Citizens' Savings Trust Company v. Illinois Central Railroad Company

This suit in equity was brought in the circuit court of the United States for the eastern district of Illinois against the Illinois Central Railroad Company, the Belleville & Southern Illinois Railroad Company, the St. Louis, Alton, & Terre Haute Railroad Company, all Illinois corporations (to be hereafter called, respectively, the Illinois, the Belleville, and Terre Haute companies), and the United States Trust Company, a New York corporation. The lastnamed corporation was never served with process and did not appear in the suit. The case presents a question as to the jurisdiction of the court below.

The plaintiff, an Ohio corporation, is the holder of 400 shares of the common stock of the Belleville company, and sues as well in its own as on behalf of all other stockholders of that company, or beneficiaries, who may choose to come in and bear their proportion of the cost and expenses of the proceedings. Assuming the allegations of the bill to be true, the suit is not a collusive one, and could be properly brought by a stockholder of the Belleville company, making that company a defendant.

The bill refers to various instruments, deeds, and leases, as follows: A deed of October 1st, 1895, between the Terre Haute company, the Illinois company, and the Belleville company, whereby the railroad and properties of the Belleville company, then held by the Terre Haute under a lease executed in 1866, were transferred to the Illinois company, for a period of ninety-nine years; a deed of September 10th, 1897, to which the Belleville and Terre Haute companies were parties, and which purported to transfer the title to all the railroad properties of the former to the latter company; a lease of September 15th, 1897, by the Terre Haute company to the Illinois Central Railroad Company, confirming the above lease of October 1st, 1895, and covering, among other properties, the Belleville railroad, extending from Belleville, in St. Clair county, Illinois, to Duquoin, Perry county, in the same state; and a deed of February 17th, 1904, between the Terre Haute company, and the Illinois company, purporting to convey to the latter company all the railroad properties, corporate rights and franchises of the former company.

The plaintiff prayed that these leases and deeds, so far as they affect, or purport to affect, the properties, franchises, rights, or liabilities of the Belleville company, be canceled and declared void, and that that company be required to return and account for whatever consideration it may have received under such leases and deeds to the party or parties from whom the consideration may have moved.

The bill charges, in substance, that said deeds were illegally and fraudulently procured by the Illinois Central Railroad Company, and by means of those instruments, and by various improper schemes, it has acquired not only complete control over and possession of the Belleville company and all its properties, but has manages, and is continuing to manage, those properties in its own interest and in total disregard of the rights of holders of the common stock of the Belleville company. Indeed, it is charged that what the Illinois Central Railroad Company has done, is doing (and, unless restrained, will continue to do), has practically destroyed the value of such stock.

The plaintiff also prayed for a decree ordering the defendant, the Illinois Central Railroad Company, to account for and pay over to the Belleville company, or to a receiver to be appointed for that company, such proportion of the yearly gross earnings as the Belleville company is entitled to under the lease executed by and between the Belleville company and the Terre Haute Railroad Company, bearing date October 1st, 1866; such accounting to cover each fiscal year, or part thereof, from the time when the Illinois Central Railroad Company first acquired the railroad properties of the Belleville company as lessee or sublessee under the lease executed on or about the 1st of April, 1896, up to the time of such accounting; further, for 'an order appointing a receiver for the Relleville & Southern Illinois Railroad Company, with the usual powers of such receivers; and that the Illinois Central Railroad Company, through its officers and agents, be ordered to surrender and deliver to said receiver all the corporate assets, books, papers, and everything that rightfully belongs to the Belleville & Southern Illinois Railroad Company, and that the Illinois Central Railroad, Company be ordered to account to such receiver, as is hereinbefore prayed. That the defendant, the Illinois Central Railroad Company, its officers and agents, be restrained from further violating the rights of your orator, and be ordered, directed, and restrained in particular from interfering in any way with said receiver, or with the operation of said Belleville company as an independent and separate railroad company; and for such other and further relief as the equity of the case may require.'

Process in the case against the Illinois company was served upon its ticket agent at Fast St. Louis, 'there being no president, vice president, secretary, or treasurer of that company found' in the district; and against the Belleville and Terre Haute companies, upon a director of each company, at Pinkneyville, Illinois, there being no president, vice president, secretary, or treasurer of either of those companies found in the district.

The Belleville company pleaded-especially appearing, under protest, for the purposes of its plea, and no other-that the court below was without jurisdiction to proceed against it, in that the defendant was an inhabitant of the morthern division of the northern district of Illinois, having its residence in that division and district at Chicago, where its corporate meetings were held and its corporate business transacted.

Similar pleas were filed by the Terre Haute company and the Illinois Central Railroad Company, each specially appearing under protest for the purpose only of denying the jurisdiction of the court below, and each company claiming to be an inhabitant and resident of the northern district of Illinois.

By its final order the court sustained the pleas to the jurisdiction, and dismissed the suit.

Messrs. Edward C. Eliot and William B. Sanders for appellant.

[Argument of Counsel from page 50 intentionally omitted]

Messrs. J. M. Dickinson and Blewett Lee for appellees.

Mr. Justice Harlan, delivered the opinion of the court: