The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1844-03-14

ed decline state stocks, and other property, which
took place in the year 1871.
shall proceed 10 notice the "trists" created dur
ing my presidency The first of these called the
blatchiord and Murray Irusi," dated Both Novem-
ber, 1910, made to secure debt of E46,s76
sterling due TO Messrs. Palmer, Mcklllop, Dent ~
(o., oil London, tor moneys advanced by them 10
me company, and payable on demand Certificates
OF uep3si'e 10 the amount OF that debt were deliver
ed To the agents OF that house. payable one year
from date, renewable for six months longer and to
secure thelr payment, property to the nominal
amount OF $32a 600 was placed in the hands OF
Messrs. r.. M Blalchiord ana James b Murray 10
hold trustees Tor that purpose under trust deed
which provided that the property should be held IN
| trust tor the company until default in the payment
OF the certificates, and upon and after such default
in trust for the payment OF the certificates the rus-
tees 10 account Tor the surplus
! BY means of this arrangement, a demand then
due, the satisfaction of which would have required
a larger amount OF properly than embraced in
the trust, was converted into debt, payable at the
end of eighteen months.
| 1t can hardly be matter OF question that this ar
| rangement was beneficial 10 the company ] need
only add that entered into by the sanction Of
the committee of investments and finance, by whose
direction, ], as president, executed the trust deed
and other papers
The Yates trust" is next in order. The trust
deed bears date on the 18th day of December 1910,
but was not executed nor the trust created until
January T. lS4l.
This trust was created in pursuance of plan to
borrow funds tor the company TO meet its smaller
debts from time to time maturing
caused 10 be prepared statement showing the
| amount ct debts to which would become payable
| in such month OF the year lS4l, and the amounts
! OF funds the company would probably need to car
ny 1t through that year, after making all practicable
arrangements tor postponing the payment OF the lar
ger debts.
The subject was presented to the directors and
stock holders 1t was found that many wonla be will
ling to advance moneys and pledge their personal
responsibility Tor the companys benefit Ifhey could
be secured for 80 doing
The amount contemplated to be borrowed and
raised was about four hundred thousand dollars but
II thought that In some cases creditors of the
company would be induced to take the securities
which might be made under the proposed arrange
meni, either IN payment or as collateral, and thus
obtain the same object was sought to be reached
by the proposed loans OF money.
The plan adopted to afford the proper security was
that the company should give TO those who lent them
funds or moneys or creditors ayment of or as
collateral tor their debts common promissory notes.
securing their payment 10y special pledge of proper
ty in the hands OF the trustees OF the right to share
| in which the notes were to be the evidence Inc
trust was authorized by the directors January A,
| 1871, and none OF the notes under II were parted
with until the 9th of the same month"; both which
appear by the receivers statement.
1t will be seen by the receivers statement that the
amount of the loans obtained on the dit of this
trust, IN cash and notes, was about Ss2Z7, 800 and
that the residue OF the obligations under the trust
were delivered to parties who took them COLA
tera security, and payment OF debts.
1t may be proper to add that these loans were OBJ
tanned al legal interest, and that no pretence OF
necuon with any transaction under this trust The
of this trust supposed by the receiver and
| his counsel to have been violation or evasion OF
the act passed May liih, lS4O torbdding the issue
and putting IN circulation OF post notes by banking
| associations.
However the legal question thus made in respect
| to these particular notes may be eventually de-
cided by the Court OF Channery, where II Is still
pending; il is certain that intention existed the
| time of violating or evadng the provisions OF the
| act IN question.
AS the transaction was large and important, the
directors, before authorship IT, awaited themselves
| of the legal advice Of Messrs. David b. Ogden,
Samuel A. Foote, and William Curtis Noyes, Es-
quires, in addition TO that OF John L. Graham, Es-
quire the official counsel oil the company These
opinions have been recently published by Colonel
Graham in connection with his statement, and
refer to them as containing the legal advice under
which the directors acted IN the creation OF this
trust
| The opinion Of the counsel was, that while the
act of May H. 1910, forbade the issue OF post notes,
for circulation money, yet ITS provisions did not
embrace common prornissory notes, not intenued
| 10 circulate as money, and given to secure cash
| loans, the payment Of debts This construction
of the act has been sustained on one OF those very
notes by the learned Judges OF the Superior Court,
and by the Court for the Correction OF Errors, IN
| like note in another case, which IS certainly high
proof OF its being reasonable one.
| may properly add, that these opinions OF our
counsel were at the time communicated 10 the
bank commissioners and the Attorney General OF
the State, by way OF explanation OF the nature OF
the trust, and the object of giving the Obligations In
question.
1t remains to speak of the 'Bank of England
trust, "'The IIolford AZ Company trust, "TheIylec
trust" all OF which were executed IN the latter
part of August, 1871. Between the months OF
January and July, 1871, so rapid had been the de-
probation of the companys moperty in the state
stocks, bonds and mortgages Nc., that the hcpe OF
saving enough after the payment of the debts to
Justify the continuance OF business had been aban-
doned, but II still thought desirable tN retain
the organization OF the company, IN order to adj
Just its affairs, and make arrangements with ITS
creditors. IL was supposed that IN tins way the at
fairs Of the company could be settled with less loss
to creditors and stockholders. than would attend
forced liquidation by a receiver.
Al a meeting of the board Of directors, on the 9TH
day of June, lS4l, committee was appointed,
who together with the president, were empowered
TO ad ust and secure all the debts OF the company.
The most ample powers were conferred upon the
SPECIAL committee thus raised, TO enable Uem to
make settlements and adjustments with creditors.
II will also appear, in what follows that the last
three mentioned trusts were sanctioned by the IL
nance committee, who, under the articles and by
laws, had very extended powers, as well as by the
spectai committee above spoken OF.
| The trust called "the Bank OF England trust,"
being the next IN order, grew out OF the follow
ing transaction. In February, 1899, Gabriel Shaw
and Melville Wilson, copartners IN the firm
| Of Thomas Wilson 81 Co, London, executed
their bond to the company, payable in two years,
sum Of E6i, s64 sterling To farther indemnify the
| company, a special deposite OF various securities
was made belonging to the firm of Wilson IL Co.
The company issued 10 the firm Of Wson% Co.
their sterling certificates OF deposiie, payable IN
| London, two years after date, TO the amount oil
| E64 s6t sterling, and it specially agreed that
the proceeds Of the securities lett win the conpa-
ny in pledge should be appropriated 10 meet me
payment OF the certificates when they shouio iai'
| due . ~
The certificates had been transferred by Wilson
| 81 Co tothe Bank of England, in whose possession
thew were al the time the trust was created, and
bsd ma,ured and been protested for non-psy ment
Under these circumstances, Wilson Co
or those representing them here, insisted that the
original agreement under which the company re,
ce,ycd and held these securities shoudbe complied
si,h and the securities placed in situation that
he aysis Of them could be applied TO the payment
Of the certificates This lead to the creation OF the