The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1855-06-09
Supreme Court-speCial Tetms
Before Judge Rosevelt.

As the SshuyIers represent the transaction loan
of money nothing else secured BY Illinois Railroad
scrip coaterathe losn with lis interest and more,
being subsequently repaid 60 the lender and the scrip
except arranged returned to the borrower
Miller ON the other hand, ssys there was. in effect
to the stock Of the Illinois Railroad the being
anxious, at the time, to engage the names Of wealthy
they had frat selected having declined the favor
and that the stock having afterwards risen enormously
~ 70 sg s 81 s
profits which, BY way Of accretion isgitimstsy DO.
Stock and that having the entire conaol Of the Com
psny in their hands, Schuylers, without informing Nil
Ter had taken to themselves and disposed Of Cor might
dollars each share the additional issues egmstsly
belonging to Miller-and which profit 80 realized,
whether actually Or only potentially Miller claims
In 1851 the let Of October, the Schuylers, APP
pears borrowed Of Miller oo0 their note, payable
deposited with him as collateral certain scrip OF the
Illinois Central Railroad which there had been paid
$780, equivalent to instalment Of ten per cent
$50 shares Of 500 EACH and which gave to the holder
the right to that number out Of 10000 sharesor two
millions Of dolars-when issued. fs#4@
the interest was paid and note given for the same
amount at the rate for the same PERIOD and with
the same collateral
On the 9Th Of October the loan was again renewed
precisely in the manner except in the substitution
Of ninety days for menths at the expiration Of
the check produced dated SD December, 1885, the
whole principal and interest, amounting to IT,,
It now appears, however, that on the same day with
the loan originally made, the Schuylers mot only
deposited with Miller the scrip before mentioned ss
ment to him Of the right to take to his own use $50
the shares when issued and that the I'd Of April
following when the renewed note fell due, another
like endorsed Of the right to 160 addi-
onsl shares making together $780, twoffths of the
Both these Assgnments on their face purport 70
show that the whatever it may have been
and whatever the amount Of its value," was not In
every respect lawful and bona adenone at all events
sufficient to rebuff the presumption resulting from the
express written admission contained In the Assgnments
There was not only evidence on the trial but allie
IL
sult-thAt although the assignments were cotempora-
neoua with the notes. they were not mutual constdera
(says the lsw) Of two consructions-admst this
Transaction to be OF which Will bring 1t Within
strucon must BE- adopted which win make Tue instru
ment valid, and not that which win render 1t void
Archibald vs.. Thomas, Cowsn, 284.
their face in express terms that value, which, uncoutra
dcted, lawful value received-t0 be valid the
question what the rights which they gave and
fairly interpreted intended to give to Miller the
T6ey are ndorsed it win be remembered ON the scrip
itself and they purport to transer to Miller the to
take, when issued, three hundred shares ofthe stock
within mentioped;' that n-fors SO they are described
Dcrp-Lnree hundred BnAro0 Oh the CAPITAL
Of said company to be issued to him LUDLOW who con-
veyed to the Schuylers) or his assigns whenever the
directors shall authorize the issue Of the second million
OF stock under the provisions of resolution OF the Board
Of Directors passed the 18th day Of April 1917
The first Issue Of stock m Jlion. II Issued
to and divided among the schuyrs and their associates
twelve in number month Of March '5l they pay
ing only twenty dollars each share OF one hundred
The scrip Of May Isl for ten per cent only and
quired further nstsmsnt of 10 per cent taking out
the certificate Both issues were made the directors
their assnr and both put upon the footing
It is obvious then that the scrip Of May 81 in speak
ing Of shave, meant the one equal undivided twenty
part of all the property and Of the
500 shares to be transferred Miller the thing
precisely when reservng the remainder Of stock
lively stated i certainly did not mssnsnd never could
have mean-,hat the shares agreed to bs given TO NIL
Ter subject to be diluted Indefinitely BY indie
finite issue subsequently ut me Of additional stock
70 called to Schuyler and his friends without Mulers
participation. Miller then, with this construction Of
company, without bis knowledge was increased by the
directors Of whom Of the schuylers was president
to seventeen millions. and although . large number
TO the holder Of the Ludlow scrip before mentioned yet
the Schuysrs who had received from him the scrip for
the alleged pupote Of taking out the more formal stock
ted while giving Miller 800 shares took all the rest to
themf elvesmasing difference in favsr OF the Schuy
and TO the pT Ho Of Miller on this one M a.
per cent, the then market value, Millers proper
tonal number Of the new shares.
Miller alleRe sand there Is evidence to the con
trary-that neither the Schuylsrs nor the company
gave him any notice Of the increase OF the capital or of
the allotment and that the Transaction only ctme
to his knowledge from other long after the 23d
Of December 1852. he settled with the Schuylsrs In
entire Of his rghts-an ignorance for which
a the sG time President q the and
infant Of, and In fact controlling, all its operations
They Intentionally kept Miller In the dark and by that
means and by their control the company secured
TO themselves the whole Of the additional shares alot
ted to the scrip Of which MlIer ~ We nave sen vas
a. much the owner to the extent of ffths % they
to the extent of the remaining three 1t seems to me-
this statement perfectly clear that they are bound
in law to make good to Muller the advantages Of which
As to the company they had right to issue to the
schuyers the whole additional stock. They knew that
the sehuylsrs only entitled to three Their
own books showed how much belonged 70 the LUDLOW
scrip; and that scrip Its presentation showed the
title Of Miller to the tWofths. His title written
II tn: r: itself
with full notice. gave to the schuylers that which they
knew belonged to them but TO their grantee Miller
liable.
The following may be stated the points OF the dec
l. where the stock Of railroad corporation b Init
nay Of ems hundred dollars each and the Directors AZ
forwards under the authority OF the charter issue and
take to themselves individually fifteen mlions Of add
each share. which they could Immediately sell In the
market for foryn other words at an advance OF seven
hundred per cent-i IL violation Of the rights Of the
original shareholders not embraced In the arrangement
who may that ground maintain either an action Tor
damages or bin for account each In proportion to
his interest In the original stock
q Scrip receipts for instalmsnt Of ten dollars on
each share giving TO the holders the right on paying
ten more TO certificates Of many shares Of the Use
cond million when issued stands In this respect ON the
footing the cert6 themselves and eptitle
the bolders to like proportonste amount OF the In
creasec issues beyond the two millions.
8. The holder, therefore, OF seven hundred and atty
scrip shares of the original two millions would be
titled to more than eight times that number Of shares In
the diluted Stockton in the proportion Of seventeen to
two To transfer to him only seven hundred and ffy
after the increase had been ordered, without his know
ledge, would be gross fraud upon his rights.
The scrip In the present case to the extent OF three
hundred out OF hundred and 6ty shares having
been duly assigned to Miller, he clearly entitled TO
two ffths Of all its advantages; not only as between
him and the chuYlera hut aao hetHesn him and the