This is an action brought by the plaintiff, Burgess, against J. & W. Seligman & Co., as stockholders of the Memphis, Carthage & Northwestern Railroad Company, under a statute of the state of Missouri, to recover a debt due to him by the company. The plaintiff, in his petition, alleges that on the fifth on November, 1874, judgment was rendered in his favor against the corporation by the district court of Cherokee county, Kansas, for $73,661, which remains unsatisfied; that in December, 1874, the corporation was dissolved; and that the defendants, at the date of the dissolution and of the judgment, were, and still are, stockholders of the corporation to the amount of $6,000,000, on which there is due and unpaid $1,000,000; and he demands judgment for the amount of his debt. Joseph Seligman, the principal defendant, answered, denying that the defendants were ever stockholders, or subscribers to the stock, of the corporation, and setting forth certain facts and circumstances (stated in the findings) under which the stock alleged to be theirs was merely deposited in their hands by the corporation in trust for a temporary purpose by way of collateral security, to be returned when that purpose was accomplished.
The cause was tried by the court, and judgment was rendered for the defendants on certain findings of fact; and the question here is whether the facts as found are sufficient to support the judgment.
The principal facts upon which the case must turn are substantially the following:
The Memphis, Carthage & Northwestern Railroad Company was a corporation organized under the general laws of missouri, with an authorized capital of $10,000,000. On the tenth of March, 1872, a contract in writing was entered into between the corporation and J. & W. Seligman & Co., (the defendants,) which is set forth in the findings. In the recitals of this contract it was stated that certain municipal subscriptions, in the shape of bonds, to the amount of $645,000, had been obtained in aid of its construction; and that a portion of the road (27 miles) was already graded, bridged, and tied, and the right of way obtained, and all paid for by the proceeds of said subscriptions; and that the company now sought additional capital for procuring iron and equipment for the road by the sale of its first-mortgage bonds. It was, therefore, agreed that the railroad company should furnish the capital necessary to completely prepare the road for the iron, and would execute and deposit with the defendants their entire issue of first-mortgage bonds, to-wit, $5,000,000, and a majority of their capital stock authorized to be issued; 'said stock to remain in the control of said party of the second part [J. & W. Seligman & Co.] for the term of one year at least.' The latter agreed to purchase 2,000 tons of railroad iron under the railroad company's direction, and from time to time to make advances of cash during the completion of the road, not exceeding $200,000, (including the amount paid for iron,) and to receive interest thereon at the rate of 7 per cent. per annum until reimbursed by sale of the bonds. They were to have the privilege for the term of 12 months of calling any portion of the five millions of bonds at the rate of 70 cents currency and accrued interest, less 2 1/2 per cent., and if more bonds were sold than enough to iron the road, they should advance funds to purchase rolling stock, $2,000 per mile, the balance to remain with them on deposit, on interest at the rate of call loans, to pay any deficiency in net earnings of the road to meet demands for interest on the bonds. If the bonds, or part of them, could not, for any unforeseen cause, be negotiated during the next 12 months, the company were to repay to J. & W. Seligman & Co. all moneys advanced by them, with interest at the rate of 7 per cent. per annum, and a commission of 2 1/2 per cent. on all bonds returned. This is the purport of the written agreement.