanced to these three companies.

The articles then recite:

** Whereas it was provided in the contract afore-
said that a Depot Company micht he organized to
Pp : s

eer

s PO ee

Daren.

take permanent charge of the property, and it was
the understanding of the parties that such com.
pany might acquire, operate and maintain said
property in such manner as best to serve the in-
terest of the parties hereto.”

This recitation shows one of two things: either that
the contract of 1882 did not correctly state the under-
standing of the parties, or that the plan for the ter-
minal! had changed since the execution of that contract.
It recites that ‘*it was the understanding of the parties
that such company might acquire, operate and main-
tain said property.’” No such understanding can be
found in the language of the contract. The contract
provides that the property should be aequired by the
three railway companies, though the title might be
taken in the name of a trustee; that it should be oper-
ated by them jointly, and that it should be maintained
by the Des Moines & St. Louis Railroad Company,
while this recitation evidenced the fact that it was
the understanding that the property should be ae-
quired, operated and maintained all by a separate corm.
pany.

The articles then continue (p. 420):

**Now, therefore, for the purposes aforesaid, as
well as for those hereinafter expressed, the under-
signed hereby associate themselves in a body cor-
porate, and adopt the following :”’

The object, then, of organizing the defendant com-
pany was not merely to provide a depot company re-
ferred to in the contract, but for other purposes. One
of the ‘‘ purposes aforesaid’’ was that *‘such company
might acquire, operate and maintain said property,”

— =n a ae

ed

and the purposes ‘hereinafter expressed’? must be
those which are subsequently contained in the articles
of incorporation,

Article 1 provides that the name of the corporation
shall be the Des Moines Union Railway Company. This
name is significant in fixing the intention of the parties.
It wasn’t a mere depot company or a company organ-
ized for the purpose of holding the legal title to the
terminal property in trust, but it was a corporation
organized for the purpose of performing the duties and
functions of a railway terminal company.

As will appear later there is great difference under
the laws of lowa between a depot company and a rail-
way company. The Des Moines Union is a railway
end terminal company,

Article 2 provides:

**The general uature of the business to be trans-
acted shall be the construction, ownership and
operation of « railway in, around and about the
City of Des Moines, lowa, including the construe-
tion, ownership and use of depots, freight houses,
railway shops, repair shops, stockyards and what-
ever clse may be useful and convenient for the
operation of railways at the terminal point of Des
Moines, lowa, as well as the transfer of cars from
the line or depot of one railway to another, or from
the various manufactories, warchouses, store-
houses, or elevators to each other or to any of
the railways or depots thereof, now constructed
or to be hereafter constructed, in or arownd said
City of Des Moines, and such corporation shall
possess all the powers conferred upon corpora-
tions for pecuniary profit hy Chapter I of Title
IX of the Code, and the amendments thereto."

———t. — =
¥ ~“
.

—

This article provides that this railway company shall
exercise the following powers and duties not conten.
plated by the contract of January 2, 1882:
(1) The construction of a railway;
(2) The ownership of a railway;
(3) The operation of a railway;

(4) The construction of depots, freight houses, rail
way shops, repair shops, stockyards, and whatever else
may be useful and convenient for the operation of a
railway at the terminal point in Des Moines, lowa;

(5) The ownership of such depots, freight houses,

etc. ;
(6) The use of such depots, freight houses, ete. ;

(7) The transfer of cars from the line or depot of
one railway to another;

(8) The transfer of cars from the various manufac
tories, warehouses, storehouses, or elevators to each
other or to any of the railways or depots now eon
structed or hereafter constructed in or around the Cit:
of Des Moines:

(9) The possession of all powers conferred upon
corporations for pecuniary profit by Chapter 1, Title
IX of the Code, and the amendments thereto.

None of these nine functions was contemplated by
the contract of January 2, 1882. It is evident from
these provisions that the plan of ownership and opera.
tion of the terminal property had changed since thy
making of that contract.

alien

it is then provided in article 2 in part as follows
(p. 420):

“*e © © All the powers exercised by this com-

pany shall be in accordance with the terms and

spirit of the aforesaid contract entered into on the
2nd day of January, A. D. 1882."

Much time and space has been devoted to a diseus-
sion of this provision by counsel for petitioners. In
its interpretation we must give force and effect to other
provisions in the articles of incorporation and the acts
and conduct of the parties in relation thereto. This
provision is purely interpretative in its character and
cannot serve to qualify any provision of the articles
which is clear and express in its terms, nor ean it null-
ify any grant of power to the Des Joines Union Com-
pany clearly made by the articles. Manifestly, it can-
not be construed to nullify or modify the power of the
terminal company to construct, own and operate a
railway in, around or about the City of Des Moines,
because these powers are expressly granted. Mani-
festly, also, it cannot mean that the terminal property
is to be owned or operated according to the terms of
the contract of January 2, 1882, beeause that contract
provides for the ownership by the three railwey com-
panies; provides for its operation by the three railroad
companies jointly, and provides for police control,
supervision and maintenance by the Des Moines & St.
Louis Railroad Company.

