Consumers' Gas Trust Co. v. Quinby

1. Federal Courts — Jurisdiction—Statutes—Application—Corporations— Stockholders—Ultra Vires Business—Actions. Rev. St. § 629 [U. S. Comp. St. 1901, p. 508], declaring that federal courts shall not have jurisdiction of an action on an assigned claim, unless suit might have been brought in the absence of an assignment, does not apply to a bill by a nonresident stockholder of a corporation, who acquired his stock by assignment from a resident of the state where the corporation was domiciled, to restrain the latter’s directors and trusteed from using the corporate assets for an alleged ultra vires business, affecting complainant’s interest only in common with all other stockholders. - 2. Same—Stockholders’ Suits—Collusion. That a stockholder of a corporation was acting in concert with other stockholders in suing in the federal courts to enjoin the alleged use of corporate assets in an ultra vires business, which other stockholders' were citizens, of the same state gs the corporation, ■ and that they contributed to the expenses of the suit, did not affect the court’s jurisdiction, or establish that the suit was collusive,- within equity rule 94, requiring every bill by one or more stockholders against the corporation, etc., to allege that the suit is not collusive, in order to confer jurisdiction on a federal court; it appearing that the majority stockholders and directors were opposed to the objects of the bill. 3. Same—Verification. Where a bill by a stockholder to restrain the use of corporate assets in an alleged ultra vires business was amended by leave of court, in order that it might be' verified by complainant personally, it was immaterial that the original verification was made by another. 4. Same—State and Federal Courts—Conflicting Jurisdiction—Suits in Personam. A noncitizen stockholder was entitled to maintain a suit in the federal courts to restrain the use of corporate assets in an alleged ultra vires business, notwithstanding the pendency of two prior suits for similar relief in the state courts; all of the suits being in personam, and there being no conflict over property in custodia legis. [Ed. Note.—Conflict of jurisdiction between state and federal courts, see note to Louisville Trust Co. v. City of Cincinnati, 22 C. C. A. 356.] 5. Same—Decisions of State Courts—Controlling Authority. The decisions of the highest courts of a state, interpreting state statutes under which a corporation was organized, are controlling on the federal courts. 6. Same—Trusts—Rights of Stockholders. Where a business corporation was organized to mine and sell natural gas to the residents of a city, the fact that the stock subscription contracts required repayment of amounts paid by subscribers, with interest and that after such payment the corporation should reduce the price of gas to consumers to cost, without further dividends to shareholders, and that the entire capital stock was under the voting power and control of five trustees, selected from the stockholders, did not deprive the latter of their character and rights as such on payment of their subscriptions, with interest, and hence, on the termination of the corporation’s business by the supply of natural gas becoming exhausted, they were entitled to have the corporation dissolved and its assets distributed to them. 7. Corporations—Organization—Natural Gas Companies—Powers. Rev. St. Ind. 1881, c. 35 (Burns’ Ann. St. 1901, § 5051), provides that persons desiring to carry on any kind of manufacturing, mining, mechanical, or chemical business, etc., shall make, sign, and acknowledge a certificate in writing, stating the corporate name, the object of its formation, its capital stock, etc., and file the same with the recorder of the county and a duplicate in the oflBce of the Secretary of State. Defendant corporation was organized “to drill and mine for natural gas, petroleum, and other minerals, and to purchase, lease, and otherwise acquire gas and petroleum wells, and the products thereof, to furnish the same to its patrons for use, and by manufacture to convert the same into gas for fuel and illuminating purposes, and other articles of commerce,” after which the organizers of the company procured the passage of Burns’ Ann. St. 1894, § 5099, defining the word “mining,” as used in the former statute, to “cover and include the sinking, drilling, boring, and operating of wells for petroleum' and natural gas,” and made it applicable to the organization in question. Held, that such corporation had no power, after the supply of natural gas was exhausted, to use its assets to manufacture artificial gas and furnish the same to consumers. 8. Same—Statutes—Amendment. The undertaking to manufacture contained in defendant’s certificate of incorporation being merely incidental to the mining business for which the corporation was organized, the right to manufacture artificial gas was not conferred, as against dissenting stockholders" by Acts 1803, p. 147, •c. 73, declaring that the articles of incorporation of any company having filed a certificate under Act May 20, 1852, or ány of “its amendments or supplements, wherein the object of the company has been stated as embracing any or all of the purposes of any one of the subdivisions of section 1 of the act, were thereby legalized and declared to be as effectual as if the original statute and all its amendments had stated that companies might be formed thereunder for any and all of the purposes therein enumerated.

