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as if the violation were of the charter powers of the corporation or of other statutory law of the state. See Second Employers' Liability Cases, 223 U. S. 1, 32 Sup. Ct. 169, 56 L. Ed. 327.

The authorities lastly herein cited are, I think, precedents for this action; but, if they are not, I think that a precedent therefor should be made, for it will tend to safeguard the interests of the minority stockholders by preventing those in control through ownership of the majority of the stock from violating the duty which they owe to the minority to conduct the affairs of the corporation and preserve it as a separate entity for the fulfillment of the purposes of its creation, instead of turning it over to a rival in violation of law and virtually terminating its independent existence. There is no danger in such a precedent. The only judgment demanded is an injunction to prevent the consummation of the transfer of the stock control in violation of the duty of the majority owner to the minority owners, and in violation of the federal statute. The defendants will neither be subjected to a double recovery nor to a multiplicity of actions. No recovery is sought excepting a decree of the court restraining the violation of this trust duty and of the statute and canceling the transfer of stock which has been made; and this as a representative action in behalf of all stockholders who are not selling their stock at the excessive valuation offered by the New Haven Company for sufficient only to give it control of the Rutland Company. Of course, no action could be brought by the majority holder who is selling, and it is a party defendant, and the final decree will determine all questions with respect to liability by virtue of the contract, or contemplated contract, as between it and the vendee, who is also before the court. No other minority stockholder can maintain a separate action in his own right for the relief demanded by plaintiffs, and if such an action should be brought, under well-settled rules of equity practice, it would be consolidated with this or stayed. I regard it as exceedingly doubtful whether the Rutland Company could maintain an action for like relief; but, however that may be, it has been made a party defendant, and the other defendants will not be prejudiced, for the Rutland Company will be bound by the decree, and could not, if it would, maintain another action for like relief.

Section 150 of the Railroad Law (chapter 49, Consol. Laws; chapter 481, Laws 1910) forbids the merging or consolidation of parallel and competing lines of railroad, other than street surface railroads, and contracts, including leases, for the use of one road by the other, "unless the Public Service Commission shall consent thereto"; and section 54 of the Public Service Commission Law (chapter 48, Consol. Laws; chapter 480, Laws 1910) forbids the purchase or acquisition by any railroad corporation, domestic or foreign, of "any part of the capital stock of any domestic railroad corporation," including street surface railroads and other common carriers, "oganized or existing under or by the laws of this state, unless authorized so to do" by the Public Service Commission. The consent and authorization by the Public Service Commission pursuant to these provisions of law was obtained. The learned counsel for the appellants contends, therefore,

that the transfer, having been authorized by the laws of our state, cannot contravene any public policy which it is the duty of or within the jurisdiction of this court to enforce.

That argument seems plausible, but it is fallacious. It leaves out of consideration the fact that the Congress of the United States has exercised its constitutional authority to declare by statutory enactment a public policy on the same subject for the whole country, which, by virtue of the express provisions of the federal Constitution, became the "supreme law of the land," and is as much the public policy of this state as any statute enacted at Albany. The federal statute superseded all state statutes inconsistent therewith, and rendered nugatory any subsequent state legislation in conflict therewith. Second Employers' Liability Cases, supra. It is based on the further erroneous theory that the Public Service Commission of the state of New York, in approving this transfer of stock, authoritatively determined that the transfer would not be prejudicial to the public interests, or in restraint of trade, or constitute a violation of the Sherman Act, and that such determination, if not controlling, should be accepted by this court. The opinions of the Public Service Commissioners, acting within their jurisdiction, are entitled to great weight, and doubtless their determinations on facts, acting likewise within their jurisdiction, if not annulled on certiorari, are controlling; but the Commission was exercising functions under the state law, and it could make no adjudication which would protect any of the parties against a prosecution or action for a violation of the Sherman Act, or which would constitute a bar to an action for damages or a suit in equity based on a violation thereof, or on a breach of the duty owing by the majority stockholders to the minority stockholders. If the transfer would constitute a violation of the Sherman Act or of such duty the Public Service Commission should not have approved it; but that body was not given jurisdiction to authoritatively decide those questions. It was authorized merely to determine authoritatively whether or not the transfer would be consistent with public interest, and, if so, to consent in behalf of the people of this state. That consent or approval was at most merely permissive, and notwithstanding it a court of equity may inquire into the motive of the Central Company in selling and the purpose and object of the New Haven Company in thus acquiring control of the Rutland Company, and the effect thereof, even though no statute were violated thereby; and if the transfer involves a breach of duty on the part of the vendor, it being in the circumstances of a quasi trustee for the minority stockholder, I think that it is entirely competent for a court of equity to enjoin it. See Farmers' Loan & Trust Co. v. N. Y. & N. R., supra, 150 N. Y. 434, 44 N. E. 1043, 34 L. R. A. 76, 55 Am. St. Rep. 689; Young v. R. & K. G. L. Co. et al., 129 N. Y. 57, 29 N. E. 83; Colby v. Equitable Trust Co., supra.

