originalbllLwould,liavebeen, good,; .as ,the. presElnt must be disposed of on the oth:er groun\labovedii!cl1ssed. !Jet the order granting leava, tocomplainlLnts to .me. aaupplemental bill be -set, aside, right $0 bring an bill for the same purpose. '
(Oi1'cuit Court; D. Ne1Yraika. October,
1. RAILROAD CoRPORATION-POWER TO Under the statute ufNebraska, the le,aseofa line of railway, orarrangement to lease, executed by one railroad corporation to another, to be valid' must be assented to by a vote of o:t least two-thirds of the eachcorpo'ration, in stockholders' meethig asserilbled. ' " '
B.um-AGREEMENT TO LEASE ;MADE STOCK SUBSCRIPTIONS. : '.
IN ADvANclliOlrC'ONBTRUCTION, TO SECUltB
No agreemetJttoexecllte'su'ch a lease, made in advance of the constrnctlon of a railroad, can be specifically enforced, unless it is subsequently ratified by a vote of the stockholders,asprovided by ,the statute.
CoRPORATIONS-RIGHTS OF STOCKHOLDERS;
Persons subscribing to tbe stock of a corporation must tak13 notice of the law creating it and'defining its powcrs, and if the directors, in order to secure stock sUbscriptions, propose to do that which they arc prohibited from doing by the ,statute, nOJsubscriber can be heard to say, ,as ,against the corporation. he has been misled",nd '
Demurrer to Amended'B1l1. Wakeley, for complamant. T. M. Marquett. for defendants. J. Upon consideration of the demul1'er to the origbill in this' case it was held that under tne stllotute' of Nehraska. the lease of aline. of railroad, or an agreement to leaEle, executed by 'one railroadeorpoi:ation to another, to be valid, must he assented to by a vote of atieasttwo-thirdsQf the stockholders.ol each 'tion, and that s'tch assent must be expressed in. a stockholders' meeting. It was therElfore held that the agreement execJltEi such a lease,. ma'ae without a meeting of' stockholders, and without the asthe requisite number of stockholders in meeting assembled, was invalid, and could not 2 McCrary. 275; [S. a
FED. REP. 513.]
Since this ruling an amended bill has been filed, in which it is alleged, in substance, as follows:
First, that on the twenty-fourth day of June, 1879, the Atchison & Nebraska Railroad Company, in order to promote its own interest by securing the construction of the line of the Lincoln & Northwestern Railroad, issued a circular inviting persons to subl!lcribe to the stock of the latter company, and stating that it was proposed that the company first named should lease the new road (meaning the road to be built by the last-named company) for a term of 30 years. and pay as an annual rental therefor 35 per cent. of the gross earnings of the said new road, which, it was estimated, would provide for the payment of interest on the new bonds; second, that the members of said board of directors of the first-named company were stockholders therein, and held in the aggregate more than two-thirds of the capital stock thereof, and that most if not all the other stockholders assented to the sending out of such circulars and proposal; third, it is further alleged, upon information and belief, that said members and stockholders did not intend to comply with said proposal if the same should be accepted, but, on the contrary, intended, after the same should be accepted and the proposed stock should be taken and the money therefor should be paid to said Lincoln & Northwestern R.ailroad Company, to hinder and prevent the making and execution of said lease, and to oppose and vote against the same as stockholders in case a stockholders' meeting should be called; fourth. the complainants subscribed for various shares of the stock of the last-named company, and paid for same in full upon the faith of the proposal embodied in the aforesaid circular, and relying upon the same.
The prayer is that the Lincoln & Northwestern Railroad Company may be decreed to execute a lease of its road to said Atchison & Nebraska Railroad Company according to the terms and conditions of said proposal, etc., and that said last-named company may be decreed to receive said lease, and to perform and execute the same, and for an injunction to restrain the execution of a lease to the Burling. ton & Missouri River Railroad Company iu Nebraska. It is apparent that this relief can only be granted upon the theory that there has been a valid agreement to lease, which agreement can be enforced by the decree for specific performance. The facts alleged do not show the existence of such an agreement; they do not show a compliance with the statute, which plainly requires, as a condition precedent to the execution of such a lease, that the directors of each of the corporations shall call a meeting of the stockholders of each, at which meeting the holders of at least two. thirds of the stock represented at such meeting, in person or by proxy, and voting thereat, shall assent thereto. The amended bill avers certain facts tending to show the assent (outside of any meeting of the stockholders) of two-thirds of the
BUSH V. UNITED STATES.
stockholders of one company. This would not be sufficient even if the allegations applied to both companies; much less is it sufficient where they apply to one only. Persons subscribing to the capital stock of a corporation are bound to take notice of the law creating it and its powers, and if the directors, in order to secure subscriptions to such stock, propose to do that which they are prohibited from doing by the terms of the their powers, no subscriber can be heard to say, as statute against the corporation, that he has been misled and deceived thereby. All that subscribers to the capital stock in this case had a right to assume, was that the lease would be executed in accordance with law, provided a meeting of stockholders should be held, and the same should be assented to by the holders of two-thirds of the stock of both corporations concerned. Every subscriber to the stock of the Lincoln & Northwestern Ra.il· road Company was bound to know that no valid lease could be executed, e-xcept in compliance with the statute above referred to. ,The allegation that the directors of the Atchison & Nebraska Rail· road Company was bound to know that no valid lease could be executed, except in compliance with the statute above referred to. The allegation that the directors of the Atchison & Nebraska Railroad company acted in bad faith, and did not intend to vote for a lease, in case a stockholders' meeting should be called, is not sufficient to authorize the execution and enforcement of such a lease con· trary to the statute and without the assent of the stockholders, as required thereby. The demurrer to the amended bill is sustained.
BUSH ". UNITED STATES.
(Oircuit Oourt, D. Oregon. November 8,1882.)
PRIORITY OF THE UNITED STATES.
The priority of the United States under sections 3466,3467, of the Rev. St. does not attach in the life-time of an insolvent debtor unless his property is taken by process of law, as in bankruptcy, insolvency, or attachment, or he makes a voluntary assignment thereof 'to a third person for the benefit of his creditors; and a judgment or judgments confessed by such debtor for an amount equal to the value of his assets, with intent to hinder, delay, or defraud the United States, is not such an assignmeut.