Appeal from the Circuit Court of the United States for the District of Indiana. ' This cause, was submitted upon the bill and answers as amended, and the appeal is from a final decree which sustains the bill and grants the relief sought against the appellants (defendants therein), the Consumers’ Gas Trust Company and its trustees and directors, respectively. The appellee (complainant), Byron C. Quinby, avers that he is a citizen of the state of Massachusetts and the owner of shares’ of capital stock in the Consumers’ Gas Trust Company “to the amount, par value, of $3,499.85,” and ‘.‘sues on behalf of himself and all others similarly interested,” and that the “suit is not a collusive one to confer on this court jurisdiction of a ease of which it would not otherwise have cognizance.” As originally filed the bill was not verified by the complainant personally, but by George H. Evans, on information and belief; Subsequently it was verified by complainant, under leave of court; but the amended bill was verified only by Evans, as on information and belief. The. defendants are citizens of Indiana; the Consumers’ Gas Trust Company being a corporation organized under the laws of that state and háving its principal place of business at Indianapolis. Substantially the following faets and circumstances are stated in the bill and amendment: On June 27, 1887, the common council and board of aldermen Of- the city of Indianapolis • adopted an ordinance, which was approved by the mayor, authorizing the use of the streets of the city for mains, pipes, and conduits ■for the purpose of supplying natural gas to its inhabitants at a schedule of prices therein specified, and requiring that any corporation or company should file with the city clerk its written acceptance of the ordinance to obtain -the benefits thereof. On November 2, 1887, thé defendant Consumers’ .Gas Trust Company was incorporated for the purpose of operating under such ordinance, under a general statute of Indiana providing for the organization of manufacturing and mining companies, by the adoption of articles of association which provide substantially as follows: “The objects of the formation of such corporation are to dril} and mine for natural gas, petroleum, and other minerals, and to purchase, lease, and otherwise acquire gas and petroleum wells and the product thereof, and to furnish the same to its patrons for use, and by manufacture to convert.the same into gas for fuel and illuminating purposes and other articles of commerce, and the ■ sale of the product to its patrons,” and to these ends to take, hold, convey, and mortgage real estate by fee simple or' lesser title, and to own, operate, and maintain such machinery, works, lines of pipe, and appliances .as the carrying out of the object above mentioned may require. That the capital stock of the company should be $500,000, to be divided into shares of $25 each. That the term of existence of the corporation should be 50 .years. That the'business and prudential concerns of" the corporation should be managed by a board of directors, consisting of nine members, to be, after the first year, annually elected by the board of trustees hereinafter’ provided for. That “the entire capita} stock of the corporation shall be placed 'under the -control of a board of five trustees and their successors, who shall be stockholders in said company,- which said board of trustees shall have full, 'complete,- exclusive, and irrevocable power during the continuance of this corporation to hold said stock and to vote the same as fully and completely as if they were the owners of said capital stock, to elect directors as above provided, and to fill any vacancy that may occur in said board of directors. Said entire capital stock shall be voted as a unit, and; in case said trustees shall not agree as to how said stock shall ,be voted, the majority of them shall cast the vote of the board. If a vacancy should occur in the board of trustees by death, resignation, removals from the city of Indianapolis, or otherwise, such vacancy shall be filled by the remaining members of the board; and, in the event of the failure of such board to fill such vacancy, the Marion circuit court shall, upon application of any stockholder, after said trustees shall have had ten days’ notice in writing of such application and shall have in the meantime failed to fill such vacancy, appoint some competent person to fill the same.” That “said trustees shall issue to each subscriber to the capital stock of said company, upon full payment by - each subscriber to said company of the amount of his subscription, and upon the stock therefor being issued to said trustees as above provided, a certificate, showing the amount of stock held by said trustees in trust for Said subscriber; and said subscriber, or holder of said certificate by assignment, shall be entitled by virtue thereof to receive from said company all dividends which shall be earned by said stock, which dividends, not to exceed eight per cent, per annum so long as the certificates of the indebtedness of the company are not fully canceled, shall be paid in money, or may be applied in payment of any indebtedness of said holder to the company as a consumer of gas.” That “when said certificate holder shall have received, by dividends or otherwise, on said certificate, an amount equal to his subscription, with interest at the rate of eight per centum per annum thereon and after the payment of all indebtedness of the said company, then it shall be the duty of the directors» of