McLane v. King - 144 U.S. 260 (1892)
U.S. Supreme Court
McLane v. King, 144 U.S. 260 (1892)
McLane v. King
Argued and submitted March 24, 1892
Decided April 4, 1892
144 U.S. 260
In this suit, the property of a corporation in a bridge constructed by it over the San Antonio River is held to have been lawfully transferred by the foreclosure of a mortgage upon it.
This suit was originally commenced in the district court of Karnes County, Texas, on September 12, 1882, and thereafter
properly removed to the Circuit Court of the United States for the Western District of Texas. The facts as disclosed by the bill were that in 1876 there existed a corporation known as the "Helena Bridge Company," and organized for the purpose of building an iron bridge over the San Antonio River at the Town of Helena. The defendants King & Son had a contract with the bridge company for the full construction of the bridge, payment therefor to be made partly by the transfer of $10,000 of full-paid stock, and partly in notes of the corporation, secured by a mortgage on the bridge. The stock was never issued, but the notes and mortgage were duly executed and delivered. King & Son contracted with the plaintiff Ruckman to do part of the work. By the terms of this contract, they were to have transferred to Ruckman, in full payment of his work, the $10,000 of stock. This contract was fully performed by Ruckman, and in the amount due thereon McLane became jointly interested. In 1880, King & Son brought suit on the notes and mortgage, which suit resulted in a judgment for $10,919 and a decree of foreclosure. Subsequently, on proper process, they purchased the property, and still hold it. The object of the suit was to have the plaintiffs decreed to be jointly interested with the Kings in the bridge, and for an accounting of tolls and the profits arising therefrom. For the purpose of invalidating the legal effect of the foreclosure proceedings, it was alleged that such proceedings were instituted and prosecuted
"with the fraudulent intent and purpose, then and there entertained by the said Z. King and James A. King, and actuating them in the premises, to obtain possession of the said bridge and its appurtenances, being the only property of value belonging to said Helena Bridge Company, and the only revenue producing property thereof, to render the stock of said Helena Bridge Company worthless in the hands of the holders, and thereby to render the performances of their contracts to deliver stock to
these complainants in the said bridge company unavailing and ineffectual if literally executed, and complainants here charge that it was the understanding and agreement of the parties to said contracts between said Z. King and Son and these complainants for the delivery of said stock, as set forth in complainants' original bill, that the stock should be good and valuable stock, worth fully dollar for dollar in the public market, and that by the institution and prosecution of their said suit against said Helena Bridge Company, and by their taking possession of the said bridge and appurtenances, the said Z. King and Son have rendered the stock of said Helena Bridge Company utterly valueless."
It was also alleged that the delivery of the stock, while in law a literal compliance with the terms of the contract, would in equity be nugatory and ineffectual because the acts of the Kings, as before stated, had rendered it valueless. A demurrer to this bill was sustained, and a decree of dismissal entered. From such decree plaintiffs appealed to this Court.