matters I find no time nor necessity to review, for they throw no light upon the issues as I understand them. It seems to me very clear that in order to hold the bank liable for the alleged conversion and spoliation it is necessary to find that either the bank, through its agentB, participated in the conversion, or received 01' benefited by the proceeds of the conversion in whole or in part. Under the evidence in this case, and the facts as I have found them, neither of these is shown, nor is there under the evidence a well-founded suspicion thltt the bank was guilty of either. Whatever figure the agents of the bank cut in the whole matter (and we have proof only of the single declaration of Lapeyre, military commissioner, as testified to by Ward) would not, in my judgmeut, bind 'the bank, even if it had been in the control of its own agents; but when it is considered that at that time the bank was in the possession and under the control of the military authorities, and not under the control of its directors and stockholders, it. would seem preposterous to hold the bank responsible for torts and wrongs with which the stockholders and directors had nothing to do, ,and that, too, on flimsy hearsay evidence, only supported by Ward, who is directly contradicted by Kilbourne. That wrongs were committed by the military liquidators, and that the bank ratified them by its stockholders resuming control, is an assumption without proof, and a conclusion that· does not follow. A decree will be entered dismissing the bill and amended supplemental bills as to the State National Bank, with costs.
Co. and others.!
(Oircuit Oourt, E. D. Louisiana. July 2, 1885.)
CORPORATIONS-REDUCTION OF CAPITAL STOCK.
Under the laws of Louisiana authority to increase the capital stock of a cor. poration must be express, As the constitution and laws of Louisiana provide for the increase of the capital stock, but are silent as to a decrease, the power to reduce the stock of a corporation was intentionally denied.
In Chancery. E. H. Farrar and E. B. Kruttschnitt, for compla,inants. Chas. B. Singleton, Rickard H. Browne, B. F. Choate, for defendants. PARDEE, J. The suit is brought to restrain the Rome Insurance Company from reducing its capital stock. The question is one of the power of the company, and not of the propriety of its proposed action. It is well-settled corporation law, "that a corporation has no implied authority to alter the amount of its capital stock where
llleported by Joseph P. Hornor, Esq" of the New Orleans bar.
SEIGNOURET V. HOME INS. CO;
the charter has definitely fixed the capital at a certain sum. The shares of a corporation can neither be increased nor diminished in number, or in their nominal value, unless this be expressly authorized by the company's charter." Mor. Priv. Corp. § 230. See Tayl. Priv. Corp. § 133; Green's Brice's Ultra Vires, 158; Granger's Life Ins. Co. v. Kamper, 73 Ala. 325.. And it is understood that the same law prevails in Louisiana. See Percy v. Millaudon, 3 La. 569. Article 239 of the constitution of Louisiana prohibits increase of stock of corporations, except in pursuance of general laws. See, also, act 26 of 1882, of the Laws of Louisiana, specifically providing the mode and manner by which the stock of corporations may be increased. See, also, section 693, Rev. St. La. From these Louisiana authorities it seems clear that the authority to increase the capital stock of a corporation must be express. It would also seem that, as the constitution and the law thereunder provide for the increase of the stock, but are silent as to a decrease, the power to decrease the stock of a corporation was intentionally denied. All the authorities examined, and the nature of things, are to the effect that a decrease of capital stock affects injuriously more parties and interests than would an increase; increase of capital being generally considered to be beneficial to shareholders and creditors alike,to the former as tending to diminish and not to add to their individual risks; to the latter as increasing the amount of their security. See Green's Brice's Ultra Vires, 160. In Percy v. Millaudon, supra, Judge MARTIN, speaking of the attempted reduction of the capital of the Planters' bank, says: "Creditors and customers have a claim to the preservation of the capital in its original integrity, for the faith of which they accept the notes of the institution, deposit their money, and lodge paper for collection. So has the public, on account of the advantages which thelegiillature has stipulated the h'l,nk should afford. as a consideration for the immunities and privileges which t,be charter confers. So have the stockholders, on account of the profits which thp,y have a right to expect on the investments they have respectively made." I do not understand counsel for defendant to seriously deny that the authority to increase or decrease the amount of capital stock of a corporation must be express; but he claims that to corporations created under the general law, as the Home Insurance Company was, the power to increase or diminish stock is given by section 687, Rev. St. La., which reads: "It shall be lawful for the stockholders of any corporation, at the general meeting convened for that purpose, to make any modifications, additions, or changes in their act of incorporation, or to dissolve it with the assent of threefOUL'ths of the stock represented at such meeting; any such modification, addition, change, or dissolution shall be recorded as required by the preceding section." And he contends that his construction of the power given in said section has been sanctioned by long-continued practice and usage among the corporations of the state, and the case proves that a nllm.
