Mercantile Trust Co. v. Kiser & Co.

Bleckley, Chief Justice.

Most of the stock in both corporations was owned by the same persons, and the management and operations of both companies were under boards composed chiefly of the same directors. Manifestly it was contemplated from the beginning that, in conducting the business after the completion of the railway, the saw-mill corporation was to have the supreme dominion and the railway was to be treated and used as a mere adjunct to the saw-mill business. The line of railway was a short one. It penetrated the country from which the supply of timber for the mill was to be drawn, and it was essential to the successful prosecution of the business contemplated and afterwards done by the great saw-mill establishment. That the railway extended beyond the timber region and was used in carrying for the general public as well as for the mill, did not prevent it from being, as it really was, a substitute for a great number of carriages and teams which, without the railroad, the mill company would probably have had to maintain and use in order to-procure its supply of timber. It is no strain upon the charter of a saw-mill corporation to construe it as authorizing the expenditure of money or the creation of debts-to procure any means reasonable and appropriate to obtain and keep up a supply of timber needful for carrying-on the business and keeping the mill in operation. The guaranty of the semi-annual interest accruing on the railroad bonds for a part of the time those bonds were running to maturity was made with the express consent and authority of the stockholders and directors of the sawmill corporation. No doubt, this consent and authority were given because without the guaranty the money requisite for constructing the railroad could not be obtained, and unless the railroad was constructed the stockholders and directors would have to make other-arrangements for transporting a supply of timber, which would have been either more expensive or less efficient than would be afforded by the railway. If it was good business or if there was good reason to think that it-would be good business on the part of the saw-mill corporation to aid in raising means to construct a railway for use as a timber carrier rather than get its timber carried in some other way, what ground is there for holding-that the guaranty of interest on these bonds was ultravires? We see none. A sufficient consideration for the-guaranty was furnished by the advantage to the sawmill corporation which was expected to be derived, and doubtless was derived, from the construction and operation of a railway which, by reason of penetrating the-country from which the supply of timber was to be-drawn and was drawn, bore an essential and special relation to this particular saw-mill establishment. The primary enterprise was the saw-mill, and connected with it was the railway as a minor and subsidiary enterprise without which, as the evidence indicates, the former could not have hoped to flourish and prove successful. That the saw-mill interest really dominated and controlled the railway and its operations is manifest from the evidence in the record. The one was the parent, the other the child; the one was the master, the other the servant. The court below erred in holding that the guaranty was not obligatory. Judgment reversed.