Minority shareholders and debenture stockholders challenged the sale of surplus railway lands under nineteenth-century perpetual railway leases and a related agreement transferring lands to a subsidiary of the majority shareholder.
The Court held that the lessee had acquired, under the lease and statutory framework, the power to sell surplus lands, that the debenture stock constituted an incumbrance for purposes of the 1891 statute, and that reinvestment of sale proceeds in the railway satisfied the statutory scheme.
The Court further held that approved rail line abandonments did not breach the lease, the shareholder meeting approving the later transaction was validly called, and the majority shareholder lawfully held and voted shares.
The lessor was not entitled in law or equity to recover its reversionary interest in lands sold.
Appeals were dismissed and the respondent’s cross-appeals were allowed in part.