said company to reduce the price of gas so that the same shall thereafter be supplied to consumers at cost.” That “for the purpose of the development of the supply of gas and the construction of pipe lines, the board of directors shall have power to borrow money for the use of the company, and to issue therefor certificates of indebtedness, bearing interest at a» rate not exceeding eight per centum per annum.” That “no indebtedness except for current expenses, shall be contracted by the board of directors in any other form than the certificates, above mentioned, without the consent of the board of trustees herein above provided for, acting for the stockholders;- and no indebtedness of any kind shall be contracted, except on the consent of two-thirds of said board of directors.” That “the principal place of business of the company shall be Indianapolis, Marion county, Indiana.” A board of directors was named in the articles to serve for the first year. Such board adopted by-laws which provided: That the secretary should “keep correct accounts, in books provided for that purpose, of all the dealings of the corporation with its stockholders, officers, creditors, and patrons, according to such system as may be provided by the board of directors. He shall attest and affix the corporate seal to all stock certificates, and keep a complete and careful record of certificates issued by the trustees to the subscribers to the capital stock and their assigns.” Also that “the committee on private consumers and rates shall attend to the business of fixing a schedule of prices,- subject to the approval of the board of directors, at which gas shall be supplied to private consumers within the limits of the city of Indianapolis, and shall hear and decide on all complaints and grievances of said consumers, subject to the approval of the board of directors. If at any time said committee shall deem it advisable to furnish gas to private consumers at less rates than is provided in the city ordinance now in force on that subject, they shall report their recommendation in that behalf to thev board of directors.” Also that “at the first regular meeting in November of each year the board of directors shall request of the trustees in writing the appointment of a committee of three stockholders, other than directors, to make thorough and careful examinations of all accounts of the company and verify the same; said committee to have the power to appoint such expert accountants as may be necessary.” The board of directors then proceeded to Solicit subscriptions for shares of the capital stock of the company, and with the consent of the board of trustees adopted a printed form for such subscriptions. AH subscriptions to the capital stock, both as originally fixed- and as subsequently increased by amendment, were made upon the form so adopted. Upon the payment of subscriptions the company “issued, to each such subscriber, to evidence his interest in said company by virtue of his said subscription and payment,” what is called a “final certificate.” The subscription form referred to contains this agreement: “I hereby agree, that the -stock■ above subscribed shall be issued to the board of-trustees above named in perpetual and irrevocable trust, in the manner and according to the terms and conditions of the articles of incorporation under which-said company is organized, and that when the indebtedness of- said company is fully paid and the subscribers to stock shall have received an amount equal to the amount by them subscribed and paid, with eight per cent, interest, that the price for gas supplied by said company shall thereafter be fixed at cost.” The subscription agreement also contained the names of the board of trustees and of the board of directors selected for such purposes. The final certificate referred to as issued to the subscribers, after stating the name of the subscriber, his payment into the treasury of the company of the sum stated “in full payment, satisfaction, and discharge of his subscription to- the capital stock of said company, and that his said subscription is hereby canceled,” recites as follows: “In consideration of the payment of the above-named sum of money the Consumers’ Gas Trust Company hereby contracts and agrees that after the payment of all indebtedness of said company, contracted for supplies, leases, materials, labor, and the construction of pipe lines and gas wells, all the net earnings of said company shall be . applied pro rata to the repayment to the subscribers or their assigns of all fully paid subscriptions to the capital stock of said company until all the same are repaid in full, together with interest thereon at the rate of 8 per centum per annum; interest to be calculated from, the date of payment of each several installments of all fully paid subscriptions to the said capital of said company. Said company, in consideration of,the payment of said sum of money herein above named, further hereby contracts and agrees that' after all indebtedness of said company, contracted for supplies, leases, materials, labor, and the construction of pipe lines and gas wells, is fully paid, and after all fully paid subscriptions to the capital of said company are repaid to the subscribers, or their assigns, together with interest thereon as herein above .provided, the said the Consumers’ Gas Trust Company will reduce the price of gas so that the same shall thereafter be supplied to all. patrons-of said company at its actual cost For and in consideration of the contracts and agreements of said company herein above set forth, and for and in consideration of the great and permanent benefit to the entire community of the city of Indianapolis to be derived from having natural gas supplied or furnished at its actual cost,-, by the acceptance of this certificate, hereby contracts and agrees, for himself and his assigns, that the capital stock of said company, issued to the board of five trustees thereof in shares of $25 each, based on the payment of the subscription to the capital of said company hereinabove mentioned, shall be .and remain, under the exclusive and irrevocable control of said board of five trustees and their, successors, with full, complete, exclusive, and irrevocable power in said board of trustees to hold said stock and to vote the same during the continuance of the Consumers’ Gas Trust Company as a corporation, for all the uses and purposes in the articles of incorporation of said company mentioned, set forth, and described.” Subscriptions to the capital stock were made accordingly for the amount authorized, which were paid and certificates issued in the form mentioned. Thereupon the company proceeded to acquire leases of natural gas territory in the then newly discovered gas fields of Indiana, drilled wells to obtain such gas, and constructed a line of mains and pipes to the city of Indianapo: lis, and a system of natural gas mains and pipe lines in the streets and alleys of that city, and was thus enabled to and did convey natural gas to Indianapolis, and entered upon the distribution of the same to- the inhabitants. The authorized capital .was found insufficient, and, after borrowing additional sums, an amendment of the articles was made, providing for an increase of the stock to $1,000,000; .the■ resolution for that purpose stating that the increase was “for the purpose of raising money to fully complete and equip the plant for supplying the entire city with natural gas.” Subscriptions for the increased capital stock were made to the amount of $105,-000, and, on payment thereof, like final certificates were issued to the subscribers, and the entire additional amount was invested in the construction and extension of the plant. On November 29, 1892, the directors of the company voted to convert the interest, at the rate of 8 per cent, per annum, which had accrued and should accrue to January 1, 1893, on the amount of capital stock, into shares of capital stock of equal amount, and to issue certificates therefor to the holders of certificates, in like form with the original certificates, and, such arrangement being carried out, the capital stock was thereby increased to $789,000, and no further addition thereto was ever made. The bill further avers: “It was contemplated at the time of the organiza- ' tion of said company, and was a principal inducement to the organization thereof and the subscriptions to its capital stock, that the supply of natural gas for Indianapolis would be obtained permanently, or at least for many years, from a part of the natural gas fields within a distance of about 25 miles from said city, and at small expense, so that the receipts of the company from the sale thereof at the rates prescribed in the said ordinance of June 27, 1887, would be so largely in excess of operating expenses that the company would be able to pay all debts contracted for money borrowed to construct its plant, and interest and dividends on its shares of capital stock, and such dividends would equal the par value of such shares long before the supply of natural gas had failed, or the cost of supplying the same had materially increased, and that thereupon it would become practicable for said company to reduce the price below that prescribed by said ordinance, and thereafter supply the same to the inhabitants of the city at cost, which it was contemplated would be less than the maximum price fixed by said ordinance.” Also that: “It was well known, at the time of the organization of the Consumers’ Gas Trust Company, that petroleum was often, if not usually, present underlying gas deposits, where such deposits were found in rock formation such as that in which the Indiana natural gas deposits were found, so that it was anticipated, at the time of the organization of said company, that, in drilling its wells for natural gas, petroleum might or would be found, be produced by such wells when the natural gas deposits reached thereby should be exhausted or diminished, and that other minerals might in the same manner be found, so that in said articles of association provision was made, as hereinbefore shown, for the operation of said company in petroleum and other minerals; but.complainant avers that it was not contemplated that said company should operate in drilling or mining for petroleum or other minerals,, or in purchasing, leasing, or otherwise acquiring petroleum wells, or the product thereof, or in furnishing petroleum for consumption or use, independently of its business as a natural gas company, but that its operations in petroleum and other minerals were intended to be such only as were connected with and incident to its business as a natural gas company, and that, in so fair as it was contemplated that said company should or could engage in any kind of manufacturing business, such business should be incidental to its business as a natural gas company, and confined to the conversion of the petroleum and other products, exclusive of natural gas, obtained from its natural gas and petroleum wells, into gas for fuel and light and other articles of commerce, and did not contemplate or mean that the said company could or should at any time, be converted into an exclusively manufacturing company engaged in the business of manufacturing artificial gas from coal or other minerals, not the products of its natural gas and petroleum wells; and plaintiff avers and charges that during the entire existence of said Consumers’ Gas Trust Company the operations and business of said company were at all times confined to natural gas, exclusive even of any operations or dealings in petroleum, until after the natural gas supply had become much depleted, when there was an inflow of petroleum, so that the natural gas leases and wells of the company yielded in some instances petroleum in sufficient quantity to make it worth while for the company to collect and dispose of the same by sale as crude oil in •the market, Which It thereafter did- and is still engaged In doing in a small way and only incidental to its business as a natural gas company.” •During the period commencing. July 1, 1893, and ending July 1, 1903, the company paid interest at the rate of 8 per cent, per annum on its capital stock , as represented by the final certificates, and dividends-as well, and the dividends so paid aggregated 95' per cent, of the par value of each share. These payments of dividends and interest were made out of the earnings of the company in its natural gas business, and, excepting the amounts so paid, together with the operating expenses and the sum reserved for contingencies, all of the receipts of the company, as well as its entire capital stock, were expended for its plant, lands, and gas wells, and in the transportation of the gas and distribution to the inhabitants of such city, so that at the commencement of the action the assets of the company, except certain sums realized from the sale of a certain portion of its plant, consisted of the natural gas mains and pipes, pumping plants, and leases of natural gas lands which had been used exclusively for the production, supply and distribution of natural gas; and it-is averred that the property was not adapted to any other use or business, and had not been constructed, acquired, or intended to be used for any other purpose or business. It is further averred that no authority exists, by ordinance or otherwise, ^r the use of the streets or public places of Indianapolis by the company fo,r any other purpose than distributing and supplying natural gas. It is further averred that the supply of natural gas has failed, so that it has become impossible for the defendant company to bring to the city of Indianapolis an adequate supply for any purpose to any of its consumers, except a small number who were supplied near to the high pressure mains at the point where such mains enter the city, and who consume substantially all of the gas delivered by such mains, and that even they were not sufficiently supplied, and such supply would shortly fail; that when it became apparent that the supply was failing, and it would never be practicable to reduce the price as prescribed in an ordinance of June 27, 1887, and that it would eventually become impossible to supply the same at any-cost to the innabitants of the city, the defendant company ceased to extend • its system of distributing mains and pipes in the city, and confined its operations thereafter to the territory to which its system then extended, 'which only accommodated about 40 per cent, of the inhabitants of the city; that after the winter of 1902-03, it became impossible to carry on the operations of the company in supplying natural gas without actual loss, and during the winter of 1903-04 - such operations were impossible, even at a loss, to afford service of any value to the few consumers who were supplied near the mains entering the city; that thereupon the board of directors, in anticipation of the cessation of the business of the company, sold certain of its leases and part of its lines of mains and pipe, and the money realized therefrom was substantially all the money in the treasury of the company when the annua! meeting of the stockholders was held in November, 1903, for the election of a board of directors. . In November, 1903, at the annual meeting of the stockholders, the trustees . elected as the board of directors the defendants Bement Lyman, John P. Frenzel, Albert A. Barnes, John E. Scott, William J. Richards, Henry O. Atkins, James W. Lilly, Hervey Bates, Jr., and Frederick Fahnley, of whom Bement Lyman, John P. Frenzel, Albert A. Barnes, John E. Scott, and Frederick Fahnley had been members of the board during the preceding year; and the directors so elected thereupon qualified as siich, and ever since had been and now are the board of directors of said company, and as such ever since have been and now are in the control and management of the business and affairs of said company, each of them being stockholders in the company, holding as their only evidence- thereof certificates in the form of the final certificate hereinbefore set out. Thereupon, it is averred, this board of directors, “by a majority only of its members, to wit, said William J. Richards, Henry O. Atkins, James W. Lilly, • Hervey Bates,' Jr., and Albert A. Barnes, adopted as the true construction of the articles of association of said company that the holders of the certificates representing moneys paid to said company, for its shares of capital stock in discharge of the subscriptions for such