From the becinning these parties had in mind the
construction of terminal facilities in the City of Des
Moines separate from their main systems, 25 well in
ownership as in operation, which might be used by all
of them as well as others in connection with the oper-

a _

ation of their roads, This po mary object was never
departed from, The departares which were made
were with respect to the method by whieh this primary
object should be attanned.

Article 5 provides:

The captal stock of ues corporation shall be
one million (F100) dollars, whieh shall be
divided into shares of one hundred (810010) del
lars each, avd shall be pard in at each times and in
such manner as the board of directors may de
termine, ded the beard are authoriod to rece vm
payment ther for Ue prapetly aud franchises in
the City of Ike Moines, now held by the Des
Moines & St. Lewis Railroad Company, the Dee
Moines Northwestern Reilway Company, the St
Louis, Des Moines & Northern Railway Company,

Jas. F. How, trustee, Jas. FL Tow and Grenvillh
M. Dodge.”

This article clearly contemplates two things net con
templated by the contract of January 2, Iss2:

First. That the stock should be paid for when teetes,

Second. That it might be paid for by a transfer of
the terminal property and franchises.

It needs no argument te show that these purposes
were not contemplated by that contract, ond that tev
denees a change in the plan.

Under the contract of January 2. 1882, the three rail
way companics owned this terminal property, altheuct
it was contemplated thet the tithe the. te might stand
in the name of the trustes, As such beneficial owners,
and under that contract, they had power te control 1
because they owned it and because of the terms of the
contract.

— 4] —

Counsel for the Wabash Company, speaking of what
was intended to be represented by this Stock, on page
28 of his Coprt of Appeals brief, frankly says:

“° * * | think it axiomatic that a corporation
takes absolutely that which is transferred to it in
exchange for its shares of stock, and, accordingly,
that the Depot Company dors not hold the servient
estate in trust, bat absolutely.”’

The question here is, what was intended, by the
article above quoted, should be received by the ter-
minal company in exchange for ‘its shares of stock.”’

The article says, first, that it shall receive “the prop-
erty and franchises in the City of Dex Moines now held
by the Des Moines & St. Louis Railroad Company.”"

Under the contract of January 2, 1882, the Des
Moines & St. Louis Railroad Company owned a one-
half interest in the terminal property, which ineladed
| omly the real extote where chsolute tithe had been
acquired by deed, but also the casement or right of way
over property acquired by condemnation procesdings
er right of way decd: also the embankments, ties, rails.
buildings, and other structures located upen the prop-
erty and need in connection with the operation of the
terminal: also the franchise or richt te wee the prop
erty for terminal purposes, All these were property
and were the things that were contemplated should be
transferred to the terminal company in exchanee for
its stock,

Likewise, the The« Moine~ Northwestern Railwaw
Company aml the St. Lonix, Des Moines & North.
em Railroad Compeny owned and held cach a one.
fourth interest in the same property. James F. How
and Grenville M. Dodge held the lewal title te a peer.

tien of the real estate. The whole property and ever,
interest therein was owned and held by these three
railroad companies and the trustees, and it was thi-
property which it was contemplated should be tran-
ferred for the stock —therefore adopting the axiom
stated by counsel for the Wabash; this article conten
plated that the terminal company should take ** ghee
lutely’ the whole terminal property ‘im exchange f.
its shares of stock.”

It evidently was their desire to change the status of
the property and turn it over to a separate corporation
which should own and. operate it, bat in connection
therewith they did not desire to love their power of
contro! and therefore it wa+ in their opinion Recerss:
to put something inte the articles of incorporation by
which a limitation should be placed apen the powers
of the terminal company te contrel the property, o
in article 2 they provide:

“@ © © Al the powers exercised by this com
pany shall be in accordance with the terms ate!
spirit of the aferesard contract etter: d inte on te
mw rla\ of January, A. D. Is82, bys and between
the Th Meinmes & St. Louis Railroad Company.
the Dee Moines Northwestern Railway Company.
the St. Leaie, Dee Meines & Northern Railwea:
Company, Ja-. F. Hew, Jas. F. Hew, trustee, and
Grenville M. Dexige. The -aid eompeny hall hav:
’ rivht te lea or ott “+ linge a of the uer
of ony port of t+ franeh. © te any other raile vy
‘ one — poowkded thet the assent in writing of
the Thee Moonee & St. Loule Railroad Company, the
D« Vemes Northwestern Railway Compant |
the St. Lealx, Dee Moines & Northern Raibeos
(Compan shall be necessary before any such lense
of disposition can be made to any other than the
parties aberve namet.”’