Moreover, I am of opinion that it is by no means clear that the Legislature contemplated that the Public Service Commission would attempt to approve of the purchase of a mere controlling interest in the stock of one corporation by a rival competing line, thus leaving

the minority stockholders at the mercy of a management directly opposed to them in interests. Such a situation might, if it were not a violation of the Sherman Act, warrant consolidation, but not the transfer of mere stock control. The approval of the Commission appears to have been largely influenced by its view that the control of the Rutland Company by the New Haven Company would be less. detrimental to the minority stockholders of the Rutland Company than if such control remained in the Central Company, which the Commission held was a parallel and competing line, where it has been for many years, and would be more beneficial to the public; and the Commission assigned this as a reason for not requiring the New Haven Company to offer to purchase the minority stock on the same terms as it had agreed to purchase the majority stock, which the Commission, on denying an application of the New Haven Company for leave to sell its stock in the New York, Ontario & Western Company to the Central Company, ruled would be a proper condition to impose on granting such an application, for the reason that the minority. stockholders could not be protected in such case by the courts or otherwise. Some of the stockholders of the Rutland Company have an action pending against the Central Company to prevent its control over the Rutland Company through ownership of the majority of the capital stock. The right of the plaintiffs to enjoin this transfer cannot be affected by the failure thus far of certain stockholders of the Rutland Company, as plaintiffs in the other action against the Central Company, to succeed.

The Court of Appeals in Young v. Rondout & Kingston Gaslight Co., 129 N. Y. 57-60, 29 N. E. 83, 84, on considering whether an injunction, which was essential to a recovery by the plaintiffs, should be vacated, said:

"To dissolve an injunction, with the inevitable result of defeating plaintiff's remedy without a trial, we must be entirely satisfied that the case is one in which by settled adjudication the plaintiff, upon the facts stated, is not entitled to final relief. We cannot say that of this plaintiff's complaint in advance of a trial. * * These are grave and serious questions. On this motion we do not decide them."

It may be said that on the review of the order the Court of Appeals was confined to legal questions, and that this court may review the exercise of discretion by the court at Special Term; but still, if the plaintiffs present a prima facie case for injunctive relief, where, as here, it is probable that their right to final judgment will depend upon whether the status quo is maintained, I am of opinion that the injunction order should be sustained. See Mannington v. Hocking Valley R. R. Co. (C. C.) 183 Fed. 133, 146, 147, 149, 159; Bigelow v. Calumet & Heckla Mining Co. (C. C.) 155 Fed. 869.

On the hearing on the application to vacate the injunction order, which was originally granted ex parte, the plaintiffs offered to have the cause submitted for decision on the merits on affidavits presented on the motion, as depositions, or to try the issues immediately, and they subsequently formally renewed this offer in writing. That was some evidence that the action has not been brought in bad faith and

for the purpose of delaying the transfer of the stock. I am of opinion that the plaintiffs have in the circumstances sufficient basis for their contention that the transfer of this stock constitutes a violation of the Sherman Act and a fraud upon the corporation and its minority stockholders to warrant the temporary injunction order until a decision of the action on the merits, which, if the defendants had been willing to proceed to trial, doubtless could have been had long ago. In view of the right which a railroad corporation now has for the exchange of freight and passenger traffic with connecting lines under the Interstate Commerce Act (section 12 of chapter 309 of Session 2 of 61st Congress [Act June 18, 1910, 36 Stat. 551] amending section 15 of "An act to regulate commerce," approved February 4, 1887 [Act Feb. 4, 1887, c. 104, 24 Stat. 384 (U. S. Comp. St. Supp. 1911, p. 1301)]), the efforts of the New Haven Company to obtain a controlling interest in the Rutland Company indicate that it is not actuated by a desire to further the interests of the Rutland Company, and the contrary is clearly shown by the exorbitant price paid for the stock and the admissions of President Mellen of the New Haven Company. It is presumptively, I think, against the interests of one corporation to have it controlled by a competitor. Louisville & Nashville v. Kentucky, 161 U. S. 677, 16 Sup. Ct. 714, 40 L. Ed. 849.