shares, made in the form hereinbefore set out, were not stockholders in said company, nor in any way represented by the board of directors thereof, nor interested, as beneficiaries or otherwise, in said company or its business or assets, except only that they were entitled to receive a further and final payment of five per centum of the par value of the amount stated to have been paid to said company in the respective certificates held by them, together with interest from July 1, 1903, at the rate of eight per centum per annum on such five per centum until the same was paid; that upon such payment being made the entire assets of the company were subject to be managed, controlled, and disposed of by the board of directors, without accountability in any way to the holders of said certificates, or any of them, as having any interest in said company, or in its shares of capital stock, by virtue of said certificates; that it was within the objects and purposes for which said company was organized to engage in the manufacture from coal and other substances of artificial gas, for fuel and light, and to supply the same' to the inhabitants of the city of Indianapolis at the bare cost of such manufacture and sale, the said company being limited by its articles of association to furnish such gas at cost, so that it should not make any profit whatever from its future business and operations; and that the-board of trustees, after such final payment to said certificate holders, would continue to hold in trust the shares of the capital stock of said company . during the corporate existence of said company, for the purpose of voting the same for all the purposes for which said stock could be voted, and to exercise all the other rights and powers resulting from the ownership of the shares of the capital stock of said company, as trustees for the inhabitants generally, of the city of Indianapolis, or such of them as should he or desire to be supplied by said company with artificial gas for fuel and light, in order to secure to such inhabitants the continuance of such supply .at the actual cost thereof, and no more during the existence of said company.” It is further averred that the board of directors by like majority •constantly maintain and assert, in substance, “that the rights and powers ■of said company, and of its board of directors and trustees, and of the holders of certificates issued by it on account of payments for shares of its capital stock, and of the inhabitants of said city generally, or such of them -as shall desire to be supplied with artificial gas, are respectively such as are above stated, and not other or different, and that it was and is their right and duty to control and manage the business of said company and to ■dispose of its assets in accordance therewith”; that in pursuance of such construction and policy it was resolved by the board to make a final payment “of five per centum of the amount represented by each final certificate issued •by said company,” together with interest thereon to January 1, 1904, and set apart the moneys to make such payment, and that payments be made accordingly by the treasurer of the company upon presentation of the certificates; that each certificate should thereupon be stamped as fully paid, and thereafter no further payments should be made to the certificate holders ; and the directors have ever since maintained and asserted that by such -action all right, title, and interest of each and every certificate holder is ■extinguished, except to receive a final payment so provided for. The board of directors proceeded thereupon to ascertain the cost of constructing a plant for the manufacture of artificial gas and the cost of supplying the same, and the value of the natural gas plant and other assets •of said company, and what part, if any, of said plant could be adapted to use and be used in manufacturing and supplying artificial gas, and the cost there■of, and also the amount that could be realized by sale of the remaining plant and assets of the company—all at the expense to the company of $3,700— and thereupon, on February 9, 1904, by like majority vote, adopted the following resolution: “Whereas, pursuant to the resolutions adopted by this board on November 7, 1903, and November 17, 1903, the board has secured reports from the auditing committee authorized to examine and report as to the financial condition of the company, and also reports from Mr. Prossor and Mr. Brill, experts employed to report as to the value of the assets of the ■company, and also as to the methods and probable cost of constructing a plant for the manufacture of artificial gas: Therefore be it resolved thai; it is thé judgment of'this hoard of directors that it .is practicable for the Consumers’ Gas Trust Company to construct a plant for the manufacture of artificial gas to supply the citizens of Indianapolis with fuel and illuminating gas. And be it further resolved that, for the purpose of raising funds for the construction of such plant, we favor the sale by the company of its leases and other property outside of the said city, and the borrowing by the company of such additional funds, not exceeding the sum of $500,000, as may be found necessary for the construction of such plant. Therefore be it further resolved that the company do borrow the sum of $500,000 for the construction of such plant, such sum to be used as a special fund for the purpose, and only for the purpose, of constructing such plant, such sum to be borrowed upon such