Weidenfeld v. Northern Pac. Ry. Co.

Citations

• 129 F. 305
• 63 C.C.A. 537
• 1904 U.S. App. LEXIS 4045

Syllabus

<p>1. COBPOEATIONS — RAILROADS—PREFERRED STOCK — RETIREMENT—CONVERSION.</p> <p>Laws Wis. 1895, c. 244, p. 475, chartered the Northern Pacific Railway Company, and authorized it to classify its stock into common and preferred, and to make such preferred stock convertible into common, on such terms and conditions as might be fixed by the board of directors. The act also authorized the company to borrow from time to time such sums of money and on such terms as the corporation or its board of directors should agree, and in its corporate name to execute evidences of indebtedness, and make the same convertible into its capital stock of any class upon such terms and conditions as its board of directors deemed advisable. Held, that the corporation, under such provisions of its charter, had authority to issue certificates of indebtedness with which to retire the preferred stock, and to immediately convert such certificates into common stock.</p> <p>2. Same — Ratification.</p> <p>The certificates of indebtedness having been issued under express statutory authority conferred by Laws Wis. 1895, p. 475, c. 244, § 11, the conversion, even if not originally authorized, was subsequently confirmed by Laws Wis. 1897, p. 632, c. 294, and Laws Wis. 1899, p. 296, c. 193, authorizing the consolidation of railroad companies, validating agreements on which their stocks had been issued, together with their plans of reorganization, etc.</p> <p>3. Same — Reduction and Increase of Stock.</p> <p>Where a corporation issued certificates of indebtedness with which to retire its preferred stock, and immediately thereafter converted such certificates into common stock, such transaction should be considered as a whole, and hence the issuance of the certificates and retirement of the preferred stock did not operate as a reduction of capital, nor the issuance of such additional common stock as an increase thereof.</p> <p>4. Same — Rights of Stockholders.</p> <p>Where a corporation issued certificates o