The appellants further contend that in the main the Rutland and New Haven Companies are connecting companies, and form a through line, and are parallel and competing only to a very small extent, and that therefore there is and will be no violation of the Sherman Act, which was construed by the Supreme Court of the United States in U. S. v. American Tobacco Co., supra, as embracing only "acts or contracts or agreements or combinations which operated to the prejudice of the public interests by unduly restricting competition or unduly obstructing the due course of trade, or which either because of their inherent nature or effect or because of the evident purpose of the acts" injuriously restrain trade. Those questions should be left for decision when the facts are fully developed by common-law proof showing definitely the extent to which the lines are competing and parallel, and the extent to which trade and commerce will be restrained and a monopoly created, and clearly laying bare the purpose of the majority stockholder of the Rutland Company in thus turning over the control and management of that company to the New Haven Company and of the latter company in acquiring it. The plaintiffs allege, and present evidence tending to show, that the New Haven Company and lines which it controls are competing and parallel lines with the Rutland line to an extent sufficient under the decisions of the federal courts construing the Sherman Act to establish presumptively that the proposed transfer constitutes a contract or combination in restraint of interstate and foreign trade and commerce, and is designed to monopolize such trade and commerce, and that it is therefore illegal and void. See Louisville & Nashville v. Kentucky, supra; Northern Securities Co. v. U. S., 193 U. S. 197, 24 Sup. Ct. 436, 48 L. Ed. 679; Standard Oil Co. v. U. S., 221 U. S. 1, 31 Sup. Ct. 502, 55 L. Ed. 619, 34 L. R. A. (N. S.) 834; U. S. v. American Tobacco Co., supra; Harriman v. Northern Securities Co., 197 U. S. 244, 25 Sup. Ct. 493, 49 L.

Ed. 739; Pearsall v. Great Northern Ry. Co., 161 U. S. 646, 16 Sup. Ct. 705, 40 L. Ed. 838; Langdon v. Branch (C. C.) 37 Fed. 449, 2 L. R. A. 120. See, also, State ex rel. Attorney General v. Hocking Valley, 12 Ch. Circuit (N. S. L.) 49; Hafer v. Činn., H. & D. R. Co., 29 Ch. L. J. 68; Gulf, C. & S. F. R. Co. v. State, 72 Tex. 404, 10 S. W. 81, 1 L. R. A. 849, 13 Am. St. Rep. 815; People v. Boston, H. & T. R. Co., 12 Abb. N. C. 230. And, therefore, without intending to express an opinion on the merits, as they may be developed on the trial, I think that the plaintiffs are entitled to have the injunction continued. I therefore dissent from the reversal of the order.

MILLER, J. I am of the opinion that a minority stockholder of a corporation may maintain an action to enjoin the transfer of the control of the corporation to a competing corporation in violation of law, and that the plaintiffs have made a sufficient case on that head to justify the Special Term in preserving the status quo until the determination of the action.

I therefore vote to affirm the order.

MARINE & CONTRACTORS' SUPPLY CO v. PALTROWITZ. (Supreme Court, Appellate Term, First Department. January 9, 1913.) PLEADING (8 345*)-ANSWer-Denials-SUFFICIENCY.

In an action on an account stated and for breach of contract, an answer admitting plaintiff's incorporation, and denying each and every other allegation in the complaint, was sufficient to require the plaintiff to prove his cause of action; and hence judgment for plaintiff on the pleadings was improperly granted.

[Ed. Note. For other cases, see Pleading, Cent. Dig. §§ 1055-1059; Dec. Dig. § 345.*]

Appeal from Municipal Court, Borough of Manhattan, First District.

Action by the Marine & Contractors' Supply Company against Harry Paltrowitz. From a judgment for plaintiff, after a trial by the court without a jury, defendant appeals. Reversed, and new trial ordered.

Argued December term, 1912, before SEABURY, GUY, and GERARD, JJ.

Isidore Siegeltuch, of New York City, for appellant.

Slade, Slade & Slade, of New York City (Maxwell Slade and David Slade, both of New Haven, Conn., of counsel), for respondent.

GERARD, J. The complaint alleges two causes of action: First, that plaintiff and defendant were joint owners of a building, that defendant as joint owner collected certain rents from the tenants, that plaintiff was entitled to one-half the rents, that an account was stated between plaintiff and defendant, and that it was found that the defendant was indebted to plaintiff in a stated sum. The second cause of action sets forth the joint ownership and alleges that the defendant *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

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