Waymire v. San Francisco & San Mateo Railway Co.

Vanclief, C. In May, 1891, the defendant railway company issued to the defendant trust company eleven hundred bonds, each for one thousand dollars, in trust, to be sold for the use of the former company, and to secure the payment of said bonds executed to the trust company a trust deed of all its property, consisting of street railroads, franchises, and all personal property pertaining thereto. The bonds bear interest at the rate of six per cent per annum, payable semi-annually, and contain a provision to the effect that, upon certain defaults in the payment of interest, the trustee may elect to declare the principal due and foreclose the trust deed. In alleged compliance with these provisions the trust company, on May 10, 1894, commenced an action in the superior court of San Francisco against the railway company to foreclose the trust deed, and for the appointment of a receiver to take possession of the property conveyed by the trust deed, and to operate the same pending the action.

On April 6, 1895, and pending the aforesaid action to foreclose the trust deed, this action was commenced by James A. Waymire and six other stockholders of the railway company, “ on behalf of themselves and all other shareholders and creditors of the railway company,” to enjoin the trust company and its beneficiaries (the bondholders) from further prosecuting said foreclosure action, on the alleged grounds that, by a conspiracy and collusion of the directors of the railway [649]company, with the directors of the construction company (a majority of such directors of each company being the same persons), said bonds had been fraudulently and without consideration transferred to the defendants—the S. S. Construction Company, C. A. Spreckels, John A. Buck, Nicholas Ohlandt, Charles H. Buck, and John C. Ohlandt—and also to enjoin these defendants from selling or otherwise disposing of said bonds pending this action. The specific ultimate relief prayed for is that the sales and transfers of bonds to the last above-named defendants be adjudged fraudulent and void; that said defendants may be ordered to redeliver the bonds to the trust company for the proper use of the railway company; and that the injunction against the further prosecution of the foreclosure suit be made perpetual.

The court sustained a general demurrer to the complaint, and thereupon dissolved the temporary injunction, and dismissed the action. The plaintiffs appeal from the order dissolving the injunction, and from the judgment, upon the judgment-roll alone.