security and such terms- as may be hereafter determined by the board of directors and board of trustees. And be it further resolved that the board of trustees of the. company be requested to signify their consent to such proposed loan and the contracting of such indebtedness as may be incurred in the construction of such plant. It being the intention of this board in carrying out these resolutions to furnish artificial gas to the consumers of this company at ultimate cost, and we pledge ourselves to this policy.” The value of the natural gas plant of the defendant company, including leases and other assets, is averred to amount to $960,078.50, with no existing indebtedness against the company. It is also averred that the board of directors has no power to carry on the business, except as a natural gas company; that, as it is impracticable to further continue such business, it is the duty of the board to wind up the company and make distribution of its assets to the certificate holders in proportion to their shares; that the value of complainant’s certificates exceeds the face value thereof, unless the business shall be converted into an artificial gas company to sell gas at cost, in which case their value would be only $175. That on February 17, 1904, he demanded of the defendants constituting the board of trustees, at a time when they were in session as a board, that they should take action to prevent the board of directors from converting the company into' an artificial gas company, and from denying his rights as a shareholder, which request. was refused. It is further averred, in the amendment to the bill, “that the board of directors of said company will, after selling, or otherwise disposing, as soon as they can, of the entire plant and other property of said company, except its mains and pipe lines in the city of Indianapolis, expend all of the proceeds thereof, and other moneys borrowed by them on the credit of said company, in the construction of an artificial gas plant, and engage said company exclusively in the manufacture of artificial gas ashereinbefore alleged, and in selling such gas to consumers in the city of Indianapolis at the bare cost thereof, without any profit to said company, and so- to continue to do until the term of existence of said corporation has expired; in accordance with the construction put by them as aforesaid upon the articles of association of said company, and in order to carry into effect such construction.” * The answers of the defendants do not controvert the allegations of fact in the bill respecting the authority and form of the corporate organization, terms' of subscription and stock certificates, operations of the' company, proceedings of trustees and directors, respectively, and cessation of the supply of natural gas, so that it is no longer practicable to furnish it- to the people of Indianapolis. But matter is set up by way (1) of challenging jurisdiction of the bill, (2) of showing that the founders intended and created a trust in favor of the people of Indianapolis for supplying gas at actual cost, whenever the shareholders were repaid the amount of their investment and interest, and (3) of showing power vested in the trustees, through the terms, of the organization, aided by subsequent legislation and the intention and: conduct of the corporators, to employ the franchise and assets in the production and supply of artificial gas to that end. While the allegations of the answer are voluminous, the appellants’ brief presents a concise statement of the ultimate facts and deductions-—aside from legislation procured subsequently to the organization—which are relied- upon for reversal of the decree. Such abstract is adopted as sufficient recital of the matter so set up, namely: “Natural gas was discovered in Indiana in 1886-87, 25 miles north of Indianapolis. The Consumers’ Gas Trust Company was organized on November 2, 1887, under the manufacturers’ and miners’ act—chapter 35, Rev. St. 1881, now chapter 38, Burns’ Ann. St. 1901. During the year 1887 two lines were being constructed from the gas field to the corporate limits of the city for the purpose of supplying natural gas. ' These lines were bought up by the Indianapolis Gas Company and those allied with it, which had the only gas plant in Indianapolis. The city council, in June, 1887, had passed an ordinance fixing schedules of prices for natural gas when used as fuel or light. After the Indianapolis Gas Company had acquired control of the lines aforesaid, it caused to be introduced into the common council an amendatory ordinance largely increasing the rates fixed by the ordinance. The people were disappointed and determined to resist the threatened monopoly. A public meeting was held on the Board of Trade on October 27, 1887, and a plan was presented and adopted for constructing a gas plant by the people and for the people. A corporation was to be organized, but not as a moneymaking venture. This plan was, in short, that every man should be asked to subscribe such sum as he felt able to contribute; that the corporation should be organized under the manufacturers’ and miners’ act, and in such way as that it could never pass under the control of the Indianapolis Gas Company, or any other person or corporation; and when the subscribers had been repaid the amount of their subscription, with 8 per cent, interest, then the company should furnish gas to the people of the city at cost. Committees were appointed to take subscriptions, to frame the articles, and