CORPORATIONS-STOCK CONVERSION-OBLIGATION OF INTERSTATE CARRIER

Authors

Abstract

Plaintiff, holding preferred stock of the defendant railroad convertible into common stock, sought to exercise his right of conversion, and on the railroad's failure to comply, filed the present suit for damages. The answer set up as an affirmative defense that the defendant, an interstate common carrier, is subject to the jurisdiction of the Interstate Commerce Commission; by the 1920 amendment to the Interstate Commerce Act, 49 U. S. C. A. sec. 20a, it was made unlawful for any carrier to issue stock except by the Commission's sanction; on Feb. 7, 1927, for the first time demand was made for conversion; the defendant thereupon with diligence made application to the Commission for leave to issue common in exchange for the preferred stock; on Feb. 24, 1927, it obtained the requisite permission; and thereupon the defendant became and ever since has been ready, able and willing to deliver to the plaintiff the common stock by him demanded. Held, the facts alleged do not constitute a defense, for the carrier's obligation was to perform all acts necessary to effect the conversion upon the exercise of the stockholder's option. Marony v. Wheeling & L. E. Ry. Co., 33 F.(2d) 916; see also Cheatham v. Wheeling etc., 37 F.(2d) 593.

Recommended Citation

CORPORATIONS-STOCK CONVERSION-OBLIGATION OF INTERSTATE CARRIER, 29 Mich. L. Rev. 111 (1930).
Available at: https://repository.law.umich.edu/mlr/vol29/iss1/20