—_— =
And in article 4 it was provided:

“Four metubers of the board shall be nominated
by the Wahash, St. Louis & Pacific Railway Com-
pany, two members by the Des Moines Northwest-
ern Railway Company and two members by the St.
Louis, Des Moines & Northern Railway Company,
and no stockholders shall be eligible for meraber-
ship of the board unles+ so nominated.

The fact that a candidate has been duly neomi-
nated shall be certified to the stockholders’ meet-
ing of this company by the seeretary of one of
the respective companies aforesaid and such certi-
fication shall be conelusive.

The provisions herein with reepect to nomina.
tion for the board of directors shall apply to and
be enjoved by any grantee or assignee of either
of the railway companies aforesaid. No contract.
lease, or other agreement, amounting to a perma.
nent charge upon the property of the corporation,
shall be entered into by the heard unless the Sait
shall have heen first approvel by the Des Moines
& St. Louis Railroad Company, the Des Moines
Northwestern Railway Company and the St. Louis,
Dee Moines & Northern Railway Company, or
their assigns, and shall have heen submitted to a
meeting of the stockholders, duly called. and shall
have been approved by more than three-fourths
of all the stockholders: and it shall net be within
the power of the board of directors to ereate any
limitation whatsoever upon any of the franchices
of the corporation, except the some shall have heen
submitted to and aprreved bey the stockholders as
hereinhefore provided.”’

Now, it wasn't neerssary to put these provisions inte
the articles of incorporation if it was not intended te
give the terminal company the tithe and ownership of
the property. If the terminal company simply was te

— | oa

hold the property as trustee, it would have no power to
dispose of or encumber it without the consent of the
beneficial owners. So these provisions, instead of
showing that it was intended that the three railway
companies should retain an interest in the property,
show that it was intended that the terminal company
should own the property, but these provisions were put
in as a limitation upon the power of the corporation to
alienate its property.

Now, of course, the adoption of these articles did not
change the title or ownership of the terminal, but thes
clearly indicate the purpose of the parties instru.
mental in organizing it to transfer the ownership and
title, just the same as the building of a house would
indicate the purpose of the builder that some one
should live in it.

These articles were adopted on the 10th day of Do-
cember, ISS4. On the Ist day of January, 1885, there
were certain resolutions passed at meetings of the
stockholders of the three corporations parties to the
contract of January 2, 1882.) To correctly understand
what was intended by these resolutions it is well to con
sider first the resolutions adopted by the Des Moines
Northwestern Railway Company. This company did
not hold the legal title to any portion of the termina!
property. The only interest it had in the property was
that evidenced by the contract of January 2, 1882,
under the terms of which it was the beneficial owner
a one-fourth interest.

pee , & tas AO OE WA ON tse yD ee WBE INS Ae Silly PO EOMLE LOD NEA D Digit AB

—

The resolutions appear commencing at page 426 of
volume IT, and in them it is first

“Resolved, that this company ratifies and ap-.
proves the selection heretofore made of J. S. Polk
and I, M. Hubbell to serve as directors of the Des
Moines Union Railway Company in accordance
with the provisions of article four (4) of the
articles of incorporation of that company author-
izing this company to nominate two members of
the board of directors of said company.”’

In connection with this resolution it is important, for
reasons which we will hereafter state, to note that from
the organization of the Des Moines Union Railway
Company down to the adoption of certain amendments
to the articles of that company, the three railway com-
panies parties to the contract of January 2, 1882, exer-
cised the power given them in article 4 of the articles
of incorporation, to nominate directors of the Des
Moines Union Railway Company.

The resolution then continues:

“Whereas, the Des Moines, St. Louis Roailroad
Company, the Des Moines Northwestern Railway
Company, the St. Louis, Des Moines & Northern
Railway Company, G. M. Dodge, James F. How,
and James F. How, trustee, on the 2nd day of
January, 1882, entered into a contract whereby it
was agreed to purchase, hold, control and use cer-
tain real estate and franchises in the City of Des
Moines which had theretofore heen held and used
by certain of the individual parties hereto for eor-
tain purposes and upon certain conditions set out
in said contract, and’’

= 46

The only importance of this recitation is to indicate
that the subject matter of the resolutions which follow.

The resolution then continues :

**Whereas, on the 10th day of December, A. D.
ISS4, a corporation under the name and style of
the Des Moines Union Railway Company was
organized as contemplated and provided in the
aforesaid contract, to acquire, hold, use and enjoy
the real estate, property rights and franchises in
the City of Des Moines east of Farnham street ip
said city of the aforesaid railway compan) aid
signatories of said contract acquired or held there-
under, and to carry out the purposes of the said
contract of January 2nd, 1882."

Note the use of the word **e

[Text truncated at 120,000 characters. The full text is on the page linked above.]

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_0365%3A02. Public record. Not legal advice.