so on.' “The committee on organization, in carrying out the purpose, framed the articles so as to provide that all the capital' stock, when paid for, should be issued to a board of five trustees, named in the articles, who were given power to fill all vacancies on their board, and who were given full, exclusive, and irrevocable power during the continuance of the corporation to hold all the stock and vote the same as fully and completely as if they were the owners of said stock. By Article 7 the trustees were required to issue to each subscriber, upon the payment in full of his subscription, a final certificate showing the amount of stock held by the trustees in trust, which amount, par value, was to be repaid by the company, with 8 per cent, interest. When a certificate holder had been repaid, by dividends or otherwise, upon his certificate, an amount equal to his subscription, with interest as aforesaid, and after the payment of all indebtedness of the company, ‘then it should be the duty of said directors to reduce the price of gas, so that the same shall thereafter be supplied at cost.’ The objects of the corporation were stated in article 2 as follows: ‘Art.2. The objects of the formation of such corporation are to drill and mine for natural gas, petroleum, and other minerals, and to purchase, lease, and otherwise acquire gas and petroleum wells and the products thereof, and to furnish the same to its patrons for use, and by manufacture to convert the same into gas for fuel and illuminating purposes, and other articles of commerce, and the sale of the product to its patrons, to these ends to take, hold, convey, and mortgage real estate, by fee simple or lesser title, and to own, operate, and maintain such machinery, works, lines of pipe, and appliances as the carrying out of the objects above mentioned may require.’ “The company was organized, put 133 miles of pipes in the city, connected this plant with the gas field, and supplied gas in this way till it gave out early this year. As each subscription was paid there was issued the same final certificate of payment to every person entitled to repayment. The company owes no debts, and has paid 95 per cent, of the principal of these certificates and all the interest, and in 1903 set apart a sum sufficient to pay the remaining. 5 per cent, and notified the owners to come and get their money. Four of the trustees and five of the directors now favor the construction of gas works in connection with the city plant to supply gas to the people at cost. The remaining trustee and the minority directors con.tend that the corporation has no power to engage in the business of manufacturing gas, holding that its powers are limited to furnishing natural gas only,-. In this posture of- affairs, Byron C._ Quinby, of Massachusetts, a certificate holder, filed his bill on February 19, 1904, In the Circuit Court, -against .the -company and the five.trustees and nine directors, to enjoin the company from using its assets or borrowing money to erect gas works, and to manufacture and supply gas, on the ground that, the company has - no power, under the articles and laws, to do so. The minority trustee and the minority directors, holding; to this view, suffered default. The corporation and the majority trustees and directors appeared and"first filed a plea, showing that the total assets of the corporation were of the value of $960,078.50, that the face value of the certificates outstanding was $788,657.10, and that the complainant held three certificates, one of the par value of $2,500, one of the par value of $265.40, and one of the par value of $743.45; that the , largest certificate was issued first to John and Edward Schmidt, citizens of Indiana, and by them assigned to the complainant, who took a reissued certificate from the company to himself. The plea -asserts that appellant cannot sue on the larger certificate under the acts of Congress, and that the aggregate of the other two certificat.es is not $2;000. . Wherefore that sum is not in dispute so as to give the court jurisdiction. The plea was overruled. “Thereupon the defendants answering filed their joint and several answer, setting forth in detail and at length the material facts above stated and many others in support thereof; also showing that before the complainant filed his'bill -two suits had' been brought' and were then pending in the. courts of the state involving substantially-the same question presented, on the’bill: and, further, that-there was not $2,000 in controversy; and, again, that the complainant, as a certificate holder, is not a stockholder, but in the nature of a creditor, -and that his bill as originally filed and as finally amended was not verified by the oath of complainant, within the meaning of rule 94, and did not state facts as required thereby. It was further shown that some of the minority directors and others in the year 1903 had determined to acquire all the final certificates possible, wreck the corporation, wind up and divide the assets, and for this purpose had organized the Eureka Investment Company, which had acquired a majority of the oustanding certificates, and that ‘complainant did not file said bill for himself alone and in his own interest, but at the instance, and request and in the interests of the said Eureka Investment Company, or those allied with it in interest, and in order to help said investment company, and those associated with it, to wreck the corporation, wind up its affairs, and distribute its assets.’ ”