ber of lea.ding insurance companies in the city of New Orleans, under such construction, have either increased or decreased their capital stock. Some have done both. The legislative construction of section 687 can be found in the proviso of section 698, "provided that nothing in this act shall be so construed as to authorize an increase in the capital stock of any railroad company." The judicial constrnction should be found in the reports of adjudged cases, but an examination of the 'Louisiana Reports shows no case where the question has been raised. It is a fair inference, then, that in every case where there has been an increase or decrease of capital stock, under authority claimed to be given by section 687, there has been unanimous consent of stockholders and creditors, which makes a very different case from the present one. While the Louisiana courts have not been called on to determine whether an increase or decrease of the capital stock of a corporation is within the scope of section 687, and there are few if any cases from sister states, the English courts have construed similar provisions against the claimed authority. In Smith v. Goldsworthy, 4 Adol. & E. N. S. 430, it was held that a provision "that for the better conduct and management of the affairs of the company, it should be lawful for a special general meeting called fOr the purpose, from time to time, to amend, alter, or annul, either wholly or in part, all or any of the clauses of the said deed, or of the existing regulations and provisions of the company," did not authorize a reduction of the number and value of the shares of the company. See, also, Droitwich Patent Salt Co. v. Curzon, L. R. 3 Exch. 35; In re Ebbw Vale Steel, etc., Co. 4 Ch. Div. 827; In re Financial C01'poration, Holmes' Case, L. R. 2 Ch. 714; Society v. Abbott, 2 Beav. 559. For American cases, see Granger's Life Ins. Co. v. Kamper, 78 Ala. 325; Salem Mill Dam v. Ropes, 6 Pick. 23. The power to dissolve does not carry the power to change the capital stock. Reducing the capital stock is practically the dissolution of the company and the organization of a new company. It did appear to me pn the hearing that the proposed action of the Home company was not a r(1duction of the capital stock, for the capital and assets of the company are. to remain tlie same. It seems that since the organization the capital hasbeenllominal, to the extent that only by estimation has the actual capital of the companY,been equal to the par value of the shares, and the proposed action now is but to write off the par value of the shares so that the par value and the estimated value may be equal, the actnal capital not being affected,-the actual stock being the same after the proposed action as before. It seems clear to metha'tthe writing off the value of shares is such an infringement onhe rights of property as can only be accomplished by consen t, or a clell.r power given in the charter. However, I have concluded to treat the case as the parties have and not from this lat· ter It seems perfectly clear to me that the proposed action of
L.'< RE PRA'lT.
the Home Insurance Company cannot be lawful over the protest of dissenting stockholders. The injunction issued in the case will be perpetuated in the decree.
Intervening Petition of PRATT and another, Partners, etc.
and others v. OHIO & M. By. Co. and others.
D. Indiana. July 18, 1885.)
NEGLTGENCE- VESSEL PASSING THROUGH DRAW-DuTY Oll' BRIDGE-KEEPER -FAILURE TO OPEN DRAW-81GNALS.
8emble, in cases where the draw of a bridge cannot be opened to an approaching boat promptly. the keeper of the bridge, by a propel' signal, in answer to the boat's whistle, should give notiee of the fact; and again, when ready to open the draw, should give a signal of the fact.
SAMI':-DUTY OF VESSEL.
Where the only notice a boat approaching with 8 tow of barges has that 8 draw will not he opened is seeing it closed, it is not negligence on the part of the boat, after giving tlie proper signals, and there is no apparent reason why the draw should not be opened, to drop down under the slow bell until reasonable prudenct' requires a different course. On examination of the evidence in this case, lteld, that contrihntory negligence on the part of the boat is not shown, and that the managers of the bridge were negligent, and liable for the injury resulting tberefrom.
Chancery. On exceptions to master's report. F. Winter and U. J. Hammond, for petitioners. Harrison, Miller et Elam, for respondents. WOODS, J. The master's report cOl.ltains a sufficient statement of the case. It is as follows:
"To the Hono1'able COU1·t ..
"This is a claim against the rereiver for injuries to a steam-boat and barges belonging to the petitioners, which injury, it is alleged, was occasioned by the negligence of the receiver's employes in the operation of a draw in a bridge over the Wabash river at or near Vincennes. "The steam-boat D. A. Goodin was descending the Wabash river between 6 and 7 o'clock A. M. on the fourteenth of February, 18tH, the river being at that time at a very high stage. It is alleged that the steamer approached the bridge in the usual and proper channel for passing through the draw, and repeatedly gave the proper signal by sounding its whistle to notify the person in charge of the draw of the bridge of the approach of the vessel, and that it was desired to pass through. It is averred that the receiver's employl's failed and omitted to open tha draw so as to permit the vessel to pass through, and negligently and wrongfully kept the dra w of the bridge closed, by reason whereof the vessel, which had approached nearly to the draw of the bridge before petitioners' employes in charge of the vessel discovpred that the draw would not be opened, was carried by the force of the current, against the bridge, and was injured, all of which occurred solely by reason of the neglion the gence of the receiver's employes. and without any fault or pal't of the petitioners' employes.